Exhibit 1.1
QILIAN INTERNATIONAL HOLDING GROUP LIMITED
UNDERWRITING AGREEMENT
[ ], 2020
Univest Securities, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
As Representative of the Underwriters
named on Schedule A hereto
Ladies and Gentlemen:
The undersigned, QILIAN
INTERNATIONAL HOLDING GROUP LIMITED, a Cayman Islands exempted company (collectively with its subsidiaries and affiliates,
including, without limitation, all entities disclosed or described in the Registration Statement (as hereinafter defined) as being
subsidiaries or affiliates of the Company, the “Company”), hereby confirms its agreement (this “Agreement”)
with several underwriters (such underwriters, including the Representative (as defined below), the “Underwriters”
and each an “Underwriter”) named in Schedule A hereto for which Univest Securities, LLC acting as the
representative to the several Underwriters (in such capacity, the “Representative”) to issue and sell an aggregate
of five million (5,000,000) ordinary shares of the Company (“Firm Shares”), par value $0.00166667
per share (“Ordinary Shares”). The Company has also granted to the several Underwriters an option to purchase
up to seven hundred and fifty thousand (750,000) additional Ordinary Shares, on the terms and for the purposes set forth in Section
2(c) hereof (the “Additional Shares”). The Firm Shares and any Additional Shares purchased pursuant to this
Agreement are herein collectively referred to as the “Securities.” The offering and sale of the Securities contemplated
by this Agreement is referred to herein as the “Offering.”
The Company confirms
its agreement with the Underwriters as follows:
SECTION
1. Representations and Warranties of the Company.
The Company represents
and warrants to the Underwriters as follows with the understanding that the same may be relied upon by the Underwriters in this
offering, as of the date hereof and as of the Closing Date (as defined below) and each Option Closing Date (as defined below),
if any:
(a) Filing
of the Registration Statement. The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”)
a registration statement on Form F-1 (File No. 333-234460), which contains a form of prospectus to be used in connection with the
public offering and sale of the Shares. Such registration statement, as amended, including the financial statements, exhibits and
schedules thereto contained in the registration statement at the time such registration statement became effective, in the form
in which it was declared effective by the Commission under the Securities Act of 1933, as amended (the “Securities Act”),
and the rules and regulations promulgated thereunder (the “Securities Act Regulations”), and including any required
information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act, or pursuant
to the Securities Exchange Act of 1934, as amended (collectively, the “Exchange Act”) and the rules and regulations
promulgated thereunder (the “Exchange Act Regulations”), is called the “Registration Statement.”
Any registration statement filed by the Company pursuant to Rule 462(b) under the Securities Act is called the “Rule 462(b)
Registration Statement,” and from and after the date and time of filing of the Rule 462(b) Registration Statement, the
term “Registration Statement” shall include the Rule 462(b) Registration Statement. Such prospectus, in the
form first filed pursuant to Rule 424(b) under the Securities Act after the date and time that this Agreement is executed and delivered
by the parties hereto, or, if no filing pursuant to Rule 424(b) under the Securities Act is required, the form of final prospectus
relating to the Shares included in the Registration Statement at the effective date of the Registration Statement, is called the
“Prospectus.” All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
the preliminary prospectus included in the Registration Statement (each, a “preliminary prospectus”), the Prospectus,
or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System (“XXXXX”). The preliminary prospectus, dated [●],
2020, that was included in the Registration Statement immediately prior to the Applicable Time (as defined below) is hereinafter
called the “Pricing Prospectus.” Any reference to the “most recent preliminary prospectus” shall
be deemed to refer to the latest preliminary prospectus included in the registration statement. Any reference herein to any preliminary
prospectus or the Prospectus or any supplement or amendment to either thereof shall be deemed to refer to and include any documents
incorporated by reference therein as of the date of such reference.
(b) “Applicable
Time” means 5:00pm, Eastern time, on the date of this Agreement.
(c) Compliance
with Registration Requirements. The Registration Statement has been declared effective by the Commission under the Securities
Act and the Securities Act Regulations on [●], 2020. The Company has complied, to the Commission’s satisfaction, with
all requests of the Commission for additional or supplemental information. No stop order preventing or suspending the effectiveness
of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been
instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.
Each preliminary
prospectus and the Prospectus when filed complied or will comply in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to XXXXX (except as may be permitted by Regulation S-T under the Securities Act), was identical
in content to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of the Shares, other
than with respect to any artwork and graphics that were not filed. Each of the Registration Statement, any Rule 462(b) Registration
Statement, and any post-effective amendment to either the Registration Statement or the Rule 462(b) Registration Statement, at
the time it became effective and at all subsequent times until the expiration of the prospectus delivery period required under
Section 4(3) of the Securities Act, complied and will comply in all material respects with the Securities Act and the Securities
Act Regulations and did not and will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as
of its date and at all subsequent times until the Underwriters have completed the placement of the offering of the Shares, did
not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties
set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement
or any Rule 462(b) Registration Statement, or any post-effective amendment to either the Registration Statement or the Rule 462(b)
Registration Statement, or in the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, made in reliance
upon and in conformity with information relating to the Underwriters furnished to the Company in writing expressly for use therein,
it being understood and agreed that the only such information furnished on behalf of any of the Underwriters consists of (i) the
name of the Underwriters contained on the cover page of the Pricing Prospectus and Prospectus and (ii) the sub-sections titled
“Underwriter’s Warrant,” “Lock-Up Agreement,” “Price Stabilization,” “Determination
of the Offering Price,” “Electronic Offer, Sale and Distribution of Securities,” “Indemnification,”
and “Offer restrictions outside the United States” in each case under the caption “Underwriting” in the
Prospectus (the “Underwriter Information”). There are no contracts or other documents required to be described
in the Pricing Prospectus or the Prospectus or to be filed as exhibits to the Registration Statement that have not been fairly
and accurately described in all material respects or filed as required.
(d) Disclosure
Package. The term “Disclosure Package” shall mean (i) the Pricing Prospectus, as amended or supplemented,
(ii) each issuer free writing prospectus, as defined in Rule 433 under the Securities Act (each, an “Issuer Free Writing
Prospectus”), if any, identified in Schedule A hereto, (iii) the pricing terms set forth in Schedule B
to this Agreement, and (iv) any other free writing prospectus that the parties hereto shall hereafter expressly agree in writing
to treat as part of the Disclosure Package. As of the Applicable Time, the Disclosure Package did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Disclosure
Package based upon and in conformity with the Underwriter’s Information.
(e) Company
Not Ineligible Issuer. (i) At the time of filing the Registration Statement and (ii) as of the date of the execution and delivery
of this Agreement (with such date being used as the determination date for purposes of this clause (ii)), the Company was not and
is not an Ineligible Issuer (as defined in Rule 405 under the Securities Act), without taking account of any determination by the
Commission pursuant to Rule 405 under the Securities Act that it is not necessary that the Company be considered an Ineligible
Issuer.
(f) Issuer
Free Writing Prospectuses. No Issuer Free Writing Prospectus includes any information that conflicts with the information contained
in the Registration Statement, including any document incorporated by reference therein that has not been superseded or modified.
The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity
with the Underwriter’s Information.
(g) Offering
Materials Furnished to the Underwriters. The Company has delivered to the Underwriters conformed copies of the Registration
Statement and of each consent and certificate of experts filed as a part thereof, and each preliminary prospectus and the Prospectus,
as amended or supplemented, in such quantities and at such places as the Underwriters has reasonably requested.
(h) Distribution
of Offering Material By the Company. The Company has not distributed and will not distribute, prior to the completion of the
Underwriters’ purchase of the Shares, any offering material in connection with the offering and sale of the Shares other
than a preliminary prospectus, the Prospectus, any Issuer Free Writing Prospectus reviewed and consented to by the Underwriters,
and the Registration Statement.
(i) The
Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable
law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or by general equitable principles.
(j) Authorization
of the Shares. The Shares to be sold by the Company through the Underwriters have been duly and validly authorized by all required
corporate action and have been reserved for issuance and sale pursuant to this Agreement and, when so issued and delivered by the
Company, will be validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company. The Ordinary
Shares underlying the Underwriter’s Warrants (the “Underlying Shares”) are duly authorized and, when issued
and paid for in accordance the terms of the Underwriter’s Warrants, as applicable, will be duly and validly issued, fully
paid and non-assessable, free and clear of all Liens imposed by the Company. The Company has sufficient Ordinary Shares for the
issuance of the maximum number of Securities and Underlying Shares issuable pursuant to the Offering as described in the Prospectus.
(k) No
Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any
securities of the Company registered for sale under the Registration Statement or included in the offering contemplated by this
Agreement.
(l) No
Material Adverse Change. Except as otherwise disclosed in the Disclosure Package, subsequent to the respective dates as of
which information is given in the Disclosure Package: (i) there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business
or operations, whether or not arising from transactions in the ordinary course of business, of the Company (any such change, a
“Material Adverse Change”); (ii) the Company has not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company
in respect of its capital stock.
(m) Independent
Accountant. Xxxxxxxx LLP (the “Accountant”), which has expressed its opinions with respect to the audited
financial statements (which term as used in this Agreement includes the related notes thereto) of the Company filed with the Commission
as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, is an independent registered
public accounting firm as required by the Securities Act and the Exchange Act.
(n) Preparation
of the Financial Statements. Each of the historical financial statements of the Company, respectively, filed with the Commission
as a part of the Registration Statement and included in the Disclosure Package and the Prospectus, presents fairly the information
provided as of and at the dates and for the periods indicated. Such financial statements comply as to form with the applicable
accounting requirements of the Securities Act and the Securities Act Regulations and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the periods involved, except as may be expressly stated
in the related notes thereto. No other financial statements or supporting schedules are required to be included or incorporated
by reference in the Registration Statement. Each item of historical financial data relating to the operations, assets or liabilities
of the Company set forth in summary form in each of the preliminary prospectuses and the Prospectus fairly presents such information
on a basis consistent with that of the complete financial statements contained in the Registration Statement.
(o) Incorporation
and Good Standing. The Company has been duly incorporated or formed and is validly existing as a company limited by shares
under the laws of the jurisdiction of its formation and has corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Disclosure Package and the Prospectus and to enter into and perform its obligations
under this Agreement. As of the Closing, the Company does not own or control, directly or indirectly, any corporation, association
or other entity that is not otherwise disclosed in the Disclosure Package.
(p) Capitalization
and Other Capital Stock Matters. The authorized, issued and outstanding capital stock of the Company is as set forth in each
of the Disclosure Package and the Prospectus (other than for subsequent issuances, if any, pursuant to employee benefit plans described
in each of the Disclosure Package and the Prospectus or upon exercise of outstanding options or warrants described in the Disclosure
Package and Prospectus, as the case may be). The Ordinary Shares conform, and, when issued and delivered as provided in this Agreement,
the Shares will conform, in all material respects to the description thereof contained in each of the Disclosure Package and Prospectus.
All of the issued and outstanding Ordinary Shares have been duly authorized and validly issued, are fully paid and non-assessable
and have been issued in compliance with applicable laws. None of the outstanding Ordinary Shares were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company other than those
described in the Disclosure Package and the Prospectus. The description of the Company’s stock option and other stock plans
or arrangements, and the options or other rights granted thereunder, set forth in the Disclosure Package and the Prospectus accurately
and fairly presents the information required to be shown with respect to such plans, arrangements, options and rights. No further
approval or authorization of any shareholder, the Board of Directors or others is required for the issuance and sale of the Securities
and the Underlying Shares. Except as set forth in the Disclosure Package and the Prospectus, there are no shareholders agreements,
voting agreements or other similar agreements with respect to the Company’s Ordinary Shares to which the Company is a party
or, to the knowledge of the Company, between or among any of the Company’s shareholders.
(q) Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals Required. The Company is not in violation of its memorandum
of association or in default (or, with the giving of notice or lapse of time, would be in default) (“Default”)
under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which it is a
party or by which it may be bound (including, without limitation, any agreement or contract filed as an exhibit to the Registration
Statement or to which any of the property or assets of the Company are subject (each, an “Existing Instrument”)),
except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company’s
execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Disclosure
Package and the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation
of the provisions of the memorandum of association of the Company, (ii) will not conflict with or constitute a breach of,
or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to, or require the consent of any other party to, any Existing Instrument and (iii) will not result in any violation
of any law, administrative regulation or administrative or court decree applicable to the Company, except in the case of each of
clauses (ii) and (iii), to the extent such conflict, breach Default or violation could not reasonably be expected to result in
a Material Adverse Effect. No consent, approval, authorization or other order of, or registration or filing with, any court or
other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby and by the Disclosure Package and the Prospectus, except
the registration or qualification of the Shares under the Securities Act and applicable state securities or blue sky laws and from
the Financial Industry Regulatory Authority (“FINRA”).
