Subject: Re: Heads up- Fund
From: <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Jim Bulger" <[email-masked]>
Date: Thu, 22 Sep 2011 23:18:25 +0800

Gentlemen,

Good news from Jonathan after his meeting with Super Chairman in HK:

   1. We three's ownership of the fund management co. 20% while Jonathan's
   10%.  (Still very very good for you two and me!)
   2. Super Chairman went: "I'm not being greedy even though I commit US$100
   million. Actually I'm planning to give part of the remaining 70% to other
   Chinese big firms which I'm going to invite to join us, companies like China
   Investment Corp. or that kind of high power companies."  (This is
   surprisingly great for us.  Companies like CIC and the like will of course
   even enhance our FMC's profile and credibility and to make the fund pie even
   much bigger if they ever choose to join and to commit money.  Imagine we
   will be sitting on the same board with CIC or the other Chinese HUGE
   investment or fund house(s)!!!)

Look forward to seeing you two together with Jonathan in DC.

Best,

Michael

On Wed, Sep 21, 2011 at 12:28 AM, <[email-masked]> wrote:

> Gents, Rock just sent me the translation of the cooperation term sheet
> (below and attached) about which Jonathan is now talking to SS in HK.
>  Jonathan will use this (with blanks filled after confirmation with SS) to
> discuss with us in DC.  Best, Michael
>
>
>
> *Term Sheet*
>
> *For China-US Parallel Funds*
>
>
>
> This Term Sheet is signed by the following parties in [location], on
> [date], 2011.
>
> *Party A: Ever Union Capital Limited and/or related persons;*
>
> *Party B: H. Biden;*
>
> *Party C: M. Lin, J Bulger;*
>
> *Party D: Management Team.*
>
>
>
> *WHEREAS,* the above four Parties in willing to raise [name] RMB Fund and
> [name] USD Fund in parallel to invest into the equities of Chinese market
> related companies;
>
> *NOW, THEREFORE, *in consideration of the terms set forth in this Term
> Sheet, the Parties agree as follows:
>
>
>
> *1.        **Funds’ Structure*
>
> Two Funds – one RMB denominated and one USD denominated – are considered to
> set up in parallel. The RMB Fund is on-shore in China, while the USD Fund is
> off-shore. See Term 4 Organization Structure for an illustration.
>
> *2.        **General Partner / Manager*
>
> All Parties in this Term Sheet are the General Partners, jointly
> responsible for the operations of both Funds.
>
> *3.        **Fund Raising / Limited Partner(s)*
>
> All Parties are responsible for raising capital. In the USD Fund, Party A
> promises to raise the capital no less than US$50 million. In the RMB Fund,
> Party A promises to raise the capital no less than US$50 million equivalent.
> Party D promises to raise the capital aggregately no less than US$50 million
> or equivalent.
>
> *4.        **Organization Structure*
>
> *5.        **Corporate Governance*
>
> All Parties join into a joint venture, which is the General Partner for
> both Funds. The joint venture should be registered outside China, with the
> initial registration capital of [  ]. The share of each Party in the joint
> venture is: [  ]% for the Party A, [  ]% for the Party B, [  ]% for the
> Party C, and [  ]% for the Party D. the Articles of Incorporation and any
> amendments to the Articles of Incorporation of the joint venture should be
> agreed by more than 2/3 of the share holders. The Board of Directors is
> composed of 7 members, among whom 3 are appointed by the Party A, 2 are
> appointed by the Party B and C jointly, 1 is appointed by the Party D, and 1
> is appointed by the Management Team. Mr./Mrs. [name] is the
> Chairman(/Chairwomen) of the Board of Directors.
>
> *6.        **Decision Making*
>
> In principal, any investment into a target company should be allocated to
> both RMB Fund and USD Fund according to the capital committed to each fund.
> If the target company is not suitable for USD investment, for example, the
> target company belongs to the industry restrict or forbidden for foreign
> investment, only RMB Fund should make the investment. If the target company
> is not suitable for RMB investment, for example, the time required for
> foreign exchange or approval on out-bound investment is too long to make the
> investment, only USD Fund should make the investment. In each investment,
> the allocation of capital between the two Funds is decided by the Investment
> Committee. The Investment Committee is composed of all members of joint
> venture’s Board of Directors, responsible for all decision making. In each
> Investment Committee meeting, at least 6 members should present. Any
> decision made should be agreed by more than 2/3 of the members who join the
> Investment Committee meeting.
