NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of AsiaInfo-Linkage, Inc. (the
Company
,
we
,
us
or
our
) will be
held at , Beijing time, on
, 2013,
at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing, Peoples Republic of China, for the following purposes:
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1.
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To adopt the Agreement and Plan of Merger, dated as of May 12, 2013 (as it may be amended from time to time, the
merger agreement
), among the
Company, Skipper Limited, a Cayman Islands exempted company with limited liability (
Parent
), and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
),
providing for the merger of Merger Sub with and into the Company (the
merger
), with the Company surviving the merger as a wholly owned subsidiary of Parent;
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2.
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To approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or which may become payable to, the named
executive officers of the Company that are based on or otherwise relate to the merger; and
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3.
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To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special
meeting to adopt the merger agreement.
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For more information about the merger and the other transactions
contemplated by the merger agreement, please review the accompanying proxy statement and the merger agreement attached thereto as Annex A.
A special committee of our board of directors, consisting entirely of independent directors (the
special committee
), negotiated, reviewed and considered the terms and conditions of the
merger agreement and the transactions contemplated by the merger agreement, including the merger. The special committee unanimously determined that the merger is fair and advisable to, and in the best interests of, the Company and its stockholders
(other than Parent, Merger Sub, the sponsors (as defined in the accompanying proxy statement), the buyer group parties (as defined in the accompanying proxy statement) and the directors and officers of the Company, and their respective affiliates),
whom we refer to as the
unaffiliated stockholders
, approved the merger agreement and declared its advisability, recommended that the stockholders of the Company adopt the merger agreement, directed that the merger agreement be
submitted to the stockholders of the Company for their adoption at a special meeting of the stockholders of the Company, and approved the merger agreement, the rollover agreements (as amended, the
rollover agreements
), the voting
agreement, the consortium agreement and any additional rollover agreements and the transactions contemplated thereby for purposes of Section 203 of the General Corporation Law of the State of Delaware, as amended (the
DGCL
).
Our board of directors, acting on the unanimous recommendation of the special committee, determined that the merger is fair and advisable to, and in the best interests of, the Company and the unaffiliated stockholders, approved the merger agreement
and declared its advisability, recommended that the stockholders of the Company adopt the merger agreement, directed that the merger agreement be submitted to the stockholders of the Company for their adoption at a special meeting of the
stockholders of the Company, and approved the merger agreement, the rollover agreements, the voting agreement, the consortium agreement and any additional rollover agreements and the transactions contemplated thereby for purposes of Section 203
of the DGCL. Please note that one of our directors, Mr. Libin Sun, voted against the foregoing recommendations and one of our directors was absent from the meeting at which our board of directors approved these recommendations.
Our board of
directors
recommends that you vote FOR the proposal to adopt the merger agreement, FOR the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable
to, or which may become payable to, the named executive officers of the Company that are based on or
otherwise relate to the merger, and FOR the proposal to approve the adjournment of the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement.
Mr. Suning (Edward) Tian (one of our directors), Ms. Jean Qin Kong (Mr.
Suning (Edward) Tians spouse), PacificInfo Limited (one of our stockholders which is wholly owned by Mr. Suning (Edward) Tian), Mr. Jian (James) Ding (our co-chairman), New Media China Investment I, Ltd. (one of our stockholders
which is wholly owned by Mr. Jian (James) Ding) and Mr. Steve Zhang (one of our directors and our chief executive officer) (collectively, the
Rollover Stockholders
) and Power Joy (Cayman) Limited beneficially own in the
aggregate approximately 15.3% of the total outstanding shares of Company common stock. The Rollover Stockholders have agreed with Parent and Skipper Holdings Limited, a corporation formed under the laws of the Cayman Islands and the sole shareholder
of Parent (
Holdco
), to contribute to Parent shares of Company common stock owned by them in exchange for newly issued shares of Holdco, immediately prior to the effective time of the merger. Power Joy (Cayman) Limited has agreed
with Parent to contribute to Parent shares of Company common stock owned by it in exchange for newly issued shares of Holdco, immediately prior to the effective time of the merger.
Only stockholders of record at the close of business, New York time, on
, are entitled to notice of and to vote at the special meeting and at any and all adjournments or postponements thereof.
The adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of
Company common stock. The approval, on an advisory, non-binding basis, of the agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company that are based on or
otherwise relate to the merger requires the affirmative vote of the holders of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote at the special meeting as of the record date. The approval
of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement requires the affirmative vote of the holders
of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote at the special meeting as of the record date, whether or not a quorum is present.
Regardless of the number of shares of Company common stock you own, your vote is important. The failure to vote will have the same
effect as a vote AGAINST the proposal to adopt the merger agreement.
Whether or not you plan to attend the special meeting, please take the time to submit a proxy by following the instructions on your proxy card as soon as possible.
If your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee, you should instruct your broker, dealer, commercial bank, trust company or other nominee how to vote in accordance
with the voting instruction form furnished by your broker, dealer, commercial bank, trust company or other nominee. The failure to instruct your broker, dealer, commercial bank, trust company or other nominee to vote your shares of our common stock
FOR the proposal to adopt the merger agreement will have the same effect as a vote AGAINST the proposal to adopt the merger agreement.
If you plan to attend the special meeting, please note that you may be asked to present valid photo identification, such as a drivers license or passport. If you wish to attend the special meeting
and your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee (i.e., in street name), you will need to bring a copy of your voting instruction card or statement
reflecting your share ownership as of the record date.
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By Order of the Board of Directors,
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Davin A. Mackenzie
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Director
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Important Notice of Internet Availability
This proxy statement for the special meeting to be held on is available free of
charge at www.envisionreports.com/asia.
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, YOU ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE. YOU MAY VOTE YOUR SHARES OF COMPANY COMMON STOCK BY TELEPHONE, OVER THE INTERNET, OR BY
SIGNING AND DATING THE ENCLOSED PAPER COPY OF THE PROXY CARD AND RETURNING IT PROMPTLY. VOTING BY PROXY WILL NOT PREVENT YOU FROM ATTENDING THE MEETING AND VOTING IN PERSON IF YOU SO DESIRE.
SUMMARY VOTING INSTRUCTIONS
Ensure that your shares of Company common stock can be voted at the special meeting by submitting your proxy or contacting your
broker, dealer, commercial bank, trust company or other nominee.
If your shares of Company common stock are
registered in the name of a broker, dealer, commercial bank, trust company or other nominee
: check the voting instruction card forwarded by your broker, dealer, commercial bank, trust company or other nominee to see which voting options are
available or contact your broker, dealer, commercial bank, trust company or other nominee in order to obtain directions as to how to ensure that your shares of Company common stock are voted at the special meeting.
If your shares of Company common stock are registered in your name
: submit your proxy as soon as possible by telephone, via
the Internet or by signing, dating and returning the enclosed proxy card in the enclosed
postage-paid
envelope, so that your shares of Company common stock can be voted at the special meeting.
Instructions regarding telephone and Internet voting are included on the proxy card.
The failure to vote will have the same effect as a vote AGAINST the proposal to adopt the merger agreement. If
you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be voted
in favor of
the proposal to adopt the merger agreement, the proposal to approve, on an advisory, non-binding basis, the
agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company that are based on or otherwise relate to the merger, and the proposal to adjourn the special meeting,
if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement.
The failure to instruct your broker, dealer, commercial bank, trust company or other nominee to vote your shares of our common stock FOR the proposal to adopt the merger agreement will have
the same effect as a vote AGAINST the proposal to adopt the merger agreement.
If you have any questions, require
assistance with voting your proxy card, or need additional copies of proxy material, please call D.F. King & Co., Inc., toll free at 1-800-758-5880, collect at 212-269-5550 or by email at asiainfo@dfking.com.
TABLE OF CONTENTS
i
ii
ASIAINFO-LINKAGE, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
PRELIMINARY PROXY STATEMENT
This proxy statement contains information related to a special meeting of stockholders of AsiaInfo-Linkage, Inc. which will be held at
, Beijing time, on
, 2013, at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing, Peoples Republic
of China, and any adjournments or postponements thereof. We are furnishing this proxy statement to stockholders of
AsiaInfo-Linkage,
Inc. as part of the solicitation of proxies by our board of directors for
use at the special meeting. This proxy statement is dated , 2013 and is first being mailed to stockholders on or about
, 2013.
SUMMARY TERM SHEET RELATED TO THE MERGER
This summary term sheet highlights selected information in this proxy statement regarding the merger and may not contain all of the
information about the merger that is important to you. We have included page references in parentheses to direct you to more complete descriptions of the topics presented in this summary term sheet. You should carefully read this proxy statement in
its entirety, including the annexes and the other documents to which we have referred you, for a more complete understanding of the matters being considered at the special meeting. You may obtain without charge copies of documents incorporated by
reference into this proxy statement by following the instructions under
Where You Can Find More Information
beginning on page 131.
In this proxy statement, the terms
we
,
us
,
our
,
AsiaInfo
and the
Company
refer to
AsiaInfo-Linkage,
Inc. and its subsidiaries. We refer to Skipper Holdings Limited as
Holdco
, Skipper Limited as
Parent
and Skipper Acquisition Corporation as
Merger
Sub
. We refer to Mr. Suning (Edward) Tian (one of our directors), Ms. Jean Qin Kong (Mr. Suning (Edward) Tians spouse), PacificInfo Limited (one of our stockholders which is wholly owned by Mr. Suning (Edward) Tian),
Mr. Jian (James) Ding (our co-chairman), New Media China Investment I, Ltd. (one of our stockholders which is wholly owned by Mr. Jian (James) Ding) and Mr. Steve Zhang (one of our directors and our chief executive officer)
collectively as the
Rollover Stockholders
. We refer to stockholders of the Company who may enter into additional rollover agreements with Parent prior to the closing for the contribution of up to 800,000 shares of Company common
stock to Parent in exchange for shares of Holdco as the
Additional Rollover Stockholders
. We refer to the Rollover Stockholders, Jun (Michael) Wu, Yadong Jin and Guoxiang Liu collectively as the
Voting
Stockholders
. We refer to Power Joy (Cayman) Limited as
Power Joy
. We refer to Power Joy, CITIC Capital (Tianjin) Equity Investment Limited Partnership (
), CPEChina Fund, L.P., Ellington Investments Pte. Ltd., Al Gharrafa Investment Company, AlpInvest Partners Co-investments 2012 I C.V., AlpInvest Partners Co-investments 2012 II C.V., AlpInvest Partners Co-investments
2011 II C.V., CBC TMT III Limited and InnoValue Capital Ltd. as the
sponsors
. We refer to the parties to any of the rollover agreements (as amended, the
rollover agreements
) and the additional rollover
agreements (if any), the voting agreement and the consortium agreement, including all amendments thereto or modifications thereof, other than Parent and Merger Sub or any of their respective affiliates as the
buyer group parties
.
We refer to the buyer group parties, Parent and Merger Sub collectively as the
buyer consortium
. We refer to the stockholders of the
1
Company (other than Parent, Merger Sub, the sponsors, the buyer group parties and the directors and officers of the Company, and their respective affiliates) as the
unaffiliated
stockholders
. We refer to Parent, the Rollover Stockholders, the sponsors and their respective affiliates as the
Excluded Persons
. We refer to the Agreement and Plan of Merger, dated as of May 12, 2013, among the
Company, Parent and Merger Sub, as the
merger agreement
, as it may be amended from time to time.
The Parties
The Company
AsiaInfo-Linkage, Inc. is a leading provider of high-quality telecommunications software solutions and IT related services in China. Its software and services enable its customers to build, maintain,
operate, manage and improve their communications infrastructure. It provides software solutions to telecommunications carriers and cable television, or TV, operators in China as well as telecommunications operators in other countries. It also
provides a variety of services including business operational consulting services, IT architecture planning services, system integration services based on its own products and other third party software and hardware, change of request
implementation, maintenance on customer premise and management services. The Companys principal executive offices are located at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China. The
Companys telephone number is (86)10-8216-6688.
Parent
Skipper Limited was formed under the laws of the Cayman Islands solely for the purpose of entering into the merger agreement and
consummating the transactions contemplated by the merger agreement. Parent is a direct, wholly owned subsidiary of Holdco. Parent has not engaged in any business except for activities incidental to its formation and in connection with the
transactions contemplated by the merger agreement, including the merger and related financing transactions. The business address of Parent is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong
Kong, and its telephone number is (852)-3710-6888.
Merger Sub
Skipper Acquisition Corporation was formed under the laws of the State of Delaware by Parent solely for the purpose of entering into the
merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub is a direct, wholly owned subsidiary of Parent. Upon completion of the merger, Merger Sub will no longer exist. Merger Sub has not engaged in any
business except for activities incidental to its formation and in connection with the transactions contemplated by the merger agreement, including the merger and related financing transactions. The business address of Merger Sub is c/o CITIC Capital
Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number is (852)-3710-6888.
Holdco
Skipper Holdings Limited was formed under the laws of the
Cayman Islands solely for the purpose of owning Parent and consummating certain transactions in connection with the merger. Holdco is currently a direct, wholly owned subsidiary of Skipper Investment Limited. Immediately prior to the effective time
of the merger, Holdco will issue certain of its shares to the Rollover Stockholders, any Additional Rollover Stockholders, Power Joy, the sponsors and certain other buyer group parties in consideration for either the contribution of shares of
Company common stock owned by them or their equity commitments, as the case may be, to Parent. Holdco has not engaged in any business except for activities incidental to its formation and in connection with the transactions contemplated by the
merger agreement, including the merger and related financing transactions. The business address of Holdco is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number
is (852)-3710-6888.
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Mr. Suning (Edward) Tian
Mr. Suning (Edward) Tian is one of our directors. Mr. Tians business address is Unit 906, Level 9, Cyberport 2, 100
Cyberport Road, Hong Kong. His telephone number is (852)-2122-8400. He is a citizen of the Peoples Republic of China (the
PRC
). During the past five years, Mr. Tian has not been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has he been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Ms. Jean Qin Kong
Ms. Jean Qin Kong is the spouse of Mr. Suning (Edward) Tian. Ms. Kongs address is Unit 906, Level 9, Cyberport 2, 100 Cyberport Road, Hong Kong. Her telephone number is
(852)-2122-8400. She is a citizen of the United States. During the past five years, Ms. Kong has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has she been a party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state securities laws.
PacificInfo Limited
PacificInfo Limited (
PacificInfo
) was formed under the laws of the British Virgin Islands by
Mr. Tian for investment holding purposes. PacificInfo is wholly owned by Mr. Suning (Edward) Tian. The business address of PacificInfo is Unit 906, Level 9, Cyberport 2, 100 Cyberport Road, Hong Kong, and its telephone number is
(852)-2122-8400.
Mr. Jian (James) Ding
Mr. Jian (James) Ding is the co-chairman of our board of directors. Mr. Dings business address is
28-7 Bishui
Zhuangyuan, Changping District, Beijing 102206, China. His telephone number is
(86)-10-5706-9898.
He is a citizen of the Hong Kong SAR. During the past five years, Mr. Ding has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), nor has he been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
New Media China Investment I, Ltd.
New Media China Investment I, Ltd. (
New Media
) was formed under the laws of the British Virgin Islands by Mr. Ding for investment holding purposes. New Media is wholly owned by
Mr. Jian (James) Ding. The business address of New Media is Bishui Zhuangyuan, Changping District, Beijing 102206, China, and its telephone number is (86)-10-5706-9898.
Mr. Steve Zhang
Mr. Steve Zhang is one of our directors
and president and chief executive officer. Mr. Zhangs business address is c/o AsiaInfo-Linkage, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China. His telephone number is
(86)-10-8216-6688. He is a citizen of the United States. During the past five years, Mr. Zhang has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has he been a party to any judicial or
administrative proceeding
3
(except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Skipper Investment Limited
Skipper Investment Limited (
CCP Co-Investment Co
) was formed under the laws of the Cayman Islands for investment holding purposes and is a direct, wholly owned subsidiary of Power Joy.
The business address of CCP Co-Investment Co is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number is (852)-3710-6888.
Power Joy
Power Joy was formed under the laws of the Cayman Islands for investment holding purposes and is a direct, wholly owned subsidiary of CITIC Capital China Partners II, L.P. The business address of Power
Joy is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number is (852)-3710-6888.
CITIC Capital MB Investment Limited
CITIC Capital MB Investment
Limited (
CITIC Capital MB
) was formed under the laws of the Cayman Islands for investment purposes and is a direct, wholly owned subsidiary of CITIC Capital Holdings Limited. The business address of CITIC Capital MB is 28th Floor
CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number is (852)-3710-6888.
CITIC Capital (Tianjin)
Equity Investment Limited Partnership
CITIC Capital (Tianjin) Equity Investment Limited Partnership (
RMB
Fund
) was formed under the laws of the PRC for investment purposes. RMB Fund is controlled by CITIC Capital (Tianjin) Investment Management Limited Partnership. The business address of RMB Fund is c/o CITIC Capital Partners Management
Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, and its telephone number is (852)-3710-6888.
CPEChina Fund L.P.
CPEChina Fund, L.P., (
CPEChina
), is a Cayman Islands exempted limited partnership principally engaged in the business of investment. The principal business address and telephone number
for CPEChina is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, +1 345 949 8066.
Al Gharrafa
Investment Company
Al Gharrafa Investment Company (
Al Gharrafa
) was formed
under the laws of the Cayman Islands for investment holding purposes. Al Gharrafa is legally and beneficially wholly owned by Qatar Holding LLC. The business address of Al Gharrafa is Q-Tel Tower, 8
th
Floor, Diplomatic Area Street, West Bay, P.O. Box 23224 Doha, Qatar,
and its telephone number is +974 4499-5900.
Ellington Investments Pte. Ltd.
Ellington Investments Pte. Ltd. (
Ellington
) was formed under the laws of Singapore for investment holding purposes.
Ellington is wholly owned by Bartley Investments Pte. Ltd., which is a wholly owned subsidiary of Tembusu Capital Pte. Ltd., which is a wholly owned subsidiary of Temasek Holdings (Private) Ltd. The business address of Ellington is 60b Orchard Road,
#06-18, Tower 2, The Atrium@Orchard, Singapore 238891, and its telephone number is +65-6828-6828.
4
AlpInvest Partners Co-Investments 2011 II C.V.
AlpInvest Partners Co-Investments 2011 II C.V. (
AlpInvest 2011 II
) is a limited partnership (
Commanditaire
Vennootschaap
) formed under the laws of the Netherlands for securities investment purposes and is controlled by its general partner, AlpInvest Partners 2011 B.V. (
AlpInvest 2011 B.V.
) which is wholly owned and controlled by
AlpInvest Partners B.V. (
AlpInvest B.V.
).
AlpInvest Partners Co-investments 2012 I C.V.
AlpInvest Partners Co-Investments 2012 I C.V. (
AlpInvest 2012 I
) is a limited partnership
(
Commanditaire Vennootschaap
) formed under the laws of the Netherlands for securities investment purposes and is controlled by its general partner, AlpInvest Partners 2012 I B.V. (
AlpInvest 2012 I B.V.
) which is wholly
owned and controlled by AlpInvest B.V.
AlpInvest Partners Co-investments 2012 II C.V.
AlpInvest Partners Co-Investments 2012 II C.V. (
AlpInvest 2012 II
) is a limited partnership (
Commanditaire
Vennootschaap
) formed under the laws of the Netherlands for securities investment purpose and is controlled by its general partner, AlpInvest Partners 2012 II B.V. (
AlpInvest 2012 II B.V.
) which is wholly owned and controlled
by AlpInvest B.V.
Each of AlpInvest 2011 B.V., AlpInvest 2012 I B.V., AlpInvest 2012 II B.V. and AlpInvest B.V. (together
with AlpInvest 2011 II, AlpInvest 2012 I and AlpInvest 2012 II, the
AlpInvest Entities
) are principally engaged in investment management.
The principal business address and telephone number for each of the AlpInvest Entities is Jachthavenweg 118, 1081 KJ Amsterdam, the Netherlands, and its telephone number is +31 20 540 7575.
CBC TMT III Limited
CBC TMT III Limited (
CBC
) was formed under the laws of the British Virgin Islands by China Broadband Capital Partners, L.P. for investment holding purposes. CBC is wholly owned by China
Broadband Capital Partners II, L.P. The business address of CBC is c/o China Broadband Capital Partners II, L.P., Unit 906, Level 9, Cyberport 2, 100 Cyberport Road, Hong Kong, and its telephone number is (852)-2122-8400.
InnoValue Capital Ltd.
InnoValue Capital Ltd. (
InnoValue
) was formed under the laws of the British Virgin Islands by Ms. Liu Tzu-Lien for investment holding purposes. InnoValue is wholly owned by
Ms. Liu Tzu-Lien. The business address of InnoValue is No. 113-3, Sec. 1 An-Ho Road, Taipei 106 Taiwan, and its telephone number is +886 2 2700 6930.
Mr. Jun (Michael) Wu
Mr. Jun (Michael) Wu is our
executive vice president and chief financial officer. Mr. Wus business address is c/o AsiaInfo-Linkage, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China. His telephone
number is (86)-10-8216-6688. He is a citizen of the PRC. During the past five years, Mr. Wu has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has he been a party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state securities laws.
5
Mr. Yadong Jin
Mr. Yadong Jin is our executive vice president, chief technology officer and general manager of marketing. Mr. Jins
business address is c/o AsiaInfo-Linkage, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China. His telephone number is
(86)-10-8216-6688.
He is a citizen of the PRC. During the past five years, Mr. Jin has not been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), nor has he been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Mr. Guoxiang Liu
Mr. Guoxiang Liu is our executive vice
president. Mr. Lius business address is c/o AsiaInfo-Linkage, Inc., 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China. His telephone number is (86)-10-8216-6688. He is a citizen
of the PRC. During the past five years, Mr. Liu has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has he been a party to any judicial or administrative proceeding (except for matters
that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws.
Overview of the Transaction (page 25)
The Company, Parent and Merger Sub entered into the merger agreement on May 12, 2013. Under the terms of the merger agreement, Merger
Sub will be merged with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Parent (the
merger
). The Company, as the surviving corporation, will continue to do business under the name
AsiaInfo-Linkage, Inc. following the merger.
At the effective time of the merger, each share of Company
common stock issued and outstanding immediately prior to the effective time of the merger (other than the excluded shares and the dissenting shares) will be converted into the right to receive US$12.00 in cash without interest (the
merger
consideration
). An
excluded share
is a share of Company common stock held (i) in the treasury of the Company or (ii) by Parent or any direct or indirect wholly owned subsidiary of Parent (including Merger Sub)
immediately prior to the time at which the merger becomes effective, including each share of Company common stock to be contributed to Parent by the Rollover Stockholders (as defined below) in accordance with certain rollover agreements entered into
by Parent and the Rollover Stockholders and each share of Company common stock to be contributed to Parent by certain other stockholders of the Company in accordance with certain additional rollover agreements, if any, which are entered into by such
stockholders and Parent from the date of the merger agreement until the date that is two business days prior to the closing date of the merger. A
dissenting share
is a share of Company common stock held by a stockholder who is
entitled to demand and properly demands appraisal of such share pursuant to, and who complies in all respects with, Section 262 of the General Corporation Law of the State of Delaware, as amended (the
DGCL
).
Following and as a result of the merger:
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the unaffiliated stockholders will no longer have any interest in, and will no longer be stockholders of the Company, and will not participate in any
of the Companys future earnings or growth;
|
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shares of Company common stock will no longer be listed on the NASDAQ Global Market, and price quotations with respect to shares of Company common
stock in the public market will no longer be available; and
|
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the registration of shares of Company common stock under the Securities Exchange Act of 1934, as amended (the
Exchange Act
), will be
terminated.
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6
The Special Meeting (page 95)
The special meeting will be held at
, Beijing time, on
, 2013, at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing, Peoples
Republic of China. At the special meeting, you will be asked to, among other things, adopt the merger agreement. See
Questions and Answers About the Special Meeting and the Merger
for additional information on the special meeting,
including how to vote your shares of Company common stock.
Stockholders Entitled to Vote; Vote Required to Adopt the Merger Agreement
(page 95)
You may vote at the special meeting and any adjournment or postponement thereof if you owned any shares
of Company common stock at the close of business, New York time, on , the record date for the special meeting. On that date,
there were shares of Company common stock outstanding and entitled to vote at the special meeting. You may cast one vote for each
share of Company common stock that you owned on that date. Adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Company common stock. See
The Special Meeting
beginning on page 95 for additional information.
Merger Consideration (page 101)
If the merger is completed, each share of Company common stock issued and outstanding immediately prior to the effective time of the
merger, other than as provided below, will be converted into the right to receive the merger consideration in cash without interest. Each excluded share will be automatically cancelled without any conversion thereof and no payment or distribution
shall be made with respect thereto. Each dissenting share will be canceled without payment of the merger consideration and the holders of such shares will instead be entitled to appraisal rights under, and in conformity with, the DGCL.
Prior to the effective time of the merger, Parent will designate a commercial bank or trust company reasonably satisfactory to
the Company to act as the paying agent. At the effective time of the merger, Parent will deposit, or will cause to be deposited, with the paying agent an amount in cash sufficient for the paying agent to make payments to the holders of shares of
Company common stock and the holders of options and restricted stock units that were granted under the stock plans of the Company pursuant to the merger agreement. Promptly after the effective time of the merger (but in any event no later than three
business days from the date thereof), each record holder of shares of Company common stock will be sent (i) a letter of transmittal describing how it may exchange its shares of Company common stock for the merger consideration and
(ii) instructions for effecting the surrender of share certificates in exchange for its merger consideration. You will not be entitled to receive the merger consideration until you surrender your stock certificate or certificates along with a
properly completed and validly executed letter of transmittal to the paying agent or until the paying agent receives an agents message in the case of shares held in book-entry form, and, in each case, such other documents as may be
required by the paying agent and approved by Parent and us. See
The Merger AgreementTreatment of Common Stock, Company Options and Company Restricted Stock Units
and
The Merger AgreementExchange and Payment
Procedures
beginning on page 101 for additional information.
Treatment of Company Options and Company Restricted Stock
Units (page 101)
At the effective time of the merger, (i) each outstanding and unvested option to
purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by a tier I employee, and (ii) 73.3% of each outstanding and unvested option to purchase shares of Company common stock that
was granted under the Companys 2011 Stock Incentive Plan and held by a tier II employee, will be converted into an option to purchase a number of shares of Holdco equal to the number of shares subject to such options to purchase shares of
Company common stock (or such applicable portion thereof in the case of a tier II employee). The exercise price of the option to purchase a share of Holdco will be equal to the excess of (x) the fair market
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value of a share of Holdco immediately following the effective time of the merger as determined by Parent in good faith over (y) the excess of the merger consideration over the per share
exercise price of such existing options to purchase shares of Company common stock. The other terms and conditions of such options to purchase shares of Company common stock will continue to apply to the options to purchase shares of Holdco. A
tier I employee
refers to an employee of the Company with the title of vice president or a more senior title as of the date of the merger agreement. A
tier II employee
refers to an employee of the Company with
the title of director as of the date of the merger agreement.
At the effective time of the merger, (i) 26.7% of
each outstanding and unvested option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by a tier II employee, and (ii) each outstanding and unvested option to purchase shares
of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by an employee of the Company who is neither a tier I employee nor a tier II employee, will be canceled in consideration of an award of restricted
stock units (or in the case of a U.S. taxpayer, restricted stock) that provides for the issuance of a number of shares of Holdco. Such number of shares of Holdco will have an aggregate fair market value as of immediately after the effective time of
the merger as determined by Parent in good faith equal to the excess of the merger consideration over the per share exercise price of such options to purchase shares of Company common stock, multiplied by the number of shares of Company common stock
subject to such options. The awards of restricted stock units and restricted stock will have the same vesting and forfeiture provisions as applied to such options to purchase shares of Company common stock.
At the effective time of the merger, (x) each outstanding and vested option to purchase shares of Company common stock that was
granted under the Companys 2011 Stock Incentive Plan, and (y) each outstanding option, whether vested or unvested, to purchase shares of Company common stock that was granted under a stock plan of the Company other than the Companys
2011 Stock Incentive Plan, will be canceled in consideration of, as soon as practicable after the effective time of the merger, (i) the right to receive a cash payment in an amount equal to the excess of the merger consideration over the per
share exercise price of such options, or (ii) at the election of the holder of such options, the right to receive a number of shares of Holdco with an aggregate fair market value as of immediately following the effective time of the merger as
determined by Parent in good faith equal to the excess of the merger consideration over the per share exercise price of such options, multiplied by the number of shares of Company common stock subject to such options, which will not be subject to
any forfeiture restriction (but may be subject to a transfer restriction).
At the effective time of the merger, each
outstanding restricted stock unit relating to a share of Company common stock that was granted under a stock plan of the Company will be converted into a restricted stock unit that provides for the issuance of a share of Holdco, which restricted
stock unit shall be subject to the same vesting and forfeiture provisions as applied to such restricted stock unit relating to a share of Company common stock.
The treatment of Company options and Company restricted stock units described in the four immediately preceding paragraphs does not apply to any Company options or Company restricted stock units held by
any director of the Company who is not a buyer group party. At the effective time of the merger, each outstanding option to purchase shares of Company common stock held by a director of the Company who is not a buyer group party, whether vested or
unvested, will be canceled in consideration of the right to receive a cash payment in an amount equal to the excess of the merger consideration over the per share exercise price of such option, multiplied by the number of shares of Company common
stock subject to such option. At the effective time of the merger, each outstanding restricted stock unit relating to a share of Company common stock held by a director of the Company who is not a buyer group party will be converted into the right
to receive the merger consideration.
See
The Merger AgreementTreatment of Common Stock, Company
Options and Company Restricted Stock Units
beginning on page 101 for additional information.
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Recommendation of Our Board of Directors and Special Committee; Reasons for Recommending the Adoption
of the Merger Agreement; Fairness of the Merger (page 52)
Our board of directors, after careful consideration and
acting on the unanimous recommendation of the special committee composed entirely of independent directors, recommends that you vote
FOR
the proposal to adopt the merger agreement. Our board of directors also
recommends that you vote
FOR
the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive
officers of the Company that are based on or otherwise relate to the merger, and
FOR
the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there
are insufficient votes at the time of the special meeting to adopt the merger agreement. Please note that one of our directors, Mr. Libin Sun, voted against the foregoing recommendations and one of our directors was absent from the meeting at
which our board of directors approved these recommendations. Our board of directors and the special committee have determined that the merger is fair to the unaffiliated stockholders. For a discussion of the material factors considered by our board
of directors and the special committee in determining to recommend the adoption of the merger agreement and in determining that the merger is fair to the unaffiliated stockholders, see
Special Factors Relating to the MergerPurposes
and Reasons of Our Board of Directors and Special Committee for the Merger
beginning on page 52 and
Special Factors Relating to the MergerRecommendation of Our Board of Directors and Special Committee; Reasons for
Recommending the Adoption of the Merger Agreement; Fairness of the Merger
beginning on page 52.
Positions of the Buyer
Consortium Regarding the Fairness of the Merger (page 68)
Each member of the buyer consortium believes that the
merger is fair to the unaffiliated stockholders. Their belief is based upon the factors discussed under the caption
Special Factors Relating to the MergerPositions of the Buyer Consortium Regarding the Fairness of the Merger
beginning on page 68.
Opinion of Goldman Sachs, Financial Advisor to the Special Committee (page 58)
On May 12, 2013, at a meeting of the special committee, Goldman Sachs (Asia) L.L.C. (
Goldman Sachs
), financial
advisor to the special committee, rendered to the special committee its oral opinion, subsequently confirmed in writing, that, as of May 12, 2013, and based upon and subject to the limitations and assumptions set forth therein, the
consideration of US$12.00 in cash to be paid for each share of Company common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the sponsors and their
respective affiliates) of shares of Company common stock.
The full text of the written opinion of Goldman Sachs, dated
May 12, 2013, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this proxy statement as Annex H. The summary of
the Goldman Sachs opinion provided in this proxy statement is qualified in its entirety by reference to the full text of the written opinion. Goldman Sachs advisory services and opinion were provided for the information and assistance of the
special committee in connection with its consideration of the proposed merger and the opinion does not constitute a recommendation as to how any holder of shares of Company common stock should vote with respect to the proposed merger or any other
matter.
Financing of the Merger (page 78)
The buyer consortium estimates that the total amount of funds required to consummate the merger and related transactions will be approximately US$887 million. The buyer consortium expects to fund this
amount through a combination of (i) the contribution of approximately 11,126,567 shares of Company common stock from the Rollover Stockholders and Power Joy to Parent (valued at approximately US$134 million based on the merger consideration),
(ii) equity financing from each sponsor to purchase or cause the purchase of shares of
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Holdco up to an aggregate amount of approximately US$415 million in cash, (iii) debt financing of up to US$330 million from a syndicate of Nomura International (Hong Kong) Limited, Bank
of Taiwan, Cathay United Bank, Co., LTD., ICBC International Capital Limited and Maybank Investment Bank Berhad and (iv) the contribution of certain shares of Company common stock underlying restricted stock units pursuant to the merger
agreement. See
Special Factors Relating to the MergerFinancing of the Merger
beginning on page 78 for additional information.
Limited Guarantees (page 80)
On May 12, 2013, each of Power
Joy, CITIC Capital MB Investment Limited, CPEChina Fund, L.P., InnoValue Capital Ltd., and CBC TMT III Limited delivered a limited guarantee to, and Ellington Investments Pte. Ltd. entered into a payment agreement with, the Company, in which they
(collectively, the
guarantors
) agreed to guarantee the obligations of Parent and Merger Sub to pay certain fees and reimburse certain expenses, including the termination fee that may become payable to the Company by
Parent under certain circumstances set forth in the merger agreement. See
Special Factors Relating to the MergerLimited Guarantee
beginning on page 80 and
The Merger AgreementFees and Expenses
beginning on page 118 for additional information. Copies of the limited guarantees and the payment agreement are attached as Annexes B to G to this proxy statement.
Voting Agreement (page 81)
Parent and the Voting Stockholders have
entered into a voting agreement (as amended) pursuant to which the Voting Stockholders agreed to vote all of their shares in favor of adoption of the merger agreement at the special meeting, and to vote against any (i) acquisition proposal,
(ii) reorganization, recapitalization, dissolution, liquidation or winding-up of the Company or any other extraordinary transaction involving the Company, (iii) proposal or corporate action that is made in opposition to or in competition
with, or would otherwise frustrate the purposes of, or prevent or delay the consummation of, the transactions contemplated by the merger agreement, including the merger, or (iv) other matter relating to, or in connection with, any of the
foregoing matters. The voting agreements terminate upon the earlier of (i) the closing of the merger and (ii) termination of the merger agreement in accordance with its terms. Additionally, the Voting Stockholders have entered into the
voting agreements solely in their capacities as stockholders of the Company, and nothing in the voting agreements will restrict or limit any fiduciary duties owed to the Company. See
Special Factors Relating to the MergerVoting
Agreement
beginning on page 81 for additional information.
Consortium Agreement (page 81)
Concurrently with the execution and delivery of the merger agreement, Parent, Merger Sub, Holdco, the sponsors and certain
affiliates of the sponsors entered into a consortium agreement that governs the relationship among the parties thereto with respect to the merger agreement and matters relating thereto until the consummation of the merger. See
Special
Factors Relating to the MergerConsortium Agreement
beginning on page 81 for additional information.
Interests of
the Companys Directors and Officers in the Merger (page 82)
When considering the recommendation of our board of
directors in favor of the adoption of the merger agreement, you should be aware that the members of our board of directors and certain of our officers have the following interests in the merger in addition to their interests as our stockholders
generally. These interests may be different from, or in addition to, your interests as our stockholders.
Concurrently
with the execution and delivery of the merger agreement, Parent delivered to us the rollover agreements executed by the Rollover Stockholders. The Rollover Stockholders have agreed, among other things, to contribute shares of Company common stock
beneficially owned by them (the
Rollover Shares
) to Parent in
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exchange for newly issued shares of Holdco. In addition, pursuant to the merger agreement, Parent may enter into additional rollover agreements with Additional Rollover Stockholders prior to
the closing for the contribution of up to 800,000 shares of Company common stock to Parent in exchange for shares of Holdco. The effect of these transactions will be to allow the Rollover Stockholders and any Additional Rollover Stockholders to
remain indirect owners of the surviving corporation after the merger is completed. Because of their equity ownership of Holdco, each Rollover Stockholder and any Additional Rollover Stockholders will enjoy the benefits from any future earnings and
growth of the Company after the merger and will also bear the corresponding risks of any possible decreases in future earnings, growth, or value. The Rollover Stockholders and any Additional Rollover Stockholders may also benefit after the merger
from the elimination of expenses associated with public company reporting and compliance requirements and increased flexibility as a private rather than a publicly traded company.
At the effective time of the merger, each outstanding option to purchase shares of Company common stock held by a director of the Company
who is not a buyer group party, whether vested or unvested, will be canceled in consideration of the right to receive a cash payment in an amount equal to the excess of the merger consideration over the per share exercise price of such option,
multiplied by the number of shares of Company common stock subject to such option. At the effective time of the merger, each outstanding restricted stock unit relating to a share of Company common stock held by a director of the Company who is not a
buyer group party will be converted into the right to receive the merger consideration.
Additionally, members of
the special committee received compensation for their service of evaluating the merger and alternatives thereto, and negotiating the merger agreement and the transactions contemplated by the merger agreement, including the merger. See
Special Factors Relating to the MergerBackground of the Merger
beginning on page 25. From the effective time of the merger until the sixth anniversary of the effective time of the merger, to the fullest extent the Company
would have been permitted to do so under applicable law (for the avoidance of doubt, subject to the limitations on the Companys ability to indemnify its directors and officers under Section 145 of the DGCL), Parent will indemnify and hold
harmless each indemnified party from and against any and all costs or expenses (including reasonable attorneys fees and expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of, relating to or in connection with (i) the fact that an indemnified party is or was a director or
officer of the Company or any of its subsidiaries, (ii) any acts or omissions occurring or alleged to occur prior to or at the effective time of the merger in such indemnified partys capacity as a director, officer, employee or agent of
the Company or any of its subsidiaries or other affiliates, or (iii) the merger, the merger agreement or any of the transactions contemplated by the merger agreement.
The members of our board of directors were aware of these additional interests, and considered them, when they adopted the merger
agreement, the merger and the other transactions contemplated by the merger agreement. See
Special Factors Relating to the MergerInterests of the Companys Directors and Officers in the Merger
beginning on page 82.
Conditions to the Merger (page 113)
The respective obligations of each of the Company, Parent and Merger Sub to consummate the merger are subject to the satisfaction or waiver of certain conditions. For a more detailed description of
these conditions, see
The Merger AgreementConditions to the Merger
beginning on page 113.
Regulatory
Matters (page 90)
The Company does not believe that any material federal, national, provincial, local or
state, whether domestic or foreign, regulatory approvals, filings or notices are required in connection with the merger other than the approvals, filings or notices required under the U.S. federal securities laws, the filing of the certificate of
merger with the Secretary of State of the State of Delaware with respect to the merger and the filings under the Anti-Monopoly Law of the PRC (
PRC Anti-Monopoly Law
) and receipt of clearance thereunder approving the merger.
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Alternative Takeover Proposals (page 108)
Until the effective time of the merger or, if earlier, the termination of the merger agreement, the Company and its subsidiaries will not,
nor will they authorize or direct any of their respective representatives to, directly or indirectly:
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solicit, initiate or take any other action knowingly to facilitate or encourage any acquisition proposal (as defined below under
The Merger
AgreementAlternative Takeover Proposals
);
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engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information or data concerning,
the Company or any of its subsidiaries to any third party (other than Parent, Merger Sub or any designees of Parent or Merger Sub) with the intent to induce the making, submission or announcement of, or the intent to encourage, facilitate or assist
an acquisition proposal; or
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approve, endorse, recommend, execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other
similar agreement (other than an acceptable confidentiality agreement) relating to any acquisition proposal.
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However, any proposal or suggestion, formal or informal, made by a director of the Company at any meeting of our board of directors or
any of its committees, which was not solicited by our board of directors or any of its committees, to take any action described in sub-clause (e) in the definition of acquisition proposal and any discussion of such proposal solely
for the purpose of informing such director of the Companys obligations will not (in themselves) be prohibited.
At any
time prior to the receipt of the Companys stockholders adoption of the merger agreement, the Company, its subsidiaries and the Companys and its subsidiaries representatives may:
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grant a waiver, amendment or release under any standstill agreement for the purpose of allowing any third party to make an acquisition proposal;
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following the receipt of an unsolicited acquisition proposal, contact the third party who has made such acquisition proposal to clarify and understand
the terms and conditions thereof;
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following the receipt of an unsolicited acquisition proposal and the determination in good faith by our board of directors that such acquisition
proposal either constitutes a superior proposal (as defined below under
The Merger AgreementAlternative Takeover Proposals
) or could reasonably be expected to result in a superior proposal, provide information (including any
non-public information or data concerning the Company or any of its subsidiaries) in response to the request of the third party who has made such acquisition proposal; and/or
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following the receipt of an unsolicited acquisition proposal and the determination in good faith by our board of directors that such acquisition
proposal either constitutes a superior proposal or could reasonably be expected to result in a superior proposal, engage or participate in any discussions or negotiations with the third party who has made such acquisition proposal.
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The merger agreement provides that our board of directors (or any committee thereof composed solely
of independent directors, including the special committee) can only (i) effect a change in the Company recommendation (as defined below under
The Merger AgreementAlternative Takeover Proposals)
in response to
an intervening event or a superior proposal and/or (ii) authorize the Company to terminate the merger agreement to enter into an alternative acquisition agreement (as defined below under
The Merger AgreementAlternative
Takeover Proposals
), if (x) with respect to a change in the Company recommendation, our board of directors (or any committee thereof composed solely of independent directors, including the special committee) determines in good faith,
after consultation with its outside legal counsel, that failure to do so would reasonably be expected to be inconsistent with the directors fiduciary duties under applicable law or (y) with respect to a termination of the merger agreement
to enter into an alternative acquisition agreement with respect to a bona
12
fide, written acquisition proposal, our board of directors (or any committee thereof composed solely of independent directors, including the special committee) determines in good faith, based
on information then available and after consultation with its independent financial advisor and outside legal counsel, that such acquisition proposal constitutes a superior proposal.
The Company is not entitled to effect a change in the Company recommendation or terminate the merger agreement to enter into an
alternative acquisition agreement unless (i) the Company has delivered the change or termination notice to Parent (as defined below under
The Merger AgreementAlternative Takeover Proposals
), and (ii) the
Company shall cause its financial and legal advisors to, during the period beginning at 5:00 p.m. Hong Kong time on the day of delivery by the Company to Parent of such change or termination notice (or, if delivered after 5:00 p.m. Hong Kong time or
any day other than a business day, beginning at 5:00 p.m. Hong Kong time on the next business day) and ending five business days later at 5:00 p.m. Hong Kong time negotiate with Parent and its representatives in good faith (to the extent Parent
desires to negotiate) any proposed modifications to the terms and conditions of the merger agreement and/or the financing documents so that such acquisition proposal ceases to constitute a superior proposal or so that the failure to effect a change
in the Company recommendation would no longer reasonably be expected to be inconsistent with the directors fiduciary duties under applicable law, and (iii) following the end of such negotiation period(s), our board of directors (or any
committee thereof composed solely of independent directors, including the special committee) will have determined in good faith (after consultation with its independent financial advisor and outside legal counsel), after considering the terms of any
proposed amendment or modification to the merger agreement and/or the financing documents, that (A) with respect to a change in the Company recommendation, the failure to effect a change in the Company recommendation would still reasonably be
expected to be inconsistent with the directors fiduciary duties under applicable law or (B) with respect to a termination of the merger agreement to enter into an alternative acquisition agreement with respect to an acquisition proposal,
such acquisition proposal continues to constitute a superior proposal.
The Company is not restricted from issuing a
stop, look and listen communication pursuant to Rule
14d-9(f)
of the Exchange Act or taking or disclosing to its stockholders a position contemplated by Rule
14e-2(a),
Rule 14d-9
or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communication to stockholders in connection with the
making or amendment of a tender offer or exchange offer).
The Company agrees that it will promptly (and, in any
event, within 48 hours) notify Parent if it or any of its representatives becomes aware that any acquisition proposals are received by, any non-public information is requested from, or any discussions or negotiations are sought to be initiated or
continued with, the Company, our board of directors (or any committee thereof composed solely of independent directors, including the special committee) or any representative of the foregoing, indicating, in connection with such notice, the identity
of the third party making such acquisition proposal and the material terms and conditions of any acquisition proposals and thereafter will keep Parent reasonably informed of the status and terms of any such acquisition proposals (including any
amendments thereto that are material in any respect) and the status of any such discussions or negotiations. None of the Company, our board of directors or any committee thereof will enter into any binding agreement or contract with any person to
limit the Companys ability to give prior notice to Parent of its intention to effect a change in the Company recommendation or to terminate the merger agreement in light of a superior proposal. For a more detailed description of the
alternative takeover proposals, see
The Merger AgreementAlternative Takeover Proposals
beginning on page 108.
Termination of the Merger Agreement (page 114)
The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after receipt of the requisite stockholder approval of the merger (except for termination in
connection with the entry into an alternative acquisition agreement with respect to a superior proposal which must occur prior to receipt of the requisite stockholder approval):
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by mutual written consent of the Company and Parent;
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by either of the Company or Parent, if:
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the merger is not consummated by the end date (as defined below under
The Merger AgreementTermination
); provided that this
termination right is not available to a party if the failure of such party to fulfill any of its obligations under the merger agreement or other intentional breach is the material cause or contributing factor to the failure of the closing to occur
by that date;
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any law or order which has the effect of enjoining, restraining, prohibiting or otherwise making illegal the consummation of the transactions
contemplated by the merger agreement becomes final and nonappealable; provided, that this termination right is not available to a party if the failure of such party to fulfill any of its obligations under the merger agreement or other intentional
breach is the material cause or contributing factor to the issuance of such final, nonappealable law or order; or
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our stockholders do not adopt the merger agreement at the special meeting or any adjournment or postponement thereof.
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upon a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement under the merger agreement, or if any representation or
warranty of Parent and Merger Sub becomes untrue, in either case such that the conditions to the obligations of the Company would not be satisfied and such breach cannot be cured by Parent or Merger Sub by the end date or, if capable of being cured,
has not been cured within ten business days following receipt by Parent of written notice from the Company of such breach or before the end date; provided that this termination right is not available to the Company if a material breach of the merger
agreement by the Company is the material cause or contributing factor to the failure of such condition to be satisfied;
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prior to the receipt of the requisite stockholder approval of the merger, in order to enter into an alternative acquisition agreement with respect to a
superior proposal; or
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if (i) all the closing conditions to the obligations of Parent and Merger Sub have been satisfied or waived by Parent, (ii) Parent fails to
fund the exchange fund within three business days following the date on which the closing was required to have occurred pursuant to the merger agreement, and (iii) the Company has irrevocably notified Parent in writing that all the closing
conditions to the obligations of the Company have been satisfied at the closing or waived by the Company and it stands ready, willing and able to consummate the merger during such period.
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upon a breach by the Company of any representation, warranty, covenant or agreement under the merger agreement, or if any representation or warranty of
the Company becomes untrue, in either case such that the conditions to the obligations of Parent and Merger Sub would not be satisfied and such breach cannot be cured by the Company by the end date or, if capable of being cured, has not been cured
within ten business days following receipt by the Company of written notice from Parent of such breach or before the end date; provided that this termination right is not available to Parent if a material breach of the merger agreement by Parent is
the material cause or contributing factor to the failure of such condition to be satisfied;
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if (i) prior to the receipt of the requisite stockholder approval of the merger, there has been a change of recommendation, (ii) a tender or
exchange offer for the common stock of the Company that constitutes an acquisition proposal (whether or not a superior proposal) is commenced by a person unaffiliated with Parent or any Rollover Stockholder and, within five business days after the
public announcement of the commencement of such acquisition proposal, the Company has not filed a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the
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Exchange Act recommending that the stockholders of the Company reject such acquisition proposal and not tender any shares of Company common stock into such tender or exchange offer, or
(iii) at any time after receipt or public announcement of an acquisition proposal, our board of directors fails to reaffirm its recommendation that the stockholders of the Company adopt the merger agreement within five business days after
receipt of any written request to do so from Parent; or
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there is an intentional and material breach by the Company of its covenants relating to holding the stockholders meeting and submitting the
merger agreement to the stockholders for approval at such meeting, non-solicitation of acquisition proposals and making and changing its recommendation to stockholders under certain conditions.
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Termination Fees and Reimbursement of Expenses (page 116)
The Company is required to pay Parent a termination fee of US$18 million in the event the merger agreement is terminated:
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by Parent, upon a breach by the Company of any representation, warranty, covenant or agreement under the merger agreement, or if any representation or
warranty of the Company becomes untrue, in either case such that the conditions to the obligations of Parent and Merger Sub would not be satisfied and such breach cannot be cured by the Company by the end date or, if capable of being cured, has not
been cured within ten business days following receipt by the Company of written notice from Parent of such breach or before the end date;
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by Parent, if (i) prior to the receipt of the requisite stockholder approval of the merger, there has been a change of recommendation, (ii) a
tender or exchange offer for the common stock of the Company that constitutes an acquisition proposal (whether or not a superior proposal) is commenced by a person unaffiliated with Parent or any Rollover Stockholder and, within five business days
after the public announcement of the commencement of such acquisition proposal, the Company has not filed a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act recommending that the stockholders of the Company
reject such acquisition proposal and not tender any shares of Company common stock into such tender or exchange offer, or (iii) at any time after receipt or public announcement of an acquisition proposal, our board of directors fails to
reaffirm its recommendation that the stockholders of the Company adopt the merger agreement within five business days after receipt of any written request to do so from Parent;
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by Parent, if there is an intentional and material breach on the part of the Company of covenants relating to the stockholders meeting of the
Company, no solicitation of transactions and change of recommendation;
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by the Company, if our stockholders do not adopt the merger agreement at the special meeting or any adjournment or postponement thereof, but only if at
the time of such termination Parent has the right to terminate the merger agreement under any of the three events noted above;
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by the Company, prior to the receipt of the requisite stockholder approval of the merger, in order to enter into an alternative acquisition agreement
with respect to a superior proposal; or
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by Parent or the Company, (i) due to the fact that (x) the merger is not consummated by the end date, or (y) our stockholders do not
adopt the merger agreement at the special meeting or any adjournment or postponement thereof, (ii) at any time between the date of the merger agreement and such termination a third party has publicly disclosed (or solely in the case of
termination due to sub-clause (i)(x) above, otherwise communicated to our board of directors (or any committee thereof composed solely of independent directors, including the special committee)) a
bona fide
acquisition proposal, and
(iii) within nine months following such termination, the Company enters into a definitive agreement with respect to, recommends to its stockholders, or consummates, any acquisition proposal.
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15
Parent is required to pay the Company a termination fee in the event the merger agreement is
terminated by the Company:
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upon a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement under the merger agreement, or if any representation or
warranty of Parent and Merger Sub becomes untrue, in either case such that the conditions to the obligations of the Company would not be satisfied and such breach cannot be cured by Parent or Merger Sub by the end date or, if capable of being cured,
has not been cured within ten business days following receipt by Parent of written notice from the Company of such breach or before the end date, with the termination fee being in the amount of:
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US$36 million, if such breach by Parent or Merger Sub is a willful breach (as defined below under
The Merger AgreementTermination Fees
and Reimbursement of Expenses
); or
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US$18 million, in any other circumstance giving rise to the termination mentioned above; or
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if (i) all the closing conditions to the obligations of Parent and Merger Sub have been satisfied or waived by Parent, (ii) Parent fails to
fund the exchange fund within three business days following the date on which the closing was required to have occurred pursuant to the merger agreement, and (iii) the Company has irrevocably notified Parent in writing that all the closing
conditions to the obligations of the Company have been satisfied at the closing or waived by the Company and it stands ready, willing and able to consummate the merger during such period, with the termination fee being in the amount of:
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US$36 million, if (i) Parents failure to fund the exchange fund is due to the proceeds of the debt financing not being available, where such
unavailability is a result of (x) any willful breach by Parent or Merger Sub of the representations, warranties, covenants or agreements contained in the merger agreement, or (y) any breach by the buyer group parties or any of their
respective affiliates (other than the Company and its subsidiaries) of any of the rollover agreements, additional rollover agreements, the voting agreement, the consortium agreement, the debt commitment letter and the equity commitment letters, or
(ii) Parent fails to fund the exchange fund when and if the proceeds of the debt financing are available to be drawn down; or
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US$18 million, in any other circumstance giving rise to the termination mentioned above.
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The Company is required to reimburse Parent and its affiliates for 100% of their documented out-of-pocket expenses up to US$5 million
actually incurred by any of them in connection with the merger agreement and the transactions contemplated thereunder, in the event the merger agreement is terminated:
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by Parent, upon a breach by the Company of any representation, warranty, covenant or agreement under the merger agreement, or if any representation or
warranty of the Company becomes untrue, in either case such that the conditions to the obligations of Parent and Merger Sub would not be satisfied and such breach cannot be cured by the Company by the end date or, if capable of being cured, has not
been cured within ten business days following receipt by the Company of written notice from Parent of such breach or before the end date;
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by Parent, if (i) prior to the receipt of the requisite stockholder approval of the merger, there has been a change of recommendation, (ii) a
tender or exchange offer for the common stock of the Company that constitutes an acquisition proposal (whether or not a superior proposal) is commenced by a person unaffiliated with Parent or any Rollover Stockholder and, within five business days
after the public announcement of the commencement of such acquisition proposal, the Company has not filed a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act recommending that the stockholders of the Company
reject such acquisition proposal and not tender any shares of Company common stock into such tender or exchange offer, or (iii) at any time after receipt or public announcement of an acquisition proposal, our board of directors fails to
reaffirm its recommendation that the stockholders of the Company adopt the merger agreement within five business days after receipt of any written request to do so from Parent;
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16
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by Parent, there has been an intentional and material breach on the part of the Company of covenants relating to the stockholders meeting of the
Company, no solicitation of transactions and change of recommendation;
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by the Company under any of the circumstances in which Parent solely has a right to terminate the merger agreement; or
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by the Company, prior to the receipt of the requisite stockholder approval of the merger, in order to enter into an alternative acquisition agreement
with respect to a superior proposal.
|
Parent is required to reimburse the Company and its affiliates for
100% of their documented out-of-pocket expenses up to US$5 million actually incurred by any of them in connection with the merger agreement and the transactions contemplated thereunder, in the event the merger agreement is terminated:
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by the Company, upon a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement under the merger agreement, or if any
representation or warranty of Parent and Merger Sub becomes untrue, in either case such that the conditions to the obligations of the Company would not be satisfied and such breach cannot be cured by Parent or Merger Sub by the end date or, if
capable of being cured, has not been cured within ten business days following receipt by Parent of written notice from the Company of such breach or before the end date; or
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by the Company, if (i) all the closing conditions to the obligations of Parent and Merger Sub have been satisfied or waived by Parent,
(ii) Parent fails to fund the exchange fund within three business days following the date on which the closing was required to have occurred pursuant to the merger agreement, and (iii) the Company has irrevocably notified Parent in writing
that all the closing conditions to the obligations of the Company have been satisfied at the closing or waived by the Company and it stands ready, willing and able to consummate the merger during such period; or
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by Parent, at the time of such termination, the Company had the right to terminate the merger agreement pursuant to any of the above two sub-items.
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Remedies (page 118)
The Companys right to terminate the merger agreement and receive payment of (i) a termination fee of either US$18 million or US$36 million from Parent, (ii) any reimbursement of costs and
expenses pursuant to the merger agreement, and/or (iii) any amount in respect of which it is indemnified by Parent in connection with financing assistance provided by it pursuant to the merger agreement, as may be applicable, is the sole and
exclusive remedy of the Company against Parent, Merger Sub, their respective affiliates or financing sources for any loss or damage suffered as a result of any such breach or failure to perform under the merger agreement or other failure of the
merger to be consummated.
Subject to any equitable remedies Parent may be entitled to, Parents right to receive payment
of (i) a termination fee of US$18 million, and/or (ii) any reimbursement of costs and expenses pursuant to the merger agreement, as may be applicable, is the sole and exclusive remedy of Parent and Merger Sub against the Company for any
loss or damage suffered as a result of any such breach or failure to perform under the merger agreement or other failure of the merger to be consummated.
Parent and Merger Sub are entitled to specific performance of the terms under the merger agreement, including an injunction or injunctions to prevent breaches of the merger agreement and to enforce
specifically the terms and provisions of the merger agreement. The Company is not entitled to an injunction or injunctions to prevent breaches of the merger agreement by Parent or Merger Sub or any remedy to enforce specifically the terms and
provisions of the merger agreement.
17
Appraisal Rights (page 122)
If the merger is consummated, stockholders of the Company who do not vote in favor of adopting the merger agreement will have the right to
seek appraisal of the fair value of their shares of Company common stock as determined by the Delaware Court of Chancery, but only if they comply fully with all requirements of Section 262 of the DGCL, which are summarized in this proxy
statement. The value so determined could be more or less than, or the same as, merger consideration.
You should
read
Appraisal Rights
beginning on page 122 for a more complete discussion of the appraisal rights in relation to the merger as well as Annex I which contains a full text of the applicable Delaware statute.
Material United States Federal Income Tax Consequences (page 91)
The receipt of cash in exchange for Company common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under applicable state, local,
foreign or other tax laws. In general, a U.S. Holder (as defined below under
Special Factors Relating to the MergerMaterial United States Federal Income Tax Consequences
) of Company common stock will recognize gain or loss
in an amount equal to the difference, if any, between the amount of cash received in the merger and the U.S. Holders adjusted tax basis in its shares of Company common stock. In general, a Non-U.S. Holder (as defined below under
Special Factors Relating to the MergerMaterial United States Federal Income Tax Consequences
) of shares of Company common stock will not be subject to U.S. federal income tax in respect of cash received in the merger, unless
such Non-U.S. Holder has certain connections to the United States. The tax consequences of the merger to you will depend upon your own personal circumstances. You should consult your tax advisors to determine the particular tax consequences to you
(including the application and effect of any state, local or foreign income and other tax laws) of the merger.
Material PRC Tax
Consequences (page 93)
Under the PRC Enterprise Income Tax Law (the
EIT Law
), which took
effect on January 1, 2008, enterprises established outside of the PRC whose de facto management bodies are located in the PRC are considered resident enterprises. The implementation rules for the EIT Law define the
de facto management body as an establishment that has substantial management and control over the business, personnel, accounts and properties of an enterprise. Although there has not been a definitive determination of the Companys
status by the PRC tax authorities, the Company does not believe that it should be considered a resident enterprise under the EIT Law or that the gain recognized on the receipt of cash for Company common stock should be subject to PRC tax to holders
of such common stock that are not PRC residents. If, however, the PRC tax authorities were to determine that the Company should be considered a resident enterprise or that the receipt of cash for these common stock should otherwise be subject to PRC
tax, then gain recognized on the receipt of cash for Company common stock pursuant to the merger (or through the exercise of dissenters rights) by holders of such common stock who are not PRC residents could be treated as PRC-source income
that would be subject to PRC tax at a rate of 20% in the case of individuals or 10% in the case of enterprises (subject to any applicable treaty relief). You should consult your own tax advisor for a full understanding of the tax consequences of the
merger to you, including any PRC tax consequences.
Litigation Relating to the Merger (page 94)
Since our announcement that we entered into the merger agreement, three alleged Company stockholders filed putative class action
complaints against us, the members of our board of directors and Merger Sub in the Delaware Court of Chancery (the
Court
). The plaintiffs in these actions (
Plaintiffs
) allege that each member of our board of
directors breached his fiduciary duties to our stockholders by favoring Parent over other potential purchasers, favoring his own interests over the interests of our stockholders, failing to take appropriate steps to maximize the value of the Company
to our stockholders, agreeing to preclusive deal protection devices and
18
otherwise agreeing to sell the Company for an unfairly low price. Plaintiffs further allege that the Company and Merger Sub aided and abetted those alleged breaches of fiduciary duty. Plaintiffs
have requested an injunction, rescission of the merger to the extent consummated, money damages if the merger is consummated, certain other equitable relief, a declaration that the merger is unfair, unjust and inequitable, and an award of
Plaintiffs costs, including legal fees. On August 6, 2013, the Court entered an order consolidating the three actions under the caption
In re AsiaInfo-Linkage, Inc
.
Stockholder Litigation
, Consol. C.A. No. 8583-VCP (the
Consolidated Action
), appointing interim co-lead counsel for Plaintiffs, and resolving other organizational matters.
On August 9, 2013, Plaintiffs filed a Consolidated Amended Class Action Complaint, which adds new claims alleging that the preliminary version of this proxy statement filed on July 23, 2013 omitted
certain material information essential to the Companys stockholders in order to allow them to cast a fully informed vote at the upcoming stockholders meeting concerning the merger.
On August 30, 2013, the parties executed a stipulation and proposed protective order to govern discovery in the Consolidated Action. Also
on August 30, 2013, in response to a request by Plaintiffs, the defendants commenced the expedited production of non-public documents. Plaintiffs also took the depositions of the chairman of the special committee and a representative of the special
committees financial advisor.
On October 28, 2013, the parties executed a memorandum of understanding (the
MOU
) setting forth an agreement-in-principle, which, when finalized as a stipulation of settlement (the
Stipulation of Settlement
), is intended to fully and finally resolve and settle the litigation and all
related claims (the
Settlement
). Pursuant to the MOU, the Company agreed to make certain disclosures in the definitive proxy statement. The MOU further provides that, among other things, the Settlement is expressly conditioned on
and subject to execution of a definitive Stipulation of Settlement that will contain the following conditions: (a) the completion of confirmatory discovery, as well as Plaintiffs continued good faith belief that the Settlement is fair,
reasonable, adequate, and in the best interests of the class; (b) final certification of the class; (c) final approval of the Settlement by the Court; (d) dismissal with prejudice of the Consolidated Action as to all members of the class (including
Plaintiffs) without the award of any damages, costs, fees or the grant of further relief except for the payments contemplated by the Stipulation of Settlement; and (e) the consummation of the Merger. The Settlement will not affect the amount of the
merger consideration that Company stockholders are entitled to receive in the merger.
The defendants deny that they engaged
in any wrongdoing, committed any violations of law or acted improperly in any way, and believe that they acted properly at all times and that the Consolidated Action has no merit, but wish to settle the Consolidated Action in order to avoid the
costs, disruption, and distraction of continued litigation of the Consolidated Action.
Where You Can Find More Information (page 131)
You can find more information about the Company in the periodic reports and other information we file with the SEC.
The information is available at the website maintained by the SEC at www.sec.gov. For a more detailed description of the additional information available, see
Where You Can Find More Information
beginning on page 131.
19
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address commonly asked questions regarding the merger, the
merger agreement, and the special meeting. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the section titled Summary Term Sheet Related to the Merger
beginning on page 1 and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement, and the documents referred to in this proxy statement, all of which you should read carefully and in their
entirety. You may obtain the documents incorporated by reference in this proxy statement without charge by following the instructions in the section titled Where You Can Find More Information beginning on page 131.
Q:
|
When and where is the special meeting of our stockholders?
|
A:
|
The special meeting of stockholders will be held at
, Beijing time, on
, at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing, Peoples Republic of
China.
|
Q:
|
Why am I receiving this proxy statement?
|
A:
|
You are receiving this proxy statement in connection with the solicitation of proxies by our board of directors in favor of, among other things, the adoption of the
merger agreement. On May 12, 2013, we entered into the merger agreement with Parent and Merger Sub providing for the merger of Merger Sub with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Parent.
After the merger, shares of Company common stock will not be publicly traded.
|
Q:
|
What matters will be voted on at the special meeting?
|
A:
|
You will be asked to consider and vote on the following proposals:
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adoption of the merger agreement, which provides for the merger;
|
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approval, on an advisory, non-binding basis, of the agreements or understandings with and items of compensation payable to, or which may become payable
to, the named executive officers of the Company that are based on or otherwise relate to the merger; and
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approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the
time of the special meeting to adopt the merger agreement.
|
Q:
|
As a stockholder, what will I receive in the merger?
|
A:
|
If the merger is completed, you will be entitled to receive US$12.00 in cash, without interest, for each share of Company common stock that you own immediately prior to
the effective time of the merger as described in the merger agreement.
|
See
Special Factors Relating
to the MergerMaterial United States Federal Income Tax Consequences
and
Material PRC Tax Consequences
beginning on pages 91 and 93, respectively, for a more detailed description of the U.S. federal and PRC
tax consequences of the merger. You should consult your own tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local, PRC and/or other
non-U.S.
taxes.
Q:
|
What vote of our stockholders is required to adopt the merger agreement and other proposals?
|
A:
|
The vote requirements to approve the proposals are as follows:
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For Proposal No. 1 (adoption of the merger agreement), the affirmative vote of the holders of a majority of the outstanding shares of Company
common stock must vote
FOR
the proposal to adopt the merger agreement.
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For Proposal No. 2 (the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation
payable to, or which may become payable to, the
|
20
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named executive officers of the Company that are based on or otherwise relate to the merger), the affirmative vote of the holders of a majority of shares of Company common stock present or
represented by proxy at the meeting and entitled to vote is required. The vote on the payment of merger-related compensation is a vote separate and apart from the vote to adopt the merger agreement. Accordingly, you may vote in favor of the adoption
of the merger agreement and not in favor the merger-related compensation proposal, or vice versa. Approval of this proposal is not a condition to completion of the merger, and the vote with respect to this proposal is advisory only and will not be
binding on the Company, Parent or Merger Sub. If the merger agreement is adopted and the merger is completed, the named executive officers will become entitled to the compensation and benefits described herein regardless of the outcome of this
advisory vote.
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For Proposal No. 3 (approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting to adopt the merger agreement), the affirmative vote of the holders of a majority of the shares of Company common stock present in person or represented by proxy and entitled to vote at the
meeting, whether or not a quorum is present, is required.
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At the close of business, New York time, on
, the record date,
shares of Company common stock were outstanding and entitled to vote at the special meeting.
Pursuant to the voting
agreement, as amended, the Voting Stockholders have agreed to vote approximately 11.6% of the total outstanding shares of Company common stock (as of the date of the voting agreement, as amended) in favor of the adoption of the merger agreement.
Q:
|
Who can attend and vote at the special meeting?
|
A:
|
All stockholders of record as of the close of business, New York time, on
, the record date for the special meeting, are entitled to receive notice of and to attend and vote at the special meeting, or
any postponement or adjournment thereof. If you wish to attend the special meeting and your shares of Company common stock are held in an account at a broker, dealer, commercial bank, trust company or other nominee (i.e., in street
name), you will need to bring a copy of your voting instruction card or statement reflecting your share ownership as of the record date. Street name holders who wish to vote at the special meeting will need to obtain a proxy from
the broker, dealer, commercial bank, trust company or other nominee that holds their shares of Company common stock. Seating will be limited at the special meeting. Admission to the special meeting will be on a
first-come,
first-served
basis.
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Q:
|
Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my shares of Company common stock?
|
A:
|
Company stockholders who do not vote in favor of adoption of the merger agreement will have the right to seek appraisal and receive the fair value of their shares of
Company common stock in lieu of receiving the merger consideration if the merger closes, but only if they perfect their appraisal rights by complying with the required procedures under Delaware law. See
Appraisal Rights
beginning
on page 122 for additional information. For the full text of Section 262 of the DGCL, please see Annex I hereto.
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Q:
|
How do I cast my vote if I am a holder of record?
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A:
|
If you were a holder of record as of the close of business, New York time, on
, you may vote in person at the special meeting or by submitting a proxy for the special meeting. You can submit your proxy by
completing, signing, dating and returning the enclosed proxy card in the accompanying
pre-addressed,
postage paid envelope. Holders of record may also vote by telephone or the Internet by following the
instructions on the proxy card.
|
If you properly transmit your proxy, but do not indicate how you want to
vote, your proxy will be voted FOR the proposal to adopt the merger agreement, FOR the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or
which may become payable to, the named executive officers of the Company that are based on or
21
otherwise relate to the merger, and FOR the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting to adopt the merger agreement.
Q:
|
How do I cast my vote if my shares of Company common stock are held in street name by my broker, dealer, commercial bank, trust company or other nominee?
|
A:
|
If you hold your shares in street name, which means your shares of Company common stock are held of record on
, by a broker, dealer, commercial bank, trust company or other nominee, you must provide the record holder of your shares of
Company common stock with instructions on how to vote your shares of Company common stock in accordance with the voting directions provided by your broker, dealer, commercial bank, trust company or other nominee.
If you do not provide your
broker, dealer, commercial bank, trust company or other nominee with instructions on how to vote your shares of Company common stock, your shares of Company common stock will not be voted, which will have the same effect as voting
AGAINST the proposal to adopt the merger agreement.
Please refer to the voting instruction card used by your broker, dealer, commercial bank, trust company or other nominee to see if you may submit voting instructions using the
Internet or telephone.
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Q:
|
What will happen if I abstain from voting or fail to vote on the proposal to adopt the merger agreement or other proposals?
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A:
|
If you are a beneficial owner of shares of Company common stock held in street name and do not provide the organization that holds your shares of Company common stock
with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares of Company common stock may generally vote on routine matters but cannot vote on non-routine matters.
If the organization that holds your shares of Company common stock does not receive instructions from you on how to vote your shares of Company common stock on a non-routine matter, the organization that holds your shares of Company common stock
does not have the authority to vote on the matter with respect to those shares of Company common stock. This is generally referred to as a broker non-vote.
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A failure to vote your shares of Company common stock, an abstention from voting or a broker non-vote will have the same effect as a vote
AGAINST the proposal to adopt the merger agreement. A failure to vote your shares of Company common stock and broker non-votes will have no effect on the outcome of the proposal to approve, on an advisory, non-binding basis, the
agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company that are based on or otherwise relate to the merger. An abstention from voting will have the same
effect as a vote AGAINST the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company
that are based on or otherwise relate to the merger. A failure to vote your shares of Company common stock and broker non-votes will have no effect on the outcome of the proposal to adjourn the special meeting. An abstention from voting will have
the same effect as a vote AGAINST the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.
All proposals involve matters that we believe will be considered non-routine. We encourage you to provide voting instructions to the organization that holds your shares of Company common stock by
carefully following the instructions provided on your proxy card.
Q:
|
Can I change my vote after I have delivered my proxy?
|
A:
|
Yes. If you are a record holder, you can change your vote at any time before your proxy is voted at the special meeting by properly delivering a
later-dated
proxy either by mail, the Internet or telephone or attending the special meeting in person and voting. You also may revoke your proxy by delivering a notice of revocation to the Companys Corporate
Secretary prior to the vote at the special meeting. If your shares of Company common stock are held in street name, you must contact your broker, dealer, commercial bank, trust company or other nominee to revoke your proxy.
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22
Q:
|
What should I do if I receive more than one set of voting materials?
|
A.
|
You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if
you hold your shares of Company common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Company common stock. If you are a holder of record and your
shares of Company common stock are registered in more than one name, you will receive more than one proxy card.
Please submit each proxy and voting instruction card that you receive.
|
Q:
|
How does our board of directors recommend that I vote?
|
A:
|
Our board of directors, after careful consideration and acting on the unanimous recommendation of the special committee composed entirely of independent directors,
recommends that our stockholders vote FOR the proposal to adopt the merger agreement. Our board of directors also recommends that you vote FOR the proposal to approve, on an advisory, non-binding basis, the agreements or
understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company that are based on or otherwise relate to the merger, and FOR the proposal to approve the adjournment of
the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement. Please note that one of our directors, Mr. Libin Sun, voted
against the foregoing recommendations and one of our directors was absent from the meeting at which our board of directors approved these recommendations. See
Special Factors Relating to the MergerBackground of the Merger
beginning on page 25 for more details.
|
You should read
Special Factors Relating to the
MergerRecommendation of Our Board of Directors and Special Committee; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
beginning on page 52 for a discussion of the factors that our special
committee and board of directors considered in deciding to recommend the adoption of the merger agreement. In addition, in considering the recommendation of the special committee and our board of directors with respect to the merger agreement, you
should be aware that some of the Companys directors and executive officers may have interests that are different from, or in addition to, the interests of our stockholders generally. See
Special Factors Relating to the
MergerInterests of the Companys Directors and Officers in the Merger
beginning on page 82.
Q:
|
If I am a holder of certificated shares of Company common stock, should I send in my stock certificates now?
|
A:
|
No. Promptly after the merger is completed, each holder of record as of the time of the merger will be sent written instructions for exchanging their stock certificates
for the merger consideration. These instructions will tell you how and where to send in your stock certificates for your cash consideration. You will receive your cash payment after the paying agent receives your share certificates and any other
documents requested in the instructions. Please do not send stock certificates with your proxy.
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Holders of
uncertificated shares of Company common stock (i.e., holders whose shares of Company common stock are held in
book-form
entry) will automatically receive their cash consideration as soon as practicable after
the effective time of the merger without any further action required on the part of such holders.
Q:
|
What constitutes a quorum for the special meeting?
|
A:
|
The presence at the special meeting in person or by proxy of the holders of a majority of shares of Company common stock issued and outstanding and entitled to vote at
the special meeting as of the record date will be necessary to constitute a quorum for the purposes of the special meeting.
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Q:
|
Will any proxy solicitors be used in connection with the special meeting?
|
A:
|
Yes. To assist in the solicitation of proxies, the Company has engaged D.F. King & Co., Inc.