(r) Subsidiaries
and Consolidated Affiliated Entities. Each of the Company’s direct and indirect subsidiaries (each a Subsidiary”
and collectively, the “Subsidiaries”) has been identified on Schedule D hereto, and each of the entities
which the Company directly or indirectly controls through contractual arrangements (each an “Consolidated Affiliated Entity”
and collectively, the “Consolidated Affiliated Entities”) has been identified on Schedule E hereto. Each
of the Subsidiaries and Consolidated Affiliated Entities has been duly incorporated, is validly existing under the laws of Hong
Kong or the People’s Republic of China (the “PRC”), as the case may be, and in good standing under the
laws of the jurisdiction of its incorporation, has full power and authority (corporate or otherwise) to own its property and to
conduct its business as described in the Prospectus, and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; all of the equity interests of each Subsidiary have been duly and validly authorized and issued,
are owned directly or indirectly by the Company, are fully paid in accordance with its articles of association and non-assessable
and are free and clear of all liens, encumbrances, equities or claims; all of the equity or sponsorship interests in each Consolidated
Affiliated Entity have been duly and validly authorized and issued, are fully paid in accordance with its articles of association
and non-assessable and are owned as described in the Prospectus, and, except as described in the Prospectus, free and clear of
all liens, encumbrances, equities or claims. None of the outstanding share capital or equity interest in any Subsidiary was issued
in violation of preemptive or similar rights of any security holder of such Subsidiary. All of the constitutive or organizational
documents of each of the Subsidiaries and Consolidated Affiliated Entities comply with the requirements of applicable laws of its
jurisdiction of incorporation or organization and are in full force and effect. Apart from the Subsidiaries and Consolidated Affiliated
Entities, the Company has no direct or indirect subsidiaries or any other company over which it has direct or indirect effective
control.
(s) No
Material Actions or Proceedings. Except as otherwise disclosed in the Disclosure Package and the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the Company’s knowledge, threatened (i) against the Company,
(ii) which have as the subject thereof any officer or director (in such capacities) of, or property owned or leased by, the Company,
where in any such case (A) there is a reasonable possibility that such action, suit or proceeding might be determined adversely
to the Company and (B) any such action, suit or proceeding, if so determined adversely, would reasonably be expected to result
in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement. Except as
otherwise disclosed in the Disclosure Package and the Prospectus, no material labor dispute with the employees of the Company exists
or, to the Company’s knowledge, is threatened or imminent. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary or Consolidated Affiliated
Entity, and neither the Company nor any of its Subsidiaries or Consolidated Affiliated Entities is a party to a collective bargaining
agreement, and the Company and its Subsidiaries and Consolidated Affiliated Entities believe that their relationships with their
employees are good. No executive officer, to the knowledge of the Company, is in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract
or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer
does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. Except as
otherwise disclosed in the Disclosure Package and the Prospectus, the Company and its Subsidiaries are in compliance with all applicable
laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except
where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect. Neither the Company or any Subsidiary or Consolidated Affiliated Entity, nor any director or officer thereof, is or has
within the last 10 years been the subject of any Action involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or former director or officer of the Company.
(t) Intellectual
Property Rights. The Company owns, possesses or licenses, and otherwise has legally enforceable rights to use all patents,
patent applications, trademarks, trade names, copyrights, domain names, licenses, approvals and trade secrets (collectively, “Intellectual
Property Rights”) reasonably necessary to conduct its business as now conducted or, otherwise, as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, except to the extent such failure to own, possess or have other rights to
use such Intellectual Property would not be expected to result in a Material Adverse Change. Except as otherwise disclosed in the
Registration Statement, the Disclosure Package and the Prospectus: (i) the Company has not received any written notice of infringement
or conflict with asserted Intellectual Property Rights of others; (ii) the Company is not a party to or bound by any options, licenses
or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth
in the Registration Statement, Disclosure Package and the Prospectus and are not described in all material respects; (iii) none
of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation
binding on the Company or, to the Company’s knowledge, in violation of the rights of any persons;(iv) the Company is not
subject to any judgment, order, writ, injunction or decree of any court or any governmental department, commission, board, bureau,
agency or instrumentality, or any arbitrator, nor has it entered into nor is it a party to any agreement made in settlement of
any pending or threatened litigation, which materially restricts or impairs its use of any Intellectual Property Rights.
(u) All
Necessary Permits, etc. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company possesses such
valid and current certificates, authorizations or permits issued by the applicable regulatory agencies or bodies necessary to conduct
its business, and the Company has not received any notice of proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit.
(v) Title
to Properties. The Company has good and marketable title to all the properties and assets reflected as owned by it in the financial
statements referred to in Section 1(n) above (or elsewhere in the Disclosure Package and the Prospectus), in each case free
and clear of any security interest, mortgage, lien, encumbrance, equity, adverse claim or other defect, except such as do not materially
and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such
property by the Company. The real property, improvements, equipment and personal property held under lease by the Company are held
under valid and enforceable leases, with such exceptions as are not material and do not materially interfere with the use made
or proposed to be made of such real property, improvements, equipment or personal property by the Company.
(w) Tax
Law Compliance. The Company has filed all necessary income tax returns or has timely and properly filed requested extensions
thereof and has paid all taxes required to be paid by it and, if due and payable, any related or similar assessment, fine or penalty
levied against it. Specifically, each of XXXX, Xxxxx XXX, Xxxxxxx XXX, Ahan, Qiming, Cangmen and Samen (each defined in Section
1(ll) below) has filed its tax returns for the fiscal years 2018 and 2017 and no taxes or duties are payable in China to any
Chinese taxing authority. The Company has made adequate charges, accruals and reserves in the applicable financial statements referred
to in Section 1(n) above in respect of all federal, state and foreign income and franchise taxes for all periods as to which
the tax liability of the Company has not been finally determined.
(x) Company
Not an “Investment Company.” The Company is not, and after giving effect to payment for the Shares and the application
of the proceeds as contemplated under the caption “Use of Proceeds” in each of the Disclosure Package and the Prospectus
will not be, required to register as an “investment company” within the meaning of the Investment Company Act of 1940,
as amended (the “Investment Company Act”).
(y) Insurance.
The Company is insured by institutions believed to be recognized, financially sound and reputable, with policies in such
amounts and with such deductibles and covering such risks as the Company reasonably believes are adequate and customary for its
business including. The Company reasonably believes that it will be able (i) to renew its existing insurance coverage as and when
such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct
its business as now conducted
(z) No
Price Stabilization or Manipulation. The Company has not taken and will not take, directly or indirectly, any action designed
to, or that might be reasonably expected to cause or result in, stabilization or manipulation of the price of any securities of
the Company to facilitate the sale or resale of the Shares.
(aa) Related
Party Transactions. There are no business relationships or related-party transactions involving the Company or any other person
required to be described or filed in the Registration Statement, or described in the Disclosure Package or the Prospectus, that
have not been as set forth in the Registration Statement, the Prospectus and the Pricing Prospectus.
(bb) Disclosure
Controls and Procedures. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company has established
and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) of the Exchange Act Regulations) designed
to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Except
as otherwise disclosed in the Disclosure Package and the Prospectus, the Company is not aware of (a) any significant deficiency
in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize
and report financial data or any material weaknesses in internal controls or (b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s internal controls.
(cc) Company’s
Accounting System. Except as otherwise disclosed in the Disclosure Package and the Prospectus, the Company maintains a system
of accounting controls designed to provide reasonable assurances that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(dd) Money
Laundering Law Compliance. The operations of the Company are and have been conducted at all times in material compliance with
all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title
III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company conducts business,
the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced
by any competent governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect
to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ee) OFAC.
(i) Neither the Company nor, to the knowledge of the Company, any director, officer, employee or affiliate of the Company, of any
other person authorized to act on behalf of the Company, is an individual or entity (“Person”) that is, or is
owned or controlled by a Person that is:
A. the
subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”),
the United Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor
B. located,
organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar,
Cuba, Iran, Libya, North Korea, Sudan and Syria).
(ii) The
Company will not, directly or indirectly, use the proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any Subsidiary or Consolidated Affiliated Entity, joint venture partner or other Person:
A. to
fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding
or facilitation, is the subject of Sanctions; or
B. in
any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering,
whether as underwriter, advisor, investor or otherwise).
(ff) Foreign
Corrupt Practices Act. Neither the Company nor, to the best of the Company’s knowledge, any director, officer, employee
or affiliate of the Company or any other person authorized to act on behalf of the Company has, directly or indirectly, knowingly
given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental
agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection
with any actual or proposed transaction) that might subject the Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding.
(gg) Compliance
with Xxxxxxxx-Xxxxx Act of 2002. The Company has taken all necessary actions to ensure that, upon the effectiveness of the
Registration Statement, it has been in compliance with any provision applicable to it of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”) and the rules and regulations promulgated in connection therewith, including, without limitation, Section 402 related
to loans and Sections 302 and 906 related to certifications of the Xxxxxxxx-Xxxxx Act.
(hh) Exchange
Act Filing. A registration statement in respect of the Ordinary Shares has been filed on Form 8-A pursuant to Section 12(b)
of the Exchange Act, which registration statement complies in all material respects with the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Ordinary
Shares under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such
registration.
(ii) Foreign
Private Issuer Status. The Company is a “foreign private issuer” within the meaning of Rule 405 under the Act.
(jj) Earning
Statements. The Company will make generally available (which includes filings pursuant to the Exchange Act made publicly through
the XXXXX system) to its security holders as soon as practicable, but in any event not later than 16 months after the end of the
Company’s current fiscal year, an earnings statement (which need not be audited) covering a 12-month period that shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.
(kk) Periodic
Reporting Obligations. During the Prospectus Delivery Period, the Company shall file, on a timely basis, with the Commission
all reports and documents required to be filed under the Exchange Act. Additionally, the Company shall report the use of proceeds
from the issuance of the Firm Shares as may be required under Rule 463 under the Securities Act.
(ll) VIE
Structure and Valid Title. Each of Chengdu Qilian Trading Co., Ltd. (“WFOE”), Gansu Qilianshan Pharmaceutical
Co. Ltd. (“Gansu QLS”), Chengdu Qilianshan Biotechnology Co., Ltd. (“Chengdu QLS”), Jiuquan
Ahan Biotechnology Co., Ltd. (“Ahan”), Jiuquan Qiming Biotechnology Co., Ltd. (“Qiming”),
Tibet Cangmen Trading Co., Ltd. (“Cangmen”) and Tibet Samen Trading Co., Ltd. (“Samen”) is
a limited liability company organized under the laws of the PRC and has legal and valid title to all of its properties and assets,
free and clear of all liens, charges, encumbrances, equities, claims, options and restrictions except such as do not materially
and adversely affect the value of such property and do not materially interfere with the use made or proposed to be made of such
property by such entity; each lease agreement to which it is a party is duly executed and legally binding; its leasehold interests
are set forth in and governed by the terms of any lease agreements, and, to the best of the Company’s knowledge such agreements
are valid, binding and enforceable in accordance with their respective terms under PRC law; and, none of XXXX, Xxxxx XXX, Xxxxxxx
XXX, Ahan, Qiming, Cangmen or Samen owns, operates, manages or has any other right or interest in any other material real property
of any kind, except as described in the Prospectus or the Disclosure Package.
(mm) VIE
Agreements.
(i) The
description of the corporate structure of the Company and each of the contracts among WFOE, and Gansu QLS and Gansu QLS’s
shareholders (each a “VIE Agreement” and collectively the “VIE Agreements”), as set forth
in the Prospectus under the captions “Our History and Corporate Structure” and “Related Party Transactions”
and filed as Exhibits 10.3 through 10.6 to the Registration Statement, is true and accurate in all material respects and nothing
has been omitted from such description which would make it misleading. There is no other material agreement, contract or other
document relating to the corporate structure or the operation of the Company together with its Subsidiaries and Consolidated Affiliated
Entities taken as a whole, which has not been previously disclosed or made available to the Underwriters and disclosed in the Prospectus.
