Document:

Exhibit 10.5

 

NEITHER THE ISSUANCE NOR SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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: $105,000.00	Issue
Date: August 12, 2015
	Purchase
    Price: $100,000.00	 

  

8% CONVERTIBLE PROMISSORY NOTE

 

FOR VALUE RECEIVED, VAPE
HOLDINGS, INC. a Delaware corporation (hereinafter called the “Borrower”), hereby promises to pay to the order
of DARLING CAPITAL, LLC a New York limited liability company, or registered assigns (the “Holder”) the sum
of One Hundred and Five Thousand ($105,000.00) as set forth herein, on June 12, 2016 (the “Maturity Date”), and to
pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum
from August 12, 2015 until the Note plus any and all accrued interest is paid in full. The Holder will have the option to extend
the Maturity Date an additional nine (9) months. The Holder must inform the Borrower, in writing, within thirty (30) days from
the original Maturity Date of its intent to extend the Maturity Date. Interest shall commence accruing on the date that the Note
is fully paid and shall be computed on the basis of a 360-day year and the actual number of days elapsed. 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 or the
maximum rate permitted under applicable law from the due date thereof until the same is paid (“Default Interest”).
All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”)
in accordance with the terms hereof) 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 Borrower 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.

 

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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 Borrower 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 at any time after 180 days from issuance of the 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 Borrower 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 Borrower 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 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided,
further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder,
not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply
until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). 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, in the
form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance
with Section 1.4 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 Borrower 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 pursuant to Sections 1.3 and
1.4(g) hereof.

 

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1.2.         Conversion Price.

 

a)          Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as
defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating
to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The "Variable Conversion Price" shall mean the 58% multiplied by the
Market Price (as defined herein) “Market Price” means the lowest closing bid Price (as defined below) for the Common
Stock during the Thirteen (13) Trading Day period immediately preceding the Conversion Date (the “Look Back Period”).
“Trading Price” means, for any security as of any date, the closing stock price on the Over-the-Counter Bulletin Board,
or applicable trading market (the “OTCPink”) as reported by a reliable reporting service (“Reporting Service”)
designated by the Holder (i.e. Bloomberg); provided that if the Closing Bid Price for the common stock on the Clearing date (defined
below) is lower than the Closing Bid Price, then the purchase price shall be adjusted such that the Discount shall be taken from
the closing bid price on the Clearing Date, and the company shall issue additional shares to Purchaser to reflect such adjusted
Purchase Price. For purposes of this Agreement, the Clearing Date shall be the latest date on which (i) the conversion shares
are transferred to and deposited into the Buyer's brokerage account by the Company’s representatives or transfer agent and
(ii) Buyer's broker has confirmed with Buyer that the Buyer may execute trades of the conversion shares. If such events occur
after 5:30 PM Eastern Standard Time, the events shall be deemed to have occurred on the next trading day. Upon the exercise of
any conversion, the Holder shall duly notify the Borrower whether principal or interest is being converted. If the Borrower’s
Common stock is chilled for deposit at DTC, becomes chilled at any point while this Agreement remains outstanding or deposit otherwise
additional fees due to a Yield Sign, Stop Sign or other trading restrictions, an additional 10% discount will be attributed to
the Conversion Price defined hereof. For purposes of this agreement, “Trading Day” shall mean any day on which the
Common Stock is tradable for any period on the OTCPink, or on the principal securities exchange or other securities market on
which the Common Stock is then being traded. The company shall bear any and all miscellaneous expenses that may arise as a result
of conversion of the replacement note and the delivery of shares of common stock thereunder including but not limited to transfer
agent fees, rule 144 legal opinion fees and deposit fees. All accrued conversion expenses paid by the holder shall be added to
the amount being converted under the note. No fractional shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded up or down, as the case may be, to the nearest whole share.

