Document:

Interest
        free if paid in
        full

        within
        3 months

 

$300,000
CONVERTIBLE NOTE

FOR
VALUE RECEIVED, Avalanche
International, Corp.,
a Nevada corporation
(the “Issuer”
of this Security)
with at
least 5,000,000 common
shares issued
and outstanding,
issues this Security
and promises
to pay to JMJ
Financial, a Nevada
sole proprietorship, or its Assignees
(the “Investor”) the
Principal Sum along with the Interest
Rate and any other fees according
to the terms herein. This Note
will become effective only
upon execution by both parties and delivery
of the first
payment of Consideration by the
Investor (the “Effective
Date”).

The
Principal Sum is
$300,000 (three
hundred thousand)
plus accrued and
unpaid interest and
any other fees. 
The Consideration is $270,000 (two
hundred seventy thousand)
payable by wire
(there exists a
$30,000 original
issue discount (the
“OID”)). The
Investor shall
pay $30,000 of
Consideration upon
closing of this
Note. The Investor may
pay additional Consideration
to the Issuer
in such amounts and at such
dates as the Investor may
choose in its sole discretion. THE
PRINCIPAL SUM DUE TO THE
INVESTOR SHALL BE PRORATED BASED ON THE CONSIDERATION ACTUALLY PAID BY
INVESTOR (PLUS AN APPROXIMATE
10% ORIGINAL ISSUE
DISCOUNT THAT IS
PRORATED BASED ON THE
CONSIDERATION ACTUALLY PAID BY THE INVESTOR AS WELL AS
ANY OTHER INTEREST OR FEES)
SUCH THAT THE ISSUER IS ONLY
REQUIRED TO REPAY THE AMOUNT
FUNDED AND THE ISSUER IS NOT
REQUIRED TO REPAY
ANY UNFUNDED PORTION OF THIS NOTE.
The Maturity Date is two
years from the Effective Date of each payment
(the “Maturity Date”) and
is the date upon which the Principal
Sum of this Note, as well as any unpaid interest and other fees,
shall be due and payable. The
Conversion Price is the
lesser of $1.06 or 60% of the lowest
trade price in the 25 trading
days previous to the
conversion (In the case
that conversion shares are not deliverable by
DWAC an additional 10% discount
will apply; and if the shares are ineligible
for deposit into the
DTC system and only eligible
for Xclearing deposit an additional 5% discount
shall apply; in the case of both
an additional cumulative 15% discount
shall apply). Unless otherwise agreed
in writing by both parties, at no
time will the Investor convert
any amount of the Note into common stock
that would result in the Investor
owning more than 4.99% of the
common stock outstanding.

1.       
ZERO
Percent Interest
for
the First
Three Months.
The Issuer
may repay
this Note at
any time
on or before
90 days
from the
Effective Date,
after which
the Issuer
may not make further payments
on this Note
prior to
the Maturity Date without
written approval from the Investor.
If the Issuer repays a payment
of Consideration on or before 90 days from the Effective Date of that payment,
the Interest
Rate on that
payment of
Consideration shall be
ZERO PERCENT
(0%). If the
Issuer does
not repay
a payment
of Consideration on or
before 90 days
from its Effective
Date, a one-time
Interest charge
of 12% shall
be applied to
the Principal Sum.
Any interest payable
is in addition
to the OID,
and that
OID (or
prorated OID,
if applicable) remains
payable regardless of
time and
manner of payment by
the Issuer.

2.       
Conversion. The
Investor has the right, at
any time
after the Effective
Date, at its
election, to convert
all or part
of the outstanding
and unpaid
Principal Sum and
accrued interest
(and any
other fees)
into shares of
fully paid
and non-assessable
shares of
common stock of
the Issuer
as per this
conversion formula: Number
of shares
receivable upon conversion
equals the
dollar conversion
amount divided by the Conversion
Price. Conversions may be
delivered to the
Issuer by
method of
the Investor’s choice
(including but
not limited to email, facsimile,
mail, overnight courier,
or personal delivery), and all conversions shall
be cashless and not require
further payment from the Investor.
If no objection is delivered from the
Issuer to the Investor regarding
any variable or calculation of the conversion
notice within
24 hours of
delivery of the
conversion notice,
the Issuer
shall have
been thereafter
deemed to have
irrevocably confirmed and irrevocably
ratified such notice
of conversion and waived any objection thereto. The
Issuer shall deliver the shares
from any conversion to the
Investor (in any
name directed
by the Investor)
within 3
(three) business
days of conversion
notice delivery.

3.       
Conversion
Delays.
If the Issuer
fails to deliver
shares in
accordance with
the timeframe
stated in
Section 2, the
Investor, at any
time prior
to selling all
of those shares,
may rescind any
portion, in whole
or in part,
of that particular
conversion attributable to
the unsold
shares and
have the
rescinded conversion amount
returned to
the Principal
Sum with the
rescinded conversion shares returned
to the Issuer
(under the Investor’s
and the
Issuer’s expectations that
any returned conversion amounts
will tack back to
the original
date of the
Note). In addition, for
each conversion, in the event that
shares are not delivered by the
fourth business day
(inclusive of the day
of conversion), a penalty of $2,000 per day will be assessed
for each day after the third
business day (inclusive of the
day of the conversion) until
share delivery is made;
and such penalty will
be added to the
Principal Sum of
the Note (under the
Investor’s and the Issuer’s
expectations that any
penalty amounts will
tack back to the original date of the
Note).

4.       
Reservation
of Shares.
At all times
during which this
Note is
convertible, the Issuer
will reserve
from its authorized and
unissued Common
Stock to provide
for the
issuance of Common
Stock upon the
full conversion
of this Note.
The Issuer
will at
all times
reserve at least
1,000,000 shares
of Common Stock
for conversion.

5.       
Piggyback Registration
Rights. The Issuer
shall include on
the next
registration statement the
Issuer files with
SEC (or on
the subsequent
registration statement if
such registration statement
is withdrawn) all shares
issuable upon conversion of
this Note. Failure to
do so will
result in liquidated
damages of
25% of the
outstanding principal balance
of this Note,
but not
less than $25,000, being immediately due
and payable
to the
Investor at its
election in
the form of
cash payment
or addition to
the balance
of this Note.

6.       
Terms of
Future Financings. So long
as this Note is outstanding,
upon any
issuance by
the Issuer or any
of its subsidiaries of any
security with any
term more favorable
to the
holder of such
security or
with a term
in favor of the
holder of such security
that was
not similarly provided
to the
Investor in
this Note,
then the
Issuer shall
notify the Investor
of such
additional or more
favorable term and
such term, at
the Investor’s
option, shall
become a part
of the transaction
documents with the
Investor. The types
of terms contained
in another security that
may be more
favorable to the
holder of such security
include, but are
not limited
to, terms addressing
conversion discounts, conversion
lookback periods, interest rates,
original issue
discounts, stock
sale price, private placement
price per share, and
warrant coverage.

    	1

    	 

    

 

7.       
Default.
The following
are events of
default under this
Note: (i) the
Issuer shall
fail to pay
any principal under
the Note
when due
and payable
(or payable
by conversion)
thereunder; or (ii)
the Issuer
shall fail
to pay any
interest or
any other amount
under the
Note when due
and payable (or
payable by conversion) thereunder;
or (iii) a
receiver, trustee
or other
similar official
shall be appointed
over the
Issuer or
a material part of its assets
and such appointment shall
remain uncontested for
twenty (20)
days or shall
not be dismissed or
discharged within
sixty (60) days;
or (iv)
the Issuer
shall become insolvent
or generally fails
to pay,
or admits
in writing
its inability to pay,
its debts as they become due,
subject to applicable grace periods, if any;
or (v) the Issuer
shall make a
general assignment for the
benefit of creditors; or (vi) the
Issuer shall file
a petition for relief under any bankruptcy,
insolvency or similar law (domestic
or foreign); or (vii) an involuntary
proceeding shall be commenced or filed
against the Issuer; or (viii) the
Issuer shall lose its status as
“DTC Eligible” or the
Issuer’s shareholders shall lose
the ability to deposit (either electronically or by physical certificates,
or otherwise) shares into
the DTC
System; or
(ix) the
Issuer shall become
delinquent in
its filing
requirements as a
fully-reporting issuer
registered with the
SEC; or (x) the
Issuer shall fail to meet
all requirements to satisfy the availability
of Rule 144 to the
Investor or its assigns including but not
limited to timely
fulfillment of
its filing
requirements as a
fully-reporting issuer
registered with the
SEC, requirements
for XBRL
filings, and
requirements for disclosure
of financial statements on its
website.

8.       
Remedies. In
the event
of any default,
the outstanding
principal amount
of this Note,
plus accrued
but unpaid
interest, liquidated
damages, fees
and other
amounts owing in
respect thereof through
the date of
acceleration, shall
become, at the
Investor’s election,
immediately due and payable
in cash at
the Mandatory
Default Amount.
The Mandatory Default
Amount means
the greater of
(i) the
outstanding principal
amount of
this Note,
plus all
accrued and
unpaid interest,
liquidated damages,
fees and
other amounts
hereon, divided by
the Conversion Price
on the date
the Mandatory Default
Amount is either
demanded or paid
in full, whichever
has a lower Conversion
Price, multiplied
by the VWAP on
the date the
Mandatory Default
Amount is either
demanded or paid in
full, whichever has
a higher VWAP, or (ii) 150% of the outstanding principal amount
of this Note, plus 100%
of accrued and unpaid interest, liquidated damages,
fees and
other amounts
hereon. Commencing five
(5) days
after the
occurrence of any event of
default that
results in
the eventual acceleration of
this Note, the
interest rate on this
Note shall accrue
at an interest
rate equal
to the
lesser of 18%
per annum or the
maximum rate permitted under applicable law. In connection with
such acceleration described herein, the Investor
need not provide, and
the Issuer
hereby waives,
any presentment, demand, protest
or other
notice of
any kind, and
the Investor may
immediately and without expiration
of any grace period enforce
any and all of its rights and remedies
hereunder and all other remedies
available to it under applicable law.
Such acceleration may be rescinded
and annulled
by the Investor at any time
prior to payment hereunder and
the Investor shall
have all rights as a holder
of the note until
such time, if any,
as the Investor receives
full payment pursuant to this
Section

 

8.   
No such
rescission or annulment
shall affect
any subsequent
event of default
or impair
any right
consequent thereon. Nothing
herein shall limit
the Investor’s
right to pursue
any other remedies
available to it at
law or in equity
including, without
limitation, a decree
of specific
performance and/or injunctive
relief with
respect to the
Issuer’s failure
to timely deliver
certificates representing
shares of Common Stock upon conversion
of the Note as required pursuant to
the terms hereof.

9.       
No Shorting.
The Investor
agrees that
so long
as this Note
from the
Issuer to the
Investor remains
outstanding, the Investor
will not
enter into or effect “short sales”
of the Common
Stock or
hedging transaction which
establishes a net
short position with
respect to the
Common Stock
of the Issuer.
The Issuer
acknowledges and
agrees that upon delivery of a
conversion notice
by the Investor,
the Investor immediately owns the
shares of Common Stock described in the
conversion notice and any
sale of those shares issuable under
such conversion notice
would not
be considered
short sales.

10.    
Assignability.
The Issuer
may not
assign this Note.
This Note will
be binding upon the
Issuer and its successors
and will
inure to the
benefit of the
Investor and
its successors and
assigns and may
be assigned
by the
Investor to anyone
without the Issuer’s
approval.

