C.
Investor Note(s) Being
Offset:
*
Subject to adjustments
for corrections, defaults,
interest and other
adjustments permitted
by the Transaction
Documents (as
defined in
the Purchase Agreement),
the terms
of which
shall control in
the event
of any dispute between
the terms
of this Notice
of Exercise of
Borrower Offset Right and
such Transaction
Documents.
Sincerely,
Borrower:
AVALANCHE
INTERNATIONAL, CORP.
By:
_________________
Name:
_________________
Title:
_________________
SECURITIES
PURCHASE AGREEMENT
THIS
SECURITIES PURCHASE
AGREEMENT (this
“Agreement”), dated
as of May
29, 2015, is
entered into
by and between
AVALANCHE INTERNATIONAL,
CORP., a Nevada
corporation (“Company”),
and TYPENEX
CO-INVESTMENT, LLC, a
Utah limited liability
company, its successors
and/or assigns (“Investor”).
A.
Company
and Investor
are executing
and delivering
this Agreement
in reliance
upon the
exemption from
securities registration
afforded by the
rules and
regulations promulgated
by the United
States Securities
and Exchange
Commission (the
“SEC”) under
the Securities
Act of
1933, as amended
(the “1933 Act”).
B.
Investor
desires
to purchase
and Company
desires to issue
and sell, upon
the terms
and conditions
set forth
in this
Agreement (i)
a Secured
Convertible Promissory
Note, in the
form attached
hereto as
Exhibit A,
in the original
principal amount
of $252,500.00
(the “Note”),
convertible into
shares of common
stock, $0.001 par value per share,
of Company
(the “Common Stock”),
upon the terms and
subject to the limitations
and conditions set forth
in such Note, and (ii) 15,000
shares of Common Stock (the
“Origination Shares”).
C.
This
Agreement, the
Note,
the Security Agreement
(as defined below), the
Investor Notes
(as defined
below), and
all other
certificates, documents,
agreements, resolutions
and instruments
delivered to any
party under
or in
connection with
this Agreement,
as the
same may
be amended
from time
to time, are collectively
referred to herein as
the “Transaction Documents”.
D.
For purposes
of this
Agreement: “Conversion
Shares”
means all
shares of Common
Stock issuable
upon conversion
of all
or any portion
of the
Note; and
“Securities” means
the Note,
the Origination
Shares and the
Conversion Shares.
NOW,
THEREFORE, in
consideration of
the above recitals and
other good and
valuable consideration, the
receipt and adequacy
of which
are hereby
acknowledged, Company
and Investor
hereby agree
as follows:
1.
Purchase and Sale
of Securities.
1.1.
Purchase
of Securities.
Company shall issue
and sell
to Investor
and Investor
agrees to
purchase from
Company the
Note and
the Origination
Shares. In
consideration thereof,
Investor shall
pay (i) the
amount designated
as the
initial cash purchase
price on Investor’s
signature page
to this Agreement (the “Initial
Cash Purchase Price”),
and (ii) issue
to Company the
Investor Notes (the sum
of the initial principal
amount of the Investor Notes,
together with the Initial Cash
Purchase Price, the “Purchase
Price”). The Purchase Price,
the OID (as defined
below), and the Transaction Expense
Amount (as defined
below) are
allocated to the
Tranches (as
defined in the
Note) of the
Note and to the Origination Shares
as set forth in the
table attached
hereto as Exhibit B.
For the avoidance
of doubt, the
Initial Cash
Purchase Price
constitutes payment
in full for
the Initial
Tranche (as defined
in the Note)
and the Origination Shares.
1.2.
Form of Payment.
On the Closing
Date, (i) Investor
shall pay
the Purchase
Price to
Company by
delivering the following
at the Closing:
(A) the
Initial Cash
Purchase Price,
which shall
be delivered
by wire
transfer of
immediately available
funds to Company,
in accordance
with Company’s
written wiring instructions; (B)
Investor Note
#1 in the principal
amount of
$50,000.00 duly
executed and substantially
in the
form attached
hereto as Exhibit
C (“Investor Note
#1”);
(C) Investor
Note #2
in the principal
amount of $50,000.00 duly
executed and substantially
in the form attached
hereto as Exhibit C
(“Investor Note
#2”); and (D)
Investor Note
#3 in the
principal amount
of $50,000.00
duly executed
and substantially in the form
attached hereto as Exhibit
C (“Investor Note
#3”, and together with
Investor
Note
#2, the
“Investor Notes”);
and (ii) Company
shall deliver
the duly
executed Note
on behalf
of Company
and deliver
a certificate
representing the Origination
Shares, to
Investor, against
delivery of such Purchase
Price.
1.3.
Closing
Date.
Subject to
the satisfaction
(or written
waiver) of
the conditions
set forth
in Section
5 and Section
6 below,
the date
and time
of the issuance
and sale
of the
Securities pursuant
to this
Agreement (the
“Closing Date”)
shall be 5:00
p.m., Eastern
Time on
or about May
29, 2015, or such
other mutually agreed
upon time. The closing
of the transactions contemplated
by this Agreement (the “Closing”)
shall occur on the
Closing Date
by means of
the exchange
by express courier and email
of .pdf documents, but shall
be deemed to have occurred
at the offices of Hansen
Black Anderson Ashcraft PLLC
in Lehi, Utah.
1.4.
Collateral
for
the
Note.
The Note
shall be secured
by the collateral
set forth
in that
certain Security
Agreement attached
hereto as Exhibit
D listing
the Investor
Notes as
security for
Company’s obligations under
the Transaction Documents
(the “Security Agreement”).
1.5.
Collateral
for
Investor
Notes.
Initially, none
of the
Investor Notes
will be
secured, but
all or any
of the Investor
Notes may
become secured
subsequent to
the Closing
by such collateral
and at
such time
as determined
by Investor
in its
sole discretion.
In the
event Investor desires
to secure any of the Investor
Notes, Company shall timely
execute any and all amendments and documents
and take such other measures
requested by Investor that are
necessary or advisable in order
to properly secure
the applicable Investor Notes.
1.6.
Original
Issue
Discount; Transaction
Expenses. The
Note carries
an original
issue discount
of $22,500.00
(the “OID”).
In addition,
Company agrees
to pay $5,000.00
to Investor
to cover
Investor’s legal fees,
accounting costs, due
diligence, monitoring
and other transaction
costs incurred
in connection
with the
purchase and
sale of the Securities
(the “Transaction
Expense Amount”),
all of which amount is included
in the initial principal
balance of the Note. The Purchase
Price, therefore, shall
be $225,000.00,
computed as follows: $252,500.00
original principal balance,
less the OID, less the Transaction
Expense Amount. The Initial Cash
Purchase Price shall be the
Purchase Price less the sum of
the initial principal amounts
of the
Investor Notes. The portion
of the OID
and the Transaction Expense
Amount allocated to the
Initial Cash Purchase Price
are set forth on
Exhibit B.
2.
Investor’s
Representations
and Warranties.
Investor represents
and warrants
to Company
that: (i)
this Agreement
has been
duly and validly
authorized; (ii)
this Agreement
constitutes a valid
and binding
agreement of
Investor enforceable
in accordance
with its
terms; (iii)
Investor is
an “accredited investor”
as that term is defined in Rule
501(a) of Regulation D of the 1933
Act; and (iv) this
Agreement and the Investor Notes
have been duly executed
and delivered on behalf
of Investor.
3.
Representations
and Warranties
of Company.
Company represents
and warrants
to Investor
that: (i)
Company is
a corporation
duly organized,
validly existing
and in
good standing
under the
laws of
its state
of incorporation
and has
the requisite
corporate power
to own
its properties
and to carry
on its business
as now being
conducted; (ii)
Company is
duly qualified
as a foreign
corporation to do business
and is in good standing
in each jurisdiction where
the nature of the
business conducted or
property owned by it makes
such qualification necessary;
(iii) Company has registered its Common
Stock under Section 15(d)
of the Securities Exchange
Act of 1934,
as amended (the “1934
Act”), and
is obligated to file reports
pursuant to Section 13 or Section
15(d) of the 1934 Act; (iv)
each of the Transaction Documents
and the transactions
contemplated hereby
and thereby, have been duly and
validly authorized by Company;
(v) this Agreement, the Note,
the Security Agreement
and the other Transaction Documents
have been duly executed
and delivered by Company and
constitute the valid and binding
obligations of Company
enforceable in accordance
with their
terms, subject
as to
enforceability only
to general principles
of equity
and to bankruptcy,
insolvency, moratorium,
and other
similar laws
affecting the enforcement of creditors’
rights generally;
(vi) the
execution
and delivery
of the Transaction
Documents
by Company,
the issuance
of Securities
in accordance
with the
terms hereof,
and the
consummation by
Company of
the other
transactions contemplated
by the Transaction
Documents do not
and will
not conflict
with or
result in
a breach
by Company
of any of
the terms
or provisions
of, or
constitute a
default under (a)
Company’s formation documents or
bylaws, each
as currently
in effect,
(b) any indenture,
mortgage, deed
of trust,
or other
material agreement
or instrument
to which
Company is
a party or by which it or
any of its properties
or assets are bound,
including any listing agreement
for the Common Stock,
or (c) any existing applicable law, rule,
or regulation or any applicable
decree, judgment, or order
of any court, United States
federal or state regulatory body,
administrative agency, or other governmental
body having
jurisdiction over
Company or any
of Company’s
properties or assets; (vii) no
further authorization, approval
or consent of any court,
governmental body, regulatory
agency, self- regulatory
organization, or stock exchange
or market or the stockholders or any
lender of Company is required
to be obtained by Company
for the issuance of the Securities
to Investor; (viii)
none of Company’s
filings with
the SEC contained, at
the time they were
filed, any untrue statement of
a material fact
or omitted
to state
any material fact
required to be
stated therein
or necessary
to make
the statements made
therein, in light of the circumstances
under which they were made,
not misleading; (ix) Company has filed
all reports, schedules,
forms, statements and other documents
required to be filed by Company
with the SEC under the 1934
Act on a timely basis or has
received a valid extension of
such time of filing
and has
filed any
such report,
schedule, form,
statement or other
document prior to
the expiration
of any such extension;
(x) Company has not
consummated any financing
transaction that has
not been disclosed
in a periodic
filing with the SEC
under the 1934
Act; (xi) Company
is not currently,
nor has it
been since July
21, 2014, a
“Shell Company,”
as such type
of “issuer”
is described
in Rule
144(i)(1) under
the 1933 Act;
(xii) with
respect to
any commissions,
placement agent
or finder’s
fees or
similar payments
that will or
would become
due and owing
by Company
to any person
or entity as
a result of
this Agreement
or the transactions contemplated
hereby (“Broker
Fees”), any
such Broker Fees will be
made in full compliance with
all applicable laws
and regulations
and only
to a person
or entity
that is a registered
investment adviser or
registered broker-dealer; (xiii)
Investor shall
have no
obligation with
respect to any Broker Fees or
with respect
to any claims
made by or on
behalf of
other persons
for fees of
a type
contemplated in this
subsection that
may be
due in
connection with
the transactions contemplated
hereby and Company shall
indemnify and hold harmless each
of Investor, Investor’s
employees, officers, directors,
stockholders, managers, agents,
and partners, and their respective
affiliates, from and against
all claims, losses,
damages, costs (including the costs
of preparation and attorneys’
fees) and expenses suffered
in respect of any such claimed
or existing Broker Fees; (xiv)
when issued, the Origination Shares
and the Conversion
Shares will be
duly authorized,
validly issued,
fully paid for
and non-assessable, free
and clear of all
liens, claims, charges and
encumbrances; (xv) neither Investor
nor any of its officers, directors,
members, managers, employees,
agents or representatives
has made any representations
or warranties to
Company or any of its officers, directors,
employees, agents or representatives
except as expressly set forth
in the Transaction Documents
and, in making
its decision to
enter into
the transactions contemplated
by the Transaction Documents,
Company is not relying on any representation,
warranty, covenant or promise
of Investor or its officers,
directors, members, managers, employees,
agents or representatives other
than as set forth in the
Transaction Documents; and (xvi)
Company has performed due diligence
and background research on Investor
and its affiliates including,
without limitation, John M. Fife, and,
to its satisfaction, has
made inquiries with
respect to all
matters Company may
consider relevant
to the undertakings and relationships
contemplated by the Transaction Documents
including, among other things, the following:
http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC;
SEC Civil Case
No. 07-C-0347
(N.D. Ill.);
SEC Civil Action
No. 07-CV-347
(N.D. Ill.);
and FINRA Case
#2011029203701. Company, being
aware of the matters described in
subsection (xvi)
above, acknowledges and agrees
that such matters, or any
similar matters, have no bearing
on the transactions contemplated
by the Transaction Documents
and covenants and agrees it will
not use any such information as
a defense to performance
of its obligations under
the Transaction Documents or in any
attempt to avoid, modify or
reduce such obligations
and shall not pay
such proceeds to any other party
pursuant to any financing
transaction effected prior to
the date hereof.
4.
Company
Covenants.
Until
all
of Company’s
obligations under
all of
the Transaction
Documents are
paid and performed
in full,
or within
the timeframes
otherwise specifically
set forth
below, Company
shall comply with the following
covenants: (i) so long
as Investor beneficially
owns any of
the Securities
and for
at least twenty
(20) Trading Days
thereafter, Company
shall file
all reports
required to be filed with the
SEC pursuant to Sections 13 or
15(d) of the 1934 Act, and
shall take all
reasonable action
under its
control to ensure
that adequate
current public
information with respect
to Company, as required in accordance
with Rule 144 of the 1933 Act,
is publicly available, and shall
not terminate its
status as an issuer required
to file reports under
the 1934 Act even
if the 1934 Act or the
rules and regulations thereunder
would permit such termination;
(ii) the Common Stock shall be listed
or quoted for
trading on any of (a)
NYSE, (b) NASDAQ, (c) OTCQX, (d)
OTCQB, or (e) OTC
Pink Current Information; (iii)
when issued, the Origination
Shares and the Conversion Shares
will be duly
authorized, validly issued,
fully paid for and non-assessable, free
and clear of all
liens, claims, charges and
encumbrances; (iv) Company
shall use the
net proceeds
received hereunder
for working
capital and
general corporate purposes
only and shall not pay such proceeds
to any other party
pursuant to any financing
transaction effected prior
to the date hereof; (v)
trading in Company’s Common
Stock shall not
be suspended,
halted, chilled,
frozen, reach
zero bid
or otherwise
cease on
the Company’s
principal trading market; (vi)
from and after the date
hereof and until all
of Company’s obligations
hereunder and the Note
are paid and performed in full,
Company shall not transfer, assign,
sell, pledge, hypothecate or
otherwise alienate or encumber
the Investor Notes in
any way without the prior
written consent of Investor;
and (vii) at all
times during
which the
Note remains
outstanding, Company shall
not have
at any given
time more than five
(5) Variable Security Holders
(as defined below), excluding
Investor, without
Investor’s prior written
consent. For purposes hereof,
the term “Variable Security Holder” means
any holder of any Company
securities that are convertible
into Common Stock (including
without limitation convertible
debt, warrants or convertible
preferred stock) with a conversion
price that varies with
the market price of
the Common Stock.
5.
Conditions
to Company’s
Obligation to Sell.
The obligation
of Company
hereunder to
issue and
sell the
Securities to
Investor at
the Closing
is subject
to the satisfaction,
at or before
the Closing
Date, of each
of the following
conditions:
5.1.
Investor shall
have executed this Agreement
and the Investor Notes
and delivered the same
to Company.
5.2.
Investor shall
have delivered
the Initial
Cash Purchase
Price to Company
in accordance with
Section 1.2 above.
6.
Conditions
to Investor’s
Obligation to Purchase.
The obligation
of Investor
hereunder to
purchase the
Securities at
the Closing
is subject
to the
satisfaction, at
or before
the Closing
Date, of
each of the
following conditions, provided
that these conditions are
for Investor’s sole
benefit and may be waived
by Investor at any
time in its sole discretion:
6.1.
Company shall
have executed this
Agreement and delivered
the same to Investor.
6.2.
Company shall
have delivered
to Investor
the duly
executed Note
in accordance
with Section 1.2
above.
6.3.
Company shall
have delivered
to Investor
a certificate
representing the
Origination Shares.
6.4.
Company
shall have
delivered to Investor
a fully
executed Irrevocable
Letter of Instructions
to Transfer
Agent substantially
in the form
attached hereto
as Exhibit
E acknowledged
in writing
by Company’s transfer
agent (the “Transfer
Agent”).
6.5.
Company
shall have
delivered to
Investor a
fully executed
Secretary’s Certificate
substantially in
the form
attached hereto
as Exhibit
F evidencing
Company’s approval
of the Transaction
Documents.
6.6.
Company shall
have delivered
to Investor
a fully
executed Share
Issuance Resolution substantially
in the form
attached hereto as
Exhibit G to be
delivered to
the Transfer Agent.
6.7.
Company shall
have delivered
to Investor
fully executed
copies of
the Security
Agreement and all
other Transaction Documents
required to be executed
by Company
herein or therein.
7.
Reservation
of
Shares.
At all
times during
which the Note
is convertible,
Company will
reserve from
its authorized
and unissued
Common Stock
to provide
for the
issuance of
Common Stock upon
the full
conversion of the
Note at least
three (3) times
the quotient
obtained by dividing
the Outstanding Balance (as defined
in the Note) by
the Installment Conversion Price
(as defined in the Note) (the “Share
Reserve”), but in any event not less
than 400,000 shares of Common
Stock shall be reserved
at all times for such
purpose (the “Transfer Agent
Reserve”). Company
further agrees that
it will cause the Transfer
Agent to immediately
add shares
of Common Stock to
the Transfer
Agent Reserve
in increments of
100,000 shares
as and when
requested by Investor
in writing
from time
to time,
provided that such
incremental increases do not
cause the Transfer Agent Reserve
to exceed the Share Reserve.
In furtherance thereof,
from and after the date
hereof and until such time that
the Note has
been paid in full,
Company shall require the
Transfer Agent to reserve
for the purpose of issuance
of Conversion Shares under the
Note, a number of shares of Common
Stock equal to the Transfer
Agent Reserve. Company shall
further require the
Transfer Agent to hold such shares
of Common Stock exclusively for
the benefit of Investor and to issue
such shares to Investor promptly
upon Investor’s delivery
of a conversion notice under the
Note. Finally, Company shall require
the Transfer Agent to issue
shares of Common Stock pursuant
to the Note to Investor out
of its authorized and unissued
shares, and not the Transfer Agent
Reserve, to the extent shares
of Common Stock have been
authorized, but not issued,
and are not included in the Transfer
Agent Reserve. The Transfer Agent
shall only issue shares out
of the Transfer Agent
Reserve to the extent there
are no other authorized shares
available for issuance and then
only with Investor’s
written consent.
