13D Filing: Mistry Pravin and Avalanche International Corp (AVLP)

Until the Class B Shares shall become convertible, the holders of the Class B Shares (referred to along with holders of the Notes as “Holders”) have no voting power whatsoever, except as otherwise provided by the Nevada Revised Statutes or as provided below.  After the Class B Shares shall have become convertible, the Holders of the Class B Shares shall vote with the holders of Common Stock on an “as converted” basis.

In the election of directors to the Corporation, for so long as the Holders own in the aggregate at least 100,000 shares of Class B Shares, the Holders, voting as a separate class, shall be entitled to elect by majority vote (with each Class B Share entitled to one vote) two (2) individuals to the Board (each such individual, a “Class B Director”). On August 22, 2017, Messrs. Pravin Mistry and Manuel C. Turchan were appointed to serve as Class B directors. A Class B Director may be removed at any time as a director on the Board (with or without cause) upon, and only upon, the written request of the holders of the outstanding Class B Shares (voting as a separate class by a 2/3 majority vote with each Class B Share entitled to one vote). In the event that a vacancy is created on the Board at any time due to the death, disability, retirement, resignation or removal of a Class B Director, then the Holders (voting as a separate class by majority vote with each Class B Share entitled to one vote) shall have the right to designate an individual to fill such vacancy. In the event that the Holders shall fail to designate in writing a representative to fill the vacant Class B Director seat on the Board, and such Board seat shall remain vacant until such time as the Holders elect an individual to fill such seat in accordance with Section 5(b) of the Certificate of Designation, and during any period where such seat remains vacant, the Board nonetheless shall be deemed duly constituted.

The Class B Shares shall contain the respective rights, privileges and designations as are set forth in the Certificate of Designations, Preferences, Rights and Limitations of Class B Convertible Preferred Stock. Commencing two (2) years after the Closing Date, the Class B Shares shall be convertible into shares of Common Stock by dividing the Class B Stated Value by the Conversion Price applicable to the Notes; provided, however, that in no event shall the Holder be entitled to convert any number of Class B Shares in excess of that number of Class B Shares upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Class B Shares or the unexercised or unconverted portion of any other security of the Corporation subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the Class B Shares with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (“Beneficial Ownership Limitation”).  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the Corporation, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The rights and obligations of the Holders are several and not joint and no action taken by a Holder pursuant to the Notes shall be deemed to create a group or create a presumption that the Holders are in any way acting in concert.

Notwithstanding anything in the Notes  to the contrary, if the shares of Common Stock shall be traded on a national securities exchange and the Company has not obtained Shareholder Approval (defined below), then the Company may not issue, upon conversion of either the principal amount of, or interest thereon, the Note, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date (i) in connection with the conversion of any Notes issued pursuant to the Exchange Agreement, and (ii) in connection with the conversion of the Class B Shares, would exceed 19.99% of the number of shares of Common Stock outstanding on the Trading Day immediately preceding the Original Issue Date (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the “Issuable Maximum”). Each Note Holder shall be entitled to a portion of the Issuable Maximum equal to the quotient obtained by dividing (x) the original principal amount of the Note Holder’s Note by (y) the aggregate original principal amount of all Notes issued on the Original Issue Date to all Note Holders. In addition, each Holder may allocate its pro-rata portion of the Issuable Maximum among Notes and Class B Shares held by it in its sole discretion. Such portion shall be adjusted upward ratably in the event a Holder no longer holds any Notes or Class B Shares and the amount of shares issued to the Holder pursuant to the Holder’s Notes and Class B Shares was less than the Holder’s pro-rata share of the Issuable Maximum.  The Company will use best efforts to obtain Shareholder Approval and the Holder understands and agrees that shares of Common Stock issued to and then held by the Holder as a result of conversions of Notes shall not be entitled to cast votes on any resolution to obtain Shareholder Approval pursuant hereto. “Shareholder Approval” means such approval as may be required by the applicable rules and regulations of any national securities exchange upon which the shares of Common Stock may be traded, if any, from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents (as defined in the Notes), including the issuance of all of the underlying shares in excess of 19.99% of the issued and outstanding Common Stock on the Closing Date.