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23
Q:
|
What happens if the merger is not completed?
|
A:
|
If the merger agreement is not adopted by our stockholders, or if the merger is not completed for any other reason, you will not receive any payment for your Company
common stock pursuant to the merger agreement. Instead, we will remain a publicly traded company and our common stock will continue to be registered under the Exchange Act and listed and traded on the NASDAQ Global Market. Under certain
circumstances specified in the merger agreement, we may be required to pay Parent a termination fee of US$18 million and reimbursement of expenses, or Parent may be required to pay us a termination fee of US$18 million or US$36 million and
reimbursement of expenses. See
The Merger AgreementTermination Fees and Reimbursement of Expenses
beginning on page 116 for additional information.
|
Q:
|
When is the merger expected to be completed?
|
A:
|
We are working to complete the merger as quickly as possible. We expect the transaction to close prior to the end date as defined below under
The Merger
AgreementTermination
on page 114; however, we cannot predict the exact timing of the merger. In order to complete the merger, we must obtain the requisite stockholder adoption of the merger agreement and the other closing conditions
under the merger agreement must be satisfied or waived.
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Q:
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When and how will I receive the merger consideration for my shares of Company common stock?
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A:
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If you are a record holder of shares of Company common stock, promptly after the effective time of the merger (but in any event no later than three business days), you
will be sent (i) a letter of transmittal describing how you may exchange your shares of Company common stock for the merger consideration and (ii) instructions for effecting the surrender of share certificates in exchange for your merger
consideration. After you surrender your stock certificate or certificates along with a properly completed and validly executed letter of transmittal to the paying agent or after the paying agent receives an agents message in the
case of shares of Company common stock held in book-entry form, and, in each case, such other documents as may be required by the paying agent and approved by Parent and us, the paying agent will issue and deliver to you a check or wire transfer for
the amount of cash you are entitled to receive. See
The Merger AgreementExchange and Payment Procedures
beginning on page 102 for additional information.
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If your shares of Company common stock are held in street name by a broker, dealer, commercial bank, trust company or other
nominee, you will receive instructions from your broker, dealer, commercial bank, trust company or other nominee on any actions you may need to take to receive the merger consideration for those shares of Company common stock.
Q:
|
What is householding and how does it affect me?
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A:
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The Securities and Exchange Commission (
SEC
) permits companies to send a single set of certain disclosure documents to any household at which two or
more stockholders reside, unless contrary instructions have been received, but only if the Company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and
proxy card. This householding process reduces the volume of duplicate information and reduces printing and mailing expenses. We have not instituted householding for stockholders of record; however, certain brokerage firms may have instituted
householding for beneficial owners of Company common stock held through brokerage firms. If your family has multiple accounts holding Company common stock, you may have already received householding notification from your broker. Please contact your
broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to
revoke your decision to household, and thereby receive multiple copies.
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Q:
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Who can help answer my questions?
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A:
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If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card, you should
contact D.F. King & Co., Inc., toll free at
1-800-758-5880,
collect at 212-269-5550 or by email at asiainfo@dfking.com.
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24
SPECIAL FACTORS RELATING TO THE MERGER
The following is a description of the material aspects of the merger. While we believe that the following description covers the
material terms of the merger, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire document, including the merger agreement attached to this proxy statement as Annex A, for a
more complete understanding of the merger. The following description is subject to, and is qualified in its entirety by reference to, the merger agreement.
Overview of the Transaction
The Company, Parent
and Merger Sub entered into the merger agreement on May 12, 2013. Under the terms of the merger agreement, Merger Sub will be merged with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of Parent. The
Company, as the surviving corporation, will continue to do business under the name AsiaInfo-Linkage, Inc. following the merger.
At the effective time of the merger, each share of Company common stock issued and outstanding immediately prior to the effective time of the merger (other than the excluded shares and the dissenting
shares) will be converted into the right to receive US$12.00 in cash without interest (the
merger consideration
) without interest.
Following and as a result of the merger:
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the unaffiliated stockholders will no longer have any interest in, and will no longer be stockholders of, the Company, and will not participate in any
of the Companys future earnings or growth;
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shares of Company common stock will no longer be listed on the NASDAQ Global Market, and price quotations with respect to shares of Company common
stock in the public market will no longer be available; and
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the registration of shares of Company common stock under the Exchange Act will be terminated.
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Management and Board of Directors of the Surviving Corporation
The board of directors of the surviving corporation will, from and after the effective time of the merger, consist of the directors of
Merger Sub as of immediately prior to the effective time of the merger (identified below under
Annex JDirectors and Executive Officers of Each Filing Person
), until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified. The officers of the surviving corporation will, from and after the effective time of the merger, be the officers of the Company as of immediately prior to the effective time of the merger
(identified below under
Annex JDirectors and Executive Officers of Each Filing Person
), until their respective successors are duly elected or appointed and qualified, or until their earlier death, resignation or removal.
Background of the Merger
Our board of directors and senior management periodically review the Companys long-term strategic plans, industry trends, and potential opportunities with the goal of enhancing stockholder value. As
part of this ongoing process, our board of directors and senior management have, from time to time, considered potential strategic alternatives for the Company.
On November 29, 2006, AsiaInfo Holdings, Inc., the name of the Company before its business combination with Linkage Technologies International Holdings Limited (
Linkage
), entered
into a Strategic Investors Agreement with CITIC Capital MB Investment Limited and PacificInfo Limited, pursuant to which CITIC Capital MB Investment Limited acquired approximately 8.7% of the outstanding shares of common stock of AsiaInfo
Holdings, Inc. In connection therewith, CITIC Capital MB Investment Limited nominated and the Company appointed the then-current Chief Executive Officer of CITIC Capital Holdings Limited (the parent company of CITIC Capital MB Investment Limited),
as a director of the Company.
25
On April 8, 2009, CITIC Capital MB Investment Limited entered into a broker trade sale
pursuant to which it sold all of its shares of common stock of AsiaInfo Holdings, Inc. In connection therewith, CITICs designee resigned as a director of AsiaInfo Holdings, Inc.
In December 2009, AsiaInfo Holdings, Inc. entered into a business combination agreement (the
Combination Agreement
),
with Linkage, certain stockholders of Linkage, including Mr. Libin Sun, Mr. Guoxiang Liu, Mr. Xiwei Huang, and LT International Limited, an entity controlled by Mr. Sun, and Mr. Sun as agent for the stockholders of Linkage.
AsiaInfo Holdings, Inc. entered into a supplemental agreement with such parties on June 5, 2010, which set forth certain ancillary agreements in connection with the Combination Agreement.
Concurrently and as a condition to the execution of the Combination Agreement, the Company entered into a stockholders agreement
(the
2009 Stockholders Agreement
), with each of Linkage, Mr. Tian, our co-founder and a director, and Mr. Sun, our Executive CoChairman and a director, containing certain restrictions on the voting of shares
of Company common stock and standstill restrictions following the closing under the Combination Agreement. Pursuant to the 2009 Stockholders Agreement, Mr. Tian and Mr. Sun each agreed to vote all of their respective voting shares
(i) in favor of the election or re-election to our board of directors of the other, and (ii) on all other matters (except their own elections to our board of directors) (
Other Matters
), in proportion to the votes for and
against, and the abstentions and withholds, of the outstanding shares of our capital stock entitled to vote generally in the election of directors that are not held by Mr. Tian or Mr. Sun or issued pursuant to the Combination Agreement
(the
Proportionality Requirement
). In January 2011, we entered into an amendment to the 2009 Stockholders Agreement. Pursuant to the amendment, on all Other Matters, Mr. Tian and Mr. Sun agreed to consult with each
other prior to any vote of stockholders and attempt in good faith to agree on whether they will vote their respective voting shares for or against, or abstain or withhold authority with respect to, such Other Matters. In the event they failed to
agree on such Other Matters, Mr. Tian and Mr. Sun agreed to vote their respective voting shares according to the Proportionality Requirement. Pursuant to the 2009 Stockholders Agreement, each of Mr. Sun and Mr. Tian were
prohibited from engaging in certain activities, including the acquisition of any voting securities of the Company, without first obtaining a waiver of such restrictions from a committee of our board of directors comprised solely of independent
directors. In addition, as amended, the 2009 Stockholders Agreement continued in full force and effect until the earlier of (i) July 1, 2013, and (ii) the date on which either of Mr. Tian or Mr. Sun beneficially owned
less than 5% of our voting securities. The 2009 Stockholders Agreement terminated on July 1, 2013 in accordance with its terms and the Proportionality Requirement no longer restricts Mr. Tian or Mr. Sun from freely voting their
voting shares on elections to our board of directors or Other Matters, including the vote upon the proposal to adopt the merger agreement.
In addition, as a condition to the closing of the Combination Agreement, in June 2010 the Company entered into non-competition agreements with each of Mr. Sun, Mr. Liu, Mr. Huang and
certain other former officers and directors of Linkage.
The transactions contemplated by the Combination Agreement closed in
July 2010. Upon the closing, Mr. Sun became the Executive Co-Chairman and a director of the Company, Mr. Liu became the Executive Vice President of the Company, and Mr. Huang became the Vice President and Chief Operating Officer and a
director of the Company. Pursuant to the Combination Agreement, the Company purchased from Linkage 100% of the outstanding share capital of Linkages wholly-owned subsidiary, Linkage Technologies Investment Limited, a company organized under
the laws of the British Virgin Islands, for $60 million in cash and 26,832,731 shares of common stock of the Company, subject to certain adjustments.
On January 12, 2012, Power Joy (Cayman) Limited (
Power Joy
), a wholly owned subsidiary of CITIC Capital China Partners II, L.P. (together with Power Joy and their affiliates,
CITIC, and both affiliates to CITIC Capital MB Investment Limited), submitted a preliminary non-binding letter (the
January 12 Letter
) to our board of directors proposing to acquire all the outstanding shares of
Company common stock not already
26
owned by CITIC for US$12.00 per share in cash. The closing price per share of Company common stock on January 11, 2012 was US$7.88. (For more information of historical market prices of
Company common stock, see
Market Price and Dividend Information
beginning on page 128). At the time the January 12 Letter was sent, CITIC owned approximately 4.5% of the outstanding shares of Company common stock. In the
January 12 Letter, CITIC, among other things: (i) stated that it placed significant value on continuity of the Companys leadership, expressed CITICs desire that both Mr. Sun and Mr. Tian would join their equity
interests with CITIC and continue to be major stockholders of the Company following the acquisition, and that its proposal was conditioned on at least one of Mr. Sun or Mr. Tian exchanging the proceeds that they would otherwise receive in the
proposed transaction for equity participation in the Company following the consummation of the proposed transaction; (ii) stated that CITIC intended to finance the proposed transaction with a combination of debt and equity capital and that
commitments for the debt financing would be in place when definitive transaction documents were executed; (iii) informed our board of directors that CITIC had received a highly confident letter in respect of such financing from
Morgan Stanley Asia Limited (
Morgan Stanley
); (iv) requested that our board of directors grant CITIC access to confidential due diligence; and (v) requested that the proposed transaction proceed in a confidential manner.
CITIC also requested an exclusivity period of four weeks in order to complete its due diligence and concurrently negotiate and execute definitive transaction documents, which would include standard deal protection mechanisms and a post-signing
go-shop period on customary terms, and stated that it would withdraw its proposal if the Company were to solicit competing proposals from other potential acquirers prior to executing a definitive agreement with CITIC.
On January 18, 2012, our board of directors held a special meeting via teleconference which was attended by representatives of
Shearman & Sterling LLP (
Shearman
), then the Companys U.S. securities law counsel. Shearman advised the directors as to their fiduciary duties to the stockholders of the Company under Delaware law. The directors
discussed the role and function of a potential special committee in connection with the evaluation of a potential going-private transaction involving the Company. After Shearman responded to questions from the directors in respect of these matters,
our board of directors resolved unanimously that it was in the best interests of the Company and its stockholders to form, and did form, a special committee consisting of three independent directors, Messrs. Davin Mackenzie, Sean Shao and Yungang
Lu, which would consider and attend to all matters in connection with the January 12 Letter and any other alternative transactions involving the Company. The members of the special committee were selected based on their meeting the criteria for
an independent director under the NASDAQ listing rules as well as the belief of our board of directors that the three individuals were free from all personal, professional and business relationships with CITIC and its affiliates and the
management of the Company, and from any other personal, professional and business relationships which could affect their ability to act impartially in discharging their duties on behalf of the Companys stockholders in connection with a
potential transaction involving the Company. Our board of directors authorized the special committee to, among other things: (i) consider, review and evaluate the terms and conditions of any proposed transaction; (ii) negotiate the terms
and conditions of any proposed transaction; (iii) express its view as to the fairness to the Company and the unaffiliated stockholders of any proposed transaction; (iv) determine whether, and under what process and conditions, to seek or
commence solicitations of interest or proposals from other interested parties for transactions with the Company; (v) reject the proposed transaction or any alternative proposals; (vi) recommend to our board of directors what action, if
any, should be taken by the Company with respect to any proposed transaction or any alternative proposals; and (vii) retain legal counsel, financial advisors and such other accountants, appraisers, consultants or advisors to assist it in
connection with the performance of its duties as the special committee deemed appropriate in its sole discretion. Our board of directors also resolved that the chairperson and each other member of the special committee would receive US$5,000 and
US$4,000, respectively, per month for their service on the special committee.
Throughout the course of the next 16 months,
the special committee held 48 meetings, received the advice of legal counsel and financial advisors, and reached out to 49 potential transaction partners, including CITIC.
Immediately following the meeting of our board of directors on January 18, 2012, the special committee held a telephonic meeting. During the meeting, the special committee appointed
Mr. Mackenzie as its chairman.
27
After Shearman was excused from the meeting, the special committee also considered the engagement of U.S. legal counsel to represent the committee. The special committee concluded that
Shearmans service to the Company as its U.S. securities law compliance counsel since July 2011 did not impair Shearmans ability to provide independent advice to the special committee in respect of a proposed transaction and, in fact,
provided the benefit of familiarity with the Company and its business. After considering Shearmans experience in similar transactions and its reputation and other qualifications, the special committee decided to engage Shearman as its U.S.
legal counsel in connection with a potential transaction involving the Company.
On January 20, 2012, the special
committee held a conference call with representatives of Shearman, CITIC, Morgan Stanley and CITICs legal counsel, Davis Polk & Wardwell LLP (
Davis Polk
), to discuss several issues in respect of the CITIC proposal,
including CITICs request for exclusivity, a press release to announce the proposal and CITICs offer being conditioned on at least one of Messrs. Sun and Tian partnering with CITIC. CITIC clarified that it would not expect to withdraw its
proposal solely in the event either of Messrs. Sun and Tian were to decline to partner with CITIC in a potential transaction so long as the other agreed to partner with CITIC.
Following this conference call, on January 20, 2012, the special committee held a telephonic meeting with Shearman present. After discussion, the special committee instructed the Company to issue a
press release announcing the receipt of the going-private proposal from CITIC before the opening of the U.S. financial markets that day. After considering the possibility of CITICs withdrawal of its proposal if its request for an exclusivity
period were rejected and the fact that it would take other potential interested investors some time to prepare proposals in respect of a transaction involving the Company, the special committee agreed to grant CITIC a two-week period of exclusivity
to begin conducting due diligence. As instructed by the special committee, Shearman conveyed the special committees views to Davis Polk. Davis Polk subsequently confirmed that CITIC agreed to accept a two-week exclusivity period. The Company
issued a press release later on the same day to announce the receipt of CITICs proposal, the formation of the special committee and that the special committee had been charged with considering CITICs proposal and any potential
alternative transactions, and the engagement of the special committees legal counsel.
The Company entered into a
confidentiality and standstill agreement, and an exclusivity agreement, with CITIC on January 22, 2012. Thereafter, CITIC commenced confidential due diligence.
On January 22, 2012, the special committee held a telephonic meeting with Shearman at which the special committee discussed the engagement of an independent financial advisor. In addition, the
special committee held discussions with Mr. Steve Zhang, the chief executive officer of the Company, in order to obtain managements perspectives on a potential transaction and to obtain additional information as to the Companys
present financial position and future operations. Mr. Zhang inquired whether there would be any change in the development plan or the management team of the Company following completion of a potential transaction. At the request of the special
committee, Mr. Zhang confirmed that management would provide the special committee with updated financial information concerning the Company. As CITICs proposal was conditioned on at least one of Messrs. Sun and Tian partnering with CITIC
in a potential transaction, the special committee also decided to discuss CITICs proposal with each of them. At the invitation of the special committee, Mr. Tian then joined the meeting and told the special committee that he might be
interested in participating with CITIC in a potential transaction. The special committee also tried to reach Mr. Sun during the meeting but was unable to do so. The special committee determined to contact Mr. Sun in the next few days.
On January 22 and 23, 2012, as instructed by the special committee, Shearman contacted six investment banks which
had experience serving as independent financial advisor to special committees in going-private transactions to solicit their interest in serving as the financial advisor to the special committee.
On January 24, 2012, Shearman and Davis Polk met to discuss CITICs offer and a potential transaction involving the Company. On
behalf of CITIC, Davis Polk requested that the parties: (i) begin negotiating a draft
28
merger agreement, the initial draft of which was to be provided by CITIC; (ii) extend the exclusivity period to the four week period originally requested in the January 12 Letter; and
(iii) permit CITIC to communicate with Messrs. Tian and Sun in respect of the proposed transaction.
On January 24,
2012, the special committee held a telephonic meeting with Shearman. Shearman reported CITICs requests to the special committee. After discussion, the special committee decided not to agree to CITICs requests until after engaging a
financial advisor and reviewing the draft merger agreement to be provided by CITIC.
On January 25, 2012, the special
committee held a telephonic meeting and invited Mr. Sun to attend. Mr. Sun noted that he had not to date had discussions with CITIC, that he did not intend to partner with CITIC in the acquisition of the Company, and that his preliminary
view at the time was that the proposed acquisition was not attractive to him. Mr. Sun expressed his view that the proposal was financially inadequate and that the potential transaction could be disruptive to the Companys operations.
Mr. Sun also expressed his view that the Company should remain independent at that time. In response to a question from the special committee, Mr. Sun said that he would not support a potential transaction with CITIC even if CITIC were to
raise the proposed price, as he did not see CITIC being a controlling stockholder that could add any value to the Company. Mr. Sun then left the meeting. The special committee noted Mr. Suns views, and also noted that, although
Mr. Sun would not support the proposed transaction, Mr. Tian had stated his interest in participating in a potential transaction, which would satisfy CITICs request that at least one of Messrs. Sun or Tian join in a potential
transaction. After discussion, the special committee agreed that it would be advisable to further consider CITICs proposal and permit CITIC to engage in discussions with Messrs. Tian and Sun only at a later time, after the special committee
determined whether the key terms in the merger agreement to be proposed by CITIC were in the best interests of the Companys public stockholders. The special committee also confirmed that it had made no decision with respect to CITICs
proposal or whether to sell the Company.
On January 26, 2012, the special committee engaged Morris, Nichols,
Arsht & Tunnell LLP (MNAT) as its Delaware legal counsel. MNAT had not previously acted as legal counsel to the Company.
On January 26, 2012, Davis Polk circulated a draft merger agreement to Shearman.
On January 29, 2012, Shearman provided a summary of the key issues raised by the draft merger agreement to the special committee for its consideration.
On January 31, 2012, after reviewing proposals submitted by six investment banks to serve as independent financial advisor to the
special committee, the special committee interviewed four investment banks. After interviews and discussion with Shearman, the special committee decided to have further discussions with three of the four investment banks including Goldman Sachs
(Asia) L.L.C. (
Goldman Sachs
) with respect to their proposals and also asked each of the three investment banks to disclose any potential conflicts of interest.
On February 3, 2012, Davis Polk sent to Shearman a draft extension agreement proposing to extend CITICs exclusivity period for
an additional two weeks.
On February 3, 2012, the special committee held a telephonic meeting with Shearman to discuss
the draft extension agreement and the special committees engagement of an independent financial advisor. The special committee concluded that it was not prepared to respond to CITICs request for extension of its exclusivity period and
instructed Shearman to notify Davis Polk accordingly. On the same day, the special committee had follow-up discussions with the three investment banks regarding their respective proposed strategies, staffing arrangements and any potential conflicts
of interests. After reviewing the reputation, credentials, experience, team members and proposed terms of engagement of each of the three investment banks, the special committee decided to proceed with discussions to engage Goldman Sachs as its
financial advisor in connection with the potential going-private transaction and instructed Shearman to begin negotiating the terms of an engagement letter with Goldman Sachs.
29
On February 7, 2012, the special committee held a telephonic meeting with Shearman, at
which the Special Committee decided to engage Goldman Sachs as its financial advisor and executed an engagement letter with Goldman Sachs. See
Special Factors Relating to the MergerOpinion of Goldman Sachs, Financial Advisor to the
Special Committee
for more details. On the same day, the Company issued a press release announcing the special committees engagement of Goldman Sachs as its financial advisor.
On February 8, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to discuss the next steps in
respect of the proposed transaction. The special committee decided to suspend due diligence by CITIC (in order to give the special committee additional time to consider next steps) and instructed Goldman Sachs to conduct a financial analysis of the
Company and to reach out to certain unaffiliated stockholders of the Company to solicit views from such stockholders as to the proposal made by CITIC.
On February 9, 2012, Morgan Stanley, acting as CITICs financial advisor in respect of a potential transaction, contacted Goldman Sachs to request the special committees extension of the
exclusivity period and the resumption of the due diligence process.
On February 10, 2012, the special committee held a
telephonic meeting which was attended by Goldman Sachs, Shearman and Goldman Sachss legal counsel, Fried, Frank, Harris, Shriver & Jacobson LLP (
Fried Frank
). After discussion, the special committee decided not to
extend the exclusivity period granted to CITIC and instructed Goldman Sachs to seek clarification from CITIC on what further due diligence CITIC required.
During the two weeks following February 10, 2012, Goldman Sachs conducted a review of the business, operations and financial performance of the Company. Goldman Sachs also had discussions with the
senior management and finance team of the Company regarding these matters.
On February 23, 2012, the special committee
held a telephonic meeting with Goldman Sachs and Shearman at which Goldman Sachs communicated to the special committee the preliminary views of certain unaffiliated stockholders of the Company as to a potential transaction and the inquiries and
indications of interest it had received from certain private equity firms. Goldman Sachs noted that the stockholders with whom it had communicated had not expressed any preliminary views on the attractiveness of a potential transaction involving the
Company and were of the opinion that they would be in a better position to form a view after more detailed information about CITICs offer, including the offer price, was made available.
On March 5, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman at which the special committee
discussed with its advisors: (i) the Companys stockholder profile and Goldman Sachss further communications with certain unaffiliated stockholders as to a potential transaction; (ii) inquiries from 10 potential interested
private equity firms; (iii) the progress of the financial analysis being conducted by Goldman Sachs; and (iv) the status of the discussions with CITIC.
On March 8, 2012, the special committee held a meeting with Goldman Sachs and Shearman in the Beijing offices of Shearman at which Goldman Sachs reviewed certain draft financial projections of the
Company prepared by its management. At the invitation of the special committee, Mr. Jun (Michael) Wu, the chief financial officer of the Company, attended the portion of the meeting during which the management projections were discussed. See
Special Factors Relating to the MergerProspective Financial Information for more details of the financial projections of the Company.
On March 10, 2012, the special committee received a letter from Mr. Sun requesting that the special committee grant a waiver of his standstill obligations under the 2009 Stockholders
Agreement so that he may, solely in his capacity as a stockholder of the Company, undertake activities he deemed necessary or desirable in connection with CITICs proposal and/or developing his own alternative acquisition proposal.
30
On March 12, 2012, Goldman Sachs and CITIC discussed a potential transaction involving
the Company. CITIC expressed its continuing interest in such transaction and confirmed that it owned 4.5% of the outstanding shares of Company common stock as of the January 12 Letter and as of the March 12 call with Goldman Sachs.
On March 14, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman. Goldman Sachs
reported on, among other things, its discussion with CITIC regarding a potential transaction. The special committee also discussed with its advisors Mr. Suns request for the special committee to waive his standstill obligations under the
2009 Stockholders Agreement. After discussion, the special committee decided that it was premature to agree to Mr. Suns request before the special committee had reviewed Goldman Sachss financial analysis regarding the
transaction proposed by CITIC and the strategic alternatives to such transaction. On March 15, 2012, as instructed by the special committee, Shearman conveyed the special committees responses to Mr. Suns legal counsel,
Kirkland & Ellis LLP (
Kirkland & Ellis
).
On March 21, 2012, the special
committee held a meeting with Goldman Sachs and Shearman at which the special committee further discussed Mr. Suns request for a waiver of his standstill obligations under the 2009 Stockholders Agreement. At this meeting, Goldman
Sachs reviewed with the special committee certain financial information regarding the Company and also reviewed strategic alternatives that might be available to the Company in lieu of the going-private transaction proposed by CITIC, including the
possibility of remaining independent either with or without a levered recapitalization, a share buyback or the declaration of a special dividend. Goldman Sachs also provided a summary of the management projections and the key assumptions used by the
Companys management. After discussing with Goldman Sachs and Shearman the advantages and disadvantages of various strategic alternatives and the manner in which a sale of a public company might be conducted, Goldman Sachs and Shearman were
excused from the meeting. After further internal deliberations, the special committee decided that, to maximize the value of the Company in the best interests of the Company and its stockholders, the special committee would initiate a formal process
to solicit interest from, and engage in discussions with, other potential qualified interested parties regarding a potential transaction involving the Company, and to evaluate any proposals received. The special committee decided to ask the board of
directors of the Company to specifically confirm the authority of the special committee to waive or amend the standstill obligations under the 2009 Stockholders Agreement as the special committee deemed appropriate and in the best interest of
the Companys stockholders.
On March 25, 2012, as requested by the special committee, our board of directors
convened a special meeting via teleconference. After discussion, our board of directors unanimously adopted resolutions expressly authorizing the special committee to consider, waive or amend the terms of the 2009 Stockholders Agreement.
On March 26, 2012, the Company issued a press release announcing that the special committee had determined to solicit
interest from, and engage in discussions with, other potential qualified interested parties regarding a potential transaction involving the Company, and to evaluate any proposals it might receive.
Between March 26, 2012 and April 1, 2012, the Company and the special committees advisors identified potential qualified
interested parties to contact in connection with a potential transaction involving the Company based on a review of, among other things, each potential interested partys operational profile (and thus potential interest in a transaction with
the Company), past investment activities and ability to finance a transaction, and prepared a draft confidentiality agreement, a draft process letter, a memorandum containing certain key information pertaining to the Company and a draft merger
agreement. On April 1, 2012, the special committee approved a list of 48 parties to be contacted, comprising 19 potential strategic bidders and 29 potential financial bidders.
On March 30, 2012, Mr. Sun sent an email to the special committee to reiterate his request for a waiver under the 2009
Stockholders Agreement. In the email, Mr. Sun stated that he expected to receive a formal invitation from the special committee to participate in the process.
31
On March 30, 2012, after discussions with Goldman Sachs and Shearman, the special
committee sent written communication guidelines to both the members of the Board and the management of the Company reminding them that, among other things, they should not discuss or communicate with or make any comments to third parties about the
proposed transaction, irrespective of whether such information was public or non-public.
Beginning on April 2, 2012,
Goldman Sachs contacted 48 potential bidders previously identified to gauge their potential interest in a transaction involving the Company. On behalf of the special committee, Shearman and Goldman Sachs also began to negotiate with interested
potential bidders the terms of a form confidentiality agreement.
On April 5, 2012, the special committee held a
telephonic meeting with Goldman Sachs and Shearman at which Goldman Sachs reported on the preliminary feedback that it had received from potential bidders. Goldman Sachs and Shearman also discussed with the special committee the status of
negotiations with potential bidders as to the confidentiality agreement. Goldman Sachs and Shearman discussed with the special committee the possibility that a broad waiver of the standstill obligations of Messrs. Sun and Tian at this time might
render the bidding process less competitive as it would allow each of these individuals to form a consortium with one or more other potential bidders before the first round of bids were due. Following these discussions, the special committee decided
to grant Mr. Sun only a limited waiver of his obligations under the 2009 Stockholders Agreement upon his execution of a waiver letter and a confidentiality agreement which would be substantially identical to the confidentiality agreements
to be executed by other potential bidders and allow Mr. Sun to develop his own proposal in respect of an alternative transaction. The special committee also decided to grant a similar waiver to Mr. Tian, who was bound by the same
standstill restrictions under the 2009 Stockholders Agreement.
On April 10, 2012, Shearman sent a draft of an
amended and restated confidentiality agreement between the Company and CITIC to Davis Polk. The draft was prepared based on the form confidentiality agreement to be entered into with other potential bidders in the strategic review process.
On April 10, 2012, Mr. Mackenzie, on behalf of the special committee, informed each of Messrs. Sun and Tian,
respectively, that the special committee had decided to waive the standstill restrictions in Section 6 of the 2009 Stockholders Agreement to the extent necessary solely to allow each of them to form his own proposal in connection with a
transaction involving the Company. Mr. Mackenzie also sent a draft waiver letter and confidentiality agreement to each of Messrs. Sun and Tian. Each waiver was conditioned on the execution and delivery by the signatory of the waiver letter and
the confidentiality agreement attached thereto. The confidentiality agreement prohibited the signatory and his representatives from negotiating, discussing or entering into any agreement or arrangement with CITIC or any other potential bidder in
respect of a proposed transaction without the prior written consent of the special committee.
From April 10, 2012
through May 11, 2012, 15 potential bidders, including 2 potential strategic bidders and 13 potential financial bidders, executed confidentiality agreements with the Company. Each executed confidentiality agreement includes a customary
standstill provision but also allows each signatory to initiate confidential communications with Goldman Sachs in connection with or for the purposes of a possible transaction with the Company, notwithstanding execution of the Merger Agreement.
On April 13, 2012, Shearman and Kirkland & Ellis discussed the scope of the waiver the special committee was
willing to grant to Mr. Sun. Following the discussion, Mr. Sun decided not to sign the proposed confidentiality agreement. Neither Mr. Sun nor Mr. Tian executed a waiver letter or a confidentiality agreement.
On April 13, 2012, the special committee held a telephonic meeting during which Goldman Sachs and Shearman updated the special
committee as to communications with potential bidders and the status of negotiations of the confidentiality agreements with each of them. The special committee also instructed Goldman Sachs to contact each of Mr. Sun and Mr. Tian to
further review the proposed restrictions on their communications with other potential bidders as set out in the draft confidentiality agreement. The special
32
committee further instructed Goldman Sachs and Shearman to coordinate with the Companys management to prepare a virtual data room and management presentations in connection with the bidder
due diligence process.
On April 16 and 17, 2012, Goldman Sachs communicated with each of Messrs. Sun and Tian,
respectively, as instructed by the special committee.
Beginning on April 16, 2012, as instructed by the special
committee, Goldman Sachs sent process letters together with an information package on the Company to each of the 15 potential bidders which had executed a confidentiality agreement with the Company. The process letter invited the potential bidders
to submit their first-round indicative bids by May 14, 2012.
On April 20, 2012, the special committee held a
telephonic meeting with Goldman Sachs and Shearman. Goldman Sachs and Shearman provided updates on the feedback from the potential bidders and the negotiation of confidentiality agreements with potential bidders.
On April 23, 2012, Goldman Sachs received an indication of interest in the Company from a private equity firm (
Bidder
B
) which it had not contacted in respect of a potential transaction involving the Company. The special committee decided to include Bidder B in the strategic review process and instructed Shearman to commence negotiating the
confidentiality agreement with Bidder B.
On May 7, 2012, the special committee engaged Haiwen Partners
(
Haiwen
) as its PRC legal counsel.
On May 9, 2012, the special committee held a telephonic meeting
with Goldman Sachs and Shearman. Goldman Sachs and Shearman provided further updates on feedback from the potential bidders and the negotiation of confidentiality agreements up to this date.
On May 14 and 15, 2012, Goldman Sachs received bid letters from six potential bidders comprising (i) five financial investors,
namely, CITIC, Bidder B, a private equity firm (
Bidder A
) and two other private equity firms and (ii) one strategic investor (collectively, the
First Round
Bidders
). The First Round Bidders submitted
indications of interest valuing the Company at US$12.00, US$11.50, US$12.32 to US$13.22, US$11.50 to US$13.00, US$15.00 and US$12.00 per share, respectively. Through follow-up communications with the other interested parties that had executed
confidentiality agreements earlier but did not submit first-round indicative bids, Goldman Sachs was informed that these other parties withdrew from the process primarily because, following an initial due diligence review, they determined that the
business of the Company may not be a good strategic fit for such party or that an investment in the Company would not likely deliver the level of return desired by such party.
On May 15, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to review the bid letters submitted
by the First Round Bidders. Goldman Sachs and Shearman described the proposed process for a second round of the strategic review process. After discussion, the special committee decided to take additional time to further review and discuss
internally among the special committee members the terms of the bid letters submitted by the First Round Bidders and to convene another meeting to decide whether or not to proceed with a second round of the strategic review process.
On May 21, 2012, after negotiations, CITIC and the Company entered into an amended and restated confidentiality agreement based on
the form confidentiality agreement entered into with other potential bidders in the strategic review process.
On
May 23, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman. After further reviewing the bid letters with its advisors, the special committee decided that (i) it should proceed with a second round of the
strategic review process and (ii) all the First Round Bidders other than Bidder B (because its bid was the lowest bid received among the First Round Bidders and following the request of the special committee, Bidder B did not offer an increase
in bid price to be competitive among all the First Round Bidders) should be invited to participate in the next round of the strategic review process.
33
From May 29, 2012 through July 4, 2012, the Company provided the five remaining
First Round Bidders with access to a virtual data room and a physical data room for due diligence purposes. The Company also held management presentations for these bidders with Goldman Sachs in attendance and provided the remaining First Round
Bidders with the financial projections of the Company prepared by its management. See
Special Factors Relating to the MergerProspective Financial Information
for more details in respect of the financial projections of the
Company.
On June 22, 2012, Goldman Sachs sent process letters for the second round of the strategic review process to
the five remaining bidders and invited them to submit their second round bids by July 4, 2012.
On July 4, 2012,
CITIC and Bidder A submitted second round bids. Two other First Round Bidders withdrew from the strategic review process, indicating that they were no longer interested in pursuing a potential transaction with the Company because they did not
believe that an investment in the Company would deliver their desired level of return and the remaining First Round Bidder advised that it was only interested in exploring a business collaboration in the ordinary course of business with the Company
and was not interested in acquiring an equity interest in the Company. CITICs bid proposed an offer price of US$12.50 per share. Bidder As bid proposed an offer price of US$12.32 to US$13.22 per share.
From July 4 through September 24, 2012, CITIC and Bidder A and their respective representatives continued to conduct due
diligence on the Company under the supervision of the special committee and its advisors.
On July 5, 2012, pursuant to
the special committees request communicated by Goldman Sachs that the offer price in the bid be expressed as a fixed number as opposed to a range, Bidder A submitted its revised bid which set its offer price at US$12.80 per share.
On July 6, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to discuss the terms of the second
round bids. Following discussion, the special committee decided to continue the strategic review process.
On July 19,
2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman. Goldman Sachs presented updated materials regarding its financial analysis of the Company. After deliberation and discussion with its advisors, the special
committee determined that it was in the best interests of the Companys stockholders, in order to encourage CITIC and Bidder A to maximize the value of their respective proposals, to (i) consent to CITIC and Bidder A and their
representatives, including permitted potential co-investors and financing sources, engaging in discussions with Messrs. Sun and Tian in connection with a proposed transaction, and (ii) grant a limited waiver to Messrs. Sun and Tian from the
standstill restrictions and the voting provisions set forth in the 2009 Stockholders Agreement in respect of such discussions.
On July 23 and 24, 2012, the Company, at the direction of the special committee, granted its consent to CITIC and Bidder A and their respective representatives engaging in discussions with each of
Messrs. Tian and Sun and their respective representatives in connection with a proposed transaction.
On July 25, 2012,
the Company, at the direction of the special committee, entered into a confidentiality agreement with each of Mr. Sun and Mr. Tian, which were each substantially identical to the confidentiality agreements to be executed by other potential
bidders, and granted each of them a limited waiver of the standstill restrictions and the voting provisions set forth in the 2009 Stockholders Agreement. The waiver allowed each of Messrs. Sun and Tian to engage in discussions with CITIC
and/or Bidder A and to engage in discussions with their own representatives in potentially making a proposal to the Company in respect of an alternative transaction. The special committee directed Goldman Sachs to assist in arranging meetings
between CITIC and Bidder A and each of Messrs. Tian and Sun.
34
On July 25, 2012, the special committee held a telephonic meeting with Goldman Sachs
and Shearman during which Shearman provided an update on its drafting of the merger agreement and reviewed key terms of the draft merger agreement with the special committee.
On August 1, 2012, Goldman Sachs received a request from Bidder A for the special committees consent to enter into discussions
and negotiations with 28 private equity firms and their respective representatives regarding their potential participation as co-investors in a proposed transaction involving the Company. Five of these 28 private equity firms were among the 48
parties initially contacted by Goldman Sachs, and who declined to pursue a transaction with the Company on their own.
On
August 2, 2012, the special committee adopted a resolution to confirm that its prior consents, granted to CITIC and Bidder A on July 23, 2012 and July 24, 2012 respectively, constituted approval of any nonbinding agreements,
arrangements or understandings between each of CITIC or Bidder A and its representatives, on the one hand, and Mr. Sun and/or Mr. Tian, on the other hand, in connection with a proposed transaction that may result from the activities
permitted under such prior consents for the purposes of Section 203 of the Delaware General Corporation Law. On the same day, the special committee sent a written acknowledgement of the foregoing to each of CITIC and Bidder A.
On August 2, 2012, with the permission of the special committee, representatives of CITIC travelled to Nanjing and met with
Mr. Sun to ask for his support and participation in CITICs proposed transaction. At this meeting, Mr. Sun stated to the representatives from CITIC the following: (i) in his opinion the Companys current management is not
taking the Company in the optimal strategic direction; (ii) he is the largest stockholder and should have, and has been trying to gain, management control over the Company in order to change its strategic direction; (iii) he believed that
the Company could be worth considerably more than CITICs US$12.50 per share proposed offer price if he were able to obtain management control; and (iv) he was opposed to any transaction that did not result in him gaining management
control of the Company.
On August 6, 2012, Goldman Sachs received a request from Morgan Stanley for the special
committee to grant CITIC a consent to enter into discussions with Messrs. Tian, James Ding, Zhang and Wu in respect of their participation in CITICs proposed transaction.
On August 6, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman at which Goldman Sachs updated
the special committee on the strategic review process. As to CITICs request to engage in discussions with the senior management of the Company, the special committee decided, after discussion with its advisors, that it would not grant this
request at this stage and would re-consider granting the request after the final round bids had been received. The special committee also noted that it had already granted CITIC and Bidder A permission to enter into discussions with Messrs. Tian and
Sun.
Later in the day on August 6, 2012, Goldman Sachs had a discussion with Bidder A regarding its request to enter
into discussions with 28 private equity firms as potential co-investors. Goldman Sachs advised Bidder A that two of the 28 private equity firms were CITICs limited partners and may have joined CITIC in its due diligence investigations in
connection with CITICs proposed transaction. After discussion, Bidder A agreed to withdraw its request for the special committees consent to enter into discussions with these two private equity firms.
On August 7, 2012, the special committee granted the consent requested by Bidder A allowing Bidder A to enter into discussions and
negotiations with the other 26 private equity firms and their respective representatives regarding their potential participation in the proposed transaction as co-investors.
On August 9, 2012, Shearman received from Bidder As legal counsel, Sullivan & Cromwell LLP (
Sullivan
& Cromwell
), a request for the special
committees consent to Bidder A entering into discussions and negotiations regarding the proposed transaction with two additional potential co-investors and their respective representatives.
35
On August 10, 2012, the special committee granted its consent to Bidder A entering into
discussions and negotiations regarding the proposed transaction with the two additional potential co-investors and their respective representatives and another consent to Bidder A to enter into exclusive arrangements with two commercial banks as
requested by Bidder A in its second round bid letter.
On August 14, 2012, Mr. Sun sent a letter to the special
committee in which he stated that he had commenced discussions with Bidder A based on the waiver granted to him on July 25, 2012 and disclosed his interest in potentially participating together with Bidder A and any potential co-investors
introduced by Bidder A in the proposed transaction. In the same letter, Mr. Sun also requested (i) certain additional waivers under the 2009 Stockholders Agreement and waivers under the confidentiality agreement between him and the
Company dated as of July 25, 2012 to permit him and his representatives to, among other things, enter into discussions, agreements, arrangements and understandings regarding the proposed transaction with management members and other employees
of the Company who owned shares of Company common stock, as well as with potential co-investors of Bidder A, (ii) a consent under Section 203 of the Delaware General Corporation Law in connection with the foregoing proposed discussions,
agreements, arrangements and understandings, and (iii) 8 to 12 weeks from the date of such letter to assemble his own potential bidder consortium.
On August 15, 2012, Kirkland & Ellis, as counsel for Mr. Sun, circulated to the special committee, Goldman Sachs and Shearman an estimated timetable for a consortium organized by
Mr. Sun to form and submit an acquisition proposal. According to this estimated timetable, Mr. Sun would be able to provide definitive acquisition documents by mid-October 2012.
On August 16, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman. The special committee discussed
with its advisors Mr. Suns letter dated August 14, 2012 and instructed its advisors to prepare a response to Mr. Suns letter. The special committee also agreed that the final bids should be submitted by mid-September 2012.
The special committee and its advisors believed that submission deadline was reasonable and in the best interests of the Companys stockholders because each bidder, as well as Mr. Sun as a potential bidder, had been given sufficient time
to form a bid.
On August 17, 2012, at the direction of the special committee, Goldman Sachs sent final round process
letters to CITIC and Bidder A. The deadline for submitting definitive legally-binding proposals was originally set to be September 10, 2012. After considering the request of Bidder A for more time to complete due diligence and find
co-investors, the special committee agreed to extend the bid deadline to September 24, 2012. Goldman Sachs also informed Mr. Sun of this extended bid deadline and that the special committee did not agree to extend the bid deadline to
mid-October, 2012 for him.
On August 17, 2012, Shearman received from Sullivan & Cromwell a request for the
special committees consent to Bidder A entering into discussions and negotiations regarding the proposed transaction with three additional potential co-investors and their respective representatives.
On August 19, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to further discuss the requests
in Mr. Suns letter to the special committee dated August 14, 2012. After discussion with its advisors, the special committee decided to consent to Mr. Sun and his representatives engaging in (i) discussions and negotiations
with bona fide potential providers of equity financing to CITIC and Bidder A in connection with the proposed transaction, and (ii) due diligence on the Company in connection with the proposed transaction. The special committee also decided to
request that Mr. Sun provide written confirmation of the nature of his proposed involvement in the proposed transaction (whether as a participant with a potential investor or otherwise). After confirming Mr. Suns intended role in the
proposed transaction, the special committee would further consider Mr. Suns request to communicate with management and employee stockholders of the Company. These positions were communicated to Mr. Sun the following day.
On August 20, 2012, the special committee granted its consent to Bidder A to enter into discussions and negotiations regarding the
proposed transaction with three additional potential co-investors and their respective representatives.
36
Later that day, Kirkland & Ellis, on behalf of Mr. Sun, confirmed that
Mr. Sun was interested in potentially participating in the consortium led by Bidder A.
On August 21, 2012, Shearman
delivered to Kirkland & Ellis a written consent of the special committee for Mr. Sun to engage in discussions with certain bona fide potential co-investors of Bidder A and to conduct due diligence on the Company solely in connection
with a potential co-investment by Mr. Sun with Bidder A in the proposed transaction.
On August 21, 2012,
Mr. Sun filed with the SEC a Schedule 13D/A disclosing that after discussions with the special committee and, with the permission of the special committee, preliminary discussions with certain qualified interested parties regarding the proposed
transaction, Mr. Sun had determined that he was interested in potentially participating in a proposed transaction involving the Company.
On August 21, 2012, CITIC sent a letter to Goldman Sachs in response to the final round process letter sent by Goldman Sachs on August 17, 2012, requesting (i) a three-week exclusive
negotiation period beginning prior to the bid deadline set out in the August 17, 2012 letter, (ii) reimbursement by the Company of its expenses of up to US$3 million in connection with the proposed transaction, and (iii) the special
committees consent to enter into discussions with the Companys management stockholders, particularly Messrs. Zhang and Ding.
On August 22, 2012, Shearman received from Sullivan & Cromwell a request for the special committees consent to Bidder A entering into discussions and negotiations regarding a proposed
transaction with a new potential co-investor and its representatives.
On August 23, 2012, Mr. Sun sent a letter to
the special committee, confirming that he was interested in potentially participating in a consortium led by Bidder A in the proposed transaction, but also stating that he was considering forming his own consortium and submitting an alternative
proposal in respect of the proposed transaction. He also raised issues in respect of what he described as feedback from Bidder A including with respect to the due diligence process and the managements lack of confidence in the business and
future of the Company. He went on to request access to conduct due diligence in connection with preparing an alternative proposal and a consent to enter into discussions with the management and other employees of the Company. In addition, he
requested an extension of the bid deadline to approximately 8 to 12 weeks from the date of his letter.
On August 23,
2012, Bidder A sent a letter to Goldman Sachs requesting (i) permission to enter into discussions with the Companys management and employee stockholders, (ii) further information for due diligence purposes and (iii) an extension
of the date for submission of its final proposal to a date that was eight weeks after completion of certain items, including completion of Bidder As due diligence and permission being granted for Bidder A to enter into agreements with the
Companys management.
On August 23, 2012, Mr. Tian filed with the SEC a Schedule 13D/A announcing that, with
the permission of the special committee, Mr. Tian had engaged in preliminary discussions with certain qualified interested parties, including CITIC, and determined that he was interested in potentially participating in a proposed transaction
with CITIC.
On August 24, 2012, the special committee granted the consent requested by Bidder A to allow it to enter
into discussions and negotiations regarding the proposed transaction with an additional potential co-investor and its representatives.
On August 24, 2012, at the direction of the special committee, Shearman distributed an initial draft merger agreement to CITIC and Bidder A.
On August 27, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to discuss the issues raised in
the letters from CITIC, Mr. Sun and Bidder A. After discussion with its advisors, the special committee decided to respond to CITIC to the effect that only if CITICs bid ultimately were determined
37
by the special committee to be superior to any other bid received, the special committee would be prepared to enter into an exclusivity arrangement with CITIC and would agree to the inclusion of
expense reimbursement provisions in the merger agreement to be executed in connection with the proposed transaction, in each case, on terms to be negotiated at an appropriate time. Taking into account the stockholder structure of the Company and the
timetable of the proposed transaction, the special committee also determined to permit communications between any of CITIC, Mr. Sun, and Bidder A and a limited number of the largest management and employee stockholders only after final round
bids were received.
On August 28, 2012, Shearman received from Sullivan & Cromwell a request for the special
committees consent to Bidder A to enter into discussions and negotiations regarding the proposed transaction with two additional potential co-investors and their respective representatives.
On August 29, 2012, the special committee granted its consent to Bidder A entering into discussions and negotiations regarding the
proposed transaction with the 33rd potential co-investor and its representatives, but did not grant its consent with respect to Bidder As discussions and negotiations with the 34th potential co-investor and its representatives due to a lack of
available background information concerning the 34th potential co-investor.
On August 30, 2012, at the direction of the
special committee, Goldman Sachs sent a letter to CITIC (i) stating that the special committee would be prepared to allow CITIC to have limited discussions with certain management and employee stockholders (other than Messrs. Sun and Tian) who
collectively owned 7.1% of the outstanding shares of Company common stock about the number of shares they would be willing to roll over in the proposed transaction and that Goldman Sachs would arrange such discussions, and (ii) confirming that
in the event that the bid submitted by CITIC ultimately were determined by the special committee to be superior to any other bid submitted in respect of the proposed transaction, the special committee would be prepared to revisit the decision
whether to enter into exclusivity arrangements with CITIC and agree to the inclusion of expense reimbursement provisions in the merger agreement on terms to be negotiated at an appropriate time.
On August 30, 2012, the special committee sent to Mr. Sun a letter noting that Mr. Suns consideration of forming his
own consortium to submit an alternative proposal was contrary to the intentions he had indicated to the special committee prior to August 23, 2012. The letter also stated that, if there were a bona fide probability that Mr. Sun would
submit an independent bid in connection with the proposed transaction, the special committee would welcome a statement from Mr. Sun, for the special committees consideration, setting out in detail his indicative valuation, proposed
acquisition structure and potential equity and debt financing sources, as soon as practicable and, in any event, no later than September 24, 2012. The special committee also responded to Mr. Sun on the issues he had raised in respect of
what he described as feedback from Bidder A on due diligence and the lack of confidence of the management in the future of the Company, stating that the special committee and its advisors believed that all due diligence requests from Bidder A had
substantially been resolved and that it had not ever received the impression from Bidder A or the management of the Company that there was any lack of confidence in the Company. The special committee invited Mr. Sun to provide any support for
the foregoing assertions and asked him to share with the special committee as soon as practicable any thoughts on inspiring the confidence of the management and other employees of the Company to further maximize stockholder value. As to
Mr. Suns request for access to management for rollover discussions, the special committee informed Mr. Sun that it would be prepared to allow all the bidders and their representatives to have limited discussion with certain
management and employee stockholders (other than Messrs. Sun and Tian) who collectively owned approximately 7.1% of the outstanding shares of Company common stock about the number of shares they would be willing to roll over in the proposed
transaction and that Goldman Sachs would arrange such discussions. As to Mr. Suns request for an extension of the bid deadline, the special committee advised that it would not grant an extension because it was in the best interests of the
Company and its stockholders to maintain the pace of the process.
On August 30, 2012, at the direction of the special
committee, Goldman Sachs sent a letter to Bidder A stating that the special committee would be prepared to allow Bidder A to discuss with certain management and
38
employee stockholders (other than Messrs. Sun and Tian) who collectively owned approximately 7.1% of the outstanding shares of Company common stock the number of shares they would be willing to
roll over in the proposed transaction and that Goldman Sachs would arrange such discussions. The letter also responded to Bidder As requests in respect of due diligence and additional time for the submission of its final proposal to the effect
that the Company had provided and was continuing to provide Bidder A with appropriate due diligence on a timely basis and that the special committee had extended the previously-contemplated bid deadline of September 10 to September 24,
2012 and was of the view that Bidder A would have had ample time to form its bid prior to September 24, 2012.
On
September 5, 2012, Mr. Sun sent a letter to the special committee asserting among other things that he had not been released from certain restrictions or been given sufficient time to form his own consortium, both of which, the letter
contended, prevented him from forming his most competitive bid. In addition to requesting additional time, he also requested a release from the restrictions stated in his letter, including (i) a waiver under the 2009 Stockholders
Agreement and his confidentiality agreement with the Company which would allow him to have discussions and/or enter into non-binding agreements, arrangements or understandings with former Linkage employee stockholders of the Company and to share the
Companys confidential information with such former Linkage employee stockholders in connection with the potential transaction and (ii) pre-approval from the Company to enter into non-binding agreements, arrangements or understandings
under Section 203 of the DGCL with the aforementioned former Linkage employee stockholders in connection with the potential transaction. Mr. Sun also mentioned that he believed the true value of the Company had not been
reflected in the five-year performance forecasts provided by the Company management and further asserted that he had the ability to inspire the confidence of members of management of the Company so as to further maximize stockholder value but did
not articulate any specific thoughts in that regard.
On September 6, 2012, Mr. Tians legal counsel,
Skadden, Arps, Slate, Meagher & Flom LLP (
Skadden
), sent an email to Goldman Sachs requesting the special committees consent to Mr. Tian entering into discussions and negotiations regarding the proposed
transaction with three potential co-investors including China Broadband Capital Partners II, L.P. Later on the same day, Shearman discussed such request with Skadden and Skadden clarified that Mr. Tian was considering bringing these potential
co-investors into the consortium led by CITIC, as opposed to forming a consortium of his own.
On September 7, 2012, the
special committee sent to Mr. Sun a response to his September 5, 2012 letter stating, among other things, that: (i) the special committee disagreed with Mr. Sun as to his characterizations of the bidding process; (ii) the
special committee would welcome any real probability that Mr. Sun would submit an independent bid; and (iii) the special committee proposed a meeting between Mr. Sun and his representatives and the special committee and its
representatives to discuss how best to expedite an independent bid from Mr. Sun, Mr. Suns thoughts on the management projections and how Mr. Sun believed he could further maximize stockholder value, regardless of the identity of
the winning bidder, and any other issues Mr. Sun may raise. The special committee proposed holding the meeting on September 10 or 11, 2012 in Beijing and offered to be flexible if such date and location were inconvenient for Mr. Sun.
Mr. Sun and his representatives never responded to the special committees letter dated September 7, 2012 and did not at any time over the next eight months (i) outline the terms of an independent bid to be made by him or any
other potential strategic transaction involving the Company or (ii) provide concrete views as to the value of the Company.
On September 10, 2012, the special committee granted its consent to Mr. Tian to enter into discussions and negotiations
regarding the proposed transaction with the three potential co-investors and their representatives requested by Mr. Tian in Skaddens email to Goldman Sachs on September 6, 2012.
On September 11, 2012, Morgan Stanley sent an email to Goldman Sachs and Shearman requesting the special committees consent to
CITIC entering into discussions and negotiations regarding the proposed transaction with CPEChina as a potential co-investor.
39
On September 12, 2012, Morgan Stanley sent an email to Goldman Sachs requesting the
special committees consent to CITIC entering into discussions and negotiations regarding the proposed transaction with the same three potential co-investors in respect of which the special committee had granted consent to Mr. Tian to
enter into discussions and negotiations.
Later in the day on September 12, 2012, the special committee granted its
consent to CITIC to enter into discussions and negotiations regarding the proposed transaction with these three potential co-investors and CPEChina, as requested by CITIC.
On September 14, 2012, Skadden contacted Goldman Sachs and requested the special committees consent to Mr. Tian entering into discussions and negotiations regarding the proposed
transaction with Bidder B as a co-investor in the consortium led by CITIC.
On September 14, 2012, on a telephonic
discussion with Goldman Sachs, CITIC requested an extension of the deadline for the submission of the final round bid to October 19, 2012 because CITIC needed additional time to incorporate the four new co-investors into its consortium.
On September 17, 2012, the special committee held a telephonic meeting with its advisors to discuss the progress of
the proposed transaction. The special committee discussed Mr. Tians request to engage in discussions with Bidder B as a co-investor in respect of the proposed transaction. After such discussion, the special committee decided not to grant
its consent to this request because Bidder B had not been selected to continue in the process after the first round and allowing Bidder B to re-enter the process at this later stage could be disruptive to the process. Goldman Sachs also reported to
the special committee that Mr. Sun had advised Goldman Sachs of his intention to participate with Bidder A rather than to submit his own bid in respect of the proposed transaction. After discussion with its advisors, the special committee
reaffirmed its decision not to allow the bidders access to the Companys management stockholders for the purposes of discussing the management stockholders participation in the proposed transaction until after the receipt of final bids
and confirmation that the bidders had arranged credible equity and/or debt financing.
On September 20, 2012, the
special committee reviewed with Goldman Sachs the Companys operational costs and profit margins during the preceding six quarters.
On September 25, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman, during which Goldman Sachs reported to the special committee that Bidder A had notified Goldman
Sachs of its withdrawal from the process for the proposed transaction and stated that it would not submit a final round bid because it would be difficult for it to put together a consortium and a winning bid. Goldman Sachs also reported to the
special committee that CITIC had requested an extension of the deadline for submission of its final bid to October 19, 2012 to allow additional time for its new co-investors to conduct due diligence. After discussion with its advisors, the
special committee decided to extend the submission date for the final bid to mid-October 2012.
On September 27, 2012, at
the direction of the special committee, Goldman Sachs sent a letter to CITIC, extending the submission date of CITICs final proposal to October 15, 2012.
On October 15, 2012, Skadden sent an email to Goldman Sachs requesting the special committees consent to Mr. Tian entering into discussions and negotiations regarding the proposed
transaction with InnoValue Capital Ltd.
On October 15, 2012, CITIC submitted its final bid in respect of the proposed
transaction, which proposed an offer price of US$11.50 per share. The bid proposal was accompanied by a highly confident letter from ICBC International Capital Limited (
ICBCI
) and CITICs comments on the draft
merger agreement which reflected CITICs positions with respect to the terms of the draft merger agreement, including, among other
40
things, that: (i) the merger agreement be signed together with a debt commitment letter rather than requiring that an executed definitive facility agreement be in place as of signing;
(ii) the Company have not less than US$330 million of net cash immediately before the closing of the proposed transaction; (iii) the proposed transaction not be conditioned on approval by a majority of the outstanding shares of
Company common stock held by disinterested stockholders (the majority of the minority condition); (iv) the Company be required to submit the proposed transaction to the stockholders (the force the vote provision);
(v) CITICs closing of the proposed transaction be conditioned on, among other things, dissenting shares of Company common stock constituting no more than 10% of the outstanding shares of Company common stock, each of certain senior
employees of the Company not leaving the Company and having entered into new employment and non-compete agreements with the Company and the Companys completion of the disposal of its interests in certain entities contractually controlled by
the Company (the
VIEs
); (vi) both the Companys termination fee and CITICs reverse termination fee be equal to 3.5% of the equity value of the Company, (vii) the Company pay a termination fee,
equal to 1% of the equity value of the Company, in the event the stockholders did not approve the proposed transaction; (viii) CITIC be entitled to an expense reimbursement by the Company in addition to the Companys termination fee; and
(ix) the specific performance remedy be available only to CITIC.
In connection with the submission of CITICs final
bid, Morgan Stanley explained to Goldman Sachs that CITIC reduced its price to US$11.50 per share in light of the deteriorating financial performance of the Company over the first two quarters of 2012 and indications from due diligence that this
deteriorating performance would continue into the third quarter and potentially beyond.
On October 17, 2012, the special
committee held a telephonic meeting with Goldman Sachs and Shearman to review CITICs October 15 bid. After considering the strategic review process and discussing CITICs bid with its advisors, the special committee decided that the
current bid submitted by CITIC was not acceptable without a price increase. The special committee instructed Goldman Sachs to contact CITIC and its financial advisor to seek an upward revision to the bid price proposed by CITIC.
From October 18, 2012 to October 21, 2012, Goldman Sachs held several telephonic meetings with CITIC and Morgan Stanley.
On October 22, 2012, Morgan Stanley verbally communicated a revised offer on behalf CITIC of US$12.00 per share, subject to (i) agreement of the special committee that this will be the final price, (ii) deletion of the majority of the
minority condition, and (iii) completion of confirmatory due diligence by CITIC. Morgan Stanley stated that CITIC would not submit a written offer on these terms unless the special committee advised CITIC that these conditions were acceptable.
On October 24, 2012, the special committee held a telephonic meeting with Goldman Sachs and Shearman to further discuss
the next steps in respect of the transaction process. After such discussion, the special committee agreed that in order to maximize the interests of the public stockholders of the Company and as a negotiation tactic, the special committee would seek
a higher offer price of US$12.50 per share from CITIC, which was offered by CITIC in its second round bid, and would consider being more flexible with CITIC on certain terms of the merger agreement in exchange for a higher price, if necessary.
Goldman Sachs delivered to CITIC the special committees request for higher price immediately after the meeting.
On
October 26, 2012, the special committee held a telephonic meeting with Shearman and MNAT to discuss the fiduciary duties of the directors under Delaware law. The special committee also discussed whether to include a majority of the minority
condition in the draft merger agreement. After discussion, and in light of (i) the extensive outreach performed, (ii) the facts that the potential buyer group would only have a relatively small minority interest before closing and the
potential rollover stockholders would only hold a relatively small percentage of the outstanding shares of Company common stock and (iii) CITICs continued insistence on the removal of the majority of the minority condition, the special
committee decided that, although it would continue to request inclusion of a majority of the minority condition, it would be willing to trade such a condition in exchange for other terms, including price, that would be favorable to the Company and
its public stockholders. Over the next several weeks, the special committee discussed CITICs request to delete the majority of the minority condition from the draft merger agreement.
41
On November 3, 2012, the special committee granted its consent to CITIC and
Mr. Tian entering into discussions and negotiations with InnoValue Capital Ltd. regarding the proposed transaction.
On
November 12, 2012, CITIC submitted a revised bid with an increased offer price of US$12.00 per share. CITIC advised that this proposal reflected CITICs best and final offer and requested a further three week period to complete its
confirmatory due diligence.
On November 12, 2012, the special committee held a telephonic meeting with Goldman Sachs
and Shearman to review CITICs revised bid and discuss the next steps of the proposed transaction. Goldman Sachs reported to the special committee that it would conduct a preliminary financial analysis in respect of CITICs revised
proposal and make a presentation to the special committee. In light of the decline in market conditions during the preceding months, and its concern that CITIC might withdraw from negotiations, the special committee determined not to continue to
seek an increase in the offer price from CITIC at this time.
On November 14, 2012, the special committee held a
telephonic meeting with Goldman Sachs and Shearman. Fried Frank also attended the meeting. Goldman Sachs presented to the special committee its preliminary financial analysis in respect of CITICs revised bid dated November 12, 2012 and
answered questions from the special committee with respect to such analysis. Goldman Sachs reviewed with the special committee strategic alternatives that might be available to the Company in lieu of the transaction proposed by CITIC. After Goldman
Sachs and its counsel left the meeting, the special committee continued to discuss Goldman Sachss preliminary financial analysis, the alternatives available to the Company and the next steps the special committee should take. Goldman Sachs was
then asked to rejoin the meeting, after which the special committee determined, assuming the fairness of the offer price of US$12.00 per share and the certainty of financing, that it would proceed with negotiating the proposed transaction with
CITIC.
From November 16, 2012 through November 19, 2012, the special committee discussed with its advisors
CITICs comments to the draft merger agreement. After these discussions, the special committee decided, among other things, to retain its existing positions on the key open points, and propose that the Companys termination fee and
CITICs termination fee be 1.5% and 5%, respectively, of the equity value of the Company.
On November 19, 2012,
Shearman held discussions with the Companys management as to the managements views with respect to the representations, warranties and covenants in the draft merger agreement.
On November 20, 2012, at the direction of the special committee, Shearman sent a revised draft merger agreement to Davis Polk
reflecting the special committees positions discussed above.
On November 25, 2012, Davis Polk sent a markup of the
draft merger agreement to Shearman. As reflected in that markup, CITIC retained its existing positions on the key open deal terms, counter-proposed 2% of the equity value of the Company as the Companys termination fee and 2.5% of the equity
value of the Company as CITICs reverse termination fee, offered to cap its proposed expense reimbursement by the Company at US$10 million and accepted the special committees position not to have a termination fee payable if
stockholders do not approve the proposed transaction.
On November 26, 2012, Shearman provided the special committee with
a summary of CITICs November 25 comments to the draft merger agreement.
On November 27, 2012, the special
committee held a telephonic meeting with Goldman Sachs and Shearman. At the request of the special committee, Goldman Sachs further discussed its financial analysis presented on November 14, 2012.
Between November 27 and November 30, 2012, Shearman and Davis Polk negotiated certain key issues of the draft merger agreement
as reflected in CITICs November 25 comments to the draft merger agreement.
42
On November 30, 2012, the special committee held a telephonic meeting with Goldman
Sachs and Shearman. Goldman Sachs reported to the special committee that it had had discussions with Morgan Stanley in respect of the status of the proposed transaction. After discussion with its advisors, the special committee decided that, in the
interests of time, the negotiation of the draft merger agreement and the finalization of the financing documents should move forward in parallel, and instructed Goldman Sachs and Shearman to convey this position to CITIC and its advisors.
On December 7, 2012, the special committee met with CITIC at the Hong Kong offices of Goldman Sachs. Representatives of
Goldman Sachs, Shearman, Morgan Stanley and Davis Polk were in attendance. After negotiating the open issues on the draft merger agreement, CITIC agreed to the special committees positions on the following key open points: (i) the closing
of the proposed transaction would not be conditioned on the dissenting shares of Company common stock being less than a specified capped percentage of the shares of Company common stock; (ii) the closing of the proposed transaction would not be
conditioned on any senior employees of the Company entering into any employment or other agreements; instead, the special committee would consent to CITIC having discussions with such employees with the aim of finalizing their employment
arrangements before the closing of the proposed transaction; and (iii) the closing of the proposed transaction would not be conditioned on completion of the disposition of the Companys interests in the VIEs; instead, the Company would
agree to a covenant to use reasonable best efforts to complete this disposition. The special committee in turn agreed that the merger agreement would not contain a majority of the minority condition. The parties did not reach agreement on any other
open issues at this meeting.
On December 13, 2012, Shearman sent a revised draft of the merger agreement to Davis Polk
reflecting the agreement between the special committee and CITIC on the issues discussed during their meeting on December 7, 2012.
On December 18, 2012, Goldman Sachs contacted Morgan Stanley to discuss the transaction process. Morgan Stanley informed Goldman Sachs that, in light of the ongoing deterioration in the
Companys financial performance, ICBCI would need to review the Companys financials for the fourth quarter of 2012 before making a final decision to commit debt financing. Morgan Stanley also advised that CITIC and its potential
co-investors would be able to provide draft equity financing documents soon. Goldman Sachs requested Morgan Stanley and CITIC to work in parallel on both the financing documents as well as on the draft merger agreement.
On December 24, 2012, Morgan Stanley sent the initial draft equity commitment letter to Goldman Sachs.
On January 5, 2013, CITIC and ICBCI met with Mr. Wu to review the Companys preliminary high-level results of the fourth
quarter of 2012. Mr. Wu confirmed that the Companys results would meet managements previous guidance and would likely be above the mid-point of the range, but when taken together with the prior three quarters would still show
substantial under-performance for the year in relation to the management forecasts for 2012 previously provided to CITIC. Morgan Stanley also informed Goldman Sachs that ICBCI would need an additional few weeks to finalize the debt commitment
letter.
On January 25, 2013, the special committee held a telephonic meeting with Goldman Sachs and Shearman. Goldman
Sachs updated the special committee on CITICs financing arrangements in connection with the proposed transaction. The special committee and its advisors then discussed whether to execute the merger agreement on the basis of a debt commitment
letter as opposed to requiring that an executed facility agreement be in place at signing. The special committee noted that CITIC had advised that it remained unwilling to agree to this, did not believe it was market practice to require this, and in
any event a considerable amount of additional time would be required in order to finalize a facility agreement. After discussion with its advisors, the special committee agreed that it would be acceptable, on balance, to enter into the merger
agreement based on a debt commitment letter rather than risk the delay of waiting for a full facility agreement, assuming that all other terms were acceptable to the special committee. At the meeting, Mr. Mackenzie reported to the special
committee that he had had a conversation with Mr. Sun, during which Mr. Sun had stated that he expected that some stockholders of the Company would not support the proposed transaction based on the current offer price.
43
On January 29, 2013, Goldman Sachs and Shearman held a telephonic meeting with ICBCI,
CITIC and Morgan Stanley on CITICs debt financing arrangements and the estimated timing thereof. ICBCI informed the other parties that it was in the process of obtaining internal approval and it would likely require another two to three weeks
to obtain such approval.
On February 1, 2013, Shearman, CITIC and Davis Polk held a telephonic meeting to discuss the
draft merger agreement and debt financing documents. Shearman advised that the special committee could only consider accepting CITICs position to sign the merger agreement on the basis of a debt commitment letter instead of an executed
facility agreement if it had an opportunity to first review and comment on a draft of the proposed debt commitment letter. CITIC and Davis Polk agreed to provide a copy of the draft ICBCI debt commitment letter as soon as possible and suggested that
they would be in a better position to provide their comments to the draft merger agreement if the special committee confirmed that it would be acceptable in principle to execute the merger agreement on the basis of a debt commitment letter.
On February 4, 2013, Shearman sent a markup of the draft equity commitment letter to Davis Polk and Davis Polk sent a
draft ICBCI debt commitment letter to Shearman, the terms of which were still subject to further review and negotiations by CITIC and ICBCI.
From February 6, 2013 through March 6, 2013, Shearman, Fried Frank, Davis Polk and ICBCIs legal counsel, Latham & Watkins LLP, discussed the terms of the draft ICBCI debt
commitment letter.
On February 6, 2013, the special committee held a telephonic meeting with Goldman Sachs and Shearman.
Goldman Sachs updated the special committee on CITICs debt financing process in connection with the proposed transaction. After careful consideration of all relevant factors, including prevailing market practice in comparable transactions,
CITICs obligations under the merger agreement to secure debt financing prior to the closing, and concerns with deal certainty and further delays in timing, the special committee decided to move forward on the basis that the merger agreement
would be executed based on a debt commitment letter.
On February 7, 2013, Shearman and Davis Polk held a telephonic
meeting to discuss the remaining open issues in the draft merger agreement, including the force the vote provision, the definition of superior proposal, expense reimbursement and CITICs reverse termination fee. Davis
Polk stated CITIC would agree to the special committees position that the Company would not be required to have a minimum net cash amount as a condition to the closing if CITIC could obtain tighter interim operating covenants. The parties did
not reach agreement on the remaining open issues during that telephonic meeting; however, Shearman informed Davis Polk that the special committee had agreed that the merger agreement could be signed based on a debt commitment letter. After the
telephonic meeting, Davis Polk sent to Shearman a revised draft of the merger agreement reflecting CITICs position on the open issues and an initial draft of the limited guarantee to be executed by the signatories to the equity commitment
letters.
On February 8, 2013, Shearman provided the special committee with a summary of CITICs positions on the
open issues in the draft merger agreement.
From February 8, 2013 through February 19, 2013, the special committee,
Goldman Sachs, Shearman, MNAT and Fried Frank held multiple discussions on the remaining open issues in the merger agreement. After such discussions, the special committee decided to counter-propose that, among other things: (i) our board of
directors should have the right to change its recommendation in response to an intervening event; (ii) the expense reimbursement should be mutual and capped at US$5 million each; (iii) CITICs reverse termination fee
should be equal to 4.25% of the equity value of the Company; (iv) the Company should have the right to trigger an early termination of the merger agreement if a limited guarantee or any financing document were to be terminated or failed to be
effective or enforceable; (v) the specific performance remedy should be reciprocal; and (vi) the percentage threshold in the definition of superior proposal should be 50%, which would allow our board of directors to consider
any potential bid made or joined by any current significant stockholder of the Company.
44
On February 20, 2013, Shearman and Davis Polk held a telephonic meeting to discuss the
draft merger agreement. During this meeting, Shearman put forward the special committees positions as described above.
On February 21, 2013, the special committee held a telephonic meeting with Goldman Sachs and Shearman. The special committee
directed Goldman Sachs to discuss with management a draft budget for 2013, including updated management projections (the
Draft 2013 Budget
), which the Company had prepared in the ordinary course of business, and to report to the
special committee the data and assumptions contained therein and how they compared to prior projections.
On February 21,
2013, Shearman sent a revised draft of the merger agreement to Davis Polk reflecting the positions discussed during the February 20 telephone call between Shearman and Davis Polk.
On February 24, 2013, the special committee held a telephonic meeting with Goldman Sachs and Shearman. Goldman Sachs reported to the
special committee its discussion with Mr. Wu as to the management projections reflected in the Draft 2013 Budget. Mr. Wu reported these projections were lower than the previous management projections, which had been provided to Goldman
Sachs for its valuation analysis and the First Round Bidders for their due diligence purposes, primarily because of the volatility in the Companys international business (although the Companys core onshore business was largely
unaffected). After discussion with its advisors, the special committee decided to discuss the Draft 2013 Budget with our board of directors and recommend to our board of directors that the Companys management be requested to clarify certain
aspects of the management projections reflected in the Draft 2013 Budget (such as separating the international and onshore businesses, and presenting a range of outcomes for the international business) and produce a revised budget (including revised
projections) which would be submitted to our board of directors for approval.
On February 26, 2013, Davis Polk sent
initial drafts of the rollover agreements and voting agreement to Shearman.
On February 28, 2013, Shearman and Davis
Polk held a telephonic meeting to negotiate the remaining open issues in respect of the draft merger agreement.
Later that
day, Shearman sent an email to Davis Polk summarizing the major open issues in respect of the draft limited guarantee, including the nature and scope of coverage of the limited guarantee, certain waivers and the assignability of the limited
guarantee.
On February 28, 2013, Shearman and Davis Polk held a telephonic meeting to negotiate the remaining open
issues in respect of the draft merger agreement.
Later that day, Shearman sent an email to Davis Polk summarizing the major
open issues in respect of the draft limited guarantee, including the nature and scope of coverage of the limited guarantee, certain waivers and the assignability of the limited guarantee.
On February 28, 2013 Davis Polk sent Shearman revised drafts of certain sections of the merger agreement, including the first
detailed proposal on a covenant describing the treatment of existing employee stock options in connection with the closing of the transaction.
Based on this draft proposal, Shearman and Mr. Mackenzie inquired whether there had been any discussions between CITIC and certain members of the Companys management in respect of their
employment arrangements. CITIC and the Companys management confirmed to the special committee that no material discussions had taken place on these matters to date.
On March 1, 2013, Morgan Stanley informed Goldman Sachs that ICBCI had obtained final internal approval in respect of the debt financing but had also requested that certain terms be added to the
draft ICBCI debt commitment letter, which would require additional time for negotiations between CITIC and ICBCI.
45
On March 5, 2013, Morgan Stanley sent a revised draft of the ICBCI debt commitment
letter to Goldman Sachs.
From March 6, 2013 through March 8, 2013, the special committee, Goldman Sachs and
Shearman discussed the remaining open issues on the draft merger agreement.
On March 7, 2013, Shearman and Davis Polk
held a telephonic meeting to discuss the major open issues on the draft limited guarantee.
On March 8, 2013, Shearman
sent a revised draft of the merger agreement to Davis Polk.
On March 11, 2013, Shearman sent a revised draft of the
limited guarantee to Davis Polk.
On March 12, 2013, Shearman and Davis Polk held a telephonic meeting to discuss the
ICBCI debt commitment letter.