 

b)          The
Borrower acknowledges that it will take all reasonable steps necessary or appropriate to issue and deliver the common stock upon
conversion, including providing a board of directors resolution authorizing the issuance of common stock. 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 (3 Trading days) the Borrower
shall pay to the Holder $2,000.00 per day in cash, for each day beyond the Deadline that the Borrower 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 Borrower 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 Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure,
attempt to frustrate, interfere 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.

 

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c)          Conversion Price During Major
Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a
public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower
is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of
the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase
50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause
(i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon
the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the
lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y)
the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion
Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price Termination
Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement
as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the
person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of
the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

1.3.          Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower 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 issued. The Borrower is required at all times to have authorized and reserved one and one
half 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 Borrower’s obligations. Initially, the Company shall reserve Seven Million (7,000,000) shares of
common stock in the name of the Holder. The Borrower represents that upon issuance, such shares will be duly and validly issued,
fully paid and non-assessable. In addition, if the Borrower 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 Borrower 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 Borrower (i)
acknowledges that it has irrevocably instructed 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 Borrower does not maintain the Reserved Amount
it will be considered an Event of Default under Section 3.2 of the Note 

 

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Method of Conversion.

 

a)          Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time
from time to time after 180 days from Issue Date, by (A) submitting to the Borrower 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) and
(B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

 

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 Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower 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 Borrower, 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 Borrower shall, prima facie, be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. 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 Borrower 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 Borrower 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 Borrower the amount
of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

d)          Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower 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 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder
certificates for 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.

 

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e)          Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a duly and properly executed 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 Borrower 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 Borrower’s
obligation to issue and deliver the certificates for 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 Borrower 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 Borrower, and irrespective of any other circumstance which might otherwise
limit such obligation of the Borrower 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 Borrower before 6:00 p.m., New
York, New York time, on such date.

 

f)          Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower 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 Borrower 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 Prime 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 (other than a failure due to the circumstances described in Section

 

h)         1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder

 

i)          $2,000.00 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock through willful
acts designed to hinder the delivery of Common Stock to the Holder. 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 Borrower 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 Borrower 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 1.4(g) are justified.

 

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1.4.          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 Borrower 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 Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who
is an Accredited Investor. (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:

 

“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE 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.”

 

legend set forth above shall be removed and
the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer
agent shall have received an opinion of counsel 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 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 Section 3.2 of this Note.

 

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1.5.         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 Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower 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.

 

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 Borrower shall be changed into the same or a different number
of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance
of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the
Borrower, 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 Borrower 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 Borrower) 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 Borrower 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 Borrower’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.

 

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d)          Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower 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.

 

e)          Protection
Period. In the event that the Borrower issues at any time when this Note is issued and outstanding to any person, group or
entity (during the period that there remains an outstanding balance on the note), subsequent convertible securities bearing a
greater conversion discount and / or longer look back period than that which is stated in this note, then the conversion discount
and / or the look back period will be adjusted to equal the conversion discount and / or look back period of the subsequent convertible
securities. Additionally, notwithstanding anything to the contrary contained in this Note, in the event that the borrower issues
any subsequent convertible securities that would allow for conversion that would result in beneficial ownership by the Holder
of the subsequent convertible securities (and / or its affiliates) of up to 9.99% of the outstanding shares of Common Stock, then
this note shall allow for conversion that would result beneficial ownership by the Holder (and its affiliates) of up to 9.99%. 

 

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 1.5, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower 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.

 

1.6.         Intentionally left blank.

 

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1.7.        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 certificates for 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 Borrower
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 Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions
of this Note and the Borrower 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
Borrower’s failure to convert this Note.

 

1.8.         Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on
the Issue Date the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to
the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section
1.9.  Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of
the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2)
the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On
the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment
Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one
(1) business day prior to the Optional Prepayment Date. If the Borrower exercises its right to prepay the Note, the Borrower shall
make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to 150%, multiplied by 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 Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses
(w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers
an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business
days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this
Section 1.8

 

After the expiration of one hundred
eighty (180) following the date of the Note, the Borrower shall have no right of prepayment.