(ii) Each
VIE Agreement has been duly authorized, executed and delivered by WFOE and Gansu QLS and constitutes a valid and legally binding
obligation of WFOE and Gansu QLS, enforceable in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles. No consent, approval, authorization, or order of, or filing or registration with, any
person (including any governmental agency or body or any court) is required for the performance of the obligations under any VIE
Agreement by the parties thereto, other than those as described in the Registration Statement, the Disclosure Package and the Prospectus;
and no consent, approval, authorization, order, filing or registration that has been obtained is being withdrawn or revoked or
is subject to any condition precedent which has not been fulfilled or performed. Except as disclosed in the Registration Statement,
the Disclosure Package or the Prospectus, the corporate structure of the Company complies with all applicable laws and regulations
of the PRC, and neither the corporate structure nor the VIE Agreements violate, breach, contravene or otherwise conflict with any
applicable laws of the PRC. There is no legal or governmental proceeding, inquiry or investigation pending against the Company,
the Subsidiaries and Consolidated Affiliated Entities or, to the Company’s knowledge, against the shareholders of the Consolidated
Affiliated Entities in any jurisdiction challenging the validity of any of the VIE Agreements, and to the knowledge of the Company,
no such proceeding, inquiry or investigation is threatened in any jurisdiction.
(iii) The execution,
delivery and performance of each VIE Agreement by the parties thereto do not and will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, or result in the imposition of any lien, encumbrance, equity or
claim upon any property or assets of the Company or any of the Subsidiaries and Consolidated Affiliated Entities pursuant to (A) the
constitutive or organizational documents of the Company or any of the Subsidiaries and Consolidated Affiliated Entities, (B) any
statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over
the Company or any of the Subsidiaries and Consolidated Affiliated Entities or any of their properties, or any arbitration award,
or (C) any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company
or any of the Subsidiaries and Consolidated Affiliated Entities is a party or by which the Company or any of the Subsidiaries and
Consolidated Affiliated Entities is bound or to which any of the properties of the Company or any of the Subsidiaries and Consolidated
Affiliated Entities is subject. Each VIE Agreement is in full force and effect and none of WFOE and Gansu QLS is in breach or default
in the performance of any of the terms or provisions of such VIE Agreement. None of WFOE and Gansu QLS has sent or received any
communication regarding termination of, or intention not to renew, any of the VIE Agreements, and no such termination or non-renewal has
been threatened by any of the parties thereto.
(iv) The Company
possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the Consolidated
Affiliated Entities, through the rights of its Subsidiary, to which the voting rights of Consolidated Affiliated Entities are entrusted
to.
(nn) Foreign
Tax Compliance. Except as otherwise disclosed in the Disclosure Package and the Prospectus, including the risk factor set forth
in “Risk Factors—Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise”
of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders”
no transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable
in China, Hong Kong or the Cayman Islands to any Chinese, Hong Kong or Cayman Islands taxing authority in connection with the issuance,
sale and delivery of the Shares, and the delivery of the Shares to or for the account of the Investors.
(oo) Compliance
with SAFE Rules and Regulations. Except as otherwise disclosed in Disclosure Package and the Prospectus, the Company has taken
reasonable steps to cause the Company’s shareholders who are residents or citizens of the PRC, to comply with any applicable
rules and regulations of the State Administration of Foreign Exchange (“SAFE”) relating to such shareholders’
shareholding with the Company (the “SAFE Rules and Regulations”), including, without limitation, taking reasonable
steps to require each shareholder that is, or is directly or indirectly owned or controlled by, a resident or citizen of the PRC
to complete any registration and other procedures required under applicable SAFE Rules and Regulations.
(pp) M&A
Rules. The Company is aware of and has been advised as to the content of the Rules on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors jointly promulgated by the Ministry of Commerce, the State Assets Supervision and Administration
Commission, the State Tax Administration, the State Administration of Industry and Commerce, the China Securities Regulatory Commission
(“CSRC”) and SAFE on August 8, 2006 (the “M&A Rules”), in particular the relevant provisions
thereof that purport to require offshore special purpose vehicles formed for the purpose of obtaining a stock exchange listing
outside of the PRC and controlled directly or indirectly by companies or natural persons of the PRC, to obtain the approval of
the CSRC prior to the listing and trading of their securities on a stock exchange located outside of the PRC; the Company has received
legal advice specifically with respect to the M&A Rules from its PRC counsel and based on such legal advice, the Company confirms
with the Underwriters:
(qq) Except
as disclosed in the Disclosure Materials, Registration Statement and the Prospectus, the issuance and sale of the Shares, the listing
and trading of the Shares on the New York Stock Exchange and the consummation of the transactions contemplated by this Agreement
are not and will not be, as of the date hereof, at the Closing Date or the Option Closing Date, materially affected by the M&A
Rules or any official clarifications, guidance, interpretations or implementation rules in connection with or related to the M&A
Rules as amended as of the date hereof (collectively, the “M&A Rules and Related Clarifications”).
(rr) Except
as disclosed in the Disclosure Materials, Registration Statement and the Prospectus, as of the date hereof, the M&A Rules and
Related Classifications did not and do not require the Company to obtain the approval of the CSRC prior to the issuance and sale
of the Shares, the listing and trading of the Shares on the New York Stock Exchange, or the consummation of the transactions contemplated
by this Agreement.
(ss) D&O
Questionnaires. To the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”)
completed by each of the Company’s directors and officers prior to the Offering (the “Insiders”)
as well as in the Lock-Up Agreement in the form attached hereto as Exhibit B provided to the Representative is
true and correct in all respects and the Company has not become aware of any information which would cause the information disclosed
in the Questionnaires completed by each Insider to become inaccurate and incorrect.
Any certificate
signed by an officer of the Company and delivered to the Representative or to counsel for the Representative shall be deemed to
be a representation and warranty by the Company to the Underwriters as to the matters set forth therein. The Company acknowledges
that the Underwriters and, for purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel to the Company,
will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
(tt) Solvency.
Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Offered Securities hereunder, the current cash flow of the Company, together with
the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses
of the cash, are sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The
Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt). Except as set forth in the Registration Statement and the Prospectus,
the Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from each Closing Date. The Registration Statement
and the Prospectus set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary
or Consolidated Affiliated Entity, or for which the Company or any Subsidiary or Consolidated Affiliated Entity has commitments.
For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed
in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements
and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the
Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments
in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Except as set forth in the Registration
Statement and the Prospectus, neither the Company nor any Subsidiary or Consolidated Affiliated Entity is in default with respect
to any Indebtedness.
(uu) Regulation
M Compliance. The Company has not, and to its knowledge no one authorized to act on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities or Underlying Shares, (ii) sold, bid for, purchased, or, paid
any compensation for soliciting purchases of, any of the Offered Securities of the Underlying Shares, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case
of clauses (ii) and (iii), compensation paid to the Underwriter in connection with the Offering.
(vv) Testing
the Waters Communications. The Company (a) has not alone engaged in any Testing-the-Waters Communication other than Testing-the-Waters
Communications with the consent of the Underwriter with entities that are qualified institutional buyers within the meaning of
Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities
Act and (b) has not authorized anyone other than the Underwriter to engage in Testing-the-Waters Communications. The Company reconfirms
that the Underwriter has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has
not distributed any Written Testing-the-Waters Communications.
(ww) Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries owns or controls, directly or indirectly, five percent or
more of the outstanding shares of any class of voting securities or 25 percent or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries exercises
a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by
the Federal Reserve.
(xx) U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Underwriters’
request.
(yy) Margin
Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors
of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause
any of the Shares or Warrants to be considered a “purpose credit” within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(zz) Integration.
Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering
to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of
any such securities under the Securities Act.
(aaa) No
Fiduciary Duties. The Company acknowledges and agrees that the Underwriter’s responsibility to the Company is solely
contractual in nature and that none of the Underwriter or its affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this Agreement. Notwithstanding anything in this Agreement to the contrary, the Company
acknowledges that the Underwriter may have financial interests in the success of the Offering that are not limited to the difference
between the price to the public and the purchase price paid to the Company by the Underwriter for the Shares and the Warrants and
the Underwriter has no obligation to disclose, or account to the Company for, any of such additional financial interests. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriter
with respect to any breach or alleged breach of fiduciary duty.
SECTION
2. Firm Shares; Additional Shares and Underwriter’s Warrants.
(a) Purchase
of Firm Shares. On the basis of the representations and warranties herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to issue and sell to the Underwriters an aggregate of 5,000,000 Ordinary Shares (the “Firm
Shares”) at a purchase price (net of discount and commissions) of $[●] per Share. The Underwriters agree to purchase
from the Company the Firm Shares.
(b) Delivery
of and Payment for Firm Shares. Delivery of and payment for the Firm Shares shall be made at 10:00 A.M., Eastern time, on the
third (3nd) Business Day following the Applicable Time, or at such time as shall
be agreed upon by the Underwriters and the Company, at the offices of the Representative’s counsel or at such other place
as shall be agreed upon by the Underwriters and the Company. The hour and date of delivery of and payment for the Firm Shares is
called the “Closing Date.” The closing of the payment of the purchase price for, and delivery of certificates
representing, the Firm Shares is referred to herein as the “Closing.” Payment for the Firm Shares shall be made
on the Closing Date by wire transfer in Federal (same day) funds upon delivery to the Underwriters of certificates (in form and
substance reasonably satisfactory to the Underwriters) representing the Firm Shares (or if uncertificated through the full fast
transfer facilities of the Depository Trust Company (the “DTC”)) for the account of the Underwriters. The Firm
Shares shall be registered in such names and in such denominations as the Underwriters may request in writing at least two Business
Days prior to the Closing Date. If certificated, the Company will permit the Underwriters to examine and package the Firm Shares
for delivery at least one full Business Day prior to the Closing Date. The Company shall not be obligated to sell or deliver the
Firm Shares except upon tender of payment by the Underwriters for all the Firm Shares.
(c) Additional
Shares. The Company hereby grants to the Underwriters an option (the “Over-allotment Option”) to purchase
up to an additional 750,000 Ordinary Shares (the “Additional Shares”), in each case solely for the purpose of
covering over-allotments of such securities, if any. The Over-allotment Option is, at the Underwriters’ sole discretion,
for Additional Shares.
(d) Exercise
of Options. The Over-allotment Option granted pursuant to Section 2(c) hereof within 45 days after the Closing Date.
The purchase price to be paid per Additional Shares shall be equal to the price per Firm Share in Section 2(a). The Underwriters
shall not be under any obligation to purchase any Additional Shares prior to the exercise of the Over-allotment Option. The Over-allotment
Option granted hereby may be exercised by the giving of oral notice to the Company from the Underwriters, which shall be confirmed
in writing via overnight mail or facsimile or other electronic transmission, setting forth the number of Additional Shares to be
purchased and the date and time for delivery of and payment for the Additional Shares (the “Option Closing Date”),
which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon
by the Company and the Underwriters, at the offices of the Representative’s counsel or at such other place (including remotely
by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Underwriters. If such delivery and
payment for the Additional Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice.
Upon exercise of the Over-allotment Option with respect to all or any portion of the Additional Shares, subject to the terms and
conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the number of Additional Shares
specified in such notice and (ii) the Underwriters shall purchase that portion of the total number of Additional Shares.
(e) Delivery
and Payment of Additional Shares. Payment for the Additional Shares shall be made on the Option Closing Date by wire transfer
in Federal (same day) funds, upon delivery to the Underwriters of certificates (in form and substance satisfactory to the Underwriters)
representing the Additional Shares (or through the facilities of DTC) for the account of the Underwriters. The Additional Shares
shall be registered in such name or names and in such authorized denominations as the Underwriters may request in writing at least
two (2) full Business Days prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Additional
Shares except upon tender of payment by the Underwriters for applicable Additional Shares. The Option Closing Date may be simultaneous
with, but not earlier than, the Closing Date; and in the event that such time and date are simultaneous with the Closing Date,
the term “Closing Date” shall refer to the time and date of delivery of the Firm Shares and Additional Shares.
