Document:

Exhibit 10.3

 

EXECUTION COPY

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (the
“Agreement”) is entered into as of the 21st day of August, 2019, by and among KushCo Holdings, Inc.,
a Nevada corporation with offices located at 11958 Monarch Street, Garden Grove, CA 92841 (the “Company”) and
the investor signatory hereto (the “Holder”), with reference to the following facts:

 

A.           Prior
to the date hereof, pursuant to that Securities Purchase Agreement, dated as of April 29, 2019, by and between the Company and
the investors party thereto (as the same has been amended, restated, amended and restated, supplemented or otherwise modified prior
to the date hereof, the “Securities Purchase Agreement”), the Company issued a senior note (as the same has
been amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Existing
Note” and together with the Securities Purchase Agreement, the “Existing Note Documents”) to the Holder,
as the initial holder. Capitalized terms used but not otherwise defined herein shall have the meanings as set forth in the Securities
Purchase Agreement (as amended hereby) or, as the context may require, the Existing Note.

 

B.           As
of the date of this Agreement, the Holder is the holder of all of the Existing Notes issued under the Securities Purchase Agreement
and has not assigned, transferred or exchanged any of the Existing Notes.

 

C.           The
Company and the Holder desire to amend and waive certain provisions of the Existing Note Documents and exchange (the “Exchange”
or the “Transaction”) the Existing Note, on the basis and subject to the terms and conditions set forth in this
Agreement, for (i) a new senior note in such aggregate principal amount as set forth on the signature page of the Holder attached
hereto, in the form attached hereto as Exhibit A (the “New Note”) and (ii) a warrant, in the form
attached hereto as Exhibit B (the “New Warrant”, and together with the New Note, the “New
Primary Securities”), exercisable into such aggregate number of shares of Common Stock of the Company as set forth on
the signature page of the Holder attached hereto (the “New Warrant Shares”, and together with the New Primary
Securities, collectively, the “New Securities”).

 

D.           The
New Primary Securities and this Agreement and such other documents and certificates related thereto are collectively referred to
herein as the “Exchange Documents”.

 

E.           The
Exchange is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act
of 1933, as amended (the “Securities Act”).

 

NOW, THEREFORE, in consideration
of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

 

    	 	 	 

     

    

 

1.            Exchange.
On the Closing Date (as defined below), subject to the terms and conditions of this Agreement, pursuant to Section 3(a)(9) of the
Securities Act, the Holder shall convey, assign and transfer the Existing Note to the Company in exchange for which the Company
shall issue the New Primary Securities to the Holder. On the Closing Date, in exchange for the Existing Note, the Company shall
deliver or cause to be delivered to the Holder (or its designee) the New Primary Securities at the address for delivery set forth
on the signature page of the Holder attached hereto. Immediately following the delivery of the New Primary Securities to the Holder
(or its designee), the Holder shall relinquish all rights, title and interest in the Existing Note (including any claims the Holder
may have against the Company related thereto) and assign the same to the Company, and the Existing Note shall be deemed canceled.

 

2.            Ratifications;
Incorporation of Terms under Transaction Documents.

 

(a)          Ratifications.
Except as otherwise expressly provided herein, the Securities Purchase Agreement and each other Transaction Document, is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the date
hereof: (i) all references in the Securities Purchase Agreement to “this Agreement”, “hereto”, “hereof”,
“hereunder” or words of like import referring to the Securities Purchase Agreement shall mean the Securities Purchase
Agreement as amended by this Agreement, and (ii) all references in the other Transaction Documents to the “Securities Purchase
Agreement”, “thereto”, “thereof”, “thereunder” or words of like import referring to the
Securities Purchase Agreement shall mean the Securities Purchase Agreement as amended by this Agreement.

 

(b)          Amendments
and Incorporation of Terms under Transaction Documents. Effective as of the date hereof, the Securities Purchase Agreement
and each of the other Transaction Documents are hereby amended as follows (and any such agreements, covenants and related provisions
therein shall be deemed incorporated by reference herein, mutatis mutandis, as amended as such):

 

(i) The defined
term “Notes” is hereby amended to mean the New Note (as defined herein).

 

(ii) The defined
term “Transaction Documents” is hereby amended to include this Agreement and the other Exchange Documents.

 

(c)          Amendments
to Securities Purchase Agreement. Effective as of the date hereof, the Securities Purchase Agreement is hereby amended as follows
(and any such agreements, covenants and related provisions therein shall be deemed incorporated by reference herein, mutatis
mutandis, as amended as such):

 

(i)           Section
3(a) of the Securities Purchase Agreement is hereby amended to restate the final sentence thereof to read as follows:

 

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“Subsidiaries” means
any Person in which the Company, directly or indirectly, (I) owns at least 30% of the outstanding capital stock or holds at least
30% of any equity or similar interest of such Person, in each case, on a fully-diluted basis or (II) controls or operates all or
any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein
as a “Subsidiary”; provided, however, that the term “Subsidiaries” shall not
include (i) a limited liability company (the “Equipment Financing JV”) to be formed in the State of Delaware
that is at least 50% owned by the Company (or such lesser percentage that either is (x) permitted by the written consent of the
Required Holders or (y) not less than 30% (and the Company continues to control the right to appoint at least 30% of the non-independent
managers of the Equipment Financing JV’s board of managers) with such reduction occurring as a result of dilution in respect
of (A) options or other incentive equity issued pursuant to a customary management incentive equity plan in the ordinary course
of business and/or (B) equity of the Equipment Financing JV that is issued to one or more bona fide third party investors and/or
Specified Entities (as defined below) (solely to the extent of such third party investor’s and/or Specified Entities, as
applicable, cash investment in the Equity Financing JV at fair market value, as reasonably determined)) and with the remaining
percentage owned by Monroe Capital Management Advisors, LLC, a Delaware limited liability company (“Monroe”),
and/or its Affiliates or related funds (Monroe, together with its Affiliates and related funds, are collectively referred to herein
as the “Specified Entities”), which Equipment Financing JV (together with any of its subsidiaries) shall operate
an equipment leasing business and related financing activities and (ii) any entity owned or controlled, directly or indirectly,
by the Equipment Financing JV.

 

(ii)          Section
4(l) of the Securities Purchase Agreement is hereby amended and restated to read as follows:

 

“Restriction
on Redemption and Cash Dividends. So long as any Notes are outstanding, except as permitted under clause (e) or (h) of the
definition of Permitted Restricted Payments under the Senior Secured Financing Agreement (as defined in the Note) as in effect
on the Exchange Date (as defined in the Note), the Company shall not, and the Company shall cause each of its Subsidiaries to not,
directly or indirectly, redeem, repurchase or declare or pay any cash dividend or cash distribution on, any securities of the Company
without the prior express written consent of the Buyers.”

 

(iii)         Section
9(f) of the Securities Purchase Agreement is hereby amended by amending the notice information of the counsel to the Company to
read as follows:

 

“Reed Smith LLP

599 Lexington Avenue

22nd Floor

New York, NY 10022

Attention: Aron S. Izower

Telephone: 212-549-0393

Telecopier: 212-521-5450

 

and:

Reed Smith LLP

101 Second Street, Suite 1800

San Francisco, CA 94105-3659

Attention: Marc D. Hauser

Telephone: 415-659-4814

Telecopier: 415-391-8269”

 

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3.            Consent
and Limited Waivers.

 

a.            The
Holder hereby consents to the Company and such Subsidiaries' execution and delivery of the Senior Secured Financing Agreement (as
defined below) and the other documents executed and delivered in connection with thereto (collectively, the “Senior Secured
Documents”) and the performance of their obligations thereunder, and acknowledges that the Indebtedness under the Senior
Secured Documents is Permitted Senior Indebtedness for the purposes of the Transaction Documents. “Senior Secured Financing
Agreement” means that certain Financing Agreement, dated August 21, 2019 (as amended, supplemented or otherwise modified
from time to time), by and among the Company, each subsidiary of the Company party thereto, the lenders from time to time party
hereto, Monroe Capital Management Advisors, LLC, a Delaware limited liability company (“Monroe”), as collateral
agent for the Lenders, and Monroe, as administrative agent for the Lenders.

 

b.            The
Holder hereby waives any right pursuant to Section 4(j) of the Securities Purchase Agreement to participate in (or receive notice
with respect to) any guarantee made by the Company to any Specified Entity (as defined in the Securities Purchase Agreement, as
amended hereby) with respect to any indebtedness owed by the Equipment Financing JV and/or any direct, or indirect, subsidiary
of the Equipment Financing JV.

 

c.            The
Holder hereby waives each default and Event of Default (as defined in the Existing Note) under or relating to the Existing Note
Documents occurring prior to the date hereof which the Holder has actual knowledge of (including any default or Event of Default
that would have arisen from the Company entering to the Senior Secured Documents)(collectively, the “Known
Defaults”); provided that the foregoing waiver shall be limited precisely as
written and relates solely to the Known Defaults in the manner they exist on the date hereof and not to any other change in facts
or circumstances occurring after the date hereof, or to any other defaults or Events of Default now existing or occurring after
the date hereof, and shall not in any way or manner restrict the Holder from exercising any rights or remedies they may have with
respect to any other default or Event of Default (including, for the avoidance of doubt, any default or Event of Default existing
as of the date hereof which is not a Known Default) at any time in respect of any of the Existing Note Documents or the Exchange
Documents.