 

ARTICLE II. CERTAIN COVENANTS 

 

2.1.         Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower 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
Borrower or any warrants, rights or options to purchase or acquire any such shares. 

 

    	10

    	 

    

 

2.2.         Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower 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.

 

2.3.         Timely reporting obligation. So long as the Borrower shall have any obligation under this Note the borrower shall remain
currant in its fillings with the SEC, as required under the Exchange act.

 

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 Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.

 

3.2.         Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens
in writing 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 certificate for 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 Borrower 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 certificate for 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 written 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 Borrower 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 Borrower to its transfer agent.
If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion,
such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.

 

3.3.         Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents and such breach continues for a period of ten (10) days after written notice thereof to the
Borrower from the Holder.

 

3.4.         Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith, 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.

 

    	11

    	 

    

 

3.5.         Receiver or Trustee. The Borrower or any subsidiary of the Borrower 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 Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $30,000, 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 Borrower or any
subsidiary of the Borrower.

 

3.8.         Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCPink
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 Borrower shall fail to comply in any material respect with the reporting requirements
or obligations of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements or obligations
of the Exchange Act.

 

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

 

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

 

3.12.       Maintenance of Assets. The failure by Borrower 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 Borrower 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 unrestated financial statement, have constituted a material adverse effect on
the rights of the Holder with respect to this Note.

 

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

 

3.15.       Reserve Increase and Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent,
the Borrower 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 section 1.3 on the note (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 Borrower and the Borrower. Additionally,
In the event that the Share Reserve has been depleted and Borrower Fails to cause the increase of the number of shares within
3 business days of the reserve being depleted.

 

    	12

    	 

    

 

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 Borrower 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 Holder, 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
Borrower, 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 Borrower to the Holder.

 

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 Borrower 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 BORROWER 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 Borrower 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 Borrower 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.

 

    	13

    	 

    

 

If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and payable, then the default amount shall be added
to the principal balance of the note and the Holder shall have the right at any time, so long as the Borrower remains in default
(and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to
immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount
divided by the Conversion Price then in effect. Upon an Event of Default, interest shall be accrue at a default interest rate
of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted
by law.

 

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 Borrower, to: Vape Holdings, Inc. 21822 Lassen Street, Suite
A Chatsworth, CA 91311 Email: Kylet@vapeholdings.com Darling Capital, LLC, 767 3rd Avenue, Suite 25-1A, New York, NY 10017. Email:
Yehuda@darlingcapital.net

 

4.3.         Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
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 Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined
in Rule 501(a) of the 1933 Act). 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 Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

    	14

    	 

    

 

4.6.         Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any
action brought by either party against the other concerning the transactions contemplated by this Agreement must be brought only
in the civil or state courts of New York or in the federal courts located in the State and county of New York. Both parties and
the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. 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 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 unenforceability
of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing
suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations
to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision
in favor of the Holder. This Note shall be deemed an unconditional obligation of Borrower for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against Borrower by summary proceeding pursuant to New York Civil
Procedure Law and Rules Section 3213 or any similar rule or statute in the jurisdiction where enforcement is sought. For purposes
of such rule or statute, any other document or agreement to which Holder and Borrower are parties or which Borrower delivered
to Holder, which may be convenient or necessary to determine Holder’s rights hereunder or Borrower’s obligations to
Holder are deemed a part of this Note, whether or not such other document or agreement was delivered together herewith or was
executed apart from this Note.

 

4.7.         Certain Amounts. Whenever pursuant to this Note the Borrower 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 Borrower 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 Borrower 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 Borrower 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.         Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the
Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information
relating to the Company or any of its Subsidiaries, the Company shall within one (1) Trading Day after any such receipt or delivery,
publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, non- public information relating to the Company or any of its Subsidiaries, the Company
so shall indicate to such Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to the Company or its Subsidiaries.