(f) Underwriting
Discount. In consideration of the services to be provided for hereunder, the Company shall pay to the Underwriters, with respect
to any Firm Shares sold to investors in this Offering, a seven percent (7%) underwriting discount. For Company-sourced investors,
the Company shall pay to the Underwriters an underwriting discount calculated as a percentage of the gross proceeds follows: (i)
four percent (4%) of the first $10,000,000; (ii) three percent (3%) of the second $10,000,000, (iii) two percent (2%) of the third
$10,000,000; and (iv) one percent (1%) of the gross proceeds in excess.
(g) Underwriter’s
Warrant. The Company hereby agrees to issue to the Underwriter (and/or its designees) on the applicable Closing Date, Warrants
to purchase such number of Shares equal to six percent (6%) of the Firm Shares issued at the Closing (for the avoidance of doubt,
not including the Additional Shares) (the “Underwriter’s Warrant”). The Underwriter’s Warrant shall
be exercisable, in whole or in part, commencing anytime from the date of issuance and expiring on the fifth-year anniversary of
the effective date of the Offering at an initial exercise price of $[●] per Ordinary Share, which is equal to one hundred
ten percent (110%) of the initial public offering price of a Firm Share. The Underwriter’s Warrant and the Ordinary Shares
issuable upon exercise of the Underwriter’s Warrant are hereinafter referred to collectively as the “Underwriter’s
Securities.”
The Firm
Shares, the Additional Shares and the Underwriter’s Securities are hereinafter referred to collectively as the “Securities.”
SECTION
3. Covenants of the Company.
The Company covenants
and agrees with the Underwriters as follows:
(a) Underwriter’s
Review of Proposed Amendments and Supplements. During the period beginning at the Applicable Time and ending on the later of
the Closing Date or such date as, in the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to
be delivered in connection with sales by the Underwriters or selected dealers, including under circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities Act (the “Prospectus Delivery Period”), prior to
amending or supplementing the Registration Statement or the Prospectus, including any amendment or supplement through incorporation
by reference of any report filed under the Exchange Act, the Company shall furnish to the Underwriters for review a copy of each
such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters
reasonably objects.
(b) Securities
Act Compliance. After the date of this Agreement, during the Prospectus Delivery Period, the Company shall promptly advise
the Underwriters in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment
or supplement to the Pricing Prospectus or the Prospectus, (iii) of the time and date that any post-effective amendment to the
Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto or of any order or notice preventing or suspending the use
of the Registration Statement, the Pricing Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Shares from any securities exchange upon which it is listed for trading or included or designated
for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any
such stop order or order or notice of prevention or suspension at any time, the Company will use commercially reasonable efforts
to obtain the lifting of such order at the earliest possible moment, or will file a new registration statement and use commercially
reasonable efforts to have such new registration statement declared effective as soon as practicable. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b) and 430A, as applicable, under the Securities Act, including with
respect to the timely filing of documents thereunder, and will confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
(c) Exchange
Act Compliance. During the Prospectus Delivery Period, to the extent the Company becomes subject to reporting obligation under
the Exchange Act, the Company will file all documents required to be filed with the Commission pursuant to Sections 13, 14 or 15
of the Exchange Act in the manner and within the time periods required by the Exchange Act.
(d) Amendments
and Supplements to the Registration Statement, Prospectus and Other Securities Act Matters. If, during the Prospectus Delivery
Period, any event or development shall occur or condition exist as a result of which the Disclosure Package or the Prospectus as
then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein in the light of the circumstances under which they were made, as the case may be, not misleading,
or if it shall be necessary to amend or supplement the Disclosure Package or the Prospectus, in order to make the statements therein,
in the light of the circumstances under which they were made, as the case may be, not misleading, or if in the opinion of the Underwriters
it is otherwise necessary to amend or supplement the Registration Statement, the Disclosure Package or the Prospectus, or to file
a new registration statement containing the Prospectus, in order to comply with law, including in connection with the delivery
of the Prospectus, the Company agrees to (i) notify the Underwriters of any such event or condition (unless such event or condition
was previously brought to the Company’s attention by the Underwriters during the Prospectus Delivery Period) and (ii) promptly
prepare (subject to Section 3(a) and Section 3(f) hereof), file with the Commission (and use its commercially reasonable
efforts to have any amendment to the Registration Statement or any new registration statement to be declared effective) and furnish
at its own expense to the Underwriters and to dealers, amendments or supplements to the Registration Statement, the Disclosure
Package or the Prospectus, or any new registration statement, necessary in order to make the statements in the Disclosure Package
or the Prospectus as so amended or supplemented, in the light of the circumstances under which they were made, as the case may
be, not misleading or so that the Registration Statement, the Disclosure Package or the Prospectus, as amended or supplemented,
will comply with law.
(e) Permitted
Free Writing Prospectuses. The Company represents that it has not made, and agrees that, unless it obtains the prior written
consent of the Underwriters, it will not make, any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405 under the Securities
Act) required to be filed by the Company with the Commission or retained by the Company under Rule 433 under the Securities Act;
provided that the prior written consent of the Underwriters hereto shall be deemed to have been given in respect of each free writing
prospectuses listed on Schedule A hereto. Any such free writing prospectus consented to by the Underwriters is hereinafter
referred to as a “Permitted Free Writing Prospectus.” The Company agrees that (i) it has treated and will treat,
as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will
comply, as the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to any Permitted Free
Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.
(f) Copies
of any Amendments and Supplements to the Prospectus. The Company agrees to furnish the Underwriters, without charge, during
the Prospectus Delivery Period, as many copies of each of the preliminary prospectuses, the Prospectus and the Disclosure Package
and any amendments and supplements thereto (including any documents incorporated or deemed incorporated by reference therein) as
the Underwriters may reasonably request.
(g) Use
of Proceeds. The Company shall apply the net proceeds from the sale of the Shares sold by it in the manner described under
the caption “Use of Proceeds” in the Disclosure Package and the Prospectus.
(h) Transfer
Agent. The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Shares.
(i) Internal
Controls. The Company will maintain a system of internal accounting controls designed to provide reasonable assurances that:
(i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded
as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The internal controls, upon consummation of the offering of the Shares, will be, overseen by the
Audit Committee (the “Audit Committee”) of the Board in accordance with the rules of the New York Stock Exchange.
(j) [Intentionally
omitted]
(k) Exchange
Listing. The Ordinary Shares has been duly authorized for listing on the New York Stock Exchange, subject to official notice
of issuance. The Company is in material compliance with the provisions of the rules and regulations promulgated by the New York
Stock Exchange and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements (to the extent applicable to the Company as of the date hereof, the Closing Date or the Option
Closing Date; and subject to all exemptions and exceptions from the requirements thereof as are set forth therein, to the extent
applicable to the Company). Without limiting the generality of the foregoing and subject to the qualifications above: (i) all members
of the Company’s board of directors who are required to be “independent” (as that term is defined under applicable
laws, rules and regulations), including, without limitation, all members of each of the audit committee, compensation committee
and nominating committee of the Company’s board of directors, meet the qualifications of independence as set forth under
such laws, rules and regulations, (ii) the audit committee of the Company’s board of directors has at least one member who
is an “audit committee financial expert” (as that term is defined under such laws, rules and regulations), and (iii)
that, based on discussions with the New York Stock Exchange, the Company meets all requirements for listing on the New York Stock
Exchange.
(l) Future
Reports to the Underwriters. For two years after the date of this Agreement, the Company will furnish, if not otherwise available
on XXXXX, to the Representative at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxx Xxx, COO: (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company as of
the close of such fiscal year and statements of income, stockholders’ equity and cash flows for the year then ended and the
opinion thereon of the Company’s independent public or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 20-F, quarterly financial statements using a Form 6-K or
other report filed by the Company with the Commission; and (iii) as soon as available, copies of any report or communication of
the Company mailed generally to holders of its capital stock.
(m) No
Manipulation of Price. The Company will not take, directly or indirectly, any action designed to cause or result in, or that
has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities
of the Company.
(n) Existing
Lock-Up Agreements. Except as described in the Registration Statement, the Disclosure Package and the Prospectus, there are
no existing agreements between the Company and its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation
of any of the Company’s securities. The Company will direct the transfer agent to place stop transfer restrictions upon the
securities of the Company that are bound by such “lock-up” agreements for the duration of the periods contemplated
therein.
(o) Company
Lock-Up.
(i) The
Company will not, without the prior written consent of the Underwriter, from the date of execution of this Agreement and continuing
for a period of 6 months from the commencement of the Company’s first day of trading (the “Lock-Up Period”),
(i) offer, pledge, announce the intention to sell, 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 or otherwise transfer or dispose of, directly or indirectly,
or file with the Commission a registration statement under the Securities Act relating to, any Ordinary Shares or any securities
convertible into or exercisable or exchangeable for Ordinary Shares, or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Ordinary Shares or any such other securities, whether
any such transaction described in clause (i) or (ii) above is to be settled by delivery of Ordinary Shares or such other securities,
in cash or otherwise, except to the Underwriter pursuant to this Agreement. The Company agrees not to accelerate the vesting of
any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period.
(ii) The restrictions
contained in Section 3(o)(i) hereof shall not apply to: (A) the Shares, (B) Ordinary Shares underlying the Underwriter’s
Warrants, (C) any Ordinary Shares issued under Company Stock Plans or warrants issued by the Company, in each case, described as
outstanding in the Offering Materials, (D) any options and other awards granted under a Company Stock Plan or Ordinary Shares issued
pursuant to an employee stock purchase plan, in each case, as described in the Offering Materials, and (E) Ordinary Shares or other
securities issued in connection with a transaction with an unaffiliated third party that includes a bona fide commercial relationship
(including joint ventures, marketing or distribution arrangements, collaboration agreements or intellectual property license agreements)
or any acquisition of assets or acquisition of not less than a majority or controlling portion of the equity of another entity;
provided that (x) the aggregate number of Ordinary Shares issued pursuant to clause (E) shall not exceed five percent (5%) of the
total number of outstanding Ordinary Shares immediately following the issuance and sale of the Underwritten Shares pursuant hereto
and (y) the recipient of any such Ordinary Shares or other securities issued or granted pursuant to clauses (C), (D) and (E) during
the Lock-Up Period shall enter into an agreement substantially in the form of Exhibit B hereto.
(p) Restriction
on Continuous Offerings. Notwithstanding the restrictions contained in Section 3(o), the Company, on behalf of itself
and any successor entity, agrees that, without the prior written consent of the Underwriter, it will not, for a period of 6 months
from the commencement of the Company’s first day of trading, directly or indirectly in any “at-the-market” or
continuous equity transaction, offer to sell, sell, contract to sell, grant any option to sell or otherwise dispose of shares of
the Company or any securities convertible into or exercisable or exchangeable for shares of the Company.
SECTION
4. Payment of Fees and Expenses.
(a) Whether
or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay
all costs, fees and expenses incurred in connection with the transactions contemplated hereby, including without limitation (i)
all of the reasonable and documented out-of-pocket expenses incurred by the Representative in an aggregate amount not to exceed
$150,000, (ii) all expenses incident to the issuance and delivery of the Shares (including all printing and engraving costs, if
any), (iii) all fees and expenses of the clearing firm, registrar and transfer agent of the Shares, (iv) all necessary issue, transfer
and other stamp taxes in connection with the issuance and sale of the Shares placed by the Representative, (v) all fees and expenses
of the Company’s counsel, independent public or certified public accountants and other advisors, (vi) all costs and expenses
incurred in connection with the preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free Writing Prospectus, each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and this Agreement, and (vii) all filing fees, attorneys’
fees and expenses incurred by the Company, or the Representative, in connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the Shares for offer and sale under the state securities or blue
sky laws, and, if requested by the Representative, preparing and printing a “Blue Sky Survey” or memorandum, and any
supplements thereto, advising the Representative of such qualifications, registrations and exemptions. The Company has advanced
$50,000 to the Representative to cover its out-of-pocket expenses. The advance will be returned to the Company to the extent such
out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(f)(2)(C).
(b) We
have also agreed to pay the Underwriter an advisory fee of $50,000 upon closing of the Offering.
SECTION
5. Conditions of the Obligations of the Underwriters. The obligations of the Underwriters to purchase the Shares
as provided herein on the Closing Date or the Option Closing Date shall be subject to (1) the accuracy of the representations and
warranties on the part of the Company set forth in Section 1 hereof as of the date hereof and as of the Closing Date or
the Option Closing Date as though then made; (2) the timely performance by the Company of its covenants and other obligations hereunder;
and (3) each of the following additional conditions:
(a) Accountant’s
Comfort Letter. On the date hereof, the Representative shall have received from the Accountant, a letter dated the date hereof
addressed to the Representative, in form and substance satisfactory to the Representative, containing statements and information
of the type ordinarily included in accountants’ “comfort letters” to Representative, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and the Prospectus.
