Common use of PRC Subsidiaries Clause in Contracts

PRC Subsidiaries. a. Each of the Company’s Subsidiaries that has been established under the laws of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up in accordance with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents of the PRC Subsidiaries have been duly approved in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares and the Representative’s Warrant by the Company or (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply with, and to ensure compliance by the Company’s 5% or more shareholders who are PRC residents with, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Shares, the listing and trading of the Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are not and will not be, as of the date hereof, on the Closing Date, prohibited or otherwise 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. i. The Company has taken all necessary steps to ensure compliance by each of major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications 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 and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.

PRC Subsidiaries. a. (i) Each of the Company’s PRC Subsidiaries that is and has at all times been established resident for all Tax purposes only in the PRC. None of the PRC Subsidiaries is liable to pay or has at any time incurred any liability to Tax chargeable under the laws Laws of any jurisdiction other than the PRC and the place where such PRC Subsidiary carries out its business. (ii) Each of the People’s Republic PRC Subsidiaries has, in respect of China all years of assessment since incorporation ending before the date of this Agreement, made all proper returns, and has supplied or caused to be supplied all accurate and true information regarding Tax matters which it is required to make or supply to the Tax authority (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”wherever situated), has the corporate power except for such omissions and authority to owninaccuracies which, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly individually or in the aggregate, do not and would not have a Material Adverse Effect. Each , and there is at the date hereof no dispute or disagreement pending with or, to the knowledge of Chindex and the PRC Subsidiaries, threatened by, any Tax authority regarding the liability or potential liability of any PRC Subsidiary has applied for to any Tax (including in each case penalties and obtained interest) or regarding the availability to any of the PRC Subsidiaries of any relief from Tax; and all requisite business licenses, clearance and permits required under such returns have been accepted by the applicable Tax authorities. (iii) Each of the PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary Subsidiaries has complied with in all material respects with all PRC the relevant taxation laws and regulations in connection with foreign exchange, including without limitation, carrying out all China in calculating and recording its profits. (iv) No Tax authority has operated or agreed to operate any specific arrangement which is not based on relevant filings, registrations and applications for relevant permits with legislation or any published practice in relation to any of the PRC State Administration Subsidiaries. (v) True and complete copies of Foreign Exchange all annual income Tax, monthly business Tax, monthly value added Tax returns and any other relevant authoritiesreturns filed by the PRC Subsidiaries from 2008 to 2010, Tax registration documents and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up in accordance correspondences with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents Tax authorities of the PRC Subsidiaries have been duly approved in accordance with provided to Fosun. (vi) Chindex has delivered to Fosun true and complete copies of all audit reports from and after 2008 relating to the laws returns of the PRC and are valid and enforceable. The business scope specified in Subsidiaries. (vii) No extension or waiver of the Establishment Documents limitation period applicable to any of each the PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record Subsidiaries’ returns has been granted (by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiariesother Person). c. None (viii) Any Tax required to have been withheld or collected by any of the PRC Subsidiaries nor has been duly withheld and collected, and (to the extent required) each such Tax has been paid to the appropriate Governmental Authority, excluding any Taxes with respect to which the validity or amount of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It assessment is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the being contested by such PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery Subsidiary as of the Shares and the Representative’s Warrant by the Company or (ii) the execution and delivery date of this Agreement and for which a reserve or accrual is reflected in the consummation of the transactions contemplated herebyFinancial Statements. f. The Company has taken all necessary steps to comply with, and to ensure compliance by the Company’s 5% or more shareholders who are PRC residents with, any applicable rules and regulations (ix) All amounts shown on returns of the PRC State Administration Subsidiaries as due and payable on or before the date hereof have been paid. (x) No claim, litigation or Tax audit is pending or, to the knowledge of Foreign Exchange Chindex, threatened against or with respect to any of the PRC (the “SAFE Rules and Regulations”)Subsidiaries, including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete in respect of any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and RegulationsTax. g. The Company is aware of, (xi) Full and has adequate provisions have been advised as to, made on the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors jointly promulgated on August 8, 2006 balance sheet for all Taxes payable by the PRC Ministry Subsidiaries, except for such Taxes which, if unpaid, individually or in the aggregate, do not and would not have a Material Adverse Effect and Taxes incurred in the ordinary course of Commerce, business after the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission Balance Sheet Date. (“CSRC”xii) and the PRC State Administration of Foreign Exchange Each of the PRC Subsidiaries has kept all the account books, vouchers, statements, proof of Tax payment and amended by PRC Ministry of Commerce on June 22other relevant Tax records (collectively, 2009 (the “M&A RulesTax Records”), in particular ) since its incorporation or formation and the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for Tax Records are under the purpose of obtaining a stock exchange listing outside control of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Shares, the listing and trading of the Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are not and will not be, as of the date hereof, on the Closing Date, prohibited or otherwise affected by the M&A Rules or any official clarifications, guidance, interpretations or implementation rules in connection with or related to the M&A RulesSubsidiaries. i. The Company has taken all necessary steps to ensure compliance by each of major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications 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 and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.

