JST Jinpan International Limited

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13E-3
Amendment No. 2

RULE 13e-3 TRANSACTION STATEMENT UNDER SECTION 13(E)
OF THE SECURITIES EXCHANGE ACT OF 1934

JINPAN INTERNATIONAL LIMITED

(Name of the Issuer)

Jinpan International Limited
FNOF E&M Investment Limited
Silkwings Limited
Zhiyuan Li
Yuqing Jing
Forebright Smart Connection Technology Limited
Smart Anchor Holdings Limited
Forebright New Opportunities Fund, L.P.
FNOF GP Limited
Forebright Capital Partners Inc.
Take Success Limited
Greenfiled International Limited
Cheng Liu
Kun Wan Ip

(Names of Persons Filing Statement)

Common Shares, $0.0045 par value

(Title of Class of Securities)

G5138L100

(CUSIP Number)

This statement is filed in connection with (check the appropriate box):

The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14-C or Rule 13e-3(c) under the Securities Exchange Act of 1934.

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The filing of a registration statement under the Securities Act of 1933.

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A tender offer

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☒

None of the above

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Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐

Check the following box if the filing is a final amendment reporting the results of the transaction: ☐

Calculation of Filing Fee

*

Calculated solely for the purpose of determining the filing fee in accordance with Rule 0-11(b)(1) under the Securities Exchange Act of 1934, as amended. The filing fee is calculated based on the sum of the aggregate cash payment for the proposed per share cash payment of  $6.00 for 12,567,665 outstanding Shares of the issuer subject to the transaction (the “Transaction Valuation”).

​

**

The amount of the filing fee, calculated in accordance with Exchange Act Rule 0-11(b)(1) and the Securities and Exchange Commission Fee Rate Advisory #1 for Fiscal Year 2016, was calculated by multiplying the Transaction Valuation by 0.0001007.

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Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting of the fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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TABLE OF CONTENTS

i

INTRODUCTION

This Amendment No. 2 (this “Amendment”) to the Rule 13E-3 transaction statement on Schedule 13E-3, together with the exhibits hereto (the “Transaction Statement”), is being filed with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), jointly by the following persons (each, a “Filing Person,” and collectively, the “Filing Persons”): (a) Jinpan International Limited, a company with limited liability incorporated under the laws of the British Virgin Islands (the “Company”), the issuer of the registered common shares, par value of US$0.0045 per share (each, a “Share” and collectively, the “Shares”); (b) FNOF E&M Investment Limited, a company with limited liability incorporated under the laws of the British Virgin Islands (“Parent”); (c) Silkwings Limited, a company with limited liability incorporated under the laws of the British Virgin Islands (“Merger Sub”); (d) Mr. Zhiyuan Li, the Company’s Chairman of the Board of Directors, President, and Chief Executive Officer (“Mr. Li” or the “Chairman”); (e) Ms. Yuqing Jing, Secretary of the Company and wife of Mr. Li (“Ms. Jing”, collectively with Mr. Li, the “Rollover Shareholders”); (f) Forebright Smart Connection Technology Limited, a company established under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (“Forebright SPV”); (g) Smart Anchor Holdings Limited, a company with limited liability incorporated under the laws of the British Virgin Islands (“Smart Anchor”); (h) Forebright New Opportunities Fund, L.P., an exempted limited partnership registered in the Cayman Islands (“Forebright Fund”); (i) FNOF GP Limited, an exempted company incorporated under laws of the Cayman Islands with limited liability (“FNOF GP”); (j) Forebright Capital Partners Inc., a limited liability company incorporated under the laws of the British Virgin Islands (“Forebright Capital”); (k) Take Success Limited, a limited liability company incorporated under the laws of the British Virgin Islands (“Take Success”); (l) Greenfiled International Limited, a limited liability company incorporated under the laws of the British Virgin Islands (“Greenfiled”); (m) Mr. Cheng Liu, a citizen of Hong Kong Special Administrative Region (“Mr. Liu”); and (n) Mr. Kun Wan Ip, a citizen of Australia (“Mr. Ip”). The Rollover Shareholders, Forebright SPV, Smart Anchor, Forebright Fund, FNOF GP, Forebright Capital, Take Success, Greenfiled, Mr. Liu, Mr. Ip, Parent and Merger Sub are collectively referred to herein as the “Buyer Group”. This Amendment amends and restates in its entirety information set forth in the Transaction Statement.

On January 24, 2016, Parent, Merger Sub and the Company entered into an agreement and plan of merger (the “merger agreement”), which included a plan of merger required to be filed with the Registrar of Corporate Affairs of the British Virgin Islands, substantially in the form attached as Appendix 1 to the merger agreement (the “plan of merger”). If the merger agreement is approved and authorized by the Company’s shareholders and the other conditions to the closing of the merger (as described below) are met, Merger Sub will merge with and into the Company (the “merger”), with the Company continuing as the surviving company after the merger. Parent and Merger Sub are currently wholly owned by Forebright SPV.

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each outstanding Share will be cancelled in exchange for the right to receive US$6.00 per Share surrendered for cancellation, in each case, in cash, without interest and net of any applicable withholding taxes, except for the following excluded Shares (the “Excluded Shares”): (i) Shares beneficially owned by the Rollover Shareholders (the “Rollover Shares”); and (ii) Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 179 of the BVI Business Companies Act, as amended (the “BVI Companies Act”) (the “Dissenting Shareholders”); and (iii) Shares owned by the Company or any direct or indirect wholly owned subsidiary of the Company. Each Excluded Share (other than the Dissenting Shares) issued and outstanding immediately prior to the effective time of the merger, will be cancelled and will cease to exist, and no merger consideration will be delivered with respect thereto. Each Dissenting Shareholder will be entitled to receive only the payment resulting from the procedure in Section 179 of the BVI Companies Act with respect to Shares owned by such Dissenting Shareholder.

The merger remains subject to the satisfaction or waiver of the conditions set forth in the merger agreement, including the authorization and approval by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders which will be convened to consider the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger.

1

The Company will make available to its shareholders a proxy statement (the “proxy statement”, a copy of which is attached as Exhibit (a)-(1) to this Amendment), relating to the general meeting of shareholders of the Company, at which the shareholders of the Company will consider and vote upon, among other proposals, a proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. A copy of the merger agreement, together with the articles and plan of merger substantially in the form attached as Appendix 1 to the merger agreement, is attached to the proxy statement as Annex A and is incorporated herein by reference.

The cross-references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the proxy statement of the information required to be included in response to the items of Schedule 13E-3. Pursuant to General Instruction F to Schedule 13E-3, the information contained in the proxy statement, including all annexes thereto, is incorporated in its entirety herein by this reference, and the responses to each item in this Amendment are qualified in their entirety by the information contained in the proxy statement and the annexes thereto. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the proxy statement.

All information contained in this Amendment concerning each Filing Person has been supplied by such Filing Person. No Filing Person, including the Company, has produced any disclosure with respect to any other Filing Person.

The filing of this Amendment shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, or that the Company is “controlled” by any other Filing Person.

Item 1   Summary Term Sheet

The information set forth in the proxy statement under the following captions is incorporated herein by reference:

•

“Summary Term Sheet”

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•

“Questions and Answers about the General Meeting and the Merger”

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Item 2   Subject Company Information

(a)

Name and Address. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

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•

“Summary Term Sheet — The Parties Involved in the Merger”

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(b)

Securities. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“The General Meeting — Record Date; Shares Entitled to Vote”

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•

“The General Meeting — Record Date; Shareholders Entitled to Vote; Voting Materials”

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•

“Security Ownership of Certain Beneficial Owners and Management of the Company”

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(c)

Trading Market and Price. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

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•

“Market Price of the Shares, Dividends and Other Matters — Market Price of the Shares”

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(d)

Dividends. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

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•

“Market Price of the Shares, Dividends and Other Matters — Dividend Policy”

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(e)

Prior Public Offering. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

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•

“Transactions in the Shares — Prior Public Offerings”

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2

(f)

Prior Stock Purchase. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

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•

“Transactions in the Shares”

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•

“Special Factors — Related Party Transactions”

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Item 3   Identity and Background of Filing Person

(a)

Name and Address. Jinpan International Limited is the subject company. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — The Parties Involved in the Merger”

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•

“Annex D — Directors and Executive Officers of Each Filing Person”

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(b)

Business and Background of Entities. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — The Parties in the Merger”

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•

“Annex D — Directors and Executive Officers of Each Filing Person”

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(c)

Business and Background of Natural Persons. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — The Parties Involved in the Merger”

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•

“Annex D — Directors and Executive Officers of Each Filing Person”

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Item 4   Terms of the Transaction

(a)-(1)

Material Terms. Not applicable.

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(a)-(2)

Material Terms. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet”

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•

“Questions and Answers about the General Meeting and the Merger”

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•

“Special Factors”

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•

“The General Meeting”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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(c)

Different Terms. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Interests of the Company’s Directors and Executive Officers in the Merger”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“The General Meeting — Proposals to be Considered at the General Meeting”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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(d)

Appraisal Rights. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Appraisal Rights of Shareholders”

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•

“Questions and Answers about the General Meeting and the Merger”

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3

•

“Appraisal Rights”

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•

“Annex C — BVI Business Companies Act, as amended — Section 179”

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(e)

Provisions for unaffiliated shareholders. The information set forth in the proxy statement the following caption is incorporated herein by reference:

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•

“Provisions for Unaffiliated Shareholders”

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(f)

Eligibility of Listing or Trading. Not applicable.

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Item 5   Past Contracts, Transactions, Negotiations and Agreements

(a)

Transactions. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Special Factors — Related Party Transactions”

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•

“Transactions in the Shares”

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(b)

Significant Corporate Events. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Purpose of and Reasons for the Merger”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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(c)

Negotiations or Contacts. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Plans for the Company after the Merger”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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(e)

Agreements Involving the Subject Company’s Securities. The information set forth in the proxy statement under the following captions incorporated herein by reference:

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•

“Summary Term Sheet — Rollover Agreement”

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•

“Summary Term Sheet — Voting Agreement”

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•

“Summary Term Sheet — Financing of the Merger”

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Plans for the Company after the Merger”

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•

“Special Factors — Financing”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“Special Factors — Voting by the Rollover Shareholders at the General Meeting”

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•

“The Merger Agreement and Plan of Merger”

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•

“Transactions in the Shares”

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4

•

“Annex A — Agreement and Plan of Merger”

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Item 6   Purposes of the Transaction and Plans or Proposals

(b)

Use of Securities Acquired. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet”

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•

“Questions and Answers about the General Meeting and the Merger”

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•

“Special Factors — Purpose of and Reasons for the Merger”

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•

“Special Factors — Effect of the Merger on the Company”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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(c)(1)-(8)

Plans. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — The Merger”

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•

“Summary Term Sheet — Purposes and Effects of the Merger”

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•

“Summary Term Sheet — Plans for the Company after the Merger”

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•

“Summary Term Sheet — Financing of the Merger”

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•

“Summary Term Sheet — Interests of the Company’s Directors and Executive Officers in the Merger”

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Purpose of and Reasons for the Merger”

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•

“Special Factors — Effect of the Merger on the Company”

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•

“Special Factors — Plans for the Company after the Merger”

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•

“Special Factors — Financing”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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Item 7   Purposes, Alternatives, Reasons and Effects

(a)

Purposes. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Purposes and Effects of the Merger”

​

•

“Summary Term Sheet — Plans for the Company after the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Purpose of and Reasons for the Merger”

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(b)

Alternatives. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Special Factors — Background of the Merger”

​

5

•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Position of the Buyer Group as to the Fairness of the Merger”

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•

“Special Factors — Purpose of and Reasons for the Merger”

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•

“Special Factors — Effects on the Company if the Merger is not Completed”

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(c)

Reasons. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Purposes and Effects of the Merger”

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•

“Special Factors — Background of the Merger”

​

•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Position of the Buyer Group as to the Fairness of the Merger”

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•

“Special Factors — Purpose of and Reasons for the Merger”

​

•

“Special Factors — Effect of the Merger on the Company”

​

(d)

Effects. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Purposes and Effects of the Merger”

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•

“Special Factors — Background of the Merger”

​

•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Effect of the Merger on the Company”

​

•

“Special Factors — Plans for the Company after the Merger”

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•

“Special Factors — Effects on the Company if the Merger is not Completed”

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•

“Special Factors — Effect of the Merger on the Company’s Net Book Value and Net Earnings”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“Special Factors — Material U.S. Federal Income Tax Consequences”

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•

“Special Factors — Material PRC Income Tax Consequences”

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•

“Special Factors — Material British Virgin Islands Tax Consequences”

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•

“The Merger Agreement and Plan of Merger”

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•

“Annex A — Agreement and Plan of Merger”

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Item 8   Fairness of the Transaction

(a)-(b)

Fairness; Factors Considered in Determining Fairness. The information set forth in the proxy statement under the following captions incorporated herein by reference:

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•

“Summary Term Sheet — Recommendations of the Special Committee and the Board of Directors”

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•

“Summary Term Sheet — Position of the Buyer Group as to the Fairness of the Merger”

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•

“Summary Term Sheet — Interests of the Company’s Directors Executive Officers in the Merger”

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•

“Special Factors — Background of the Merger”

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6

•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Position of the Buyer Group as to the Fairness of the Merger”

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•

“Special Factors — Opinion of the Special Committee’s Financial Advisor”

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•

“Special Factors — Interests of Certain Persons in the Merger”

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•

“Annex B — Opinion of Duff  & Phelps, LLC as Financial Advisor”

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(c)

Approval of Security Holders. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Shareholder Vote Required to Authorize and Approve the Merger Agreement and Plan of Merger”

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•

“Questions and Answers about the General Meeting and the Merger”

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•

“The General Meeting — Vote Required”

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(d)

Unaffiliated Representative. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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•

“Special Factors — Opinion of the Special Committee’s Financial Advisor”

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(e)

Approval of Directors. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Recommendations of the Special Committee and the Board of Directors”

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•

“Questions and Answers about the General Meeting and the Merger”

​

•

“Special Factors — Background of the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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(f)

Other Offers. The information set forth in the proxy statement under the following caption since incorporated herein by reference:

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•

“Special Factors — Background of the Merger”

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•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

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Item 9   Reports, Opinions, Appraisals and Negotiations

(a)

Report, Opinion or Appraisal. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Opinion of the Special Committee’s Financial Advisor”

​

•

“Special Factors — Background of the Merger”

​

•

“Special Factors — Opinion of the Special Committee’s Financial Advisor”

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•

“Annex B — Opinion of Duff  & Phelps, LLC as Financial Advisor”

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(b)

Preparer and Summary of the Report, Opinion or Appraisal. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Special Factors — Opinion of the Special Committee’s Financial Advisor”

​

7

•

“Annex B — Opinion of Duff  & Phelps, LLC as Financial Advisor”

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(c)

Availability of Documents. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

​

•

“Where You Can Find More Information”

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The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive office of the Company during its regular business hours by any interested holder of the Shares or his, her or its representative who has been so designated in writing.

Item 10   Source and Amount of Funds or Other Consideration

(a)

Source of Funds. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Summary Term Sheet — Financing of the Merger”

​

•

“Special Factors — Financing”

​

•

“The Merger Agreement and Plan of Merger”

​

•

“Annex A — Agreement and Plan of Merger”

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(b)

Conditions. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Financing of the Merger”

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•

“Special Factors — Financing”

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(c)

Expenses. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

​

•

“Summary Term Sheet — Fees and Expenses”

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•

“Special Factors — Fees and Expenses”

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•

“The Merger Agreement and Plan of Merger — Fees and Expenses”

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(d)

Borrowed Funds. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

​

•

“Summary Term Sheet — Financing of the Merger”

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•

“Special Factors — Financing”

​

•

“The Merger Agreement and Plan of Merger — Financing”

​

Item 11   Interest in Securities of the Subject Company

(a)

Securities Ownership. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Share Ownership of the Company Directors and Officers and Voting Commitments”

​

•

“Special Factors — Interests of Certain Persons in the Merger”

​

•

“Security Ownership of Certain Beneficial Owners and Management of the Company”

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(b)

Securities Transaction. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

​

•

“Transactions in the Shares”

​

8

Item 12   The Solicitation or Recommendation

(d)

Intent to Tender or Vote in a Going-Private Transaction. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Share Ownership of the Company Directors and Officers and Voting Commitments”

​

•

“Questions and Answers about the General Meeting and the Merger”

​

•

“Special Factors — Voting by the Rollover Shareholders at the General Meeting”

​

•

“The General Meeting — Vote Required”

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•

“Security Ownership of Certain Beneficial Owners and Management of the Company”

​

(e)

Recommendations of Others. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — Recommendations of the Special Committee and the Board of Directors”

​

•

“Summary Term Sheet — Position of the Buyer Group as to the Fairness of the Merger”

​

•

“Summary Term Sheet — Share Ownership of the Company Directors and Officers and Voting Commitments”

​

•

“Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors”

​

•

“Special Factors — Position of the Buyer Group as to the Fairness of the Merger”

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•

“The General Meeting — Our Board’s Recommendation”

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Item 13   Financial Statements

(a)

Financial Information. The audited financial statements of the Company for the year ended December 31, 2014 are incorporated herein by reference to the Company’s Form 20-F for the year ended December 31, 2014, as amended, originally filed on April 30, 2015 (see page F-1 and following pages). The unaudited consolidated financial statements of the Company for the nine-month periods ended September 30, 2014 and 2015 are incorporated herein by reference to the Company’s Form 6-K furnished on November 15, 2013, November 14, 2014, and November 24, 2015, respectively. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

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•

“Financial Information”

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•

“Where You Can Find More Information”

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(b)

Pro Forma Information. Not applicable.

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Item 14   Persons/Assets, Retained, Employed, Compensated or Used

(a)

Solicitation or Recommendations. The information set forth in the proxy statement under the following caption is incorporated herein by reference:

​

•

“The General Meeting — Solicitation of Proxies”

​

(b)

Employees and Corporate Assets. The information set forth in the proxy statement under the following captions is incorporated herein by reference:

​

•

“Summary Term Sheet — The Parties Involved in the Merger”

​

•

“Special Factors — Interests of Certain Persons in the Merger”

​

•

“Annex D — Directors and Executive Officers of Each Filing Person”

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9

Item 15   Additional Information

(a)

Other Material Information. The information contained in the proxy statement, including all annexes thereto, is incorporated herein by reference.

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Item 16   Exhibits

(a)-(1)

Proxy Statement of the Company, dated March 18, 2016 (the “proxy statement”).

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(a)-(2)

Notice of General Meeting of Shareholders of the Company, incorporated herein by reference to the proxy statement.

​

(a)-(3)

Form of Proxy Card, incorporated herein by reference to the proxy statement.

​

(a)-(4)

Press Release issued by the Company, dated September 15, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on September 16, 2015.

​

(a)-(5)

Press Release issued by the Company, dated September 29, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on September 30, 2015.

​

(a)-(6)

Press Release issued by the Company, dated October 7, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on October 8, 2015.

​

(a)-(7)

Press Release issued by the Company, dated January 25, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on January 25, 2016.

​

(a)-(8)

Press Release issued by the Company, dated March 18, 2016, incorporated by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on March 18, 2016.

​

(b)-(1)

Debt Commitment Letter, dated as of January 24, 2016, by and among Forebright SPV, Forebright Fund and Mr. Li, incorporated herein by reference to Exhibit 7.05 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(c)-(1)

Opinion of Duff  & Phelps, LLC, dated January 22, 2016, incorporated herein by reference to Annex B of the proxy statement.

​

(c)-(2)

Preliminary Draft Fairness Analysis prepared by Duff  & Phelps, LLC for discussion with the Special Committee of the board of directors of the Company, dated December 20, 2015.*

​

(c)-(3)

Discussion materials prepared by Duff  & Phelps, LLC for discussion with the Special Committee of the board of directors of the Company, dated January 22, 2016.*

​

(d)-(1)

Agreement and Plan of Merger, dated as of January 24, 2016, by and among the Company, Parent and Merger Sub incorporated herein by reference to Annex A to the proxy statement.

​

(d)-(2)

Rollover Agreement, dated as of January 24, 2016, by and among Rollover Shareholders and Parent, incorporated herein by reference to Annex E of the proxy statement.

​

(d)-(3)

Voting Agreement, dated as of January 24, 2016, by and among Rollover Shareholders and Parent, incorporated herein by reference to Annex F of the proxy statement.

​

(d)-(4)

Limited Guarantee, dated as of January 24, 2016, by Mr. Li and Forebright Fund in favor of the Company, incorporated herein by reference to Annex G of the proxy statement.

​

(d)-(5)

Equity Commitment Letter, dated as of January 24, 2016, by and between Mr. Li and Parent, incorporated herein by reference to Exhibit 7.04 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

10

(d)-(6)

Equity Commitment Letter, dated as of January 24, 2016, by and among Forebright SPV, Forebright Fund and Parent, incorporated herein by reference to Exhibit 7.03 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(d)-(7)

Interim Investors Agreement, dated as of January 24, 2016, by and among Mr. Li, Forebright SPV and Parent, incorporated herein by reference to Exhibit 7.09 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(f)-(1)

Appraisal Rights, incorporated herein by reference to the section entitled “Appraisal Rights” in the proxy statement.

​

(f)-(2)

Section 179 of the BVI Business Companies Act, as amended, incorporated herein by reference to Annex C of the proxy statement.

​

(g)

Not applicable.

​

*

Previously filed.

​

11

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2016

12

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2016

13

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2016

14

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2016

15

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 18, 2016

16

Exhibit Index

(a)-(1)

Proxy Statement of the Company, dated March 18, 2016.

​

(a)-(2)

Notice of General Meeting of Shareholders of the Company, incorporated herein by reference to the proxy statement.

​

(a)-(3)

Form of Proxy Card, incorporated herein by reference to the proxy statement.

​

(a)-(4)

Press Release issued by the Company, dated September 15, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on September 16, 2015.

​

(a)-(5)

Press Release issued by the Company, dated September 29, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on September 30, 2015.

​

(a)-(6)

Press Release issued by the Company, dated October 7, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on October 8, 2015.

​

(a)-(7)

Press Release issued by the Company, dated January 25, 2015, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on January 25, 2016.

​

(a)-(8)

Press Release issued by the Company, dated March 18, 2016, incorporated herein by reference to Exhibit 1 to the Report on Form 6-K furnished by the Company to the Securities and Exchange Commission on March 18, 2016.

​

(b)-(1)

Debt Commitment Letter, dated as of January 24, 2016, by and among Forebright SPV, Forebright Fund and Mr. Li, incorporated herein by reference to Exhibit 7.05 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(c)-(1)

Opinion of Duff  & Phelps, LLC, dated January 22, 2016, incorporated herein by reference to Annex B of the proxy statement.

​

(c)-(2)

Preliminary Draft Fairness Analysis prepared by Duff  & Phelps, LLC for discussion with the Special Committee of the board of directors of the Company, dated December 20, 2015.*

​

(c)-(3)

Discussion materials prepared by Duff  & Phelps, LLC for discussion with the Special Committee of the board of directors of the Company, dated January 22, 2016.*

​

(d)-(1)

Agreement and Plan of Merger, dated as of January 24, 2016, by and among the Company, Parent and Merger Sub incorporated herein by reference to Annex A to the proxy statement.

​

(d)-(2)

Rollover Agreement, dated as of January 24, 2016, by and among Rollover Shareholders and Parent, incorporated herein by reference to Annex E of the proxy statement.

​

(d)-(3)

Voting Agreement, dated as of January 24, 2016, by and among Rollover Shareholders and Parent, incorporated herein by reference to Annex F of the proxy statement.

​

(d)-(4)

Limited Guarantee, dated as of January 24, 2016, by Mr. Li and Forebright Fund in favor of the Company, incorporated herein by reference to Annex G of the proxy statement.