 

4.            Company
Representations and Warranties. As of the date hereof and as of the Closing Date (as defined below):

 

4.1.         Each
of the Company and each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws
of the jurisdiction in which they are formed, and have the requisite power and authority to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted. Each of the Company and each of its Subsidiaries
is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect
(as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverse effect on
(i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, (ii) the transactions contemplated hereby or in any of the other
Exchange Documents or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority
or ability of the Company or any of its Subsidiaries to perform any of their respective obligations under any of the Exchange Documents
(as defined below). Other than the Persons (as defined below) set forth on Schedule 3.1, the Company has no Subsidiaries.

 

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4.2.         Authorization
and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement, the New Primary Securities and each of the other agreements entered into by the parties hereto in connection with the
transactions contemplated by the Exchange Documents and to consummate the Transaction (including, without limitation, the issuance
of the New Primary Securities in accordance with the terms hereof and thereof). As of the Closing Date, the execution and delivery
of the Exchange Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the New Primary Securities and the reservation for issuance and issuance of the
New Warrant Shares issuable upon exercise of the New Primary Securities will have been duly authorized by the Company’s Board
of Directors (or a duly authorized committee thereof) and no further filing, consent, or authorization will be required by the
Company, its Board of Directors or its shareholders (other than such filings as may be required by any federal or state securities
laws, rules or regulations). This Agreement has been and, as of the Closing Date, the other Exchange Documents to which the Company
is a party will have been, duly executed and delivered by the Company, and constitute or will constitute, as applicable, the legal,
valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except
as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies
and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

 

4.3.         No
Conflict. The execution, delivery and performance of the Exchange Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the New Primary Securities
and reservation for issuance and issuance of the New Warrant Shares) will not (i) result in a violation of the Articles of Incorporation
(as defined below) or any other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company
or any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party, after giving effect to the consent and limited waiver contained in Section 3 above and the receipt
by the Company of the Required Consents (as defined below), or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTCQX
(the “Principal Market”) and including all applicable federal laws, rules and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected
except, in the case of clause (ii) or (iii) above, to the extent such violations that would not reasonably be expected to have
a Material Adverse Effect.

 

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4.4.         No
Consents. Except as set forth on Schedule 4.4 (the “Required Consents”), neither the Company nor any Subsidiary
is required to obtain any consent from, authorization or order of, or make any filing or registration with (other than such filings
as may be required by any federal or state securities laws, rules or regulations), any Governmental Entity or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under
or contemplated by the Exchange Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence
have been or will be obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries
are aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting
any of the registration, application or filings contemplated by the Exchange Documents.

 

4.5.         Securities
Law Exemptions. Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and issuance
by the Company of the New Securities is exempt from registration under the Securities Act pursuant to the exemption provided by
Section 3(a)(9) thereof.

 

4.6.         Status
of Existing Note; Issuance of New Securities.

 

(a)          The
Company has no knowledge that the Existing Note is subject to dispute and to the knowledge of the Company there is no action based
on the Existing Note that is currently pending in any court or other legal venue and to the knowledge of the Company no judgments
based upon the Existing Note have been previously entered in any legal proceeding. The Company has not received any written notice
from the Holder or any other person challenging or disputing the Existing Note, or any portion thereof, and prior to the Exchange,
the Company is unconditionally obligated to pay the entire aggregate principal amount outstanding under the Existing Note (and
any accrued and unpaid interest thereunder) without defense, counterclaim or offset. Upon the Exchange, the Company is unconditionally
obligated to pay the entire aggregate principal amount outstanding under the New Note (and any accrued and unpaid interest thereunder)
without defense, counterclaim or offset.

 

(b)          As
of the Closing Date, the issuance of the New Primary Securities will be duly authorized and upon issuance in accordance with the
terms of the Exchange Documents shall be validly issued, fully paid and non-assessable and free from all Liens (as defined in the
New Note). Upon issuance upon exchange, in accordance with the New Warrant, the New Warrant Shares, when issued, will be validly
issued, fully paid and nonassessable and free from all Liens with respect to the issue thereof, with the Holder being entitled
to all rights accorded to a holder of Common Stock. By virtue of Section 3(a)(9) under the Securities Act, the New Primary Securities
will have a Rule 144 holding period that will be deemed to have commenced as of the Closing Date (as defined in the Securities
Purchase Agreement), the date of the original issuance of the Existing Note to the Holder. At any time on and after October 30,
2019, assuming (i) the Holder is not an affiliate of the Company and (ii) at such time of determination the Company has not failed
to satisfy the requirements of Rule 144(c)(1), including, without limitation, the failure to satisfy the current public information
requirement under Rule 144(c) (a “Current Public Information Failure”), (A) the New Primary Securities shall
not be required to bear any restrictive legend and shall be freely transferable by the Holder pursuant to and in accordance with
Rule 144 of the Securities Act (“Rule 144”) and (B) to the extent any applicable New Warrant Shares are issued
pursuant to a “cashless exercise” of the New Warrant, such New Warrant Shares shall not be required to bear any restrictive
legend and shall be freely transferable by the Holder pursuant to and in accordance with Rule 144.

 

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4.7.         Transfer
Taxes. On the Closing Date, all share transfer or other taxes (other than income or similar taxes) that are required to be
paid in connection with the issuance of the New Primary Securities to be issued to the Holder hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

4.8.         Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in material violation of any term of or
in default under its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation,
memorandum of association, articles of association, Articles of Incorporation or certificate of incorporation or bylaws, respectively.
Neither the Company nor any of its Subsidiaries is in material violation of any judgment, decree or order or any statute, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will
conduct its business in violation of any of the foregoing, except in all cases for possible violations which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the generality of the foregoing,
except as set forth in the SEC Documents, the Company is not in material violation of any of the rules, regulations or requirements
of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension
of the Common Stock by the Principal Market in the foreseeable future. Except as set forth in SEC Documents, during the two years
prior to the date hereof, (i) the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading
in the Common Stock has not been suspended by the Securities and Exchange Commission (“SEC”) or the Principal
Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the
suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement, commitment,
judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any
business practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries
or the conduct of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually
or in the aggregate, which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or
any of its Subsidiaries.

 

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4.9.         Transactions
With Affiliates. Except as set forth in the SEC Documents or as set forth on Schedule 4.9, none of the officers or directors
of the Company or its Subsidiaries and, to the knowledge of the Company, none of the employees of the Company or its Subsidiaries
is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and
directors) required to be disclosed under Item 404 of Regulation S-K under the Exchange Act.

 

4.10.       Equity
Capitalization. 

 

(a)          Definitions:

 

(i)           “Common
Stock” means (x) the Company’s shares of common stock, $0.0001 par value per share, and (y) any capital stock
into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

 

(ii)          “Preferred
Stock” means (x) the Company’s blank check preferred stock, $0.0001 par value per share, the terms of which may
be designated by the board of directors of the Company in a certificate of designations and (y) any capital stock into which such
preferred stock shall have been changed or any share capital resulting from a reclassification of such preferred stock (other than
a conversion of such preferred stock into Common Stock in accordance with the terms of such certificate of designations).

 

(b)          Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of (A) 265,000,000
shares of Common Stock, of which 90,040,693 are issued and outstanding and 20,646,000 shares are reserved for issuance pursuant
to Convertible Securities (as defined below) exercisable or exchangeable for, or convertible into, shares of Common Stock and (B)
10,000,000 shares of Preferred Stock, none of which are issued and outstanding. No shares of Common Stock are held in the treasury
of the Company. As of the Closing, the Company shall have reserved from its duly authorized share capital not less than the maximum
number of New Warrant Shares issuable upon exercise of the New Warrant (assuming for purposes hereof that any such exercise shall
not take into account any limitations on the exercise of the New Warrant set forth in the New Warrant).

 

(c)          Valid
Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued, fully paid and nonassessable. The SEC Documents accurately set forth, as of the dates referred to therein,
the number of shares of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities (as defined below) (other
than the New Warrant) and (B) that are, as of the date referred to therein, owned by Persons who are “affiliates” (as
defined in Rule 405 of the Securities Act and calculated based on the assumption that only officers, directors and holders of at
least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such
Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. “Convertible
Securities” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and
under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or
any of its Subsidiaries.

 

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(d)          Existing
Securities; Obligations. Except as disclosed in the SEC Documents or on Schedule 4.10: (A) none of the Company’s or any
Subsidiary’s shares, interests or capital stock is subject to preemptive rights or any other similar rights or Liens suffered
or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or
capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares,
interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (D) there
are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its Subsidiaries; (E) neither the Company nor any Subsidiary
has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (F)
there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of
the New Securities.

 

(e)          Organizational
Documents. True, correct and complete copies of the Company’s Articles of Incorporation, as amended and as in effect
on the date hereof (the “Articles of Incorporation”), and the Company’s Bylaws, as in effect on the date
hereof (the “Bylaws”), and the terms of all Convertible Securities and the material rights of the holders thereof
in respect thereto, are set forth in, or filed as exhibits to, the SEC Documents, or otherwise set forth on Schedule 4.10.