11.    
Governing
Law.
This Note will
be governed by,
and construed and enforced in accordance
with, the
laws of the State of
Nevada, without
regard to the
conflict of laws
principles thereof. Any
action brought
by either
party against
the other
concerning the
transactions contemplated
by this Agreement
shall be
brought only in
the state
courts of Florida or in the
federal courts located in Miami-Dade
County, in the State of Florida.
Both parties and the individuals
signing this Agreement agree
to submit to the jurisdiction
of such courts.

12.    
Delivery of Process
by the Investor
to the
Issuer. In the
event of any
action or proceeding
by the
Investor against
the Issuer,
and only
by the
Investor against the
Issuer, service
of copies of summons
and/or complaint
and/or any other
process which
may be served
in any
such action or
proceeding may
be made by
the Investor via U.S.
Mail, overnight delivery service
such as FedEx or UPS,
email, fax,
or process server,
or by mailing or otherwise
delivering a copy of
such process to
the Issuer
at its last known
attorney as set
forth in its most
recent SEC filing.

13.    
Attorney Fees.
If any
attorney is
employed by
either party with
regard to any
legal or equitable
action, arbitration
or other
proceeding brought
by such
party for
enforcement of
this Note or
because of an
alleged dispute,
breach, default
or misrepresentation in
connection with
any of the
provisions of this
Note, the prevailing
party will be
entitled to recover
from the other
party reasonable attorneys' fees
and other
costs and
expenses incurred, in
addition to any
other relief to
which the
prevailing party
may be
entitled.

14.    
Opinion
of Counsel.
In the event
that an
opinion of counsel
is needed
for any matter
related to this Note,
the Investor has the right
to have
any such opinion
provided by its
counsel. Investor
also has
the right
to have
any such
opinion provided by
Issuer’s counsel.

15.    
Notices. Any
notice required
or permitted hereunder
(including Conversion
Notices) must
be in writing
and either personally
served, sent by
facsimile or email transmission,
or sent by
overnight courier.  Notices
will be deemed
effectively delivered at
the time
of transmission
if by
facsimile or
email, and
if by
overnight courier
the business day
after such
notice is
deposited with the
courier service for
delivery.

    	2

    	 

    

 

Issuer:Investor:

 

/s/
Phili Mansour  

Philip
Mansour

Avalanche
International, Corp.

Chief
Executive Officer and
Director

Date:
 4/24/2015

 

JMJ
Financial

Its
Principal

 

Date:
 

 

 

 

 [Signature
Page to $300,000 Convertible Promissory
Note]

    	3SE
CURED CONVERTIBLE PROMISSORY NOTE

 

	Effective
Date: May
29, 2015	U.S. $252,500.00

 

FOR
 VALUE
 RECEIVED,
 AVALANCHE
 INTERNATIONAL,
 CORP.,
 a  Nevada
 corporation

(“Borrower”),
promises to
pay to TYPENEX
CO-INVESTMENT, LLC, a
Utah limited
liability company,
or its successors
or assigns
(“Lender”), $252,500.00
and any interest, fees,
charges, and late
fees on the
date that
is thirteen
(13) months
after the
Purchase Price
Date (as defined
below) (the
“Maturity Date”)
in accordance with the
terms set forth herein and
to pay interest on the
Outstanding Balance (including all
Tranches (as defined below),
both Conversion Eligible Tranches
(as defined below) and Subsequent
Tranches (as
defined below)
that have
not yet
become Conversion
Eligible Tranches) at
the rate of
ten percent (10%)
per annum from the Purchase Price
Date until the same
is paid in full. This
Secured Convertible Promissory
Note (this “Note”)
is issued and made
effective as of May 29, 2015 (the
“Effective Date”).
This Note
is issued
pursuant to that certain
Securities Purchase
Agreement dated May 29, 2015, as
the same may
be amended from
time to time, by
and between Borrower and Lender
(the “Purchase Agreement”).
All interest calculations
hereunder shall be computed on
the basis of a 360-day year
comprised of twelve (12) thirty
(30) day months, shall
compound daily and shall be payable
in accordance with the
terms of this Note. Certain
capitalized terms used herein
are defined
in Attachment 1 attached
hereto and incorporated herein
by this reference.

 

This
Note carries
an OID
of $22,500.00.
In addition,
Borrower agrees to
pay $5,000.00 to Lender
to cover
Lender’s legal
fees, accounting
costs, due
diligence, monitoring
and other
transaction costs
incurred in
connection with
the purchase
and sale
of this
Note (the
“Transaction Expense
Amount”),
all of
which amount
is included
in the initial
principal balance
of this
Note. The purchase
price for this
Note and the Origination Shares
(as defined in the Purchase
Agreement) shall be $225,000.00
(the “Purchase Price”),
computed as follows: $252,500.00
original principal balance,
less the OID, less the Transaction
Expense Amount.
The Purchase
Price shall
be payable
by delivery
to Borrower at
Closing of the
Investor Notes (as
defined in the Purchase Agreement)
and a wire transfer of immediately
available funds in the amount
of the Initial Cash Purchase
Price (as defined in the Purchase
Agreement).This Note shall
be comprised of four (4) tranches
(each, a “Tranche”),
consisting of (i) an initial
Tranche in an amount equal to $87,500.00
and any interest, costs,
fees or charges accrued thereon
or added thereto under the terms
of this Note and the
other Transaction Documents (as
defined in the Purchase Agreement)
(the “Initial Tranche”),
and (ii) three (3)
additional Tranches, each in
the amount of $55,000.00, plus
any interest, costs,
fees or charges
accrued thereon
or added
thereto under
the terms of
this Note
and the other
Transaction Documents (each,
a “Subsequent Tranche”).
The Initial Tranche shall
correspond to the Initial Cash
Purchase Price, $7,500.00 of
the OID and the Transaction
Expense Amount, and may be converted
any time subsequent
to the
Purchase Price
Date. The first
Subsequent Tranche
shall correspond
to Investor Note #1
and $5,000.00 of the OID,
the second Subsequent Tranche
shall correspond to
Investor Note #2 and $5,000.00
of the OID, and the third
Subsequent Tranche shall correspond
to Investor Note
#3 and
$5,000.00 of
the OID.
Lender’s right
to convert
any portion of
any of  the
Subsequent Tranches
is conditioned
upon Lender’s
payment in
full of the
Investor Note
corresponding to such Subsequent
Tranche (upon the satisfaction
of such condition,
such Subsequent Tranche becomes
a “Conversion
Eligible Tranche”).
In the
event Lender
exercises its Lender
Offset Right (as
defined below) with
respect to
a portion
of an Investor
Note and
pays in
full the remaining
outstanding balance of such
Investor Note,
the Subsequent
Tranche that
corresponds to
such Investor
Note shall
be deemed
to be
a Conversion Eligible Tranche
only for the portion of
such Tranche that was
paid for in cash by Lender
and the portion of such Investor
Note that was
offset pursuant to Lender’s
exercise of the Lender
Offset Right shall
not be included in the
applicable Conversion Eligible
Tranche. For the avoidance
of doubt, subject to the
other terms and conditions hereof,
the Initial Tranche shall
be deemed a Conversion Eligible
Tranche as
of the Purchase
Price Date
for all
purposes hereunder
and may
be converted
in whole or in part
at any time
subsequent to the Purchase
Price Date, and each
Subsequent Tranche that
becomes a Conversion Eligible
Tranche may
be converted
in whole
or in part
at any
time subsequent
to the first
date on which such
Subsequent Tranche becomes a
Conversion Eligible Tranche.
For all purposes hereunder,

    	1

    	 

    

 

 

Conversion
Eligible Tranches
shall be
converted (or
redeemed, as
applicable) in
order of
the lowest-
numbered Conversion
Eligible Tranche
and Conversion
Eligible Tranches
may be converted
(or redeemed,
as applicable)
in one
or more
separate Conversions
(as defined
below), as
determined in
Lender’s sole
discretion. At
all times
hereunder, the
aggregate amount of any
costs, fees
or charges
incurred by or assessable against
Borrower hereunder, including,
without limitation, any fees,
charges or premiums incurred
in connection with an
Event of Default
(as defined below), shall
be added to
the lowest-numbered then-current
Conversion Eligible Tranche.

 

1.                 
Payment;
Prepayment.
Provided there
is an
Outstanding Balance, on
each Installment
Date (as
defined below),
Borrower shall
pay to
Lender an amount
equal to the
Installment Amount
(as defined
below) due
on such
Installment Date
in accordance
with Section
8. All
payments owing
hereunder shall be in lawful
money of the United
States of America or
Conversion Shares (as
defined below), as provided for
herein, and delivered to Lender
at the address
furnished to Borrower for that
purpose. All payments shall be
applied first to (a) costs
of collection, if any,
then to (b) fees and
charges, if any, then to (c)
accrued and unpaid interest,
and thereafter, to (d) principal.
Notwithstanding the foregoing, so long
as Borrower has not received
a Lender Conversion Notice (as
defined below) or an Installment
Notice (as
defined below)
from Lender where the
applicable Conversion Shares
have not yet
been delivered and so long as
no Event of Default has occurred
since the Effective Date (whether
declared by Lender
or undeclared), then
Borrower shall
have the right,
exercisable on not
less than
five

(5)
Trading Days
prior written
notice to
Lender to
prepay the
Outstanding Balance
of this
Note, in
full, in accordance
with this
Section 1.
Any notice
of prepayment
hereunder (an “Optional
Prepayment Notice”)
shall be delivered
to Lender at its
registered address
and shall
state: (i)
that Borrower
is exercising its
right to prepay
this Note,
and (ii)
the date
of prepayment, which
shall be not
less than
five

(5)
Trading Days from
the date of
the Optional
Prepayment Notice.
On the
date fixed
for prepayment
(the “Optional
Prepayment Date”),
Borrower shall
make payment
of the Optional
Prepayment Amount
(as defined
below) to or
upon the order
of Lender
as may
be specified
by Lender
in writing
to Borrower.
If Borrower
exercises its
right to prepay
this Note, Borrower
shall make
payment to
Lender of an
amount in
cash equal to 125% (the
“Prepayment Premium”)
multiplied by the then Outstanding Balance
of this Note
(the “Optional Prepayment
Amount”). In the event
Borrower delivers the Optional
Prepayment Amount to
Lender prior
to the Optional
Prepayment Date
or without
delivering an Optional
Prepayment Notice to Lender
as set forth herein without
Lender’s prior written consent,
the Optional Prepayment Amount
shall not be deemed
to have been paid to
Lender until the Optional Prepayment
Date. Moreover, in
such event
the Optional
Prepayment Liquidated
Damages Amount
will automatically
be added to
the Outstanding Balance of
this Note on the day Borrower
delivers the Optional
Prepayment Amount
to Lender. In the event
Borrower delivers the Optional
Prepayment Amount without an
Optional Prepayment Notice, then
the Optional Prepayment
Date will be deemed to be the
date that is five (5)
Trading Days from the
date that the Optional
Prepayment Amount
was delivered
to Lender. In
addition, if Borrower delivers
an Optional Prepayment Notice
and fails to pay the Optional
Prepayment Amount due
to Lender
within two
(2) Trading Days
following the Optional
Prepayment Date,
Borrower shall
forever forfeit
its right
to prepay this
Note.

