Document:

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.

 

    	 	2	 

     

    

 

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.

 

    	 	3	 

     

    

 

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.

 

    	 	4	 

     

    

 

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.

 

[Remainder
of page intentionally left blank; signature page follows]

 

    	 	5	 

     

    

 

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	 	$	10,000.00Exhibit 10.5

 

Securities
Purchase Agreement

 

THIS
PURCHASE AGREEMENT (“Agreement”) is made as of the 28 day of October, 2016 by and between VAPE Holdings,
Inc., (the “Company”), and GHS Investments, LLC (the “Investor”).

 

Recitals

 

A.
The Investor wishes to purchase from the Company and the Company wishes to sell and issue to the Investor, upon the terms and
conditions stated in this Agreement:

 

1.
Up to $1,105,000 of Convertible Securities, in the form of a Convertible Promissory Note (the “Note”), attached hereto.

 

Upon
the execution of this Agreement and Supporting Documents, Investor shall cause $40,000 to be wired to the Company or its designee(s)
(“Initial Tranche”). Within fifteen (15) calendar days after an increase of the Company’s authorized shares
is effective (with an appropriate reserve being established for the Investor) and so long as there are no Events of Default outstanding
pursuant to the Agreements between the parties, an additional $40,000 shall be disbursed to the Company by the Investor, at its
sole discretion(“Second Tranche”). Within 30 calendar days from the Second Tranche being delivered to the Company
and so long as there are no Events of Default outstanding pursuant to the Agreements between the parties, the Investor, in its
discretion, shall cause $50,000 (or an amount both parties agree to) to be wired to the Company every 30 calendar days until $1,000,000
has been funded to the Company (“Subsequent Tranches”).

 

In
consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. In
addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following
terms shall have the meanings set forth below:

 

“Affiliate”
means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person.

 

“Business
Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction
of business.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

     

     

    

 

“Company’s
Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company,
after due inquiry.

 

“Confidential
Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae,
compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications,
support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related
information).

 

“Control”
(including the terms “controlling”, “controlled by” or “under common control with”) means
the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

 

“Intellectual
Property” means all of the following: (i) patents, patent applications, patent disclosures and inventions (whether or
not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names,
logos, slogans and Internet domain names, together with all goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).

 

“Material
Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial
or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company
to perform its obligations under the Transaction Documents.

 

“Person”
means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

 

“Purchase
Price” means up to one million dollars ($1,000,000) representing a ten percent (10%) original issuance discount on each
Tranche, as funded and $5,000 in initial legal costs which shall be added to the principal balance of the Note upon the funding
of the Initial Tranche.

 

“SEC”
means the United States Securities and Exchange Commission.

 

“Securities”
means the Note and the common shares issuable at conversion.

 

    	 	-2-	 

     

    

 

“Subsidiary”
of any Person means another Person, an amount of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

 

“Transaction
Documents” means this Agreement, the Note, the Company Representation Letter, the Security Agreement and supporting
documents.

 

“1933
Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated
thereunder.

 

“1934
Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations
promulgated thereunder.

 

2.
Purchase and Sale of the Securities. Subject to the terms and conditions of this Agreement, the Company shall sell and
issue to the Investor a Convertible Note in the principal amount of $1,105,000.

 

3.
Closing. Upon confirmation that the other conditions to closing specified herein have been satisfied or duly waived by
the Investor, the Company shall deliver to the Investor, a Note registered the name of the Investor and the Investor shall cause
a wire transfer in same day funds to be sent to the account of the Company as instructed in writing by the Company, in an amount
representing the Purchase Price for the Note (the “Closing Date”).

 

4.
Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except
as set forth in the schedules delivered herewith (collectively, the “Disclosure Schedules”) and except as otherwise
disclosed in the Company’s filings with the SEC:

 

4.
1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries
is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify
has not and could not reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are listed on
the Company’s public disclosures filed with the SEC.

 

4.2 Authorization. The
Company has full power and authority and, has taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) authorization
of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or
affecting creditors’ rights generally.