 

4.11.       Indebtedness
and Other Contracts. Except as disclosed in the SEC Documents or on Schedule 4.11, after giving effect to the consent and limited
waivers contained in Section 3 hereof, neither the Company nor any of its Subsidiaries, (i) has any outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company
or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound (other than the Senior Secured
Documents to be entered into immediately after consummating the Exchange), (ii) is a party to any contract, agreement or instrument,
the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably
be expected to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement
or instrument relating to any Indebtedness, except where such violations and defaults would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect (other than the Notes and the Securities Purchase Agreement), or
(iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment
of the Company’s officers, has or is expected to have a Material Adverse Effect.

 

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4.12.       Litigation.
Except as set forth in the SEC Documents, there is no action, claim, suit, investigation or proceeding before any Governmental
Entity pending or, to the knowledge of the Company, threatened against the Company or its Subsidiaries wherein an unfavorable decision,
ruling or finding would reasonably be expected to, individually or in the aggregate, (i) materially adversely affect the validity
or enforceability of, or the authority or ability of the Company to perform its obligations under, the Exchange Documents or (ii) have
a Material Adverse Effect. The Company is not a party to or subject to the provisions of any injunction, judgment, decree or order
of any court, regulatory body, administrative agency or other governmental agency or body that could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

 

4.13.       No
Consideration Paid. No consideration, commission or other remuneration has been paid by the Holder to the Company, its Subsidiaries
or any of their agents or affiliates in connection with the Exchange.

 

4.14.       Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided the Holder or its agents or counsel
with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Exchange Documents and any matters disclosed in the 8-K Filing (as defined below). The Company understands and confirms that the
Holder will rely on the foregoing representations in effecting transactions in securities of the Company.

 

5.            Holder’s
Representations and Warranties. As a material inducement to the Company to enter into this Agreement and consummate the Exchange,
the Holder hereby represents and warrants with and to the Company, as of the date hereof and as of the Closing Date, as follows:

 

5.1          Reliance
on Exemptions. The Holder understands that the New Securities are being offered and exchanged in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and the Holder’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Holder set forth herein and in the other Exchange Documents in order to determine the availability of
such exemptions and the eligibility of the Holder to acquire the New Securities.

 

5.2          No
Governmental Review. The Holder understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the New Securities or the fairness or suitability of the investment
in the New Securities nor have such authorities passed upon or endorsed the merits of the offering of the New Securities.

 

5.3          Validity;
Enforcement. This Agreement and the other Exchange Documents to which the Holder is a party have been duly and validly authorized,
executed and delivered on behalf of the Holder and shall constitute the legal, valid and binding obligations of the Holder enforceable
against the Holder in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to,
or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

    	 	10	 

     

    

 

5.4          No
Conflicts. The execution, delivery and performance by the Holder of this Agreement and the other Exchange Documents to which
the Holder is a party, and the consummation by the Holder of the transactions contemplated hereby and thereby will not (i) result
in a violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Holder, except
in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations
hereunder.

 

5.5         Investment
Risk; Sophistication. The Holder is acquiring the New Primary Securities hereunder in the ordinary course of its business.
The Holder has such knowledge, sophistication, and experience in business and financial matters so as to be capable of evaluation
of the merits and risks of the prospective investment in the New Primary Securities, and has so evaluated the merits and risk of
such investment. The Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

 

5.6         Ownership
of Existing Note. The Holder owns the Existing Note free and clear of any Liens (other than the obligations pursuant to this
Agreement, the Transaction Documents and applicable securities laws) and has the requisite power and authority to enter into and
perform its obligations under this Agreement and each of the other Exchange Documents to which it is a party and to consummate
the Transaction.

 

5.7          Transfer
or Resale. The Holder understands that except as provided Section 10 hereof: (i) the New Securities have not been and are not
being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company)
an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such New Securities to be sold, assigned
or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides
the Company with reasonable assurance that such New Securities can be sold, assigned or transferred pursuant to Rule 144; (ii)
any sale of the New Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further,
if Rule 144 is not applicable, any resale of the New Securities under circumstances in which the seller (or the Person through
whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance
with some other exemption under the Securities Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither
the Company nor any other Person is under any obligation to register the New Securities under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the New Securities
may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the New Securities
and such pledge of New Securities shall not be deemed to be a transfer, sale or assignment of the New Securities hereunder, and
the Holder effecting a pledge of New Securities shall not be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Exchange Document, including, without limitation, this
Section 5.7.

 

    	 	11	 

     

    

 

6.            Closing;
Conditions. Subject to the conditions set forth below, the Exchange shall take place at the offices of Kelley Drye & Warren
LLP, 101 Park Avenue, New York, NY 10178, on the Business Day immediately following such date as the Company shall have satisfied
all conditions to closing below, or at such other time and place as the Company and the Holder mutually agree (the “Closing”
and the “Closing Date”).

 

6.1.        Condition’s
to Holder’s Obligations. The obligation of the Holder to consummate the Exchange is subject to the fulfillment, to the
Holder’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions (unless waived by the Holder
in writing, prior to the Closing):

 

(a)          Representations
and Warranties; Covenants. After giving effect to the consent and limited waiver contained in Section 3, the representations
and warranties of the Company contained in this Agreement shall be true and correct in all material respects (except for those
representations and warranties that are qualified by materiality or Material Adverse Effect, which are accurate in all respects)
on the date hereof and on and as of the Closing Date as if made on and as of such date (except for representations and warranties
that speak as of a specific date, which are accurate in all material respects (except for those representations and warranties
that are qualified by materiality or Material Adverse Effect, which are accurate in all respects) as of such specified date). After
giving effect to the consent and limited waiver contained in Section 3, the Company shall have performed, satisfied and complied
in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company
at or prior to the Closing Date.

 

(b)          Issuance
of Securities. At the Closing, the Company shall issue the New Primary Securities to the Holder.

 

(c)          No
Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(d)          Proceedings
and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident
to such transactions shall be satisfactory in substance and form to the Holder, and the Holder shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably request.

 

(e)          No
Event of Default. After giving effect to the Exchange, no Event of Default (as defined in the New Note) or event that with
the passage of time or giving of notice would constitute an Event of Default shall have occurred and be continuing.

 

    	 	12	 

     

    

 

(f)          Consents.
The Company shall have obtained all governmental, regulatory or third party consents and approvals (or waiver of such consents
or approvals), if any, necessary for the Exchange, including without limitation, those required by the Principal Market, if any,
and the Required Consents.

 

(g)          Listing.
The Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have
been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market.

 

6.2.         Condition’s
to the Company’s Obligations. The obligation of the Company to consummate the Exchange is subject to the fulfillment,
to the Company’s reasonable satisfaction, prior to or at the Closing, of each of the following conditions (unless waived
by the Company in writing, prior to the Closing):

 

(a)          Representations
and Warranties. The representations and warranties of the Holder contained in this Agreement shall be true and correct in all
material respects (except for those representations and warranties that are qualified by materiality or material adverse effect,
which are accurate in all respects) on the date hereof and on and as of the Closing Date as if made on and as of such date (except
for representations and warranties that speak as of a specific date, which are accurate in all material respects (except for those
representations and warranties that are qualified by materiality or material adverse effect, which are accurate in all respects)
as of such specified date).

 

(b)          No
Actions. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or authority or legislative body to enjoin, restrain, prohibit, or obtain substantial damages
in respect of, this Agreement or the consummation of the transactions contemplated by this Agreement.

 

(c)          Proceedings
and Documents. All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident
to such transactions shall be satisfactory in substance and form to the Company and the Company shall have received all such counterpart
originals or certified or other copies of such documents as the Company may reasonably request.

 

7.            No
Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on their behalf shall,
directly or indirectly, make any offers or sales of any security (as defined in the Securities Act) or solicit any offers to buy
any security or take any other actions, under circumstances that would require registration of any of the New Warrant Shares under
the Securities Act or cause this offering of the New Warrant Shares to be integrated with such offering or any prior offerings
by the Company for purposes of Regulation D under the Securities Act.

 

    	 	13	 

     

    

 

8.            Additional
New Warrant Covenants.

 

(a)          Reporting
Status; Financial Information. Until the date on which the Holder shall have sold all of the New Securities (the “Reporting
Period”), the Company shall timely file all reports required to be filed with the SEC pursuant to the Securities Act
of 1934, as amended (the “1934 Act”), and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise
permit such termination. The Company agrees to send the following to each holder of the New Warrant (each, an “Investor”)
during the Reporting Period: (i) unless the following are filed with the SEC through EDGAR and are available to the public through
the EDGAR system, within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets, income statements, shareholders’
equity statements and/or cash flow statements for any period other than annual, any Current Reports on Form 8-K and any registration
statements (other than on Form S-8) or amendments filed pursuant to the Securities Act, (ii) unless the following are either filed
with the SEC through EDGAR or are otherwise widely disseminated via a recognized news release service (such as PR Newswire), on
the same day as the release thereof, facsimile copies of all press releases issued by the Company or any of its Subsidiaries and
(iii) unless the following are filed with the SEC through EDGAR, copies of any notices and other information made available or
given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders.