 

2.                 
Security.
This Note
is secured
by that
certain Security
Agreement of even
date herewith,
as the
same may
be amended
from time
to time
(the “Security Agreement”),
executed by Borrower
in favor
of Lender encumbering
the Investor
Notes, as
more specifically set
forth in the Security
Agreement, all the
terms and conditions of which
are hereby incorporated
into and made a part
of this Note.

 

		3.	Lender
                                         Optional Conversion.

 

3.1.           
Lender Conversion
Price. Subject
to adjustment
as set
forth in
this Note,
the conversion
price for each
Lender Conversion
(as defined
below) shall
be $1.30
(the “Lender
Conversion Price”).
However, in the
event the
Market Capitalization
falls below
$3,000,000.00 at
any time,
then in
such event
(a) the Lender
Conversion Price for all
Lender Conversions occurring
after the
first date of
such occurrence shall equal
the lower of the Lender Conversion
Price and the Market Price as
of any

 

    	2

    	 

    

 

 

applicable
date of
Conversion,
and
(b) the true-up
provisions of Section
11 below shall
apply to all
Lender Conversions
that occur
after the
first date
the Market
Capitalization falls
below $3,000,000.00,
provided that
all references
to the “Installment
Notice” in Section 11 shall
be replaced
with references
to a “Lender
Conversion Notice” for
purposes of this
Section 3.1, all references
to “Installment Conversion
Shares” in Section 11 shall
be replaced with references
to “Lender Conversion Shares”
for purposes of this Section
3.1, and all references
to the “Installment Conversion
Price” in Section 11 shall
be replaced with references
to the “Lender Conversion
Price” for purposes
of this Section
3.1.

 

3.2.           
Lender Conversions.
Lender has
the right
at any time
after the Purchase
Price Date
until the
Outstanding Balance
has been
paid in full,
including without
limitation (a)
until any Optional
Prepayment Date
(even if
Lender has
received an
Optional Prepayment
Notice) or at
any time
thereafter with
respect to any amount that
is not prepaid, and (b) during
or after
any Fundamental
Default Measuring
Period, at
its election,
to convert
(each instance
of conversion
is referred
to herein
as a “Lender
Conversion”) all or any
part of the Outstanding Balance
into shares (“Lender Conversion
Shares”) of
fully paid
and non-assessable common
stock, $0.001 par value
per share  (“Common
Stock”), of Borrower as per
the following conversion formula:
the number of Lender Conversion Shares
equals the amount being
converted (the “Conversion
Amount”) divided by the
Lender Conversion Price. Conversion
notices in the form attached
hereto as Exhibit A
(each, a “Lender Conversion
Notice”) may
be effectively delivered to Borrower
by any method of Lender’s
choice (including but not limited
to facsimile, email,
mail, overnight
courier, or personal
delivery), and
all Lender
Conversions shall
be cashless and not require
further payment from Lender. Borrower
shall deliver the Lender Conversion
Shares from any Lender Conversion
to Lender in accordance with
Section 9 below.

 

3.3.           
Application
to Installments.
Notwithstanding anything
to the contrary
herein, including
without limitation
Section 8
hereof, Lender
may, in
its sole
discretion, apply all
or any portion
of any Lender
Conversion toward
any Installment
Conversion (as
defined below),
even if
such Installment Conversion
is pending, as determined
in Lender’s sole discretion,
by delivering written notice
of such election (which
notice may be included as
part of the applicable Lender
Conversion Notice) to
Borrower at any date on or prior
to the applicable Installment
Date. In such event,
Borrower may not elect to
allocate such portion
of the Installment Amount
being paid pursuant
to this Section
3.3 in the manner
prescribed in Section 8.3; rather,
Borrower must reduce the
applicable Installment Amount
by the Conversion Amount described
in this Section 3.3.

 

		4.	Defaults
                                         and Remedies.

 

4.1.           
Defaults.
The
following are
events of
default under
this Note
(each, an
“Event of Default”):
(a) Borrower
shall fail
to pay
any principal,
interest, fees,
charges, or
any other
amount when
due and payable
hereunder; or
(b) Borrower
shall fail
to deliver any
Lender Conversion
Shares in accordance
with the terms
hereof; or (c)
Borrower shall fail
to deliver any
Installment Conversion
Shares (as defined below)
or True-Up Shares (as defined
below) in accordance with the
terms hereof; or (d) a receiver,
trustee or
other similar
official shall
be appointed
over Borrower
or a material
part of its
assets and such appointment
shall remain
uncontested for twenty (20) days
or shall
not be
dismissed or
discharged within sixty
(60) days; or (e) Borrower shall
become insolvent or generally
fails to pay, or
admits in
writing its
inability to
pay, its
debts as they
become due, subject
to applicable
grace periods,
if any; or (f) Borrower
shall make a general assignment
for the benefit of creditors;
or (g) Borrower shall
file a petition
for relief under
any bankruptcy, insolvency
or similar law
(domestic or
foreign); or (h)
an involuntary proceeding
shall be commenced or filed against
Borrower; or (i) Borrower shall
default or otherwise
fail to observe or
perform any covenant,
obligation, condition or agreement
of Borrower contained herein
or in any other Transaction Document,
other than those specifically
set forth in this Section
4.1 and Section
4 of the
Purchase Agreement;
or (j) any representation,
warranty or other
statement made
or furnished
by or on
behalf of
Borrower to
Lender herein,
in any Transaction
Document, or otherwise
in connection with
the issuance of
this Note
shall be false,
incorrect, incomplete
or misleading in any material
respect when made or furnished;
or (k) the occurrence
of a Fundamental

 

    	3

    	 

    

 

Transaction
without Lender’s
prior
written
consent;
or (l)
Borrower shall fail
to maintain the
Share Reserve
as required
under the Purchase
Agreement; or (m)
Borrower effectuates a
reverse split of
its Common
Stock without twenty (20) Trading
Days prior
written notice to Lender; or
(n) any money judgment, writ or similar
process shall be entered or filed
against Borrower or any subsidiary of
Borrower or any of its property or other
assets for more than $100,000.00,
and shall remain unvacated,
unbonded or unstayed for a
period of
twenty (20) calendar days
unless otherwise
consented to by Lender;
or (o) Borrower shall
fail to deliver to Lender original
signature pages to all
Transaction Documents within
five

(5)
Trading Days
of the Purchase
Price Date;
or (p)
Borrower shall
fail to be
DWAC Eligible;
or (q)
Borrower shall
fail to
observe or perform
any covenant
set forth
in Section 4 of the
Purchase Agreement.

 

4.2.           
Remedies.
Upon
the
occurrence
of any
Event of
Default, Borrower
shall within
one (1)
Trading Day
deliver written
notice thereof
via facsimile,
email or reputable
overnight courier
(with next
day delivery
specified) (an
“Event of
Default Notice”)
to Lender.
At any time
and from time to
time after
the earlier of Lender’s
receipt of an Event
of Default
Notice and Lender
becoming aware of the occurrence
of any Event of
Default, Lender
may accelerate this
Note by written notice
to Borrower, with the
Outstanding Balance becoming
immediately due and payable
in cash at
the Mandatory Default Amount.
Notwithstanding the foregoing,
at any time following
the occurrence of
any Event of
Default, Lender may,
at its option, elect
to increase the Outstanding
Balance by applying the Default
Effect (subject to the limitation
set forth below) via
written notice to
Borrower without accelerating
the Outstanding Balance,
in which event
the Outstanding Balance shall
be increased
as of the date of
the occurrence of
the applicable Event
of Default pursuant to the
Default Effect, but the
Outstanding Balance shall not
be immediately due
and payable unless so declared
by Lender (for the
avoidance of doubt, if
Lender elects to
apply the Default Effect pursuant
to this sentence,
it shall reserve
the right to declare
the Outstanding Balance
immediately due and payable
at any time
and no such
election by Lender
shall be
deemed to be a waiver of
its right to declare
the Outstanding Balance immediately
due and payable as set forth
herein unless otherwise agreed
to by Lender in writing).
Notwithstanding the foregoing,
upon the occurrence of any
Event of Default described
in clauses (d), (e),
(f), (g) or (h) of Section
4.1, the Outstanding Balance
as of the date of
acceleration shall become
immediately and automatically due
and payable in cash at the
Mandatory Default Amount, without
any written notice required
by Lender. At any time
following the occurrence of any
Event of Default, upon written
notice given by Lender to Borrower,
interest shall accrue
on the Outstanding Balance beginning
on the date the applicable
Event of Default occurred
at an interest
rate equal to
the lesser
of 22%
per annum or the
maximum rate permitted
under applicable
law (“Default Interest”);
provided, however,
that no
Default Interest
shall accrue during the Fundamental
Default Measuring
Period. Additionally, following
the occurrence
of any Event
of Default, Borrower
may, at its
option, pay any
Lender Conversion in
cash instead
of Lender Conversion
Shares by paying to Lender on
or before the applicable
Delivery Date (as defined below)
a cash amount equal to the
number of Lender
Conversion Shares
set forth
in the
applicable Lender
Conversion Notice
multiplied by
the highest intra-day
trading price of
the Common
Stock that occurs
during the period beginning
on the date the applicable Event
of Default occurred
and ending on the date of the
applicable Lender Conversion
Notice. In connection
with acceleration
described herein,
Lender need
not provide,
and Borrower
hereby waives, any
presentment, demand, protest
or other notice of
any kind, and Lender
may immediately and without
expiration of any grace period
enforce any and all of its
rights and remedies hereunder
and all other
remedies available
to it under
applicable law. Such acceleration
may be
rescinded and
annulled by Lender at
any time
prior to
payment hereunder
and Lender shall
have all
rights as
a holder
of the Note
until such time,
if any, as Lender receives
full payment pursuant to this
Section 4.2. No
such rescission or annulment
shall affect
any subsequent
Event of Default
or impair
any right
consequent thereon.
Nothing herein shall limit
Lender’s right to
pursue any other remedies
available to it at law or in
equity including, without
limitation, a decree of specific
performance and/or injunctive
relief with respect
to Borrower’s failure
to timely deliver
Conversion Shares
upon Conversion
of the
Notes as required
pursuant to the terms hereof.

 

4.3.           
Fundamental Default
Remedies. Notwithstanding anything to the contrary
herein, in addition
to all
other remedies
set forth
herein, after
giving effect to
the Lender
Offset Right
(as defined

    	4

    	 

    

 

below),
which shall
occur automatically
upon the
occurrence of any
Fundamental Default,
the Fundamental
Liquidated Damages
Amount shall
be added
to the
Outstanding Balance
upon Lender’s
delivery to
Borrower of
a notice
(which notice
Lender may
deliver to
Borrower at
any time
following the occurrence
of a Fundamental Default) setting
forth its election to declare
a Fundamental Default and the
Fundamental Liquidated Damages Amount
that will be added
to the Outstanding Balance.

 

4.4.           
Certain
Additional
Rights.
Notwithstanding anything
to the
contrary herein,
in the event
Borrower fails to
make any payment
or otherwise to deliver
any Conversion Shares
as and when required
under this
Note, then
(a) the
Lender Conversion
Price for
all Lender
Conversions occurring
after the
date of
such failure
to pay
shall equal
the lower
of the Lender
Conversion Price
and the
Market Price
as of any
applicable date
of Conversion,
and (b)
the true-up
provisions of
Section 11
below shall
apply to all Lender
Conversions that occur after
the date of such
failure to pay, provided
that all references
to the “Installment
Notice” in
Section 11
shall be
replaced with
references to a
“Lender Conversion
Notice” for purposes
of this
Section 4.4, all
references to “Installment
Conversion Shares” in
Section 11 shall
be replaced
with references
to “Lender
Conversion Shares”
for purposes
of this
Section 4.4, and
all references to the
“Installment Conversion Price”
in Section 11 shall be
replaced with references
to the “Lender Conversion
Price” for purposes of this
Section 4.4. For the avoidance of
doubt, Lender’s exercise
of the rights granted
to it pursuant to this Section
4.4 shall not relieve Borrower
of its obligation to
continue paying the Installment
Amount on all
future Installment
Dates.