PRC Subsidiaries. a. Each of the Company’s Subsidiaries that Except as has been established under the laws of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly or in the aggregate, not reasonably likely have a Company Material Adverse Effect. Each , (a) All filings and registrations with competent PRC Subsidiary has applied for Governmental Entities required to be made in respect of the PRC Subsidiaries and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchangetheir operations, including without limitationthe registrations with MOFCOM, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant for Market Regulation or its competent local counterparts, education authorities, SAFE, tax bureau and all such permits are validly subsisting. customs authorities, have been duly completed in accordance with applicable PRC Laws. (b) The registered capital of each PRC Subsidiary has been fully paid up (including each of the VIEs that were incorporated under the PRC Laws (the “PRC VIEs”) and each of its Subsidiaries) is contributed in accordance with applicable PRC Laws. The Company controls its PRC VIEs through a series of contractual arrangements (the schedule of payment stipulated in its respective articles of associationunderlying Contracts for such arrangements, approval documentcollectively, certificate of approval and legal person business license (hereinafter referred to as the “Establishment DocumentsVIE Contracts”) and each of the VIE Contracts constitutes the valid, binding and enforceable obligations of the relevant parties thereto under the prevailing interpretation of applicable PRC Laws as of the date hereof and enable the Company to consolidate the financial statements of the PRC VIEs in compliance accordance with PRC laws and regulationsIFRS, and to the Knowledge of the Company, there is no outstanding capital contribution commitment for any PRC Subsidiaryenforceable agreement or understanding to rescind, amend or change the nature of such captive structure or material terms of such contractual arrangements. Section 4.21(b) of the Company Disclosure Schedule sets forth a true and complete list of the VIE Contracts. (c) The Establishment Documents ownership structures of the PRC Subsidiaries have been duly approved VIEs and the PRC VIEs’ shareholders as described in accordance with the laws Company SEC Filings do not violate any applicable PRC Laws as such applicable PRC Laws are being interpreted and enforced as of the PRC and date hereof, unless otherwise disclosed. (d) No approvals, other than those already obtained, are valid and enforceable. The business scope specified in required to be obtained for the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record performance by the respective entities or individuals identified as the registered holders thereof in the Registration Statement parties of their obligations and the Prospectus b. No PRC Subsidiary is currently prohibitedtransactions contemplated under the VIE Contracts, directly or indirectly, from paying any dividends to except (i) if the Company WFOE (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares and the Representative’s Warrant Person designated by the Company or WFOE) decides to exercise the option granted under the applicable VIE Contract to purchase the Equity Interests in a PRC VIE and, as a result of such purchase, relevant PRC VIE will be operating its business in a restricted industry under PRC Laws, such purchase shall satisfy relevant requirements of MOFCOM, be subject to prior approval by local education authorities, and be further subject to registrations with the relevant PRC Government Entities, and (ii) if there is any change to the execution shareholding percentage or registered capital of any PRC VIE, the pledges under the applicable VIE Contract shall be subject to re-registration with the State Administration for Market Regulation or its local counterparts. (e) Other than any violation, conflict or breach fully cured prior to the date hereof, the execution, delivery and delivery performance by each of this Agreement the relevant parties of their respective obligations under each of the VIE Contracts, and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply withthereunder, and to ensure compliance by the Company’s 5% or more shareholders who are PRC residents withdid not, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Shares, the listing and trading of the Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are do not and will not (i) result in any violation of their respective articles of association, their respective business licenses or constitutive documents, (ii) result in any violation of any applicable Laws, or (iii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement, instrument, arbitration award or judgment, Order or decree of any court of the PRC having jurisdiction over the relevant parties to the VIE Contracts, as the case may be, as of the date hereof, on the Closing Date, prohibited or otherwise affected by the M&A Rules or any official clarificationsagreement with, guidance, interpretations or implementation rules in connection with instrument to which any of them is expressed to be a party or related to the M&A Ruleswhich is binding on any of them. i. The Company