 

(b)          Listing.
The Company shall promptly secure the listing or designation for quotation (as applicable) of all of the New Warrant Shares upon
the Principal Market (subject to official notice of issuance) and shall maintain such listing of all of the New Warrant Shares
from time to time issuable under the terms of the Exchange Documents. The Company shall maintain the Common Stock’s authorization
for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably
expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 8(b).

 

(c)          Exercise
Procedures. The form of Exercise Notice (as defined in the New Warrant) included in the New Warrant sets forth the totality
of the procedures required of the Investor in order to exercise the New Warrant. No legal opinion or other information or instructions
shall be required of the Investor to exercise the New Warrant. The Company shall honor exercises of the New Warrant and shall deliver
the New Warrant Shares in accordance with the terms, conditions and time periods set forth in the New Warrant. Without limiting
the preceding sentences, no ink-original Exercise Notice shall be required, nor shall any medallion guarantee (or other type of
guarantee or notarization) of any Exercise Notice form be required in order to exercise the New Warrant.

 

(d)          Reservation
of Shares. So long as any portion of the New Warrant remains outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less than 100% of the sum of the maximum number of New
Warrant Shares issuable upon exercise of the New Warrant then outstanding (without regard to any limitations on the exercise of
the New Warrant set forth therein) (collectively, the “Required Reserve Amount”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this Section 8(d) be reduced other than proportionally in connection
with any exercise of the New Warrant. If at any time the number of shares of Common Stock authorized and reserved for issuance
by the Company is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary
to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an
insufficient number of authorized shares, obtain shareholder approval of an increase in such authorized number of shares, and voting
the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number
of authorized shares is sufficient to meet the Required Reserve Amount.

 

    	 	14	 

     

    

 

(e)          Pledge
of New Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees
that the New Securities may be pledged by an Investor in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the New Securities. The pledge of New Securities shall not be deemed to be a transfer, sale or assignment
of the New Securities hereunder, and no Investor effecting a pledge of New Securities shall be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document,
including, without limitation, Section 5.7 hereof; provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 5.7 hereof in order to effect a sale, transfer or assignment of New Securities to such pledgee. The Company
hereby agrees to execute and deliver such documentation as a pledgee of the New Securities may reasonably request in connection
with a pledge of the New Securities to such pledgee by the Holder.

 

9.            Fees.
The Company shall promptly reimburse Kelley Drye & Warren, LLP (counsel to the Holder), on demand, for all reasonable, documented
costs and expenses incurred by it in connection with preparing and delivering this Agreement (including, without limitation, all
reasonable, documented legal fees and disbursements in connection therewith, and due diligence in connection with the transactions
contemplated thereby) in an aggregate amount not to exceed $40,000.

 

10.          Holding
Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the New Primary Securities
(and upon cashless exercise of the New Warrant, the New Warrant Shares) may be tacked onto the holding period of the Existing Note,
and the Company agrees not to take a position contrary to this Section 10. The Company acknowledges and agrees that from and after
October 30, 2019 assuming (a) the Holder is not an affiliate of the Company and (b) at such time of determination no Current Public
Information Failure exists, (i) the New Primary Securities shall not be required to bear any restrictive legend and shall be freely
transferable by the Holder pursuant to and in accordance with Rule 144 and (ii) to the extent any applicable New Warrant Shares
are issued pursuant to a “cashless exercise” of the New Warrant, such New Warrant Shares shall not be required to bear
any restrictive legend and shall be freely transferable by the Holder pursuant to and in accordance with Rule 144.

 

11.          Register;
Transfer Agent Instructions; Legend.

 

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

 

    	 	15	 

     

    

 

(b)          Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent (the “Transfer Agent”)
and any subsequent transfer agent in a form acceptable to the Holder (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at the Depository Trust Company (“DTC”),
registered in the name of the Holder or its respective nominee(s), for the New Warrant Shares in such amounts as specified from
time to time by the Holder to the Company upon the exercise of the New Warrant. The Company represents and warrants that no instruction
other than the Irrevocable Transfer Agent Instructions referred to in this Section 11(b) will be given by the Company to its Transfer
Agent with respect to the New Warrant Shares, and that the New Warrant Shares shall otherwise be freely transferable on the books
and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction Documents. If the
Holder effects a sale, assignment or transfer of the New Warrant Shares, the Company shall permit the transfer and shall promptly
instruct its Transfer Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by the Holder to effect such sale, transfer or assignment. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to the Holder. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 11(b) will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section 11(b) that the Holder shall be entitled, in addition
to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its
counsel to issue each legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Transfer Agent as follows:
(i) upon each exercise of the New Warrant (unless such issuance is covered by a prior legal opinion previously delivered to the
Transfer Agent), and (ii) on each date a registration statement with respect to the issuance or resale of any of the New Warrant
Shares is declared effective by the SEC. Any fees (with respect to the Transfer Agent, counsel to the Company or otherwise) associated
with the issuance of such opinions or the removal of any legends on any of the New Warrant Shares shall be borne by the Company.

 

(c)          Legends.
The Holder understands that the New Primary Securities have been issued (or will be issued in the case of the New Warrant Shares)
pursuant to an exemption from registration or qualification under the Securities Act and applicable state securities laws, and
except as set forth below, the New Securities shall bear any legend as required by the “blue sky” laws of any state
and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

 

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

 

    	 	16	 

     

    

 

(d)          Removal
of Legends. Certificates evidencing New Securities shall not be required to contain the legend set forth in Section 11(c) above
or any other legend (i) while a registration statement covering the resale of such New Securities is effective under the Securities
Act, (ii) following any sale of such New Securities pursuant to Rule 144 (assuming neither the transferor nor the transferee is
an affiliate of the Company), (iii) if such New Securities are eligible to be sold, assigned or transferred under Rule 144 (provided
that the Holder provides the Company with reasonable assurances that such New Securities are eligible for sale, assignment or transfer
under Rule 144 which shall not include an opinion of Holder’s counsel), (iv) in connection with a sale, assignment or other
transfer (other than under Rule 144), provided that the Holder provides the Company with an opinion of counsel to the Holder, in
a generally acceptable form, to the effect that such sale, assignment or transfer of the New Securities may be made without registration
under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable requirements of
the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC).
If a legend is not required pursuant to the foregoing with respect to such New Securities, the Company shall no later than two
(2) Trading Days (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the
settlement of a trade initiated on the date the Holder delivers such legended certificate representing such New Securities to the
Company) following the delivery by the Holder to the Company or the transfer agent (with notice to the Company) of a legended certificate
representing such New Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary
to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may be required
above in this Section 11(d), as directed by the Holder, either: (A) provided that the Company’s transfer agent is participating
in the DTC Fast Automated Securities Transfer Program and such New Securities are New Warrant Shares, credit the aggregate number
of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Holder, a certificate
representing such New Securities that is free from all restrictive and other legends, registered in the name of the Holder or its
designee (the date by which such credit is so required to be made to the balance account of the Holder’s or the Holder’s
nominee with DTC or such certificate is required to be delivered to the Holder pursuant to the foregoing is referred to herein
as the “Share Delivery Deadline”). The Company shall be responsible for any transfer agent fees or DTC fees
with respect to any issuance of New Securities or the removal of any legends with respect to any New Securities in accordance herewith.

 

    	 	17	 

     

    

 

(e)          Failure
to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and (i) if the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program, deliver (or cause to be delivered) to the Holder (or its
designee) by the applicable Share Delivery Deadline a certificate for the number of New Warrant Shares submitted for legend removal
by the Holder pursuant to Section 11(d) above to which the Holder is entitled and register such New Warrant Shares on the Company’s
share register or (ii) if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the
balance account of the Holder or the Holder’s designee with DTC for such number of New Warrant Shares submitted for legend
removal by the Holder pursuant to Section 11(d) above to which the Holder is entitled (in each case, a “Delivery Failure”),
and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares of Common Stock submitted for legend removal by the Holder pursuant to
Section 11(d) above that the Holder is entitled to receive from the Company (a “Buy-In”), then the Company shall,
within two (2) Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder
in an amount equal to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses,
if any, for the shares of Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s
obligation to so deliver such certificate or credit the Holder’s balance account shall terminate and such shares shall be
cancelled, or (ii) promptly honor its obligation to so deliver to the Holder a certificate or certificates or credit the balance
account of the Holder or the Holder’s designee with DTC representing such number of shares of Common Stock that would have
been so delivered if the Company timely complied with its obligations hereunder and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of New Warrant Shares that the Company was required
to deliver to the Holder by the Share Delivery Deadline multiplied by (B) the lowest Closing Sale Price (as defined in the Warrant”)
of the Common Stock on any Trading Day during the period commencing on the date of the delivery by the Holder to the Company of
the Holder’s request under this Section 11(e) and ending on the date of such delivery and payment under this clause (ii).
Nothing shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock (or to electronically deliver such shares of Common Stock) as required
pursuant to the terms hereof. Notwithstanding anything herein to the contrary, with respect to any given Delivery Failure, this
Section 11(e) shall not apply to the Holder to the extent the Company has already paid such amounts in full to the Holder with
respect to such Delivery Failure, as applicable, pursuant to the analogous section of the New Warrant held by the Holder. Additionally,
if the Company fails for any reason to deliver to the Holder the Warrant Shares subject to an Exercise Notice (as defined in the
Warrant) by the Share Delivery Deadline, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based on the Weighted Average Price (as defined in the Warrant) of
the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the
fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery
Deadline until such Warrant Shares are delivered or Holder rescinds such exercise.