 

4.5.           
Cross
Default.
A breach
or default
by Borrower
of any
covenant or other
term or condition
contained in any
Other Agreements
shall, at
the option
of Lender,
be considered
an Event
of Default
under this
Note, in
which event
Lender shall
be entitled
(but in
no event required)
to apply
all rights
and remedies of Lender
under the terms of this
Note.

 

5.                 
Unconditional
Obligation;
No
Offset.
Borrower acknowledges
that this
Note is
an unconditional,
valid, binding
and enforceable
obligation of
Borrower not
subject to offset
(except as set
forth in Section
20 below),
deduction or
counterclaim of
any kind.
Borrower hereby
waives any rights
of offset
it now
has or may
have hereafter
against Lender,
its successors and assigns, and
agrees to make
the payments or Conversions
called for herein in accordance
with the terms of
this Note.

 

6.                 
Waiver.
No
waiver
of any
provision of
this Note
shall be effective
unless it
is in
the form
of a writing
signed by the
party granting
the waiver.
No waiver
of any
provision or
consent to
any prohibited
action shall
constitute a
waiver of
any other
provision or
consent to
any other
prohibited action, whether
or not similar.
No waiver or consent
shall constitute a continuing
waiver or consent or commit a party
to provide a waiver or consent
in the future except to
the extent specifically set
forth in writing.

 

		7.	Rights
                                         Upon Issuance
                                         of Securities.

 

7.1.           
Subsequent
Equity
Sales.
Except with
respect to Excluded
Securities, if Borrower
or any subsidiary
thereof, as
applicable, at
any time
this Note
is outstanding,
shall sell,
issue or
grant any
Common Stock,
option to purchase
Common Stock,
right to
reprice, preferred
shares convertible into
Common Stock, or debt, warrants,
options or other
instruments or securities to Lender
or any third party which
are convertible into or exercisable
for shares of Common
Stock (collectively, the “Equity Securities”),
including without limitation
any Deemed Issuance,
at an effective price
per share less than the
then effective
Lender Conversion
Price (such
issuance is referred
to herein
as a “Dilutive Issuance”),
then, the Lender Conversion
Price shall be automatically
reduced and only reduced to equal
such lower effective
price per share. If
the holder of any Equity Securities
so issued shall at any time,
whether by operation of purchase
price adjustments,
reset provisions, floating
conversion, exercise or exchange
prices or otherwise, or due to
warrants, options, or rights per
share which are issued in
connection with such Dilutive
Issuance, be entitled to receive
shares of Common Stock at an effective
price per share that
is less than the Lender Conversion
Price, such issuance shall
be deemed to have occurred for
less than the

 

    	5

    	 

    

 

Lender
Conversion Price
on the
date of such
Dilutive Issuance,
and the
then effective
Lender Conversion
Price shall
be reduced
and only
reduced to
equal such
lower effective
price per
share. Such
adjustments described
above to the
Lender Conversion
Price shall
be permanent
(subject to
additional adjustments
under this section),
and shall be made
whenever such Equity Securities are issued.
Borrower shall notify
Lender, in writing, no later
than the Trading
Day following
the issuance of any Equity
Securities subject
to this Section 7.1, indicating
therein the applicable issuance
price, or applicable reset price,
exchange price, conversion
price, or other
pricing terms
(such notice,
the “Dilutive
Issuance Notice”).
 For purposes of clarification,
whether or not Borrower
provides a Dilutive Issuance Notice
pursuant to this Section 7.1,
upon the occurrence of any Dilutive
Issuance, on the date of such
Dilutive Issuance the
Lender Conversion Price shall
be lowered to equal
the applicable effective price
per share regardless of
whether Borrower or
Lender accurately
refers to such
lower effective price
per share in any Installment
Notice or Lender Conversion Notice.

 

7.2.           
Adjustment
of Lender
Conversion Price
upon Subdivision
or Combination
of Common
Stock.
Without limiting
any provision
hereof, if
Borrower at any
time on or
after the
Effective Date
subdivides (by any
stock split,
stock dividend,
recapitalization or
otherwise) one
or more
classes of
its outstanding
shares of
Common Stock
into a greater
number of shares,
the Lender
Conversion Price
in effect
immediately prior to
such subdivision will be
proportionately reduced. Without
limiting any provision hereof,
if Borrower
at any time on
or after
the Effective
Date combines (by combination,
reverse stock split or otherwise)
one or more classes of its
outstanding shares of Common Stock
into a smaller number of shares,
the Lender Conversion Price
in effect immediately prior
to such combination will
be proportionately increased. Any
adjustment pursuant to this
Section 7.2 shall become effective
immediately after the effective date
of such subdivision or combination.
If any event
requiring an adjustment under
this Section 7.2 occurs during
the period that a Lender
Conversion Price is calculated
hereunder, then
the calculation
of such Lender
Conversion Price
shall be adjusted appropriately
to reflect
such event.

 

7.3.           
Other Events.
In the
event that
Borrower (or any subsidiary)
shall take
any action to
which the
provisions hereof
are not strictly
applicable, or,
if applicable,
would not
operate to
protect Lender
from dilution
or if
any event
occurs of
the type
contemplated by the
provisions of
this Section
7 but not
expressly provided
for by such provisions
(including, without limitation,
the granting of
stock appreciation
rights, phantom
stock rights
or other
rights with
equity features),
then Borrower’s
board of directors
shall in good faith
determine and implement an appropriate
adjustment in the Lender Conversion
Price so
as to
protect the
rights of
Lender, provided
that no
such adjustment pursuant
to this
Section 7.3
will increase the
Lender Conversion Price as
otherwise determined pursuant
to this Section
7, provided further that
if Lender does not accept
such adjustments as appropriately
protecting its interests hereunder
against such dilution,
then Borrower’s
board of
directors and
Lender shall agree,
in good
faith, upon
an independent investment
bank of nationally recognized
standing to make such appropriate
adjustments, whose determination
shall be final and
binding and whose
fees and expenses
shall be borne by Borrower.

 

		8.	Borrower
                                         Installments.

 

8.1.           
Installment
Conversion
Price.
Subject to
the adjustments
set forth
herein, the
conversion price
for each
Installment Conversion
(the “Installment
Conversion Price”)
shall be the
lesser of (a)
the Lender Conversion Price,
and (b) the
Market Price.

 

8.2.           
Installment
Conversions.
Beginning on
the date
that is
six (6)
months after
the Purchase
Price Date
and on
the same
day of each
month thereafter
until the
Maturity Date
(each, an
“Installment Date”),
if paying
in cash, Borrower
shall pay to
Lender the
applicable Installment
Amount due on
such date
subject to
the provisions
of this
Section 8, and if
paying in Installment
Conversion Shares (as
defined below), Borrower
shall deliver such
Installment Conversion
Shares on or before the Delivery
Date. Payments of each Installment
Amount may be
made (a) in cash, or (b) by converting
such Installment Amount into
shares of Common Stock (“Installment
Conversion Shares”,
and together with

    	6

    	 

    

 

the
Lender Conversion
Shares, the
“Conversion Shares”)
in accordance
with this
Section 8 (each
an “Installment
Conversion”)
per the
following formula:
the number of
Installment Conversion
Shares equals
the portion
of the applicable
Installment Amount being
converted divided
by the Installment
Conversion Price, or (c) by any
combination of the foregoing,
so long as the cash is delivered
to Lender on the applicable
Installment Date and the Installment
Conversion Shares are delivered
to Lender on or before
the applicable Delivery Date.
Notwithstanding the foregoing, Borrower
will not be entitled to elect
an Installment Conversion with
respect to any portion of any applicable Installment
Amount and shall be required to
pay the entire amount
of such Installment Amount in
cash if on the applicable Installment
Date there is an Equity
Conditions Failure, and such
failure is not waived in writing by Lender. Moreover,
in the event Borrower desires
to pay all or any portion of
any Installment Amount in cash,
it must notify
Lender in writing of such election
and the portion of the applicable
Installment Amount it elects
to pay in cash not more
than twenty-five (25) or less
than fifteen (15)
Trading Days prior to
the applicable Installment
Date. If Borrower fails to so
notify Lender, it shall not be permitted
to elect to pay any portion of
such Installment
Amount in cash unless
otherwise agreed to
by Lender in writing
or proposed
by Lender in an Installment
Notice delivered by Lender
to Borrower. Notwithstanding
the foregoing
or anything to the contrary
herein, Borrower shall only
be obligated to deliver Installment
Amounts with respect to Tranches
that have become Conversion Eligible
Tranches and shall have no obligation
to pay to Lender any Installment Amount with
respect to any Tranche that has
not become a Conversion Eligible Tranche.
In furtherance thereof, in the
event Borrower has repaid all
Conversion Eligible Tranches
pursuant to the terms
of this Note, it shall
have no further obligations to
deliver any Installment Amount
to Lender unless and until
any Subsequent Tranche that
was not previously a Conversion
Eligible Tranche becomes
a Conversion Eligible Tranche
pursuant to the terms of this
Note. Notwithstanding that failure
to repay this Note
in full by the Maturity
Date is an Event
of Default, the Installment
Dates shall continue
after the Maturity
Date pursuant to this Section
8 until the Outstanding Balance
is repaid in full, provided
that Lender shall, in Lender’s
sole discretion, determine the
Installment Amount for each Installment
Date after the Maturity Date.

 

8.3.           
Allocation
of
Installment
Amounts.
Subject to
Section 8.2
regarding an
Equity Conditions
Failure, for each
Installment Date,
Borrower may
elect to
allocate the
amount of
the applicable
Installment Amount
between cash
and via an
Installment Conversion,
by email or fax
delivery of a notice
to Lender substantially
in the form attached hereto
as Exhibit B (each,
an “Installment
Notice”), provided, that
to be effective, each applicable
Installment Notice must be received
by Lender not more than twenty-five
(25) or less than
fifteen (15) Trading Days
prior to the applicable Installment
Date. If
Lender has
not received an
Installment Notice
within such time
period, then
Lender may prepare the Installment
Notice and deliver the same to
Borrower by fax or
email. Following its
receipt of such Installment
Notice, Borrower
may either ratify
Lender’s proposed allocation in the
applicable Installment Notice
or elect to change the
allocation by written notice to Lender
by email or fax on or before
12:00 p.m.
New York time
on the applicable Installment
Date, so long as the sum of
the cash payments and
the amount
of Installment Conversions equal
the applicable Installment Amount,
provided that Lender must approve
any increase to the
portion of the Installment Amount
payable in cash. If Borrower
fails to notify Lender of its
election to change the allocation
prior to the deadline set
forth in the previous sentence
(and seek approval
to increase the amount
payable in cash), it shall
be deemed to have ratified
and accepted the allocation
set forth in the
applicable Installment Notice
prepared by Lender. If
neither Borrower nor
Lender prepare and deliver to
the other party an Installment
Notice as outlined above, then Borrower
shall be deemed to have elected
that the entire Installment
Amount be converted via
an Installment Conversion. Borrower
acknowledges and agrees that
regardless of which party prepares
the applicable Installment Notice,
the amounts and calculations
set forth thereon are subject
to correction or adjustment
because of error, mistake,
or any adjustment
resulting from an Event
of Default or
other adjustment permitted
under the Transaction Documents
(an “Adjustment”). Furthermore,
no error or mistake
in the preparation of such notices,
or failure to apply
any Adjustment that could
have been applied prior
to the preparation of an Installment
Notice may be deemed a waiver
of Lender’s right to enforce
the terms of any Note, even
if such error, mistake, or
failure to include an Adjustment
arises from Lender’s own
calculation. Borrower

    	7

    	 

    

 

shall
deliver
the
Installment
Conversion
Shares
from any
Installment Conversion
to Lender
in accordance
with Section 9
below on or before
each applicable Delivery
Date.