​

(d)-(5)

Equity Commitment Letter, dated as of January 24, 2016, by and between Mr. Li and Parent, incorporated herein by reference to Exhibit 7.04 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(d)-(6)

Equity Commitment Letter, dated as of January 24, 2016, by and among Forebright SPV, Forebright Fund and Parent, incorporated herein by reference to Exhibit 7.03 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

(d)-(7)

Interim Investors Agreement, dated as of January 24, 2016, by and among Mr. Li, Forebright SPV and Parent, incorporated herein by reference to Exhibit 7.09 to the Schedule 13D filed by Mr. Li and Ms. Jing on January 29, 2016.

​

17

(f)-(1)

Appraisal Rights, incorporated herein by reference to the section entitled “Appraisal Rights” in the proxy statement.

​

(f)-(2)

Section 179 of the BVI Business Companies Act, as amended, incorporated herein by reference to Annex C of the proxy statement.

​

(g)

Not applicable.

​

*

Previously filed.

​

18

Exhibit (a)-(1)​

JINPAN INTERNATIONAL LIMITED

March 18, 2016

Shareholders of Jinpan International Limited

Re: Notice of General Meeting of Shareholders

Dear Shareholder:

You are cordially invited to attend a general meeting of shareholders of Jinpan International Limited (the “Company”) to be held on April 18, 2016 at 10:00 a.m. (Beijing Time). The meeting will be held at our principal executive office located at No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone, Haikou, Hainan, People’s Republic of China. The attached notice of the general meeting and proxy statement provide information regarding the matters to be acted on at the general meeting, including at any adjournment or postponement thereof.

At the general meeting you will be asked to consider and vote upon a proposal to authorize and approve the agreement and plan of merger dated as of January 24, 2016 (the “merger agreement”), by and among the Company, FNOF E&M Investment Limited (“Parent”) and Silkwings Limited (“Merger Sub”), the plan of merger required to be filed with the Registrar of Corporate Affairs of the British Virgin Islands, substantially in the form attached as Appendix 1 to the merger agreement (the “plan of merger”) and the transactions contemplated by the merger agreement, including the merger (the “merger”). Copies of the merger agreement and the plan of merger are attached as Annex A to the accompanying proxy statement. Under the terms of the merger agreement, Merger Sub, a company wholly owned by Parent, will be merged with and into the Company, with the Company continuing as the surviving company after the merger.

Immediately following the consummation of the transactions contemplated under the merger agreement, Parent will be beneficially owned by Mr. Zhiyuan Li, the Company’s Chairman and Chief Executive Officer (“Mr. Li”), Ms. Yuqing Jing, the Company’s Secretary and wife of Mr. Li (“Ms. Jing”, collectively with Mr. Li, the “Rollover Shareholders”), and Forebright Smart Connection Technology Limited, a company established under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (“Forebright SPV”, together with the Rollover Shareholders, Smart Anchor Holdings Limited, Forebright New Opportunities Fund, L.P. (“Forebright Fund”), FNOF GP Limited, Forebright Capital Partners Inc., Take Success Limited, Greenfiled International Limited, Mr. Cheng Liu, Mr. Kun Wan Ip, Parent and Merger Sub, the “Buyer Group”). The Rollover Shareholders will have their rollover shares cancelled in the merger and pursuant to the terms of the plan of merger no merger consideration will be paid to such shareholders, but pursuant to the terms of the Rollover Agreement and in lieu of receiving US$6.00 per share they will be issued newly issued shares of Parent. As of the date of the accompanying proxy statement, the Rollover Shareholders collectively beneficially own approximately 23.45% of the Company’s issued and outstanding common shares, par value of US$0.0045 per share, (each a “Share” and collectively, the “Shares”).

If the merger is consummated, the Company will continue its operations as a privately held company.

At the effective time of the merger, except as described below, holders of our Shares will have the right to receive US$6.00 per Share surrendered for cancellation, in each case, in cash without interest and net of any applicable withholding taxes. The following Shares of the Company will not be converted into the right to receive the consideration described in the immediately preceding sentence: (a) Shares beneficially owned by the Rollover Shareholders (the “Rollover Shares”); and (b) Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 179 of the BVI Business Companies Act, as amended (the “BVI Companies Act”) (the “Dissenting Shareholders”); and (c) Shares owned by the Company or any direct or indirect wholly-owned subsidiary of the Company ((a), (b) and (c) collectively, the “Excluded Shares”). Each Excluded Share, other than the Dissenting Shares, issued and outstanding immediately prior to the effective time of the merger, will be cancelled and will cease to exist, and no merger consideration will be delivered with respect thereto.

The Buyer Group intends to fund the merger consideration through a cash contribution from Mr. Li pursuant to an equity commitment letter dated January 24, 2016 by and between Mr. Li and Parent, and a cash contribution from Forebright pursuant to an equity commitment letter dated January 24, 2016 by and among Forebright SPV, Forebright Fund and Parent. Mr. Li, Forebright SPV and Forebright Fund have entered into a debt commitment letter, pursuant to which Forebright SPV has agreed to provide Mr. Li with debt financing in an amount of US$25 million, the proceeds of which will be used by Mr. Li to perform his funding obligations under the equity commitment letter issued by him to Parent. On January 24, 2016, Mr. Li and Forebright Fund have entered into a limited guarantee in favor of the Company to guarantee certain payment obligations of Parent under the Merger Agreement.

A special committee of the board of directors of the Company (the “Special Committee”), composed solely of independent and disinterested directors who are unaffiliated with any of the Buyer Group or any of the management of the Company, has reviewed and considered the terms and conditions of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. On January 22, 2016, the Special Committee had unanimously (a) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and its shareholders, other than the shareholders who are affiliates of the Company, including members of the Buyer Group (such unaffiliated shareholders are referred to herein as the “unaffiliated shareholders”); (b) declared that it is advisable to enter into the merger agreement and the plan of merger; (c) recommended that the board of directors of the Company approve the execution, delivery and performance by the Company of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; and (d) recommended that the board of directors of the Company direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote at a general meeting of the shareholders of the Company with the recommendation of the board of directors that the shareholders of the Company authorize and approve by way of a shareholders resolution the merger agreement, the plan of merger and the transactions contemplated under the merger agreement, including the merger.

On January 22, 2016, the board of directors of the Company, after carefully considering all relevant factors, including the unanimous determination and recommendation of the Special Committee, had (a) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and its shareholders (including those shareholders who are unaffiliated with the Buyer Group); (b) approved the execution, delivery and performance by the Company of the merger agreement, the plan of merger and the consummation of the transactions contemplated thereby, including the merger; and (c) resolved to direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, be submitted to a vote at a general meeting of the shareholders of the Company.

The board of directors of the Company unanimously recommends that you vote FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the general meeting.

In considering the recommendation of the Special Committee and the board of directors, you should be aware that some of the Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of the shareholders generally. As of the date of the merger agreement, the Rollover Shareholders have agreed with Parent pursuant to a voting agreement to vote their Shares in favor of the proposal to approve and authorize the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger.

The accompanying proxy statement provides detailed information about the merger and the general meeting. We encourage you to read the entire document and all of the attachments and other documents referred to or incorporated by reference herein carefully. You may also obtain more information about the Company from documents the Company has filed with the Securities and Exchange Commission (the “SEC”), which are available for free at the SEC’s website www.sec.gov.

Regardless of the number of the Shares you own, your vote is very important. The merger cannot be completed unless the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, are approved and authorized by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders. As of the date of this proxy statement, the Rollover Shareholders, as a group, beneficially own 3,850,791 Shares, which represent approximately 23.45% of the total number of outstanding Shares. Accordingly, based on 16,418,456 Shares expected to be outstanding at the close of business in the British Virgin Islands on March 17, 2016, the Share record date, assuming the Rollover Shareholders will attend the general meeting, in person or by proxy, and vote all of their Shares in favor of the proposal to approve and authorize the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and all unaffiliated shareholders will be present and voting in person or by proxy at the general meeting, 4,358,438 Shares owned by unaffiliated shareholders and (representing approximately 34.68% of the total outstanding Shares owned by the unaffiliated shareholders) must be voted in favor of the proposal to be approved. Even if you plan to attend the general meeting in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. The deadline to lodge your proxy card is April 17, 2016 at 5:00 p.m. (Beijing time). Voting at the general meeting will take place by poll voting if so demanded by the chairman of the meeting, or by any shareholder present in person or by proxy entitled to vote who disputes the announcement by the chairman of the result of the vote.

If you hold Shares through a financial intermediary such as a broker, bank, or other nominee, you must rely on the procedures and timing of the financial intermediary through which you hold your Shares if you wish to vote at the general meeting.

Shareholders who dissent from the merger will be entitled to seek appraisal and payment of the fair value of their Shares if the merger is completed, subject to the condition that they deliver to the Company, before the vote is taken at the general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 179 of the BVI Business Companies Act, as amended regarding the exercise of appraisal rights, a copy of which is attached as Annex C to the accompanying proxy statement. The fair value of your Shares as determined under that statute could be more than, the same as, or less than the merger consideration you would receive pursuant to the merger agreement if you do not exercise appraisal rights with respect to your Shares.

Neither the SEC nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this letter or in the accompanying notice of the general meeting or proxy statement. Any representation to the contrary is a criminal offense.

If you have any questions or need assistance in voting your Shares, you may contact Innisfree M&A Incorporated, our proxy solicitor, at 877-800-5190 toll-free in North America or at 212-750-5833 collect.

On behalf of Jinpan International Limited, we would like to thank all of our shareholders for their ongoing support as we prepare to take part in this important event in our history.

The accompanying proxy statement is dated March 18, 2016, and is first being mailed to shareholders on or about March 21, 2016.

JINPAN INTERNATIONAL LIMITED
   
NOTICE OF GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2016

Dear Shareholder:

Notice is hereby given that a general meeting of the shareholders of Jinpan International Limited, referred to herein alternately as the “Company,” “us,” “our” or “we,” will be held on April 18, 2016, beginning at 10:00 a.m. (Beijing time), at our principal executive office located at No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone, Haikou, Hainan, People’s Republic of China.

Only registered holders of common shares, par value of US$0.0045 per share, of the Company (each a “Share” and collectively, the “Shares”), at the close of business in the British Virgin Islands on March 17, 2016, the Share record date, or their proxy holders are entitled to directly vote at this general meeting or any adjournment or postponements thereof. At the meeting, you will be asked to consider and vote upon the following resolutions:

THAT the Agreement and Plan of Merger dated January 24, 2016 (the “merger agreement”) by and among FNOF E&M Investment Limited (“Parent”), a limited liability company incorporated under the laws of the British Virgin Islands, Silkwings Limited (“Merger Sub”), a limited liability company incorporated under the laws of the British Virgin Islands and a wholly owned subsidiary of Parent, and the Company, and the plan of merger required to be filed with the Registrar of Corporate Affairs of the British Virgin Islands as provided in Section 171(2) of the BVI Companies Act for the purpose of the merger, substantially in the form attached as Appendix 1 to the merger agreement (the “plan of merger”) (copies of such merger agreement and plan of merger being in the form attached to the proxy statement accompanying this notice, which will also be produced and made available for inspection at the meeting), pursuant to which Merger Sub will be merged with and into the Company (the “merger”), with the Company continuing as the surviving company, and the transactions contemplated by the merger agreement, including the merger, be approved and authorized by the Company; and

THAT the chairman of the general meeting be instructed to adjourn or postpone the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the general meeting to pass the shareholders resolutions to be proposed at the general meeting.

A list of the shareholders of the Company will be available at its principal executive office at No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone Haikou, Hainan, People’s Republic of China, during ordinary business hours for the two business days immediately prior to the general meeting.

After careful consideration and upon the unanimous recommendation of the Special Committee of the board of directors of the Company (the “Special Committee”) composed solely of independent and disinterested directors of the Company who are unaffiliated with any of Parent, Merger Sub, Mr. Zhiyuan Li, Ms. Yuqing Jing, Forebright Smart Connection Technology Limited, Smart Anchor Holdings Limited, Forebright Opportunities Fund, L.P., FNOF GP Limited, Forebright Capital Partners Inc., Take Success Limited, Greenfiled International Limited, Mr. Cheng Liu and Mr. Kun Wan Ip (collectively, the “Buyer Group”) or any of the management of the Company, the Company’s board of directors has approved the merger agreement and recommends that you vote FOR the proposal to approve and authorize the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR the proposal to instruct the chairman of the general meeting to adjourn or postpone the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received at the time of the general meeting to pass the resolutions to be proposed at the general meeting.

Certain existing shareholders of the Company (and/or entities affiliated with or related to them), including Mr. Zhiyuan Li and Ms. Yuqing Jing (collectively, the “Rollover Shareholders”), have elected to roll-over all of their respective interests in the Company in connection with the merger pursuant to a rollover agreement with Parent and have entered into a voting agreement with Parent pursuant to which each Rollover Shareholder has agreed, among other things, to vote all of his or her Shares in favor of the

proposal to approve and authorize the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. Collectively, the Rollover Shareholders beneficially own approximately 23.45% of the total issued and outstanding Shares entitled to vote as of the date of this proxy statement. Forebright Smart Connection Technology Limited and its affiliates, along with the Rollover Shareholders will beneficially own Parent immediately following the consummation of the merger.

Regardless of the number of the Shares you own, your vote is very important. The merger cannot be completed unless the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, are approved and authorized by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders. Given the Rollover Shareholders’ ownership as described above, and assuming all Rollover Shareholders will attend the general meeting, in person or by proxy, and vote all of their Shares in favor of the proposal to approve and authorize the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, based on the number of Shares expected to be outstanding on the Share record date, 4,358,438 Shares owned by the unaffiliated shareholders (shareholders other than the Buyer Group and the directors and officers of the Company that are affiliated with the Buyer Group (representing approximately 34.68% of the total outstanding Shares owned by the unaffiliated shareholders) must be voted in favor of the proposal to be approved, assuming all unaffiliated shareholders will be present and voting in person or by proxy at the general meeting. Even if you plan to attend the general meeting in person, we request that you submit your proxy in accordance with the instructions set forth on the proxy card as promptly as possible. The proxy card shall be completed, signed, and returned to the Company’s United States office, c/o Jinpan International USA Limited, 390 Veterans Boulevard, Carlstadt, NJ 07072. The deadline to lodge your proxy card is April 17, 2016 at 5:00 p.m. (Beijing time). Voting at the general meeting will take place by poll voting if so demanded by the chairman of the meeting or by any shareholder present in person or by proxy entitled to vote who disputes the announcement by the chairman of the result of the vote.

Completing the proxy card in accordance with the instructions set forth on the proxy card will not deprive you of your right to attend the general meeting and vote your Shares in person. Please note, however, that if your Shares are registered in the name of a broker, bank or other nominee and you wish to vote at the general meeting in person, you must obtain from the record holder a proxy issued in your name.

If you fail to complete your proxy card in accordance with the instructions set forth on the proxy card or if you abstain from voting, your vote will not be counted.

If you receive more than one proxy card because you own Shares that are registered in different names, please vote all of your Shares shown on each of your proxy cards in accordance with the instructions set forth on each such proxy card.

If you submit your signed proxy card without indicating how you wish to vote, the Shares represented by your proxy card will be voted FOR the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and FOR any adjournment of the general meeting referred to above unless you appoint a person other than the chairman of the meeting as proxy, in which case the Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines.

When proxies are properly dated, executed and returned by holders of Shares, the Shares they represent will be voted at the general meeting in accordance with the instructions of the shareholders. If no specific instructions are given by such holders, the Shares will be voted “FOR” the proposals as described above and in the proxy holder’s discretion as to other matters that may properly come before the general meeting. Abstentions by holders of Shares are included in the determination of the number of Shares present and voting but are not counted as votes for or against a proposal.

If you hold Shares through a financial intermediary such as a broker, bank, or other nominee, you must rely on the procedures and timing of the financial intermediary through which you hold your Shares if you wish to vote at the general meeting.

Shareholders who dissent from the merger will be entitled to seek appraisal and payment of the fair value of their Shares if the merger is completed, subject to the condition that they deliver to the Company, before the vote is taken at the general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 179 of the BVI Business Companies Act, as amended regarding the exercise of appraisal rights, a copy of which is attached as Annex C to the accompanying proxy statement. The fair value of your Shares as determined under that statute could be more than, the same as, or less than the merger consideration you would receive pursuant to the merger agreement if you do not exercise appraisal rights with respect to your Shares.

Please do not send your share certificate at this time. If the merger is completed, you will be sent instructions regarding the surrender of your share certificates.

If you have any questions or need assistance in voting your Shares, you may contact Innisfree M&A Incorporated, the firm assisting us with this proxy solicitation, at 877-800-5190 toll-free in North America or at 212-750-5833 collect.

The merger agreement, the plan of merger and the merger are described in the accompanying proxy statement. Copies of the merger agreement and the plan of merger are included as Annex A to the accompanying proxy statement. We urge you to read the entire proxy statement carefully.

Notes:

1.

In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company.

​

2.

The proxy card shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized.

​

3.

A proxy need not be a member (registered shareholder) of the Company.

​

4.

The chairman of the meeting may at his discretion direct that a proxy card shall be deemed to have been duly deposited. A proxy card that is not deposited in the manner permitted shall be invalid.

​

5.

A vote given in accordance with the terms of a proxy card shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the proxy card or of the authority under which it was executed, provided that no notice in writing of such death, insanity or revocation shall have been received by the Company at its principal executive office before the commencement of the meeting or adjourned meeting at which the proxy is used.

​

BY ORDER OF THE BOARD OF DIRECTORS,​

​	/s/ Zhiyuan Li	​
​	Zhiyuan Li Chairman of the Board	​

TABLE OF CONTENTS

i

SUMMARY TERM SHEET

This “Summary Term Sheet”, together with the “Questions and Answers about the General Meeting and the Merger,” highlights selected information contained in this proxy statement regarding the merger and may not contain all of the information that may be important to your consideration of the merger. You should carefully read this entire proxy statement and the other documents to which this proxy statement refers for a more complete understanding of the matters being considered at the general meeting. In addition, this proxy statement incorporates by reference important business and financial information about the Company. You are encouraged to read all of the documents incorporated by reference into this proxy statement and you may obtain such information without charge by following the instructions in “Where You Can Find More Information” beginning on page 94. In this proxy statement, the terms “we”, “us”, “our,”, “Jinpan”, the “Company” refer to Jinpan International Limited and its subsidiaries. All references to “dollars” and “US$” in this proxy statement are to U.S. dollars.

The Parties Involved in the Merger

The Company

We design, manufacture, and market electrical control and distribution equipment used in demanding industrial applications, utility projects, renewable energy installations, and infrastructure projects. Major products include cast resin transformers, VPI transformers and reactors, switchgears, and unit substations.

We serve a wide range of customers in China and reaches international markets as a qualified supplier to leading global industrial electrical equipment manufacturers. We are one of the largest manufacturers of cast resin transformers in China by production capacity. Jinpan’s four manufacturing facilities in China are located in the cities of Haikou, Wuhan, Shanghai and Guilin. The Company was founded in 1993. Its principal executive office are located in Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey. For more information, visit www.jinpaninternational.com.

Our principal executive office is located at No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone Haikou, Hainan, People’s Republic of China. Our telephone number at this address is +86-898-6681-1301 and our fax number is +86-898-6681-3519. Our registered office in the British Virgin Islands is located at the office of Offshore Incorporated Limited, P.O. Box 957, Offshore Incroporations Centre, Road Town, Tortola, British Virgin Islands.

For a description of our history, development, business and organizational structure, see our annual report on Form 20-F for the year ended December 31, 2014, originally filed on April 30, 2015, which is incorporated herein by reference. Please see “Where You Can Find More Information” beginning on page 94 for a description of how to obtain a copy of our annual report.

Parent

FNOF E&M Investment Limited (“Parent”), a limited liability company incorporated under the laws of the British Virgin Islands and wholly owned by Forebright Smart Connection Technology Limited, was formed solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Parent does not currently hold any Shares of the Company. The business address of Parent is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Parent is +852 2598-2598.

Merger Sub

Silkwings Limited (“Merger Sub”), a limited liability company incorporated under the laws of the British Virgin Islands and a wholly owned subsidiary of Parent, was formed by Parent solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. Merger Sub does not currently hold any Shares of the Company. The business address of Merger Sub is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Merger Sub is +852 2598-2598.

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Forebright Smart Connection Technology Limited

Forebright Smart Connection Technology Limited (“Forebright SPV”), a company established under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China and wholly owned by Smart Anchor Holdings Limited. Forebright SPV does not currently hold any Shares of the Company. The business address of Forebright SPV is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Forebright SPV is +852 2598-2598. Its principal business is investment holding.

Smart Anchor Holdings Limited

Smart Anchor Holdings Limited (“Smart Anchor”), a limited liability company incorporated under the laws of the British Virgin Islands and wholly owned by Forebright New Opportunities Fund, L.P. Smart Anchor does not currently hold any Shares of the Company. The business address of Smart Anchor is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Smart Anchor is +852 2598-2598. Its principal business is investment holding.

Forebright New Opportunities Fund, L.P.

Forebright New Opportunities Fund, L.P. (“Forebright Fund”), an exempted limited partnership registered in the Cayman Islands. The general partner of Forebright Fund is FNOF GP Limited. Forebright Fund does not currently hold any Shares of the Company. The business address of Forebright Fund is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Forebright Fund is +852 2598-2598. Its principal business is making investment.

FNOF GP Limited

FNOF GP Limited (“FNOF GP”), an exempted company incorporated under the laws of the Cayman Islands with limited liability and wholly owned by Forebright Capital Partners Inc. FNOF GP does not currently hold any Shares of the Company. The business address of FNOF GP is located at Suite 3720 Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of FNOF GP is +852 2598-2598. Its principal business is making investment.

Forebright Capital Partners Inc.

Forebright Capital Partners Inc. (“Forebright Capital”), a limited liability company incorporated under the laws of the British Virgin Islands. Forebright Capital is owned as to 58.6% by Take Success Limited and 41.4% by Greenfiled International Limited. Forebright Capital does not currently hold any Shares of the Company. The business address of Forebright Capital is located at Suite 3720, Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Forebright Capital is +852 2598-2598. Its principal business is investment holding.

Take Success Limited

Take Success Limited (“Take Success”), a limited liability company incorporated under the laws of the British Virgin Islands and wholly owned by Mr. Cheng Liu. Take Success does not currently hold any Shares of the Company. The business address of Take Success is located at Suite 3720, Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Take Success is +852 2598-2598. Its principal business is investment holding.

Greenfiled International Limited

Greenfiled International Limited (“Greenfiled”), a limited liability company incorporated under the laws of the British Virgin Islands and wholly owned by Mr. Kun Wan Ip. Greenfiled does not currently hold any Shares of the Company. The business address of Greenfiled is located at Suite 3720, Jardine House, 1 Connaught Place, Central, Hong Kong. The telephone number of Greenfiled is +852 2598-2598. Its principal business is investment holding.

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Mr. Cheng Liu

Mr. Cheng Liu (“Mr. Liu”) is a director of Parent, Merger Sub, Forebright SPV, Smart Anchor, Forebright Capital and Take Success. Mr. Liu is a citizen of Hong Kong Special Administrative Region. The business address of Mr. Liu is located at Suite 3720, Jardine House, 1 Connaught Place, Central, Hong Kong. His business telephone number is +852 2598-2598.

Mr. Kun Wan Ip

Mr. Kun Wan Ip (“Mr. Ip”) is a director of Parent, Merger Sub, Forebright SPV, Smart Anchor, FNOF GP, Forebright Capital and Greenfiled, Mr. Ip is a citizen of Australia. The business address of Mr. Ip is located at Suite 3720, Jardine House, 1 Connaught Place, Central, Hong Kong. His business telephone number is +852 2598-2598.

Zhiyuan Li

Mr. Zhiyuan Li (“Mr. Li” or the “Chairman”), a PRC citizen, has served as chairman of the board of directors and the chief executive officer since April 1997. The business address of Mr. Li is located at c/o Hainan Jinpan Electric Company, Ltd, No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone, Haikou, Hainan, People’s Republic of China. The telephone number of Mr. Li is +86 898 6681-1301.