 

(f)          FAST
Compliance. While the New Warrant remain outstanding, the Company shall maintain a transfer agent that participates in the
DTC Fast Automated Securities Transfer Program.

 

    	 	18	 

     

    

 

12.          Blue
Sky. The Company shall make all filings and reports relating to the Exchange required under applicable securities or “Blue
Sky” laws of the states of the United States following the date hereof, if any.

 

13.          Disclosure
of Transaction.

 

(a)          On
or before 9:00 a.m., New York time, on the first (1st) Business Day after the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Exchange Documents
in the form required by the Exchange Act and attaching this Agreement and the forms of the New Primary Securities (including all
attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed
all material, non-public information (if any) provided to the Holder by the Company or any of its Subsidiaries or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Exchange Documents.
In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, on the one hand, and the Holder or any of its affiliates, on the
other hand, relating to the transactions contemplated by the Exchange Documents, shall terminate.

 

(b)          Except
as may be required by the Securities Purchase Agreement or the New Primary Securities, the Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective officers, directors, employees and agents not to, provide the
Holder with any material, non-public information regarding the Company or any of its Subsidiaries from and after the date hereof
without the express prior written consent of the Holder (which may be granted or withheld in the Holder’s sole discretion).
To the extent that the Company delivers any material, non-public information to the Holder without the Holder’s consent,
other than as required by the Securities Purchase Agreement or the New Primary Securities, the Company hereby covenants and agrees
that the Holder shall not have any duty of confidentiality with respect to such material, non-public information. Subject to the
foregoing, neither the Company, its Subsidiaries nor the Holder shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of
the Holder, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity
with the 8-K Filing and (ii) as is required by applicable law and regulations. Notwithstanding anything contained in this Agreement
to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges and agrees
that the Holder shall not have (unless expressly agreed to by the Holder after the date hereof in a written definitive and binding
agreement executed by the Company and the Holder), any duty of confidentiality with respect to any material, non-public information
regarding the Company or any of its Subsidiaries.

 

14.          Notices
to Holder. All notices to Holder pursuant to the Securities Purchase Agreement or the New Primary Securities shall be delivered
in accordance with the notice instructions set forth on the signature page of the Holder attached hereto (or such other instructions
delivered in writing to the Company by the Holder from time to time).

 

    	 	19	 

     

    

 

15.          Termination.
If the Transaction is not consummated on or prior to August 21, 2019, the Holder may terminate this Agreement by written notice
to the Company and this Agreement shall thereafter be null and void, ab initio.

 

16.          Independent
Nature of Holder’s Obligations and Rights. The obligations of the Holder under this Agreement are several and not
joint with the obligations of any other holder of securities of the Company (each, an “Other Holder”), and the
Holder shall not be responsible in any way for the performance of the obligations of any Other Holder under any other agreement
by and between the Company and any Other Holder (each, an “Other Agreement”). Nothing contained herein or in
any Other Agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and Other Holders
as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and Other
Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this
Agreement or any Other Agreement and the Company acknowledges that, to the best of its knowledge, the Holder and the Other Holders
are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement or
any Other Agreement. The Company and the Holder confirm that the Holder has independently participated in the negotiation of the
transactions contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary
for any Other Holder to be joined as an additional party in any proceeding for such purpose.

 

17.          Most
Favored Nations. The Company hereby represents and warrants as of the date hereof and covenants and agrees that from the
date hereof through the date that the New Note is no longer outstanding (the “MFN Termination Date”) none of
the terms offered to any Other Holder with respect to any exchange of any warrant to purchase Common Stock issued pursuant to the
Senior Secured Financing Agreement (including any security subsequently exchanged therefor), including, without limitation with
respect to any consent, release, amendment, settlement, or waiver relating to any exchange of any such security (each an “Settlement
Document”), is or will be more favorable to such Person (other than any reimbursement of legal fees) than those of the
Holder and this Agreement. If, and whenever during the period beginning on the date hereof and ending on the MFN Termination Date,
the Company enters into a Settlement Document, then (i) the Company shall provide notice thereof to the Holder immediately following
the occurrence thereof and (ii) the terms and conditions of this Agreement shall be, without any further action by the Holder or
the Company, automatically amended and modified in an economically and legally equivalent manner such that the Holder shall receive
the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such Settlement Document, provided
that upon written notice to the Company at any time the Holder may elect not to accept the benefit of any such amended or modified
term or condition, in which event the term or condition contained in this Agreement shall apply to the Holder as it was in effect
immediately prior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder.
The provisions of this Section 17 shall apply similarly and equally to each Settlement Document entered into on or prior to the
MFN Termination Date.

 

18.          Repayment
of Current Facility. On or prior to the second (2nd) Business Day after the date of the Senior Secured Financing
Agreement, the Company shall have repaid, in full, all of the outstanding obligations under the Current Facility (as defined in
the Existing Note).

 

    	 	20	 

     

    

 

19.          Miscellaneous
Provisions. Section 9 of the Securities Purchase Agreement (as amended hereby) is hereby incorporated by reference herein,
mutatis mutandis.

 

[The remainder of the page
is intentionally left blank] 

          

    	 	21	 

     

    

 

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

 

	 	COMPANY:
	 	 
	 	KUSHCO HOLDINGS, INC.
	 	 	 
	 	By:	/s/  Nicholas Kovacevich
	 	 	Name:  Nicholas Kovacevich
	 	 	Title:    Chairman and CFO

 

    	 	 	 

     

    

 

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

 

	 	 	HOLDER:
	 	 	 
	Principal Amount of Existing Note:	 	HB SUB FUND II LLC

 

	$21,300,000	 	 	By:	/s/  George Antonopoulos

	 	 	 	Name:	George Antonopoulos
	Principal Amount of New Note:	 	 	Title:	Authorized Signatory

 

	$21,300,000	 	 	 

	 	 	Address for Notices:
	Aggregate Number of New Warrant Shares issuable upon exercise of the New Warrant (without regard to any limitations on exercise set forth therein):	 	
         

        Please deliver any notices other than Pre-Notices
        to:

	 	 	777 Third Avenue, 30th Floor

	650,000	 	 	New York, NY 10017

	 	 	Attention:  Yoav Roth
	 	 	Facsimile:  (212) 571-1279
	 	 	E-mail:  investments@hudsonbaycapital.com
	 	 	Residence:  Cayman Islands

	 	 	
         

        Please deliver any Pre-Notice to:

         

        777 Third Ave., 30th Floor

        New York, NY 10017

        Facsimile: (646) 214-7946

        Attention: Scott Black

        General Counsel and Chief Compliance Officer

         

        with a copy (for information
        purposes only) to:

         

        Kelley Drye & Warren
LLP

101 Park Avenue

New York, NY 10178

Telephone: 212-808-7540

Facsimile: (212) 808-7897

Attention: Michael Adelstein, Esq.

Email: madelstein@kelleydrye.com

 

    	 	 	 

     

    

 

SCHEDULES TO EXCHANGE AGREEMENT

 

SCHEDULE 4.1

 

Subsidiaries

 

	Entity Name	 	
        Jurisdiction of

        Organization
	 	Authorized Interests	 	Outstanding Interests
	Kush Energy, LLC	 	Colorado	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	Kush Supply Co. LLC	 	Nevada	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	Celeritas Industries, LLC	 	Nevada	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	Zack Darling Creative Associates, LLC	 	California	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	The Hybrid Creative LLC	 	California	 	Membership interests 	 	100% of membership interests held by Zack Darling Creative Associates, LLC
	Koleto Innovations LLC	 	Nevada	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	KIM International Corporation	 	California	 	10,000,000 shares of a single class of stock, no par value specified	 	10,000 shares of stock (all held by KushCo Holdings, Inc.)
	KBCMP, Inc.	 	Delaware	 	100 shares of common stock $0.01 par value	 	100 shares of common stock (all held by KushCo Holdings, Inc.)
	CMP Wellness, LLC	 	California	 	Membership interests 	 	100% of membership interests held by KBCMP, Inc.
	Betaport, LLC	 	Delaware	 	Membership interests 	 	100% of membership interests held by KushCo Holdings, Inc.
	KCH Distribution Inc.	 	British Columbia	 	1 common share	 	1 share of common stock (all held by KushCo Holdings, Inc.).

 

SCHEDULE 4.4 

 

Required Consents

 

None

 

SCHEDULE 4.9

 

Transactions with Affiliates

 

The Company and its subsidiaries provide customary
compensation for the benefit of present and/or former directors, officers, and employees (including bonuses and stock option programs),
as well as customary benefits and indemnification arrangements.

