Exhibit
10.1


 


NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE 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 (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS 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.


 


Principal
Amount: $119,806


Date:
March 7, 2016 (Tacking Back to August 5, 2015)


  


CONVERTIBLE
PROMISSORY NOTE


 


Vape
Holdings, Inc., (hereinafter called the “Company” or “VAPE”), hereby promises to pay to the order
of GHS Investments, LLC, a Nevada Limited Liability Company, or its registered assigns (the “Holder”) the sum
of $119,806 together with any interest as set forth herein, on October 7, 2016 (the “Maturity Date”), and to pay interest
on the unpaid principal balance hereof at the rate of ten percent (10%) (the “Interest Rate”) per annum from the date
hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment
or otherwise.


 


This
Note shall serve in lieu of (and tack back to) $119,806 of convertible debt owing to JSJ Investments, Inc., pursuant to that certain
$112,000 Convertible Promissory Note dated August 5, 2015, as amended, and incorporate all interests and charges contemplated
therein.


 


This
Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date
thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Note is
fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder
(to the extent not converted into common stock) shall be made in lawful money of the United States of America.


 


All
payments shall be made at such address as the Holder shall hereafter give to the Company by written notice made in
accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any
day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the
case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date
thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this
Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks
in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized
term used herein, and not otherwise defined, shall have the meaning ascribed thereto in the supporting documents of same date
(attached hereto).


 






     


     

    

 


This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.


 


The
following terms shall apply to this Note:


 


ARTICLE
I. CONVERSION RIGHTS


 


1.1          Conversion
Right. The Holder shall have the right and at any time following the execution of this Note to convert all or any part of
the outstanding and unpaid principal amount of this Note into fully paid and non- assessable shares of Common Stock, as such Common
Stock exists on the Issue Date, or any shares of capital stock or other securities of the Company into which such Common Stock
shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided
herein (a “Conversion”); provided, however, that in no event shall the Holder be entitled to convert
any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security
of the Company subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock. Notwithstanding the foregoing, the term "4.99%" above shall be replaced with "9.99%"
following any Event of Default if the Holder, in its sole discretion and in writing, elects to demand the replacement. If the
term "4.99%" is replaced with "9.99%" pursuant to the preceding sentence, such increase to "9.99%"
shall remain at 9.99% until decreased by the Holder in writing.


 


The
number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion
Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion,
(the “Notice of Conversion”), delivered to the Company by the Holder in accordance with the Sections below; provided
that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result
in, notice) to the Company before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”).


 


The
term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any,
on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s
option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4)
at the Holder’s option, any amounts owed to the Holder.


 


1.2          Conversion
Price.


 


(a)          Calculation
of Conversion Price. Subject to the adjustments set forth herein, Holder, at its discretion, shall have the right to convert
this Note in its entirety or in part(s) into common stock of the Company valued at a forty five percent (45%) discount off of
the lowest intra-day trading price for the Company’s common stock during the twenty (20) trading days immediately preceding
a conversion date, as reported by Quotestream.


 






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If
at any time after the execution of this Note, the Company experiences a "DTC Chill," the Conversion Price Discount shall
be increased by five percent (5%). If at any time following the execution of this Note, the Company becomes ineligible to participate
in the DTC's "DWAC" system, the Conversion Price Discount will be increased by five percent (5%). If the Company experiences
both a "DTC Chill" and DWAC ineligibility, the Holder shall have the right to Convert this Note in its entirety or in
part(s) into common stock of the Company valued at a fifty five percent (55%) discount off of the lowest intra-day trading price
for the Company's common stock during the twenty (20) trading days immediately preceding the relevant Notice of Conversion.


 


 


1.3          Authorized
Shares. The Company covenants that during the period the conversion right exists the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note. The Company is required at all times to have authorized and reserved five times
the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in
effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance
with the Company’s obligations.


 


The
Company represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition,
if the Company shall issue any securities or make any change to its capital structure which would change the number of shares
of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Company shall at the same
time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved,
free from preemptive rights, for conversion of the outstanding Notes.


 


The
Company (i) acknowledges that it will irrevocably instruct its transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to
its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates
for shares of Common Stock in accordance with the terms and conditions of this Note.


 


If,
at any time the Company does not maintain the Reserved Amount it will be considered an Event of Default as defined in this Note.


 


1.4          Method
of Conversion.


 


(a)          Mechanics
of Conversion. This Note may be converted by the Holder in whole or in part at any time from time to time after the execution
of the Note, by (A) submitting to the Company a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication
dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time).


