Document:

Exhibit 10.13 

   

   

   

 Avalanche International
Corp., a Nevada Corporation

LOAN AND SECURITY AGREEMENT 

   

   

   

     

     

    

   

 This LOAN AND SECURITY AGREEMENT is
entered into with an effective date as of August 21, 2017, by and among Digital Power Corporation, a California corporation (“DPW”)
and Avalanche International Corp., Nevada Corporation (“Borrower”). 

   

 RECITALS 

   

 WHEREAS, the DPW has previously loaned
Borrower Three Million Four Hundred Thousand Seventy Four, Four Hundred Dollars ($3,474,400) in the aggregate and evidenced by
three convertible notes issued on October 5, 2016, November 30, 2016 and February 22, 2017 (with such October 5, 2016, November
30, 2016 and February 22, 2017 convertible notes collectively referred to as the “Prior Notes”) with an aggregate
face amount of One Million Five Hundred Seventy-Five Thousand Dollars ($1,575,000) and additional advances in the aggregate face
amount of One Million Eight Hundred Ninety ninety Thousand Four Hundred Dollars ($1,899,400); 

   

 WHEREAS, Borrower wishes to seek, and
DPW wishes to grant, an increase in additional credit up to an aggregate amount of Five Million Dollars ($5,000,000); 

   

 WHEREAS, in consideration of the increase
in additional maximum credit of up to $5,000,000, DPW and the Borrower wishes to terminate the Prior Notes and enter into this
Agreement and to make other changes to the terms of the issuance of credit, including the reduction of the conversion price to
fifty cents ($0.50) per share and the issuance of Warrants; and 

   

 WHEREAS, DPW and Borrower have agreed
to enter into this Agreement to memorialize their understanding regarding their respective rights and obligations with respect
to this Agreement and the Loan as such term is defined herein. 

   

 AGREEMENT 

   

 NOW; THEREFORE, in consideration of
the making of the Loan and the covenants, agreements, representations and warranties set forth in this Agreement and the other
Loan Documents as defined herein, the receipt and legal sufficiency of which hereby are acknowledged, the parties hereby covenant,
agree, represent and warrant as follows: 

   

 1.             DEFINITIONS
AND CONSTRUCTION. 

   

 1.1       Definitions.
As used in this Agreement, the following terms shall have the following definitions: 

   

 “Advance” or “Advances”
means a cash advance or cash advances under the Non-Revolving Line. 

   

 “Affiliate” means, with
respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled
by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and partners. 

   

 “DPW Expenses” means all
reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated in-house or by outside
counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable
annual Collateral audit fees; and DPW’s reasonable attorneys’ fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred
before, during and after an Insolvency Proceeding, whether or not suit is brought. 

   

    - 1 - 

     

    

   

 “Borrower’s Books”
means all of Borrower’s books and records including: ledgers; records concerning Borrower’s assets or liabilities,
the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing
such information. 

   

 “Business Day” means any
day that is not a Saturday, Sunday, or other day on which national and state banks located in the State of California are authorized
or required to close. 

   

 “Cash” means cash and cash
equivalents. 

   

 “Change in Control” shall
mean a transaction in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower
ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect
a majority of the Board of Directors of Borrower, who did not have such power before such transaction. 

   

 “Closing Date” means the
date of this Agreement. 

   

 “Code” means the California
Uniform Commercial Code, as amended or supplemented from time to time. 

   

 “Collateral” means the property
described on Exhibit A attached hereto. 

   

 “Contingent Obligation”
means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i)
any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which
that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit; and (iii)
all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate
collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements
for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person
in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement. 

   

 “Conversion Price” shall
mean $0.50 subject to adjustment as set forth in the Note or Warrant. 

   

 “Credit Extension” means
each Advance or any other extension of credit by DPW to or for the benefit of Borrower hereunder. 

   

 “Equipment” means all present
and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which any
Borrower has any interest. 

   

 “Event of Default” has the
meaning assigned in Article 8. 

   

    - 2 - 

     

    

   

 “GAAP” means generally accepted
accounting principles, consistently applied, as in effect from time to time. 

   

 “Indebtedness” means (a)
all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement
and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures
or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, if any. 

   

 “Insolvency Proceeding”
means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other
relief. 

   

 “Investment” means any beneficial
ownership of (including stock, partnership or limited liability company interest other securities) any Person, or any loan, advance
or capital contribution to any Person. 

   

 “IRC” means the Internal
Revenue Code of 1986, as amended, and the regulations thereunder. 

   

 “Lien” means any mortgage,
lien, deed of trust, charge, pledge, security interest or other encumbrance. 

   

 “Liquidity” means the sum
of Borrower’s consolidated Cash. 

   

 “Loan” means, collectively,
the Credit Extensions available to Borrower under the Loan Documents. 

   

 “Loan Documents” means,
collectively, this Agreement, the Note, and any other document, instrument or agreement entered into in connection with this Agreement,
all as amended or extended from time to time. 

   

 “Material Adverse Effect”
means a material adverse effect on (i) the business operations, or financial condition of Borrower and its Subsidiaries taken
as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents,
(iii) Borrower’s interest in, or the value, perfection or priority of DPW’s security interest in the Collateral. 

   

 “Maturity Date” shall mean
that date stated on the Convertible Promissory Note and shall be date two years from the issuance date of such Convertible Promissory
Note. 

   

 “Negotiable Collateral”
means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including
promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing. 

   

 “Non-Revolving Line” means
a Credit Extension of up to Five Million Dollars ($5,000,000) granted by DPW to Borrower. 

   

 “Note” has the meaning given
to such term in Section 3.1. 

   

 “Obligations” means all
debt, principal, interest, DPW Expenses and other amounts owed to DPW by Borrower pursuant to this Agreement or any other agreement,
whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after
the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that
DPW may have obtained by assignment or otherwise. 

   

    - 3 - 

     

    

   

 “Periodic Payments” means
all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to DPW pursuant to the
terms and provisions of any instrument, or agreement, including this Agreement, now or hereafter in existence between Borrower
and DPW. 

   

 “Permitted Indebtedness”
means: 

   

 (a)       Indebtedness
of Borrower in favor of DPW arising under this Agreement or any other Loan Document; 

   

 (b)       Indebtedness
existing on the Closing Date; 

   

 (c)       Indebtedness
incurred in connection with capital leases secured by a lien described in clause (c) of the defined term “Permitted Liens;”
provided such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness; 

   

 (d)       Subordinated
Debt; 

   

 (e)       Indebtedness
to trade creditors incurred in the ordinary course of business; 

   

 (f)        Indebtedness
that constitutes a Permitted Investment; 

   

 (g)       Guaranties
made in the ordinary course of business; and 

   

 (h)       Extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms
modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be. 

