THISNOTEMAYNOTBESOLD, TRANSFERRED,ASSIGNED, PLEDGED,HYPOTHECATEDOROTHERWISEALIENATEDORENCUMBEREDWITHOUT THEPRIOR WRITTENCONSENTOF INVESTOR.
$50,000.00
StateofUtahMay 29,2015
INVESTOR NOTE#2
FOR VALUERECEIVED, TYPENEXCO-INVESTMENT, LLC,aUtahlimited liabilitycompany(“Investor”),hereby promisestopaytoAVALANCHEINTERNATIONAL,CORP., aNevadacorporation(“Company”,andtogetherwithInvestor,the“Parties”),theprincipalsumof$50,000.00 togetherwith allaccrued andunpaid interestthereon,feesincurredorotheramounts owinghereunder,allassetforthbelow inthisInvestorNote#2(this “Note”).ThisNote isissuedpursuanttothat certainSecuritiesPurchase Agreementof evendateherewith, enteredinto byandbetweenInvestorandCompany(asthe same may beamendedfromtimetotime, the “PurchaseAgreement”), pursuanttowhichCompany issuedtoInvestor thatcertainSecuredConvertiblePromissoryNoteintheprincipal amountof
$252,500.00(asthe samemaybeamendedfromtimetotime,the“CompanyNote”)convertibleinto sharesofCompany’sCommonStock.All capitalizedtermsusedbut nototherwisedefinedherein shallhave themeanings ascribedthereto inthePurchaseAgreement.
1. PrincipalandInterest.Interestshallaccrue ontheunpaidprincipal balanceandanyunpaidlatefeesorotherfees underthisNoteatarateofeight percent(8%)perannum untilthefull amountoftheprincipaland feeshasbeenpaid. Interestshallbecomputedonthe basisofa365-day year for theactualnumberofdayselapsed.Notwithstandinganyprovisiontothecontraryherein,innoeventshalltheapplicableinterest rateatanytimeexceedthemaximuminterestrateallowed underapplicablelaw,asprovidedinSection 12below.Theentireunpaidprincipalbalanceandallaccruedandunpaidinterest,ifany,underthisNote,shallbedueandpayableonthe datethatisthirteen(13)monthsfromthedatehereof(the“InvestorNoteMaturity Date”);provided, however,thatInvestor mayelect,inits solediscretion,toextend theInvestorNoteMaturityDateforuptothirty(30)daysbydeliveringwrittennoticeofsuchelectiontoCompanyatanytimepriortotheInvestorNote MaturityDate.
2. Payment.Unlessprepaid,allprincipalandaccrued interestunderthisNoteispayableinonelumpsumontheInvestor NoteMaturityDate.Allpaymentsofinterestand principalshallbe(i)inlawfulmoneyoftheUnitedStatesofAmerica,and(ii)intheformofimmediatelyavailable funds.Allpaymentsshallbeappliedfirstto costs ofcollection,ifany, then toaccrued andunpaidinterest,andthereaftertoprincipal.Paymentofprincipalandinterest hereundershallbedeliveredtoCompanyattheaddress furnishedtoInvestorfor that purpose.
3. PrepaymentbyInvestor. Investormay,withCompany’sconsent, pay,withoutpenalty, alloranyportionoftheoutstanding balancealongwithanyaccruedbut unpaidinterestonthisNoteatanytimepriortotheInvestorNote MaturityDate.
4. Security;Collateral. Investormay,initssole discretion,designate collateral(the “Collateral”)asit deemsfit,assecurityforInvestor’sobligations hereunder,which Collateralmaybe,butisnotrequiredtobe,realproperty,aletterofcredit with afinancialinstitution determinedbyInvestorinitssolediscretion,orpledgedmembershipinterests, providedthatthenet fairmarketvalue ofthe Collateral(net of anyoutstandingmonetaryliens) shall not belessthan theprincipal balance ofthisNote asof thedateofany suchdesignation. UponInvestor’sdesignationofCollateral,eachofInvestor andCompanyshalltimelyexecuteanyandalldocumentsnecessaryoradvisable inorder toproperly grant asecurityinterest upontheCollateralinfavorofCompany.