8.
Miscellaneous. The provisions set
forth in this
Section 8
shall apply
to this Agreement, as
well as all
other Transaction Documents as if
these terms were fully
set forth
therein.
8.1.
Original
Signature
Pages.
Each party
agrees to deliver
its original
signature pages
to the Transaction
Documents to the other
party within five
(5) Trading Days
of the
date hereof.
Notwithstanding the foregoing,
the Transaction
Documents shall
be fully
effective upon
exchange of electronic
signature pages by the parties
and payment of the Initial
Cash Purchase Price by Investor.
For the avoidance of doubt,
the failure by either party
to deliver its original
signature pages to the other
party shall not affect
in any way the validity
or effectiveness of any of the Transaction
Documents, provided that
such failure
to deliver original
signatures shall
be a breach of
the party’s
obligations hereunder.
| 8.2. | Arbitration
of
Claims.
The parties
shall submit
all Claims
(as defined
in Exhibit |
H)
arising under
this Agreement
or any other
Transaction Document
or other
agreements between
the parties
and their
affiliates to
binding arbitration
pursuant to
the arbitration
provisions set
forth in Exhibit
H attached
hereto (the
“Arbitration Provisions”).
The parties
hereby acknowledge
and agree
that the
Arbitration Provisions
are unconditionally
binding on the
parties hereto
and are
severable from
all other
provisions of this Agreement.
By executing this Agreement, Company
represents, warrants and covenants that
Company has reviewed
the Arbitration
Provisions carefully,
consulted with
legal counsel
about such provisions
(or waived its right to do so),
understands that the
Arbitration Provisions are intended
to allow for the
expeditious and
efficient resolution
of any dispute
hereunder, agrees
to the terms
and limitations set forth
in the Arbitration Provisions,
and that Company will
not take a position contrary to
the foregoing
representations.
Company acknowledges
and agrees
that Investor
may rely
upon the foregoing
representations and covenants
of Company
regarding the
Arbitration Provisions.
8.3.
Governing
Law;
Venue.
This Agreement
shall be
governed by
and interpreted
in accordance
with the
laws of the
State of Utah
for contracts
to be
wholly performed
in such
state and
without giving
effect to the
principles thereof
regarding the conflict
of laws.
Each party
consents to and expressly
agrees that exclusive venue
for arbitration of any dispute
arising out of or relating to any Transaction
Document or the relationship
of the parties or their
affiliates shall be in Salt
Lake County, Utah or Utah
County, Utah, Utah;
provided, however,
that notwithstanding anything
herein to the contrary, enforcement
of Investor’s rights under
the Security Agreement will
occur in accordance with the
Uniform Commercial Code
of the applicable state(s) under
the Security Agreement
and enforcement of Company’s
rights over
the Collateral will
occur in accordance
with the laws of
the state in which
the Collateral
is located.
Without modifying
the parties
obligations to
resolve disputes
hereunder pursuant
to the Arbitration
Provisions, for
any litigation
arising in
connection with
any of the
Transaction Documents, each party
hereto hereby (i) consents
to and expressly submits to the
exclusive personal jurisdiction of any
state or federal court sitting
in Salt Lake County,
Utah, (ii) expressly submits
to the exclusive venue
of any such
court for the purposes
hereof, and (iii)
waives any claim
of improper venue and any
claim or objection
that such courts
are an inconvenient
forum or any
other claim
or objection to the
bringing of
any such proceeding
in such jurisdictions
or to
any claim that
such venue
of the
suit, action or
proceeding is improper.
8.4.
Calculation Disputes. Notwithstanding
the Arbitration
Provisions, in the
case of a dispute
as to
any determination
or arithmetic
calculation under
the Transaction
Documents, including
without limitation,
calculating the
Outstanding Balance,
Lender Conversion
Price (as
defined in
the Note),
Lender Conversion Shares (as
defined in the Note), Installment
Conversion Price, Installment
Conversion Shares (as defined
in the Note), Conversion Factor
(as defined in the Note),
Market Price (as
defined in the
Note), or
VWAP (as defined
in the Note) (each, a “Calculation”),
Company or Investor (as
the case may
be) shall submit any disputed
Calculation via
email or facsimile
with confirmation
of receipt
(i)
within two
(2) Trading
Days after
receipt of the
applicable notice
giving rise
to such
dispute to
Company or Investor
(as the
case may
be) or (ii)
if no
notice gave
rise to such
dispute, at
any time
after Investor
learned of the
circumstances giving
rise to
such dispute.
If Investor
and Company
are unable
to agree
upon such Calculation
within two (2) Trading Days
of such disputed
Calculation being submitted to
Company or Investor (as
the case may
be), then Investor shall,
within two (2)
Trading Days,
submit via
email or facsimile the disputed
Calculation to Unkar Systems
Inc. (“Unkar Systems”).
Company shall cause Unkar
Systems to perform the
Calculation and notify
Company and Investor of the
results no later than ten
(10) Trading Days from the time
it receives such disputed
Calculation. Unkar Systems’
determination of the disputed Calculation
shall be binding upon all
parties absent demonstrable error.
Unkar Systems’ fee for performing
such Calculation
shall be paid
by the incorrect
party, or if both parties
are incorrect, by the party whose
Calculation is furthest from
the correct Calculation as determined
by Unkar Systems.
In the
event Company
is the losing
party, no extension
of the Delivery
Date (as
defined in the Note)
shall be granted and Company
shall incur all effects for
failing to deliver the
applicable shares in a timely
manner as set forth in
the Transaction Documents. Notwithstanding
the foregoing, Investor may,
in its sole discretion,
designate an independent, reputable
investment bank or accounting
firm other than Unkar Systems
to resolve any such dispute
and in such event, all references
to “Unkar Systems”
herein will
be replaced with
references to such independent,
reputable investment
bank or accounting firm so designated
by Investor.
8.5.
Counterparts.
Each
Transaction
Document
may
be executed
in any number
of counterparts,
each of
which shall
be deemed
an original,
but all
of which
together shall
constitute one
instrument. The
parties hereto
confirm that any electronic
copy of another party’s
executed counterpart
of a Transaction
Document (or such party’s
signature page thereof)
will be deemed to be an executed
original thereof.
8.6.
Headings. The
headings of
this Agreement
are for
convenience of
reference only
and shall not
form part of,
or affect the
interpretation of, this
Agreement.
8.7.
Severability.
In
the event
that any provision
of this
Agreement is
invalid or
unenforceable under
any applicable statute
or rule of
law, then such provision shall
be deemed inoperative
to the
extent that
it may
conflict therewith
and shall
be deemed
modified to
conform to
such statute
or rule of law. Any provision
hereof which may prove
invalid or unenforceable under any law shall
not affect the
validity or enforceability
of any other
provision hereof.
8.8.
Entire
Agreement.
This Agreement,
together with
the other
Transaction Documents,
contains the entire
understanding of the parties
with respect
to the matters
covered herein
and therein
and, except
as specifically
set forth
herein or therein,
neither Company
nor Investor
makes any
representation, warranty, covenant
or undertaking
with respect
to such matters.
8.9.
No
Reliance.
Company acknowledges
and agrees
that neither
Investor nor
any of its
officers, directors,
stockholders, members,
managers, representatives
or agents
has made
any representations
or warranties
to Company or
any of its
officers, directors,
representatives, agents or
employees except
as expressly set forth
in the
Transaction Documents and, in
making its decision
to enter into the
transactions contemplated
by the Transaction
Documents, Company
is not
relying on
any representation, warranty,
covenant or promise of Investor or its
officers, directors, members,
managers, agents or
representatives other than
as set forth
in the Transaction
Documents.
8.10.
Amendments. No
provision of this
Agreement may
be waived
or amended
other than by
an instrument
in writing signed
by the parties hereto.
8.11.
Notices.
Any
notice
required
or permitted
hereunder shall
be given
in writing
(unless otherwise
specified herein)
and shall
be deemed
effectively given
on the earliest
of: (i)
the date
delivered, if
delivered by personal
delivery as against
written receipt therefor
or by
email to
an executive officer, or by facsimile
(with successful transmission
confirmation), (ii) the
earlier of the date delivered
or the third
Trading Day after deposit,
postage prepaid, in the United
States Postal Service by certified
mail, or (iii) the earlier
of the date
delivered or the third
Trading Day after mailing by
express courier, with delivery
costs and fees prepaid,
in each
case, addressed
to each
of the
other parties
thereunto entitled
at the following addresses (or at such other
addresses as such party may designate by
five (5) calendar days’
advance written notice
similarly given to each
of the other parties
hereto):
If
to Company:
Avalanche
International, Corp.
Attn: Philip
E. Mansour
5940
South Rainbow Blvd.
Las Vegas, Nevada
89118
If
to Investor:
Typenex
Co-Investment, LLC
Attn: John
Fife
303
East Wacker Drive,
Suite 1040
Chicago,
Illinois 60601
With
a copy
to (which copy
shall not
constitute notice):
Hansen
Black Anderson
Ashcraft PLLC
Attn: Jonathan
K. Hansen
3051
West Maple
Loop Drive, Suite 325
Lehi, Utah 84043
8.12.
Successors
and Assigns.
This Agreement
or any of
the severable
rights and
obligations inuring
to the
benefit of
or to
be performed
by Investor
hereunder may
be assigned
by Investor
to a
third party,
including its
financing sources,
in whole
or in
part, without
the need
to obtain
Company’s consent thereto.
Company may not
assign its
rights or
obligations under
this Agreement or delegate
its duties hereunder without
the prior written consent
of Investor.
8.13.
Survival.
The representations
and warranties
of Company
and the agreements
and covenants
set forth
in this
Agreement shall
survive the
Closing hereunder
notwithstanding any due
diligence investigation
conducted by or
on behalf of Investor.
Company agrees
to indemnify
and hold harmless
Investor and
all its
officers, directors,
employees, attorneys,
and agents
for loss or
damage arising as a result of
or related to any breach
or alleged breach by Company
of any of its representations, warranties
and covenants
set forth
in this
Agreement or
any of its
covenants and
obligations under
this Agreement, including
advancement of expenses
as they are incurred.
8.14.
Further
Assurances.
Each party
shall do
and perform,
or cause
to be done
and performed,
all such
further acts
and things,
and shall
execute and
deliver all
such other
agreements, certificates,
instruments and
documents, as
the other
party may
reasonably request
in order
to carry
out the intent
and accomplish the
purposes of
this Agreement
and the consummation
of the
transactions contemplated hereby.
8.15.
Investor’s
Rights
and Remedies
Cumulative; Liquidated
Damages.
All rights,
remedies, and powers
conferred in this Agreement
and the Transaction Documents
are cumulative and not
exclusive of
any other rights
or remedies,
and shall
be in addition
to every
other right,
power, and
remedy that
Investor may
have, whether
specifically granted
in this Agreement
or any other Transaction Document,
or existing at law,
in equity, or by statute,
and any and all such rights
and remedies may be exercised
from time to time
and as often
and in such
order as Investor
may deem expedient.
The parties
acknowledge and agree that
upon Company’s failure
to comply with the provisions
of the Transaction
Documents, Investor’s damages
would be uncertain and difficult
(if not impossible)
to accurately estimate
because of the parties’
inability to predict future
interest rates and future
share prices, Investor’s
increased risk, and the uncertainty
of the availability of a suitable
substitute investment opportunity
for Investor, among
other reasons. Accordingly, any
fees, charges, and default interest
due under the Note and the
other Transaction Documents
are intended
by the parties to be,
and shall be deemed,
liquidated damages (under
Company’s and Investor’s expectations
that any such liquidated damages
will tack back to the Closing
Date for purposes of determining
the holding period under
Rule 144 under the 1933
Act). The parties agree that
such liquidated damages
are a reasonable estimate of Investor’s
actual damages and not a penalty,
and shall not be
deemed in any way
to limit any other right
or remedy Investor
may have hereunder,
at law or
in equity. The
parties acknowledge
and agree that
under the circumstances existing
at the time
this Agreement is entered
into, such liquidated damages
are fair and reasonable and
are not penalties. All fees,
charges, and default interest
provided for in the Transaction
Documents are agreed to by the
parties to be based
upon the
obligations and the risks
assumed by
the parties
as of
the Closing
Date and are consistent with investments
of this type. The
liquidated damages provisions
of the Transaction Documents
shall not limit or preclude a
party from pursuing
any other remedy available at
law or in equity; provided,
however, that the
liquidated damages provided for
in the Transaction Documents
are intended to be
in lieu of
actual damages.
8.16.
Ownership
Limitation.
Notwithstanding anything
to the contrary
contained in this
Agreement or the
other Transaction
Documents, if at
any time
Investor shall
or would
be issued
shares of
Common Stock under
any of
the Transaction
Documents, but
such issuance
would cause
Investor (together
with its
affiliates) to
beneficially own
a number of
shares exceeding
the Maximum Percentage
(as defined
in the
Note), then
Company must not
issue to
Investor the
shares that
would cause
Investor to
exceed the Maximum
Percentage. The shares
of Common
Stock issuable to
Investor that
would cause
the Maximum Percentage to
be exceeded are referred to herein
as the “Ownership
Limitation Shares”.
Company will reserve
the Ownership
Limitation Shares
for the exclusive
benefit of Investor.
From time to
time, Investor
may notify Company
in writing of the
number of the Ownership
Limitation Shares that
may be issued to Investor
without causing
Investor to exceed
the Maximum Percentage.
Upon receipt of
such notice,
Company shall
be unconditionally
obligated to
immediately issue
such designated
shares to Investor,
with a corresponding
reduction in
the number
of the Ownership
Limitation Shares.
For purposes
of this Section, beneficial
ownership of Common Stock will
be determined under Section
13(d) of the 1934 Act.
8.17.
Attorneys’
Fees
and Cost
of Collection.
In the
event of
any arbitration
or action at
law or
in equity
to enforce
or interpret
the terms
of this
Agreement or
any of the
other Transaction
Documents, the parties agree
that the party
who is awarded the
most money
shall be deemed the
prevailing party
for all
purposes and
shall therefore be
entitled to an
additional award of the
full amount
of the
attorneys’ fees,
deposition costs,
and expenses
paid by such
prevailing party in
connection with
arbitration or
litigation without
reduction or apportionment
based upon the
individual claims
or defenses giving
rise to the
fees and
expenses. Nothing
herein shall
restrict or
impair an
arbitrator’s or
a court’s power
to award fees and expenses
for frivolous or bad
faith pleading. If
(i) the Note is placed in the
hands of an attorney for collection
or enforcement prior
to commencing arbitration or
legal proceedings,
or is collected
or enforced
through any
arbitration or
legal proceeding,
or Investor
otherwise takes
action to collect amounts
due under the Note or
to enforce the provisions
of the Note;
or (ii) there occurs any bankruptcy,
reorganization, receivership of
Company or other
proceedings affecting Company’s
creditors’ rights and involving
a claim under the Note; then Company
shall pay the costs incurred
by Investor for such collection,
enforcement or action or in
connection with such bankruptcy,
reorganization, receivership or
other proceeding,
including, without
limitation, attorneys’
fees, expenses, deposition
costs, and disbursements.
8.18.
Waiver.
No
waiver
of any provision
of this
Agreement shall
be effective unless
it is in
the form of
a writing
signed by
the party
granting the
waiver. No
waiver of any
provision or consent
to any prohibited
action shall
constitute a waiver
of any other provision
or consent to any other
prohibited action,
whether or
not similar.
No waiver
or consent
shall constitute
a continuing
waiver or
consent or
commit a
party to provide a
waiver or consent
in the future except
to the extent specifically set
forth in writing.
8.19.
Waiver of Jury
Trial. EACH PARTY
TO THIS
AGREEMENT IRREVOCABLY
WAIVES ANY
AND ALL RIGHTS
SUCH PARTY MAY
HAVE TO DEMAND
THAT ANY
ACTION, PROCEEDING
OR COUNTERCLAIM
ARISING OUT
OF OR IN
ANY WAY RELATED
TO THIS
AGREEMENT OR THE RELATIONSHIPS
OF THE PARTIES HERETO BE
TRIED BY
JURY. THIS WAIVER EXTENDS
TO ANY
AND ALL RIGHTS TO
DEMAND A TRIAL
BY JURY ARISING UNDER COMMON
LAW OR ANY APPLICABLE STATUTE, LAW,
RULE OR REGULATION. FURTHER, EACH PARTY
HERETO ACKNOWLEDGES THAT SUCH PARTY IS
KNOWINGLY AND
VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.
8.20.
Time of
the Essence. Time
is expressly
made of
the essence
with respect
to each
and every provision
of this
Agreement and the
other Transaction Documents.
[Remainder
of
page
intentionally
left blank;
signature page follows]
IN
WITNESS WHEREOF,
the undersigned
Investor and
Company have
caused this
Agreement to be duly
executed as of the
date first above written.
SUBSCRIPTION
AMOUNT:
Principal
Amount of
Note: $252,500.00
Initial
Cash Purchase Price: $75,000.00
INVESTOR:
TYPENEX
CO-INVESTMENT, LLC
By:
Red
Cliffs Investments, Inc., its Manager
/s/ John
M. Fife
John
M. Fife, President
COMPANY:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Philip Mansour
Printed
Name: Phil Mansour
Title:
Ceo
ATTACHED
EXHIBITS:
Exhibit
A Note
Exhibit
B Allocation of
Purchase Price
Exhibit
C Form of Investor
Note
Exhibit
D Security
Agreement
Exhibit
E Irrevocable
Transfer Agent
Instructions
Exhibit
F Secretary’s
Certificate
Exhibit
G Share Issuance
Resolution Exhibit H Arbitration
Provisions
EXHIBIT
H
ARBITRATION
PROVISIONS
1.
Dispute Resolution.
For purposes
of this
Exhibit H,
the term
“Claims” means
any disputes, claims,
demands, causes
of action,
liabilities, damages,
losses, or controversies
whatsoever arising
from related
to or
connected with
the transactions contemplated
in the Transaction
Documents and
any communications
between the parties
related thereto, including
without limitation
any claims
of mutual mistake,
mistake, fraud, misrepresentation,
failure of formation, failure
of consideration, promissory estoppel,
unconscionability, failure of condition precedent,
rescission, and any statutory
claims, tort claims, contract
claims, or claims to
void, invalidate or terminate
the Agreement or any
of the other Transaction
Documents. The term
“Claims” specifically excludes
a dispute over Calculations and
enforcement of Investor’s
rights and remedies against
the personal property
described in
the Security
Agreement under
the applicable
provisions of the Uniform Commercial
Code. The parties hereby agree
that the arbitration provisions
set forth in this
Exhibit H (“Arbitration Provisions”) are binding
on the parties hereto
and are severable from all other provisions
in the Transaction Documents.
