UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
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eLong, Inc.
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(Name of Issuer)
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Ordinary Shares, par value $0.01 per share
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(Title of Class of Securities)
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290138205
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(CUSIP Number)
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TCH Sapphire Limited
c/o
Tencent Holdings Limited
29/F., Three Pacific Place,
No. 1 Queen’s Road East, Wanchai, Hong Kong
Telephone: +852 3148 5100
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
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February 4, 2016
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(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-l(f) or 240.13d-l(g), check the following box. ☐
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*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
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The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 2 of 8
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1
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NAME OF REPORTING PERSON OR
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TCH Sapphire Limited
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
AF
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐ |
6
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CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING PERSON
WITH
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7
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SOLE VOTING POWER
None
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8
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SHARED VOTING POWER
6,031,500*
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9
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SOLE DISPOSITIVE POWER
None
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10
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SHARED DISPOSITIVE POWER
6,031,500*
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,031,500*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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o |
13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.7%**
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14
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TYPE OF REPORTING PERSON
OO
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 3 of 8
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1
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NAME OF REPORTING PERSON OR
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tencent Holdings Limited
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
AF
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐ |
6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING PERSON
WITH
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7
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SOLE VOTING POWER
None
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8
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SHARED VOTING POWER
6,031,500*
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9
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SOLE DISPOSITIVE POWER
None
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10
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SHARED DISPOSITIVE POWER
6,031,500*
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,031,500*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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o |
13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.7%**
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14
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TYPE OF REPORTING PERSON
HC
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 4 of 8
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1
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NAME OF REPORTING PERSON OR
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tencent Asset Management Limited
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
PF
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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☐ |
6
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CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING PERSON
WITH
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7
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SOLE VOTING POWER
None
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8
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SHARED VOTING POWER
6,031,500*
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9
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SOLE DISPOSITIVE POWER
None
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10
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SHARED DISPOSITIVE POWER
6,031,500*
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,031,500*
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
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o |
13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.7%**
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14
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TYPE OF REPORTING PERSON
CO
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 5 of 8
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(i) | TCH Sapphire Limited, a British Virgin Islands company (“TCH”); |
(ii) | Tencent Holdings Limited, a Cayman Islands company (“Tencent”); and |
(iii)
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Tencent Asset Management Limited, a British Virgin Islands company (“TAML”).
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 6 of 8
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 7 of 8
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Exhibit Number
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Description of Exhibits
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1
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Joint Filing Agreement dated as of February 4, 2016, as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934. | |
2
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Merger Agreement, by and among eLong, Inc. China E-dragon Holdings Limited and China E-dragon Mergersub Limited, dated as of February 4, 2016 (incorporated by reference to Exhibit 99.2 to eLong, Inc.’s Report of Foreign Private Issuer filed on Form 6-K on February 4, 2016).
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3
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4
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5
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6
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CUSIP No. 290138205
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SCHEDULE 13D |
Page 8 of 8
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TCH SAPPHIRE LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Director
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TENCENT HOLDINGS LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Chairman of the Board
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TENCENT ASSET MANAGEMENT LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Director
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Name
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Present Principal Employment
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Business Address
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Citizenship
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Ma Huateng
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Director
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Charles St Leger Searle
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Director
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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Republic of South Africa
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Name
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Present Principal Employment
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Business Address
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Citizenship
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Ma Huateng
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Executive Director, Chairman of the Board and Chief Executive Officer of Tencent Holdings Limited
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Lau Chi Ping Martin
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Executive Director and President of Tencent Holdings Limited
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China (Hong Kong SAR)
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Charles St Leger Searle