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5. Release.Companycovenantsandagreesthatintheevent thatthis Noteis securedbyCollateral, Companyshalltimelyexecuteanyandall documentsnecessaryoradvisableinordertoreleasesuchsecurity interestandCollateraltoInvestor,orInvestor’s designee,upontheearlierof(i)the datethisNote ispaidinfulland(ii)thedate thatissix(6) monthsandthree (3)daysfollowingthedatesuchCollateralisgivenassecurityforthisNote,orsuchlaterdateasdeterminedinthesolediscretionofInvestor(the “ReleaseDate”). For theavoidanceofdoubt, as of thedatehereof, thereisnocollateralsecuring thisNote,andaftertheReleaseDate,asapplicable,thereshallbenocollateral securingthisNote.
6. RightofOffset. Notwithstandinganythingtothecontrary hereinorinanyoftheother TransactionDocuments,intheevent (i)oftheoccurrenceofanyEventofDefault(asdefinedintheCompanyNote)underthe CompanyNote oranyothernoteissuedbyCompanyinconnectionwiththe Purchase Agreement,(ii)Investor appliesaDefault Effect(asdefined intheCompanyNote)undertheCompanyNote,(iii) theOutstanding Balanceisautomatically increased to theMandatoryDefaultAmountunder theCompany Note,(iv)theCompany Note isaccelerated for anyreason,or(v) of abreach of anymaterialterm,condition, representation,warranty,covenantorobligationofCompany underany TransactionDocument;Investorshall beentitled todeduct andoffset anyamountowingbyCompany undertheCompanyNote from anyamountowed byInvestor underthisNote (the “InvestorOffsetRight”),provided that ifanyof theforegoingeventsoccurandInvestor hasnotyetexercisedtheInvestorOffsetRight,theInvestor OffsetRightshall beautomatically exercised on thedatethatis thirty(30)dayspriorto theInvestorNoteMaturity Date (an“AutomaticOffset”). Otherthanwithrespect to anAutomaticOffset, Investormayonlyelect toexercise theInvestorOffsetRightby deliveringtoCompanyanoffsetnotice inaformsubstantially similar toExhibit Dto theCompanyNote oranother form ofInvestor’schoosing.Intheeventthat Investor’sexerciseofthe InvestorOffsetRight underthis SectionError!Reference sourcenotfound.resultsinthefull satisfactionofInvestor’s obligationsunderthisNote,then Company shallreturnthisNotetoInvestor forcancellation or, in theeventthisNote hasbeenlost,stolenordestroyed,Company shallprovideInvestorwithalost noteaffidavit in aform reasonablyacceptabletoInvestor.
7. Default.Ifanyofthe events specifiedbelowshalloccur(each,an“InvestorNoteDefault”)Companymaydeclaretheunpaidprincipal balanceunderthisNote, togetherwithallaccruedandunpaidinterestthereon, feesincurredorotheramounts owinghereunderimmediatelydue andpayable,bynoticeinwritingtoInvestor.If any default, otherthan aPaymentDefault(asdefinedbelow), iscurable,thenthedefaultmaybe cured(andnoInvestorNoteDefaultwillhaveoccurred)ifInvestor,afterreceiving writtennoticefromCompany demanding cureofsuchdefault, either(i)cures thedefaultwithin fifteen(15)days of thereceiptofsuchnotice,or(ii) if thecurerequires more thanfifteen (15)days,immediatelyinitiatessteps thatCompanydeemsinCompany’sreasonablediscretion to besufficient tocure thedefault andthereafter diligentlycontinues andcompletesallreasonable andnecessarystepssufficienttoproduce complianceassoon asreasonably practical. Each ofthefollowingeventsshallconstituteanInvestorNoteDefault:
7.1. Failureto Pay.Investor’s failuretomakeanypaymentwhendueandpayableunderthisNote(a “PaymentDefault”);
7.2. BreachesofCovenants.Investor’sfailuretoobserveorperformanyothercovenant,obligation, conditionoragreementcontainedinthis Note;
7.3. Representationsand Warranties.Ifanyrepresentation,warranty,certificate,orother statement(financialorotherwise)madeorfurnishedbyoronbehalfofInvestortoCompanyinwritinginconnectionwiththis Note or any oftheotherTransactionDocuments, oras aninducementto
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CompanytoenterintothePurchase Agreement,shallbefalseormisleadinginanymaterialrespectwhenmadeorfurnished;and
7.4. Involuntary Bankruptcy.Ifanyinvoluntary petition isfiledunderanybankruptcyorsimilarlaworruleagainst Investor,andsuchpetitionis notdismissedwithinsixty (60)days,orareceiver, trustee,liquidator,assignee,custodian,sequestratororothersimilarofficialisappointedtotakepossessionofanyoftheassets orpropertiesofInvestor.