Yuqing Jing

Ms. Yuqing Jing (“Ms. Jing”), a PRC citizen, has served as our Corporate Secretary since April 1997. She is Mr. Li’s wife. The business address of Ms. Jing is c/o Jinpan International (USA) Ltd., 390 Veterans Boulevard, Carlstadt, NJ 07072, United States. The telephone number of Ms. Jing is +1 201-460-8778.

Throughout this proxy statement, Mr. Li and Ms. Jing are collectively referred to herein as the “Rollover Shareholders” and the Rollover Shareholders, Forebright SPV, Smart Anchor, Forebright Fund, FNOF GP, Forebright Capital, Take Success, Greenfiled, Mr. Liu, Mr. Ip, Parent and Merger Sub are collectively referred to herein as the “Buyer Group”.

The Merger (Page 66)

You are being asked to vote to authorize and approve the agreement and plan of merger dated as of January 24, 2016 (the “merger agreement”) among the Company, Parent and Merger Sub, the plan of merger required to be filed with the Registrar of Corporate Affairs of the British Virgin Islands, substantially in the form attached as Appendix 1 to the merger agreement (the “plan of merger”) and the transactions contemplated by the merger agreement, including the merger (the “merger”). Once the merger agreement and plan of merger are authorized and approved by the requisite vote of the shareholders of the Company and the other conditions to the consummation of the transactions contemplated by the merger agreement are satisfied or waived in accordance with the terms of the merger agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company. The Company, as the surviving company, will continue to do business under the name “Jinpan International Limited” following the merger. If the merger is completed, the Company will cease to be a publicly traded company. Copies of the merger agreement and the plan of merger are attached as Annex A to this proxy statement. You should read the merger agreement and the plan of merger in their entirety because they, and not this proxy statement, are the legal documents that govern the merger.

Merger Consideration (Page 66)

Under the terms of the merger agreement, at the effective time of the merger, each of our outstanding common shares, par value of US$0.0045 per share (each, a “Share” and collectively, the “Shares”), issued and outstanding immediately prior to the effective time of the merger, will be cancelled in exchange for the right to receive US$6.00 per Share surrendered for cancellation, in each case, without interest and net of any applicable withholding taxes, except for the following excluded Shares (the “Excluded Shares”): (a) Shares beneficially owned by the Rollover Shareholders (the “Rollover Shares”); and (b) Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their appraisal rights pursuant to Section 179 of the BVI Business Companies Act, as amended (the

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“BVI Companies Act”) (the “Dissenting Shareholders”); and (c) Shares owned by the Company or any direct or indirect wholly-owned subsidiary of the Company. Each Excluded Share (but excluding the Dissenting Shares) issued and outstanding immediately prior to the effective time of the merger, will be cancelled and will cease to exist, and no merger consideration will be delivered with respect thereto. Each Dissenting Shareholder will be entitled to receive only the payment resulting from the procedure in Section 179 of the BVI Companies Act with respect to Shares owned by such Dissenting Shareholder. Please see “Appraisal Rights” beginning on page 81 for additional information.

Treatment of Share Options (Page 67)

Immediately after the effective time of the merger, each outstanding option of the Company to purchase Shares under the Company’s 1997 Stock Option Plan and 2006 Stock Option Plan, in each case as amended or modified from time to time (the “Stock Plan”), whether vested or unvested, shall be cancelled and converted into the right of the holder of such option to receive cash in the amount equal to: (i) the total number of Shares subject to such option immediately prior to the effective time (without regard to vesting); multiplied by (ii) the excess, if any, of  (x) US$6.00 in cash per Share without interest over (y) the exercise price per Share under such option, which amount shall be paid, net of any applicable withholding taxes, as soon as reasonably practicable after the effective time. No holder of an option that has an exercise price per Share that is equal to or greater than the merger consideration of US$6.00 per Share shall be entitled to any payment with respect to such cancelled option before or after the effective time.

Voting Agreement (Annex F)

Concurrently with the execution and delivery of the merger agreement, each of the Rollover Shareholders entered into a voting agreement with Parent (the “Voting Agreement”), pursuant to which, among the others, (a) during the period commencing on the date of the Voting Agreement and continuing until the earlier of  (i) board of directors of the Company (at the direction of the Special Committee) or the Special Committee has made an adverse recommendation, or (ii) the termination of the Voting Agreement in accordance with its terms, each Rollover Shareholder and each of his or her affiliates that acquires beneficial ownership of any Share will appear at the shareholders’ meeting or otherwise cause the Shares to be counted as present thereat for purposes of establishing a quorum and vote (or cause to be voted) the Shares in favor of the approval of the merger agreement and the approval of other actions contemplated by the merger agreement and any actions required in furtherance thereof; and (b) each Rollover Shareholder irrevocably appoints Parent and any designee thereof as his or her proxy and attorney-in-fact (with full power of substitution), to vote or cause to be voted (including by proxy or written consent, if applicable) the Shares at the extraordinary shareholders’ meeting in favor of the approval of the merger agreement and the approval of other actions contemplated by the merger agreement and any actions required in furtherance thereof. Each Rollover Shareholder will take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy.

The Voting Agreement will terminate on the earliest to occur of: (a) termination of the merger agreement in accordance with its terms; or (b) the effective time of merger. The Voting Agreement is attached as Annex F to this proxy statement.

Record Date and Voting (Page 64)

You are entitled to attend and directly vote at the general meeting if you have Shares registered in your name at the close of business in the British Virgin Islands on March 17, 2016, the Share record date for voting at the general meeting. Each outstanding Share on the Share record date entitles the holder to one vote on each matter submitted to the shareholders for authorization and approval at the general meeting and any adjournment thereof. We expect that, as of the Share record date, there will be 16,418,456 Shares entitled to be voted at the general meeting. If you have Shares registered in your name on the Share record date, the deadline for you to lodge your proxy card and vote is April 17, 2016 at 5:00 p.m. (Beijing Time). See “Summary Term Sheet — Voting Information” below.

Shareholder Vote Required to Authorize and Approve the Merger Agreement and Plan of Merger (Page 64)

In order for the merger to be completed, the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, must be authorized and

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approved by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders. The authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, are not subject to the authorization and approval of holders of a majority of the Shares unaffiliated with the Buyer Group.

Based on the number of Shares we expect to be issued and outstanding and entitled to vote on the record date, approximately 8,209,229 Shares must be voted in favor of the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, in order for the proposal to be authorized and approved, assuming all shareholders will be present and voting in person or by proxy at the general meeting.

As of the date of this proxy statement, the Rollover Shareholders as a group beneficially owned in the aggregate 3,850,791 Shares, which represents 23.45% of the total outstanding voting Shares. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 90 for additional information. Pursuant to the terms of the Voting Agreement, these Shares will be voted in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger at the general meeting of the Company. Based on the number of Shares expected to be outstanding on the record date, approximately 26.55% of the total outstanding Shares entitled to vote owned by the remaining shareholders must be voted in favor of the proposal in order for the merger to be approved, assuming all remaining shareholders will be present and voting in person or by proxy at the general meeting.

If your Shares are held in the name of a broker, bank or other nominee, your broker, bank or other nominee will not vote your Shares in the absence of specific instructions from you. These non-voted Shares are referred to as “broker non-votes.”

Voting Information (Page 64)

Before voting your Shares, we encourage you to read this proxy statement in its entirety, including all of the annexes, attachments, exhibits and materials incorporated by reference, and carefully consider how the merger will affect you. To ensure that your Shares can be voted at the general meeting, please complete the enclosed proxy card in accordance with the instructions set forth on the proxy card as soon as possible. The deadline for you to lodge your proxy card is April 17, 2016 at 5:00 p.m. (Beijing Time).

Appraisal Rights of Shareholders (Page 81)

Shareholders who dissent from the merger will have the right to seek appraisal and payment of the fair value of their Shares if the merger is completed, on the condition that they deliver to the Company, before the vote is taken, a written objection to the merger and subsequently comply with all procedures and requirements of Section 179 of the BVI Companies Act regarding the exercise of appraisal rights. The fair value of your Shares as determined under that statute could be more than, the same as, or less than the merger consideration you would receive according to the merger agreement if you do not exercise appraisal rights with respect to your Shares.

We encourage you to review carefully the section of this proxy statement entitled “Appraisal Rights” as well as Annex C to this proxy statement and to consult your British Virgin Islands legal counsel if you consider exercising your appraisal rights.

Purposes and Effects of the Merger (Pages 45)

The purpose of the merger is to enable Parent to acquire 100% control of the Company in a transaction in which the Company’s shareholders other than the holders of Excluded Shares will be cashed out in exchange for US$6.00 per Share without interest and net of any applicable withholding taxes, so that Parent will bear the rewards and risks of the sole ownership of the Company after the merger, including any future earnings and growth of the Company as a result of improvements to the Company’s operations or acquisitions of other businesses. Please see “Special Factors — Buyer Group’s Purpose of and Reasons for the Merger” beginning on page 45 for additional information.

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The Shares are currently listed on the NASDAQ under the symbol “JST.” It is expected that, following the consummation of the merger, the Company will cease to be a publicly traded company and will instead become a private company beneficially owned by the Buyer Group. Following the completion of the merger, the Shares will no longer be listed on any securities exchange or quotation system, including the NASDAQ, and price quotations with respect to sales of the Shares in the public market will no longer be available. In addition, registration of Shares under the Exchange Act may be terminated upon the Company’s application to the SEC if Shares are not listed on a national securities exchange and there are fewer than 300 record holders of Shares. Ninety days after the filing of Form 15 in connection with the completion of the merger or such shorter period as may be determined by the SEC, registration of the Shares under the Exchange Act will be terminated and the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the U.S. federal securities laws, including the Sarbanes-Oxley Act of 2002, applicable to public companies. Following the completion of the merger, the Company’s shareholders will no longer enjoy the rights or protections that the U.S. federal securities laws provide to shareholders of public companies, including reporting obligations for directors, officers and principal securities holders of the Company. Please see “Special Factors — Effects of the Merger on the Company” beginning on page 46 for additional information.

Plans for the Company after the Merger (Page 48)

After the effective time of the merger, Parent anticipates that the Company’s operations will be conducted substantially as they are currently being conducted, except that the Company will cease to be an independent public company and will instead be a wholly owned subsidiary of Parent.

Recommendations of the Special Committee and the Board of Directors (Page 27)

The Special Committee has unanimously (a) determined that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to, and in the best interests of, the Company and the unaffiliated shareholders; (b) declared that it is advisable to enter into the merger agreement; (c) recommended that the board of directors of the Company authorize and approve the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the merger; and (d) recommended that the board of directors direct that the authorization and approval of the merger agreement, the plan of merger substantively in the form contained in Appendix 1 to the merger agreement (the “plan of merger”), and the transactions contemplated under the merger agreement, including the merger, be submitted to a vote at a general meeting of the shareholders of the Company with the recommendation of the Board that the shareholders of the Company authorize and approve the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger.

ACCORDINGLY, OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AUTHORIZE AND APPROVE THE MERGER AGREEMENT, THE PLAN OF MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER, AND FOR THE PROPOSAL TO ADJOURN THE GENERAL MEETING IN ORDER TO ALLOW THE COMPANY TO SOLICIT ADDITIONAL PROXIES IN THE EVENT THAT THERE ARE INSUFFICIENT PROXIES RECEIVED TO PASS THE SHAREHOLDERS RESOLUTION DURING THE GENERAL MEETING.

Position of the Buyer Group as to the Fairness of the Merger (Page 33)

Each member of the Buyer Group believes that the merger is fair (both substantively and procedurally) to the Company’s unaffiliated shareholders. Their belief is based upon the factors discussed under the caption “Special Factors — Position of the Buyer Group as to the Fairness of the Merger” beginning on page 33.

Each member of the Buyer Group is making the statements included in this paragraph solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of each aforementioned person as to the fairness of the merger are not intended to be and should not be construed as a recommendation to any shareholder of the Company as to how that shareholder should vote on the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger.

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Financing of the Merger (Page 50)

Parent estimates that the total amount of funds necessary to complete the merger and the related transactions at the closing of the merger, including for the payment of the merger consideration to our unaffiliated shareholders pursuant to the merger agreement, is anticipated to be approximately US$75.5 million, assuming no exercise of dissenters’ rights by shareholders of the Company. In calculating this amount, the Buyer Group does not consider the value of the Rollover Shares which will, in connection with and immediately prior to the closing of the merger at the Effective Time, be cancelled without receiving any merger consideration, and the Rollover Shareholders in lieu of receiving US$6.00 per share will be issued newly issued shares of Parent pursuant to the Rollover Agreement. This amount is expected to be provided through a combination of funds (a) of US$27.7 million to be provided by Forebright SPV to the Parent pursuant to an equity commitment letter dated January 24, 2016 (the “Forebright Equity Commitment Letter”), with such funding obligations being guaranteed by Forebright Fund; and (b) of US$47.8 million to be provided by Mr. Li to the Parent pursuant to an equity commitment letter dated January 24, 2016 (the “Mr. Li Equity Commitment Letter”).

In connection with his US$47.8 million funding commitment under the Mr. Li Equity Commitment Letter, Mr. Li has entered into a debt commitment letter with Forebright SPV and Forebright Fund on January 24, 2016 (the “Debt Commitment Letter”), pursuant to which Forebright SPV has agreed to provide Mr. Li with debt financing in an amount of US$25 million, with such financing obligation to be guaranteed by Forebright Fund.

Limited Guarantee (Annex G)

On January 24, 2016, Mr. Li, Forebright Fund and the Company entered into a limited guarantee (the “Limited Guarantee”), pursuant to which Mr. Li and Forebright Fund agreed to guarantee certain payment obligations of Parent under the merger agreement in favor of the Company.

Rollover Agreement (Annex E)

Concurrently with the execution and delivery of the merger agreement, each of the Rollover Shareholders entered into a rollover agreement with Parent (the “Rollover Agreement”). Subject to the conditions set forth in the Rollover Agreement, at the effective time of the merger and without further action by the Rollover Shareholders, all Rollover Shares will be cancelled without receiving any merger consideration, but in lieu of receiving US$6.00 per share, Parent will issue Parent shares in the name of each Rollover Holder or a designee of the Rollover Holder in the amount equal to the amount of the Rollover Shares. Each Rollover Shareholder hereby acknowledges and agrees that (a) delivery of such Parent shares will constitute complete satisfaction of all obligations towards or sums due such Rollover Shareholder by Parent with respect to the cancellation of the applicable Rollover Shares; and (b) upon receipt of such Parent shares, such Rollover Shareholder will have no right to any merger consideration with respect to the Rollover Shares so cancelled.

Interim Investors Agreement (Page 52)

On January 24, 2016, Forebright SPV, Mr. Li and Parent entered in to an interim investors agreement (the “Interim Investors Agreement”). Pursuant to the Interim Investors Agreement, absent the written consent of each of Forebright SPV and Mr. Li: (i) none of Forebright SPV and Mr. Li will present to the Company or any subsidiary of the Company any request that such entity take or omit to take certain actions which will or will reasonably be expected to (x) cause the Company to be in breach of any representation, warranty, covenant or agreement under the merger agreement, (y) constitute a Material Adverse Effect as defined in the merger agreement; and (ii) none of Forebright SPV and Mr. Li shall consent to any of such action or omission in writing. The Interim Investors Agreement also provides that all actions of Parent and Merger Sub relating to the merger agreement shall require the approval of each of Forebright SPV and Mr. Li. See “Special Factors — Interim Investors Agreement” beginning on page 52 for additional information.

Share Ownership of the Company Directors and Officers and Voting Commitments (Page 90)

As of the record date, we expect that the Buyer Group will beneficially own approximately 23.45% of our issued and outstanding Shares entitled to vote. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 90 for additional information.

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Pursuant to the Voting Agreement, the Rollover Shareholders have agreed to irrevocably approve Parent and its designees as its proxy and attorney-in-fact and vote all in favor of the merger agreement and consummation of the transactions contemplated thereby, including the merger. If completed, the merger will result in the Company becoming a privately held company, and the Shares will no longer listed on the NASDAQ.

Opinion of the Special Committee’s Financial Advisor (Page 38)

Duff  & Phelps, LLC (sometimes referred to as Duff  & Phelps), delivered a written opinion, dated January 22, 2016 (the “Opinion”) to the Special Committee that, subject to and based upon the assumptions and limiting conditions set forth therein, as of the date of its opinion, the $6.00 per Share merger consideration to be received by holders of the Shares (other than the Excluded Shares) in the merger was fair, from a financial point of view, to such shareholders (without giving effect to any impact of the merger or any particular holder of Shares other than in their capacity as a holder of Shares). The full text of the Opinion is attached as Annex B. Holders of Shares are urged to read the Opinion carefully and in its entirety. The Opinion does not and shall not constitute a recommendation to any holders of Shares as to how they should vote in connection with the merger. The summary of the Opinion contained in this proxy statement is qualified in its entirety by reference to the full text of the Opinion.

Please see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 38 for additional information.

Interests of the Company’s Directors and Executive Officers in the Merger (Page 53)

In considering the recommendations of the board of directors, the Company’s shareholders should be aware that certain of the Company’s directors and executive officers have interests in the transaction that are different from, and/or in addition to, the interests of the Company’s shareholders generally. These interests include, among others:

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the beneficial ownership of equity interests in Parent by the Rollover Shareholders and the prospective beneficial ownership of equity interests in Parent by the Rollover Shareholders at and after the effective time of the merger;

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the potential enhancement or decline of share value for Parent, of which the Rollover Shareholders will beneficially own, as a result of the merger and future performance of the surviving company;

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continued indemnification rights, rights to advancement of fees and directors and officers liability insurance to be provided by the surviving company to former directors and officers of the Company;

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the monthly compensation of US$13,000 (subject to a cap of US$65,000 in the aggregate) of Dr. Li-Wen Zhang, and US$10,000 (subject to a cap of US$50,000 in the aggregate) of each of Dr. Xu Cai and Ms. Jing Zhang, each of which is a member of the Special Committee, in exchange for their services in such capacity (the payment of which is not contingent upon the completion of the merger or the Special Committee’s or the board’s recommendation of the merger); and

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the continuation of service of the executive officers of the Company with the surviving company in positions that are substantially similar to their current positions.

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The Special Committee and our board of directors were aware of these potential conflicts of interest and considered them, among other matters, in reaching their decisions and recommendations with respect to the merger agreement and related matters. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 53 for additional information.

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Conditions to the Merger (Page 76)

The completion of the transactions contemplated by the merger agreement, including the merger, is subject to the satisfaction of the following conditions:

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the merger agreement, the plan of merger and transactions contemplated by the merger agreement, including the merger, being authorized and approved by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders; and

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no court or other governmental entity of competent jurisdiction having enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in effect which restrains, enjoins or otherwise prohibits the consummation of the merger.

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The obligations of Parent and Merger Sub to consummate the merger are also subject to the satisfaction, or waiver by Parent, of the following conditions:

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(i) certain representations and warranties of the Company in the merger agreement being true and correct (disregarding any limitation or qualification by “materiality” or “Material Adverse Effect”) as of the date of the merger agreement and as of the closing date (or as of a specific date, to the extent such representation or warranty is expressly made as of a specific date), except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to have a Material Adverse Effect; and (ii) certain other representations and warranties of the Company in the merger agreement being true and correct in all respects as of the date of the merger agreement and as of the closing date (or as of a specific date, to the extent such representation or warranty is expressly made as of a specific date);

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the Company having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date;

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since the date of the merger agreement, there having been no effect that has had, individually or in the aggregate, a Material Adverse Effect and is ongoing; and

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Parent having received a certificate signed by an executive officer of the Company certifying as to the fulfillment of the above conditions.

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The obligations of the Company to consummate the merger are also subject to the satisfaction, or waiver by the Company, of the following conditions:

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the representations and warranties of Parent and Merger Sub in the merger agreement being true and correct (disregarding any limitation or qualification by “materiality”) as of the date of the merger agreement and as of the closing date (or as of a specific date, to the extent such representation or warranty is expressly made as of a specific date), except where the failure of such representations and warranties to be so true and correct in all material respects, individually or in the aggregate, would not reasonably be expected to prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by the merger agreement;

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each of Parent and Merger Sub having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date; and

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the Company having received a certificate signed by an officer or director of each of Parent and Merger Sub certifying as to the fulfillment of the above conditions.

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Acquisition Proposals (Page 72)

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From the date of the merger agreement until the effective time of the merger or, if earlier, the termination of the merger agreement, neither the Company nor any of its subsidiaries nor any of the officers and directors of it or any of its subsidiaries will: (a) initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or would

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reasonably be expected to lead to, any acquisition proposal; (b) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information to any third party relating to any acquisition proposal; or (c) otherwise knowingly facilitate any effort or attempt to make an acquisition proposal.

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The Company agrees that it will promptly (and, in any event, within 48 hours) notify Parent and Merger Sub in writing if any proposals or offers with respect to an acquisition proposal are initially received by, any such information is initially requested from, or any such discussions or negotiation are sought to be initiated or continued with, it or any of its representatives indicating, in connection with such notice, the name of such person, the material terms and conditions of any proposals or offers and whether the Company has any intention to provide confidential information to such person, and thereafter shall keep Parent and Merger Sub informed, on a reasonably current basis (and in any event within 48 hours of the occurrence of any material changes, developments, discussions or negotiations) of the status and material terms of any such acquisition proposal, indication, inquiry or request and of any material changes in the status and material terms of any such acquisition proposal, indication, inquiry or request (including the material terms and conditions thereof). The Company shall not, and shall cause its subsidiaries not to, enter into any confidentiality agreement with any person subsequent to the date of the merger agreement that prohibits the Company from providing such information to Parent or Merger Sub. Without limiting the foregoing, the Company shall promptly (and in any event within 48 hours) notify Parent and Merger Sub in writing if it determines to initiate actions concerning an acquisition proposal as permitted by under the merger agreement.

​

Change of Recommendation (Page 73)

The board of directors of the Company and the Special Committee will not:

•

withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Parent or Merger Sub the recommendation to the shareholders of the Company to vote in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; or

​

•

subject to certain exceptions and conditions, cause or permit the Company to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other definitive agreement (other than a confidentiality agreement entered into in accordance with the merger agreement) relating to any acquisition proposal.

​

However, prior to obtaining the required shareholder authorization and approval of the merger agreement, the board of directors of the Company, based on the recommendation of the Special Committee, may withhold, withdraw, qualify or modify the company recommendation in a manner adverse to Parent or Merger Sub to approve, recommend or otherwise declare advisable any superior proposal not solicited, entered into or agreed to in breach of obligations under the merger agreement, and/or authorize the Company to terminate the merger agreement or enter into an alternative acquisition agreement with respect to such superior proposal, and made after the date of the merger agreement, if the board of directors of the Company (upon the direction of the Special Committee after consultation with outside legal counsel to the Special Committee) determines in good faith, that failing to do so would be inconsistent with its fiduciary obligations under applicable laws; provided, however, that prior to making any such adverse recommendation:

•

the Company will give Parent and Merger Sub at least four (4) business days written notice advising that the Company (acting through the Special Committee) currently intends to take such action and the basis therefor;

​

•

during the four (4) business day period following Parent’s and Merger Sub’s receipt of such notice of superior proposal, the Company will, and will cause its representatives to, negotiate with Parent and Merger Sub in good faith (to the extent Parent and Merger Sub desire to negotiate) to make such adjustments in the terms and conditions of the merger agreement so that such superior proposal ceases to constitute a superior proposal; and

​

10

•

following the end of the four (4) business day period, the board of directors of the Company (upon the direction of the Special Committee after consultation with its financial advisor and outside legal counsel) will have determined in good faith, taking into account any changes to the merger agreement proposed in writing by Parent and Merger Sub, that the acquisition proposal continues to constitute a superior proposal;

​

provided further, that substantially simultaneous with the Company’s board of directors’ making of such adverse recommendation, the Company shall terminate this Agreement and pay the termination fee as required under the merger agreement to Parent.