 






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(b)          Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Company shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Holder shall, prima facie, be controlling and determinative in the absence of manifest error. The Holder
and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.


 


(c)          Payment
of Taxes. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Company shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Company the amount of any such
tax or shall have established to the satisfaction of the Company that such tax has been paid.


 


(d)          Delivery
of Common Stock Upon Conversion. Upon receipt by the Company from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section,
the Company shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder the Common Stock issuable
upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of
conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase
Agreement.


 


Within
Five (5) business days of having received common stock pursuant to a Notice of Conversion and prior to having traded any shares
from that specific Notice of Conversion, Holder may elect to rescind the Notice of Conversion and return the shares, at Holder's
expense, to the Company's Transfer Agent. In the event of such rescission, the principal amount outstanding under this Note shall
be adjusted to include the Conversion Amount which was deducted from the Note as part of the rescinded Notice of Conversion.


 


(e)          Obligation
of Company to Deliver Common Stock. Upon receipt by the Company of a Notice of Conversion, the Holder shall be deemed to be
the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Company defaults on its obligations
under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except
the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the
Holder shall have given a Notice of Conversion as provided herein, the Company’s obligation to issue and deliver the Common
Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver
or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the
same, any failure or delay in the enforcement of any other obligation of the Company to the holder of record, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective
of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such conversion.
The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is
received by the Company before 6:00 p.m., New York, New York time, on such date.


 






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(f)          Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical
certificates representing the Common Stock issuable upon conversion, provided the Company is participating in the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its
compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Company shall use its best efforts to cause
its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account
of Holder’s Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.


 


(g)          Failure
to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered by the Deadline the Company shall pay to the Holder $2,000 per day in cash, for each day beyond
the Deadline that the Company fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of
the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Company by the
first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which
event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible
into Common Stock in accordance with the terms of this Note. The Company agrees that the right to convert is a valuable right
to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult
if not impossible to qualify. Accordingly the parties acknowledge that
the liquidated damages provision contained in this Section are justified. Any delay or failure of performance by the Company hereunder
shall be excused if and to the extent caused by Force Majeure. For purposes of this agreement, Force Majeure shall mean a cause
or event that is not reasonably foreseeable and/or caused by the Company, including acts of God, fires, floods, explosions, riots
wars, hurricanes, etc.


 


1.5          Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Company or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor
rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the
Company who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited
Investor. Except as otherwise provided herein (and subject to the removal provisions set forth below), until such time as the
shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant
to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold,
each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the following form, as appropriate:


 






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“NEITHERTHEISSUANCEANDSALEOFTHESECURITIES
REPRESENTED  BY  THIS  CERTIFICATE  NOR  THE  SECURITIES  INTO WHICHTHESE SECURITIES AREEXERCISABLEHAVE
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 (WHICH COUNSEL SHALL BE SELECTED BY THEHOLDER),INAGENERALLYACCEPTABLEFORM,THAT
REGISTRATION  IS  NOT  REQUIRED  UNDER  SAID  ACT  OR  (II)  UNLESS 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.”




 


The
legend set forth above shall be removed and the Company shall issue to the Holder a new certificate therefore free of any
transfer legend if (i) the Company or its transfer agent shall have received an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such
Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale
or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is
registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be
immediately sold.  In the event that the Company does not accept
the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to this
note.


 


1.6          Effect
of Certain Events.


 


(a)          Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all
of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more
than 50% of the voting power of the Company is disposed of, or the consolidation, merger or other business combination of the
Company with or into any other Person (as defined below) or Persons when the Company is not the survivor shall either: (i) be
deemed to be an Event of Default (as defined in Article III) pursuant to which the Company shall be required to pay to the Holder
upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III)
or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability
company, partnership, association, trust or other entity or organization.


 






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(b)          Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note
is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Company shall be
changed into the same or a different number of shares of another class or classes of stock or securities of the Company or another
entity, or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection
with a plan of complete liquidation of the Company, then the Holder of this Note shall thereafter have the right to receive upon
conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common
Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled
to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any
limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights
and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for
adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable,
as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The
Company shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable,
thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of
the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation,
exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall
be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligations of this Section 1.6(b). The above provisions shall similarly apply to successive consolidations, mergers,
sales, transfers or share exchanges.


 


(c)          Adjustment
Due to Distribution. If the Company shall declare or make any distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution
to the Company’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a
spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after
the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would
have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been
the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.