 

9.                 
Method
of Conversion
Share Delivery.
On or before
the close
of business
on the
third (3rd)
Trading Day
following the Installment
Date or
the third
(3rd) Trading
Day following
the date
of delivery
of a Lender
Conversion Notice,
as applicable
(the “Delivery
Date”),
Borrower shall, provided
it is DWAC Eligible
at such time, deliver or cause
its transfer agent to deliver
the applicable Conversion
Shares electronically via
DWAC to the account
designated by Lender in the
applicable Lender
Conversion Notice
or Installment
Notice. If Borrower
is not DWAC
Eligible, it shall
deliver to
Lender or its broker
(as designated in the Lender
Conversion Notice or Installment
Notice, as applicable), via reputable
overnight courier, a certificate
representing the number of shares
of Common Stock
equal to the number of Conversion
Shares to which Lender
shall be entitled, registered
in the name of Lender
or its designee.
For the avoidance of doubt,
Borrower has not met
its obligation to deliver
Conversion Shares by the Delivery
Date unless Lender or its
broker, as
applicable, has
actually received the
certificate representing the applicable
Conversion Shares no
later than the close of
business on
the relevant Delivery Date
pursuant to the terms set
forth above.

 

10.             
Conversion
Delays.
If
Borrower
fails
to deliver
Conversion Shares
or True-Up
Shares in accordance
with the timeframes
stated in Sections
9 or 11,
as applicable,
Lender, at
any time
prior to selling
all of
those Conversion
Shares or True-Up
Shares, as applicable,
may rescind in
whole or
in part that particular
Conversion attributable to the
unsold Conversion Shares
or True-Up Shares, with a corresponding
increase to the Outstanding
Balance (any returned amount
will tack back to the Purchase
Price Date
for purposes
of determining the holding
period under
Rule 144
under the
Securities Act
of 1933, as amended
(“Rule 144”)).
In addition, for each
Lender Conversion, in the event
that Lender Conversion Shares
are not delivered by the fourth
Trading Day (inclusive of the day of the Lender
Conversion), a late fee equal
to the greater of (a)
$500.00 and (b) 2% of the
applicable Lender Conversion
Share Value
rounded to
the nearest
multiple of
$100.00 (but in
any event
the cumulative
amount of such
late fees for each Lender Conversion
shall not exceed 200% of the applicable
Lender Conversion Share Value)
will be assessed for each
day after the third
Trading Day (inclusive
of the day of the Lender Conversion)
until Lender Conversion Share
delivery is made; and such late
fee will be added
to the Outstanding Balance (such
fees, the “Conversion Delay Late
Fees”). For illustration
purposes only, if Lender delivers
a Lender Conversion Notice
to Borrower pursuant
to which Borrower is
required to deliver 100,000 Lender
Conversion Shares to Lender
and on the Delivery Date
such Lender Conversion Shares
have a Lender
Conversion Share
Value of
$20,000.00 (assuming
a Closing Trade
Price on
the Delivery Date
of $0.20
per share
of Common
Stock), then
in such event
a Conversion
Delay Late
Fee in
the amount of $500.00 per
day (the greater of $500.00 per
day and $20,000.00 multiplied
by 2%, which is

$400.00)
would be added
to the Outstanding Balance
of the Note until
such Lender Conversion
Shares are delivered
to Lender.
For purposes
of this
example, if
the Lender
Conversion Shares
are delivered
to Lender twenty
(20) days
after the
applicable Delivery
Date, the
total Conversion
Delay Late Fees
that would be added
to the Outstanding Balance
would be $10,000.00 (20 days
multiplied by $500.00 per
day). If the Lender
Conversion Shares are
delivered to Lender one
hundred (100) days after
the applicable Delivery Date,
the total Conversion Delay
Late Fees that would
be added to the Outstanding
Balance would be $40,000.00
(100 days multiplied
by $500.00 per day, but capped
at 200% of the Lender Conversion
Share Value).

 

11.             
True-Up.
On
the date
that is
twenty (20)
Trading Days
(a “True-Up Date”)
from each date
that the
Installment Conversion
Shares delivered
by Borrower
to Lender
become Free
Trading, there
shall be
a true-up where Borrower
shall deliver to
Lender additional Installment
Conversion Shares (“True-Up
Shares”) if the
Installment Conversion Price
as of
the True-Up Date
is less
than the
Installment Conversion Price
used in the
applicable Installment Notice.
In such event, Borrower shall deliver
to Lender within three
(3) Trading Days of the True-Up
Date (the “True-Up
Share Delivery Date”)
a number
of True-Up
Shares equal
to the difference
between the number
of Installment Conversion
 Shares 
that would 
have been delivered
 to  Lender
 on  the 
True-Up Date 
based  on 
the

    	8

    	 

    

 

Installment
Conversion Price
as of
the
True-Up
Date
and the
number of
Installment Conversion
Shares originally
delivered to
Lender pursuant
to the
applicable Installment
Notice. For the
avoidance of
doubt, if
the Installment Conversion
Price as of the
True-Up Date
is higher than
the Installment Conversion
Price set forth in
the applicable
Installment Notice,
then Borrower
shall have
no obligation
to deliver
True-Up Shares to Lender, nor
shall Lender have any obligation
to return any excess Installment
Conversion Shares
to Borrower
under any circumstance.
For the
convenience of
Borrower only,
Lender may,
in its sole discretion,
deliver to Borrower a notice
(pursuant to a form of notice substantially
in the form attached hereto
as Exhibit C) informing
Borrower of the number of True-Up
Shares it is obligated to
deliver to Lender as of any given
True-Up Date, provided
that if Lender does not
deliver any such notice, Borrower
shall not be relieved of its
obligation to deliver True-Up
Shares pursuant to this Section
11. Notwithstanding the foregoing,
if Borrower fails to
deliver any required
True-Up Shares on or
before any applicable
True-Up Share Delivery
Date, then in such
event the Outstanding Balance
of this Note will
automatically increase by
a sum equal to the number of True-Up
Shares deliverable as of the applicable
True-Up Date multiplied
by the Market Price
for the Common Stock as of the
applicable True-Up Date (under
Lender’s and Borrower’s
expectations that
any such
increase will
tack back to
the Purchase
Price Date
for purposes of determining
the holding period
under Rule 144).

 

12.             
Ownership
Limitation.
Notwithstanding anything
to the contrary
contained in this
Note or
the other Transaction Documents,
if at
any time Lender
shall or
would be issued shares
of Common
Stock under any
of the
Transaction Documents,
but such
issuance would
cause Lender
(together with
its affiliates)
to beneficially
own a
number of shares exceeding
4.99% of the
number of
shares of Common
Stock outstanding on such date
(including for such
purpose the shares of Common
Stock issuable upon such issuance)
(the “Maximum Percentage”),
then Borrower must
not issue to Lender shares
of Common Stock which would
exceed the Maximum Percentage.
For purposes of
this section, beneficial
ownership of Common
Stock will be
determined pursuant
to Section
13(d) of
the 1934 Act.
The shares
of Common
Stock issuable to Lender that
would cause the
Maximum Percentage
to be exceeded
are referred to
herein as
the “Ownership
Limitation Shares”.
Borrower will
reserve the Ownership
Limitation Shares for
the exclusive benefit of
Lender. From time
to time, Lender may
notify Borrower in writing of
the number of the Ownership
Limitation Shares that
may be issued to Lender without
causing Lender to exceed the
Maximum Percentage. Upon
receipt of such notice, Borrower
shall be unconditionally obligated
to immediately issue such designated
shares to Lender, with a corresponding
reduction in the number of the
Ownership Limitation Shares.
Notwithstanding the forgoing,
the term
“4.99%” above shall
be replaced with “9.99%”
at such time as the Market Capitalization
is less than $10,000,000.00.
Notwithstanding any other provision contained
herein, if the term “4.99%” is replaced
with “9.99%” pursuant
to the preceding sentence,
such increase to “9.99%”
shall remain at 9.99% until
increased, decreased or
waived by
Lender as
set forth
below. By
written notice
to Borrower,
Lender may increase,
decrease or waive the Maximum
Percentage as to itself
but any such waiver
will not be
effective until the
61st day after delivery thereof.
The foregoing 61-day notice requirement
is enforceable, unconditional
and non-waivable and shall
apply to all
affiliates and assigns of
Lender.

 

13.             
Payment
of Collection
Costs. If
this Note
is placed
in the hands
of an
attorney for collection
or enforcement
prior to
commencing arbitration
or legal
proceedings, or
is collected 
or enforced
through any arbitration
or legal
proceeding, or
Lender otherwise
takes action
to collect
amounts due under
this Note
or to enforce
the provisions
of this
Note, then
Borrower shall
pay the costs
incurred by Lender for such
collection, enforcement or action
including, without limitation,
attorneys’ fees and disbursements.
Borrower also agrees to pay for
any costs, fees or charges
of its transfer agent
that are charged
to Lender pursuant
to any Conversion or
issuance of shares
pursuant to this Note.

 

14.             
Opinion
of Counsel.
In the
event that
an opinion
of counsel
is needed
for any
matter related
to this
Note, Lender
has the right
to have
any such opinion
provided by its
counsel. Lender
also has the right
to have any such
opinion provided
by Borrower’s counsel.

    	9

    	 

    

 

15.             
Governing
Law.
This Note
shall be construed
and enforced
in accordance
with, and
all questions
concerning the construction,
validity, interpretation
and performance
of this
Note 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.

 

		16.	Resolution
                                         of
                                         Disputes.

 

16.1.       
Arbitration
of Disputes.
By its
acceptance of
this Note,
each party
agrees to
be bound
by the Arbitration
Provisions (as
defined in
the Purchase
Agreement) set
forth as
an exhibit
to the
Purchase Agreement.

 

16.2.       
Calculation Disputes. Notwithstanding
the Arbitration
Provisions, in
the case of a
dispute as
to any Calculation
(as defined
in the Purchase
Agreement), such dispute
will be
resolved in
the manner
set forth
in the Purchase Agreement.

 

17.             
Cancellation.
After
repayment
or
conversion
of
the
entire
Outstanding Balance (including
without limitation
delivery of True-Up
Shares pursuant
to the
payment of
the final
Installment Amount,
if applicable),
this Note
shall be
deemed paid
in full,
shall automatically
be deemed
canceled, and
shall not be reissued.

 

18.             
Amendments. The
prior written
consent of
both parties
hereto shall
be required
for any change
or amendment
to this Note.