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Non-executive Director of Tencent Holdings Limited, Chief Executive Officer of Naspers Internet Listed Assets
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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Republic of South Africa
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Jacobus Petrus (Koos) Bekker
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Non-executive Director of Tencent Holdings Limited, Non-executive Chairman of Naspers
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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Republic of South Africa
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Li Dong Sheng
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Independent Non-executive Director of Tencent Holdings Limited, Chairman and Chief Executive Officer of TCL Corporation, Chairman of TCL Multimedia Technology Holdings Limited, Chairman of TCL Communication Technology Holdings Limited
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Iain Ferguson Bruce
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Independent Non-executive Director of Tencent Holdings Limited
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China (Hong Kong SAR)
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Ian Charles Stone
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Independent Non-executive Director of Tencent Holdings Limited, Chief Executive Officer of Saudi Integrated Telecom Company, Director of Franco Development Ltd
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China (Hong Kong SAR)
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Name
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Present Principal Employment
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Business Address
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Citizenship
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Ma Huateng
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Executive Director, Chairman of the Board, Chief Executive Officer
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Lau Chi Ping Martin
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Executive Director, President
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China (Hong Kong SAR)
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David A.M. Wallerstein
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Chief eXploration Officer, Senior Executive Vice President
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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United States of America
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Xu Chenye
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Chief Information Officer
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Ren Yuxin
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Chief Operating Officer, President of Interactive Entertainment Group and Mobile Internet Group
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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James Gordon Mitchell
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Chief Strategy Officer, Senior Executive Vice President
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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United Kingdom of Great Britain and Northern Ireland
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John Shek Hon Lo
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Chief Financial Officer, Senior Vice President
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China (Hong Kong SAR)
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Name
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Present Principal Employment
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Business Address
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Citizenship
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Ma Huateng
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Director
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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People’s Republic of China
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Charles St Leger Searle
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Director
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c/o Tencent Holdings Limited, 29/F., Three Pacific Place, No. 1 Queen’s Road East, Wanchai, Hong Kong
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Republic of South Africa
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TCH SAPPHIRE LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Director
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TENCENT HOLDINGS LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Chairman of the Board
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TENCENT ASSET MANAGEMENT LIMITED
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By:
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/s/ Ma Huateng
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Name:
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Ma Huateng
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Title:
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Director
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Sincerely,
TENCENT ASSET MANAGEMENT LIMITED
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By:
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/s/ Ma Huateng | |
Name: | Ma Huateng | ||
Title: | Director | ||
Agreed to and accepted:
CHINA E-DRAGON HOLDINGS LIMITED
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By:
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/s/ Lin Haifeng | ||
Name: | Lin Haifeng | ||
Title: | Director | ||
1. | SEAGULL LIMITED; |
2. | OCEAN IMAGINATION L.P.; |
3. | JIANG HAO (江浩); and |
4. | ZHOU RONG (周荣). |
PARENT | |||
CHINA E-DRAGON HOLDINGS LIMITED | |||
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By:
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/s/ Lin Haifeng | |
Name: | Lin Haifeng | ||
Title: | Director | ||
Notice details: | ||
Address: the offices of Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY 1-9008, Cayman Islands | ||
Attention: | ||
Facsimile: | ||
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With a copy to (which alone shall not constitute notice): | |||
Paul, Weiss, Rifkind, Wharton & Garrison LLP | |||
Address: |
1285 Avenue of the Americas
New York, NY 10019-6064
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Attention: |
Steven J. Williams
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Facsimile: | +1 (212) 757-3990 |
INVESTORS | |||
TCH SAPPHIRE LIMITED | |||
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By:
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/s/ Ma Huateng | |
Name: | Ma Huateng | ||
Title: | Director | ||
Notice details: |
Address: |
c/o Tencent Holdings Limited
Level 29, Three Pacific Place,
No. 1 Queen’s Road East,
Wanchai, Hong Kong
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Attention: |
Compliance and Transactions Department
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Email: | legalnotice@tencent.com |
With a copy to (which alone shall not constitute notice): | |||
Address: |
Tencent Building, Keji Zhongyi Avenue
Hi-tech Park, Nanshan District,
Shenzhen 518057, PRC
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Attention: |
Mergers and Acquisitions Department
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Email: | PD_Support@tencent.com |
And a copy to (which alone shall not constitute notice): | |||
Paul, Weiss, Rifkind, Wharton & Garrison LLP | |||
Address: |
1285 Avenue of the Americas
New York, NY 10019-6064
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Attention: |
Steven J. Williams
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Facsimile: | +1 (212) 757-3990 | ||
Email: | swilliams@paulweiss.com |
C-TRAVEL INTERNATIONAL LIMITED | |||
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By:
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/s/ Liang Jianzhang | |
Name: | Liang Jianzhang | ||
Title: | Director | ||
Notice details: |
Address: |
99 Fu Quan Road, Shanghai 200335
People’s Republic of China
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Attention: |
Chief Financial Officer
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Facsimile: | + 86 21 5251 0000 |
With a copy to (which alone shall not constitute notice): | |||
Skadden, Arps, Slate, Meagher & Flom | |||
Address: |
42/F Edinburgh Tower, The Landmark
15 Queen’s Road Central, Hong Kong
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Attention: |
Z. Julie Gao, Esq./Haiping Li, Esq.
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Facsimile: | + 852 3740 4727 | ||
Email: | Julie.Gao@skadden.com/ Haiping.Li@skadden.com |
OCEAN IMAGINATION L.P. | |||
A Cayman Islands exempted limited partnership | |||
By:
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Ocean Voyage L.P.