has taken all necessary steps to ensure compliance by each of major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchangef) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications 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 and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, there have been no Actions of any nature, raised by any Governmental Entity or any other party, in writing pending or, to the Representative’s WarrantKnowledge of the Company, threatened against any of the WFOE, the Registration Statement PRC VIEs, any of the PRC VIEs’ Subsidiaries that: (i) challenge the validity or enforceability of any part or all of the VIE Contracts taken as a whole; (ii) challenge the VIE structure or the Prospectus. k. All local ownership structure as set forth in the VIE Contracts and national PRC governmental tax holidaysas disclosed in the Company SEC Filings; (iii) claim any ownership, exemptionsshare, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by equity or interest in any PRC Entity as described VIE, any PRC VIE’s Subsidiaries, or claim any compensation for not being granted any ownership, share, equity or interest in any PRC VIE, any PRC VIE’s Subsidiaries; in each case in the Registration Statement preceding clauses (i) through (iii), where such dispute, disagreement, claim, legal proceeding or Action has a materially disproportionate adverse effect on the Company, the WFOE, any PRC VIE, any PRC VIE’s Subsidiaries or any of their respective shareholders as compared to other similarly situated enterprises in the PRC which adopt a similar “variable interest entity” structure that allows one entity to exercise voting control and the Prospectus are validhave a substantial economic interest in another entity where such first entity does not, binding and enforceable and do not violate any lawsdirectly or indirectly, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation own a majority of the PRCEquity Interests of the second entity.

PRC Subsidiaries. a. Each of the Company’s Subsidiaries that has been established under the laws of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up in accordance with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents of the PRC Subsidiaries have been duly approved in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares Securities and the Representative’s Warrant by the Company or (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply with, and to ensure compliance by all of the Company’s 5% direct or more indirect shareholders and option holders who are PRC residents with, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such each shareholder and option holder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the SharesSecurities, the listing and trading of the Shares Securities on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are not and will not be, as of the date hereof, on the Closing Date and on the Option Closing Date, prohibited or otherwise 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. i. The Company has taken all necessary steps to ensure compliance by each of major its shareholders, directors option holders, directors, officers and officers employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholdersshareholder, directors option holder, director, officer, employee and officers participant that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications do not require the Company to obtain the approval of the CSRC prior to the issuance and sale of the SharesSecurities, the listing and trading of the Shares Shares, the Warrants and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.

PRC Subsidiaries. a. Each of the Company’s Subsidiaries that has been established under the laws of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up in accordance with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents of the PRC Subsidiaries have been duly approved in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Offered Shares and the Representative’s Warrant by the Company or (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply with, and to ensure compliance by all of the Company’s 5% direct or more indirect shareholders and option holders who are PRC residents with, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such each shareholder and option holder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Offered Shares, the listing and trading of the Offered Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are not and will not be, as of the date hereof, hereof and on the Closing Date, prohibited or otherwise 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. i. The Company has taken all necessary steps to ensure compliance by each of major its shareholders, directors option holders, directors, officers and officers employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholdersshareholder, directors option holder, director, officer, employee and officers participant that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications do not require the Company to obtain the approval of the CSRC prior to the issuance and sale of the SharesSecurities, the listing and trading of the Shares Shares, the Warrants and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.