Any material amendment to any acquisition proposal will be deemed to be a new acquisition proposal and will require a new notice of superior proposal to Parent and Merger Sub and the Company will be required to comply with the requirements under the merger agreement fully with respect to such amended acquisition proposal.

In addition, prior to obtaining the required shareholder authorization and approval of the merger agreement, the board of directors of the Company, based on the recommendation of the Special Committee, may withhold, withdraw, qualify or modify the company recommendation in a manner adverse to Parent or Merger Sub, in connection with an intervening event unforeseeable at the date of the merger agreement and other than in response to or in connection with a superior proposal, if the board of directors of the Company determines, in its good faith judgment upon the recommendation of the Special Committee (after consultation with its financial advisor and outside legal counsel), that failure to make an adverse recommendation and/or terminate the merger agreement would be inconsistent with its fiduciary duties under applicable laws, provided that prior to making such adverse recommendation,

•

the Company will give Parent and Merger Sub at least four (4) business days written notice with reasonable details about the intervening event advising that the Company (acting through the Special Committee) currently intends to take such action;

​

•

during the four (4) business day period following Parent’s and Merger Sub’s receipt of such notice of intervening event, the Company will, and will cause its representatives to, negotiate with Parent and Merger Sub in good faith (to the extent Parent and Merger Sub desire to negotiate) to make such adjustments in the terms and conditions of the merger agreement so that it would no longer be inconsistent with the board of directors’ fiduciary obligations not to effect an adverse recommendation; and

​

•

following the end of the four (4) business day period, the board of directors of the Company (upon the direction of the Special Committee after consultation with financial advisor and outside legal counsel to the Special Committee) will have determined in good faith, taking into account any changes to the merger agreement proposed in writing by Parent and Merger Sub, that it would continue to be inconsistent with the board of directors’ fiduciary duties under applicable law not to effect an adverse recommendation in light of the intervening event.

​

Termination of the Merger Agreement (Page 77)

The merger agreement may be terminated at any time prior to the effective time, whether before or after shareholder approval has been obtained:

•

by mutual written consent of the Company and Parent;

​

•

by either Parent or the Company, if:

​

•

the merger is not consummated on or before nine (9) months following the date of the merger agreement; provided, however, that this termination right is not available to a party if the failure of the merger to have been consummated on or before the termination date was primarily due to the breach or failure of such party to perform in any material respect any of its obligations under the merger agreement;

​

11

•

any injunction permanently restraining, enjoining or otherwise prohibiting the consummation of the merger becomes final and non-appealable; provided, however, that this termination right will not be available to a party if the issuance of such injunction was primarily due to the breach or failure of such party to perform in any material respect any of its obligations under the merger agreement; or

​

•

the shareholders’ meeting has been held and completed and the requisite shareholders’ approval has not been obtained at the general meeting duly convened therefor or at any adjournment or postponement thereof.

​

•

by Parent, if:

​

•

the Company has breached any of its representations, warranties, covenants or agreements under the merger agreement, or any representation or warranty made by the Company under the merger agreement is not true and correct, such that the corresponding condition to closing would not be satisfied and such breach or inaccuracy cannot be cured by the termination date, or if curable, is not cured within thirty (30) business days following receipt by the Company of written notice from Parent; provided that this termination right is not available to Parent if it or Merger Sub is then in material breach of any representations, warranties, covenants or other agreements under the merger agreement that would result in the corresponding conditions to closing would not be satisfied; or

​

•

prior to the receipt of the shareholders’ approval, the board of directors of the Company (A) has effected a Company adverse recommendation, or (B) approves, endorses or recommends any acquisition proposal other than the merger, or (C) acting upon recommendation of the Special Committee, fails to include the company recommendation in favor of the merger in the proxy statement.

​

•

by the Company, if:

​

•

Parent or Merger Sub has breached any of its covenants or agreements under the merger agreement, or any representation or warranty made by Parent or Merger Sub under the merger agreement is not true and correct, such that the corresponding condition to closing would not be satisfied and such breach or inaccuracy cannot be cured by the termination date, or if curable, is not cured within thirty (30) business days following receipt by Parent or Merger Sub of written notice from the Company; provided that this termination right is not available to the Company if it is then in material breach of any representations, warranties, covenants or other agreements under the merger agreement that would result in the corresponding conditions to closing would not be satisfied;

​

•

prior to obtaining the shareholder approval in order to enter into an alternative acquisition agreement with respect to an acquisition proposal pursuant to terms of the merger agreement; or

​

•

the board of directors of the Company or the Special Committee shall have made a company adverse recommendation pursuant to terms of the merger agreement.

​

Termination Fee (Page 78)

The Company is required to pay Parent a termination fee of US$3,940,429, if:

•

(a) a bona fide acquisition proposal for 50% or more of the voting power of the shares of the Company has been made, proposed or communicated (and not withdrawn) by a third party after the date of the merger agreement and prior to the shareholders’ meeting (or prior to the termination of the agreement if there has been such shareholders’ meeting); (b) the merger agreement is terminated by the Company or Parent pursuant to the merger agreement (without the board of directors of the Company having made any company adverse recommendation); and (c) within twelve (12) months after such termination of the merger agreement, the Company or any of its subsidiaries enters into a definitive agreement with such third party in respect of such acquisition proposal;

​

12

•

the merger agreement is terminated by Parent due to a breach by the Company of their representations, warranties, covenants or agreements in the merger agreement, or a failure of any of their representations or warranties in the merger agreement being true and correct, such that the corresponding condition to closing cannot be satisfied;

​

•

the merger agreement is terminated by Parent if prior to the receipt of the requisite shareholders’ approval, the board of the Company (A) has effected a Company adverse recommendation, or (B) approves, endorses or recommends any acquisition proposal other than the merger, or (C) fails to include the company recommendation in favor of the merger in the proxy statement;

​

•

the merger agreement is terminated by the Company, if prior to obtaining the shareholder approval, in order to enter into an alternative acquisition agreement with respect to an acquisition proposal pursuant to terms of the merger agreement; and

​

•

the merger agreement is terminated by the Company, if the board of directors of the Company or the Special Committee has made a company adverse recommendation pursuant to terms of the merger agreement.

​

Parent is required to pay the Company a termination fee of US$3,940,429, if

•

the merger agreement is terminated by the Company due to a breach by Parent or Merger Sub of their representations, warranties, covenants or agreements in the merger agreement, or a failure of any of their representations or warranties in the merger agreement being true and correct, such that the corresponding condition to closing cannot be satisfied.

​

Fees and Expenses (Page 45)

Whether or not the merger is consummated, all costs and expenses incurred in connection with the merger agreement and the merger and the other transactions contemplated by the merger agreement will be paid by the party incurring such expense.

Material U.S. Federal Income Tax Consequences (Page 57)

The receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local and other tax laws. Please see “Special Factors — Material U.S. Federal Income Tax Consequences” beginning on page 57 for additional information. The tax consequences of the merger to you will depend upon your personal circumstances. Because we may be or have been a passive foreign investment company, or PFIC, for U.S. federal income tax purposes during a U.S. Holder’s holding period for Shares, any gain recognized by a U.S. Holder on the receipt of cash in exchange for such U.S. Holder’s Shares may be taxed under special U.S. federal income tax rules, as described under “Material U.S. Federal Income Tax Consequences.” You should consult your tax advisors for a full understanding of the U.S. federal, state, local, foreign and other tax consequences of the merger to you.

Material PRC Income Tax Consequences (Page 59)

The Company does not believe that it should be considered a resident enterprise under the PRC Enterprise Income Tax Law (the “EIT Law”) or that the gain recognized on the receipt of cash for our Shares should otherwise be subject to PRC tax to holders of such Shares that are not PRC residents. However, there is uncertainty regarding whether the PRC tax authorities would deem the Company to be a resident enterprise. If the PRC tax authorities were to determine that the Company should be considered a resident enterprise, then gain recognized on the receipt of cash for our Shares pursuant to the merger by our shareholders holders who are not PRC residents could be treated as PRC-source income that would be subject to PRC income tax at a rate of 10% in the case of enterprises or 20% in the case of individuals (subject to applicable tax treaty relief, if any), and, even in the event that the Company is not considered a resident enterprise, gain recognized on the receipt of cash for Shares is subject to PRC tax if the holders of such Shares are PRC resident individuals.

You should consult your own tax advisor for a full understanding of the tax consequences of the merger to you, including any PRC tax consequences.

13

Material British Virgin Islands Tax Consequences (Page 61)

The British Virgin Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will be payable (either by direct assessment or withholding) to the government or other taxing authority in the British Virgin Islands under the laws of the British Virgin Islands in respect of the merger or the receipt of cash for our Shares under the terms of the merger. This is subject to the qualification that registration fees will be payable by the Company to the Registrar of Corporate Affairs of the British Virgin Islands to register the plan of merger. Please see “Special Factors — Material British Virgin Islands Tax Consequences” beginning on page 61 for additional information.

Regulatory Matters (Page 57)

The Company does not believe that any material federal or state regulatory approvals, filings or notices are required in connection with the merger other than the approvals, filings or notices required under the federal securities laws and the registration of the articles of merger (and supporting documentation as specified in the BVI Companies Act) by the Registrar of Corporate Affairs of the British Virgin Islands.

Accounting Treatment of the Merger (Page 57)

Upon completion of the merger, the Company would cease to be a publicly traded company, and the Company expects to account for the merger at historical cost.

Market Price of the Shares (Page 62)

The closing price of the Shares on NASDAQ on September 14, 2015, the last trading day immediately prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal, was US$3.62 per Shares. The merger consideration of US$6.00 per Share to be paid in the merger represents a premium of approximately 65.7% to that closing price.

14

QUESTIONS AND ANSWERS ABOUT THE GENERAL MEETING AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the general meeting and the merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement.

Q:

What is the merger?

​

A:

The merger is a going private transaction pursuant to which Merger Sub will merge with and into the Company. Once the merger agreement is authorized and approved by the shareholders of the Company and the other closing conditions under the merger agreement have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company continuing as the surviving company after the merger. If the merger is completed, the Company will be a privately held company beneficially owned by the Buyer Group, and as a result of the merger, the Shares will no longer be listed on NASDAQ, and the Company will cease to be a publicly traded company.

​

Q:

What will I receive in the merger?

​

A:

If you own Shares and the merger is completed, you will be entitled to receive US$6.00 in cash, without interest and net of any applicable withholding taxes, for each Share you own as of the effective time of the merger (unless you validly exercise and have not effectively withdrawn or lost your appraisal rights under Section 179 of the BVI Companies Act, with respect to the merger, in which event you will be entitled to the fair value of each Share pursuant to the BVI Companies Act).

​

Please see “Special Factors — Material U.S. Federal Income Tax Consequences,” “Special Factors — Material PRC Income Tax Consequences” and “Special Factors — Material British Virgin Islands Tax Consequences” beginning on page 61 for a more detailed description of the tax consequences of the merger. You should consult with your own tax advisor for a full understanding of how the merger will affect your U.S. federal, state, local, foreign and other taxes.

Q:

How will the Company’s share options be treated in the merger?

​

A:

Immediately after the effective time of the merger, each outstanding option of the Company to purchase Shares under the Company’s share incentive plans in 1997 and 2006, in each case as amended or modified from time to time, whether vested or unvested, shall be cancelled and converted into the right of the holder of such option to receive cash in the amount equal to: (i) the total number of Shares subject to such option immediately prior to the effective time (without regard to vesting); multiplied by (ii) the excess, if any, of  (x) US$6.00 in cash per Share without interest over (y) the exercise price per Share under such option, which amount shall be paid, net of any applicable withholding taxes, as soon as reasonably practicable after the effective time. No holder of an option that has an exercise price per Share that is equal to or greater than the merger consideration of US$6.00 per Share shall be entitled to any payment with respect to such cancelled option before or after the effective time.

​

Q:

After the merger is completed, how will I receive the merger consideration for my Shares?

​

A:

If you are a registered holder of Shares, promptly after the effective time of the merger (in any event within three business days after the effective time of the merger), a paying agent appointed by Parent will mail you (a) a form of letter of transmittal specifying how the delivery of the merger consideration to you will be effected and (b) instructions for effecting the surrender of share certificates in exchange for the applicable merger consideration. You will receive cash for your Shares from the paying agent after you comply with these instructions. Upon surrender of your share certificates or a declaration of loss or non-receipt, you will receive an amount equal to the number of your Shares multiplied by US$6.00 in cash, without interest and net of any applicable withholding taxes, in exchange for the cancellation of your Shares.

​

If your Shares are held in “street name” by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee on how to surrender your Shares and receive the merger consideration for those Shares.

15

Q:

When and where will the general meeting be held?

​

A:

The general meeting will take place on April 18, 2016, at 10:00 a.m. (Beijing Time) at our principal executive office located at No. 168 Nanhai Avenue (Building No. 7), Haikou Free Trade Zone, Haikou, Hainan, People’s Republic of China.

​

Q:

What matters will be voted on at the general meeting?

​

A:

You will be asked to consider and vote on the following proposals:

​

•

to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; and

​

•

to approve any motion to adjourn or postpone the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the general meeting.

​

Q:

What vote of our shareholders is required to authorize and approve the merger agreement and the plan of merger?

​

A:

In order for the merger to be completed, the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger must, be authorized and approved by an affirmative vote of shareholders representing more than fifty percent (50%) of the outstanding Shares of the Company present and voting in person or by proxy as a single class at a quorate general meeting of the Company’s shareholders. At the close of business in the British Virgin Islands on March 17, 2016, the record date for the general meeting, we expect that there will be 16,418,456 Shares issued and outstanding and entitled to vote at the general meeting. Pursuant to the Voting Agreement, the Rollover Shareholders have agreed to vote all of the Shares beneficially owned by them in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger. As of the date of this proxy statement, the Rollover Shareholders beneficially owned 3,850,791 Shares, approximately 23.45% of the total issued and outstanding Shares entitled to vote. Based on the number of Shares expected to be outstanding on the record date, 4,358,438 Shares, approximately 26.55% of the total outstanding Shares entitled to vote owned by the unaffiliated shareholders must be voted in favor of the proposal in order for the merger to be approved, assuming all remaining shareholders will be present and voting in person or by proxy at the general meeting.

​

Q:

How does the Company board of directors recommend that I vote on the proposals?

​

A:

After careful consideration and upon the unanimous recommendation of the Special Committee, our board of directors by a unanimous vote (with Mr. Li abstaining) recommends that you vote:

​

•

FOR the proposal to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; and

​

•

FOR the proposal to approve any motion to adjourn the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the general meeting.

​

Q:

Who is entitled to vote at the general meeting?

​

A:

The share record date is March 17, 2016. Only shareholders entered in the register of members of the Company at the close of business in the British Virgin Islands on the share record date or their proxy holders are entitled to directly vote at the general meeting or any adjournment thereof.

​

Q:

What constitutes a quorum for the general meeting?

​

A:

The presence, in person or by proxy, of shareholders holding not less than 50 percent of the issued and outstanding Shares that are entitled to vote on the record date will constitute a quorum for the general meeting.

​

16

Q:

What effects will the merger have on the Company?

​

A:

As a result of the merger, the Company will cease to be a publicly traded company and will be indirectly wholly owned by the Buyer Group. You will no longer have any interest in our future earnings or growth. Following consummation of the merger, the registration of our Shares and our reporting obligations with respect to our Shares under the Exchange Act, will be terminated upon application to the SEC. In addition, upon completion of the merger, our Shares will no longer be listed or traded on any stock exchange, including the NASDAQ.

​

Q:

When do you expect the merger to be completed?

​

A:

We are working toward completing the merger as quickly as possible and currently expect the merger to close in the first half of 2016. In order to complete the merger, we must obtain shareholder approval of the merger at the general meeting and the other closing conditions under the merger agreement must be satisfied or waived in accordance with the merger agreement.

​

Q:

What happens if the merger is not completed?

​

A:

If our shareholders do not authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, or if the merger is not completed for any other reason, our shareholders will not receive any payment for their Shares pursuant to the merger agreement. In addition, the Company will remain a publicly traded company. The Shares will continue to be listed and traded on NASDAQ, provided that the Company continues to meet NASDAQ’s listing requirements. In addition, the Company will remain subject to SEC reporting obligations.

​

Under specified circumstances in which the merger agreement is terminated, the Company may be required to pay Parent a termination fee, or Parent may be required to pay the Company a termination fee, in each case, as described under the caption “The Merger Agreement and Plan of Merger — Termination Fee” beginning on page 78.

Q:

What do I need to do now?

​

A:

We urge you to read this proxy statement carefully, including its annexes, exhibits, attachments and the other documents referred to or incorporated by reference herein and to consider how the merger affects you as a shareholder. After you have done so, please vote as soon as possible.

​

Q:

How do I vote if my Shares are registered in my name?

​

A:

If Shares are registered in your name as of the record date, you should simply indicate on your proxy card how you want to vote, and sign and mail your proxy card in the enclosed return envelope as soon as possible but in any event at least 72 hours before the time of the general meeting so that your Shares will be represented and may be voted at the general meeting.

​

Alternatively, you can attend the general meeting and vote in person. If you decide to sign and send in your proxy card, and do not indicate how you want to vote, the Shares represented by your proxy will be voted FOR the proposal to authorize and approve the merger agreement, the plan of merger and transactions contemplated by the merger agreement, including the merger, and FOR the proposal to adjourn the general meeting in order to allow the Company to solicit additional proxies in the event that there are insufficient proxies received to pass the shareholders resolution during the general meeting unless you appoint a person other than the chairman of the meeting as proxy, in which case the Shares represented by your proxy card will be voted (or not submitted for voting) as your proxy determines. If your Shares are held by your broker, bank or other nominee, please see below for additional information.

Q:

If my Shares are held in a brokerage account, will my broker vote my Shares on my behalf?

​

A:

Your broker, bank or other nominee will only vote your Shares on your behalf if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your broker, bank or nominee regarding how to instruct it to vote your Shares. If you do not instruct your broker, bank or other nominee how to vote your Shares that it holds on your behalf, those Shares may not be voted.

​

17

Q:

What will happen if I abstain from voting or fail to vote on the proposal to authorize and approve the merger agreement and the plan of merger?

​

A:

If you abstain from voting, fail to cast your vote in person or by proxy or fail to give voting instructions to your broker, dealer, commercial bank, trust company or other nominee, your vote will not be counted.

​

Q:

May I change my vote?

​

A:

Yes, you may change your vote in one of three ways:

​

•

first, you may revoke a proxy by written notice of revocation given to the chairman of the general meeting before the general meeting commences. Any written notice revoking a proxy should be sent to Jinpan International Limited, 390 Veterans Boulevard, Carlstadt, NJ 07072, Attention: Chief Financial Officer.

​

•

second, you may complete, date and submit a new proxy card bearing a later date than the proxy card sought to be revoked to the Company no less than 48 hours prior to the general meeting; or

​

•

third, you may attend the general meeting and vote in person. Attendance, by itself, will not revoke a proxy. It will only be revoked if the shareholder actually votes at the general meeting.

​

If you hold Shares through a broker, bank or other nominee and have instructed the broker, bank or other nominee to vote your Shares, you must follow directions received from the broker, bank or other nominee to change your instructions.

Q:

What should I do if I receive more than one set of voting materials?

​

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your Shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold Shares. If you are a holder of record and your Shares are registered in more than one name, you will receive more than one proxy card. Please submit each proxy card that you receive.

​

Q:

If I am a holder of certificated Shares, should I send in my share certificates now?

​

A:

No. After the merger is completed, you will be sent a form of letter of transmittal with detailed written instructions for exchanging your share certificates for the merger consideration. Please do not send in your certificates now.

​

All holders of uncertificated Shares (i.e., holders whose Shares are held in book entry) will automatically receive their cash consideration shortly after the merger is completed without any further action required on the part of such holders. If your Shares are held in “street name” by your broker, bank or other nominee you will receive instructions from your broker, bank or other nominee as to how to effect the surrender of your share certificates in exchange for the merger consideration.

Q:

As a Shareholder, am I entitled to appraisal rights?

​

A:

Yes. Shareholders who dissent from the merger will have the right to seek appraisal and payment of the fair value of their Shares if the merger is completed, but only if they deliver to the Company, before the vote is taken, a written objection to the merger and they subsequently comply with all procedures and requirements of Section 179 of the BVI Companies Act, as amended, for the exercise of appraisal rights. The fair value of your Shares as determined under that statute could be more than, the same as, or less than the merger consideration you would receive pursuant to the merger agreement if you do not exercise appraisal rights with respect to your Shares.

​

We encourage you to read the information set forth in this proxy statement carefully and to consult your own British Virgin Islands legal counsel if you desire to exercise your appraisal rights. Please see “Appraisal Rights” beginning on page 81 as well as “Annex C — BVI Business Companies Act, — Section 179” to this proxy statement for additional information.

18

Q:

Will any proxy solicitors be used in connection with the general meeting?

​

A:

Yes. To assist in the solicitation of proxies, the Company has engaged Innisfree M&A Incorporated as its proxy solicitor.

​

Q:

Do any of the Company’s directors or executive officers have interests in the merger that may differ from those of other shareholders?

​

A:

Yes. Some of the Company’s directors or executive officers have interests in the merger that may differ from those of other shareholders, including:

​

•

the prospective beneficial ownership of equity interests in Parent by the Rollover Shareholder at and after the effective time of the merger;

​

•

the potential enhancement or decline of share value for Parent, of which the Buyer Group will beneficially own, as a result of the merger and future performance of the surviving company;

​

•

continued indemnification rights, rights to advancement of fees and directors and officers liability insurance to be provided by the surviving company to former directors and officers of the Company;

​

•

the monthly compensation of US$13,000 (subject to a cap of US$65,000 in the aggregate) of Dr. Li-Wen Zhang, and US$10,000 (subject to a cap of US$50,000 in the aggregate) of each of Dr. Xu Cai and Ms. Jing Zhang, each of which is a member of the Special Committee, in exchange for their services in such capacity (the payment of which is not contingent upon the completion of the merger or the Special Committee’s or the board’s recommendation of the merger); and

​

•

the continuation of service of the executive officers of the Company with the surviving company in positions that are substantially similar to their current positions.

​

Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 53 for a more detailed discussion of how some of our Company’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of our shareholders generally.

Q:

How will our directors and executive officers vote on the proposal to approve the merger agreement?

​

A:

Pursuant to the Voting Agreement, both of the Rollover Shareholders have agreed to vote, or cause to be voted, all of the Shares they beneficially own, representing an aggregate of approximately 23.45% of the total issued and outstanding Shares entitled to vote as of January 24, 2016, plus any Shares that they may acquire after January 24, 2016, in favor of the proposal to approve the merger agreement and the transactions contemplated thereby, including the merger.

​

Q:

Who can help answer my questions?

​

A:

If you have any questions or need assistance in voting your Shares, you may contact Innisfree M&A Incorporated, the firm assisting us with this proxy solicitation, at 877-800-5190 toll-free in North America or at 212-750-5833 collect.

​

19

SPECIAL FACTORS

Background of the Merger

The Board and senior management of the Company periodically review the Company’s long-term strategic plans with the goal of maximizing shareholder value. As part of this ongoing process, the Board and senior management have, from time to time, considered strategic alternatives that may be available to the Company.

In July of 2014, an affiliate of Forebright Fund, a private equity investor fund based in Hong Kong, approached Mr. Li on a highly preliminary basis with respect to a potential strategic investment involving Mr. Li, Forebright Fund and the Company. Over the course of August and early September of 2014, Forebright, with Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) as its legal advisor, explored with Mr. Li the feasibility of a going private transaction with respect to the Company. Neither Mr. Li nor the Company received any other indication of interest from any other financial investor or strategic buyer with respect to a potential investment in the Company.