Later that day, CITIC communicated to Mr. Mackenzie a brief update on the status of the
debt financing to be provided by ICBCI. CITIC confirmed that ICBCI received its final internal approval for the debt financing in the week of February 25, 2013 and advised that CITIC and ICBCI had been working to finalize the terms of the ICBCI
debt commitment letter. On the same day, Mr. Mackenzie sent a response to CITIC via email, requesting information as to what issues were causing the additional delay and clarification as to whether there was another potential source of debt
financing and, if so, whether this was likely to result in further delays in finalizing the debt financing. Later on the same day, CITIC responded to Mr. Mackenzie, assuring him and the special committee of its commitment to completing the
proposed transaction. CITIC stated that it was extremely focused on finalizing the financing arrangements as quickly as possible and believed that the financing arrangements would be finalized in the very near term. CITIC also stated that it was
exploring options for the debt financing that could lead to a more attractive financing package for the proposed transaction, but that such efforts had not been the cause of any delay.
On March 13, 2013, the special committee received a revised copy of the Draft 2013 Budget, including updated management projections,
from the Companys management. Later that day, the special committee held a telephonic meeting with Goldman Sachs and Shearman. At the meeting, the special committee reviewed and discussed the updated management projections with Goldman Sachs.
The special committee noted that the updated management projections were based on the Companys current strategy to aggressively expand overseas by penetrating the Europe, Middle East and Africa markets. In order to analyze the options
available for the development of the Companys overseas business, and at the request of our board of directors, the Companys management had also developed two alternative scenarios for the purpose of sensitivity analysis. After such
further review and discussion, the special committee decided to approve the updated management projections and to present such projections for the review of our board of directors and approval at a special meeting of our board of directors, which
occurred the following day. At that meeting of our board of directors, our board of directors approved the updated Draft 2013 Budget and the revised management projections reflected in that Budget. Also at the March 13, 2013 meeting, the
special committee instructed Shearman to remind CITIC and the Companys management that any discussions between CITIC and management concerning employment or compensation arrangements require prior consent from the special committee. Shearman
promptly carried out the special committees instruction.
On March 15, 2013 Morgan Stanley on behalf of CITIC
requested to Goldman Sachs that the special committee approve a meeting in the near future between representatives of CITIC and members of the Companys senior management team to discuss the overall proposed transaction structure, as well as
CITICs proposals regarding employment agreements, the proposed management incentive program, rollover agreements and voting support agreements to be entered into with senior management and other employees of the Company in connection with the
transaction.
46
On March 19, 2013, with the consent of the special committee, Messrs. Zhang, Wu, Yadong
Jin and Liu met with CITIC in its Beijing offices to discuss extension of their employment agreements with the Company, rollover of the senior management members company stock awards and the proposed equity-based incentive plan of the
surviving corporation after the closing. Representatives of Goldman Sachs and Shearman also attended. During the meeting, CITIC delivered to each of the above four senior management members a draft agreement extending his existing employment
agreement. CITIC also provided copies of such employment extension agreements to Goldman Sachs and Shearman for their review. See Special Factors Relating to the MergerInterests of the Companys Directors and Officers in the
MergerEmployment and Change-in-Control Agreements for more details.
On March 20, 2013, Goldman Sachs
provided the revised management projections to CITIC. After reviewing such projections, CITIC did not state that the revised projections created any issue in respect of CITICs valuation or offer price.
On March 21, 2013, Shearman, CITIC, Davis Polk and Fangda, CITICs PRC counsel, held a telephonic meeting to discuss the
Companys plans to dispose of its interests in the Companys VIEs in connection with the proposed transaction.
From
March 21, 2013 through May 12, 2013, Shearman, Haiwen, the Companys management and Han Kun Law Offices, the Companys PRC counsel, worked to develop a potential plan to dispose of the Companys interests in the VIEs,
identify and negotiate with potential buyers of the Companys interests in the VIEs, draft and finalize the VIE transfer documents, and engage an independent asset appraiser to determine the fair market value of the VIEs. Shearman also
regularly reported on and discussed the progress of this process with the special committee and Goldman Sachs and kept CITIC, Davis Polk and Fangda informed as to progress.
On March 22, 2013, the special committee held a telephonic meeting with Goldman Sachs and Shearman. Goldman Sachs presented the special committee with an updated preliminary financial analysis in
respect of CITICs revised bid dated November 12, 2012 and discussed that analysis with the special committee.
On
March 28, 2013, the special committee, Goldman Sachs, Shearman, CITIC, Morgan Stanley and Davis Polk held a telephonic meeting to discuss pending issues in respect of the proposed transaction. CITIC requested that the disposition by the Company
of its interests in the VIEs be completed before the signing of the merger agreement.
On April 2, 2013, Davis Polk sent
a revised draft of the merger agreement to Shearman.
On April 5, 2013, Shearman and Davis Polk held a telephonic meeting
to negotiate the key remaining open issues on the draft merger agreement
On April 6, 2013, Shearman provided the special
committee with a summary of CITICs positions on the key open issues in the draft merger agreement.
On April 6,
2013, Shearman conveyed to Davis Polk the special committees position on certain key open issues in the draft merger agreement, including that: (i) the special committee would not insist on the Company having a right to specific
performance and to be a third party beneficiary under the equity commitment letters or on the Companys right to terminate the merger agreement in the event of a failure of the debt financing; (ii) CITICs termination fee should be
6.375% of the equity value of the Company in the event of CITICs intentional breach or failure to close the proposed transaction when all the closing conditions are satisfied or waived and 4.5% of the equity value of the Company in the event
of CITICs unintentional material breach or failure of the debt financing; and (iii) the expense reimbursement should be mutual and capped at an amount to be specified.
From April 6, 2013 through April 8, 2013, Shearman and Davis Polk negotiated the remaining open issues on the draft merger
agreement.
47
On April 9, 2013, the special committee held a telephonic meeting with Goldman Sachs
and Shearman, during which Shearman updated the special committee on its discussions with Davis Polk on the remaining open issues in the draft merger agreement.
On April 15, 2013, Shearman sent a revised draft of the merger agreement to Davis Polk reflecting the special committees position on these open issues, and the Company engaged an independent
asset appraiser to determine the fair market value of the VIEs in connection with the Companys disposition of its interests in the VIEs.
From April 16, 2013 through April 30, 2013, Shearman and Davis Polk negotiated the final terms of the draft merger agreement. During the same period, Shearman and Davis Polk also negotiated the
other transaction documents, including the Companys disclosure schedule, the rollover agreements, voting agreement, equity commitment letter and limited guarantee.
On April 22, 2013, Morgan Stanley sent Goldman Sachs a finalized debt commitment letter from a syndicate of banks comprised of Nomura International (Hong Kong) Limited, Bank of Taiwan and Cathay
United Bank, Co., Ltd. and informed Goldman that this syndicate, instead of ICBCI, would provide debt financing for the proposed transaction.
On April 24, 2013, CITIC requested that the special committee consent to CITIC having discussions with Mr. Ding regarding his potential execution of a rollover agreement. Later on the same day,
the special committee granted this consent.
On April 25, 2013, Mr. Sun sent an email to Mr. Mackenzie, the
chairman of the special committee, requesting that the Company return certain Linkage trademarks and brand names that had been licensed by Lianchuang Technology Company Limited, a company controlled by Mr. Sun
(
Lianchuang
), to an affiliate of the Company in connection with the transactions contemplated by the Combination Agreement, to Lianchuang upon the completion of the proposed transaction, because he would cease to be a stockholder
of the Company at such time.
From April 25, 2013 through May 11, 2013, the special committee, Shearman and the
Companys management discussed Mr. Suns requests regarding the Linkage trademarks. The Companys management expressed the view that Mr. Suns request had no legal basis and was not acceptable to the Company from a
commercial perspective. During the same period, Shearman kept CITIC and Davis Polk informed of these developments.
On
April 25, 2013, Davis Polk sent the initial draft consortium agreement and Parent disclosure schedule to Shearman documenting the proposed members of the consortium led by CITIC, the intended rollover stockholders and the stockholders who would
be parties to the draft voting agreement.
On April 25, 2013, Shearman sent Davis Polk its comments on the debt
commitment documents to be executed by the syndicate of banks providing debt financing for the proposed transaction (the
Nomura debt commitment documents
).
From April 25, 2013 through April 27, 2013, Shearman held telephonic meetings with Davis Polk to discuss Shearmans comments on the Nomura debt commitment documents.
On April 26, 2013, Davis Polk held telephonic meetings with Paul Hastings LLP (
Paul Hastings
), counsel for the
syndicate of banks, to discuss Shearmans comments on the Nomura debt commitment papers, following which Paul Hastings sent a revised set of Nomura debt commitment papers to Davis Polk, and Davis Polk then sent a revised set of Nomura debt
commitment papers to Shearman.
48
On April 27, 2013, Davis Polk held telephonic meetings with Shearman to discuss
Shearmans comments on the revised set of Nomura debt commitment papers, following which Shearman confirmed that the revised set of Nomura debt commitment papers was acceptable to the special committee.
On April 29, 2013, Shearman sent a revised draft of the merger agreement to Davis Polk.
On April 30, 2013, Mr. Liu confirmed that the employment extension agreement delivered to him at the March 19, 2013,
meeting was acceptable. See
Special Factors Relating to the MergerInterests of the Companys Directors and Officers in the MergerEmployment and Change-in-Control Agreements
for more details.
On May 1, 2013, Davis Polk sent comments on the draft merger agreement to Shearman.
On May 2, 2013, Goldman Sachs held a telephonic meeting with Morgan Stanley to discuss CITICs reverse termination fee. Morgan
Stanley stated that CITIC would not accept any increase to the proposed termination higher-tier and lower-tier reverse termination fees of 4% and 2%, respectively, of the equity value of the Company.
On May 2, 2013, the special committee discussed with Goldman Sachs and Shearman CITICs position on its termination fee and the
parties rights to expense reimbursement. After these discussions, the special committee decided to accept CITICs position regarding CITICs termination fee and propose either (i) a mutual expense reimbursement provision capped
at US$5 million or (ii) a reduction of the Companys termination fee to 0.9% of the equity value of the Company. Later that day, Shearman conveyed to Davis Polk the special committees proposal.
On May 6, 2013, each of Messrs. Zhang, Wu and Jin confirmed that the employment extension agreement delivered to each of them at the
March 19, 2013, meeting was acceptable. See
Special Factors Relating to the MergerInterests of the Companys Directors and Officers in the MergerEmployment and Change-in-Control Agreements
for more details.
On May 7, 2013, Mr. Sun sent the special committee drafts of certain agreements to be entered into between the
Company and Lianchuang. In the cover email, Mr. Sun proposed that, before the formal announcement of a transaction with CITIC the Company should agree that (i) all the trademark license agreements between Lianchuang and Linkage
Technology (Nanjing) Co., Ltd. (
Nanjing Linkage
), an indirect, wholly-owned subsidiary of the Company, under which five Linkage trademarks had been licensed to Nanjing Linkage, would be terminated, (ii) the
Company would agree not to continue to use the trade names and trademarks containing the word Linkage and related logos, and (iii) the Company would release Mr. Sun, Mr. Liu, Mr. Huang and certain other individual
former stockholders of Linkage and their affiliates from their non-compete agreements with the Company, in each case, upon the closing of the proposed take-private transaction.
On May 7, 2013, after confirming the composition of the buyer consortium and in connection with the preparation of its fairness
opinion, Goldman Sachs disclosed to the special committee and Shearman that Goldman Sachs or certain of its affiliates had, in matters unrelated to the proposed transaction, provided investment banking services to affiliates of certain members of
the consortium led by CITIC. The special committee and Shearman requested Goldman Sachs to provide further information regarding such services. See
Special Factors Relating to the MergerOpinion of Goldman Sachs, Financial Advisor to
the Special Committee
for more details.
On May 7, 2013, Davis Polk informed Shearman that CITIC had
accepted the special committees proposal regarding mutual expense reimbursement with a cap of US$5 million each.
From
May 7, 2013 through May 12, 2013, Shearman and Davis Polk discussed and finalized execution versions of the merger agreement and the other transaction documents.
49
On May 9, 2013, the special committee held a telephonic meeting with Goldman Sachs and
Shearman. Shearman updated the special committee as to progress and various developments, including the finalization of the draft merger agreement and the other transaction documents and Mr. Suns request regarding the cessation of the
Companys use of the Linkage trademarks and the release of Mr. Sun, Mr. Liu, Mr. Huang and certain other former stockholders of Linkage and their affiliates from their non-compete agreements. The special committee also discussed
with its advisors the provision by Goldman Sachs or certain of its affiliates, in matters unrelated to the proposed transaction, of investment banking services to affiliates of certain members of the consortium led by CITIC. After discussion, the
special committee requested Goldman Sachs to provide additional information about the services it had provided to the affiliates of such consortium members (including the fees it had earned). In light of, among other things, the identity of the
relevant consortium members, the relative participation of each of the relevant consortium members in the proposed transaction, and the fact that they had become part of the consortium only relatively recently in the entire strategic review process,
the special committee determined that Goldman Sachs remained free from any material conflicts of interest that could impact its ability to provide the committee with independent financial advice. After discussion, the special committee decided to
propose a meeting of our board of directors for Sunday, May 12, 2013.
On May 9, 2013, pursuant to the special
committees request, Goldman Sachs provided to the special committee detailed information in respect of its services to and fees earned from certain members of the consortium led by CITIC in the proposed transaction. The special committee had
no further questions after reviewing the additional information provided by Goldman Sachs.
On May 10, 2013, after a
majority of the members of our board of directors had confirmed their availability to attend a special meeting of our board of directors on May 12, 2013, a special meeting of our board of directors was called for May 12, 2013 to discuss
the proposed transaction. Together with the meeting notice, each member of our board of directors received certain materials including the full package of finalized transaction documents.
On May 11, 2013, Davis Polk informed Shearman that ICBCI and Maybank Investment Bank Berhad had agreed to join the syndicate of
banks providing debt financing in respect of the proposed transaction.
On May 11, 2013, the Companys legal
department circulated to the special committee and our board of directors, including Mr. Sun, a memorandum setting forth managements view that Mr. Suns requests regarding the Linkage trademarks and non-compete agreements had no
legal basis.
In the morning of May 12, 2013, a special meeting of our board of directors was convened via
teleconference, with Goldman Sachs and Shearman in attendance, to discuss the proposed transaction. All directors were in attendance except Mr. Huang. Mr. Huang had initially indicated that he could attend the meeting of our board of
directors scheduled for the morning of May 12, 2013 but subsequently stated that he was not available that morning and would not be available, even to attend a teleconference, for several days. After discussion with its advisors, and
considering both the likelihood that delaying the meeting of our board of directors to even the earliest date Mr. Huang indicated he might be available could be viewed negatively by CITIC and introduce uncertainty in the transaction, and that
all other directors indicated they could attend the currently scheduled meeting, the special committee decided not to recommend rescheduling the meeting of our board of directors.
At the special meeting of our board of directors on May 12, 2013, Mr. Sun requested (i) additional time to review the
draft transaction documents and the fairness of the merger consideration and (ii) certain additional information in respect of the bid process and Goldman Sachss financial analysis. After discussion, Mr. Sun agreed that the meeting
should continue as planned, with his request to be considered at the time of the vote by the directors in respect of the transaction. Following an overview provided by Mr. Mackenzie, who acted as chairman of the special meeting of our board of
directors, as to the work undertaken by the special committee to date in connection with the transaction, Goldman Sachs reported in further detail to our board of directors on the process conducted by the special committee and its advisors in
connection with the proposed transaction and
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Shearman reported to our board of directors the major commercial terms of the proposed transaction and briefed our board of directors regarding the directors fiduciary duties. Messrs. Ding,
Tian and Zhang recused themselves from further deliberation of our board of directors and left the meeting. Goldman Sachs then presented to the remaining directors its financial analysis, and reviewed the alternatives available to the Company,
including the possibility of remaining independent either with or without a levered recapitalization, a share buyback or the declaration of a special dividend.
After Goldman Sachss responses to questions from the directors, the special meeting of our board of directors adjourned, and the special committee held a telephonic meeting with Goldman Sachs and
Shearman. The special committee discussed with its advisors the substantive and procedural factors of the proposed transaction including the updated terms of the transaction documents. Goldman Sachs reviewed with the special committee its financial
analysis and delivered to the special committee its oral opinion, which was subsequently confirmed in writing, that, as of May 12, 2013, and based upon and subject to the limitations and assumptions set forth in the written opinion, the
consideration of US$12.00 in cash to be paid for each share of the Company common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the Sponsors and their
respective affiliates) of shares of the Company common stock. The special committee considered the potential strategic alternatives presented by Goldman Sachs to our board of directors and determined that other alternatives were less favorable to
the unaffiliated stockholders than the transactions contemplated by the merger agreement given the potential rewards, risks and uncertainties associated with those alternatives. The special committee also considered Mr. Suns requests for
additional time and information and decided that based on the facts of the transaction, including the fact that each director had been given sufficient time and information, it would not recommend delaying the vote of our board of directors. The
special committee then unanimously resolved to, among other things, recommend that our board of directors adopt resolutions approving the Merger Agreement and declaring its advisability.
Following the meeting of the special committee, our board of directors reconvened its special meeting via teleconference, with Messrs.
Ding, Tian and Zhang rejoining the meeting. After the special committee reported its recommendations, and after discussion among the members of our board of directors, all directors present at the meeting except for Mr. Sun voted against
Mr. Suns request to postpone action on the resolutions in respect of the proposed transaction. Our board of directors then proceeded to vote on the transaction and decided, by a vote of 7-1, to adopt resolutions, among other things,
approving the Merger Agreement and declaring its advisability. Mr. Sun voted against such resolutions based on his assertion that he did not have sufficient time to consider the proposed transaction.
Later in the day on May 12, 2013, the Company, Parent and Merger Sub executed the Merger Agreement and the parties to the other
transaction documents executed such other transaction documents that, on their terms, were to be executed simultaneously with the Merger Agreement.
On May 12, 2013, the Companys relevant subsidiaries and employees and other parties to the VIE transfer documents executed the VIE transfer documents.
On May 13, 2013, prior to the opening of the U.S. financial markets, the Company issued a press release announcing the execution of
the Merger Agreement and the limited guarantees.
During August 2013, Mr. Sun initiated separate discussions with the
Company and CITIC regarding a possible sale of a portion of his Company common stock. He discussed with the Company a potential sale of a portion of his shareholding in the public market under Rule 144. In connection with his possible Rule 144 sale,
Mr. Sun requested the Company to remove restrictive legends on certain of his shares and made related representations about his planned sale, including his bona fide intention to sell the shares within a reasonable period of time. Mr. Sun
discussed with CITIC a potential privately negotiated sale of a portion of his shareholding to CITIC and/or other members of the buyer group to satisfy liquidity needs. These discussions with CITIC were preliminary in nature, did not involve any
discussions as to the price at which any such sale would
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occur, and did not lead to an agreement. At the end of August 2013, Mr. Sun informed CITIC that he was no longer interested in exploring a possible sale to CITIC and/or other members of the
buyer group. Mr. Sun requested CITIC to increase the merger consideration to US$13.00 per share. Mr. Sun told CITIC that if it increased the merger consideration to US$13.00 per share he would commit to support the proposed merger and vote
his shares to adopt the merger agreement at the special meeting of the stockholders of the Company. CITIC responded that it was not willing to increase the merger consideration, that CITIC believes that the merger consideration is full and fair, and
that CITIC hopes Mr. Sun will support the proposed merger.
Purposes and Reasons of Our Board of
Directors and Special Committee for the Merger
The special committee and our board of directors believe that, as a
privately-held entity, the Companys management may have greater flexibility to focus on improving the Companys financial performance without the constraints caused by the public equity markets valuation of the Company and emphasis
on short-term period-to-period performance. As a publicly traded entity, the Company faces pressure from public stockholders and investment analysts to make decisions that might produce better short-term results, but over the long term lead to a
reduction in the per share price of the Companys publicly traded common stock.
The special committee and our board of
directors also believe that it is appropriate for the Company to undertake the merger and terminate the registration of Company common stock at this time due to the high costs of remaining a public company, including the cost of complying with the
Sarbanes-Oxley Act of 2002 and other U.S. federal securities laws. We estimate such costs to be, on an annualized basis, approximately US$2.0 million for service fees and expenses of public accountants (excluding fees and expenses relating to the
merger), approximately US$0.5 million for fees and expenses of U.S. securities counsel (excluding fees and expenses relating to the merger) and US$0.09 million for fees and expenses of the Companys investor relations firm (excluding fees and
expenses relating to the merger). These costs are ongoing, comprise a significant element of our corporate overhead expense, and are difficult to reduce. In addition to the direct out-of-pocket costs associated with SEC reporting and compliance, the
Companys management and accounting staff, which comprises a handful of individuals, need to devote significant time to these matters.
Furthermore, as an SEC-reporting company, the Company is required to disclose a considerable amount of business information to the public, some of which would be considered proprietary and would not be
disclosed by a non-reporting company. As a result, our actual or potential competitors, customers, lenders and vendors all have ready access to this information which potentially may help them compete against us or make it more difficult for us to
negotiate favorable terms with them, as the case may be.
The special committee and our board of directors also believe that
it is appropriate for the Company to undertake the merger and terminate the registration at this time because the merger consideration of US$12.00 represents a premium over recent market prices of shares of Company common stock.
Based on the foregoing considerations, each of the special committee and our board of directors has concluded that it is more beneficial
to the Company to undertake the proposed merger and become a private company than to remain a public company.
Recommendation of Our Board of Directors and Special Committee; Reasons for Recommending the Adoption of the Merger
Agreement; Fairness of the Merger
At a meeting on May 12, 2013, the special committee unanimously recommended that
our board of directors adopt resolutions that:
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determine that the merger is fair and advisable to, and in the best interests of, the Company and the unaffiliated stockholders;
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approve the merger agreement and declare its advisability;
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recommend that the stockholders of the Company adopt the merger agreement;
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direct that the merger agreement be submitted to the stockholders of the Company for their adoption at a special meeting of the stockholders of the
Company; and
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approve the merger agreement, the rollover agreements, the voting agreement, the consortium agreement and any additional rollover agreements and the
transactions contemplated thereby for purposes of Section 203 of the DGCL.
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On May 12, 2013, our
board of directors adopted resolutions as recommended by the special committee. In reaching these determinations, our board of directors considered the special committees unanimous recommendation and adopted resolutions that:
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determine that the merger is fair and advisable to, and in the best interests of, the Company and the unaffiliated stockholders;
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approve the merger agreement and declare its advisability;
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recommend that the stockholders of the Company adopt the merger agreement;
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direct that the merger agreement be submitted to the stockholders of the Company for their adoption at a special meeting of the stockholders of the
Company; and
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approve the merger agreement, the rollover agreements, the voting agreement, the consortium agreement and any additional rollover agreements and the
transactions contemplated thereby for purposes of Section 203 of the DGCL.
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The merger agreement
and the merger were approved by a majority of the directors of the Company who are not employees of the Company. Please note that one of our directors, Mr. Libin Sun, voted against the foregoing recommendations and one of our directors was
absent from the meeting at which our board of directors approved these recommendations.
In the course of reaching their
respective determinations, the special committee and our board of directors considered the following substantive factors and potential benefits of the merger, each of which the special committee and our board of directors believed supported their
respective decisions, but which are not listed in any order of importance:
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the fact that the form of consideration provides certainty of value, and the US$12.00 merger consideration represents a premium of
(i) approximately 21.0% over the closing price on January 19, 2012, the last trading day before the January 20 press release and 50.8% over the volume-weighted average closing price for the previous 30-trading day period ended
January 19, 2012 and (ii) approximately 2.7% over the closing price on May 10, 2013, the last trading day before the announcement of the merger agreement and 4.6% over the volume-weighted average closing price for the previous
30-trading day period ended May 10, 2013;
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the belief, after a review of strategic alternatives with the assistance of Goldman Sachs, including the possibility of remaining independent either
with or without a leveraged recapitalization, and combinations with other merger partners, that other alternatives were less favorable to the unaffiliated stockholders than the merger agreement given the potential risks, rewards and uncertainties
associated with those alternatives;
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the financial analyses presented by Goldman Sachs as well as the opinion of Goldman Sachs that, as of May 12, 2013, and based upon and subject to
the limitations and assumptions set forth in Goldman Sachs written opinion, the consideration of US$12.00 in cash to be paid for each share of Company common stock pursuant to the merger agreement was fair from a financial point of view to the
holders (other than Parent, the Rollover Stockholders, the sponsors and their respective affiliates) of shares of Company common stock;
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the likelihood that the merger would be completed based on, among other things (not in any order of importance):
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the fact that Parent and Merger Sub had obtained equity and debt commitments for the transaction in the forms provided to the special committee, the
limited number and nature of conditions to the equity and debt financing, the reputation of the financing sources and the obligation of Parent to use its reasonable best efforts to obtain the financing, and the receipt of limited guarantees and/or
the payment agreement, each of which, in the reasonable judgment of the special committee, increases the likelihood of such financings being completed;
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the likelihood and anticipated timing of completing the merger in light of the scope of the conditions to completion; and
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the fact that the merger agreement provides that, in the event of a failure of the merger to be consummated under certain circumstances, Parent will
pay the Company a termination fee in the amount of US$18 million or US$36 million, as applicable, without the Company having to establish any damages, plus up to US$5 million in expenses, and the guarantee of such payment obligation by the
guarantors pursuant to the limited guarantees and/or the payment agreement; and
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the other terms of the merger agreement and related agreements, including:
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the ability of the Company to grant a waiver, amendment or release under any standstill agreement for the purpose of allowing an acquisition proposal;
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the ability of the Company to furnish information to and engage in discussions or negotiations with a third party under certain circumstances permitted
under the merger agreement;
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the ability, under certain circumstances, to withdraw or modify the recommendation regarding the merger;
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the Companys ability, under certain circumstances, to terminate the merger agreement to enter into an agreement providing for a superior
proposal; provided, that the Company complies with its obligations to pay to Parent a US$18 million termination fee, plus up to US$5 million in expenses; and
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the termination fee and expenses payable to Parent under certain circumstances, including as described above, in connection with the termination of the
merger agreement, which the special committee concluded were reasonable in the context of termination fees and expenses payable in comparable transactions and in light of the overall terms of the merger agreement.
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Neither the special committee nor our board of directors considered the Companys net book value, which is defined as total assets
minus total liabilities, attributable to the stockholders of the Company as a factor because they believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs.
The Companys net book value per share as of December 31, 2012 was US$13.99, based on the weighted average number of outstanding shares of Company common stock during the fiscal year 2012. Net book value does not take into account the
future prospects of the Company, market conditions, trends in the industry in which the Company conducts its business or the business risks inherent in competing with other companies in the same industry.
Neither the special committee nor our board of directors considered the liquidation value of the Companys assets because each
considers the Company to be a viable going concern business where value is derived from cash flows generated from its continuing operations. In addition, the special committee and our board of directors believe that the value of the Companys
assets that might be realized in a liquidation would be significantly less than its going concern value. In the course of reaching their respective conclusions regarding the fairness of the merger to the unaffiliated stockholders of the Company and
their respective decisions to recommend the adoption
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of the merger agreement, neither the special committee nor our board of directors sought to establish a pre-merger going concern value for the Company in determining the fairness of the merger
consideration to the Companys unaffiliated stockholders because they did not believe there was a single method for determining going concern value. However, each of the special committee and our board of directors believed that the financial
analyses presented by Goldman Sachs (i.e., implied premia and multiples analysis, selected public companies analysis, historical trading multiples analyses, illustrative present value of future stock price analysis, illustrative discounted cash flow
analysis, illustrative leveraged buyout analysis, and selected precedent transactions analysis as each is more fully summarized below under the caption
Special FactorsOpinion of Goldman Sachs, Financial Advisor to the Special
Committee
) represented potential valuations of the Company as it continues to operate its business, and, to that extent, the special committee and our board of directors collectively characterized such analyses as forms of going concern
valuations. The special committee and our board of directors considered each of these analyses in the context of the fairness opinion provided by Goldman Sachs as well as various additional factors, including the historical market prices of our
shares as described under the caption
Market Price and Dividend Information
beginning on page 128, as the trading price of the shares of Company common stock at any given time represents the best available indicator of the
Companys going concern value at that time so long as the trading price at that time is not impacted by speculation regarding the likelihood of a potential transaction.
In addition, the special committee and our board of directors believe that sufficient procedural safeguards were and are present to
ensure that the merger, based upon the terms of the merger agreement, was procedurally fair to the unaffiliated stockholders and to permit the special committee and our board of directors to represent effectively the interests of such unaffiliated
stockholders. These procedural safeguards, which are not listed in any order of importance, are discussed below:
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the fact that the special committee is comprised of three independent directors who (i) are not employees or officers of the Company,
(ii) are not affiliates of any member of the buyer consortium and (iii) do not have a material financial interest in the merger;
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the fact that the determination to engage in discussions related to the merger and the consideration and negotiation of the price and other terms of
the merger and alternatives thereto (including remaining a standalone entity either alone or in combination with a leveraged recapitalization) was conducted under the oversight of the special committee; and the special committee was given authority
to, among other things, recommend to our board of directors what action should be taken by the Company, including not to engage in the merger;
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the fact that the special committee and our board of directors had no obligation to recommend the adoption of the merger agreement or any other
transaction;
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the fact that the Company publicly announced the receipt of a non-binding proposal from Power Joy in January 2012 in the press release dated
January 20, 2012, and issued other press releases as to the special committee process;
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the fact that the special committee and Goldman Sachs oversaw a process to identify and seek offers from interested third parties, during which, in
addition to Power Joy, (i) Goldman Sachs contacted 48 potential acquirors regarding their potential interest in the Company (including 19 potential strategic acquirors and 29 potential financial acquirors), (ii) the Company entered
into confidentiality agreements with, and provided nonpublic information to, 15 potential acquirors and (iii) 5 potential acquirors (including Power Joy) received detailed management presentations;
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the fact that the special committee was advised by its legal counsel and its financial advisor and the fact that the special committee requested and
received from Goldman Sachs an opinion that, as of May 12, 2013, and based upon and subject to the limitations and assumptions set forth in Goldman Sachs written opinion, the consideration of US$12.00 in cash to be paid for each share of
Company common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the sponsors and their respective affiliates) of shares of Company common stock;
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the fact that the special committee engaged in active negotiations with CITIC Capital China Partners II, L.P. regarding the merger consideration and
the other terms of the merger, the merger agreement and related documents;
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the recognition by the special committee that, given the relatively low percentage of outstanding shares of Company common stock beneficially owned by
the buyer consortium, because the adoption of the merger agreement requires the approval of the affirmative vote of the holders of a majority of the outstanding shares of Company common stock, a substantial vote of the unaffiliated stockholders will
still be required to adopt the merger agreement even without the express condition that the merger must be approved by a majority of the unaffiliated stockholders;
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the ability of stockholders who comply with all of the required procedures within the applicable time periods under Delaware law to seek appraisal of
the fair value of their shares of Company common stock; and
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the fact that while, pursuant to the voting agreement, the parties to the voting agreement have committed to vote in favor of adopting the merger
agreement and approving the merger, such commitments terminate automatically upon termination of the merger agreement in accordance with its terms, including termination by the Company to accept a superior proposal and in other circumstances
specified in the voting agreement.
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The special committee and our board of directors also considered a
variety of potentially negative factors discussed below concerning the merger agreement and the merger, which are not listed in any order of importance:
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the risk that the merger might not be completed in a timely manner or at all, including the risk that the merger will not occur if the equity financing
or debt financing is not obtained;
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the risks and costs to the Company if the merger does not close, including the diversion of management and employee attention, potential employee
attrition and the potential disruptive effect on the Companys various business relationships;
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the fact that following the completion of the merger, the unaffiliated stockholders would not be able to participate in the future growth or earnings
of the Company;
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the restrictions on the Companys operations prior to completion of the merger, which may delay or prevent the Company from undertaking business
opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending the completion of the merger;
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the possibility that the US$18 million termination fee, plus up to US$5 million in expenses, payable by the Company upon the termination of the merger
agreement under certain circumstances may discourage other potential acquirors from making an acquisition proposal for the Company;
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the risk that the voting agreement and certain of managements participation in the merger may deter third parties from submitting competing
proposals;
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the fact that if the merger is not completed, the Company will be required to pay its own expenses associated with the negotiation of the merger
agreement, and the transactions contemplated thereby, as well as, under certain circumstances, to pay Parent a US$18 million termination fee, plus up to US$5 million in expenses in connection with the termination of the merger agreement;
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the fact that Parent and Merger Sub are newly formed entities with essentially no assets other than the equity commitments of the sponsors, and that
the Companys remedy in the event of breach of the merger agreement by Parent or Merger Sub may be limited to receipt of the US$18 million or US$36 million, as applicable, reverse termination fee, plus up to US$5 million in expenses, and
that under certain circumstances the Company may not be entitled to a termination fee at all;
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the fact that an all cash transaction would be taxable to the Companys stockholders that are U.S. holders for U.S. federal income tax
purposes; and
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the terms of the Rollover Stockholders and any Additional Rollover Stockholders participation in the merger and the fact that certain of
the Companys executive officers and directors may have interests in the transaction that are different from, or in addition to, those of the unaffiliated stockholders.
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Except as discussed in
Special FactorsBackground of the Merger
,
Special FactorsRecommendation of
Our Board of Directors and Special Committee; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
, and
Special FactorsOpinion of Goldman Sachs, Financial Advisor to the Special
Committee
, no director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of unaffiliated security holders for purposes of negotiating the terms of the transaction and/or preparing a
report concerning the fairness of the transaction.
The special committee and our board of directors did not view the purchase
prices paid in the transactions described under
Common Stock Transaction Information
beginning on page 121 to be relevant except to the extent those prices indicated the trading price of the shares of Company common stock during
the applicable periods.
The Company is not aware of any firm offers made by any unaffiliated person, other than the buyer
consortium and six potential bidders as discussed in
Special FactorsBackground of the Merger
, during the past two years for: (i) the merger or consolidation of the Company with or into another company, or vice-versa;
(ii) the sale or other transfer of all or any substantial part of the assets of the Company; or (iii) a purchase of the Companys securities that would enable the holder to exercise control of the Company.
The foregoing discussion of information and factors considered by the special committee and our board of directors is not intended to be
exhaustive, but includes all of the material factors considered by the special committee and our board of directors. In view of the wide variety of factors considered by the special committee and our board of directors, neither the special committee
nor our board of directors found it practicable to, and neither did quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusion. In addition, individual members of the special committee and our board of
directors may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The special committee recommended that our board of directors approve, and our board of directors approved,
the merger agreement based upon the totality of the information presented to and considered by it.
The special committee
expressly adopted the analyses and the opinion of Goldman Sachs, among other factors considered, in reaching its determination as to the fairness of the transactions contemplated by the merger agreement.
In reaching its determination that the merger is fair and advisable to, and in the best interests of, the Company and the unaffiliated
stockholders, and its decision to approve the merger agreement and declare its advisability, to recommend that the stockholders of the Company adopt the merger agreement, to direct that the merger agreement be submitted to the stockholders of the
Company for their adoption at a special meeting of the stockholders of the Company, and to approve the merger agreement, the rollover agreements, the voting agreement, the consortium agreement and any additional rollover agreements and the
transactions contemplated thereby for purposes of Section 203 of the DGCL, our board of directors considered the analysis and recommendation of the special committee and the factors examined by the special committee as described above under the
captions
Special Factors Relating to the MergerPurposes and Reasons of Our Board of Directors and Special Committee for the Merger
and
Special Factors Relating to the MergerRecommendation of Our Board of
Directors and Special Committee; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
, and adopted such recommendations and analysis. For the foregoing reasons, our board of directors, on behalf of the
Company, believes that the merger agreement and the transactions contemplated thereby are fair to the unaffiliated stockholders.
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Our board of directors recommends that you vote FOR the proposal to adopt the
merger agreement, FOR the proposal to approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive officers of the Company
that are based on or otherwise relate to the merger, and FOR the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the
special meeting to adopt the merger agreement.
Opinion of Goldman Sachs, Financial Advisor to the Special
Committee
On May 12, 2013, at a meeting of the special committee, Goldman Sachs rendered to the special committee its
oral opinion, subsequently confirmed in writing, that, as of May 12, 2013, and based upon and subject to the limitations and assumptions set forth therein, the consideration of US$12.00 in cash to be paid for each share of Company common stock
pursuant to the merger agreement was fair from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the sponsors and their respective affiliates) of shares of Company common stock.
The full text of the written opinion of Goldman Sachs, dated May 12, 2013, which sets forth the assumptions made, procedures
followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this proxy statement as Annex H. The summary of the Goldman Sachs opinion provided in this proxy statement is
qualified in its entirety by reference to the full text of the written opinion. Goldman Sachs advisory services and opinion were provided for the information and assistance of the special committee in connection with its consideration of the
proposed merger and the opinion does not constitute a recommendation as to how any holder of shares of Company common stock should vote with respect to the proposed merger or any other matter.
In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among
other things:
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annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five fiscal years ended December 31, 2011;
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certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company;
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certain other communications from the Company to its stockholders;
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certain publicly available research analyst reports for the Company; and
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certain internal financial analyses and forecasts for the Company prepared by its management as approved for Goldman Sachs use by the special
committee (the
Management Forecasts
), which are presented under
Special Factors Relating to the MergerProspective Financial Information2013 Projections
.
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Goldman Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and
current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for shares of Company common stock; compared certain financial and stock market information for the Company with
similar information for certain other companies of which the securities are publicly traded; reviewed the financial terms of certain recent business combinations in the Chinese telecom service industry and in other industries; and performed such
other studies and analyses, and considered such other factors, as it deemed appropriate.
For purposes of rendering its
opinion, Goldman Sachs, with the consent of the special committee, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and
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other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed, with the special
committees consent, that the Management Forecasts had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or any of its subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal.
Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the proposed transaction would be obtained without any adverse effect on the Company or on the expected benefits of the
proposed transaction in any way meaningful to its analysis. Goldman Sachs assumed that the proposed transaction would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the
effect of which would be in any way meaningful to its analysis.
Goldman Sachs opinion did not address the underlying
business decision of the Company to engage in the proposed transaction, or the relative merits of the proposed transaction as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax
or accounting matters. Goldman Sachs opinion addressed only the fairness from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the sponsors and their respective affiliates) of shares of Company common
stock, as of the date of the opinion, of the US$12.00 per share to be paid to such holders pursuant to the merger agreement. Goldman Sachs did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement
or the proposed transaction or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the proposed transaction, including, the fairness of the proposed transaction
to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable
to any of the officers, directors or employees of the Company, or class of such persons, in connection with the proposed transaction, whether relative to the US$12.00 per share to be paid to the holders of shares of Company common stock pursuant to
the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the impact of the proposed transaction on the solvency or viability of the Company or Parent or the ability of the Company or Parent to pay their respective
obligations when they come due. Goldman Sachs opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, May 12, 2013 and Goldman Sachs
assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after such date. Goldman Sachs advisory services and its opinion were provided for the information and
assistance of the special committee in connection with its consideration of the proposed transaction and such opinion does not constitute a recommendation as to how any holder of shares of Company common stock should vote with respect to the
proposed transaction or any other matter. Goldman Sachs opinion was approved by a fairness committee of Goldman Sachs.
The following is a summary of the material financial analyses presented by Goldman Sachs to the special committee on May 12, 2013 in
connection with rendering the opinion described above. Goldman Sachs analyses and the summary below must be considered as a whole and selecting portions of its analyses and factors could create a misleading or incomplete view of Goldman
Sachs analyses and opinion. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight
given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description
of Goldman Sachs financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 8, 2013 and is not necessarily
indicative of current market conditions.
59
Implied Premia and Multiples Analysis
Goldman Sachs calculated the premium or discount represented by the merger consideration of US$12.00 per share of Company common
stock to the following reference share prices of Company common stock:
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|
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the closing price of Company common stock on May 8, 2013;
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|
the closing price of Company common stock on January 19, 2012, the last trading day before the Company publicly announced its receipt of a
proposal to acquire 100% of the Companys equity;
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the closing price of Company common stock on January 11, 2012, the last trading day prior to the day the Company received a going
private proposal from CITIC Capital Partners;
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the highest and lowest closing price of Company common stock during the 52-week and 2-year periods ended May 8, 2013, respectively; and
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the volume weighted average trading price of Company common stock during the 1-month and
3-month
periods ended
May 8, 2013, respectively.
|
By multiplying the merger consideration of US$12.00 by the total number of
fully diluted outstanding shares of Company common stock calculated using the treasury method, Goldman Sachs derived an implied equity value of the Company of approximately US$896.7 million. Goldman Sachs then subtracted from this implied equity
value the sum of the Companys cash and short-term investments of approximately US$292.4 million and the aggregate loss of approximately US$4.6 million associated with minority interests in other businesses held by the Company as reflected
in the Companys publicly filed financial statements for the period ended March 31, 2013 and derived an implied enterprise value of the Company of approximately US$599.7 million.
Using the results of the calculations described above, the Companys actual financial results for 2012 reflected in its publicly
filed financial statements, Management Forecasts for 2013 and 2014 and the selected estimates for the Companys 2013 and 2014 financial results published by Institutional Brokers Estimate System, or IBES, Goldman Sachs calculated the
following multiples:
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the implied enterprise value as a multiple of the Companys earnings before interest, taxes, depreciation and amortization, or EBITDA, for 2012;
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the implied enterprise value as a multiple of the Companys estimated EBITDA for 2013 published by IBES and the Companys estimated EBITDA
for 2013 and 2014 contained in the Management Forecasts;
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the merger consideration as a multiple of the Companys earnings per share, or EPS, for 2012; and
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the merger consideration as a multiple of the Companys estimated EPS for 2013 and 2014 published by IBES or contained in the Management
Forecasts, as applicable.
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60
The results of these analyses are summarized as follows:
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Premium/Discount to
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5/8/2013 Close
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2.7
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%
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1/19/2012 Close
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21.0
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%
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1/11/2012 Close
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52.3
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%
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52-Week High
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(6.2
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)%
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52-Week Low
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26.1
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%
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2-Year High
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|
(40.6
|
)%
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2-Year Low
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87.5
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%
|
1-Month Volume Weighted Average Price
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5.4
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%
|
3-Month Volume Weighted Average Price
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5.4
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%
|
Enterprise Value / EBITDA
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2012A
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7.6
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x
|
2013EIBES
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9.6
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x
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2013EManagement
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6.8
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x
|
2014EManagement
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4.9
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x
|
Merger Consideration/EPS
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2012A
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10.4
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x
|
2013EIBES
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|
10.3
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x
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2014EIBES
|
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9.7
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x
|
2013EManagement
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10.2
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x
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2014EManagement
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8.2
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x
|
Selected Public Companies Analysis
Goldman Sachs calculated and compared certain financial information and multiples for the Company to corresponding financial information and multiples for the following selected companies in the Chinese
IT service industry:
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Pactera Technology International Ltd. (
Pactera
)
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|
iSoftStone Holdings Limited (
iSoftStone
)
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Although neither of the selected companies is directly comparable to the Company, the companies were chosen because they are U.S.
publicly traded companies in the Chinese IT service industry with operations that, for purposes of analysis, may be considered similar to certain operations of the Company.
With respect to the Company and each of the selected companies, Goldman Sachs calculated:
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enterprise value as a multiple of estimated EBITDA for 2013 and 2014;
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|
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|
closing share price on May 8, 2013, as a multiple of estimated EPS for 2013 and 2014.
|
61
For purposes of these calculations, Goldman Sachs calculated an implied equity value for
each company derived by multiplying the number of fully diluted outstanding shares of that company as reported in its most recent public filings by the companys closing share price on May 8, 2013. By adding the net debt amount of each
company as reported in its most recent public filings to the equity value of such company derived from the foregoing calculations, Goldman Sachs determined an implied enterprise value for each company. The multiples for the Company were calculated
using both the Management Forecasts and the most recent median estimates for the Company published by IBES or other Wall Street research analysts. The multiples for each of the selected companies were calculated using the most recent median
estimates for each company published by IBES or other Wall Street research analysts. The following table presents the results of these calculations:
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Company
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|
Selected Companies
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|
IBES
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|
Management
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|
Pactera
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|
iSoftStone
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Mean
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|
Enterprise Value/Estimated EBITDA
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2013E
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|
9.2x
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6.5x
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|
3.8x
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|
3.7x
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3.8x
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|
2014E
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|
N/A
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|
4.7x
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|
2.8x
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|
N/A
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|
2.8x
|
|
Price/Estimated EPS
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2013E
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10.1x
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|
9.9x
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6.8x
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|
6.2x
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|
6.5x
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|
2014E
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|
9.4x
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|
8.0x
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|
5.4x
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|
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|
5.2x
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|
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|
5.3x
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|
Based on its review of the foregoing calculations and applying its professional judgment:
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|
Goldman Sachs applied illustrative price/EPS multiples ranging from 5.5x to 7.5x to the Companys estimated EPS for 2013 contained in the
Management Forecasts to derive illustrative implied values per share of Company common stock ranging from US$6.51 to US$8.88.
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|
Goldman Sachs applied illustrative price/EPS multiples ranging from 4.5x to 6.0x to the Companys estimated EPS for 2014 contained in the
Management Forecasts to derive illustrative implied values per share of Company common stock ranging from US$6.56 to US$8.75.
|
Historical Trading Multiples Analyses
Goldman Sachs calculated the historical price/EPS multiples for each of the Company and the selected companies above based on the closing prices for the shares of their respective common stock during the
period from May 6, 2011 through May 8, 2013 and the estimated 1-year forward EPS for each company published by Bloomberg, Capital IQ or IBES during the same period. Using the methodologies described above, Goldman Sachs derived implied
enterprise values of each company using their respective closing share prices during the period from May 6, 2011 through May 8, 2013 and calculated the historical enterprise value/EBITDA multiples based on the estimated 1-year forward
EBITDA for each company published by Bloomberg, Capital IQ or IBES during the same period. This analysis did not include the enterprise value/EBITDA multiples for Pactera over the period from November 13, 2012 through March 13, 2013 as the
predecessor of Pactera merged with another company in November 2012 and IBES did not publish estimated EBITDA for Pactera on a consolidated basis during that period. The following table presents the results of this analysis:
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High
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|
Low
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|
Median
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|
Mean
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|
Historical 1-Year Forward Price/EPS
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Company
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|
12.6x
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|
3.9x
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|
9.4x
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|
8.8x
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|
Selected Companies
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|
31.3x
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|
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|
6.4x
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|
11.3x
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|
12.3x
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|
Historical 1-Year Forward EV/EBITDA
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|
Company
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|
9.0x
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|
1.8x
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|
6.1x
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|
5.8x
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|
Selected Companies
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|
21.3x
|
|
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|
3.0x
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|
7.7x
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|
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|
8.3x
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|
Illustrative Present Value of Future Stock Price Analysis
Goldman Sachs calculated an illustrative range of implied present values per share of Company common stock as of the beginning of 2013
based on illustrative share prices for Company common stock as of the end of
62
2015. For purposes of this analysis, Goldman Sachs derived these illustrative future share prices for Company common stock as of the end of 2015 by applying an illustrative range of one-year
forward price/EPS multiples of 5.5x to 7.5x to the Companys estimated EPS for 2016 as reflected in the Management Forecasts. By applying discount rates ranging from 13.0% to 15.0%, reflecting an estimate of Companys cost of equity, to
these hypothetical future share prices, Goldman Sachs derived an illustrative range of present values per share of Company common stock of US$7.22 to US$10.38. The discount rates were derived by application of the Capital Asset Pricing Model, which
takes into account certain Company-specific metrics, including the Companys target capital structure and historical beta, as well as certain financial metrics for the financial markets generally.
Illustrative Discounted Cash Flow Analysis
Goldman Sachs performed an illustrative discounted cash flow analysis to determine the present value per share of Company common stock as of the beginning of 2013. For purpose of this analysis, Goldman
Sachs applied discount rates ranging from 16.3% to 18.3%, reflecting an estimate of the Companys weighted average cost of capital, to (a) the Companys estimated unlevered free cash flow for the years 2013 through 2016, and
(b) illustrative terminal values for the Company at the end of 2016. The range of discount rates was derived by application of the Capital Asset Pricing Model, which takes into account certain Company-specific metrics, including the
Companys target capital structure, the cost of long-term debt, after-tax yield on permanent excess cash, if any, forecast tax rate and historical beta, as well as certain financial metrics for the financial markets generally. Unlevered free
cash flow was calculated based on the Management Forecasts as the Companys projected earnings before interest, tax and amortization (
EBITA
), minus taxes (calculated by multiplying the statutory domestic tax rate of 25% by
the Companys projected domestic EBITA), plus depreciation, minus projected capital expenditures and minus the projected increase in net working capital. In calculating the unlevered free cash flow, stock-based compensation was treated as a
cash expense. The illustrative terminal values were derived by applying perpetuity growth rates ranging from 0.0% to 4.0% (which implied price/EPS multiples ranging from 5.3x to 6.5x) to the Companys estimated unlevered free cash flow for
2016. The range of perpetuity growth rates was estimated by Goldman Sachs based on its professional judgment and experience, taking into account the Management Forecasts and market expectations regarding long-term growth of gross domestic product
and inflation in the PRC. Goldman Sachs added the net cash amount of the Company as of March 31, 2013 as reflected in the Companys most recent public filings to the sum of the present values of unlevered future free cash flows and
terminal values to derive an illustrative range of present equity value of the Company. By dividing this range of present equity values of the Company by the total number of fully diluted shares outstanding, Goldman Sachs derived illustrative
present values per share of Company common stock as of the beginning of 2013 ranging from US$10.61 to US$12.91.
Illustrative
Leveraged Buyout Analysis
Goldman Sachs performed an illustrative leveraged buyout analysis to determine the range of
prices per share of Company common stock a financial buyer would be willing to pay to acquire the Company on a stand-alone basis. For purpose of this analysis, Goldman Sachs assumed a target exit date of December 31, 2015, an internal rate of
return ranging from 20.0% to 25.0% to be realized upon exit, and an exit one-year forward price/EPS multiple ranging from 5.5x to 7.5x. The assumed range of internal rate of return was determined by Goldman Sachs based on its professional judgment
and experience as to a customary range of target internal rate of return that would be acceptable to a typical financial sponsor. The assumed range of exit one-year forward price/EPS multiple was determined by Goldman Sachs based on its review of
the one year forward price/EPS multiples calculated with respect to the selected companies discussed under the
Opinion of Goldman Sachs, Financial Advisor to the Special CommitteeSelected Public Companies Analysis
.
Based upon the Companys estimated EPS for 2016 reflected in the Management Forecasts, a hypothetical bank loan of
US$330 million (which is the amount of the debt financing available for the proposed merger) at an interest rate of LIBOR plus 3.25% per annum, and estimated transaction expenses of US$18 million, Goldman Sachs derived illustrative per share
purchase prices for Company common stock ranging from US$8.87 to US$11.79.
63
Selected Precedent Transactions Analysis
Goldman Sachs analyzed certain publicly available information relating to the following transactions involving an acquisition of 100% of
the equity interest in a target company in the global information technology service industry for cash:
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|
|
|
|
Date Announced
|
|
Acquiror
|
|
Target
|
July 2012
|
|
SAIC Inc.
|
|
MaxIT Healthcare LLC
|
May 2012
|
|
CGI Holdings Europe Ltd.
|
|
Logica plc.
|
March 2012
|
|
NEC Corp.
|
|
Information management business of Convergys Corp
|
April 2011
|
|
Apax Partners LP
|
|
Activant Solutions Inc.
|
January 2011
|
|
Pan-Asia iGate Solutions and iGATE Global Solutions Limited
|
|
Patni Computer Systems Ltd.
|
September 2009
|
|
Adobe Systems Inc
|
|
Omniture Inc
|
July 2008
|
|
BAE Systems (Holdings) Ltd.
|
|
Detica Group PLC
|
July 2007
|
|
Steria SA
|
|
Xansa PLC
|
July 2007
|
|
Court Square Capital Partners
|
|
CompuCom Systems Inc.
|
April 2007
|
|
Computer Sciences Corp.
|
|
Covansys Corp.
|
February 2007
|
|
Caritor, Inc.
|
|
Keane, Inc.
|
Although none of the selected transactions is directly comparable to the proposed merger, the target
companies in the selected transactions are such that, for purposes of analysis, the selected transactions may be considered similar to the proposed merger.
With respect to each of the selected transactions for which relevant information was publicly available, Goldman Sachs calculated the implied enterprise value of the target company based on the announced
transaction price, as a multiple of the target companys EBITDA for the last twelve-month period prior to the announcement of the transaction, or the
LTM EBITDA
. The following presents the results of these calculations
relating to selected transactions announced after July 1, 2010, the date on which the Company completed the merger with Linkage Technologies International Holdings Limited.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Transactions since 7/1/2010
|
|
|
|
High
|
|
|
Low
|
|
|
Median
|
|
Enterprise value/LTM EBITDA
|
|
|
8.2x
|
|
|
|
7.0x
|
|
|
|
7.9x
|
|
Based on its review of the foregoing calculations and applying its professional judgment, Goldman Sachs
applied enterprise value/LTM EBITDA multiples ranging from 7.0x to 8.2x to the Companys actual non-GAAP EBITDA for 2012 to derive a range of illustrative enterprise values of the Company. By adding the Companys net cash amount to these
illustrative enterprise values and dividing the results by the total number of fully diluted shares of the Company, Goldman Sachs derived illustrative implied values per share of Company common stock ranging from US$11.28 to US$12.54.
General
The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth
above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and
did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its
analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company or the proposed transaction.
64
Goldman Sachs prepared these analyses for purposes of providing its opinion to the special
committee as to the fairness from a financial point of view to the holders (other than Parent, the Rollover Stockholders, the sponsors and their respective affiliates) of Company common stock, as of May 12, 2013, of the US$12.00 per share to be
paid to such holders pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon projections of future
results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or
events beyond the control of the parties or their respective advisors, none of the Company, the special committee, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.
The merger consideration was determined through arms-length negotiations between the special committee and Parent and was approved
by our board of directors. Goldman Sachs provided advice to the special committee during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Company or the special committee or that any specific
amount of consideration constituted the only appropriate consideration for the proposed merger.
As described above, Goldman
Sachs opinion was one of many factors taken into consideration by the special committee in making its recommendation to our board of directors to approve the merger agreement. The foregoing summary does not purport to be a complete description
of the analyses performed by Goldman Sachs in connection with the delivery of its fairness opinion to the special committee and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex H to this proxy
statement.
Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing,
sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or
with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Parent,
any of their respective affiliates or any of the respective affiliates and portfolio companies of the Sponsors, or any currency or commodity that may be involved in the transaction contemplated by the merger agreement for the accounts of Goldman
Sachs (Asia) L.L.C. and its affiliates and employees and their customers. Goldman Sachs acted as financial advisor to the special committee in connection with, and has participated in certain of the negotiations leading to, the proposed transaction.
In addition, Goldman Sachs disclosed in its fairness opinion that Goldman Sachs provided certain investment banking services to Ellington and its affiliates and portfolio companies from time to time for which its Investment Banking Division has
received, and may receive, compensation, including having acted as joint bookrunning manager with respect to a public offering of 538,962,054 shares of CitySpring Infrastructure Trust, a portfolio company of affiliates of Ellington, pursuant to a
rights issuance in September 2011; as financial advisor to Global Crossing Limited, which at the time was a portfolio company of an affiliate of Ellington, in connection with its sale in October 2011; and as joint bookrunning manager with respect to
the public offering of 2.375% Notes due 2023 (aggregate principal amount of US$1,200,000,000) and 3.375% Notes due 2042 (aggregate principal amount of US$500,000,000) by Temasek Financial (I) Limited and guaranteed by Ellington in July 2012.
Goldman Sachs disclosed in its fairness opinion that Goldman Sachs also provided certain investment banking services to the AlpInvest Entities and their affiliates and portfolio companies from time to time for which its Investment Banking Division
has received, and may receive, compensation, including having acted as joint bookrunning manager with respect to a public offering of 34,500,000 shares of common stock of Nielsen Holdings N.V., a portfolio company of the AlpInvest Entities, in March
2012. The AlpInvest Entities have not had, and do not have, a controlling interest in Nielsen Holdings N.V. Goldman Sachs disclosed in its fairness opinion that Goldman Sachs also provided certain investment banking services to affiliates of
Al Gharrafa and their portfolio companies from time to time for which its Investment Banking Division has received, and may receive, compensation. During the two year period ended May 12, 2013, the Investment Banking Division of Goldman
Sachs had received compensation for such financial advisory and
65
underwriting services provided to affiliates and portfolio companies of the sponsors and portfolio companies of such affiliates of the sponsors (including companies not controlled by the sponsors
or their affiliates) specifically described above of approximately US$25,000,000. During the two year period ended May 12, 2013, Goldman Sachs had not been engaged to provide financial advisory or underwriting services to any other sponsors or
their affiliates for which the Investment Banking Division of Goldman Sachs had received compensation. Goldman Sachs may in the future provide investment banking services to the Company, Parent, the sponsors and their respective affiliates and
portfolio companies for which its Investment Banking Division may receive compensation. Affiliates of Goldman Sachs also may have co-invested with certain of the sponsors and their respective affiliates from time to time and may have invested in
limited partnership units of affiliates of certain of the sponsors from time to time and may do so in the future.
The
special committee selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the proposed transaction. Pursuant to a letter
agreement, dated February 7, 2012, the special committee engaged Goldman Sachs to act as its financial advisor in connection with the transaction. Pursuant to the terms of this engagement letter, the Company has agreed to pay Goldman Sachs fees
of approximately US$8 million in the aggregate, approximately US$6 million of which is contingent upon the consummation of the proposed merger. In addition, the Company has agreed to reimburse Goldman Sachs for its expenses, including
attorneys fees and disbursements, and to indemnify Goldman Sachs and related persons against certain liabilities that may arise out of its engagement.
Copies of Goldman Sachs written opinion and presentation to the special committee on May 12, 2013 have been attached as exhibits to the Transaction Statement on Schedule 13E-3 filed with the
SEC in connection with the proposed transaction. These materials will be available for any interested stockholder of the Company (or any representative of a stockholder who has been so designated in writing) to inspect and copy at the Companys
principal executive offices during regular business hours.
Other Written Presentations by Goldman Sachs
In addition to the presentation made to the special committee described above, Goldman Sachs also made written and
oral presentations to the special committee in March, July, and November of 2012 and March 2013. Copies of these other written presentations by Goldman Sachs to the special committee have been attached as exhibits to the Transaction Statement on
Schedule 13E-3 filed with the SEC in connection with the proposed transaction. These written presentations will be available for any interested stockholder of the Company (or any representative of a stockholder who has been so designated in writing)
to inspect and copy at the Companys principal executive offices during regular business hours.
None of these other
written and oral presentations by Goldman Sachs, alone or together, constitutes an opinion of Goldman Sachs with respect to the consideration to be paid in the proposed transaction. Information contained in these other written and oral presentations
is substantially similar to the information provided in Goldman Sachs written presentation to the special committee on May 12, 2013, as described above. The March 2012 materials contained a review of CITICs initial non-binding
offer, an overview of the Companys historical trading performance, a discussion of the Companys strategic alternatives, selected financial analyses and initial process considerations. The July 2012 materials contained an updated review
of the Companys historical trading performance, a summary of then-current price targets and earnings estimates published by Wall Street analysts and illustrative financial analyses with respect to a hypothetical range of offer price from
US$12.50 to US$12.80 per share of Company common stock. The November 2012 materials contained a review of CITICs final offer, an updated overview of the Companys historical trading performance, a summary of then-current price
targets and earnings estimates published by Wall Street analysts and illustrative financial analyses with respect to CITICs final offer price of US$12.00 per share of Company common stock. The March 2013 materials contained an updated overview
of the Companys historical trading performance, a summary of then-current price targets and earnings estimates published by Wall Street analysts and updated illustrative financial
66
analyses with respect to CITICs final offer price of US$12.00 per share of Company common stock. These other written and oral presentations made by Goldman Sachs contained, among other
things, the following types of financial analyses:
|
|
|
implied transaction premia multiples analysis;
|
|
|
|
selected public companies analysis;
|
|
|
|
illustrative present value of future stock prices analysis;
|
|
|
|
illustrative discounted cash flow analysis;
|
|
|
|
illustrative leveraged buyout analysis; and
|
|
|
|
selected precedent transactions analysis.
|
The selected public companies analysis contained in the March 2012 presentation was performed using financial metrics of iSoftStone, HiSoft Technology International Limited (
HiSoft
) and
VanceInfo Technologies Inc. (
VanceInfo
) as comparable companies in the Chinese IT service industry as well as a selected group of international players in the global IT service arena. These international players were later
determined by Goldman Sachs as not being sufficiently comparable to the Company for purposes of analysis because they have most of their revenues generated in North America and Europe. Therefore, these international players were not used in the
selected public companies analyses in later presentations. In November 2012, HiSoft and VanceInfo merged to become Pactera. Accordingly, the selected public companies analyses contained in the March 2013 presentation and the presentation made to the
special committee on May 12, 2013 were performed using financial metrics of iSoftStone and Pactera. To the extent that any financial analysis contained in these other presentations utilized projections prepared by management of the Company, the
2012 Projections, as discussed under
Special Factors Relating to the MergerProspective Financial Information2012 Projections
, were used in the financial analyses contained in each of the presentations made in 2012. The
2013 Projections, which are the same as the Management Forecasts, were used in the financial analyses contained in the March 2013 presentation.
Not all of the other written and oral presentations contained all of the financial analyses listed above. The financial analyses in these other written and oral presentations were based on market,
economic and other conditions as they existed as of the dates of the respective presentations as well as other information that was available at those times. Accordingly, the results of the financial analyses differed due to changes in those
conditions. Among other things, multiples attributable to selected companies changed as those companies stock prices changed, and implied transaction multiples, illustrative discounted cash flow analyses and illustrative leveraged buyout
analyses changed as the Companys financial results (as well as projections made by management of the Company) changed. Finally, Goldman Sachs continued to refine various aspects of its financial analyses with respect to the Company over time.
Purposes and Reasons of the Buyer Consortium for the Merger
Under SEC rules governing going-private transactions, each member of the buyer consortium may be deemed to be an affiliate of
the Company and required to express its reasons for the merger to the unaffiliated stockholders. Each member of the buyer consortium is making the statements included in this section solely for the purpose of complying with the requirements of Rule
13e-3 and related rules under the Exchange Act.
For the buyer consortium, the primary purpose of the merger is to enable
Parent to acquire 100% control of the Company and to benefit from and bear 100% of the rewards and risks, respectively, of ownership of the Company, in a transaction in which the unaffiliated stockholders will receive US$12.00 per share of Company
common stock. In addition, the merger will allow the Rollover Stockholders and any Additional Rollover Stockholders to maintain their investment in the Company through their respective commitments to subscribe for equity investments in Holdco as
described in this proxy statement under the section captioned
Special Factors Relating to the MergerFinancing of the MergerRollover Financing
.
67
The buyer consortium believes that, after the Company becomes a privately held entity, the
Companys management will have greater flexibility to focus on improving the Companys long-term profitability without the constraints caused by the public equity markets valuation of the Company and emphasis on short-term
period-to-period performance. As a privately held entity, the Company will have greater flexibility to make decisions that might negatively affect short-term results but that could increase the Companys value over the long term. In contrast,
as a publicly traded entity, the Company faces pressure from public stockholders and investment analysts to make decisions that might produce improved short-term results, but which are not necessarily beneficial in the long term.
As a privately held entity, the Company will be relieved of many other expenses, burdens and constraints imposed on companies that are
subject to the public reporting requirements under the federal securities laws of the United States, including the Exchange Act and Sarbanes-Oxley Act of 2002. The need for the management of the Company to be responsive to the concerns of the
unaffiliated stockholders and to engage in dialogue with the unaffiliated stockholders can also at times distract the managements time and attention from the effective operation and improvement of the business. See
Special Factors
Relating to the MergerPurposes and Reasons of Our Board of Directors and Special Committee for the Merger
and
Special Factors Relating to the MergerRecommendation of Our Board of Directors and Special Committee;
Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
.
The buyer consortium decided
to undertake the going-private transaction at this time because it wants to take advantage of the benefits of the Company being a privately held company as described above.
Positions of the Buyer Consortium Regarding the Fairness of the Merger
Under SEC rules governing going-private transactions, each member of the buyer consortium may be deemed to be an affiliate of the Company and required to express its beliefs as to the fairness
of the proposed merger to the unaffiliated stockholders. The buyer consortium is making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The
views of the buyer consortium as to the fairness of the proposed merger are not intended and should not be construed as a recommendation to any stockholder of the Company as to how to vote on the proposal to adopt the merger agreement. The buyer
consortium has interests in the merger that are different from those of the other stockholders of the Company by virtue of their continuing interests in the surviving corporation after the consummation of the merger. These interests are described
under
Special Factors Relating to the MergerInterests of the Companys Directors and Officers in the Merger
of this proxy statement.
The buyer consortium believes the interests of the unaffiliated stockholders were represented by the special committee, which negotiated the terms and conditions of the merger agreement with the
assistance of its independent legal and financial advisors. The buyer consortium attempted to negotiate a transaction that would be most favorable to them, and not to the unaffiliated stockholders and, accordingly, did not negotiate the merger
agreement with a goal of obtaining terms that were substantively and procedurally fair to such unaffiliated stockholders. The buyer consortium did not participate in the deliberations of the special committee regarding, and did not receive any
advice from the special committees independent legal or financial advisors as to, the fairness of the proposed merger to the unaffiliated stockholders. The buyer consortium did not perform, or engage a financial advisor to perform, any
independent valuation or other analysis for the buyer consortium to assist them in assessing the substantive and procedural fairness of the proposed merger to the unaffiliated stockholders.
Based on their knowledge and analysis of available information regarding the Company, as well as discussions with the Companys
senior management regarding the Company and its business and the factors considered by, and findings of, the special committee and our board of directors discussed in
Special Factors Relating to the MergerPurposes and Reasons of Our
Board of Directors and Special Committee for the Merger
and
Special Factors Relating to the MergerRecommendation of Our Board of Directors and Special
68
Committee; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
of this proxy statement (which considerations and findings are adopted by the buyer
consortium solely for the purposes of making the statements in this section), the buyer consortium believes the proposed merger is substantively and procedurally fair to the unaffiliated stockholders based upon the following factors:
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the fact that the special committee and, acting upon the unanimous recommendation of the special committee, our board of directors determined that the
merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of the Companys unaffiliated stockholders;
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the fact that the special committee, consisting entirely of directors who are not officers or employees of the Company and who are not affiliated with
any member of the buyer consortium, was established and given authority to, among other things, review, evaluate and negotiate the terms of the merger and to recommend to our board of directors what action should be taken by the Company, including
not to engage in the merger;
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the fact that the members of the special committee do not have any interests in the merger different from, or in addition to, those of the
Companys unaffiliated stockholders, other than (i) the directors receipt of board compensation in the ordinary course, (ii) special committee members compensation in connection with its evaluation of the merger (which is
not contingent upon the completion of the merger or the special committees or boards recommendation of the merger), (iii) the cancellation of any options (whether vested or unvested) or restricted stock units held by a director of
the Company (including members of the special committee) who is not a buyer group party in exchange for the right to receive cash amounts equal to, in the case of options, the excess of the merger consideration over the per share exercise price of
such option, and in the case of restricted stock units, the merger consideration, and (iv) the directors indemnification and liability insurance rights under the merger agreement;
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the fact that the special committee retained and was advised by independent legal and financial advisors who are experienced in advising committees
such as the special committee in similar transactions;
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the fact that the special committee and our board of directors had no obligation to recommend the authorization, approval or adoption of the merger
agreement and the transactions contemplated thereby, including the merger, or any other transaction;
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the historical market price of the Companys shares of common stock and the fact that the merger consideration represents an approximately
(a) 52% premium over the Companys shares closing price on January 11, 2012, the last trading day prior to the Companys receipt of a going private proposal, (b) 53% premium over the Companys
shares 30-trading day volume weighted average price as of the same date, (c) 40% premium over the Companys shares 3-month-trading day volume weighted average price as of the same date and (d) 22% premium over the
Companys shares 6-month-trading day volume weighted average price as of the same date;
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given the adoption of the merger agreement is subject to the affirmative vote of the holders of a majority of the outstanding shares of Company common
stock and even assuming that the Voting Stockholders comply with their obligations under the voting agreement, the buyer consortium, as a group, does not have sufficient votes to constitute a quorum for the special meeting and unilaterally adopt the
merger agreement at the special meeting and a substantial vote of the unaffiliated stockholders will still be required to adopt the merger agreement at the special meeting;
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the fact that the merger consideration is all cash, which provides certainty of value and liquidity to unaffiliated stockholders and allows the
unaffiliated stockholders not to be exposed to risks and uncertainties relating to the prospects of the Company;
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the fact that the merger consideration, other terms and conditions of the merger agreement and the transactions contemplated thereby were the result of
extensive negotiations over an extended period of time between the special committee, its advisors and the buyer consortium;
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69
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the fact that Parent and Merger Sub obtained debt and equity financing commitments for the transaction, the limited number and nature of the conditions
to the debt and equity financing, and the obligation of Parent to use its reasonable best efforts to obtain the debt financing;
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the fact that the guarantors have agreed to guarantee collectively 100% of the obligations of Parent and Merger Sub under the merger agreement to pay,
under certain circumstances, certain expenses payable by them thereunder, including any termination fee payable to the Company;
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notwithstanding that the opinion of Goldman Sachs was provided solely for the information and assistance of the special committee and members of the
buyer consortium are not entitled to, and did not, rely on such opinion, the fact that the special committee received from Goldman Sachs an opinion that as of May 12, 2013, and based upon and subject to the limitations and assumptions set forth
in Goldman Sachs written opinion, the consideration of US$12.00 in cash to be paid for each share of Company common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Parent, the Rollover
Stockholders, the sponsors and their respective affiliates) of shares of Company common stock;
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the fact that in certain circumstances under the terms of the merger agreement, the special committee and our board of directors are able to change,
withhold, withdraw, qualify or modify their recommendation of the merger, including in response to intervening events that are not acquisition proposals;
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the fact that the Company is able to, subject to compliance with the terms and conditions of the merger agreement, terminate the merger agreement prior
to the completion of the merger in order to accept an alternative transaction proposed by a third party that is a superior proposal;
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the fact that the fee payable by the Company to Parent if the merger agreement is terminated under certain circumstances will not exceed US$18 million;
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the availability of dissenter rights to the Companys stockholders;
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that our board of directors was fully informed about the extent to which the interests of the Rollover Stockholders in the merger differed from those
of the Companys other stockholders; and
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the fact that no member of the buyer consortium nor any of their advisors participated in or sought to influence the deliberative process of the
special committee.
|
The buyer consortium did not consider the Companys net book value, which is
defined as total assets minus total liabilities, as a factor. The buyer consortium believes that net book value, which is an accounting concept based on historical costs, is not a material indicator of the value of the Company as a going concern
because it does not take into account the future prospects of the Company, market conditions, trends in the industry in which the Company conducts its business or the business risks inherent in competing with other companies in the same industry.
The buyer consortium did not consider the Companys liquidation value to be a relevant valuation method because they
consider the Company to be a viable, going concern and because the Company will continue to operate its business following the merger.
The buyer consortium did not establish, and did not consider, a going concern value for Company common stock as a public company to determine the fairness of the proposed merger consideration to the
unaffiliated stockholders. However, to the extent the pre-merger going concern value was reflected in the pre-announcement price of Company common stock, the merger consideration of US$12.00 per share represented a premium to the per share going
concern value of the Company.
The buyer consortium is not aware of, and thus did not consider in its fairness determination,
any offers or proposals made by any unaffiliated third parties with respect to a merger or consolidation of the Company with or into another company, a sale of all or a substantial part of the Companys assets, or the purchase of the Company
voting securities that would enable the holder to exercise control over the Company.
70
The buyer consortium did not receive any independent reports, opinions or appraisals from
any outside party related to the proposed merger, and thus did not consider any such reports, opinions or appraisals in determining the substantive and procedural fairness of the merger to the unaffiliated stockholders.
The buyer group did not specifically consider the purchase prices paid in the transactions described under
Common Stock
Transaction Information
but notes that the consideration to be received by the Companys unaffiliated stockholders generally represents a premium over such prices.
The foregoing discussion of the information and factors considered and given weight by the buyer consortium in connection with their
evaluation of the substantive and procedural fairness to the unaffiliated stockholders of the merger agreement and the transactions contemplated by the merger agreement, including the proposed merger, is not intended to be exhaustive, but is
believed by the buyer consortium to include all material factors considered by them. The buyer consortium did not find it practicable to and did not quantify or otherwise attach relative weights to the foregoing factors in reaching their position as
to the substantive and procedural fairness of the merger agreement and the proposed merger to the unaffiliated stockholders. Rather, the buyer consortium made the fairness determinations after considering all of the foregoing as a whole. In
addition, the buyer consortium considered and recognized the negative factors considered by the special committee and our board of directors described under
Special Factors Relating to the MergerRecommendation of Our Board of
Directors and Special Committee; Reasons for Recommending the Adoption of the Merger Agreement; Fairness of the Merger
, the consideration of which is adopted by the buyer consortium.
The buyer consortium believes these factors provide a reasonable basis for its belief that the proposed merger is both substantively and
procedurally fair to the unaffiliated stockholders. This belief, however, is not intended to be and should not be construed as a recommendation by the buyer consortium to any stockholder of the Company as to how such stockholder should vote with
respect to the adoption of the merger agreement.
Certain Effects of the Merger
If the merger is completed, all of our equity interests will be owned by Parent. Except for the Rollover Stockholders, any Additional
Rollover Stockholders and Power Joy, none of our current stockholders will have any ownership interest in, or be a stockholder of, the Company after the completion of the merger. As a result, our unaffiliated stockholders will no longer benefit from
any increase in our value, nor will they bear the risk of any decrease in our value. Following the merger, Parent will benefit from any increase in our value and also will bear the risk of any decrease in our value.
At the effective time of the merger, each share of Company common stock issued and outstanding immediately prior to the effective time of
the merger (other than the excluded shares and the dissenting shares) will be converted into the right to receive the merger consideration in cash without interest.