 

    	 	 	 

     

    

 

SCHEDULE 4.10

 

Equity Capitalization

 

Preemptive
Rights

 

		·	Pursuant to the “Purchase Rights” set forth in Section 4(a) of the New Warrant, Holder
is entitled to receive, on an as-converted basis, options, convertible securities, and rights to purchase stock, warrants, securities
or other property that are otherwise issued to the record holders of any class of Common Stock of the Company on a pro rata
basis

		·	Pursuant to the “Purchase Rights” set forth in Section 4(a) of those certain Warrants
to Purchase Common Stock dated as of the date hereof and issued by the Company to certain affiliates and related funds of Monroe
Capital Management Advisors, LLC (the “Specified Warrants”), the holder thereof is entitled to receive, on an
as-converted basis, options, convertible securities, and rights to purchase stock, warrants, securities or other property that
are otherwise issued to the record holders of any class of Common Stock of the Company on a pro rata basis

		·	Pursuant to the Securities Purchase Agreement, Holder is entitled to participation rights for any
“Subsequent Placement” (as defined therein) under specified circumstances

		·	Pursuant to the New Note, the Holder has the right to receive warrants under specified circumstances
under the definition of “Permitted Senior Indebtedness” (as defined therein)

 

Convertible or Exchangeable Securities

		·	Outstanding options to purchase 12,662,000 shares of common stock of KushCo Holdings, Inc.

		·	Outstanding warrants (excluding the New Warrant and the Specified Warrants (defined above) copies
of which have been provided to Holder) to purchase 6,988,000 shares of common stock of KushCo Holdings, Inc.

 

SCHEDULE 4.11

 

Other Indebtedness

 

		·	Indebtedness incurred pursuant to the “Senior Secured Financing Agreement” (as defined
in the New Note)

		·	The New Note

		·	Two capital lease agreements for Ford Transit vans that will be paid in full on October 2019 and
August 2020, respectivelyExhibit 10.1 

 

EXECUTIVE TRANSITION AND CONSULTING AGREEMENT

 

This Executive Transition
and Consulting Agreement (“Agreement”) is made and entered into by and between Celia Catlett (“Catlett”)
and Texas Roadhouse, Inc., Texas Roadhouse Holdings LLC, and Texas Roadhouse Management Corp. (“Management Corp.”)
(collectively, “Texas Roadhouse” or the “Companies”). Catlett and the Companies will together
be referred to herein as the “Parties” or individually as a “Party.”

 

Recitals

 

	A.	Catlett is currently the General Counsel and Corporate Secretary of Texas Roadhouse, Inc. and is
paid and provided benefits by Management Corp. for such services pursuant to the terms of a 2018 Employment Agreement with Management
Corp. executed on December 26, 2017 (the “Employment Agreement”).

 

	B.	Catlett has expressed her intention to resign from active employment with the Companies.

 

	C.	The Companies wish to arrange for an orderly transition of Catlett’s duties, and Catlett
wishes to facilitate and cooperate in such transition on the terms and conditions set out in this Agreement.

 

Agreements

 

NOW THEREFORE,
in consideration of the covenants and mutual promises contained herein, the Parties agree as follows:

 

1.                 
Termination Date. Catlett resigns all of her titles, officer and/or board or manager positions with the Companies
and any of their affiliates effective on August 22, 2019 (the “Termination Date”) and the Companies hereby accept
such resignation as of that same date.

 

2.                 
Effective Date. The Effective Date of the remainder of Agreement shall be the 8th day after it is executed by Catlett,
provided that, prior to that date, she has not revoked it in accordance with Section 8(d) hereof. If the Effective Date does not
occur, Catlett’s employment will nonetheless have ended but the Consulting Period shall cease, and no amounts thereafter
due to be paid hereunder shall be due or payable and all Catlett’s rights with respect to the compensation set out herein
shall be forfeited.

 

3.                 
Post-Employment Consulting Availability and Duties. From and after the Termination Date, Catlett will continue to
make herself available on a consulting basis, as and if called on by the Companies’ management, officers or the chairs of
the audit and compensation committees of the Board of Directors with reasonable prior notice, for no more than 8 hours per week
on average, during the period between the Termination Date and January 31, 2020 (the “Consulting Period”). During
the Consulting Period, Catlett shall provide information and guidance to any interim and/or new general counsel and assist in answering
questions for or training others in the Companies regarding matters in which she was involved prior to the Termination Date or
legal issues that may arise that are in her particular areas of experience. Consulting services hereunder shall be performed in
Catlett’s capacity as an independent contractor. Nothing contained herein shall be deemed to create the relationship of partner,
principal and agent, or joint venture between the Parties after the Termination Date. Catlett shall have no right or authority
to incur obligations of any kind in the name of or for the account of Companies nor to commit or bind the Companies to any contract
or other obligation during the Consulting Period.

 

     

     

    

 

4.                 
Separation and Consulting Compensation. Catlett will receive the following payments from the Companies in connection
with her separation and in consideration of her willingness to provide ongoing consulting services as provided herein:

 

(a)              
Management Corp. shall pay Catlett (or Catlett’s estate, if she dies before such date)
at her current rate of base compensation ($315,000) in bi-weekly installments pursuant to Management Corp.’s regular
payroll cycles during the Consulting Period, less income and employment tax withholdings as may be required by law, as well as,
through December 31, 2019 (and not thereafter), less any amounts which Catlett previously and irrevocably elected be deferred from
her 2019 base salary pursuant to the Third Amended and Restated Deferred Compensation Plan of Management Corp. (the “DCP”).

 

(b)              
Management Corp will pay Catlett, at the first pay date following her execution of this Agreement, a stipend of $6,500,
less income and employment tax withholdings, to assist her in paying for ongoing health insurance via a timely election made under
the Companies’ health plan pursuant to the Consolidated Omnibus Reconciliation Act (COBRA) or otherwise.

 

(c)               
Catlett will be permitted to retain the laptop computer she has used during her employment with the Companies, after any
Company-specific software or confidential data is removed therefrom by the Companies.

 

(d)              
Catlett (or Catlett’s estate, if she dies before such date) shall be entitled to be
paid an annual incentive bonus with respect to 2019, to the extent the performance metrics as previously approved by the Compensation
Committee of Texas Roadhouse, Inc. are certified as met, paid at the same time and in the same manner as to other management who
also participate in such program, but in no event later than March 15, 2020; provided, however, that such bonus shall not
be paid and Catlett will have no rights with respect thereto if she does not tender a signed copy of the Release set forth as Annex
A to this Agreement on or within 3 business days after the Consulting Period expires, or if she tenders such Release and then
revokes it within the period provided for revocation in that Release.

 

(e)              
Catlett was awarded 10,000 restricted stock units under the Texas Roadhouse, Inc. 2013 Long-Term
Incentive Plan under an Award Agreement dated January 8, 2019, and Texas Roadhouse, Inc. (pursuant to approval by its Compensation
Committee), hereby agrees that the Consulting Period shall extend Catlett’s Continuous Service as provided in such Award,
such that the Award shall be and become vested on January 8, 2020. 

 

5.                 
Benefit Plan Participation.

 

(a)               
Except for (i) continued deferrals into the DCP as provided in Section 4(a) above, and (ii) benefits made available under
the terms of the Companies’ employee benefit plans for former employees (such as COBRA), in accordance with such plans’
terms as in effect from time to time, all Catlett’s rights as an employee to paid time off, reimbursements, and participation
in employee benefit plans shall cease on the Termination Date.

 

(b)              
Except for the equity award referred to in Section 4(e), all other outstanding equity awards, including but not limited
to the retention-based restricted stock unit award dated December 26, 2017 which would otherwise vest on January 8, 2021, shall
lapse and be forfeited on the Termination Date.

 

     

     

    

 

(c)               
Business expenses incurred by Catlett prior to the Termination Date that are eligible for reimbursement under the Companies’
policies generally, to the extent timely submitted, shall be paid in accordance with the policies of the Companies now in effect.

 

(d)              
Pursuant to the terms of the DCP, Catlett is entitled to payment of certain deferred amounts at a future date. The Parties
agree that, upon the Termination Date, whether or not Catlett signs this Agreement or revokes it, Catlett will have incurred a
“Separation from Service” as defined in Internal Revenue Code Section 409A and the DCP, such that the timing of payment
of her DCP benefits will be governed by the Termination Date and her status as a “Specified Employee” thereunder, which
means that DCP benefits may not begin until six months following the Termination Date.

 

6.                 
Ongoing Obligations Pursuant to Employment Agreement. Catlett’s duties as an employee cease on the Termination
Date. Sections 9 (Termination of Employment) and 10 (Payments upon Termination of Employment) of the Employment Agreement are hereby
amended and superseded entirely with the compensation and other terms in this Agreement. Catlett remains subject to various post-employment
obligations contained in the Employment Agreement, including but not limited to obligations pertaining to the clawbacks, nondisclosure
of confidential information, non-disparagement, non-competition, non-hire, and non-solicitation, intellectual property, return
of property (other than the laptop referred to in Section 4(c)), and survival (Sections 4(g), 6-8, and 11-13), except that the
“Restricted Period” as defined therein shall include the Consulting Period, and shall continue for 2 years thereafter.