As a result, any attempt to
rescind the Agreement or declare
the Agreement or any
other Transaction Document invalid or unenforceable
for any reason is subject
to these Arbitration Provisions.
These Arbitration Provisions shall also survive
any termination or expiration
of the Agreement.
Any capitalized
term not
defined in these
Arbitration Provisions shall
have the meaning
set forth in the Agreement.
2.
Arbitration. Except
as otherwise
provided herein,
all Claims
must be
submitted to
arbitration (“Arbitration”)
to be
conducted exclusively in
Salt Lake County,
Utah or
Utah County, Utah
and pursuant to
the terms
set forth
in these
Arbitration Provisions.
The parties
agree that
the award of
the arbitrator
(the “Arbitration Award”) shall
be final
and binding upon the
parties (subject to the
appear right set
forth in Section 4 below); shall
be the sole and exclusive
remedy between them regarding
any Claims, counterclaims, issues,
or accountings presented or pleaded
to the arbitrator; and shall promptly
be payable in United States
dollars free of any
tax, deduction or
offset (with respect
to monetary awards). Any costs
or fees, including without
limitation attorneys’ fees,
incident to enforcing
the arbitrator’s award shall,
to the
maximum extent permitted
by law, be charged
against the party
resisting such enforcement. The award
shall include Default Interest (as defined
in the Note) both before
and after the award. Judgment
upon the award of the arbitrator will
be entered and enforced by
a state court sitting in Salt
Lake County, Utah. The parties hereby
incorporate herein the provisions and
procedures set forth in the Utah Uniform Arbitration
Act, U.C.A. § 78B-11-101 et seq.
(as amended
or superseded from
time to time,
the “Arbitration
Act”). Pursuant to
Section 105 of
the Arbitration Act, in the
event of conflict between the terms of these Arbitration
Provisions and the provisions of the Arbitration
Act, the terms of these Arbitration
Provisions shall control.
| 3. | Arbitration
Proceedings.
Arbitration
between
the
parties
will
be subject
to the
following procedures: |
3.1
Pursuant to
Section 110 of
the Arbitration
Act, the
parties agree
that a
party may
initiate Arbitration by
giving written notice
to the other
party (“Arbitration Notice”)
in the same
manner that notice
is permitted
under Section
8.11 of the
Agreement; provided, however,
that the Arbitration
Notice may not
be given
by email
or fax. Arbitration will
be deemed initiated
as of the
date that the
Arbitration Notice is deemed
delivered under Section
8.11 of the Agreement (the “Service
Date”). After
the Service Date, information may
be delivered, and notices
may be given, by
email or fax pursuant to Section
8.11 of the Agreement or any other method
permitted thereunder. The Arbitration
Notice must describe the
nature of the controversy,
the remedies
sought, and
the election
to commence Arbitration
proceedings. All
Claims in the Arbitration
Notice must be pleaded consistent with
the Utah Rules of Civil Procedure.
3.2
Within ten (10)
calendar days
after the
Service Date,
Investor shall
select and
submit to
Company the names
of three
(3) arbitrators
that are designated
as “neutrals” or
qualified arbitrators
by Utah
ADR Services
(http://www.utahadrservices.com) (such three
(3) designated persons hereunder
are referred to herein
as the “Proposed Arbitrators”).
For the avoidance of doubt, each Proposed Arbitrator must be qualified
as a “neutral” with Utah
ADR Services. Within ten
(10) calendar days after Investor
has submitted to Company
the names of the Proposed
Arbitrators, Company must select,
by written notice to
Investor, one (1) of the
Proposed Arbitrators to
act as the
arbitrator for the
parties under
these Arbitration Provisions.
If Company fails to
select one of the Proposed Arbitrators
in writing within such 10-day
period, then Investor
may select the
arbitrator from the Proposed
Arbitrators by providing written
notice of such selection
to
Company.
If Investor
fails to
identify the Proposed
Arbitrators within the
time period
required above,
then Company
may at any
time prior to
Investor designating
the Proposed
Arbitrators, select
the names
of three
(3)
arbitrators that
are designated as
“neutrals” or qualified
arbitrators by
Utah ADR Service
by written
notice to
Investor. Investor
may then,
within ten
(10) calendar
days after Company
has submitted
notice of
its selected
arbitrators to
Investor, select, by
written notice
to Company, one
(1) of
the selected
arbitrators to
act as the
arbitrator for the
parties under these Arbitration
Provisions. If
Investor fails to
select in
writing and within such 10-day
period one of
the three (3) arbitrators selected
by Company, then
Company may select the arbitrator
from its three (3) previously selected
arbitrators by providing written
notice of such selection to Investor.
Subject to Paragraph 3.12 below,
the cost of the arbitrator must
be paid equally by
both parties; provided,
however, that if one
party refuses
or fails
to pay its portion
of the
arbitrator fee, then the other
party can advance such unpaid amount
(subject to the accrual of Default
Interest thereupon), with such amount
added to or subtracted from,
as applicable, the award
granted by the arbitrator. If
Utah ADR Services ceases to
exist or to provide
a list of neutrals, then
the arbitrator shall be selected
under the then prevailing rules
of the American Arbitration
Association. The date that the
selected arbitrator agrees
in writing to serve as the
arbitrator hereunder is referred
to herein as the “Arbitration Commencement Date”.
3.3
An answer
and any
counterclaims to
the Arbitration
Notice, which must
be pleaded
consistent with
the Utah
Rules of
Civil Procedure,
shall be
required to
be delivered to
the other party
within twenty
(20) calendar
days after
the Service
Date. Upon
request, the
arbitrator is hereby
instructed to
render a
default award, consistent with
the relief requested in
the Arbitration Notice, against
a party that fails to submit an answer
within such time period.
3.4
The party
that delivers
the Arbitration
Notice to
the other
party shall
have the option
to also commence
concurrent legal
proceedings with any
state court
sitting in Salt
Lake County,
Utah (“Litigation Proceedings”),
subject to the following:
(i) the complaint
in the Litigation Proceedings is
to be substantially similar to the
claims set forth in the Arbitration
Notice, provided that
an additional cause of action
to compel arbitration
will also be included therein,
(ii) so long as the other party
files an answer to the complaint
in the Litigation Proceedings and an
answer to the Arbitration
Notice, the Litigation Proceedings
will be stayed pending
an Arbitration Award
hereunder, (iii) if
the other party
fails to
file an answer
in the Litigation
Proceedings or an answer in the Arbitration
Proceedings, then the party
initiating Arbitration shall be
entitled to a default
judgment consistent with the relief
requested, to be entered in the
Litigation Proceedings, and
(iv) any legal or procedural
issue arising under the
Arbitration Act that requires
a decision of a court of competent
jurisdiction may be determined
in the Litigation Proceedings. Any award of the
arbitrator may be entered in such Litigation
Proceedings pursuant to the Arbitration
Act.
3.5
Pursuant to
Section 118(8) of
the Arbitration
Act, the parties
agree that
discovery shall
be conducted
in accordance
with the
Utah Rules
of Civil
Procedure; provided, however,
that incorporation
of such
rules will
in no
event supersede
the Arbitration
Provisions set
forth herein,
including without limitation
the time
limitation set forth
in Paragraph 3.9
below, and
the following:
a.
Discovery
will
only
be
allowed
if
the
likely
benefits
of the
proposed discovery outweigh
the burden
or expense,
and the discovery sought is likely
to reveal information that
will satisfy a
specific element of
a claim or
defense already
pleaded in the
Arbitration. The
party seeking
discovery shall always
have the burden
of showing that all of the standards
and limitations set forth
in these Arbitration Provisions
are satisfied. The scope of discovery in the
Arbitration proceedings shall also be
limited as follows:
(i)
To facts
directly connected
with the transactions
contemplated by
the Agreement.
(ii)
To facts
and information
that cannot
be obtained
from another
source that
is more convenient,
less burdensome or
less expensive.
b.
No party
shall be
allowed (i)
more than
fifteen (15) interrogatories
(including discrete
subparts), (ii) more
than fifteen (15) requests
for admission (including
discrete subparts),
(iii) more than ten
(10)
document requests
(including discrete
subparts), or
(iv) more than
three depositions (excluding
expert depositions)
for a maximum
of seven
(7) hours per
deposition.
3.6
Any party
submitting any
written discovery
requests, including
interrogatories, requests
for production,
subpoenas to
a party
or a third
party, or requests
for admissions,
must prepay
the estimated
attorneys’ fees
and costs, as determined by
the arbitrator, before the
responding party has
any obligation to produce or respond.
(a)
All discovery
requests must
be submitted
in writing
to the
arbitrator and
the other party
before issuing or
serving such
discovery requests.
The party
issuing the
written discovery
requests must
include with such discovery requests
a detailed explanation of
how the proposed discovery requests satisfy
the requirements of these Arbitration
Provisions and the Utah Rules
of Civil Procedure. Any party
will then be allowed, within
ten (10) calendar days of receiving
the proposed discovery requests,
to submit to
the arbitrator an estimate of
the attorneys’ fees and costs associated with responding
to such written discovery requests
and a written challenge to
each applicable discovery request.
After receipt of an estimate of
attorneys’ fees and costs and/or challenge(s)
to one or more discovery requests,
the arbitrator will make a finding as
to the likely attorneys’ fees and costs associated
with responding to the discovery requests and issue an order that (A) requires
the requesting party to prepay
the attorneys’ fees and costs associated
with responding to
the discovery requests,
and (B) requires
the responding
party to
respond to
the discovery requests as
limited by the
arbitrator within a certain
period of time after receiving payment
from the requesting party.
If a party entitled to submit
an estimate of attorneys’ fees and costs and/or a challenge to discovery
requests fails to do so within
such 10-day period, the arbitrator will
make a finding that (A) there are no
attorneys’ fees or
costs associated with responding to
such discovery requests, and (B)
the responding party must respond
to such discovery requests (as
may be limited by
the arbitrator) within a certain
period of time as determined by
the arbitrator.
(b)
In order
to allow a
written discovery
request, the
arbitrator must
find that
the discovery
request satisfies
the standards set
forth in these
Arbitration Provisions and
the Utah Rules
of Civil Procedure.
The arbitrator must
strictly enforce
these standards. If
a discovery request
does not
satisfy any of
the standards
set forth in
these Arbitration Provisions
or the Utah Rules of
Civil Procedure, the arbitrator
may modify such discovery request to
satisfy the applicable standards,
or strike such discovery request in whole
or in part.
(c)
Discovery deadlines will be
set forth in a scheduling order issued
by the arbitrator.
The parties
hereby authorize
and direct
the arbitrator
to take
such actions
and make
such rulings
as may be
necessary to
carry out the
parties’ intent
for the arbitration
proceedings to be
efficient and expeditious.
3.7
Each party
may submit
expert reports
(and rebuttals
thereto), provided
that such reports
must be submitted
by the deadlines
established by
the arbitrator.
Expert reports
must contain the
following: (a)
a complete
statement of
all opinions
the expert
will offer
at trial
and the
basis and
reasons for
them; (b)
the expert’s name and qualifications,
including a list of all publications within the preceding 10
years, and a list of any other
cases in which
the expert
has testified
at trial or
in a deposition
or prepared
a report
within the
preceding 10 years; and (c) the
compensation to be paid for the expert’s
report and testimony. The parties are entitled
to depose any other party’s
expert witness one time for no more
than 4 hours. An expert may not testify
in a party’s case-in-chief concerning any matter not fairly disclosed
in the expert report.
3.8
All information
disclosed by
either party
during the Arbitration
process (including
without limitation
information disclosed during
the discovery process)
shall be
considered confidential
in nature.
Each party
agrees not
to disclose any
confidential information
received from
the other
party during
the discovery
process unless (i) prior to
or after the time of disclosure such information
becomes public knowledge
or part of the public
domain, not
as a result
of any inaction
or action
of the receiving
party, (ii) such information is required
by a court order, subpoena
or similar legal duress to
be disclosed if such receiving party
has notified the other party
thereof in writing and given it a reasonable opportunity to
obtain a protective order from
a court of competent jurisdiction prior to
disclosure; or (iii) disclosed to
the receiving party’s
agents, representatives and legal
counsel on a need
to know basis who
each agree in writing
not to disclose such information to any
third party. Pursuant to Section
118(5) of the Arbitration Act,
the arbitrator is hereby
authorized and directed to
issue a protective order to prevent
the disclosure of privileged information
and confidential information upon the written
request of either party.
3.9
The parties
hereby authorize
and direct
the arbitrator
to take
such actions
and make
such rulings
as may be
necessary to carry
out the parties’
intent for the
arbitration proceedings to
be efficient
and expeditious.
Pursuant to
Section 120 of
the Arbitration Act,
the parties
hereby agree that
an Arbitration Award
must be made within 150 days after the Arbitration
Commencement Date. The arbitrator is hereby
authorized and directed to hold
a scheduling conference
within ten
(10) calendar days after the
Arbitration Commencement Date in order to
establish a scheduling order
with various binding deadlines for discovery,
expert testimony,
and the submission
of documents by
the parties
to enable the arbitrator
to render a
decision
prior to
the end of
such 150-day period.
The Utah Rules
of Evidence will
apply to
any final
hearing before
the arbitrator.
3.10
The arbitrator
shall have the
right to
award or include
in the
Arbitration Award any
relief which
the arbitrator
deems proper under
the circumstances,
including, without
limitation, specific
performance and
injunctive relief,
provided that the
arbitrator may not
award exemplary
or punitive
damages.
3.11
If any
part of these
Arbitration Provisions is
found to
violate applicable
law or to
be illegal,
then such
provision shall be
modified to the minimum
extent necessary
to make such provision enforceable
under applicable
law.
3.12
The arbitrator is
hereby directed to
require the
losing party
to (i)
pay the
full amount
of any
unpaid costs and
fees of
the arbitrator, and (ii) reimburse the
prevailing party the reasonable
attorneys’ fees,
arbitrator costs,
deposition costs,
and other
discovery costs incurred
by the prevailing
party.
4.1
Following the
entry of
the Arbitration Award,
either party (the
“Appellant”) shall
have a period of
thirty (30)
days in which
to notify
the other party
(the “Appellee”), in
writing, that it
elects to
appeal (the “Appeal”)
the Arbitration Award
(such notice,
an “Appeal Notice”).
The date the
Appellant delivers
an Appeal Notice
to the Appellee is referred
to herein as
the “Appeal Date”.
The Appeal Notice
must be delivered
to the Appellee in accordance
with the provisions of Paragraph
3.1 above with respect to delivery of
an Arbitration Notice and
must describe the
nature of the
appeal and the
remedies sought. In addition,
together with its delivery of an Appeal
Notice to the Appellee, the
Appellant must also pay for (and
provide proof of such payment
to the Appellee together
with its delivery of the Appeal Notice) a bond
in the amount of 110% of the
sum it owes to the
Appellee as a result of the
final decision made by the arbitrators
that it is appealing.
In the event
neither party
delivers an Appeal Notice to
the other within the
deadline prescribed
in this Paragraph 4.1, each
party shall lose its right to appeal
and the decision of the arbitrator
shall be final.
4.2
In the
event an
Appellant delivers
an Appeal
Notice to
the Appellee
in compliance with
the provisions
of Paragraph
4.1 above,
the following
provisions shall apply
with respect
to the
Appeal:
(a)
The Appeal will be
heard by
a three (3) person
arbitration panel (the “Appeal
Panel”). Within ten
(10) calendar
days after
the Appeal
Date, the
Appellee shall select
and submit to
the Appellant
the names
of five (5)
arbitrators that are
designated as “neutrals”
or qualified
arbitrators by
Utah ADR Services
(http://www.utahadrservices.com) (such
five designated
persons hereunder
are referred
to herein
as the “Proposed
Appeal Arbitrators”). For the avoidance of doubt,
each Proposed Appeal Arbitrator must be qualified
as a “neutral”
with Utah ADR
Services. Within ten
(10) calendar days
after the
Appellee has submitted to
the Appellant the names
of the Proposed Appeal Arbitrators,
the Appellant must select, by
written notice to the Appellee,
three (3) of the Proposed Appeal Arbitrators
to act as the members
of the Appeal Panel. If
the Appellant fails to select
three (3) of the Proposed Appeal
Arbitrators in writing within
such 10-day period, then the
Appellee may select such three
(3) arbitrators from the Proposed
Appeal Arbitrators by
providing written notice of
such selection
to the
Appellant. If the Appellee
fails to
identify the Proposed Appeal
Arbitrators within the time period
required above, then the Appellant
may at any time prior to the
Appellee designating the Proposed
Appeal Arbitrators, select
the names of the five (5) Proposed
Appeal Arbitrators.
The Appellee may then, within
ten (10) calendar days after
the Appellant has submitted
notice of its Proposed Appeal
Arbitrators to the Appellee,
select, by written notice to
the Appellant, three (3) of the
Proposed Appeal
Arbitrators to
serve on the
Appeal Panel.
If the
Appellee fails to
select in writing
and within such
10-day period
the three (3) members
of the Appeal Panel,
then the Appellant
may select
such three (3) members
of the Appeal Panel by providing written
notice of such selection to the Appellee.
After the three (3) members
of the Appeal
Panel are
selected, the
Appellee shall designate
in writing to the
Appellant the name of one of
such three (3) arbitrators
to serve as the lead arbitrator.
Subject to Paragraph 4.2(d) below,
the cost of the Appeal Panel must
be paid entirely by
the Appellant. If Utah ADR
Services ceases to exist
or to provide a list of
neutrals, then
the arbitrators shall
be selected
under the then
prevailing rules
of the American
Arbitration Association. The date
that all three (3) selected
arbitrators agree in writing
to serve as the arbitrators
hereunder is referred to herein
as the “Appeal Commencement Date”.
(b)
Within seven (7)
days of the
Appeal Commencement Date,
Appellant shall
deliver to
the Appeal
Panel and
to Appellee
a memorandum
in support
of appeal
describing in
detail its
basis and
arguments for
appealing the Arbitration Award (the “Memorandum in
Support”). Within seven
(7) days of Appellant’s delivery of the Memorandum in Support,
Appellee shall deliver to the
Appeal Panel and
to Appellant a
memorandum
in opposition to
the Memorandum in
Support (the “Memorandum
in Opposition”).
Within seven
(7) days of Appellee’s
delivery of
the Memorandum in Opposition,
Appellant shall deliver
to the
Appeal Panel
and to
Appellee a
reply memorandum to
the Memorandum
in Opposition.
(c)
The parties
hereby agree
that the Appeal must
be heard
by the Appeal Panel
within thirty (30)
calendar days
of the Appeal
Commencement Date
and that the
Appeal Panel’s
Arbitration Award must
be made within
thirty (30)
days after
the Appeal
is heard, and
in any
event within
sixty (60) days
of the
Appeal Commencement Date.
The Utah Rules of Evidence will
apply to any final hearing
before the Appeal Panel.