   

 “Permitted Investment” means: 

   

 (a)       Investments
existing on the Closing Date; 

   

 (b)       (i)
Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State
thereof maturing within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1)
year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) certificates of deposit maturing no more than one year from the date of
investment therein, and (iv) money market accounts; 

   

 (c)       Investments
accepted in connection with Permitted Transfers; 

   

 (d)       Investments
of Subsidiaries in or to other Subsidiaries or Borrower and Investments by Borrower in Subsidiaries to fund operating expenses
in the ordinary course of business; 

   

 (e)       Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors; 

   

    - 4 - 

     

    

   

 (f)        Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s
business; 

   

 (g)       Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business, provided that this subparagraph (g) shall not apply to Investments of Borrower in any Subsidiary;
and 

   

 (h)       Other
Investments approved in advance and in writing by DPW in its sole discretion. 

   

 “Permitted Liens” means the
following: 

   

 (a)       Any
Liens existing on the Closing Date or arising under this Agreement or the other Loan Documents; 

   

 (b)       Liens
for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and for which adequate reserves are maintained; 

   

 (c)        Liens
incurred (i) upon or in any acquired or held by any Borrower or any of its Subsidiaries to secure the purchase price of such Equipment
or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such
Equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements
thereon, and the proceeds of such Equipment; 

   

 (d)       Liens
of materialmen, mechanics, warehousemen, carriers, landlord, artisan’s or other similar Liens arising in the ordinary course
of business or by operation of law, which are not past due or which are being contested in good faith by appropriate proceedings; 

   

 (e)       Liens
which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower’s
assets taken as a whole; 

   

 (f)        Lien
securing Subordinated Debt; 

   

 (g)       Liens
securing judgments or attachments in circumstances that do not constitute an Event of Default; 

   

 (h)       leases
or subleases, licenses or sublicenses granted in the ordinary course of business which do not interfere in any material respect
with the business of Borrower; 

   

 (i)        Liens
in favor of custom and revenue authorities arising as a matter of law, in the ordinary course of business, to secure payment of
custom duties in connection with the import and export of goods; 

   

 (j)        Liens
in favor of financial institutions arising in connection with deposit or investment accounts held at such financial institutions,
provided that such liens only secure fees and service charges associated with such accounts; 

   

 (k)       deposits
in the ordinary course of business under worker’s compensation, unemployment insurance, social security and other similar
laws, or to secure the performance of bids, tenders or contracts or to secure indemnity, performance or other similar bonds for
the performance of bids, tenders or contracts or to secure statutory obligations or surety or appeal bonds; 

   

    - 5 - 

     

    

   

 (l)         Liens
incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Permitted Liens, provided that
any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not increase in any material respect; and 

   

 (m)       Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.5 or 8.9. 

   

 “Permitted Transfer” means
the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of: 

   

 (a)        Inventory
in the ordinary course of business; 

   

 (b)        licenses
and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; 

   

 (c)        worn-out
or obsolete Equipment; 

   

 (d)        Transfers
otherwise permitted by the terms of Section 7; 

   

 (e)        sales
and transfers in the ordinary course of business, including normal intercompany business transactions; or 

   

 (f)        other
assets of Borrower or its Subsidiaries that do not in the aggregate exceed One Hundred Thousand Dollars ($100,000) during any
fiscal year. 

   

 “Person” means any individual,
sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 

   

 “Interest Rate” means 12%
interest, per annum. 

   

 “Responsible Officer” means
each of the Chief Executive Officer, the Chief Financial Officer and the Controller of Borrower. 

   

 “Revolving Maturity Date”
means, with respect to each Note, the maturity date set forth in such Note or such subsequent date as agreed to between the parties
pursuant to a written amendment or modification of the Loan Documents. 

   

 “Schedule” means the schedule
of exceptions attached hereto and approved by DPW, if any. 

   

 “Subordinated Debt” means
any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to DPW on terms reasonably acceptable
to DPW (and identified as being such by Borrower and DPW). 

   

 “Subsidiary” means any corporation,
partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than fifty
percent (50%) of the stock, limited liability company interest or joint venture of which by the terms thereof has the ordinary
voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is
being made, is owned by a Borrower, either directly or through an Affiliate. 

   

    - 6 - 

     

    

   

 “Trademarks” means any trademark
and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections,
and the entire goodwill of the business of a Borrower connected with and symbolized by such trademarks. 

   

 “Warrant” means that certain
five year warrant to purchase shares of common stock of Borrow in a number equal to the face amount of the Loan divided by $0.50
with at an exercise price equal to $0.50 per share under the terms and conditions thereof as set forth in the form of Exhibit
C hereto 

   

 1.2          Accounting
Terms. Any accounting term not specifically defined herein shall be construed in accordance with GAAP and all calculations
shall be made in accordance with GAAP. The term “financial statements” shall include the accompanying notes and schedules. 

   

 2.            LOAN
AND TERMS OF PAYMENT. 

   

 2.1          Credit
Extensions. 

   

 (a)          Promise
to Pay. Borrower promises to pay to DPW, in lawful money of the United States of America, the aggregate unpaid principal amount
of all Credit Extensions made by DPW to Borrower, together with interest on the unpaid principal amount of such Credit Extensions
at rates in accordance with the terms hereof. 

   

 (b)          Advances
Under Non Revolving Line. 

   

 (i)       Amount.
Subject to and upon the terms and conditions of this Agreement and DPW’s availability of capital, Borrower may request Advances
in an aggregate outstanding amount not to exceed the Non-Revolving Line. Amounts borrowed pursuant to this Section 2.1(b) which
have been repaid may not be reborrowed at any time. All Advances under this Section 2.1(b) shall be immediately due and payable
on the Revolving Maturity Date. Borrower may prepay any Advances without penalty or premium upon notice. 

   

 (ii)       Form
of Request. Whenever a Borrower desires an Advance, such Borrower will notify DPW by facsimile transmission or telephone no
later than ten (10) Business Day prior to the date the Advance is to be made. Each such notification shall be promptly confirmed
by a Payment/Advance Form in substantially the form of Exhibit D hereto. DPW is authorized to make Advances under this Agreement,
based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without instructions if
in DPW’s discretion such Advances are necessary to meet Obligations which have become due and remain unpaid. DPW shall be
entitled to rely on any telephonic notice given by a person who DPW reasonably believes to be a Responsible Officer or a designee
thereof, and Borrower shall indemnify and hold DPW harmless for any damages or loss suffered by DPW as a result of such reliance.
DPW will evidenced the amount of Advances made under this Section 2.1(b) by a Note. 

   

 2.2          Overadvances.
If the aggregate amount of the outstanding Advances exceeds the Non-Revolving Line at any time, then within fifteen (15) days
(or such longer period as DPW may grant in its sole discretion) of notice of such excess advanced, Borrower shall pay to DPW,
in cash, the amount of such excess. 

   

    - 7 - 

     

    

   

 2.3           Interest
Rates, Payments, and Calculations. 

   

 (a)           Interest
Rates. Except as set forth in Section 2.3(b), the Advances shall bear interest at the rate equal to the Interest Rate. 

   

 (b)           Default
Rate. If any payment is not made within ten (10) days after the date such payment is due, Borrower shall pay DPW a late fee
equal to the lesser of (i) five percent (5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged
under applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to five (5) percentage points above the Interest Rate applicable immediately prior to the occurrence
of the Event of Default. 