At the effective time of the merger, (i) each outstanding and unvested option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held
by a tier I employee, and (ii) 73.3% of each outstanding and unvested option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by a tier II employee, will be converted into
an option to purchase a number of shares of Holdco equal to the number of shares subject to such options to purchase shares of Company common stock (or such applicable portion thereof in the case of a tier II employee). The exercise price of the
option to purchase a share of Holdco will be equal to the excess of (x) the fair market value of a share of Holdco immediately following the effective time of the merger as determined by Parent in good faith over (y) the excess of the
merger consideration over the per share exercise price of such existing options to purchase shares of Company common stock. The other terms and conditions of such options to purchase shares of Company common stock will continue to apply to the
options to purchase shares of Holdco.
At the effective time of the merger, (i) 26.7% of each outstanding and unvested
option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by a tier II
71
employee, and (ii) each outstanding and unvested option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan and held by an employee
of the Company who is neither a tier I employee nor a tier II employee, will be canceled in consideration of an award of restricted stock units (or in the case of a U.S. taxpayer, restricted stock) that provides for the issuance of a number of
shares of Holdco. Such number of shares of Holdco will have an aggregate fair market value as of immediately after the effective time of the merger as determined by Parent in good faith equal to the excess of the merger consideration over the per
share exercise price of such options to purchase shares of Company common stock, multiplied by the number of shares of Company common stock subject to such options. The awards of restricted stock units and restricted stock will have the same vesting
and forfeiture provisions as applied to such options to purchase shares of Company common stock.
At the effective time of the
merger, (x) each outstanding and vested option to purchase shares of Company common stock that was granted under the Companys 2011 Stock Incentive Plan, and (y) each outstanding option, whether vested or unvested, to purchase shares
of Company common stock that was granted under a stock plan of the Company other than the Companys 2011 Stock Incentive Plan, will be canceled in consideration of, as soon as practicable after the effective time of the merger, (i) the
right to receive a cash payment in an amount equal to the excess of the merger consideration over the per share exercise price of such options, or (ii) at the election of the holder of such options, the right to receive a number of shares of
Holdco with an aggregate fair market value as of immediately following the effective time of the merger as determined by Parent in good faith equal to the excess of the merger consideration over the per share exercise price of such options,
multiplied by the number of shares of Company common stock subject to such options, which will not be subject to any forfeiture restriction (but may be subject to a transfer restriction).
At the effective time of the merger, each outstanding restricted stock unit relating to a share of Company common stock that was granted
under a stock plan of the Company will be converted into a restricted stock unit that provides for the issuance of a share of Holdco, which restricted stock unit shall be subject to the same vesting and forfeiture provisions as applied to such
restricted stock unit relating to a share of Company common stock.
The treatment of Company options and Company restricted
stock units described in the four immediately preceding paragraphs does not apply to any Company options or Company restricted stock units held by any director of the Company who is not a buyer group party. At the effective time of the merger, each
outstanding option to purchase shares of Company common stock held by a director of the Company who is not a buyer group party, whether vested or unvested, will be canceled in consideration of the right to receive a cash payment in an amount equal
to the excess of the merger consideration over the per share exercise price of such option, multiplied by the number of shares of Company common stock subject to such option. At the effective time of the merger, each outstanding restricted stock
unit relating to a share of Company common stock held by a director of the Company who is not a buyer group party will be converted into the right to receive the merger consideration.
Following the merger, shares of Company common stock will no longer be traded on the NASDAQ Global Market or any other public market. Our
common stock is registered as a class of equity security under the Exchange Act. Registration of our common stock under the Exchange Act may be terminated upon the Companys application to the SEC if our common stock is not listed on a national
securities exchange. Termination of registration of our common stock under the Exchange Act will substantially reduce the information required to be furnished by the Company to our stockholders and the SEC, and would make certain provisions of the
Exchange Act, such as the short-swing trading provisions of Section 16(b) of the Exchange Act and the requirement of furnishing a proxy statement in connection with stockholders meetings pursuant to Section 14(a) of the Exchange Act,
no longer applicable to the Company.
Following consummation of the merger, Parent will directly or indirectly own 100% of our
outstanding common stock and will have a corresponding interest in our net book value and net earnings. The table below
72
sets forth the direct and indirect beneficial interest in our net book value and net earnings for the buyer group parties before and after the merger in proportion to each such persons
direct and indirect beneficial ownership in the Company before and after the merger, based on our net earnings for the fiscal year ended December 31, 2012 of approximately US$30.0 million and our net book value as of December 31, 2012 of
approximately US$1.0 billion.
All dollar figures in the chart immediately below are in the thousands and rounded to the
nearest dollar amount, and ownership percentages of the Company after the merger are estimates only.
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Beneficial Ownership of the
Company
Prior to the Merger
|
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Beneficial Ownership of the
Company
After the Merger
|
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|
Net book
value as
of
December 31,
2012
|
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%
Ownership
|
|
|
Net earnings
for the
fiscal
year
ended
December 31,
2012
|
|
|
Net book
value as
of
December 31,
2012
|
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%
Ownership*
|
|
|
Net earnings
for the
fiscal year
ended
December 31,
2012
|
|
Edward Tian
|
|
US$
|
93,366,384
|
|
|
|
9.2
|
%
|
|
US$
|
2,755,676
|
|
|
US$
|
147,153,540
|
|
|
|
14.5
|
%
|
|
US$
|
4,343,185
|
|
Jian (James) Ding
|
|
US$
|
14,207,928
|
|
|
|
1.4
|
%
|
|
US$
|
419,342
|
|
|
US$
|
22,326,744
|
|
|
|
2.2
|
%
|
|
US$
|
658,966
|
|
Steve Zhang
|
|
US$
|
1,461,098
|
|
|
|
0.1
|
%
|
|
US$
|
43,124
|
|
|
US$
|
2,029,704
|
|
|
|
0.2
|
%
|
|
US$
|
59,906
|
|
Power Joy
|
|
US$
|
45,668,340
|
|
|
|
4.5
|
%
|
|
US$
|
1,347,885
|
|
|
US$
|
239,505,072
|
|
|
|
23.6
|
%
|
|
US$
|
7,068,908
|
|
Sponsors other than Power Joy
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
593,688,420
|
|
|
|
58.5
|
%
|
|
US$
|
17,522,505
|
|
CITIC Capital (Tianjin) Investment Management Limited Partnership (
)
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
54,802,008
|
|
|
|
5.4
|
%
|
|
US$
|
1,617,462
|
|
CPEChina Fund, L.P.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
109,604,016
|
|
|
|
10.8
|
%
|
|
US$
|
3,234,924
|
|
Ellington Investments Pte. Ltd.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
91,336,680
|
|
|
|
9.0
|
%
|
|
US$
|
2,695,770
|
|
Al Gharrafa Investment Company
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
91,336,680
|
|
|
|
9.0
|
%
|
|
US$
|
2,695,770
|
|
AlpInvest Partners Co-investments 2012
I C.V.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
54,091,612
|
|
|
|
5.33
|
%
|
|
US$
|
1,596,495
|
|
AlpInvest Partners Co-investments 2012
II C.V.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
7,509,905
|
|
|
|
0.74
|
%
|
|
US$
|
221,652
|
|
AlpInvest Partners Co-investments 2011
II C.V.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
11,467,828
|
|
|
|
1.13
|
%
|
|
US$
|
338,469
|
|
CBC TMT III Limited
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
82,203,012
|
|
|
|
8.1
|
%
|
|
US$
|
2,426,193
|
|
InnoValue Capital Ltd.
|
|
US$
|
0
|
|
|
|
0.0
|
%
|
|
US$
|
0
|
|
|
US$
|
91,336,680
|
|
|
|
9.0
|
%
|
|
US$
|
2,695,770
|
|
*
|
Does not include approximately 1.2% expected to be allocated to holders of Company options who elect to receive shares in Holdco pursuant to the merger agreement.
|
Effects on the Company if Merger is not Completed
If our stockholders do not adopt the merger agreement or if the merger is not completed for any other reason, our stockholders will not
receive any payment for their shares of Company common stock provided by the merger agreement. Instead, unless the Company is sold to a third party, we will remain an independent
73
publicly traded company, the management expects to operate the business in a manner similar to that in which it is being operated today, and our stockholders will continue to be subject to
similar risks and opportunities as they currently are with respect to their ownership of our common stock. If the merger is not completed, there is no assurance as to the effect of these risks and opportunities on the future value of your shares of
Company common stock, including the risk that the market price of our common stock may decline to the extent that the current market price of our stock reflects a market assumption that the merger will be completed. From time to time, our board of
directors will evaluate and review the business operations, properties and capitalization of the Company and, among other things, make such changes as are deemed appropriate and continue to seek to maximize stockholder value. If our stockholders do
not adopt the merger agreement or the merger is not completed for any other reason, there is no assurance that any other transaction acceptable to the Company will be offered or that the business, prospects or results of operations of the Company
will not be adversely impacted. Pursuant to the merger agreement, under certain circumstances the Company is permitted to terminate the merger agreement and recommend an alternative transaction. Also under other circumstances, if the merger is not
completed, the Company may be obligated to pay to Parent a termination fee and reimburse certain of Parents expenses. See
The Merger AgreementTermination Fees and Reimbursement of Expenses
for additional information.
Plans for the Company
After the effective time of the merger, Parent anticipates that the Company will continue its current operations, except that it will (i) cease to be an independent publicly traded company and will
instead be a wholly owned subsidiary of Parent and (ii) have substantially more debt than it currently has. There are no current plans to repay the debt taken out to finance the merger. After the effective time of the merger, the directors of
Merger Sub immediately prior to the effective time of the merger will become the directors of the Company, and the officers of the Company immediately prior to the effective time of the merger will remain the officers of the Company, in each case
until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be.
Parent has informed us that it has no current plans or proposals or negotiations which relate to or would result in an extraordinary corporate transaction involving our corporate structure, business or
management, such as a merger, reorganization, liquidation, relocation of any operations, or sale or transfer of a material amount of assets except as described in this proxy statement. Parent may initiate from time to time reviews of the Company and
our assets, corporate structure, capitalization, operations, properties, management and personnel to determine what changes, if any, would be desirable following the merger, and expressly reserves the right to make any changes that it deems
necessary or appropriate in light of its review or in light of future developments.
Submission of Stockholder Proposals
If the merger is completed, we will cease to have public stockholders and there will be no public participation in any future meeting of
stockholders. However, if the merger is not completed, we expect to hold our 2014 annual meeting of stockholders. If you wish to have a proposal included in our proxy statement for a 2014 annual meeting (assuming that the merger is not completed) in
accordance with Rule 14a-8 under the Exchange Act, your proposal must have been received by our Corporate Secretary at 4th Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China, no later than 120
calendar days in advance of the one year anniversary of the release of the proxy statement of the Company dated February 28, 2013 to the stockholders. A proposal which is received after that date or which otherwise fails to meet the
requirements for stockholder proposals established by the SEC will not be included. Holders of proxies for our 2014 annual meeting of stockholders may exercise discretionary authority on any matter for which we do not receive notice prior to 45
calendar days in advance of the one year anniversary of the date the proxy statement of the Company dated February 28, 2013 to the stockholders was first sent to stockholders.
130
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING
STATEMENTS
This proxy statement contains
forward-looking
statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of the Company and its consolidated
subsidiaries and actual results of matters related to the merger could differ materially from those expressed or implied by such
forward-looking
statements and assumptions. All statements other than statements
of historical fact are statements that could be deemed
forward-looking
statements. In many cases you can identify
forward-looking
statements by the use of words such as
believe, anticipate, intend, plan, estimate, may, could, predict, project, prospective or expect and similar
expressions, although the absence of such words does not necessarily mean that a statement is not
forward-looking.
You should be aware that
forward-looking
statements involve known and unknown risks and uncertainties. We cannot assure you that the actual results or developments
reflected in these
forward-looking
statements will be realized or, even if they are realized, that they will have the expected effects on the merger or on our business or operations. These
forward-looking
statements speak only as of the date on which the statements were made, and we assume no obligation and do not intend to update these
forward-looking
statements, except as required by law.
Risks, uncertainties and assumptions include the occurrence of any event, change or
other circumstances that could give rise to the termination of the merger agreement; the possibility that various closing conditions for the merger (including the requisite stockholder approval of the merger) may not be satisfied or waived; the
possibility that alternative acquisition proposals will or will not be made; the failure to obtain sufficient funds to close the merger; the failure of the merger to close for any other reason; the amount of fees and expenses related to the merger;
the diversion of managements attention from ongoing business concerns; the effect of the announcement of the merger on our business relationships, operating results and business generally, including our ability to retain key employees; the
merger agreements contractual restrictions on the conduct of our business prior to the completion of the merger; the possible adverse effect on our business and the price of our common stock if the merger is not completed in a timely matter or
at all; the outcome of any legal proceedings, regulatory proceedings or enforcement matters that have been or may be instituted against us; the clearance under the PRC Anti-Monopoly Law in respect of the merger may not be obtained; and others
relating to the merger and other risks that are set forth in the Companys filings with the SEC, which are available without charge at
www.sec.gov
.
WHERE YOU CAN FIND MORE INFORMATION
We are
subject to the informational requirements of the Exchange Act, as amended. We file reports, proxy statements and other information with the SEC. You may read and print these reports, proxy statements and other information at www.sec.gov, an Internet
website maintained by the SEC that contains reports, proxy statements and other information regarding companies and individuals that file electronically with the SEC.
You also may obtain free copies of the documents the Company files with the SEC by going to the Investor Relations section of our website at
www.asiainfo-linkage.com
. Our website
address is provided as an inactive textual reference only. The information provided on our website is not part of this proxy statement, and therefore is not incorporated by reference.
The information contained in this proxy statement speaks only as of the date indicated on the cover of this proxy statement unless the
information specifically indicates that another date applies.
Statements contained in this proxy statement, or in any
document incorporated in this proxy statement by reference, regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document
filed as an exhibit with the
131
SEC. The SEC allows us to incorporate by reference information into this proxy statement. This means that we can disclose important information by referring to another document filed
separately with the SEC. The information incorporated by reference is considered to be part of this proxy statement. This proxy statement and the information that we later file with the SEC may update and supersede the information incorporated by
reference. Similarly, the information that we later file with the SEC may update and supersede the information in this proxy statement. We also incorporate by reference into this proxy statement the following documents filed by us with the SEC under
the Exchange Act:
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our Annual Report on Form
10-K
for the fiscal year ended December 31, 2012;
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, respectively; and
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our Current Reports on Form
8-K
filed on March 25, 2013, March 28, 2013, April 29,
2013, May 13, 2013, May 21, 2013, May 24, 2013 and August 7, 2013.
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Notwithstanding the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form
8-K,
including the related exhibits, is not incorporated by reference in this proxy statement.
We undertake to provide without charge to each person to whom a copy of this proxy statement has been delivered, upon request, by first class mail or other equally prompt means, within one business day of
receipt of the request, a copy of any or all of the documents incorporated by reference into this proxy statement, other than the exhibits to these documents, unless the exhibits are specifically incorporated by reference into the information that
this proxy statement incorporates.
Requests for copies of our filings should be directed to AsiaInfo-Linkage, Inc., 4th
Floor, Zhongdian Information Tower, 6 Zhongguancun South Street, Haidian District, Beijing 100086, China, Attention: Corporate Secretary, and should be made at least five business days before the date of the special meeting in order to receive them
before the special meeting.
The proxy statement does not constitute an offer to sell, or a solicitation of an offer to buy,
any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is not lawful to make any offer or solicitation in that jurisdiction. The delivery of this proxy statement should not create an implication that
there has been no change in our affairs since the date of this proxy statement or that the information herein is correct as of any later date.
You should rely only on the information contained in this proxy statement. We have not authorized anyone to provide you with information that is different from what is contained in this proxy
statement. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of
activities, then the offer presented in this proxy statement does not extend to you. You should not assume that the information contained in this proxy statement is accurate as of any date other than the date of this proxy statement, unless the
information specifically indicates that another date applies. The mailing of this proxy statement to our stockholders does not create any implication to the contrary.
132
Annex A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
among
SKIPPER LIMITED,
SKIPPER ACQUISITION CORPORATION
and
ASIAINFO-LINKAGE, INC.
Dated as of May 12, 2013
A-1
TABLE OF CONTENTS
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Page
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ARTICLE I
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DEFINED TERMS
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Section 1.01
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Certain Defined Terms
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A-5
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Section 1.02
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Other Defined Terms
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A-13
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Section 1.03
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Interpretation; Headings
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A-14
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ARTICLE II
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THE MERGER
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Section 2.01
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The Merger
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A-15
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Section 2.02
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Closing; Effective Time
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A-15
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Section 2.03
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Effect of the Merger
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A-15
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Section 2.04
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Certificate of Incorporation; Bylaws
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A-15
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Section 2.05
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Directors and Officers
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A-15
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ARTICLE III
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CONVERSION OF SECURITIES; MERGER CONSIDERATION
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Section 3.01
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Conversion of Securities
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A-16
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Section 3.02
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Exchange of Certificates
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A-17
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Section 3.03
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Stock Transfer Books
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A-18
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Section 3.04
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Company Stock Awards
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A-19
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Section 3.05
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Appraisal Rights
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A-21
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Section 4.01
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Organization and Qualification; Subsidiaries
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A-21
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Section 4.02
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Certificate of Incorporation and Bylaws
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A-22
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Section 4.03
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Capitalization
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A-22
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Section 4.04
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Authority Relative to This Agreement; Vote Required
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A-23
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Section 4.05
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No Conflict; Required Filings and Consents
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A-24
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Section 4.06
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Permits; Compliance
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A-24
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Section 4.07
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SEC Filings; Financial Statements
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A-25
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Section 4.08
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Absence of Certain Changes or Events
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A-26
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Section 4.09
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Absence of Litigation
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A-26
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Section 4.10
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Labor and Employment Matters
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A-27
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Section 4.11
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Real Property; Title to Assets
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A-29
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Section 4.12
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Intellectual Property
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A-30
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Section 4.13
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Taxes
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A-31
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Section 4.14
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Environmental Matters
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A-32
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Section 4.15
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Material Contracts
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A-33
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Section 4.16
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Insurance
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A-34
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A-2
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Section 4.17
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Opinion of Financial Advisor
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A-35
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Section 4.18
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Brokers
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A-35
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Section 4.19
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Customers
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A-35
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Section 4.20
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Compliance with Anti-Corruption and Trade Sanction Laws
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A-35
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Section 4.21
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Privacy
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A-36
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Section 4.22
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No Additional Representations
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A-36
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ARTICLE V
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
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Section 5.01
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Corporate Organization
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A-36
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Section 5.02
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Certificate of Incorporation and Bylaws
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A-37
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Section 5.03
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Capitalization
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A-37
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Section 5.04
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Authority Relative to This Agreement
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A-37
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Section 5.05
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No Conflict; Required Filings and Consents
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A-37
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Section 5.06
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Operations of Merger Sub
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A-38
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Section 5.07
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Absence of Litigation
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A-38
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Section 5.08
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Available Funds and Financing
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A-38
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Section 5.09
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Limited Guarantees
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A-39
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Section 5.10
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Brokers
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A-40
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Section 5.11
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Solvency
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A-40
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Section 5.12
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Ownership of Company Shares
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A-40
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Section 5.13
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Independent Investigation
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A-40
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Section 5.14
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Buyer Group Contracts
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A-40
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Section 5.15
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Non-Reliance on Company Estimates
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A-41
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Section 5.16
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No Other Representations or Warranties
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A-41
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ARTICLE VI
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CONDUCT OF BUSINESS PENDING THE MERGER
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Section 6.01
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Conduct of Business by the Company Pending the Merger
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A-41
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Section 6.02
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Conduct of Business by Parent and Merger Sub Pending the Merger
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A-44
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Section 6.03
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No Control of Other Partys Business
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A-44
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ARTICLE VII
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ADDITIONAL AGREEMENTS
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Section 7.01
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Proxy Statement and Schedule 13E-3
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A-44
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Section 7.02
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Company Stockholders Meeting
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A-45
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Section 7.03
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No Solicitation of Transactions; Company Board Recommendation; Alternative Acquisition Agreement
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A-46
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Section 7.04
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Access to Information; Confidentiality
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A-48
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Section 7.05
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Employee Benefits Matters
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A-49
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Section 7.06
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Directors and Officers Indemnification and Insurance
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A-50
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Section 7.07
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Notification of Certain Matters
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A-51
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Section 7.08
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Reasonable Best Efforts; Further Action
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A-52
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Section 7.09
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Obligations of Merger Sub
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A-53
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A-3
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Section 7.10
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Public Announcements
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A-53
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Section 7.11
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Stock Exchange Delisting
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A-53
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Section 7.12
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Section 16 Matters
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A-53
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Section 7.13
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Takeover Statute
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A-53
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Section 7.14
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Resignations
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A-53
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Section 7.15
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Participation in Litigation
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A-53
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Section 7.16
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Financing
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A-54
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Section 7.17
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Financing Assistance
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A-55
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Section 7.18
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Bank Consent
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A-56
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Section 7.19
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No Amendment to Buyer Group Contracts
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A-56
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ARTICLE VIII
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CONDITIONS TO THE MERGER
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Section 8.01
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Conditions to the Obligations of Each Party
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A-56
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Section 8.02
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Conditions to the Obligations of Parent and Merger Sub
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A-57
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Section 8.03
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Conditions to the Obligations of the Company
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A-57
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ARTICLE IX
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TERMINATION, AMENDMENT AND WAIVER
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Section 9.01
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Termination
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A-58
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Section 9.02
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Effect of Termination
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A-59
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Section 9.03
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Fees and Expenses
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A-59
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Section 9.04
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Amendment
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A-62
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Section 9.05
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Waiver
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A-62
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ARTICLE X
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GENERAL PROVISIONS
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Section 10.01
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Non-Survival of Representations, Warranties, Covenants and Agreements
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A-62
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Section 10.02
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Notices
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A-63
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Section 10.03
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Severability
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A-64
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Section 10.04
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Entire Agreement; Assignment
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A-64
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Section 10.05
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Parties in Interest
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A-64
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Section 10.06
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Specific Performance
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A-64
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Section 10.07
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Governing Law
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A-65
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Section 10.08
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Counterparts
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A-65
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Section 10.09
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Waiver of Jury Trial
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A-65
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Exhibits
Exhibit A
Certificate of Incorporation
Company Disclosure Schedule
Parent Disclosure Schedule
A-4
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 2013 (this
Agreement
), among Skipper Limited, a Cayman Islands exempted company with limited liability (
Parent
), Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
(
Merger Sub
), and AsiaInfo-Linkage, Inc., a Delaware corporation (the
Company
).
WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, Parent, Merger Sub and the Company have agreed to enter into a business combination transaction
pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the Surviving Corporation (the
Merger
);
WHEREAS, the Company Board, acting upon the recommendation of the Special Committee, has (a) determined that the Merger is advisable and fair to, and in the best interests of, the Company and its
stockholders (other than the holders of the Excluded Shares), (b) approved this Agreement and declared its advisability and (c) resolved to recommend the adoption of this Agreement by the stockholders of the Company and directed that this
Agreement be submitted for consideration by the stockholders of the Company at the Company Stockholders Meeting;
WHEREAS, the board of directors of each of Parent and Merger Sub has (a) approved the execution, delivery and performance by Parent
and Merger Sub, as the case may be, of this Agreement and consummation of the Transactions, including the Merger and (b) declared it advisable for Parent and Merger Sub, as the case may be, to enter into this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parents and Merger
Subs willingness to enter into this Agreement, (a) the Rollover Stockholders have executed and delivered to Parent a rollover agreement, dated as of the date hereof, among the Rollover Stockholders, HoldCo, Parent and Merger Sub (together
with the schedules and exhibits attached thereto, the
Rollover Agreement
), pursuant to which the Rollover Stockholders will contribute to Parent, subject to the terms and conditions therein, the Rollover Shares, and
(b) the Voting Stockholders have executed and delivered to Parent a voting agreement, dated as of the date hereof, among such Voting Stockholders, HoldCo, Parent and Merger Sub, pursuant to which such Voting Stockholders agreed to vote their
shares of the Company Common Stock in favor of the adoption of this Agreement (the
Voting Agreement
); and
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition to the Companys willingness to enter into this Agreement, Parent has delivered to the Company a limited
guarantee or a similar agreement executed by the Sponsors or Affiliates thereof identified on
Schedule A
of the Parent Disclosure Schedule (
Guarantors
), dated as of the date hereof, in favor of the Company with
respect to certain obligations of Parent and Merger Sub under this Agreement (collectively, the
Limited Guarantees
).
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, Parent,
Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.01
Certain Defined Terms
. For purposes of this Agreement:
2012 Balance Sheet
means the audited consolidated balance sheet of the Company and its consolidated Subsidiaries as at December 31, 2012, including the notes thereto.
Acceptable Confidentiality Agreement
means an executed confidentiality agreement on
terms no less favorable to the Company than those contained in the Confidentiality Agreement.
A-5
Acquisition Proposal
means any offer or proposal
(other than an offer or proposal by Parent or Merger Sub) relating to (a) any merger, consolidation, business combination, reorganization, recapitalization or other similar transaction involving the Company pursuant to which the stockholders of
the Company immediately preceding such transaction would hold less than 90% of the voting equity interests in the surviving or resulting entity of such transaction or the parent of such surviving or resulting entity; (b) any direct or indirect
sale, lease, license, exchange, transfer or other disposition of assets or businesses (including by sale, lease, license, exchange, transfer or other disposition of any equity securities of any Subsidiary of the Company) that constitute or represent
more than 10% of the fair market value of the assets of the Company and its Subsidiaries, taken as a whole, or to which more than 10% of the revenues of the Company and its Subsidiaries, taken as a whole, are attributable; (c) any sale,
exchange, transfer or other disposition of more than 10% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of the Company; (d) any tender offer (including a self-tender offer) or exchange
offer that, if consummated, would result in any Person or group of Persons becoming the beneficial owner of more than 10% of the Shares; (e) any liquidation, dissolution, recapitalization, extraordinary dividend or other significant corporate
reorganization of the Company or any of its Subsidiaries that constitutes or represents more than 10% of the fair market value of the assets of the Company and its Subsidiaries, taken as a whole, or to which more than 10% of the revenues of the
Company and its Subsidiaries, taken as a whole, are attributable; or (f) any combination of the foregoing types of transactions that would result in any Person or group of Persons beneficially owning assets that constitute or represent more
than 10% of the fair market value of the assets of the Company and its Subsidiaries, taken as a whole, or to which more than 10% of the revenues of the Company and its Subsidiaries, taken as a whole, are attributable.
Action
means any litigation, suit, claim, action, proceeding or investigation.
Affiliate
of a Person means a Person who, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with, such Person.
Alternative Acquisition Agreement
means a letter of intent, agreement in principle, term sheet,
merger agreement, acquisition agreement, option agreement or other contract, commitment or agreement relating to any Acquisition Proposal (other than an Acceptable Confidentiality Agreement).
beneficial owner
, with respect to any Shares, has the meaning ascribed to such term under
Rule 13d-3 of
the Exchange Act.
Business
Day
means any day other than a Saturday or Sunday and other than a day on which banks are not required or authorized to close in Beijing, Hong Kong or the City of New York.
Buyer Group Contracts
means (a) the Rollover Agreement and the Additional Rollover
Agreements (if any), (b) the Voting Agreement and (c) the Consortium Agreement, including all amendments thereto or modifications thereof.
Buyer Group Parties
means, collectively, the parties to any of the Buyer Group Contracts, other than Parent and Merger Sub or any of their respective Affiliates.
Closing Date
means the date on which the Closing occurs.
Code
means the U.S. Internal Revenue Code of 1986, as amended.
Company Board
means the board of directors of the Company.
Company Common Stock
means the common stock, par value US$0.01 per share, of the Company.
Company Disclosure Schedule
means the disclosure schedule dated as of the date of
this Agreement and delivered by the Company to Parent and Merger Sub simultaneously with the signing of this Agreement.
Company Financial Advisor
means Goldman Sachs (Asia) L.L.C., which, for purposes of this Agreement, the parties agree is an independent financial advisor of nationally recognized
reputation.
Company IT Assets
means all IT Assets owned, leased or licensed by the
Company or any of its Subsidiaries.
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Company Material Adverse Effect
means any Effect
that, individually or in the aggregate together with all other Effects, (a) has had or would reasonably be expected to have a material adverse effect on the financial condition, results of operations, business, assets (tangible or intangible),
properties or liabilities (including contingent liabilities) of the Company and its Subsidiaries, taken as a whole;
provided
,
however
, that no Effect (by itself or when aggregated or taken together with any and all other Effects)
directly or indirectly arising out of or resulting from any of the following shall be (x) deemed to be or constitute a Company Material Adverse Effect, or (y) taken into account in determining whether a Company Material
Adverse Effect has occurred or may, would or could occur: (i) changes or modifications in GAAP or regulatory accounting requirements or changes in Laws (or interpretations thereof) applicable to the Company or any of its Subsidiaries;
(ii) changes in the industries or markets in which the Company or any of its Subsidiaries operates; (iii) changes in general business, economic, political or financial market conditions; (iv) changes in the financial, credit or
securities markets in the U.S., the PRC or any other country or region in which the Company or any of its Subsidiaries has material business operations, including changes in interest rates, foreign exchange rates and sovereign credit ratings;
(v) the public disclosure of this Agreement or the Transactions or the consummation of the Transactions or the announcement of the execution of this Agreement, including, without limitation, any stockholder litigation relating to this
Agreement; (vi) any change in the price of the Shares or trading volume as quoted on NASDAQ (it being understood that the underlying cause of such change in stock price or trading volume may, except as otherwise provided in the other clauses of
this proviso, be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably expected to occur); (vii) any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism,
acts of God or natural disasters; (viii) actions or omissions taken with the prior written consent of or at the written request of the other parties hereto or expressly permitted or required to be taken by this Agreement; (ix) the failure
by the Company or any of its Subsidiaries to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period (it being understood that the underlying cause of such failure may, except as otherwise provided in
the other clauses of this proviso, be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably expected to occur); (x) any loss of, or change in, the relationship of the Company or any of its
Subsidiaries, contractual or otherwise, with its brokers, customers, suppliers, vendors, lenders, employees, investors, or joint venture partners arising out of the execution, delivery or performance of this Agreement, the consummation of the
Transactions or the announcement of any of the foregoing; except, in the case of the foregoing clauses (ii), (iii) and (iv), to the extent the impact of such Effect is disproportionately adverse to the Company and its Subsidiaries, taken as a
whole, as compared to other companies in the industries in which the Company and its Subsidiaries operate, or (b) would reasonably be expected to prevent the consummation of the Transactions, other than any Effect solely arising out of or
resulting from any action or omission taken by Parent, Merger Sub, any Buyer Group Party or any of their respective Affiliates (other than the Company and its Subsidiaries).
Company Option
means an option to purchase Shares granted on a particular date at a specified
exercise price and outstanding under a Company Stock Plan.
Company Owned Intellectual Property
Rights
means all Intellectual Property Rights owned or purported to be owned, either exclusively or jointly, by the Company or any of its Subsidiaries.
Company Permits
means franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, concessions, registrations, filings, clearances, exemptions, certificates, approvals and orders of any Governmental Authority necessary for each of the Company and its Subsidiaries to own, lease and operate their
respective properties and assets or to carry on their respective businesses as they are now being conducted.
Company Recommendation
means the recommendation of the Company Board that the stockholders of
the Company adopt this Agreement.
Company Restricted Stock Unit
means a restricted
stock unit granted and outstanding under a Company Stock Plan.
A-7
Company Stock Awards
means Company Options,
Company Restricted Stock Units and other stock rights granted pursuant to the Company Stock Plans.
Company Stockholder Approval
means the adoption of this Agreement at the Company
Stockholders Meeting by the affirmative vote of the holders of a majority of the outstanding Shares.
Company Stockholders Meeting
means the extraordinary meeting of the Companys
stockholders (including any adjournments or postponements thereof) to be held to consider adoption of this Agreement.
Company Stock Plans
means the Companys 2011 Stock Incentive Plan, 2008 Stock Incentive Plan, 2005 Stock Incentive Plan, 2002 Stock Option Plan and 2000 Stock
Option Plan, each as amended and supplemented as of the date hereof.
Confidentiality
Agreement
means the amended and restated confidentiality agreement, dated May 21, 2012, between Power Joy (Cayman) Limited, an Affiliate of Parent, and the Company.
Consortium Agreement
means the consortium agreement by and among the Sponsors and the other
parties named therein, dated as of the date hereof.
Contract
shall mean any note,
bond, mortgage, indenture, Lease, license, permit, concession, franchise, contract, agreement, arrangement, plan or other instrument, right or obligation.
control
(including the terms
controlled by
and
under common control with
) means the possession, directly or indirectly, or as
trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or credit arrangement or otherwise.
DGCL
means the General Corporation Law of the State of Delaware, as amended.
Effect
means any circumstance, event, change, effect or development.
Encumbrances
means mortgages, pledges, liens, licenses, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third parties or restrictions of any kind, including any easement, reversion interest, right of way or other encumbrance to title, limitations on voting rights, or any option,
right of first refusal or right of first offer.
End Date
means February 12, 2014,
which date shall be automatically extended to the date that is three months after such date, to the extent necessary to satisfy the condition set forth in
Section 8.01(c)
and so long as all other conditions have been satisfied or shall
be capable of being satisfied.
Environmental Laws
means any applicable Law or any
Contract with any Governmental Authority relating to: (a) the protection of health, safety or the environment or (b) the handling, use, transportation, disposal, release or threatened release of any Hazardous Substance.
ERISA
means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations thereunder.
ERISA Affiliate
with respect to an entity means any
other entity that, together with such first entity, would be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
Exchange Act
means the U.S. Securities Exchange Act of 1934, as amended.
Expenses
means, with respect to any party hereto, all
out-of-pocket
fees and expenses (including
all fees and expenses of counsel, accountants, investment banking firms and other financial institutions, experts and consultants to a party hereto and its Affiliates) actually incurred or accrued by such party or its Affiliates or on its or their
behalf or for which it or they are liable in connection with or related to the authorization, preparation, negotiation, execution and performance of the Transactions, the preparation, printing, filing and mailing of the Schedule 13E-3 and the Proxy
Statement, the solicitation of stockholder approvals, the filing of any required notices under applicable Law and all other matters related to the closing of the Merger and the other Transactions.
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Financing Sources
means the entities that have
committed to provide or arrange or otherwise entered into agreements in connection with all or any portion of the Financing, the Financing Documents, the Facility Agreement or other financings in connection with the Transactions, including the
parties named in
Section 5.08
, and the parties to any joinder agreements, indentures or credit agreements entered pursuant thereto or relating thereto, together with their respective Affiliates, and their and their respective
Affiliates officers, directors, employees, agents and representatives and their respective successors and assigns.
GAAP
means U.S. generally accepted accounting principles.
Governmental Authority
means any federal, national, foreign, supranational, state, provincial, county, local or other government, governmental, regulatory or administrative
authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body of competent jurisdiction.
Hazardous Substances
means any chemical, pollutant, waste or substance that is (a) listed, classified or regulated under any Environmental Law as hazardous substance, toxic
substance, pollutant, contaminant or oil or (b) any petroleum product or by-product, asbestos containing material, polychlorinated biphenyls or radioactive materials.
HoldCo
means Skipper Holdings Limited, a Cayman limited company and the direct holder of all
outstanding and issued share capital of Parent.
HoldCo Share
means an ordinary share
of Holdco.
Indebtedness
means, with respect to any Person, without duplication:
(a) all indebtedness of such Person, whether or not contingent, for borrowed money, including all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments; (b) all obligations of such Person for the
deferred purchase of property or services; (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all obligations of such Person as lessee under Leases that have been or should be, in accordance with GAAP, recorded as capital
leases; (e) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities; (f) all Indebtedness of others referred to in clauses (a) through (e) above guaranteed (or in
effect guaranteed) directly or indirectly in any manner by such Person, and (g) all Indebtedness of others referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Encumbrance on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.
Intellectual Property Rights
means any and all of the following, whether or not registered, and
all rights therein, in all jurisdictions throughout the world: (a) inventions and improvements thereto, whether or not patentable, invention disclosures, patents and patent applications (including all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof) and industrial designs; (b) trademarks, service marks, trade dress, logos, domain names, rights of publicity, trade names, corporate names and all other source identifiers, and all
goodwill associated therewith; (c) copyrights, including all derivative works, moral rights, renewals, extensions, reversions or restorations associated with such copyrights, now or hereafter provided by law, regardless of the medium of
fixation or means of expression; (d) Software; (e) trade secrets and know-how; (f) databases and data collections; (g) any other type of intellectual property or intellectual property right; (h) registrations and
applications for registration of any of the foregoing; and (i) rights to sue or recover and retain damages, costs and attorneys fees for past, present or future infringement, misappropriation or violation of any of the foregoing.
Intervening Event
means a material event, fact, circumstance, development or
occurrence that is unknown to or by the Company Board as of the date of this Agreement (or if known, the magnitude or material consequences of which were not known or understood by the Company Board as of the date hereof), which event, fact,
circumstance, development, occurrence, magnitude or material consequence becomes known to or by the Company Board prior to obtaining the Company Stockholder Approval.
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Intrinsic Value
means, with respect to a Company
Option or an Option Tranche or a portion thereof, (A) the excess, if any, of the Merger Consideration over the per Share exercise price of such Company Option or Option Tranche or portion thereof, as applicable, multiplied by (B) the
number of Shares subject to such Company Option or Option Tranche or portion thereof, as applicable.
IRS
means the U.S. Internal Revenue Service.
IT Assets
means Software, systems, servers, computers, hardware, firmware, middleware, networks,
data communications lines, routers, hubs, switches and all other information technology equipment, and all associated documentation.
Knowledge of the Company
or
Companys Knowledge
means the knowledge, after due inquiry, of Steven Zhang, Michael Wu, Yadong Jin, Shengxi Jin, Hao
Zhang, Fan Zhang, Liu Gouxiang and Jie Li.
Knowledge of Parent
or
Parents Knowledge
means the knowledge, after due inquiry, of Bryan Doyle, Eric Xin and Zhen Ji.
Law
means any federal, national, foreign, supranational, state, local, administrative or other law (including common law), treaty, convention, statute, ordinance, regulation,
requirement, regulatory interpretation, rule, code or Order.
Lease
means any and all
leases, subleases, licenses or other occupancy agreements, sale/leaseback arrangements or similar arrangements.
Leased Real Property
means the real property leased, subleased, licensed or otherwise occupied
by the Company or any of its Subsidiaries as tenant, sublessee, licensee or occupier, together with, to the extent leased by the Company or any of its Subsidiaries, all buildings and other structures, facilities or improvements currently or
hereafter located thereon, all fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
NASDAQ
means the NASDAQ Global Market.
Open Source Software
means any Software that contains, or is derived in any manner (in whole or
in part) from, any Software that is distributed as free software or open source software or under any similar licensing or distribution model whereby such Software is distributed publicly in source code form under terms that
permit modification and redistribution of such Software. For the avoidance of doubt, Open Source Software includes any Software that is licensed or distributed under any version of any of the following licenses or distribution models: the GNU
General Public License (GPL), the GNU Lesser General Public License (LGPL), the Mozilla Public License, the Common Public License, the Apache License, the BSD License, the Artistic License (e.g., PERL), the Netscape Public License, the Sun Community
Source License and the Sun Industry Standards License.
Option Tranche
means the
portion of a Company Option that was granted under the Companys 2011 Stock Incentive Plan and that, as of the Effective Time, is either vested or is scheduled to vest on a specified date.
Order
means any order, judgment, injunction, award, decision, determination, stipulation,
ruling, subpoena, writ, decree or verdict entered by or with any Governmental Authority.
Owned
Real Property
means the real property in which the Company or any of its Subsidiaries has fee title (or equivalent) interest, together with, to the extent owned by the Company or any of its Subsidiaries, all buildings and other
structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
Parent Board
means the board of directors of Parent.
Parent Disclosure Schedule
means the disclosure schedule dated as of the date of this Agreement
and delivered by Parent to the Company simultaneously with the signing of this Agreement.
A-10
Parent Permits
means franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents, concessions, registrations, clearances, exemptions, certificates, approvals and orders of any Governmental Authority necessary for Parent and each of its Subsidiaries to
own, lease and operate their respective properties and assets or to carry on their respective businesses as they are now being conducted.
Permitted Encumbrances
means: (a) liens for Taxes, assessments and charges or levies by Governmental Authorities not yet due and payable or that are being contested in good
faith by appropriate proceedings and for which adequate reserves have been reflected on the books of the Company or a Subsidiary in accordance with GAAP; (b) materialmens, mechanics, carriers, workmens and
repairmens liens and other similar liens arising in the ordinary course of business relating to obligations as to which there is no default on the part of the Company or any of its Subsidiaries or that secure a liquidated amount, in each case,
that are being contested in good faith by appropriate proceedings; (c) leases and subleases (other than capital leases and leases underlying sale and leaseback transactions); (d) Encumbrances imposed by applicable Law; (e) pledges or
deposits to secure obligations under workers compensation laws or similar legislation or to secure public or statutory obligations; (f) pledges or deposits to secure the performance of bids, trade contracts, leases, surety and appeal
bonds, performance bonds and other obligations of a similar nature, in each case, in the ordinary course of business; (g) easements, covenants and rights of way (unrecorded and of record) and other similar restrictions of record, and zoning,
building and other similar restrictions, in each case, that do not adversely affect in any material respect the current use of the applicable property owned, leased, used or held for use by the Company or any of its Subsidiaries;
(h) Encumbrances securing indebtedness or liabilities that (i) are reflected in the Company SEC Reports filed or furnished prior to the date hereof or (ii) that are set forth in the Company Disclosure Schedule; (i) matters which
would be disclosed by an accurate survey or inspection of the real property which do not, individually or in the aggregate, materially impair the occupancy or current use of such real property which they encumber; (j) outbound license
agreements entered into in the ordinary course of business; and (k) standard survey and title exceptions.
Person
means an individual, corporation, partnership, limited partnership, limited liability
company, syndicate, person (as defined in Section 13(d)(3) of the Exchange Act), trust, association, entity or Governmental Authority.
PRC
means the Peoples Republic of China, but solely for purposes of this Agreement excluding the Hong Kong Special Administrative Region, the Macau Special Administrative
Region and Taiwan.
PRC Anti-Monopoly Law
means the Anti-Monopoly Law of the PRC,
effective as of August 1, 2008, as amended.
Real Property
means the Leased Real
Property and the Owned Real Property.
Representatives
means a Persons
officers, directors, employees, accountants, consultants, legal counsel, investment bankers, advisors, agents and other representatives.
Rollover Shares
means the Shares set forth in the Rollover Agreement.
Rollover Stockholders
means each of the Persons listed on
Schedule B
of the Parent Disclosure Schedule and each other Person who enters into an Additional Rollover
Agreement with Parent and Holdco pursuant to
Section 3.01(f)
.
Schedule
13E-3
means the transaction statement on Schedule 13E-3 under the Exchange Act to be filed pursuant to Section 13(e) of the Exchange Act relating to the adoption of this Agreement by the stockholders of the Company (together with
any amendments thereof or supplements thereto and including any document incorporated by reference therein).
SEC
means the U.S. Securities and Exchange Commission.
Securities Act
means the U.S. Securities Act of 1933, as amended.
Senior Employee
means a Tier I Employee or a Tier II Employee.
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Service Provider
means each of the officers,
employees, directors and independent contractors of the Company and each of its Subsidiaries.
Software
means all (a) computer programs, applications, systems and code, including
software implementations of algorithms, models and methodologies, program interfaces, and source code and object code, (b) Internet and intranet websites, databases and compilations, including data and collections of data, whether
machine-readable or otherwise, (c) development and design tools, library functions and compilers, (d) technology supporting websites, and the contents and audiovisual displays of websites, and (e) media, documentation and other works
of authorship, including user manuals and training materials, relating to or embodying any of the foregoing or on which any of the foregoing is recorded.
Special Committee
means a committee of the Company Board consisting of directors of the Company that are not affiliated with Parent, Merger Sub or the Rollover Stockholders, and
are not members of the Companys management.
Sponsor
means each of the Persons
listed on
Schedule C
of the Parent Disclosure Schedule.
Subsidiary
or
Subsidiaries
of any specified Person means an Affiliate controlled by such Person, directly or indirectly, through one or more intermediaries.
Superior Proposal
means a written
bona fide
unsolicited Acquisition Proposal on terms
that the Company Board (or any committee thereof composed solely of independent directors, including the Special Committee) determines, in its good faith judgment, after having received the advice of its independent financial advisor of
nationally (in the U.S.) recognized reputation and outside U.S. legal counsel, and taking into account all the terms and conditions of the Acquisition Proposal, including any financing (if a cash transaction), break-up fees, expense reimbursement
provisions and conditions and timing to, and likelihood of, consummation, are more favorable in the aggregate to the stockholders of the Company than as provided under this Agreement, taking into account any written proposal by Parent to amend the
terms of this Agreement pursuant to
Section 7.03(d)(ii)
. For purposes of the definition of Superior Proposal, each reference to 10% and 90% in the definition of Acquisition Proposal shall
be replaced with 80% and 20%, respectively;
provided
,
however
, that such replacement shall not apply in relation to an Acquisition Proposal, made by any stockholder of the Company or any of such
stockholders Affiliates, in respect of an offer by such stockholder to acquire at least 75% of the voting equity interests in the Company.
Taxes
means (a) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental Authority, including taxes or other charges on or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers compensation, unemployment compensation or net worth; (b) taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
(c) license, registration and documentation fees; (d) customs duties, tariffs and similar charges; and (e) in the case of the Company and its Subsidiaries, liability for the payment of any amount of the type described in any of
(a) through (d) as a result of being or having been before the Effective Time a member of an affiliated, consolidated, combined or unitary group or as a result of being or having been a party to any Tax Sharing Agreement.
Tax Return
shall mean any return, declaration, report, election, claim for refund or information
return or other statement or form filed or required to be filed with any Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Tax Sharing Agreement
means all existing agreements or arrangements (whether or not written)
binding on the Company or any of its Subsidiaries that provide for the allocation, apportionment, sharing or assignment of any Tax liability or benefit, or the transfer or assignment of income, revenues, receipts, or gains for the purpose of
determining any Persons Tax liability.
Taxing Authority
means any Governmental
Authority responsible for the imposition or collection of any Tax.
A-12
Tier I Employee
means an employee of the Company
with the title of Vice President (
) or a more senior title as of the date hereof.
Tier II
Employee
means an employee of the Company with the title of Director (
) as of the date hereof.
Transactions
means the Merger
and the other transactions contemplated by this Agreement.
U.S.
means the United
States of America.
U.S. Taxpayer
means an individual who as of the Effective Time is
a U.S. citizen or resident alien for U.S. federal income tax purposes.
Willful
Breach
means a material breach of representations, warranties, covenants or agreements that is a consequence of a deliberate act or omission knowingly undertaken by the breaching party with the actual knowledge of the breaching party
that such act or omission would cause or constitute a breach of this Agreement;
provided
that a Willful Breach does not include any failure by the Parent to fund the Exchange Fund under the circumstances described in
Section 9.01(d)(iii)
(where such failure did not result from (1) any Willful Breach by Parent or Merger Sub of the representations, warranties, covenants or agreements contained herein or (2) any breach by the Buyer Group
Parties or any of their respective Affiliates (other than the Company and its Subsidiaries) of the Buyer Group Contracts or any Financing Documents).
Voting Stockholders
means each of the Persons listed on
Schedule D
of the Parent Disclosure Schedule.
Section 1.02
Other Defined Terms
. The following terms have the meanings set forth in the
Sections set forth below:
|
|
|
Defined Term
|
|
Location of Definition
|
Additional Rollover Agreements
|
|
Section 3.01(f)
|
Additional Rollover Shares
|
|
Section 3.01(f)
|
Agreement
|
|
Preamble
|
Alternative Debt Financing
|
|
Section 7.16(b)
|
Alternative Debt Financing Documents
|
|
Section 7.16(b)
|
Bankruptcy and Equity Exception
|
|
Section 4.04(a)
|
Benefit Plan
|
|
Section 4.10(c)
|
Book-Entry Shares
|
|
Section 3.01(a)
|
Certificate of Merger
|
|
Section 2.02
|
Certificates
|
|
Section 3.01(a)
|
Change in the Company Recommendation
|
|
Section 7.03(c)
|
Change or Termination Notice
|
|
Section 7.03(d)(ii)
|
Closing
|
|
Section 2.02
|
Company
|
|
Preamble
|
Company Expense Reimbursement
|
|
Section 9.03(d)
|
Company Owned Software
|
|
Section 4.12(c)
|
Company SEC Reports
|
|
Section 4.07(a)
|
Company Termination Fee
|
|
Section 9.03(a)
|
D&O Insurance
|
|
Section 7.06(c)
|
Debt Commitment Letter
|
|
Section 5.08(b)
|
Debt Financing
|
|
Section 5.08(b)
|
Dissenting Shares
|
|
Section 3.05
|
Dissenting Stockholder
|
|
Section 3.05
|
Effective Time
|
|
Section 2.02
|
Equity Commitment Letters
|
|
Section 5.08(b)
|
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|
|
|
Defined Term
|
|
Location of Definition
|
Equity Financing
|
|
Section 5.08(b)
|
Exchange Fund
|
|
Section 3.02(a)
|
Excluded Share
|
|
Section 3.01(b)
|
Facility Agreement
|
|
Section 7.16(a)
|
Financing
|
|
Section 5.08(b)
|
Financing Documents
|
|
Section 5.08(b)
|
Guarantors
|
|
Recitals
|
Indemnified Parties
|
|
Section 7.06(a)
|
Insurance Policies
|
|
Section 4.16(a)
|
International Plan
|
|
Section 4.10(c)
|
Key Contract
|
|
Section 4.15(b)
|
Lender
|
|
Section 5.08(b)
|
Limited Guarantees
|
|
Recitals
|
Major Customer
|
|
Section 4.19(a)
|
Material Contracts
|
|
Section 4.15(a)
|
Maximum Tail Premium
|
|
Section 7.06(c)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
Section 3.01(a)
|
Merger Sub
|
|
Preamble
|
Notice Period
|
|
Section 7.03(d)(ii)
|
Parent
|
|
Preamble
|
Parent Expense Reimbursement
|
|
Section 9.03(d)
|
Parent Termination Fee
|
|
Section 9.03(c)
|
Paying Agent
|
|
Section 3.02(a)
|
Preliminary Proxy Statement
|
|
Section 7.01(a)
|
Privacy and Security Laws
|
|
Section 4.21
|
Proxy Statement
|
|
Section 7.01(a)
|
Restraint
|
|
Section 8.01(a)
|
Rollover Agreement
|
|
Recitals
|
Selected Business Contracts
|
|
Section 4.15(c)
|
Seller Related Party
|
|
Section 9.03(g)
|
Shares
|
|
Section 3.01(a)
|
Surviving Corporation
|
|
Section 2.03
|
U.S. Plan
|
|
Section 4.10(c)
|
Voting Agreement
|
|
Recitals
|
Section 1.03
Interpretation; Headings
. Whenever the words
include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. When reference is made to an Article, Section or Exhibit, such reference is to an Article or Section of, or Exhibit
to, this Agreement unless otherwise indicated. The table of contents and descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein. The words hereof, herein and
hereunder and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement. Each of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
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ARTICLE II
THE MERGER
Section 2.01
The Merger
. Upon the terms and subject to the satisfaction or written waiver (where permissible) of the conditions set forth in
Article VIII
, and in accordance with the applicable provisions of the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company.
Section 2.02
Closing; Effective Time
. The closing of the Merger (the
Closing
) shall take place at 9:00 p.m. (Hong Kong time) at the
offices of Shearman & Sterling, 12/F Gloucester Tower, The Landmark, 15 Queens Road Central, Hong Kong on the fifteenth (15th) Business Day after the satisfaction or written waiver (where permissible) of the conditions set
forth in
Article VIII
(other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or written waiver (where permissible) of those conditions at the Closing), unless another date,
time or place is agreed to in writing by the Company and Parent. By mutual agreement of Parent and the Company, the Closing may take place by conference call and exchange of faxes and/or e-mails of documents in .pdf format. At the Closing, the
parties shall cause the Merger to be consummated by filing a certificate of merger (the
Certificate of Merger
) with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance
with, the relevant provisions of the DGCL (the date and time of such filing of the Certificate of Merger (or such later time as may be agreed by each of the parties hereto and specified in the Certificate of Merger) being the
Effective
Time
).
Section 2.03
Effect of the Merger
. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, (a) Merger Sub shall be merged with and into the Company and, as a
result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the
Surviving Corporation
), and (b) all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.04
Certificate of Incorporation; Bylaws
.
(a) At the Effective Time, the certificate of incorporation of the Company shall be amended so as to read in its entirety as set forth in
Exhibit A
attached hereto and, as so amended, shall be the certificate of incorporation of the Surviving Corporation, until thereafter changed or amended as provided therein or by applicable Law, subject to
Section 7.06(a)
.
(b) The parties hereto shall take all necessary action such that, at the Effective Time, the bylaws of the Company shall be
amended and restated in their entirety to read the same as the bylaws of Merger Sub as in effect immediately prior to the Effective Time, until thereafter amended as provided by Law, the certificate of incorporation of the Surviving Corporation and
such bylaws, subject to
Section 7.06(a)
.
Section 2.05
Directors and
Officers
. The parties hereto shall take all necessary action such that the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and bylaws of the Surviving Corporation and until the earlier of their death, resignation or removal or until their respective successors are duly elected and qualified. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, in each case until their respective successors are duly elected and qualified or until such officers earlier death, resignation or removal.
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ARTICLE III
CONVERSION OF SECURITIES; MERGER CONSIDERATION
Section 3.01
Conversion of Securities
. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or the holders of the Company Common Stock, the following shall occur:
(a)
Merger Consideration; Conversion of Company Common Stock
. Each share of Company Common Stock (a
Share
and, collectively, the
Shares
) issued
and outstanding immediately prior to the Effective Time (other than the Excluded Shares and the Dissenting Shares) shall be converted automatically into the right to receive US$12 in cash without interest (the
Merger
Consideration
), and each holder of a certificate or certificates which immediately prior to the Effective Time represented such Shares (
Certificates
) or
book-entry
shares which immediately prior to the Effective Time represented such Shares (
Book-Entry
Shares
) shall thereafter cease to have any rights with respect thereto except (i) the
right to receive the Merger Consideration in consideration therefor upon surrender of such Certificate or transfer of the Book-Entry Shares in accordance with
Section 3.02(b)
(or in the case of a lost, stolen or destroyed Certificate,
Section 3.02(f)
) or (ii) as provided by Law.
(b)
Excluded Shares
. Each Share held
(i) in the treasury of the Company or (ii) by Parent or any direct or indirect wholly-owned Subsidiary of Parent (including Merger Sub) immediately prior to the Effective Time including, for the avoidance of doubt, each Rollover Share
contributed to Parent by the Rollover Stockholders in accordance with the Rollover Agreement and each Additional Rollover Share contributed to Parent by any Rollover Stockholders in accordance with the Additional Rollover Agreements (if any) (each,
an
Excluded Share
or, collectively, the
Excluded Shares
), shall be automatically cancelled without any conversion thereof and no payment or distribution shall be made with respect thereto.
(c)
Capital Stock of Merger Sub
. Each share of common stock, par value US$0.001 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value US$0.001 per share, of the Surviving Corporation.
(d)
Rollover
. Immediately prior to the Effective Time, the Rollover Stockholders shall contribute the Rollover Shares
and the Additional Rollover Shares (if any) to Parent pursuant to the Rollover Agreement or the Additional Rollover Agreements, as the case may be. Subsequent to the receipt by Parent of the Rollover Shares or Additional Rollover Shares (if any)
from the Rollover Stockholders, such Rollover Shares or Additional Rollover Shares, as the case may be, shall automatically be canceled, by virtue of the Merger, in accordance with
Section 3.01(b)
.
(e)
Adjustments to Merger Consideration
. The Merger Consideration shall be adjusted to reflect appropriately the effect of any
stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Common Stock), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change
with respect to Company Common Stock with a record date occurring on or after the date hereof and prior to the Effective Time.
(f)
Additional Rollover Shares
. From the date hereof until the date that is two (2) Business Days prior to the Closing Date,
Parent may from time to time enter into one or more rollover agreements, on substantially the same terms as the Rollover Agreement (the
Additional Rollover Agreements
), pursuant to which the Rollover Stockholders party
thereto agree to contribute to Parent, subject to the terms and conditions therein, the number of Shares set forth in such agreements (the
Additional Rollover Shares
);
provided
that the aggregate number of Additional
Rollover Shares shall not exceed 800,000 Shares (as adjusted in accordance with Section 3.01(e)).
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Section 3.02
Exchange of Certificates
.
(a)
Paying Agent
. Prior to the Effective Time, Parent shall designate a commercial bank or trust company which shall be reasonably
satisfactory to the Company to act as agent (the
Paying Agent
) for the benefit of the holders of Shares. At the Effective Time (or in the case of
Section 3.05
, when ascertained), Parent shall deposit, or shall
cause to be deposited, with the Paying Agent, for the benefit of the holders of Shares, Company Options and Company Restricted Stock Units, a cash amount in immediately available funds sufficient for the Paying Agent to make payments under
Section 3.01(a)
,
Section 3.04
and
Section 3.05
(such aggregate cash amount being hereafter referred to as the
Exchange Fund
). The Exchange Fund shall be invested by the Paying Agent as
directed by Parent;
provided
,
however
, that such investments shall be in obligations of or guaranteed by the U.S. or any agency or instrumentality thereof and backed by the full faith and credit of the U.S., in commercial paper
obligations rated A-1 or P-1 or better by Moodys Investors Service, Inc. or Standard & Poors Corporation, respectively, or in certificates of deposit, bank repurchase agreements or bankers acceptances of commercial banks
with capital exceeding US$1 billion (based on the most recent financial statements of such bank which are then publicly available). If for any reason following the Effective Time (including investment losses or as a result of any Dissenting
Stockholder effectively waiving, withdrawing or losing such stockholders right to seek appraisal of its Dissenting Shares under the DGCL or if a court of competent jurisdiction shall determine that such stockholder is not entitled to the
relief provided by Section 262 of DGCL) the cash in the Exchange Fund is insufficient to fully satisfy all of the payment obligations to be made in cash by the Paying Agent hereunder, Parent or the Surviving Corporation shall promptly deposit
or cause to be deposited cash in immediately available funds into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required to fully satisfy such cash payment obligations. Any interest or other income from such
investments shall be paid to and become the income of Parent and any Taxes resulting therefrom shall be paid by Parent. Except as contemplated by
Section 3.02(d)
, the Exchange Fund shall not be used for any purpose other than as
specified in this
Section 3.02(a)
.
(b)
Payment Procedures
. (i) As promptly as practicable after the
Effective Time, but in any event no later than three (3) Business Days following the Effective Time, Parent shall cause the Paying Agent to mail to each Person who was, at the Effective Time, a holder of record of Shares entitled to receive the
Merger Consideration pursuant to
Section 3.01(a)
: (A) a letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Shares shall pass, only upon proper
delivery of the Shares to the Paying Agent) and (B) instructions for use in effecting the surrender of the Shares pursuant to such letter of transmittal. At the Effective Time, Parent shall also cause the Paying Agent to deliver to the
Surviving Corporation a cash amount in immediately available funds sufficient to make the payments described under
Section 3.04(b)
and
Section 3.04(c)
and the Surviving Corporation shall make such payments to the Persons
entitled to receive such amounts through its payroll, subject to all applicable income and employment Taxes and other authorized deductions.
(ii) Upon (A) surrender to the Paying Agent of a Certificate for cancellation, together with such letter of transmittal, properly completed and validly executed in accordance with the instructions
thereto, or (B) receipt by the Paying Agent of an agents message in the case of Book-Entry Shares, and, in each case, such other documents as may be required pursuant to such instructions, the holder of such Shares shall be
entitled to receive in exchange therefor an amount of cash equal to the aggregate Merger Consideration which such holder has the right to receive pursuant to
Section 3.01(a)
in respect of the Shares formerly represented by such
holders Certificates or Book-Entry Shares, and the Certificates or Book-Entry Shares so surrendered shall forthwith be cancelled. In the event of a transfer of ownership of Shares which is not registered in the transfer records of the Company,
an amount of cash equal to the aggregate Merger Consideration for such Shares may be issued to a transferee if the Certificates or
Book-Entry
Shares representing such Shares are presented to the Paying Agent,
accompanied by all documents required to evidence and effect such transfer and by evidence reasonably satisfactory to the Paying Agent that any applicable stock transfer Taxes have been paid. Until surrendered as contemplated by
Section 3.01(a)
and this
Section 3.02
, each Certificate or Book-Entry Share shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender, without interest, the Merger
Consideration.
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(c)
No Further Rights in Company Common Stock
. The Merger
Consideration paid in respect of the Shares upon the surrender for exchange of a Certificate or transfer of a Book-Entry Share in accordance with the terms of this
Article III
shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares previously represented by such Certificate or Book-Entry Share. From and after the Effective Time, the holders of Certificates or Book-Entry Shares that evidenced ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided for herein or by applicable Law.
(d)
Termination of Exchange Fund
. Any portion of the Exchange Fund (including proceeds of any investment thereof) that remains undistributed to the holders of Shares on the date that is
one (1) year after the Effective Time shall be delivered to Parent, upon demand, and any holders of Shares who have not theretofore complied with this
Article III
shall thereafter look only to Parent or the Surviving Corporation for
the Merger Consideration to which they are entitled pursuant to
Section 3.01(a)
, without any interest thereon.
(e)
No Liability
. None of the Paying Agent, Parent or the Surviving Corporation shall be liable to any holder of Shares for any
Merger Consideration from the Exchange Fund or other cash properly delivered to a public official pursuant to any abandoned property, escheat or similar Law.
(f)
Lost Certificates
. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or
destroyed and, if required by the Surviving Corporation or the Paying Agent, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation or the Paying Agent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration with respect to the Shares formerly represented by such Certificate to which the holder
thereof is entitled pursuant to
Section 3.01(a)
.
(g)
Withholding Rights
. The current understanding of
Parent, Merger Sub and the Company is that no party will be required to deduct or withhold any amount from the consideration otherwise payable pursuant to this Agreement under applicable Law other than (i) compensatory-related withholding
required with respect to certain payments made to holders of Company Stock Awards with respect to such Company Stock Award and (ii) any U.S. federal backup withholding tax to a payee that does not provide the required documentation with respect
to its U.S. tax status. Notwithstanding any provision contained herein to the contrary, each of Parent, the Company and the Paying Agent shall be entitled to deduct and withhold from the consideration payable to any Person pursuant to this Agreement
any such Taxes as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign Tax Law. In the event that Parent, Merger Sub or the Company determines that any deduction or
withholding is required to be made from the consideration payable pursuant to this Agreement (other than any deduction or withholding described in (i) or (ii) above), Parent, Merger Sub or the Company, as applicable, shall inform the
Special Committee and the other parties to this Agreement of such determination and provide them with a reasonably detailed explanation of such determination and the parties to this Agreement shall consult with each other in good faith regarding
such determination, and Parent, the Company and the Paying Agent, as applicable, shall be entitled to deduct and withhold such amounts. To the extent that any amounts are withheld and paid over to the appropriate Governmental Authority, such
withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares or Company Stock Award in respect of which such deduction and withholding was made.
Section 3.03
Stock Transfer Books
. At the Effective Time, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the records of the Company. On or after the Effective Time, any Certificates or Book-Entry Shares presented to the Paying Agent or Parent for any
reason shall be cancelled and exchanged for the Merger Consideration with respect to the Shares formerly represented by such Certificates or Book-Entry Shares to which the holders thereof are entitled pursuant to
Section 3.01(a)
.
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Section 3.04
Company Stock Awards
.
(a) At the Effective Time, for each Option Tranche then held by a Senior Employee:
(i) if such Option Tranche is then unvested:
(A) 100% of such Option Tranche in the case of a Tier I Employee (with 2,084,750 Shares in the aggregate subject to such
Option Tranches held by the Tier I Employees) and 73.3% (rounded up to the nearest whole Share) of such Option Tranche in the case of a Tier II Employee (with 912,181 Shares in the aggregate subject to such portions of Option Tranches held by
the Tier II Employees) shall be converted into an option to purchase a number of HoldCo Shares equal to the number of Shares subject to such Option Tranche (or such applicable portion thereof in the case of a Tier II Employee), at a per HoldCo Share
exercise price equal to the excess of (x) the fair market value of a HoldCo Share immediately following the Effective Time (as determined by Parent in good faith) over (y) the per Share Intrinsic Value of such Option Tranche, which option
shall be subject to such other terms and conditions as applied to such Option Tranche; and
(B) the remaining
26.7% (rounded down to the nearest whole Share) of such Option Tranche in the case of a Tier II Employee (with 332,841 Shares in the aggregate subject to such remaining portions of Option Tranches held by the Tier II Employees) shall be canceled in
consideration of an award of restricted stock units to such Tier II Employee, which award shall provide for the issuance of a number of HoldCo Shares (rounded up to the nearest whole Holdco Share) that have an aggregate fair market value as of
immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such portion, which HoldCo Shares shall be issued on the applicable scheduled vesting date, subject to the same vesting and forfeiture
provisions as applied to such Option Tranche;
provided
,
however
, that if such Tier II Employee is a U.S. Taxpayer, such portion shall be canceled in consideration of the issuance to such Tier II Employee of a number of HoldCo Shares
(rounded up to the nearest whole Holdco Share) that have an aggregate fair market value as of immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such portion, which HoldCo Shares shall be
issued as soon as practicable (and in no event later than five days) after the Effective Time and shall be subject to the same vesting and forfeiture provisions as applied to such Option Tranche; and
(ii) if such Option Tranche is then vested, such Option Tranche shall be canceled in consideration of a cash payment to
such Senior Employee in an amount equal to the Intrinsic Value of such portion, which payment shall be made as soon as practicable (and in no event later than five days) after the Effective Time;
provided
,
however
, that, if such Senior
Employee elects, not later than five days prior to the Effective Time, pursuant to a form provided by the Company, to receive such consideration in the form of HoldCo Shares, such portion shall be canceled in consideration of a number of HoldCo
Shares (rounded down to the nearest whole HoldCo Share, with the balance paid in cash) with an aggregate fair market value as of immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such
portion, which HoldCo Shares shall be issued as soon as practicable (and in no event later than five days) after the Effective Time and shall not be subject to any forfeiture restriction (but may be subject to a transfer restriction).
(b) At the Effective Time, for each Option Tranche then held by an individual who is not a Senior Employee:
(i) if such Option Tranche is then vested, such Option Tranche shall be canceled in consideration of a cash payment to
such individual in an amount equal to the Intrinsic Value of such Option Tranche, which payment shall be made as soon as practicable (and in no event later than five days) after the Effective Time;
provided
,
however
, that, if such
individual elects, not later than five days prior to the Effective Time, pursuant to a form provided by the Company, to receive such consideration in the form of HoldCo Shares, such Option Tranche shall be canceled in consideration of a number of
HoldCo Shares (rounded down to the nearest whole HoldCo Share, with the balance paid in cash) with an aggregate fair market value as of
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immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such Option Tranche, which HoldCo Shares shall be issued as soon as practicable
(and in no event later than five days) after the Effective Time and shall not be subject to any forfeiture restriction (but may be subject to a transfer restriction);
(ii) if such Option Tranche is then unvested, such Option Tranche shall be canceled in consideration of an award of
restricted stock units to such individual, which award shall provide for the issuance of a number of HoldCo Shares (rounded up to the nearest whole HoldCo Share) that have an aggregate fair market value as of immediately following the Effective Time
(as determined by Parent in good faith) equal to the Intrinsic Value of such Option Tranche, which HoldCo Shares shall be issued on the applicable scheduled vesting date, subject to the same vesting and forfeiture provisions as applied to such
Option Tranche;
provided
,
however
, that if such individual is a U.S. Taxpayer, such Option Tranche shall be canceled in consideration of the issuance to such individual of a number of HoldCo Shares (rounded up to the nearest whole
HoldCo Share) that have an aggregate fair market value as of immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such Option Tranche, which HoldCo Shares shall be issued as soon as
practicable (and in no event later than five days) after the Effective Time and shall be subject to the same vesting and forfeiture provisions as applied to such Option Tranche.
(c) For the avoidance of doubt, for each Option Tranche (or portion thereof) held by a U.S. Taxpayer that is converted into an option to
purchase HoldCo Shares pursuant to this
Section 3.04
, the number of HoldCo Shares and the exercise price applicable to such option shall be determined in a manner that would not result in such option being treated as the grant of a new
option under Section 409A of the Code.
(d) At the Effective Time, each Company Option that was granted under a Company
Stock Plan other than the Companys 2011 Stock Incentive Plan and that is then outstanding (whether vested or unvested) shall be canceled in consideration of a cash payment to the holder of such Company Option in an amount equal to the
Intrinsic Value of such Company Option, which payment shall be made as soon as practicable (and in no event later than five days) after the Effective Time;
provided
,
however
, that, if such holder elects, not later than five days prior
to the Effective Time, pursuant to a form provided by the Company, to receive such consideration in the form of HoldCo Shares, such Company Option shall be canceled in consideration of a number of HoldCo Shares (rounded down to the nearest whole
HoldCo Share, with the balance paid in cash) with an aggregate fair market value as of immediately following the Effective Time (as determined by Parent in good faith) equal to the Intrinsic Value of such Company Option, which HoldCo Shares shall be
issued as soon as practicable (and in no event later than five days) after the Effective Time and shall not be subject to any forfeiture restriction (but may be subject to a transfer restriction).
(e) At the Effective Time, each Company Restricted Stock Unit relating to a Share that remains outstanding as of immediately prior to the
Effective Time shall be converted into a restricted stock unit that provides for the issuance of a HoldCo Share (rounded up to the nearest whole HoldCo Share), which restricted stock unit shall be subject to the same vesting and forfeiture
provisions as applied to such Company Restricted Stock Unit.
(f) Notwithstanding any provision of this Agreement to the
contrary, at the Effective Time, (i) each Company Option then held by any member of the Company Board who is not a Buyer Group Party, whether vested or unvested, shall be canceled in consideration of a cash payment to such individual in an
amount equal to the Intrinsic Value of such Company Option, which payment shall be made as soon as practicable (and in no event later than five days) after the Effective Time, and (ii) each Company Restricted Stock Unit held by any member of
the Company Board who is not a Buyer Group Party relating to a Share that remains outstanding as of immediately prior to the Effective Time shall be converted into the right to receive the Merger Consideration.
(g) Prior to the Effective Time, the Company shall take all actions with respect to the Company Options, Company Restricted Stock Units
and compensation plans or arrangements that are necessary to give
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effect to the transactions contemplated by this
Section 3.04
. Promptly following the date hereof, the Company shall deliver written notice to each holder of a Company Stock Award
informing such holder of the treatment of such Company Stock Award contemplated by this Agreement.
Section 3.05
Appraisal Rights
. Notwithstanding any provision of this Agreement to the contrary
and to the extent available under the DGCL, Shares (
Dissenting Shares
) that are held by a stockholder who is entitled to demand and properly demands appraisal of such Shares pursuant to, and who complies in all respects
with, Section 262 of the DGCL (a
Dissenting Stockholder
) shall not be converted into the right to receive the Merger Consideration, unless and until such Dissenting Stockholder shall have failed to perfect or shall
have effectively withdrawn or lost such stockholders right to seek appraisal of such Dissenting Shares under the DGCL or if a court of competent jurisdiction shall have determined that such Dissenting Stockholder is not entitled to the
appraisal provided by Section 262 of DGCL with respect to such Dissenting Shares, and any Dissenting Stockholder shall be entitled to receive only the payment provided by Section 262 of the DGCL with respect to the Dissenting Shares owned
by such Dissenting Stockholder and not any Merger Consideration with respect to such Dissenting Shares. If any Person who otherwise would be deemed a Dissenting Stockholder shall have failed properly to perfect appraisal rights, shall have
effectively withdrawn appraisal rights, or shall have lost the right to seek appraisal, in each case with respect to any Dissenting Shares, or if a court of competent jurisdiction shall have determined that such Dissenting Stockholder is not
entitled to the appraisal provided by Section 262 of DGCL with respect to such Dissenting Shares, then (a) such Dissenting Shares shall thereupon be treated as though such Dissenting Shares had been converted into the Merger Consideration
pursuant to this Agreement and (b) Parent shall promptly deposit or cause to be deposited with the Paying Agent any additional funds necessary to pay in full the aggregate Merger Consideration, without interest thereon, so due and payable to
such Persons in respect of such Dissenting Shares. The Company shall provide Parent with prompt written notice of any demands received by the Company for appraisal of Dissenting Shares, any withdrawal of any such demand and any other demand, notice
or instrument delivered to the Company prior to the Effective Time pursuant to DGCL that relates to such demand, and Parent shall have the opportunity and right to participate in all negotiations and proceedings with respect to such demands under
the applicable provisions of DGCL. Except with the prior written consent of Parent (which consent shall not be unreasonably withheld or delayed), or to the extent required by applicable Law, the Company shall not voluntarily make any payment with
respect to any demands for appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any withdrawal of any such demands, or agree to do or commit to do any of the foregoing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Merger Sub to enter into this Agreement, (a) except as set forth in the corresponding section of the
Company Disclosure Schedule (it being agreed that disclosure of any item in any section of the Company Disclosure Schedule shall be deemed disclosure with respect to any other section of this Agreement to which the relevance of such item is
reasonably apparent on its face, without independent inquiry) and (b) except as disclosed in the Company SEC Reports filed after January 1, 2011 and prior to the date of this Agreement (excluding risk factors sections or any
language in such reports that is predictive or forward-looking), in each case, only to the extent that the relevance of a disclosure or statement therein to a section of this Agreement is reasonably apparent on its face, without independent inquiry,
the Company hereby represents and warrants to Parent and Merger Sub that:
Section 4.01
Organization and Qualification; Subsidiaries
.