(d)
The Appeal Panel
is hereby
directed to
require the
losing party
to (i)
pay the
full amount
of any
unpaid costs
and fees of
the Appeal
Panel, and (ii)
reimburse the prevailing
party the reasonable
attorneys’ fees,
arbitrator costs, deposition
costs, and other discovery costs
incurred by the
prevailing party.
[Remainder
of
page
intentionally
left blank]
SECURITY
AGREEMENT
THIS
SECURITY AGREEMENT
(this “Agreement”),
dated as of
May 29,
2015, is executed
by Avalanche
International, Corp.,
a Nevada
corporation (“Debtor”),
in favor
of Typenex
Co-Investment, LLC,
a Utah limited liability
company (“Secured Party”).
A.
Debtor has
issued to
Secured Party
a certain
Secured Convertible
Promissory Note
of even
date herewith,
as may
be amended
from time
to time,
in the original
face amount
of $252,500.00 (the
“Note”).
B.
In
order to
induce Secured
Party to extend
the credit
evidenced by
the Note,
Debtor has
agreed to
enter into
this Agreement
and to grant
Secured Party
a security
interest in
the Collateral
(as defined below).
NOW,
THEREFORE, in
consideration of
the above
recitals and
for other
good and
valuable consideration,
the receipt
and adequacy
of which
are hereby
acknowledged, Debtor
hereby agrees
with Secured
Party as follows:
1.
Definitions and
Interpretation.
When used
in this
Agreement, the
following terms
have the
following respective
meanings:
“Collateral”
has the
meaning given to that
term in Section 2 hereof.
“Lien”
shall mean,
with respect
to any
property, any security
interest, mortgage, pledge,
lien, claim,
charge or other
encumbrance in,
of, or
on such property
or the income
therefrom, including,
without limitation,
the interest
of a vendor
or lessor
under a conditional
sale agreement,
capital lease
or other
title retention
agreement, or
any agreement to
provide any of the
foregoing, and
the filing of
any financing statement
or similar
instrument under the
UCC or comparable
law of any jurisdiction.
“Obligations”
means (a)
all loans,
advances, future
advances, debts,
liabilities and
obligations, howsoever
arising, owed
by Debtor
to Secured
Party or
any affiliate
of Secured
Party of
every kind
and description,
now existing
or hereafter
arising, whether
created by the
Note, this Agreement,
that certain Securities Purchase
Agreement of even date herewith,
entered into by and between Debtor
and Secured
Party (the
“Purchase Agreement”),
any other Transaction
Documents (as defined
in the Purchase Agreement),
any modification or amendment
to any of the foregoing, guaranty
of payment or other contract
or by a quasi-contract, tort,
statute or other operation
of law, whether incurred or owed
directly to Secured
Party or as an affiliate
of Secured Party
or acquired by
Secured Party
or an affiliate of
Secured Party
by purchase,
pledge or otherwise, (b)
all costs and expenses,
including attorneys’ fees,
incurred by Secured Party or
any affiliate of Secured Party
in connection with the Note
or in connection
with the collection
or enforcement of
any portion of the
indebtedness, liabilities or obligations
described in the foregoing
clause (a),
(c) the
payment of
all other
sums, with
interest thereon,
advanced in accordance herewith to
protect the security of this
Agreement, and (d) the
performance of the covenants
and agreements
of Debtor contained
in this Agreement
and all other
Transaction Documents.
“Permitted
Liens” means
(a) Liens
for taxes
not yet
delinquent or Liens
for taxes
being contested
in good
faith and
by appropriate
proceedings for
which adequate
reserves have
been established,
and (b)
Liens in
favor of
Secured Party
under this
Agreement or
arising under the
other Transaction
Documents.
“UCC”
means the
Uniform Commercial
Code as
in effect
in the state
whose laws
would govern
the security
interest in,
including without
limitation the perfection
thereof, and foreclosure
of the
applicable Collateral.
Unless
otherwise defined
herein, all
terms defined
in the
UCC have
the respective
meanings given
to those terms in the
UCC.
2.
Grant of
Security Interest.
As security
for the Obligations,
Debtor hereby
pledges to
Secured Party
and grants
to Secured
Party a
security interest
in all
right, title,
interest, claims
and demands
of Debtor in
and to
the property described
in Schedule
A hereto,
and all replacements,
proceeds, products, and accessions
thereof (collectively, the “Collateral”).
3.
Authorization to
File Financing
Statements.
Debtor hereby
irrevocably authorizes
Secured Party
at any time
and from time
to time
to file in
any filing
office in
any Uniform
Commercial Code
jurisdiction or
other jurisdiction
of Debtor
or its subsidiaries
(including without
limitation Nevada)
any financing
statements or
documents having
a similar
effect and
amendments thereto
that provide
any other information required
by the Uniform Commercial Code
(or similar law of any non-United States
jurisdiction, if applicable) of such state
or jurisdiction for the sufficiency
or filing office acceptance of
any financing
statement or amendment,
including whether
Debtor is an
organization, the type
of organization and any organization
identification number issued
to Debtor. Debtor agrees to
furnish any such information to Secured
Party promptly upon Secured Party’s
request.
4.
General Representations and
Warranties. Debtor represents
and warrants to Secured
Party that (a)
Debtor is
the owner of
the Collateral and
that no
other person has
any right,
title, claim
or interest
(by way of Lien
or otherwise) in, against
or to
the Collateral,
other than
Permitted Liens, and (b) upon
the filing
of UCC-1
financing statements
with the Nevada
Secretary of State,
Secured Party
shall have
a perfected first-position
security interest in the Collateral
to the extent that
a security interest in the
Collateral can be perfected
by such filing, except
for Permitted Liens.
| 5. | Additional
Covenants. Debtor
hereby agrees: |
5.1.
to perform
all acts
that may
be necessary
to maintain,
preserve, protect
and perfect
in the Collateral,
the Lien
granted to
Secured Party therein,
and the
perfection and
priority of such
Lien, except for Permitted
Liens;
5.2.
to procure,
execute (including
endorse, as applicable),
and deliver from
time to
time any
endorsements, assignments,
financing statements,
certificates of
title, and
all other
instruments, documents
and/or writings
reasonably deemed
necessary or appropriate
by Secured Party
to perfect,
maintain and protect Secured
Party’s Lien hereunder
and the priority
thereof;
5.3.
to provide at
least fifteen
(15) days prior written
notice to Secured Party
of any of the
following events:
(a) any
changes or
alterations of
Debtor’s name,
(b) any
changes with
respect to
Debtor’s address
or principal
place of business,
or (c) the formation
of any subsidiaries
of Debtor;
5.4.
upon the occurrence
of an
Event of
Default (as
defined in the
Note) under
the Note
and, thereafter,
at Secured
Party’s request,
to endorse
(up to the
outstanding amount
under such
promissory notes
at the time
of Secured Party’s request),
assign and deliver
any promissory notes
included in the Collateral to
Secured Party, accompanied by
such instruments of transfer
or assignment duly executed
in blank as Secured
Party may from time to time specify;
5.5.
to the
extent the
Collateral is not
delivered to Secured
Party pursuant
to this
Agreement, to
keep the
Collateral at
the principal
office of
Debtor (unless otherwise
agreed to by Secured
Party in writing),
and not to relocate the
Collateral to any other
locations without
the prior
written consent
of Secured Party;
5.6.
not to sell
or otherwise
dispose, or
offer to
sell or
otherwise dispose,
of the
Collateral or
any interest therein (other
than inventory
in the ordinary
course of business);
and
5.7.
not to, directly
or indirectly,
allow, grant
or suffer
to exist
any Lien
upon any
of the Collateral, other
than Permitted Liens.
6.
Authorized Action
by Secured Party.
Debtor hereby
irrevocably appoints
Secured Party as
its attorney-in-fact
(which appointment
is coupled
with an
interest) and agrees
that Secured
Party may
perform (but
Secured Party
shall not be
obligated to
and shall
incur no
liability to
Debtor or
any third party for failure so
to do) any act which Debtor
is obligated by this Agreement
to perform, and to exercise such
rights and powers
as Debtor might
exercise with respect to the
Collateral, including the
right to (a) collect by legal
proceedings or otherwise and endorse,
receive and receipt for all
dividends, interest, payments,
proceeds and other sums
and property now or hereafter
payable on or on account of the
Collateral; (b) enter into
any extension, reorganization,
deposit, merger,
consolidation or other
agreement pertaining to, or deposit,
surrender, accept, hold or apply other
property in exchange for the Collateral;
(c) make any compromise
or settlement,
and take any
action Secured
Party deems
advisable, with respect
to the Collateral;
(d) file
a copy
of this Agreement
with any governmental
agency, body or
authority, at
the sole cost
and expense
of Debtor; (e)
insure, process
and preserve
the Collateral; (f)
pay any indebtedness of Debtor
relating to the Collateral;
(g) execute and
file UCC financing
statements and other documents,
certificates, instruments
and agreements
with respect
to the Collateral
or as otherwise
required or permitted
hereunder; and (h) take
any and all appropriate action
and execute any
and all documents and instruments
that may be necessary
or useful to accomplish the purposes
of this Agreement; provided,
however, that Secured Party
shall not exercise
any such powers
granted pursuant to clauses
(a) through (c)
above prior to the occurrence
of an Event of Default and shall
only exercise such powers
during the continuance of an Event
of Default. The powers
conferred on Secured Party under
this Section 6 are
solely to protect
its interests
in the Collateral and
shall not impose any
duty upon it
to exercise any
such powers. Secured Party
shall be accountable only for
the amounts that
it actually receives as a result
of the exercise of such
powers, and neither Secured Party
nor any of its stockholders,
directors, officers, managers,
employees or agents
shall be responsible
to Debtor for
any act or failure to
act, except
with respect to Secured
Party’s own gross
negligence or
willful misconduct.
Nothing in this Section
6 shall be
deemed an authorization for
Debtor to take any action
that it is otherwise expressly
prohibited from undertaking by
way of other
provision of this Agreement.
7.1.
Default.
Debtor
shall
be deemed
in default
under this
Agreement upon
the occurrence
of an Event
of Default
(as defined
in the Note).
7.2.
Remedies. Upon
the occurrence
of any
such Event
of Default,
Secured Party
shall have
the rights
of a
secured creditor
under the
UCC, all
rights granted
by this
Agreement and
by law, including,
without limiting
the foregoing,
(a) the
right to require
Debtor to assemble
the Collateral and
make it available
to Secured Party
at a place to be
designated by Secured
Party, and (b) the
right to take possession
of the Collateral, and for
that purpose Secured
Party may enter upon
premises on which the Collateral
may be situated and remove
the Collateral therefrom. Debtor
hereby agrees that fifteen (15)
days’ notice of a public
sale of any Collateral
or notice of
the date after
which a private sale
of any Collateral may
take place is reasonable. In
addition, Debtor waives
any and all rights
that it may have
to a
judicial
hearing in
advance of
the enforcement
of any of
Secured Party’s
rights and
remedies hereunder,
including, without
limitation, Secured
Party’s right
following an
Event of
Default to
take immediate
possession of
Collateral and
to exercise Secured
Party’s rights and remedies
with respect thereto.
Secured Party may also have
a receiver appointed to take
charge of all or any portion
of the Collateral and to exercise
all rights of Secured
Party under this Agreement. Secured
Party may exercise any of its
rights under this
Section 7.2
without demand
or notice
of any
kind. The remedies
in this
Agreement, including
without limitation this Section
7.2, are in addition to, not in limitation
of, any other right, power, privilege,
or remedy, either in law, in
equity, or otherwise, to which
Secured Party may be entitled.
No failure or delay
on the part of Secured
party in exercising
any right, power,
or remedy will
operate as a waiver thereof,
nor will any
single or partial exercise
thereof preclude any other
or further exercise thereof
or the
exercise of
any other right
hereunder. All
of Secured
Party’s rights
and remedies,
whether evidenced
by this Agreement
or by any other agreement,
instrument or document
shall be cumulative
and may be exercised
singularly or concurrently.
7.3.
Standards for
Exercising Rights and
Remedies. To
the extent that
applicable law
imposes duties
on Secured
Party to exercise
remedies in a
commercially reasonable
manner, Debtor acknowledges
and agrees
that it
is not commercially
unreasonable for
Secured Party
(a) to
fail to
incur expenses
reasonably deemed
significant by Secured
Party to
prepare Collateral
for disposition,
(b) to
fail to obtain third
party consents for
access to Collateral to
be disposed
of, or to
obtain or,
if not
required by other law,
to fail to obtain governmental
or third party
consents for the
collection or disposition
of Collateral to be collected
or disposed of, (c) to fail
to exercise collection remedies
against account debtors or other
persons obligated on Collateral
or to fail to remove liens or encumbrances
on or any adverse claims
against Collateral, (d)
to exercise collection
remedies against account
debtors and other persons obligated
on Collateral directly
or through the use of collection
agencies and other collection
specialists, (e) to advertise dispositions
of Collateral through
publications or media of general
circulation, whether or not the Collateral
is of a specialized nature, (f)
to contact other persons,
whether or not in the same business
as Debtor,
for expressions
of interest in
acquiring all
or any portion
of the Collateral,
(g) to hire
one or more professional auctioneers
to assist in the disposition
of Collateral, whether or not
the Collateral is of a
specialized nature,
(h) to dispose
of Collateral by utilizing Internet
sites that provide
for the auction of assets of
the types included in the
Collateral or that have the reasonable
capability of doing so, or that
match buyers and sellers
of assets, (i) to
dispose of assets in wholesale
rather than retail
markets, (j) to disclaim disposition
warranties, (k) to purchase insurance
or credit enhancements to insure
Secured Party against risks
of loss, collection or disposition
of Collateral or to provide to Secured
Party a guaranteed return
from the collection or
disposition of
Collateral, or (l)
to the extent deemed appropriate
by Secured Party, to obtain the services
of other brokers, investment
bankers, consultants and other
professionals to assist Secured
Party in the collection or disposition
of any of the Collateral. Debtor acknowledges
that the purpose
of this Section
is to provide non-exhaustive
indications of what
actions or omissions by Secured
Party would fulfill Secured
Party’s duties under the
UCC in Secured Party’s exercise
of remedies
against the
Collateral and that
other actions
or omissions by Secured
Party shall
not be deemed to fail
to fulfill such duties solely
on account of not being
indicated in this Section. Without
limitation upon the foregoing,
nothing contained in this Section
shall be construed to grant any
rights to Debtor or to impose
any duties on Secured Party
that would not have been granted
or imposed by this Agreement
or by applicable law in the absence
of this Section.
7.4.
Marshalling. Secured
Party shall
not be
required to
marshal any present
or future
Collateral for,
or other
assurances of payment
of, the Obligations
or to resort
to such Collateral
or other
assurances of
payment in
any particular
order, and all
of its
rights and
remedies hereunder
and in respect
of such
Collateral and
other assurances
of payment
shall be cumulative
and in addition
to all
other rights
and remedies, however
existing or arising. To the extent
that it lawfully may,
Debtor hereby agrees
that it will not invoke
any law relating to the marshalling
of Collateral which might
cause delay in or impede the
enforcement of
Secured Party’s
rights and
remedies under
this Agreement
or under any
other instrument
creating
or evidencing
any of the
Obligations or
under which
any of the
Obligations is
outstanding or
by which
any of the
Obligations is
secured or
payment thereof
is otherwise
assured, and,
to the extent
that it
lawfully may,
Debtor hereby
irrevocably waives
the benefits
of all such
laws.
7.5.
Application of
Collateral Proceeds.
The proceeds
and/or avails
of the Collateral,
or any part
thereof, and
the proceeds
and the avails
of any remedy
hereunder (as well
as any other
amounts of any
kind held
by Secured
Party at
the time
of, or
received by
Secured Party
after, the occurrence
of an Event of
Default) shall be paid
to and applied
as follows:
(a)
First, to
the payment
of reasonable costs
and expenses,
including all
amounts expended
to preserve
the value
of the Collateral,
of foreclosure
or suit,
if any,
and of
such sale
and the exercise
of any other
rights or remedies,
and of all
proper fees,
expenses, liability
and advances, including
reasonable legal expenses
and attorneys’ fees,
incurred or made hereunder
by Secured Party;
(b)
Second, to the
payment to Secured
Party of the
amount then
owing or
unpaid on the
Note (to
be applied
first to
accrued interest
and second
to outstanding
principal) and all
amounts owed under
any of the other
Transaction Documents; and
(c)
Third, to
the payment
of the
surplus, if
any, to
Debtor, its
successors and
assigns, or
to whosoever may
be lawfully entitled
to receive the same.
In
the absence of final
payment and satisfaction in
full of all
of the Obligations, Debtor shall
remain liable for any
deficiency.
8.1.
Notices. Any
notice required
or permitted
hereunder shall
be given
in the
manner provided
in the subsection
titled “Notices”
in the
Purchase Agreement,
the terms
of which
are incorporated
herein by this
reference.
8.2.
Non-waiver. No
failure or delay
on Secured
Party’s part
in exercising
any right
hereunder shall
operate as a
waiver thereof
or of
any other
right nor
shall any
single or
partial exercise
of any
such right preclude
any other further
exercise thereof or
of any other
right.
8.3.
Amendments and
Waivers.
This Agreement
may not be
amended or
modified, nor
may any
of its terms
be waived,
except by
written instruments
signed by Debtor
and Secured
Party. Each waiver
or consent
under any
provision hereof
shall be
effective only
in the specific
instances for
the purpose for which
given.
8.4.
Assignment. This
Agreement shall
be binding
upon and inure
to the benefit
of Secured
Party and Debtor
and their
respective successors
and assigns;
provided, however,
that Debtor
may not
sell, assign
or delegate
rights and
obligations hereunder
without the prior
written consent
of Secured Party.
8.5.
Cumulative Rights,
etc. The
rights, powers
and remedies
of Secured
Party under
this Agreement
shall be
in addition
to all
rights, powers
and remedies
given to
Secured Party
by virtue
of any
applicable law,
rule or
regulation of
any governmental
authority, or
the Note,
all of
which rights,
powers, and remedies shall be
cumulative and may be exercised
successively or concurrently without
impairing Secured
Party’s rights
hereunder. Debtor
waives any
right to require
Secured Party to proceed
against any person or entity
or to exhaust any Collateral
or to pursue any remedy
in Secured Party’s power.
8.6.
Partial Invalidity.
If any
part of this
Agreement is construed
to be
in violation
of any
law, such part
shall be
modified to
achieve the
objective of
the parties
to the
fullest extent
permitted and the balance
of this Agreement
shall remain in
full force and
effect.
8.7.