 

19.             
Assignments.
Borrower
may
not assign
this Note
without the
prior written
consent of
Lender. This
Note and any
shares of
Common Stock issued
upon conversion
of this
Note may
be offered,
sold, assigned or
transferred by Lender
without the
consent of Borrower.

 

20.             
Offset
Rights.
Notwithstanding anything
to the
contrary herein
or in any
of the
other Transaction
Documents, (a)
the parties
hereto acknowledge
and agree
that Lender
maintains a right
of offset
pursuant to
the terms
of the
Investor Notes
that, under
certain circumstances,
permits Lender to deduct
amounts owed by Borrower under
this Note from amounts otherwise
owed by Lender under
the Investor Notes
(the “Lender Offset
Right”), and (b) at
any time Borrower shall
be entitled to deduct
and offset any amount owing
by the initial Lender under
the Investor Notes from
any amount owed by
Borrower under this
Note (the “Borrower
Offset Right”).
In order to exercise the
Borrower Offset Right,
Borrower must deliver
to Lender (a) a completed and
signed Borrower Offset Right
Notice in the form
attached hereto
as Exhibit D,
(b) the original
Investor Note
being offset
marked “cancelled”
or, in the
event the applicable Investor
Note has been
lost, stolen or destroyed,
a lost
note affidavit in
a form reasonably
acceptable to Lender, and
(c) a check payable to Lender
in the amount of $250.00.
In the event that
Borrower’s exercise of the Borrower
Offset Right results in
the full satisfaction
of Borrower’s obligations
under this Note, Lender
shall return the original Note
to Borrower marked “cancelled”
or, in the event this Note
has been lost, stolen or destroyed,
a lost note affidavit in a form
reasonably acceptable to Borrower.
For the avoidance of
doubt, Borrower shall
not incur any Prepayment Premium
set forth in
Section 1 hereof with
respect to any portions of this
Note that are
satisfied by way of a Borrower
Offset Right.

 

21.             
Time is
of the
Essence.
Time is
expressly made
of the
essence with
respect to each
and every
provision of this
Note and the documents and
instruments entered into
in connection herewith.

    	10

    	 

    

 

22.             
Notices.
Whenever
notice
is required
to be given
under this
Note, unless
otherwise provided
herein, such
notice shall
be given
in accordance
with the
subsection of
the Purchase
Agreement titled “Notices.”

 

23.             
Liquidated
Damages.
Lender and
Borrower agree
that in the
event Borrower
fails to
comply with
any of the
terms or
provisions of
this Note,
Lender’s damages
would be
uncertain and
difficult (if not
impossible) to accurately
estimate because of
the parties’ inability
to predict future
interest rates, future share
prices, future trading volumes
and other relevant factors. Accordingly,
Lender and Borrower agree
that any fees, balance adjustments,
Default Interest or other
charges assessed under this
Note are
not penalties
but instead
are intended
by the parties
to be,
and shall be
deemed, liquidated
damages (under Lender’s and
Borrower’s expectations that any
such liquidated damages will
tack back to the Purchase Price
Date for purposes
of determining the
holding period under
Rule 144).

 

24.             
Waiver
of
Jury Trial.
EACH OF
LENDER AND
BORROWER IRREVOCABLY
WAIVES ANY
AND ALL
RIGHTS SUCH
PARTY 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
SUCH PARTY
IS KNOWINGLY
AND VOLUNTARILY WAIVING SUCH
PARTY’S RIGHT TO DEMAND TRIAL
BY JURY.

 

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

    	11

    	 

    

 

 

Date.

IN
WITNESS WHEREOF,
Borrower has
caused this Note
to be
duly executed as of the
Effective

 

BORROWER:

AVALANCHE
INTERNATIONAL, CORP.

 

 

By:
/s/ Phil Mansour

Name:
Phil  Mansour

Title:
 Ceo  

 

ACKNOWLEDGED,
ACCEPTED AND AGREED:

LENDER:

TYPENEX
CO-INVESTMENT, LLC

 

By:
Red Cliffs Investments, Inc., its Manager

 

/s/ John
M. Fife

John M.
Fife, President

 

    	12

    	 

    

 

ATTACHMENT
1 DEFINITIONS

 

For
purposes of this
Note, the following
terms shall
have the
following meanings:

 

A1.
“Adjusted Outstanding
Balance” means
the Outstanding Balance
of this Note
as of
the date
the applicable
Fundamental Default
occurred less
any Conversion Delay
Late Fees
included in such
Outstanding Balance.

A2.
“Approved Stock
Plan” means
any stock
option plan which
has been approved
by the
board of directors
of Borrower and
is in effect
as of
the Purchase Price Date,
pursuant to which Borrower’s
securities may be
issued to any employee,
officer or director
for services provided to Borrower.

A3.
“Bloomberg”
means Bloomberg L.P.
(or if that
service is not
 then  reporting 
the  relevant
information regarding the
Common Stock, a comparable
reporting service of national
reputation selected
by Lender
and reasonably
satisfactory to Borrower).

A4.
 “Closing
Bid Price”
and “Closing Trade
Price” means
the last
closing bid price
and last
closing trade price,
respectively, for
the Common Stock
on its principal
market, as
reported by
Bloomberg, or, if
its principal market
begins to operate on
an extended hours
basis and does
not designate the closing
bid price or the closing trade
price (as the case may
be) then the last
bid price or last trade price,
respectively, of the
Common Stock prior to 4:00:00 p.m.,
New York time, as reported by Bloomberg, or, if its principal market
is not the principal securities
exchange or trading
market for the
Common Stock, the
last closing bid price or
last trade price, respectively,
of the Common Stock on the principal
securities exchange or trading market
where the
Common Stock is listed or traded
as reported by
Bloomberg, or if
the foregoing do not
apply, the last closing
bid price or
last trade price, respectively,
of the Common Stock in the over-the-counter
market on the electronic bulletin board
for the Common
Stock as reported by Bloomberg, or,
if no
closing bid price or
last trade price, respectively,
is reported for the
Common Stock by Bloomberg, the average of the
bid prices, or the ask prices,
respectively, of any market makers for
the Common Stock as reported by OTC
Markets Group, Inc., and any successor
thereto. If the Closing
Bid Price or the
Closing Trade Price cannot
be calculated for the
Common Stock on
a particular date on
any of
the foregoing bases, the Closing
Bid Price or the
Closing Trade Price (as the
case may be) of the Common
Stock on such date shall
be the fair market value
as mutually determined by Lender
and Borrower. If Lender and
Borrower are unable to agree upon the
fair market
value of the Common Stock, then
such dispute shall be resolved
in accordance with
the procedures in Section 16.2. All such
determinations shall be appropriately adjusted for
any stock dividend, stock split, stock combination or other
similar transaction during such
period.

A5.
“Conversion” means
a Lender
Conversion under
Section 3 or
an Installment
Conversion under Section
8.

A6.
 “Conversion
Eligible Outstanding
Balance” means
the Outstanding Balance
of this Note
less the sum
of each
Subsequent Tranche that
has not yet
become a Conversion
Eligible Tranche
(i.e., Lender has not yet
paid the
outstanding balance of
the Investor
Note that corresponds to such
Subsequent Tranche).

A7.
“Conversion Factor”
means 50%,
subject to the
following adjustments.
If at any
time the
lowest Closing
Bid Price in the twenty
(20) Trading Days
immediately preceding any
date of measurement
is below $0.50,
then in
such event
the then-current Conversion
Factor shall
be reduced
by 5% for
all future
Conversions (subject
to other
reductions set forth
in this
section). Additionally, if
at any time after the
Effective Date, Borrower is not
DWAC Eligible, then the then-current Conversion
Factor will automatically be reduced
by 5% for all future Conversions.
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 an
additional 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 Borrower is not
DWAC Eligible, the Conversion
Factor for
future Conversions
thereafter will be
reduced from 50%
to 45% for purposes
of this example.
Following such event, the first
time the Conversion Shares are no
longer DTC Eligible,
the Conversion Factor for
future Conversions
thereafter will
be reduced from 45% to 40%
for purposes of this
example. If, thereafter,
there are three (3)
separate occurrences of a Major
Default pursuant to
Section 4.1(c), then
for purposes
of this example
the

    	13

    	 

    

 

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.

A8.
 “Deemed
Issuance”
means an
issuance of
Common Stock that
shall be deemed
to have
occurred on
the latest
possible permitted date
pursuant to
the terms hereof
in the event
Borrower fails to
deliver Conversion
Shares as
and when
required pursuant
to Section 9
of the Note.
For the
avoidance of
doubt, if Borrower
has elected or
is deemed under
Section 8.3 to
have elected
to pay
an Installment
Amount in
Installment Conversion
Shares and
fails to deliver
such Installment Conversion
Shares, such failure
shall be
considered a Deemed Issuance
hereunder even if an
Equity Conditions Failure exists
at that time or other relevant date
of determination.

A9.
 “Default
Effect”
means multiplying
the Conversion
Eligible Outstanding
Balance as of
the date
the applicable
Event of
Default occurred
by (a) 15%
for each
occurrence of any
Major Default,
or (b) 5%
for each
occurrence of any Minor Default,
and then adding the resulting product
to the Outstanding Balance as of
the date the applicable Event of
Default occurred, with
the sum of the
foregoing then becoming
the Outstanding Balance under this
Note as of the date the applicable
Event of Default occurred; provided
that the Default Effect may
only be applied three (3) times
hereunder with respect to Major
Defaults and three (3) times
hereunder with respect to Minor Defaults;
and provided further
that the
Default Effect
shall not
apply to any Event
of Default pursuant
to Section 4.1(b) hereof.

A10.“DTC”
means the
Depository Trust
Company.

A11.
 “DTC
Eligible”
means, with
respect to the Common
Stock, that
such Common Stock
is eligible to
be deposited in certificate
form at the
DTC, cleared and
converted into electronic
shares by the DTC
and held
in the name
of the
clearing firm servicing
Lender’s brokerage firm
for the
benefit of Lender.

A12.“DTC/FAST
Program” means
the DTC’s Fast
Automated Securities Transfer
program. A13.“DWAC”
means the
DTC’s Deposit/Withdrawal at
Custodian system.

A14.
“DWAC Eligible”
means that
(a) Borrower’s Common Stock is eligible at DTC for full
services pursuant to DTC’s operational arrangements, including without limitation transfer through DTC’s DWAC system, (b)     Borrower has been approved (without
revocation) by the DTC’s underwriting department, (c) Borrower’s
transfer agent is
approved as an agent in the DTC/FAST Program, (d) the Conversion Shares
are otherwise eligible
for delivery via DWAC; (e) Borrower has
previously delivered all Conversion Shares to Lender
via DWAC; and (f) Borrower’s
transfer agent does not have a policy prohibiting or
limiting delivery of the Conversion Shares via DWAC.

