Exhibit 10.4


 


Membership
Interest Pledge Agreement


 


This
MEMBERSHIP INTEREST PLEDGE AGREEMENT (this “Agreement”) is entered into as of November 1, 2016 (the “Effective
Date”) by and between Vape Holdings, Inc., a Delaware corporation (“Company”),
and Typenex Co-Investment, LLC, a Utah limited liability company (the “Pledgor”).


 


A. Pursuant
to the terms and conditions of that certain Securities Purchase Agreement of even date herewith by and between the Pledgor and
Company (the “Purchase Agreement”), the Pledgor has issued to Company a series of fifteen (15) Secured Investor
Notes (collectively, the “Notes”). All capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Purchase Agreement.


 


B. The
Pledger has agreed to pledge a 40% membership interest in Typenex Medical, LLC, an Illinois limited liability company (“Typenex
Medical”), to secure the Pledgor’s performance of its obligations under all of the Notes.


 


C. Company
is willing to accept the Notes only upon receiving the Pledgor’s pledge of such membership interest as set forth in this
Agreement.


 


NOW,
THEREFORE, in consideration of the premises, the mutual covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


 


1. Grant
of Security Interest. The Pledgor hereby pledges to Company as collateral and security for the Secured Obligations (as defined
in Section 2) a 40% membership interest in Typenex Medical (the “Pledged Interest”). Company shall have the
right to exercise the rights and remedies set forth herein and in the Notes if a Payment Default (as defined in the Notes) shall
occur. Such Pledged Interest, together with any additions, replacements, accessions or substitutes therefor or proceeds thereof,
are hereinafter referred to collectively as the “Collateral”.


 


2. Secured
Obligations. During the term hereof, the Collateral shall secure the performance by the Pledgor of all of its payment obligations
under each and every one of the Notes (the “Secured
Obligations”).


 


3. Perfection
of Security Interests. The Pledgor hereby authorizes Company to file and record, as the Pledgor’s attorney-in-fact,
any financing statements, any carbon, photographic or other reproduction of a financing statement, or other paper that may be
necessary in order to create, preserve, perfect or validate any security interest or to enable Company to exercise and enforce
its rights hereunder with respect to any of the Collateral.


 


4. Representations
and Warranties of the Pledgor. The Pledger represents and warrants hereby to Company as follows with respect to the Pledged
Interest:


 


4.1. Title.
The Pledgor is the sole owner of the Pledged Interest, having good and marketable title thereto; provided, however, that
the Pledged Interest may be subject to other liens and encumbrances. The Pledged Interest is subject to the applicable transfer
restrictions which may be imposed under the operating agreement of Typenex Medical or other governing documents of Typenex Medical
or applicable federal and state securities laws.


 




     


     


    

 


4.2. Binding
Effect. This Agreement constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with
its terms (except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws now or hereafter in effect).


 


5. Preservation
of the Value of the Collateral. The Pledgor shall pay all taxes, charges, and assessments against the Collateral and do all
acts necessary to preserve and maintain the value thereof.


 


6. Collection
of Distributions and Interest. During the term of this Agreement and so long as no Payment Default has occurred and is continuing
under any of the Notes, the Pledgor is authorized to collect all distributions, interest payments, and other amounts that may
be, or may become, due on any of the Collateral.


 


7. Voting
Rights. Unless and until Company has rightfully exercised its rights under this Agreement to foreclose its security interest
in the Collateral, the Pledgor shall have the right to exercise any voting rights evidenced by, or relating to, the Collateral.


 


8. Company
Not a Member or Partner. The pledge of the Pledged Interest hereunder does not, in and of itself, constitute an assignment
of any rights or obligations of the Pledgor as a member in or of Typenex Medical. Company is not, in any manner or respect,
a member, partner or joint venturer in or with Typenex Medical.


 


9. Remedies
upon Default. Upon the occurrence and during the continuance of a Payment Default under any of the Notes (“Event
of Default”), Company may exercise in respect of the Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured party on default under applicable law (irrespective
of whether such applies to the affected items of Collateral). The Pledgor agrees that, to the extent notice of sale shall be required
by Jaw, at least fifteen (15) calendar days’ notice to the Pledgor of the time and place of any public sale or the time
after which a private sale is to be made shall constitute reasonable notification.


