AGREEMENT
AGREEMENT
This
Agreement is made as of this [23rd day of January, 2007] [February 9, 2007]
by
and between Xxxxx Xxx Shun (Hong Kong Identity Card Number X000000(0)), an
individual (“Xxxxx”),
and
certain purchasers (each an “Investor”
and
together the “Investors”)
of the
Series A Convertible Preferred Stock (the “Series
A Stock”)
of
SRKP 9, Inc., a Delaware corporation (the “Company”),
sold
in that certain private placement (“Private Placement”) conducted by the
Company.
RECITALS
WHEREAS,
as of the date of the final closing of the Private Placement, the Investors
purchased an aggregate of 2,325,581 shares of the Series A Stock, the rights,
preferences and privileges of said Series A Stock as set in that Certificate
of
Designations, Preferences and Rights of Series A Convertible Preferred Stock
($0.0001 par value per share) of SRKP 9, Inc., a copy of which is attached
hereto as Exhibit “A” (the “Certificate”).
NOW
THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follow:
Section 1. Definitions.
The
following terms shall have the following meanings:
“Business
Day”
means
any day except Saturday, Sunday, any day which shall be a federal legal holiday
in the United States or any day on which banking institutions in the State
of
New York are authorized or required by law or other governmental action to
close.
“Common
Stock”
means
the Company’s common stock, par value $0.0001 per share, and stock of any other
class of securities into which such securities may hereafter be reclassified
or
changed into.
“Preferred
Stock”
means
the Series A Convertible Preferred Stock, $0.0001 par value per share, of
SRKP 9, Inc.
“Stated
Value”
shall
have the meaning set forth in Section 2 of the Certificate.
“Trading
Day”
means
a
day on which the principal Trading Market is open for business.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed for
trading on the date in question: the American Stock Exchange, the Nasdaq Capital
Market, the Nasdaq Global Market, or the New York Stock Exchange.
“Trading
Market Listing Date”
means
the first Trading Day on which the Common Stock is listed for trading on a
Trading Market.
“Triggering
Purchase Amount”
means,
for each share of Preferred Stock, 110% of the Stated Value.
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Section 2. 2006
and 2007 Earnings.
a) The
parties hereto acknowledge that the mutually agreed valuation of the Company
as
of the date of the final close of the Private Placement shall be $32,872,050
(the “Agreed
Investment Valuation”)
and
based on 25,482,210 shares of Common Stock outstanding, each share of Common
Stock shall be valued at $1.29. The parties understand that the Agreed
Investment Valuation is also based on the understanding that the Company’s net
income determined in accordance with United States Generally Accepted Accounting
Principles (“GAAP”)
as set
forth in its audited financial statements for the year ending December 31,
2006
(“2006
Net Income”)
will
be $6.3 million (a price-earning ratio of 5 times), and the net income
determined in accordance with GAAP as set forth in its audited financial
statements for the year ending December 31, 2007 (“2007
Net Income”)
will
be $7.7 million (a price-earning ratio of 4 times).
b) Xxxxx
now
undertakes to the Investors that if it happens that the actual net income of
2006 and/or 2007 is less than the 2006 Net Income and/or 2007 Net Income
respectively, then Xxxxx shall make up the shortfall by transferring to the
Investors a certain number of Common Stock calculated as follows:
A
= N x
S
A
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means
the number of additional shares of Common Stock (rounded down to
the
nearest integral) to be transferred by Xxxxx to the Investors under
this
section (“Net
Income Shares”)
|
N means
the
number of Stock that have not been sold by the Investors
S
|
means
the shortfall in agreed valuation per share of Common Stock calculated
as
follows:
|
$1.29
- ((actual amount of net income for the Relevant Year x Relevant
P/E) /
25,482,210)
|
and
for this purpose, “Relevant
Year”
means 2006 and 2007 (as the case may be) and “Relevant
P/E”
means the price earning ratio of 5 for the year 2006 and the price
earning
ratio 4 for the year 2007
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c) The
parties agree that the total number of Net Income Shares shall in no
circumstances be more than 2,326,000. Upon execution of this Agreement, Xxxxx
shall cause 2,326,000 shares of Common Stock be placed in escrow with
Xxxxx X. Xxxxx (the “Escrow
Agent”)
and
that the Net Income Shares shall be further distributed subject to the timing
of
said escrow.
Section 3. Purchase
Upon Triggering Event.
a) “Triggering
Event”
means
the Common Stock shall fail to be listed for trading on a Trading Market on
or
before June 30, 2007.
b) Upon
the
occurrence of a Triggering Event, each Investor shall (in addition to all other
rights it may have hereunder or under applicable law) have the right,
exercisable at the sole option of such Investor for a period of thirty (30)
days
following the Triggering Purchase Payment Date as defined below, to require
Xxxxx to purchase all of the Preferred Stock then held by such Holder for a
price, in cash, equal to the Triggering Purchase Amount. The Triggering
Purchase
Amount
shall be due and payable within five Trading Days of the date on which the
notice for the payment therefor is provided by a Holder (the “Triggering
Purchase Payment Date”).
Xxxxx
fails to pay in full the Triggering Purchase Amount hereunder on the date such
amount is due in accordance with this Section, Xxxxx will pay interest thereon
at a rate equal to the lesser of 10% per annum or the maximum rate
permitted by applicable law, accruing daily from such date until the Triggering
Purchase Amount, plus all such interest thereon, is paid in full. For purposes
of this Section, a share of Preferred Stock is outstanding until such date
as
the applicable Holder has been paid the Triggering Purchase Amount in
cash.
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Section 4. Miscellaneous.
a) Notices.
Any and
all notices or other communications or deliveries to be provided hereunder
shall
be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service addressed to each
Party at
the facsimile number or address of such party as attached hereto appearing
on
the books. Any notice or other communication or deliveries hereunder shall
be
deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 4 prior to 5:00 p.m. (New York City time)
on any date, (ii) the date immediately following the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 4 between 5:00 p.m. and 11:59 p.m. (New
York City time) on any date, (iii) the second Business Day following the
date of mailing, if sent by nationally recognized overnight courier service,
or
(iv) upon actual receipt by the party to whom such notice is required to be
given.
b) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense of the
transactions contemplated by this Agreement shall be commenced in the state
and
federal courts sitting in the City of Los Angeles, State of California (the
“California
Courts”).
Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Los
Angeles Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of
such Los Angeles Courts, or such Los Angeles Courts are improper or inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address
in
effect for notices to it under this Agreement and agrees that such service
shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by applicable law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and
all right to trial by jury in any legal proceeding arising out of or relating
to
this Agreement or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed
by
the other party for its attorneys’ fees and other costs and expenses incurred in
the investigation, preparation and prosecution of such action or
proceeding.
c) Severability.
If any
provision of this Agreement is invalid, illegal or unenforceable, the balance
of
this Agreement shall remain in effect, and if any provision is inapplicable
to
any person or circumstance, it shall nevertheless remain applicable to all
other
Persons and circumstances.
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d) Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
e) Headings.
The
headings contained herein are for convenience only, do not constitute a part
of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
XXXXX
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Xxxxx
Kai Shun
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(Hong
Kong Identity Card Number X000000(0))
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Xxxx
0000-0000, 00/X., XXX Xxxxxx
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000
Xxxxxx Xxx Xxx Xxxx, Xxxxxxx, Xxxx Xxxx
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Address:
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Telephone:
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Facsimile:
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INVESTORS
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Address:
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Telephone:
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Facsimile:
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