Re: Heads up- Fund

Keep this btw us pls. But bottom line is if I/ you and me get around 7% of this fund it could be in many ways the end all be all. I dont believe in lottery tickets anymore, but I do believe in the super chairman.  See below.  I know Michael can be overly optimistic but if we were 20% owners of a CIC super chairman backed fund I think the sky's the limit.

RHB

202.333.1880

Begin forwarded message:

From: michael.c.l.lin@gmail.com
Date: September 22, 2011 6:18:25 PM GMT+03:00
To: Hunter Biden <hbiden@rosemontseneca.com>, Jim Bulger <bulgerthor@aol.com>
Subject: Re: Heads up- Fund

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, <michael.c.l.lin@gmail.com> 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	：