its General Partner
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By: |
Fortune Smart Holdings Limited
its General Partner
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By:
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/s/ Nanyan Zheng | |
Name: | Nanyan Zheng | ||
Title: | Director | ||
Notice details: |
Address: |
Room A609, Bund Office Building, No.
868 Longhua East Road, Huangpu District
Shanghai P.R.C.
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Attention: |
Nanyan Zheng
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Facsimile: |
With a copy to (which alone shall not constitute notice): | |||
Fenwick & West LLP | |||
Address: |
Unit 908, Kerry Parkside Office,
No. 1155 Fang Dian Road, Pudong New Area,
Shanghai, P.R.C.
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Attention: |
Karen Yan
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Facsimile: | + 86 (21) 8017 1299 | ||
Email: | karen.yan@fenwick.com |
LUXURIANT HOLDINGS LIMITED | |||
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By:
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/s/ Wang Li Qun | |
Name: | Wang Li Qun | ||
Title: | Director | ||
Notice details: |
Address: |
Stone Capital, NO.4 Lane 163, South Maoming Rd, Shanghai
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Attention: |
Jimmy Wang
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Telephone: | 86-21-60758990-103 | ||
Facsimile: | 86-21-60758997 |
Investor
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Owned Shares
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Rollover Shares
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Parent Shares
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TCH Sapphire Limited
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6,031,500 Ordinary Shares
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6,031,500 Ordinary Shares
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6,031,500 Parent Ordinary Shares
|
5,038,500 High-Vote Ordinary Shares
|
5,038,500 High-Vote Ordinary Shares
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5,038,500 Parent Preferred Shares
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C-Travel International Limited
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12,192,608 Ordinary Shares
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12,192,608 Ordinary Shares
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12,192,608 Parent Ordinary Shares
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16,634,711 High-Vote Ordinary Shares
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16,634,711 High-Vote Ordinary Shares
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16,634,711 Parent Preferred Shares
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Ocean Imagination L.P.
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6,185,649 Ordinary Shares
|
6,185,649 Ordinary Shares
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6,185,649 Parent Ordinary Shares
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10,213,708 High-Vote Ordinary Shares
|
10,213,708 High-Vote Ordinary Shares
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10,213,708 Parent Preferred Shares
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Luxuriant Holdings Limited
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1,030,942 Ordinary Shares
|
1,030,942 Ordinary Shares
|
1,030,942 Parent Ordinary Shares
|
1,702,285 High-Vote Ordinary Shares
|
1,702,285 High-Vote Ordinary Shares
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1,702,285 Parent Preferred Shares
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Investor
|
Subscription Amount
|
Parent Shares
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TCH Sapphire Limited
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US$80,000,000
|
8,908,791 Parent Preferred Shares
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C-Travel International Limited
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US$0
|
0 Parent Shares
|
Ocean Imagination L.P.
|
US$27,184,889
|
3,027,306 Parent Preferred Shares
|
Luxuriant Holdings Limited
|
US$0
|
0 Parent Shares
|
TCH SAPPHIRE LIMITED | |||
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By:
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/s/ Ma Huateng | |
Name: | Ma Huateng | ||
Title: | Director | ||
C-TRAVEL INTERNATIONAL LIMITED | |||
|
By:
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/s/ Liang Jianzhang | |
Name: | Liang Jianzhang | ||
Title: | Director | ||
SEAGULL LIMITED | |||
|
By:
|
/s/ Sun Jie | |
Name: | Sun Jie | ||
Title: | Director | ||
OCEAN IMAGINATION L.P.