Expenses. Debtor
shall pay
on demand
all reasonable
fees and
expenses, including
reasonable attorneys’
fees and
expenses, incurred
by Secured
Party in
connection with
the custody,
preservation or
sale of,
or other
realization on,
any of
the Collateral
or the enforcement
or attempt
to enforce
any of the Obligations
which are
not performed
as and when
required by this Agreement.
8.8.
Entire Agreement.
This Agreement
and the other
Transaction Documents,
taken together,
constitute and contain
the entire
agreement of
Debtor and
Secured Party
with respect
to this
particular matter
and supersede
any and all
prior agreements,
negotiations, correspondence,
understandings and communications
between the
parties, whether
written or oral,
respecting the subject
matter hereof.
8.9.
Governing Law.
Except as
otherwise specifically
set forth
herein, the
parties expressly
agree that
this Agreement
shall be
governed solely
by the laws
of the State
of Utah,
without giving
effect to the
principles thereof
regarding the conflict
of laws; provided,
however, that
enforcement of Secured Party’s
rights and remedies
against the Collateral as provided
herein will be subject to the
UCC.
8.10.
Waiver of
Jury Trial.
EACH PARTY
TO THIS
AGREEMENT IRREVOCABLY
WAIVES ANY
AND ALL
RIGHTS IT
MAY HAVE
TO DEMAND
THAT ANY
ACTION, PROCEEDING
OR COUNTERCLAIM
ARISING OUT
OF OR
IN ANY
WAY RELATED
TO THIS AGREEMENT
OR THE
RELATIONSHIPS OF
THE PARTIES
HERETO BE
TRIED BY JURY.
THIS WAIVER EXTENDS
TO ANY AND ALL
RIGHTS TO DEMAND A TRIAL BY
JURY ARISING UNDER COMMON
LAW OR ANY APPLICABLE
STATUTE, LAW, RULE OR
REGULATION. FURTHER, EACH PARTY
HERETO ACKNOWLEDGES THAT IT
IS KNOWINGLY AND
VOLUNTARILY WAIVING ITS
RIGHT TO DEMAND TRIAL
BY JURY.
8.11.
Purchase Agreement;
Arbitration of
Disputes.
By executing this Agreement,
each party agrees
to be bound
by the
terms, conditions
and general
provisions of
the Purchase
Agreement and
the other
Transaction Documents,
including without
limitation the
Arbitration Provisions
(as defined
in the Purchase Agreement)
set forth as
an exhibit to the
Purchase Agreement.
8.12.
Counterparts. This
Agreement may
be executed
in any
number of counterparts,
each of which shall
be an original
and all of which
together shall
constitute one instrument. Any
electronic copy of a party’s
executed counterpart
will be deemed
to be an executed
original.
8.13.
Termination of
Security Interest.
Upon the
payment in
full of
all Obligations,
the security
interest granted
herein shall
terminate and
all rights
to the
Collateral shall
revert to Debtor.
Upon such termination,
Secured Party hereby
authorizes Debtor
to file
any UCC
termination statements
necessary to effect
such termination
and Secured
Party will
execute and
deliver to
Debtor any
additional documents or
instruments as Debtor shall
reasonably request to evidence
such termination.
8.14.
Time of
the Essence. Time
is expressly
made of
the essence
with respect
to each
and every provision
of this
Agreement.
[Remainder
of
page
intentionally left blank;
signature page follows]
IN
WITNESS WHEREOF,
Secured Party
and Debtor
have caused
this Agreement
to be
executed as of
the day and year
first above written.
SECURED
PARTY:
TYPENEX
CO-INVESTMENT, LLC
By:
Red
Cliffs Investments, Inc., its Manager
/s/ John
M. Fife
John M.
Fife, President
DEBTOR:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phil Mansour
Name: Phil
Mansour
Title:
Ceo
SCHEDULE
A
TO
SECURITY AGREEMENT
Those
certain Investor
Notes (comprised
of
Investor Note
#1, Investor
Note #2
and Investor Note
#3) issued
by Secured Party in favor
of Debtor on May
29, 2015, in the initial
principal amount
of $50,000.00
each, and any
and all
claims, rights
and interests
in any of
the above
and all substitutions
for, additions
and accessions to, and
proceeds thereof.
THIS
NOTE
MAY NOT
BE SOLD,
TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR
OTHERWISE ALIENATED OR
ENCUMBERED WITHOUT THE
PRIOR WRITTEN CONSENT OF
INVESTOR.
$50,000.00
State
of Utah
May 29, 2015
INVESTOR
NOTE #1
FOR
VALUE RECEIVED,
TYPENEX CO-INVESTMENT,
LLC, a
Utah limited
liability company
(“Investor”), hereby
promises to pay
to AVALANCHE
INTERNATIONAL, CORP.,
a Nevada
corporation (“Company”,
and together
with Investor,
the “Parties”),
the principal
sum of $50,000.00
together with all
accrued and unpaid
interest thereon,
fees incurred
or other
amounts owing
hereunder, all as set
forth below in this
Investor Note #1 (this
“Note”). This Note
is issued
pursuant to that
certain Securities Purchase
Agreement of even date herewith,
entered into by
and between Investor
and Company (as the
same may be amended from time
to time, the “Purchase Agreement”),
pursuant to which Company
issued to Investor
that certain
Secured Convertible
Promissory Note
in the principal
amount of
$252,500.00
(as the
same may be
amended from
time to time,
the “Company
Note”)
convertible into
shares of
Company’s Common
Stock. All
capitalized terms
used but
not otherwise
defined herein
shall have the meanings
ascribed thereto in
the Purchase Agreement.
1.
Principal and
Interest.
Interest
shall
accrue
on the unpaid principal
balance and any unpaid
late fees
or other
fees under this
Note at
a rate
of eight
percent (8%)
per annum
until the full
amount of
the principal and
fees has been
paid. Interest shall
be computed
on the
basis of a
365-day year
for the actual
number of days
elapsed. Notwithstanding any
provision to the
contrary herein, in
no event shall
the applicable interest
rate at any time
exceed the maximum
interest rate allowed
under applicable law, as
provided in Section
12 below. The entire
unpaid principal balance
and all accrued
and unpaid interest,
if any, under
this Note, shall
be due and
payable on the
date that is thirteen
(13) months from
the date hereof
(the “Investor
Note Maturity
Date”); provided,
however, that Investor
may elect, in its
sole discretion, to extend
the Investor Note Maturity
Date for up
to thirty (30)
days by delivering
written notice of
such election
to Company
at any
time prior
to the
Investor Note
Maturity Date.
2.
Payment.
Unless
prepaid,
all
principal and
accrued interest under
this Note is
payable in
one lump
sum on the
Investor Note Maturity
Date. All payments
of interest
and principal shall
be (i)
in lawful
money of
the United
States of
America, and
(ii) in
the form
of immediately
available funds.
All payments shall
be applied first
to costs of collection, if
any, then to accrued and unpaid
interest, and thereafter
to principal.
Payment of
principal and interest
hereunder shall
be delivered
to Company
at the address
furnished to Investor for
that purpose.
3.
Prepayment
by Investor.
Investor may,
with Company’s consent,
pay, without penalty,
all or any
portion of
the outstanding
balance along
with any
accrued but
unpaid interest
on this
Note at
any time prior
to the Investor Note
Maturity Date.
4.
Security;
Collateral.
Investor may,
in its
sole discretion, designate
collateral (the “Collateral”)
as it deems
fit, as security
for Investor’s
obligations hereunder, which
Collateral may be,
but is not
required to
be, real
property, a letter
of credit
with a financial
institution determined by Investor
in its sole discretion,
or pledged membership interests,
provided that the net
fair market value of the
Collateral (net of any outstanding
monetary liens)
shall not be less than the principal
balance of this Note as
of the date
of any such designation.
Upon Investor’s
designation of
Collateral, each
of Investor and Company
shall timely execute any and
all documents necessary
or advisable in order to properly
grant a security interest
upon the Collateral
in favor of
Company.
5.
Release.
Company
covenants
and
agrees that
in the
event that this
Note is
secured by Collateral,
Company shall timely
execute any and all
documents necessary
or advisable in order
to release such
security interest and
Collateral to Investor,
or Investor’s
designee, upon
the earlier
of (i) the
date this
Note is
paid in full
and (ii)
the date
that is
six (6)
months and three
(3) days
following the
date such
Collateral is given
as security
for this
Note, or
such later
date as
determined in
the sole
discretion of
Investor (the
“Release Date”).
For the avoidance of
doubt, as of the date hereof,
there is
no collateral securing
this Note,
and after
the Release
Date, as
applicable, there
shall be no
collateral securing
this Note.
6.
Right
of Offset.
Notwithstanding anything
to the contrary
herein or
in any of
the other
Transaction Documents,
in the event
(i) of
the occurrence
of any Event
of Default
(as defined
in the
Company Note)
under the
Company Note or
any other
note issued
by Company
in connection
with the
Purchase Agreement,
(ii) Investor applies
a Default Effect
(as defined
in the Company
Note) under
the Company Note,
(iii) the Outstanding
Balance is automatically increased
to the Mandatory Default Amount
under the Company Note, (iv)
the Company Note is accelerated
for any reason, or (v) of a breach
of any material term,
condition, representation,
warranty, covenant
or obligation of
Company under any Transaction
Document; Investor shall be entitled
to deduct and
offset any amount owing
by Company under the
Company Note from any amount
owed by Investor
under this Note
(the “Investor
Offset Right”),
provided that if any of the foregoing
events occur and Investor
has not yet exercised
the Investor Offset Right,
the Investor Offset
Right shall be automatically
exercised on the date that is
thirty (30) days prior to the
Investor Note Maturity
Date (an “Automatic Offset”).
Other than with respect
to an Automatic Offset, Investor
may only elect to exercise the
Investor Offset Right by
delivering to Company an
offset notice
in a form
substantially similar to
Exhibit D to the Company
Note or another
form of Investor’s choosing.
In the event
that Investor’s exercise
of the Investor
Offset Right under this Section
Error! Reference
source not
found. results
in the
full satisfaction
of Investor’s
obligations under
this Note, then
Company shall return this Note
to Investor for cancellation
or, in the event this Note
has been lost, stolen
or destroyed,
Company shall provide
Investor with
a lost note affidavit in a form
reasonably acceptable to Investor.
7.
Default.
If any of the
events specified below shall
occur (each,
an “Investor Note
Default”)
Company may
declare the
unpaid principal
balance under
this Note,
together with
all accrued
and unpaid interest
thereon, fees incurred
or other amounts
owing hereunder
immediately due and payable,
by notice in writing
to Investor. If any
default, other than a Payment
Default (as defined below),
is curable, then
the default
may be cured
(and no Investor
Note Default will
have occurred)
if Investor, after receiving
written notice
from Company
demanding cure of
such default,
either (i) cures
the default within
fifteen (15) days of the receipt
of such notice,
or (ii) if the cure requires
more than fifteen (15) days,
immediately initiates steps
that Company deems
in Company’s reasonable
discretion to be sufficient
to cure the default and thereafter
diligently continues and completes
all reasonable and necessary
steps sufficient to produce
compliance as soon as reasonably
practical. Each of the following
events shall
constitute an Investor
Note Default:
7.1.
Failure to
Pay. Investor’s
failure to make
any payment when
due and
payable under
this Note (a
“Payment Default”);
7.2.
Breaches of
Covenants.
Investor’s failure
to observe
or perform any
other covenant, obligation,
condition or agreement
contained in this
Note;
7.3.
Representations and
Warranties. If
any representation,
warranty, certificate,
or other
statement (financial
or otherwise)
made or
furnished by
or on behalf
of Investor
to Company
in writing
in connection
with this
Note or any of the
other Transaction
Documents, or as an inducement
to
Company
to enter
into the Purchase
Agreement, shall
be false
or misleading
in any
material respect
when made
or furnished; and
7.4.
Involuntary Bankruptcy. If
any involuntary petition is filed
under any bankruptcy
or similar
law or
rule against
Investor, and such
petition is
not dismissed
within sixty
(60) days,
or a receiver,
trustee, liquidator, assignee,
custodian, sequestrator
or other similar official is
appointed to
take possession of
any of the assets
or properties of
Investor.
8.
Binding
Effect;
Assignment.
This Note
shall be
binding on
the Parties
and their
respective heirs,
successors, and
assigns; provided,
however, that
neither Party
shall assign
any of its
rights hereunder without
the prior written
consent of the
other Party, except that
Investor may assign this
Note to any of
its Affiliates without the
prior written consent
of Company and, furthermore,
Company agrees that it shall
not unreasonably withhold, condition
or delay its consent to
any other assignment of this Note by Investor.
9.
Governing
Law.
This Note shall
be governed
by and interpreted
in accordance
with the
laws of the
State of Utah
for contracts
to be
wholly performed
in such state
and without
giving effect to
the principles thereof
regarding the conflict
of laws.
10.
Purchase
Agreement;
Arbitration
of Disputes.
By acceptance
of this
Note, each
Party agrees
to be bound
by the applicable
terms, conditions
and general
provisions of
the Purchase
Agreement and the
other Transaction
Documents, including
without limitation
the Arbitration
Provisions attached
as an exhibit to the
Purchase Agreement.
11.
Customer
Identification–USA
Patriot
Act
Notice.
Company hereby
notifies Investor
that pursuant
to the requirements
of the USA
Patriot Act
(Title III
of Pub. L. 107-56, signed
into law October 26,
2001) (the
“Act”), and
Company’s policies
and practices, Company
is required
to obtain,
verify and record
certain information and documentation
that identifies Investor, which
information includes the name
and address of
Investor and
such other information that
will allow
Company to identify
Investor in accordance with
the Act.
12.
Lawful
Interest.
It
being the intention
of Company
and Investor
to comply
with all
applicable laws
with regard
to the interest
charged hereunder,
it is
agreed that,
notwithstanding any
provision to
the contrary in
this Note or any of the other
Transaction Documents,
no such provision,
including without limitation
any provision of this Note
providing for the payment of interest
or other charges,
shall require the payment
or permit the collection
of any amount in excess of the
maximum amount
of interest permitted by law
to be charged for
the use or detention, or
the forbearance in the collection,
of all or any portion
of the indebtedness evidenced
by this Note or by
any extension or renewal
hereof (“Excess Interest”).
If any Excess Interest is provided
for, or is adjudicated to be
provided for, in
this Note, then in
such event:
12.1.
the provisions of this
Section 12 shall
govern and control;
| 12.2. | Investor
shall
not be obligated
to pay any
Excess Interest; |
12.3.
any Excess Interest
that Company
may have
received hereunder
shall, at
the option
of Company,
be (i)
applied as
a credit
against the
principal balance
due under
this Note
or the
accrued and
unpaid interest
thereon not to
exceed the
maximum amount permitted
by law, or both, (ii) refunded
to Investor, or (iii) any
combination of the
foregoing;
12.4.
the applicable
interest rate
or rates
shall be
automatically subject
to reduction
to the
maximum lawful
rate allowed
to be contracted
for in writing
under the
applicable governing
usury laws,
and this
Note and
the Transaction
Documents shall
be deemed
to have
been, and
shall be,
reformed and modified
to reflect such reduction
in such interest rate or
rates; and
12.5.
Investor shall
not have
any action
or remedy
against Company
for any damages
whatsoever or any
defense to
enforcement of
this Note
or arising
out of
the payment
or collection
of any
Excess Interest.
13.
Pronouns.
Regardless
of their
form, all
words used
in this
Note shall
be deemed
singular or plural
and shall
have the
gender as required
by the
text.
14.
Headings.
The various
headings used in
this Note
as headings
for sections
or otherwise
are for
convenience and
reference only
and shall
not be
used in
interpreting the
text of the
section in
which they
appear and
shall not limit
or otherwise
affect the
meanings thereof.
15.
Time of Essence.
Time is of the essence
with this Note.
16.
Severability.
If
any part of
this Note is
construed to be
in violation of
any law,
such part shall
be modified to
achieve the
objective of
the Parties to
the fullest
extent permitted by law
and the
balance of this
Note shall
remain in full
force and effect.
17.
Attorneys’
Fees . If
any arbitration or action
at law or in
equity is necessary
to enforce this
Note or
to collect
payment under
this Note,
Company shall be
entitled to
recover reasonable
attorneys’ fees directly
related to such
enforcement or
collection actions.
18.
Amendments
and Waivers;
Remedies.
No failure
or delay on
the part of
either Party
hereto in exercising
any right,
power or
remedy hereunder
shall operate
as a waiver
thereof, nor
shall any single
or partial
exercise of any
such right, power or remedy
preclude any other
or further
exercise thereof
or the exercise
of any
other right,
power or
remedy. The
remedies provided
for herein
are cumulative
and are not exclusive of any
remedies that may
be available to either Party
hereto at law, in equity
or otherwise. Any amendment,
supplement or modification of
or to any provision of
this Note, any
waiver of any
provision of this
Note, and any consent
to any departure
by either Party
from the terms of any provision
of this Note, shall
be effective (i) only if it
is made or given in writing
and signed by Investor
and Company and (ii)
only in the specific instance
and for the
specific purpose
for which made or
given.
19.
Notices.
Unless
otherwise
provided
for
herein, all
notices, requests,
demands, claims
and other
communications hereunder
shall be
given in accordance
with the
subsection of
the Purchase
Agreement titled
“Notices.” Either
Party may
change the
address to
which notices,
requests, demands, claims
and other communications
hereunder are
to be delivered
by providing notice thereof
in the manner
set forth
in the Purchase Agreement.
20.
Final
Note.
This Note,
together with
the other
Transaction Documents, contains
the complete
understanding and agreement
of Investor
and Company
and supersedes all
prior representations,
warranties, agreements,
arrangements, understandings,
and negotiations
of Investor
and Company
with respect to the
subject matter of the Transaction
Documents. THIS NOTE,
TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, REPRESENTS
THE FINAL AGREEMENT BETWEEN
THE PARTIES AND
MAY NOT BE
CONTRADICTED BY
EVIDENCE OF ANY
ALLEGED PRIOR,
CONTEMPORANEOUS, OR
SUBSEQUENT ORAL
AGREEMENTS OF
THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
[Remainder
of
page
intentionally left blank;
signature page follows]
IN
WITNESS WHEREOF, the
Parties have executed
this Note as of
the date set
forth above.
INVESTOR:
TYPENEX
CO-INVESTMENT, LLC
By:
Red
Cliffs Investments, Inc., its Manager
/s/
John M. Fife
John
M. Fife, President
ACKNOWLEDGED,
ACCEPTED AND
AGREED: COMPANY:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phil Mansour
Name:
Phil Mansour
Title:Ceo
THIS
NOTE
MAY
NOT BE
SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR
OTHERWISE ALIENATED
OR ENCUMBERED
WITHOUT THE PRIOR
WRITTEN CONSENT OF INVESTOR.