   

 (c)           Payments.
Interest and principal hereunder shall be due and payable on the Maturity Date. Borrower authorize DPW, at its option, to charge
such interest, all DPW Expenses, and all Periodic Payments against the Non-Revolving Line, in which case those amounts shall thereafter
accrue interest at the rate then applicable hereunder. 

   

 (d)           Computation.
All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty-five (365) day year for
the actual number of days elapsed. 

   

 2.4           Crediting
Payments. If no Event of Default exists, DPW shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. During the existence of an Event of Default, DPW shall have the right, in
its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment DPW may receive to conditionally
reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately
available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received by DPW or for its benefit at its financial institution
after 12:00 noon Pacific time shall be deemed to have been received by DPW as of the opening of business on the immediately following
Business Day. Whenever any payment to DPW under the Loan Documents would otherwise be due (except by reason of acceleration) on
a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest,
as the case may be, shall accrue and be payable for the period of such extension. 

   

 2.5           [Reserved]
 

   

 2.6           Term.
This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect
for so long as any Obligations remain outstanding or DPW has any obligation to make Credit Extensions under this Agreement. Notwithstanding
the foregoing, DPW shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately
and without notice upon the occurrence and during the continuance of an Event of Default. After August 21, 2019, DPW will not
be obligated to make any further Advances. 

   

 2.7           Warrant.
As a condition of the extension of credit provide for under this Agreement, concurrent with the issuance of Advances as evidenced
by a Note, Borrower will issue to DPW the Warrant. 

   

    - 8 - 

     

    

   

 3.            CONDITIONS
OF LOANS. 

   

 3.1          Conditions
Precedent to Initial Credit Extension. The obligation of DPW to make the initial Credit Extension is subject to the condition
precedent that DPW shall have received, in form and substance satisfactory to DPW, the following: 

   

 (a)          this
Agreement duly executed by the Borrower; 

   

 (b)          a
convertible promissory note providing for the conversion of the outstanding amount including interest thereon at the Conversion
Price in the form of Exhibit B duly executed by each Borrower (the “Note”); 

   

 (c)          the
Warrant to purchase shares of common stock of the Borrow in a number equal to the face amount of the Note divided by $0.50 per
share and 

   

 (d)          an
officer’s certificate of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery
of this Agreement. 

   

 3.2          Conditions
Precedent to all Credit Extensions. The obligation of DPW to make each Credit Extension, including the initial Credit Extension,
is further subject to the following conditions: 

   

 (a)          timely
receipt by DPW of the Payment/Advance Form as provided in Section 2.1; and 

   

 (b)          the
representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date
of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and
no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided,
however, that those representations and warranties expressly referring to another date shall be true, correct and complete in
all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty
by each Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2. 

   

 3.3          Cancellation
of Prior Notes and Consolidation of Advances; Issuance of Warrant. 

   

 (a)           Subject
to all of the terms and conditions hereof and in consideration of the increase in the extension of credit to Borrower, DPW and
Borrower agree as follows: 

   

 (i)         DPW
and Borrower agree to cancel the Prior Notes; 

   

 (ii)        DPW
will issue a new Convertible Promissory Note in the aggregate face amount of $3,474,400.00 which aggregates the Prior Notes and
prior advances and which is convertible into shares of the Borrower’s common stock at a conversion price equal to $0.50
per share; 

   

 (iii)       Warrant.
In connection with the initial extension of credit under this Non-Revolving Line of Credit and issuance of the new the Convertible
Promissory Note, the Borrower agrees that it will issue a Warrant to purchase 6,948,800 shares of common stock at $0.50 per share
under the terms and conditions thereof as set forth in the Warrant; and 

   

 (iv)       DPW
is not waiving any accrued interest and Borrower will continue to be obligated to pay interest on the face amount of the Prior
Notes and prior advances based on the Interest Rate starting on the dates Borrower received the funds. 

   

    - 9 - 

     

    

   

 4.            CREATION
OF SECURITY INTEREST. 

   

 4.1           Grant
of Security Interest. Borrower grants and pledges to DPW a continuing security interest in the Collateral to secure prompt
repayment of any and all Obligations and to secure prompt performance by Borrower of its covenants and duties under the Loan Documents.
Except for Permitted Liens, such security interest constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral. 

   

 4.2           Perfection
of Security Interest. Borrower authorizes DPW to file at any time financing statements, continuation statements, and amendments
thereto that (i) specifically describing the Collateral or describe the Collateral as all assets of such Borrower of the kind
pledged hereunder, and (ii) contain any other information required by the Code for the sufficiency of filing office acceptance
of any financing statement, continuation statement, or amendment, including whether Borrower is an organization, the type of organization
and any organizational identification number issued to Borrower, if applicable. Borrower shall from time to time endorse and deliver
to DPW, at the request of DPW, all Negotiable Collateral and other documents that DPW may reasonably request, in form satisfactory
to DPW, to perfect and continue perfected DPW’s security interests in the Collateral and in order to fully consummate all
of the transactions contemplated under the Loan Documents. Borrower shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where DPW chooses to perfect its security interest by possession in addition to the filing
of a financing statement. Borrower shall take such steps as DPW reasonably requests for DPW to obtain “control” of
any Collateral consisting of investment property, deposit accounts, letter-of-credit rights or electronic chattel paper (as such
items and the term “control” are defined in Revised Article 9 of the Code) by causing the securities intermediary
or depositary institution or issuing DPW to execute a control agreement in form and substance satisfactory to DPW. Borrower will
not create any chattel paper in which Borrower is a lessor without placing a legend on the chattel paper acceptable to DPW indicating
that DPW has a security interest in the chattel paper. 

   

 4.3           Right
to Inspect. DPW (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower’s usual business hours to inspect a Borrower’s Books and to make copies thereof and to
check, test, and appraise the Collateral in order to verify such Borrower’s financial condition or the amount, condition
of, or any other matter relating to, the Collateral. 

   

 5.            REPRESENTATIONS
AND WARRANTIES. 

   

 Each Borrower represents and warrants
as follows: 

   

 5.1           Due
Organization and Qualification. Borrower and each Subsidiary is duly existing under the laws of the state in which it is organized
and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires
that it be so qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Effect. 

   

 5.2           Due
Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower’s powers,
have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower’s
Certificate/Articles of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement by which it is bound, except to the extent such default
could not reasonably be expected to cause a Material Adverse Effect. 

   

    - 10 - 

     

    

   

 5.3           Collateral.
Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse
claims, and restrictions on transfer or pledge except for Permitted Liens. 

   

 5.4           Intellectual
Property. To the best of Borrower’s knowledge, each of the Copyrights, Trademarks and Patents is valid and enforceable,
and no part of such intellectual property has been judged invalid or unenforceable, in whole or in part, and no claim has been
made to Borrower that any part of such intellectual property violates the rights of any third party except to the extent such
claim could not reasonably be expected to cause a Material Adverse Effect. 

   

 5.5           Legal
Name. Borrower’s exact legal name is as set forth in the first paragraph of this Agreement. 

   

 5.6           Litigation.
There are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency
in which a likely adverse decision could reasonably be expected to have a Material Adverse Effect. 