A15.
“Equity Conditions
Failure” means that any of the following conditions
has not been satisfied during any applicable Equity Conditions Measuring Period (as defined below): (a) with respect to the applicable date
of determination all of the Conversion Shares would be
freely tradable under Rule 144 or
without the need for registration under
any applicable federal or state securities laws
(in each case, disregarding any limitation on conversion of
this Note); (b) on each day during the period beginning one month prior to the applicable date of
determination and ending on and including the applicable date of determination
(the “Equity Conditions
Measuring Period”), the Common Stock is listed
or designated for quotation (as applicable) on any of
NYSE, NASDAQ, OTCQX, OTCQB, or OTC Pink Current
Information (each, an “Eligible
Market”) and shall not have
been suspended from trading
on any such Eligible Market
(other than suspensions of not
more than two (2) Trading Days
and occurring prior to the
applicable date of determination due to business announcements by Borrower); (c)   
on each day during
the Equity Conditions Measuring Period, Borrower
shall have delivered all shares of Common
Stock issuable upon conversion of this Note on a
timely basis as set
forth in Section 9 hereof
and all other shares of capital stock required
to be delivered by Borrower on a timely basis as set
forth in the other Transaction Documents; (d)
any shares of Common Stock to be issued
in connection with the
event requiring determination may be issued in full without violating Section
12 hereof (Lender acknowledges that Borrower shall be entitled
to assume that this condition has
been met for all purposes hereunder absent written
notice from Lender); (e) any shares of Common
Stock to be issued in connection with the event
requiring determination may be issued in full
without violating the rules
or regulations of the Eligible Market on
which the Common Stock is
then listed or designated for
quotation (as applicable); (f) on each day during
the Equity Conditions Measuring Period, no public announcement of
a pending, proposed or intended Fundamental
Transaction shall have occurred which has not been
abandoned, terminated or consummated; (g)
Borrower shall have no knowledge
of any fact that would
reasonably be expected to cause any of the Conversion Shares to not
be freely tradable without the need
for registration under any applicable state securities laws
(in each case, disregarding any limitation on conversion of this Note); (h) on
each day during the Equity
Conditions Measuring Period, Borrower otherwise shall
have been in material
compliance with each, and shall not
have breached any, term, provision,
covenant, representation or warranty of any Transaction
Document;

    	14

    	 

    

 

(i)
without limiting
clause (j) above,
on each day
during the Equity
Conditions Measuring Period,
there shall
not have
occurred an
Event of
Default or an event
that with
the passage of
time or
giving of
notice would
constitute an Event
of Default;
(k) on each Installment
Date, the average and median
daily dollar volume of the Common
Stock on its principal market
for the previous twenty
(20) Trading Days
shall be greater
than $10,000.00; (l) the
ten (10) day average VWAP of the Common
Stock is greater than $0.10,
and (m) the Common Stock shall
be DWAC Eligible as of each applicable Installment
Date or other date of determination.

A16.
“Excluded Securities”
means any shares
of Common Stock,
options, or
convertible securities
issued or
issuable in
connection with
any Approved
Stock Plan; provided
that the
option term,
exercise price or
similar provisions
of any issuances pursuant
to such Approved
Stock Plan are not amended, modified
or changed on or after the
Purchase Price Date.

A17.
“Free Trading”
means that
(a) the
shares or certificate(s)
representing the applicable
shares of
Common Stock
have been
cleared and
approved for
public resale by
the compliance
departments of
Lender’s brokerage firm and
the clearing firm servicing such brokerage, and
(b) such shares are held in the
name of the clearing
firm servicing Lender’s brokerage
firm and have
been deposited into such
clearing firm’s account for
the benefit of
Lender.

A18.
“Fundamental Default”
means that Borrower
either fails to pay
the entire Outstanding
Balance to Lender
on or before
the Maturity
Date or fails
to pay the
Mandatory Default Amount
within three (3)
Trading Days of
the date
Lender delivers
any notice
of acceleration to
Borrower pursuant
to Section 4.2
of this Note.

A19.
 “Fundamental
Default Conversion
Value” means
the Adjusted
Outstanding Balance multiplied
by the highest
Fundamental Default Ratio
that occurs
during the
Fundamental Default
Measuring Period.

A20.
“Fundamental Default
Measuring Period”
means a
number of months
equal to the
Outstanding Balance as
of the
date the
Fundamental Default
occurred divided
by the
Installment Amount,
with such
number being rounded up
to the next whole month;
provided, however, that if Borrower
repays the entire Outstanding Balance prior
to the
conclusion of the
Fundamental Default
Measuring Period,
the Fundamental
Default Measuring Period shall
end on the date of
repayment. For illustration purposes
only, if
the Outstanding Balance were
equal to

$125,000.00
as of the
date a Fundamental
Default occurred and if
the Installment Amount
were $28,500.00, then
the Fundamental
Default Measuring Period would
equal five
(5) months calculated
as follows: $125,000.00/$28,500.00 equals
4.386, rounded
up to
five (5).

A21.
 “Fundamental
Default Ratio”
means a
ratio that
will be
calculated on
each Trading Day
during the
Fundamental Default
Measuring Period by
dividing the Closing
Trade Price for
the Common Stock
on a given
Trading Day by
the Lender
Conversion Price (as
adjusted pursuant
to the
terms hereof) in
effect for
such Trading Day.

A22.
“Fundamental Liquidated
Damages Amount”
means the
greater of
(a) (i) the
quotient of
the Outstanding Balance
on the date
the Fundamental
Default occurred
divided by
the then-current
Conversion Factor, minus (ii) the
Outstanding Balance on the date the
Fundamental Default occurred, or (b) the
Fundamental Default Conversion
Value.

A23.
 “Fundamental
Transaction”
means that
(a) (i) Borrower
or any
of its subsidiaries
shall, directly
or indirectly,
in one or
more related
transactions, consolidate
or merge
with or into
(whether or not
Borrower or any
of its subsidiaries
is the surviving
corporation) any other
person or entity,
or (ii) Borrower
or any of its
subsidiaries shall,
directly or indirectly,
in one
or more related transactions, sell,
lease, license, assign,
transfer, convey or otherwise dispose
of all or substantially all of its respective
properties or assets to any other
person or entity, or

(iii)   
Borrower or
any of
its subsidiaries shall,
directly or indirectly,
in one
or more
related transactions,
allow any
other person or entity
to make
a purchase, tender or exchange
offer that is accepted by
the holders
of more than
50% of the
outstanding shares of voting
stock of Borrower
(not including any shares of
voting stock
of Borrower held
by the
person or persons making or party to,
or associated or affiliated with the persons
or entities making or party to, such
purchase, tender or exchange
offer), or (iv)
Borrower or any of its subsidiaries
shall, directly or indirectly,
in one
or more
related transactions,
consummate a
stock or
share purchase
agreement or other
business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement)
with any other
person or entity whereby
such other person or
entity acquires more than
50% of the outstanding shares of voting
stock of Borrower
(not including
any shares
of voting stock
of Borrower held
by the other
persons or entities making
or party to, or associated or affiliated with
the other persons or entities making
or party to, such stock or share
purchase agreement or other business
combination), or (v) Borrower
or any of its subsidiaries shall, directly or indirectly,
in one or more
related transactions,
reorganize, recapitalize or
reclassify the Common
Stock, other than an increase
in the
number of authorized
shares of Borrower’s
Common Stock,
or (b) any
“person” or “group”
(as

    	15

    	 

    

 

these
terms are
used for
purposes of Sections
13(d) and
14(d) of the
1934 Act
and the
rules and regulations
promulgated thereunder)
is or shall
become the “beneficial
owner” (as defined
in Rule
13d-3 under
the 1934 Act),
directly or indirectly, of
50% of the
aggregate ordinary voting power represented
by issued and
outstanding voting stock
of Borrower.

A24.
“Installment Amount”
means $31,562.50 ($252,500.00
÷ 8), plus
the sum of
any accrued and
unpaid interest on
all Conversion
Eligible Tranches
as of the
applicable Installment
Date, and
accrued and
unpaid late charges, if any, under this Note as of the
applicable Installment Date, and any other amounts accruing
or owing to Lender under this Note as of such
Installment Date; provided, however, that,
if the remaining amount owing under all
then-existing Conversion Eligible Tranches
or otherwise with respect to this
Note as of the applicable Installment
Date is less than the
Installment Amount
set forth
above, then
the Installment Amount
for such
Installment Date (and
only such Installment
Amount) shall
be reduced
(and only reduced)
by the amount necessary to
cause such Installment Amount
to equal such outstanding amount.

A25.
“Lender Conversion
Share Value”
means the
product of the
number of
Lender Conversion
Shares deliverable pursuant
to any Lender
Conversion multiplied by
the Closing Trade
Price of
the Common
Stock on the Delivery Date for
such Lender Conversion.

A26.
“Major Default”
means any
Event of
Default occurring
under Sections
4.1(a) (payments),
4.1(c) (delivery
of Installment Conversion
Shares or True-Up
Shares), 4.1(l)
(Share Reserve),
or 4.1(q) (breach
of certain
covenants) of
this Note.

A27.
“Mandatory Default
Amount” means
the greater
of (a) the
Outstanding Balance (including
all Tranches, both
Conversion Eligible
Tranches and
Subsequent Tranches
that have
not yet
become Conversion
Eligible Tranches) divided by the
Installment Conversion Price on the
date the Mandatory Default Amount is
demanded, multiplied
by the VWAP on the date the Mandatory
Default Amount is demanded, or (b)
the Outstanding Balance following the application of the
Default Effect.

A28.
“Market Capitalization”
means the
product equal to
(a) the
average VWAP
of the Common
Stock for
the immediately preceding
fifteen (15)
Trading Days,
multiplied by
(b) the
aggregate number
of outstanding
shares of Common
Stock as
reported on Borrower’s most
recently filed Form 10-Q
or Form 10-K.

A29.
“Market Price”
means the
Conversion Factor multiplied
by the
lowest Closing Bid
Price in the
twenty (20)
Trading Days
immediately preceding the
applicable Conversion

 A30.“Minor
Default” means any Event of
Default that is not
a Major Default or
a Fundamental Default.

A31.“OID”
means an
original issue
discount.

A32.“Optional
Prepayment Liquidated Damages
Amount” means
an amount
equal to the
difference between (a) the
product of
(i) the
number of
shares of
Common Stock obtained
by dividing
(1) the
applicable Optional
Prepayment Amount
by (2) the Lender
Conversion Price as of the
date Borrower delivered the applicable
Optional Prepayment Amount
to Lender, multiplied by (ii)
the Closing Trade Price of the Common Stock on the date Borrower
delivered the applicable Optional
Prepayment Amount to Lender, and (b)
the applicable Optional Prepayment
Amount paid by Borrower to Lender.
For illustration purposes only, if the
applicable Optional Prepayment Amount
were $50,000.00, the Lender
Conversion Price as of the date
the Optional Prepayment Amount was
paid to Lender was
equal to $0.75 per share
of Common Stock, and
the Closing Trade Price of a share
of Common Stock as of such date was equal to $1.00, then
the Optional Prepayment Liquidated
Damages Amount would equal
$16,666.67 computed as follows:
(a) $66,666.67 (calculated
as (i) (1) $50,000.00 divided by (2) $0.75 multiplied
by (ii) $1.00) minus (b) $50,000.00.

A33.
“Other Agreements”
means, collectively,
(a) all existing
and future
agreements and
instruments between,
among or by
Borrower (or
an affiliate),
on the
one hand,
and Lender
(or an affiliate),
on the
other hand,
and (b) any
financing agreement
or a material
agreement that affects
Borrower’s ongoing business
operations.

A34.
“Outstanding Balance”
means as
of any
date of determination,
the Purchase
Price, as reduced
or increased,
as the
case may
be, pursuant
to the
terms hereof
for payment,
Conversion, offset, or
otherwise, plus
the OID, the
Transaction Expense Amount, accrued
but unpaid interest, collection
and enforcements costs (including attorneys’
fees) incurred
by Lender, transfer,
stamp, issuance and
similar taxes and
fees related to
Conversions, and any other fees
or charges (including without limitation Conversion Delay Late
Fees) incurred under this
Note.