$50,000.00
State
of Utah
May 29, 2015
INVESTOR
NOTE #2
FOR
VALUE RECEIVED,
TYPENEX
CO-INVESTMENT,
LLC, a
Utah limited
liability company
(“Investor”), hereby
promises to pay
to AVALANCHE
INTERNATIONAL, CORP.,
a Nevada
corporation (“Company”,
and together
with Investor,
the “Parties”),
the principal
sum of $50,000.00
together with all
accrued and unpaid
interest thereon,
fees incurred
or other amounts
owing hereunder, all
as set forth
below in this Investor
Note #2 (this
“Note”). This Note
is issued
pursuant to that
certain Securities Purchase
Agreement of even date herewith,
entered into by
and between Investor
and Company (as the
same may be amended from time
to time, the “Purchase Agreement”),
pursuant to which Company
issued to Investor
that certain
Secured Convertible
Promissory Note
in the principal
amount of
$252,500.00
(as the
same may be
amended from
time to time,
the “Company
Note”)
convertible into
shares of
Company’s Common
Stock. All
capitalized terms
used but
not otherwise
defined herein
shall have the meanings
ascribed thereto in
the Purchase Agreement.
1.
Principal and
Interest.
Interest
shall
accrue
on the unpaid principal
balance and any unpaid
late fees
or other
fees under this
Note at
a rate
of eight
percent (8%)
per annum
until the full
amount of
the principal and
fees has been
paid. Interest shall
be computed
on the
basis of a 365-day
year for the actual
number of days
elapsed. Notwithstanding any
provision to the
contrary herein, in
no event shall
the applicable interest
rate at any time
exceed the maximum
interest rate allowed
under applicable law, as
provided in Section
12 below. The entire
unpaid principal balance
and all accrued
and unpaid interest,
if any, under
this Note, shall
be due and
payable on the
date that is thirteen
(13) months from
the date hereof
(the “Investor
Note Maturity
Date”); provided,
however, that Investor
may elect, in its
sole discretion, to extend
the Investor Note Maturity
Date for up
to thirty (30)
days by delivering
written notice of
such election
to Company
at any
time prior
to the
Investor Note
Maturity Date.
2.
Payment.
Unless
prepaid,
all
principal
and accrued
interest under
this Note
is payable
in one
lump sum
on the Investor
Note Maturity
Date. All
payments of
interest and
principal shall
be (i)
in lawful
money of
the United
States of
America, and
(ii) in
the form
of immediately
available funds. All
payments shall be
applied first to
costs of collection, if any,
then to accrued and unpaid interest,
and thereafter
to principal.
Payment of
principal and interest
hereunder shall
be delivered
to Company
at the address
furnished to Investor for
that purpose.
3.
Prepayment
by Investor.
Investor may,
with Company’s consent,
pay, without penalty,
all or any
portion of
the outstanding
balance along
with any
accrued but
unpaid interest
on this
Note at
any time prior
to the Investor Note
Maturity Date.
4.
Security;
Collateral.
Investor may,
in its
sole discretion, designate
collateral (the “Collateral”)
as it deems
fit, as security
for Investor’s
obligations hereunder, which
Collateral may be,
but is not
required to
be, real
property, a letter
of credit
with a financial
institution determined by Investor
in its sole discretion,
or pledged membership interests,
provided that the net
fair market value of the
Collateral (net of any outstanding
monetary liens)
shall not be less than the principal
balance of this Note as
of the date
of any such designation.
Upon Investor’s
designation of
Collateral, each
of Investor and Company
shall timely execute any
and all documents necessary
or advisable in order to properly
grant a security interest
upon the Collateral
in favor of
Company.
5.
Release.
Company
covenants
and
agrees
that
in the
event that this
Note is secured
by Collateral, Company
shall timely execute
any and all documents necessary
or advisable in order
to release such security
interest and
Collateral to Investor,
or Investor’s
designee, upon
the earlier
of (i) the
date this Note
is paid
in full
and (ii)
the date
that is
six (6)
months and three
(3) days following
the date
such Collateral
is given
as security
for this
Note, or
such later
date as
determined in
the sole
discretion of
Investor (the
“Release Date”).
For the avoidance of
doubt, as of the date hereof,
there is
no collateral securing this
Note, and
after the
Release Date,
as applicable,
there shall
be no collateral
securing this
Note.
6.
Right
of Offset.
Notwithstanding anything
to the contrary
herein or
in any of
the other
Transaction Documents,
in the event
(i) of
the occurrence
of any Event
of Default
(as defined
in the
Company Note)
under the
Company Note or
any other
note issued
by Company
in connection
with the
Purchase Agreement, (ii) Investor
applies a Default
Effect (as defined
in the Company Note)
under the
Company Note, (iii)
the Outstanding Balance is automatically
increased to the Mandatory Default
Amount under the Company
Note, (iv) the Company
Note is accelerated for any reason,
or (v) of a breach of any material
term, condition,
representation, warranty,
covenant or obligation
of Company under any
Transaction Document; Investor
shall be entitled to deduct
and offset any amount owing
by Company under the
Company Note from any
amount owed by Investor
under this Note
(the “Investor Offset
Right”), provided
that if any of the foregoing events
occur and Investor
has not yet exercised
the Investor Offset
Right, the Investor
Offset Right shall be automatically
exercised on the date that is
thirty (30) days prior
to the Investor Note Maturity
Date (an “Automatic Offset”).
Other than with respect
to an Automatic Offset,
Investor may only elect to exercise
the Investor Offset Right
by delivering to Company
an offset notice
in a form substantially
similar to Exhibit D
to the Company Note or another
form of Investor’s choosing.
In the event that
Investor’s exercise of the
Investor Offset Right under this
Section Error! Reference
source not found.
results in
the full
satisfaction of Investor’s
obligations under
this Note, then
Company shall return this Note
to Investor for cancellation
or, in the event this Note
has been lost, stolen
or destroyed,
Company shall provide
Investor with
a lost note affidavit in a form
reasonably acceptable to Investor.
7.
Default.
If any of the
events specified below shall
occur (each,
an “Investor Note
Default”)
Company may
declare the
unpaid principal
balance under
this Note,
together with
all accrued
and unpaid interest
thereon, fees incurred
or other amounts
owing hereunder
immediately due and payable,
by notice in writing
to Investor. If any default, other
than a Payment Default
(as defined below), is
curable, then
the default
may be cured
(and no Investor
Note Default will
have occurred)
if Investor, after receiving
written notice
from Company
demanding cure of
such default,
either (i) cures
the default within
fifteen (15) days of the receipt
of such notice,
or (ii) if the cure requires
more than fifteen (15) days,
immediately initiates steps
that Company deems
in Company’s reasonable
discretion to be sufficient to
cure the default and thereafter
diligently continues and completes
all reasonable and necessary
steps sufficient to produce
compliance as soon as reasonably
practical. Each of the following
events shall
constitute an Investor
Note Default:
7.1.
Failure to
Pay. Investor’s
failure to make
any payment when
due and
payable under
this Note (a
“Payment Default”);
7.2.
Breaches of
Covenants.
Investor’s failure
to observe
or perform any
other covenant, obligation,
condition or agreement
contained in this
Note;
7.3.
Representations and
Warranties. If
any representation,
warranty, certificate,
or other
statement (financial
or otherwise)
made or
furnished by
or on behalf
of Investor
to Company
in writing
in connection
with this
Note or any of the
other Transaction
Documents, or as an inducement
to
Company
to enter
into the Purchase
Agreement, shall
be false
or misleading
in any
material respect
when made
or furnished; and
7.4.
Involuntary Bankruptcy. If
any involuntary petition is filed
under any bankruptcy
or similar
law or
rule against
Investor, and such
petition is
not dismissed
within sixty
(60) days,
or a receiver,
trustee, liquidator, assignee,
custodian, sequestrator
or other similar official
is appointed to
take possession of
any of the assets
or properties of
Investor.
8.
Binding
Effect;
Assignment.
This Note
shall be
binding on
the Parties
and their
respective heirs,
successors, and
assigns; provided,
however, that
neither Party
shall assign
any of its
rights hereunder without
the prior written
consent of the
other Party, except that
Investor may assign this
Note to any of
its Affiliates without
the prior written
consent of Company and, furthermore,
Company agrees that it shall
not unreasonably withhold, condition
or delay its consent to
any other assignment of this Note by Investor.
9.
Governing
Law.
This Note
shall be
governed by
and interpreted
in accordance
with the
laws of the
State of Utah
for contracts
to be
wholly performed
in such state
and without
giving effect to
the principles thereof
regarding the conflict
of laws.
10.
Purchase
Agreement;
Arbitration
of Disputes.
By acceptance
of this
Note, each
Party agrees
to be bound
by the applicable
terms, conditions
and general
provisions of
the Purchase
Agreement and the
other Transaction
Documents, including
without limitation
the Arbitration
Provisions attached
as an exhibit
to the Purchase
Agreement.
11.
Customer
Identification–USA
Patriot
Act
Notice.
Company hereby
notifies Investor
that pursuant
to the requirements
of the USA
Patriot Act
(Title III
of Pub. L.
107-56, signed
into law
October 26, 2001)
(the “Act”),
and Company’s
policies and
practices, Company
is required
to obtain,
verify and record certain
information and documentation that
identifies Investor, which
information includes the name
and address of Investor
and such other information
that will allow
Company to identify
Investor in accordance with
the Act.
12.
Lawful
Interest.
It
being the intention
of Company
and Investor
to comply
with all
applicable laws
with regard
to the interest
charged hereunder,
it is
agreed that,
notwithstanding any
provision to
the contrary in
this Note or any of the other
Transaction Documents,
no such provision,
including without limitation
any provision of this Note
providing for the payment of interest
or other charges, shall require
the payment or permit the collection
of any amount in excess of the
maximum amount
of interest permitted by law
to be charged for
the use or detention, or
the forbearance in the collection,
of all or any portion
of the indebtedness evidenced
by this Note or by
any extension or renewal
hereof (“Excess Interest”).
If any Excess Interest is provided
for, or is adjudicated to be
provided for, in
this Note, then in
such event:
12.1.
the provisions of this
Section 12 shall
govern and control;
12.2.
Investor shall not be obligated
to pay any Excess Interest;
12.3.
any Excess Interest
that Company
may have
received hereunder
shall, at
the option
of Company,
be (i)
applied as
a credit
against the
principal balance
due under
this Note
or the
accrued and
unpaid interest
thereon not to
exceed the
maximum amount permitted
by law, or both, (ii)
refunded to Investor, or
(iii) any combination of
the foregoing;
12.4.
the applicable
interest rate
or rates
shall be
automatically subject
to reduction
to the
maximum lawful
rate allowed
to be contracted
for in writing
under the
applicable governing
usury laws, and
this Note
and the Transaction
Documents shall
be deemed
to have
been, and
shall be,
reformed and modified
to reflect such reduction
in such interest rate or rates;
and
12.5.
Investor shall
not have
any action
or remedy
against Company
for any damages
whatsoever or any
defense to
enforcement of
this Note
or arising
out of
the payment
or collection
of any
Excess Interest.
13.
Pronouns.
Regardless
of their
form, all
words used
in this
Note shall
be deemed
singular or plural
and shall
have the
gender as required
by the text.
14.
Headings.
The various
headings used in
this Note
as headings
for sections
or otherwise
are for
convenience and
reference only
and shall
not be
used in
interpreting the
text of the
section in
which they
appear and
shall not limit
or otherwise
affect the
meanings thereof.
15.
Time of Essence.
Time is of the essence with
this Note.
16.
Severability.
If
any part of
this Note is
construed to be
in violation of
any law,
such part shall
be modified to
achieve the
objective of
the Parties to
the fullest
extent permitted by law
and the
balance of this
Note shall
remain in full
force and effect.
17.
Attorneys’
Fees . If
any arbitration or action
at law or in
equity is necessary
to enforce this
Note or
to collect
payment under
this Note,
Company shall be
entitled to
recover reasonable
attorneys’ fees directly
related to such
enforcement or
collection actions.
18.
Amendments
and Waivers;
Remedies.
No failure
or delay on
the part of
either Party
hereto in exercising
any right,
power or
remedy hereunder
shall operate
as a waiver
thereof, nor
shall any
single or partial
exercise of any such right,
power or remedy preclude
any other or
further exercise
thereof or the
exercise of
any other right,
power or
remedy. The
remedies provided
for herein
are cumulative
and are not exclusive
of any remedies that may
be available to either Party
hereto at law, in equity
or otherwise. Any amendment,
supplement or modification of
or to any provision of
this Note, any
waiver of any
provision of this
Note, and any consent
to any departure
by either Party
from the terms of any provision
of this Note, shall
be effective (i) only if it
is made or given in writing
and signed by Investor
and Company and (ii)
only in the specific
instance and for the
specific purpose
for which made
or given.
19.
Notices.
Unless
otherwise
provided
for
herein,
all
notices,
requests,
demands,
claims
and other
communications hereunder
shall be
given in accordance
with the
subsection of
the Purchase
Agreement titled
“Notices.” Either
Party may
change the
address to
which notices,
requests, demands,
claims and
other communications
hereunder are to
be delivered
by providing notice thereof
in the manner
set forth
in the Purchase Agreement.
20.
Final
Note.
This Note,
together with
the other
Transaction Documents,
contains the
complete understanding and
agreement of
Investor and
Company and supersedes all
prior representations,
warranties, agreements,
arrangements, understandings,
and negotiations
of Investor
and Company
with respect to the
subject matter of the Transaction
Documents. THIS NOTE,
TOGETHER WITH THE
OTHER TRANSACTION
DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE
PARTIES AND
MAY NOT BE
CONTRADICTED BY
EVIDENCE OF ANY
ALLEGED PRIOR,
CONTEMPORANEOUS, OR
SUBSEQUENT ORAL
AGREEMENTS OF
THE PARTIES. THERE
ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN
THE PARTIES.
[Remainder
of
page
intentionally left blank;
signature page follows]
IN WITNESS
WHEREOF, the Parties have executed
this Note as of
the date set forth
above.
INVESTOR:
TYPENEX
CO-INVESTMENT, LLC
By:
Red
Cliffs Investments, Inc., its Manager
/s/
John M. Fife
John
M. Fife, President
ACKNOWLEDGED,
ACCEPTED AND
AGREED:
COMPANY:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phil Mansour
Name:
Phil Mansour
Title:
CEO
THIS
NOTE
MAY
NOT BE
SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR
OTHERWISE ALIENATED
OR ENCUMBERED
WITHOUT THE PRIOR
WRITTEN CONSENT OF INVESTOR.
$50,000.00
State
of Utah
May 29, 2015
INVESTOR
NOTE #3
FOR
VALUE RECEIVED,
TYPENEX CO-INVESTMENT,
LLC, a
Utah limited
liability company
(“Investor”), hereby
promises to pay
to AVALANCHE
INTERNATIONAL, CORP.,
a Nevada
corporation (“Company”,
and together
with Investor,
the “Parties”),
the principal
sum of $50,000.00
together with all
accrued and unpaid
interest thereon,
fees incurred
or other
amounts owing
hereunder, all as set
forth below in this
Investor Note #3
(this “Note”).
This Note
is issued
pursuant to that
certain Securities
Purchase Agreement of even date
herewith, entered into
by and between
Investor and Company
(as the same may be amended
from time to time, the “Purchase
Agreement”), pursuant
to which Company issued
to Investor
that certain
Secured Convertible
Promissory Note
in the principal
amount of
$252,500.00
(as the
same may be
amended from
time to time,
the “Company
Note”)
convertible into
shares of
Company’s Common
Stock. All
capitalized terms
used but
not otherwise
defined herein
shall have the meanings
ascribed thereto in
the Purchase Agreement.
1.
Principal and
Interest.
Interest
shall
accrue
on the unpaid principal
balance and any unpaid
late fees
or other
fees under this
Note at
a rate
of eight
percent (8%)
per annum
until the full
amount of
the principal and
fees has been
paid. Interest shall
be computed
on the
basis of a
365-day year
for the actual
number of days
elapsed. Notwithstanding any
provision to the
contrary herein, in
no event shall
the applicable interest
rate at any time
exceed the maximum
interest rate allowed
under applicable law, as
provided in Section
12 below. The entire
unpaid principal balance
and all accrued
and unpaid interest,
if any, under
this Note, shall
be due and
payable on the
date that is thirteen
(13) months from
the date hereof
(the “Investor
Note Maturity
Date”); provided,
however, that Investor
may elect, in its
sole discretion, to extend
the Investor Note Maturity
Date for up
to thirty (30)
days by delivering
written notice of
such election
to Company
at any
time prior
to the
Investor Note
Maturity Date.
2.
Payment.
Unless
prepaid,
all
principal
and accrued
interest under
this Note
is payable
in one
lump sum
on the Investor
Note Maturity
Date. All
payments of
interest and
principal shall
be (i)
in lawful
money of
the United
States of
America, and
(ii) in
the form
of immediately
available funds.
All payments shall
be applied first
to costs of collection, if
any, then to accrued and unpaid
interest, and thereafter
to principal.
Payment of
principal and interest
hereunder shall
be delivered
to Company
at the address
furnished to Investor for
that purpose.
3.
Prepayment
by Investor.
Investor may,
with Company’s consent,
pay, without penalty,
all or any
portion of
the outstanding
balance along
with any
accrued but
unpaid interest
on this
Note at
any time prior
to the Investor Note
Maturity Date.
4.
Security;
Collateral.
Investor may,
in its
sole discretion, designate
collateral (the “Collateral”)
as it deems
fit, as security
for Investor’s
obligations hereunder, which
Collateral may be,
but is not
required to
be, real
property, a letter
of credit
with a financial
institution determined by Investor
in its sole discretion,
or pledged membership interests,
provided that the net
fair market value of the
Collateral (net of any outstanding
monetary liens)
shall not be less than the principal
balance of this Note as
of the date
of any such designation.
Upon Investor’s
designation of
Collateral, each
of Investor and Company
shall timely execute any
and all documents necessary
or advisable in order to properly
grant a security interest
upon the Collateral
in favor of
Company.
5.
Release.
Company
covenants
and
agrees
that
in the
event that this
Note is secured
by Collateral, Company
shall timely execute
any and all documents necessary
or advisable in order
to release such security
interest and
Collateral to Investor,
or Investor’s
designee, upon
the earlier
of (i) the
date this Note
is paid
in full
and (ii)
the date
that is
six (6)
months and three
(3) days following
the date
such Collateral
is given
as security
for this
Note, or
such later
date as
determined in
the sole
discretion of
Investor (the
“Release Date”).
For the avoidance of
doubt, as of the date hereof,
there is no collateral securing
this Note,
and after
the Release
Date, as
applicable, there
shall be no
collateral securing
this Note.
6.
Right
of Offset.