(b) Effectiveness
of Registration Statement; Compliance with Registration Requirements; No Stop Order. During the period from and after the execution
of this Agreement to and including the Closing Date or the Option Closing Date, as applicable:
(i) the
Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities
Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed
a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective
amendment shall have become effective; and
(ii) no
stop order suspending the effectiveness of the Registration Statement, or any post-effective amendment to the Registration Statement,
shall be in effect and no proceedings for such purpose shall have been instituted or threatened by the Commission.
(c) No
Material Adverse Change. For the period from and after the date of this Agreement to and including the Closing Date or the
Option Closing Date, in the reasonable judgment of the Representative there shall not have occurred any Material Adverse Change.
(d) CFO
Certificate. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate
executed by the Chief Financial Officer of the Company, dated as of such date, on behalf
of the Company, with respect to certain financial data contained in the Registration Statement,
Disclosure Package and the Prospectus, providing “management comfort” with respect to such information, in form and
substance reasonably satisfactory to the Underwriter.
(e) Officers’
Certificate. On the Closing Date and/or the Option Closing Date, the Representative shall have received a written certificate
executed by the Chairman of the Board and Acting Chief Executive Officer and the Chief Financial Officer of the Company, dated
as of such date, to the effect that the signers of such certificate have reviewed the Registration Statement, the Disclosure Package
and the Prospectus and any amendment or supplement thereto, each Issuer Free Writing Prospectus and this Agreement, to the effect
that:
(i) The
representations and warranties of the Company in this Agreement are true and correct, as if made on and as of such Closing Date,
and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date;
(ii) No
stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus has been issued and no proceedings
for that purpose have been instituted or are pending or, to the Company’s knowledge, threatened under the Securities Act;
no order having the effect of ceasing or suspending the distribution of the Underwritten Shares or any other securities of the
Company has been issued by any securities commission, securities regulatory authority or stock exchange in the United States and
no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, contemplated by any securities
commission, securities regulatory authority or stock exchange in the United States; and
(iii) Subsequent
to the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been:
(a) any Material Adverse Effect; (b) any transaction that is material to the Company and the Subsidiaries taken as a whole, except
transactions entered into in the ordinary course of business; (c) any obligation, direct or contingent, that is material to the
Company and the Subsidiaries taken as a whole, incurred by the Company or any Subsidiary or Consolidated Affiliated Entity, except
obligations incurred in the ordinary course of business; (d) any material change in the capital stock (except changes thereto resulting
from the exercise of outstanding options or warrants or conversion of outstanding indebtedness into Ordinary Shares of the Company)
or outstanding indebtedness of the Company or any Subsidiary or Consolidated Affiliated Entity (except for the conversion of such
indebtedness into Ordinary Shares of the Company); (e) any dividend or distribution of any kind declared, paid or made on Ordinary
Shares of the Company; or (f) any loss or damage (whether or not insured) to the property of the Company or any Subsidiary or Consolidated
Affiliated Entity which has been sustained or will have been sustained which has a Material Adverse Effect
(f) Secretary’s
Certificate. As of each Closing Date, the Representative shall have received a certificate of the Company signed by the Secretary
of the Company, dated such Closing Date, certifying: (i) that each of the Company’s Articles of Association and Memorandum
of Association attached to such certificate is true and complete, has not been modified and is in full force and effect; (ii) that
each of the Subsidiaries Articles of Association, Memorandum of Association or charter documents attached to such certificate is
true and complete, has not been modified and is in full force and effect; (iii) that the resolutions of the Company’s Board
of Directors relating to the Offering attached to such certificate are in full force and effect and have not been modified; and
(iv) the good standing of the Company and each of the Subsidiaries. The documents referred to in such certificate shall be attached
to such certificate.
(g) Bring-down
Comfort Letter. On the Closing Date and/or the Option Closing Date, the Representative shall have received from the Accountant,
a letter dated such date, in form and substance satisfactory to the Representative, to the effect that the Accountant reaffirms
the statements made in the letter furnished by it pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no more than three business days prior to the Closing Date
and/or the Option Closing Date.
(h) Lock-Up
Agreement from Certain Securityholders of the Company. On or prior to the date hereof, the Company shall have furnished to
the Representative an agreement substantially in the form of Exhibit B hereto from each of the Company’s officers,
directors, security holders of 5% or more of the Company’s Ordinary Shares or securities convertible into or exercisable
for the Company’s Ordinary Shares listed on Schedule C hereto.
(i) Exchange
Listing. The Shares to be delivered on the Closing Date shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
(j) Company
Counsel Opinions. On the Closing Date and/or the Option Closing Date, the Representative shall have received
| (i) | the favorable opinion of Xxxxxx Xxxxxxx Xxxxxxx & Li LLC, U.S. securities counsel to the Company,
dated as of such date, addressed to the Representative, in form and substance reasonably satisfactory to the Representative; |
| (ii) | the favorable opinion of Ogier, Cayman Islands counsel to the Company, in form and substance reasonably
satisfactory to the Representative; and |
| (iii) | the favorable opinion of Dentons Law Offices, PRC counsel to the Company, in form and substance
reasonably satisfactory to the Representative. |
The Underwriter
shall rely on the opinions of (i) the Company’s Cayman Islands counsel, Ogier, filed as Exhibit 5.1 to the Registration Statement,
as to the due incorporation, validity of the Securities and due authorization, execution and delivery of the Agreement and (ii)
the Company’s PRC counsel, Dentons Law Offices, filed as Exhibit 8.1 to the Registration Statement.
(k) Additional
Documents. On or before the Closing Date and/or the Option Closing Date, the Representative and counsel for the Representative
shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in order to evidence the accuracy of any of the representations
and warranties, or the satisfaction of any of the conditions or agreements, herein contained.
If any condition
specified in this Section 5 is not satisfied when and as required to be satisfied, this Agreement may be terminated by the
Representative by written notice to the Company at any time on or prior to the Closing Date and/or the Option Closing Date, which
termination shall be without liability on the part of any party to any other party, except that Section 4 (with respect
to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the Representative) and Section 7
shall at all times be effective and shall survive such termination.
SECTION
6. Effectiveness of this Agreement. This Agreement shall not become effective until the later of (i) the execution
of this Agreement by the parties hereto and (ii) notification (including by way of oral notification from the reviewer at the Commission)
by the Commission to the Company of the effectiveness of the Registration Statement under the Securities Act.
SECTION
7. Indemnification.
(a) Indemnification
by the Company. The Company shall indemnify and hold harmless the Underwriters, its affiliates and each of their respective
directors, officers, members, employees and agents and each person, if any, who controls such Underwriters within the meaning of
Section 15 of the Securities Act of or Section 20 of the Exchange Act (collectively the “Underwriter Indemnified Parties,”
and each a “Underwriter Indemnified Party”) from and against any losses, claims, damages or liabilities (including
in settlement of any litigation if such settlement is effected with the prior written consent of the Company) arising out of (i)
an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including the information
deemed to be a part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant to Rules 430A
and 430B of the Securities Act Regulations, or arise out of or are based upon the omission from the Registration Statement, or
alleged omission to state therein, a material fact required to be stated therein or necessary to make the statements therein not
misleading; or (ii) an untrue statement or alleged untrue statement of a material fact contained in the Prospectus, or any
amendment or supplement thereto, or in any other materials used in connection with the Offering, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, and will reimburse such Underwriter Indemnified
Party for any legal or other expenses reasonably incurred by it in connection with evaluating, investigating or defending against
such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, expense or liability arises out of or is based upon an untrue statement in, or
omission from any preliminary prospectus, any Registration Statement or the Prospectus, or any such amendment or supplement thereto,
or any Issuer Free Writing Prospectus made in reliance upon and in conformity with written information furnished to the Company
through the Underwriters expressly for use therein, which information the parties hereto agree is limited to the Underwriter’s
Information. The indemnification obligations under this Section 7(a) are not exclusive and will be in addition to any liability,
which the Company might otherwise have and shall not limit any rights or remedies which may otherwise be available at law or in
equity to each Underwriter Indemnified Party.
(b) Indemnification
by the Underwriters. The Underwriters shall indemnify and hold harmless the Company and the Company’s affiliates, directors,
officers, employees, agents and each person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively the “Company Indemnified Parties” and each a “Company
Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any action, investigation or
proceeding in respect thereof), to which such Company Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, expense, liability, action, investigation or proceeding arises out of or is based upon (i)
any untrue statement of a material fact contained in any preliminary prospectus, any Issuer Free Writing Prospectus, any “issuer
information” filed or required to be filed pursuant to Rule 433(d) of the Securities Act Regulations, any Registration Statement
or the Prospectus, or in any amendment or supplement thereto, or (ii) the omission to state in any preliminary prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d) of the
Securities Act Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, a material
fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent
that the untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company
through the Underwriters expressly for use therein, which information the parties hereto agree is limited to the Underwriters’
Information and shall reimburse the Company for any legal or other expenses reasonably incurred by such party in connection with
investigating or preparing to defend or defending against or appearing as third party witness in connection with any such loss,
claim, damage, liability, action, investigation or proceeding, as such fees and expenses are incurred. Notwithstanding the provisions
of this Section 7(b), in no event shall any indemnity by the Underwriters under this Section 7(b) exceed the total
discount received by the Underwriters in connection with the Offering. The indemnification obligations under this Section 7(b)
are not exclusive and will be in addition to any liability, which the Company might otherwise have and shall not limit any rights
or remedies which may otherwise be available at law or in equity to each Company Indemnified Party.
(c) Procedure.
Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying party under this Section 7, notify such
indemnifying party in writing of the commencement of that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this Section 7 except to the extent it has been materially
adversely prejudiced by such failure; and, provided, further, that the failure to notify an indemnifying party shall not relieve
it from any liability which it may have to an indemnified party otherwise than under this Section 7. If any such action
shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense of such action with counsel reasonably satisfactory to the indemnified party (which counsel shall not, except
with the written consent of the indemnified party, be counsel to the indemnifying party). After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such action, except as provided herein, the indemnifying party
shall not be liable to the indemnified party under Section 7(a) or 7(b), as applicable, for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense of such action other than reasonable costs of investigation;
provided, however, that any indemnified party shall have the right to employ separate counsel in any such action and to
participate in the defense of such action but the fees and expenses of such counsel (other than reasonable costs of investigation)
shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized in writing
by the Company in the case of a claim for indemnification under Section 7(a), (ii) such indemnified party shall have been
advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those
available to the indemnifying party, or (iii) the indemnifying party has failed to assume the defense of such action and employ
counsel reasonably satisfactory to the indemnified party within a reasonable period of time after notice of the commencement of
the action or the indemnifying party does not diligently defend the action after assumption of the defense, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of (or, in the case of a failure to diligently defend
the action after assumption of the defense, to continue to defend) such action on behalf of such indemnified party and the indemnifying
party shall be responsible for legal or other expenses subsequently incurred by such indemnified party in connection with the defense
of such action; provided, however, that the indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time any such indemnified party
(in addition to any local counsel), which firm shall be designated in writing by the Underwriters if the indemnified party under
this Section 7 is an Underwriter Indemnified Party or by the Company if an indemnified party under this Section 7
is a Company Indemnified Party. Subject to this Section 7(c), the amount payable by an indemnifying party under Section
7 shall include, but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified party and any
other expenses in investigating, or preparing to defend or defending against, or appearing as a third party witness in respect
of, or otherwise incurred in connection with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement
of any of the foregoing. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise
or consent to the entry of judgment with respect to any pending or threatened action or any claim whatsoever, in respect of which
indemnification or contribution could be sought under this Section 7 (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified
party in form and substance reasonably satisfactory to such indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party. Subject to the provisions of the following sentence, no indemnifying party shall be liable for settlement
of any pending or threatened action or any claim whatsoever that is effected without its written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with its written consent, if its consent has been unreasonably withheld or
delayed or if there be a judgment for the plaintiff in any such matter, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, if at any time
an indemnified party shall have requested that an indemnifying party reimburse the indemnified party for fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated herein effected without its
written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party
of the request for reimbursement, (ii) such indemnifying party shall have received notice of the terms of such settlement at least
thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
(d) Contribution.