 


10. Termination
of Agreement and Security Interests. Company covenants and agrees that on the earlier of (i) the date on which all of the
Notes are repaid in full and (ii) at Pledgor’s option, the date that is six (6) months and three (3) days following the
Effective Date, or such later date as specified by the Pledgor in its sole discretion (the “Termination Date”),
this Agreement and all security interests
granted hereunder with respect to the Collateral shall terminate (and all such security interests shall be deemed released). At
the Termination Date, Pledgor, as Company’s attorney-in-fact, shall be authorized to terminate all UCC Financing Statements
(Form UCC1) (each a “Financing Statement”) filed hereunder by way of filing a UCC Financing Statement Amendment
(Form UCC3) with respect to each such Financing Statement, and to take all other action (including making all filings) necessary
to reflect that this Agreement and the security interests granted hereunder have terminated. Any portion of the Collateral held
by or on behalf of Company shall be returned to the Pledgor within five (5) business days of the Termination Date and Company
shall timely execute and deliver to the Pledgor, and file and/or record, as necessary, all such documents as the Pledgor shall
reasonably request to evidence the termination of this Agreement and all security interests granted hereunder and the return of
the Collateral to the Pledgor. Notwithstanding any other provision contained herein, all provisions of this Agreement that by
their nature are intended to survive the termination of this Agreement shall survive the termination of this Agreement.


 






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11. Substitution
of Collateral. Notwithstanding anything to the contrary herein, the Pledgor may, in the Pledgor’s sole discretion,
add additional collateral to the Collateral and/or may substitute Collateral as the Pledgor deems fit, provided that the fair
market value of the substituted Collateral may not be less than the aggregate principal balance of the Notes as of the date
of any such substitution. Pledgor, as Company’s attorney-in-fact, shall be authorized to file a UCC Financing Statement
Amendment (Form UCC3) with respect to each applicable Financing Statement to reflect such substitution of Collateral. Any
portion of the Collateral replaced by the substituted Collateral that is held by or on behalf of Company shall be returned to
the Pledgor within five (5) business days of Pledgor’s written notice of substitution, and Company shall timely execute
and deliver to the Pledgor, and file and/or record, as necessary, all such documents as the Pledgor shall reasonably request
to evidence such substitution of Collateral.


 


12. Application
of Collateral Proceeds. Upon the occurrence and during the continuance of an Event of Default, any cash held by Company as
Collateral and all cash proceeds received by Company in respect of any sale of, collection from, or other realization, upon all
or any part of the Collateral pursuant to the exercise by Company of its remedies as a secured creditor as provided in Section
9 shall be paid to and applied as follows:


 


12.1. First,
to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral, of
foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees,
expenses, liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made
hereunder by Company;


 


12.2. Second,
to the payment to Company of the amount then owing or unpaid on the Notes (to be applied first to accrued interest and
second to outstanding principal); and


 


12.3. Third,
to the payment of the surplus, if any, to the Pledgor, its assigns, or to whosoever may be lawfully entitled to receive the
same.


 


13. Expenses.
The Pledgor agrees to pay and reimburse Company upon demand for all reasonable costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) that Company may incur in connection with (a) the custody, use or
preservation of, or the sale of, collection from or other realization upon, any of the Collateral, (b) the exercise or
enforcement of any rights or remedies granted hereunder, under any of the Notes or otherwise available to it (whether at law,
in equity or otherwise), or (c) the failure by the Pledgor to perform or observe any of the provisions hereof.


 


14. Governing
Law; Venue. This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of Utah, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the
Purchase Agreement to determine the proper venue for any disputes are incorporated herein by this reference.


 


15. Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY
JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE,
LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND
TRIAL BY JURY.


 




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16. Purchase
Agreement; Arbitration of Disputes. By executing this Agreement, each party agrees to be bound by the terms, conditions and
general provisions of the Purchase Agreement and the other Transaction Documents (as defined in the Purchase Agreement), including
without limitation the Arbitration Provisions set forth as an Exhibit to the Purchase Agreement.


 


17. Waivers
and Amendments.


 


17.1.
Non-waiver. No failure or delay on either party’s part in exercising any right hereunder shall operate as a waiver
thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise thereof
or of any other right.


 


17.2.
Amendments and Waivers. This Agreement may not be amended or modified, nor may any of its terms be waived, except by written
instruments signed by the Pledgor and Company; provided, however, that the Pledgor may amend this Agreement to add additional
Secured Investor Notes or Investor Notes (as such terms are defined in the Purchase Agreement) to the definition of “Notes”
in the Recitals above without Company’s consent thereto and in such event it shall be sufficient to amend this Agreement
for the Pledgor to give written notice of such amendment to Company. For the avoidance of doubt, in the event the Pledgor amends
this Agreement as permitted in the preceding sentence, any such Secured Investor Notes or Investor Notes that are added to the
definition of “Notes” set forth in the recitals above shall automatically become Notes for all purposes hereunder
and shall be secured by the Collateral pursuant to the terms and conditions set forth herein from the date of such amendment.
Each waiver or consent under any provision hereof shall be effective only in the specific instances for the purpose for which
given.