Notwithstanding anything
to the contrary
herein or
in any of
the other
Transaction Documents,
in the event
(i) of
the occurrence
of any Event
of Default
(as defined
in the
Company Note)
under the
Company Note or
any other
note issued
by Company
in connection
with the
Purchase Agreement,
(ii) Investor applies
a Default Effect
(as defined
in the Company
Note) under
the Company Note,
(iii) the Outstanding
Balance is automatically increased
to the Mandatory Default Amount
under the Company Note, (iv)
the Company Note is accelerated
for any reason, or (v) of a breach
of any material term,
condition, representation,
warranty, covenant
or obligation of
Company under any Transaction
Document; Investor shall be entitled
to deduct and offset
any amount owing by
Company under the Company
Note from any amount owed
by Investor under
this Note (the
“Investor Offset
Right”), provided
that if any of the foregoing events
occur and Investor
has not yet exercised
the Investor Offset
Right, the Investor
Offset Right shall be automatically
exercised on the date that is
thirty (30) days prior
to the Investor Note Maturity
Date (an “Automatic Offset”).
Other than with respect
to an Automatic Offset,
Investor may only elect to exercise
the Investor Offset Right
by delivering to Company
an offset notice
in a form substantially
similar to Exhibit D
to the Company Note or another
form of Investor’s choosing. In
the event that Investor’s
exercise of the Investor
Offset Right under this Section
Error! Reference
source not
found. results
in the
full satisfaction
of Investor’s
obligations under
this Note, then
Company shall return this Note
to Investor for cancellation
or, in the event this Note
has been lost, stolen
or destroyed,
Company shall provide
Investor with
a lost note affidavit in a form
reasonably acceptable to Investor.
7.
Default.
If any of the
events specified below shall
occur (each,
an “Investor Note
Default”)
Company may
declare the
unpaid principal
balance under
this Note,
together with
all accrued
and unpaid interest
thereon, fees incurred
or other amounts
owing hereunder
immediately due and payable,
by notice in writing
to Investor. If any default, other
than a Payment Default
(as defined below), is
curable, then
the default
may be cured
(and no Investor
Note Default will
have occurred)
if Investor, after receiving
written notice
from Company
demanding cure of
such default,
either (i) cures
the default within
fifteen (15) days of the receipt
of such notice,
or (ii) if the cure requires
more than fifteen (15) days,
immediately initiates steps
that Company deems
in Company’s reasonable
discretion to be sufficient to
cure the default and thereafter
diligently continues and completes
all reasonable and necessary
steps sufficient to produce compliance
as soon as reasonably practical.
Each of the following events
shall constitute
an Investor Note Default:
7.1.
Failure to
Pay. Investor’s
failure to make
any payment when
due and
payable under
this Note (a
“Payment Default”);
7.2.
Breaches of
Covenants.
Investor’s failure
to observe
or perform any
other covenant, obligation,
condition or agreement
contained in this
Note;
7.3.
Representations and
Warranties. If
any representation,
warranty, certificate,
or other
statement (financial
or otherwise)
made or
furnished by
or on behalf
of Investor
to Company
in writing
in connection
with this
Note or any of the
other Transaction
Documents, or as an inducement
to
Company
to enter
into the Purchase
Agreement, shall
be false
or misleading
in any
material respect
when made
or furnished; and
7.4.
Involuntary Bankruptcy. If
any involuntary petition is filed
under any bankruptcy
or similar
law or
rule against
Investor, and such
petition is
not dismissed
within sixty
(60) days,
or a receiver,
trustee, liquidator, assignee,
custodian, sequestrator
or other similar official
is appointed to
take possession of
any of the assets
or properties of
Investor.
8.
Binding
Effect;
Assignment.
This Note
shall be
binding on
the Parties
and their
respective heirs,
successors, and
assigns; provided,
however, that
neither Party
shall assign
any of its
rights hereunder without
the prior written
consent of the
other Party, except that
Investor may assign this
Note to any of
its Affiliates without the
prior written consent
of Company and, furthermore,
Company agrees that it shall
not unreasonably withhold, condition
or delay its consent to
any other assignment of this Note by Investor.
9.
Governing
Law.
This Note
shall be
governed by
and interpreted
in accordance
with the
laws of the
State of Utah
for contracts
to be
wholly performed
in such state
and without
giving effect to
the principles thereof
regarding the conflict
of laws.
10.
Purchase
Agreement;
Arbitration
of Disputes.
By acceptance
of this
Note, each
Party agrees
to be bound
by the applicable
terms, conditions
and general
provisions of
the Purchase
Agreement and the
other Transaction
Documents, including
without limitation
the Arbitration
Provisions attached
as an exhibit
to the Purchase
Agreement.
11.
Customer
Identification–USA
Patriot
Act
Notice.
Company hereby
notifies Investor
that pursuant
to the requirements
of the USA
Patriot Act
(Title III
of Pub. L.
107-56, signed
into law
October 26, 2001)
(the “Act”),
and Company’s
policies and
practices, Company
is required
to obtain,
verify and record certain
information and documentation that
identifies Investor, which
information includes the name
and address of Investor
and such other information
that will allow
Company to identify
Investor in accordance with
the Act.
12.
Lawful
Interest.
It
being the intention
of Company
and Investor
to comply
with all
applicable laws
with regard
to the interest
charged hereunder,
it is
agreed that,
notwithstanding any
provision to
the contrary in
this Note or any of the other
Transaction Documents,
no such provision,
including without limitation
any provision of this Note
providing for the payment of interest
or other charges,
shall require the payment
or permit the collection
of any amount in excess of the
maximum amount
of interest permitted by law
to be charged for
the use or detention, or
the forbearance in the collection,
of all or any portion
of the indebtedness evidenced
by this Note or by
any extension or renewal
hereof (“Excess Interest”).
If any Excess Interest is provided
for, or is adjudicated to be
provided for, in
this Note, then in
such event:
12.1.
the provisions of this
Section 12 shall
govern and control;
12.2.
Investor shall not be obligated
to pay any Excess Interest;
12.3.
any Excess Interest
that Company
may have
received hereunder
shall, at
the option
of Company,
be (i)
applied as
a credit
against the
principal balance
due under
this Note
or the
accrued and
unpaid interest
thereon not to
exceed the
maximum amount permitted
by law, or both, (ii)
refunded to Investor, or
(iii) any combination of
the foregoing;
12.4.
the applicable
interest rate
or rates
shall be
automatically subject
to reduction
to the
maximum lawful
rate allowed
to be contracted
for in writing
under the
applicable governing
usury laws, and
this Note
and the Transaction
Documents shall
be deemed
to have
been, and
shall be,
reformed and modified
to reflect such reduction
in such interest rate or rates;
and
12.5.
Investor shall
not have
any action
or remedy
against Company
for any damages
whatsoever or any
defense to
enforcement of
this Note
or arising
out of
the payment
or collection
of any
Excess Interest.
13.
Pronouns.
Regardless
of their
form, all
words used
in this
Note shall
be deemed
singular or plural
and shall
have the
gender as required
by the text.
14.
Headings.
The various
headings used in
this Note
as headings
for sections
or otherwise
are for
convenience and
reference only
and shall
not be
used in
interpreting the
text of the
section in
which they
appear and
shall not limit
or otherwise
affect the
meanings thereof.
15.
Time of
Essence.
Time is of the essence
with this Note.
16.
Severability.
If
any part of
this Note is
construed to be
in violation of
any law,
such part shall
be modified to
achieve the
objective of
the Parties to
the fullest
extent permitted by law
and the
balance of this
Note shall
remain in full
force and effect.
17.
Attorneys’
Fees . If
any arbitration or action
at law or in
equity is necessary
to enforce this
Note or
to collect
payment under
this Note,
Company shall be
entitled to
recover reasonable
attorneys’ fees directly
related to such
enforcement or
collection actions.
18.
Amendments
and Waivers;
Remedies.
No failure
or delay on
the part of
either Party
hereto in exercising
any right,
power or
remedy hereunder
shall operate
as a waiver
thereof, nor
shall any
single or partial
exercise of any such right,
power or remedy preclude
any other or
further exercise
thereof or the
exercise of
any other
right, power
or remedy.
The remedies
provided for
herein are
cumulative and are not
exclusive of any remedies that
may be available to either
Party hereto at law,
in equity or otherwise. Any
amendment, supplement
or modification of or to any provision
of this Note,
any waiver
of any provision of
this Note, and any
consent to any
departure by either Party
from the terms of any provision
of this Note, shall
be effective (i) only if it
is made or given in writing
and signed by Investor
and Company and (ii)
only in the specific
instance and for the
specific purpose
for which made
or given.
19.
Notices.
Unless
otherwise
provided
for
herein,
all
notices,
requests,
demands,
claims
and other
communications hereunder
shall be
given in accordance
with the
subsection of
the Purchase
Agreement titled
“Notices.” Either
Party may
change the
address to
which notices,
requests, demands, claims
and other communications
hereunder are
to be delivered
by providing notice thereof
in the manner
set forth
in the Purchase Agreement.
20.
Final
Note.
This Note,
together with
the other
Transaction Documents,
contains the
complete understanding and
agreement of
Investor and
Company and supersedes all
prior representations,
warranties, agreements,
arrangements, understandings,
and negotiations
of Investor
and Company
with respect to the
subject matter of the Transaction
Documents. THIS NOTE,
TOGETHER WITH THE
OTHER TRANSACTION
DOCUMENTS, REPRESENTS
THE FINAL AGREEMENT
BETWEEN THE PARTIES
AND MAY
NOT BE CONTRADICTED
BY EVIDENCE OF
ANY ALLEGED
PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT
ORAL AGREEMENTS
OF THE PARTIES.
THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN
THE PARTIES.
[Remainder
of
page
intentionally left blank;
signature page follows]
IN
WITNESS WHEREOF, the
Parties have executed
this Note as of
the date set
forth above.
INVESTOR:
TYPENEX
CO-INVESTMENT, LLC
By:
Red
Cliffs Investments, Inc., its Manager
/s/
John M. Fife
John
M. Fife, President
ACKNOWLEDGED,
ACCEPTED AND
AGREED:
COMPANY:
AVALANCHE
INTERNATIONAL, CORP.
By:
/s/ Phil Mansour
Name:
Phil Mansour
Title:
CEO
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLO IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
AVALANCHE
INTERNATIONAL,CORP.
CONVERTIBLE
NOTE
Issuance
Date: June 4, 2015
Note
No. AVLP-1 |
Original
Principal Amount: $50,000
Consideration
Paid at Close: $50,000 |
FOR
VALUE RECEIVED, Avalanche International, Corp., a Nevada corporation (the "Company"), hereby promises to pay
to the order of Black Mountain Equities, Inc. or registered assigns (the "Holder") the amount set out above as
the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal")
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest ("Interest") on any outstanding Principal at the applicable Interest
Rate from the date set out above as the Issuance Date (the "Issuance Date") until the same becomes due
and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the
terms hereof).
The
Original Principal Amount is $55,000 (Fifty Five thousand) plus accrued and unpaid interest and any other fees. The Consideration
is $50,000 (Fifty thousand) payable by wire transfer (there exists a $5,000 original issue discount (the "OID',)). The Holder
shall pay $25,000 of Consideration upon closing of this Note and $25,000 on the day that is 4 days after closing. For purposes
hereof, the term "Outstanding Balance" means the Original Principal Amount, as reduced or increased, as the case may
be, pursuant to the terms hereof for conversion, breach hereof or otherwise, plus any accrued but unpaid interest, collection
and enforcements costs, and any other fees or charges incurred under this Note. The Original Principal Amount due to Holder shall
be prorated based on the Consideration paid by Holder (plus an approximate 6% Original Issue Discount).
(a)
Payment of Principal. The "Maturity Date" shall
be one year from the date of payment, as may be extended at the option of the Holder in the event that, and for so long as, an
Event of Default (as defined below) shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant
to this Section l) or any event shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to
this Section I ) that with the passage of time and the failure to cure would result in an Event of Default.
(b)
Interest. A one-time interest charge of ten percent (I0%)
("Interest Rate") shall be applied on the Issuance Date to the Original Principal Amount. Interest hereunder
shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Note is registered
on the records of the Company regarding registration and transfers of Notes in cash or converted into Common Stock at the Conversion
Price provided the Equity Conditions are satisfied.
(c)
Security. This Note shall not be secured by any collateral
or any assets pledged to the Holder.
(d)
Inducement. Company shall provide Five thousand shares (5,000)
to the Holder
in
the form of one certificate within I 0 days of closing.
(a)
An "Event of Default'', wherever used herein, means
any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation
of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental
body):
(i)
The Company's failure to pay to the Holder any amount of Principal,
Interest, or other amounts when and as due under this Note (including, without limitation, the Company's failure to pay any redemption
payments or amounts hereunder) or any other Transaction Document ;
(ii)
A Conversion Failure as defined in section 3(bXii)
(iii)
The Company or any subsidiary of the Company shall commence, or
there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws
as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding
under any reorganization , arrangement. adjustment of debt. relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is
commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains
undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company
suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the
Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall fail to
pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company
or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent
to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary
of the Company for the purpose of effecting any of the foregoing;
(iv)
The Company or any subsidiary of the Company shall default in any
of its obligations under any other Note or any mortgage, cred it agreement or other facility, indenture agreement, factoring agreement
or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed
money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an
amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created; and
(v)
The Common Stock is suspended or delisted for trading on the Over
the Counter Bulletin Board market (the "Primary Market'').
(vi)
The Company loses its ability to deliver shares via "DWAC/FAST”
electronic transfer.
(vii)
The Company loses its status as "OTC Eligible.''
(viii)
The Company shall become late or delinquent in its filing requirements
as a fully-reporting issuer registered with the Securities & Exchange Commission.
(b)
Upon the occurrence of any Event of Default, the Outstanding Balance
shall immediately increase to 120% of the Outstanding Balance immediately prior to the occurrence of the Event of Default (the
"Default Effect"). The Default Effect shall automatically apply upon the occurrence of an Event of Default without the
need for any party to give any notice or take any other action.
(3)
CONVERSION OF NOTE. This Note shall be convertible into shares of the Company's Common Stock, on the terms and
conditions the forth in this Section 3.
(a)
Conversion Right. Subject to the provisions of Section 3(c),
at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and
unpaid Conversion Amount (as defined below) into fully paid and non-assessable shares of Common Stock in accordance with Section
3(b), at the Conversion Price (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion
Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing the Conversion Amount by the Conversion Price.
The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance
of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole
share. The Company shall pay any and all transfer agent fees, legal fees, costs and any other fees or costs that may be incurred
or charged in connection with the issuance of shares of the Company's Common Stock to the Holder arising out of or relating to
the conversion of this Note.
(i)
"Conversion Amount" means the portion of the Original
Principal Amount and Interest to be converted, plus any penalties, redeemed or otherwise with respect to which this determination
is being made.
(ii)
“Conversion Price" shall equal 70% of the average
of the 3 lowest closing prices occurring during the twenty (20) consecutive Trading Days immediately preceding the applicable
Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note.
Mechanics of Conversion.
(iii)
Optional Conversion. To convert any Conversion Amount into
shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by email, facsimile (or otherwise
deliver), for receipt on or prior to 1 1:59 p.m., New York, NY Time, on such date, a copy of an executed notice of conversion
in the form attached hereto as Exhibit A (the "Conversion Notice") to the Company. On or before the third Business Day
following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (A) if legends are
not required to be placed on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities
Act of 1933 ("Rule 144") and provided that the Transfer Agent is participating in the Depository Trust Company's ("OTC")
Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be
entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or
(B) if the Transfer Agent is not participating in the OTC Fast Automated Securities Transfer Program, issue and deliver to the
address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number
of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless
required pursuant the Rule 144. If this Note is physically surrendered for conversion and the outstanding Principal of this Note
is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request of the Holder,
as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue
and deliver to the holder a new Note representing the outstanding Principal not converted. The Person or Persons entitled to receive
the shares of Common Stock issuable upon a conversion of th is Note shall be treated for all purposes as the record holder or
holders of such shares of Common Stock upon the transmission of a Conversion Notice.
(iv)
Company's failure to Timely Convert. If within two (2) Trading
Days after the Company's receipt of the facsimile or email copy of a Conversion Notice the Company shall fail to issue and deliver
to Holder via "OWAC/f AST" electronic transfer the number of shares of Common Stock to which the Holder is entitled
upon such holder's conversion of any Conversion Amount (a "Conversion Feature").the .original Principal Amount
of the Note shall increase by $2,000 per day until the Company issues and delivers a certificate to the Holder or credit the Holder's
balance account with OTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion
of any Conversion Amount (under Holder's and Company' s expectation that any damages will tack back to the Issuance Date). Company
will not be subject to any penalties once ifs transfer agent processes the shares to the DWAC system. If the Company fails
to deliver shares in accordance with the timeframe stated in this Section, resulting in a Conversion Failure, the Holder, at any
time prior to selling all of those shares, may rescind any portion, in whole or in part, of that particular conversion attributable
to the unsold shares and have the rescinded conversion amount returned to the Outstanding Balance with the rescinded conversion
shares returned to the Company (under Holder's and Company's expectations that any returned conversion amounts will tack back
to the original date of the Note).
(v)
DWAC/FAST Eligibility. If the Company fails for any reason
to deliver to the Holder the Shares by DWAC/FAST electronic transfer (such as by delivering a physical stock certificate), or
if there is a Conversion Failure as defined in Section 3(bXii), and if the Holder incurs a Market Price Loss, then at any time
subsequent to incurring the loss the Holder may provide the Company written notice indicating the amounts payable to the Holder
in respect of the Market Price Loss and the Company must make the Holder whole by either of the following options at Holder's
election:
Market
Price Loss = ((High trade price for the period between the day of conversion and the day the shares clear in the Holder's brokerage
account) x (Number of shares receivable from the conversion)) - [(Net Sales price realized by Holder) x (Number of shares receivable
from the conversion)].
Option
A - Pay Market Price Loss in Cash. The Company must pay the Market Price Loss by cash payment, and any such cash payment must
be made by the third business day from the time of the Holder's written notice to the Company.
Option
B -Add Market Price Loss to Outstanding Balance. The Company must pay the Market Price Loss by adding the Market Price Loss to
the Outstanding Balance (under Holder's and the Company's expectation that any Market Price Loss amounts will tack back to the
Issuance Date).
In
the case that conversion shares are not deliverable by DWAC/FAST electronic transfer an additional 10% discount to the Conversion
Price will apply.
(vi)
OTC Eligibility & Sub-Penny. If the Company fails to
maintain its status as "OTC Eligible" for any reason, or, if the Conversion Price is less than $0.0 I , the Principal
Amount of the Note shall increase by five thousand dollars ($5,000) (under Holder' s and Company's expectation that any Principal
Amount increase will tack back to the Issuance Date). In addition, the Conversion Price shall be redefined to equal 50% of
the average of the 3 lowest closing prices occurring during the twenty five (25) consecutive Trading Days immediately preceding
the applicable Conversion Date on which the Holder elects to convert all or part of this Note, subject to adjustment as provided
in this Note.