 

    	15

    	 

    

 

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 Borrower shall provide the Holder
with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information
sent to shareholders). In the event of any taking by the Borrower 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 Borrower or
any proposed liquidation, dissolution or winding up of the Borrower, the Borrower 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 Borrower 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.

 

4.10.       Remedies. The Borrower 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 Borrower 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 Borrower 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.

  

[signature on following page]

 

    	16

    	 

    

 

IN WITNESS WHEREOF, Borrower has caused this
Note to be signed in its name by its duly authorized officer this day of August 12, 2015. 

 

	 	VAPE HOLDINGS, INC.
	 	 	 
	 	By:	 
	 	 	Name: Kyle Tracey
	 	 	Title:   CEO.

  

    	17

    	 

    

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

TO: VAPE HOLDINGS, INC.

 

 

 

 

VIA EMAIL Attn: CFO or President

 

 

 

 

The undersigned
hereby irrevocably elects to exercise the right, represented by the PROMISSORY NOTE dated as of August 12, 2015 issued by
VAPE HOLDINGS, INC.(the "Note") to convert $___ principal plus accrued interest equal to $___ into shares
("Conversion Shares") of the Common Stock, $0.001 par value ("Common Stock").

 

Dated:

 

Holder's Signature:

 

____________________________________

By: Yehuda Marrus, Director

 

Holder’s Address:

Darling Capital, LLC

767 3rd Avenue, 

25th Floor New York, NY 10017

 

 

Please send shares to:

 

TBD

 

 

18Exhibit
10.6

 

AMENDMENT,
WAIVER AND MODIFICATION TO 

 

SECURITIES
PURCHASE AGREEMENT AND RELATED TRANSACTION DOCUMENTS

 

This
Amendment, Waiver and Modification Agreement to the Securities Purchase Agreement (the “Agreement”) and the
Transaction Documents (as defined in the Securities Purchase Agreement), dated as of February 10, 2015, is entered into by and
between VAPE Holdings, Inc., a Delaware corporation (the “Company”) and the Redwood Management, LLC, including
any designees and assignees thereto identified on Exhibit A to this Agreement (the “Investor”) as of
the date set forth on the signature page hereto.

 

BACKGROUND

 

	(A)	On
    February 10, 2105, the Company and the Investor entered into a Securities Purchase Agreement (as amended, modified, or supplemented
    from time to time, the “Securities Purchase Agreement”), pursuant to which the Company agreed to issue
    and sell to the Investor, and the Investor agreed to purchase from the Company, pursuant to a certain Unsecured Convertible
    Note (the “Note”) in several Closings for an aggregate subscription amount of $2,000,000, on the terms
    and conditions set forth therein.

 

	(B)	At
    Closing of the Securities Purchase Agreement, the Investor paid the Initial Cash Purchase Price of $200,000 (less original
    issue discount (“OID”) and certain transaction expenses) and issued to the Company an offsetting “Investor
    Note” in the principal amount of $1,627,200 (the sum of the initial principal amount of the Investor Note together
    with the Initial Cash Purchase Price, the “Purchase Price”).

 

	(C)	The
    Investor funded three (3) additional Tranches (as defined in the Note) of the Note totaling $600,000 for an aggregate funding
    of $800,000 under the Note. As a result of the funding, the Investor Note balance was reduced down to $1,084,800.

 

	(D)	As
    set forth in the Securities Purchase Agreement, the Note and the Investor Note, interest began accruing at Closing on the
    full $2,000,000 principal balance of the Note and the full principal balance of the Investor Note at a rate of ten percent
    (10.0%) per annum.

 

	(E)	Section
    2.2 of the Note defines the Company’s Amortization Payment Obligations.