If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an indemnified party
under Section 7(a) or Section 7(b), then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid, payable or otherwise incurred by such indemnified party as a result of such loss, claim,
damage, expense or liability (or any action, investigation or proceeding in respect thereof), as incurred, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the
indemnified parry or parties on the other hand from the offering of the Shares, or (ii) if the allocation provided by clause (i)
of this Section 7(d) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) of this Section 7(d) but also the relative fault of the indemnifying party or parties
on the one hand and the indemnified party or parties on the other with respect to the statements, omissions, acts or failures to
act which resulted in such loss, claim, damage, expense or liability (or any action, investigation or proceeding in respect thereof)
as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters
on the other with respect to such offering shall be deemed to be in the same proportion as the total proceeds from the offering
of the Shares purchased by investors as contemplated by this Agreement (before deducting expenses) received by the Company bear
to the total underwriting discounts received by the Underwriters in connection with the Offering, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault of the Company on the one hand and the Underwriters on the other
shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the Underwriters
on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent
such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished
to the Company by the Underwriters for use in any preliminary prospectus, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto, consists solely of the Underwriter’s Information. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this Section 7(d) be determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage, expense, liability, action, investigation or proceeding
referred to above in this Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with investigating, preparing to defend or defending
against or appearing as a third party witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage,
expense, liability, action, investigation or proceeding. Notwithstanding the provisions of this Section 7(d), the Underwriters
shall not be required to contribute any amount in excess of the total discounts received in cash by the Underwriters in connection
with the Offering less the amount of any damages that the Underwriters have otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement, omission or alleged omission, act or alleged act or failure to act or alleged failure to
act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation.
SECTION
8. Termination of this Agreement. Prior to the Closing Date, whether before or after notification by the Commission
to the Company of the effectiveness of the Registration Statement under the Securities Act, this Agreement may be terminated by
the Underwriters by written notice given to the Company if at any time (i) trading or quotation in any of the Company’s securities
shall have been suspended or limited by the Commission or by the New York Stock Exchange; (ii) a general banking moratorium shall
have been declared by any of federal, New York or Cayman Islands authorities; or (iii) there shall have occurred any outbreak or
escalation of national or international hostilities or any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a prospective substantial change in United States’
or international political, financial or economic conditions that, in the reasonable judgment of the Underwriters, is material
and adverse and makes it impracticable to market the Shares in the manner and on the terms described in the Prospectus or to enforce
contracts for the sale of securities. Any termination pursuant to this Section 8 shall be without liability on the part
of (a) the Company to any of the Underwriters, except that the Company shall be, subject to demand by the Underwriters, obligated
to reimburse the Underwriters for only those out-of-pocket expenses (including the reasonable fees and expenses of their counsel,
and expenses associated with a due diligence report), actually incurred by the Underwriters in connection herewith as allowed under
FINRA Rule 5110, less any amounts previously paid by the Company; provided, however, that all such expenses shall not exceed
$150,000 in the aggregate, (b) the Underwriters to the Company, or (c) of any party hereto to any other party except that the provisions
of Section 4 (with respect to the reimbursement of out-of-pocket accountable, bona fide expenses actually incurred by the
Underwriters) and Section 7 shall at all times be effective and shall survive such termination.
SECTION
9. No Advisory or Fiduciary Responsibility. The Company hereby acknowledges that the Underwriters are acting solely
as underwriters in connection with the offering of the Company’s Securities. The Company further acknowledges that the Underwriters
are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s-length basis
and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company, its management,
shareholders, creditors or any other person in connection with any activity that the Underwriters may undertake or have undertaken
in furtherance of the offering of the Company’s Securities, either before or after the date hereof. The Underwriters hereby
expressly disclaim any fiduciary or similar obligations to the Company, either in connection with the transactions contemplated
by this Agreement or any matters leading up to such transactions, and the Company hereby confirms its understanding and agreement
to that effect. The Company hereby further confirms its understanding that no Underwriter has assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the Offering contemplated hereby or the process leading thereto, including,
without limitation, any negotiation related to the pricing of the Securities; and the Company has consulted its own legal and financial
advisors to the extent it has deemed appropriate in connection with this Agreement and the Offering. The Company and the Underwriters
agree that they are each responsible for making their own independent judgments with respect to any such transactions, and that
any opinions or views expressed by the Underwriters to the Company regarding such transactions, including but not limited to any
opinions or views with respect to the price or market for the Company’s securities, do not constitute advice or recommendations
to the Company. The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may
have against the Underwriters with respect to any breach or alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up to such transactions.
This Agreement supersedes
all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, solely with respect
to the offering contemplated by this Agreement.
SECTION
10. Representations and Indemnities to Survive Delivery; Third Party Beneficiaries. The respective indemnities,
agreements, representations, warranties and other statements of the Company, of its officers, and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf
of the Underwriters or the Company or any of its or their partners, officers or directors or any controlling person, as the case
may be, and will survive delivery of and payment for the Shares sold hereunder and any termination of this Agreement. Each Investor
shall be a third party beneficiary with respect to the representations, warranties, covenants and agreements of the Company set
forth herein.
Section
11. Right of First Refusal. The Company agrees that it shall provide the Underwriter the right of first
refusal ("Right of First Refusal") for eighteen (18) months from the date of commencement of the Company’s first
day of trading to act as financial advisor or to act as joint financial advisor on at least equal economic terms on any public
or private financing (debt or equity), (collectively, "Future Services"). In the event the Company notifies the
Underwriter of its intention to pursue an activity that would enable the Underwriter to exercise its Right of First Refusal to
provide Future Services, the Underwriter shall notify the Company of its election to provide such Future Services, including notification
of the compensation and other terms to which the Underwriter claims to be entitled, within seven (7) days of written notice by
the Company. In the event the Company engages the Underwriter to provide such Future Services, the Underwriter will be compensated
as mutually agreed by the Company and the Underwriter.
SECTION
12. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied
and confirmed to the parties hereto as follows:
If to the Underwriters:
Univest Securities, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxx
Email: xxxx@xxxxxxx.xx
Phone No.: 000 000-0000
Fax No.: 000-000-0000
With a copy (which
shall not constitute notice) to:
Ortoli Rosenstadt LLP
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esq.
Attn: Mengyi “Xxxxx” Ye, Esq.
Email: xxx@xxxxx.xxxxx
xxx@xxxxx.xxxxx
Fax No.: (000) 000-0000
If to the Company:
Qilian International Holding Group Limited
Jiuquan Economic and Technological Development Zone
Jiuquan City, Gansu Province
People’s Republic of China
Attn: Zhanchang
Xin, CEO and Chairman of the Board
Email: xxxxx@000.xxx
Fax No.: x00-0000-0000000
With a copy (which shall not constitute notice)
to:
Xxxxxx Xxxxxxx Xxxxxxx & Li, LLC
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xx, Esq.
Email: xxx@xxxxxxxxxx.xxx
Fax No.: 000 000 0000
Any party hereto may
change the address for receipt of communications by giving written notice to the others.
SECTION
13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and to the
benefit of the employees, officers and directors and controlling persons referred to in Section 7, and in each case their
respective successors, and no other person will have any right or obligation hereunder. The term “successors”
shall not include any purchaser of the Shares as such merely by reason of such purchase.
SECTION
14. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section,
paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to
be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
SECTION
15. Governing Law Provisions. This Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York.
SECTION
16. General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes
all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the offering
contemplated by this Agreement, except for the Engagement Letter not related to the transactions contemplated by the Registration
Statement and the Prospectus, each of which provisions shall remain in full force and effect for the term of the Engagement Letter.
This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing
by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party
whom the condition is meant to benefit. The section headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
Each of the parties
hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding
the provisions hereof, including, without limitation, the indemnification and contribution provisions of Section 7, and
is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Section
7 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business
in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus
(and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.
The respective indemnities,
contribution agreements, representations, warranties and other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of the Underwriters, the officers or employees of the Underwriters, any person
controlling any of the Underwriters, the Company, the officers or employees of the Company, or any person controlling the Company,
(ii) acceptance of the Shares and payment for them as contemplated hereby and (iii) termination of this Agreement.
Except as otherwise
provided, this Agreement has been and is made solely for the benefit of and shall be binding upon the Company, the Underwriters,
the Underwriters’ officers and employees, any controlling persons referred to herein, the Company’s directors and the
Company’s officers who sign the Registration Statement and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right under or by virtue of this Agreement. The term
“successors and assigns” shall not include a purchaser of any of the Shares from the Underwriters merely because
of such purchase.
If the foregoing is
in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon
this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
|
Very truly yours, |
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Qilian International Holding Group Limited |
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By: |
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Name: Zhanchang Xin |
|
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Title: Chief Executive Officer and Chairman of the Board |
The foregoing Underwriting
Agreement is hereby confirmed and accepted by the Underwriters as of the date first above written.
For itself and on behalf of the several |
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Underwriters listed on Schedule A hereto |
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UNIVEST SECURITIES, LLC |
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By: |
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Name: Xxxxx Xxx |
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Title: COO |
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SCHEDULE A
Underwriter |
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Univest Securities, LLC |
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Loop Capital Markets LLC |
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Total |
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SCHEDULE B
Issuer Free Writing Prospectus(es)
SCHEDULE C
Lock-Up Parties
SCHEDULE D
Subsidiaries
|
Name |
Place of Incorporation |
1. |
Qilian International (Hong Kong) Holdings Limited |
Hong Kong |
2. |
Chengdu Qilian Trading Co., Ltd. |
The PRC |
SCHEDULE E
Consolidated Affiliated Entities
|
Name |
Place of Incorporation |
1. |
Gansu Qilian Pharmaceutical Co., Ltd. |
The PRC |
2. |
Chengdu Qilianshan Biotechnology Co., Ltd. |
The PRC |
3. |
Rugao Tianlu Animal Products Co., Ltd. |
The PRC |
4. |
Jiuquan Qiming Biotechnology Co., Ltd. |
The PRC |
5. |
Tibet Cangmen Trading Co., Ltd. |
The PRC |
6. |
Tibet Samen Trading Co., Ltd. |
The PRC |
7. |
Jiuquan Ahan Biotechnology Co., Ltd. |
The PRC |
EXHIBIT A
Form of Warrant
THE REGISTERED HOLDER OF THIS PURCHASE
WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED
AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE
WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FOLLOWING THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT TO ANYONE OTHER
THAN (I) UNIVEST SECURITIES, LLC, OR A REPRESENTATIVE OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE
OFFICER OR PARTNER OF UNIVEST SECURITIES, LLC, OR OF ANY SUCH UNDERWRITERS OR SELECTED DEALER.
THIS PURCHASE WARRANT IS NOT EXERCISABLE
PRIOR TO [●], 20[__]. VOID AFTER 5:00 P.M., EASTERN TIME, [●], 20[__].
UNDERWRITER’S WARRANT
FOR THE PURCHASE OF [●] ORDINARY
SHARES
OF
QILIAN INTERNATIONAL HOLDING GROUP LIMITED
1. Purchase
Warrant. THIS CERTIFIES THAT, pursuant to that certain Underwriting Agreement by and between Qilian International Holding Group
Limited, a Cayman Islands company limited by shares (the “Company”), on one hand, and Univest Securities, LLC
(the “Holder”), on the other hand, dated [●], 2020 (the “Underwriting Agreement”),
the Holder, as registered owner of this Purchase Warrant, is entitled, at any time or from time to time from [●], 20[__]
(the “Exercise Date”), and at or before 5:00 p.m., Eastern time, on [●], 20[__] (the “Expiration
Date”)[1], but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to such number
of ordinary shares of the Company, par value $0.00166667 per ordinary share (the “Ordinary
Shares”) as equates to six percent (6%) of the Ordinary Shares sold in the Offering (the “Shares”),
excluding any Ordinary Shares sold as result of the exercise by the underwriters of their over-allotment option, subject to adjustment
as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized
by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with
the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate
this Purchase Warrant. This Purchase Warrant is initially exercisable at $[●] per Ordinary Share (110% of the price of the
Ordinary Shares sold in the Offering); provided, however, that upon the occurrence of any of the events specified
in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Ordinary Share
and the number of Ordinary Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise
Price” shall mean the initial exercise price as set forth above or the adjusted exercise price as a result of the events
set forth in Section 6 below, depending on the context. Capitalized terms not defined herein shall have the meaning ascribed to
them in the Underwriting Agreement.