a Cayman Islands exempted limited partnership
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|||
By: | Ocean Voyage L.P., its General Partner | ||
By: | Fortune Smart Holdings Limited, its General Partner | ||
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By:
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/s/ Nanyan Zheng | |
Name: | Nanyan Zheng | ||
Title: | Director | ||
LUXURIANT HOLDINGS LIMITED | |||
|
By:
|
/s/ Wang Li Qun | |
Name: | Wang Li Qun | ||
Title: | Director | ||
OASIS LIMITED | |||
|
By:
|
/s/ Jiang Hao | |
Name: | Jiang Hao | ||
Title: | Director | ||
ZHOU RONG (周荣) | |||
|
By:
|
/s/ Zhou Rong | |
CHINA E-DRAGON HOLDINGS LIMITED | |||
|
By:
|
/s/ Lin Haifeng | |
Name: | Lin Haifeng | ||
Title: | Director | ||
CHINA E-DRAGON MERGERSUB LIMITED | |||
|
By:
|
/s/ Lin Haifeng | |
Name: | Lin Haifeng | ||
Title: | Director | ||
Investor
|
Rollover Company Shares
|
Cash Subscription
|
Parent Shares
|
TCH Sapphire Limited
|
6,031,500 Ordinary Shares
|
6,031,500 Ordinary Shares
|
|
5,038,500 High-Vote Ordinary Shares
|
5,038,500 Preferred Shares
|
||
US$80,000,000
|
8,908,791 Preferred Shares
|
||
C-Travel International Limited
|
12,192,608 Ordinary Shares
|
12,192,608 Ordinary Shares
|
|
16,634,711 High-Vote Ordinary Shares
|
16,634,711 Preferred Shares
|
||
Ocean Imagination L.P.
|
6,185,649 Ordinary Shares
|
6,185,649 Ordinary Shares
|
|
10,213,708 High-Vote Ordinary Shares
|
10,213,708 Preferred Shares
|
||
US$27,184,889
|
3,027,306 Preferred Shares
|
||
Luxuriant Holdings Limited
|
1,030,942 Ordinary Shares
|
1,030,942 Ordinary Shares
|
|
1,702,285 High-Vote Ordinary Shares
|
1,702,285 Preferred Shares
|
||
Seagull Limited
|
0
|
US$35,000,000
|
3,897,596 Preferred Shares
|
Oasis Limited
|
0
|
US$5,000,000
|
555,556 Ordinary Shares
|
Zhou Rong (周荣)
|
0
|
US$500,000
|
55,555 Ordinary Shares
|
Summary of Transaction
|
Pursuant to the Agreement and Plan of Merger, dated as of February 4, 2016 (as amended, the “Merger Agreement”), by and among Parent, Merger Sub and eLong, Inc., an exempted company incorporated with limited liability under the laws of the Cayman Islands (the “Company”), at the Effective Time, Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent.
In connection with the Closing, each Investor will satisfy such Investor’s Equity Commitment by acquiring, in exchange for such Investor’s contribution of cash or contributed Company Shares (“Rollover Shares”), equity securities of the Parent, as provided in such Investor’s Equity Commitment and in accordance with the terms thereof (each Investor’s “Contribution”).
|
Equity Securities
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Parent shall have two classes of shares, ordinary shares (“Ordinary Shares”) and convertible participating preferred shares of Parent (“Preferred Shares”, together with the Ordinary Shares, the “Parent Shares”).
Each Principal Investor shall be entitled to receive, in exchange for such Principal Investor’s cash contribution, and each Principal Investor and Luxuriant shall be entitled to receive, in exchange for such party's Rollover Shares that are High-Vote ordinary shares of
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the Company, Preferred Shares with a per share liquidation preference (the “Liquidation Preference”) in the amount equal to the higher of (i) US$13.50; or (ii) US$9.00 plus an assumed 8% per annum return for each year.
Each Investor shall be entitled to receive Ordinary Shares in exchange for such Investor’s Rollover Shares that are not High-Vote ordinary shares of the Company. Each member of Management shall be entitled to receive Ordinary Shares in exchange for such Investor’s cash contribution. All Ordinary Shares issued in connection with the closing shall be valued at a fixed price (the “Original Issue Price”) determined prior to Closing by the Principal Investors.
The capitalization table of the Parent immediately after the Effective Time is attached hereto as Appendix I.
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Terms of Preferred Shares
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Ranking
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The Preferred Shares will rank senior to the Ordinary Shares with respect to dividends, liquidation and payments on redemption.