 

    	 

    	 

    

 

	(F)	Section
    A.10 of the Note defines “Equity Conditions” as, ...”during the period in question, (a) Borrower
    shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Notices of
    Conversion of Lender, if any, (b) Borrower shall have paid all liquidated damages and other amounts owing to Lender in respect
    of this Note, (c) all of the Conversion Shares issuable pursuant to the Transaction Documents (and shares issuable in lieu
    of cash payments of interest) may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions as determined
    by the counsel to Borrower as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer
    Agent and Lender, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction
    Documents are listed or quoted for trading on such Trading Market (and Borrower believes, in good faith, that trading of the
    Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number
    of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable
    pursuant to the Transaction Documents, (f) there is no existing Event of Default and no existing event which, with the passage
    of time or the giving of notice, would constitute an Event of Default, (g) the issuance of the shares in question to Lender
    would not violate the limitations set forth in Section 10 herein, (h) there has been no public announcement of a pending or
    proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Lender
    is not in possession of any information provided by Borrower that constitutes, or may constitute, material non-public information,
    (j) for each Trading Day in a period of 10 consecutive Trading Days prior to the applicable date in question, the daily dollar
    trading volume for the Common Stock on the principal Trading Market exceeds $20,000 per Trading Day, (i) Borrower’s
    Common Stock must be DTC and DWAC Eligible and not subject to a “DTC Chill” and (j) Borrower has timely filed
    (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by
    Borrower after the date hereof pursuant to the Exchange Act.”

 

	(G)	The
    parties now wish to enter into this Agreement in order to restructure the existing Transaction Documents to define the Parties’
    future rights and obligations.

 

AGREED
TERMS

 

	1.	Definitions and interpretation

 

	1.1	Capitalized
    terms not otherwise defined herein shall have the meanings set forth in the Securities Purchase Agreement.

 

	1.2	The
    Outstanding Balance shall be defined as $800,000 plus accrued but unpaid interest. Any reference to $2,000,000 or calculations
    derived therefrom are hereby replaced with $800,000 and such future calculations must be derived from this new Outstanding
    Balance.

 

	2.	Modification to Sections 2.2 and 2.3 of the Note

 

	2.1	Section 2.2 is deleted in its entirety.

 

	2.2	Section 2.3 is deleted in its entirety.

 

    	2

    	 

    

 

	3.	Modification to Section 3.1 of the Note

 

	3.1	Section
    3.1 of the Note shall be amended by replacing:

 

Conversion
Price. Subject to the adjustments set forth herein, the conversion price for each Conversion (the “Conversion Price”)
shall be 70% (the “Conversion Factor”) of the lowest daily VWAP (as defined below) in the ten (10) Trading
Days immediately preceding the applicable Conversion. Additionally, if at any time after the Effective Date, the Conversion Shares
are not DTC Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future Conversions.
Finally, in addition to the Default Effect, if any Major Default occurs after the Effective Date, the Conversion Factor shall
automatically be reduced for all future Conversions by an additional 5% for each of the first three (3) Major Defaults that occur
after the Effective Date (for the avoidance of doubt, each occurrence of any Major Default shall be deemed to be a separate occurrence
for purposes of the foregoing reductions in Conversion Factor, even if the same Major Default occurs three (3) separate times).
For example, the first time the Conversion Shares are not DTC Eligible, the Conversion Factor for future Conversions thereafter
will be reduced from 70% to 65% for purposes of this example. If, thereafter, there are three (3) separate occurrences of a Major
Default pursuant to Section 4.1 (i) for purposes of this example the Conversion Factor would be reduced by 5% for the first such
occurrence, and so on for each of the second and third occurrences of such Major Default. Notwithstanding the foregoing, in no
event shall the Conversion Factor be less than 50% or the Conversion Price be less than $0.50 (the “Conversion Price
Floor”);

 

	 	 	For:

 