8. BindingEffect;Assignment. ThisNote shallbebindingonthePartiesandtheir respectiveheirs,successors,andassigns;provided,however,thatneitherPartyshallassignanyofits rightshereunderwithoutthepriorwrittenconsent ofthe otherParty,exceptthat Investor mayassignthis Noteto anyofitsAffiliateswithouttheprior writtenconsent ofCompanyand,furthermore, Companyagreesthat itshall notunreasonablywithhold,conditionordelay itsconsenttoany other assignment ofthis Note byInvestor.
9. GoverningLaw. ThisNoteshallbegovernedbyandinterpretedinaccordancewiththelawsofthe StateofUtah forcontractstobewhollyperformedinsuchstateandwithout givingeffecttotheprinciplesthereofregardingtheconflictoflaws.
10. PurchaseAgreement;ArbitrationofDisputes. ByacceptanceofthisNote,each Partyagreestobeboundbytheapplicable terms,conditionsandgeneralprovisionsofthePurchase Agreementandthe otherTransactionDocuments,includingwithoutlimitationtheArbitrationProvisionsattached asanexhibittothePurchaseAgreement.
11. CustomerIdentification–USAPatriotActNotice. CompanyherebynotifiesInvestor thatpursuanttotherequirementsoftheUSAPatriotAct (TitleIIIofPub.L.107-56,signedintolawOctober 26,2001)(the“Act”), andCompany’spoliciesandpractices,Companyisrequiredtoobtain,verify andrecordcertain information anddocumentationthatidentifiesInvestor,which information includesthename andaddressofInvestor andsuchotherinformation thatwillallowCompanytoidentify InvestorinaccordancewiththeAct.
12. LawfulInterest.Itbeing theintentionofCompanyandInvestortocomply withallapplicablelawswithregardtotheinterest chargedhereunder,itis agreedthat,notwithstandinganyprovisiontothecontraryinthisNote or any of theotherTransactionDocuments,nosuchprovision, includingwithoutlimitationanyprovision ofthisNote providing forthepayment ofinterestorothercharges, shallrequirethepayment orpermit thecollectionof anyamount inexcess of themaximumamountofinterestpermitted by law tobechargedfortheuse or detention,ortheforbearance in thecollection, ofall or anyportionof theindebtednessevidencedbythis Note or byanyextension orrenewal hereof(“ExcessInterest”).If any ExcessInterest isprovided for, orisadjudicated to beprovidedfor,in thisNote,thenin suchevent:
12.1. theprovisionsofthis Section12shallgovern andcontrol;
12.2.Investor shallnot beobligatedtopayanyExcessInterest;
12.3. anyExcessInterest thatCompanymayhave receivedhereundershall,at theoptionofCompany,be(i)appliedasacreditagainstthe principalbalancedueunder thisNoteorthe accruedandunpaidinterest thereonnot toexceedthe maximumamountpermittedby law, orboth,(ii) refundedtoInvestor, or (iii) anycombinationoftheforegoing;
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12.4. theapplicableinterestrateorratesshallbeautomaticallysubject toreductiontothemaximumlawfulrateallowedtobecontracted forinwritingundertheapplicablegoverningusurylaws,andthisNoteandtheTransaction Documentsshallbedeemedtohavebeen,andshallbe,reformedandmodified toreflectsuchreductioninsuch interest rate orrates; and
12.5. Investorshall nothaveanyactionorremedyagainstCompanyforanydamages whatsoeveroranydefensetoenforcementofthisNoteorarisingoutofthepaymentorcollectionofanyExcessInterest.