(a) The Company and each of its Subsidiaries is an entity duly organized,
validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the Law of the jurisdiction of its organization and has the requisite corporate or similar power and authority and all necessary
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governmental approvals to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, in each case, in all material respects. The Company and each
of its Subsidiaries is duly qualified or licensed as a foreign corporation to do business, and is in good standing (with respect to jurisdictions that recognize the concept of good standing), in each jurisdiction where the character of the
properties or assets owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary or desirable, except where the failure to be so qualified or licensed and in good standing would not constitute a
Company Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries of the Company as of the date hereof,
identifying the jurisdiction of incorporation or organization of each such Subsidiary of the Company and the percentage of the outstanding capital stock or other equity or similar interests of each such Subsidiary owned by the Company and each of
its other Subsidiaries, is set forth in
Section
4.01(b)
of the Company Disclosure Schedule.
Section 4.02
Certificate of
Incorporation and Bylaws
. The Company has heretofore furnished to Parent a complete and correct copy of the certificate of incorporation and bylaws or other equivalent organizational documents, each as amended to date, of the Company and each of
its Subsidiaries. Such certificates of incorporation and bylaws or equivalent organizational documents, are in full force and effect. Neither the Company nor any of its Subsidiaries is in violation of any of the provisions of its certificate of
incorporation, bylaws or equivalent organizational documents.
Section 4.03
Capitalization
.
(a) The authorized capital stock of the Company consists of (i) 100,000,000 Shares and
(ii) 10,000,000 shares of preferred stock. As of May 9, 2013, (i) 72,794,429 Shares are issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, (ii) 6,166,500 Shares are held in
the treasury of the Company, (iii) no Shares are held by any Subsidiary of the Company, and (iv) 7,511,299 Shares are reserved for future issuance pursuant to outstanding Company Stock Awards. No shares of the Companys preferred
stock are issued and outstanding. Except as set forth in this
Section 4.03
and
Section 4.03(a)
of the Company Disclosure Schedule and the Voting Agreement, there are no shares of capital stock or other equity interests in the
Company, options, warrants, convertible debt, other convertible instruments or other rights, agreements, arrangements or commitments of any character to which the Company is a party relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue or sell any shares of capital stock of, or other equity interests in, the Company or any of its Subsidiaries, or stock appreciation rights, performance units,
restricted stock units, contingent value rights, phantom stock units or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of or
other equity interests in, the Company or any of its Subsidiaries. All Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other equity interests in, any Subsidiary
of the Company or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of the Company or any other Person. All outstanding Company Stock Awards have been issued in compliance
with all applicable Law in all material respects, and all requirements set forth in the applicable Company Stock Plan. The Company has delivered to Parent (A) a true and complete list which sets forth, for each outstanding Company
Stock Award granted under the Companys 2011 Stock Incentive Plan and held by a Senior Employee, type of award, grant date, exercise price (if applicable), vesting schedule and numbers of granted and vested Shares underlying such Company Stock
Award and a separate true and complete list which sets forth the names of all the Senior Employees that hold any Company Stock Award and (B) a true and complete list which sets forth the aggregate amount of the outstanding Company Stock Awards
and the weighted average exercise price (if applicable) under each of the 2011 Stock Incentive Plan, the 2008 Stock Incentive Plan and the 2002 Stock Option Plan of the Company. Five (5) Business Days prior to the Closing Date, the Company
will provide Parent with a revised version of such lists, updated as of the most recent practicable date.
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(b) Except as set forth in Part A of
Section 4.03(b)
of the Company Disclosure
Schedule, each outstanding share of capital stock of, or other equity interests in, each Subsidiary owned directly or indirectly by the Company is (i) duly authorized, validly issued, fully paid and non-assessable, (ii) free and clear of
all Encumbrances and (iii) not subject to any outstanding obligations of the Company or any of its Subsidiaries requiring the registration under any securities Law for sale of such share of capital stock, or other equity interests. Except for
the capital stock or other equity interests in (A) its Subsidiaries and (B) the entities set forth in Part B of
Section 4.03(b)
of the Company Disclosure Schedule, the Company does not own, directly or indirectly, any capital
stock or other equity interests in, any Person.
(c) No bonds, debentures, notes or other Indebtedness of the Company having
the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which stockholders of the Company may vote are issued and outstanding.
(d) Except as set forth in
Section 4.03(d)
of the Company Disclosure Schedule and the Voting Agreement, there are no
outstanding voting trusts or other agreements to which the Company or any of its Subsidiaries is a party (i) restricting the transfer of, (ii) relating to the voting of, or (iii) requiring the registration under any securities Law for
sale of, any Shares, shares of preferred stock or any other capital stock of, or other equity interests in, the Company.
Section 4.04
Authority Relative to This Agreement; Vote Required
.
(a) Assuming the accuracy of the
representations and warranties of Parent and Merger Sub in
Section 5.12
of this Agreement, the Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to receipt of the Company
Stockholder Approval, to perform its obligations hereunder and to consummate the Transactions. Assuming the accuracy of the representations and warranties of Parent and Merger Sub in
Section 5.12
of this Agreement, the execution and
delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger, obtaining the Company Stockholder Approval and the filing of the Certificate of Merger as required by the DGCL). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the accuracy of the representations and warranties of Parent and Merger Sub in
Section 5.12
of this Agreement and the due authorization, execution and delivery by Parent and
Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to fraudulent
transfers), reorganization, moratorium or similar Laws affecting creditors rights generally and subject to the effect of general principles of equity, regardless of whether considered in a proceeding at law or in equity
(the
Bankruptcy and Equity Exception
).
(b) The Special Committee is composed of three members
of the Company Board who are not affiliated with Parent, Merger Sub or the Rollover Stockholders and are not members of the Companys management. As of the date hereof, the Company Board, acting upon the unanimous recommendation of the Special
Committee, by resolutions duly adopted by vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way, has (i) determined that the Merger is advisable and fair to, and in the best interests of,
the Company and its stockholders (other than the holders of the Excluded Shares), (ii) approved this Agreement and declared its advisability, and (iii) subject to the terms of this Agreement (including
Section 7.03
), resolved
to recommend the adoption of this Agreement by the stockholders of the Company, and directed that this Agreement be submitted for consideration by the stockholders of the Company at the Company Stockholders Meeting. Assuming the accuracy of
the representations and warranties of Parent and Merger Sub in
Section 5.12
of this Agreement, the restrictions on business combinations set forth in Section 203(a) of the DGCL shall not apply to any of the Transactions. To the
Knowledge of the Company, no restrictions in other U.S. state or federal takeover statutes or Laws are applicable to the Merger or any of the other Transactions.
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Section 4.05
No Conflict; Required Filings and
Consents
.
(a) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by
the Company, and the consummation of the Merger, will not, (i) conflict with or violate the certificate of incorporation, bylaws or other equivalent organizational documents of the Company or any of its Subsidiaries, (ii) assuming the
accuracy of the representations and warranties of Parent and Merger Sub in
Section 5.12
of this Agreement, and assuming all consents, approvals, authorizations and other actions described in
Section 4.05(b)
have been obtained
or taken and all filings and obligations described in
Section 4.05(b)
have been made or satisfied, and assuming receipt of the Company Stockholder Approval, conflict with or violate any Law applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, or (iii) except as set forth in
Section 4.05(a)
of the Company Disclosure Schedule, violate, conflict with, require
consent under, result in any breach of, result in loss of benefit or release of source code under, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance (other than Permitted Encumbrances) on any property or asset of the Company or any of its Subsidiaries pursuant to any Contract or Company Permit,
except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not constitute a Company Material Adverse Effect (without regard to the exclusions set forth in clauses
(v) and (x) of the definition of Company Material Adverse Effect).
(b) The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by the Company, and the consummation of the Transactions, will not, require any consent, approval, authorization or permit of, or filing with or notification to,
any Governmental Authority, except (i) for compliance with the applicable requirements, if any, of the Securities Act, the Exchange Act, and the rules and regulations thereunder (including, but not limited to, the filing of a Schedule
13E-3 and the Proxy Statement, and the filing of one or more amendments to the Schedule 13E-3 and the Proxy Statement to respond to comments of the SEC, if any, on such documents), (ii) for compliance with the rules and regulations of NASDAQ,
(iii) for the filing of the Certificate of Merger as required by the DGCL, (iv) for the filings under the PRC Anti-Monopoly Law and receipt of clearance thereunder approving the Merger, and (v) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or notifications, would not constitute a Company Material Adverse Effect (without regard to the exclusions set forth in clauses (v) and (x) of the definition of
Company Material Adverse Effect). Solely for the purposes of determining whether any filing is required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, in
connection with the Transactions, each of (A) the fair market value of the assets (other than cash) of the Company and the Subsidiaries, taken as a whole, located in the U.S., and (B) the sales of the Company and the Subsidiaries, taken as
a whole, in or into the U.S. from assets located outside the U.S. in the fiscal year ended December 31, 2012, is no more than US$70.9 million. The Company estimates in good faith that the sales of the Company and the Subsidiaries, taken as a
whole, in or into the U.S. from assets located outside the U.S. in the fiscal year ending December 31, 2013, will be no more than US$70.9 million.
Section 4.06
Permits; Compliance
.
(a)
Except as set forth in
Section 4.06(a)
of the Company Disclosure Schedule, the Company and each of its Subsidiaries is in possession of all material Company Permits. No suspension, modification, revocation or cancellation of any of the
material Company Permits is pending or, to the Knowledge of the Company, threatened. Neither the Company nor any of its Subsidiaries is or has been in conflict with, or in default, breach or violation of, in any material respects, any Law or Company
Permit applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected.
(b) Notwithstanding the foregoing, this
Section 4.06
shall not be deemed to relate to (i) the Companys reporting obligations under the Securities Act, the Exchange Act, and the
rules and regulations promulgated thereunder, (ii) labor, employment and employee benefit matters, (iii) Laws relating to infringement,
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misappropriation, violation, validity or enforceability of Intellectual Property Rights, (iv) Taxes, or (v) environmental matters, each of which are the subject exclusively of the
representations and warranties in
Section 4.07
,
Section 4.10
,
Section 4.12
,
Section 4.13
and
Section 4.14
, respectively.
(c) Except as set forth in
Section 4.06(c)
of the Company Disclosure Schedule and to the Knowledge of the Company, the
beneficial stockholders of the Company who are PRC residents (as defined under the
Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and Round-trip Investments via Overseas Special
Purpose Companies
promulgated on October 21, 2005 by the PRC State Administration of Foreign Exchange) have complied in all material respects with all reporting and filing requirements in accordance with applicable PRC Law with respect to
their interest in the Company.
Section 4.07
SEC Filings; Financial Statements
.
Except as set forth in
Section 4.07
of the Company Disclosure Schedule:
(a) The Company has filed all forms,
reports, statements, schedules and other documents required to be filed by it with the SEC since December 31, 2009 (the forms, reports, statements, schedules and other documents filed since December 31, 2009 and those filed subsequent to
the date hereof, including any amendments thereto, and together with any exhibits and schedules thereto (other than press releases or other documents not incorporated by reference therein), collectively, the
Company SEC
Reports
). The Company SEC Reports (i) at the time they were filed and, if amended, as of the date of such amendment, complied in all material respects with all applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, and, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is subject to the reporting requirement of
Sections 13(a) or 15(d) of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained (or incorporated by reference) in the Company SEC Reports was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by
Form 10-Q
and related rules of the SEC) and each fairly presents, in all material respects, the consolidated financial position, results of operations and
cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring
year-end
adjustments which have not had, and would not constitute a Company Material Adverse Effect).
(c) Neither the Company nor any of its Subsidiaries has any outstanding liability or obligation of any nature (whether accrued, absolute, contingent, determined, determinable or otherwise and whether due
or to become due) that would be required to be reflected or reserved against in a consolidated balance sheet of the Company and its consolidated Subsidiaries prepared in accordance with GAAP, except for liabilities and obligations (i) that are
reflected, or for which reserves were established, on the 2012 Balance Sheet, (ii) incurred in the ordinary course of business consistent with past practice since December 31, 2012, (iii) that would not constitute a Company Material
Adverse Effect, or (iv) that are disclosed prior to the date of this Agreement in the Company SEC Reports, incurred in connection with the Transactions or otherwise as contemplated by this Agreement.
(d) The Company has timely filed all certifications and statements required by
(i) Rule 13a-14
or
Rule 15d-14
under the Exchange Act or (ii) 18 U.S.C. Section 1350 (Section 906 of the
Sarbanes-Oxley
Act of 2002) with respect to any Company SEC Report. The Company maintains disclosure controls and procedures required by
Rule 13a-15
or
Rule 15d-15
under the Exchange Act reasonably designed and maintained to ensure that information required to be disclosed by the Company in the reports that it files or submits to the SEC under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Companys
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management as appropriate to allow timely decisions regarding required disclosure. The Company maintains internal control over financial reporting that are designed to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Companys certifying officers have evaluated the effectiveness of the Companys
disclosure controls and procedures as of the end of the period covered by the Companys most recently filed periodic report under the Exchange Act and the Company has disclosed, based on its most recent evaluations, to its outside auditors and
the audit committee of the Company Board, (A) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule
13a-15(f)
of
the Exchange Act) which are reasonably likely to adversely affect the Companys ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who
have a significant role in the Companys internal controls over financial reporting. Based on the evaluation of disclosure controls and procedures as of the end of the period covered by the most recent Form 10-K or 10-Q prior to the date
hereof, the Companys certifying officer concluded that such disclosure controls and procedures are effective. As used in this
Section 4.07
, the term filed shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to the SEC.
(e) The Company maintains and has
maintained a standard system of accounting established and administered in accordance with GAAP in all material respects.
(f)
There are no outstanding loans or other extensions of credit made by the Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company that would violate Section 402 of
the Sarbanes-Oxley Act of 2002.
(g) There is no outstanding transaction, or series of similar transactions, agreements,
arrangements or understandings, to which the Company or any of its Subsidiaries is a party, that would be required to be disclosed under Item 404 of Regulation S-K promulgated under the Securities Act in a Company SEC Report that was not so
disclosed.
(h) None of the Company or any of its Subsidiaries has any off-balance sheet arrangement (as defined in
Item 303 of Regulation S-K promulgated under the Securities Act) that would be required to be disclosed under Item 303 of Regulation S-K promulgated under the Securities Act.
(i) The Company has complied in all material respects with the applicable listing and corporate governance rules and regulations of
NASDAQ.
Section 4.08
Absence of Certain Changes or Events
.
(a) Since June 30, 2012 until the date hereof, (i) the Company and its Subsidiaries have conducted their businesses in all
material respects in the ordinary course and in a manner consistent with past practice (except for actions taken or not taken in connection with the Transactions), and (ii) there has not been any change in the financial condition, business or
results of their operations or any circumstance, occurrence or development which, to the Companys Knowledge, constitutes a Company Material Adverse Effect.
(b) Since June 30, 2012 until the date hereof, there has not been any action taken by the Company or any of its Subsidiaries that, if taken during the period from the date of this Agreement through
the Effective Time without Parents consent, would constitute a breach of
Section 6.01(b)(i)
,
6.01(b)(iv)
,
6.01(b)(v)
,
6.01(b)(vi)
,
6.01(b)(viii)
,
6.01(b)(ix)
,
6.01(b)(xi)
,
6.01(b)(xii)
,
6.01(b)(xvi)
or
6.01(b)(xvii)
, or, to the extent applicable to the foregoing Sections, subsections or clauses,
Section 6.01(b)(xviii)
.
Section 4.09
Absence of Litigation
. There is no Action pending or, to the Knowledge of the
Company, threatened against the Company, any of its Subsidiaries, or any property or asset of the Company or any of its
A-26
Subsidiaries, before (or, in the case of threatened Actions that would be before) or by any Governmental Authority or arbitrator that constitutes a Company Material Adverse Effect or that would
reasonably be expected to expose the Company or any of its Subsidiaries to any criminal liability or to any material governmental fines or penalties. Neither the Company nor any of its Subsidiaries nor any material property or asset of the Company
or any of its Subsidiaries is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the Knowledge of the Company, continuing investigation by, any Governmental Authority or any Order
of any Governmental Authority, except as would not constitute a Company Material Adverse Effect.
Section 4.10
Labor and Employment Matters
.
(a) (i) Neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining or similar agreement or
understanding applicable to persons employed by the Company or any of its Subsidiaries and there has not been any organizational campaign, petition or other unionization activity seeking recognition of a collective bargaining unit relating to any
such person; (ii) neither the Company nor any of its Subsidiaries has breached or otherwise failed to comply in any material respect with the provisions of any collective bargaining or similar agreement or understanding, and there are no
material grievances outstanding against the Company or any of its Subsidiaries under any such agreement or understanding; (iii) there are no unfair labor practice complaints pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries before any Governmental Authority; and (iv) there is no, and there has not been, since January 1, 2011, any labor strike, slowdown, stoppage, material interruption of work or lockout and, to the Knowledge
of the Company, no event or act described in this clause (iv) is threatened against the Company or any of its Subsidiaries.
(b) Except as set forth in
Section 4.10(b)
of the Company Disclosure Schedule, the Company and its Subsidiaries are currently in compliance in all material respects with all applicable Law
relating to the employment of labor, including those related to labor management relations, wages, hours, collective bargaining, overtime, employee classification, discrimination, sexual harassment, civil rights, affirmative action, work
authorization, immigration, safety and health, information privacy and security, workers compensation, continuation coverage under group health plans, wage payment and the payment and withholding of Taxes.
(c)
Section 4.10(c)
of the Company Disclosure Schedule lists any (i) employee benefit plan as defined in
Section 3(3) of ERISA, (ii) compensation, employment, severance, collective bargaining, termination protection, change in control, transaction bonus, retention or similar plan, agreement, arrangement, program or policy or (iii) other
plan, agreement, arrangement, program or policy providing for compensation, bonuses, profit-sharing, equity or equity-based compensation or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured
arrangement), medical, dental, vision, prescription or fringe benefits, life insurance, relocation or expatriate benefits, perquisites, disability or sick leave benefits, employee assistance program, workers compensation, supplemental
unemployment benefits or post-employment or retirement benefits (including compensation, pension, health, medical or insurance benefits), in each case whether or not written, (x) that is sponsored, maintained, administered, contributed to or
entered into by the Company or any of its Subsidiaries for the current or future benefit of any current or former Service Provider or (y) for which the Company or any of its Subsidiaries has any direct or indirect liability (except, in each
case, for any statutory or social security pension plans or arrangements required under applicable non-U.S. Law) (each, a
Benefit Plan
) and specifies whether such Benefit Plan (i) is a Benefit Plan that covers Service
Providers located primarily within the United States (each, a
U.S. Plan
) or a Benefit Plan that is not a U.S. Plan (each, an
International Plan
). For each Benefit Plan, the Company has made
available to Parent and Merger Sub a copy of such Benefit Plan (or a description, if such Benefit Plan is not written) and all amendments thereto and, as applicable (A) all trust agreements, insurance contracts or other funding arrangements and
amendments thereto, (B) the most recent favorable determination or opinion letter from the IRS, (C) the annual returns/reports (Form 5500) and accompanying schedules and attachments thereto for the three most recently completed plan years,
A-27
(D) the three most recently prepared actuarial reports and financial statements, and (E) if such plan is an International Plan, documents that are substantially comparable (taking into
account differences in applicable Law and practices) to the documents required to be provided in clauses (A) through (D) above.
(d) (i) The Company has delivered to Parent a true and complete list which sets forth, for each Tier I Employee and Tier II Employee who has a title of Senior Director (
) or Senior Expert as of the date hereof, such employees name, employer, department and hire date, and five (5) Business Days prior to the Closing Date, the Company will provide Parent and
Merger Sub with a revised version of such list, updated as of the most recent practicable date. The Company has delivered to Parent a separate true and complete list which sets forth, (A) for each of 2011 and 2012, the aggregate amount of the
base salary paid to the employees who then held the title of Vice President or a more senior title (other than Steve Zhang and Libin Sun) and the names of such employees, (B) for each of 2011 and 2012, the aggregate amount of the base salary
paid to the employees who then held the title of Senior Director or Senior Expert (or, for 2011, any other approximately equivalent designation or title) and the names of such employees, and (C) the aggregate amount of the cash bonus paid to
the employees who then held the title of Senior Director, Senior Expert (or, for 2011, any other approximately equivalent designation or title) or a more senior title (other than Steve Zhang and Libin Sun) in 2011 and 2012.
(ii)
Section 4.10(d)(ii)
of the Company Disclosure Schedule sets forth an organizational chart indicating the functions and reporting responsibilities of the Senior Employees. (iii) As of the date of this Agreement, except as
set forth in
Section 4.10(d)(iii)
of the Company Disclosure Schedule, no Tier I Employee has indicated to the Company or any of its Subsidiaries in writing that he or she intends to resign or retire, and to the Knowledge of the Company,
no Tier I Employee intends to resign or retire, as a result of the Transactions or otherwise within one year after the Closing Date.
(e) Except (i) as set forth in
Section 4.10(e)
of the Company Disclosure Schedule and (ii) as otherwise specifically provided in this Agreement regarding the Company Stock Awards,
neither the execution and delivery of this Agreement nor the consummation of the Transactions (either alone or in conjunction with another event, such as a termination of employment) will (A) result in any payment or benefit, including, but not
limited to, any bonus, retention, severance, retirement or job security payment or benefit, becoming due to any current or former director or current or former Service Provider under any of the Benefit Plans or otherwise; (B) increase any
benefits otherwise payable under any of the Benefit Plans; (C) result in any acceleration of the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase
the amount payable or trigger any obligation, under any Benefit Plan; or (D) limit or restrict the right of the Company or any of its Subsidiaries, or after the Closing, Parent, to merge, amend or terminate any Benefit Plan. No Benefit Plan,
individually or collectively, would be expected to result in the payment of any amount that would not be deductible under Section 280G of the Code.
(f) There is no outstanding material Order against or which relates to any Benefit Plan. Except as set forth in
Section 4.10(f)
of the Company Disclosure Schedule, each document prepared in
connection with a Benefit Plan complies in all material respects with applicable Law. (i) Each Benefit Plan has been operated in all material respects in accordance with its terms, applicable Law, and, to the extent applicable, in accordance
with generally accepted accounting practices in the applicable jurisdiction applied to such matters and, (ii) to the Knowledge of the Company, no circumstance, fact or event exists that could result in any material default under or violation of
any Benefit Plan, and no Action (other than routine claims for benefits) is pending or, to the Knowledge of the Company, threatened with respect to any Benefit Plan. Each International Plan, (A) if intended to qualify for special Tax treatment,
meets all the requirements for such treatment and, (B) if required, to any extent, to be funded, book-reserved or secured by an insurance policy, is fully funded, book-reserved or secured by an insurance policy, as applicable, based on
reasonable actuarial assumptions in accordance with applicable accounting principles.
(g) All material contributions,
premiums and payments that are due have been made for each Benefit Plan within the time periods prescribed by the terms of such plan and applicable Law, and all material contributions, premiums and payments for any period ending on or before the
Closing Date that are not due are
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properly accrued to the extent required to be accrued under applicable accounting principles and have been properly reflected in the applicable audited consolidated financial statements of the
Company and its Subsidiaries. There has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of its Subsidiaries relating to, or change in employee participation or coverage under, any
Benefit Plan that would increase materially the expense of maintaining such plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.
(h) No events have occurred with respect to any Benefit Plan that would reasonably be expected to result in the assessment of any excise
taxes against the Company or any of its Subsidiaries. Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS or has applied to the IRS for such a
letter within the applicable remedial amendment period. Each trust created under any such Benefit Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. Each Benefit Plan, and any award thereunder,
that is or forms part of a nonqualified deferred compensation plan within the meaning of Section 409A or 457A of the Code has been timely amended (if applicable) to comply and has been operated in compliance with, and the Company
and its Subsidiaries have complied in practice and operation with, all applicable requirements of Section 409A and 457A of the Code. Except as set forth in
Section 4.10(h)
of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any current or former Service Provider for any tax incurred by such Service Provider, including under Section 409A, 457A or 4999 of the Code.
(i) Neither the Company nor any of its ERISA Affiliates (nor any predecessor of any such entity) sponsors, maintains, administers or
contributes to (or has any obligation to contribute to), or has in the past six years sponsored, maintained, administered or contributed to (or had any obligation to contribute to), any plan subject to Title IV of ERISA, including any
multiemployer plan as defined in Section 3(37) of ERISA.
(j) Neither the Company nor any of its Subsidiaries
has any current or projected liability for, and no Benefit Plan provides or promises, any post-employment or post-retirement medical, dental, disability, hospitalization, life or similar benefits (whether insured or self-insured) to any current or
former Service Provider (other than coverage mandated by applicable Law).
(k) The consent or consultation of, or the
rendering of formal advice by, any labor or trade union, works council or other employee representative body is not required for the Company to enter into this Agreement or to consummate any of the Transactions.
Section 4.11
Real Property; Title to Assets
.
(a)
Section 4.11(a)
of the Company Disclosure Schedule sets forth all of the Owned Real Property of the Company and its
Subsidiaries that is material to the business of the Company and its Subsidiaries taken as a whole. Except as would not constitute a Company Material Adverse Effect, each of the Company and its Subsidiaries has good and marketable title to each
parcel of Owned Real Property, free and clear of all Encumbrances, except Permitted Encumbrances.
(b) The Company has made
available to Parent copies of all Leases under which the Company or any of its Subsidiaries uses or occupies or has the right to use or occupy any Leased Real Property that is material to the business of the Company and its Subsidiaries taken as a
whole (and all modifications, amendments and supplements thereto). Except as would not constitute a Company Material Adverse Effect, each of the Company and its Subsidiaries has a good and valid leasehold interest in each parcel of the Leased Real
Property, free and clear of all Encumbrances, except Permitted Encumbrances.
(c) As of the date of this Agreement, no party
to any such Real Property Leases has given written notice to the Company or any of its Subsidiaries of or made a written claim against the Company or any of its Subsidiaries with respect to any material breach or default thereunder. Neither the
Company nor any of its
A-29
Subsidiaries, nor to the Companys Knowledge any other party to a Lease, has violated in any material respect any provision of such Lease, or taken or failed to take any act which, with or
without notice, lapse of time, or both, would constitute a material default under the provisions of such Lease.
(d) Except as
would not constitute a Company Material Adverse Effect, the Company and its Subsidiaries have good and marketable title to, or a valid and binding leasehold interest in, all other properties and assets (excluding Owned Real Property, Leased Real
Property and Intellectual Property Rights) that are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all Encumbrances, except Permitted Encumbrances.
Section 4.12
Intellectual Property
.
(a)
Section 4.12(a)(i)
of the Company Disclosure Schedule sets forth a true and complete list of all registrations, including
domain names, and applications for registration included in the Company Owned Intellectual Property Rights. Except as set forth in
Section 4.12(a)(ii)
of the Company Disclosure Schedule, the Company and its Subsidiaries own, or have
effective rights to use, all Intellectual Property Rights necessary for, or used or held for use in connection with, their respective businesses as currently conducted except where the failure to own or have such Intellectual Property Rights could,
individually or in the aggregate, have a Company Material Adverse Effect. The Company and its Subsidiaries, collectively, are the sole and exclusive owners of all material Company Owned Intellectual Property Rights free and clear of any Encumbrances
other than Permitted Encumbrances.
(b) To the Knowledge of the Company, neither the Company nor any of its Subsidiaries nor
the conduct of their respective businesses has, in the past three (3) years, infringed, misappropriated or otherwise violated the Intellectual Property Rights of any Person in any material respect, and neither the Company nor any of its
Subsidiaries has received a written notice alleging the foregoing or challenging the scope, ownership, validity or enforceability of any Company Owned Intellectual Property Rights. There is no Action pending or, to the Knowledge of the Company,
threatened with respect to any of the foregoing in this
Section 4.12(b)
. To the Knowledge of the Company, all registered Company Owned Intellectual Property Rights are valid and enforceable and no Person has, in the past three
(3) years, infringed, misappropriated or otherwise violated any of the Company Owned Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable measures to protect the secrecy, confidentiality and value of all material
Company Owned Intellectual Property Rights.
(c) Except as would not have a Company Material Adverse Effect, the Company IT
Assets are adequate for, and operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required in connection with, the operation of the Companys and its
Subsidiaries respective businesses, and the Company and its Subsidiaries have implemented reasonable backup, security and disaster recovery measures and technology consistent with industry practices. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, there are no defects in any of the Software included in the Company Owned Intellectual Property Rights and distributed by the Company and its Subsidiaries (the
Company Owned Software
) that would prevent such Software from performing in accordance with its user specifications, and there are no viruses, worms, Trojan horses or similar programs in any such Software.
(d)
Section 4.12(d)
of the Company Disclosure Schedule accurately identifies and describes (i) each item of Open Source
Software that is contained within or distributed with any Company Owned Software, and (ii) the Company Owned Software to which each such item of Open Source Software relates (including whether such Open Source Software has been modified by or
for the Company or any of its Subsidiaries with respect to such applicable Company Owned Software). Except as would not constitute a Company Material Adverse Effect, no Company Owned Software contains, is derived from or is distributed with any Open
Source Software that is licensed under any terms that impose or could impose (A) a requirement or condition that such Company Owned
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Software or any part thereof (x) be disclosed or distributed in source code form, (y) be licensed for the purpose of making modifications or derivative works, or (z) be
redistributable at no charge, or (B) any other material limitation, restriction or condition on the right or ability of the Company and its Subsidiaries to use or distribute any Company Owned Software. Except as would not constitute a Company
Material Adverse Effect, neither the Company nor any of its Subsidiaries is in violation of the terms and conditions of any license pertaining to any Open Source Software. Except as would not constitute a Company Material Adverse Effect, no Person
other than the Company and its Subsidiaries possesses any current or contingent right to obtain access to any source code included in the Company Owned Software, and no source code included in the Company Owned Software has been released from escrow
or otherwise been made available to any third party.
Section 4.13
Taxes
.
(a) Except as set forth in
Section 4.13(a)
of the Company Disclosure Schedule, all U.S. federal and material state
income and franchise, PRC income and franchise and other material Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed (taking into account any extension of time within which to file)
and all such Tax Returns are correct and complete in all material respects.
(b) The Company and each of its Subsidiaries has
paid (or has had paid on its behalf), or has withheld and remitted, to the appropriate Taxing Authority all material Taxes due and payable (whether or not shown as due on any Tax Return).
(c) The charges, accruals and reserves for Taxes with respect to the Company and its Subsidiaries reflected on the books of the Company
and the Subsidiaries are adequate to cover Tax liabilities accruing through the end of the last period for which the Company and the Subsidiaries ordinarily record items on their respective books.
(d) Each of the Company and its Subsidiaries has timely paid or withheld all material Taxes required to be paid or withheld with respect
to their employees, independent contractors, creditors and other third parties (and timely paid over such Taxes to the appropriate Taxing Authority). The Company and its Subsidiaries have taken all steps required under applicable PRC Law to cause
their respective employees who have participated in a Company Stock Plan to make all necessary filings and pay all applicable PRC Taxes in relation to their participation in a Company Stock Plan under applicable PRC Law.
(e) Neither the Company nor any of its Subsidiaries has executed any outstanding waiver of any statute of limitations or outstanding
extension of the period for the assessment or collection of any material Tax. To the Knowledge of the Company, no audit or other examination or administrative, judicial or other proceeding of, or with respect to, any material Tax Return or Taxes of
the Company or any of its Subsidiaries is currently in progress or is threatened. No deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against the Company or any of its Subsidiaries that has not been
satisfied by payment, settled or withdrawn.
(f) During the five-year period ending on the date hereof, neither the Company
nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.
(g)
Section 4.13(g)
of the Company Disclosure Schedule contains a list of all jurisdictions (including Hong Kong) in which the Company or any of its Subsidiaries filed Tax Returns in
connection with income taxes as of December 31, 2012. Neither the Company nor any of its Subsidiaries has a permanent establishment (within the meaning of an applicable tax treaty) or otherwise has an office or fixed place of business in a
jurisdiction other than the jurisdiction in which it is organized or has received a claim for Taxes in a jurisdiction in which it does not file Tax Returns.
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(h) The income and franchise Tax Returns of the Company and its Subsidiaries through the Tax
year ended December 31, 2011 have been examined and closed or are Tax Returns with respect to which the applicable period for assessment under applicable Law, after giving effect to extensions or waivers, has expired.
(i) Neither the Company nor any of its Subsidiaries owns an interest in real property in any jurisdiction in which Tax is imposed, or the
value of the interest is reassessed on the transfer of an interest in real property and which treats the transfer of an interest in an entity that owns an interest in real property as a transfer of the interest in real property. Neither the Company
nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the 5-year period ending on the date hereof.
(j) None of the Company or any of its Subsidiaries is a party to any Tax Sharing Agreement or otherwise has any actual or contingent
liability with respect to Taxes of any person other than the Company or its Subsidiaries.
(k) Each of the Companys
Subsidiaries formed in the PRC has, in accordance with applicable Law, duly registered with the relevant PRC Governmental Authority, obtained and maintained the validity of all state and local tax registration certificates and complied in all
material respects with all requirements imposed by such Governmental Authority. No submissions made to any Taxing Authority in connection with obtaining Tax exemptions, Tax holidays, Tax deferrals, Tax incentives or other preferential Tax treatments
or Tax rebates contained any material misstatement or omission that would have affected the granting of such Tax exemptions, preferential treatments or rebates. No suspension, revocation or cancellation of any such Tax exemptions, preferential
treatments or rebates is pending or threatened.
(l) Neither the Company nor any of its Subsidiaries has taken any action
outside the ordinary course of business that could reasonably be expected to result in the Company or a Subsidiary being required to include a material item of income in, or exclude a material deduction from, a Tax Return for a period beginning
after the date hereof, including as a result of entering into any closing agreement, an installment sale or open transaction, receiving a prepayment or filing an election under Section 108(i) of the Code.
(m) Neither the Company nor any of its Subsidiaries has received a private letter ruling from the IRS or any comparable ruling from any
other Taxing Authority.
(n) All material transactions between the Company and its Subsidiaries have been on an arms-length
basis, and all such transactions have been appropriately documented for transfer pricing purposes.
Section 4.14
Environmental Matters
. Except as would not constitute a Company Material Adverse
Effect, (a) none of the Company nor any of its Subsidiaries has violated or is in violation of any Environmental Law; (b) none of the Company or any of its Subsidiaries is actually, potentially or allegedly liable under any Environmental
Law (including pending or threatened liens, or with respect to exposure to Hazardous Substances); and (c) neither the execution of this Agreement nor the consummation of the Transactions will require any investigation, remediation or other
action with respect to Hazardous Substances, or any notice to or consent of Governmental Authorities or third parties, pursuant to any applicable Environmental Law. To the Knowledge of the Company, there is no Phase I or Phase II environmental site
assessment or other environmental investigation report, remedial report or environmental study or audit conducted in the past three years of which the Company is in possession, custody or control as of the date hereof that relates to the current or
prior business of the Company or any of its Subsidiaries or any property or facility now or previously owned or leased by the Company or any of its Subsidiaries a copy of which has not been made available to Parent at least three Business Days prior
to the date hereof.
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Section 4.15
Material Contracts
.
(a) Except for this Agreement and except for Contracts filed as exhibits to the Company SEC Reports that are available prior to the date
hereof or set forth in
Section 4.15(a)
of the Company Disclosure Schedule, as of the date hereof, none of the Company or its Subsidiaries is a party to or bound by any Contract that:
(i) is a material contract (as such term is defined in Item 601(b)(10) of
Regulation S-K
under the Securities Act) with respect to the Company and its Subsidiaries;
(ii) would, individually or in the aggregate, prevent, materially delay or materially impair the Companys ability to consummate the Transactions;
(iii) is an indenture, credit agreement, loan agreement, security agreement, guarantee, note, or mortgage, other than
intercompany agreements;
(iv) is a Contract to which the Company or any of its Subsidiaries is a party that
creates or grants a material Encumbrance on properties or other assets of the Company or any of its Subsidiaries, other than any Permitted Encumbrances;
(v) is a Contract pursuant to which the Company or any of its Subsidiaries was granted any land use rights;
(vi) is a Contract under which the Company or any of its Subsidiaries has, directly or indirectly, made any loan, capital contribution to, or other investment in, any Person (except for the Company or any
of its Subsidiaries), other than (A) accounts receivable and extensions of credit to customers in the ordinary course of business consistent with past practice in connection with the sale, license or lease by the Company or any of its
Subsidiaries of the Companys products, and (B) investments in marketable securities (consisting solely of time deposits held at major banks, commercial paper, U.S. government agency discount notes, money market mutual funds and other
money market securities with maturities of 90 days or less at the date of purchase) in the ordinary course of business;
(vii) is a joint venture contract, strategic cooperation or partnership arrangement (including cooperation or long-term agency contracts entered into at the corporate headquarters level with insurance
companies), or any other agreement involving a sharing of profits, losses, costs or liabilities by the Company or any of its Subsidiaries with any third party;
(viii) is between the Company or any of its Subsidiaries and any director or executive officer of the Company or any Person beneficially owning five percent or more of the outstanding Shares required to
be disclosed pursuant to Item 404(a) of Regulation
S-K
under the Securities Act;
(ix) is a Contract that contains any provisions restricting the Company or any of its Affiliates or their successors in any material respect from (A) competing or engaging in any activity or line of
business or with any Person or in any area or pursuant to which any benefit or right is required to be given or lost as a result of so competing or engaging or which, pursuant to its terms, could have such effect after the Closing solely as a result
of the consummation of the Transactions or (B) hiring or soliciting for hire the employees or contractors of any third party (other than non-hire and non-solicitation provisions contained in confidentiality agreements);
(x) is a Contract that (A) grants any exclusive rights to any third party (other than any exclusive license,
sublicense or other right to, or covenant not to be sued under, any Intellectual Property Right), including any exclusive license or supply or distribution agreement or other exclusive rights or which, pursuant to its terms, could have such effect
after the Closing solely as a result of the consummation of the Transactions, (B) contains any provision that requires the purchase of all or any stated percentage of the Companys or any of its Subsidiaries requirements from any
third party or (C) grants most favored nation rights (other than most favored nation provisions contained in confidentiality agreements), except in the case of each of clauses (A), (B) and (C) above for such
rights and provisions that are not material to the Company and its Subsidiaries, taken as a whole;
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(xi) is a Contract pursuant to which the Company or any of its Subsidiaries
(A) receives or is granted any license, sublicense or other right to, or covenant not to be sued under, any material Intellectual Property Right (other than any non-exclusive license to off-the-shelf Software generally available on
non-discriminatory pricing terms) or (B) grants any license, sublicense or other right to, or covenant not to be sued under, any material Intellectual Property Right (other than a non-exclusive license granted in the ordinary course of the
grantors business); and
(xii) is an outstanding Contract that is not included in (i) through
(xi) above and in respect of which the consideration payable by or to the Company and/or its Subsidiaries exceeds US$1,000,000.
Each
such Contract described in clauses (i) through (xii) above is referred to herein as a
Material Contract
;
provided
that Material Contracts shall not include any (i) Benefit Plans and (ii) any
management, employment, severance, change in control, transaction bonus, consulting, repatriation or expatriation agreement or other Contract between the Company or one of its Subsidiaries and any Service Provider with respect to which the Company
or one of its Subsidiaries has or may have any material liability or obligation, which Contracts are dealt with exclusively in
Section 4.10
.
(b) Except as would not constitute a Company Material Adverse Effect, (i) each Key Contract is a legal, valid and binding obligation of the Company and/or any Subsidiary that is a party thereto and,
to the Companys Knowledge, the other parties thereto, in each case subject to the Bankruptcy and Equity Exception; (ii) neither the Company nor any of its Subsidiaries nor, to the Companys Knowledge, any other party thereto is in
breach or violation of, or default under, any Key Contract and no event has occurred or not occurred through the Companys or any of its Subsidiaries action or inaction or, to the Companys Knowledge, the action or inaction of any
third party, that with notice or lapse of time or both would constitute a breach or violation of, or default under, any Key Contract; and (iii) except as set forth in Section 4.15(b) of the Company Disclosure Schedule, to the Companys
Knowledge, the Company and its Subsidiaries have not received any written claim or notice of default, termination or cancellation under any such Key Contract. For the purposes of this Agreement, a
Key Contract
means a
Contract that is either (x) a Material Contract or, (y) if not a Material Contract, an outstanding Contract pursuant to which the Company or any of its Subsidiaries (A) provides material products or services to any Major Customer,
(B) provides products or services to any third party (other than any Major Customer), in respect of which the aggregate consideration payable to the Company or its Subsidiaries exceeds RMB 10,000,000, or (C) purchases products, services or
supplies from any third party, in respect of which the aggregate consideration payable by the Company or its Subsidiaries exceeds RMB 8,000,000.
(c)
Section 4.15(c)
of the Company Disclosure Schedule lists certain business Contracts of the Company and its Subsidiaries entered into during the fiscal year ended December 31, 2012,
pursuant to which the Company or any of its Subsidiaries provided to, or purchased from, any third party products or services (the
Selected Business Contracts
). The aggregate value of the Selected Business Contracts is
equal to at least 60% of the aggregate value of the business Contracts of the Company and its Subsidiaries, taken as a whole, entered into during the fiscal year ended December 31, 2012. Each Selected Business Contract was, at the time such
Contract was entered into, a legal, valid and binding obligation of the Company and/or any Subsidiary that was a party thereto and, to the Companys Knowledge, the other parties thereto, in each case subject to the Bankruptcy and Equity
Exception.
(d) Complete, correct and unredacted copies of each Material Contract, as amended and supplemented, have been
filed with the SEC prior to the date of this Agreement or have been provided by the Company to Parent prior to the date of this Agreement.
Section 4.16
Insurance
.
(a)
Section 4.16(a)
of the Company Disclosure Schedule lists, as of the date hereof, all material insurance policies of the Company and its Subsidiaries covering its or their assets, business, equipment,
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properties, operations, employees, directors or directors (collectively, the
Insurance Policies
). There is no material claim by the Company or any of its Subsidiaries
pending under any of the Insurance Policies as to which the Company has been notified that coverage has been questioned, denied or disputed by the underwriters of such policies.
(b) Except as would not constitute a Company Material Adverse Effect, (i) all Insurance Policies or renewals thereof are in full
force and effect, (ii) the Company has no reason to believe that it or any of its Subsidiaries will not be able to (A) renew its Insurance Policies as and when such policies expire or (B) obtain comparable coverage from comparable
insurers as may be necessary to continue its business without a significant increase in cost, (iii) all premiums due and payable under all of the Insurance Policies have been paid when due and (iv) the Company and its Subsidiaries are
otherwise in material compliance with the terms of all of the Insurance Policies.
(c)
Section 4.16(c)
of the
Company Disclosure Schedule lists each material insurance claim made by the Company or any of its Subsidiaries between December 31, 2011 and the date of this Agreement.
Section 4.17
Opinion of Financial Advisor
. The Special Committee has received the oral opinion of the Company Financial Advisor (to be confirmed in writing) to
the effect that, as of the date of this Agreement and subject to the assumptions and limitations set forth in the Company Financial Advisors written opinion, the Merger Consideration is fair, from a financial point of view, to the
Companys stockholders (other than Parent, Merger Sub, the Sponsors, the Buyer Group Parties, and their respective Affiliates). A signed copy of such opinion will be made available to Parent for information purposes only, promptly following
receipt thereof by the Special Committee. It is agreed and understood that such opinion may not be relied on by Parent, Merger Sub, the Sponsors, any of the Buyer Group Parties or any of their respective Affiliates, Representatives or Financing
Sources.
Section 4.18
Brokers
. Except for the Company Financial Advisor, a copy of
whose engagement agreement has been provided to Parent, no broker, finder or investment banker (other than the Company Financial Advisor) is entitled to any brokerage, finders or other fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company. On or prior to the date hereof, the Company has provided to Parent (i) the aggregate amount of all unpaid Expenses of the Company as of the date hereof and (ii) the
Companys good faith estimate of the aggregate amount of all unpaid Expenses of the Company as of immediately prior to the Effective Time (based on the assumptions set forth therein).
Section 4.19
Customers
.
(a)
Section 4.19(a)
of the Company Disclosure Schedule lists the five largest customers of the Company and its Subsidiaries
(determined on the basis of aggregate revenues recognized by the Company and its Subsidiaries by quarter for each quarter over the fiscal year ended December 31, 2012) (each, a
Major Customer
).
(b) Except as would not constitute a Material Adverse Effect, neither the Company nor any of its Subsidiaries has received, as of the
date of this Agreement, any notice in writing from any Major Customer that it intends to terminate, or not renew, its relationship with the Company or its Subsidiaries as a result of the Merger.
Section 4.20
Compliance with Anti-Corruption and Trade Sanction Laws
. None of the Company, any
of its Subsidiaries or any of their respective directors, executives or, to the Companys Knowledge, agents has, in any material respect, (i) used any corporate funds for any illegal contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) used any corporate funds for any direct or indirect unlawful payments to any foreign or domestic government officials or employees, (iii) violated or is violating any provision of the U.S.
Foreign Corrupt Practices Act of 1977, (iv) except as set forth in
Section 4.20
of the
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Company Disclosure Schedule, violated or is violating any provision of the PRC Law on Anti-Unfair Competition promulgated on September 2, 1993, or the Interim Rules on Prevention of
Commercial Bribery promulgated on November 15, 1996, or any PRC Law in relation thereto, prohibiting commercial bribery activities, (v) established or maintained any fund of corporate monies or other properties not recorded on the
Companys books and records, (vi) to the Knowledge of the Company, made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature, or (vii) violated or operated in noncompliance with any
applicable money laundering law, anti-terrorism law or regulation, anti-boycott regulations, export restrictions or embargo regulations. None of the Company, any of its Subsidiaries or any of their respective directors, executives or, to the
Companys Knowledge, agents is currently the target of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.
Section 4.21
Privacy
.
Except as would not have a Company Material Adverse Effect, the Company and each of its Subsidiaries have complied with all
applicable Law regarding collecting, accessing, using, disclosing, electronically transmitting, securing, sharing, transferring and storing personally identifiable data, including federal, state or foreign laws or regulations regarding (i) data
privacy and information security, (ii) data breach notification (as applicable), and/or (iii) trespass, computer crime and other laws governing unauthorized access to or use of electronic data (
Privacy and Security
Laws
). The Company and each of its Subsidiaries have in place, and take steps reasonably designed to assure material compliance with its, privacy security policies and procedures. As of the date of this Agreement, except as would not
have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has been notified in writing of any complaint to or audit, proceeding, investigation (formal or informal) or claim currently pending against, the Company or any
of its Subsidiaries by (A) any private party or (B) any Governmental Authority, with respect to any Privacy and Security Laws.
Section 4.22
No Additional Representations
.
Except for the representations and warranties made by the Company in this
Article IV
, neither the
Company nor any other Person makes any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or
prospects or any information provided to Parent, Merger Sub or any of their Affiliates or Representatives, notwithstanding the delivery or disclosure to Parent, Merger Sub or any of their Affiliates or Representatives of any documentation, forecasts
or other information in connection with the Transactions and hereby expressly disclaims any such other representations and warranties, and each of Parent and Merger Sub acknowledges the foregoing. Neither the Company nor any other Person will have
or be subject to any liability or indemnity obligations to Parent, Merger Sub or any other Person resulting from the distribution or disclosure or failure to distribute or disclose to Parent, Merger Sub or any of their Affiliates or Representatives,
or their use of, any information, unless and to the extent such information is expressly included in the representations and warranties contained in this
Article IV
.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As an inducement to the Company to enter into this Agreement, Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company that:
Section 5.01
Corporate Organization
. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and has the requisite corporate or similar power and authority and all necessary governmental approvals to own, lease and
operate its properties and assets and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, prevent or materially adversely affect the ability of Parent or Merger Sub to consummate the Transactions.
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Section 5.02
Certificate of Incorporation and
Bylaws
. Parent has heretofore furnished to the Company a complete and correct copy of the certificate of incorporation and bylaws or other equivalent organizational documents of Parent and the certificate of incorporation and bylaws or other
equivalent organizational documents of Merger Sub, each as amended to date. Such certificates of incorporation and bylaws or other equivalent organizational documents are in full force and effect. Neither Parent nor Merger Sub is in violation of any
of the provisions of its certificate of incorporation or bylaws or other equivalent organizational documents.
Section 5.03
Capitalization
.
(a) As of the date of this Agreement, the authorized share capital of Parent
consists of 5,000,000 ordinary shares of par value US$0.01 per share. As of the date of this Agreement, one ordinary share is issued and outstanding, which is duly authorized, validly issued, fully paid and
non-assessable.
As of the date of this Agreement, no preferred shares of Parent are issued and outstanding. Except as set forth in the Rollover Agreement, the Additional Rollover Agreements (if any) and the
Equity Commitment Letters, there are no options, warrants, convertible debt or other convertible instruments or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Parent or
Merger Sub or obligating Parent or Merger Sub to issue or sell any shares of capital stock of, or other equity interests in, Parent or Merger Sub. All ordinary shares of Parent subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and
non-assessable.
(b) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value US$0.001 per share, 100 shares of
which are duly authorized, validly issued, fully paid and
non-assessable
and free of any preemptive rights in respect thereof and are owned by Parent. Each outstanding share of capital stock of Merger Sub is
owned by Parent free and clear of all Encumbrances, except where failure to own such shares free and clear would not, individually or in the aggregate, materially adversely affect Parents ability to consummate the Transactions.
Section 5.04
Authority Relative to This Agreement
.
(a) Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement and, subject to
the adoption of this Agreement by Parent in accordance with
Section 7.08(f)
hereof, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the adoption of this Agreement by Parent in accordance with
Section 7.08(f)
hereof and the filing of the Certificate of Merger as required by the DGCL). This Agreement
has been duly and validly executed and delivered by each of Parent and Merger Sub and constitutes a valid, legal and binding agreement of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms,
subject to the Bankruptcy and Equity Exception.
(b) The Parent Board and the board of directors of Merger Sub have duly and
validly approved by resolution and authorized the execution, delivery and performance of this Agreement and the consummation of the Transactions by Parent and Merger Sub, as the case may be, and taken all such actions as may be required to be taken
by the Parent Board and the board of directors of Merger Sub to effect the Transactions. The board of directors of Merger Sub has declared this Agreement advisable, resolved to recommend the adoption of this Agreement to, and directed that this
Agreement be submitted for consideration by, Parent.
Section 5.05
No Conflict; Required
Filings and Consents
.
(a) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the
performance of this Agreement by each of Parent and Merger Sub, and the consummation of the Merger, will
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not, (i) conflict with or violate the certificate of incorporation or bylaws or other equivalent organizational documents of Parent or Merger Sub, (ii) assuming all consents, approvals,
authorizations and other actions described in
Section 5.05(b)
have been obtained or taken and all filings and obligations described in
Section 5.05(b)
have been made or satisfied, and subject to the adoption of this Agreement
by Parent in accordance with
Section 7.08(f)
hereof, conflict with or violate any Law applicable to Parent or Merger Sub or by which any property or asset of Parent or Merger Sub is bound or affected, or (iii) violate, conflict
with, require consent under, result in any breach of, result in any loss of any benefit under, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance on any property or asset of Parent or Merger Sub pursuant to, any Contract, Parent Permit or other instrument or obligation to which Parent or
Merger Sub is a party or by which Parent or Merger Sub or any property or asset of Parent or Merger Sub is bound or affected, except, with respect to clauses
(ii)
and
(iii)
, for any such conflicts, violations, breaches, defaults
or other occurrences which would not, individually or in the aggregate, prevent or materially adversely affect the ability of Parent or Merger Sub to consummate the Transactions.
(b) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each
of Parent and Merger Sub, and the consummation of the Transactions will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable requirements, if
any, of the Securities Act, the Exchange Act, and the rules and regulations thereunder (including, but not limited to, the filing of the Proxy Statement, and the filing of one or more amendments to the Proxy Statement to respond to comments of the
SEC, if any, on such documents), (ii) for compliance with the rules and regulations of NASDAQ, (iii) for the filing of the Certificate of Merger as required by the DGCL, (iv) for the filings under the PRC Anti-Monopoly Law and receipt
of clearance thereunder approving the Merger, and (v) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, prevent or materially
adversely affect the ability of Parent or Merger Sub to consummate the Transactions.
Section 5.06
Operations of Merger Sub
. Merger Sub is a direct, wholly owned Subsidiary of
Parent, was formed solely for the purpose of engaging in the Transactions, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.
Section 5.07
Absence of Litigation
. As of the date hereof, there is no Action pending or, to
the Knowledge of Parent, threatened against Parent or any of its Subsidiaries, or any property or asset of Parent or any of its Subsidiaries, before any Governmental Authority that, individually or in the aggregate, prevents or has prevented or
materially adversely affects or has materially adversely affected the ability of Parent or Merger Sub to consummate the Transactions. As of the date hereof, neither Parent nor any of its Subsidiaries nor any material property or asset of Parent or
any of its Subsidiaries is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the Knowledge of Parent, continuing investigation by, any Governmental Authority or any Order of any
Governmental Authority that would, individually or in the aggregate, prevent or materially adversely affect the ability of Parent or Merger Sub to consummate the Transactions.
Section 5.08
Available Funds and Financing
.
(a) Assuming (i) the Financing is funded in accordance with the Financing Documents, (ii) the contribution of Shares to Parent by the Rollover Stockholders pursuant to and in accordance with the
Rollover Agreement and the Additional Rollover Agreements (if any), and (iii) the satisfaction of the conditions to the obligation of Parent and Merger Sub to consummate the Merger as set forth in
Section 8.01
and
Section 8.02
or the waiver of such conditions, Parent and Merger Sub will have available to them, as of or immediately after the Effective Time, all funds necessary for the payment to the Paying Agent of the aggregate amount of the
Exchange Fund and any other amounts required to be paid in connection with the consummation of the Merger, the Financing and the other Transactions and to pay all related Expenses.
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(b) Parent has on or before the date hereof delivered to the Company true, correct and
complete copies of (i) an executed equity commitment letter from each Sponsor (each, an
Equity Commitment Letter
) pursuant to which each Sponsor has committed to purchase, or cause the purchase of, for cash, subject to
the terms and conditions therein, equity securities of Parent up to the aggregate amount set forth therein (the
Equity Financing
), the proceeds of which shall be used to finance the consummation of the Merger and the other
Transactions, (ii) an executed debt commitment letter (the
Debt Commitment Letter
, and together with the Equity Commitment Letters, the
Financing Documents
), between Parent and Merger Sub,
Nomura International (Hong Kong) Limited, Bank of Taiwan, Cathay United Bank, Co., LTD., ICBC International Capital Limited and Maybank Investment Bank Berhad (collectively, the
Lender
), and the other parties thereto,
pursuant to which the Lender has committed to provide, by itself or through is Affiliates, debt financing to Merger Sub in the aggregate amount set forth therein (the
Debt Financing
, and together with the Equity Financing,
the
Financing
), subject to the terms and conditions therein, the proceeds of which shall be used to finance the consummation of the Merger and the other Transactions, and (iii) the Rollover Agreement. As of the date
hereof, each of the Financing Documents, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of Parent, Merger Sub and the other parties thereto (other than the Lender) and, to the Knowledge of Parent,
the Lender, in each case, subject to the Bankruptcy and Equity Exception. As of the date hereof, each of the Financing Documents has not been amended or modified, no such amendment or modification is contemplated, the obligations and commitments
contained in the Financing Documents have not been withdrawn, terminated or rescinded in any respect and no such withdrawal, termination or restriction is contemplated. Parent or Merger Sub has fully paid any and all fees in connection with any
Financing Document that are payable on or prior to the date hereof and will pay when due all other fees arising under the Financing Documents as and when they become due and payable thereunder. As of the date hereof, the Rollover Agreement, in the
form so delivered, is in full force and effect and is a legal, valid and binding obligation of the parties thereto (other than the Rollover Stockholders) and, to the Knowledge of Parent, the Rollover Stockholders, in each case, subject to the
Bankruptcy and Equity Exception. As of the date hereof, the Rollover Agreement has not been amended or modified, no such amendment or modification is contemplated, no obligations or commitments contained in the Rollover Agreement have been
withdrawn, terminated or rescinded in any respect and no such withdrawal, termination or restriction is contemplated.
(c) As
of the date hereof, no event has occurred which, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent or Merger Sub or, to the Knowledge of Parent, any other parties thereto, under the Financing
Documents;
provided
,
however
, that Parent is not making any representation or warranty regarding the effect of the inaccuracy of the representations and warranties in
Article IV
. As of the date hereof, Parent and Merger Sub
do not have any reason to believe that any of the conditions to the Financing will not be satisfied or that the Financing will not be available to Parent or Merger Sub at the Effective Time;
provided
,
however
, that Parent is not making
any representation or warranty regarding the effect of the inaccuracy of the representations and warranties in
Article IV
, or compliance by the Company with its obligations hereunder. Each of the Financing Documents contains all of the
conditions precedent to the obligations of the parties thereunder to make the Financing available to Parent on the terms therein. The parties hereto agree that it shall not be a condition to the Closing for Parent or Merger Sub to obtain the
Financing or the Alternative Debt Financing.
(d) There are no side letters or other oral or written
Contracts containing any conditions to the funding of the full amount of the Financing other than (i) as expressly set forth in the Financing Documents, and (ii) any customary engagement letter(s) and non-disclosure agreement(s).
Section 5.09
Limited Guarantees
. Concurrently with the execution of this Agreement,
Parent has delivered to the Company a Limited Guarantee duly executed by each Guarantor, with respect to certain matters on the terms specified therein. Each Limited Guarantee is in full force and effect and constitutes a legal, valid, binding and
enforceable obligation of the relevant Guarantor, subject to the Bankruptcy and Equity Exception, and no event has occurred, which, with or without notice, lapse of time or both, would constitute a default on the part of such Guarantor under such
Limited Guarantee.
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Section 5.10
Brokers
. No broker, finder or
investment banker (other than the Person(s) listed on
Section 5.10
of the Parent Disclosure Schedule) is entitled to any brokerage, finders or other fee or commission in connection with the Transactions based upon arrangements made
by or on behalf of Parent or Merger Sub.
Section 5.11
Solvency
. Neither Parent nor
Merger Sub is entering into the Transactions with the intent to hinder, delay or defraud either present or future creditors. As of the date hereof, neither Parent nor Merger Sub owns any assets (except for cash in a
de minimis
amount) and
neither Parent nor Merger Sub has any liabilities other than liabilities incidental to their formation or relating to the transactions contemplated by (a) this Agreement, (b) the Rollover Agreement, (c) the Voting Agreement,
(d) the Equity Commitment Letters, (e) the Limited Guarantees, and (f) the Debt Commitment Letter, or the Alternative Debt Financing Documents, as applicable. Assuming the satisfaction of the conditions of Parent and Merger Sub to
consummate the Merger as set forth in
Section 8.01
and
Section 8.02
, immediately after giving effect to all of the Transactions, including the Financing (and any Alternative Debt Financing, if applicable), the payment of the
Merger Consideration and the aggregate amount of consideration payable in respect of Company Options and Company Restricted Stock Units in accordance with
Section 3.04
, the payment of all other amounts required to be paid in connection
with the consummation of the Transactions, and the payment of all related Expenses, the Surviving Corporation shall (A) be able to pay its debts as they become due, and (B) not have, as of such date, unreasonably small capital to carry on
its business.
Section 5.12
Ownership of Company Shares
. As of the date hereof,
other than as a result of this Agreement, the Rollover Agreement and the Voting Agreement, neither Parent nor Merger Sub beneficially owns (as such term is used in Rule 13d-3 promulgated under the Exchange Act) any Shares or other securities or
any other economic interest (through derivative securities or otherwise) of the Company or any options, warrants or other rights to acquire any Shares or other securities of, or any other economic interest (through derivatives securities or
otherwise) in the Company, except as set forth on
Section 5.12
of the Parent Disclosure Schedule. Other than as a result of this Agreement, the Rollover Agreement, the Additional Rollover Agreements (if any), the Voting Agreement or any
agreement, arrangement or understanding between Parent and/or Merger Sub, on the one hand, and any of the Rollover Stockholders, on the other, that occurred subsequent to, and in conformity with, the unanimous written consent of the Special
Committee, dated as of August 2, 2012, none of Parent, Merger Sub or any of their affiliates or associates is, or at any time during the last three (3) years has been, an interested stockholder of the
Company, as such terms are defined in Section 203 of the DGCL.
Section 5.13
Independent Investigation
. Parent and Merger Sub have conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Company
and the Subsidiaries of the Company, which investigation, review and analysis was performed by Parent, Merger Sub, their respective Affiliates and Representatives. Each of Parent and Merger Sub acknowledges that as of the date hereof, it, its
Affiliates and their respective Representatives have been provided adequate access to the personnel, properties, facilities and records of the Company and the Company Subsidiaries for such purpose. In entering into this Agreement, each of Parent and
Merger Sub acknowledges that it has relied solely upon the aforementioned investigation, review and analysis and not on any statements, representations or opinions of any of the Company, its Affiliates or their respective Representatives (except the
representations and warranties of the Company set forth in this Agreement and in any certificate delivered pursuant to this Agreement).
Section 5.14
Buyer Group Contracts
. Parent has on or before the date hereof delivered to the Company a true, correct and complete copy of each of the Buyer Group
Contracts as in effect as of the date hereof. As of the date hereof, other than the Buyer Group Contracts provided to the Company, there are no side letters or other oral or written agreements or understandings (i) between Parent, Merger Sub or
any of their Affiliates (excluding the Company and its Subsidiaries), on the one hand, and any of the Companys or its Subsidiaries directors, officers, employees or stockholders (excluding any of the Persons identified on
Section 5.14
of the Parent Disclosure Schedule), on the other hand, that relate to the Transactions, (ii) pursuant to which any stockholder of the Company would be entitled to receive consideration of a different amount or nature
than the Merger Consideration or (iii) pursuant to which any stockholder of the Company has agreed to vote to approve this Agreement or the Merger or has agreed to vote against any Superior Proposal.
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Section 5.15
Non-Reliance on Company Estimates
.
The Company has made available to Parent and Merger Sub, and may continue to make available, certain estimates, projections and other forecasts for the business of the Company and its Subsidiaries and certain plan and budget information. Each of
Parent and Merger Sub acknowledges that these estimates, projections, forecasts, plans and budgets and the assumptions on which they are based were prepared for specific purposes and may vary significantly from each other. Further, each of Parent
and Merger Sub acknowledges that there are uncertainties inherent in attempting to make such estimates, projections, forecasts, plans and budgets, that Parent and Merger Sub are taking full responsibility for making their own evaluation of the
adequacy and accuracy of all estimates, projections, forecasts, plans and budgets so furnished to them (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans and budgets), and that neither Parent
nor Merger Sub is relying on any estimates, projections, forecasts, plans or budgets furnished by the Company, its Subsidiaries or their respective Affiliates and Representatives, and neither Parent nor Merger Sub shall, and shall cause its
Affiliates and their respective Representatives not to, hold any such Person liable with respect thereto.
Section 5.16
No Other Representations or Warranties
. Except for the representations and warranties made by Parent and Merger Sub in this
Article V
, neither Parent nor Merger Sub nor any other Person makes any other
express or implied representation or warranty with respect to Parent or Merger Sub or any of their Subsidiaries or their respective business, operations, assets, liabilities, condition (financial or otherwise) or prospects, notwithstanding the
delivery or disclosure to the Company or any of its Affiliates or Representatives of any documentation, forecasts or other information in connection with the Transactions and hereby expressly disclaims any such other representations and warranties,
and the Company hereby acknowledges the foregoing.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01
Conduct of Business by the Company Pending the Merger
.
(a) The Company covenants and agrees that, between the date of this Agreement and the Effective Time, except (i) as contemplated or
permitted by this Agreement, (ii) as required by applicable Law or (iii) with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall use its reasonable best efforts
to carry on the businesses of the Company and its Subsidiaries in the ordinary course and in a manner consistent with past practice in all material respects and the Company and each of its Subsidiaries shall use their reasonable best efforts,
consistent with past practice, to preserve substantially intact their business organization, keep available the services of their directors, officers and Tier I Employees and maintain their current relationships and goodwill with customers, lenders,
suppliers, and distributors with which the Company or any of its Subsidiaries has material business relations.
(b) By way of
amplification and not limitation, except as (i) set forth in
Section 6.01(b)
of the Company Disclosure Schedule, (ii) as required by applicable Law, (iii) as contemplated or permitted by any other provision of this
Agreement, or (iv) with the prior written consent of Parent, which consent shall not be unreasonably withheld, conditioned or delayed, neither the Company nor any of its Subsidiaries shall, between the date of this Agreement and the Effective
Time, directly or indirectly, do any of the following (it being understood and hereby agreed that if any action is expressly permitted by any of the following subsections, such action shall be expressly permitted under
Section 6.01(a)
):
(i) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational
documents (whether by merger, consolidation or otherwise);
(ii) issue, sell, pledge, dispose of, grant,
encumber, or authorize the issuance, sale, pledge, disposition, grant, or encumbrance of, or redeem, purchase or otherwise acquire, any capital stock of the Company or any of its Subsidiaries, or securities convertible or exchangeable into or
exercisable for such capital stock, or any options, warrants or other rights of any kind to acquire any capital stock or such
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convertible or exchangeable securities, other than in connection with (A) the exercise of Company Stock Awards that are outstanding on the date of this Agreement, in each case in accordance
with their terms on the date of this Agreement, (B) the acquisition by the Company of its securities in connection with the forfeiture of Company Options that are outstanding on the date of this Agreement, in each case in accordance with their
terms on the date of this Agreement, (C) the acquisition by the Company of its securities in connection with the net exercise of Company Stock Awards that are outstanding on the date of this Agreement, in each case in accordance with their
terms on the date of this Agreement, (D) the issuance of Company securities as required to comply with any Company Stock Plan or Benefit Plan in effect on the date of this Agreement, (E) the transfer or other disposition of securities
between or among the Company and its direct or indirect wholly-owned Subsidiaries, or (F) pursuant to Contracts as in effect on the date of this Agreement (copies of which have been made available to Parent prior to the date hereof);
(iii) (A) sell, lease, pledge, transfer or otherwise dispose of, (B) grant an Encumbrance on or permit an
Encumbrance to exist on, or (C) authorize the sale, lease, pledge, transfer or other disposition of, or granting or placing of an Encumbrance on, any material assets of the Company or any of its Subsidiaries having a value in excess of
US$3,000,000 in the aggregate, except (x) in the ordinary course of business and in a manner consistent with past practice or (y) any sale, lease, pledge, transfer or other disposition of securities between or among the Company and its
direct or indirect wholly-owned Subsidiaries;
(iv) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any of the Companys direct or indirect wholly owned Subsidiaries to the Company or any of its other wholly owned
Subsidiaries, in the ordinary course of business consistent with past practice;
(v) reclassify, combine, split
or subdivide any of its capital stock;
(vi) adopt a plan or agreement of, or resolutions providing for or
authorizing, complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, each with respect to the Company or any of its Subsidiaries;
(vii) acquire (including by merger, consolidation or acquisition of stock or assets or any other business combination) any
corporation, partnership, other business organization or any division thereof or any assets, other than (A) in the ordinary course of business, or (B) if not in the ordinary course of business, with a value or purchase price (including the
value of assumed liabilities) not in excess of US$4,000,000 for any individual transaction or a related series of transactions or acquisitions or US$5,000,000 in the aggregate;
(viii) repurchase, prepay or incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any Person, or make any loans or advances or capital contributions to, or investments in, any Person, other than (A) from the Company to any wholly owned Subsidiary or from any wholly owned
Subsidiary to the Company or another wholly owned Subsidiary, (B) if from the Company to any Person (other than a wholly owned Subsidiary of the Company) or from any Person (other than a wholly owned Subsidiary of the Company) to the Company or
a Subsidiary of the Company, not in excess of US$15,000,000 in the aggregate, or (C) that is a renewal or extension of any facility agreement effective as of the date hereof;
(ix) other than expenditures (A) associated with the construction project disclosed in
Section 4.11(a)
of the Company Disclosure Schedule in accordance with the budget and business plan provided to Parent prior to the date hereof and which do not exceed 10% of the amount budgeted therefor, or (B) necessary to
maintain existing assets in good repair, authorize, or make any commitment with respect to, any single capital expenditure which is in excess of US$500,000 or capital expenditures which are, in the aggregate, in excess of US$8,000,000;
(x) except as required under applicable Law or the terms of any Benefit Plan as in effect on the date hereof (copies of
which have been made available to Parent prior to the date hereof) or this Agreement (A) increase the compensation payable or to become payable or the benefits provided to any Service
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Provider (except for increases in base salaries or wages in the ordinary course of business consistent with past practice for Service Providers who are not Tier I Employees); (B) grant (or
increase the amount of) any severance, equity or equity-based awards, retention or termination pay to, or enter into any employment, bonus, change in control or severance agreement with, any Service Provider; (C) establish, adopt, enter into or
amend any collective bargaining agreement or Benefit Plan; (D) hire any Service Provider to whom a written offer of employment has not previously been made and accepted prior to the date hereof who, upon such hire, would be a Tier I Employee
or, after the date hereof, extend any new offers of employment with the Company or any of its Subsidiaries to any individual who would be a Tier I Employee; or (E) take any action to amend or waive any performance or vesting criteria or
accelerate any rights or benefits or take any action to fund or in any other way secure the payment of compensation or benefits under any Benefit Plan, including as a consequence of consummation of the Transactions or termination of employment;
(xi) make any changes with respect to accounting policies or procedures materially affecting the reported
consolidated assets, liabilities or results of operations of the Company and its Subsidiaries, except as required by changes in applicable GAAP or applicable Law;
(xii) make or change any material Tax election, materially amend any Tax Return (except as required by applicable Law),
enter into any material closing agreement with respect to Taxes, surrender any right to claim a material refund of Taxes, settle or finally resolve any material controversy with respect to material Taxes or materially change any method of Tax
accounting or take any action outside the ordinary course of business that could reasonably be expected to result in the Company or a Subsidiary being required to include a material item of income in, or exclude a material deduction from, a Tax
Return for a period beginning after the Closing Date;
(xiii) except (A) in the ordinary course of
business consistent with past practice or (B) in connection with any transaction or a series of transactions which are otherwise permitted under this
Section 6.01
, enter into, amend or modify, in any material respect, or terminate,
or waive any material rights under, any Material Contract (or Contract that would be a Material Contract if such Contract had been entered into prior to the date hereof);
(xiv) enter into any Contract that contains any provisions restricting the Company or any of its Affiliates from competing
or engaging in any material respect in any activity or line of business or with any Person or in any area or pursuant to which any material benefit or right is required to be given or lost as a result of so competing or engaging, except in the
ordinary course of business consistent with past practice, or which, pursuant to its terms, could have such effect after the Closing solely as a result of the consummation of the Transactions;
(xv) fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the
rules and regulations promulgated thereunder;
(xvi) (A) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of liabilities or obligations (1) as required by their terms as in effect on the date of this Agreement;
(2) reserved against on the 2012 Balance Sheet (for amounts not in excess of such reserves); or (3) as they become due in the ordinary course of business and consistent with past practice, or (B) settle any Action before a
Governmental Authority by or against the Company or any of its Subsidiaries or relating to any of their business, properties or assets, other than settlements (1) entered into in connection with any labor disputes; (2) of any Action by the
Company or any of its Subsidiaries requiring of the Company and its Subsidiaries only the payment of monetary damages not exceeding RMB10,000,000; or (3) of any Action against the Company or any of its Subsidiaries requiring of the Company and
its Subsidiaries only the payment of monetary damages not exceeding RMB6,000,000;
(xvii) sell, assign,
license, sublicense, abandon, allow to lapse, transfer or otherwise dispose of, or create or incur any Encumbrance (other than Permitted Encumbrances) on, any material Company Owned Intellectual Property Rights, other than in the ordinary course of
business or for the purpose of disposing of obsolete or worthless assets; or
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(xviii) agree, resolve or commit to do any of the foregoing.
(c) In addition, between the date of this Agreement and the Effective Time, the Company and its Subsidiaries shall (i) prepare and
timely file all Tax Returns required to be filed, (ii) timely pay all Taxes shown to be due and payable on such Tax Returns, and (iii) promptly notify Parent of any notice of any suit, claim, action, investigation, audit or proceeding in
respect of any Tax matters (or any significant developments with respect to ongoing suits, claims, actions, investigations, audits or proceedings in respect of such Tax matters).
Section 6.02
Conduct of Business by Parent and Merger Sub Pending the Merger
. Each of Parent
and Merger Sub agrees that, from the date hereof to the Effective Time, it shall not take any action or fail to take any action, the taking or failure to take, as applicable, would, or would be reasonably likely to, individually or in the aggregate,
prevent, materially delay or materially impede the ability of Parent or Merger Sub to consummate the Merger or the other Transactions.
Section 6.03
No Control of Other Partys Business
. Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the
right to control or direct the operations of the Company or its Subsidiaries prior to the Effective Time, and nothing contained in this Agreement is intended to give the Company, directly or indirectly, the right to control or direct Parents
or Merger Subs operations. Prior to the Effective Time, each of Parent, Merger Sub and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries
respective operations.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01
Proxy Statement and Schedule 13E-3
.