(vii)
Book-Entry. Notwithstanding anything to the contrary set
forth herein upon conversion of an portion of this Note in accordance with the terms hereof, the Holder shall not be required
t phs1cally surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted
or (BJ the Holder has provided the Company with prior written notice (which notice may be included m a Conversion Notice) requesting
re1ssuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Principal
and Interest converted and the dates of such conversions .or shall use such other method, reasonably satisfactory to the Holder
and the Company, so as not to require physical surrender of this Note upon conversion.
(b)
Limitations on Conversions or Trading.
(i)
Beneficial Ownership. The Company shall not effect any conversions
or this Note and the Holder shall not have the right to convert any portion or this Note or receive shares of Common Stock as
payment of interest hereunder to the extent that after giving effect to such conversion or receipt of such interest payment, the
Holder, together with any affiliate thereof, would beneficially own (as determined m accordance with Section 13(d) of the Exchange
Act and the rules promulgated thereunder) in excess of 4.99% of the number of shares of Common Stock outstanding immediately after
giving effect to such conversion or receipt of shares 85 payment of interest. Since the Holder will not be obligated to report
to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at
issue would result in the issuance of shares of Common Stock in excess of 4.9/0 of the then outstanding shares of Common Stock
without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof. the Holder shall have
the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination
of which portion of the principal amount of this Note is convertible shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Conversion Notice for a principal amount of this Note that, without regard to any other shares that
the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the
Company shall notify the Holder of this fact and shall honor the conversion for the maximum principal amount permitted to be converted
on such Conversion Date in accordance with Section 3(a) and, any principal amount tendered for conversion in excess of the permitted
amount hereunder shall remain outstanding under this Note. The provisions of this Section may be waived at any time by Holder
upon written notification to the Company.
(c)
Other Provisions.
(i)
Share Reservation. The Company shall at au times reserve
and keep available out or its authorized Common Stock a number or shares equal to at least 3 (three) times the full number or
shares or Common Stock issuable upon conversion of all outstanding amounts under this Note; and within 3 (three) Business Days
following the receipt by the Company of a Holder's notice that such minimum number of Underlying Shares is not so reserved, the
Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement .The Company will
at all times reserve at least 1,000,000 shares of Common Stock for conversion.
(ii)
Prepavment. At any time within the 180 day period immediately
following the Issuance Date, the Company shall have the option, upon 10 business days' notice to Holder, to pre pay the entire
remaining outstanding principal amount of this Note in cash, provided that (i) the Company shall pay the Holder 1 15% of the Outstanding
Balance, (ii) such amount must be paid in cash on the next business day following such I0 business day notice period, and (iii)
the Holder may still convert this Note pursuant to the terms hereof at all times until such prepayment amount has been received
in full. Except as set forth in this Section the Company may not prepay this Note in whole or in part.
(iii)
Terms of Future Financings. So long as this Note is outstanding,
upon any issuance by the Company or any of its subsidiaries of any security with any term more favorable to the holder of such
security or with a term in favor of the holder of such security that was not similarly provided to the Holder in this Note, then
the Company shall notify the Holder of such additional or more favorable term and such term, at Holder's option, shall become
a part of the transaction documents with the Holder. The types of terms contained in another. security that may be more favorable
to the holder of such security include, but are not limited to, terms addressing conversion discounts, conversion look-back periods,
interest rates, original issue discounts, stock sale price, private placement price per share, and warrant coverage.
(iv)
All calculations under this Section 3 shall be rounded up to the
nearest $0.0000 I or whole share.
(v)
Nothing herein shall limit a Holder's right to pursue actual damages
or declare an Event of Default pursuant to Section 2 herein for the Company's failure to deliver certificates representing shares
of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief,
in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
(4)
SECTION 3CAX9) OR 3(AX l0) TRANSACTION. So long as this Note is outstanding, the Company shall not enter into any transaction
or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or in part, either Section
3(a)(9) of the Securities Act (a "3(a)(9) Transaction") or Section 3(aXIO) of the Securities Act (a "3(aXI O) Transaction").
In the event that the Company does enter into, or makes any issuance of Common Stock related to a 3(aX9) Transaction or a 3(a)(
I 0) Transaction while this note is outstanding, a liquidated damages charge of 25% of the outstanding principal balance of this
Note, but not less than $25,000, will be assessed and will become immediately due and payable to the Holder at its election in
the form of cash payment or addition to the balance of this Note.
(5)
PIGGYBACK REGISTRATION RIGHTS. The Company shall include on the next registration statement the Company files with SEC
(or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion
of this Note. failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but
not less than $25,000, being immediately due and payable to the Holder at its election in the form of cash payment or addition
to the balance of this Note.
(6)
REISSUANCE OF THIS NOTE.
(a)
Assignability. The Company may not assign this Note. This
Note will be binding upon the Company and its successors and will inure to the benefit of the Holder and its successors and assigns
and may be assigned by the Holder to anyone of its choosing without Company's approval.
(b)
Lost Stolen or Mutilated Note. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and,
in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder a
new Note representing the outstanding Principal.
(7)
NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms
hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by
the sending party) (iii) upon receipt, when sent by email; or (iv) one ( I) Trading Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be those set forth in the communications and documents that each party has provided the other immediately
preceding the issuance of this Note or at such other address and/or facsimile number and/or to the attention of such other person
as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness
of such change. Written conformation of receipt (i) given by the recipient of such notice, consent, waiver or other communication,
(ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
The
addresses for such communications shall be:
If
to the Company, to:
Avalanche
International, Corp. 5940 S. Rainbow Avenue
Las
Vegas, NV 891 18
Attn:
Rachel Boulds, CFO
Email:
Rachel@AvalanchelntemationalC orp.com
If
to the Holder:
Black
Mountain Equities, Inc.
13366
Greenstone Crt.
San
Diego.CA 9213 I
Attn:
Adam Baker
Email:
adam@blackmountainequities.com
(8)
APPLICABLE LAW ANO VENUE. This Note shall be governed by and construed in accordance with the laws of the State of
Nevada. without giving effect to conflicts of laws thereof. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located
in the city and county of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree
to submit to the jurisdiction of such courts.
(a)
WAIVER. Any waiver by the Holder of a breach of any provision
of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any
other provision of this Note. The failure of the Holder to insist upon strict adherence to any term of this Note on one or more
occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that
term or any other term of this Note. Any waiver must be in writing.
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date
set forth above.
COMPANY:
Avalanche
International, Corp.
By:
/s/ Philip Mansour
Name:
Philip Mansour
Title:
President and Chief Executive Officer
HOLDER:
Black
Mountain Equities, Inc.
By:
/s/ Adam Baker
Name:
Adam Baker
Title:
Principal
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN NOR THE SECURITIES !NTO WHICH
THIS NOTE IS CONVERTIBLE MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
AVALANCHE
INTERNATIONAL CORP., INC. (AVLP)
Convertible
Promissory Note
June
30, 2015
$250,000.00
FOR
VALUE RECEIVED, the undersigned, Avalanche International Corp., Inc. (AVLP) (Maker), promises to pay to the order of GCEF Opportunity
Fund, LLC. (Note Holder), or the successors and assigns, up to the principal sum of One Hundred Thousand Dollars ($225,000) (Principal)
plus a Loan Fee of up to Twenty Five Thousand Dollars ($25,000.00) for a total of up to Two Hundred & Fifty Thousand Dollars
($250,000), subject to the terms and conditions set forth herein. The interest rate will be Ten (10%) Percent annually, compounded
monthly until maturity. If the note is not repaid by June 30, 2016, then the interest rate will become Twenty-Four (24%) Percent,
compounded monthly from the date of the default.
The
funding of this note may be made in multiple tranches, of no less than Ten Thousand ($10,000.00) Dollar increments, up to the
total amount of this note of One Hundred Thousand ($225,000.00) Dollars. All funding is at the discretion of the Note Holder.
Each funding shall have a separate twelve month term relative to each funding date. All other facets of this agreement will be
the same, including, but not limited to the initial interest rate, if not repaid by the maturity date(s) and the ability to convert
this note into a convertible note per the agreement of per the terms outlined herein. The Original Issue Discount ("OID")
of Twenty-Five Thousand ($25,000.00) dollars will be pro-rata based upon ten percent (10%) of the actual amount funded.
Principal
and interest payment shall be made to: GCEF Opportunity Fund, LLC
1000
Fifth Street, Suite 200
Miami
Beach, FL 33139
The
principal and interest shall be due and payable at the end of the Initial Term of One (1) Year from the date of funding (expected
to be on or about June 30, 2016) without offset or deduction, in lawful money of the United States. As written above, the twelve
month Period, will carry an interest rate of Ten (10%) percent (compounded monthly), and once the original term expires without
full payment, then the interest rate shall change to Twenty-Four (24%) percent thereafter also compounded monthly.
GCEF
Opportunity Fund, LLC, 1s providing this loan as a short term funding to pay various operational expenses. This note will become
convertible into common stock of Avalanche International Corp., Inc. (AVLP) upon based upon the following conversion terms:
| a) | The
conversion price is the lower of $1.00 or 60% of the lowest closing price of the twenty
(20) days immediately preceding the date of the notice of conversion. |
Example
1: if lowest closing price of the twenty (20) days immediately preceding the date of the notice of conversion is $2.00, then the
conversion price is $1.00 since $1.00 is less than 60% of $2.00.
Example
2: if lowest closing price of the twenty (20) days immediately preceding the date of the notice of conversion is $1.50, then the
conversion price is $.90 since 60% of $1.50 is less than $1.00.
| b) | The
note may be converted in full at any time after the first thirty (30) days at the Holder's
discretion until such time as it is fully paid. |
| c) | All
interest, fees and principal may be included in the conversion. |
| d) | If
at any time in the year following the issuance of this note, the Maker sells, grants
any option to purchase, otherwise disposes of, or issues (or announces any sale, grant
or any option to purchase or other disposition) any Common Stock of the Maker at an effective
price per share that is lower than the Conversion Price then in effect (a "Dilutive
Issuance"), then the Conversion Price shall be reduced to equal the effective price
per share of such Dilutive Issuance. |
| e) | If
the Maker shall (i) declare a dividend or other distribution payable in securities, (ii)
split its outstanding shares of Common Stock into a larger number, (iii) combine its
outstanding shares of Common Stock into a smaller number, or (iv) increase or decrease
the number of shares of its capital stock in a reclassification of the Common Stock including
any such reclassification in connection with a merger, consolidation or other business
combination in which the Maker is the continuing entity (any such corporate event, an
"Event"), then in each instance the Conversion Price shall be adjusted such
that the number of shares issued upon conversion of the sum due and owing hereunder will
equal the number of shares of Common Stock that would otherwise be issued but for such
event. |
| f) | In
no event may the investor own more than 9.99% of the outstanding common stock of Avalanche
International Corp., Inc. |
Avalanche
International Corp., Inc. agrees to reserve five hundred (500,000) thousand shares of unissued non-assessable shares of the common
stock of the Company and provide a Transfer Agent Irrevocable Letter of Instruction to do so.
The
Maker agrees that if, at any time, and from time to time, the Board of Directors of the Maker shall authorize the filing of a
registration statement under the Securities Act of 1933 on Form S-1, S-3, or S-4 in connection with the proposed offer of any
of its securities by it or any of its stockholders, the Maker shall: (A) promptly notify each Holder that such registration statement
will be filed and that the Common Stock issuable to Holder upon conversion of this Note at the Conversion Price then in effect
(the "Registrable Securities") will be included in such registration statement at such Holder's request; (B) cause such
registration statement to cover all of such Registrable Securities for which such Holder 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 the sellers of Registrable Securities have 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 such Holders; 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.
The
right of any Holder to request inclusion in any registration pursuant to this Agreement shall terminate if all Registrable Securities
may immediately be sold under Rule 144.
Notwithstanding
any other provision of this Section, the Maker may at any time, abandon or delay any registration commenced by the Maker. In the
event of such an abandonment by the Maker, the Maker shall not be required to continue registration of shares requested by the
Holder for inclusion.
In
connection with any offering involving an underwriting of shares of the Maker's capital stock, the Maker 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 Maker 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 the Maker. If the total amount of securities, including Registrable
Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the
Maker that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Maker
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).
Maker
will reimburse legal expenses to Note Holder for any costs and expenses incurred in enforcing this Note to the extent allowable
by applicable law. Those expenses include, but are not limited to, reasonable attorney's fees.
Avalanche
International Corp., Inc. (Maker) and GCEF Opportunity Fund, LLC (Holder) waive the rights of Presentment and Notice of Dishonor.
"Presentment" means the right to require the Note Holder to demand payment of amounts due. "Notice of Dishonor"
means the right to require the Note Holder to give notice to other persons that amounts due have not been paid.
The
Maker represents and warrants to Holder:
Organization
and Qualification. The Maker, with full power and authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and conducted. The Maker is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature
of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the business,
operations, assets, financial condition or prospects of the Maker or its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered into in connection herewith.
Authorization;
Enforcement. (i) The Maker has all requisite corporate power and authority to enter into and perform this Note and to consummate
the transactions contemplated hereby and thereby and to agree to all fees charged, in accordance with the terms hereof, (ii) the
execution and delivery of this Note by the Maker and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by the Maker's Board of Directors and no further consent or authorization of the Maker, its Board of
Directors, or its shareholders is required, (iii) this Note has been duly executed and delivered by the Maker by its authorized
representative, and such authorized representative is the true and official representative with authority to sign this Note and
the other documents executed in connection herewith and bind the Maker accordingly, and (iv) this Note constitutes, a legal, valid
and binding obligation of the Maker enforceable against the Maker in accordance with its terms.
No
Conflicts. The execution, delivery and performance the Note by the Maker and the consummation by the Maker of the transactions
contemplated hereby will not (i) conflict with or result in a violation of any provision of the Articles of Incorporation or By-laws
of the Maker, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Maker or any of its
Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations and regulations of any self-regulatory organizations to which the Maker or its securities
are subject) applicable to the Maker or any of its Subsidiaries or by which any property or asset of the Maker or any of its Subsidiaries
is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect).
No
Integrated Offering. Neither the Maker, nor any of its affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under
circumstances
that would require registration under the 1933 Act of the issuance of this note or the Conversion Stock to the Holder.
No
Investment Company. The Company is not an "investment company" required to be registered under the Investment Company
Act of 1940 (an "Investment Company"). The Maker is not controlled by an Investment Company.
This
Note is a uniform instrument with limited variations in some jurisdictions.
Notices.
Any notice herein required or permitted to be given shall be in writing and may be personally served or delivered by courier or
sent by United States mail and shall be deemed to have been given upon receipt if personally served (which shall include telephone
line facsimile transmission) or sent by courier or three (3) days after being deposited in the United States mail, certified,
with postage pre-paid and properly addressed, if sent by mail. For the purposes hereof, the address of the Note Holder shall be
GCEF Opportunity Fund, LLC, 1000 Fifth Street, Suite 200, Miami Beach, FL 33139; and the address of the Maker shall
be 5940 South Rainbow Ave., Las Vegas, NV 89118. Both the Holder or its assigns and the Maker may change the address for
service by delivery of written notice to the other as herein provided.
Amendment.
This Note and any provision hereof may be amended only by an instrument in writing signed by the Maker and the Note Holder.
Assignability.
This Note shall be binding upon the Maker and its successors and assigns and shall inure to be the benefit of the Holder and
its successors and assigns; provided, however, that so long as no Event of Default has occurred, this Note shall only be transferable
in whole subject to the restrictions contained in the restrictive legend on the first page of this Note.
Governing
Law. This Note shall be governed by the internal laws of the State of Nevada, without regard to conflicts of laws principles.
Replacement
of Note. The Maker covenants that upon receipt by the Maker of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Note, and in case ofloss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Note, if mutilated, the Maker
will make and deliver a new Note of like tenor.
Severability.
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.
Headings.
The headings of the sections of this Note are inserted for convenience only and do not affect the meaning of such section.
Counterparts.
This Note may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to
constitute on instrument.
IN
WITNESS WHEREOF, with the intent to be legally bound hereby, the Maker as executed this Note as of the date first written above.
MAKER:
/s/
Phil Mansour
Phil
Mansour , President & CEO
Avalanche
International Corp., Inc.
June
30, 2014
NOTE
HOLDER:
/s/
Eric Flesche
Eric
Flesche, Managing Member
GCEF
Opportunity Fund, LLC
Date:
June 30, 2014
CERTIFICATION
I,
Philip Mansour, certify that;
| 1. |
|
I have reviewed this quarterly
report on Form 10-Q for the quarter ended May 31, 2015 of Avalanche International,
Corp.; |
| 2. |
|
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
| 3. |
|
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
| 4. |
|
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. |
|
Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b. |
|
Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c. |
|
Evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. |
|
Disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
|
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions): |
| a. |
|
All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. |
|
Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting. |
Date:
July 16, 2015
/s/
Philip Mansour
By:
Philip Mansour
Title:
Chief Executive Officer
CERTIFICATION
I,
Rachel Boulds, certify that;
| 1. |
|
I have reviewed this quarterly
report on Form 10-Q for the quarter ended May 31, 2015 of Avalanche International,
Corp.; |
| 2. |
|
Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report; |
| 3. |
|
Based on my knowledge,
the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
| 4. |
|
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. |
|
Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b. |
|
Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c. |
|
Evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. |
|
Disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. |
|
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent functions): |
| a. |
|
All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. |
|
Any fraud, whether or not
material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting. |
Date:
July 16, 2015
/s/
Rachel Boulds
By:
Rachel Boulds
Title:
Chief Financial Officer
CERTIFICATION
OF CHIEF EXECUTIVE OFFICER AND
CHIEF
FINANCIAL OFFICER
PURSUANT
TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the quarterly Report of Avalanche International Corp (the “Company”) on Form 10-Q for the quarter
ended May 31, 2015 filed with the Securities and Exchange Commission (the “Report”),
I, Phillip Mansour, Chief Executive Officer of the Company, and I, Rachel Boulds, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The
Report fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934; and |
| 2. | The
information contained in the Report fairly presents, in all material respects, the consolidated
financial condition of the Company as of the dates presented and the consolidated result
of operations of the Company for the periods presented. |
| By: |
/s/
Philip Mansour |
| Name: |
Philip Mansour |
| Title: |
Principal Executive
Officer and Director |
| Date: |
July 16, 2015 |
| By: |
/s/
Rachel Boulds |
| Name: |
Rachel Boulds |
| Title: |
Principal Financial
Officer |
| Date: |
July 16, 2015 |
This
certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Avalanche (CE) (USOTC:AVLP)
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