On September 21, 2014, Mr. Li and an affiliate of Forebright Fund (the “2014 Buyer Consortium”) jointly submitted a preliminary non-binding proposal letter (the “2014 Proposal”) to acquire all of the outstanding Shares not already owned by the 2014 Buyer Consortium in a going private transaction for $8.80 per Share, in cash, subject to certain conditions. In the 2014 Proposal, Mr. Li also stated, among other things, that he did not intend to sell his stake in the Company to any third party.

On September 24, 2014, the Board held a telephonic meeting to discuss the Proposal and established a special committee of the independent directors of the board of directors, consisting of Mr. Donald Burris and Dr. Li-Wen Zhang (the “2014 Special Committee”). Over September and October 2014, the 2014 Special Committee interviewed legal and financial advisers, including Gibson, Dunn & Crutcher LLP (“Gibson Dunn”) and Duff  & Phelps, LLP (“Duff  & Phelps”), and retained Gibson Dunn as its legal advisor and Duff  & Phelps as its financial advisor based on the qualifications, experience and other characteristics of each of Gibson Dunn and Duff  & Phelps.

In December 2014, the 2014 Special Committee attempted to negotiate a higher price from the 2014 Buyer Consortium. At about the same time, the Special Committee authorized the Company to enter into a confidentiality agreement with an affiliate of Forebright Fund that contained customary terms, which would allow Forebright Fund to conduct due diligence investigation of the Company.

On December 29, 2014 the Company received a letter from the 2014 Buyer Consortium withdrawing the 2014 Proposal. On December 30, 2014, the Company issued a press release regarding the letter it received from the 2014 Buyer Consortium. The Buyer Consortium withdrew its 2014 Proposal in light of the underperformance of the Chinese economy and the industrial sector the Company was in. In the letter to the Company, the Buyer Consortium reserved its right to review continuously Mr. Li’s investment in the Company and the Company’s business affairs, capital needs and general industrial and economic conditions, and to propose a strategic transaction with the Company in the future, with or without any other person and subject to the terms and conditions of the confidentiality agreement, based on such review.

After the 2014 Proposal was terminated, the Buyer Consortium reviewed from time to time the Company’s business operations and the general conditions of the Chinese economy and the industrial sector the Company is in. In August of 2015, in light of the continuously low trading price of the Company’s shares and the continuous underperformance of the sector the Company is in, the Buyer Consortium considered submitting another going private proposal to the Company.

On September 15, 2015, Mr. Li and Forebright Smart Connection Technology Limited (“Forebright SPV”, and together with Mr. Li, the “Buyer Consortium”) jointly submitted a preliminary non-binding proposal letter to acquire all of the outstanding Shares not already owned by the Buyer Consortium and its affiliates in a going private transaction for $4.50 per Share, in cash, subject to certain conditions (the “September 15 Proposal”). In the September 15 Proposal, Mr. Li also stated, among other things, that he did not intend to sell his stake in the Company to any third party. On the day following the receipt of the September 15 Proposal by the Board, the Company issued a press release regarding its receipt of the September 15 Proposal.

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On September 24, 2015, the Board held a telephonic meeting to discuss the September 15 Proposal. All members of the Board attended the meeting other than Mr. Li. Troutman Sanders LLP, counsel to the Company, then discussed with the Board members the general process of a going private transaction, including potential SEC filings. Troutman Sanders also reviewed with the Board members their fiduciary duties and responsibilities as members of the Board in the context of a going private transaction, including the importance of the appointment of a special committee of independent directors to review the going private transaction.

On September 29, 2015, the Board held a telephonic meeting to continue to discuss the September 15 Proposal. All members of the Board attended the meeting other than Mr. Li. During the meeting, the attending directors discussed the various qualifications of the directors of the Company to serve on the Special Committee and unanimously passed a resolution to form the Special Committee, to be solely comprised of independent directors of the Company. Dr. Zhang, Dr. Cai and Ms. Zhang were elected to serve on the Special Committee, and Dr. Zhang was elected the chairperson of the Special Committee. On the same day, by way of unanimous written resolutions of the directors, the Board also granted to the Special Committee the power to (i) review and evaluate the terms and conditions, and determine the advisability of any proposed transaction, including maintaining the Company’s current status as a public company, (ii) negotiate with any party the Special Committee deems appropriate the terms and conditions of a proposed transaction and, if the Special Committee deems appropriate, approve the execution and delivery of documents on behalf of the Company, (iii) determine whether any proposed transaction negotiated by the Special Committee is fair to, and in the best interests of, the Company and its shareholders (other than Mr. Li or any other shareholders affiliated with the Buyer Consortium), (iv) recommend to the full Board what action, if any, should be taken by the Company with respect to any proposed transaction, and (v) retain, in its sole discretion, and on terms and conditions acceptable to the Special Committee, such independent advisors, including legal counsels, financial advisors and outside consultants, as the Special Committee deems appropriate to assist the Special Committee in discharging its responsibilities.

On September 30, 2015, after discussion of the qualifications, experience and other characteristics of each potential legal advisor considered by the Special Committee, as well as the determination that Gibson Dunn did not have any conflict that would impair its representation of the Special Committee, the Special Committee retained Gibson Dunn as its legal advisor, by way of unanimous written resolutions of the directors, based on its experience and expertise in going private transactions, including its role as legal advisor to the 2014 Special Committee.

On October 5, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn. During the meeting, Gibson Dunn made a presentation to the Special Committee of general matters on corporate governance and best practices in the context of a going private transaction and the advisors’ respective roles in assisting the Special Committee in its work, as well as the advice of Conyers Dill & Pearman (“Conyers Dill”) of the directors’ fiduciary duties to the Company’s shareholders, under the laws of the British Virgin Islands, which Gibson Dunn solicited on the Special Committee’s behalf. Gibson Dunn also discussed precedent privatization transactions involving U.S. listed Chinese corporations. Gibson Dunn then interviewed each member of the Special Committee as to whether he or she is aware of any conflict that would prevent him or her from objectively evaluating the September 15 Proposal, and each member of the Special Committee stated that he or she is not aware of any such conflict and confirmed that he or she is comfortable serving as a member of the Special Committee. Duff  & Phelps was subsequently invited to join the meeting. Because the 2014 Special Committee conducted extensive interviews with investment banks, Duff  & Phelps was the only investment bank that the Special Committee chose to interview at that time. During the meeting, Duff  & Phelps was interviewed by the Special Committee regarding its credentials and experience in going private transactions, considerations in relation to the September 15 Proposal, valuation methodologies typically used in going private transactions and financial due diligence with respect to the Company. Duff  & Phelps also reviewed its prior work advising the 2014 Special Committee to evaluate the 2014 Proposal. After the Duff  & Phelps team exited the meeting, the Special Committee further discussed Duff  & Phelps’ presentation with Gibson Dunn. Various questions were asked and answered regarding the Duff  & Phelps presentation and process for evaluating the September 15 Proposal. After lengthy discussion of the qualifications, experience and other characteristics of Duff  & Phelps, and the determination that Duff  & Phelps did not have any conflict that would impair its

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representation of the Special Committee, by way of unanimous resolution of the directors, the Special Committee retained Duff  & Phelps as its financial advisor based on its experience and expertise in going private transactions, and authorized Gibson Dunn to negotiate with Duff  & Phelps the terms of Duff  & Phelps’ engagement by the Special Committee. On October 7, 2015, the Company issued a press release regarding the engagement of its financial adviser and U.S. legal counsel by the Special Committee.

On October 26, 2015, Skadden sent to Gibson Dunn an initial draft of the confidentiality agreement between Forebright SPV and the Company. The draft confidentiality agreement was on substantially the same terms as were used in connection with the 2014 Proposal.

On October 28, 2015, Forebright SPV and the Company entered into the confidentiality agreement.

On November 2, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Duff  & Phelps updated the Special Committee on its discussions with the Buyer Consortium regarding the September 15 Proposal and the materials it had received from the Company to date, including the Company’s business plan and financial projections for the years 2015 through 2020, which were prepared by members of management that are not affiliated with Mr. Li (the “Business Plan”). Duff  & Phelps also answered questions from the Special Committee and informed the Special Committee of its projected timeline to complete its preliminary analysis with respect to the September 15 Proposal.

On November 3, 2015, Skadden sent to Gibson Dunn initial drafts of the merger agreement and ancillary transaction documents (the “Transaction Documents”).

On November 12, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Duff  & Phelps updated the Special Committee on the materials it had received from the Company to date, including the Business Plan, and discussed its preliminary view on the various assumptions underlying such materials. Duff  & Phelps also discussed the progress of its analysis of the September 15 Proposal, informed the Special Committee of its projected timeline to complete its preliminary analysis with respect to the September 15 Proposal and answered questions from the Special Committee. The Special Committee also discussed with Duff  & Phelps and Gibson Dunn whether it would be necessary or advisable to conduct a market check before entering into the definitive agreements and/or retain a “go-shop” right after entering into the definitive agreements. Duff  & Phelps and Gibson Dunn discussed with the Special Committee an overview of a potential market check process and potential “go-shop” process. The Special Committee authorized Duff  & Phelps to further discuss the materials prepared by the Company, including the Business Plan, and the assumptions underlying such materials with the Company’s management.

On November 19, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn, Duff  & Phelps and members of the Company’s management (“Management”). During the meeting, Management discussed the materials prepared by the Company with respect to the Company’s business, including the Business Plan, as well as the various assumptions underlying such materials. The Special Committee then determined that Duff  & Phelps and the Company should further discuss the underlying materials prepared by the Company, including the Business Plan, in connection with Duff  & Phelps’ analysis of the September 15 Proposal. Following the November 19, 2015 Special Committee meeting, management of the Company circulated a revised Business Plan. The Special Committee determined that the revised Business Plan reasonably reflected the business and financial prospects of the Company and instructed Duff  & Phelps to use the revised Business Plan to perform its financial analysis of the Company.

On December 13, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Duff  & Phelps informed the Special Committee that it held meetings with the Duff  & Phelps committee responsible for approving fairness opinions. Based on such meetings, Duff  & Phelps reported the following regarding the September 15 Proposal: (i) the Buyer Consortium’s offer of  $4.50 per Share is not a price at which Duff  & Phelps can render a fairness opinion and (ii) Duff  & Phelps would be in a position to render a fairness opinion at a price of  $5.50 or more per Share, subject to a pre-signing market check. Duff  & Phelps explained the various factors it had taken into consideration in reaching its conclusion and then answered questions from the Special Committee. Based on the advice of Duff  & Phelps, the Special Committee determined that the $4.50 per Share price in the September 15 Proposal was inadequate.

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On December 16, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. Following such meeting, the Special Committee directed Duff  & Phelps to prepare a letter to the Buyer Consortium to inform them that the Special Committee determined that the $4.50 per Share price in the September 15 Proposal was inadequate and that the Special Committee requests that the Buyer Consortium raise its per Share offer price. The Special Committee determined that it would review and discuss the materials being prepared by Duff  & Phelps at the next Special Committee meeting before authorizing Duff  & Phelps to contact the Buyer Consortium.

On December 20, 2015, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Duff  & Phelps presented to the Special Committee its preliminary financial analysis of the Company based on the Business Plan, as provided by the Company, which included a preliminary selected public companies analysis, preliminary selected merger & acquisition transactions analysis, and preliminary discounted cash flow analysis. The Special Committee discussed written materials prepared by Duff  & Phelps and Duff  & Phelps answered questions from the Special Committee regarding such materials. After Duff  & Phelps left the meeting, Gibson Dunn answered questions from the Special Committee regarding its fiduciary duties and other legal matters in connection with evaluating the September 15 Proposal. After further discussion, the Special Committee resolved to send a letter informing the Buyer Consortium that the $4.50 per Share price in the September 15 Proposal is a price at which Duff  & Phelps cannot render a fairness opinion, and to request that the Buyer Consortium (i) provide the Special Committee with information supporting a going private transaction at this time, (ii) improve its offer, and (iii) be prepared to allow a majority of the disinterested shareholders to determine whether the Buyer Consortium offer to purchase the Company is acceptable. On December 21, 2015, Duff & Phelps, at the direction of the Special Committee, delivered such letter to the Buyer Consortium.

In response to the letter from the Special Committee, members of the Buyer Consortium discussed (i) the underlying economic factors that would favor a going private transaction, (ii) a potential increase in the Buyer Consortium’s offer price and (iii) whether the Buyer Consortium would be prepared to allow a majority of the disinterested shareholders to determine whether to adopt the merger agreement. The Buyer Consortium’s conclusions are reflected in their response letter as described in the paragraph below.

On December 22, 2015, Skadden, at the direction of the Buyer Consortium, delivered a letter to the Special Committee, dated December 22, 2015, from the Buyer Consortium (the “December 22 Letter”). In the December 22 Letter, the Buyer Consortium stated that the Company has been thinly traded on Nasdaq and is subject to a lack of interest from long term value investors, and that the Buyer Consortium believes that the Company has lost its ability to use the U.S. capital markets for further capital raising. Additionally, the Buyer Consortium stated that under the laws of the British Virgin Islands, minority shareholders have statutory appraisal rights if they dissent a merger proposal. The December 22 Letter also included a proposed increase in the Buyer Consortium’s price to $5.00 per Share (the “December 22 Proposal”), subject to the conditions that the Company enter into a merger agreement with the Buyer Consortium on a timely basis and that the Merger not require the approval of the affirmative vote of holders of Shares representing more than fifty percent (50%) of the voting rights of the Shares, excluding the Shares held by Mr. Li and his affiliates (a “majority of the minority shareholder vote requirement”). The Buyer Consortium emphasized that given its ability to close the transaction in an expedient manner, its all cash proposal presented the disinterested shareholders with an opportunity to immediately realize enhanced share value at a significant premium to the Company’s public trading price.

On December 23, 2015, the Special Committee discussed the December 22 Letter via telephone and later that day convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. Dr. Cai was not present at the meeting due to a scheduling conflict. During the meeting, Duff  & Phelps and Gibson Dunn reviewed with the Special Committee the December 22 Letter and the December 22 Proposal. Duff  & Phelps advised the Special Committee that it would still be unable to render a fairness opinion at a price of  $5.00 per Share. Duff  & Phelps answered questions from the Special Committee regarding its valuation analysis of the Company. Gibson Dunn advised the Special Committee regarding general matters on corporate governance and best practices in the context of a going private transaction, as well as the advice of Conyers Dill of the directors’ fiduciary duties to the Company’s shareholders in connection with the December 22 Proposal, under the laws of the British Virgin Islands, which Gibson Dunn solicited on the Special Committee’s behalf. After further discussion and questions from the Special Committee, the

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Special Committee authorized Duff  & Phelps and Gibson Dunn to speak with Dr. Cai after the meeting and provide him with the same information it had provided to Dr. Zhang and Ms. Zhang. The Special Committee determined that it would wait to take further action regarding the December 22 Proposal until speaking with Dr. Cai.

On December 31, 2015, Duff  & Phelps, at the direction of the Special Committee, delivered a letter to the Buyer Consortium stating that based on all of the information available to the Special Committee, including that it would not be able to receive an opinion from Duff  & Phelps as to the fairness of the revised offer price of  $5.00 per Share from a financial point of view, that it is unable to recommend approval of the December 22 Proposal. Additionally, the Special Committee stated that it was willing to enter into a transaction at a fair and reasonable price and that Gibson Dunn had reviewed the draft Transaction Documents and is prepared to share its comments on the documents, provided that the Special Committee is able to receive indication that the Buyer Consortium is prepared to pay a fair and reasonable price. The Special Committee stated that it believes $6.00 is a fair and reasonable price, and that at that price the Special Committee would be prepared to enter into negotiations with regard to a transaction with the Buyer Consortium on market terms. Further, the Special Committee stated that if it is able to agree to a fair and reasonable price with the Buyer Consortium, it would not insist on a majority of the minority shareholder vote requirement or a “go shop” provision.

On January 1, 2016, Skadden, at the direction of the Buyer Consortium, delivered a letter to the Special Committee (the “First January 1 Letter”). In the First January 1 Letter, the Buyer Consortium stated its willingness to negotiate its price with the Special Committee, but before it would do so it would like the opportunity to review the Special Committee’s comments on the draft Transaction Documents so that it could discuss various legal terms and commercial terms in totality and together with the offer price.

Later that day, Skadden, at the direction of the Buyer Consortium, delivered another letter to the Special Committee (the “Second January 1 Letter” and, together with the First January 1 Letter, the “January 1 Letters”). In the Second January 1 Letter, the Buyer Consortium stated that it would be prepared to raise its purchase price to $5.50 per Share (the “January 1 Proposal”) on the conditions that (i) the merger only require the statutory shareholder approval as required under the laws of the British Virgin Islands, (ii) the other terms in the Transaction Documents be customary and reasonable to those in similar going private transactions involving China-based U.S. listed foreign private issuers and (iii) the Special Committee and its advisors immediately commence substantive negotiations with the Buyer Consortium on the Transaction Documents.

On January 5, 2016, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Duff  & Phelps and Gibson Dunn reviewed with the Special Committee the January 1 Letters and the January 1 Proposal. The Special Committee discussed with Duff  & Phelps and Gibson Dunn its proposed responses to the Buyer Consortium and other potential courses of action for the Special Committee. After Duff  & Phelps left the meeting, Gibson Dunn answered questions from the Special Committee regarding general matters on corporate governance and best practices in the context of a going private transaction and other legal matters in connection with evaluating the January 1 Proposal, as well as the advice of Conyers Dill of the directors’ fiduciary duties to the Company’s shareholders in connection with the December 22 Proposal, under the laws of the British Virgin Islands, which Gibson Dunn solicited on the Special Committee’s behalf. After further discussion, the Special Committee resolved to send a letter to the Buyer Consortium asking the Buyer Consortium to raise its price to $6.00 per Share and inform the Buyer Consortium that it had authorized Gibson Dunn to share the Special Committee’s comments to the draft Transaction documents with Skadden, and that the Special Committee was available to further negotiate the price of a possible transaction with the Buyer Consortium. The Special Committee also instructed Gibson Dunn to revise and negotiate with the Buyer Consortium the terms of the Transaction Documents.

On January 7, 2016, Gibson Dunn, at the direction of the Special Committee, delivered a letter to the Buyer Consortium (the “January 7 Letter”) stating that the Special Committee had reviewed the January 1 Letters and the January 1 Proposal with Duff  & Phelps and Gibson Dunn and that the Special Committee was sharing its comments to the draft Transaction Documents in the hope that the Buyer Consortium would raise its final offer price to $6.00, and at that price the Special Committee would not insist on a majority of the minority shareholder vote requirement or a “go shop” provision. Gibson Dunn then delivered revised Transaction Documents to Skadden and the Buyer Consortium.

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On January 11, 2016, Skadden, at the direction of the Buyer Consortium, delivered a letter to the Special Committee stating that the Buyer consortium had reviewed the January 7 Letter and the Special Committee’s comments to the draft Transaction Documents. Skadden enclosed with the January 11 Letter further revised Transaction Documents for the Special Committee’s consideration. The letter also restated the Buyer Consortium’s belief that in light of the Chinese economy’s underperformance, it will be extremely difficult for the Company to gain meaningful recognition from U.S. public investors. The letter additionally stated that on the basis of the foregoing, together with the poor performance of China’s currency and strong performance of the U.S. dollar, the Buyer Consortium would not raise its price above $5.50 but would consider an increase in the reverse termination fee payable in light of the Forebright SPV’s requirement that its equity commitment letter be subject to the condition that Forebright SPV and Mr. Li enter into a shareholders agreement prior to the Merger.

On January 12, 2016, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. Dr. Cai was not present at the meeting due to a scheduling conflict. During the meeting, Duff  & Phelps and Gibson Dunn reviewed with the Special Committee the January 11 Letter. The Special Committee discussed the Buyer Consortium’s (i) position that it would not raise its price above $5.50 per Share, (ii) response to the January 7 Letter and (iii) proposed terms in the revised draft Transaction Documents, and Duff  & Phelps and Gibson Dunn advised the Special Committee on the contents of the January 11 Letter. The Special Committee discussed with Duff  & Phelps and Gibson Dunn its proposed responses to the Buyer Consortium and other potential courses of action for the Special Committee. After the discussion, the Special Committee determined, subject to consultation with Dr. Cai, that it would not further negotiate the terms of the revised draft Transaction Documents until (x) the Buyer Consortium removed the funding condition in Forebright SPV’s equity commitment letter that Forebright SPV and Mr. Li first enter into a shareholders agreement prior to funding and (y) the Buyer Consortium responded to the Special Committee’s position in the January 7 Letter that the Special Committee would only forego a majority of the minority shareholder vote requirement and “go-shop clause” in the merger agreement if the Buyer Consortium raised its offer price to $6.00 per Share.

Between January 12 and January 14, 2016, Gibson Dunn and Skadden discussed the terms of the Buyer Consortium’s financing arrangements, including the inclusion in Forebright SPV’s equity commitment letter of a funding condition that Forebright SPV and Mr. Li first enter into a shareholders agreement prior to funding.

On January 14, 2016, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Gibson Dunn provided an update to the Special Committee regarding the status of the financing arrangements between Forebright SPV and Mr. Li. The Special Committee then discussed, and was advised by Duff  & Phelps and Gibson Dunn concerning, the Buyer Consortium’s offer price of  $5.50 per Share, the advisability of a pre-signing market check or a “go-shop” clause in the merger agreement and the advisability of a majority of the minority shareholder vote requirement. After further discussion, the Special Committee authorized Gibson Dunn to deliver a letter to the Buyer Consortium stating that (i) the Buyer Consortium must have fully committed financing prior to the signing of definitive transaction documents and (ii) that the Special Committee was not in a position to recommend a transaction to the minority shareholders without a “go-shop” clause in the merger agreement and a majority of the minority shareholder vote requirement unless the Buyer Consortium raised its offer price to $6.00 per Share.

On January 14, 2016, Gibson Dunn, at the direction of the Special Committee, delivered a letter to Skadden (the “January 14 Letter”) asking the Buyer Consortium to respond to the Special Committee’s positions in the January 7 Letter and stating that the January 11 Letter raised a new and substantial issue for the Special Committee, as this was the first time the Special Committee learned that it had not received a fully financed offer from the Buyer Consortium, but rather an offer subject to the members of the Buyer Consortium entering into a shareholders agreement prior to the Merger. The January 14 Letter also stated that the Special Committee’s advisors would not recommend a transaction to the Special Committee that had such a condition. The January 14 Letter also repeated the Special Committee’s position in the January 7 Letter that at a price of  $5.50 per Share , the Special Committee would insist on including in the merger agreement a majority of the minority shareholder vote requirement and a “go shop” provision.

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Between January 14 and January 22, 2015, Gibson Dunn and Skadden negotiated and revised the Transaction Documents. Skadden also provided documentation to Gibson Dunn evidencing the financing arrangements between Forebright SPV and Mr. Li.

On January 19, 2016, Skadden, at the direction of the Buyer Consortium, delivered a letter to Gibson Dunn (the “January 19 Letter”) stating that the Buyer Consortium reviewed and considered the January 14 Letter and would increase its price to $6.00 per Share on the condition that the merger agreement contain neither a majority of the minority shareholder vote requirement nor a “go shop” clause. The January 19 Letter also stated that the Buyer Consortium would agree to remove the condition from Forebright SPV’s equity commitment letter that Forebright SPV and Mr. Li enter into a shareholders agreement prior to the Merger.