PRC Subsidiaries. a. Each (a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the constitutional documents and certificates and related contracts and agreements of the Company’s Subsidiaries that has been established under formed in the laws of the People’s Republic of China PRC (Collectively, the “PRC Subsidiaries”) has are valid and have been duly establishedapproved or issued (as applicable) by competent PRC Governmental Entities. (b) Except as would not reasonably be expected to have, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly individually or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for , all filings and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up Governmental Entities required to be made in accordance with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents respect of the PRC Subsidiaries have been duly approved in accordance and their operations, including but not limited to the registrations with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares and the Representative’s Warrant by the Company or (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply with, and to ensure compliance by the Company’s 5% or more shareholders who are PRC residents with, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange Exchange, tax bureau and customs authorities have been duly completed in accordance with the relevant rules and regulations. (c) The registered capital of VIE has been fully contributed according to the payment schedule approved by the PRC Governmental Entities. (d) No approvals are required to be obtained for the performance by the respective parties of their obligations and the transactions contemplated under the VIE Contracts other than those already obtained, except (i) if WFOE or any other party designated by WFOE decides to exercise the option granted under the Option Agreements (as amended and supplemented) to purchase the equity interests in VIE, such purchase shall be subject to prior approval by the PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular or its local counterpart and be further subject to registrations with the relevant provisions thereof that purport Government Entities and (ii) if there is any change to require offshore special purpose vehicles controlled directly the shareholding percentage or indirectly registered capital of VIE, the pledges under the applicable Equity Pledge Agreements (as amended and supplemented) shall be subject to re-registration with the State Administration of Industry and Commerce or its local counterparts. (e) The execution, delivery and performance by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside each of the PRC to obtain the approval relevant parties of their respective obligations under each of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In additionVIE Contracts, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Shares, the listing and trading of the Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreementthereunder, the Registration Statement and the Prospectus are did not and will do not (i) result in any violation of their respective articles of association, their respective business licenses or constitutive documents, (ii) result in any violation of any applicable PRC Laws, or (iii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement, instrument, arbitration award or judgment, order or decree of any court of the PRC having jurisdiction over the relevant parties to the VIE Contracts, as the case may be, as or any agreement with, or instrument to which any of them is expressed to be a party or which is binding on any of them. (f) Each VIE Contract is, and all of the date hereofVIE Contracts taken as a whole are, on legal, valid and admissible as evidence under PRC Laws. Each VIE Contract is in proper legal form under PRC Laws for the Closing Dateenforcement thereof against the parties thereto in the PRC. (g) The ownership structures of WFOE, prohibited VIE and VIE’s shareholders as described in the Company SEC Reports comply with all applicable PRC Laws in all material respects, and do not violate, breach, or otherwise 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. i. The Company has taken all necessary steps to ensure compliance by each of major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen conflict with any applicable rules and regulations of the relevant PRC government agencies Laws in any material respect. (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchangeh) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules Company has effective control of VIE and Related Clarifications do not require is the Company sole beneficiary of VIE and, to obtain the approval Company’s knowledge, all shareholders of VIE are acting in good faith and in the best interests of the CSRC prior to the issuance and sale Company. As of the Shares, the listing and trading date of the Shares and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, there have been no disputes, disagreements, claims or any legal proceedings of any nature, raised by any Governmental Entity or any other party, pending or, to the RepresentativeCompany’s Warrantknowledge, threatened against or affecting any of the Registration Statement Company, WFOE or VIE that: (i) challenge the validity or enforceability of any part or all of the VIE Contracts taken as whole; (ii) challenge the VIE structure or the Prospectus. k. All local ownership structure as set forth in the VIE Contracts and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and Company SEC Reports; (iii) claim any ownership, share, equity or interest in WFOE or VIE, or claim any compensation for not being granted any ownership, share, equity or interest in WFOE or VIE; or (iv) claim any of the Prospectus are validVIE Contracts or the ownership structure thereof or any arrangements or performance of or in accordance with the VIE Contracts was, binding and enforceable and do not is or will violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRCPRC Laws.

PRC Subsidiaries. a. Each of the Company’s Subsidiaries that has been established under the laws of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as a company in good standing under the laws of the People’s Republic of China (the “PRC”), has the corporate power and authority to own, lease and operate its property and to conduct its business as described in the Registration Statement and 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, singly or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsisting. The registered capital of each PRC Subsidiary has been fully paid up in accordance with the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents of the PRC Subsidiaries have been duly approved in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record by the respective entities or individuals identified as the registered holders thereof in the Registration Statement and the Prospectus b. No PRC Subsidiary is currently prohibited, directly or indirectly, from paying any dividends to the Company (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares Securities and the Representative’s Warrant by the Company or (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply with, and to ensure compliance by all of the Company’s 5% or more major shareholders who are PRC residents with, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the SharesSecurities, the listing and trading of the Shares Securities on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are not and will not be, as of the date hereof, on the Closing Date and on the Option Closing Date, prohibited or otherwise 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. i. The Company has taken all necessary steps to ensure compliance by each of its major shareholders, directors directors, and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its such major shareholdersshareholder, directors director and officers officer that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications do not require the Company to obtain the approval of the CSRC prior to the issuance and sale of the SharesSecurities, the listing and trading of the Shares and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRC.

