ANTI-DILUTION AGREEMENT
EXHIBIT
4.5
ANTI-DILUTION
AGREEMENT, dated March 28, 2008, among Travel Xxxx Holdings, Inc., a Delaware
Corporation (the “Company”), and La Pergola Investments Limited (“La Pergola”).
The Company and La Pergola are each referred to herein as a “Party,” and are
collectively referred to herein as the “Parties”.
BACKGROUND
La
Pergola is the controlling stockholder of the Company. The Company is a
publicly-traded shell company whose common stock is quoted on the
over-the-counter bulletin board.
The
Parties desire to effectuate a reverse acquisition transaction (the “Reverse
Merger”) whereby the Company will issue to the shareholder of Willsky
Development Limited, a British Virgin Islands corporation (“Willsky”),
94,908,650 shares of its common stock in exchange for all of the issued and
outstanding capital stock of Willsky. Willsky owns all of the equity of Tianjin
SingOcean Public Utility Development Co., Ltd. (“SingOcean”). SingOcean is a
vertically integrated natural gas company engaged in the development of natural
gas distribution networks, the distribution of natural gas to residential and
industrial customers in small and medium sized cities in China and the
exploration and recovery of natural gas reserves.
In
addition, concurrently with the Reverse Merger, La Pergola will surrender to
the
Company 300,000 shares of the common stock of the Company for cancellation
in
exchange for $99,000 payable through the delivery of a six month Convertible
Promissory Note (the “Note”). After redemption of the 300,000 shares by the
Company, La Pergola would retain 750,000 shares of the Company’s common stock
(the “La Pergola Shares”).
The
Parties originally contemplated that the Company would sell securities for
gross
proceeds of at least $8,000,000 in a private placement (a “PIPE,” it being
understood that for purposes of this Agreement, “PIPE” means a private placement
with gross proceeds of at least $8,000,000) simultaneously with the closing
of
the Reverse Merger. The Parties understood that the PIPE would occur at a
valuation such that the La Pergola Shares would have a value (valued at the
valuation used for the PIPE) equal to $112,500 (the “Aggregate La Pergola Share
Target”). The Company desires to close the Reverse Merger without simultaneously
closing the PIPE. La Pergola is willing to permit the Company to close the
Reverse Merger without simultaneously closing the PIPE so long as there is
an
adjustment in the number of La Pergola Shares if the PIPE closes at a valuation
(the “PIPE Valuation”) that results in the La Pergola Shares not meeting the
Aggregate La Pergola Share Target. If the PIPE Valuation results in the La
Pergola Shares having a value that is less than the Aggregate La Pergola Share
Target, then the Company will issue to La Pergola a number of shares of its
Common Stock held by the Company such that the La Pergola Shares plus the
additional shares issued by the Company will have a value equal to the Aggregate
La Pergola Share Target. If, on the other hand, the PIPE Valuation results
in
the La Pergola Shares being equal to more than the Aggregate La Pergola Share
Target, then La Pergola will surrender to the Company for cancellation a number
of La Pergola Shares such that the remaining La Pergola Shares retained by
La
Pergola (the “Retained La Pergola Shares”) have a value that is equal to the
Aggregate La Pergola Share Target.
EXHIBIT
4.5
As
a
condition to consummating the Reverse Merger, the Parties are entering into
this
Agreement to govern the anti-dilution adjustment described above that may be
required upon the consummation of the PIPE.
AGREEMENT
NOW,
THEREFORE, for the mutual promises herein contained and for such other good
and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be bound, hereby agree as
follows:
1. Anti-Dilution
Adjustment in Favor of Fountainhead.
If the
PIPE Valuation results in the La Pergola Shares having a value (determined
based
upon the PIPE Valuation) that is less than the Aggregate La Pergola Share
Target, then the Company shall issue promptly (and in any event within ten
(10)
days) to La Pergola a number of shares of the Company’s common stock such that
the La Pergola Shares plus the additional shares issued by the Company will
have
a value (determined based on the PIPE Valuation) equal to the Aggregate La
Pergola Share Target. Notwithstanding
the foregoing, if, at the time that any shares are issuable by the Company
to La
Pergola pursuant to this Agreement, there is insufficient authorized shares
of
the Company’s common stock available for issuance to La Pergola, then the
Company shall be obligated to use its best efforts to promptly amend its
certificate of incorporation to authorize additional shares of its common stock
such that there will be sufficient authorized shares of the Company’s common
stock to include all of the shares issuable hereunder and
the
Company's obligation to issue shares hereunder shall be tolled until such
amendment becomes effective.
2. Anti-Dilution
Adjustment in Favor of the Company.
If the
PIPE Valuation results in the La Pergola Shares being equal to more than the
Aggregate La Pergola Share Target, then La Pergola shall surrender promptly
(and
in any event within ten (10) days) to the Company for cancellation a number
of
La Pergola Shares such that the Retained La Pergola Shares have a value
(determined based on the PIPE Valuation) that is equal to the Aggregate La
Pergola Share Target.
3. No
Anti-Dilution Adjustment When Target Met.
If upon
the closing of the PIPE the La Pergola Shares have a value that is equal to
the
Aggregate La Pergola Share Target, then no anti-dilution adjustment shall be
made hereunder.
4. Termination.
This
Agreement shall automatically terminate and no anti-dilution adjustment shall
be
made hereunder if the Note is converted by La Pergola for the Convertible Shares
(as defined in the Note). Under no circumstances shall there be both an
anti-dilution adjustment hereunder and the conversion of the Convertible Shares
under the Note. If the Note is paid in cash and not converted, then this
Agreement shall terminate on March 28, 2010.
EXHIBIT
4.5
5. Miscellaneous.
All
notices under this Agreement shall be in writing, and shall be deemed given
when
personally delivered, three days after being sent by prepaid certified or
registered U.S. mail, or one day after being sent by overnight express courier
to the address of the Party to be noticed, as set forth in any writing or
document provided by the Party to be noticed to the other. This Agreement
constitutes the entire agreement between the parties regarding the subject
matter hereof and supersedes all prior understandings, agreements, or
representations by or between the parties, written or oral, to the extent they
related in any way to the subject matter hereof. No changes, modifications,
or
waivers to this Agreement will be effective unless in writing and signed by
both
parties. In the event that any provision hereof is determined to be illegal
or
unenforceable, that provision will be limited or eliminated to the minimum
extent necessary so that these terms and conditions shall otherwise remain
in
full force and effect and enforceable. These terms and conditions shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to the conflicts of laws provisions of such state. Neither Party
may assign its rights or delegate its duties under this Agreement without the
express prior written consent of the other Party, which consent shall not be
unreasonably withheld. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument. Facsimile execution
and
delivery of this Agreement is legal, valid and binding execution and delivery
for all purposes.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the undersigned Parties have executed this Agreement as of
the
date first above written.
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TRAVEL
XXXX HOLDINGS, INC.
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By:
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/s/
Xxxxxxxx Alison
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| Name: Xxxxxxxx Xxxxxx | |
| Title: CEO and President | |
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Address:
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00xx
Xxxxx, XxxxXx Xxxxxxxx, XxxXxx
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Xxxx,
XxXxx District, Tianjin, China
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LA
PERGOLA:
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LA
PERGOLA INVESTMENTS LIMITED
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By:
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/s/
Xxxxxx X.X. Xxxxxx
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| Name: Xxxxxx X.X. Xxxxxx | |
| Title: Attorney-in-Fact | |
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Address:
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1
Xxxxxxx Xxxxx, Xxx Xxxxxx
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XX0
0XX
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[Signature
Page to La Pergola Anti-Dilution Agreement]