 

7.                 
General Release, Waiver of All Claims and Potential Claims.
Catlett, individually and collectively, for and on behalf of herself, her estate, agents, attorneys, successors, heirs, executors,
administrators and assigns, agrees not to file, pursue or prosecute any lawsuit, action, charge or claim, of any nature whatsoever,
against the Companies or any of their agents, directors, shareholders, parent and subsidiary corporations, joint venturers, officers,
employees, representatives, attorneys, predecessors and/or successors, or against any other person or entity of any kind (collectively,
the “Releasees”), both jointly and individually, and releases all such claims, demands, causes of action, suits,
debts, complaints, liabilities, obligations, promises, agreements, controversies, damages and expenses that are releasable by
law (including, without limitation, attorneys fees and costs actually incurred or to be incurred) of any nature or description
whatsoever, in law or equity, whether known or unknown, in connection with or arising out of Catlett’s employment or other
affiliation with the Companies, the terms and conditions of employment with the Companies and/or her resignation from employment
with the Companies, whether such claim is known or unknown to Catlett, accrued or unaccrued, which she ever had, now has or may
have had against Releasees since the beginning of time through the date of execution of this Agreement. This release includes,
but is not limited to, any and all claims arising under Federal, State or local statutes, ordinances, resolutions, regulations
or constitutional provisions, each as amended, regulating employment relationships or prohibiting discrimination in employment
on the basis of sex, sexual orientation, race, religion, national origin, age, disability and/or veterans' status, including,
but not limited to, claims arising under: Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq.;
42 U.S.C. §§ 1981, 1981a, 1983 and 1985; the Kentucky Civil Rights Act, as amended, KRS Chapter 344.010 et seq,;
any other state laws addressing discrimination issues; the Americans With Disabilities Act, as amended, 42 U.S.C. § 12101
et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621 et seq.; the Federal Rehabilitation
Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the Older Workers' Benefits Protection Act; Executive Order 11246;
KRS Chapters 337 and 207; the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act,
29 U.S.C. § 201 et seq.; the Sarbanes-Oxley Act, 18 U.S.C. §§ 1514A, et seq.; the Pregnancy Discrimination
Act; the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq.; the Genetic Information
Non-Discrimination Act, 42 U.S.C. §§ 2000ff et seq., the minimum wage act, wage payment law and wage discrimination
statutes and workers compensation statutes and similar state laws of Kentucky, in all instances as amended. This general release
and waiver of claims also includes, but is not limited to, any and all claims for unpaid benefits or entitlements asserted under
any plan, policy, benefits offering or program (except as otherwise required by law), any and all contract or tort claims, including,
without limitation, claims of wrongful discharge, assault, battery, intentional infliction of emotional distress, negligence,
and/or defamation against Releasees. Nothing in this section or any other provision in the remainder of this Agreement shall be
construed to prevent Catlett from (i) making a claim for indemnity under law or governance documents providing for indemnity or
insurance against claims for acts or omissions in her capacity acting as an officer or director of the Companies; or (ii) talking
to, cooperating in any investigation by, and/or filing a charge with a government agency, including but not limited to the Securities
and Exchange Commission (the “SEC”), the U.S. Equal Employment Opportunity Commission (the “EEOC”),
or any similar state or local fair employment practices administrative agency. However, by signing this Agreement, Catlett hereby
waives the right to recover from Releasees any relief from any charge or claim pursued or otherwise prosecuted by her, or by persons
or entities like the EEOC acting by or through her, including, without limitation, the right to attorneys’ fees, costs,
and any other relief, whether legal or equitable, sought in such charge, claim, or other proceeding.

 

     

     

    

 

8.                 
Specific Release of Age Claims.

 

(a)              
Catlett agrees that in exchange for a portion of the consideration described in Section 4 of this Agreement, this Agreement
constitutes a knowing and voluntary release and waiver of all rights or claims she may have against the Companies or any of their
agents, directors, shareholders, parent and subsidiary corporations, joint venturers, officers, employees, representatives, attorneys,
predecessors and/or successors including, but not limited to, all rights or claims arising under the Age Discrimination in Employment
Act of 1967, 29 U.S.C. §§ 621-634, as amended by the Older Workers' Benefit Protection Act, P.L. 101-433 (“ADEA”),
including, but not limited to, all claims of age discrimination in employment and all claims of retaliation in violation of the
ADEA and any state statute or local ordinance barring age discrimination.

 

(b)              
The Parties agree that, by entering into this Agreement, Catlett does not waive rights or claims that may arise after the
date this Agreement is executed.

 

(c)              
Catlett represents and warrants that the Companies advised her to consult with an attorney prior to executing this Agreement
and that Catlett was provided the opportunity to do so. Catlett further represents and warrants that the Companies provided her
a period of at least twenty-one (21) days in which to consider this Agreement before executing this Agreement.

 

(d)              
The Parties agree that, for a period of seven (7) days following the execution of this Agreement, Catlett has the right
to revoke this Agreement, and the Companies and Catlett further agree that this Agreement shall not become effective or enforceable
until the revocation period of seven (7) days has expired. Written notice of revocation must be sent to the Companies within the
seven (7) day period to the attention of Mark Simpson, Texas Roadhouse.

 

(e)              
Catlett agrees that if she executes this Agreement at any time prior to the end of the period provided in which to consider
this Agreement, such early execution was a knowing and voluntary waiver of her right to consider this Agreement for at least twenty-one
(21) days, and was because of her desire to receive immediately the consideration provided hereunder and her belief that she had
ample time in which to consider and understand this Agreement, and in which to review this Agreement with an attorney.

 

     

     

    

 

9.                 
No Known Claims. Catlett represents, warrants and
covenants that, as of the date she signs this Agreement, (1) she is unaware of any wages (as that term is defined by applicable
state law) that are owed to her by the Companies and that have not been paid; (2) she is unaware of any request for leave under
the Family and Medical Leave Act that was denied; (3) she has no known work-related injury, disability, or illness, and has not
requested any accommodation under the Americans With Disabilities Act or similar state law that has not been satisfied; and (4)
she is unaware of any document, circumstance, occurrence, or any conduct on behalf of the Companies or any of their agents, employees,
officers or directors, or any Releasee, which evidence, contain, or constitute a violation of any law, standard, or regulation,
including but not limited to a violation of federal or state securities laws, which either has not been properly documented by
her in the Companies’ records or not been disclosed by her to persons other than herself at the Companies, upon which representations
the Companies expressly rely in entering into this Agreement.

 

10.             
No Wrongdoing by the Parties. The Parties further
agree that they have entered this Agreement to resolve any and all claims, if any, Catlett may have against the Companies or any
other Releasee, and that this Agreement does not constitute an admission of, or is to be used as evidence of, any liability, violation
or wrongdoing of any kind by either Party.

 

11.             
Cooperation with Litigation. Catlett agrees to cooperate with the Companies during the Consulting Period and thereafter,
by being reasonably available to testify on behalf of the Companies in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and to assist the Companies in any such action, suit, or proceeding by providing information
to and meeting and consulting with the Companies, or any of their counsel or representatives upon reasonable request, provided
that such cooperation and assistance shall not materially interfere with Catlett’s then-current professional activities and
that the Companies shall agree to reimburse Catlett for all reasonable out-of-pocket expenses incurred by Catlett in connection
with providing such cooperation and assistance.

 

12.             
Governing Law; Jurisdiction; Venue. This Agreement shall be governed by, subject to, and construed in accordance
with the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Agreement
shall only be brought in a court of competent jurisdiction in the Jefferson County, the Commonwealth of Kentucky, and the Parties
consent to the jurisdiction, venue and convenience of such courts, and that any objection to this jurisdiction or venue is specifically
waived.

 

13.             
Severability. The Parties agree that in any event a provision of the Agreement or any application thereof shall be
judged by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of all other applications of that provision, and of all other provisions and applications of the Agreement, shall
not in any way be affected, and that such invalid, illegal or unenforceable provision or application shall be deemed not to be
a part of the Agreement, and that the Agreement shall then be enforced to the maximum extent allowed by the applicable law.

 

     

     

    

 

14.             
Assignment. The Agreement shall not be assignable by Catlett, but shall be binding on Catlett and her estate, agents,
attorneys, successors, heirs, executors, administrators, insurers and assigns, and shall inure to the benefit of the Companies
and the Releasees, who shall be third party beneficiaries hereof.

 

 

15.             
Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing
and signed by the Parties hereto.

 

 

16.             
Counterparts. This Agreement may be executed in any number of counterparts, and such counterparts executed
and delivered, each as an original, shall constitute but one and the same instrument.

 

[Signature page follows]

 

     

     

    

 

IN WITNESS WHEREOF, the Parties have
executed the forgoing Agreement as of the dates indicated.

 

I, CELIA CATLETT,
UNDERSTAND AND AGREE THAT THE RELEASE IN THIS AGREEMENT CONSTITUTES A FULL AND FINAL RELEASE OF ALL CLAIMS THAT ARE RELEASEABLE
BY LAW.

 

 

 

	Date:	August 21, 2019	 	 /s/ Celia Catlett
	 	Celia Catlett
	 
	 	TEXAS ROADHOUSE, INC.
	 
