AMENDMENT TO SECURITIES ESCROW AGREEMENT
AMENDMENT
TO
This
Amendment (“Amendment”) to the Securities Escrow Agreement dated as of March 28,
2008 (the “Securities Escrow Agreement”), by and among QKL Stores, Inc., a
Delaware corporation (the “Company”), Vision Opportunity China LP, a
closed-ended investment company incorporated in Guernsey, as representative of
the Purchasers (the “Purchaser Representative”), Winning State Investment
Limited, a company organized in the British Virgin Islands (the “Principal
Stockholder”), and Loeb & Loeb, LLP (the “Escrow Agent”) is made and entered
into as of October 15, 2009. Capitalized terms used but not defined herein
shall have the meanings set forth in the Securities Escrow Agreement (as defined
below).
WHEREAS, the Company has filed
a registration statement on Form S-1 in contemplation of a public offering (the
“Offering) of its common stock, $.001 par value (“Common Stock”);
and
WHEREAS, the Company has also
filed an application to list its Common Stock on the NASDAQ stock market (the
“Listing”); and
WHEREAS, as a result of the
Offering and the Listing, there will be certain cash expenses that will impact
the Company’s net income for the fiscal year ended December 31,
2009;
NOW THEREFORE, in
consideration of the foregoing and for other consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
1.
The parties hereto agree to amend paragraph (b) on page 2 of the
Securities Escrow Agreement as follows:
(b) In 2009, without
additional financing (i) Both Net Income, as defined in accordance with US GAAP
and reported by the Company in its audited financial statements for 2009 (the
“2009 financial
statements”) and Cash from Operations, as reported by the Company in the
2009 financial statements exceed $11.15 million and (ii) Earnings Per Share
equal or exceed $0.27, such “Earnings Per Share” to be calculated by dividing
the lesser of Net Income and Cash from Operations, as reported by the Company in
the 2009 financial statements plus (a) any amounts
that may have been recorded as charges or liabilities on the 2009 financial
statements due to the application of EITF No. 00-19 that are associated with (1)
any outstanding Warrants of the Company issued in connection with the Purchase
Agreement or (2) any liabilities created as a result of the Escrow Shares being
released to any officers or directors of the Company and (b) one time
non-recurring cash expenses incurred by the Company relating to the Offering and
the Listing, including all legal and accounting fees, SEC and FINRA filing fees,
NASDAQ application and listing fees, printing fees and road show expenses
(“2009 Net
Income”) by the then Outstanding Shares; provided however that for the
purposes of this paragraph, Outstanding Shares shall exclude any shares issued
by the Company in the Offering (the performance thresholds set forth in (i) and
(ii) above shall be collectively referred to herein as the “2009 Performance
Thresholds”); and
2. Except
as specifically amended hereby, the Securities Escrow Agreement shall continue
in full force and effect and the parties hereby reaffirm the same.
3. This
Amendment shall be construed in accordance with and governed by the internal
laws of the State of New York.
4. This
Amendment is entered into pursuant to Section 4.7 of the Securities Escrow
Agreement, which allows the parties to amend the Securities Escrow Agreement if
such amendment is signed by the Company, the Purchaser Representative, the
Principal Stockholder and the Escrow Agent.
5. This
Amendment may be signed in any number of counterparts, each of which shall be an
original and all of which shall be deemed to be one and the same instrument,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. A facsimile signature shall be deemed to be an original
signature for purposes of this Supplement.
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of page intentionally left blank]
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[SIGNATURE
PAGE TO THE SUPPLEMENT TO SECURITIES ESCROW AGREEMENT]
IN WITNESS WHEREOF, the
parties hereto have duly executed this Supplement as of the day and
year first above written.
QKL
STORES, INC.
|
By:
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/s/
Xxxxxxxx Xxxx
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Name:
Xxxxxxxx Xxxx
Title:
Chief Executive Officer and President
PURCHASER
REPRESENTATIVE:
VISION
OPPORUNITY CHINA LP
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By:
|
/s/
Xxxx Xxxxxxxx
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Name:
Xxxx Xxxxxxxx
Title:
Authorized Signatory
ESCROW
AGENT:
LOEB
& LOEB, LLP
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By:
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/s/
Xxxxxxxx Xxxxxxxx
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Name:
Xxxxxxxx Xxxxxxxx
Title:
Partner
PRINCIPAL
STOCKHOLDER:
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By:
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/s/
Chin Yoke Yap
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Name:
Winning State Investment Limited
Authorized
Signatory: Chin Yoke Yap
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