On January 22, 2016, the Special Committee convened a meeting by telephone with representatives of Gibson Dunn and Duff  & Phelps. During the meeting, Gibson Dunn presented to the Special Committee a summary of the revised Transaction Documents and the terms of conditions thereof, pursuant to which the Merger would be consummated, and answered questions from the Special Committee regarding the revised Transaction Documents. Additionally, Duff  & Phelps reviewed its financial analysis of the Company and the Buyer Consortium’s offer price of  $6.00 per Share. Duff  & Phelps delivered verbally its opinion, which was subsequently confirmed in writing by delivery of its written opinion dated as of the same date, that as of January 22, 2016 and based upon and subject to the various qualifications, factors, assumptions and limitations described in its opinion, the merger consideration of  $6.00 per Share to be received by the Company’s shareholders, other than the holders of Excluded Shares, in the proposed Merger is fair, from a financial point of view, to such holders. Please see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 38 for additional information. Following a comprehensive discussion and detailed discussion of the proposed terms of the merger agreement, the financial presentation provided by Duff  & Phelps and its fairness opinion, and taking into account the other factors described below under the heading titled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors” beginning on page 27, the Special Committee determined that the terms and conditions of the revised Transaction Documents, including the Buyer Consortium’s offer price of  $6.00 per Share, are in the best interests of the Company and its shareholders. Upon a motion by Ms. Zhang, seconded by Chairperson Dr. Zhang, the Special Committee unanimously adopted resolutions approving the revised Transaction Documents and resolutions recommending to the board of directors of the Company that they adopt the revised Transaction Documents and recommend the acquisition of the Company by the Buyer Consortium to the Company’s shareholders.

Following the meeting of the Special Committee, the board of directors of the Company convened and based upon the unanimous recommendation of the special Committee, and taking into accounts the other factors described below under the heading titled “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors” beginning on page 27, the board of directors of the Company (with Mr. Li abstaining from voting) unanimously adopted resolutions approving the terms of the revised Transaction Documents and the transactions contemplated thereby and resolutions recommending that the Company’s shareholders vote to approve the terms of the merger agreement. Upon the adoption and approval of the terms of the Transaction Documents by the Company’s board of directors, the Company, Parent and Merger Sub subsequently executed and delivered the Transaction Documents.

On January 29, 2016, Michael Silverman, an individual shareholder of Jinpan International Ltd. (“Jinpan”), filed a lawsuit in the Superior Court of New Jersey, Bergen County, challenging the fairness of the proposed transaction in which FNOF E&M Investment Limited and Silkwings Limited (the “Buyer Group”) would acquire the publicly owned shares of Jinpan common stock. The lawsuit, purportedly brought on behalf of a class of Jinpan shareholders, names as defendants Jinpan, current and former directors of Jinpan, and the Buyer Group, and alleges that Jinpan’s directors breached their fiduciary duties in connection with the proposed transaction and that the Buyer Group aided and abetted those breaches. The lawsuit claims that the price of the proposed transaction is unfair to Jinpan’s holders of common stock and that the terms of the proposed transaction are unreasonable. Jinpan believes the allegations in the complaint are without merit and intends to defend against them vigorously.

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Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors

Our board of directors, acting upon the unanimous recommendation of the Special Committee, which Special Committee acted with the advice and assistance of its independent financial and legal advisors, evaluated the merger, including the terms and conditions of the merger agreement.

At a meeting on January 22, 2016, the Special Committee unanimously recommended that our board of directors adopt resolutions that:

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determine that the merger, on the terms and subject to the conditions set forth in the merger agreement, is fair to and in the best interests of, the Company and the unaffiliated shareholders, and declare it advisable to enter into the merger agreement;

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authorize and approve the execution, delivery and performance by the Company of the merger agreement and the completion of the transactions contemplated thereby, including the merger; and

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direct that the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, be submitted to a vote at a general meeting of the shareholders of the Company with the recommendation that the shareholders of the Company authorize and approve the merger agreement, the plan of merger and the transactions contemplated under the merger agreement, including the merger.

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On January 22, 2016, our board of directors (with Mr. Li abstaining) unanimously approved and adopted the resolutions recommended by the Special Committee. Mr. Li abstained from voting because of the potential conflicts of interest arising from his role as a member of the board of directors of the Company and his interests in the transactions contemplated under the merger agreement and the rollover agreement, including the merger. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 53 for additional information.

In the course of reaching their respective determinations, the Special Committee and our board of directors considered the following substantive factors and potential benefits of the merger, each of which the Special Committee and our board of directors believed supported their respective decisions, but which are not listed in any relative order of importance:

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the current and historical market prices of the Shares, including the fact that the merger consideration offered to our unaffiliated shareholders represents a 65.7% premium to the closing price of our Shares on September 14, 2015, the last trading day immediately prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal. The US$6.00 per Share merger consideration to be paid to unaffiliated shareholders in the merger also represents (a) 42.2% premium over the closing price of US$4.22 per share on January 22, 2016, the trading day immediately before the merger agreement was signed; and (b) 35.1% and 23.7% premium over the closing price of US$4.44 and US$4.85 per Shares on August 3, 2015 and June 19, 2015, respectively, 30 and 60 days prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal.

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the lack of interested bidders, considering the fact that there were no other proposal submitted to the Company following the Company’s announcement on September 15, 2015 that it has received a “going private” proposal;

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the financing obtained by and the ability of the Buyer Group to consummate the merger, in particular, the general guarantee provided by Forebright Fund of certain funding obligations of certain members of the Buyer Group;

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the negotiations with respect to the merger consideration and the Special Committee’s determination that, following extensive negotiations with the Buyer Group, US$6.00 per Share was the highest price that the Buyer Group would agree to pay, which represents 33.3% increase of the price initially offered by the Buyer Group on September 25, 2015, US$4.50;

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the all-cash merger consideration, which will allow our unaffiliated shareholders to immediately realize liquidity for their investment and provide them with a specific amount of cash consideration for their Shares;

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•

the financial analysis reviewed and discussed with the Special Committee (the “Financial Analysis”) by representatives of Duff  & Phelps, as well as the oral opinion of Duff  & Phelps to the Special Committee on January 22, 2016 (which was subsequently confirmed by delivery of the Opinion) with respect to the fairness, from a financial point of view, of the US$6.00 per Share merger consideration to be received by holders of the Shares (other than the Excluded Shares) in the merger, as of January 22, 2016, subject to the various assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff  & Phelps in preparing their Opinion. Please see “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 38 for additional information; the Special Committee notes that the Opinion delivered by Duff  & Phelps addresses the fairness, from a financial point of view, of the US$6.00 per Share merger consideration to be received by holders of the Shares (other than the Excluded Shares), including the Company’s director and officer shareholders (namely, Mr. Ling Xiangsheng, Mr. Mark Du, and Dr. Li-Wen Zhang) who are not Rollover Shareholders, holding, in aggregate, 617,992 Shares and options to purchase 18,251 Shares with an exercise price lower than US$6.00 per share. These director and officer shareholders are treated in the same way as the Company’s Unaffiliated Shareholders in connection with the merger, and will receive the same amount of merger consideration per Share as the Unaffiliated Shareholders. The Special Committee does not believe the inclusion of these director and officer shareholders in the Opinion affects its ability to rely on the Opinion as one of the factors based on which the Special Committee determines that the merger is fair to the Unaffiliated Shareholders. However, the Special Committee has not made any determination, nor does it intend to express any view, as to the fairness of the merger to any shareholder who is an affiliate of the Company, such as the director and officer shareholders identified in the preceding sentence;

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the overall slowdown in the PRC economy which may have an adverse effect on the Company’s business, financial condition and projections, and results of operations;

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the increased costs of regulatory compliance for public companies, especially considering the trend that many comparable companies in our industry ceased to be publicly listed and traded;

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the recognition that, as an SEC-reporting company, the Company’s management and accounting staff, which comprises a relatively small number of individuals, must devote significant time to SEC reporting and compliance;

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the recognition that, as a privately held entity, the Company’s management may have greater flexibility to focus on improving the Company’s long-term financial performance without the pressures created by the public equity market’s emphasis on short-term period-to-period financial performance;

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the recognition that, as an SEC-reporting company, the Company is required to disclose a considerable amount of business information to the public, some of which would otherwise be considered competitively sensitive and would not be disclosed by a non-reporting company and which potentially may help our actual or potential competitors, customers, lenders and vendors compete against us or make it more difficult for us to negotiate favorable terms with them, as the case may be;

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the possible alternatives to the merger (including the possibility of continuing to operate the Company as an independent publicly-traded entity and the perceived risks of that alterative), the range of potential benefits to its shareholders of the possible alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, and the assessment by the Special Committee that none of these alternatives was reasonably likely to present superior opportunities for the Company or to create greater value for its shareholders than the merger, taking into account the likelihood of execution as well as business, competitive, industry and market risks;

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the limited trading volume of the Company’s Shares on NASDAQ and the possibility that it could take a considerable period of time before the trading price of the Shares would reach and sustain at least the merger consideration of US$6.00, as adjusted for present value, and the possibility that such value might never be obtained;

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estimated forecasts of our future financial performance prepared by our management, together with our management’s view of our financial condition, results of operations, business and prospects, indicating that the Company may face uncertain business conditions in China, which made the transaction desirable at this time as compared with other times since the Company’s initial public offering in 1998;

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the belief of the Special Committee that the terms of the merger agreement, including the parties’ representations, warranties and covenants and the conditions to their respective obligations, are reasonable;

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the likelihood that the merger would be completed based on, among other things (not in any relative order of importance):

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the absence of a financing condition in the merger agreement;

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the likelihood and anticipated timing of completing the merger in light of the scope of the conditions to completion, including the absence of required regulatory approvals;

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the fact the merger agreement provides that, in the event of a failure of the merger to be completed under certain circumstances, Parent will pay the Company a US$3,940,429 termination fee, and the guarantee of such payment obligation by the Buyer Group pursuant to a limited guarantee;

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our ability, subject to compliance with the terms and conditions of the merger agreement, to terminate the merger agreement prior to the completion of the merger in order to accept an alternative transaction proposed by a third party that is a “superior proposal” (as defined in the merger agreement and further explained under the caption “The Merger Agreement and Plan of Merger — Acquisition Proposals” beginning on page 72);

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our ability, under certain circumstances, to change, withhold, withdraw, qualify or modify our recommendation that our shareholders vote to authorize and approve the merger agreement (as further explained under the caption “The Merger Agreement and Plan of Merger — Change of Recommendation” beginning on page 73;

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our ability, under certain circumstances, to specifically enforce the terms of the merger agreement; and

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the consideration and negotiation of the merger agreement was conducted entirely under the control and supervision of the Special Committee, which consists of three independent directors, each of whom is an outside, non-employee director, and that no limitations were placed on the authority of the Special Committee, which was advised throughout the process by independent legal and financial advisors.

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In addition, the Special Committee and our board of directors believed that sufficient procedural safeguards were and are present to ensure that the merger is procedurally fair to our unaffiliated shareholders and to permit the Special Committee and our board of directors to represent effectively the interests of such unaffiliated shareholders. These procedural safeguards, which are not listed in any relative order of importance, are discussed below:

•

in considering the merger with the Buyer Group, the Special Committee acted solely to represent the interests of the unaffiliated shareholders, and the Special Committee had independent control of the negotiations with the Buyer Group and its independent legal advisor on behalf of such unaffiliated shareholders;

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all of the directors serving on the Special Committee during the entire process were and are independent directors and free from any affiliation with the Buyer Group; none of such directors

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is or ever was an employee of the Company or any of its subsidiaries or affiliates and none of such directors has any financial interest in the merger that is different from that of the unaffiliated shareholders other than (i) the director’s receipt of board compensation in the ordinary course; (ii) Special Committee member’s compensation in connection with its evaluation of the merger (which is not contingent upon the completion of the merger or the Special Committee’s or board’s recommendation of the merger); and (iii) the director’s indemnification and liability insurance rights under the merger agreement;

•

following its formation, the Special Committee’s independent control of the sale process with the advice and assistance of Duff  & Phelps, as its independent financial advisor, and Gibson, Dunn & Crutcher LLP, as its independent legal advisors, each reporting solely to the Special Committee;

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•

the Special Committee was empowered to consider, attend to and take any and all actions in connection with the written proposal from the Buyer Group and the transactions contemplated thereby from the date the committee was established, and no evaluation, negotiation, or response regarding the transaction or any documentation in connection therewith from that date forward was considered by our board of directors for authorization and approval unless the Special Committee had recommended such action to our board of directors;

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the Special Committee had the authority to reject the terms of any strategic transaction, including the merger;

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the Special Committee met regularly to consider and review the terms of the merger;

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the recognition by the Special Committee and our board of directors that it had no obligation to recommend the authorization and approval of the proposal from the Buyer Group or any other proposed transaction;

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the recognition by the Special Committee and our board of directors that, under the terms of the merger agreement, it has the ability to consider any proposal regarding a competing transaction reasonably likely to lead to a superior proposal until the date our shareholders vote upon and authorize and approve the merger agreement; and

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the availability of appraisal rights to the unaffiliated shareholders who comply with all of the required procedures under the BVI Business Companies Act for exercising dissenters’ and appraisal rights, which allow such holders to seek appraisal of the fair value of their shares as determined by independent appraisers.

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The Special Committee and board of directors also considered a variety of potentially negative factors discussed below concerning the merger agreement and the merger, which are not listed in any relative order of importance:

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the fact that authorization and approval of the merger agreement are not subject to the authorization and approval of holders of a majority of the Company’s outstanding Shares unaffiliated with the Buyer Group;

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the fact that the Company’s shareholders, other than the Rollover Shareholders, will have no ongoing equity participation in the Company following the merger, and that they will cease to participate in our future earnings or growth, if any, or to benefit from increases, if any, in the value of the Shares, and will not participate in any potential future sale of the Company to a third party or any potential recapitalization of the Company which could include a dividend to shareholders;

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the possibility that the Buyer Group could sell part or all of the Company following the merger to one or more purchasers at a valuation higher than that being paid in the merger;

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the restrictions on the conduct of the Company’s business prior to the completion of the merger, which may delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company pending completion of the merger; see “The Merger Agreement and Plan of Merger — Conduct of Business Prior to Closing” beginning on page 70 for additional information;

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the risks and costs to the Company if the merger does not close, including the diversion of management and employee attention, potential employee attrition and the potential disruptive effect on business and customer relationships;

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the Company will be required to, under certain circumstances, pay Parent a termination fee of US$3,940,429 in connection with the termination of the merger agreement;

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the fact that Parent and Merger Sub are newly formed companies with essentially no assets other than certain Buyer Group members’ financing commitments for the merger, and that the Company’s legal remedy in the event of breach of the merger agreement by Parent or Merger Sub under certain circumstances may be limited to receipt of a termination fee of US$3,940,429, and that under certain circumstances the Company may not be entitled to a termination fee, but instead, have to seek specific performance. See “The Merger Agreement and Plan of Merger — Termination of the Merger Agreement” beginning on page 77 and “The Merger Agreement and Plan of Merger — Termination Fee” beginning on page 78 for additional information;

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the terms of the Buyer Group’s participation in the merger and the fact that the Buyer Group may have interests in the transaction that are different from, or in addition to, those of our unaffiliated shareholders, as well as the other interests of the Company’s directors and officers in the merger; see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 53 for additional information;

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the possibility that the merger might not be completed and the negative impact of a public announcement of the merger on our sales and operating results and our ability to attract and retain key management, marketing and technical personnel; and

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the taxability of an all-cash transaction to our unaffiliated shareholders that are U.S. holders as defined below in “Special Factors — Material U.S. Federal Income Tax Consequences” beginning on page 57.

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The forgoing discussion of information and factors considered by the Special Committee and our board of directors is not intended to be exhaustive, but includes the material factors considered by the Special Committee and our board of directors. In view of the wide variety of factors considered by the Special Committee and our board of directors, neither the Special Committee nor our board of directors found it practicable to quantify or otherwise assign relative weights to the foregoing factors in reaching its conclusions. In addition, individual members of the Special Committee and our board of directors may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee recommended that our board of directors authorize and approve, and our board of directors authorized and approved, the merger agreement based upon the totality of the information presented to and considered by it.

In the course of reaching its conclusion regarding the fairness of the merger to the unaffiliated shareholders and its decision to recommend the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, the Special Committee considered certain financial analyses presented by Duff  & Phelps. These analyses included, among others, discounted cash flow analysis, selected public company analysis, and selected merger and acquisition transactions analysis. All of the material analyses as presented to the Special Committee on January 22, 2016 are summarized below under the caption “Special Factors — Opinion of the Special Committee’s Financial Advisor” beginning on page 38. The Special Committee expressly adopted these analyses and the Opinion of Duff  & Phelps, among other factors considered, in reaching its determination as to the fairness of the transactions contemplated by the merger agreement, including the merger.

Neither the Special Committee nor our board of directors considered the liquidation value of Company’s assets because each considers the Company to be a viable going concern business where value is derived from cash flows generated from its continuing operations. In addition, the Special Committee and the Board believe that the value of the Company’s assets that might be realized in a liquidation would be significantly less than its going-concern value for the reasons that (i) liquidation sales generally result in proceeds substantially less than the sales of a going concern; (ii) it is impracticable to determine a

31

liquidation value given the significant execution risk involved in any breakup of a company; (iii) an ongoing operation has the ability to continue to earn profit, while a liquidated company does not, such that the “going-concern value” will be higher than the “liquidation value” of a company because the “going concern value” includes the liquidation value of a company’s tangible assets as well as the value of its intangible assets, such as goodwill; and (iv) a liquidation process would involve additional legal fees, costs of sale and other expenses that would reduce any amounts that shareholders might receive upon liquidation. Furthermore, the Company has no intention of liquidation and the merger will not result in the liquidation of the Company. Following the consummation of the merger, the Company will cease to be a publicly-traded company and will become a private company beneficially owned by the Buyer Group. Each of the Special Committee and the board of directors believes the analyses and additional factors it reviewed provided an indication of our going concern value. Specifically, the financial analyses presented by Duff  & Phelps (i.e., a discounted cash flow analysis, an analysis of selected public companies, and an analysis of selected merger and acquisition transactions, as each is more fully summarized below under the caption “Special Factors — Summary of Valuation Analysis”) represented potential valuations of the Company as it continues to operate its business, and, to that extent, the Special Committee collectively characterized such analyses as forms of going concern valuations. The Special Committee expressly adopted these analyses and the opinion of Duff  & Phelps, among other factors considered, in reaching its determination as to the fairness of the merger. Each of the Special Committee and the board of directors considered the historical market prices of the Shares as described under the caption “Market Price of the Shares, Dividends and Other Matters — Market Price of the Shares” beginning on page 62. Each of the Special Committee and the board of directors considered the purchase prices paid in previous purchases as described under the caption “Transactions in the Shares” beginning on page 89. Neither the Special Committee nor our board of directors considered the Company’s net book value, which is defined as total assets minus total liabilities, attributable to the shareholders of the Company, as a factor. The Special Committee and board of directors believe that net book value is not a material indicator of the value of the Company as a going concern. The Company’s unaudited net book value per Share as of September 30, 2015 was US$13.98, which is calculated as total equity divided by common shares as of September 30, 2015. Net book value does not take into account the future prospects of the Company, market conditions, trends in the information technology services industry or the business risks inherent in competing with larger companies in that industry. The Company is not aware of any firm offers made by any unaffiliated person, other than the filing persons, during the past two years for (i) the merger or consolidation of the Company with or into another company, or vice-versa; (ii) the sale or other transfer of all or any substantial part of the assets of the Company; or (iii) a purchase of the Company’s securities that would enable the holder to exercise control of the Company.

In reaching its determination that the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Company and our unaffiliated shareholders and its decision to authorize and approve the merger agreement and recommend the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated thereby, including the merger, by our shareholders, our board of directors, on behalf of the Company, considered the analysis and recommendation of the Special Committee and the factors examined by the Special Committee as described above under this section and adopted such recommendations and analysis.

Except as discussed in “Special Factors — Background of the Merger,” “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and our Board of Directors,” and “Special Factors — Opinion of the Special Committee’s Financial Advisor,” no director who is not an employee of the Company has retained an unaffiliated representative to act solely on behalf of unaffiliated shareholders for purposes of negotiating the terms of the transaction and/or preparing a report concerning the fairness of the transaction.

For the foregoing reasons, each of the Company and our board of directors believes that the merger agreement, the plan of merger and the transactions contemplated thereby are substantively and procedurally fair to and in the best interests of the Company and our unaffiliated shareholders.

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Position of the Buyer Group as to the Fairness of the Merger

Under SEC rules governing “going private” transactions, each of the Buyer Group members is deemed to be an affiliate of the Company, and therefore, required to express his, her or its belief as to the fairness of the merger to the Company’s unaffiliated shareholders. Each Buyer Group member is making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The views of the Buyer Group members as to the fairness of the merger are not intended and should be construed as a recommendation to any shareholder of the Company as to how that shareholder should vote on the proposal to adopt the merger agreement and the transactions contemplated by the merger agreement, including the merger. Each Buyer Group member has interests in the merger that are different from, and/or in addition to, those of the other shareholders of the Company by virtue of their continuing interests in the surviving company after the completion of the merger. Please see “Special Factors — Interests of Certain Persons in the Merger” beginning on page 53 for additional information. The Buyer Group members believe the proposed merger is fair for the Company’s unaffiliated shareholders on the basis of the factors described in “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors” beginning on page 27 and the additional factors described below.

Each Buyer Group member believes the interests of the Company’s unaffiliated shareholders were represented by the Special Committee, which negotiated the terms and conditions of the merger agreement with the assistance of its independent legal and financial advisors. The Buyer Group attempted to negotiate a transaction that would be most favorable to it, and not to the Company’s unaffiliated shareholders and, accordingly, did not negotiate the merger agreement with a goal of obtaining terms that were substantively and procedurally fair to such holders. The Buyer Group did not participate in the deliberations of the Special Committee regarding, and did not receive any advice from the Special Committee’s independent legal or financial advisors as to, the fairness of the merger to the Company’s unaffiliated shareholders. Furthermore, the Buyer Group did not perform, or engage a financial advisor to perform, any independent valuation or other analysis to assist them in assessing the fairness of the merger consideration to the Company’s unaffiliated shareholders.