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Conversion
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Each Preferred Share will be convertible at any time, at the option of the holder, into the number of Ordinary Shares obtained by dividing the Liquidation Preference by the then-applicable Conversion Price. The “Conversion Price” will initially be equal to the Original Issue Price and will be subject to adjustment as described below under “Anti-Dilution.”
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Anti-Dilution
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The Conversion Price will be subject to adjustment in the event that the Company issues additional equity securities or securities convertible into, or exchangeable or exercisable for, equity securities (“Equity Securities”) (other than pursuant to certain equity compensation arrangements approved by the Board and other customary carve-outs (“Excluded Transactions”)) at a per-share purchase price less than the then-applicable Conversion Price. The Conversion Price will be subject to adjustment on a broad-based (i.e., taking into account all issued and outstanding options) weighted average basis, which takes into account issuances of additional Equity Securities at prices less than the applicable Conversion Price. The Conversion Price will also be appropriately adjusted for stock splits, recapitalizations and similar events.
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Dividends
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The holders of Preferred Shares will be entitled to participate in dividends declared on Ordinary Shares on an as-converted basis.
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Liquidation Preference
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Upon a liquidation or similar event with respect to Company, the holders of Preferred Shares will be entitled to receive, in preference to payment on Ordinary Shares or other equity securities ranking junior to the Preference Shares, an amount with respect to each
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Preferred Share equal to the greater of (i) the Liquidation Preference, or (ii) the amount distributable to holders of common shares upon the occurrence of such event (assuming the conversion of all Preferred Shares, at the then-applicable Conversion Price). | |
Voting Rights
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Preferred Shares will vote together with the Ordinary Shares (on an as-converted basis) as a single class on all matters.
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Terms of Shareholders’ Agreement
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Board Representation
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From closing, the Board of Directors will consist of 5 members, including:
— the Chief Executive Officer of Parent;
— one (1) individual designated by TCH (the “TCH Director”);
— one (1) individual designated by C-Travel (the “C-Travel Director”);
— one (1) individual designated by Ocean (the “Ocean Director”); and
— one (1) individual designated by Luxuriant VC (the “Luxuriant Director”).
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Board Meetings
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The quorum for Board meetings shall include the TCH Director, the C-Travel Director and the Ocean Director. In the event a quorum of any board meeting is not met, such meeting shall be adjourned to the same time and day in the following week, and the quorum at such adjourned meeting shall be the directors who attend such meeting.
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Preemptive Rights
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Prior to an initial public offering (an “IPO”), each Principal Investor will have preemptive rights with respect to any issuance of Equity Securities to maintain such person’s percentage of fully diluted equity (subject to customary exceptions, including issuances under employee equity plans). To the extent any Principal Investor does not elect to purchase such Principal Investor’s pro rata share of such newly issued Equity Securities, the Principal Investors exercising their preemptive rights shall have the overallotment right to purchase up to all the unpurchased Equity Securities.
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Restrictions on Transfer
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Prior to an IPO, no Investor may sell, transfer, pledge or otherwise dispose of (“Transfer”) any Equity Securities other than (i) to an affiliate or other customary permitted transferees to be set forth in the Shareholders’ Agreement (a “Permitted Transferee”) or (ii) following compliance with the Right of First Offer and Tag-Along Right described below, provided always that no Transfer of Equity
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Securities can be made to the restricted transferees listed in Part 1 of Appendix II attached hereto (the “TCH's Restricted Transferees”) or Part 2 of Appendix II attached hereto (the “C-Travel's Restricted Transferees”).
The list of TCH's Restricted Transferees may be updated once per year by the Board with the consent of the TCH Director, and the list of C-Travel's Restricted Transferees may be updated once per year by the Board with the consent of the C-Travel Director.
Prior to an IPO, no member of Management may Transfer any Equity Securities other than (i) to his/her Permitted Transferee or (ii) pursuant to a buyback of shares by the Company in accordance with the terms of the employee stock option plan or other agreement with the Company.
Any Transfers of equity securities in Seagull or in Oasis shall be subject to the same transfer restrictions as Transfer of equity securities in Parent made by Seagull and Oasis respectively, and the shareholders of Seagull and Oasis shall also be parties to the Shareholders Agreement.