	Date:	August 21, 2019	 	By	 /s/ Tonya Robinson
	 	 
	 	Printed Name:	Tonya Robinson
	 
	 	Title:	Chief Financial Officer
	 
	 	TEXAS ROADHOUSE HOLDINGS LLC
	 	By Texas Roadhouse, Inc., its manager
	 
	Date:	August 21, 2019	 	By	/s/ Tonya Robinson
	 	 	 	 
	 	Printed Name:	Tonya Robinson
	 	 	 
	 	Title:	Chief Financial Officer
	 
	 	TEXAS ROADHOUSE MANAGEMENT CORP.
	 
	Date:	August 21, 2019	 	By 	/s/ Tonya Robinson
	 
	 	Printed Name:	Tonya Robinson
	 
	 	Title:	Treasurer

 

     

     

    

Annex
A

 

RELEASE AGREEMENT

 

This Release (this
“Release”) is given by Celia Catlett (“Catlett”) pursuant to the terms of that certain Executive
Transition and Consulting Agreement dated August 21, 2019 (the “Consulting Agreement”), which provides for certain
consideration to be paid after the Consulting Period (as defined therein) expires, conditioned upon Catlett first signing this
general release of claims.

 

1.                 
Definitions. Capitalized terms used herein and not defined in the context in which they appear shall have
the meanings given them in the Consulting Agreement.

 

2.                 
General Release, Waiver of All Claims and Potential Claims.
 For and in consideration of the promises made herein by Companies in the Consulting Agreement, the sufficiency
of which is hereby acknowledged, Catlett agrees as follows:

 

(a)              
Catlett, individually and collectively, for and on behalf of herself, her estate, agents, attorneys, successors, heirs,
executors, administrators and assigns, agrees not to file, pursue or prosecute any lawsuit, action, charge or claim, of any nature
whatsoever, against the Companies or any of their agents, directors, shareholders, parent and subsidiary corporations, joint venturers,
officers, employees, representatives, attorneys, predecessors and/or successors, or against any other person or entity of any kind
(collectively, the “Releasees”), both jointly and individually, and releases all such claims, demands, causes
of action, suits, debts, complaints, liabilities, obligations, promises, agreements, controversies, damages and expenses that are
releasable by law (including, without limitation, attorneys fees and costs actually incurred or to be incurred) of any nature or
description whatsoever, in law or equity, whether known or unknown, in connection with or arising out of Catlett’s employment,
consulting or other affiliation with the Companies, the terms and conditions of employment or consulting with the Companies and/or
her resignation from employment and cessation of the Consulting Period with the Companies, whether such claim is known or unknown
to Catlett, accrued or unaccrued, which she ever had, now has or may have had against Releasees since the beginning of time through
the date of execution of this Release. This Release includes, but is not limited to, any and all claims arising under Federal,
State or local statutes, ordinances, resolutions, regulations or constitutional provisions, each as amended, regulating employment
relationships or prohibiting discrimination in employment on the basis of sex, sexual orientation, race, religion, national origin,
age, disability and/or veterans' status, including, but not limited to, claims arising under: Title VII of the Civil Rights Act
of 1964, as amended, 42 U.S.C. § 2000e, et seq.; 42 U.S.C. §§ 1981, 1981a, 1983 and 1985; the Kentucky Civil
Rights Act, as amended, KRS Chapter 344.010 et seq,; any other state laws addressing discrimination issues; the Americans
With Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Age Discrimination in Employment Act, as amended,
29 U.S.C. § 621 et seq.; the Federal Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the
Older Workers' Benefits Protection Act; Executive Order 11246; KRS Chapters 337 and 207; the Family and Medical Leave Act, 29 U.S.C.
§ 2601 et seq.; the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.; the Sarbanes-Oxley Act, 18 U.S.C.
§§ 1514A, et seq.; the Pregnancy Discrimination Act; the Employee Retirement Income Security Act of 1974, 29 U.S.C.
§§ 1001 et seq.; the Genetic Information Non-Discrimination Act, 42 U.S.C. §§ 2000ff et seq.,
the minimum wage act, wage payment law and wage discrimination statutes and workers compensation statutes and similar state laws
of Kentucky, in all instances as amended. This general release and waiver of claims also includes, but is not limited to, any and
all claims for unpaid benefits or entitlements asserted under any plan, policy, benefits offering or program (except as otherwise
required by law), any and all contract or tort claims, including, without limitation, claims of wrongful discharge, assault, battery,
intentional infliction of emotional distress, negligence, and/or defamation against Releasees. Nothing in this section or any other
provision in the remainder of this Agreement shall be construed to prevent Catlett from (i) making a claim for indemnity under
law or governance documents providing for indemnity or insurance against claims for acts or omissions in her capacity acting as
an officer or director of the Companies; or (ii) talking to, cooperating in any investigation by, and/or filing a charge with a
government agency, including but not limited to the Securities and Exchange Commission (the “SEC”), the U.S.
Equal Employment Opportunity Commission (the “EEOC”), or any similar state or local fair employment practices
administrative agency. However, by signing this Agreement, Catlett hereby waives the right to recover from Releasees any relief
from any charge or claim pursued or otherwise prosecuted by her, or by persons or entities like the EEOC acting by or through her,
including, without limitation, the right to attorneys’ fees, costs, and any other relief, whether legal or equitable, sought
in such charge, claim, or other proceeding.

 

    A-1 

     

    

 

(b)              
Catlett agrees that in exchange for a portion of the consideration described in the Consulting Agreement, that this Release
constitutes a knowing and voluntary release and waiver of all rights or claims she may have against the Companies or any of their
agents, directors, shareholders, parent and subsidiary corporations, joint venturers, officers, employees, representatives, attorneys,
predecessors and/or successors including, but not limited to, all rights or claims arising under the Age Discrimination in Employment
Act of 1967, 29 U.S.C. §§ 621-634, as amended by the Older Workers' Benefit Protection Act, P.L. 101-433 (“ADEA”),
including, but not limited to, all claims of age discrimination in employment and all claims of retaliation in violation of the
ADEA and any state statute or local ordinance barring age discrimination.

 

3.                 
Other Acknowledgements and Representations.

 

(a)              
By giving this Release, Catlett does not waive rights or claims that may arise after the date this Release is executed.

 

(b)              
Catlett represents and warrants that the Companies advised her to consult with an attorney prior to executing this Release
and that Catlett was provided the opportunity to do so. Catlett further represents and warrants that the Companies provided her
a period of at least twenty-one (21) days in which to consider this Release before executing this Release.

 

(c)              
Catlett represents, warrants and covenants that, as of the date she signs this Release, (1) she is unaware of any wages
(as that term is defined by applicable state law) that are owed to her by the Companies and that have not been paid; (2) she is
unaware of any request for leave under the Family and Medical Leave Act that was denied; (3) she has no known work-related injury,
disability, or illness, and has not requested any accommodation under the Americans With Disabilities Act or similar state law
that has not been satisfied; and (4) she is unaware of any document, circumstance, occurrence, or any conduct on behalf of the
Companies or any of their agents, employees, officers or directors, or any Releasee, which evidence, contain, or constitute a violation
of any law, standard, or regulation, including but not limited to a violation of federal or state securities laws, which either
has not been properly documented by her in the Companies’ records or not been disclosed by her to persons other than herself
at the Companies, upon which representations the Companies expressly rely in entering into this Agreement.

 

4.                 
Revocation Right.For a period of seven (7) days following the execution of this Release, Catlett has the right
to revoke this Release, at which time it will be null and void, but she will forego the right to certain consideration as set forth
in the Consulting Agreement. The release contained within the Consulting Agreement shall remain in full force and effect despite
and revocation of this Release. Written notice of revocation must be sent to the Companies within the seven (7) day period to the
attention of Mark Simpson, Texas Roadhouse.

 

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5.                 
Governing Law; Jurisdiction; Venue. This Release shall be governed by, subject to, and construed in accordance with
the laws of the Commonwealth of Kentucky without regard to conflict of law principles. Any action relating to this Release shall
only be brought in a court of competent jurisdiction in the Jefferson County, the Commonwealth of Kentucky, and the Parties consent
to the jurisdiction, venue and convenience of such courts, and that any objection to this jurisdiction or venue is specifically
waived.

 

6.                 
Severability. In any event a provision of the Release or any application thereof shall be judged by any court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect, the validity, legality or enforceability of all
other applications of that provision, and of all other provisions and applications of the Consulting Agreement or this Release,
shall not in any way be affected, and that such invalid, illegal or unenforceable provision or application shall be deemed not
to be a part of the Consulting Agreement or Release, and that the Consulting Agreement and Release shall then be enforced to the
maximum extent allowed by the applicable law.

 

I, CELIA CATLETT,
UNDERSTAND AND AGREE THAT THIS RELEASE CONSTITUTES A FULL AND FINAL RELEASE OF ALL CLAIMS THAT ARE RELEASEABLE BY LAW.

 

	 	 	 	 
	 	 	 	Celia Catlett
	 	 	 	 
	 	 	 	Date: 	 
	 	 	 	 
	STATE OF 	 	 	)
	 	 	 	) SS:
	COUNTY OF 	 	 	)

 

Subscribed and sworn to before me by Celia
Catlett, this _____ day of __________, 2020.

 

	 	 
	 	Notary Public
	 	 
	 	My Commission expires:	 

 

    A-3

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