Based on their knowledge and analysis of available information regarding the Company and the factors considered by, and the analysis and resulting conclusions of, the Special Committee and the Company’s board of directors discussed in “Special Factors — Reasons for the Merger and Recommendation of the Special Committee and Our Board of Directors” beginning on page 27, each Buyer Group member believes the merger is substantively and procedurally fair to the Company’s unaffiliated shareholders. In particular, each Buyer Group member believes that the proposed merger is both procedurally and substantively fair to the unaffiliated shareholders of the Company based on the consideration of the following factors, which are not listed in any relative order of importance, among others:

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the fact that the Special Committee and, acting upon the unanimous recommendation of the Special Committee, the Company’s board of directors (with Mr. Li abstaining) unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of the Company’s unaffiliated shareholders;

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the fact that the Special Committee, consisting entirely of directors who are not affiliated with any Buyer Group member, was established and given authority to, among other things, review, evaluate and negotiate the terms of the merger and to recommend to the Company’s board of directors what action should be taken by the Company, including not to engage in the merger;

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the fact that the members of the Special Committee do not have any interests in the merger different from, or in addition to, those of the Company’s unaffiliated shareholders, other than (i) the directors’ receipt of board compensation in the ordinary course; (ii) Special Committee members’ compensation in connection with its evaluation of the merger (which is not contingent upon the completion of the merger or the Special Committee’s or board’s recommendation of the merger); and (iii) the directors’ indemnification and liability insurance rights under the merger agreement;

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•

the fact that the Special Committee retained and was advised by its independent legal and financial advisors who are experienced in advising committees such as the Special Committee in similar transactions;

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the fact that the Special Committee and the Company’s board of directors had no obligation to recommend the authorization and approval of the merger agreement and the transactions contemplated thereby, including the merger, or any other transaction;

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the current and historical market prices of the Shares, including the fact that the merger consideration offered to our unaffiliated shareholders represents a 65.7% premium to the closing price of our Shares on September 14, 2015, the last trading day immediately prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal. The US$6.00 per Share merger consideration to be paid to unaffiliated shareholders in the merger also represents (a) 42.2% premium over the closing price of US$4.22 per share on January 22, 2016, the trading day immediately before the merger agreement was signed; and (b) 35.1% and 23.7% premium over the closing price of US$4.44 and US$4.85 per Shares on August 3, 2015 and June 19, 2015, respectively, 30 and 60 days prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal;

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the fact that the merger consideration is all cash, which provides a specific amount of cash consideration for Shares held by, and liquidity to, unaffiliated shareholders and allows the unaffiliated shareholders not to be exposed to risks and uncertainties relating to the prospects of the Company;

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the fact that the merger consideration, other terms and conditions of the merger agreement and the transactions contemplated thereby were the result of extensive negotiations over an extended period of time between the Special Committee, its advisors and the Buyer Group;

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the fact that Parent and Merger Sub obtained equity financing commitments for the transaction, the limited number and nature of the conditions to such financings, and the obligation of Parent to use its reasonable best efforts to effect the drawdown of the financing;

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the fact that the Special Committee received from its independent financial advisor, Duff  & Phelps, LLC, an opinion, dated January 22, 2016, as to the fairness, from a financial point of view, of the US$6.00 per Share merger consideration to be received by holders of the Shares (other than the Excluded Shares) in the merger, as of January 22, 2016, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Duff  & Phelps, LLC in preparing its opinion;

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the fact that in certain circumstances under the terms of the merger agreement, the Special Committee and the board of directors of the Company are able to change, withhold, withdraw, qualify or modify their recommendation of the merger;

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the fact that the Company is able to, subject to compliance with the terms and conditions of the merger agreement, terminate the merger agreement prior to the completion of the merger in order to accept an alternative transaction proposed by a third party that is a “superior proposal” (as defined in the merger agreement and further explained under the caption “The Merger Agreement and Plan of Merger — Acquisition Proposals” beginning on page 72);

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the fact that the Company, under certain circumstances, is able to specifically enforce the terms of the merger agreement;

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the availability of dissenter rights to the shareholders, other than the Rollover Shareholders, who comply with all of the required procedures under the BVI Business Companies Act for exercising dissenter rights, which allow such holders to receive the fair value of their Shares as determined by the individual appraisers;

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•

the fact that although adoption of the merger agreement is not subject to the approval by a majority of unaffiliated shareholders, it is subject to approval by the affirmative vote of at least a majority of the shareholders present and voting in person or by proxy in accordance with the BVI Business Companies Act and the Company’s memorandum and articles of association;

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that the board of directors was fully informed about the extent to which the interests of the Rollover Shareholders in the merger differed from those of the Company’s other shareholders; and

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the fact that none of the Buyer Group members or any of their advisors participated in or sought to influence the deliberative process of the Special Committee.

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Certain Financial Projections

The Company’s management does not, as a matter of course, make available to the public future financial projections. However, the Company’s management prepared certain financial projections for the Special Committee and its financial advisor in connection with the financial analysis of the merger. These financial projections, which were based on our management’s projection of our future financial performance as of the date provided, were prepared by the Company’s management for internal use and for use by the Special Committee’s financial advisor in its financial analyses, and were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC regarding forward-looking information or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or U.S. generally accepted accounting principles.

The financial projections are not a guarantee of performance. In compiling the projections, the Company’s management took into account historical performance, combined with estimates regarding gross revenues, gross profit, adjusted EBITDA and net income. Although the projections are presented with numerical specificity, they were based on numerous assumptions and estimates as to future events made by our management that our management believed were reasonable at the time the projections were prepared. The primary assumptions and estimates underlying the Company’s financial projections provided to the Special Committee and its financial advisor consist of the following: (1) the Company’s own historical financials, (2) the projected revenues, costs and expenses of the Company will conform to the level estimated in the budgets prepared by management, (3) that there will be no material change in the existing political, legal, fiscal and economic conditions in China where the Company conducts most of its business, (4) that there will be no significant deviation in the industry trends and market conditions from the current market expectation, and (5) that the Company will retain current management and key personnel to support its ongoing operation and development. This information is not, however, fact and should not be relied upon as being necessarily indicative of actual future results. In addition, factors such as industry performance, the market for our existing and new products, the competitive environment, expectations regarding future acquisitions or any other transaction and general business, economic, regulatory, market and financial conditions, all of which are difficult to predict and beyond the control of our management, may cause actual future results to differ materially from the results forecasted in these financial projections. In addition, the projections do not take into account any circumstances or events occurring after the date that they were prepared. For instance, the projections do not give effect to the merger or any changes to our operations or strategy that may be implemented after the time the projections were prepared. We cannot assure you that the projections will be realized or that actual results will not be significantly different from those contained in the projections.

Neither our independent registered public accounting firm, Grant Thornton China, nor any other independent accountants have examined, compiled or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon and, accordingly, they have not expressed any opinion or given any form of assurance on the financial projections or their achievability. Grant Thornton China’s report accompanying our audited consolidated financial statements included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2014 incorporated by reference in this proxy statement refers exclusively to the Company’s historical information and does not cover any other information in this proxy statement and should not be read to do so. The financial projections included in this proxy statement are included solely to give shareholders access to certain

35

information that was made available to the Special Committee’s financial advisor and are not included for the purpose of influencing any shareholder to make any investment decision with respect to the merger, including whether or not to seek appraisal for his, her or its Shares pursuant to Section 238 of the Cayman Islands Companies Law.

The following table sets forth the financial projections prepared by our management and reviewed by Duff  & Phelps and the Special Committee at the Special Committee meeting on November 2, 2015 (the “Original Forecast”), and the final financial projections delivered by our management following the November 19, 2015 Special Committee meeting, which were considered by the Special Committee in connection with their analysis of the merger and Duff  & Phelps in connection with their Financial Analysis and delivery of the Opinion (the “Revised Forecast”). The changes from the Original Forecast to Revised Forecast were made in response to the view of the Special Committee and Duff  & Phelps (i) that the Company’s growth prospects were expected to be stronger than as assumed in the Original Forecast; (ii) that gross margins could be sustained as opposed to declining over the forecast period, and (iii) that working capital needs as a function of days receivable would remain constant as opposed to increasing over the forecast period, and are described in the text below the table.

Financial Performance Summary

(RMB in thousands)

(1)

Adjusted for excess public company costs and includes government grants.

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Changes from November 2, 2015 Original Forecast to November 19, 2015 Revised Forecast

(i)

2016P Net Sales were assumed to grow at 10.0% in the Revised Forecast, compared to growth of 6.6% for 2016P in the Original Forecast.(1) Beyond 2017P Net Sales were assumed to grow at 5.0% each year in the Revised Forecast, compared to declining from 4.8% growth(1) in 2018P to 2.5% growth in 2020P in the Original Forecast.

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(ii)

Gross Profit Margin was assumed to be approximately 30.3% in the Revised Forecast for 2015E, which is consistent with the OriginalForecast for 2015E. Beyond 2016P, Gross Profit Margin in the Revised Forecast was assumed to reach 31.1% by 2020P, compared to adecline in Gross Profit Margin to 28.3% in 2020P in the Original Forecast.

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(iii)

A/R Days Outstanding were assumed to remain at 230 days each year in the Revised Forecast, compared to an increase from 230 days(3) in 2015E to 245 days in 2020P in the Original Forecast.

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Since EBITDA and adjusted EBITDA are not measures of performance calculated in accordance with Generally Accepted Accounting Principles (“GAAP”), it should not be considered in isolation from, nor as a substitute for, net income as an indicator of operating performance. EBITDA and Adjusted EBITDA, as the Company calculates them, may not be comparable to similarly titled measures employed by other companies. In addition, these measures do not necessarily represent funds available for discretionary use and is not necessarily a measure of the Company’s ability to fund its cash needs. As EBITDA and Adjusted EBITDA exclude certain financial information compared to net income, the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions that are excluded. As required by the SEC, the Company provides below a reconciliation of net income to EBITDA and to Adjusted EBITDA.

Because of the forward-looking nature of the projected financial information, actual quantification of the amounts needed to reconcile the non-GAAP measures to the associated GAAP measures involved substantial hypothetical and unverifiable assumptions. The reconciliation above was not provided to, reviewed by or relied on by any of Special Committee or its financial advisor in connection with their financial analyses.

NONE OF THE COMPANY OR THE SPECIAL COMMITTEE, OR THEIR RESPECTIVE AFFILIATES, ADVISORS, OFFICERS, DIRECTORS OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY SHAREHOLDER OR OTHER PERSON REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION CONTAINED IN THE PROJECTIONS OR THAT PROJECTED RESULTS WILL BE ACHIEVED.

BY INCLUDING IN THIS PROXY STATEMENT A SUMMARY OF ITS INTERNAL FINANCIAL PROJECTIONS, THE COMPANY UNDERTAKES NO OBLIGATIONS TO UPDATE, OR PUBLICLY DISCLOSE ANY UPDATE TO, THESE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FINANCIAL PROJECTIONS ARE SHOWN TO BE IN ERROR OR CHANGE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAW.

The financial projections are forward-looking statements. For information on factors that may cause our future financial results to materially vary, see “Cautionary Note Regarding Forward-Looking Statements” beginning on page 92 and “Item 3. Key Information — D. Risk Factors” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2014, incorporated by reference into this proxy statement.

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Opinion of the Special Committee’s Financial Advisor

Duff  & Phelps has been engaged by the Special Committee to serve as its independent financial advisor and to provide the Opinion in connection with the merger. Duff  & Phelps is an internationally recognized financial services firm that, among other things, is regularly engaged in the investment banking business, including the valuation of businesses and securities in connection with mergers and acquisitions, underwritings and private placements of securities, and other investment banking services.

Duff  & Phelps reviewed its Financial Analysis with, and rendered its oral opinion to, the Special Committee on January 22, 2016 (which oral opinion was subsequently confirmed by delivery of the Opinion) that, as of such date and based upon and subject to the factors, assumptions, and limitations set forth in the Opinion, the $6.00 per Share merger consideration to be received by holders of the Shares (other than the Excluded Shares) in the merger was fair, from a financial point of view, to such shareholders (without giving effect to any impact of the merger or any particular holder of Shares other than in their capacity as a holder of Shares).

The full text of the Opinion, which sets forth the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken, is attached hereto as Annex B and is incorporated herein by reference in its entirety. This summary of the Opinion is qualified in its entirety by reference to the full text of the Opinion. The shareholders of the Company are urged to read the Opinion in its entirety. The Financial Analysis and Opinion were prepared for, and are addressed to, the Special Committee, and are directed only to the fairness, from a financial point of view, of the merger consideration for the Shares as of January 22, 2016 and do not constitute a recommendation to any shareholders of the Company as to how such shareholder should act with respect to the merger or any other matter. The merger consideration was determined through arms-length negotiations between the Special Committee and the Buyer Group and was approved by the Special Committee and the board of directors of the Company, and Duff  & Phelps did not recommend any specific amount of consideration or that any specific amount of merger consideration constituted the only appropriate merger consideration.

In arriving at the Opinion, Duff  & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff  & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff  & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of the Opinion included, but were not limited to, the items summarized below:

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reviewed the Company’s annual reports and audited financial statements on Form 20-F filed with the SEC for the fiscal years ended December 31, 2011, December 31, 2012, December 31, 2013, and December 31, 2014;

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reviewed the Company’s unaudited interim financial statements included in the Company’s Form 6-K filed with the SEC for the nine months ended September 30, 2013, September 30, 2014, and September 30, 2015;

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reviewed a detailed financial projections model for the years ending December 31, 2015 through December 31, 2020, prepared and provided to Duff  & Phelps by management of the Company, upon which Duff  & Phelps has, with the Special Committee’s consent, relied in performing its analysis (the “Management Projections”);

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reviewed the preliminary, non-binding proposal letter, dated September 15, 2015, from Li Zhiyuan and Forebright Smart Connection Technology Limited; and

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•

reviewed documents related to the Proposed Transaction (the “Transaction Documents”), including drafts, dated as of January 21, 2016, of the merger agreement, Voting Agreement, Rollover Agreement, Limited Guarantee by Mr. Zhiyuan Li and Forebright New Opportunities Fund, L.P., the Forebright Smart Connection Technology Limited Equity Commitment Letter, the Mr. Zhiyuan Li Equity Commitment Letter, and the Debt Commitment Letter by and among FNOF E&M Investment Limited, Mr. Zhiyuan Li, and Forebright New Opportunities Fund, L.P. (together, the “Transaction Documents”);

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•

discussed the information referred to above and the background and other elements of the merger and related transactions with the management of the Company;

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discussed with Company management its plans and intentions with respect to the management and operation of the business;

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reviewed the historical trading price and trading volume of the Company’s common shares and the publicly traded securities of certain other companies that Duff  & Phelps deemed relevant;

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performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques including a discounted cash flow analysis, an analysis of selected public companies that Duff  & Phelps deemed relevant, and an analysis of selected transactions that Duff  & Phelps deemed relevant; and

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conducted such other analyses and considered such other factors as Duff  & Phelps deemed appropriate.

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In performing its Financial Analyses and arriving at the Opinion, Duff  & Phelps, with the Company’s and the Special Committee’s consent:

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relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management, and did not independently verify such information;

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relied upon the fact that the Special Committee, the board of directors and the Company have been advised by counsel as to all legal matters with respect to the merger and related transactions, including whether all procedures required by law to be taken in connection with the merger and any related transaction have been duly, validly and timely taken;

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assumed that any estimates, evaluations, forecasts and projections, including the Management Projections, furnished to Duff  & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same;

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assumed that information supplied and representations made by Company management are substantially accurate regarding the Company, the merger and the related transactions;

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assumed that the representations and warranties made in the Transaction Documents are substantially accurate and that each party to the Transaction Documents will fully and timely perform all covenants and agreements required to be performed by such party;

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assumed that the final versions of all documents reviewed by Duff  & Phelps in draft form conform in all material respects to the drafts reviewed;

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assumed that there has been no material change in the assets, liabilities, financial condition, results of operations, business, or prospects of the Company since the date of the most recent financial statements and other information made available to Duff  & Phelps, and that there is no information or facts that would make the information reviewed by Duff  & Phelps incomplete or misleading;

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assumed that all of the conditions required to implement the merger and related transactions will be satisfied and that the merger and related transactions will be completed in accordance with the merger agreement and other Transaction Documents without any amendments thereto or any waivers of any terms or conditions thereof; and

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assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger and related transactions will be obtained without any adverse effect on the Company or any other party to the merger or any related transaction, or the contemplated benefits expected to be derived in the merger and related transactions.

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To the extent that any of the foregoing assumptions or any of the facts on which the Financial Analysis or Opinion is based prove to be untrue in any material respect, the Opinion cannot and should not be relied upon. Furthermore, in Duff  & Phelps’ Financial Analysis and in connection with the preparation of the

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Opinion, Duff  & Phelps made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the merger and as to which Duff  & Phelps does not express any view or opinion, including as to the reasonableness of such assumptions.

Duff  & Phelps prepared the Opinion effective as of January 22, 2016. The Opinion was necessarily based upon the information made available to Duff  & Phelps as of the date thereof and market, economic, financial and other conditions as they exist and could be evaluated as of the date thereof, and Duff  & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Duff  & Phelps after the date thereof. Duff  & Phelps assumes no obligation to update, revise or reaffirm its Opinion.

Duff  & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff  & Phelps was not requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the merger or any related transaction, the assets, businesses or operations of the Company, or any alternatives to the merger or any related transaction, (ii) negotiate the terms of the merger or any Transaction Document, and therefore, Duff  & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Transaction Documents, or (iii) advise the Special Committee, the Board of Directors or any other party with respect to alternatives to the merger or any related transaction.

Duff  & Phelps did not express any opinion as to the market price or value of the Company’s Shares (or anything else) after the announcement or the consummation of the merger. The Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness, as tax advice, or as accounting advice. Duff  & Phelps did not make, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

In rendering the Opinion, Duff  & Phelps did not express any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the consideration to be received by the public shareholders of the Company in the merger, or with respect to the fairness of any such compensation.

The Opinion was furnished solely for the use and benefit of the Special Committee in connection with its consideration of the merger and related transactions and is not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff  & Phelps’ express consent.

The Opinion (i) does not address the merits of the underlying business decision to enter into the merger versus any alternative strategy or transaction; (ii) does not address any transaction related to the merger; (iii) is not a recommendation as to how the Special Committee, the board of directors of the Company or any shareholder of the Company should vote or act with respect to any matters relating to the merger, or whether to proceed with the merger or any related transaction, and (iv) does not indicate that the consideration received is the best possibly attainable under any circumstances. Instead, it merely states whether the per Share consideration payable in the merger is within a range suggested by certain financial analyses. The decision as to whether to proceed with the merger or any related transaction may depend on an assessment of factors unrelated to the Financial Analysis on which the Opinion is based.

Set forth below is a summary of the Financial Analysis performed by Duff  & Phelps that was reviewed with the Special Committee in connection with the delivery of the Opinion to the Special Committee. This summary is qualified in its entirety by reference to the full text of the Financial Analysis, a copy of which is attached hereto as Exhibit (c) (2) to the Transaction Statement and incorporated herein by reference. While this summary describes the analyses and factors that Duff  & Phelps deemed material in its presentation to the Special Committee, it is not a comprehensive description of all analyses performed and factors considered by Duff  & Phelps. The preparation of a financial analysis is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances. Therefore, the Financial Analysis and the Opinion are not readily susceptible to partial analysis. In arriving at its Opinion, Duff  & Phelps did not

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attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff  & Phelps believes that its analysis must be considered as a whole and that selecting portions of its analysis and of the factors without considering all analysis and factors could create a misleading or incomplete view of the evaluation process underlying financial analysis. The conclusion reached by Duff  & Phelps was based on all analysis and factors taken as a whole, and also on the application of the experience and judgment of Duff  & Phelps. The fact that any specific analysis has been referred to in the summary below is not meant to indicate that this analysis was given greater weight than any other analysis. In addition, the ranges of valuations resulting from any particular analysis described below should not be taken to be the view of Duff  & Phelps as the actual value of the Company.

The Financial Analysis summarized below includes information presented in tabular format. In order for the Financial Analysis to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the Financial Analysis. Considering the data below without considering the full narrative description of the Financial Analysis, including the methodologies and assumptions underlying the analysis, could create a misleading or incomplete view of the Financial Analysis.

Discounted Cash Flow Analysis

Duff  & Phelps performed a discounted cash flow analysis of the estimated future unlevered free cash flows of the Company for the fiscal years ending December 31, 2015 through December 31, 2020, with “free cash flow” defined as cash generated by the business that is available either to reinvest or to distribute to security holders. The discounted cash flow analysis was used to determine the net present value of estimated future free cash flows utilizing a weighted average cost of capital as the applicable discount rate. For the purposes of its discounted cash flow analysis, Duff  & Phelps utilized and relied upon the projections of the Company’s management, which are described in this proxy statement in the section entitled “Certain Financial Projections” beginning on page 35. The costs associated with the Company being a publicly listed company were excluded from the management’s projections because such costs would likely be eliminated as a result of the merger.

Duff  & Phelps estimated the net present value of all cash flows of the Company after fiscal year 2020 (the “terminal value”) using a perpetuity growth formula assuming 4.9x, 5.4x and 5.9x terminal EBITDA multiples, which took into consideration an estimate of the expected long-term growth rate of the Chinese economy and the Company’s business. Duff  & Phelps used discount rates ranging from 15.0% to 17.0%, reflecting Duff  & Phelps’s estimate of the Company’s weighted average cost of capital, to discount the projected free cash flows and terminal value. Duff  & Phelps estimated the Company’s weighted average cost of capital by estimating the weighted average of the Company’s cost of equity (derived using the capital asset pricing model) and the Company’s after-tax cost of debt. Duff  & Phelps believes that this range of discount rates is consistent with the rate of return that security holders could expect to realize on alternative investment opportunities with similar risk profiles.

Based on these assumptions, the discounted cash flow analysis conducted by Duff  & Phelps resulted in an estimated enterprise value for the Company of RMB 724 million to RMB 904.1 million, which Duff  & Phelps converted into U.S. Dollars using forward rates, and a range of implied values of each Share of $4.09 to $5.75.

Selected Public Companies and Merger & Acquisition Transaction Analyses

Duff  & Phelps analyzed selected public companies and selected merger & acquisition transactions for purposes of estimating valuation multiples with which to calculate a range of implied enterprise values of the Company. This collective analysis was based on publicly available information and is described in more detail in the sections that follow. None of the companies utilized for comparative purposes in the following analysis are directly comparable to the Company, and none of the transactions utilized for comparative purposes in the following analysis are directly comparable to the merger. Duff  & Phelps does not have access to non-public information of any of these companies used for comparative purposes. Accordingly, a complete valuation analysis of the Company and the merger cannot rely solely upon a quantitative review of such companies and transactions, and involves complex considerations and judgments concerning

41

differences in financial and operating characteristics of such companies and targets, as well as other factors that could affect their value relative to that of the Company. Therefore, the selected public companies / merger & acquisition transactions analysis is necessarily subject to limitations.

Selected Public Companies Analysis.   Duff  & Phelps compared certain financial information of the Company to corresponding data and ratios from five publicly traded companies in the electrical components and equipment industry that Duff  & Phelps deemed relevant to its analysis. For purposes of its analysis, Duff  & Phelps used certain publicly available historical financial data and consensus equity analyst estimates for the selected publicly traded companies. The five companies included in the selected public companies analysis in the electrical components and equipment industry were:

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ABB Ltd.

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AZZ Incorporated

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Hubbell Inc.

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Powell Industries, Inc.

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Schneider Electric SE

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Duff  & Phelps selected these companies for its analysis based on their relative similarity, primarily in terms of business model and primary products, to that of the Company.

The tables below summarize certain observed trading multiples and historical and projected financial performance, on an aggregate basis, of the selected public companies. The estimates for 2015 and 2016 in the tables below with respect to the selected public companies were derived based on information for the 12-month periods ending closest to the Company’s fiscal year ends for which information was available. Data related to the Company’s earnings before interests, taxes, depreciation and amortization (“EBITDA”) were adjusted for purposes of this analysis to eliminate public company costs and government grants.

Selected Public Company Analysis

($ in millions, except per share data)

LTM = Latest Twelve Months

CAGR = Compounded Annual Growth Rate

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Source: Bloomberg, Capital IQ, SEC filings

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Selected Public Company Analysis

($ in millions, except per share data)

LTM = Latest Twelve Months

Enterprise Value = (Market Capitalization) + (Debt + Preferred Stock + Non-Controlling Interest) - (Cash & Equivalents)

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Source: Bloomberg, Capital IQ, SEC filings

Selected Merger & Acquisition Transaction Analysis.   Duff  & Phelps selected 18 precedent transactions within the electrical components and equipment industry that it determined to be relevant to its analysis (listed below). Duff  & Phelps computed the revenue and EBITDA of the last 12 months, referred to herein as “LTM,” for each of the target companies (where publicly disclosed). Duff  & Phelps then calculated the implied enterprise value to revenue and enterprise value to EBITDA multiples for each transaction. The selected electrical components and equipment industry transactions indicated enterprise value to LTM EBITDA multiples ranging from 5.9x to 21.9x with a median of 11.9x and a mean of 11.8x, and enterprise value to LTM revenue multiples ranging from 0.54x to 3.06x with a median of 1.64x and a mean of 1.75x.

The Company is not directly comparable to the target companies in the selected merger & acquisition transactions analysis given certain characteristics of the transactions and the target companies, including direct industry comparability and lack of recent relevant transactions. Therefore, although reviewed, Duff  & Phelps did not select valuation multiples for the Company based on the selected merger & acquisition transactions analysis.

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Summary of Selected Public Companies / Merger & Acquisition Transactions Analyses

In order to estimate a range of enterprise values for the Company, Duff  & Phelps applied valuation multiples to the Company’s 2015 Adjusted EBITDA of 4.75x to 6.00x and the Company’s 2016 Adjusted EBITDA of 4.25x to 5.50x. As a result of these selected valuation multiples described above, the selected public companies / merger & acquisition transaction analyses indicated an estimated enterprise value for the Company of RMB 831.8 million to RMB 1.037 billion and a range of implied values of each Share of $5.09 to $7.21.