>
> *7.        **Management Team*
>
> Mr./Mrs. [name] is the General Manager of the joint venture. The
> composition of the top management should be suggested by the General Manager
> and approved by the Board of Directors. The Management Team should be
> recruited by the General Manager.
>
> *8.        **Investment Focuses*
>
> By all means, such as private equity, prefer share, convertible bond,
> exchangeable bond, and PIPE, the Funds should make value investment into the
> equities of: 1) promising Chinese companies and their international
> practices, 2) Chinese companies’ domestic and/or global merger and
> acquisitions, 3) outstanding Chinese and foreign companies in the industries
> with global value chains.
>
> *9.        **Returns’ Distribution*
>
> 20% of returns should be distributed to the joint venture as General
> Partner’s Carry. 15% of the Carry should be distributed to the Management
> Team, excluding the General Manager, and the rest should be distributed
> among the share holders.
>
> *10.    **Funds’ Key Terms – Subject to the Agreement of Limited
> Partner(s)*
>
> *Funds*
>
> *：***
>
> [name] (RMB) Fund and [name] (USD) Fund
>
> *Format*
>
> *：*
>
> Limited Partnership
>
> *Locations*
>
> *：***
>
> [location] for the RMB Fund
>
> [location] for the USD Fund
>
> *Target Fund Sizes*
>
> *：*
>
> RMB Fund: equivalent to US$150 million
>
> USD Fund: US$150 million
>
> *Capital Contribution*
>
> *：***
>
> 10% of the capital committed by each Limited Partner should be contributed
> on the Closing Day and capital calls may be required from time to time
> within the Investment Period
>
> *First Closing*
>
> *：***
>
> The capital up to 1/3 of the target fund size is committed for each fund
>
> *Management Fee*
>
> *：*
>
> 2.0% per annum of Limited Partner’s Commitment during the Investment
> Period, and thereafter, 2.0% per annum of the capital invested less those
> returned and distributed
>
> *Offering/Organizational Expenses*
>
> *：*
>
> No more than 2.0% of Limited Partner’s Commitment
>
> *Commitment Period*
>
> *：*
>
> 8 years, of which first 4 years is the Investment Period; may be extended
> by 2 years, if approved by the Partners
>
> *Returns’ Distribution*
>
> *：*
>
> 6% Preferred Return for the Limited Partners; and a 80/20 Split between the
> Limited Partners and the General Partners, after General Partner Catch-up
>
> *LP Advisory Committee*
>
> *：*
>
> Meeting once annually, while special meeting(s) may be called, if necessary
>
> *Reports*
>
> *：*
>
> On a regular time basis, each Limited Partner will be furnished with a
> Funds’ Operation Report and a special report will also be furnished whenever
> necessary
>
> *Closing Day*
>
> *：*
>
> The day when all legal documents are signed
>
> *11.    **General Terms*
>
> 1)        Confidentiality: each Party is responsible for keep this Term
> Sheet strictly confidential.
>
> 2)        The Party who breach this Term Sheet should be responsible for
> the subsequence.
>
> 3)        Others:
>
>                     i.     Only Term 11 General Terms are legally binding
> for all Parties.
>
>                   ii.     Any notice from any Party to another should be
> made in written format.
>
>                 iii.     Each Party has a copy of this Term Sheet, with
> equal legal force.
>
>
>
>  (This page is for each Party to sign)
>
>
>
> *Party A: [    ]*
>
>
>
>
>
> *Party B: [    ]*
>
>
>
>
>
> *Party C: [    ]*
>
>
>
>
>
> *Party D: [    ]*
>
>
>
>
>
>
>
> On Tue, Sep 20, 2011 at 11:28 PM, Hunter Biden <[email-masked]>wrote:
>
>> Wow! This is a great deal.
>>
>> RHB
>> 202.333.1880
>>
>> On Sep 20, 2011, at 3:57 PM, [email-masked] wrote:
>>
>> This is all good stuff Michael. I am looking forward to seeing you and
>> Jonathan next week in DC.
>> Jimmy
>>
>> Sent via BlackBerry by AT&T
>> ------------------------------
>> *From: * [email-masked]
>> *Date: *Tue, 20 Sep 2011 18:35:21 +0800
>> *To: *Jimmy Bulger<[email-masked]>; Hunter Biden<
>> [email-masked]>
>> *Subject: *Re: Heads up- Fund
>>
>> Forgot to mention-  Jonathan and SS have already in the pipeline many
>> great projects in China.  Amazing!  Easy for us to just open doors in the US
>> or other places for them:
>>
>>
>>    1. Bohai's brand name: #1 in China;
>>    2. Professional team with excellent Eng proficiency: #1 in China;
>>    3. Huge anchor investment: US$150 million of the US$300 million of
>>    total Fund I size; and
>>    4. Great pipeline deals to be invested.
>>
>>
>> I personally feel that they can raise the remaining US$150 million in Asia
>> especially from Hong Kong and China.  I don't really think we will have to
>> do much door opening for them in the US even though we will tell them yes we