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Right of First Offer and
Tag-Along Right
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In the event any Investor proposes to Transfer Equity Securities in Parent prior to an IPO other than to a Permitted Transferee, then each Principal Investor will have a right of first offer (the “Right of First Offer”) to purchase such Principal Investor’s pro rata share (based on relative equity ownership) of such Equity Securities. To the extent any Principal Investor does not elect to purchase such Principal Investor’s pro rata share of the Equity Securities, the Principal Investors exercising their Right of First Offer shall have the right to purchase up to all the unpurchased Equity Securities offered for sale.
Any Principal Investor that does not exercise its Right of First Offer, will have the right (the “Tag-Along Right”) to participate in such Transfer on pro rata basis and on the same terms and conditions as the selling Investor, provided that if (i) C-Travel proposes to Transfer any Equity Securities and/or (ii) Seagull proposes to Transfer any Equity Securities, which, if aggregated with all previous Transfers by Seagull, would result in Seagull Transferring more than 50% of the issued shares of Parent held by Seagull immediately after the Effective Time, each of TCH and Ocean shall have the right to exercise the Tag-Along Right with respect to all the Equity Securities then held by it in Parent.
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Redemption Rights
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If (a) a QIPO (as defined below) has not occurred by the fifth anniversary of the date of the Shareholders Agreement or (b) the Company is in material breach of the Shareholders Agreement or any other agreement entered into by the Company and the Investors in connection with the Transaction, any Principal Investor shall have
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the right to require Parent to purchase and fully pay for, all of such Principal Investor’s Parent Shares at the Liquidation Preference (subject to applicable corporate “solvency” requirements).
A “QIPO” means a firm commitment underwritten public offering of the Ordinary Shares of the Company on an internally recognized stock exchange, with gross proceeds to the Company in excess of US$120,000,000 (prior to any underwriters’ commissions, discounts and expenses) and a market capitalization pre-closing in excess of US$1,200,000,000.
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Negative Covenants
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The following matters with respect to Parent or any of its subsidiaries (collectively, the “Group Companies”) will require the approval of TCH, C-Travel and Ocean:
— any merger, consolidation, or any form of transaction resulting in a change of control of any Group Company, or any sale of all or substantially all of the assets, or any exclusive licensing of all or substantially all intellectual property of any Group Company;
— any issuance of Equity Securities, other than issuances pursuant to employee equity plans previously approved by the Principal Investors;
— any amendment or restatement of the governing documents of any Group Company;
— any amendment to the size or composition of the board of any Group Company;
— any liquidation, dissolution or winding up of any Group Company;
— the adoption or amendment of any employee equity plan;
— any material change to the business of any Group Company and its subsidiaries, taken as a whole;
— the declaration and payment of any dividends or distributions by any Group Company;
— any plan of the initial public offering of any Group Company; or
— committing to do any of the foregoing.
The following matters with respect to the Group Companies will require the approval of the Board which shall include the approval from the TCH Director, the C-Travel Director and the Ocean Director:
—— any issuance of debt securities and any incurrence of debt, other than incurrence of indebtedness in accordance with approved annual budgets, incurrences of debt under revolving credit facilities of the Group Companies in the ordinary course consistent with past practices, and other incurrences of debt not exceeding $5,000,000 in the aggregate at any time outstanding;
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— approval of expenditures above 10% of the annual budget;
— any acquisition of any person, business or assets by any Group Company (including any acquisition of shares, equity interests or debt securities of any person), and any investment by any Group Company in any person, in an amount in excess of $5,000,000;
— engaging in any transaction with any Investor or any affiliate of an Investor, other than (i) arm’s-length transactions having a value not in excess of $5,000,000 or (ii) transactions with management with respect to the grant or buyback of their awards or shares granted under the employee stock option scheme and duly approved by the Company prior to the Effective Time;
— appointment/removal of the CEO, CFO or other key management;
— any material amendment to accounting policies, changes to the financial year or change to a non-Big Four auditor;
— entry into any contract in excess of $5,000,000;
— amendment or termination of the VIE contracts; or
— committing to do any of the foregoing.
To protect TCH’s financial interest in the Parent, TCH’s prior written consent is required for the joint venture by any Group Company with (i) any Restricted Person or (ii) C-Travel or any of its affiliates.
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Information Rights
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Prior to an IPO, each Investor that holds at least 5% of the outstanding Ordinary Shares (on an as-converted basis) will be entitled to receive audited annual, and unaudited quarterly and monthly, financial statements, and such other financial information as such stockholder shall reasonably request, and will be entitled to inspect the books and records of the Company.