2. Exercise.
2.1 Exercise
Form. In order to exercise this Purchase Warrant, the exercise form attached hereto as Exhibit A must be duly
executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for
the Ordinary Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by
the Company or by certified check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m.,
Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
[1]
Which shall be the five-year anniversary of the effective date of this offering.
2.2 Cashless
Exercise. At any time after the Exercise Date and until the Expiration Date, Holder may elect to receive the number of Ordinary
Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant
to the Company, together with the exercise form attached hereto, in which event the Company shall issue to Holder, Shares in accordance
with the following formula:
X |
= |
Y(A-B) |
|
|
A |
|
|
|
|
|
|
Where, |
X |
= |
The number of Ordinary Shares to be issued to Holder; |
|
Y |
= |
The number of Ordinary Shares for which the Purchase Warrant is being exercised; |
|
A |
= |
The fair market value of one Ordinary Share; and |
|
B |
= |
The Exercise Price. |
For purposes of this Section
2.2, the “fair market value” of an Ordinary Share is defined as follows:
| (i) | if the Ordinary Shares are traded on a national securities exchange, the value shall be deemed
to be the closing price on such exchange for the five consecutive trading days ending on the day immediately prior to the exercise
form being submitted in connection with the exercise of the Purchase Warrant; or |
| (ii) | if the Ordinary Shares are actively traded over-the-counter, the value shall be deemed to be the
weighted average price of the Ordinary Shares for the five consecutive trading days ending on the trading day immediately prior
to the exercise form being submitted in connection with the exercise of the Purchase Warrant; or |
| (iii) | if there is no market for the Ordinary Shares, the value shall be the fair market value thereof,
as determined in good faith by the Company’s Board of Directors. |
2.3 Legend.
Each certificate for the securities purchased under this Purchase Warrant shall bear the following legends unless such securities
have been registered under the Securities Act of 1933, as amended (the “Act”), or are exempt from registration
under the Act:
(i) “THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE
STATE LAW. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE
STATE LAW WHICH, IN THE OPINION OF COUNSEL TO THE COMPANY, IS AVAILABLE.”
(ii) Any legend required by
the securities laws of any state to the extent such laws are applicable to the Shares represented by a certificate, instrument,
or book entry so legended.
3. Transfer.
3.1 General
Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder
will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days
following the effective date of the Registration Statement (the “Effective Date”) to anyone other than: (i)
the Underwriter or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of the Underwriter or
of any such selected dealer, in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this Purchase Warrant
or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would
result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA
Rule 5110(g)(2). On and after that date that is one hundred eighty (180) days after the Effective Date, transfers to others may
be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the
Holder must deliver to the Company the assignment form attached hereto as Exhibit B duly executed and completed,
together with this Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall
within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase
Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate
number of Ordinary Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
3.2 Restrictions
Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) the Company
has received the opinion of counsel for the Company that the securities may be transferred pursuant to an exemption from registration
under the Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of
the Company, (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and
sale of such securities that has been declared effective by the U.S. Securities and Exchange Commission (the “Commission”)
and includes a current prospectus or (iii) a registration statement, pursuant to which the Holder has exercised its registration
rights pursuant to Sections 4.1 and 4.2 herein, relating to the offer and sale of such securities has been filed
and declared effective by the Commission and compliance with applicable state securities law has been established.
4. Registration
Rights.
4.1 “Piggy-Back”
Registration. Unless all of the Ordinary Shares underlying the Purchase Warrants (collectively, the “Registrable Securities”)
are included in an effective registration statement with a current prospectus, and to the extent the cashless exercise provided
by Section 2.2 is not available to Holder, the Holder shall have the right, until the Expiration Date, to include the remaining
Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145 promulgated under the Act or pursuant to Forms S-8, F-3 or any equivalent forms); provided, however,
that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s)
thereof shall, in its reasonable discretion, impose a limitation on the number of ordinary shares of Registrable Securities which
may be included in the registration statement because, in such underwriter(s)’ judgment, marketing or other factors dictate
such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such registration
statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder
as the underwriter shall reasonably permit; and further provided that ) no such piggy-back rights shall exist
for so long as the Registrable Securities (which term shall include those paid as consideration pursuant to the cashless exercise
provisions of this Warrant) may be sold pursuant to Rule 144 of the Act without restriction. Any exclusion of Registrable Securities
shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities
sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities
in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities. In the event of such
a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than fifteen
(15) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall
continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities
have been sold by the Holder. The holders of the Registrable Securities shall exercise the “piggy-back” rights provided
for herein by giving written notice, within seven (7) days of the receipt of the Company’s notice of its intention to file
a registration statement. Except as otherwise provided in this Purchase Warrant, there shall be no limit on the number of times
the Holder may request registration under this Section 4.1.
4.2 General
Terms.
4.2.1 Expenses
of Registration. The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant
to Section 4 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected
by the Holders to represent them in connection with the sale of the Registrable Securities.
4.2.2 Indemnification.
The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder
and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20 (a) of the Securities
Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any
claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify
the Underwriter contained in Section 7 of the Underwriting Agreement.
4.2.3 Exercise
of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise
their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.
4.2.4 Documents
to be Delivered by Holder(s). Each of the Holder(s) participating in any of the registration statement filed by the Company
shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily
sought of selling security holders.
4.2.5 Damages.
Should the registration or the effectiveness thereof required by Section 4 hereof be delayed by the Company or
the Company otherwise fails to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief
available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against
the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages
and without the necessity of posting bond or other security.
5. New
Purchase Warrants to be Issued.
5.1 Partial
Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised
or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase
Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise
Price and/or transfer tax if exercised pursuant to Section 2.1 hereof, the Company shall cause to be delivered
to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing
the right of the Holder to purchase the number of Ordinary Shares purchasable hereunder as to which this Purchase Warrant has not
been exercised or assigned.
5.2 Lost
Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this
Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft,
mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
6. Adjustments.
6.1 Adjustments
to Exercise Price and Number of Ordinary Shares. The Exercise Price and the number of Ordinary Shares underlying this Purchase
Warrant shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Share
Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number
of outstanding Ordinary Shares is increased by a stock dividend payable in Ordinary Shares or by a split up of Ordinary Shares
or other similar event, then, on the effective day thereof, the number of Ordinary Shares purchasable hereunder shall be increased
in proportion to such increase in outstanding Ordinary Shares, and the Exercise Price shall be proportionately decreased.
6.1.2 Aggregation
of Ordinary Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number
of outstanding Ordinary Shares is decreased by a consolidation, combination or reclassification of Ordinary Shares or other similar
event, then, on the effective date thereof, the number of Ordinary Shares purchasable hereunder shall be decreased in proportion
to such decrease in outstanding shares, and the Exercise Price shall be proportionately increased.
6.1.3 Replacement
of Ordinary Shares upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Ordinary
Shares other than a change covered by Section 6.1.1 or Section 6.1.2 hereof or that solely affects
the par value of such Ordinary Shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company
with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the
continuing corporation and that does not result in any reclassification or reorganization of the outstanding Ordinary Shares),
or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially
as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter
(until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate
Exercise Price payable hereunder immediately prior to such event, the kind and amount of ordinary shares or other securities or
property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation,
or upon a dissolution following any such sale or transfer, by a Holder of the number of Ordinary Shares of the Company obtainable
upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in
Ordinary Shares covered by Section 6.1.1 or Section 6.1.2, then such adjustment shall be made pursuant
to Section 6.1.1, Section 6.1.2 and this Section 6.1.3. The provisions of this Section
6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations,
or consolidations, sales or other transfers.
6.1.4 Fundamental
Transaction. If, at any time while this Purchase Warrant is outstanding, (i) the Company, directly or indirectly, in one
or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any direct or indirect purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Ordinary Shares are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Ordinary Shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Ordinary Shares or any compulsory share exchange pursuant to which the Ordinary Shares
is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly,
in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spinoff or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the outstanding Ordinary Shares (not including any Ordinary Shares held by
the other Person or other Persons making or party to, or associated or affiliated with, the other Persons making or party to such
stock or share purchase agreement or other business combination) (each a "Fundamental Transaction"), then, upon any subsequent
exercise of this Purchase Warrant, the Holder shall have the right to receive, for each Purchase Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number Ordinary Shares
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional or alternative
consideration (the "Alternative Consideration") receivable as a result of such Fundamental Transaction by a holder of
the number of Ordinary Shares for which this Purchase Warrant is exercisable immediately prior to such Fundamental Transaction.
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternative
Consideration based on the amount of Alternative Consideration issuable in respect of one Ordinary Share in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternative Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternative Consideration. If holders of Ordinary Shares are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to
the Alternative Consideration it receives upon any exercise of this Purchase Warrant following such Fundamental Transaction. The
Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the "Successor
Entity") to assume in writing all of the obligations of the Company under this Purchase Warrant, and to deliver to the Holder
in exchange for this Purchase Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Purchase Warrant which is exercisable for a corresponding number of shares of capital stock of such
Successor Entity (or its parent entity) equivalent to the Ordinary Shares acquirable and receivable upon exercise of this Purchase
Warrant prior to such Fundamental Transaction, and with an exercise price which applies the Exercise Price hereunder to such shares
of capital stock (but taking into account the relative value of the Ordinary Shares pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Purchase Warrant immediately prior to the consummation of such Fundamental Transaction).
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Purchase Warrant and the other Transaction Documents
referring to the "Company" shall refer instead to the Successor Entity), and may exercise every right and power of, the
Company and shall assume all of the obligations of the Company, under this Purchase Warrant and the other Transaction Documents
with the same effect as if such Successor Entity had been named as the Company herein.
6.1.5 Changes
in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section
6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Ordinary Shares
as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring
after the date hereof or the computation thereof.
6.2 Substitute
Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company
with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in
any reclassification or change of the outstanding Ordinary Shares), the corporation formed by such consolidation or share reconstruction
or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase
Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant)
to receive, upon exercise of such Purchase Warrant, the kind and amount of Ordinary Shares and other securities and property receivable
upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Ordinary Shares of the Company for
which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation,
sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments
provided for in this Section 6. The above provision of this Section 6 shall similarly apply to successive
consolidations or share reconstructions or amalgamations.
6.3 Elimination
of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Ordinary Shares
upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests,
it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the
case may be, to the nearest whole number of Ordinary Shares or other securities, properties or rights.
7. Reservation
and Listing. The Company shall at all times reserve and keep available out of its authorized Ordinary Shares, solely for the
purpose of issuance upon exercise of this Purchase Warrant, such number of Ordinary Shares or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of this Purchase Warrant and
payment of the Exercise Price therefor, in accordance with the terms hereby, all Ordinary Shares and other securities issuable
upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any
shareholder. The Company further covenants and agrees that upon exercise of this Purchase Warrant and payment of the exercise price
therefor, all Ordinary Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and
non-assessable and not subject to preemptive rights of any shareholder. As long as this Purchase Warrant shall be outstanding,
the Company shall use its commercially reasonable efforts to cause all Ordinary Shares issuable upon exercise of this Purchase
Warrant to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on the OTCQB
Market or any successor quotation system) on which the Ordinary Shares issued to the public in the Offering may then be listed
and/or quoted (if at all).
8. Certain
Notice Requirements.
8.1 Holder’s
Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to
receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder
of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice
of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books (the “Notice
Date”) for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities
or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company
shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same
manner that such notice is given to the shareholders.
8.2 Events
Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or
more of the following events: (i) if the Company shall take a record of the holders of its Ordinary Shares for the purpose of entitling
them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company,
(ii) the Company shall offer to all the holders of its Ordinary Shares any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe
therefor, or (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or share
reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.
8.3 Notice
of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section
6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall
describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the
Company’s Chief Financial Officer.
8.4 Transmittal
of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall
be deemed to have been duly made if made in accordance with the notice provisions of the Underwriting Agreement to the addresses
and contact information set forth below:
If to the Holder, then to:
Univest Securities, LLC
370 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxx
Email: xxxx@xxxxxxx.xx
With a copy to:
Ortoli Rosenstadt LLP
360 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esq.
Attn: Mengyi “Xxxxx” Ye, Esq.