Conversion
Price. Subject to the adjustments set forth herein, the conversion price for each Conversion (the “Conversion Price”)
shall be 55% (the “Conversion Factor”) of the lowest traded price in the fifteen (15) Trading Days immediately
preceding the applicable Conversion. Additionally, if at any time after the Effective Date, the Conversion Shares are not DTC
Eligible, then the then-current Conversion Factor will automatically be reduced by 5% for all future Conversions. Finally, in
addition to the Default Effect, if any Major Default occurs after the Effective Date, the Conversion Factor shall automatically
be reduced for all future Conversions by an additional 5% for each of the first three (3) Major Defaults that occur after the
Effective Date (for the avoidance of doubt, each occurrence of any Major Default shall be deemed to be a separate occurrence for
purposes of the foregoing reductions in Conversion Factor, even if the same Major Default occurs three (3) separate times). For
example, the first time the Conversion Shares are not DTC Eligible, the Conversion Factor for future Conversions thereafter will
be reduced from 55% to 50% for purposes of this example. If, thereafter, there are three (3) separate occurrences of a Major Default
pursuant to Section 4.1(i), then for purposes of this example the Conversion Factor would be reduced by 5% for the first such
occurrence, and so on for each of the second and third occurrences of such Major Default.

 

	4.	Waiver of Certain Accrued Interest

 

The
Company and Investor acknowledge and agree that any offsetting interest previously accrued on the unfunded $2,000,000 principal
sum of the Note and the unfunded $1,627,200 principal sum of the Investor Note is hereby waived due to offsetting interest claims
and is of no further force and effect. For avoidance of doubt, the Investor expressly waives claims to interest on the unpaid
balance of the Note up to and including the date of this Agreement.

 

	5.	Termination of the Investor Note

 

The
Company and Investor agree that, due to the reduction of the Outstanding Balance on the Note from $2,000,000 to $800,000 and the
waiver of offsetting interest claims by the parties, the Investor Note serves no additional purpose and is hereby terminated in
in its entirety. Any reference to the Investor Note is hereby stricken throughout the Transaction Documents; provided, however,
that both parties agree that the Note and the Investor Note are two separate and distinct instruments and the termination of the
Investor Note has no impact, force or effect on the Note.

 

	6.	Waiver of Past Claims for Default

 

The
Company and Investor acknowledge that each party has certain claims against each other for default under their various obligations
under the Transaction Documents and each party desires to waive past claims of default and set forth new terms upon which to continue
their contractual relationship. It is understood and agreed by both parties that this waiver addresses only past defaults up to
the date of this Agreement and does not apply to events which may trigger default provisions in the Transaction Documents in the
future.

 

	7.	Representations and Warranties 

 

The
Company represents and warrants to the Investor as of the date of this Agreement that:

 

	 	(a)	it
    has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated
    by this Agreement;

 

	 	(b)	it
    has taken all necessary corporate actions to authorize the execution, delivery and performance of this Agreement and no further
    action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith; and

 

	 	(c)	the
    obligations assumed by the Company in this Agreement are legal, valid, and enforceable obligations binding on it in accordance
    with its terms.

 

    	3

    	 

    

 

	8.	Counterparts and delivery 

 

This
Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood
that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or
by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

	9.	Governing law

 

This
Agreement shall be governed by and shall be governed by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against
a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding 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 the Securities Purchase 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.

  

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

    	4

    	 

    

 

IN
WITNESS WHEREOF, the Company and the Holder have caused this Amendment, Waiver and Modification to Securities Purchase Agreement
to be signed by their duly authorized officers.

 

		VAPE HOLDINGS, INC.
	 	 	 
	Dated: __________________	By:	 
	 	 	Name:   
	 	 	Title:
	 	 	 
		REDWOOD MANAGEMENT, LLC
	 	 	 
	Dated: __________________	By:	 
	 	 	Name:  John DeNobile
	 	 	Title:    Manager and Member

 

    	5

    	 

    

 

Exhibit
A

 

Redwood
Management LLC

RDW
Capital LLC

Redwood
Fund III, Ltd.

Old
Main Capital, LLC (assignee)

 

 

6

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