   

 5.7           No
Material Adverse Change in Financial Statements. All consolidated and consolidating financial statements related to Borrower
and any Subsidiary that are delivered by Borrower to DPW fairly present in all material respects Borrower’s consolidated
and consolidating financial condition as of the date thereof and Borrower’s consolidated and consolidating results of operations
for the period then ended. There has not been a material adverse change in the consolidated or in the consolidating financial
condition of Borrower since the date of the most recent of such financial statements submitted to DPW. 

   

 5.8           Solvency,
Payment of Debts. Borrower is able to pay its debts as they mature; the fair saleable value of Borrower’s assets (including
goodwill minus disposition costs) exceeds the fair value of its liabilities; and Borrower is not left with unreasonably small
capital after the transactions contemplated by this Agreement. 

   

 5.9           Compliance
with Laws and Regulations. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower’s failure to comply with ERISA
that is reasonably likely to result in Borrower’s incurring any liability that could have a Material Adverse Effect. Borrower
is not an “investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities,
in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations
T and U of the Board of Governors of the Federal Reserve System). Borrower has complied in all material respects with all the
provisions of the Federal Fair Labor Standards Act. Borrower is in compliance with all environmental laws, regulations and ordinances
except where the failure to comply is not reasonably likely to have a Material Adverse Effect. Borrower has not violated any statutes,
laws, ordinances or rules applicable to it, the violation of which could reasonably be expected to have a Material Adverse Effect.
Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made
adequate provision for the payment of, all taxes reflected therein except those being contested in good faith with adequate reserves
under GAAP or where the failure to file such returns or pay such taxes could not reasonably be expected to have a Material Adverse
Effect. 

   

 5.10         Subsidiaries.
Borrower does not own any stock, partnership or membership interest or other equity securities of any Person, except for MTIX
Limited. 

   

    - 11 - 

     

    

   

 5.11         Government
Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower’s
business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse
Effect. 

   

 5.12         Full
Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished
to DPW taken together with all such certificates and written statements furnished to DPW contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements
not misleading, it being recognized by DPW that the projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not to be viewed as facts and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results. 

   

 6.            AFFIRMATIVE
COVENANTS. 

   

 Borrower covenants and agrees that,
until payment in full of all outstanding Obligations (other than inchoate indemnity obligations), and for so long as DPW may have
any commitment to make a Credit Extension hereunder, such Borrower shall do all of the following: 

   

 6.1           Good
Standing and Government Compliance. Borrower shall maintain its and each of its Subsidiaries’ corporate existence and
good standing in the jurisdiction of formation, shall maintain qualification and good standing in each other jurisdiction in which
the failure to so qualify could have a Material Adverse Effect, and shall furnish to DPW the organizational identification number
issued to Borrower by the authorities of the state in which Borrower is organized, if applicable. Borrower shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to
ERISA. Borrower shall comply in all material respects with all applicable Environmental Laws, and maintain all material permits,
licenses and approvals required thereunder where the failure to do so could reasonably be expected to have a Material Adverse
Effect. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules
and regulations to which it is subject, and shall maintain, and shall cause each of its Subsidiaries to maintain, in force all
licenses, approvals and agreements, the loss of which or failure to comply with which could reasonably be expected to have a Material
Adverse Effect. 

   

 6.2           Financial
Statements, Reports, Certificates. Borrower shall deliver the financial statements, reports and certificates provided for
in Schedule 3 thereto with the periods specified therein. Borrower may deliver to DPW on an electronic basis any certificates,
reports or information required pursuant to this Section 6.2, and DPW shall be entitled to rely on the information contained in
the electronic files, provided that DPW in good faith believes that the files were delivered by a Responsible Officer. 

   

 6.3           [Reserved]. 

   

 6.4           Taxes.
Borrower shall make, and cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, including, but not limited to, those laws concerning income
taxes, F.I.C.A., F.U.T.A. and state disability, and will execute and deliver to DPW, on demand, proof satisfactory to DPW indicating
that Borrower or a Subsidiary has made such payments or deposits and any appropriate certificates attesting to the payment or
deposit thereof; provided that each Borrower or a Subsidiary need not make any payment if the amount or validity of such payment
is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. 

   

    - 12 - 

     

    

   

 6.5           Insurance. 

   

 (a)           Borrower,
at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations
where each Borrower’s business is conducted on the date hereof. Borrower shall also maintain liability and other insurance
in an amount not less than One Million Dollars ($1,000,000) and of a type that are customary to businesses similar to Borrower’s. 

   

 (b)           All
such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to DPW.
All policies of property insurance shall contain a DPW’s loss payable endorsement, in a form satisfactory to DPW, showing
DPW as an additional loss payee, and all liability insurance policies shall show DPW as an additional insured and specify that
the insurer must give at least 30 days’ notice to DPW before canceling its policy for any reason. Upon DPW’s request,
each Borrower shall deliver to DPW certified copies of the policies of insurance and evidence of all premium payments. If no Event
of Default has occurred and is continuing, proceeds payable under any casualty policy will, at each Borrower’s option, be
payable to such Borrower to replace the property subject to the claim, provided that any such replacement property shall be deemed
Collateral in which DPW has been granted a first priority security interest. If an Event of Default has occurred and is continuing,
all proceeds payable under any such policy shall, at DPW’s option, be payable to DPW to be applied on account of the Obligations. 

   

 6.6           [Reserved]. 

   

 6.7           Additional
Filings. Borrower shall use its best efforts, to the extent requested by the DPW, to execute any documents necessary in order
to consummate the transactions contemplated in this Agreement including without limitation, UCC-1 Financial Statement(s) filed
in the either California or Nevada or both. 

   

 6.8          
Registration Rights. 

   

 (a)           Borrower
agrees that if, at any time, and from time to time, the Board of Directors of Borrower shall authorize the filing of a registration
statement under the Securities Act of 1933 on Form S-1, S-3, or other available registration statement in connection with the
proposed offer of any of its securities by it or any of its stockholders, Borrower shall: (A) promptly notify DPW that such registration
statement will be filed and that the Common Stock issuable to DPW upon conversion of the Note at the then conversion price and
the purchase of Common Stock upon the exercise of the Warrant at the exercise price then in effect and warrant (the “Registrable
Securities”) will be included in such registration statement at DPW’s request; (B) cause such registration statement
to cover all of such Registrable Securities for which DPW requests inclusion; (C) use best efforts to cause such registration
statement to become effective as soon as practicable; (D) use best efforts to cause such registration statement to remain effective
until the earliest to occur of (i) such date as DPW has completed the distribution described in the registration statement and
(ii) such time that all of such Registrable Securities are no longer, by reason of Rule 144 under the Securities Act, required
to be registered for the sale thereof by DPW; and (E) take all other reasonable action necessary under any federal or state law
or regulation of any governmental authority to permit all such Registrable Securities to be sold or otherwise disposed of, and
will maintain such compliance with each such federal and state law and regulation of any governmental authority for the period
necessary for such Holder to promptly effect the proposed sale or other disposition. 