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Shareholder Meetings
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The quorum for shareholders meeting shall include TCH, C-Travel and Ocean. In the event a quorum of any shareholder meeting is not met, such meeting shall be adjourned to 30 days thereafter, and the quorum at such adjourned meeting shall be the shareholders who attend such meeting.
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ESOP
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Parent shall reserve 6,006,365 Ordinary Shares to be allocated to employees after the Closing under the Company's employee incentive scheme.
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Governing Law
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The Shareholders Agreement will be governed by the laws of New York, without regard to the conflicts of law principles thereof.
Any dispute, controversy, claim or difference of any kind whatsoever arising out or in connection with the Shareholders Agreement will be resolved exclusively through arbitration
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administered by the Hong Kong International Arbitration Centre (“HKIAC”) in Hong Kong and will be conducted in accordance with then effective HKIAC Rules.
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After Privatization
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||||||||||||||||||||||||||||
Shareholders
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Ordinary
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Ordinary %
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Preferred
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Preferred
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Total
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Total Fully
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Total Before
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|||||||||||||||||||||
Shares
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Shares
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%
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Shares
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Diluted %
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Diluted %
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|||||||||||||||||||||||
Ctrip
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12,193
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35
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%
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16,635
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34
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%
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28,827
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34
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%
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37
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%
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|||||||||||||||||
Ocean
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6,186
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18
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%
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13,241
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27
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%
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19,427
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23
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%
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25
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%
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|||||||||||||||||
Tencent
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6,032
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17
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%
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13,947
|
28
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%
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19,979
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24
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%
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25
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%
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|||||||||||||||||
Ctrip Management
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3,898
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8
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%
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3,898
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5
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%
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5
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%
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||||||||||||||||||||
Elong Management
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611
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2
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%
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611
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1
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%
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1
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%
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||||||||||||||||||||
Luxuriant
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1,031
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3
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%
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1,702
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3
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%
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2,733
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3
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%
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3
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%
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ESOP-Rollover
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2,948
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8
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%
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2,948
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3
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%
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4
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%
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||||||||||||||||||||
ESOP-Ungranted
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6,006
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17
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%
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6,006
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7
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%
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||||||||||||||||||||||
Total
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35,006
|
100
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%
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49,423
|
100
|
%
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84,429
|
100
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%
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100
|
%
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a) | QIHOO 360 TECHNOLOGY CO. LTD.; |
b) | Alibaba Group Holding Limited; |
c) | Zhejiang Ant Small and Micro Financial Services Group Co., Ltd. (浙江蚂蚁小微金融服务集团有限公司); |
d) | Baidu, Inc.; |
e) | any of the successor holding companies of the entities listed in (a) – (d); and |
f) | each of the affiliates of the entities listed in (a) – (d) (as such term is defined in Rule 405 of the U.S. Securities Act of 1933, as amended) of the entities listed in (a) – (d). |
a) | Internet Plus Holdings Limited (美团点评); |
b) | LY.com/Tongcheng Network Technology Share Co., Ltd. (同程旅游); |
c) | Tuniu Corporation (途牛旅行网); |
d) | Expedia, Inc.; |
e) | The Priceline Group Inc.; |
f) | TripAdvisor, Inc.; |
g) | any of the successor holding companies of the entities listed in (a) – (f) in Part 2; and |
h) | each of the affiliates of the entities listed in (a) – (f) in Part 2 (as such term is defined in Rule 405 of the U.S. Securities Act of 1933, as amended), unless such affiliates are also affiliates of the Principal Investors. |
Paul, Weiss, Rifkind, Wharton & Garrison LLP
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Address:
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1285 Avenue of the Americas
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New York, NY 10019-6064
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Attention: | Steven J. Williams |
Facsimile: | +1 (212) 757-3990 |
Email: | swilliams@paulweiss.com |
TENCENT ASSET MANAGEMENT LIMITED | |||
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By:
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/s/ Ma Huateng | |
Name: | Ma Huateng | ||
Title: | Director | ||
ELONG, INC. | |||
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By:
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/s/ May Wu | |
Name: | May Wu | ||
Title: | Chairman of the Special Committee | ||
1. | C-Travel International Limited |
2. | Ocean Imagination L.P. |