(a) As soon as reasonably practicable following the date of this Agreement, the Company shall (i) prepare and file with the SEC the Schedule 13E-3 and a preliminary proxy statement (the
Preliminary Proxy
Statement
) relating to this Agreement and the Transactions;
provided
, that the Company shall provide Parent and its counsel a reasonable opportunity to review the proposed Preliminary
Proxy Statement in advance of filing and consider in good faith any comments reasonably proposed by Parent and its counsel; (ii) respond as promptly as reasonably practicable to any comments of the SEC with respect to the Schedule 13E-3 and the
Preliminary Proxy Statement; (iii) use commercially reasonable efforts to have the SEC confirm that it has no further comments thereto; and (iv) cause a definitive proxy statement, letter to stockholders, notice of meeting and form of
proxy accompanying the proxy statement that will be provided to the holders of Shares in connection with the solicitation of proxies for use at the Company Stockholders Meeting (collectively, as amended or supplemented, the
Proxy
Statement
), to be mailed to the holders of Shares at the earliest practicable date, and in any event within five (5) Business Days, after the date that the SEC confirms it has no further comments;
provided
,
however
,
that no material amendments or supplements to the Schedule 13E-3, the Preliminary Proxy Statement or the Proxy Statement will be made by the Company without prior consultation with Parent and its counsel in accordance with this
Section 7.01
. The Company and Parent shall cooperate to: (A) respond as promptly as reasonably practicable to any comments received from the SEC with respect to such filings; and (B) prepare and file any amendments or
supplements necessary to be filed in response to any SEC comments or as required by Law. The Company will cause the information relating to the Company for inclusion in the Schedule 13E-3, the Preliminary Proxy Statement and the Proxy Statement, at
the time of the mailing of the Proxy Statement or any amendments or supplements thereto, and at the time of the Company Stockholders Meeting, not to contain any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
provided
,
however
, that no representation, warranty, covenant or agreement is made by the
Company with
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respect to information supplied by Parent for inclusion or incorporation by reference in the Proxy Statement. For the avoidance of doubt, nothing in this
Section 7.01(a)
shall limit
or preclude the ability of the Company Board (or any committee thereof, including the Special Committee) to effect a Change in the Company Recommendation in accordance with
Section 7.03(d)
.
(b) Parent shall provide to the Company all information concerning Parent and Merger Sub and their respective Affiliates as may be
reasonably requested by the Company in connection with the Schedule 13E-3, the Preliminary Proxy Statement and the Proxy Statement and shall otherwise assist and cooperate with the Company in the preparation of the Schedule 13E-3, the Preliminary
Proxy Statement and the Proxy Statement and resolution of comments of the SEC or its staff related thereto. Parent will cause the information relating to Parent, Merger Sub, or any of their respective Affiliates supplied by it for inclusion in the
Schedule 13E-3, the Preliminary Proxy Statement and the Proxy Statement, at the time of the mailing of the Proxy Statement or any amendments or supplements thereto, and at the time of the Company Stockholders Meeting, not to contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;
provided
,
however
, that no representation or warranty is made by Parent or Merger Sub with respect to information supplied by the Company for inclusion or incorporation by reference in the Proxy Statement.
(c) Each of the Company and Parent shall promptly correct any information provided by it for use in the Schedule 13E-3, the Preliminary
Proxy Statement and the Proxy Statement if and to the extent that such information shall have become false or misleading in any material respect, and the Company shall take all steps necessary to amend or supplement the Schedule 13E-3, the
Preliminary Proxy Statement and the Proxy Statement and to cause the Schedule 13E-3 and the Proxy Statement, as so amended or supplemented, to be filed with the SEC and mailed to its stockholders, in each case as and to the extent required by
applicable Law. The Company shall (i) as promptly as practicable after receipt thereof, provide Parent or its counsel with copies of any written comments, and advise Parent or its counsel of any oral comments, with respect to the Preliminary
Proxy Statement, the Proxy Statement (or any amendment or supplement thereto) or the Schedule 13E-3 received from the SEC or its staff, (ii) provide Parent and its counsel a reasonable opportunity to review the Companys proposed response
to such comments and (iii) consider in good faith any comments reasonably proposed by Parent and its counsel.
(d)
Notwithstanding the foregoing or anything else herein to the contrary, and subject to compliance with the terms of
Section 7.03
, in connection with any disclosure regarding a Change in the Company Recommendation, the Company shall not be
required to provide Parent or Merger Sub the opportunity to review or comment on (or include comments proposed by Parent or Merger Sub in) the Schedule 13E-3 or the Proxy Statement, or any amendment or supplement thereto, or any comments thereon or
any other filing by the Company with the SEC, with respect to such disclosure.
Section 7.02
Company Stockholders Meeting
.
(a) (i) Subject to
Section 9.01
, as promptly as reasonably practicable following clearance of the Proxy Statement and the
Schedule 13E-3 by the SEC, the Company shall take, in accordance with applicable Law, its certificate of incorporation and bylaws and the rules of NASDAQ, all action necessary to call, give notice of, set a record date for, and convene the Company
Stockholders Meeting for the purpose of obtaining the Company Stockholder Approval.
(b) Unless there has been a Change
in the Company Recommendation pursuant to
Section 7.03(d)
, the Company Board shall (i) make the Company Recommendation and include such recommendation in the Proxy Statement and (ii) use commercially reasonable efforts to take
all actions reasonably necessary in accordance with applicable Law and the certificate of incorporation and bylaws of the Company, to solicit the Company Stockholder Approval. Unless this Agreement has been terminated in accordance with its terms,
this Agreement shall be submitted to the Companys stockholders at the Company Stockholders Meeting whether or not a Change in the Company Recommendation in response to an Intervening Event shall have occurred.
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Section 7.03
No Solicitation of Transactions; Company
Board Recommendation; Alternative Acquisition Agreement
.
(a) Until the Effective Time or, if earlier, the termination of
this Agreement in accordance with
Article IX
, the Company and its Subsidiaries shall not, nor shall they authorize or direct any of their respective Representatives to, directly or indirectly:
(i) solicit, initiate or take any other action knowingly to facilitate or encourage any Acquisition Proposal; or
(ii) engage in, continue or otherwise participate in any discussions or negotiations
regarding, or provide any non-public information or data concerning, the Company or any of its Subsidiaries to any Person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) with the intent to induce the making, submission or
announcement of, or the intent to encourage, facilitate or assist an Acquisition Proposal; or
(iii) approve,
endorse, recommend, execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement (other than an Acceptable Confidentiality Agreement) relating to any Acquisition Proposal;
provided
that, any proposal or suggestion, formal or informal, made by a director of the Company at any meeting of the Company Board
or any of its committees, which was not solicited by the Company Board or any of its committees, to take any action described in sub-clause (e) in the definition of Acquisition Proposal and any discussion of such proposal solely for
the purpose of informing such director of the Companys obligations pursuant to this Section 7.03(a) shall not (in themselves) be a breach of this Section 7.03(a);
provided
further
, that no further action which is not
permitted pursuant to sub-clauses (i) through (iii) above is taken with respect to such proposal.
(b)
Notwithstanding anything to the contrary in this Agreement, at any time prior to the receipt of the Company Stockholder Approval, the Company, its Subsidiaries and the Companys and its Subsidiaries Representatives may:
(i) grant a waiver, amendment or release under any standstill agreement for the purpose of allowing any Person or group of
Persons to make an Acquisition Proposal;
(ii) following the receipt of an Acquisition Proposal which did not
result from any breach of this
Section 7.03
, contact the Person or group of Persons who has made such Acquisition Proposal to clarify and understand the terms and conditions thereof;
(iii) following the receipt of an Acquisition Proposal which did not result from any breach of this
Section 7.03
, provide information (including any non-public information or data concerning the Company or any of its Subsidiaries) in response to the request of the Person or group of Persons who has made such Acquisition Proposal, if
and only if, prior to providing such information, the Company has received from the Person or group of Persons so requesting such information an executed Acceptable Confidentiality Agreement (a copy of which shall be provided for informational
purposes only to Parent);
provided
that the Company shall promptly make available to Parent any non-public information concerning the Company and its Subsidiaries that is provided to any Person or group of Persons making such Acquisition
Proposal that is given such access and that was not previously made available to Parent or its Representatives; and/or
(iv) following the receipt of an Acquisition Proposal which did not result from any breach of this
Section 7.03
, engage or participate in any discussions or negotiations with the Person or
group of Persons who has made such Acquisition Proposal;
provided
that prior to taking any action described in
Section 7.03(b)(iii)
or
Section 7.03(b)(iv)
above, the Company Board (or any committee thereof composed solely of independent directors, including the Special Committee) shall have determined in good faith, based on the
information then available and after consultation with its independent financial advisor and outside legal counsel, that such Acquisition Proposal either constitutes a Superior Proposal or could reasonably be expected to result in a Superior
Proposal.
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(c) Except as set forth in
Section 7.03(d)
, neither the Company Board nor any
committee thereof shall (i) withhold, withdraw, amend or modify in a manner adverse to Parent, or publicly propose to withhold, withdraw, amend or modify in a manner adverse to Parent, the Company Recommendation (a
Change in the
Company Recommendation
);
provided
,
however
, that a stop, look and listen communication by the Company Board (or any committee thereof) pursuant to Rule 14d-9(f) of the Exchange Act, or any substantially
similar communication, with respect to an Acquisition Proposal, which did not result from any breach of this
Section 7.03
, shall not be deemed to be a Change in the Company Recommendation or (ii) cause or permit the Company or any
of its Subsidiaries to enter into any Alternative Acquisition Agreement.
(d) Notwithstanding anything to the contrary set
forth in this Agreement, at any time prior to obtaining the Company Stockholder Approval, subject to the Companys compliance with this
Section 7.03
, the Company Board (or any committee thereof composed solely of independent
directors, including the Special Committee) may (i) effect a Change in the Company Recommendation in response to an Intervening Event or a Superior Proposal and/or (ii) authorize the Company to terminate this Agreement to enter into
an Alternative Acquisition Agreement, if and only if:
(i) (A) with respect to a Change in the Company
Recommendation, the Company Board (or any committee thereof composed solely of independent directors, including the Special Committee) determines in good faith, after consultation with its outside legal counsel, that failure to do so would
reasonably be expected to be inconsistent with the directors fiduciary duties under applicable Law or (B) with respect to a termination of this Agreement to enter into an Alternative Acquisition Agreement with respect to a bona fide,
written Acquisition Proposal, the Company Board (or any committee thereof composed solely of independent directors, including the Special Committee) determines in good faith, based on information then available and after consultation with its
independent financial advisor and outside legal counsel, that such Acquisition Proposal constitutes a Superior Proposal;
(ii) prior to effecting a Change in the Company Recommendation or terminating this Agreement to enter into an Alternative Acquisition Agreement in accordance with this
Section 7.03(d)
,
(A) the Company shall have provided prior written notice (the
Change or Termination Notice
) to Parent that the Company Board (or any committee thereof composed solely of independent directors, including the Special
Committee) has resolved to effect a Change in the Company Recommendation or to terminate this Agreement pursuant to
Section 9.01(d)(ii)
, describing in reasonable detail the reasons for such Change in the Company Recommendation or
termination (which notice shall specify, if related to an Acquisition Proposal, the identity of the party making the Acquisition Proposal and the material terms thereof and copies of all relevant documents (other than redacted terms of financing
documents) relating to such Acquisition Proposal), and (B) the Company shall cause its financial and legal advisors to, during the period beginning at 5:00 p.m. Hong Kong Time on the day of delivery by the Company to Parent of such Change
or Termination Notice (or, if delivered after 5:00 p.m. Hong Kong Time or any day other than a Business Day, beginning at 5:00 p.m. Hong Kong Time on the next Business Day) and ending five (5) Business Days later at 5:00 p.m.
Hong Kong Time (the
Notice Period
) negotiate with Parent and its Representatives in good faith (to the extent Parent desires to negotiate) any proposed modifications to the terms and conditions of this Agreement and/or the
Financing Documents so that such Acquisition Proposal ceases to constitute a Superior Proposal or so that the failure to effect a Change in the Company Recommendation would no longer reasonably be expected to be inconsistent with the directors
fiduciary duties under applicable Law;
provided
, that, with respect to a Change in the Company Recommendation made in connection with an Acquisition Proposal or a termination of this Agreement to enter into an Alternative Acquisition
Agreement, in the event of any material revisions to the Acquisition Proposal, the Company shall deliver a new written notice to Parent and comply with the requirements of this
Section 7.03(d)(ii)
with respect to such new written notice;
provided
,
further
, that with respect to the new written notice to Parent, the Notice Period shall be deemed to be a three (3) Business-Day period rather than the five (5) Business-Day period first described above;
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(iii) following the end of such negotiation period(s), the Company Board (or
any committee thereof composed solely of independent directors, including the Special Committee) shall have determined in good faith (after consultation with its independent financial advisor and outside legal counsel), after considering the terms
of any proposed amendment or modification to this Agreement and/or the Financing Documents, that (A) with respect to a Change in the Company Recommendation, the failure to effect a Change in the Company Recommendation would still reasonably be
expected to be inconsistent with the directors fiduciary duties under applicable Law or (B) with respect to a termination of this Agreement to enter into an Alternative Acquisition Agreement with respect to an Acquisition Proposal, such
Acquisition Proposal continues to constitute a Superior Proposal; and
(iv) in the case of the Company
terminating this Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal, the Company shall have paid, or caused the payment of, the Company Termination Fee in accordance with
Section 9.03(a)
.
(e) Nothing contained in this
Section 7.03
shall be deemed to prohibit the Company or the Company Board (or any
committee thereof) from complying with its disclosure obligations under U.S. federal or state or non-U.S. Law with regard to an Acquisition Proposal, including taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a),
Rule 14d-9
or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment of a
tender offer or exchange offer);
provided
that if such disclosure includes a Change in the Company Recommendation or has the substantive effect of withdrawing or adversely modifying the Company Recommendation, such disclosure shall be deemed
to be a Change in the Company Recommendation for all purposes under this Agreement, including
Section 9.01(c)(ii)
(it being understood that a statement that the Company Board or any committee thereof has received and is
currently evaluating such Acquisition Proposal and/or describing the operation of this Agreement with respect thereto, or any stop, look and listen communication of the type contemplated by Rule 14d-9(f) under the Exchange Act, in each
case, which is consistent with this
Section 7.03
, shall not be deemed to be a Change in the Company Recommendation).
(f) The Company agrees that it will promptly (and, in any event, within 48 hours) notify Parent if it or any of its Representatives becomes aware that any Acquisition Proposals are received by, any
non-public information is requested from, or any discussions or negotiations are sought to be initiated or continued with, the Company, the Company Board (or any committee thereof composed solely of independent directors, including the Special
Committee) or any Representative of the foregoing, indicating, in connection with such notice, the identity of the Person or group of Persons making such Acquisition Proposal and the material terms and conditions of any Acquisition Proposals and
thereafter shall keep Parent reasonably informed of the status and terms of any such Acquisition Proposals (including any amendments thereto that are material in any respect) and the status of any such discussions or negotiations. None of the
Company, the Company Board or any committee of the Company Board shall enter into any binding agreement or Contract with any person to limit the Companys ability to give prior notice to Parent of its intention to effect a Change in the Company
Recommendation or to terminate this Agreement in light of a Superior Proposal.
(g) The Company shall, and shall cause its
Subsidiaries and its and their Representatives to cease immediately and cause to be terminated any and all existing activities, discussions or negotiations, if any, with any Person or group of Persons and its or their Representatives conducted prior
to the date hereof with respect to any Acquisition Proposal.
Section 7.04
Access to
Information; Confidentiality
.
(a) Except as otherwise prohibited by applicable Law or the terms of any contract or
agreement to which the Company or any of its Subsidiaries is subject (
provided
that the Company shall use its commercially reasonable efforts to promptly obtain any consent required under such contract or agreement in order that it may comply
with the terms of this
Section 7.04(a)
), from the date of this Agreement until the earlier of the date on
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which this Agreement is terminated in accordance with its terms or the Effective Time, the Company shall, and shall cause its Subsidiaries to, (i) provide to Parent and Parents
Representatives reasonable access, during normal business hours and upon prior reasonable notice, to the officers, employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and to the books and records thereof;
and (ii) furnish Parent and its Representatives with such information concerning its business, properties, contracts, assets, liabilities, personnel and other information as Parent or its Representatives may reasonably request in writing;
provided
,
however
, that the Company shall not be required to provide access to or disclose any information if such access or disclosure would jeopardize any attorney-client privilege, work product doctrine or other applicable privilege
of the Company or any of its Subsidiaries, violate any Contract, Law or Order, or give a third party the right to terminate or accelerate the rights under a Contract (
provided
that the Company shall use its commercially reasonable efforts to
cause such information to be provided in a manner that would not result in such jeopardy or violation).
(b) Without
limitation of Section 7.04(a), the Company shall, as promptly as practicable but in no event later than 20 Business Days after the date hereof, provide complete, correct and unredacted copies of any Selected Business Contracts, as amended and
supplemented, that have not been provided by the Company to Parent prior to the date hereof.
(c) All information obtained by
Parent pursuant to this
Section 7.04
shall be kept confidential in accordance with the Confidentiality Agreement. Parent shall be responsible for any unauthorized disclosure of any such information provided or made available pursuant to
this
Section 7.04
by its Representatives.
(d) No investigation pursuant to this
Section 7.04
shall
affect any representation, warranty, covenant or agreement in this Agreement of any party hereto or any condition to the obligations of the parties hereto.
Section 7.05
Employee Benefits Matters
. For the period beginning at the Effective Time and continuing through the second anniversary of the Effective Time,
Parent shall cause the Surviving Corporation and its Subsidiaries to provide each employee of the Company as of immediately prior to the Effective Time with (i) a base salary at a level at least equal to such employees base salary as of
immediately prior to the Effective Time, (ii) an opportunity for cash incentive compensation in a manner and with such criteria that is consistent with past practice and (iii) other employee benefits and arrangements that are at least
substantially comparable in the aggregate to the employee benefits and arrangements in effect as of immediately prior to the Effective Time (excluding any equity-based plan or arrangement). From and after the Effective Time, Parent shall cause the
Surviving Corporation and its Subsidiaries to honor in accordance with their terms, all contractual commitments under the Benefit Plans as in effect immediately prior to the Effective Time that are applicable to any current or former employees or
directors of the Company or any Subsidiary of the Company. Employees of the Company or any Subsidiary of the Company shall receive credit for purposes of eligibility to participate and vesting (but not for benefit accruals) under any employee
benefit plan, program or arrangement established or maintained by the Surviving Corporation or any of its Subsidiaries for service accrued or deemed accrued prior to the Effective Time with the Company or any Subsidiary of the Company;
provided
,
however
, that such crediting of service shall not operate to duplicate any benefit or the funding of any such benefit. In addition, Parent shall use its reasonable best efforts to waive, or cause to be waived, any limitations
on benefits relating to any
pre-existing
conditions to the extent such conditions are covered immediately prior to the Effective Time under the applicable Benefit Plans and to the same extent such limitations
are waived under any comparable plan of Parent or its Subsidiaries and use reasonable best efforts to recognize, for purposes of annual deductible and
out-of-pocket
limits under its medical and dental plans, deductible and
out-of-pocket
expenses paid by employees of the Company and its Subsidiaries in the calendar year in which the
Effective Time occurs. Nothing contained herein, expressed or implied is intended to confer upon any Service Provider any benefits under any employee benefit plans or right to employment or continued employment with Parent or the Surviving
Corporation or any of its Subsidiaries for any period by reason of this Agreement. The provisions of this Agreement, including this
Section 7.05
are solely for the benefit of the parties to this Agreement and no current or former Service
Provider or any other individual associated therewith shall be regarded for any purpose as a third party beneficiary of this Agreement, and nothing contained herein shall be construed as an amendment to any employee benefit plan for any purpose.
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Section 7.06
Directors and Officers
Indemnification and Insurance
.
(a) The Surviving Corporation and its Subsidiaries shall (and Parent shall cause the
Surviving Corporation and its Subsidiaries to) honor and fulfill the obligations of the Company and its Subsidiaries under (i) any indemnification, advancement of expenses and exculpation provision set forth in any certificate of incorporation
or bylaws or comparable organizational documents of the Company or any of its Subsidiaries as in effect on the date of this Agreement and (ii) all indemnification agreements between the Company or any of its Subsidiaries and any of their
respective current or former directors and officers and any person who becomes a director or officer of the Company or any of its Subsidiaries prior to the Effective Time (the
Indemnified Parties
). In addition, during the
period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, the Surviving Corporation and its Subsidiaries shall (and Parent shall cause the Surviving Corporation and its Subsidiaries to) cause the certificate
of incorporation and bylaws (and other similar organizational documents) of the Surviving Corporation and its Subsidiaries to contain provisions with respect to exculpation, advancement of expenses and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the certificate of incorporation and bylaws (or other similar organizational documents) of the Company and its Subsidiaries as in effect on the date hereof, and during such six year period, such
provisions shall not be amended, repealed, or otherwise modified in any manner except as required by applicable Law.
(b) From
the Effective Time until the sixth anniversary of the Effective Time, to the fullest extent the Company would have been permitted to do so under applicable Law (for the avoidance of doubt, subject to the limitations on the Companys ability to
indemnify its directors and officers under Section 145 of the DGCL), Parent shall indemnify and hold harmless each Indemnified Party from and against any and all costs or expenses (including reasonable attorneys fees and expenses),
judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out
of, relating to or in connection with (i) the fact that an Indemnified Party is or was a director or officer of the Company or any of its Subsidiaries, (ii) any acts or omissions occurring or alleged to occur prior to or at the Effective
Time in such Indemnified Partys capacity as a director, officer, employee or agent of the Company or any of its Subsidiaries or other Affiliates, or (iii) the Merger, this Agreement or any of the Transactions;
provided
,
however
, that if, at any time prior to the sixth anniversary of the Effective Time, any Indemnified Party delivers to Parent a written notice asserting a claim for indemnification under this
Section 7.06(b)
, then the claim
asserted in such notice shall survive the sixth anniversary of the Effective Time until such time as such claim is fully and finally resolved. In addition, during the period commencing at the Effective Time and ending on the sixth anniversary of the
Effective Time, to the fullest extent the Company would have been permitted to do so under applicable Law (for the avoidance of doubt, subject to the limitations on the Companys ability to advance expenses to its directors and officers under
Section 145 of the DGCL), Parent shall advance, prior to the final disposition of any claim, proceeding, investigation or inquiry for which indemnification may be sought under this Agreement, promptly following request by an Indemnified Party
therefor, all costs, fees and expenses (including reasonable attorneys fees and investigation expenses) incurred by such Indemnified Party in connection with any such claim, proceeding, investigation or inquiry;
provided
,
however
, that if, at any time prior to the sixth anniversary of the Effective Time, any Indemnified Party delivers to Parent a written notice asserting a claim for advancement under this
Section 7.06(b)
, then the right to
advancement asserted in such notice shall survive the sixth anniversary of the Effective Time until such time as such claim is fully and finally resolved.
(c) Prior to the Effective Time, notwithstanding anything to the contrary set forth in this Agreement, the Company may purchase a six year tail prepaid policy on the D&O Insurance. In the
event that the Company elects to purchase such a tail policy prior to the Effective Time, the Surviving Corporation shall (and Parent shall cause the Surviving Corporation to) maintain such tail policy in full force and
effect and continue to honor their respective obligations thereunder for so long as such tail policy shall be maintained in full force and effect. In the event that the Company does not elect to purchase such a tail policy
prior to the Effective Time, during the period commencing at the Effective Time and ending on the sixth anniversary of the Effective
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Time, the Surviving Corporation shall (and Parent shall cause the Surviving Corporation to) maintain in effect the Companys current directors and officers liability insurance
(
D&O Insurance
) in respect of acts or omissions occurring at or prior to the Effective Time, covering each person covered by the D&O Insurance, on terms with respect to the coverage and amounts that are equivalent
to those of the D&O Insurance;
provided
,
however
, that the total amount payable for such tail insurance policy shall not exceed two hundred and fifty percent (250%) of the premium amount per annum the Company paid
in its last full fiscal year as set forth in
Section 7.06(c)
of the Company Disclosure Schedule (such two hundred and fifty percent (250%) amount, the
Maximum Tail Premium
);
provided
that, if the
cost for such tail insurance policy exceeds the Maximum Tail Premium, then the Company or the Surviving Corporation shall be obligated to obtain a substantially similar policy with the greatest coverage available for a cost not exceeding
the Maximum Tail Premium.
(d) In the event Parent or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of their respective properties and
assets to any Person, then, and in each such case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this
Section 7.06.
(e) The provisions of this
Section 7.06
shall survive the consummation of the Merger and are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and legal representatives, each of which shall be a third-party beneficiary of the provisions of this
Section 7.06
.
(f) The agreements and covenants contained in this
Section 7.06
shall not be deemed to be exclusive of any other rights to
which any such Indemnified Party is entitled, whether pursuant to Law, Contract or otherwise. Nothing in this Agreement is intended to, shall be construed to or shall release, waive or impair any rights to directors and officers
insurance claims under any policy that is or has been in existence with respect to the Company or any of its Subsidiaries or their respective officers, directors and employees.
Section 7.07
Notification of Certain Matters
.
(a) From and after the date of this Agreement until the earlier to occur of the Effective Time or termination of this Agreement in
accordance with its terms, the Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence,
of any event which would reasonably
be expected to cause any condition to the obligation of any party to effect the Transactions not to be satisfied, or (ii) any failure of the Company, Parent or Merger Sub, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement which would reasonably be expected to cause any condition to the obligation of any party to effect the Transactions not to be satisfied;
provided
,
however
, that the
delivery of any notice pursuant to this
Section 7.07
shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice.
(b) From and after the date of this Agreement until the earlier to occur of the Effective Time or termination of this Agreement in accordance with its terms, the Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company, of (i) any written notice or other written communication from any Governmental Authority in connection with the Transactions, or from any Person alleging that the consent of such
Person is or may be required in connection with the Transactions, or (ii) any Actions commenced or, to its Knowledge, threatened against the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as the case may be, that, if
pending on the date of this Agreement, would have been required to have been disclosed by such Person pursuant to any of such Persons representations and warranties contained herein, or that relate to such Persons ability to consummate
the Transactions.
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Section 7.08
Reasonable Best Efforts; Further
Action
.
(a) Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the Transactions, including using its reasonable best efforts (i) to obtain, or cause to be
obtained, all permits, consents, approvals, authorizations, qualifications and Orders of all Governmental Authorities and officials and parties to Contracts with the Company and its Subsidiaries that may be or become necessary for the performance of
the obligations of such party hereto pursuant to this Agreement and the consummation of the Transactions and (ii) to consummate the transactions contemplated by the Rollover Agreement and the Additional Rollover Agreements (if any), including
execution of the Shareholders Agreement referred to in the Rollover Agreement, and will cooperate fully with the other parties in promptly seeking to obtain all such permits, consents, approvals, authorizations, qualifications and Orders;
provided
that, for the avoidance of doubt, no action permitted to be taken pursuant to
Section 6.01
or
Section 7.03
hereof shall be prohibited by this sentence.
(b) Upon the terms and subject to the conditions of this Agreement, each party hereto agrees to make an appropriate filing, if necessary,
pursuant to the PRC Anti-Monopoly Law with respect to the Merger promptly following the date of this Agreement, to supply as promptly as practicable to the appropriate Governmental Authorities any additional information and documentary material that
may be requested pursuant to the PRC Anti-Monopoly Law and to use its reasonable best efforts to obtain approval, consent or clearance from appropriate Governmental Authorities under the PRC Anti-Monopoly Law.
(c) Each party hereto shall promptly notify the others of any material communication it receives from any Governmental Authority relating
to any filing or submissions under the PRC Anti-Monopoly Law or other applicable antitrust, competition or fair trade Laws. Each party agrees to provide promptly to the other parties all information and assistance reasonably necessary in connection
with preparing and submitting such filings and obtaining the relevant approvals, consents or expiration of waiting periods in relation to such filings.
(d) Each of Parent and Merger Sub, on the one hand, and the Company, on the other hand shall, subject to applicable Law, (i) permit counsel for the other party to review in advance and consider in
good faith the views of the other party in connection with any proposed written communications with Governmental Authorities concerning the Transactions under the PRC Anti-Monopoly Law or other applicable antitrust, competition or fair trade Laws,
and (ii) provide counsel for the other party with copies of all filings made by such party to any antitrust, competition, or fair trade Governmental Authority and all correspondence between such party (and its advisors) and any antitrust,
competition, or fair trade Governmental Authority, and any other information supplied by such party and such partys Affiliates to or received from any antitrust, competition, or fair trade Governmental Authority in connection with the proposed
Transactions;
provided
,
however
, that such materials may be redacted (A) to remove references concerning the valuation of the Company, (B) as necessary to comply with contractual arrangements, and (C) as necessary to
address reasonable privilege and confidentiality concerns.
(e) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to contest and resist any Action, including any administrative or judicial Action, and to have vacated, lifted, reversed or overturned any Order (whether temporary, preliminary or permanent) that is in effect and that
restricts, prevents or prohibits consummation of the Transactions. Notwithstanding the foregoing or anything else in this Agreement to the contrary, none of the parties hereto nor any of their Affiliates (including, after the Effective Time, the
Surviving Corporation) shall be required to propose or agree to accept any undertaking or condition, to enter into any consent decree, to divest, hold separate or otherwise take or commit to take any action that limits its freedom of action with
respect to, or its ability to retain, any of its material businesses, services or assets, or pay any material amounts (other than the payment of filing fees and expenses and fees of counsel).
(f) Immediately after the execution of this Agreement, Parent shall duly approve and adopt this Agreement in its capacity as sole
stockholder of Merger Sub in accordance with applicable Law and the certificate of incorporation and bylaws of Merger Sub and deliver to the Company evidence of its vote or action by written consent so approving and adopting this Agreement.
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Section 7.09
Obligations of Merger Sub
.
(a) Parent shall take all actions necessary to cause Merger Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and subject to the conditions set forth in this Agreement.
(b) At the Company
Stockholders Meeting and any other extraordinary meeting of the stockholders of the Company called to seek the Company Stockholder Approval or in any other circumstances upon which a vote, consent or other approval (including by written
consent) with respect to this Agreement, the Merger or any other Transaction contemplated herein is sought, Parent shall, and shall cause its direct or indirect stockholders and their respective Affiliates to, vote their beneficially owned Shares in
favor of granting the Company Stockholder Approval.
Section 7.10
Public
Announcements
. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of Parent and the Company. Thereafter, unless otherwise required by applicable Law or the
requirements of NASDAQ, each of Parent and the Company shall consult with the other before issuing any press release, having any communication with the press (whether or not with attribution), making any other public announcement or scheduling any
press conference or conference call with investors or analysts with respect to this Agreement, the Merger or any of the other Transactions (other than any press release or public statement with respect to a Change in the Company Recommendation,
Acquisition Proposal, Superior Proposal or any action taken by the Company, the Company Board or any committee thereof permitted under
Section 7.03
);
provided
,
however
, that the restrictions set forth in this
Section 7.10
shall not apply to any press release or announcement with respect to a Change in the Company Recommendation.
Section 7.11
Stock Exchange Delisting
. Parent shall use commercially reasonable efforts to cause the Shares to be (a) delisted by the Surviving Corporation
from NASDAQ as promptly as practicable after the Effective Time, and (b) deregistered under the Exchange Act by the Surviving Corporation as promptly as practicable after such delisting.
Section 7.12
Section 16 Matters
. Prior to the Effective Time, the Company shall use
reasonable best efforts, including in accordance with the interpretive guidance set forth by the SEC, to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the
Transactions by each officer or director who is or will be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.13
Takeover Statute
. If the restrictions of any takeover statute are or
may become applicable to the Merger or any of the other Transactions, the parties shall use their respective reasonable best efforts (a) to take all action necessary so that no such restriction is or becomes applicable to the Merger or any of
the other Transactions and (b) if any such restriction is or becomes applicable to any of the foregoing, to take all action necessary so that the Merger and the other Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate or lawfully minimize the effects of such statute on the Merger and the other Transactions.
Section 7.14
Resignations
. To the extent requested by Parent in writing at least three (3) Business Days prior to the Closing, on the Closing Date, the
Company shall use reasonable best efforts to cause to be delivered to Parent duly signed resignations, effective as of the Effective Time, of the directors of the Company and any of its Subsidiaries designated by Parent.
Section 7.15
Participation in Litigation
. Prior to the Effective Time, Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of any Action commenced or, to the Companys Knowledge on the one hand and Parents Knowledge on the other hand, threatened against such party which relate to this
Agreement and the Transactions. The Company shall give Parent reasonable opportunity to participate in the defense or settlement of any stockholder Action against the Company and/or its directors relating to the Transactions.
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Section 7.16
Financing
.
(a) Each of Parent and Merger Sub shall use their reasonable best efforts to arrange the Financing in a timely manner, including to
(i) maintain in effect the Financing Documents, (ii) negotiate and enter into a definitive agreement prior to the Closing with respect to the Debt Financing on the terms and conditions contained in the Debt Commitment Letter (including the
flex provisions, if any) or on other terms no less favorable to Parent and Merger Sub (the
Facility Agreement
), (iii) satisfy, or cause its Representatives to satisfy, on a timely basis all conditions in the Financing
Documents and the Facility Agreement that are within its control, (iv) subject to the terms and conditions of the applicable Financing Documents and the Facility Agreement, cause the Lenders and any other Persons providing the Debt Financing to
fund the Debt Financing at or prior to the Closing, (v) subject to the terms and conditions of the applicable Financing Documents, cause the Sponsors to fund the Equity Financing at or prior to the Closing, and (vi) subject to the terms
and conditions of the Financing Documents and the Facility Agreement, draw upon and consummate the Financing at or prior to the Closing.
(b) If any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Debt Commitment Letter or the Facility Agreement, (A) Parent shall promptly so notify the
Company, and (B) each of Parent and Merger Sub shall use its reasonable best efforts to arrange to obtain alternative debt financing from the same or alternate sources, as promptly as practicable following the occurrence of such event (and in
any event no later than ten (10) Business Days prior to the End Date), on terms and conditions (including the flex provisions, if any) not materially less favorable, in the aggregate, to Parent and Merger Sub than those contained in the Debt
Commitment Letter or the Facility Agreement and any related fee letter, in an amount sufficient (assuming (1) the Equity Financing is funded in accordance with the Equity Commitment Letters, (2) the contributions contemplated by the
Rollover Agreement and the Additional Rollover Agreements (if any) are made in accordance with the terms of such agreements, and (3) the satisfaction of the conditions to the obligation of Parent and Merger Sub to consummate the Merger as set
forth in
Section 8.01
and
Section 8.02
or the waiver of such conditions by Parent) to consummate the Merger and the other Transactions (the
Alternative Debt Financing
), and to enter into new
definitive agreements with respect to such Alternative Debt Financing (the
Alternative Debt Financing Documents
) and Parent shall deliver to the Company as promptly as practicable (and no later than two (2) Business
Days) after such execution, a true and complete copy of each such Alternative Debt Financing Document. In the event that any Alternative Debt Financing Documents are entered into, (A) any reference in this Agreement to the Debt
Financing shall mean the debt financing contemplated by the Debt Commitment Letter or the Facility Agreement as modified pursuant to clause (B) below, (B) any reference in this Agreement to the Debt Commitment Letter or
the Facility Agreement shall be deemed to include the Debt Commitment Letter or the Facility Agreement to the extent not superseded by the Alternative Debt Financing Documents at the time in question and the Alternative Debt Financing
Documents to the extent then in effect and (C) any reference in this Agreement to fee letter shall be deemed to include any fee letter relating to the Debt Commitment Letter or the Facility Agreement to the extent not superseded by
the Alternative Debt Financing Documents at the time in question and the Alternative Debt Financing Documents to the extent then in effect. Notwithstanding anything contained in this
Section 7.16
or in any other provision of this
Agreement, in no event shall Parent or Merger Sub be required to amend or waive any of the terms or conditions herein or in the Financing Documents or the Facility Agreement.
(c) Neither Parent nor Merger Sub shall agree to or permit any amendments or modifications to, or grant any waivers of, any condition or other provision under the Financing Documents, the Facility
Agreement or the Alternative Debt Financing Documents, as applicable, without the prior written consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed) if such amendments, modifications or waivers would
(i) reduce the aggregate amount of the Financing or the Alternative Debt Financing, as applicable, or (ii) impose new or additional conditions that would reasonably be expected to (A) prevent or materially delay the ability of Parent
or Merger Sub to consummate the Merger and the other Transactions or (B) adversely impact in any material respect the ability of Parent or Merger Sub to enforce its rights against the other parties to the Financing Documents, the Facility
Agreement or the Alternative Debt Financing Documents,
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as applicable. Without limiting the generality of the foregoing, neither Parent nor Merger Sub shall release or consent to the termination of the obligations of the Lender or any Sponsor under
the Financing Documents or the Facility Agreement or the comparable parties under the Alternative Debt Financing Documents, as applicable, except as expressly contemplated hereby and thereby.
(d) Parent shall (i) prior to the Closing, give the Company prompt notice (A) upon becoming aware of any breach of any
provision of, or termination by any party to, any Financing Document, the Facility Agreement or any Alternative Debt Financing Document, as applicable, or (B) upon the receipt of any written or oral notice or other communication from any Person
with respect to any threatened breach or threatened termination by any party to any Financing Document, the Facility Agreement or any Alternative Debt Financing Document, as applicable, and (ii) prior to the Closing, otherwise keep the Company
reasonably informed on a reasonably current basis of the status of Parent and Merger Subs efforts to arrange the Financing or any Alternative Debt Financing.
Section 7.17
Financing Assistance
.
(a)
Prior to the Closing, the Company shall, and shall cause each of its Subsidiaries to, and shall use its reasonable best efforts to cause its Representatives to use their reasonable best efforts to, provide such reasonable cooperation as may be
requested by Parent in connection with the arrangement of the Financing (
provided
that such requested cooperation is consistent with applicable Law, does not unreasonably interfere with the operations of the Company and its Subsidiaries and
is customary in connection with the arrangement of the Financing), including (i) participation in a reasonable number of meetings, presentations, due diligence sessions, and sessions with rating agencies, (ii) furnishing Merger Sub and the
Financing Sources with financial and other pertinent information regarding the Company and its Subsidiaries as may be reasonably requested as promptly as practicable, subject to appropriate confidentiality undertakings, (iii) obtaining any
consents, legal opinions, surveys and title insurance as reasonably requested in writing by Parent, (iv) arranging for customary payoff letters, Encumbrance terminations and instruments of discharge to be delivered at the Closing providing for
the payoff, discharge and termination on the Closing Date of all Indebtedness and Encumbrances to the extent that such Indebtedness will be required to be paid off, discharged and terminated on the Closing Date, (v) to the extent customary and
in accordance with applicable Law, facilitating the pledging of collateral and executing and delivering any pledge and security documents, commitment letters or other definitive financing documents (
provided
that any collateral or security
granted thereunder and any obligations of the Company or any of its Subsidiaries under any such definitive documents shall be contingent upon the occurrence of the Effective Time), and (vi) taking all reasonable corporate actions reasonably
requested by such Financing Sources to permit the consummation of the Financing effective as of the Effective Time, including the execution and delivery of such customary instruments and documents as may be reasonably requested by such
Financing Sources including a customary solvency certificate signed by the Chief Financial Officer of the Company. Neither the Company nor any of its Subsidiaries shall be required, under the provisions of this
Section 7.17(a)
or
otherwise in connection with any Financing, (x) to pay any commitment or other similar fee prior to the Effective Time, (y) to incur any expense unless such expense is reimbursed by Parent promptly after incurrence thereof in accordance
with
Section 7.17(c)
, or (z) to commit to take any action that is not contingent upon the Closing (including the entry into any agreement) or that would be effective prior to the Effective Time or that would otherwise subject it to
actual or potential liability in connection with any Financing. Nothing contained in this
Section 7.17(a)
or otherwise shall require the Company to be an issuer or other obligor with respect to any Financing prior to the Effective Time.
(b) All non-public or otherwise confidential information regarding the Company obtained by Parent or Merger Sub or any of
their respective Representatives pursuant to this
Section 7.17
shall be kept confidential in accordance with the Confidentiality Agreement;
provided
, that the Company agrees that Parent and Merger Sub may share non-public or
confidential information with the Financing Sources and that Parent and Merger Sub and such Financing Sources may share such information with potential financing sources in connection with the marketing of the Debt Financing if the recipients of
such information agree to customary confidentiality arrangements.
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(c) Parent shall, promptly upon request by the Company, reimburse the Company for all
reasonable and documented out-of-pocket costs incurred by the Company or its Subsidiaries in connection with any cooperation provided pursuant to
Section 7.17(a)
and shall indemnify and hold harmless the Company, its Subsidiaries and
their respective Representatives for and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties actually suffered or incurred by them in connection with the arrangement of the Debt
Financing and any information utilized in connection therewith (other than information provided in writing by the Company or its Subsidiaries specifically for use in connection therewith).
Section 7.18
Bank Consent
. The Company shall use commercially reasonable efforts to, prior to
the Closing, obtain the consent of Shenzhen Development Bank Beijing Branch with respect to the change of control clause under the Facility Agreement, dated February 20, 2012, between Shenzhen Development Bank Beijing Branch and
AsiaInfo-Linkage Technologies (China), Inc.
Section 7.19
No Amendment to Buyer Group
Contracts
. (a) Without the Companys prior written consent, Parent and Merger Sub shall not, and shall use reasonable best efforts to cause the Buyer Group Parties and their Affiliates not to, enter into or modify any Contract
(A) which would, individually or in the aggregate, prevent or materially delay the ability of Parent or Merger Sub to consummate the Merger and the other Transactions or (B) which would prevent or materially impair the ability of any
management member, director or stockholder (excluding any of the Persons set forth in
Section 7.19
of the Parent Disclosure Schedule) of the Company, or any of their respective Affiliates, with respect to any Acquisition Proposal the
Company may receive that did not result from any breach of
Section 7.03
, taking any of the actions described in
Section 7.03(b)(ii)
,
Section 7.03(b)(iii)
or
Section 7.03(b)(iv)
to the extent such
actions are permitted to be taken by the Company thereunder. Within two (2) Business Days after the execution thereof, Parent and Merger Sub shall provide the Company with a copy of (x) any Additional Rollover Agreement, (y) any
agreement pursuant to which a Rollover Stockholder who is a party thereto agrees to vote such Rollover Stockholders Shares in favor of the adoption of this Agreement, and (z) any amendment to a Buyer Group Contract.
(b) The parties hereby acknowledge and agree that nothing herein amends, modifies or constitutes any waiver of the Company of any of its
rights under the Confidentiality Agreement, which agreement shall remain in full force and effect.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01
Conditions to the Obligations of Each Party
. The respective obligations of the
Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver (where permissible under applicable Law) at or prior to the Effective Time of the following conditions:
(a)
Stockholder Approval
. The Company Stockholder Approval shall have been obtained.
(b)
No Order
. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) which is then in effect and has the effect of enjoining, restraining, prohibiting or otherwise making illegal the consummation of the Transactions (collectively, a
Restraint
).
(c)
Antitrust Approval
. The parties shall have made all necessary filings under the PRC Anti-Monopoly Law and shall
have received, if necessary, clearance under the PRC Anti-Monopoly Law approving the Merger.
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Section 8.02
Conditions to the Obligations of Parent
and Merger Sub
. The obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver (where permissible under applicable Law) at or prior to the Effective Time of the following additional
conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of the Company contained
in
Section 4.03
shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of such time, subject to
de minimis
exceptions that do not, individually or in the
aggregate, increase the aggregate amount of the Merger Consideration by more than US$250,000, (ii) the representations and warranties of the Company contained in
Sections 4.01(a)
,
4.04
,
4.08(a)(ii)
,
4.17
,
4.18
and
4.20
shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of such time, and (iii) the other representations and warranties of the Company contained in this
Agreement shall be true and correct (without giving effect to any limitation as to materiality or Company Material Adverse Effect set forth therein) as of the date of this Agreement and as of the Closing Date as though made
on and as of such time, except (A) in the case of clauses
(i)-(iii)
above, to the extent such representation or warranty is expressly made as of a specific date, in which case such representations and
warranties shall be true and correct as of such specific date only and (B) in the case of clause (iii) above only, where the failure of such representations and warranties of the Company to be so true and correct does not constitute a
Company Material Adverse Effect.
(b)
Agreements and Covenants
. The Company shall have performed or complied in all
material respects with all of the agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Effective Time.
(c)
Officers Certificate
. The Company shall have delivered to Parent a certificate, dated the Closing Date, signed by an executive officer of the Company, certifying as to the satisfaction of
the conditions specified in
Section 8.02(a)
and
Section 8.02(b)
.
(d)
No Company Material Adverse
Effect
. Since the date hereof, there shall not have occurred any Company Material Adverse Effect.
Section 8.03
Conditions to the Obligations of the Company
. The obligations of the Company to consummate the Merger are subject to the satisfaction or written waiver (where permissible under applicable Law) at or prior to the
Effective Time of the following additional conditions:
(a)
Representations and Warranties
. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall be true and correct (without giving effect to any limitation as to materiality set forth therein) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, in each case, except (i) to the extent such representation or warranty is expressly made as of a specific date, in which case such representations and warranties shall be true and correct as of such specific
date only and (ii) where the failure of such representations and warranties of Parent and Merger Sub to be so true and correct has not, individually or in the aggregate, prevented or materially adversely affected the ability of Parent or Merger
Sub to consummate the Transactions.
(b)
Agreements and Covenants
. Parent and Merger Sub shall have performed or
complied in all material respects with all of the agreements and covenants required by this Agreement to be performed or complied with by them at or prior to the Effective Time.
(c)
Officers Certificate
. Parent shall have delivered to the Company a certificate, dated the Closing Date, signed by an
executive officer of Parent, certifying as to the satisfaction of the conditions specified in
Section 8.03(a)
and
Section 8.03(b)
.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01
Termination
. This Agreement may be terminated and the Transactions may be
abandoned at any time prior to the Effective Time, whether before or after receipt of the Company Stockholder Approval (except as set forth in
Section 9.01(d)(ii)
), by action taken or authorized by (a) in the case of the Company,
the Company Board (or any committee thereof composed solely of independent directors, including the Special Committee), and (b) in the case of Parent, the Parent Board, as follows:
(a) by the mutual written consent of Parent and the Company duly authorized by the Parent Board and the Company Board (or any committee
thereof composed solely of independent directors, including the Special Committee), respectively; or
(b) by either Parent or
the Company if:
(i) the Effective Time shall not have occurred on or before the End Date;
provided
,
however
, that the right to terminate this Agreement under this
Section 9.01(b)(i)
shall not be available to any party whose failure to fulfill any obligation under this Agreement or other intentional breach has been a material
cause of, or resulted in, the failure of the Effective Time to occur on or before the End Date;
(ii) any
Restraint having the effect set forth in
Section 8.01(b)
hereof shall have become final and nonappealable;
provided
,
however
, that the right to terminate this Agreement under this
Section 9.01(b)(ii)
shall not
be available to any party whose failure to fulfill any obligation under this Agreement or other intentional breach has been a material cause of, or resulted in, the issuance of such final, non-appealable Restraint; or
(iii) the Company Stockholder Approval shall not have been obtained upon a vote held at the Company Stockholders
Meeting or at any adjournment or postponement thereof; or
(c) by Parent:
(i) upon a breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement, or if
any representation or warranty of the Company shall have become untrue, in either case such that the conditions set forth in
Section 8.02(a)
or
Section 8.02(b)
would not be satisfied and such breach cannot be cured by the
Company by the End Date or, if capable of being cured, shall not have been cured (x) within ten (10) Business Days following receipt by the Company of written notice from Parent of such breach or (y) any shorter period of time that
remains between the date Parent provides written notice of such breach and the End Date;
provided
,
however
, that Parent shall not have the right to terminate this Agreement pursuant to this
Section 9.01(c)(i)
if either
Parent or Merger Sub is then in material breach of any representations, warranties, covenants or other agreements hereunder such that the conditions set forth in
Section 8.03(a)
or
Section 8.03(b)
would not be satisfied; or
(ii) if (x) prior to obtaining the Company Stockholder Approval, there shall have been a Change in the
Company Recommendation, (y) a tender or exchange offer for Company Common Stock that constitutes an Acquisition Proposal (whether or not a Superior Proposal) is commenced by a Person unaffiliated with Parent or any Rollover Stockholder and,
within five (5) Business Days after the public announcement of the commencement of such Acquisition Proposal, the Company shall not have filed a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the Exchange
Act recommending that the holders of Shares reject such Acquisition Proposal and not tender any Shares into such tender or exchange offer, or (z) at any time after receipt or public announcement of an Acquisition Proposal, the Company Board
shall have failed to reaffirm the Company Recommendation within five (5) Business Days after receipt of any written request to do so from Parent; or
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(iii) there shall have been an intentional and material breach on the part
of the Company of
Section 7.02
or
Section 7.03
; or
(d) by the Company:
(i) upon a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement set forth in this
Agreement, or if any representation or warranty of Parent and Merger Sub shall have become untrue, in either case such that the conditions set forth in
Section 8.03(a)
or
Section 8.03(b)
would not be satisfied and such breach
cannot be cured by Parent or Merger Sub by the End Date or, if capable of being cured, shall not have been cured (x) within ten (10) Business Days following receipt by Parent of written notice from the Company of such breach or
(y) any shorter period of time that remains between the date the Company provides written notice of such breach and the End Date;
provided
,
however
, that the Company shall not have the right to terminate this Agreement pursuant to
this
Section 9.01(d)(i)
if it is then in material breach of any representations, warranties, covenants or other agreements hereunder such that the conditions set forth in
Section 8.02(a)
or
Section 8.02(b)
would
not be satisfied;
(ii) prior to obtaining the Company Stockholder Approval, in order to enter into an
Alternative Acquisition Agreement with respect to a Superior Proposal in accordance with
Section 7.03(d)
;
provided
, that concurrently with such termination, the Company enters into such Alternative Acquisition Agreement and pays
to Parent (or one or more of its designees) the Company Termination Fee in accordance with
Section 9.03(a)
; or
(iii) if (A) all the conditions to the Closing contained in
Section 8.01
and
Section 8.02
have been satisfied (other than those conditions that by their nature are only
capable of being satisfied at the Closing (but subject to their satisfaction or waiver by the party having the benefit thereof)) or waived by Parent and Merger Sub, (B) Parent fails to fund the Exchange Fund within three (3) Business Days
following the date on which the Closing was required to have occurred pursuant to
Section 2.02
, and (C) the Company has irrevocably notified Parent in writing (x) that all of the conditions set forth in
Section 8.03
have been satisfied (other than those conditions that by their nature are only capable of being satisfied at the Closing (but subject to their satisfaction or waiver by the party having the benefit thereof)) or waived by the Company and (y) it
stands ready, willing and able to consummate the Transactions during such period.
Section 9.02
Effect of Termination
. In the event of the valid termination of this Agreement
pursuant to
Section 9.01
, written notice thereof shall be given to the other party or parties, specifying the provision or provisions hereof pursuant to which such termination shall have been made, and this Agreement shall forthwith
become void, and there shall be no liability under this Agreement on the part of any party hereto or their respective Subsidiaries or Representatives, except (a) with respect to this
Section 9.02
,
Section 7.04(c)
,
Section 7.17(c)
,
Section 9.03
and
Article X
which shall remain in full force and effect and (b) subject to
Section 9.03(f)
, nothing in this
Section 9.02
shall relieve any party from
liability for any knowing and intentional breach of, or fraud in connection with this Agreement. In addition to the foregoing, no termination of this Agreement shall affect the obligations of the parties hereto set forth in the Confidentiality
Agreement, all of which obligations shall survive termination of this Agreement in accordance with their terms.
Section 9.03
Fees and Expenses
.
(a) If this Agreement is validly terminated by
(i) Parent, pursuant to
Section 9.01(c)
; or
(ii) the Company, pursuant to
Section 9.01(b)(iii)
(but only if at the time of such termination, Parent shall
have had the right to terminate pursuant to
Section 9.01(c)
) or
Section 9.01(d)(ii)
,
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then in any such event, the Company shall pay to Parent or its designee (A) promptly (but in any event
no later than three (3) Business Days after Parent terminates this Agreement pursuant to
Section 9.01(c)(i)
,
Section 9.01(c)(ii)
or
Section 9.01(c)(iii)
, or (B) on the date the Company terminates this
Agreement pursuant to
Section 9.01(b)(iii)
or
Section 9.01(d)(ii)
, an amount equal to US$18,000,000 (the
Company Termination Fee
), which amount shall be payable in cash in immediately available
funds, by wire transfer to an account or accounts designated in writing by Parent.
(b) In the event that (i) this
Agreement is validly terminated by Parent or the Company pursuant to
Section 9.01(b)(i)
or
Section 9.01(b)(iii)
, (ii) at any time between the date hereof and the time of the termination of this Agreement a third party
shall have publicly disclosed (or solely in the case of termination pursuant to
Section 9.01(b)(i)
, otherwise communicated to the Company Board (or any committee thereof composed solely of independent directors, including the Special
Committee)) a
bona fide
Acquisition Proposal, and (iii) within nine (9) months following the termination of this Agreement, the Company enters into a definitive agreement with respect to, recommends to its stockholders, or
consummates, any Acquisition Proposal, then, in any such case, the Company shall pay to Parent or its designee the Company Termination Fee by wire transfer of immediately available funds to an account or accounts designated in writing by Parent,
concurrently with the consummation of the Acquisition Proposal described in clause (iii) above (even if such consummation occurs after the end of such 9-month period).
(c) If this Agreement is terminated by the Company pursuant to
Section 9.01(d)(i)
or
Section 9.01(d)(iii)
, then in any such event, Parent shall pay or cause to be paid to the
Company or its designees promptly (but in any event no later than three (3) Business Days) after the Company validly terminates this Agreement pursuant to
Section 9.01(d)(i)
or
Section 9.01(d)(iii)
, a termination fee
(the
Parent Termination Fee
), which shall be payable in cash in immediately available funds, by wire transfer to an account or accounts designated in writing by the Company. The Parent Termination Fee shall be in an amount
equal to (i) US$36,000,000, in the event the Company terminates this Agreement pursuant to (A)
Section 9.01(d)(i)
for any Willful Breach by Parent or Merger Sub of the representations, warranties, covenants or agreements
contained herein, (B)
Section 9.01(d)(iii)
for Parents failure to fund the Exchange Fund pursuant to
Section 2.02
due to the proceeds of the Debt Financing (including any Alternative Debt Financing, if applicable)
not being available, where such unavailability is a result of (1) any Willful Breach by Parent or Merger Sub of the representations, warranties, covenants or agreements contained herein or (2) any breach by the Buyer Group Parties or any
of their respective Affiliates (other than the Company and its Subsidiaries) of the Buyer Group Contracts or any Financing Documents, or (C)
Section 9.01(d)(iii)
for Parents failure to fund the Exchange Fund pursuant to
Section 2.02
when and if the proceeds of the Debt Financing (including any Alternative Debt Financing, if applicable) are available to be drawn down pursuant to the terms of the Facility Agreement (and/or such Alternative Debt Financing
Documents, if applicable), or (ii) US$18,000,000, in the event the Company terminates this Agreement pursuant to
Section 9.01(d)(i)
or
Section 9.01(d)(iii)
in any other circumstance.
(d) Upon any termination of this Agreement by Parent pursuant to
Section 9.01(c)
, any termination by the Company pursuant to
Section 9.01(d)(ii)
, or any termination by the Company if, at the time of such termination, Parent shall have had the right to terminate pursuant to
Section 9.01(c)
, the Company shall reimburse Parent and its Affiliates (by
wire transfer of immediately available funds), no later than three (3) Business Days after submission of reasonable documentation thereof, for 100% of their documented out-of-pocket Expenses (including reasonable fees and expenses of their
counsel) up to US$5,000,000 actually incurred by any of them in connection with this Agreement and the Transactions, including the arrangement of, obtaining the commitment to provide or obtaining any financing for such Transactions (the
Company Expense Reimbursement
), by wire transfer of immediately available funds to an account or accounts designated in writing by Parent. Upon any termination of this Agreement by the Company pursuant to
Section 9.01(d)(i)
or
Section 9.01(d)(iii)
, or any termination by Parent if, at the time of such termination, the Company shall have had the right to terminate pursuant to
Section 9.01(d)(i)
or
Section 9.01(d)(iii)
, Parent shall reimburse the Company and its Affiliates (by wire transfer of immediately available funds), no later than three (3) Business Days after submission of reasonable documentation thereof, for 100% of
their documented out-of-pocket Expenses
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(including reasonable fees and expenses of their counsel) up to US$5,000,000 actually incurred by any of them in connection with this Agreement and the Transactions (the
Parent
Expense Reimbursement
), by wire transfer of immediately available funds to an account or accounts designated in writing by the Company. Except as set forth in this
Section 9.03
, all costs and expenses incurred in connection
with this Agreement and the Transactions shall be paid by the party incurring such Expenses, whether or not the Merger or any other Transaction is consummated.
(e) The Company and Parent acknowledge that the agreements contained in this
Section 9.03
are an integral part of the Transactions and without the agreements contained in this
Section 9.03
, the parties would not have entered into this Agreement. Accordingly, in the event that the Company or Parent shall fail to pay the Company Termination Fee, Company Expense Reimbursement, Parent Termination Fee or Parent
Expense Reimbursement, as applicable, when due, and, in order to obtain the payment, Parent or the Company, as the case may be, commences an Action which results in a judgment against the other party for such payment, such paying party shall pay the
other party its reasonably documented costs and expenses (including reasonable legal fees and expenses) in connection with such Action, together with interest on the amount of (i) the Company Termination Fee, Company Expense Reimbursement,
Parent Termination Fee or Parent Expense Reimbursement, as applicable, and (ii) such documented costs and expenses at the annual rate of five percent (5%) plus the prime rate as published in the Wall Street Journal in effect on the date
such payment was required to be made through the date such payment is actually received.
(f) In no event shall (i) the
Company be required to pay the Company Termination Fee or the Company Expense Reimbursement on more than one occasion or (ii) Parent be required to pay the Parent Termination Fee or the Parent Expense Reimbursement on more than one
occasion. Notwithstanding anything to the contrary in this Agreement, but subject to
Section 9.03(d)
and
Section 9.03(e)
, (x) if the Company pays the Company Termination Fee pursuant to
Section 9.03(a)
or
Section 9.03(b)
and the Company Expense Reimbursement pursuant to
Section 9.03(d)
, then any such payment shall be the sole and exclusive remedy of Parent and Merger Sub against the Company and its Subsidiaries, and any of
their respective former, current or future officers, directors, partners, stockholders, managers, members, Affiliates or successors and none of the Company, any of its Subsidiaries or any of their respective former, current or future officers,
directors, partners, stockholders, managers, members, Affiliates or successors shall have any further liability or obligation relating to or arising out of this Agreement or the Transactions, including the failure of the Merger or the Financing to
be consummated or for a breach or failure to perform hereunder or under any Financing Document (whether intentionally, unintentionally, knowingly, willfully or otherwise) or otherwise, (y) if Parent pays the Parent Termination Fee pursuant to
Section 9.03(c)
, the Parent Expense Reimbursement pursuant to
Section 9.03(d)
and any costs payable by it pursuant to
Section 7.17(c)
, then any such payment shall be the sole and exclusive remedy of the Company
and its Subsidiaries and stockholders against Parent and Merger Sub and any of their respective former, current or future officers, directors, partners, stockholders, managers, members, Affiliates or successors or the Financing Sources and none of
Parent or Merger Sub or any of their respective former, current or future officers, directors, partners, stockholders, managers, members, Affiliates or successors or the Financing Sources shall have any further liability or obligation relating to or
arising out of this Agreement or the Transactions, including the failure of the Merger or the Financing to be consummated or for a breach or failure to perform hereunder or under any Financing Document (whether intentionally, unintentionally,
knowingly, willfully or otherwise) or otherwise and (z) (A) if Parent or Merger Sub receives any payments from the Company in respect of any breach of this Agreement, and thereafter Parent is entitled to receive the Company Termination Fee
under
Section 9.03(a)
or
Section 9.03(b)
, the amount of such Company Termination Fee shall be reduced by the aggregate amount of any payments made by the Company to Parent or Merger Sub in respect of any such breaches of this
Agreement and (B) if the Company receives any payments from Parent or Merger Sub in respect of any breach of this Agreement, and thereafter the Company is entitled to receive the Parent Termination Fee under
Section 9.03(c)
, the
amount of such Parent Termination Fee shall be reduced by the aggregate amount of any payments made by Parent or Merger Sub to the Company in respect of any such breaches of this Agreement.
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(g) Notwithstanding anything to the contrary contained herein, no Seller Related Party
(other than Parent and Merger Sub) shall have any rights or claims against any Financing Source providing Debt Financing in connection with this Agreement, the Debt Financing or the transactions contemplated hereby or thereby, and no Financing
Source providing Debt Financing shall have any rights or claims against any Seller Related Party (other than Parent and Merger Sub) in connection with this Agreement, the Debt Financing or the transactions contemplated hereby or thereby, whether at
law, or equity, in contract, in tort or otherwise;
provided
that, following consummation of the Merger, the foregoing will not limit the rights of the parties to the Debt Financing under any definitive agreement with respect thereto.
Seller Related Party
means the Company and each of its Affiliates and their respective stockholders, partners, members, officers, directors, employees, controlling persons, agents and representatives.
Section 9.04
Amendment
. This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors (or any committees thereof), at any time prior to the Effective Time;
provided
,
however
, that, (a) after the Company Stockholder Approval has been obtained, no amendment may be
made that under applicable Law requires further approval by the stockholders of the Company without such approval having been obtained; and (b) the prior written consent of the Financing Sources for the Debt Financing shall be required for any
amendment, waiver or other modification that is adverse to the Financing Sources of
Section 9.03(f)
,
Section 9.03(g)
,
Section 9.04
,
Section 9.05
,
Section 10.04(b)
,
Section 10.05
,
Section 10.07
or
Section 10.09
. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
Section 9.05
Waiver
. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any breach of or inaccuracy in the representations and warranties of any other party contained in this Agreement or in any document
delivered pursuant hereto and (c) subject to the proviso in the first sentence of
Section 9.04
and to the extent permitted by applicable Law, waive compliance with any agreement of any other party or any condition to its own
obligations contained in this Agreement. Notwithstanding the foregoing, no failure or delay by the Company or Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or future exercise of any other right hereunder. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
Section 10.01
Non-Survival of Representations, Warranties, Covenants and Agreements
. The representations, warranties, covenants and agreements in this Agreement and in any instrument delivered pursuant hereto shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 9.01
, as the case may be, except for those covenants and agreements contained in this Agreement (including
Article II
,
Article III
,
Section 7.04(b)
,
Section 7.04(c)
,
Section 7.06
,
Section 9.03
and this
Article X
) that by their terms are to be performed in whole or in part after the Effective Time (or termination of this
Agreement, as applicable).
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Section 10.02
Notices
. All notices, requests,
claims, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) upon confirmation of receipt after transmittal by facsimile (to such number
specified below or another number or numbers as such Person may subsequently specify by proper notice under this Agreement), with a confirmatory copy to be sent by overnight courier, and (c) on the next Business Day when sent by national
overnight courier, in each case to the respective parties and accompanied by a copy sent by email (which copy shall not constitute notice) at the following addresses (or at such other address for a party as shall be specified in a notice given in
accordance with this
Section 10.02
):
if to Parent or Merger Sub:
Skipper Limited
Skipper Acquisition Corporation
28/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Attention: Vicki Hui, Venus Lam, Zhen Ji
Facsimile No.: +852 2111 9699, +86 21 3218 0303
E-mail: vickihui@citiccapital.com, vlam@citiccapital.com,
zhenji@citiccapital.com
with a copy to:
Davis Polk & Wardwell
Hong Kong Club Building
3A Chater Road
Hong Kong
Attention: Mark J. Lehmkuhler, Esq.
Facsimile: +852 2533 3388
E-mail: mark.lehmkuhler@davispolk.com
if to the Company:
AsiaInfo-Linkage. Inc.
4th Floor, Zhongdian Information Tower,
6 Zhongguancun South Street, Haidian District,
Beijing 10086, China
Attention: Legal Director
Telephone: +86 10 8216 6688
Facsimile: +86 10 8216 6655
with a copy to:
Shearman & Sterling
12th Floor, Gloucester Tower,
The Landmark, 15 Queens Road Central,
Hong Kong
Attention: Paul Strecker, Esq.
Telephone: +852 2978 8038
Facsimile: +852 2140 0338
E-mail: paul.strecker@shearman.com
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Section 10.03
Severability
. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced by virtue of any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent
possible.
Section 10.04
Entire Agreement; Assignment
.
(a) This Agreement, the exhibits and schedules hereto (including the Company Disclosure Schedule), the Rollover Agreement, the Voting
Agreement, the Equity Commitment Letters, the Limited Guarantees and the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof;
provided
,
however
,
for the avoidance of doubt, that the Confidentiality Agreement shall not be
superseded, shall survive any termination of this Agreement and shall continue in full force and effect until the earlier to occur of (a) the Effective Time and (b) the date on which the Confidentiality Agreement expires in accordance with
its terms or is validly terminated by the parties thereto.
(b) No party may assign, delegate or otherwise transfer, by
operation of law or otherwise, any of its rights or obligations under this Agreement without the consent of each other party hereto, except that Parent or Merger Sub may transfer or assign its rights and obligations under this Agreement, in whole or
from time to time in part, to (i) one or more of its Affiliates or (ii) any Financing Sources for the Debt Financing pursuant to the terms of such Debt Financing (including for purposes of creating a security interest herein or otherwise
assigning as collateral in respect of such Debt Financing);
provided
, that such transfer or assignment shall not relieve Parent or Merger Sub of its obligations hereunder or enlarge, alter or change any obligation of any other party hereto or
due to Parent or Merger Sub. Any purported assignment not permitted under this
Section 10.04(b)
shall be null and void.
Section 10.05
Parties in Interest
. This Agreement shall be binding upon, inure solely to the benefit of, and be enforceable by, only the parties hereto, and
nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than as set forth in or contemplated by the terms
and provisions of
Section 7.06
(which is intended to be for the benefit of the Persons covered thereby) and for the Financing Sources for the Debt Financing and their respective successors, Representatives and permitted assigns with
respect to their respective rights and third party benefits under this
Section 10.05
,
Section 9.03(f)
,
Section 9.03(g)
,
Section 9.04
,
Section 9.05
,
Section 10.04(b)
,
Section 10.07
and
Section 10.09
.
Section 10.06
Specific
Performance
. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed by the Company in accordance with the terms hereof and that Parent and Merger Sub shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement by the Company or to enforce specifically the performance of the terms and provisions hereof by the Company in any state or federal court sitting in the Borough of Manhattan of the City of New
York, in addition to any other remedy to which they are entitled at law or in equity. The parties acknowledge that the Company shall not be entitled to an injunction or injunctions to prevent breaches of this Agreement by Parent or Merger Sub or any
remedy to enforce specifically the terms and provisions of this Agreement and that the Companys sole and exclusive remedies with respect to any such breach shall be the remedies set forth in
Section 9.02
and
Section 9.03
.
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Section 10.07
Governing Law
. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New York (other than those provisions set forth in this Agreement that are required to be governed by the DGCL). All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or
federal court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of
motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the Transactions may not be enforced in or by any of the
above-named
courts.
Section 10.08
Counterparts
. This Agreement may be executed and delivered (including by
facsimile transmission or pdf) in two or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same
agreement.
Section 10.09
Waiver of Jury Trial
. Each of the parties hereto hereby
irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Transactions. Each
of the parties hereto (a) certifies that no Representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other parties hereto have been induced to enter into this Agreement and the Transactions, as applicable, by, among other things, the mutual waivers and certifications in this
Section 10.09
.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be
executed as of the date first written above by their respective officers thereunto duly authorized.
|
|
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SKIPPER LIMITED
|
|
|
By
|
|
/s/ Ji Zhen
|
Name:
|
|
Ji Zhen
|
Title:
|
|
Authorised Signatory
|
|
SKIPPER ACQUISITION CORPORATION
|
|
|
By
|
|
/s/ Ji Zhen
|
Name:
|
|
Ji Zhen
|
Title:
|
|
Authorised Signatory
|
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ASIAINFO-LINKAGE, INC.
|
|
|
By
|
|
/s/ Davin Mackenzie
|
Name:
|
|
Davin Mackenzie
|
Title:
|
|
Director
|
Annex B
LIMITED GUARANTEE
LIMITED GUARANTEE
dated as of May 12, 2013 (this
Limited Guarantee
), by Power Joy (Cayman) Limited (the
Guarantor
), in favor of AsiaInfo-Linkage, Inc., a
Delaware corporation (the
Guaranteed Party
).
Section 1.01
. Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Guaranteed Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Guaranteed Party, the
Guarantor, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party, as a primary obligor and not merely as a surety, the due and punctual performance and discharge of 37.393% (the
Percentage
) of all
of the payment obligations of Parent and/or Merger Sub pursuant to Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
);
provided
that, notwithstanding anything to the
contrary contained in this Limited Guarantee, in no event shall the Guarantors aggregate liability under this Limited Guarantee exceed 37.393% of the Obligations less any amount actually paid by Parent and/or Merger Sub to the Guaranteed Party
in respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Guaranteed Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied Obligations, payment of the Guarantors
Percentage of such unsatisfied Obligations by the Guarantor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Guarantor) shall constitute satisfaction in full of the Guarantors obligation with respect thereto. The
Guarantor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Limited Guarantee other than as expressly set forth herein, and the parties hereto hereby acknowledge and agree that this
Limited Guarantee may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Limited Guarantee, the parties set forth on
Annex A
(each an
Other
Guarantor
) are also entering into limited guarantees or similar agreements with the Guaranteed Party substantially identical to this Limited Guarantee. Capitalized terms used but not defined in this Limited Guarantee shall have the
meanings assigned to such terms in the Merger Agreement (as defined below). All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Guarantor shall make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Limited Guarantee. The Guarantor acknowledges that the Guaranteed Party is entering into the Transactions in reliance upon the execution of this
Limited Guarantee.
(b) Subject to the terms and conditions of this Limited Guarantee, if Parent and/or Merger Sub fails to
pay the Obligations when due, then all of the Guarantors liabilities to the Guaranteed Party hereunder in respect of such Obligations shall become immediately due and payable and the Guaranteed Party may, at the Guaranteed Partys option,
take any and all actions available hereunder or under applicable Law to collect such Obligations from the Guarantor (subject to the Maximum Amount). In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its
sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action is brought against
Parent, Merger Sub or any Other Guarantor. The Guarantor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Guarantor fails or refuses to make any payment to the
Guaranteed Party hereunder when due and payable.
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(c) The parties hereto acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Limited Guarantee were not performed in accordance with its specific terms or were otherwise breached and further agree that the Guaranteed Party shall be entitled to an injunction, specific performance and
other equitable relief against the Guarantor to prevent breaches of this Limited Guarantee and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be
required to provide any bond or other security in connection with any such order or injunction. The Guarantor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that
(x) the Guaranteed Party has an adequate remedy at Law or (y) an award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited
Defense
).
Section 1.02
. Nature of Guarantee.
The Guaranteed Party shall not be obligated to file any
claim relating to the Obligations in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantors obligations
hereunder. In the event that any payment to the Guaranteed Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations
(subject to the Maximum Amount) as if such payment had not been made. This is an unconditional guaranty of payment and not of collectability. The Guarantor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of
any Obligations, other than defenses arising from the bankruptcy or insolvency of Parent and/or Merger Sub and other defenses expressly waived hereby. The Guaranteed Party shall not be required to proceed against Parent, Merger Sub or any Other
Guarantor first before proceeding against the Guarantor.
Section 1.03
. Certain Waivers.
(a) The Guarantor agrees that, subject to Section 1.03(d)(i), the Guaranteed Party may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any
way impairing or affecting the Guarantors obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by
(i) any failure or delay of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent,
Merger Sub and the Guaranteed Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a
discharge or release of Parent and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the
Guarantor or any Person interested in the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Guarantor may have at any time against Parent,
Merger Sub, any other Person interested in the Transactions and/or the Guaranteed Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Guaranteed Party may have of obtaining repayment of
any of the Obligations. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The
Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance,
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default, dishonor and protest, notice of the incurrence of any Obligations and all other notices of any kind (other than notices to Parent and/or Merger Sub pursuant to the Merger Agreement or
notices expressly required to be provided pursuant to this Limited Guarantee), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to require the marshaling
of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or circumstance that might be construed to constitute, an equitable or legal discharge of the
Guarantors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger Agreement or breach by the Guaranteed Party of this Limited Guarantee). The Guarantor
acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.
(b) The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates and use its
reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to
(A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of its
Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Guarantor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein)
and (ii) against the Guarantor and its permitted assignees under this Limited Guarantee pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Guarantor shall be similarly relieved of its obligations under this Limited Guarantee, and (ii) the Guarantor shall have all defenses to the payment of its obligations
under this Limited Guarantee (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud
of the Guaranteed Party hereunder or any breach by the Guaranteed Party of any of the terms or provisions of this Limited Guarantee.
Section 1.04
. No Waiver; Cumulative Rights.
No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 1.05
. Representations and Warranties.
The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a legal entity duly organized and validly existing under the Laws of its jurisdiction of organization;
(b) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and
do not contravene (i) any provision of the Guarantors charter documents, partnership
B-3
agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of
the Guarantor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;
(c) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of the Guarantor to perform its obligations hereunder, (i) all consents, approvals,
authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof
have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or regulatory body is required from the Guarantor in connection with the execution, delivery or performance of this Limited
Guarantee;
(d) assuming due execution and delivery of this Limited Guarantee by the Guaranteed Party, this Limited Guarantee
constitutes a legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other
similar Laws affecting creditors rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and
(e) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited
Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 1.08 hereof.
Section 1.06
. No Assignment.
Neither the Guarantor nor the Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law)
without the prior written consent of the other party hereto;
provided
,
however
, that the Guarantor may assign all or a portion of its obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) to any
Other Guarantor, or (ii) any Affiliate of the Guarantor or one or more private equity funds sponsored or managed by any such Affiliate,
provided
that such assignment shall not relieve the Guarantor of any liability or obligations
hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of this Section 1.06 shall be null and void.
Section 1.07
. Notices.
All notices, requests and other communications to any party hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as
specified therein) as follows:
If to Power Joy (Cayman) Limited, to:
28/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Attention: Eric Chan, Dixon Ng, Zhen Ji
Fax: +852 2104 6977
Email: echan@citiccapital.com, dixonng@citiccapital.com,
zhenji@citiccapital.com
with a copy to:
28/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Legal & Compliance Department
Attention: Yong Kai Wong, Janet Zhou
Fax: +852 2104 6623
Email: yongkaiwong@citiccapital.com, janetzhou@citiccapital.com
B-4
or to such other address or facsimile number as the Guarantor shall have notified the Guaranteed Party in a
written notice delivered to the Guaranteed Party in accordance with the Merger Agreement. All notices to the Guaranteed Party hereunder shall be given as set forth in the Merger Agreement.