   

    - 13 - 

     

    

   

 (b)           The
rights of DPW to request inclusion in any registration pursuant to this Agreement shall terminate if all Registrable Securities
may immediately be sold under Rule 144. 

   

 (c)           Notwithstanding
any other provision of this Section 6.8, Borrower may at any time, abandon or delay any registration commenced by Borrower. In
the event of such an abandonment by Borrower, Borrower shall not be required to continue registration of shares requested by DPW
for inclusion in that registration statement. 

   

 (d)           In
connection with any offering involving an underwriting of shares of the Borrower’s capital stock, Borrower shall not be
required to include any of the Registrable Securities in such underwriting unless they accept the terms of the underwriting as
agreed upon between the Borrower and the underwriters selected by it, and then only in such quantity as the underwriters determine
in their sole discretion will not jeopardize the success of the offering by Borrower. If the total amount of securities, including
Registrable Securities, requested DPW to be included in such offering exceeds the amount of securities sold other than by Borrower
that the underwriters determine in their sole discretion is compatible with the success of the offering, then Borrower shall be
required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned
pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). 

   

 7.            NEGATIVE
COVENANTS. 

   

 Borrower covenants and agrees that,
until the outstanding Obligations (other than inchoate indemnity obligations) are paid in full, Borrower will not do any of the
following without DPW’s prior written consent, which shall not be unreasonably withheld: 

   

 7.1           Dispositions.
Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or property, other than Permitted Transfers. Borrower will not engage
in any bulk sale of all or substantially all of its assets. 

   

 7.2           Change
in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control.
Change its name or its jurisdiction of formation or relocate its chief executive office without prior written notification to
DPW; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or
incidental to the businesses currently engaged in by each Borrower; change its fiscal year end. 

   

 7.3           Mergers
or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into a Borrower), or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person except
where (i) such transactions do not in the aggregate exceed One Million Dollars ($1,000,000) during any fiscal year, (ii) no Event
of Default has occurred, is continuing or would exist after giving effect to such transactions, (iii) such transactions do not
result in a Change in Control, and (iv) Company is the surviving entity. 

   

 7.4           Indebtedness.
Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other
than Permitted Indebtedness, or prepay any Indebtedness prior to its scheduled maturity or take any actions which impose on each
Borrower an obligation to prepay any Indebtedness prior to its scheduled maturity, except Indebtedness to DPW. 

   

    - 14 - 

     

    

   

 7.5          Encumbrances.
Create, incur, assume or allow any Lien with respect to any of its property, or assign or otherwise convey any right to receive
income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens. 

   

 7.6          Distributions.
Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital
stock, except that (i) Borrower may repurchase the stock of former employees pursuant to stock repurchase agreements as long as
an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, (ii) Borrower
may repurchase the stock of former employees pursuant to stock repurchase agreements by the cancellation of indebtedness owed
by such former employees to a Borrower regardless of whether an Event of Default exists, (iii) Borrower may pay dividends in capital
stock, and (iv) Company may make dividends or distributions to Parent. 

   

 7.7          Investments.
Acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments. 

   

 7.8          Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of a Borrower
except for (i) transactions that are in the ordinary course of a Borrower’s business, upon fair and reasonable terms that
are no less favorable to a Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person and
(ii) transactions that are otherwise permitted pursuant to Section 7. 

   

 7.9          No
Investment Company; Margin Regulation. Become or be controlled by an “investment company,” within the meaning
of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension
for such purpose. 

   

 8.            EVENTS
OF DEFAULT. 

   

 Any one or more of the following events
shall constitute an Event of Default by Borrower under this Agreement: 

   

 8.1          Payment
Default. If Borrower fails to pay any of the Obligations when due; 

   

 8.2          Covenant
Default. 

   

 (a)       If
Borrower fails to perform any obligation under Sections 6.5 or 6.7 violates any of the covenants contained in Article 7 of this
Agreement; or 

   

 (b)       If
Borrower fails or neglects to perform or observe any other material term, provision, condition, covenant contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement between Borrower and DPW and as to any default under
such other term, provision, condition or covenant that can be cured, has failed to cure such default within ten (10) Business
Days after Borrower receives notice thereof; provided, however, that if the default cannot by its nature be cured within such
ten (10) Business Day period or cannot after diligent attempts by Borrower be cured within such ten (10) Business Day period,
and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made; 

   

    - 15 - 

     

    

   

 8.3           Material
Adverse Effect. If there occurs any Material Adverse Effect; 

   

 8.4           Attachment.
If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied
upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure,
writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if a Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs,
or if a judgment or other claim becomes a lien or encumbrance upon any material portion of a Borrower’s assets, or if a
notice of lien, levy, or assessment is filed of record with respect to any of Borrower’s assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same
is not paid within ten (10) days after a Borrower receives notice thereof, provided that none of the foregoing shall constitute
an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by a
Borrower (provided that no Credit Extensions will be made during such cure period); 

   

 8.5           Insolvency.
If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against a Borrower and is not dismissed or stayed within thirty (30) days (provided that no Credit Extensions will be made prior
to the dismissal of such Insolvency Proceeding); 

   

 8.6           Judgments.
If a judgment or judgments (not covered by insurance) for the payment of money in an amount, individually or in the aggregate,
of at least One Hundred Thousand Dollars ($100,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed
for a period of thirty (30) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); 

   

 8.7           Change
in Control. If a Change in Control occurs; or 

   

 8.8           Misrepresentations.
If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to DPW by any Responsible Officer pursuant to this Agreement or to induce DPW to enter
into this Agreement or any other Loan Document. 

   

 9.            DPW’S
RIGHTS AND REMEDIES. 

   

 9.1           Rights
and Remedies. Upon the occurrence and during the continuance of an Event of Default, DPW may, at its election, without notice
of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: 

   

 (a)           Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable
(provided that upon the occurrence of an Event of Default described in Section 8.6, all Obligations shall become immediately due
and payable without any action by DPW); 

   

 (b)         Cease
advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between
Borrower and DPW; 

   

    - 16 - 

     

    

   

 (c)          Settle
or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that DPW reasonably
considers advisable; 

   

 (d)          Make
such payments and do such acts as DPW considers necessary or reasonable to protect its security interest in the Collateral. Borrower
agrees to assemble the Collateral if DPW so requires, and to make the Collateral available to DPW as DPW may designate. Borrower
authorizes DPW to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in DPW’s determination appears
to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any
of Borrower’s owned premises, Borrower hereby grants DPW a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of DPW’s rights or remedies provided herein, at law, in equity, or otherwise; 

   

 (e)          Set
off and apply to the Obligations any and all (i) balances and deposits of Borrower held by DPW, and (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held by DPW; 

   

 (f)           Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. DPW is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1,
to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale, and selling any Collateral and, in connection with DPW’s exercise of its rights under this Section
9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to DPW’s benefit; 

   

 (g)          Sell
the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including Borrower’s premises) as DPW determines is commercially reasonable, and apply
any proceeds to the Obligations in whatever manner or order DPW deems appropriate. DPW may sell the Collateral without giving
any warranties as to the Collateral. DPW may specifically disclaim any warranties of title or the like. This procedure will not
be considered adversely to affect the commercial reasonableness of any sale of the Collateral. If DPW sells any of the Collateral
upon credit, Borrower will be credited only with payments actually made by the purchaser, received by DPW, and applied to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, DPW may resell the Collateral and Borrower shall
be credited with the proceeds of the sale; 

   

 (h)          DPW
may credit bid and purchase at any public sale; 

   

 (i)         Apply
for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to
the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person
liable for any of the Obligations; and 

   

 (j)         Any
deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.  