 


18. Notices.
Unless otherwise provided for herein, all notices, requests, demands, claims and other communications hereunder shall be given
in accordance with the subsection of the Purchase Agreement titled “Notices.” Either party may change the address
to which notices, requests, demands, claims or other communications hereunder are to be delivered by providing notice thereof
in the manner set forth in the Purchase Agreement.


 


19. Headings.
Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute
a part of this Agreement or be given any substantive effect.


 


20. Attorneys’
Fees. Without limiting any other provision contained herein, in the event of any action at law or in equity to enforce or
interpret the terms of this Agreement, the parties agree that the party who is awarded the most money (which, for the avoidance
of doubt, shall be determined without regard to any statutory fines, penalties, fees, or other charges awarded to any party) shall
be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the
attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction
or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict
or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.


 


21. Construction
and Interpretation. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and each
party has been represented by its or its own legal counsel. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.


 




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22. Successor
and Assigns; Assignment. The terms and provisions of this Agreement shall be binding upon, and, subject to the provisions
of this Section, the benefits thereof shall insure to, the parties hereto and their respective successors and assigns; provided,
however, that the rights, interests or obligations of Company hereunder may not be assigned, by operation of law or otherwise,
in whole or in part, by Company without the prior written consent of the Pledgor, which consent may be withheld at the sole discretion
of the Pledgor; provided, however, that in the case of a merger, sale of substantially all of Company’s assets or
other corporate reorganization, the Pledger shall not unreasonably withhold, condition or delay such consent.


 


23. Severability.
If any part of this Agreement is construed to be in violation of any law, such part shall be modified to achieve the objective
of the parties to the fullest extent permitted by law and the balance of this Agreement shall remain in full force and effect.


 


24. Entire
Agreement. This Agreement, together with the Purchase Agreement and Notes and all other Transaction Documents, constitute
and contain the entire agreement between Company and the Pledgor and supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.


 


25. Counterparts;
Facsimile Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same Agreement. Delivery of an executed counterpart of this Agreement by
facsimile or email shall be equally as effective as delivery of an original executed counterpart of this Agreement.


 


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of page intentionally left blank; signature page follows]


 




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IN
WITNESS WHEREOF, the Pledgor and Company have caused this Agreement to be duly executed and delivered by their officers thereunto,
as applicable, duly authorized as of the date first written above.


 


	 	PLEDGOR:
	 	 	 
	 	Typenex
    Co-Investment, llc
	 	 	 
	 	By:	Red
    Cliffs Investments, Inc.,
	 	 	Its
    Manager



 


	 	 	By:	/s/
John
    M. Fife
	 	 	 	John
    M. Fife, President


 


	 	COMPANY:
	 	 
	 	Vape
    Holdings, Inc.


 


	 	By:	/s/
    Benjamin Beaulieu
	 	 	Benjamin
    Beaulieu, CEO



 


[Signature Page to Membership Interest Pledge Agreement]


 



     


     


    

 


EXHIBIT
C


 


ALLOCATION
OF PURCHASE PRICE


 


	Purchase Price	 	Tranche	 	OID/Transaction
 Expense	 
	Initial Cash Purchase Price	 	Initial Tranche	 	$	9,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #1	 	Subsequent Tranche #1	 	$	4,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #2	 	Subsequent Tranche #2	 	$	5,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #3	 	Subsequent Tranche #3	 	$	5,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #4	 	Subsequent Tranche #4	 	$	5,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #5	 	Subsequent Tranche #5	 	$	5,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #6	 	Subsequent Tranche #6	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #7	 	Subsequent Tranche #7	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #8	 	Subsequent Tranche #8	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #9	 	Subsequent Tranche #9	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #10	 	Subsequent Tranche #10	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #11	 	Subsequent Tranche #11	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #12	 	Subsequent Tranche #12	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #13	 	Subsequent Tranche #13	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #14	 	Subsequent Tranche #14	 	$	10,000.00	 
	 	 	 	 	 	 	 
	Secured Investor Note #15	 	Subsequent Tranche #15	 	$	10,000.00