>> will definitely help.  Maybe we will do much more attending meetings in
>> China and Hong Kong that SS and Jonathan themselves will arrange during the
>> fund raise!
>>
>> If the meetings goes well in DC, SS will request you two pls come meet him
>> in Hong Kong after the October long vacation (National Day holidays 10/1-
>> 10/9) to seal the partnership deal.
>>
>> I heard from SS that he wishes to open shop in November and no later than
>> the end of December.  He wishes to complete the total fund raise 1Q next
>> year.  He and Jonathan are both very confident in the success in Fund I
>> raise- the amount and the time frame!!!
>>
>>
>>
>>
>> On Tue, Sep 20, 2011 at 4:17 PM, Michael Lin <<[email-masked]>
>> [email-masked]> wrote:
>>
>>> All right, Gents, let me give you a heads up of my meeting with Jonathan
>>> last night.  Nice to have such a great and long time buddy!
>>>
>>> Jonathan has put down what he and I discussed a few days ago into a 7
>>> pager in Chinese to be presented to Super Chairman today when he flies to HK
>>> to see him in person to final confirm things before presenting the proposal
>>> to you two in Wash DC. After all nego and confirmation from SS in HK Rock
>>> will right away translate the piece into English for my review and edits. I
>>> think I will be able to send the Eng version to you over the weekend before
>>> Jonathan and I fly to DC.
>>>
>>> Here is the gist of the proposal and upon final nego or confirmation with
>>> SS today Jonathan will discuss in greater detail with you in DC:
>>>
>>> ------------------------------**----
>>> A PE Fund; 2% annual management fee. Carried: 20%.
>>>
>>> Fund I size: USD300 million.
>>>
>>> Fund I will have a RMB fund and a USD fund with a size of USD150 million,
>>> respectively.
>>>
>>> Fund I will be managed by some key Bohai team members who plan to leave
>>> together with Jonathan and the team will of course be headed by Jonathan in
>>> our new fund management co.
>>>
>>> SS himself to commit USD50 million equivalent RMB to the local RMB fund
>>> and another USD50 million to the USD fund while Jonathan and his team to
>>> commit (through raise) USD50 million or its equivalent RMB either to the USD
>>> Fund or the RMB Fund or both mixed. (Jonathan told me in private he had that
>>> USD50 million commitment from investors already once he quits Bohai.)
>>>
>>> Proposed owership structure of the FMC: SS 40%, Jonathan and one or two
>>> of his senior team members 30%, and we three 30%. (Isn't this nice and
>>> sweet?!)
>>>
>>> FMC board directorship: SS 3 seats, Jonathan 1 seat; management team 1
>>> seat, and we 2 seats. 2/3 majority to approve major desions presented to the
>>> board of FMC.
>>>
>>> FMC: Chairman SS ir his appointed guy. President Jonathan.
>>>
>>> IC: 2/3 IC members majority vote to aprrove an investment in a project.
>>>
>>> Management team incentive on carried; 15% of the carried. Jonathan
>>> himself though being president of our FMC but as a shareholder of FMC won't
>>> share with management team on the 15% of the carried but will share with us
>>> the 85% of the carried according to the FMC ownership %.
>>>
>>> SS, Jonthan and team, and we based on our best effort to raise the
>>> remaining USD150 million. We three's FMC owership will not be reduced or
>>> changed no matter we have succeeded in helping the fund raise. What SS and
>>> Jonathan ask from us is the following and I confirm this many times with
>>> Jonathan: 1. Make the FMC look internationalized with guolos' faces on the
>>> board and ownership structure (of course guilos whom SS and Jonathan can get
>>> along with and can trust), 2. Open as many doors as possible in the western
>>> world for this very famous Bohai professional team with impressive track to
>>> present our case to the LPs (they don't need us to do it in China or HK
>>> where SS and Jonathan know almost every LP), and 3. Lastly, they want us to
>>> join some of the meetings in HK and China they arrange when talking to high
>>> profile LPs during the road shows.
>>> ------------------------------**----
>>>
>>> This might not happen but if it does, our worst case scenario as I reckon
>>> is that SS might want to claim more than 40% say maybe 50% or 60% and we
>>> three and Jonathan might have to be reduced to 25% (or 20%) respectively.
>>> But so what? Even that, it's great and sweet enough for us judging from the
>>> no money and much smaller efforts we need to commit and make for the fund
>>> raise. I honestly don't think SS will counter propose we three only get 15%.
>>>
>>> Gents, Share with me my big big laughters and joys!!!  Let's wait for
>>> Jonathana feedback after his meeting with SS.
>>>
>>> Best,
>>>
>>> Michael
>>>
>>>
>>>
>>>
>>