Section 1.08
. Continuing Guarantee.
This Limited Guarantee shall remain in full force and effect and shall be binding on the
Guarantor, its successors and assigns until the Obligations have been satisfied in full. Notwithstanding the foregoing, this Limited Guarantee will terminate, and be of no further force or effect, immediately following the earliest of (i) the
Closing, (ii) the termination of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any unpaid Obligations, (iii) 30 days following
the termination of the Merger Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been made in writing prior thereto and (iv) the date that
is twelve (12) months after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Limited Guarantee shall not terminate for so long as a claim made in accordance with clause (iii) above
remains unresolved, and (2) in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this Limited Guarantee limiting the Guarantors liability to the
Maximum Amount are illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any Non-Recourse Party or, other than its rights to recover from the Guarantor with respect to the Obligations, any Guarantor,
Parent and/or Merger Sub with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate
ab initio
and be null and void, (y) if the
Guarantor has previously made any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payment(s) and (z) neither Guarantor nor any Non-Recourse Party shall have any liability to the Guaranteed Party with
respect to the Merger Agreement and the transactions contemplated thereby, the Financing or under this Limited Guarantee.
Section 1.09.
No Recourse
.
(a) The Guaranteed Party acknowledges that the sole assets of Parent and Merger Sub are its rights under the Merger Agreement, the Financing Documents and the Facility Agreement, and that no funds are
expected to be contributed to either Parent or Merger Sub unless and until the Closing occurs. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, by its
acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, agrees and acknowledges that no Person (other than the Guarantor and any permitted assignees thereof) have any obligations under this Limited Guarantee and that,
notwithstanding that the Guarantor may be a partnership or limited liability company, the Guaranteed Party has no right of recovery under this Limited Guarantee, or any claim based on such obligations against, and no personal liability shall attach
under this Limited Guarantee to, the former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of the Guarantor, any Other Guarantor, Parent
or Merger Sub, or any former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of any of the foregoing, excluding however the Guarantor
itself or any permitted assignee thereof under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein (collectively, each of the non-excluded parties, a
Non-Recourse Party
), through
Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse
Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except in each case for its right to recover from the Guarantor and any permitted assignees under and to the extent
provided in this Limited Guarantee and subject to the limitations set forth herein. The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets other than certain contract rights and cash in a
de minimis
amount and
that no additional funds are expected to be contributed to Parent or Merger Sub unless and until the Closing occurs.
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(b) Recourse against the Guarantor and its permitted assignees under and pursuant to the
terms of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its Related Persons against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in
connection with, the Merger Agreement, the Financing Documents, the Facility Agreement or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall affect or be construed to affect any liability of Parent and/or Merger
Sub to the Guaranteed Party under the Merger Agreement or otherwise or give or shall be construed to confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, except as expressly set forth in this
Limited Guarantee.
(c) For the purposes of this Limited Guarantee, pursuit of a claim against a Person by the Guaranteed Party
or any Related Person of the Guaranteed Party shall be deemed to be pursuit of a claim by the Guaranteed Party. A Person shall be deemed to have pursued a claim against another Person if such first Person brings a legal action against such second
Person, adds such second Person to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the purposes of this Limited Guarantee, the term
Related Person
shall mean, with respect to any Person, any controlled Affiliate of such Person, but shall not include Parent,
Merger Sub or any of their controlled Affiliates.
Section 1.10
Release
. By its execution of this Limited
Guarantee, the Guaranteed Party hereby covenants and agrees that (a) neither the Guaranteed Party nor any of its Related Persons, and the Guaranteed Party agrees to the maximum extent permitted by Law, none of its officers, directors,
security holders or representatives, has or shall have any right of recovery against the Guarantor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the
extent that it has or obtains any such right it, to the maximum extent permitted by law, hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Guarantor and
each Non-Recourse Party from and with respect to any claim, known or unknown, now existing or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Limited Guarantee or the
transactions contemplated thereby or hereby, whether by or through attempted piercing of the corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against
any Non-Recourse Party, or otherwise under any theory of law or equity (the
Released Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the Guarantor and its permitted assignees
pursuant to this Limited Guarantee (subject to the limitations set forth herein) and (b) recourse against the Guarantor and its permitted assignees under this Limited Guarantee (subject to the limitations set forth herein) shall be the sole and
exclusive remedy of the Guaranteed Party against the Guarantor or any Non-Recourse Party (other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11
. Amendments and Waivers.
No amendment or waiver of any provision of this Limited Guarantee will be valid and binding unless it is in writing and signed, in the case of an
amendment, by the Guarantor and the Guaranteed Party, or in the case of waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation of, or default under, this Limited Guarantee, whether
intentional or not, will be deemed to extend to any prior or subsequent breach, violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
Section 1.12
. Entire Agreement.
This Limited Guarantee constitutes the entire agreement with respect to the subject matter
hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Parent, Merger Sub and the Guarantor or any of their respective Affiliates on the one hand, and
the Guaranteed Party or any of its Affiliates on the other hand.
Section 1.13
. Governing Law; Submission to
Jurisdiction.
This Limited Guarantee shall be governed by and construed in accordance with the Laws of the State of New York, excluding (to the greatest extent a New York
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court would permit) any rule of Law that would cause the application of the Laws of any jurisdiction other than the State of New York. All Actions arising out of or relating to this Limited
Guarantee shall be heard and determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (i) submit to the exclusive jurisdiction of any state or federal
court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Limited Guarantee brought by any party hereto, and (ii) irrevocably waive, and agree not to assert by way of
motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Limited Guarantee may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by
applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Limited Guarantee. Each of the parties hereto (i) certifies that no Representative of
any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter
into this Limited Guarantee, as applicable, by, among other things, the mutual waivers and certifications in this Section 1.14.
Section 1.15
. No Third Party Beneficiaries.
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and
covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Limited Guarantee and the Merger Agreement, and this Limited Guarantee is not intended to, and does not, confer
upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
Section 1.16
. Counterparts.
This Limited Guarantee may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format,
and each counterpart shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Limited Guarantee shall become effective when each party hereto shall have received a counterpart hereof
signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Limited Guarantee shall have no effect and no party shall have any right or obligations hereunder
(whether by virtue of any other oral or written agreement or other communication).
Section 1.17
. Severability.
If
any term or other provision of this Limited Guarantee is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Limited Guarantee shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party;
provided
,
however
, that this Limited Guarantee may not be enforced against any
Guarantor without giving effect to the Maximum Amount or the provisions set forth in Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert,
that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable. Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Limited Guarantee so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18
. Headings.
Headings are used for reference purposes only and do not affect the meaning or
interpretation of this Limited Guarantee.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
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POWER JOY (CAYMAN) LIMITED
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By:
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/s/ Ji Zhen
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Name:
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Ji Zhen
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Title:
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Authorised Signatory
|
Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
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By:
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/s/ Davin Mackenzie
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Name:
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Davin Mackenzie
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Title:
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Director
|
[Signature Page to Limited Guarantee]
Annex A
Other Guarantors
CITIC Capital MB Investment Limited
CPEChina Fund, L.P.
Ellington Investments Pte. Ltd.
CBC TMT III Limited
InnoValue Capital Ltd.
Annex C
LIMITED GUARANTEE
LIMITED GUARANTEE
dated as of May 12, 2013 (this
Limited Guarantee
), by CITIC Capital MB Investment Limited (the
Guarantor
), in favor of AsiaInfo-Linkage,
Inc., a Delaware corporation (the
Guaranteed Party
).
Section 1.01
. Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Guaranteed Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Guaranteed Party, the
Guarantor, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party, as a primary obligor and not merely as a surety, the due and punctual performance and discharge of 17.490% (the
Percentage
) of all
of the payment obligations of Parent and/or Merger Sub pursuant to Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
);
provided
that, notwithstanding anything to the
contrary contained in this Limited Guarantee, in no event shall the Guarantors aggregate liability under this Limited Guarantee exceed 17.490% of the Obligations less any amount actually paid by Parent and/or Merger Sub to the Guaranteed Party
in respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Guaranteed Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied Obligations, payment of the Guarantors
Percentage of such unsatisfied Obligations by the Guarantor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Guarantor) shall constitute satisfaction in full of the Guarantors obligation with respect thereto. The
Guarantor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Limited Guarantee other than as expressly set forth herein, and the parties hereto hereby acknowledge and agree that this
Limited Guarantee may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Limited Guarantee, the parties set forth on
Annex A
(each an
Other
Guarantor
) are also entering into limited guarantees or similar agreements with the Guaranteed Party substantially identical to this Limited Guarantee. Capitalized terms used but not defined in this Limited Guarantee shall have the
meanings assigned to such terms in the Merger Agreement (as defined below). All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Guarantor shall make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Limited Guarantee. The Guarantor acknowledges that the Guaranteed Party is entering into the Transactions in reliance upon the execution of this
Limited Guarantee.
(b) Subject to the terms and conditions of this Limited Guarantee, if Parent and/or Merger Sub fails to
pay the Obligations when due, then all of the Guarantors liabilities to the Guaranteed Party hereunder in respect of such Obligations shall become immediately due and payable and the Guaranteed Party may, at the Guaranteed Partys option,
take any and all actions available hereunder or under applicable Law to collect such Obligations from the Guarantor (subject to the Maximum Amount). In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its
sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action is brought against
Parent, Merger Sub or any Other Guarantor. The Guarantor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Guarantor fails or refuses to make any payment to the
Guaranteed Party hereunder when due and payable.
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(c) The parties hereto acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Limited Guarantee were not performed in accordance with its specific terms or were otherwise breached and further agree that the Guaranteed Party shall be entitled to an injunction, specific performance and
other equitable relief against the Guarantor to prevent breaches of this Limited Guarantee and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be
required to provide any bond or other security in connection with any such order or injunction. The Guarantor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that
(x) the Guaranteed Party has an adequate remedy at Law or (y) an award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited
Defense
).
Section 1.02
. Nature of Guarantee.
The Guaranteed Party shall not be obligated to file any
claim relating to the Obligations in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantors obligations
hereunder. In the event that any payment to the Guaranteed Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations
(subject to the Maximum Amount) as if such payment had not been made. This is an unconditional guaranty of payment and not of collectability. The Guarantor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of
any Obligations, other than defenses arising from the bankruptcy or insolvency of Parent and/or Merger Sub and other defenses expressly waived hereby. The Guaranteed Party shall not be required to proceed against Parent, Merger Sub or any Other
Guarantor first before proceeding against the Guarantor.
Section 1.03
. Certain Waivers.
(a) The Guarantor agrees that, subject to Section 1.03(d)(i), the Guaranteed Party may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any
way impairing or affecting the Guarantors obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by
(i) any failure or delay of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent,
Merger Sub and the Guaranteed Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a
discharge or release of Parent and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the
Guarantor or any Person interested in the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Guarantor may have at any time against Parent,
Merger Sub, any other Person interested in the Transactions and/or the Guaranteed Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Guaranteed Party may have of obtaining repayment of
any of the Obligations. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The
Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance,
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default, dishonor and protest, notice of the incurrence of any Obligations and all other notices of any kind (other than notices to Parent and/or Merger Sub pursuant to the Merger Agreement or
notices expressly required to be provided pursuant to this Limited Guarantee), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to require the marshaling
of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or circumstance that might be construed to constitute, an equitable or legal discharge of the
Guarantors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger Agreement or breach by the Guaranteed Party of this Limited Guarantee). The Guarantor
acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.
(b) The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates and use its
reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to
(A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of its
Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Guarantor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein)
and (ii) against the Guarantor and its permitted assignees under this Limited Guarantee pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Guarantor shall be similarly relieved of its obligations under this Limited Guarantee, and (ii) the Guarantor shall have all defenses to the payment of its obligations
under this Limited Guarantee (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud
of the Guaranteed Party hereunder or any breach by the Guaranteed Party of any of the terms or provisions of this Limited Guarantee.
Section 1.04
. No Waiver; Cumulative Rights.
No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 1.05
. Representations and Warranties.
The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a legal entity duly organized and validly existing under the Laws of its jurisdiction of organization;
(b) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and
do not contravene (i) any provision of the Guarantors charter documents, partnership
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agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of
the Guarantor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;
(c) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of the Guarantor to perform its obligations hereunder, (i) all consents, approvals,
authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof
have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or regulatory body is required from the Guarantor in connection with the execution, delivery or performance of this Limited
Guarantee;
(d) assuming due execution and delivery of this Limited Guarantee by the Guaranteed Party, this Limited Guarantee
constitutes a legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other
similar Laws affecting creditors rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and
(e) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited
Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 1.08 hereof.
Section 1.06
. No Assignment.
Neither the Guarantor nor the Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law)
without the prior written consent of the other party hereto;
provided
,
however
, that the Guarantor may assign all or a portion of its obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) to any
Other Guarantor, or (ii) any Affiliate of the Guarantor or one or more private equity funds sponsored or managed by any such Affiliate,
provided
that such assignment shall not relieve the Guarantor of any liability or obligations
hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of this Section 1.06 shall be null and void.
Section 1.07
. Notices.
All notices, requests and other communications to any party hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as
specified therein) as follows:
If to CITIC Capital MB Investment Limited, to:
28/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Attention: Eric Chan, Dixon Ng, Zhen Ji
Fax: +852 2104 6977
Email: echan@citiccapital.com, dixonng@citiccapital.com,
zhenji@citiccapital.com
with a copy to:
28/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
Legal & Compliance Department
Attention: Yong Kai Wong, Janet Zhou
Fax: +852 2104 6623
Email: yongkaiwong@citiccapital.com, janetzhou@citiccapital.com
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or to such other address or facsimile number as the Guarantor shall have notified the Guaranteed Party in a
written notice delivered to the Guaranteed Party in accordance with the Merger Agreement. All notices to the Guaranteed Party hereunder shall be given as set forth in the Merger Agreement.
Section 1.08
. Continuing Guarantee.
This Limited Guarantee shall remain in full force and effect and shall be binding on the
Guarantor, its successors and assigns until the Obligations have been satisfied in full. Notwithstanding the foregoing, this Limited Guarantee will terminate, and be of no further force or effect, immediately following the earliest of (i) the
Closing, (ii) the termination of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any unpaid Obligations, (iii) 30 days following
the termination of the Merger Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been made in writing prior thereto and (iv) the date that
is twelve (12) months after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Limited Guarantee shall not terminate for so long as a claim made in accordance with clause (iii) above
remains unresolved, and (2) in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this Limited Guarantee limiting the Guarantors liability to the
Maximum Amount are illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any Non-Recourse Party or, other than its rights to recover from the Guarantor with respect to the Obligations, any Guarantor,
Parent and/or Merger Sub with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate
ab initio
and be null and void, (y) if the
Guarantor has previously made any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payment(s) and (z) neither Guarantor nor any Non-Recourse Party shall have any liability to the Guaranteed Party with
respect to the Merger Agreement and the transactions contemplated thereby, the Financing or under this Limited Guarantee.
Section 1.09.
No Recourse
.
(a) The Guaranteed Party acknowledges that the sole assets of Parent and Merger Sub are its rights under the Merger Agreement, the Financing Documents and the Facility Agreement, and that no funds are
expected to be contributed to either Parent or Merger Sub unless and until the Closing occurs. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, by its
acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, agrees and acknowledges that no Person (other than the Guarantor and any permitted assignees thereof) have any obligations under this Limited Guarantee and that,
notwithstanding that the Guarantor may be a partnership or limited liability company, the Guaranteed Party has no right of recovery under this Limited Guarantee, or any claim based on such obligations against, and no personal liability shall attach
under this Limited Guarantee to, the former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of the Guarantor, any Other Guarantor, Parent
or Merger Sub, or any former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of any of the foregoing, excluding however the Guarantor
itself or any permitted assignee thereof under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein (collectively, each of the non-excluded parties, a
Non-Recourse Party
), through
Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse
Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except in each case for its right to recover from the Guarantor and any permitted assignees under and to the extent
provided in this Limited Guarantee and subject to the limitations set forth herein. The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets other than certain contract rights and cash in a
de minimis
amount and
that no additional funds are expected to be contributed to Parent or Merger Sub unless and until the Closing occurs.
(b)
Recourse against the Guarantor and its permitted assignees under and pursuant to the terms of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its Related Persons
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against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, the Financing Documents, the Facility
Agreement or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall affect or be construed to affect any liability of Parent and/or Merger Sub to the Guaranteed Party under the Merger Agreement or otherwise or give
or shall be construed to confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, except as expressly set forth in this Limited Guarantee.
(c) For the purposes of this Limited Guarantee, pursuit of a claim against a Person by the Guaranteed Party or any Related Person of the
Guaranteed Party shall be deemed to be pursuit of a claim by the Guaranteed Party. A Person shall be deemed to have pursued a claim against another Person if such first Person brings a legal action against such second Person, adds such second Person
to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the
purposes of this Limited Guarantee, the term
Related Person
shall mean, with respect to any Person, any controlled Affiliate of such Person, but shall not include Parent, Merger Sub or any of their controlled Affiliates.
Section 1.10
Release
. By its execution of this Limited Guarantee, the Guaranteed Party hereby covenants and
agrees that (a) neither the Guaranteed Party nor any of its Related Persons, and the Guaranteed Party agrees to the maximum extent permitted by Law, none of its officers, directors, security holders or representatives, has or shall have any
right of recovery against the Guarantor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the extent that it has or obtains any such right it, to the maximum extent
permitted by law, hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Guarantor and each Non-Recourse Party from and with respect to any claim, known or
unknown, now existing or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Limited Guarantee or the transactions contemplated thereby or hereby, whether by or through attempted
piercing of the corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against any Non-Recourse Party, or otherwise under any theory of law or equity (the
Released Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the Guarantor and its permitted assignees pursuant to this Limited Guarantee (subject to the limitations set forth herein)
and (b) recourse against the Guarantor and its permitted assignees under this Limited Guarantee (subject to the limitations set forth herein) shall be the sole and exclusive remedy of the Guaranteed Party against the Guarantor or any
Non-Recourse Party (other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11
.
Amendments and Waivers.
No amendment or waiver of any provision of this Limited Guarantee will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Guarantor and the Guaranteed Party, or in the case of
waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation of, or default under, this Limited Guarantee, whether intentional or not, will be deemed to extend to any prior or subsequent breach,
violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
Section 1.12
. Entire Agreement.
This Limited Guarantee constitutes the entire agreement with respect to the subject matter
hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Parent, Merger Sub and the Guarantor or any of their respective Affiliates on the one hand, and
the Guaranteed Party or any of its Affiliates on the other hand.
Section 1.13
. Governing Law; Submission to
Jurisdiction.
This Limited Guarantee shall be governed by and construed in accordance with the Laws of the State of New York, excluding (to the greatest extent a New York court would permit) any rule of Law that would cause the application of
the Laws of any jurisdiction other than the State of New York. All Actions arising out of or relating to this Limited Guarantee shall be heard and
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determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (i) submit to the exclusive jurisdiction
of any state or federal court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Limited Guarantee brought by any party hereto, and (ii) irrevocably waive, and agree not
to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from
attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Limited Guarantee may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Limited Guarantee. Each of the parties hereto (i) certifies that
no Representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Limited Guarantee, as applicable, by, among other things, the mutual waivers and certifications in this Section 1.14.
Section 1.15
. No Third Party Beneficiaries .
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and
covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Limited Guarantee and the Merger Agreement, and this Limited Guarantee is not intended to, and does not, confer
upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
Section 1.16
. Counterparts.
This Limited Guarantee may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format,
and each counterpart shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Limited Guarantee shall become effective when each party hereto shall have received a counterpart hereof
signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Limited Guarantee shall have no effect and no party shall have any right or obligations hereunder
(whether by virtue of any other oral or written agreement or other communication).
Section 1.17
. Severability.
If
any term or other provision of this Limited Guarantee is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Limited Guarantee shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party;
provided
,
however
, that this Limited Guarantee may not be enforced against any
Guarantor without giving effect to the Maximum Amount or the provisions set forth in Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert,
that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable. Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Limited Guarantee so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18
. Headings.
Headings are used for reference purposes only and do not affect the meaning or
interpretation of this Limited Guarantee.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
|
|
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CITIC CAPITAL MB INVESTMENT LIMITED
|
By:
|
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/s/ Ji Zhen
|
Name:
|
|
Ji Zhen
|
Title:
|
|
Authorised Signatory
|
Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
|
By:
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/s/ Davin Mackenzie
|
Name:
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Davin Mackenzie
|
Title:
|
|
Director
|
[Signature Page to Limited Guarantee]
Annex A
Other Guarantors
Power Joy (Cayman) Limited
CPEChina Fund, L.P.
Ellington Investments Pte. Ltd.
CBC TMT III Limited
InnoValue Capital Ltd.
Annex D
LIMITED GUARANTEE
LIMITED GUARANTEE
dated as of May 12, 2013 (this
Limited Guarantee
), by CPEChina Fund, L.P. (the
Guarantor
), in favor of AsiaInfo-Linkage, Inc., a Delaware
corporation (the
Guaranteed Party
).
Section 1.01
. Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Guaranteed Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Guaranteed Party, the
Guarantor, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party, as a primary obligor and not merely as a surety, the due and punctual performance and discharge of 13.205% (the
Percentage
) of all
of the payment obligations of Parent and/or Merger Sub pursuant to Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
);
provided
that, notwithstanding anything to the
contrary contained in this Limited Guarantee, in no event shall the Guarantors aggregate liability under this Limited Guarantee exceed 13.205% of the Obligations less any amount actually paid by Parent and/or Merger Sub to the Guaranteed Party
in respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Guaranteed Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied Obligations, payment of the Guarantors
Percentage of such unsatisfied Obligations by the Guarantor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Guarantor) shall constitute satisfaction in full of the Guarantors obligation with respect thereto. The
Guarantor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Limited Guarantee other than as expressly set forth herein, and the parties hereto hereby acknowledge and agree that this
Limited Guarantee may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Limited Guarantee, the parties set forth on
Annex A
(each an
Other
Guarantor
) are also entering into limited guarantees or similar agreements with the Guaranteed Party substantially identical to this Limited Guarantee. Capitalized terms used but not defined in this Limited Guarantee shall have the
meanings assigned to such terms in the Merger Agreement (as defined below). All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Guarantor shall make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Limited Guarantee. The Guarantor acknowledges that the Guaranteed Party is entering into the Transactions in reliance upon the execution of this
Limited Guarantee.
(b) Subject to the terms and conditions of this Limited Guarantee, if Parent and/or Merger Sub fails to
pay the Obligations when due, then all of the Guarantors liabilities to the Guaranteed Party hereunder in respect of such Obligations shall become immediately due and payable and the Guaranteed Party may, at the Guaranteed Partys option,
take any and all actions available hereunder or under applicable Law to collect such Obligations from the Guarantor (subject to the Maximum Amount). In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its
sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action is brought against
Parent, Merger Sub or any Other Guarantor. The Guarantor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Guarantor fails or refuses to make any payment to the
Guaranteed Party hereunder when due and payable.
(c) The parties hereto acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Limited Guarantee were not performed in accordance with its specific terms or were
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otherwise breached and further agree that the Guaranteed Party shall be entitled to an injunction, specific performance and other equitable relief against the Guarantor to prevent breaches of
this Limited Guarantee and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be required to provide any bond or other security in connection with any
such order or injunction. The Guarantor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that (x) the Guaranteed Party has an adequate remedy at Law or (y) an
award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited Defense
).
Section 1.02
. Nature of Guarantee.
The Guaranteed Party shall not be obligated to file any claim relating to the Obligations
in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantors obligations hereunder. In the event that any
payment to the Guaranteed Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations (subject to the Maximum Amount) as if
such payment had not been made. This is an unconditional guaranty of payment and not of collectability. The Guarantor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of any Obligations, other than defenses
arising from the bankruptcy or insolvency of Parent and/or Merger Sub and other defenses expressly waived hereby. The Guaranteed Party shall not be required to proceed against Parent, Merger Sub or any Other Guarantor first before proceeding against
the Guarantor.
Section 1.03
. Certain Waivers.
(a) The Guarantor agrees that, subject to Section 1.03(d)(i), the Guaranteed Party may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any
way impairing or affecting the Guarantors obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by
(i) any failure or delay of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent,
Merger Sub and the Guaranteed Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a
discharge or release of Parent and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the
Guarantor or any Person interested in the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Guarantor may have at any time against Parent,
Merger Sub, any other Person interested in the Transactions and/or the Guaranteed Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Guaranteed Party may have of obtaining repayment of
any of the Obligations. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The
Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the incurrence of any Obligations
and all other notices of any kind (other than notices to Parent and/or Merger Sub pursuant to the Merger Agreement or notices expressly required to be
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provided pursuant to this Limited Guarantee), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to
require the marshaling of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or circumstance that might be construed to constitute, an equitable or
legal discharge of the Guarantors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger Agreement or breach by the Guaranteed Party of this Limited
Guarantee). The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.
(b) The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates and use its
reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to
(A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of its
Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Guarantor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein)
and (ii) against the Guarantor and its permitted assignees under this Limited Guarantee pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Guarantor shall be similarly relieved of its obligations under this Limited Guarantee, and (ii) the Guarantor shall have all defenses to the payment of its obligations
under this Limited Guarantee (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud
of the Guaranteed Party hereunder or any breach by the Guaranteed Party of any of the terms or provisions of this Limited Guarantee.
Section 1.04
. No Waiver; Cumulative Rights.
No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 1.05
. Representations and Warranties.
The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a legal entity duly organized and validly existing under the Laws of its jurisdiction of organization;
(b) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and
do not contravene (i) any provision of the Guarantors charter documents, partnership agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent or adversely affect
in any material respect the ability of the Guarantor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;
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(c) except as would not reasonably be expected to prevent or adversely affect in any
material respect the ability of the Guarantor to perform its obligations hereunder, (i) all consents, approvals, authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or
regulatory body is required from the Guarantor in connection with the execution, delivery or performance of this Limited Guarantee;
(d) assuming due execution and delivery of this Limited Guarantee by the Guaranteed Party, this Limited Guarantee constitutes a legal, valid and binding obligations of the Guarantor enforceable against
the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors rights generally and (ii) general equitable
principles (whether considered in a proceeding in equity or at Law); and
(e) the Guarantor has the financial capacity to pay
and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in
effect in accordance with Section 1.08 hereof.
Section 1.06
. No Assignment.
Neither the Guarantor nor the
Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law) without the prior written consent of the other party hereto;
provided
,
however
, that the Guarantor may
assign all or a portion of its obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) to any Other Guarantor, or (ii) any Affiliate of the Guarantor or one or more private equity funds sponsored or managed
by any such Affiliate,
provided
that such assignment shall not relieve the Guarantor of any liability or obligations hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of
this Section 1.06 shall be null and void.
Section 1.07
. Notices.
All notices, requests and other
communications to any party hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as specified therein) as follows:
If to CPEChina Fund, L.P., to:
CPEChina Fund, L.P.
c/o CITIC PE Advisors (Hong Kong) Limited
Suite 606, 6/F
One Pacific Place
88 Queensway
Hong Kong
Attention: Jingyang Wu
Facsimile: +86-10-8522- 1872
Email: WuJingyang@citicpe.com
with a copy to:
Akin Gump Strauss Hauer & Feld LLP
Unit 05-07, 36th Floor
Edinburgh Tower, The Landmark
15 Queens Road Central Hong Kong
Attention: Gregory D. Puff
Facsimile: +852-3694-3001
Email: gpuff@akingump.com
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or to such other address or facsimile number as the Guarantor shall have notified the Guaranteed Party in a
written notice delivered to the Guaranteed Party in accordance with the Merger Agreement. All notices to the Guaranteed Party hereunder shall be given as set forth in the Merger Agreement.
Section 1.08
. Continuing Guarantee.
This Limited Guarantee shall remain in full force and effect and shall
be binding on the Guarantor, its successors and assigns until the Obligations have been satisfied in full. Notwithstanding the foregoing, this Limited Guarantee will terminate, and be of no further force or effect, immediately following the earliest
of (i) the Closing, (ii) the termination of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any unpaid Obligations, (iii) 30
days following the termination of the Merger Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been made in writing prior thereto and
(iv) the date that is twelve (12) months after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Limited Guarantee shall not terminate for so long as a claim made in accordance with
clause (iii) above remains unresolved, and (2) in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this Limited Guarantee limiting the
Guarantors liability to the Maximum Amount are illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any
Non-Recourse
Party or, other than its rights to
recover from the Guarantor with respect to the Obligations, any Guarantor, Parent and/or Merger Sub with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee
shall terminate
ab initio
and be null and void, (y) if the Guarantor has previously made any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payment(s) and (z) neither Guarantor nor any
Non-Recourse Party shall have any liability to the Guaranteed Party with respect to the Merger Agreement and the transactions contemplated thereby, the Financing or under this Limited Guarantee.
Section 1.09.
No Recourse
.
(a) The Guaranteed Party acknowledges that the sole assets of Parent and Merger Sub are its rights under the Merger Agreement, the Financing Documents and the Facility Agreement, and that no funds are
expected to be contributed to either Parent or Merger Sub unless and until the Closing occurs. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, by its
acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, agrees and acknowledges that no Person (other than the Guarantor and any permitted assignees thereof) have any obligations under this Limited Guarantee and that,
notwithstanding that the Guarantor may be a partnership or limited liability company, the Guaranteed Party has no right of recovery under this Limited Guarantee, or any claim based on such obligations against, and no personal liability shall attach
under this Limited Guarantee to, the former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of the Guarantor, any Other Guarantor, Parent
or Merger Sub, or any former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of any of the foregoing, excluding however the Guarantor
itself or any permitted assignee thereof under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein (collectively, each of the non-excluded parties, a
Non-Recourse Party
), through
Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse
Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except in each case for its right to recover from the Guarantor and any permitted assignees under and to the extent
provided in this Limited Guarantee and subject to the limitations set forth herein. The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets other than certain contract rights and cash in a
de minimis
amount and
that no additional funds are expected to be contributed to Parent or Merger Sub unless and until the Closing occurs.
(b)
Recourse against the Guarantor and its permitted assignees under and pursuant to the terms of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its Related Persons
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against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, the Financing Documents, the Facility
Agreement or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall affect or be construed to affect any liability of Parent and/or Merger Sub to the Guaranteed Party under the Merger Agreement or otherwise or give
or shall be construed to confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, except as expressly set forth in this Limited Guarantee.
(c) For the purposes of this Limited Guarantee, pursuit of a claim against a Person by the Guaranteed Party or any Related Person of the
Guaranteed Party shall be deemed to be pursuit of a claim by the Guaranteed Party. A Person shall be deemed to have pursued a claim against another Person if such first Person brings a legal action against such second Person, adds such second Person
to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the
purposes of this Limited Guarantee, the term
Related Person
shall mean, with respect to any Person, any controlled Affiliate of such Person, but shall not include Parent, Merger Sub or any of their controlled Affiliates.
Section 1.10
Release
. By its execution of this Limited Guarantee, the Guaranteed Party hereby covenants and
agrees that (a) neither the Guaranteed Party nor any of its Related Persons, and the Guaranteed Party agrees to the maximum extent permitted by Law, none of its officers, directors, security holders or representatives, has or shall have any
right of recovery against the Guarantor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the extent that it has or obtains any such right it, to the maximum extent
permitted by law, hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Guarantor and each
Non-Recourse
Party from
and with respect to any claim, known or unknown, now existing or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Limited Guarantee or the transactions contemplated thereby or
hereby, whether by or through attempted piercing of the corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against any
Non-Recourse
Party, or otherwise under any theory of law or equity (the
Released Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the
Guarantor and its permitted assignees pursuant to this Limited Guarantee (subject to the limitations set forth herein) and (b) recourse against the Guarantor and its permitted assignees under this Limited Guarantee (subject to the limitations
set forth herein) shall be the sole and exclusive remedy of the Guaranteed Party against the Guarantor or any Non-Recourse Party (other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11
. Amendments and Waivers.
No amendment or waiver of any provision of this Limited Guarantee will be valid and
binding unless it is in writing and signed, in the case of an amendment, by the Guarantor and the Guaranteed Party, or in the case of waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation
of, or default under, this Limited Guarantee, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 1.12
. Entire Agreement.
This Limited Guarantee constitutes the entire agreement with respect
to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Parent, Merger Sub and the Guarantor or any of their respective
Affiliates on the one hand, and the Guaranteed Party or any of its Affiliates on the other hand.
Section 1.13
.
Governing Law; Submission to Jurisdiction.
This Limited Guarantee shall be governed by and construed in accordance with the Laws of the State of New York, excluding (to the greatest extent a New York court would permit) any rule of Law that
would cause the application of the Laws of any jurisdiction other than the State of New York. All Actions arising out of or relating to this Limited Guarantee shall be heard and
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determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (i) submit to the exclusive jurisdiction
of any state or federal court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Limited Guarantee brought by any party hereto, and (ii) irrevocably waive, and agree not
to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from
attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Limited Guarantee may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Limited Guarantee. Each of the parties hereto (i) certifies that
no Representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been
induced to enter into this Limited Guarantee, as applicable, by, among other things, the mutual waivers and certifications in this Section 1.14.
Section 1.15
. No Third Party Beneficiaries.
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and
covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Limited Guarantee and the Merger Agreement, and this Limited Guarantee is not intended to, and does not, confer
upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
Section 1.16
. Counterparts.
This Limited Guarantee may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format,
and each counterpart shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Limited Guarantee shall become effective when each party hereto shall have received a counterpart hereof
signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Limited Guarantee shall have no effect and no party shall have any right or obligations hereunder
(whether by virtue of any other oral or written agreement or other communication).
Section 1.17
. Severability.
If
any term or other provision of this Limited Guarantee is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Limited Guarantee shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party;
provided
,
however
, that this Limited Guarantee may not be enforced against any
Guarantor without giving effect to the Maximum Amount or the provisions set forth in Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert,
that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable. Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Limited Guarantee so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18
. Headings.
Headings are used for reference purposes only and do not affect the meaning or
interpretation of this Limited Guarantee.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
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CPECHINA FUND, L.P.
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BY:
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CITIC PE ASSOCIATES, L.P.
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BY:
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CITIC PE FUNDS LIMITED
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By:
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/s/ Ching Nar Cindy Chan
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Name:
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Ching Nar Cindy Chan
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Title:
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Director
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Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
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By:
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/s/ Davin Mackenzie
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Name:
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Davin Mackenzie
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Title:
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Director
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[Signature Page to Limited Guarantee]
Annex A
Other Guarantors
Power Joy (Cayman) Limited
CITIC Capital MB Investment Limited
Ellington Investments Pte. Ltd.
CBC TMT III Limited
InnoValue Capital Ltd.
Annex E
LIMITED GUARANTEE
LIMITED GUARANTEE
dated as of May 12, 2013 (this
Limited Guarantee
), by CBC TMT III Limited (the
Guarantor
), in favor of AsiaInfo-Linkage, Inc., a Delaware
corporation (the
Guaranteed Party
).
Section 1.01
. Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Guaranteed Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Guaranteed Party, the
Guarantor, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party, as a primary obligor and not merely as a surety, the due and punctual performance and discharge of 9.904% (the
Percentage
) of all of
the payment obligations of Parent and/or Merger Sub pursuant to Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
);
provided
that, notwithstanding anything to the contrary
contained in this Limited Guarantee, in no event shall the Guarantors aggregate liability under this Limited Guarantee exceed 9.904% of the Obligations less any amount actually paid by Parent and/or Merger Sub to the Guaranteed Party in
respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Guaranteed Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied Obligations, payment of the Guarantors
Percentage of such unsatisfied Obligations by the Guarantor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Guarantor) shall constitute satisfaction in full of the Guarantors obligation with respect thereto. The
Guarantor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Limited Guarantee other than as expressly set forth herein, and the parties hereto hereby acknowledge and agree that this
Limited Guarantee may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Limited Guarantee, the parties set forth on
Annex A
(each an
Other
Guarantor
) are also entering into limited guarantees or similar agreements with the Guaranteed Party substantially identical to this Limited Guarantee. Capitalized terms used but not defined in this Limited Guarantee shall have the
meanings assigned to such terms in the Merger Agreement (as defined below). All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Guarantor shall make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Limited Guarantee. The Guarantor acknowledges that the Guaranteed Party is entering into the Transactions in reliance upon the execution of this
Limited Guarantee.
(b) Subject to the terms and conditions of this Limited Guarantee, if Parent and/or Merger Sub fails to
pay the Obligations when due, then all of the Guarantors liabilities to the Guaranteed Party hereunder in respect of such Obligations shall become immediately due and payable and the Guaranteed Party may, at the Guaranteed Partys option,
take any and all actions available hereunder or under applicable Law to collect such Obligations from the Guarantor (subject to the Maximum Amount). In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its
sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action is brought against
Parent, Merger Sub or any Other Guarantor. The Guarantor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Guarantor fails or refuses to make any payment to the
Guaranteed Party hereunder when due and payable.
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(c) The parties hereto acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Limited Guarantee were not performed in accordance with its specific terms or were otherwise breached and further agree that the Guaranteed Party shall be entitled to an injunction, specific performance and
other equitable relief against the Guarantor to prevent breaches of this Limited Guarantee and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be
required to provide any bond or other security in connection with any such order or injunction. The Guarantor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that
(x) the Guaranteed Party has an adequate remedy at Law or (y) an award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited
Defense
).
Section 1.02
. Nature of Guarantee.
The Guaranteed Party shall not be obligated to file any
claim relating to the Obligations in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantors obligations
hereunder. In the event that any payment to the Guaranteed Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations
(subject to the Maximum Amount) as if such payment had not been made. This is an unconditional guaranty of payment and not of collectability. The Guarantor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of
any Obligations, other than defenses arising from the bankruptcy or insolvency of Parent and/or Merger Sub and other defenses expressly waived hereby. The Guaranteed Party shall not be required to proceed against Parent, Merger Sub or any Other
Guarantor first before proceeding against the Guarantor.
Section 1.03
. Certain Waivers.
(a) The Guarantor agrees that, subject to Section 1.03(d)(i), the Guaranteed Party may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any
way impairing or affecting the Guarantors obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by
(i) any failure or delay of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent,
Merger Sub and the Guaranteed Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a
discharge or release of Parent and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the
Guarantor or any Person interested in the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Guarantor may have at any time against Parent,
Merger Sub, any other Person interested in the Transactions and/or the Guaranteed Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Guaranteed Party may have of obtaining repayment of
any of the Obligations. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The
Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance,
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default, dishonor and protest, notice of the incurrence of any Obligations and all other notices of any kind (other than notices to Parent and/or Merger Sub pursuant to the Merger Agreement or
notices expressly required to be provided pursuant to this Limited Guarantee), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to require the marshaling
of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or circumstance that might be construed to constitute, an equitable or legal discharge of the
Guarantors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger Agreement or breach by the Guaranteed Party of this Limited Guarantee). The Guarantor
acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.
(b) The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates and use its
reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to
(A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of its
Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Guarantor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein)
and (ii) against the Guarantor and its permitted assignees under this Limited Guarantee pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Guarantor shall be similarly relieved of its obligations under this Limited Guarantee, and (ii) the Guarantor shall have all defenses to the payment of its obligations
under this Limited Guarantee (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud
of the Guaranteed Party hereunder or any breach by the Guaranteed Party of any of the terms or provisions of this Limited Guarantee.
Section 1.04
. No Waiver; Cumulative Rights.
No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 1.05
. Representations and Warranties.
The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a legal entity duly organized and validly existing under the Laws of its jurisdiction of organization;
(b) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and
do not contravene (i) any provision of the Guarantors charter documents, partnership
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agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of
the Guarantor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;
(c) except as would not reasonably be expected to prevent or adversely affect in any material respect the ability of the Guarantor to perform its obligations hereunder, (i) all consents, approvals,
authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof
have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or regulatory body is required from the Guarantor in connection with the execution, delivery or performance of this Limited
Guarantee;
(d) assuming due execution and delivery of this Limited Guarantee by the Guaranteed Party, this Limited Guarantee
constitutes a legal, valid and binding obligations of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other
similar Laws affecting creditors rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at Law); and
(e) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited
Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 1.08 hereof.
Section 1.06
. No Assignment.
Neither the Guarantor nor the Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law)
without the prior written consent of the other party hereto;
provided
,
however
, that the Guarantor may assign all or a portion of its obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) to any
Other Guarantor, or (ii) any Affiliate of the Guarantor or one or more private equity funds sponsored or managed by any such Affiliate,
provided
that such assignment shall not relieve the Guarantor of any liability or obligations
hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of this Section 1.06 shall be null and void.
Section 1.07
. Notices.
All notices, requests and other communications to any party hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as
specified therein) as follows:
If to CBC TMT III Limited, to:
China Broadband Capital Partners, L.P.
Unit 906, Level 9, Cyberport 2
100 Cyberport Road, Hong Kong
Attention: Jian Jiang
Fax: +852 2122 8410
with a copy to:
Peter X. Huang
Skadden, Arps, Slate, Meagher & Flom LLP
30th Floor, China World Office 2
No. 1, Jianguomenwai Avenue
Beijing 100004, Peoples Republic of China
Fax: +86 10 6535 5577
Email: peter.huang@skadden.com
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or to such other address or facsimile number as the Guarantor shall have notified the Guaranteed Party in a
written notice delivered to the Guaranteed Party in accordance with the Merger Agreement. All notices to the Guaranteed Party hereunder shall be given as set forth in the Merger Agreement.
Section 1.08
. Continuing Guarantee.
This Limited Guarantee shall remain in full force and effect and shall
be binding on the Guarantor, its successors and assigns until the Obligations have been satisfied in full. Notwithstanding the foregoing, this Limited Guarantee will terminate, and be of no further force or effect, immediately following the earliest
of (i) the Closing, (ii) the termination of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any unpaid Obligations, (iii) 30
days following the termination of the Merger Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been made in writing prior thereto and
(iv) the date that is twelve (12) months after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Limited Guarantee shall not terminate for so long as a claim made in accordance with
clause (iii) above remains unresolved, and (2) in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this Limited Guarantee limiting the
Guarantors liability to the Maximum Amount are illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any Non-Recourse Party or, other than its rights to recover from the Guarantor with respect to the
Obligations, any Guarantor, Parent and/or Merger Sub with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate
ab initio
and be null and
void, (y) if the Guarantor has previously made any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payment(s) and (z) neither Guarantor nor any Non-Recourse Party shall have any liability to the
Guaranteed Party with respect to the Merger Agreement and the transactions contemplated thereby, the Financing or under this Limited Guarantee.
Section 1.09.
No Recourse
.
(a) The Guaranteed Party acknowledges that
the sole assets of Parent and Merger Sub are its rights under the Merger Agreement, the Financing Documents and the Facility Agreement, and that no funds are expected to be contributed to either Parent or Merger Sub unless and until the Closing
occurs. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants,
agrees and acknowledges that no Person (other than the Guarantor and any permitted assignees thereof) have any obligations under this Limited Guarantee and that, notwithstanding that the Guarantor may be a partnership or limited liability company,
the Guaranteed Party has no right of recovery under this Limited Guarantee, or any claim based on such obligations against, and no personal liability shall attach under this Limited Guarantee to, the former, current or future equity holders,
controlling Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of the Guarantor, any Other Guarantor, Parent or Merger Sub, or any former, current or future equity holders, controlling
Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of any of the foregoing, excluding however the Guarantor itself or any permitted assignee thereof under and to the extent provided in this
Limited Guarantee and subject to the limitations set forth herein (collectively, each of the non-excluded parties, a
Non-Recourse Party
), through Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of
the corporate (or limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding,
by virtue of any applicable Law, or otherwise, except in each case for its right to recover from the Guarantor and any permitted assignees under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein.
The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets other than certain contract rights and cash in a
de minimis
amount and that no additional funds are expected to be contributed to Parent or Merger Sub
unless and until the Closing occurs.
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(b) Recourse against the Guarantor and its permitted assignees under and pursuant to the
terms of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its Related Persons against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in
connection with, the Merger Agreement, the Financing Documents, the Facility Agreement or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall affect or be construed to affect any liability of Parent and/or Merger
Sub to the Guaranteed Party under the Merger Agreement or otherwise or give or shall be construed to confer or give to any Person other than the Guaranteed Party any rights or remedies against any Person, except as expressly set forth in this
Limited Guarantee.
(c) For the purposes of this Limited Guarantee, pursuit of a claim against a Person by the Guaranteed
Party or any Related Person of the Guaranteed Party shall be deemed to be pursuit of a claim by the Guaranteed Party. A Person shall be deemed to have pursued a claim against another Person if such first Person brings a legal action against such
second Person, adds such second Person to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the purposes of this Limited Guarantee, the term
Related Person
shall mean, with respect to any Person, any controlled Affiliate of such Person, but shall not include Parent,
Merger Sub or any of their controlled Affiliates.
Section 1.10
Release
. By its execution of this
Limited Guarantee, the Guaranteed Party hereby covenants and agrees that (a) neither the Guaranteed Party nor any of its Related Persons, and the Guaranteed Party agrees to the maximum extent permitted by Law, none of its officers, directors,
security holders or representatives, has or shall have any right of recovery against the Guarantor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the extent that
it has or obtains any such right it, to the maximum extent permitted by law, hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Guarantor and each
Non-Recourse Party from and with respect to any claim, known or unknown, now existing or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Limited Guarantee or the transactions
contemplated thereby or hereby, whether by or through attempted piercing of the corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against any
Non-Recourse Party, or otherwise under any theory of law or equity (the
Released Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the Guarantor and its permitted assignees pursuant
to this Limited Guarantee (subject to the limitations set forth herein) and (b) recourse against the Guarantor and its permitted assignees under this Limited Guarantee (subject to the limitations set forth herein) shall be the sole and
exclusive remedy of the Guaranteed Party against the Guarantor or any Non-Recourse Party (other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11
. Amendments and Waivers.
No amendment or waiver of any provision of this Limited Guarantee will be valid and binding unless it is in writing and signed, in the case of an
amendment, by the Guarantor and the Guaranteed Party, or in the case of waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation of, or default under, this Limited Guarantee, whether
intentional or not, will be deemed to extend to any prior or subsequent breach, violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
Section 1.12
. Entire Agreement.
This Limited Guarantee constitutes the entire agreement with respect to the subject matter
hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Parent, Merger Sub and the Guarantor or any of their respective Affiliates on the one hand, and
the Guaranteed Party or any of its Affiliates on the other hand.
Section 1.13
. Governing Law; Submission to
Jurisdiction.
This Limited Guarantee shall be governed by and construed in accordance with the Laws of the State of New York, excluding (to the greatest extent a New York
E-6
court would permit) any rule of Law that would cause the application of the Laws of any jurisdiction other than the State of New York. All Actions arising out of or relating to this Limited
Guarantee shall be heard and determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (i) submit to the exclusive jurisdiction of any state or federal
court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Limited Guarantee brought by any party hereto, and (ii) irrevocably waive, and agree not to assert by way of
motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Limited Guarantee may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by
applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Limited Guarantee. Each of the parties hereto (i) certifies that no Representative of
any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter
into this Limited Guarantee, as applicable, by, among other things, the mutual waivers and certifications in this Section 1.14.
Section 1.15
. No Third Party Beneficiaries.
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and
covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Limited Guarantee and the Merger Agreement, and this Limited Guarantee is not intended to, and does not, confer
upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.
Section 1.16
. Counterparts.
This Limited Guarantee may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format,
and each counterpart shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Limited Guarantee shall become effective when each party hereto shall have received a counterpart hereof
signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Limited Guarantee shall have no effect and no party shall have any right or obligations hereunder
(whether by virtue of any other oral or written agreement or other communication).
Section 1.17
. Severability.
If
any term or other provision of this Limited Guarantee is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Limited Guarantee shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party;
provided
,
however
, that this Limited Guarantee may not be enforced against any
Guarantor without giving effect to the Maximum Amount or the provisions set forth in Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert,
that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable. Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Limited Guarantee so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18
. Headings.
Headings are used for reference purposes only and do not affect the meaning or
interpretation of this Limited Guarantee.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
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CBC TMT III LIMITED
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By:
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/s/ Edward Tian
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Name:
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Edward Tian
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Title:
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Director
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Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
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By:
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/s/ Davin Mackenzie
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Name:
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Davin Mackenzie
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Title:
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Director
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[Signature Page to Limited Guarantee]
Annex A
Other Guarantors
Power Joy (Cayman) Limited
CITIC Capital MB Investment Limited
CPEChina Fund, L.P.
Ellington Investments Pte. Ltd.
InnoValue Capital Ltd.
Annex F
LIMITED GUARANTEE
LIMITED GUARANTEE
dated as of May 12, 2013 (this
Limited Guarantee
), by InnoValue Capital Ltd. (the
Guarantor
), in favor of AsiaInfo-Linkage, Inc., a Delaware
corporation (the
Guaranteed Party
).
Section 1.01.
Limited Guarantee.
(a) To induce the Guaranteed Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Guaranteed Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Guaranteed Party, the
Guarantor, hereby absolutely, unconditionally and irrevocably guarantees to the Guaranteed Party, as a primary obligor and not merely as a surety, the due and punctual performance and discharge of 11.004% (the
Percentage
) of all
of the payment obligations of Parent and/or Merger Sub pursuant to Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
);
provided
that, notwithstanding anything to the
contrary contained in this Limited Guarantee, in no event shall the Guarantors aggregate liability under this Limited Guarantee exceed 11.004% of the Obligations less any amount actually paid by Parent and/or Merger Sub to the Guaranteed Party
in respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Guaranteed Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied Obligations, payment of the Guarantors
Percentage of such unsatisfied Obligations by the Guarantor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Guarantor) shall constitute satisfaction in full of the Guarantors obligation with respect thereto. The
Guarantor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Limited Guarantee other than as expressly set forth herein, and the parties hereto hereby acknowledge and agree that this
Limited Guarantee may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Limited Guarantee, the parties set forth on
Annex A
(each an
Other
Guarantor
) are also entering into limited guarantees or similar agreements with the Guaranteed Party substantially identical to this Limited Guarantee. Capitalized terms used but not defined in this Limited Guarantee shall have the
meanings assigned to such terms in the Merger Agreement (as defined below). All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Guarantor shall make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Limited Guarantee. The Guarantor acknowledges that the Guaranteed Party is entering into the Transactions in reliance upon the execution of this
Limited Guarantee.
(b) Subject to the terms and conditions of this Limited Guarantee, if Parent and/or Merger Sub fails to
pay the Obligations when due, then all of the Guarantors liabilities to the Guaranteed Party hereunder in respect of such Obligations shall become immediately due and payable and the Guaranteed Party may, at the Guaranteed Partys option,
take any and all actions available hereunder or under applicable Law to collect such Obligations from the Guarantor (subject to the Maximum Amount). In furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its
sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Guarantors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action is brought against
Parent, Merger Sub or any Other Guarantor. The Guarantor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Guaranteed Party in
connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Guarantor fails or refuses to make any payment to the
Guaranteed Party hereunder when due and payable.
(c) The parties hereto acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Limited Guarantee were not performed in accordance with its specific terms or were
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otherwise breached and further agree that the Guaranteed Party shall be entitled to an injunction, specific performance and other equitable relief against the Guarantor to prevent breaches of
this Limited Guarantee and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be required to provide any bond or other security in connection with any
such order or injunction. The Guarantor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that (x) the Guaranteed Party has an adequate remedy at Law or (y) an
award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited Defense
).
Section 1.02.
Nature of Guarantee
. The Guaranteed Party shall not be obligated to file any claim relating to the Obligations
in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantors obligations hereunder. In the event that any
payment to the Guaranteed Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations (subject to the Maximum Amount) as if
such payment had not been made. This is an unconditional guaranty of payment and not of collectability. The Guarantor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of any Obligations, other than defenses
arising from the bankruptcy or insolvency of Parent and/or Merger Sub and other defenses expressly waived hereby. The Guaranteed Party shall not be required to proceed against Parent, Merger Sub or any Other Guarantor first before proceeding against
the Guarantor.
Section 1.03.
Certain Waivers.
(a) The Guarantor agrees that, subject to Section 1.03(d)(i), the Guaranteed Party may at any time and from time to time, without
notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Guaranteed Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any
way impairing or affecting the Guarantors obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by
(i) any failure or delay of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or
manner of payment of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent,
Merger Sub and the Guaranteed Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a
discharge or release of Parent and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the
Guarantor or any Person interested in the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Guarantor may have at any time against Parent,
Merger Sub, any other Person interested in the Transactions and/or the Guaranteed Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Guaranteed Party may have of obtaining repayment of
any of the Obligations. To the fullest extent permitted by Law, the Guarantor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The
Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the incurrence of any Obligations
and all other notices of any kind (other than notices to Parent and/or Merger Sub pursuant to the Merger Agreement or notices expressly required to be
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provided pursuant to this Limited Guarantee), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to
require the marshaling of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or circumstance that might be construed to constitute, an equitable or
legal discharge of the Guarantors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger Agreement or breach by the Guaranteed Party of this Limited
Guarantee). The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.
(b) The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its controlled Affiliates and use its
reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to
(A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Guaranteed Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of its
Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Guarantor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein)
and (ii) against the Guarantor and its permitted assignees under this Limited Guarantee pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Limited Guarantee, the Guaranteed Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Guarantor shall be similarly relieved of its obligations under this Limited Guarantee, and (ii) the Guarantor shall have all defenses to the payment of its obligations
under this Limited Guarantee (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud
of the Guaranteed Party hereunder or any breach by the Guaranteed Party of any of the terms or provisions of this Limited Guarantee.
Section 1.04.
No Waiver; Cumulative Rights.
No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby
granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time.
Section 1.05.
Representations and Warranties
. The Guarantor hereby represents and warrants to the Guaranteed Party that:
(a) the Guarantor is a legal entity duly organized and validly existing under the Laws of its jurisdiction of organization;
(b) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and
do not contravene (i) any provision of the Guarantors charter documents, partnership agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent or adversely affect
in any material respect the ability of the Guarantor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Guarantor or its assets;
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(c) except as would not reasonably be expected to prevent or adversely affect in any
material respect the ability of the Guarantor to perform its obligations hereunder, (i) all consents, approvals, authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or
regulatory body is required from the Guarantor in connection with the execution, delivery or performance of this Limited Guarantee;
(d) assuming due execution and delivery of this Limited Guarantee by the Guaranteed Party, this Limited Guarantee constitutes a legal, valid and binding obligations of the Guarantor enforceable against
the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors rights generally and (ii) general equitable
principles (whether considered in a proceeding in equity or at Law); and
(e) the Guarantor has the financial capacity to pay
and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in
effect in accordance with Section 1.08 hereof.
Section 1.06.
No Assignment
. Neither the Guarantor nor the
Guaranteed Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law) without the prior written consent of the other party hereto;
provided
,
however
, that the Guarantor may
assign all or a portion of its obligations hereunder, without the prior written consent of the Guaranteed Party, to (i) to any Other Guarantor, or (ii) any Affiliate of the Guarantor or one or more private equity funds sponsored or managed
by any such Affiliate,
provided
that such assignment shall not relieve the Guarantor of any liability or obligations hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of
this Section 1.06 shall be null and void.
Section 1.07.
Notices
. All notices, requests and other
communications to any party hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as specified therein) as follows:
If to InnoValue Capital Ltd., to:
InnoValue Capital Ltd.
No. 113-3, Sec. 1 An-Ho Road, Taipei 106, Taiwan
Attention: Pei-Chen Tsai
Fax: +886 2 2700 6932
Email: meg@flow.org.tw
with a copy to:
Baker & McKenzie
15th Floor, 168 Tun Hwa North Road
Taipei 10548, Taiwan
Fax: +886 2 2712 8292
Attention: Alex Chiang / Mark Tu
or to such other address or facsimile number as the Guarantor
shall have notified the Guaranteed Party in a written notice delivered to the Guaranteed Party in accordance with the Merger Agreement. All notices to the Guaranteed Party hereunder shall be given as set forth in the Merger Agreement.
Section 1.08.
Continuing Guarantee
. This Limited Guarantee shall remain in full force and effect and shall
be binding on the Guarantor, its successors and assigns until the Obligations have been satisfied in full.
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Notwithstanding the foregoing, this Limited Guarantee will terminate, and be of no further force or effect, immediately following the earliest of (i) the Closing, (ii) the termination
of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any unpaid Obligations, (iii) 30 days following the termination of the Merger
Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been made in writing prior thereto and (iv) the date that is twelve (12) months
after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Limited Guarantee shall not terminate for so long as a claim made in accordance with clause (iii) above remains unresolved, and
(2) in the event that the Guaranteed Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this Limited Guarantee limiting the Guarantors liability to the Maximum Amount are
illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any Non-Recourse Party or, other than its rights to recover from the Guarantor with respect to the Obligations, any Guarantor, Parent and/or Merger Sub
with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Guarantor under this Limited Guarantee shall terminate
ab initio
and be null and void, (y) if the Guarantor has previously made
any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payment(s) and (z) neither Guarantor nor any Non-Recourse Party shall have any liability to the Guaranteed Party with respect to the Merger Agreement and
the transactions contemplated thereby, the Financing or under this Limited Guarantee.
Section 1.09.
No Recourse
.
(a) The Guaranteed Party acknowledges that the sole assets of Parent and Merger Sub are its rights under the Merger Agreement,
the Financing Documents and the Facility Agreement, and that no funds are expected to be contributed to either Parent or Merger Sub unless and until the Closing occurs. Notwithstanding anything that may be expressed or implied in this Limited
Guarantee or any document or instrument delivered in connection herewith, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party covenants, agrees and acknowledges that no Person (other than the Guarantor and any permitted
assignees thereof) have any obligations under this Limited Guarantee and that, notwithstanding that the Guarantor may be a partnership or limited liability company, the Guaranteed Party has no right of recovery under this Limited Guarantee, or any
claim based on such obligations against, and no personal liability shall attach under this Limited Guarantee to, the former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners,
managers, members, or Affiliates of the Guarantor, any Other Guarantor, Parent or Merger Sub, or any former, current or future equity holders, controlling Persons, directors, officers, employees, agents, general or limited partners, managers,
members, or Affiliates of any of the foregoing, excluding however the Guarantor itself or any permitted assignee thereof under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein (collectively, each
of the non-excluded parties, a
Non-Recourse Party
), through Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or limited partnership or limited liability company) veil, by or through
a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except in each case for its right to
recover from the Guarantor and any permitted assignees under and to the extent provided in this Limited Guarantee and subject to the limitations set forth herein. The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets
other than certain contract rights and cash in a
de minimis
amount and that no additional funds are expected to be contributed to Parent or Merger Sub unless and until the Closing occurs.
(b) Recourse against the Guarantor and its permitted assignees under and pursuant to the terms of this Limited Guarantee shall be the
sole and exclusive remedy of the Guaranteed Party and all of its Related Persons against the Guarantor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, the
Financing Documents, the Facility Agreement or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall affect or be construed to affect any
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liability of Parent and/or Merger Sub to the Guaranteed Party under the Merger Agreement or otherwise or give or shall be construed to confer or give to any Person other than the Guaranteed Party
any rights or remedies against any Person, except as expressly set forth in this Limited Guarantee.
(c) For the purposes of
this Limited Guarantee, pursuit of a claim against a Person by the Guaranteed Party or any Related Person of the Guaranteed Party shall be deemed to be pursuit of a claim by the Guaranteed Party. A Person shall be deemed to have pursued a claim
against another Person if such first Person brings a legal action against such second Person, adds such second Person to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the purposes of this Limited Guarantee, the term
Related Person
shall mean, with respect to any Person, any
controlled Affiliate of such Person, but shall not include Parent, Merger Sub or any of their controlled Affiliates.
Section 1.10
Release
. By its execution of this Limited Guarantee, the Guaranteed Party hereby covenants and agrees that
(a) neither the Guaranteed Party nor any of its Related Persons, and the Guaranteed Party agrees to the maximum extent permitted by Law, none of its officers, directors, security holders or representatives, has or shall have any right of
recovery against the Guarantor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the extent that it has or obtains any such right it, to the maximum extent permitted
by law, hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Guarantor and each Non-Recourse Party from and with respect to any claim, known or unknown, now
existing or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Limited Guarantee or the transactions contemplated thereby or hereby, whether by or through attempted piercing of
the corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against any Non-Recourse Party, or otherwise under any theory of law or equity (the
Released Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the Guarantor and its permitted assignees pursuant to this Limited Guarantee (subject to the limitations set forth herein)
and (b) recourse against the Guarantor and its permitted assignees under this Limited Guarantee (subject to the limitations set forth herein) shall be the sole and exclusive remedy of the Guaranteed Party against the Guarantor or any
Non-Recourse Party (other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11.
Amendments and Waivers
. No amendment or waiver of any provision of this Limited Guarantee will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Guarantor and the Guaranteed Party, or in the case of
waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation of, or default under, this Limited Guarantee, whether intentional or not, will be deemed to extend to any prior or subsequent breach,
violation or default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
Section 1.12.
Entire Agreement
. This Limited Guarantee constitutes the entire agreement with respect to the subject matter
hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Parent, Merger Sub and the Guarantor or any of their respective Affiliates on the one hand, and
the Guaranteed Party or any of its Affiliates on the other hand.
Section 1.13.
Governing Law; Submission to
Jurisdiction
. This Limited Guarantee shall be governed by and construed in accordance with the Laws of the State of New York, excluding (to the greatest extent a New York court would permit) any rule of Law that would cause the application of
the Laws of any jurisdiction other than the State of New York. All Actions arising out of or relating to this Limited Guarantee shall be heard and determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of
the City of New York. The parties hereto hereby (i) submit to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this
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Limited Guarantee brought by any party hereto, and (ii) irrevocably waive, and agree not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the
above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the
Action is improper, or that this Limited Guarantee may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect
to any litigation directly or indirectly arising out of, under or in connection with this Limited Guarantee. Each of the parties hereto (i) certifies that no Representative of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Limited Guarantee, as applicable, by, among other things,
the mutual waivers and certifications in this Section 1.14.
Section 1.15.
No Third Party Beneficiaries
.
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with
and subject to the terms of this Limited Guarantee and the Merger Agreement, and this Limited Guarantee is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to
rely upon the representations and warranties set forth herein.
Section 1.16.
Counterparts
. This Limited Guarantee
may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format, and each counterpart shall be an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Limited Guarantee shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart hereof signed
by the other party hereto, this Limited Guarantee shall have no effect and no party shall have any right or obligations hereunder (whether by virtue of any other oral or written agreement or other communication).
Section 1.17.
Severability
. If any term or other provision of this Limited Guarantee is invalid, illegal or incapable of
being enforced by any rule of Law, or public policy, all other conditions and provisions of this Limited Guarantee shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party;
provided
,
however
, that this Limited Guarantee may not be enforced against any Guarantor without giving effect to the Maximum Amount or the provisions set forth in
Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert, that this Limited Guarantee or any part hereof is invalid, illegal or unenforceable.
Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Limited Guarantee so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18.
Headings
. Headings are used for reference purposes only and do not affect the meaning or interpretation of this Limited Guarantee.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
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INNOVALUE CAPITAL LTD.
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By:
|
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/s/ Liu, Tzu-Lien
|
Name:
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Liu, Tzu-Lien
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Title:
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Director
|
Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
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By:
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/s/ Davin Mackenzie
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Name:
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Davin Mackenzie
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Title:
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Director
|
[Signature Page to Limited Guarantee]
Annex A
Other Guarantors
Power Joy (Cayman) Limited
CITIC Capital MB Investment Limited
CPEChina Fund, L.P.
Ellington Investments Pte. Ltd.
CBC TMT III Limited
Annex G
PAYMENT AGREEMENT
PAYMENT AGREEMENT
dated as of May 12, 2013 (this
Payment Agreement
), by Ellington Investments Pte. Ltd. (the
Obligor
), in favor of AsiaInfo-Linkage, Inc., a
Delaware corporation (the
Obligee Party
).
Section 1.01
. Payment Agreement.
(a) To induce the Obligee Party to enter into that certain Agreement and Plan of Merger dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time in accordance with its terms, the
Merger Agreement
), by and among the Obligee Party, Skipper Limited, a Cayman Islands exempted company with limited liability
(
Parent
) and Skipper Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (
Merger Sub
), pursuant to which Merger Sub will merge with and into the Obligee Party, the Obligor
hereby absolutely, unconditionally and irrevocably covenants and agrees with the Obligee Party to pay an amount equivalent to 11.004% (the
Percentage
) of all of the payment obligations of Parent and/or Merger Sub pursuant to
Sections 7.17(c), 9.03(c), 9.03(d) and 9.03(e) of the Merger Agreement (collectively, the
Obligations
) in the event that Parent and Merger Sub fail to fulfill their payment obligations of such amount under the Merger Agreement;
provided
that, notwithstanding anything to the contrary contained in this Payment Agreement, in no event shall the Obligors aggregate liability under this Payment Agreement exceed 11.004% of the Obligations less any amount actually paid
by Parent or Merger Sub to the Obligee Party in respect of the Obligations multiplied by the Percentage (the
Maximum Amount
). The Obligee Party acknowledges that in the event that Parent and/or Merger Sub has any unsatisfied
Obligations, payment of the Obligors Percentage of such unsatisfied Obligations by the Obligor (or by any other Person, including Parent and/or Merger Sub, on behalf of the Obligor) whether pursuant to this Payment Agreement or otherwise shall
constitute satisfaction in full of the Obligors obligation with respect thereto. The Obligor shall not have any obligations or liability to any Person relating to, arising out of or in connection with this Payment Agreement other than as
expressly set forth herein, and the parties hereto hereby acknowledge and agree that this Payment Agreement may not be enforced without giving effect to the Maximum Amount and Sections 1.08 and 1.09. Concurrently with the delivery of this Payment
Agreement, the parties set forth on
Annex A
(each an
Other Obligor
) are also entering into payment agreements or similar agreements substantially identical to this Payment Agreement with the Obligee Party. Capitalized terms
used but not defined in this Payment Agreement shall have the meanings assigned to such terms in the Merger Agreement. All payments hereunder shall be made in lawful money of the U.S., in immediately available funds. The Obligor shall make all
payments hereunder free and clear of any deduction, offset, defense, claim or counterclaim of any kind, except as expressly provided in this Payment Agreement. The Obligor acknowledges that the Obligee Party is entering into the Transactions in
reliance upon the execution of this Payment Agreement.
(b) Subject to the terms and conditions of this Payment Agreement, if
Parent and/or Merger Sub fails to pay the Obligations when due, then all of the Obligors liabilities to the Obligee Party hereunder in respect of such Obligations shall become immediately due and payable and the Obligee Party may, at the
Obligee Partys option, take any and all actions available hereunder or under applicable Law to collect such Obligations from the Obligor (subject to the Maximum Amount). In furtherance of the foregoing, the Obligor acknowledges that the
Obligee Party may, in its sole discretion, bring and prosecute a separate action or actions against the Obligor for the full amount of the Obligors Percentage of the Obligations (subject to the Maximum Amount), regardless of whether any action
is brought against Parent, Merger Sub or any Other Obligor. The Obligor agrees to pay on demand its Percentage of all reasonable and documented out-of-pocket expenses (including reasonable fees and expenses of counsel) incurred by the Obligee Party
in connection with the enforcement of its rights hereunder, which amounts, if paid, will be in addition to the Obligations and not included within a determination of the Maximum Amount if the Obligor fails or refuses to make any payment to the
Obligee Party hereunder when due and payable.
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(c) The parties hereto acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Payment Agreement were not performed in accordance with its specific terms or were otherwise breached and further agree that the Obligee Party shall be entitled to an injunction, specific performance and
other equitable relief against the Obligor to prevent breaches of this Payment Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it is entitled at Law or in equity, and shall not be
required to provide any bond or other security in connection with any such order or injunction. The Obligor further agrees not to oppose the granting of any such injunction, specific performance and other equitable relief on the basis that
(x) the Obligee Party has an adequate remedy at Law or (y) an award of an injunction, specific performance or other equitable relief is not an appropriate remedy for any reason at Law or in equity (collectively, the
Prohibited
Defense
).
Section 1.02
Nature of Obligation.
The Obligee Party shall not be obligated to file any claim
relating to the Obligations in the event that Parent and/or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Obligee Party to so file shall not affect the Obligors obligations hereunder.
In the event that any payment to the Obligee Party in respect of any Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Obligor shall remain liable hereunder with respect to such Obligations (subject to the Maximum
Amount) as if such payment had not been made. This is an unconditional obligation of payment and not of collectability. The Obligor reserves the right to assert defenses which Parent and/or Merger Sub may have to payment of any Obligations, other
than defenses arising from the bankruptcy or insolvency of Parent or Merger Sub and other defenses expressly waived hereby. The Obligee Party shall not be required to proceed against Parent, Merger Sub or any Other Obligor first before proceeding
against the Obligor.
Section 1.03
. Certain Waivers.
(a) The Obligor agrees that, subject to Section 1.03(d)(i), the Obligee Party may at any time and from time to time, without notice
to or further consent of the Obligor, extend the time of payment of any of the Obligations, and may also make any agreement with Parent, Merger Sub and/or any other Person interested in the Transactions for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any modification of the terms thereof or of any agreement between the Obligee Party, Parent, Merger Sub and/or any other Person interested in the Transactions without in any way
impairing or affecting the Obligors obligations under this Payment Agreement. The Obligor agrees that the obligations of the Obligor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) any
failure or delay of the Obligee Party to assert any claim or demand or to enforce any right or remedy against Parent, Merger Sub and/or any other Person interested in the Transactions; (ii) any change in the time, place or manner of payment of
the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms of the Merger Agreement or any other agreement evidencing, securing or otherwise executed by Parent, Merger Sub and the
Obligee Party in connection with the Obligations; (iii) any legal or equitable discharge or release (other than as a result of payment in full of the Percentage of the Obligations in accordance with their terms, a discharge or release of Parent
and/or Merger Sub with respect to the Obligations under the Merger Agreement, or defenses to the payment of the Obligations that would be available to Parent and/or Merger Sub under the Merger Agreement) of the Obligor or any Person interested in
the Transactions; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub and/or any other Person interested in the Transactions; (v) any insolvency, bankruptcy, reorganization or other similar proceeding
affecting Parent, Merger Sub and/or any other Person interested in the Transactions; (vi) any existence of any claim, set-off or other right which the Obligor may have at any time against Parent, Merger Sub, any other Person interested in the
Transactions and/or the Obligee Party, whether in connection with the Obligations or otherwise; or (vii) the adequacy of any other means the Obligee Party may have of obtaining repayment of any of the Obligations. To the fullest extent
permitted by Law, the Obligor hereby expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Obligee Party. The Obligor waives promptness, diligence, notice of the
acceptance of this Payment Agreement and of the Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of the incurrence of any Obligations and all other notices of any kind (other than notices
to Parent and/or Merger Sub
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pursuant to the Merger Agreement or notices expressly required to be provided pursuant to this Payment Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium
Law or other similar Law now or hereafter in effect, any right to require the marshaling of assets of any other Person interested in the Transactions, and all suretyship defenses generally, including, without limitation, any event, condition or
circumstance that might be construed to constitute, an equitable or legal discharge of the Obligors obligations hereunder (other than defenses to the payment of the Obligations that are available to Parent and/or Merger Sub under the Merger
Agreement or breach by the Obligee Party of this Payment Agreement). The Obligor acknowledges that it will receive substantial direct and indirect benefits from the Transactions and that the waivers set forth in this Payment Agreement are knowingly
made in contemplation of such benefits.
(b) The Obligor hereby covenants and agrees that it shall not institute, and shall
cause its controlled Affiliates and use its reasonable best efforts to cause its other Affiliates, not to institute, any proceeding asserting (i) the Prohibited Defense or (ii) that this Payment Agreement is illegal, invalid or
unenforceable in accordance with its terms, subject to (A) the effects of insolvency, bankruptcy, reorganization or other similar proceedings and (B) general equitable principles (whether considered in a proceeding in equity or at Law).
(c) The Obligee Party hereby covenants and agrees that it shall not institute, directly or indirectly, and shall cause all of
its Related Persons (as defined below) not to institute, any proceeding or bring any other claim (whether in tort, contract or otherwise) arising under, or in connection with, the Merger Agreement, the Equity Commitment Letters or the transactions
contemplated thereby against the Obligor or any Non-Recourse Party (as defined below), except for claims (i) against Parent and/or Merger Sub under the Merger Agreement pursuant to the terms thereof (and subject to the limitations therein) and
(ii) against the Obligor and its permitted assignees under this Payment Agreement pursuant to the terms hereof (and subject to the limitations herein).
(d) Notwithstanding anything to the contrary contained in this Payment Agreement, the Obligee Party hereby agrees that: (i) to the extent Parent and/or Merger Sub are relieved of any of the
Obligations or any breach by Parent and/or Merger Sub of the Merger Agreement, (other than by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratium or other similar Laws affecting creditors rights generally, or general equity
principles (whether considered in a proceeding in equity or at Law)), the Obligor shall be similarly relieved of its obligations under this Payment Agreement, and (ii) the Obligor shall have all defenses to the payment of its obligations under
this Payment Agreement (which in any event shall be subject to the Maximum Amount) that would be available to Parent and/or Merger Sub under the Merger Agreement with respect to the Obligations, as well as any defenses in respect of any fraud of the
Obligee Party hereunder or any breach by the Obligee Party of any of the terms or provisions of this Payment Agreement.
Section 1.04
. No Waiver; Cumulative Rights.
No failure on the part of the Obligee Party to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Obligee Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or
power hereunder. Each and every right, remedy and power hereby granted to the Obligee Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Obligee Party at any time or from
time to time.
Section 1.05
. Representations and Warranties.
