ANTI-DILUTION AGREEMENT
EXHIBIT
4.4
ANTI-DILUTION
AGREEMENT, dated March 28, 2008, among Travel Xxxx Holdings, Inc., a Delaware
Corporation (the “Company”), and Fountainhead Capital Management Limited
(“Fountainhead”). The Company and Fountainhead are each referred to herein as a
“Party,” and are collectively referred to herein as the “Parties”.
BACKGROUND
Fountainhead
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, Fountainhead will surrender
to
the Company 1,700,000 shares of the common stock of the Company for cancellation
in exchange for $561,000 payable through the delivery of a six month Convertible
Promissory Note (the “Note”). After redemption of the 1,700,000 shares by the
Company, Fountainhead would retain 4,250,000 shares of the Company’s common
stock (the “Fountainhead 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 Fountainhead Shares would have a value (valued at the
valuation used for the PIPE) equal to $637,500 (the “Aggregate Fountainhead
Share Target”). The Company desires to close the Reverse Merger without
simultaneously closing the PIPE. Fountainhead 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 Fountainhead Shares if the PIPE closes
at a valuation (the “PIPE Valuation”) that results in the Fountainhead Shares
not meeting the Aggregate Fountainhead Share Target. If the PIPE Valuation
results in the Fountainhead Shares having a value that is less than the
Aggregate Fountainhead Share Target, then the Company will issue to Fountainhead
a number of shares of its Common Stock held by the Company such that the
Fountainhead Shares plus the additional shares issued by the Company will have
a
value equal to the Aggregate Fountainhead Share Target. If, on the other hand,
the PIPE Valuation results in the Fountainhead Shares being equal to more than
the Aggregate Fountainhead Share Target, then Fountainhead will surrender to
the
Company for cancellation a number of Fountainhead Shares such that the remaining
Fountainhead Shares retained by Fountainhead (the “Retained Fountainhead
Shares”) have a value that is equal to the Aggregate Fountainhead Share
Target.
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 Fountainhead Shares having a value (determined
based upon the PIPE Valuation) that is less than the Aggregate Fountainhead
Share Target, then the Company shall issue promptly (and in any event within
ten
(10) days) to Fountainhead a number of shares of the Company’s common stock such
that the Fountainhead Shares plus the additional shares issued by the Company
will have a value (determined based on the PIPE Valuation) equal to the
Aggregate Fountainhead Share Target. Notwithstanding
the foregoing, if, at the time that any shares are issuable by the Company
to
Fountainhead pursuant to this Agreement, there is insufficient authorized shares
of the Company’s common stock available for issuance to Fountainhead, 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 Fountainhead Shares being equal to more than
the
Aggregate Fountainhead Share Target, then Fountainhead shall surrender promptly
(and in any event within ten (10) days) to the Company for cancellation a number
of Fountainhead Shares such that the Retained Fountainhead Shares have a value
(determined based on the PIPE Valuation) that is equal to the Aggregate
Fountainhead Share Target.
3. No
Anti-Dilution Adjustment When Target Met.
If upon
the closing of the PIPE the Fountainhead Shares have a value that is equal
to
the Aggregate Fountainhead 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 Fountainhead 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.
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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]
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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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FOUNTAINHEAD:
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FOUNTAINHEAD
CAPITAL
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MANAGEMENT
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 Fountainhead Anti-Dilution Agreement]