 

    	 	-3-	 

     

    

 

4.3 Capitalization. As
of the date hereof, the authorized capital stock of the Company on the date hereof is 1,000,000,000; (b) the number of
shares of capital stock issued and outstanding is 588,837,978; (c) the number of shares of capital stock issuable pursuant to
the Company’s stock plans is 0; and (d) the number of shares of capital stock issuable and reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or convertible into or exchangeable for any shares of
capital stock of the Company are 411,162,022. All of the issued and outstanding shares of the Company’s capital stock
have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights. All of the
issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully
paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal
securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. No Person is entitled to pre-emptive or similar statutory or contractual rights with
respect to any securities of the Company. Other than described herein and in the Company’s periodic reports filed with
the SEC, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of
any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by this Agreement, neither the Company nor any of its Subsidiaries is currently in
negotiations for the issuance of any equity securities of any kind.

 

The
issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities
to any other Person (other than the Investor) and will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.

 

The
Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect
giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

 

4.4 Valid
Issuance. The issued Securities have been duly and validly authorized and, when issued and paid for pursuant to this
Agreement, shall be free and clear of all encumbrances and restrictions (other than those created by the Investor), except
for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. Upon the due
conversion of the Debenture, the Converted Shares will be validly issued, fully paid and non-assessable free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws and except for those created by the Investor. The Company does not have reserved a sufficient
number of shares of Common Stock for issuance upon the exercise of the Debenture until the Company is able to amend it
certificate of incorporation in order to increase its authorized Common Stock. The Company shall, within forty five calendar
days of executing this Agreement, use its best efforts to reserve a sufficient number of shares of Common Stock for issuance
upon the exercise of the Debenture, free and clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investor.
Notwithstanding the foregoing, the Company shall within one hundred and twenty (120) calendar days from the execution of this
Agreement, reserve a sufficient number of Common Stock for issuance upon the exercise of the Debenture.

 

    	 	-4-	 

     

    

 

4.5 Consents. Other
than the steps necessary to amend the Company’s certificate of incorporation in order to increase its authorized Common
Stock, which include, but are not limited to, certain shareholders’ consent as well as making the required filings with
the SEC, the execution, delivery and performance by the Company of the Transaction Documents, and the offer, issuance
and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body,
agency, or official other than filings that have been made pursuant to applicable state securities laws, and post-sale
filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable
time periods. Subject to the accuracy of the representations and warranties of the Investor set forth in Section 5 hereof,
the Company has taken all action necessary to exempt (i) the issuance and sale of the Securities, (ii) the issuance of the
Shares upon due conversion of the Debenture, and (iii) the other transactions contemplated by the Transaction Documents from
the provisions of any shareholder rights plan or other “poison pill” arrangement, any anti-takeover, business
combination or control share law or statute binding on the Company or to which the Company or any of its assets and
properties may be subject and any provision of the Company’s Articles of Incorporation or By-laws that is or could
reasonably be expected to become applicable to the Investor as a result of the transactions contemplated hereby, including
without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities by the Investor
or the exercise of any right granted to the Investor pursuant to this Agreement or the other Transaction
Documents.

 

4.6 Delivery
of SEC Filings; Business. The Company has made available to the Investor through the EDGAR system, true and complete
copies of the Company’s most recent Annual Report on Form 10-K for its last fiscal year (the “10-K”), and
all other reports filed by the Company pursuant to the 1934 Act since the filing of the 10-K and prior to the date hereof
(collectively, the “SEC Filings”). The SEC Filings are the only filings required of the Company pursuant to the
1934 Act for such period. Notwithstanding the foregoing, Investor acknowledges that it is aware that the Company is
delinquent in its periodic filings in that the Company has not yet filed its quarterly report on Form 10Q for the quarter
ended June 30, 2016. The Company and its Subsidiaries are engaged in all material respects only in the business described in
the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of
the Company and its Subsidiaries, taken as a whole.

 

4.7 Use
of Proceeds. The net proceeds of the sale of the Note hereunder shall be used by the Company for working capital and general
corporate purposes. The Company agrees that it shall not use the funds from this Agreement, at any time, to lend money, give credit
or make advances to any officers, directors, employees, subsidiaries and affiliates of the Company.