The Obligor hereby represents and warrants to the
Obligee Party that:
(a) the Obligor is a legal entity duly organized and validly existing under the Laws of its jurisdiction
of organization;
(b) the execution, delivery and performance of this Payment Agreement have been duly authorized by all
necessary action and do not contravene (i) any provision of the Obligors charter documents, partnership agreement, operating agreement or similar organizational documents or (ii) except as would not reasonably be expected to prevent
or adversely affect in any material respect the ability of the Obligor to perform its obligations hereunder, any Law, regulation, rule, decree, order, judgment or contractual restriction binding on the Obligor or its assets;
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(c) except as would not reasonably be expected to prevent or adversely affect in any
material respect the ability of the Obligor to perform its obligations hereunder, (i) all consents, approvals, authorizations and permits of, filings with and notifications to, any governmental authority necessary for the due execution,
delivery and performance of this Payment Agreement by the Obligor have been obtained or made and all conditions thereof have been duly complied with, and no other action by and (ii) no notice to or filing with, any governmental authority or
regulatory body is required from the Obligor in connection with the execution, delivery or performance of this Payment Agreement;
(d) assuming due execution and delivery of this Payment Agreement by the Obligee Party, this Payment Agreement constitutes a legal, valid and binding obligations of the Obligor enforceable against the
Obligor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors rights generally and (ii) general equitable
principles (whether considered in a proceeding in equity or at Law); and
(e) the Obligor has the financial capacity to pay
and perform its obligations under this Payment Agreement, and all funds necessary for the Obligor to fulfill its obligations under this Payment Agreement shall be available to the Obligor for so long as this Payment Agreement shall remain in effect
in accordance with Section 1.08 hereof.
Section 1.06
No Assignment.
Neither the Obligor nor the Obligee
Party may assign its rights, interests or obligations hereunder to any other Person (including by operation of Law) without the prior written consent of the other party hereto;
provided
,
however
, that the Obligor may assign all or a
portion of its obligations hereunder, without the prior written consent of the Obligee Party, to (i) to any Other Obligor, or (ii) any Affiliate of the Obligor or one or more private equity funds sponsored, managed or advised by any such
Affiliate, provided that such assignment shall not relieve the Obligor of any liability or obligations hereunder except to the extent actually performed or satisfied by such assignee. Any attempted assignment in violation of this Section 1.06
shall be null and void.
Section 1.07
. Notices.
All notices, requests and other communications to any party
hereunder shall be given in the manner specified in the Merger Agreement (and shall be deemed given as specified therein) as follows:
If to Ellington Investments Pte. Ltd., to:
Ellington Investments Pte Ltd.
60b Orchard Road, #06-18, Tower 2, The Atrium@Orchard
Singapore 238891
Attention: Mukul Chawla; Yiran Liu
Fax: +65-6828-8961; +86-10-6655-3597
Email: mukul@temasek.com.sg; yiran@temasek.com.sg
with a copy to:
Simpson Thacher & Bartlett
ICBC Tower, 35/F
3 Garden Road
Hong Kong
Attention: Kathryn King Sudol
Facsimile: +1-212-455-2502
or to such other address or facsimile number as the Obligor shall
have notified the Obligee Party in a written notice delivered to the Obligee Party in accordance with the Merger Agreement. All notices to the Obligee Party hereunder shall be given as set forth in the Merger Agreement.
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Section 1.08
. Continuing Obligation.
This Payment Agreement shall remain in full
force and effect and shall be binding on the Obligor, its successors and assigns until the Obligations have been satisfied in full. Notwithstanding the foregoing, this Payment Agreement will terminate, and be of no further force or effect,
immediately following the earliest of (i) the Closing, (ii) the termination of the Merger Agreement in accordance with its terms by mutual consent of the parties thereto or under circumstances in which Parent and Merger Sub do not have any
unpaid Obligations, (iii) 30 days following the termination of the Merger Agreement in accordance with its terms under circumstances in which Parent or Merger Sub have any unpaid Obligations unless a claim for such a payment has been
made in writing prior thereto and (iv) the date that is twelve (12) months after the date hereof. Notwithstanding the foregoing, (1) the parties hereto acknowledge and agree that this Payment Agreement shall not terminate for so long
as a claim made in accordance with clause (iii) above remains unresolved, and (2) in the event that the Obligee Party or any of its controlled Affiliates asserts in any litigation or other proceeding that the provisions of this
Payment Agreement limiting the Obligors liability to the Maximum Amount are illegal, invalid or unenforceable in whole or in part, or asserts any theory of liability against any Non-Recourse Party or, other than its rights to recover from the
Obligor with respect to the Obligations, any Obligor, Parent and/or Merger Sub with respect to the transactions contemplated by the Merger Agreement, then (x) the obligations of the Obligor under this Payment Agreement shall terminate
ab
initio
and be null and void, (y) if the Obligor has previously made any payments under this Payment Agreement, the Obligor shall be entitled to recover such payment(s) and (z) neither Obligor nor any Non-Recourse Party shall have any
liability to the Obligee Party with respect to the Merger Agreement and the transactions contemplated thereby, the Financing or under this Payment Agreement.
Section 1.09.
No Recourse
.
(a) The Obligee Party acknowledges that
the sole assets of Parent and Merger Sub are its rights under the Merger Agreement, the Financing Documents and the Facility Agreement, and that no funds are expected to be contributed to either Parent or Merger Sub unless and until the Closing
occurs. Notwithstanding anything that may be expressed or implied in this Payment Agreement or any document or instrument delivered in connection herewith, by its acceptance of the benefits of this Payment Agreement, the Obligee Party covenants,
agrees and acknowledges that no Person (other than the Obligor and any permitted assignees thereof) have any obligations under this Payment Agreement and that, notwithstanding that the Obligor may be a partnership or limited liability company, the
Obligee Party has no right of recovery under this Payment Agreement, or any claim based on such obligations against, and no personal liability shall attach under this Payment Agreement to, the former, current or future equity holders, controlling
Persons, directors, officers, employees, agents, general or limited partners, managers, members, or Affiliates of the Obligor, any Other Obligor, Parent or Merger Sub, or any former, current or future equity holders, controlling Persons, directors,
officers, employees, agents, general or limited partners, managers, members, or Affiliates of any of the foregoing, excluding however the Obligor itself or any permitted assignee thereof under and to the extent provided in this Payment Agreement and
subject to the limitations set forth herein (collectively, each of the non-excluded parties, a
Non-Recourse Party
), through Parent and/or Merger Sub or otherwise, whether by or through attempted piercing of the corporate (or
limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent and/or Merger Sub against any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any
applicable Law, or otherwise, except in each case for its right to recover from the Obligor and any permitted assignees under and to the extent provided in this Payment Agreement and subject to the limitations set forth herein. The Obligee Party
acknowledges and agrees that Parent and Merger Sub have no assets other than certain contract rights and cash in a
de minimis
amount and that no additional funds are expected to be contributed to Parent or Merger Sub unless and until the
Closing occurs.
(b) Recourse against the Obligor and its permitted assignees under and pursuant to the terms of this Payment
Agreement shall be the sole and exclusive remedy of the Obligee Party and all of its Related Persons against the Obligor and the Non-Recourse Parties in respect of any liabilities or obligations arising under, or in connection with, the Merger
Agreement, the Financing Documents, the Facility Agreement or the transactions contemplated thereby. Nothing set forth in this Payment Agreement shall affect or be construed to affect any liability of Parent
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and/or Merger Sub to the Obligee Party under the Merger Agreement or otherwise or give or shall be construed to confer or give to any Person other than the Obligee Party any rights or remedies
against any Person, except as expressly set forth in this Payment Agreement.
(c) For the purposes of this Payment Agreement,
pursuit of a claim against a Person by the Obligee Party or any Related Person of the Obligee Party shall be deemed to be pursuit of a claim by the Obligee Party. A Person shall be deemed to have pursued a claim against another Person if such first
Person brings a legal action against such second Person, adds such second Person to an existing legal proceeding or otherwise asserts a legal claim of any nature against such second Person.
(d) For the purposes of this Payment Agreement, the term
Related Person
shall mean, with respect to any Person, any
controlled Affiliate of such Person, but shall not include Parent, Merger Sub or any of their controlled Affiliates.
Section 1.10
. Release.
By its execution of this Payment Agreement, the Obligee Party hereby covenants and agrees that
(a) neither the Obligee Party nor any of its Related Persons, and the Obligee Party agrees to the maximum extent permitted by Law, none of its officers, directors, security holders or representatives, has or shall have any right of recovery
against the Obligor or any Non-Recourse Party under the Merger Agreement, or the transactions contemplated thereby or otherwise relating thereto, and to the extent that it has or obtains any such right it, to the maximum extent permitted by law,
hereby waives (on its own behalf and on behalf of each of the aforementioned Persons) each and every such right against, and hereby releases, the Obligor and each Non-Recourse Party from and with respect to any claim, known or unknown, now existing
or hereafter arising, in connection with any transaction contemplated by or otherwise relating to the Merger Agreement, this Payment Agreement or the transactions contemplated thereby or hereby, whether by or through attempted piercing of the
corporate (limited partnership or limited liability company) veil, by or through a claim by or on behalf of Parent, Merger Sub or any other Person against any Non-Recourse Party, or otherwise under any theory of law or equity (the
Released
Claims
), other than (i) claims against Parent and/or Merger Sub and (ii) claims against the Obligor and its permitted assignees pursuant to this Payment Agreement (subject to the limitations set forth herein) and
(b) recourse against the Obligor and its permitted assignees under this Payment Agreement (subject to the limitations set forth herein) shall be the sole and exclusive remedy of the Obligee Party against the Obligor or any Non-Recourse Party
(other than Parent and/or Merger Sub) with respect to the Released Claims.
Section 1.11
. Amendments and Waivers.
No amendment or waiver of any provision of this Payment Agreement will be valid and binding unless it is in writing and signed, in the case of an amendment, by the Obligor and the Obligee Party, or in the case of waiver, by the party against
whom the waiver is to be effective. No waiver by any party of any breach or violation of, or default under, this Payment Agreement, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation or default
hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
Section 1.12
.
Entire Agreement.
This Payment Agreement constitutes the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether
written or oral, among Parent, Merger Sub and the Obligor or any of their respective Affiliates on the one hand, and the Obligee Party or any of its Affiliates on the other hand.
Section 1.13
. Governing Law; Submission to Jurisdiction.
This Payment Agreement shall be governed by and construed in
accordance with the Laws of the State of New York, excluding (to the greatest extent a New York court would permit) any rule of Law that would cause the application of the Laws of any jurisdiction other than the State of New York. All Actions
arising out of or relating to this Payment Agreement shall be heard and determined exclusively in any New York state or federal court sitting in the Borough of Manhattan of the City of New York. The parties hereto hereby (i) submit to the
exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan of the City of New York for the purpose of any Action arising out of or relating to this Payment Agreement brought by any party hereto, and
(ii) irrevocably waive, and agree not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of
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the
above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the
venue of the Action is improper, or that this Payment Agreement may not be enforced in or by any of the
above-named
courts.
Section 1.14.
Waiver of Jury Trial
. Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect
to any litigation directly or indirectly arising out of, under or in connection with this Payment Agreement. Each of the parties hereto (i) certifies that no Representative of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties hereto have been induced to enter into this Payment Agreement, as applicable, by, among other things,
the mutual waivers and certifications in this Section 1.14.
Section 1.15
. No Third Party Beneficiaries.
Except for the rights of Non-Recourse Parties provided hereunder, the parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties hereto, in accordance
with and subject to the terms of this Payment Agreement and the Merger Agreement, and this Payment Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right
to rely upon the representations and warranties set forth herein.
Section 1.16
. Counterparts.
This Payment
Agreement may be signed in any number of counterparts and may be executed and delivered by facsimile, email or electronic transmission in PDF format, and each counterpart shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Payment Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by all of the other parties hereto. Until and unless each party has received a counterpart
hereof signed by the other party hereto, this Payment Agreement shall have no effect and no party shall have any right or obligations hereunder (whether by virtue of any other oral or written agreement or other communication).
Section 1.17
. Severability.
If any term or other provision of this Payment Agreement is invalid, illegal or incapable of
being enforced by any rule of Law, or public policy, all other conditions and provisions of this Payment Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party;
provided
,
however
, that this Payment Agreement may not be enforced against any Obligor without giving effect to the Maximum Amount or the provisions set forth in
Section 1.03, Section 1.09 and Section 1.10. No party hereto shall assert, and each party shall cause its respective Related Persons not to assert, that this Payment Agreement or any part hereof is invalid, illegal or unenforceable.
Upon a determination that any term or provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Payment Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
Section 1.18
. Headings.
Headings are used for reference purposes only and do not affect the meaning or interpretation of this Payment Agreement.
[The remainder of this page has been intentionally left blank;
the next page is the signature page.]
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IN WITNESS WHEREOF, the Obligor has caused this Payment Agreement to be executed and delivered as of the
date first written above by its officer thereunto duly authorized.
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ELLINGTON INVESTMENTS PTE. LTD.
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By:
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/s/ Ravi Lambah
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Name:
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Ravi Lambah
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Title:
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Authorised Signatory
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Acknowledged and agreed as of the date first above written:
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ASIAINFO-LINKAGE, INC.
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By:
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/s/ Davin Mackenzie
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Name:
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Davin Mackenzie
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Title:
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Director
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[Signature Page to Payment Agreement]
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Annex A
Other Obligors
Power Joy (Cayman) Limited
CPEChina Fund, L.P.
CITIC Capital MB Investment Limited
CBC TMT III Limited
InnoValue Capital Ltd.
Annex H
FINANCIAL ADVISOR OPINION
Goldman Sachs (Asia) L.L.C. (a Delaware, USA limited liability company)
68th Floor | Cheung Kong Center | 2 Queens Road Central | Hong Kong
Tel: (852) 2978-1000 |
Fax: (852) 2978-0440
PERSONAL AND CONFIDENTIAL
May 12, 2013
Special Committee of the Board of Directors
Asialnfo-Linkage, Inc.
4/F, Zhongdian
Information Tower No.6
Zhongguancun South Street
Haidian District, Beijing, China 100086
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view to the holders (other than Skipper Limited (Skipper), the
Rollover Stockholders (as defined in the Agreement (as defined below)), the Sponsors (as defined below) and their respective affiliates, collectively, the Excluded Persons) of the outstanding shares of common stock, par value $0.01 per
share (the Shares), of Asialnfo-Linkage, Inc. (the Company) of the $12.00 per Share in cash to be paid to such holders pursuant to the Agreement and Plan of Merger, dated as of May 12, 2013 (the Agreement), by and
among Skipper, Skipper Acquisition Corporation, a wholly-owned subsidiary of Skipper (Acquisition Sub) and the Company.
Goldman
Sachs (Asia) L.L.C. and its affiliates (collectively, Goldman Sachs) are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial
activities and services for various persons and entities. Goldman Sachs (Asia) L.L.C. and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long
or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Skipper, any of their respective affiliates or any of the respective affiliates and
portfolio companies of Power Joy (Cayman) Limited, CITIC Capital (Tianjing) Equity Investment Limited Partnership, CPEChina Fund, L.P., Ellington Investments Pte. Ltd. (Temasek), Al Gharrafa Investment Company (Qatar
Investment), AlpInvest Partners Co-Investments 2011 II C.V., AlpInvest Partners Co-Investments 2012 I C.V., AlpInvest Partners Co-Investments 2012 II C.V. (collectively, AlpInvest), CBC TMT III Limited, InnoValue Capital Ltd. (each
a Sponsor), each of which is a party to an Equity Commitment Letter (as defined in the Agreement), or any currency or commodity that may be involved in the transaction contemplated by the Agreement (the Transaction) for the
accounts of Goldman Sachs (Asia) L.L.C. and its affiliates and employees and their customers. We have acted as financial advisor to the Special Committee of the Board of Directors of the Company (the Special Committee) in connection
with, and have participated in certain of the negotiations leading to, the Transaction. We expect to receive fees for our services in connection with the Transaction, the principal portion of which is contingent upon consummation of the Transaction,
and the Company has agreed to reimburse our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We also have provided certain investment banking services to Temasek and its affiliates and portfolio
companies from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as joint bookrunning manager with respect to a public offering of 538,962,054 shares of CitySpring
Infrastructure Trust, a portfolio company of affiliates of Temasek, pursuant to
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Goldman Sachs (Asia) L.L.C. (a Delaware, USA limited liability company)
68th Floor | Cheung Kong Center | 2 Queens Road Central | Hong Kong
Tel: (852) 2978-1000 | Fax: (852) 2978-0440
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Special Committee of the Board of Directors
Asiainfo-Linkage, Inc.
May 12, 2013
Page 2
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a rights issuance in September 2011; as financial advisor to Global Crossing Limited, which at the time was a portfolio company of an affiliate of Temasek, in connection with its sale in October
2011; and as joint bookrunning manager with respect to the public offering of 2.375% Notes due 2023 (aggregate principal amount of $1,200,000,000) and 3.375% Notes due 2042 (aggregate principal amount of $500,000,000) by Temasek Financial (I)
Limited and guaranteed by Temasek in July 2012. We also have provided certain investment banking services to AlpInvest and its affiliates and portfolio companies from time to time for which our Investment Banking Division has received, and may
receive, compensation, including having acted as joint bookrunning manager with respect to a public offering of 34,500,000 shares of common stock of Nielsen Holdings N.V., a portfolio company of AlpInvest, in March 2012. We also have provided
certain investment banking services to affiliates of Qatar Investment and their portfolio companies from time to time for which our Investment Banking Division has received, and may receive, compensation. We may also in the future provide investment
banking services to the Company, Skipper, the Sponsors and their respective affiliates and portfolio companies for which our Investment Banking Division may receive compensation. Affiliates of Goldman Sachs (Asia) L.L.C. also may have co-invested
with certain of the Sponsors and their respective affiliates from time to time and may have invested in limited partnership units of affiliates of certain of the Sponsors from time to time and may do so in the future.
In connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to stockholders and Annual Reports on Form 10-K of
the Company for the five fiscal years ended December 31, 2011, certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company; certain other communications from the Company to its stockholders; certain publicly available
research analyst reports for the Company; and certain internal financial analyses and forecasts for the Company prepared by its management as approved for our use by the Special Committee (the Forecasts). We have also held discussions
with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the Shares;
compared certain financial and stock market information for the Company with similar information for certain other companies of which the securities are publicly traded; reviewed the financial terms of certain recent business combinations in the
Chinese telecom service industry and in other industries; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.
For purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information
provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the Forecasts have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of the Company. We have not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and
liabilities) of the Company or any of its subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the
Transaction will be obtained without any adverse effect on the Company or on the expected benefits of the Transaction in any way meaningful to our analysis. We have assumed that the Transaction will be consummated on the terms set forth in the
Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis.
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Goldman Sachs (Asia) L.L.C. (a Delaware, USA limited liability company)
68th Floor | Cheung Kong Center | 2 Queens Road Central | Hong Kong
Tel: (852) 2978-1000 | Fax: (852) 2978-0440
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Special Committee of the Board of Directors
Asiainfo-Linkage, Inc.
May 12, 2013
Page 3
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Our opinion does not address
the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or
accounting matters. This opinion addresses only the fairness from a financial point of view to the holders (other than the Excluded Persons) of Shares, as of the date hereof, of the $12.00 per share to be paid to such holders pursuant to the
Agreement. We do not express any view on, and our opinion does not address, any other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or amended
in connection with the Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of the Company; nor as to the
fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons, in connection with the Transaction, whether relative to the $12.00 per share to be
paid to the holders of Shares pursuant to the Agreement or otherwise. We are not expressing any opinion as to the impact of the Transaction on the solvency or viability of the Company or Skipper or the ability of the Company or Skipper to pay their
respective obligations when they come due. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for
updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services and the opinion expressed herein are provided for the information and assistance of the Special
Committee in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of Shares should vote with respect to such Transaction or any other matter. This opinion has been approved
by a fairness committee of Goldman Sachs.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the $12.00
per Share in cash to be paid to the holders (other than the Excluded Persons) of Shares pursuant to the Agreement is fair from a financial point of view to such holders.
Very truly yours,
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GOLDMAN SACHS (ASIA) L.L.C.
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By:
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/s/ Raghav Maliah
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Name: Raghav Maliah
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Title: Managing Director
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H-3
ANNEX I
DELAWARE GENERAL CORPORATION LAW SECTION 262
Appraisal rights
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word stockholder means a holder of record of stock in a
corporation; the words stock and share mean and include what is ordinarily meant by those words; and the words depository receipt mean a receipt or other instrument issued by a depository representing an interest
in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255, § 256, § 257, § 258, § 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation, were
either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which
shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and
b. of this section; or
d. Any combination of the shares of stock, depository receipts and cash in lieu of
fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is not owned by the parent immediately prior to the
merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may
provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation
in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth
in subsections (d) and (e) of this section, shall apply as nearly as is practicable.
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(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted
for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in
accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228, § 253, or § 267 of this title, then
either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such
notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify
such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the
appraisal of such holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such
notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the
holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to
all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date.
If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the
value of the stock of all such stockholders. Notwithstanding the
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foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named
party shall have the right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth
the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under
subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person
may, in such persons own name, file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the
office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the
notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders
who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
(h) After the
Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding
the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the
fair value. In determining such fair value, the Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of
payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of
payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final
determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholders
certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Payment shall be so made to each such
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stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates
representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the
circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys fees and the
fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends
or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal
shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance
of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms
as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for
appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had
they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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ANNEX J
DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON
AsiaInfo-Linkage, Inc.
: Set forth below for each director and executive officer of the Company is his respective present principal occupation or employment, the name of the corporation or
other organization in which such occupation or employment is conducted and the
five-year
employment history of each such director and executive officer. None of the Company or any of the Companys
directors or executive officers has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the Company nor any of the Companys directors or executive officers listed
below has, during the past five years, been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Directors of AsiaInfo-Linkage, Inc.
Jian (James) Ding.
Mr. Ding served as the Chairman of our Board between April 2003 and July 2010, has served as a Co-Chairman of our Board since July 2010, and has served as a member of our Board since our inception. Mr. Ding is currently a general
partner of GSR Ventures, a venture capital fund, a role in which he has served since June 2005. He has served as an independent director of Baidu.com, Inc., a Chinese Internet search company, since August 2005, a director of NetQin Mobile Inc., an
NYSE-listed software-as-a-service provider of consumer-centric mobile Internet services, since June 2007, and an independent director of Huayi Brothers Media Corporation, a ChiNext Shenzhen-listed company, since March 2011. He has also served as
Chairman of the Board of United ITV, Inc., a provider of distribution and marketing channels in China, from September 2004 to December 2012. He served as our Chief Executive Officer from May 1999 until April 2003, as our Senior Vice President for
Business Development and Chief Technology Officer from 1997 to 1999, and as our Senior Vice President and Chief Technology Officer from 1993 to 1997. Mr. Ding received an M.S. in Information Science from the University of California, Los
Angeles and is a graduate from the Executive Program of Haas Business School at University of California, Berkeley. Mr. Ding is a citizen of the Hong Kong SAR.
Yungang Lu.
Mr. Lu has served as a member of our Board since July 2004. Mr. Lu is now Managing Director of Seres Asset Management Limited, an investment manager based in Hong Kong, where
he has served since August 2009. Mr. Lu also serves as a board director of the following listed companies: China Techfaith Wireless Communication Technology Ltd., a handheld device company in China, China Biologic Products Inc., a
biopharmaceutical company, and China Cord Blood Corporation, a provider of cord blood storage services in China. From 2004 to July 2009, Mr. Lu was a Managing Director of APAC Capital Advisors Limited, a Hong Kong-based investment manager
specializing in Greater China equities. Mr. Lu was a research analyst with Credit Suisse First Boston (Hong Kong), a financial services company, from 1998 to 2004, where his last position was the head of China Research. Before moving to Credit
Suisse, he worked as an equity analyst focused on regional infrastructure at JP Morgan Securities Asia, a financial services company, in Hong Kong. Mr. Lu received a B.S. in Biology from Beijing University, an M.S. in Biochemistry from Brigham
Young University and a Ph.D. in Finance from the University of California, Los Angeles. Mr. Lu is a citizen of the PRC.
Libin Sun.
Mr. Sun has been our Executive Co-Chairman and a member of our Board since July 2010. Mr. Sun founded and
served as the Chairman of the Board of Linkage Technologies International Holdings Limited, or Linkage, a telecommunications software company in China, where he also served as its Chief Executive Officer from January 2009 to July 2010 and its
President from 1997 to January 2007. Mr. Sun has over 20 years of experience in the software and electronics industries and has been a member of the Standing Committee of Jiangsu Software Industry Association since 2005 and the Director General
of the Nanjing Software Export Association since 2003. Mr. Sun received a B.S. in precision electron-machinery engineering from Northwest Telecommunication Engineering College and an M.B.A. from China Europe International Business School.
Mr. Sun is a citizen of the PRC.
J-1
Sean Shao
. Mr. Shao has been a member of our Board since July 2010.
Mr. Shao currently serves as (i) independent director and chairman of the audit committee of: UTStarcom Holdings Corp., a provider of broadband equipment and solutions listed on The NASDAQ Stock Market, or Nasdaq, since October 2012; Xueda
Education Group, a Chinese personalized tutoring services company listed on the NYSE, since March 2010; China Biologic Products, Inc., a biopharmaceutical company listed on Nasdaq, since July 2008 and Yongye International, Inc., a Chinese
agricultural company listed on Nasdaq, since April 2009; and (ii) independent director and chairman of the nominating committee of Agria Corporation, a Chinese agricultural company listed on the NYSE since November 2008. He served as the chief
financial officer of Trina Solar Limited from 2006 to 2008. In addition, Mr. Shao served from 2004 to 2006 as the chief financial officer of ChinaEdu Corporation, an educational service provider, and of Watchdata Technologies Ltd., a Chinese
security software company. Prior to that, Mr. Shao worked at Deloitte Touche Tohmatsu CPA Ltd. (now Deloitte Touche Tohmatsu Certified Public Accountants LLP) for approximately a decade. Mr. Shao received his masters degree in health
care administration from the University of California at Los Angeles in 1988 and his bachelors degree in art from East China Normal University in 1982. Mr. Shao is a member of the American Institute of Certified Public Accountants.
Mr. Shao is a citizen of Canada.
Davin A. Mackenzie.
Mr. Mackenzie has served as a member of our Board since
August 2004. Mr. Mackenzie has served as a consultant for Greater China in the Beijing office of Spencer Stuart, an executive search consulting firm, since February 2012. Mr. Mackenzie has served as a director and a member of the Audit
Committee of Mecox Lane Limited, an online platform for apparel and accessories in China, since October 2011. He has served as a director and a member of the Audit Committee of The9 Limited, an online gaming company, since September 2005. He
previously founded and served as the Managing Director of Telopea Capital Limited, an investment advisory firm, from December 2009 to February 2012. From April 2008 to December 2009, Mr. Mackenzie was the Managing Director and Beijing Office
Chief Representative of Arctic Capital Limited, a private equity firm focused on Asian growth capital and mid-market buyout investments. From September 2000 to March 2008, he was a Managing Director of Peak Capital, a boutique private equity firm
focused on Greater China. Prior to Peak Capital, Mr. Mackenzie served for seven years with the International Finance Corporation, the private investment arm of the World Bank, including four years as the Country Manager for China and Mongolia.
Prior to the IFC, Mr. Mackenzie served as a senior associate at Mercer Management Consulting, a business consulting firm, in Washington, D.C., and as a manager in the First National Bank of Boston, an international bank, in Taipei, Taiwan.
Mr. Mackenzie received a B.A. in Government from Dartmouth College, an M.A. in International Studies from the University of Pennsylvania, and an M.B.A. from the Wharton School at the University of Pennsylvania. He has also completed the World
Bank Executive Development Program at the Harvard Business School. Mr. Mackenzie is a citizen of the United States.
Thomas J. Manning.
Mr. Manning has been a member of our Board since October 2005. Mr. Manning is a Lecturer in Law at
the University of Chicago Law School, where he teaches courses on corporate governance, private equity and U.S.-China policy. He also acts as a corporate board director and advisor and currently serves as an independent non-executive director of
three public companies: iSoftStone Information Technology (Group) Co., Ltd., an IT outsourcing company in China, which is listed on the NYSE (since December 2010); Clear Media Limited (HKSE), a leading outdoor media company in China (since October
2012); and Dun & Bradstreet (NYSE), the global leader in corporate information (since June 2013). He has also served as an independent non-executive director of Gome Electrical Appliances Company, a large retailer in China listed on the
Hong Kong Stock Exchange, or HKSE, between May 2007 and June 2012. From August 2004 to August 2010, Mr. Manning served as an independent non-executive director of Bank of Communications, a large commercial bank in China and a HKSE-listed
company, where he chaired the compensation committee. Mr. Manning served as the Chief Executive Officer of Cerberus Asia Operations & Advisory Limited, a subsidiary of Cerberus Capital Management, a global private equity firm, between
April 2010 and June 2012, and the Chief Executive Officer of Indachin Limited, a venture management firm based in Hong Kong, from October 2005 to March 2009; Chairman of China Board Directors Limited, a board advisory firm based in Hong Kong, from
August 2005 to April 2010; and a director of Bain & Company, where he was a member of Bains China Board and head of Bains information technology strategy practice in the Silicon Valley and Asia from August 2003 to January
J-2
2005. Mr. Manning served as Global Managing Director of the Strategy & Technology Business of Capgemini, Chief Executive Officer of Capgemini Asia Pacific, and Chief Executive
Officer of Ernst & Young Consulting Asia Pacific, where he led the development of consulting and IT service and outsourcing businesses across Asia from June 1996 to January 2003. Early in his career, Mr. Manning was with
McKinsey & Company from August 1979 to September 1985, where he developed a corporate strategy practice for medical industry clients, and Buddy Systems, Inc. a telemedicine company he founded and led from September 1985 to September 1991.
He received a bachelors degree in East Asian Studies from Harvard University and an M.B.A. from the Graduate School of Business of Stanford University. Mr. Manning is a citizen of the United States.
Suning (Edward) Tian
. Dr. Tian has served as a member of our Board since our inception. Dr. Tian is the founder and has
been the Chairman of China Broadband Capital Partners, L.P., one of the first Chinese TMT sector focused private equity funds since February 2006. Dr. Tian has also served as an independent director of MasterCard Incorporated, a credit card
company, since April 2006, a senior advisor of Kohlberg Kravis Roberts & Co., a private equity firm, since November 2006, an independent director of Lenovo Group Limited since August 2007, a nonexecutive director of Media China Limited
(formerly Asian Union New Media (Group) LTD), a media company and satellite channel operator in China, since January 2008 and an independent director of Taikang Life Insurance Company Limited, a Chinese life insurance company, since July 2008. From
April 2002 to May 2006, he served as Chief Executive Officer of China Netcom (Group) Company Limited (formerly China Netcom Corporation Ltd.), a Chinese telecommunications provider, and Vice President of China Network Communication Group
Corporation, a Chinese telecommunications provider. His other directorships include serving as a Director of China Netcom Group between 2001 and May 2006 and Vice Chairman of PCCW Limited, a telecommunications holding company, from April 2005 to
March 2007. Prior to joining China Netcom Group in 2002, Dr. Tian and Jian (James) Ding co-founded our company in 1993 and Dr. Tian served as our President through May 1999. Dr. Tian received an M.S. from the Graduate School of the
Chinese Academy of Science in Beijing and a Ph.D. in Environmental Management from Texas Tech University. Dr. Tian is a citizen of the PRC.
Xiwei Huang.
Dr. Huang has served as a member of our Board since July 2010. Dr. Huang served as our Chief Operating Officer from July 2010 to March 2011. Since April 2011, Dr. Huang
has served as the President and Executive Director of Nanjing King-friend Biochemical Pharmaceutical Co., Ltd, a medicine production company in China. Dr. Huang served as a member of the board of directors and Senior Vice President of Linkage
from January 2004 to July 2010, where he also served as its Chief Operating Officer and Chief Accounting Officer from January 2009 to July 2010 and as its Vice President overseeing technology from October 1998 to December 2003. Dr. Huang
received a B.S. in Electrical Engineering from Nanjing University of Science and Technology, an M.S. in Signal and Information Processing from Nanjing University of Posts and Telecommunications, and a Ph.D. in Information and Electrical Systems from
Shanghai Jiaotong University. Dr. Huang is a citizen of the PRC.
Steve Zhang.
Mr. Zhang has been our
President and Chief Executive Officer, as well as a member of our Board, since May 2005. Mr. Zhang joined us in December 1999 as Vice President for Software and went on to hold several prominent positions with us, including head of our Software
Products Strategic Business Unit, General Manager of our Operations Support Systems Strategic Unit, as well as Chief Technology Officer and Acting General Manager of our China Mobile Customer Account. Mr. Zhang served as President and CEO of
AsiaInfo-Linkage Technologies (China), Inc., our wholly owned subsidiary, and also served as legal representative in certain of our subsidiaries. During the ten years before he joined us, Mr. Zhang worked for several successful companies in
Silicon Valley, including Blue Martini Software, Inc., Hyperion Solutions, Inc., Arbor Software, Versant Object Technology, Inc. and Sun Microsystems. Mr. Zhang received an M.S. in Computer Science from Rice University and a Doctorate in
Information Science from the University of Pisa, Italy. Mr. Zhang is a citizen of the United States.
J-3
Executive Officers of AsiaInfo-Linkage, Inc. (other than Steve Zhang and Libin Sun)
Jun (Michael) Wu.
Mr. Wu has been our Executive Vice President and Chief Financial Officer since August 2010.
Prior to joining us, Mr. Wu served as the Chief Financial Officer of iSoftStone Information Technology (Group) Co., Ltd., an China based IT outsourcing company listed on the NYSE, from March 2008 to August 2010. From May 2006 to March 2008,
Mr. Wu served as the Vice President of Finance of HuaWei Technologies, a telecommunications solutions provider in China, where he was responsible for corporate investment, treasury and taxation, planning and reporting, and worldwide financial
operation. From March 1997 to July 2005, Mr. Wu was with Lucent Technologies China, the subsidiary of Lucent Technologies Inc., where he led the finance, accounting, contract management and information system functions, and his last position
was the Chief Financial Officer of Lucent China. Prior to joining Lucent Technologies, Mr. Wu held various financial management positions with SAP (China) Co. Ltd., and Walls (China) Co. Ltd., a joint venture under Unilever. Mr. Wu holds a
Master of Business Administration from the City University, Seattle, Washington and is an accounting graduate from the University of International Business and Economics. Mr. Wu is a citizen of the PRC.
Yadong Jin.
Mr. Jin has been our Executive Vice President and Chief Technology Officer since December 2011, and has also
served as our General Manager of Marketing since November 2008. Prior to joining us, Mr. Jin served as the Consultation Director of Hewlett-Packard Development Company from January 2005 to November 2008. Mr. Jin received bachelors
and masters degrees in Computer Science from Nanjing University. Mr. Jin is a citizen of the PRC.
Guoxiang Liu.
Mr. Liu has been our Executive Vice President since July 2010. Prior to joining us, Mr. Liu served as a member of the board of directors of Linkage from 2004 to July 2010, where he also served as its President from January 2007 to July
2010, as its Senior Vice President overseeing its sales operations from 2004 to January 2007, as its Vice President overseeing its technology center from 1998 to 2004, and as a manager from 1997 to 1998. From 1986 to 1997, Mr. Liu worked as a
researcher and lecturer in the computer science department at Nanjing University of Post and Telecommunications. Mr. Liu received a B.S. in Computer Science from Fudan University. Mr. Liu is a citizen of the PRC.
Skipper Limited
: Set forth below for each director of Parent is his present principal occupation or employment, the name of
the organization in which such occupation or employment is conducted and the
five-year
employment history of such director. As of the date hereof, Parent does not have any executive officers. During the past
five years, neither Parent nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Parent nor any of its directors has been a party to any
judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to,
federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of Skipper
Limited
Brian Joseph Doyle.
Mr. Doyle is a founding Managing Partner of CITIC Capital Partners Limited
(CCPL) and has been with the firm since its establishment in 2002. His business address is Unit 4101, CITIC Square, 1168 Nanjing West Road, Shanghai, 200041, China. Mr. Doyle is a citizen of the United States.
Chan Kai Kong.
Mr. Chan is the Chief Financial Officer and a Senior Managing Director of CITIC Capital Holdings Limited
(CCHL) and has been with the firm since 2005. His business address is 28/F CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. Mr. Chan is a citizen of Singapore.
Yuesheng Xin
. Mr. Xin is a Managing Director of CCHL and has been with the firm since 2002. His business address is 28/F
CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. Mr. Xin is a citizen of Hong Kong SAR.
J-4
Skipper Acquisition Corporation
: Set forth below for each director and
executive officer of Merger Sub is his present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. During the past five years,
neither Merger Sub nor any of its directors or executive officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Merger Sub nor any of its directors or
executive officers has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of Skipper Acquisition Corporation
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Chan.
Executive Officers of Skipper Acquisition Corporation
Brian Joseph
Doyle.
Mr. Doyle is the President of Merger Sub. See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Doyle.
Venus Lam.
Ms. Lam is the Secretary of Merger Sub. Ms. Lam is a Manager of Fund Administration at CCPL and has been with
the firm since 2008. Her business address is 28/F CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. Ms. Lam is a citizen of the Hong Kong SAR.
Skipper Holdings Limited
: Set forth below for each director of Holdco is his present principal occupation or employment, the name of the organization in which such occupation or employment
is conducted and the
five-year
employment history of such director. As of the date hereof, Holdco does not have any executive officers. During the past five years, neither Holdco nor any of its directors has
been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Holdco nor any of its directors has been a party to any judicial or administrative proceeding (except for matters
that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any
violation of federal or state securities laws.
Directors of Skipper Holdings Limited
Brian Joseph Doyle.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional
information about Mr. Doyle.
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper
Limited
beginning on page J-4 for additional information about Mr. Chan.
Yuesheng Xin
. See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Xin.
Skipper Investment Limited
. Set forth below for each director of CCP Co-Investment Co is his present principal occupation or employment, the name of the organization in which such occupation
or employment is conducted and the five-year employment history of such director. As of the date hereof, CCP Co-Investment Co does not have any executive officers. During the past five years, neither CCP Co-Investment Co nor any of its directors has
been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither CCP Co-Investment Co nor any of its directors has been a party to any judicial or administrative proceeding (except
for matters that were dismissed without sanction or settlement) that resulted
J-5
in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of
federal or state securities laws.
Directors of Skipper Investment Limited
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional
information about Mr. Chan.
Power Joy (Cayman) Limited
: Set forth below for each director of Power Joy is
his present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. As of the date hereof, Power Joy does not have any executive
officers. During the past five years, neither Power Joy nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Power Joy nor any of its
directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of Power Joy (Cayman) Limited
Brian Joseph Doyle.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Doyle.
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Chan.
Rikizo Matsukawa.
Mr. Matsukawa is a Managing Director of CCPL and has been with the firm since 2006. His business address is
10/F Hirakawacho Mori Tower, 2-16-1 Hirakawacho, Chiyoda-ku, Tokyo
102-0093,
Japan. Mr. Matsukawa is a citizen of Japan.
The sole shareholder of Power Joy is CITIC Capital China Partners II, L.P., a Cayman Islands limited partnership (CITIC CCP II). The general partner of CITIC CCP II is CCP II GP Ltd., a Cayman
Islands company (CCP II). CITIC CCP II is principally engaged in the business of investment, and CCP II is principally engaged in managing CITIC CCP II and its investments. The principal business address and telephone number for each of
CITIC CCP II and CCP II is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, +852-3710-6888. As of the date hereof, CITIC CCP II does not have any directors or executive officers, and CCP II
does not have any executive officers. During the past five years, neither CITIC CCP II, CCP II nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years,
neither CITIC CCP II, CCP II nor any of its directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of CCP II GP Ltd.
Brian Joseph Doyle.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Doyle.
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional
information about Mr. Chan.
J-6
Rikizo Matsukawa.
See
Power Joy (Cayman) LimitedDirectors of Power
Joy (Cayman) Limited
beginning on page J-6 for additional information about Mr. Matsukawa.
CITIC
Capital MB Investment Limited
. Set forth below for each director of CITIC Capital MB is his present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year
employment history of such director. As of the date hereof, CITIC Capital MB does not have any executive officers. During the past five years, neither CITIC Capital MB nor any of its directors has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). During the past five years, neither CITIC Capital MB nor any of its directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of CITIC Capital MB Investment Limited
Zhang Yichen.
Mr. Zhang is the Chief Executive Officer of CCHL and has been with the firm since its establishment in 2002. His
business address is 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. Mr. Zhang is a citizen of the Hong Kong SAR.
Chan Kai Kong.
See
Skipper LimitedDirectors of Skipper Limited
beginning on page J-4 for additional information about Mr. Chan.
Wang Fanglu.
Mr. Wang is a Senior Managing Director of CCHL and the Chief Investment Officer of CITIC Kazyna Fund I.
Mr. Wang has been with CCHL since 2004. His business address is 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong. Mr. Wang is a citizen of the PRC.
Pan Hongyan.
Mr. Pan is a Director of Structured Investment and Finance Group Department of CCHL and has been with the firm since its establishment in 2002. His business address is Suites
4101-02, 4104 & 4106-08, 41/F, CITIC Square, 1168 West Nan Jing Road, Jingan District, Shanghai 200041, China. Mr. Pan is a citizen of the PRC.
CITIC Capital (Tianjin) Equity Investment Limited Partnership
: As of the date hereof, RMB Fund does not have any directors or executive officers. During the past five years, RMB Fund has not
been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, RMB Fund has not been a party to any judicial or administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state
securities laws.
The general partner of RMB Fund is CITIC Capital (Tianjin) Investment Management Limited Partnership, a PRC
limited partnership (CITIC Capital Tianjin Management), which is principally engaged in the business of investment management. The general partner of CITIC Capital Tianjin Management is Tianjin Yuebo Investment Consultancy Company
Limited, a PRC company with limited liability (Tianjin Yuebo), which is principally engaged in the business of investment consultation. The principal address and telephone number for each of CITIC Capital Tianjin Management and Tianjin
Yuebo is c/o CITIC Capital Partners Management Limited, 28th Floor CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong, +852 3710-6888. As of the date hereof, CITIC Capital Tianjin Management does not have any directors or executive officers, and
Tianjin Yuebo does not have any executive officers. During the past five years, neither CITIC Capital Tianjin Management, Tianjin Yuebo nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the past five years, neither CITIC Capital Tianjin Management, Tianjin Yuebo nor any of its directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
J-7
Director of Tianjin Yuebo Investment Consultancy Company Limited
Zeng Zhijie.
Mr. Zeng is a Senior Managing Director of CCHL and Head of CCHLs Venture Group. Mr. Zeng has been with
the firm since 2008. Prior to that, Mr. Zeng served as a Managing Director of Walden International since 2001, for which he was mainly responsible for venture investments in China. Mr. Zeng is a citizen of the PRC.
CPEChina Fund L.P.
: Set forth below for each director and executive officer of CPEChina is his or her present principal
occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. During the past five years, neither CPEChina nor any of its directors or executive
officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither CPEChina nor any of its directors or executive officers has been a party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or
state securities laws or a finding of any violation of federal or state securities laws.
Directors and Executive Officers
of CPEChina Fund L.P.
Changqing Ye.
Mr. Ye is a managing director of CITIC PE Advisors (Hong Kong) Limited
(CITIC PE Advisors HK) and has held positions with various other entities affiliated with CITIC PE Advisors HK since February 2011. From July 1992 to February 2011, Mr. Ye worked for PricewaterhouseCoopers in China and in the UK,
and as a partner of PricewaterhouseCoopers in China between July 2004 and February 2011. Mr. Ye is a citizen of the PRC.
Hongyu Duan.
Ms. Duan is a managing director of CITIC PE Investment (Hong Kong) Limited and has held positions with various
other entities affiliated with CITIC PE Advisors HK since April 2012. From August 1998 to April 2009, Ms. Duan worked for Merrill Lynch Asia Pacific, as a director between 2004 and April 2009. From February 2010 to March 2011, Ms. Duan
worked for PIMCO Asia Limited as a senior account manager. From April 2011 to March 2012, Ms. Duan was self-employed. Mr Duan is a citizen of the Hong Kong SAR.
Ching Nar Cindy Chan.
Ms. Chan is the vice president and chief financial officer of CITIC PE Advisors HK and has occupied this position since she joined CITIC PE Advisors HK in July 2010. From
August 2009 to June 2010, Ms. Chan was self-employed and provided part time consulting services relating to the watch industry for Yu Hing International Enterprise Limited. From July 2008 to July 2009, Ms. Chan worked for FIL Capital
Management (HK) Limited, a wholly owned subsidiary of Fidelity, as Chief Financial Officer. Ms. Chans job duties as Chief Financial Officer included deal support, fund accounting and tax, and facilitating monitoring and reporting
processes, for China and India. From November 2006 to July 2008, Ms. Chan worked for 3i Asia Pacific plc as Asia Financial Controller. Ms. Chan is a citizen of Australia.
The general partner of CPEChina is CITIC PE Associates, L.P. (CITIC PE Associates), a Cayman Islands exempted limited
partnership, and the general partner of CITIC PE Associates is CITIC PE Funds Limited, a Cayman Islands exempted company. Both CITIC PE Associates and CITIC PE Funds Limited are principally engaged in the business of investment. The principal
business address and telephone number for each of CITIC PE, CITIC PE Associates and CITIC PE Funds Limited is PO Box 309, Ugland House, Grand Cayman,
KY1-1104,
Cayman Islands, +1 345 949 8066.
Qatar Holding LLC
. Set forth below for each director and executive officer of Qatar Holding LLC (
QH
) is
his present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director and executive officer. During the past five years, neither QH nor
any of its directors or executive officer has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither QH nor any
J-8
of its directors or executive officer has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors and Executive Officer of Qatar Holding LLC
H.E. Sheikh Hamad Bin Jassim Bin Jabor Al-Thani.
Sheikh Hamad is Chairman of the Board of Directors of QH. During the five year period ending July 7, 2013, Sheikh Hamad served as the Deputy
Chairman and Chief Executive Officer of the Qatar Investment Authority (
QIA
) and the Prime Minister and Minister of Foreign Affairs of the State of Qatar. His business address is: Q-Tel Tower, 8th Floor, Diplomatic Area Street,
West Bay, P.O. Box 23224, Doha, Qatar. Sheikh Hamad is a citizen of Qatar.
H.E. Sheikh Abdulla Saoud Al-Thani.
Sheikh
Abdulla is a member of the boards of directors of QIA and QH and the Governor of the Qatar Central Bank and has occupied these positions for the past five years. His business address is: Q-Tel Tower, 8th Floor, Diplomatic Area Street, West Bay, P.O.
Box 23224, Doha, Qatar. Sheikh Abdulla is a citizen of Qatar.
H.E. Ahmad Mohamed Al-Sayed.
Mr. Al-Sayed has been
the Chief Executive Officer of the QIA since July 7, 2013 and a Minister of State of Qatar since May 12, 2013, and for the past 5 years has been the Managing Director, Chief Executive Officer and a member of the board of directors of QH.
His business address is: Q-Tel Tower, 8th Floor, Diplomatic Area Street, West Bay, P.O. Box 23224, Doha, Qatar. Mr. Al-Sayed is a citizen of Qatar.
H.E. Yousef Hussain Kamal.
Mr. Kamal is a member of the Board of Directors of QH and the Chairman of the Qatar Financial Centre Authority and has occupied this position for the past five
years. During the five year period ending July 7, 2013, Mr. Kamal served as a member of the board of directors of QIA and was Minister of Economy and Finance of the State of Qatar. During the five year period ending July 7, 2013,
Mr. Kamal served as Chairman of the Qatar National Bank and during the five year period ending July 17, 2013, Mr. Kamal served as a director of Qatari Diar. His business address is: Q-Tel Tower, 8th Floor, Diplomatic Area Street, West
Bay, P.O. Box 23224, Doha, Qatar. Mr. Kamal is a citizen of Qatar.
H.E. Dr. Hussain Ali Al-Abdulla.
Dr. Al-Abdulla has been a Minister of State of Qatar since May 12, 2013, and for the past 5 years has been a member of the board of directors of QIA, the Vice Chairman of QH and the Chairman of Masraf Al-Rayan (Qatar). His business address
is: Q-Tel Tower, 8th Floor, Diplomatic Area Street, West Bay, P.O. Box 23224, Doha, Qatar. Dr. Al-Abdulla is a citizen of Qatar.
Al Gharrafa Investment Company
: Set forth below for each director of Al Gharrafa is his present principal occupation or employment, the name of the organization in which such occupation or
employment is conducted and the five-year employment history of such director. Al Gharrafa does not have any executive officers. During the past five years, neither Al Gharrafa nor any of its directors has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors). During the past five years, neither Al Gharrafa nor any of its directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction
or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities
laws.
Directors of Al Gharrafa Investment Company
Omer Abdulaziz H A Al-Marwani.
Mr. Al-Marwani is the Acting Chief Operating Officer and Director of Finance Department of QH.
Mr. Al-Marwani was the Acting Director of Finance of QH from November 2006 to December 2011, and has been the Acting Chief Operating Officer of QH since December 2012 and the Director
J-9
of Finance Department of QH since December 2011. His business address is: Q-Tel Tower, 8
th
Floor, Diplomatic Area Street, West Bay, P.O. Box 23224, Doha, Qatar. Mr. Al-Marwani is a citizen of Qatar.
Khalifa Jassim M A Al-Kuwari.
Mr. Al-Kuwari is a Consultant to the Office of the CEO of QH.
Mr. Al Kuwari was the Senior Accountant of QH from April 2007 to December 2009, the Deputy Chief Operating Officer of QH from January 2010 to May 2010 and the Acting Chief Operating Officer of QH from May 2010 to November 2012, and has been the
Consultant to the Office of the CEO of QH since November 2012. His business address is: Q-Tel Tower, 8
th
Floor, Diplomatic Area Street, West Bay, P.O. Box 23224, Doha, Qatar. Mr. Al-Kuwari is a citizen of Qatar.
Muhammad Ali Ridzwan Bin Yusof.
Mr. Bin Yusof is the Director of Financing and Corporate Affairs of QH.
Mr. Bin Yusof was the Risk Analyst of QH from January 2007 to December 2011 and has been the Director of Financing and Corporate Affairs of QH since December 2011. His business address is: Q-Tel Tower, 8
th
Floor, Diplomatic Area Street, West Bay, P.O. Box 23224, Doha,
Qatar. Mr. Bin Yusof is a citizen of Malaysia.
Ellington Investments Pte. Ltd.
: Set forth below for each
director of Ellington is his or her present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. Ellington does not have any
executive officers. During the past five years, neither Ellington nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither Ellington nor any of
its directors or executive officers has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Directors of Ellington Investments Pte. Ltd.
Bee Kheng Goh.
Ms. Goh is a Director of Ellington and Managing Director, Finance of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2008. Her business address is: 60B Orchard Road, #06-18, Tower 2, The
Atrium@Orchard, Singapore 238891, Singapore. Ms. Goh is a citizen of Singapore.
Weng Chuen Poy.
Mr. Poy is a
Director of Ellington and Director, Finance of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2006. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore.
Mr. Poy is a citizen of Singapore.
Seow Ling Seah.
Ms. Seah is a Director of Ellington and Director, Value
Management of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd since 2005. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Seah is a citizen
of Singapore.
The sole shareholder of Ellington is Bartley Investments Pte. Ltd. (Bartley), a Singapore
corporation, which is principally engaged in the business of investment holding. The sole shareholder of Bartley is Tembusu Capital Pte. Ltd. (Tembusu), a Singapore corporation, which is principally engaged in the business of investment
holding. Set forth below for each director of Bartley and Tembusu is his or her present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such
director. Bartley and Tembusu do not have any executive officers. The sole shareholder of Tembusu is Temasek Holdings (Private) Limited (Temasek), a Singapore corporation, which is principally engaged in the business of investment
holding. Set forth below for each director and executive officer of Temasek is his or her present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment
history of such
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director or executive officer. The principal business address and telephone number for each of Bartley, Tembusu and Temasek is 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore
238891, Singapore,
+65-6828-6828.
During the past five years, none of Bartley, Tembusu, Temasek or any of their respective directors or executive officers has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). During the past five years, none of Bartley, Tembusu, Temasek or any of their respective directors or executive officers has been a party to any judicial or administrative proceeding (except for matters
that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any
violation of federal or state securities laws.
Directors of Bartley Investments Pte. Ltd.
Weng Chuen Poy.
Mr. Poy is a Director of Bartley and Director, Finance of Temasek International Pte. Ltd. and has been with
Temasek International Pte. Ltd. since 2006. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Poy is a citizen of Singapore.
Ooi Keong Lee.
Mr. Lee is a Director of Bartley and Director, Risk Management of Temasek International Pte. Ltd. and has been
with Temasek International Pte. Ltd. since 2008. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Lee is a citizen of Malaysia.
Directors of Tembusu Capital Pte. Ltd.
Yue Joo Chia.
Ms. Chia is a Director of Tembusu and Managing Director, Legal & Regulations of Temasek International Pte. Ltd. Her business address is: 60B Orchard Road, #06-18, Tower
2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Chia is a citizen of Singapore.
Whye Lin Yeo.
Ms. Yeo is a Director of Tembusu and Director, Human Resources of Temasek International Pte. Ltd. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Yeo is a citizen of
Singapore.
Directors and Executive Officers of Temasek Holdings (Private) Limited.
Boon Heng Lim.
Mr. Lim became Chairman of Temasek in 2013 and has been a Director of Temasek since 2012. Prior to Temasek,
Mr. Lim was a Minister in the Prime Ministers Office for the government of Singapore, with a business address of Orchard Road, Istana, Singapore 238823, Singapore. His business address is: 60B Orchard Road, #06-18, Tower 2, The
Atrium@Orchard, Singapore 238891, Singapore. Mr. Lim is a citizen of Singapore.
Ching Ho.
Ms. Ho is
Executive Director and CEO of Temasek and has been with Temasek since 2002. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Ho is a citizen of Singapore.
Hong Pak Kua.
Mr. Kua is a Director of Temasek and Managing Director and Group CEO of ComfortDelGro Corporation Limited,
which is principally engaged in the business of land transport. His business address is: 205 Braddell Road, East Wing 7th Floor, Singapore 579701, Singapore. Mr. Kua is a citizen of Singapore.
Yew Lin Goh.
Mr. Goh is a Director of Temasek and Managing Director of GK Goh Holdings Limited, which is principally engaged
in the business of investment holding. His business address is: 50 Raffles Place, #33-00, Singapore Land Tower, Singapore 048623, Singapore. Mr. Goh is a citizen of Singapore.
J-11
Ming Kian Teo.
Mr. Teo is a Director of Temasek and has held this position
since 2006. Prior to Temasek, Mr. Teo was Permanent Secretary in the Ministry of Finance, with a business address of The Treasury, 100 High St., Singapore 179434, Singapore, and National Research and Development, National Research
Foundation in the Prime Ministers Office for the government of Singapore, with a business address of 1 CREATE Way, #12-02, CREATE Tower, Singapore 138602, Singapore. His business address is: 60B Orchard Road, #06-18, Tower 2, The
Atrium@Orchard, Singapore 238891, Singapore. Mr. Teo is a citizen of Singapore.
Marcus Wallenberg.
Mr. Wallenberg is a Director of Temasek and Chairman of Foundation Asset Mgmt Sweden AB, which is principally engaged in the business of asset management. His business address is: Arsenalsgatan 4, 3rd fl., Stockholm Sweden.
Mr. Wallenberg is a citizen of Sweden.
Jown Leam Michael Lien.
Mr. Lien is a Director of Temasek and
Executive Chairman of Wah Hin and Company Private Limited, which is principally engaged in the business of investment holding. His business address is: One Raffles Place, #51-00, Singapore 048616, Singapore. Mr. Lien is a citizen of
Singapore.
Wai Keung Cheng.
Mr. Cheng is a Director of Temasek and Chairman and Managing Director of Wing
Tai Holdings Limited, which is principally engaged in the businesses of property investment and development, lifestyle retail and hospitality management. His business address is: 3 Killiney Road, #10-01, Winsland House 1, Singapore 239519,
Singapore. Mr. Cheng is a citizen of Singapore.
Yuen Kuai Lucien Wong.
Mr. Wong is a Director of Temasek and
Chairman and Senior Partner of Allen & Gledhill LLP, which is principally engaged in the business of providing legal services. His business address is: One Marina Boulevard, #28-00, Singapore 018989, Singapore. Mr. Wong is a citizen of
Singapore.
Robert B. Zoellick.
Mr. Zoellick became a Director of Temasek in 2013. Prior to Temasek,
Mr. Zoellick was President and CEO of the World Bank Group, with a principal business address of 1818 H Street, NW Washington, DC 20433, USA. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891,
Singapore. Mr. Zoellick is a citizen of the United States of America.
Wai Ching Chan.
Ms. Chan is Co-Head of
the Corporate Development Group and Head of Organisation and Leadership of Temasek International Pte. Ltd. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Chan is a citizen of
Singapore.
Hock Kuan Cheo.
Ms. Cheo is Head of Strategic Relations & Corporate Affairs of Temasek
International Pte. Ltd. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Cheo is a citizen of Singapore.
Song Hwee Chia.
Mr. Chia is Head of the Investment Group and Co-Head of China of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2011. Prior to Temasek
International Pte. Ltd., Mr. Chia was Executive Vice President and Chief Operating Officer of GLOBALFOUNDRIES Singapore Pte. Ltd., which is principally engaged in the business of semiconductor manufacturing services, with a principal business
address of 60 Woodlands Industrial Park D Street 2, Singapore 738406, Singapore and was employed by GLOBALFOUNDRIES Singapore Pte. Ltd. beginning in 2009. Prior to GLOBALFOUNDRIES Singapore Pte. Ltd., Mr. Chia was President & Chief
Executive Officer of Chartered Semiconductor Manufacturing Ltd., which is principally engaged in the business of semiconductor manufacturing, with a principal business address of 60 Woodlands Industrial Park D Street 2, Singapore 738406, Singapore.
His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Chia is a citizen of Singapore.
John Cryan.
Mr. Cryan is Co-Head of Portfolio & Strategy Group, President of Europe, Head of Credit Portfolio, Head of Portfolio Strategy and Head of Africa of Temasek International
Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2012. Prior to Temasek International Pte. Ltd., Mr. Cryan was Chairman & CEO, EMEA of UBS AG, which is principally engaged in the business of providing investment
banking, asset management and wealth management services, with a principal business address of 1 Finsbury Avenue, London, EC2M 2PP. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore.
Mr. Cryan is a citizen of Great Britain.
J-12
Gregory L. Curl.
Mr. Curl is President of Temasek International Pte. Ltd.
and has been with Temasek International Pte. Ltd. since 2010. Prior to Temasek International Pte. Ltd., Mr. Curl was employed as Vice Chairman at Bank of America, which is principally engaged in the business of providing banking and financial
services, with a principal business address of Bank of America Corporate Center, 100 North Tryon Street, Charlotte, NC 2825. His business address is: 60B Orchard Road,
#06-18,
Tower 2, The Atrium@Orchard,
Singapore 238891, Singapore. Mr. Curl is a citizen of The United States of America.
Nagi Hamiyeh.
Mr. Hamiyeh is Co-Head of the Enterprise Development Group, Senior Managing Director of Investment, Head of Australia & New Zealand, Head of the Middle East and Co-Head of Africa of Temasek International Pte. Ltd. His business
address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Hamiyeh is a citizen of Singapore.
David Heng.
Mr. Heng is Co-Head of the Markets Group, Senior Managing Director of Investment and Head of South East Asia of Temasek International Pte. Ltd. His business address is: 60B Orchard
Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Heng is a citizen of Singapore.
Ravi
Lambah.
Mr. Lambah is Senior Managing Director of Investment and Co-Head of India of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2012. Prior to Temasek International Pte. Ltd., Mr. Lambah was
employed as the Chief Operating Officer of STT Communications Ltd., which is principally engaged in the business of providing information-communication services, with a principal business address of 1 Temasek Avenue, #33-01, Millenia Tower,
Singapore 039192, Singapore and was employed by STT Communications Ltd. beginning in 2010. Prior to STT Communications Ltd., Mr. Lambah was employed as a Managing Director of Global Investment Banking by Citi Global Markets, India, which is
principally engaged in the business of providing financial services, with a principal business address of 4th Floor Bakhtawar Nariman Point, Mumbai 400021, India. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard,
Singapore 238891, Singapore. Mr. Lambah is a citizen of India.
Theng Kiat Lee.
Mr. Lee is President of
Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2012. Prior to Temasek International Pte. Ltd., Mr. Lee was President & CEO of STT Communications Ltd., which is principally engaged in the
business of information-communication services, with a business address of 1 Temasek Avenue, #33-01, Millennia Tower, Singapore 039192, Singapore. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891,
Singapore. Mr. Lee is a citizen of Singapore.
Wai Leng Leong.
Ms. Leong is Chief Financial Officer, Head of
the Corporate Development Group and Co-Head of Portfolio Management of Temasek. Her business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Leong is a citizen of Singapore.
Siok Lan Pek.
Ms. Pek is Senior Managing Director of Investment and Senior Managing Director, General Counsel of Temasek
International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2012. Prior to Temasek International Pte. Ltd., Ms. Pek was the Executive Vice President & General Counsel of STT Communications Ltd., which is principally
engaged in the business of providing information-communication services, with a business address of 1 Temasek Avenue,
#33-01,
Millenia Tower, Singapore 039192, Singapore. Her business address is: 60B Orchard
Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Ms. Pek is a citizen of Singapore.
Dilhan
Pillay Sandrasegara.
Mr. Sandrasegara is Head of the Enterprise Development Group, Head of Singapore and Co-Head of Americas of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2010. Prior to Temasek
International Pte. Ltd., Mr. Sandrasegara was the Managing Partner of WongPartnership LLP, which is principally engaged in the business of providing legal services, with a business address of 12 Marina Boulevard Level 28, Marina Bay Financial
Centre Tower 3, Singapore 018982, Singapore. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Sandrasegara is a citizen of Singapore.
J-13
Rohit Sipahimalani.
Mr. Sipahimalani is Co-Head of the Investment Group,
Head of India and Co-Head of the Middle East of Temasek International Pte. Ltd. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Sipahimalani is a citizen of Singapore.
Boon Sim.
Mr. Sim is Head of the Markets Group, President of the Americas and Co-Head of Credit Portfolio of Temasek
International Pte. Ltd. and has been with Temasek since 2012. Prior to Temasek International Pte. Ltd., Mr. Sim was Global Head of the Mergers & Acquisitions Group of Credit Suisse Securities (USA) LLC, which is principally engaged in
the business of providing financial services, with a principal business address of 11 Madison Avenue, New York, NY 10010, USA. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore.
Mr. Sim is a citizen of The United States of America.
Chong Lee Tan.
Mr. Tan is Head of the
Portfolio & Strategy Group, Head of Portfolio Management, Head of Strategy, Co-Head of Singapore and Co-Head of Europe of Temasek International Pte. Ltd. and has been with Temasek International Pte. Ltd. since 2011. Prior to Temasek
International Pte. Ltd., Mr. Tan was the Country Executive of South East Asia & Head of Corporate & Investment Banking of South East Asia of Bank of America Merrill Lynch, which is principally engaged in the business of
providing banking and financial services, with a principal business address of 2 Harbourfront Place, Singapore 098499, Singapore and was employed by Bank of America Merrill Lynch beginning in 2010. Prior to Bank of America Merrill Lynch,
Mr. Tan was
Co-Head
of Investment Banking of South East Asia of Goldman Sachs (Singapore) Pte., which is principally engaged in the business of providing financial services, with a principal business
address of 1 Raffles Link,
#07-01,
South Lobby, Singapore 039393, Singapore. His business address is: 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891, Singapore. Mr. Tan is a
citizen of Singapore.
Yibing Wu.
Mr. Wu is Head of China of Temasek International Pte. Ltd. and has been with
Temasek International Pte. Ltd. since 2013. Prior to Temasek International Pte. Ltd., Mr. Wu was Chairman and CEO of CITIC Goldstone Investment Co. Ltd., which is principally engaged in the business of private equity, with a principal business
address of 17/F CITIC Securities Building, No. 48 Liangmaqiao Road, Chaoyang District, Beijing 100026, China and was employed by CITIC Goldstone Investment Co. Ltd. beginning in 2012. Prior to CITIC Goldstone Investment Co. Ltd., Mr. Wu
was President of CITIC Private Equity Funds Management Co. Ltd., which is principally engaged in the business of private equity, with a principal business address of 11/F Jinbao Tower, No. 89 Jinbao Street, Dongcheng District, Beijing 100005,
China
and was employed by CITIC Private Equity Funds Management Co. Ltd. beginning in 2009. Prior to CITIC Private Equity Funds Management Co. Ltd., Mr. Wu was Executive Vice President of Legend Holdings Ltd., which is principally engaged in
the business of investment holding, with a principal business address of 10F, Tower A, Raycom InfoTech Park, 2 Ke Xue Yuan Nan Lu, Hai Dian District, Beijing 100190, China. His business address is: 60B Orchard Road, #06-18, Tower 2, The
Atrium@Orchard, Singapore 238891, Singapore. Mr. Wu is a citizen of the United States of America.
AlpInvest
Partners Co-Investments 2011 II C.V., AlpInvest Partners Co-Investments 2012 I C.V.
,
AlpInvest Partners Co-Investments 2012 II C.V.
: As of the date hereof, neither AlpInvest 2011 II, AlpInvest 2012 I nor AlpInvest 2012
II has any directors or executive officers. Set forth below for each director and executive officer of AlpInvest Partners B.V., which owns and controls (i) AlpInvest Partners 2011 B.V., being the general partner of AlpInvest Partners
Co-Investments 2011 II C.V., (ii) AlpInvest Partners 2012 I B.V., being the general partner of AlpInvest Partners Co-Investments 2012 I C.V. and (iii) AlpInvest Partners 2012 II B.V., being the general partner of AlpInvest Partners
Co-Investments 2012 II C.V., is his present principal occupation or employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. During the past five years,
neither any AlpInvest Entity nor any of the directors or executive officers of AlpInvest Partners B.V. has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither any
AlpInvest Entities nor any of its directors or executive officers has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final
order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
J-14
Directors and Executive Officers of AlpInvest Partners B.V.
Volkert Doeksen.
Mr. Doeksen is the co-founder, Vice-Chairman of the Board and Managing Partner of AlpInvest Partners. His
business address is Jachthavenweg 118, 1081 KJ Amsterdam, The Netherlands. Mr. Doeksen is a citizen of The Netherlands.
Paul de Klerk.
Mr. De Klerk is the co-founder, Chief Financial Officer and Chief Operating Officer of AlpInvest Partners. His business address is Jachthavenweg 118, 1081 KJ Amsterdam, The
Netherlands. Mr. De Klerk is a citizen of The Netherlands.
Glenn A. Youngkin.
Mr. Youngkin is the
Chairman of the Board, Managing Director and the Chief Operating Officer of the Carlyle Group. Mr. Youngkin joined the Carlyle Group in 1995. From October 2010 to March 2011, he served as an Interim Chief Financial Officer of the Carlyle Group.
His business address is 1001 Pennsylvania Avenue, NW Suite 220 South Washington, DC 20004, USA. Mr. Youngkin is a citizen of the United States of America.
Jacques P. Chappuis.
Mr. Chappuis is the Global Head of the Solutions Business Segment of the Carlyle Group. He has held this position since 2013. Prior to this, Mr. Chappuis has been
with Morgan Stanley since 2006, and served as the Managing Director at Morgan Stanley and as the Head of Alternative Investments at Morgan Stanley Global Wealth Management Group between 2009 and 2013. Mr. Chappuis is a citizen of the United
States of America.
CBC TMT III Limited
: Set forth below for each director of CBC is his present principal
occupation or employment, the name of the organization in which such occupation or employment is conducted and the
five-year
employment history of such director. As of the date hereof, CBC does not have any
executive officers. During the past five years, neither CBC nor any of its directors or executive officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither CBC
nor any of its directors or executive officers has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Director of CBC TMT III Limited
Edward Tian.
See
AsiaInfo-Linkage, Inc.Directors of AsiaInfo-Linkage, Inc.
beginning on page J-1 for additional information about Dr. Tian.
InnoValue Capital Ltd
: Set forth below for each director InnoValue is his present principal occupation or employment, the name of the organization in which such occupation or employment is
conducted and the
five-year
employment history of such director. As of the date hereof, InnoValue does not have any executive officers. During the past five years, neither InnoValue nor any of its directors or
executive officers has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither InnoValue nor any of its directors or executive officers has been a party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or
state securities laws or a finding of any violation of federal or state securities laws.
Director of InnoValue Capital Ltd
Liu Tzu-Lien
. Ms. Liu is the Director of InnoValue and has been with the firm since its establishment in 2006.
Her business address is No. 113-3, Sec. 1 An-Ho Road, Taipei 106, Taiwan. Ms. Liu is a citizen of Taiwan.
PacificInfo Limited
. Set forth below for each director of PacificInfo is his present principal occupation or employment,
the name of the organization in which such occupation or employment is conducted and the
five-year
employment history of such director. As of the date hereof, PacificInfo does not have any executive
J-15
officers. During the past five years, neither PacificInfo nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the
past five years, neither PacificInfo nor any of its directors has been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.
Director of PacificInfo Limited
Edward Tian.
See
AsiaInfo-Linkage, Inc. Directors of AsiaInfo-Linkage, Inc.
beginning on page J-1 for additional information about Dr. Tian.
New Media China Investment I, Ltd.
Set forth below for each director of New Media is his present principal occupation or
employment, the name of the organization in which such occupation or employment is conducted and the five-year employment history of such director. As of the date hereof, New Media does not have any executive officers. During the past five years,
neither New Media nor any of its directors has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). During the past five years, neither New Media nor any of its directors has been a party to any judicial or
administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or
state securities laws or a finding of any violation of federal or state securities laws.
Directors of New Media China
Investment I, Ltd.
Jian (James) Ding.
See
AsiaInfo-Linkage, Inc. Directors of AsiaInfo-Linkage,
Inc.
beginning on page J-1 for additional information about Mr. Ding.
J-16
ANNEX K
PRELIMINARY PROXY MATERIAL SUBJECT TO COMPLETION
ASIAINFO-LINKAGE, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby revokes any proxy previously given and appoints Shanniang (Deborah) Lv and Jun (Michael) Wu, or either of them, as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the
shares of common stock of AsiaInfo-Linkage, Inc. (the
Company
) held of record by the undersigned on
, 2013, at the special meeting of stockholders to
be held at
local time, on
, 2013, at 4th Floor, Zhongdian Information Tower, 6
Zhongguancun South Street, Haidian District, Beijing, Peoples Republic of China or any adjournment or postponement thereof, and further authorizes each such proxy to vote at his or her discretion on any other matter that may properly come
before the meeting or any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS LISTED ON THE REVERSE SIDE. IF OTHER MATTERS THAN THE PROPOSALS LISTED ON THE REVERSE SIDE ARE PRESENTED AT THE SPECIAL MEETING OR
ANY ADJOURNMENT OR POSTPONEMENT THEREOF, THE PERSONS NAMED ABOVE WILL VOTE IN ACCORDANCE WITH THEIR DISCRETION WITH RESPECT TO THOSE MATTERS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE OR VOTE BY INTERNET OR TELEPHONE FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE.
(Continued and to be signed on the Reverse Side)
K-1
THERE ARE THREE WAYS TO VOTE: BY INTERNET, TELEPHONE OR MAIL
Internet and telephone voting is available 24 hours a day, 7 days a week through 11:59 PM Eastern Time the day prior to the special
meeting date.
Your Internet or telephone vote authorizes the proxies to vote your shares in the same manner as if you marked,
signed and returned your proxy card.
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INTERNET
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TELEPHONE
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MAIL
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www.investorvote.com/tickersymbol
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1-800-652-VOTE (8683)
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Go to the website listed above.
Have your proxy card ready.
Follow the simple
instructions that appear on your computer screen.
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Use any touch-tone telephone.
Have your proxy card ready.
Follow the simple
recorded
instructions.
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Mark, sign and date your proxy card.
Detach your proxy card.
Return your proxy card in the
postage-paid envelope provided.
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Please Vote, Sign, Date and Return Promptly in the Enclosed Postage-Paid Envelope
K-2
q
DETACH PROXY CARD HERE
TO VOTE BY MAIL
q
The Board of Directors, acting on the unanimous
recommendation of the special committee composed entirely of independent directors, recommends a vote FOR the adoption of the merger agreement. Our board of directors also recommends a vote FOR Proposal 2 and a vote
FOR Proposal 3.
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FOR
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AGAINST
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ABSTAIN
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1.
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To adopt the Agreement and Plan of Merger, dated as of May 12, 2013 (the
merger agreement
), among the Company, Skipper Limited (
Parent
) and
Skipper Acquisition Corporation (
Merger Sub
), as it may be amended from time to time, providing for the merger of Merger Sub with and into the Company (the
merger
), with the Company surviving the merger as a
wholly owned subsidiary of Parent.
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¨
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¨
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¨
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FOR
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AGAINST
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ABSTAIN
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2.
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To approve, on an advisory, non-binding basis, the agreements or understandings with and items of compensation payable to, or which may become payable to, the named executive
officers of the Company that are based on or otherwise relate to the merger.
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¨
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¨
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¨
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FOR
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AGAINST
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ABSTAIN
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3.
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To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting
to adopt the merger agreement.
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¨
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¨
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¨
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Note:
Please sign your name exactly as it appears hereon. If signing as attorney, executor, administrator, trustee or guardian, please give full title as such,
and, if signing for a corporation, give your title. When shares are in the names of more than one person, each should sign.
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Dated:
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Signature:
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Title or Authority:
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Signature (if held jointly):
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K-3