   

 DPW may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. 

   

    - 17 - 

     

    

   

 9.2           Power
of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably
appoints DPW (and any of DPW’s designated officers, or employees) as Borrower’s true and lawful attorney to: (a) send
requests for verification of Accounts or notify account debtors of DPW’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may come into DPW’s possession; (c) sign
Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle,
and adjust all claims under and decisions with respect to Borrower’s policies of insurance; and (f) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts and upon terms which DPW determines to be reasonable.
The appointment of DPW as Borrower’s attorney in fact, and each and every one of DPW’s rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations (other than inchoate indemnity obligations) have been fully repaid
and performed and DPW’s obligation to provide Credit Extensions hereunder is terminated. 

   

 9.3           Accounts
Collection. At any time after the occurrence and during the continuance of an Event of Default, DPW may notify any Person
owing funds to Borrower of DPW’s security interest in such funds and verify the amount of such Account. Borrower shall collect
all amounts owing to Borrower for DPW, receive in trust all payments as DPW’s trustee, and immediately deliver such payments
to DPW in their original form as received from the account debtor, with proper endorsements for deposit. 

   

 9.4           DPW
Expenses. If Borrower fail to pay any amounts or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then DPW may do any or all of the following after reasonable notice to Borrower: (a)
make payment of the same or any part thereof; (b) set up such reserves under the Revolving Line as DPW deems necessary to protect
DPW from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section
6.5 of this Agreement, and take any action with respect to such policies as DPW deems prudent. Any amounts so paid or deposited
by DPW shall constitute DPW Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate
hereinabove provided, and shall be secured by the Collateral. Any payments made by DPW shall not constitute an agreement by DPW
to make similar payments in the future or a waiver by DPW of any Event of Default under this Agreement. 

   

 9.5           DPW’s
Liability for Collateral. DPW has no obligation to clean up or otherwise prepare the Collateral for sale. All risk of loss,
damage or destruction of the Collateral shall be borne by Borrower. 

   

 9.6           No
Obligation to Pursue Others. DPW has no obligation to attempt to satisfy the Obligations by collecting them from any other
Person liable for them and DPW may release, modify or waive any collateral provided by any other Person to secure any of the Obligations,
all without affecting DPW’s rights against Borrower. Borrower waives any rights they may have to require DPW to pursue any
other Person for any of the Obligations. 

   

 9.7           Remedies
Cumulative. DPW’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.
DPW shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise
by DPW of one right or remedy shall be deemed an election, and no waiver by DPW of any Event of Default on Borrower’s part
shall be deemed a continuing waiver. No delay by DPW shall constitute a waiver, election, or acquiescence by it. No waiver by
DPW shall be effective unless made in a written document signed on behalf of DPW and then shall be effective only in the specific
instance and for the specific purpose for which it was given. Borrower expressly agrees that this Section may not be waived or
modified by DPW by course of performance, conduct, estoppel or otherwise. 

   

    - 18 - 

     

    

   

 9.8           Demand;
Protest. Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations. 

   

 10.          NOTICES. 

   

 Unless otherwise provided in this Agreement,
all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall
be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to Borrower or to DPW, as the case may be, at its addresses set forth below: 

   

	 If to Borrower: 	 Avalanche International
    Corp 
	   	 5940
        S. Rainbow Blvd.  

 Las
Vegas, NV 89118  

 Attn:
Philip Mansour  

 FAX: 

	   	   
	 If to DPW: 	 48430 Lakeview Blvd. 
		 Fremont,
        CA 94538  

 Attn:
William Horne  

 FAX:
(510) 657-6634 

   

 The parties hereto may change the address
at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. 

   

 11.          CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER; ARBITRATION. 

   

 This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law.
Borrower and DPW hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of Alameda,
State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED
UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT
BETWEEN THE UNDERSIGNED PARTIES. 

   

    - 19 - 

     

    

   

 The parties agree
that any dispute, controversy or claim arising out of or relating to this Agreement, the Loan Documents or any of the transactions
contemplated therein DPW and Borrower agree that all such disputes, claims and controversies between them, whether individual,
joint, or class in nature, including without limitation contract and tort disputes, shall be arbitrated pursuant to the rules
of the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules and Supplemental
Procedures for Financial Services Disputes, upon request of either party. No act to take or dispose of any collateral securing
this Agreement shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes,
without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust
or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property,
including taking or disposing of such property with or without judicial process pursuant to article 9 of the Uniform Commercial
Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right,
concerning any collateral securing this Agreement, or any other Loan Document, including without limitation, any claim to rescind,
reform, or otherwise modify any agreement relating to the collateral securing this Agreement shall also be arbitrated, provided
however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. DPW and Borrower agree
that in the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other State, the commencement of such an action will not constitute a waiver of the right to arbitrate and the
court shall refer to arbitration as much of such action, including counterclaims, as lawfully may be referred to arbitration.
Judgment upon any award rendered by any arbitrator may be entered in any court having jurisdiction. The arbitrators shall not
have power to make an award of $1.0 million or more against any party to an arbitration unless it is in the form of a statement
of decision as described in California Code of Civil Procedure Section 632, and the parties specifically reserve the right, upon
a petition to vacate, to have any such award reviewed and vacated upon the same grounds as would result in reversal on appeal
from a judgment after trial by court. Nothing in this Agreement or other Loan Documents shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. 

   

 To the extent not
provided by this Agreement, including the Rules incorporated herein, arbitration hereunder shall be governed by California arbitration
law. Arbitration shall be conducted in California, in English and, unless otherwise agreed to by the parties with respect to a
particular dispute, shall be heard by a panel of three arbitrators. The arbitrators in any arbitration shall be experienced in
the areas of law raised by the subject matter of the dispute. Lists of prospective arbitrators shall include retired judges. Notwithstanding
the AAA rules, (a) any party may strike from a list of prospective arbitrators any individual who is regarded by that party as
not appropriate for the dispute; and (b), if the arbitrator appointment cannot be made from the initial list of prospective arbitrators
circulated by the AAA, a second and, if necessary, a third list shall be circulated and exhausted before the AAA is empowered
to make the appointment. 

   

 The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of this arbitration provision. 

   

 Borrower’s Initials _________________
DPW’s Initials _______________ 

   

 12.          GENERAL
PROVISIONS. 

   

 12.1         Successors
and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each
of the parties and shall bind all Persons who become bound as a debtor to this Agreement; provided, however, that neither this
Agreement nor any rights hereunder may be assigned by Borrower without DPW’s prior written consent, which consent may be
granted or withheld in DPW’s sole discretion. DPW shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, DPW’s obligations, rights and benefits
hereunder. 