PRC Subsidiaries. a. Each Except as has not had and would not reasonably be expected to have, a Company Material Adverse Effect: (a) All filings and registrations with competent PRC Governmental Entities required to be made in respect of the PRC Subsidiaries and their operations, including the registrations with MOFCOM, the State Administration for Market Regulation or its competent local counterparts, SAFE, tax bureau and customs authorities, have been duly completed in accordance with applicable PRC Laws. (b) The Company controls its PRC VIEs through a series of contractual arrangements (the underlying Contracts for such arrangements, collectively, the “VIE Contracts”) and each of the VIE Contracts constitutes the valid, binding and enforceable obligations of the relevant parties thereto under the prevailing interpretation of applicable PRC Laws as of the date hereof and enable the Company to consolidate the financial statements of the PRC VIEs in accordance with GAAP, and to the Knowledge of the Company’s Subsidiaries that has been established under , there is no enforceable agreement or understanding to rescind, amend or change the laws nature of such captive structure or material terms of such contractual arrangements. Section 4.21(b) of the People’s Republic of China (Collectively, the “PRC Subsidiaries”) has been duly established, is validly existing as Company Disclosure Schedule sets forth a company in good standing under the laws true and complete list of the People’s Republic VIE Contracts. (c) The ownership structures of China (the “PRC”), has PRC VIEs and the corporate power and authority to own, lease and operate its property and to conduct its business PRC VIEs’ shareholders as described in the Registration Statement Company SEC Filings do not violate any applicable PRC Laws as such applicable PRC Laws are being interpreted and enforced as of 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, singly or in the aggregate, have a Material Adverse Effect. Each PRC Subsidiary has applied for and obtained all requisite business licenses, clearance and permits required under PRC law as necessary for the conduct of its businesses, and each PRC Subsidiary has complied in all material respects with all PRC laws in connection with foreign exchange, including without limitation, carrying out all relevant filings, registrations and applications for relevant permits with the PRC State Administration of Foreign Exchange and any other relevant authorities, and all such permits are validly subsistingdate hereof. The registered capital of each PRC Subsidiary has been (including each of the VIEs that were incorporated under the PRC Laws (the “PRC VIEs”) and each of its Subsidiaries) is fully paid up contributed in accordance with applicable PRC Laws. (d) No approvals, other than those already obtained, are required to be obtained for the schedule of payment stipulated in its respective articles of association, approval document, certificate of approval and legal person business license (hereinafter referred to as the “Establishment Documents”) and in compliance with PRC laws and regulations, and there is no outstanding capital contribution commitment for any PRC Subsidiary. The Establishment Documents of the PRC Subsidiaries have been duly approved in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the Establishment Documents of each PRC Subsidiary complies with the requirements of all relevant PRC laws and regulations. The outstanding equity interests of each PRC Subsidiary is owned of record performance by the respective entities or individuals identified as the registered holders thereof in the Registration Statement parties of their obligations and the Prospectus b. No PRC Subsidiary is currently prohibitedtransactions contemplated under the VIE Contracts, directly or indirectly, from paying any dividends to except (i) if the Company WFOE (or the Company’s Subsidiary that holds the outstanding equity interest of such PRC Subsidiary). Except as disclosed in the Registration Statement and the Prospectus, no PRC Subsidiary is prohibited or restricted, directly or indirectly, from making any other distribution on such PRC Subsidiary’s equity capital, or from repaying to the Company any loans or advances to such PRC Subsidiary made by the Company or any of its Subsidiaries. c. None of the PRC Subsidiaries nor any of their properties, assets or revenues are entitled to any right of immunity on the grounds of sovereignty from any legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any court, from services of process, from attachment prior to or in aid of execution of judgment, or from any other legal process or proceeding for the giving of any relief or for the enforcement of any judgment. d. It is not necessary that this Agreement, the Representative’s Warrant Agreement, the Registration Statement, the Prospectus or any other document be filed or recorded with any governmental agency, court or other authority in the PRC. e. No transaction, stamp, capital or other issuance, registration, transaction, transfer or withholding taxes or duties are payable in the PRC to any PRC taxing authority in connection with (i) the issuance, sale and delivery of the Shares and the Representative’s Warrant Person designated by the Company or WFOE) decides to exercise the option granted under the applicable VIE Contract to purchase the Equity Interests in a PRC VIE and, as a result of such purchase, relevant PRC VIE will be operating its business in a restricted industry under PRC Laws, such purchase shall be subject to prior approval by MOFCOM and be further subject to registrations with the relevant PRC Government Entities, and (ii) if there is any change to the execution shareholding percentage or registered capital of any PRC VIE, the pledges under the applicable VIE Contract shall be subject to re-registration with the State Administration for Market Regulation or its local counterparts. (e) Other than any violation, conflict or breach