 

    	 	-5-	 

     

    

 

4.8 No
Conflict, Breach, Violation or Default. The execution, delivery and performance of the Transaction Documents by the
Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (i) the Company’s Articles of Incorporation or the
Company’s Bylaws, both as in effect on the date hereof (true and complete copies of which have been made available to
the Investor through the EDGAR system), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body
or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or
properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a
Subsidiary is bound or to which any of their respective assets or properties is subject.

 

4.9 Brokers
and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid
right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company.

 

4.10
No Directed Selling Efforts or General Solicitation. Neither the Company nor any Person acting on its behalf has conducted
any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale
of any of the Securities.

 

4.11
No Integrated Offering. Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances
that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated
hereby or would require registration of the Securities under the 1933 Act.

 

4.12
Private Placement. The offer and sale of the Securities to the Investor as contemplated hereby is exempt from the registration
requirements of the 1933 Act.

 

5. Representations
and Warranties of the Investor. The Investor hereby represents and warrants to the Company that:

 

5.1 Organization
and Existence. Such Investor is a validly existing corporation, limited partnership or limited liability company and
has all requisite corporate, partnership or limited liability company power and authority to invest in the Securities
pursuant to this Agreement.

 

5.2 Authorization. The
execution, delivery and performance by such Investor of the Transaction Documents to which such Investor is a party have been
duly authorized and will each constitute the valid and legally binding obligation of such Investor, enforceable against such
Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights
generally.

 

    	 	-6-	 

     

    

 

5.3 Purchase
Entirely for Own Account. The Securities to be received by such Investor hereunder will be acquired for such
Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof
in violation of the 1933 Act, and such Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the 1933 Act without prejudice, however, to such Investor’s right at
all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state
securities laws. Nothing contained herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is not a broker-dealer registered with the SEC under the 1934 Act or an
entity engaged in a business that would require it to be so registered.

 

5.4 Investment
Experience. Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in the
Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits
and risks of the investment contemplated hereby.

 

5.5 Disclosure
of Information. Such Investor has had an opportunity to receive all information related to the Company requested by it and
to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the
offering of the Securities. Such Investor acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor any other
due diligence investigation conducted by such Investor shall modify, amend or affect such Investor’s right to rely on the
Company’s representations and warranties contained in this Agreement.

 

5.6 Restricted
Securities. Such Investor understands that the Securities are characterized as “restricted securities” under
the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without registration under the
1933 Act only in certain limited circumstances.

 

5.7 Legends. It
is understood that, except as provided below, certificates evidencing the Securities may bear the following or any
similar legend:

 

(a) “The
securities represented hereby may not be transferred unless (i) such securities have been registered for sale pursuant to the
Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to Rule 144(i), or (iii) the Company has received
an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the Securities
Act of 1933 or qualification under applicable state securities laws.”

 

(b) If
required by the authorities of any state in connection with the issuance of sale of the Securities, the legend required by such
state authority.

 

    	 	-7-	 

     

    

 

5.8 Acceredited Investor. Such Investor is an accredited
investor as defined in Rule 501(a) of Regulation D,
as amended, under the 1933 Act.

 

5.9 No
General Solicitation. Such Investor did not learn of the investment in the Securities as a result of any public
advertising or general solicitation.

 

5.10
Brokers and Finders. No Person will have, as a result of the transactions contemplated by the Transaction Documents, any
valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on behalf of such Investor.

 

6.
Conditions to Closing.

 

6.1 Conditions
to the Investor’s Obligations. The obligation of the Investor to purchase the Note at Closing is subject to the
fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which
may be waived by the Investor:

 

(a) The
representations and warranties made by the Company in Section 4 hereof qualified as to materiality shall be true and correct at
all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations
and warranties made by the Company in Section 4 hereof not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of
such earlier date. The Company shall have performed in all material respects all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing Date.

 

(b) The
Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities, and the consummation of the other transactions contemplated by the Transaction Documents,
all of which shall be in full force and effect.

 

(c) No
judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have
been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

 

(d) The
Company shall have executed and delivered the Convertible Note and supporting documentation.

 

    	 	-8-	 

     

    

 

(e) The Company shall have executed and delivered the
Irrevocable Transfer Agent Instructions.