13. Pronouns.Regardlessoftheir form,allwordsusedinthisNoteshallbedeemed singularorpluralandshallhavethegender asrequiredby thetext.
14. Headings.Thevarious headingsusedin thisNoteasheadingsforsectionsorotherwiseareforconvenienceand referenceonlyandshallnotbeusedininterpretingthe textofthesectioninwhichtheyappearand shallnotlimitorotherwiseaffectthe meaningsthereof.
15.TimeofEssence. Time isofthe essencewith this Note.
16. Severability.Ifany partofthis Noteis construedtobeinviolationofanylaw,suchpart shallbemodifiedtoachievetheobjectiveofthePartiestothefullest extent permittedbylawandthebalanceofthis Noteshallremain infullforceandeffect.
17. Attorneys’ Fees.Ifanyarbitration oraction atlaworin equityisnecessarytoenforce thisNoteortocollect paymentunderthisNote, Companyshallbeentitledtorecoverreasonable attorneys’feesdirectly relatedtosuchenforcementorcollectionactions.
18. AmendmentsandWaivers; Remedies.NofailureordelayonthepartofeitherParty heretoinexercisinganyright,powerorremedyhereunder shalloperateasawaiver thereof,norshallanysingle orpartial exerciseofanysuchright, power orremedyprecludeanyotherorfurtherexercise thereofortheexerciseofanyotherright, powerorremedy.Theremediesprovidedforhereinarecumulativeandarenotexclusiveof anyremediesthatmaybeavailable toeitherParty heretoatlaw, inequityorotherwise. Anyamendment, supplementormodification of or to anyprovisionofthisNote, anywaiverof anyprovisionofthisNote, and anyconsenttoanydeparturebyeitherPartyfrom theterms of anyprovision ofthisNote,shallbeeffective(i) only ifit ismade orgiven inwritingandsigned byInvestorandCompanyand(ii) onlyinthespecific instance andforthespecificpurposeforwhichmadeorgiven.
19. Notices.Unlessotherwiseprovidedforherein,allnotices,requests,demands,claimsandother communicationshereundershallbegiveninaccordance withthesubsectionofthePurchase Agreementtitled“Notices.”Either Partymaychangetheaddresstowhichnotices, requests,demands,claimsandothercommunicationshereunder aretobedeliveredby providing noticethereofin themannersetforthinthePurchaseAgreement.
20. FinalNote. ThisNote, togetherwiththeother TransactionDocuments,containsthe completeunderstanding andagreementofInvestorand Company andsupersedes allpriorrepresentations,warranties,agreements, arrangements,understandings,andnegotiationsofInvestor andCompanywithrespect tothe subjectmatter of theTransactionDocuments.THISNOTE, TOGETHERWITHTHEOTHERTRANSACTIONDOCUMENTS,REPRESENTS THEFINALAGREEMENTBETWEENTHE PARTIESANDMAYNOTBE CONTRADICTEDBYEVIDENCEOFANYALLEGEDPRIOR,CONTEMPORANEOUS,OR SUBSEQUENTORALAGREEMENTSOF THEPARTIES.THERE ARENO UNWRITTEN ORALAGREEMENTSBETWEENTHEPARTIES.
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IN WITNESSWHEREOF, theParties haveexecuted thisNoteasofthedate set forthabove.
INVESTOR:
TYPENEXCO-INVESTMENT,LLC
By:RedCliffs Investments,Inc., itsManager
/s/ John M. Fife
John M. Fife, President
ACKNOWLEDGED, ACCEPTED ANDAGREED:COMPANY:
AVALANCHEINTERNATIONAL,CORP.
By: /s/ Phil Mansour
Name: Phil Mansour
Title: CEO
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