LOCK-UP LETTER October 15, 2009
LOCK-UP
LETTER
October
15, 2009
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Newport
Beach, California 92660
Ladies
and Gentlemen:
The
undersigned understands that Xxxx Capital Partners, LLC (“Xxxx”) proposes to
enter into an Underwriting Agreement (the “Underwriting
Agreement”) with QKL Stores, Inc., a Delaware corporation (the “Company”) providing
for the public offering (the “Public Offering”) by
Xxxx of shares of the Company’s common stock, $0.001 par value per share (the
“Common
Stock”).
To induce
Xxxx to continue its efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxx, it
will not, during the period commencing on the date hereof and ending 180 days
after the date of the final prospectus supplement relating to the Public
Offering (the “Prospectus”) (the
“Lock-Up
Period”), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the
completion of the Public Offering, provided that no filing
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)
shall be required or shall be voluntarily made in connection with subsequent
sales of Common Stock or other securities acquired in such open market
transactions, or (b) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift, by will or intestacy or to a
family member or trust for the benefit of a family member; provided that in the case of
any transfer or distribution pursuant to clause (b), (i) each donee or
distributee shall sign and deliver a lock-up letter substantially in the form of
this letter and (ii) no filing under Section 16(a) of the Exchange Act,
reporting a reduction in beneficial ownership of shares of Common Stock, shall
be required or shall be voluntarily made during the Lock-up
Period. In addition, the undersigned agrees that, without the prior
written consent of Xxxx, it will not, during the period commencing on the date
hereof and ending 180 days after the date of the Prospectus, make any demand for
or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and registrar against
the transfer of the undersigned’s shares of Common Stock except in compliance
with the foregoing restrictions.
If (i)
the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up Period,
or (ii) prior to the expiration of the Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the
last day of the Lock-Up Period, the restrictions imposed by this agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event, unless Xxxx waives such extension.
No
provision in this agreement shall be deemed to restrict or prohibit the exercise
or exchange by the undersigned of any option or warrant to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
Common Stock, provided
that the undersigned does not transfer the Common Stock acquired on such
exercise or exchange during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this agreement. In addition, no provision
herein shall be deemed to restrict or prohibit the entry into or modification of
a so-called “10b5-1” plan at any time (other than the entry into or modification
of such a plan in such a manner as to cause the sale of any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock within the Lock-Up Period).
The
undersigned understands that the Company and Xxxx are relying upon this
agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is
irrevocable and shall be binding upon the undersigned’s heirs, legal
representatives, successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not executed by
December 1, 2009, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this letter
agreement.
Whether
or not the Public Offering actually occurs depends on a number of factors,
including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and Xxxx.
(Signature
pages follow.)
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Very
truly yours,
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Winning
State International Ltd.
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By:
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/s/ Xxxx XxxxXxx
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Name:
Xxxx Yoke Xxx
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Title:
Director
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxxxxxx Xxxx
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Xxxxxxxx
Xxxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxx Xxxxxxx
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Xxxx
Xxxxxxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxxx Xxxxx
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Xxxxx
Xxxxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxx Xxxxx
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Xxxx
Xxxxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxxxx Xxx
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Xxxxxx
Xxx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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Very
truly yours,
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/s/
Xxxxxxxx Xx
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Xxxxxxxx
Xx
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Address:
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c/o
QKL Stores Inc.
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00
Xxxxxx Xxxxxx
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Xxxxxxxx
Xxxxxx
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Sartu
District
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163311
Daqing, P.R. China
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