 

(f)
No stop order or suspension of trading shall have been imposed by the public markets on which the Company’s common
stock is traded or quoted, the SEC or any other governmental or regulatory body with respect to public trading in the Common
Stock.

 

6.2 Conditions
to Obligations of the Company. The Company’s obligation to sell and issue the Note at Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may
be waived by the Company:

 

(a) The
representations and warranties made by the Investor in Section 5 hereof, other than the representations and warranties contained
in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and correct in
all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force
and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects
when made, and shall be true and correct in all respects on the Closing Date with the same force and effect as if they had been
made on and as of said date. The Investor shall have performed in all material respects all obligations and conditions herein
required to be performed or observed by them on or prior to the Closing Date.

 

(b) The
Investor shall have delivered the Purchase Price to the Company in accordance with the schedule outlined herein.

 

6.3 Termination
of Obligations to Effect Closing; Effects.

 

(a)
The obligations of the Company, on the one hand, and the Investor, on the other hand, to effect the Closing shall terminate
as follows:

 

(i) Upon
the mutual written consent of the Company and the Investor;

 

(ii) By
the Company if any of the conditions set forth in Section 6.2 shall have become incapable of fulfillment, and shall not have been
waived by the Company;

 

(iii) By
the Investor if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have
been waived by the Investor; or provided, however, that, except in the case of clause (i) above, the party seeking to terminate
its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to
such party’s seeking to terminate its obligation to effect the Closing.

 

    	 	-9-	 

     

    

 

7. Survival
and Indemnification.

 

7.1 Survival.
The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of
the transactions contemplated by this Agreement.

 

7.2
Indemnification. The Company agrees to indemnify and hold harmless each Investor and its Affiliates and their respective
directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including
without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing
or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”)
to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or
to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts
as they are incurred by such Person.

 

7.3 Conduct
of Indemnification Proceedings. Promptly after receipt by any Person (the “Indemnified Person”)
of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action,
proceeding or investigation in respect of which indemnity may be sought pursuant to Section 7.2, such Indemnified Person
shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however,
that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations
hereunder except to the extent that the Company is materially prejudiced by such failure to notify. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the
retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company
shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall
indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not
be unreasonably withheld, the Company shall not affect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of
such proceeding.

 

    	 	-10-	 

     

    

 

8. Miscellaneous.

 

8.1 Successors
and Assigns. This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the
Investor, as applicable, provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole
or in part to an Affiliate or to a third party acquiring some or all of its Securities in a private transaction without
the prior written consent of the Company, after notice duly given by such Investor to the Company. The provisions of this
Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 

8.2 Counterparts;
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.

 

8.3 Titles
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement.

 

8.4 Notices.
Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by fax, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii)
if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B)
three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall
be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten
days’ advance written notice to the other party:

 

If
to the Company:

 

_________________________

_________________________

Attn: ____________________

 

Fax: ______________________

Tel: ______________________

 

If
to the Investor:

 

GHS
Investments, LLC

200
Stonehinge Lane, Suite 3

Carle Place, NY 11514

 

    	 	-11-	 

     

    

 

8.5 Expenses. The
parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are
commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the
other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly,
pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.

 

8.6 Amendments
and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company
and the Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any
Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.

 

8.7 Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted
as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable
in any respect.

 

8.8 Entire
Agreement. This Agreement, including the Exhibits and the Disclosure Schedules, and the other Transaction Documents
constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede
all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof
and thereof.

 

8.9 Further
Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of
the agreements herein contained.

 

8.10
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of Nevada, without regard to principles of conflicts of law. Each of the parties hereto irrevocably
submit to the exclusive jurisdiction of any United States Federal court sitting in New York State over any action or proceeding
arising out of or relating to this Agreement and the parties hereto hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such Federal court. The parties hereto agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue in the State of New York and any objection to
an action or proceeding in the State of New York on the basis of forum non conveniens.

 

[signature
page follows]

 

    	 	-12-	 

     

    

 

IN
WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as
of the date first above written.

 

	The
    Company:	Vape Holdings, Inc.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

	The
    Investor:	GHS
    Investments, LLC.

 

	 	By:	 
	 	 	Member

 

    	 	-13-	 

     

    

 

Disclosure
Schedules/ Exhibits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-14-

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