fully cured prior to the date hereof, the execution, delivery and delivery performance by each of this Agreement the relevant parties of their respective obligations under each of the VIE Contracts, and the consummation of the transactions contemplated hereby. f. The Company has taken all necessary steps to comply withthereunder, and to ensure compliance by the Company’s 5% or more shareholders who are PRC residents withdid not, any applicable rules and regulations of the PRC State Administration of Foreign Exchange of the PRC (the “SAFE Rules and Regulations”), including, without limitation, requiring such shareholder that is, or is directly or indirectly owned or controlled by, a PRC resident to complete any registration and other procedures required under applicable SAFE Rules and Regulations. The Company is using its best efforts to have all other shareholders who are PRC residents comply with the SAFE Rules and Regulations. g. 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 on August 8, 2006 by the PRC Ministry of Commerce, the PRC State Assets Supervision and Administration Commission, the PRC State Administration of Taxation, the PRC State Administration of Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and the PRC State Administration of Foreign Exchange of the PRC and amended by PRC Ministry of Commerce on June 22, 2009 (the “M&A Rules”), in particular the relevant provisions thereof that purport to require offshore special purpose vehicles controlled directly or indirectly by PRC-incorporated companies or PRC residents and established for the purpose of obtaining a stock exchange listing outside of the PRC to obtain the approval of the CSRC prior to the listing and trading of their securities on any stock exchange located outside of the PRC. The Company has received legal advice specifically with respect to the M&A Rules from its counsel in the PRC and the Company understands such legal advice. In addition, the Company has communicated such legal advice in full to each of its directors that signed the Registration Statement and each such director has confirmed that he or she understands such legal advice h. The issuance and sale of the Shares, the listing and trading of the Shares on the Nasdaq Capital Market and the consummation of the transactions contemplated by this Agreement, the Registration Statement and the Prospectus are do not and will not (i) result in any violation of their respective articles of association, their respective business licenses or constitutive documents, (ii) result in any violation of any applicable Laws, or (iii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any agreement, instrument, arbitration award or judgment, Order or decree of any court of the PRC having jurisdiction over the relevant parties to the VIE Contracts, as the case may be, as or any agreement with, or instrument to which any of them is expressed to be a party or which is binding on any of them. (f) There have been no disputes or any Legal Proceedings of any nature, raised by any Governmental Entity or any other party in writing, pending or, to the Knowledge of the date hereofCompany, threatened against any of the Company, any WFOE or any VIE or its respective shareholders that: (i) challenge the validity or enforceability of any part or all of the VIE Contracts taken as a whole, (ii) challenge the VIE structure or the ownership structure as set forth in the VIE Contracts and described in the Company SEC Filings, (iii) claim any ownership, share, equity or interest in any VIE, or claim any compensation for not being granted any ownership, share, equity or interest in any VIE, in each case in the preceding clauses (i) through (iii), where such dispute, disagreement, claim, legal proceeding or Action has a materially disproportionate adverse effect on the Closing DateCompany, prohibited the WFOE, any PRC VIE or its respective shareholders as compared to other similarly situated enterprises in the PRC which adopt a similar “variable interest entity” structure that allows one entity to exercise voting control and have a substantial economic interest in another entity where such first entity does not, directly or indirectly, own a majority of the equity interests of the second entity. Except as reflected or otherwise affected by reserved against on the M&A Rules Financial Statements, neither the Company nor any of its Subsidiaries are subject to any liabilities or any official clarifications, guidance, interpretations or implementation rules obligations in connection with any liquidation, dissolution, deregistration or related to the M&A Rules. i. The Company has taken all necessary steps to ensure compliance by each of major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC government agencies (including but not limited to the PRC Ministry of Commerce, the PRC National Development and Reform Commission and the PRC State Administration of Foreign Exchange) relating to overseas investment by PRC residents and citizens (the “PRC Overseas Investment and Listing Regulations”), including, requesting each of its major shareholders, directors and officers that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations j. As of the date hereof, the M&A Rules and Related Clarifications 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 and the Warrant Shares on the Nasdaq Capital Market, or the consummation of the transactions contemplated by this Agreement, the Representative’s Warrant, the Registration Statement or the Prospectus. k. All local and national PRC governmental tax holidays, exemptions, waivers, financial subsidies, and other local and national PRC tax relief, concessions and preferential treatment enjoyed by similar corporate event involving any PRC Entity as described in the Registration Statement and the Prospectus are valid, binding and enforceable and do not violate any laws, regulations, rules, orders, decrees, guidelines, judicial interpretations, notices or other legislation of the PRCSubsidiary.