 


(d)          Adjustment
Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock in connection with a financing transaction
based on a variable price formula (the “Alternative Variable Price Formula”) that is more favorable to the investor
in such financing transaction than the formula for calculating the Conversion Price in effect on the date of such issuance (or
deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance,
the formula for the Conversion Price will be adjusted to match the Alternative Variable Price Formula. If it is unclear whether
the Alternative Variable Price Formula is better or worse, then Holder, in its sole discretion, may elect at the time of such
issuance whether to switch to the Alternative Variable Price Formula or not.


 


(e)          Purchase
Rights. If, at any time when any Notes are issued and outstanding, the Company issues any convertible securities or rights
to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of
any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.


 






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(f)          Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in this Section 1.6, the Company, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish
to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Company shall, upon the written request at any time of the Holder, furnish to such Holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion
of the Note.


 


1.7          Omit


 


1.8          Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive such shares of Common Stock
and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Company
to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares
of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any
portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock
by so notifying the Company) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions
of this Note and the Company shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not
been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder
shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments
pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii)
the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the
Company’s failure to convert this Note.


 


1.9          Prepayment.
Maker may prepay this Note where both parties have agreed to said prepayment in writing.


 


ARTICLE
II. CERTAIN COVENANTS


 


2.1          Distributions
on Capital Stock. So long as the Company shall have any obligation under this Note, the Company shall not without the Holder’s
written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property
or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional
shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect
of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority
of the Company’s disinterested directors.


 






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2.2          Restriction
on Stock Repurchases. So long as the Company shall have any obligation under this Note, the Company shall not without the
Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other
securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Company or
any warrants, rights or options to purchase or acquire any such shares.


 


2.3          Borrowings.
So long as the Issuer shall have any obligation under this Note, the Issuer shall not, without the Holder’s written consent,
create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any
person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection,
or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of
which the Issuer has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions
incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.


 


2.4          Sale
of Assets. So long as the Company shall have any obligation under this Note, the Company shall not, without the Holder’s
written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business.
Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.


 


2.5          Advances
and Loans. So long as the Company shall have any obligation under this Note, the Company shall not, without the Holder’s
written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Company, except loans, credits or advances (a)
in existence or committed on the date hereof and which the Company has informed Holder in writing prior to the date hereof, (b)
made in the ordinary course of business or (c) not in excess of $100,000.


 


ARTICLE
III. EVENTS OF DEFAULT


 


If
any of the following events of default (each, an “Event of Default”) shall occur:


 


3.1          Failure
to Pay Principal or Interest. The Company fails to pay the principal
hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.


 






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3.2          Conversion
and the Shares. The Company fails to issue shares of Common Stock
to the Holder (or announces or threatens that it will not honor its obligation to do so) upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue)
(electronically or in certificated form) any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note, the Company directs its transfer agent not to transfer or delays, impairs, and/or
hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any shares of Common Stock to
be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove
(or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive
legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for
three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Company to remain
current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is
delayed, hindered or frustrated due to a balance owed by the Company to its transfer agent. If at the option of the Holder, the
Holder advances any funds to the Company’s transfer agent in order to process a conversion, such advanced funds shall be
paid by the Company to the Holder within forty eight (48) hours of a demand from the Holder.


 


3.3          Breach
of Covenants. The Company breaches any covenant or other material term or condition contained in this Note and any collateral
documents including but not limited to the Purchase Agreement.


 


3.4          Breach
of Representations and Warranties.  Any representation or warranty
of the Company made herein or in any agreement, statement or certificate given in


writing
pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading
in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect
on the rights of the Holder with respect to this Note or the Purchase Agreement.


 


3.5          Receiver
or Trustee. The Company or any subsidiary of the Company shall make an assignment for the benefit of creditors, or apply for
or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a
receiver or trustee shall otherwise be appointed.


 


3.6          Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Company or any subsidiary of the Company or
any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.


 


3.7          Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company or any subsidiary of the
Company.


 


3.8          Delisting
of Common Stock. The Company shall fail to maintain the listing of the Common Stock, in good standing, on the OTC Markets
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange.


 


3.9          Failure
to Comply with the Exchange Act. The Company shall fail to comply with the reporting requirements of the Exchange Act; and/or
the Company shall cease to be subject to the reporting requirements of the Exchange Act. The Company shall fail to timely file
a 10Q or 10K.


 






    	 	10	 



     

    

 


3.10        Liquidation.
Any dissolution, liquidation, or winding up of Company or any substantial portion of its business.


