EFTA Document EFTA01760006

From: Sent: Monday, May 6, 2013 6:05 PM To: Jeffrey Epstein Subject: Fwd: Proposed SC investment framework - revised What's your view? Thanks =br> Begin forwarded message: From: Ramesh Venkataraman <mailto > Date: 4 May 2=13 20:09:18 GMT+03:00 To: <mailt Subject: Proposed SC investment fr=mework - revised David, Good to see you yesterd=y! Following our discussions on April 19, I have modified the p=oposed structure for the situation where a liquidity event happens after=the next capital raising round or the 18 month anniversary of the date of t=e SC investment (the structure for a liquidity event happening sooner r=mains the same as in the email below). Let me know if this revi=ed proposal is more in line with your thinking: Exit EV 'waterfall'=/p> Samena % of exit proceeds<=:p> Sm =p class="MsoNormal">% 50% 50 to 100 30% 500 to Slb EFTA_R1_00064117 EFTA01760006 5% Above $lb<=o:p> 3% What this means is as follows: *&=bsp; if the EV at exit is at or below $50 mn, then Samena's return= are the same as the previous proposal. This, if EV is $50 mn, we wil= get 50% of the amount over that owed to Informa. If the Informa loan=note principal + accrued interest repayment obligation is $24 mn, then Same=a gets $13 mn and the other common equity holders get $13 mn. • = If the EV at exit is $80 mn, then=SC gets $21 mn whereas in the previous proposal we would have got $38 mn.&n=sp; • &nbs=; If EV at exit is $12= mn, then SC gets $30 mn, whereas in the previous proposal we would have go= $42 mn c=pan style="font-family:Symbol">• &=bsp; If the exit is at=a blockbuster EV of $500M, SC gets $68 mn vs $118M previously </=:p> 1= addition, I wanted to confirm our institutional (and my personal) commitme=t to assisting you and AG in the next round of capital raising (while, of c=urse, in no way implying any financial commitment from Samena to participat=). Amongst other things, this will include help on capital raising st=ategy, IM and investor presentation preparation and adviser selection. = The rest of the proposal remains the same as below (eg, we need to w=rk out governance etc). &n=sp; We were originally targeting mid-May fo= the team to be in Beijing. From a Poseidon perspective, the best t=me for me would be post May 25 although I could conceivably squeeze in a co=ple of days around May 15-19. Let me know. From: David, Hope your trip to Ch=na is going well. Apologies that it has taken me a week to follow up o= our discussions. Have been swamped on a number of fronts including a= unexpected (but hopefully positive) turn of events on Poseidon — w=ll brief you on your return from China. Here is a proposed fram=work that I have developed for your review/comment. Let me have your t=oughts either via email or, if you prefer, we can wait until your return to=discuss in person. </=> 2 EFTA_R1_00064118 EFTA01760007 1. &nbs=; Subject to confirmatory diligence (expe=ted to take no more than 2-3 weeks) and final documentation, SC will invest=$5 million in July 2013 or as soon as AG receives the first RMB 1 mn from C=engdu. As discussed, this $5 million amount will be the only fu=ding commitment from SC to AG (and this should be documented and minuted by=AG for the avoidance of doubt/misconception). However, as discussed, w= are fully committed to assisting you/AG in future rounds of capital raisin= from other investors including tapping the Samena network. =nbsp; Our instrument will be struct=red as preference shares (zero coupon) convertible into common equity upon a=liquidity event (IPO, trade sale, partial divestment). 3. = Our instrument will presumably rank behi=d the Informa $16 mn loan note from 2010 (payable in 2020 with a 10% roll u= coupon) and only be payable after that loan note principal and accrued int=rest are paid out. We can refine our structure once we have access to= the loan note docs and understand the draw down schedule and payment o=ligations. 4.&nb=p; The conversion=ratio for our instrument into equity shares will be on the basis of a liqui=ity preference table as follows: c.<=pan style="font:7.Opt "Times New Roman""> &nbs=; Balance $21.5 mn to be split acro=s the remaining common equity holders in proportion to their shareholding %=o:p> B. If a liquidit= event happens after the next capital raising round or the 18 month anni=ersary of the date of the SC investment: Exit EV lwaterfall'</=:p> Samena % of exit pr=ceeds Sm 50% 100 to 500=/p =00 plus 5. Any=new investor in a subsequent round (say in 2014) buys into the equity in a n=rmal way, ie, the board sets a pre-money valuation for the equity etc. = The SC prefs do not get diluted — ie, the conversion framework out=ined above stays the same. 6. &=bsp; Other terms can be worke= out, eg, negative covenants, board seats, IPO secondary offering rights, e=c. It is also going to be critical to discuss how AG's burn r=te can be reduced — ideally cut below $700K p.m., so our investment plus the $6M of cash that AG has curre=tly can last at least 18 months just in case of the inevitable execution de=ays in Chengdu. 3 EFTA_R1_00064119 EFTA01760008 David, ple=se treat this as a draft for discussion that we can refine over the next fe= days based on your feedback to arrive at a mutually acceptable framework.<=:p> Best Ramesh </=iv> 4 EFTA_R1_00064120 EFTA01760009