AMENDMENT No. 2 TO SECURITIES ESCROW AGREEMENT
AMENDMENT
No. 2 TO
This
Amendment No. 2 (“Amendment No. 2”) to the Securities Escrow Agreement dated as
of March 28, 2008 (the “Securities Escrow Agreement”) (as Amended by the
Amendment to Securities Escrow Agreement dated as of October 15, 2009, 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 April 1, 2009. Capitalized
terms used but not defined herein shall have the meanings set forth in the
Securities Escrow Agreement (as defined below).
WHEREAS, on January 1, 2009
the Company adopted the provisions of EITF 07-5, “Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (FASB ASC
815-40-15-5) FASB ASC Topic 815, “Derivatives and Hedging (“ASC 815”)
(collectively referred to as “ASC 815”) which will impact the Company’s net
income for 2009; and
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 or ASC 815 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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[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.
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇
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Name:
▇▇▇▇▇▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer and President
PURCHASER
REPRESENTATIVE:
VISION
OPPORUNITY CHINA LP
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By:
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/s/
▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Authorized Signatory
ESCROW
AGENT:
LOEB
& LOEB, LLP
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By:
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/s/
▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Partner
PRINCIPAL
STOCKHOLDER:
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇
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Name:
Winning State Investment Limited
Authorized
Signatory: ▇▇▇▇▇▇▇▇ ▇▇▇▇
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