Email: xxx@xxxxx.xxxxx
xxx@xxxxx.xxxxx
If to the Company:
Qilian International Holding Group Limited
Jiuquan Economic and Technological Development Zone
Jiuquan City, Gansu Province
People’s Republic of China
Attn: Zhanchang
Xin, CEO and Chairman of the Board
Email: xxxxx@000.xxx
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxx & Li LLC
1400 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xttn: Xxxx Xx, Esq.
Email: xxx@xxxxxxxxxx.xxx
9. Miscellaneous.
9.1 Amendments.
The Company and the Underwriter may from time to time supplement or amend this Purchase Warrant without the approval of any of
the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent
with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the
Company and the Underwriter may deem necessary or desirable and that the Company and the Underwriter deem shall not adversely affect
the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party
against whom enforcement of the modification or amendment is sought.
9.2 Headings.
The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3. Entire
Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection
with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
9.4 Binding
Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and
their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed
to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions
herein contained.
9.5 Governing
Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees
that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought
and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served
upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing
party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees
and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on
its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby
irrevocably waive, 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.
9.6 Waiver,
etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not
be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or
any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase
Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be
effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver
is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or non-fulfillment.
9.7 Exchange
Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any
time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and the Underwriter enter into an agreement
(“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged
for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
9.8 Execution
in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and
the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic
transmission.
9.9 Holder
Not Deemed a Shareholder. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder
of this Purchase Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Purchase Warrant be construed to confer upon the Holder, solely in its capacity
as the Holder of this Purchase Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of share, reclassification of share, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Shares which it is then entitled to receive upon the due exercise of this Purchase Warrant. In addition, nothing
contained in this Purchase Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Purchase Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.
9.10 Restrictions.
The Holder acknowledges that the Shares acquired upon the exercise of this Purchase Warrant, if not registered, and the Holder
does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
9.10 Severability.
Wherever possible, each provision of this Purchase Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Purchase Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Purchase Warrant.
[Signature Page to Follow]
IN WITNESS WHEREOF, the Company has
caused this Purchase Warrant to be signed by its duly authorized officer as of the ____ day of _______, 20[ ].
|
Qilian International Holding Group Limited |
|
|
|
|
|
Name: Zhanchang Xin |
|
Title: Chief Executive Officer and Chairman of the Board |
EXHIBIT A
Exercise Notice
Form to be used to exercise Purchase Warrant:
Date: __________, 20___
The undersigned hereby
elects irrevocably to exercise the Purchase Warrant for ______ Ordinary Shares of Qilian International Holding Group Limited, a
Cayman Islands company (the “Company”) and hereby makes payment of $____ (at the rate of $____ per Ordinary
Share) in payment of the Exercise Price pursuant thereto. Please issue the Ordinary Shares as to which this Purchase Warrant is
exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of
Ordinary Shares for which this Purchase Warrant has not been exercised.
or
The undersigned hereby
elects irrevocably to convert its right to purchase ___ Ordinary Shares under the Purchase Warrant for ______ Ordinary Shares,
as determined in accordance with the following formula:
|
X |
= |
Y(A-B) |
|
|
A |
|
Where, |
X |
= |
The number of Ordinary Shares to be issued to Holder; |
|
Y |
= |
The number of Ordinary Shares for which the Purchase Warrant is being exercised; |
|
A |
= |
The fair market value of one Ordinary Share which is equal to $_____; and |
|
B |
= |
The Exercise Price which is equal to $______ per Ordinary Share |
The undersigned agrees
and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect
to the calculation shall be resolved by the Company in its sole discretion.
Please issue the Ordinary
Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new
Purchase Warrant representing the number of Ordinary Shares for which this Purchase Warrant has not been converted.
Signature
Signature Guaranteed
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name:
(Print in Block Letters)
Address:
NOTICE: The signature
to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or
any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership
on a registered national securities exchange.
EXHIBIT B
Assignment Notice
Form to be used to assign Purchase Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer
of the within Purchase Warrant):
FOR VALUE RECEIVED, does
hereby sell, assign and transfer unto the right to purchase [●] ordinary shares of Qilian International
Holding Group Limited, a Cayman Islands company (the “Company”), evidenced by the Purchase Warrant and does
hereby authorize the Company to transfer such right on the books of the Company.
Dated: ,
20[ ]
Signature
Signature Guaranteed
NOTICE: The signature
to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement
or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
EXHIBIT B
Form of Lock-Up Agreement
______________, 2020
Univest Securities, LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
This Lock-Up Agreement
(this “Agreement”) is being delivered to Univest Securities, LLC (the “Underwriter”) in connection
with the proposed Underwriting Agreement (the “Underwriting Agreement”) between Qilian International Holding
Group Limited, a Cayman Islands company limited by shares (the “Company”), and the Underwriter, relating to
the proposed public offering (the “Offering”) of ordinary shares, par value $0.00166667 per share (the “Ordinary
Shares”), of the Company.
In order to induce
the Underwriter to continue its efforts in connection with the Offering, and in light of the benefits that the offering of the
Ordinary Shares will confer upon the undersigned in its capacity as a shareholder and/or an officer, director or employee of the
Company, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with the Underwriter that, during the period beginning on and including the date of this Agreement through and including
the date that is 180 days following the effective date of the registration statement for the Offering (the “Lock-Up Period”),
the undersigned will not, without the prior written consent of Underwriter, directly or indirectly, (i) offer, sell, assign, transfer,
pledge, contract to sell, or otherwise dispose of, or announce the intention to otherwise dispose of, any shares of Ordinary Shares
now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power
of disposition (including, without limitation, Ordinary Shares which may be deemed to be beneficially owned by the undersigned
in accordance with the rules and regulations promulgated under the Securities Act of 1933, as amended, and as the same may be amended
or supplemented on or after the date hereof from time to time (the “Securities Act”) (such shares, the “Beneficially
Owned Shares”) or securities convertible into or exercisable or exchangeable for Ordinary Shares, (ii) enter into any
swap, hedge or similar agreement or arrangement that transfers in whole or in part, the economic risk of ownership of the Beneficially
Owned Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or (iii)
engage in any short selling of the Ordinary Shares.
The restrictions set forth in
the immediately preceding paragraph shall not apply to:
(1) if the undersigned
is a natural person, any transfers made by the undersigned (a) as a bona fide gift to any member of the immediate family (as
defined below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned or members of the undersigned’s
immediate family, (b) by will or intestate succession upon the death of the undersigned, (c) as a bona fide gift to a
charity or educational institution, (d) any transfer pursuant to a qualified domestic relations order or in connection with a divorce;
or (e) if the undersigned is or was an officer, director or employee of the Company, to the Company pursuant to the Company’s
right of repurchase upon termination of the undersigned’s service with the Company;
(2) if the undersigned
is a corporation, partnership, limited liability company or other business entity, any transfers to any shareholder, partner or
member of, or owner of a similar equity interest in, the undersigned, as the case may be, if, in any such case, such transfer is
not for value;
(3) if the undersigned
is a corporation, partnership, limited liability company or other business entity, any transfer made by the undersigned (a) in
connection with the sale or other bona fide transfer in a single transaction of all or substantially all of the undersigned’s
capital stock, partnership interests, membership interests or other similar equity interests, as the case may be, or all or substantially
all of the undersigned’s assets, in any such case not undertaken for the purpose of avoiding the restrictions imposed by
this Agreement or (b) to another corporation, partnership, limited liability company or other business entity so long as the transferee
is an affiliate (as defined below) of the undersigned and such transfer is not for value;
(4) (a) exercises of
stock options or equity awards granted pursuant to an equity incentive or other plan or warrants to purchase Ordinary Shares or
other securities (including by cashless exercise to the extent permitted by the instruments representing such stock options or
warrants so long as such cashless exercise is effected solely by the surrender of outstanding stock options or warrants to the
Company and the Company’s cancellation of all or a portion thereof to pay the exercise price), provided that in any such
case the securities issued upon exercise shall remain subject to the provisions of this Agreement (as defined below); (b) transfers
of Ordinary Shares or other securities to the Company in connection with the vesting or exercise of any equity awards granted pursuant
to an equity incentive or other plan and held by the undersigned to the extent, but only to the extent, as may be necessary to
satisfy tax withholding obligations pursuant to the Company’s equity incentive or other plans;
(5) the exercise by
the undersigned of any warrant(s) issued by the Company prior to the date of this Agreement, including any exercise effected by
the delivery of shares of Ordinary Shares of the Company held by the undersigned; provided, that, the Ordinary Shares received
upon such exercise shall remain subject to the restrictions provided for in this Agreement;
(6) the occurrence
after the date hereof of any of (a) an acquisition by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of effective
control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of 100% of the
voting securities of the Company, (b) the Company merges into or consolidates with any other entity, or any entity merges into
or consolidates with the Company, (c) the Company sells or transfers all or substantially all of its assets to another person,
or (d) provided, that, the Ordinary Shares received upon any of the events set forth in clauses (a) through (c) above shall remain
subject to the restrictions provided for in this Agreement;
(7) the Offering;
(8) transfers consented
to, in writing by Underwriter;
(9) transactions relating
to Ordinary Shares acquired in open market transactions after the completion of the Public Offering; provided that, no filing by
any party under the Exchange Act or other public announcement shall be required or shall be voluntarily made in connection with
such transfer;
provided however,
that in the case of any transfer described in clause (1), (2) or (3) above, it shall be a condition to the transfer that
the transferee executes and delivers to Underwriter, acting on behalf of the Underwriter, not later than one business day prior
to such transfer, a written agreement, in substantially the form of this Agreement (it being understood that any references to
“immediate family” in the agreement executed by such transferee shall expressly refer only to the immediate family
of the undersigned and not to the immediate family of the transferee) and otherwise satisfactory in form and substance to Underwriter.
In addition, the restrictions
set forth herein shall not prevent the undersigned from entering into a sales plan pursuant to Rule 10b5-1 under the Exchange
Act after the date hereof, provided that (i) a copy of such plan is provided to Underwriter promptly upon
entering into the same and (ii) no sales or transfers may be made under such plan until the Lock-Up Period ends or this Agreement
is terminated in accordance with its terms. For purposes of this paragraph, “immediate family” shall mean a spouse,
child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of the undersigned; and
“affiliate” shall have the meaning set forth in Rule 405 under the Securities Act;
If (i) during the last
17 days of the Lock-Up Period, the Company issues an earnings release or material news or a material event relating to the Company
occurs, or (ii) prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results or becomes
aware that material news or a material event will occur 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 such material news or material event, as applicable, unless the Underwriter waives,
in writing, such extension.
If the undersigned
is an officer or director of the Company, (i) Underwriter agrees that, at least three business days before the effective date of
any release or waiver of the foregoing restrictions in connection with a transfer of Ordinary Shares, Underwriter will notify the
Company of the impending release or waiver Any release or waiver granted by Underwriter hereunder to any such officer or director
shall only be effective two business days after the publication date of such press release; provided, that such press release is
not a condition to the release of the aforementioned lock-up provisions due to the expiration of the Lock-Up Period. The provisions
of this paragraph will also not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration
and (b) the transferee has agreed in writing to be bound by the same terms described in this Agreement to the extent and for the
duration that such terms remain in effect at the time of such transfer.
In furtherance of the
foregoing, (1) the undersigned also agrees and consents to the entry of stop transfer instructions with any duly appointed transfer
agent for the registration or transfer of the securities described herein against the transfer of any such securities except in
compliance with the foregoing restrictions, and (2) the Company, and any duly appointed transfer agent for the registration or
transfer of the securities described herein, are hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Agreement.
The undersigned hereby
represents and warrants that the undersigned has full power and authority to enter into this Agreement and that this Agreement
has been duly authorized (if the undersigned is not a natural person), executed and delivered by the undersigned and is a valid
and binding agreement of the undersigned. This Agreement and all authority herein conferred are irrevocable and shall survive the
death or incapacity of the undersigned (if a natural person) and shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned for the term of the Lock-Up Period.
This Agreement shall
automatically terminate upon the earliest to occur, if any, of (1) either the Underwriter, on the one hand, or the Company, on
the other hand, advising the other in writing, they have determined not to proceed with the Offering, (2) termination of the Underwriting
Agreement before the sale of Ordinary Shares, (3) the withdrawal of the Registration Statement, or (4) the Offering has not closed
by the termination date of the Offering or such other date as may be agreed as the final date of the Offering if the Company and
the Underwriter extend the Offering.
This Agreement shall
be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles
thereof.