   

    - 20 - 

     

    

   

 12.2         Indemnification.
Borrower shall defend, indemnify and hold harmless DPW and its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement;
and (b) all losses or DPW Expenses in any way suffered, incurred, or paid by DPW, its officers, employees and agents as a result
of or in any way arising out of, following, or consequential to transactions between DPW and Borrower whether under this Agreement,
or otherwise (including without limitation reasonable attorneys’ fees and expenses), except for obligations, demands, claims,
liabilities and losses caused by DPW’s gross negligence or willful misconduct. 

   

 12.3         Time
of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement. 

   

 12.4         Severability
of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision. 

   

 12.5         Amendments
in Writing, Integration. All amendments to or terminations of this Agreement or the other Loan Documents must be in writing.
All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to
the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents. 

   

 12.6         Counterparts.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one
and the same Agreement. 

   

 12.7         Survival.
All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations
(other than inchoate indemnity obligations) remain outstanding or DPW has any obligation to make any Credit Extension to Borrower.
The obligations of Borrower to indemnify DPW with respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against
DPW have run. 

   

    - 21 - 

     

    

   

 IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed as of the date September 6, 2017.  

   

	   	 Digital Power Corporation 
	   	   	   
	   	 By: 	 /s/ Amos Kohn 
	   	   	 Amos Kohn, President and CEO 
	   	   	   
	   	 Avalanche International Corp. 
	   	   	   
	   	 By: 	 /s/ Philip E. Mansour 
	   	   	 Philip E. Mansour, President and CEO 

   

 [Signature Page to Loan and Security
Agreement] 

   

     

     

    

   

	 DEBTOR 	 Avalanche
                                         International Corp. 
	   	   
	 SECURED PARTY:  	 Digital
                                         Power Corporation 

   

   

 EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT 

   

 Capitalized terms used but not defined
herein have the meaning given to them in the Loan and Security Agreement with an effective date of August 21, 2017, between Digital
Power Corporation and Avalanche International Convertible Promissory Notes. 

   

 In order to secure the due and punctual
payment and performance of Borrower’s, obligations under the Note, Borrower hereby grants to DPW and its respective successors
and assigns, a continuing security interest in, and hereby collaterally assigns to the Secured Party, the following described
assets, fixtures, personal property and intangible property (collectively, the “Collateral”), whether now owned or
hereafter acquired, whether existing or hereafter arising and wherever located: 

   

 (a)            Equipment.
All machinery and equipment, all data processing and office equipment, all computer equipment, hardware and firmware, all furniture,
fixtures, appliances and all other goods of every type and description, whether now owned or hereafter acquired and wherever located,
together with all parts, accessories and attachments and all replacements thereof and additions thereto. 

   

 (b)            Inventory.
All inventory and goods, whether held for lease, sale or furnishing under contracts of service, all agreements for lease of same
and rentals therefrom, whether now in existence or owned or hereafter acquired and wherever located. 

   

 (c)            General
Intangibles. All rights, interests, choses in action, causes of action, claims and all other intangible property of every kind
and nature, in each instance whether now owned or hereafter acquired, including, but not limited to, all corporate and business
records; all loans, royalties, and other obligations receivable; all trade secrets, inventions, designs, patents, patent applications,
registered or unregistered service marks, trade names, trademarks, copyrights and the goodwill associated therewith and incorporated
therein, and all registrations and applications for registration related thereto; goodwill, licenses, permits, franchises, customer
lists and credit files; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements,
and other contracts and contract rights; all right, title and interest under leases, subleases, licenses and concessions and other
agreements relating to real or personal property and any security agreements relating thereto; all rights to indemnification;
all proceeds of insurance of which Maker or any of its subsidiaries is a beneficiary; all letters of credit, guarantees, liens,
security interests and other security held by or granted to Maker or any of its subsidiaries; and all other intangible property,
whether or not similar to the foregoing; and all products and all books and records related to any of the foregoing. 

   

 (d)           Cash;
Accounts, Chattel Paper, Instruments, Securities and Documents. All cash, accounts, accounts receivable, chattel paper, deposit
accounts, instruments, investment property, letters of credit or rights with respect to any letters of credit, securities accounts,
shares of stock and other securities, and documents, whether now in existence or owned or hereafter acquired, entered into, created
or arising, and wherever located. 

   

 (e)            Other
Property. All property or interests in any other property now owned or hereafter acquired. 

   

     

     

    

   

 EXHIBIT B 

   

 [Form of Convertible Promissory Note
attached hereto] 

   

     

     

    

   

 EXHIBIT C 

   

 Form of Warrant 

   

     

     

    

   

 EXHIBIT D 

   

 PAYMENT/ADVANCE FORM 

   

	 TO: 	   	   	   	   	   
	   	 Tel: (___) 	   	   	 Fax: (___) 	   	   

   

	   	   	   	   	   	   	   
	 Date: 	   	   	   	   	   	   	   
	   	   	   	   	   	   	   
	 From: 	 Avalanche International Corp. 	   	   	   	   
	   	   	   	   	   	   
	 Mr./Ms. 	   	   	 (Contact Person) Tel: 	   	   	   
	   	   	   	   	   	   

   

	 ☐  LOAN DISBURSEMENT:  Amount US
    $ 	   	   

   

	 ☐  LOAN PAYMENT: Amount US$ 	   	   

   

	   	 Loan Number:  	   	   

   

	   	 ☐ 	 Partial Principal Only 	 Deadline 	 3:00 PM 
	   	 ☐ 	 Interest Only 	 Deadline 	 3:00 PM 
	   	 ☐ 	 Pay off (Total Principal and Interest): 	 Deadline 	 3:00 PM 

   

	   	   	   	   	   
	   	 Authorized Signature 
	   	   
	   	 Print Name 	   	   	   	   

   

		  	 All
                                         deadlines are pacific timeExhibit 10.14 

   

 NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (i) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM GENERALLY ACCEPTABLE TO THE COMPANY’S LEGAL COUNSEL, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (ii) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 

   

 August 21, 2017  

 Principal Amount $3,474,400.00  

 Las Vegas, Nevada 

   

 CONVERTIBLE PROMISSORY NOTE 

   

 FOR VALUE RECEIVED, Avalanche International
Corp., a Nevada corporation (hereinafter called “Borrower” or the “Company”), hereby promises to pay to
Digital Power Corporation, a California corporation (the “Holder”), without demand, the aggregate principal amount
of Three Million Four Hundred Seventy Four Thousand, Four Hundred Dollars and no cents ($3,474,400.00) (the “Principal Amount”),
together with all interest accrued thereon, payable on August 21, 2019 (the “Maturity Date”). 

   

 This Convertible Promissory Note (“Note”)
is one of a series of notes (the “Notes”) issued or may be issued pursuant to the terms of a Loan and Security Agreement
(the “Loan Agreement”), by and between the Borrower and the Holder with an effective date as of August 21, 2017 (the
“Issue Date”). Unless otherwise separately defined herein, all capitalized terms used in this Note shall have the
same meaning as ascribed to them in the Loan Agreement. 