 


3.11        Cessation
of Operations. Any cessation of operations by Company or Company admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Company’s ability to continue as a “going
concern” shall not be an admission that the Company cannot pay its debts as they become due.


 


3.12        Maintenance
of Assets.  The failure by Company to maintain any material intellectual
property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).


 


3.13        Financial
Statement Restatement. The restatement of any financial statements
filed by the Company with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note
is no longer outstanding, if the result of such restatement would, by comparison to the original financial statement, have constituted
a material adverse effect on the rights of the Holder with respect to this Note or supporting documents.


 


3.14        Reverse
Splits. The Company effectuates a reverse split of its Common Stock without at least twenty (20) days prior written notice
to the Holder.


 


3.15        Replacement
of Transfer Agent. In the event that the Company proposes to replace its transfer agent, the Company fails to provide, prior
to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Company and the Company.


 


3.16        Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Company of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable
notice and cure or grace periods, shall, at the option of the Company, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder.  “Other
Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Company, and, or for the benefit
of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term
“Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions
will be cross-defaulted with each other loan transaction and with all other existing and future debt of Company.


 






    	 	11	 



     

    

 


Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable
and the Company shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum
(as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE COMPANY SHALL PAY
TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN);
MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely
with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment
Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3. 15 exercisable
through the delivery of written notice to the Company by such Holders (the “Default Notice”), and upon the occurrence
of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest
thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Company
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times
the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the
unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts
referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity
value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable
upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately
preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case
such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during
the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment
Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all
without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation,
legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at
law or in equity.


 


If
the Company fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Company remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Company, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Company equal to the Default Amount divided by the Conversion Price then in
effect.


 


As
security for payment and performance of the Company's obligations pursuant to this Note and supporting documents, Holder, following
any Event of Default, shall be granted an unconditional security interest in and to, any and all property of the Company (and
its subsidiaries), of any kind or description, tangible or intangible, whether now existing or hereafter arising or acquired.


 


ARTICLE
IV. MISCELLANEOUS


 


4.1          Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All
rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.


 


4.2          Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:


 


If
to the Company, to:


 


Vape
Holdings, Inc. 


5304
Derry Ave.


Suite
C


Agoura
Hills, CA 91301


 


If
to the Holder:


 


GHS
Investments, LLC. 


200
Stonehinge Lane Suite 3


Carle
Place, NY 11514


718.530.0182


  



    	 	12	 



     

    

 


4.3          Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Company and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or
supplemented.


 


4.4          Assignability.  This
Note shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its
successors and assigns. Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection
with a bona fide margin account or other lending arrangement.


 


4.5          Cost
of Collection. If default is made in the payment of this Note, the Company shall pay the Holder hereof costs of
collection, including reasonable attorneys’ fees.



 


4.6          Governing
Law.  This Note shall be governed by and construed in accordance
with the laws of the State of Nevada without regard to principles of conflicts of laws.  Any
action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in
the state courts of Nevada or in the federal courts located in the state.. The parties to this Note hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction
or venue or based upon forum non conveniens. The Company and Holder waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note
or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process
and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.


 


4.7          Certain
Amounts.  Whenever pursuant to this Note the Company is required
to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus
accrued and unpaid interest plus Default Interest on such interest, the Company and the Holder agree that the actual damages to
the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Company
represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to
convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price
in excess of the price paid for such shares pursuant to this Note. The Company and the Holder hereby agree that such amount of
stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without
the opportunity to convert this Note into shares of Common Stock.


 


4.8          Purchase
Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Assignment Agreement
and supporting documents.


 


4.9          Notice
of Corporate Events.  Except as otherwise provided below, the Holder
of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common
Stock. The Company shall provide the Holder with prior notification of any meeting of the Company’s shareholders (and copies
of proxy materials and other information sent to shareholders). In the event of any taking by the Company of a record of its shareholders
for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right
to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization)
any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders
who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of
the Company or any proposed liquidation, dissolution or winding up of the Company, the Company shall mail a notice to the Holder,
at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution,
right or other event, and a brief statement regarding the amount and character of such dividend, distribution, right or other
event to the extent known at such time. The Company shall make a public announcement of any event requiring notification to the
Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section
4.9.


 



    	 	13	 



     

    

 





4.10        Remedies.  The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.


 


IN
WITNESS WHEREOF, Company has caused this Note to be signed in its name by its duly authorized officer:


  





	 	Vape
    Holdings, Inc.
	 	 	 
	 	By:	/s/
    Justin Braune
	 	Print:	Justin
    Braune
	 	Title/Date:	CEO



 


 


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