    	16

    	 

    

 

A35.
 “Trading
Day”
means any
day on which
the Common Stock
is traded or
tradable for
any period
on the
Common Stock’s principal
market, or
on the
principal securities
exchange or
other securities
market on which the Common
Stock is then being traded.

A36.
 “VWAP”
means the volume
weighted average price of
the Common stock
on the principal market
for a particular
Trading Day or
set of
Trading Days,
as the case
may be,
as reported by
Bloomberg.

    	17

    	 

    

 

 

EXHIBIT
A

 

Typenex
Co-Investment, LLC
303 East Wacker
Drive, Suite
1040

Chicago,
Illinois 60601

 

Avalanche
International, Corp.Date:
  Attn:
Philip E. Mansour, CEO

5940
South Rainbow Blvd. Las
Vegas, Nevada 89118

 

LENDER
CONVERSION NOTICE

 

The
above-captioned Lender
hereby gives
notice to Avalanche
International, Corp., a
Nevada corporation
(the “Borrower”),
pursuant to that
certain Secured
Convertible Promissory
Note made
by Borrower
in favor
of Lender
on May
29, 2015 (the “Note”),
that Lender
elects to convert
the portion of the Note
balance set forth
below into fully paid
and non-assessable shares of
Common Stock of Borrower
as of the date
of conversion specified below.
Said conversion shall be based
on the Lender Conversion Price
set forth below. In
the event of a conflict
between this Lender Conversion
Notice and the Note, the
Note shall govern, or, in
the alternative, at the election
of Lender in its
sole discretion, Lender
may provide
a new form of
Lender Conversion
Notice to conform
to the Note.
Capitalized terms
used in this
notice without definition
shall have the
meanings given to them
in the Note.

 

	A.        Installment Date:	__________, 201_
	B.        Installment Amount:	__________
	C.        Portion of Installment Amount to be Paid in Cash:  	__________
	D.        Portion of Installment Amount to be Converted into Common Stock:	(B minus C)
	E.         Installment Conversion Price:	(lower of (i) Lender Conversion Price in effect and (ii) Market Price as of Installment Date)
	F.         Installment Conversion Shares:	(D divided by E)
	G.        Remaining Outstanding Balance of Note:	*
	H.        Remaining Balance of Investor Notes:	*
	I.           Outstanding Balance of Note Net of Balance of Investor Notes:	(G minus H)*

  

*  Subject to adjustments
for corrections, defaults, interest and other
adjustments permitted by the Transaction
Documents (as defined in the
Purchase Agreement), the terms
of which shall control in the
event of any dispute between the
terms of this Lender Conversion Notice
and such Transaction Documents.

 

The
Conversion Amount
converted hereunder
shall be
deducted from
the following
Conversion Eligible
Tranche(s):

 

	Conversion
    Amount	Tranche
    No.
		
		
		

 

Additionally,
$______of the
Conversion Amount converted
hereunder shall be
deducted fromtheInstallmentAmount(s)relatingtothefollowingInstallmentDate(s):_________.

 

Please
transfer the
Lender Conversion
Shares electronically
(via DWAC) to
the following
account:

 

	Broker:
     _________________	Address:	_________________
	DTC#:
     _________________		_________________
	Account
    #: _________________		_________________
	Account
    Name: _________________		

    	18

    	 

    

 

To
the extent
the Lender
Conversion Shares
are not able
to be
delivered to Lender
electronically via
the DWAC
system, deliver
all such
certificated shares
to Lender
via reputable
overnight courier
after receipt
of this Lender
Conversion Notice (by facsimile
transmission or otherwise) to:

 

Sincerely,

Lender:

TYPENEX
CO-INVESTMENT, LLC

 

By:
Red
Cliffs Investments, Inc., its Manager

 

 

/s/ John
M. Fife

John M.
Fife, President

    	19

    	 

    

 

EXHIBIT
B

 

Avalanche
International, Corp.
5940 South Rainbow Blvd.
Las Vegas, Nevada
89118

 

 

 

Typenex
Co-Investment, LLC

Date:
______________ 

Attn:
John Fife

303
East Wacker Drive,
Suite 1040

Chicago,
Illinois 60601

INSTALLMENT
NOTICE

 

The
above-captioned Borrower
hereby gives
notice to
Typenex Co-Investment,
LLC, a Utah
limited liability
company (the “Lender”),
pursuant to that
certain Secured
Convertible Promissory
Note made
by Borrower 
in  favor 
of  Lender
 on  May 
29, 2015 (the  “Note”),
of  certain
 Borrower 
elections  and

certifications  related  to  payment  of  the Installment  Amount  of  $__________ due  on
___________, 201_ (the “Installment Date”). In the event of a conflict between this
Installment Notice and the Note, the Note shall
govern, or, in the alternative, at the election of Lender in its sole discretion, Lender may provide a new form of Installment Notice to conform to the Note. Capitalized
terms used in
this notice without
definition shall have the meanings given
to them in the Note.

 

INSTALLMENT
CONVERSION AND CERTIFICATIONS
AS OF
THE INSTALLMENT DATE

 

A. INSTALLMENT CONVERSION

 

	A.        Installment Date:	__________, 201_
	B.        Installment Amount:	__________
	C.        Portion of Installment Amount to be Paid in Cash:  	__________
	D.        Portion of Installment Amount to be Converted into Common Stock:	__________ (B minus C)
	E.         Installment Conversion Price:	__________ (lower of (i) Lender Conversion Price in effect and (ii) Market Price as of Installment Date)
	F.         Installment Conversion Shares:	__________(D divided by E)
	G.        Remaining Outstanding Balance of Note:	__________*
	H.        Remaining Balance of Investor Notes:	__________*
	I.           Outstanding Balance of Note Net of Balance of Investor Notes:	__________(G minus H)*

  

* 
Subject to adjustments
for corrections, defaults,
interest and other
adjustments permitted
by the Transaction
Documents (as
defined in
the Purchase
Agreement), the
terms of which
shall control
in the
event of
any dispute
between the
terms of
this Installment Notice
and such
Transaction Documents.

 

B.
EQUITY CONDITIONS CERTIFICATION

 

		1.     
                             Market Capitalization:

 

(Check
One)

		2.	Borrower
                                         hereby
                                         certifies
                                         that
                                         no
                                         Equity Conditions
                                         Failure exists
                                         as of
                                         the Installment
                                         Date.

		3.	Borrower
                                         hereby
                                         gives
                                         notice that
                                         an Equity
                                         Conditions
                                         Failure
                                         has
                                         occurred
                                         and requests
                                         a waiver
                                         from Lender
                                         with
                                         respect
                                         thereto.
                                         The Equity
                                         Conditions Failure
                                         is as follows:

    	20

    	 

    

 

 Sincerely,
Borrower:

AVALANCHE
INTERNATIONAL, CORP.

 

 

By:
____________ 

Name:
____________

Title:
____________

    	21

    	 

    

 

EXHIBIT
C

 

Typenex
Co-Investment, LLC
303 East Wacker
Drive, Suite
1040

Chicago,
Illinois 60601

 

Avalanche
International, Corp.Date:
  Attn:
Philip E. Mansour, CEO

5940
South Rainbow Blvd. Las
Vegas, Nevada 89118

TRUE-UP
NOTICE

 

The
above-captioned Lender
hereby gives
notice to
Avalanche International,
Corp., a Nevada
corporation (the “Borrower”),
pursuant to that
certain Secured
Convertible Promissory
Note made
by Borrower
in favor
of Lender
on May 29, 2015
(the “Note”), of
True-Up Conversion
Shares related to_,
201_ (the “Installment Date”).
In the event of a conflict
between this True-Up Notice
and the Note, the Note
shall govern, or, in the
alternative, at the election
of Lender in its sole
discretion, Lender may provide
a new form of True-Up
Notice to conform to the Note.
Capitalized terms used in this
notice without
definition shall have
the meanings given to them
in the Note.

 

TRUE-UP
CONVERSION SHARES
AND CERTIFICATIONS
AS OF THE
TRUE-UP DATE

 

1. TRUE-UP
CONVERSION
SHARES 

 

	A.     Installment Date:	__________, 201_
	B.      True-Up Date:	__________, 201_
	C.      Portion of Installment Amount Converted into Common Stock:	__________
	D.     True-Up Conversion Price:	__________ (lower of (i) Lender Conversion Price in effect and (ii) Market Price as of Installment Date)
	E.      True-Up Conversion Shares:	__________ (C divided by D)
	F.       Installment Conversion Shares Delivered:  	__________
	G.     True-Up Conversion Shares to be Delivered:	(only applicable if E minus F is greater than zero)

 

2.
EQUITY CONDITIONS
CERTIFICATION
(Section to be
completed by Borrower)

		A.     Market Capitalization:

(Check
One)

		B.	Borrower
                                         herby
                                         certifies
                                         that
                                         no Equity
                                         Conditions Failure
                                         exists as
                                         of the
                                         applicable True-Up Date.

 

		C.	Borrower
                                         hereby
                                         gives
                                         notice
                                         that
                                         an Equity
                                         Conditions Failure
                                         has occurred
                                         and requests
                                         a waiver from
                                         Lender with
                                         respect thereto.
                                         The Equity
                                         Conditions Failure
                                         is as follows:

    	22

    	 

    

 

Sincerely,
Lender:

TYPENEX
CO-INVESTMENT, LLC

 

By:
Red
Cliffs Investments, Inc., its Manager

 

 

By:
John M. Fife, President 

 

 

ACKNOWLEDGED
AND
CERTIFIED
BY:

Borrower:

AVALANCHE
INTERNATIONAL, CORP.

 

 

By:
____________

Name:
____________

Title:
____________

    	23

    	 

    

 

EXHIBIT
D

 

Avalanche
International, Corp.
5940 South Rainbow Blvd.
Las Vegas, Nevada
89118

 

 

Typenex
Co-Investment, LLCDate:
 

Attn:
John Fife

303
East Wacker Drive,
Suite 1040

Chicago,
Illinois 60601

 

NOTICE
OF EXERCISE

OF
BORROWER OFFSET RIGHT

 

The
above-captioned Borrower
hereby gives
notice to
Typenex Co-Investment,
LLC, a Utah
limited liability
company (the “Lender”),
pursuant to that
certain Secured
Convertible Promissory
Note made
by Borrower
in favor
of Lender
on May 29,
2015 (the
“Note”), of
Borrower’s election
to exercise
the Borrower
Offset Right as set forth below.
In the event of a conflict
between this Notice of Exercise
of Borrower Offset
Right and the Note, the
Note shall govern.
Capitalized terms used in
this notice without
definition shall have
the meanings given to them
in the Note.

 

A.
Effective Date of Offset:________,
201_

B.
Amount of Offset: ________

C.
Investor Note(s) Being
Offset:   ________

    	24

    	 

    

 

 

C.       
Investor Note(s) Being
Offset:

 

* 
Subject to adjustments
for corrections, defaults,
interest and other
adjustments permitted
by the Transaction
Documents (as
defined in
the Purchase Agreement),
the terms
of which
shall control in
the event
of any dispute between
the terms
of this Notice
of Exercise of
Borrower Offset Right and
such Transaction
Documents.

 

Sincerely,
Borrower:

AVALANCHE
INTERNATIONAL, CORP.

 

 

By:
_________________

 

Name:
_________________

 

Title:
_________________

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