   

 WHEREAS, the Holder previously loaned
the Company loans with a face amount of One Million Five Hundred Seventy-Five Thousand Dollars ($1,575,000) in the aggregate consisting
of three notes dated October 5, 2016, November 30, 2016 and February 22, 2017 (collectively the “Prior Notes”) and
other advances in the face amount of One Million Eight Hundred Ninety-Ninety Thousand Four Hundred Dollars ($1,899,400) for an
aggregate of Three Million Four Hundred Seventy Four Thousand, Four Hundred Dollars and no cents ($3,474,400.00); 

   

 WHEREAS, subject to the terms and conditions
contained therein, pursuant to the Loan Agreement, the Holder has agreed to extend the Company a non-revolving credit facility
of up to $5,000,000; 

   

 WHEREAS, in consideration
for the extension of the credit facility as evidenced by the Loan Agreement, the Holder and the Company wish to cancel the Prior
Notes in consideration and issue this Note, including the revision of the conversion price of this Note to fifty cents ($0.50)
per share. 

   

 ARTICLE I 

 GENERAL PROVISIONS 

   

 1.1          Payment.
The Principal Amount of the Note and interest earned thereon, or such portion thereof that has not previously been converted into
common stock, no par value, of the Company (the “Common Stock”) in accordance with Article II hereof, if any, shall
be payable in full on the Maturity Date. The Company shall have the right to prepay all or part of this Note at any time without
penalty upon 30 days written notice. 

   

    1 

     

    

   

 1.2          Secured
Note. The Holder expressly acknowledges that payment of this Note is a secured obligation of the Company under the terms of the
Loan Agreement. 

   

 1.3           Interest.
Subject to the Default Rate provision contained in Section 2.3(b) of the Loan Agreement, the outstanding principal amount of the
Note shall bear interest at twelve percent (12%) per annum (“Interest Rate”) from the Issue Date until the Note is
paid in full. Accrued interest earned prior to the date of this Note will continue to accrue at the Interest Rate for the benefit
of the Holder. 

   

 ARTICLE II 

 CONVERSION RIGHTS 

   

 2.1          Conversion
into the Borrower’s Common Stock. At the option of the Holder, this Note and any interest earned thereon may be converted
into shares of the Borrower’s Common Stock. 

   

 (a)          Conversion
Price. The conversion price will be equal to $0.50, subject to adjustment herein (the “Conversion Price”). 

   

 (b)          Conversion.
The number of shares of Common Stock (“Conversion Shares”) issuable upon a conversion hereunder shall be determined
by dividing amount of this Note to be converted by the Holder by the Conversion Price. 

   

 (c)           Mechanics
of Conversion. Certificates evidencing that number of shares of Common Stock for the portion of the Note converted in accordance
herewith shall be transmitted by the Company’s transfer agent to the Holder by (x) crediting the account of the Holder’s
prime broker with the Depository Trust Company through its Deposit / Withdrawal at Custodian system if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Conversion Shares to,
or resale of the Conversion Shares by, the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144, or (y) otherwise by physical delivery to the address specified by the Holder by the date that
is three (3) Trading Days following conversion (“Share Delivery Date”). 

   

		 (d) 	 Obligation to Deliver Conversion Shares; Certain
                                         Remedies. 

   

 (i)        Obligation
Absolute. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance
with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same;
provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against
the Holder. 

   

 (ii)       Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 2.1(c), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition
to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B)
deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with
its delivery requirements under Section 2.1(c) (the “Buy-In Liquidated Damages”). For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with
respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase
obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. 

   

    2 

     

    

   

 (e)          Adjustment.
The Conversion Price and the number and kind of shares or other securities to be issued upon conversion determined pursuant to
Section 2.1(b), shall be subject to adjustment, from time to time, upon the happening of certain events while this conversion
right remains outstanding, as follows: 

   

 (i)        Fundamental
Transaction. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Note,
the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately
prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 2.1 on the conversion of
this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2.1 on the conversion of this Note). For purposes of any such conversion,
the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Note and the other Transaction Documents in accordance with
the provisions of this Section 2(e)(i) pursuant to written agreements in form and substance reasonably satisfactory to the Holder
and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the
Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such
Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of
this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with a
conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Note
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance
to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted
for (so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the
same effect as if such Successor Entity had been named as the Company herein. The foregoing provisions shall similarly apply to
successive Fundamental Transactions of a similar nature by any such successor entity. 

   

    3 

     

    

   

 (ii)       Stock
Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Notes),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification
of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding
immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification. 

   

 (f)           Notice
of Adjustment. Upon the occurrence of an event specified in Section 2.1(e), the Borrower shall promptly mail to the Holder a notice
setting forth the adjustment and setting forth a statement of the facts requiring such adjustment, provided that any additional
notice requirements set forth in Section 2.1(e)(i) shall also be applicable. 

   

		 (g) 	 Reservation of Shares. At such time when necessary,
                                         Borrower: 

   

 (i)        will
reserve from its authorized and unissued Common Stock a sufficient amount of Common Stock to permit the full conversion of Note; 

   

    4 

     

    

   

 (ii)       represents
that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable, free from all taxes, liens, charges
and preemptive rights with respect to the issuance thereof; and 

   

 (iii)      agrees
that its issuance of Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the
duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon
the conversion of Note. 

   

 ARTICLE III  

 EVENT OF DEFAULT 

   

 The occurrence of an Event of Default
as defined in the Loan Agreement shall, at the option of the Holder hereof, make the outstanding Principal Amount and accrued
and unpaid interest plus all other amounts payable under this Note immediately due and payable in cash: 

   

 ARTICLE IV  

 SECURED NOTE 

   

 4.1         Secured
Note. This Note is a secured obligation of the Borrower as set forth in the Loan Agreement. 

   

 ARTICLE VII  

 MISCELLANEOUS 

   

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

   

 5.2         Notices.
All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing
and either faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Loan Agreement. 

   

 5.3         Amendment
Provision. No provision of this Note may be modified or amended without the prior written consent of holders of the Holder thereof.
The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or supplemented. 

   

 5.4         Assignability.
Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors
and assigns. The Borrower may not assign its obligations under this Note. 

   

 5.5         Governing
Law. Note shall be governed by and construed in accordance with the laws of the State of California in accordance with Section
11 of the Loan Agreement. 

   

 5.6         Construction.
Each party acknowledges that its legal counsel participated in the preparation of Note and, therefore, stipulates that the rule
of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of Note
to favor any party against the other. 

   

    5 

     

    

   

 5.7         Shareholder
Status. The Holder shall not have rights as a shareholder of the Company with respect to unconverted portions of Note. 

   

 5.8         Cost
of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder reasonable costs of collection, including
attorney’s fees. 

   

 [SIGNATURES ON THE FOLLOWING PAGE] 

   

    6 

     

    

   

 IN WITNESS WHEREOF, Borrower has caused
Note to be signed in its name by an authorized officer on September 6, 2017 with an effective date of August 21, 2017. 

   

 AVALANCHE INTERNATIONAL CORP.  

   

	   	   	   
	 By: 	           /s/
    Philip E. Mansour 	   
	 Name: Philip E. Mansour 	   
	 Title: President & CEO 	   

   

    7

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