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Dear Devon,<br><br>Based on your suggestion, we will schedule a meeting 9:30 tomorrow morning Beijing time. I will send you the dial-in number and code later.<br><br>Jason Zhu<html><head></head><body dir="auto"><div class="quote"><br><br>-------- 原始邮件 --------<br>主题：Re: The Notice of Sinopec Deal<br>发件人：Devon Archer <darcher@rosemontcapital.com><br>收件人：Jason Zhu <jason.zhu@bhrpe.com><br>抄送：Hunter Biden <hbiden@rosemontseneca.com>,Bulger Jim <jbulger@thorntonai.com>,Michael Lin <michael.c.l.lin@gmail.com>,Leonard Mike <mleonard@thorntonai.com>,Sebastian Momtazi <smomtazi@rosemontseneca.com>,"Jonathan.li" <jonathan.li@bhrpe.com>," <xueming@bhrpe.com>" <xueming@bhrpe.com>,"<xin.wang@bhrpe.com> " <xin.wang@bhrpe.com>,李新中 <xinzhong.li@bhrpe.com>,夏雨（Yu XIA） <yu.xia@bhrpe.com>,"YU, Felix " <felix.yu@bhrpe.com><br><br><br type="attribution"><blockquote class="quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">

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<div>Jason,</div>
<div>Thank you for the unfortunate explanation. We need to do everything in our power to ensure BHR doesn't get named here, and if we do get named we must place the blame fluidly and immediately onto the said LP. This has potential to be a major credibility
hit with the US Embassy and SACAC which will be very unhelpful in our development if BHR is named.</div>
<div><br>
</div>
<div>Can we please schedule a Board call soonest so we can discuss and understand further the remedies and ramifications of this. I suggest your Monday morning Beijing time. Please advise.</div>
<div><br>
</div>
<div>Devon</div>
<div><br>
</div>
<div>Devon D. Archer
<div>646 436 3745</div>
</div>
<div><br>
On Mar 7, 2015, at 9:55 AM, Jason Zhu <<a href="mailto:jason.zhu@bhrpe.com">jason.zhu@bhrpe.com</a>> wrote:<br>
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<p class="MsoNormal"><span lang="EN-US">Dear all, <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">In reference to the SMC Capital Increase deal, we would like to update everyone as follows:<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">- following the signing of all relevant subscription and investment agreements in September 12, 2014 for a total subscription amount of RMB6 billion, Sinopec finally issued its capital call notice on February 2, 2015
requesting that all funds be fully invested by February 13, 2015<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">- by closing of business on February 13, 2015, BHR transferred a total of RMB3.75 billion to Sinopec whereas the remaining RMB2.25 billion was not made available at the time due to the withdrawal of funds by one of our
original LPs (the “<b>Defaulting LP</b>”). Sinopec agreed to extend BHR’s closing date to March 4, 2015<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">- as we continued to negotiate with the Defaulting LP, we immediately launched alternative fundraising efforts despite the intervening Chinese New Year holiday (which meant many of our contacts were either unavailable
to not able procure the necessary funds in time). By the closing of March 4, 2015, we were able to raise an additional RMB0.2 billion, bringing BHR’s total investment amount to RMB3.95 billion<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">- as of March 6, 2015, Sinopec officially closed its subscription accounts, also terminating BHR’s rights to make any further subscriptions beyond the RMB3.95 invested<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">This unfortunate incident caught each of us by surprise and despite the team’s best efforts, we were not able to raise the defaulted amount given the extremely tight timing from first receiving the capital call on February
2 to being notified at the very last minute before the original Feb. 13 closing date of the Defaulting LP’s funding withdrawal and finally to the closing of the subscription window on the morning of March 6.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Sinopec issued an announcement in relation to the closing of the SMC Capital Increase last night which touched upon the failure to fund by an investor but did not name BHR. All involved parties understand and agree that
BHR's failure to fund the entire amount is an isolated event which is solely attributable to liquidity difficulties with an LP and should not serve as a testament of BHR’s abilities. While we are confident that this incident will not have any adverse effect
in the long run, we must deal with the possibility of short-term credibility issues once the market picks up the story (which will be soon). Our position is that we maintain our support for the SMC deal as attested by our RMB3.95 billion subscription amount
but given the deal fund structure of this particular transaction, we were not able to maneuver other committed funds to cover the deficiency caused by the Defaulting LP.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">For now, we must deal with the legal aftermath of the situation. On the one hand, we are, vis-à-vis Sinopec, in breach of our funding obligations in respect of the RMB2.05 billion uninvested amount, which may involve
monetary damages of up to RMB63.5 million. On the other hand, we are pursuing all remedies against the Defaulting LP for its breach of relevant LP agreements, which directly caused our breach of the Sinopec agreements. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US">Finally, we are in close discussions with Sinopec to coordinate our efforts and to mitigate any spillover effect this incident may have on our SOE fundraising efforts or on our ability to partake in future SOE reform
opportunities. We ask that all inquiries in relation to this transaction be directed to Mr. Xia Yu, who will be the house speaker on this matter on behalf of BHR.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Regards,<o:p></o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US" style="font-size:9.0pt;font-family:华文楷体;color:#1F497D"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:宋体">诸晨刚</span><span lang="EN-US" style="font-size:9.0pt"> Jason Zhu
</span><span lang="EN-US" style="font-size:9.0pt"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:宋体">执行董事</span><span lang="EN-US" style="font-size:9.0pt"> Executive Director<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:新宋体">渤海华美（上海）股权投资基金管理有限公司<span lang="EN-US"><o:p></o:p></span></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Bohai Harvest RST (Shanghai) Equity Investment Fund Management Co., Ltd.</span><span lang="EN-US" style="font-size:9.0pt"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:宋体">北京市朝阳区建国路</span><span lang="EN-US" style="font-size:9.0pt">79</span><span style="font-size:9.0pt;font-family:宋体">号华贸中心写字楼</span><span lang="EN-US" style="font-size:9.0pt">2</span><span style="font-size:9.0pt;font-family:宋体">座</span><span lang="EN-US" style="font-size:9.0pt">31</span><span style="font-size:9.0pt;font-family:宋体">层</span><span lang="EN-US" style="font-size:9.0pt">3101</span><span style="font-size:9.0pt;font-family:宋体">室</span><span style="font-size:9.0pt">
</span><span style="font-size:9.0pt;font-family:宋体">邮编：</span><span lang="EN-US" style="font-size:9.0pt">100025<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">31/F, Unit 3101, Tower 2, China Central Place, 79 Jianguo Road,
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Chaoyang District, Beijing 100025, China<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Cellphone: 136 8169 7246<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Tel: 86 10 5969 5858<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Fax: 86 10 5969 6123<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size:9.0pt">Email: <a href="mailto:jason.zhu@bhrpe.com"><span style="color:blue">jason.zhu@bhrpe.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"><o:p> </o:p></span></p>
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</blockquote></felix.yu@bhrpe.com></yu.xia@bhrpe.com></xinzhong.li@bhrpe.com></xin.wang@bhrpe.com></xin.wang@bhrpe.com></xueming@bhrpe.com></xueming@bhrpe.com></jonathan.li@bhrpe.com></smomtazi@rosemontseneca.com></mleonard@thorntonai.com></michael.c.l.lin@gmail.com></jbulger@thorntonai.com></hbiden@rosemontseneca.com></jason.zhu@bhrpe.com></darcher@rosemontcapital.com></div></body></html>