KUSH BOTTLES, INC. (OTCMKTS:KSHB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01

Entry into a Material Definitive Agreement.

On November 16, 2017, Kush Bottles, Inc. (the “Company”) and Kim International Corporation, a wholly owned subsidiary of the Company (“Kim”) as borrowers, and all of the Company’s other subsidiaries, as credit parties, entered into a Loan and Security Agreement (as amended, the “Loan Agreement”) with Gerber Finance Inc., as lender (the “Lender”), effective as of November 6, 2017. The Loan Agreement provides a secured revolving credit facility (the “Revolving Line”) in an aggregate principal amount of up to $2.0 million at any time outstanding (the “Maximum Amount”), of which none was drawn as of November 21, 2017. Under the terms of the Loan Agreement, the principal amount of loans, plus the face amount of any outstanding Letters of Credit, at any time outstanding cannot exceed up to 85% of the Company’s eligible receivables minus reserves (the “Borrowing Base Limit”). Under the terms of the Loan Agreement, the Company may also request letters of credit from the Lender (“Letters of Credit”). The proceeds of the loans under the Loan Agreement will be used for working capital and general corporate purposes. The Revolving Line has date of November 6, 2019. Borrowings under the Revolving Line accrues interest at a rate based on the prime rate as customarily defined, plus a margin of 3.0%.

Upon entry into the Loan Agreement, and on each year anniversary of entering into the Loan Agreement prior to the maturity date, the Company must pay Lender a facility fee equal to $30,000. The Company is also required to pay on a monthly basis a collateral monitoring fee equal to $2,500, plus a field examination fee of $950 per person per day, plus related costs, disbursements and expenses, to the extent collateral monitoring includes any field examinations.

The loans under the Revolving Line as evidenced by the Loan Agreement, or the Loans, are guaranteed by all of the Company’s direct and indirect subsidiaries except for Kim, which is a borrower under the Loan Agreement, and secured by substantially all of the Company’s and its subsidiaries’ assets.The Loans are subject to customary restrictive covenants under the Loan Agreement, and financial covenants that require the Company and its subsidiaries to maintain a maximum leverage ratios of 1:00 to 1:00 on a consolidated basis at the end of any fiscal year, and to maintain tangible net worth of greater than $5,000,000 at all times after August 31, 2018. Prepayment of the Loans is allowed by the Loan Agreement at any time during the terms of the Loans. The Loans also contain limitations on our ability to incur additional indebtedness and requires lender approval for future acquisitions and investments.

The Loan Agreement also contains customary events of default including, among others, payment defaults, breaches of covenants defaults, a material adverse change default, bankruptcy and insolvency defaults, cross defaults with certain indebtedness, judgment defaults, and inaccuracies of representations and warranties defaults. Upon the occurrence and during the continuance an event of default, Lender may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement. During the existence of an event of default, interest on the obligations could be increased to 5.0% above the applicable interest rate for the Loans.

The foregoing description of the Loan Agreement is qualified in its entirety by reference to the Loan Agreement, a copy of which is included as Exhibit 10.1 hereto, and which is incorporated herein by reference.

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.

(d) Exhibits.

Kush Bottles, Inc. Exhibit
EX-10.1 2 exhibit101.htm EXHIBIT 10.1 Converted by EDGARwiz LOAN AND SECURITY AGREEMENT BETWEEN GERBER FINANCE INC as Lender and KUSH BOTTLES INC. and KIM INTERNATIONAL CORPORATION as Borrowers and Credit Parties and DANK BOTTLES,…
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About KUSH BOTTLES, INC. (OTCMKTS:KSHB)

Kush Bottles, Inc. markets and sells packaging products and solutions to customers operating in the regulated medical and recreational cannabis industries. The Company specializes in the wholesale distribution of packaging supplies and customized branding solutions for the cannabis industry. Its packaging business primarily consists of bottles, bags, tubes, and containers. It offers labeling and customization capabilities to its customers’ packaging design processes. Its products are utilized by local urban farmers, green house growers, and medical and recreational cannabis dispensaries. It sells primarily into the business-to-business market, which includes legally operating medical and adult-use dispensaries, growers, and marijuana infused product (MIP) producers in states with marijuana programs. It provides packaging solutions in the form of a bag. It provides smaller sized containers composed of either polystyrene, silicone-lined polystyrene or glass.