Summary of Analyses

The range of estimated enterprise values for the Company that Duff  & Phelps derived from its discounted cash flow analysis was RMB 724 million to RMB 904.1 million, and the range of estimated enterprise values that Duff  & Phelps derived from its selected public companies / merger & acquisition transactions analyses was RMB 831.8 million to RMB 1.067 billion. Duff  & Phelps concluded that the Company’s enterprise value was within a range of RMB 777.9 million to RMB 983.9 million based on the analyses described above. Based on the concluded enterprise value, Duff  & Phelps estimated a range of common equity value of the Company to be RMB 495.1 million to RMB 700.4 million by (i) adding excess cash and short-term investments, and (ii) subtracting after-tax product liability and debt (as of September 30, 2015). Based on the foregoing, Duff  & Phelps estimated the value of each Share to range from $4.58 to $6.49. Duff  & Phelps noted that the per Share merger consideration was within this range.

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Fees and Expenses

As compensation for Duff  & Phelps’ services in connection with the rendering of the Opinion to the Special Committee, the Company agreed to pay Duff  & Phelps a nonrefundable retainer of  $150,000 and $212,500 payable upon Duff  & Phelps informing the Special Committee that it is prepared to render the Opinion.

No portion of these fees are refundable or contingent upon the consummation of the merger or the conclusion reached in the Opinion. The Company has also agreed to indemnify Duff  & Phelps for certain liabilities arising out of its engagement. In addition, the Company has agreed to reimburse Duff  & Phelps for its reasonable out-of-pocket expenses (including fees of legal counsel) incurred in connection with the rendering of its opinion not to exceed $50,000 without the Company’s prior written consent.

The Special Committee also retained Duff  & Phelps’ affiliate, Duff  & Phelps Securities, LLC (“DPS”), to act as financial advisor to the Special Committee to provide such financial and market related advice and assistance as deemed necessary by the Special Committee in connection with the Merger. The Company will pay DPS a fee equal to 5% of the amount by which the purchase price per Share exceeds $4.50 multiplied by the number of Shares to be acquired in the merger, up to $750,000.

The terms of the fee arrangements with Duff  & Phelps, which the Company believes are customary in transactions of this nature, were negotiated at arm’s length, and the Special Committee and the Company’s board of directors are aware of these fee arrangements. Other than the DPS engagement described above and Duff  & Phelps’ engagement to render its opinion to the Special Committee, during the two years preceding the date of the opinion, Duff  & Phelps was engaged by a special committee of the board of directors of the Company in connection with its receipt of a nonbinding proposal letter dated September 21, 2014 from members of the Buyer Group related to an acquisition of the Company, which letter was unilaterally withdrawn on December 29, 2014 (the “2014 Engagement”). As compensation for the 2014 Engagement, Duff  & Phelps was paid a retainer of  $150,000. Duff  & Phelps was not otherwise retained by the Special Committee or the Company in the prior two years.

Buyer Group’s Purpose of and Reasons for the Merger

Under the rules governing “going private” transactions, each Buyer Group member is deemed to be engaged in a “going private” transaction and, therefore, required to express their reasons for the merger to the Company’s unaffiliated shareholders, as defined in Rule 13e-3 of the Exchange Act. Each Buyer Group member is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under Exchange Act.

For the Buyer Group, the primary purpose of the merger is to benefit from any future earnings and growth of the Company after the merger of Merger Sub with and into the Company, making the Company privately held and wholly owned by Parent. Each Buyer Group member believes that structuring the transaction in such manner is preferable to other transaction structures because it will enable Parent to acquire 100% control of the Company, it represents an opportunity for the Company’s unaffiliated shareholders to receive US$6.00 per Share in cash, without interest and net of any applicable withholding taxes, for their Shares, and it also allows the Rollover Shareholders to maintain a significant portion of their investment in the Company through their respective ownership in Parent.

The Buyer Group also believe that the merger will provide the Company with flexibility to pursue certain strategic alternatives that it would not be practicable to pursue as a public company, including the ability to pursue business initiatives without focusing on the short-term market reaction of the Company’s public shareholders with respect to such initiatives or the collective risk tolerance of such public shareholders as it relates to such initiatives. Further, as a privately held entity, the Company will be relieved of many of the other expenses, burdens and constraints imposed on companies that are subject to the public reporting requirements under the federal securities laws of the United States, including the Exchange Act and Sarbanes-Oxley Act of 2002. The need for the management of the Company to be responsive to unaffiliated shareholders’ concerns and to engage in an ongoing dialogue with unaffiliated shareholders can at times distract management’s time and attention from the effective operation and improvement of the business. The Buyer Group decided to undertake the going private transaction at this time because it wants to take advantage of the benefits of the Company’s being a privately held company as described above. In the course of considering the going private transaction, the Buyer Group did not consider alternative transaction structures.

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Effect of the Merger on the Company

Private Ownership

The Company’s Shares are currently listed on NASDAQ under the symbol “JST”, It is expected that, following the consummation of the merger, the Company will cease to be a publicly-traded company and will instead become a private company beneficially owned by the Buyer Group. Following the consummation of the merger, the Shares will no longer be listed on any securities exchange or quotation system, including NASDAQ, and price quotations with respect to sales of the Shares in the public market will no longer be available. In addition, registration of Shares under the Exchange Act may be terminated upon the Company’s application to the SEC if Shares are not listed on a national securities exchange and there are fewer than 300 record holders of Shares. Ninety days after the filing of Form 15 in connection with the consummation of the Merger or such shorter period as may be determined by the SEC, registration of Shares under the Exchange Act will be terminated and the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the U.S. federal securities laws, including the Sarbanes-Oxley Act of 2002, applicable to public companies. The costs of complying with the United States federal securities laws, including the Sarbanes-Oxley Act of 2002, totaled approximately US$1.0 million and US$1.0 million for the years ended December 31, 2013 and December 31, 2014, respectively. After the consummation of the merger, the Company’s shareholders will not enjoy the rights or protections that the U.S. federal securities laws provide, including reporting obligations for directors, officers and principal securities holders of the Company.

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each outstanding Share will be cancelled in exchange for the right to receive US$6.00 per Share, in each case, in cash, without interest and net of any applicable withholding taxes, except for the Excluded Shares. Each Excluded Share, other than Dissenters Shares, issued and outstanding immediately prior to the effective time, will be cancelled and will cease to exist, and no merger consideration will be delivered with respect thereto. Each Dissenting Shareholder will be entitled to receive only the payment resulting from the procedure in Section 179 of the BVI Companies Act with respect to Shares owned by such Dissenting Shareholder. As a result, current shareholders of the Company, other than the holders of Rollover Shares and the Dissenting Shareholders, will no longer have any equity interest in or be shareholders of the Company upon completion of the merger. As a result, our shareholders, other than the Rollover Shareholders will not participate in the earnings and growth of the Company, participate in the earnings and growth of the Company or have the right to vote on corporate matters. On the other hand, they will not be exposed to the risk of loss in relation to their investment in the Company.

Immediately after the effective time of the merger, each outstanding option of the Company to purchase Shares under the Company’s Stock Plans, whether vested or unvested, shall be cancelled and converted into the right of the holder of such option to receive cash in the amount equal to: (i) the total number of Shares subject to such option immediately prior to the effective time (without regard to vesting); multiplied by (ii) the excess, if any, of  (x) US$6.00 in cash per Share without interest over (y) the exercise price per Share under such option, which amount shall be paid, net of any applicable withholding taxes, as soon as reasonably practicable after the effective time. No holder of an option that has an exercise price per Share that is equal to or greater than the merger consideration of US$6.00 per share shall be entitled to any payment with respect to such cancelled option before or after the effective time.

Directors and Management of the Surviving Company

As of the effective time of the merger, without any further action on the part of the parties, the memorandum and articles of association of Merger Sub then in effect will be the memorandum and articles of association of the surviving company, except that, at the effective time of the merger, references therein to the name of the Merger Sub will be amended to describe correctly the name of the surviving company, as provided in the plan of merger, until thereafter changed or amended as provided therein or by applicable law.

In addition, unless otherwise determined by Parent prior to the effective time, the directors of Merger Sub at the effective time (identified below in Annex D — “Directors and Executive Officers of Each Filing Person”) will become the directors of the surviving company and the officers (other than those officers who

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also were directors) of the Company immediately prior to the effective time will become the officers of the surviving company, until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the memorandum and articles of association.

Primary Benefits and Detriments of the Merger

The primary benefits of the merger to the Company’s unaffiliated shareholders include, without limitation, the following:

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the receipt by such security holders of  $6.00 per Share in cash, representing a premium of 65.7% over the Company’s 30 trading day volume-weighted average closing price as quoted by NASDAQ on September 14, 2015, the last trading day prior to the Company’s announcement on September 15, 2015 that it had received a “going private” proposal; and

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the avoidance of the risk associated with any possible decrease in our future revenues and free cash flow, growth or value, and the risks related to our substantial leverage, following the merger.

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The primary detriments of the merger to the Company’s unaffiliated shareholders include, without limitation, the following:

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such shareholders will cease to have an interest in the Company and, therefore, will no longer benefit from possible increases in the future revenues and free cash flow, growth or value of the Company or payment of dividends on the Shares, if any; and

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in general, the receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under other applicable tax laws. As a result, a U.S. Holder (as defined under “Special Factors — Material U.S. Federal Income Tax Consequences”) of the Shares who receives cash in exchange for all of such U.S. Holder’s Shares in the merger generally will be required to recognize gain as a result of the merger for U.S. federal income tax purposes if the amount of cash received exceeds such U.S. Holder’s aggregate adjusted tax basis in such Shares. Because we could be or have been a PFIC for U.S. federal income tax purposes during a U.S. Holder’s holding period for Shares, any gain recognized by a U.S. Holder on the receipt of cash in exchange for such Shares may be taxed under special U.S. federal income tax rules, as described under “Material U.S. Federal Income Tax Consequences.”

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The primary benefits of the merger to the Company’s directors and executive officers (other than members of the Buyer Group) include, without limitation, the following:

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continued indemnification rights, rights to advancement of fees and directors and officers liability insurance to be provided by the surviving company to former directors and officers of the Company;

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the monthly compensation of  $13,000 (subject to a cap of  $65,000 in the aggregate) of Dr. Li-Wen Zhang, and $10,000 (subject to a cap of  $50,000 in the aggregate) of each of Dr. Xu Cai and Ms. Jing Zhang, each of which is a member of the Special Committee, in exchange for their services in such capacity (the payment of which is not contingent upon the completion of the merger or the Special Committee’s or the board’s recommendation of the merger); and

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the continuation of service of the executive officers of the Company with the surviving company in positions that are substantially similar to their current positions.

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The primary detriments of the merger to the Company’s directors and executive officers (other than members of the Buyer Group) include, without limitation, the following:

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such directors and officers, to the extent and in their capacity as shareholders of the Company, will no longer benefit from possible increases in the future revenues and free cash flow, growth or value of the Company or payment of dividends on the Shares, if any; and

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in general, the receipt of cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under other applicable tax laws.

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The primary benefits of the merger to the Buyer Group include the following:

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if the Company successfully executes its business strategies, the value of their equity investment could increase because of possible increases in future revenues and free cash flow, increases in the underlying value of the Company or increases in the payment of dividends, if any, that will accrue to Parent;

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the Company will no longer have continued pressure to meet quarterly forecasts set by analysts. In contrast, as a publicly traded company, the Company currently faces public shareholders and investment analyst pressure to make decisions that may produce better short term results, but which may not over the long term lead to a maximization of its equity value;

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the Company will have more freedom to focus on long-term strategic planning in a highly competitive business;

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the Company will have more flexibility to change its capital spending strategies without public market scrutiny or analysts’ quarterly expectations;

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the Company will be able to deploy new services or change its pricing strategies to attract customers without public market scrutiny or the pressure to meet quarterly forecasts set by analysts; and

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there will be a reduction of the costs and administrative burden associated with operating the Company as a U.S. publicly traded company, including the costs associated with regulatory filings and compliance requirements.

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The primary detriments of the merger to the Buyer Group include the following:

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all of the risk of any possible decrease in our revenues, free cash flow or value following the merger will be borne by the Buyer Group;

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risks associated with pending legal and regulatory proceedings against the Company will be borne by the Buyer Group;

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the business risks facing the Company, will be borne by the Buyer Group; and

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an equity investment in the surviving company by Parent following the merger will involve substantial risk resulting from the limited liquidity of such an investment.

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Effect of the Merger on the Company’s Net Book Value and Net Earnings

The table below sets out the direct or indirect interest in the Company’s net book value and net earnings for Mr. Li, Ms. Jing and Forebright SPV before and immediately after the merger, based on the historical net book value as of December 31, 2014 and the net earnings of the Company for the fiscal year 2014.

Plans for the Company after the Merger

After the effective time of the merger, the Buyer Group anticipates that the Company’s operations will be conducted substantially as they are currently being conducted, except that the Company will cease to be an independent public company and will instead be a wholly owned subsidiary of Parent, and through Parent, beneficially owned by the Buyer Group.

Other than as described in this proxy statement and transactions already under consideration by the Company, there are no present plans or proposals that relate to or would result in an extraordinary corporate transaction involving the Company’s corporate structure, business, or management, such as a merger, reorganization, liquidation, relocation of any material operations, or sale or transfer of a material

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amount of assets. However, the Buyer Group will continue to evaluate the Company’s entire business and operations from time to time, and may propose or develop plans and proposals which they consider to be in the best interests of the Company and its equity holders, including the disposition or acquisition of material assets, alliances, joint ventures, and other forms of cooperation with third parties or other extraordinary transactions, including the possibility of relisting the Company or a substantial part of its business on another internationally recognized stock exchange.

Subsequent to the completion of the merger and the termination of registration of the Company’s Shares under the Exchange Act, the Company will no longer be subject to the Exchange Act and NASDAQ compliance and reporting requirements and the related direct and indirect costs and expenses, and may experience positive effects on profitability as a result of the elimination of such costs and expenses.

Alternatives to the Merger

The board of directors of the Company did not independently determine to initiate a process for the sale of the Company. The Special Committee was formed on September 29, 2015, in response to the receipt of the going private proposal letter from the Buyer Group on September 15, 2015. The Special Committee discussed with its independent advisors other potential alternatives available to the Company, and reviewed and discussed the proposed process to conduct a pre-signing market check through a third-party solicitation process.

In light of  (i) the express intention of certain members of the Buyer Group not to sell the Shares they own to any third party and the beneficial ownership of the Buyer Group of approximately 23.45% of the entire issued and outstanding Shares (as of the date of this proxy statement) and (ii) the fact that, since the announcement of the proposed transaction and prior to the entry into the merger agreement, no party other than the members of the Buyer Group has contacted the Company or the Special Committee expressing an interest in exploring an alternative transaction with the Company, the Special Committee determined that there was no viable alternative to the proposed sale of the Company to the Buyer Group.

The Special Committee also took into account that the Company can terminate the merger agreement in order to enter into an alternative acquisition agreement with respect to a superior proposal, prior to obtaining required shareholder approval of the merger agreement, subject to the payment to Parent of a termination fee of  $3,940,429. In this regard, the Special Committee recognized that it has flexibility under the merger agreement to respond to an alternative transaction proposed by a third party that is or is reasonably likely to result in a superior proposal, including the ability to provide information to and engage in discussions and negotiations with such party (and, if such proposal is a superior proposal, recommend such proposal to the Company’s shareholders).

In addition, the Special Committee also considered, as an alternative available to the Company to enhance shareholder value, that the Company remain as a public company. However, the Special Committee did not believe such options to be equally or more favorable in enhancing shareholder value, after considering factors such as the forecasts of future financial performance prepared by management unaffiliated with the Buyer Group, the offer premium implied by the merger consideration, the increased costs of regulatory compliance for public companies, the challenges to the Company’s efforts to increase shareholder value as an independent publicly-traded company, and the requirement, as an SEC-reporting company, to disclose a considerable amount of business information to the public which will limit the Company’s ability to compete in the market.

Except as set forth above, no other alternatives were considered by the Special Committee.

Effects on the Company if the Merger is not Completed

If the merger agreement and the plan of merger are not authorized and approved by the Company’s shareholders or if the merger is not completed for any other reason, shareholders will not receive any payment for their Shares in connection with the merger. Instead, the Company will remain a publicly traded company, the Shares will continue to be listed and traded on NASDAQ, provided that the Company continues to meet NASDAQ’s listing requirements, and the Company will remain subject to SEC reporting obligations. Therefore, the Company’s shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of our Shares. Accordingly, if the merger

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is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your Shares, including the risk that the market price of the Shares may decline to the extent that the current market price reflects a market presumption that the merger will be completed.

Under specified circumstances in which the merger agreement is terminated, the Company may be required to pay Parent a termination fee of  $3,940,429, as the case may be, or Parent may be required to pay the Company a termination fee of  $3,940,429, in each case, as described under the caption “The Merger Agreement and Plan of Merger — Termination Fee” beginning on page 78.

If the merger is not completed, from time to time, the Company’s board of directors will evaluate and review, among other things, the business, operations, dividend policy and capitalization of the Company and make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the merger agreement is not authorized and approved by the Company’s shareholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Company will be offered, or that the business, prospects or results of operations of the Company will not be adversely impacted.

Financing

The Buyer Group estimates that the total amount of funds necessary to complete the transactions contemplated under the merger agreement, including the merger, will be approximately US$75.5 million, assuming no exercise of dissenters’ rights by holders of Shares of the Company. This amount includes the cash to be paid to the unaffiliated shareholders in connection with the merger. It does not include the value of the Rollover Shares, which will be cancelled without receiving any merger consideration. For additional information regarding such cancellation, please see “The Merger Agreement — Merger Consideration” beginning on page 66. For a discussion of the Rollover Shares and the transactions contemplated by the Rollover Agreement, please see “Special Factors — Rollover Agreement” beginning on page 51. As of the date of this proxy statement, there are no alternative financing arrangements or plans in place to obtain the funds necessary for the consummation of the merger.

This amount is expected to be provided through a combination of funds (a) of US$27.7 million to be provided by Forebright SPV to the Parent pursuant to the Forebright SPV Equity Commitment Letter with such funding obligations to be guaranteed by Forebright Fund; and (b) of US$47.8 million to be provided by Mr. Li to the Parent pursuant to the Mr. Li Equity Commitment Letter. Forebright SPV and Mr. Li are collectively referred to herein as the “Sponsors”.

The funds to be provided by the Sponsors under the equity commitment letters are to be used solely for the purpose of funding the merger. In the event that Parent does not require the full amount of the equity commitment to consummate the merger, the amount to be funded under the equity commitment letters is subject to reduction to a level sufficient to consummate the transactions contemplated by the merger agreement. The equity commitment of the Sponsors is conditioned upon (i) the satisfaction or waiver at the closing of the merger of each of the conditions to Parent’s and Merger Sub’s obligations to effect the merger pursuant to the merger agreement and (ii) the execution and delivery of the merger agreement. The equity commitment will terminate upon the earlier to occur of  (i) the effective time of the merger; provided that the Sponsors shall at or prior to the effective time of the merger have performed their respective funding obligations under the equity commitment letters, and (ii) the termination of the merger agreement in accordance with its terms. The Company is an express third-party beneficiary of the equity commitment letters and is entitled to seek specific performance of the equity commitment contemplated thereby.

In connection with his US$47.8 million funding equity commitment under the Mr. Li Equity Commitment Letter, Mr. Li has entered into the Debt Commitment Letter with Forebright SPV and Forebright Fund, pursuant to which Forebright SPV has agreed to provide Mr. Li with debt financing in an amount of US$25 million, with such financing obligation to be guaranteed by Forebright Fund. All proceeds of such loan shall be used by Mr. Li to perform his funding obligations under the Mr. Li Equity Commitment Letter. The obligations of Forebright SPV to provide such senior secured term loan facility are conditioned upon (i) the satisfaction or waiver of each of the conditions to Forebright’s funding obligations pursuant to the Forebright Equity Commitment Letter, and (ii) the execution and delivery of (A) a facility agreement between Mr. Li and Forebright SPV in respect of such loan with an interest rate of

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8% per annum and an interest period of one year and (B) a share charge over Mr. Li’s legal and beneficial equity interest in Parent and its subsidiaries constituting 27.4% of such interest in favor of Forebright SPV. Mr. Li will repay, or cause to be repaid, to Forebright SPV or any assignee of Forebright SPV, the full amount of the loan on the date that falls on the first anniversary of the closing of the merger. Mr. Li and Forebright SPV are obligated to negotiate in good faith, and to allocate sufficient resources and personnel to ensure that the facility agreement and the share charge be entered into prior to the earlier of  (a) the effective time of the merger and (b) the date falling three months following January 24, 2016. The debt commitment letter will terminate upon the earliest to occur of  (i) the termination of the merger agreement in accordance with its terms, and (ii) the closing of the merger. The Company is an express third-party beneficiary of the Debt Commitment Letter and is entitled to seek specific performance of the debt commitment contemplated thereby.

Rollover Agreement

Currently with the execution of the merger agreement, Parent entered into the Rollover Agreement with Rollover Shareholders. Pursuant to the Rollover Agreement, at the effective time of the merger and without further action by the Rollover Shareholders, all Rollover Shares will be cancelled without receiving any merger consideration, and as consideration for such cancellation of Rollover Shares, Parent will issue Parent shares in the name of each Rollover Shareholder or a designee of the Rollover Shareholder in the number equal to the number of the Rollover Shares. Each Rollover Shareholder hereby acknowledges and agrees that (a) delivery of such Parent shares will constitute complete satisfaction of all obligations towards or sums due such Rollover Shareholder by Parent with respect to the cancellation of the applicable Rollover Shares; and (b) upon receipt of such Parent shares, such Rollover Shareholder will have no right to any merger consideration with respect to the Rollover Shares so cancelled.

The Company is an express third-party beneficiary of the Rollover Agreement and is entitled to seek specific performance of the Rollover Agreement.

The Rollover Agreement will terminate on the earlier of  (a) the termination of the merger agreement in accordance with its terms, and (b) the closing of the merger.

Voting Agreement

Currently with the execution of the merger agreement, Parent entered into the Voting Agreement with Rollover Shareholders. Pursuant to the Voting Agreement, the Rollover Shareholders agreed with Parent that (i) when a meeting of the shareholders of the Company is held, to appear at such meeting or otherwise cause its Shares to be counted as present for purposes of calculating a quorum, and (ii) to vote or otherwise cause to be voted at such meeting all the Rollover Shares (A) in favor of the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated thereunder, including the merger, (B) against the approval of any alternative transaction or the approval of any other action contemplated by an alternative transaction, (C) against any other action, agreement or transaction that that is intended, that could reasonably be expected, or the effect of which could reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect the merger or any of the other transactions contemplated by the merger agreement or the performance by such Rollover Shareholder of its obligations under the Voting Agreement, (D) against any action, proposal, transaction or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the merger agreement, or of such Rollover Shareholder contained in the Voting Agreement, (E) in favor of any adjournment of any shareholders’ meeting of the Company or other annual or special meeting of the shareholders of the Company, however called, at which any of the matters described herein is to be considered (and any adjournment or postponement thereof) and (F) in favor of any other matter necessary to the consummation of the transactions contemplated under the merger agreement, including the merger.

The Company is an express third-party beneficiary of the Voting Agreement and is entitled to seek specific performance of the Voting Agreement.

The Voting Agreement will terminate on the earlier of  (a) the termination of the merger agreement in accordance with its terms, and (b) the effective time of the merger.

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Limited Guarantee

Currently with the execution of the merger agreement, Mr. Li and Forebright Fund have entered into the Limited Guarantee in favor of the Company. Each of Mr. Li and Forebright Fund absolutely, unconditionally and irrevocably guarantees to the Company, severally but not jointly, as a primary obligor and not merely as a surety, the due and punctual payment, performance and discharge as and when due of their pro rata portion of the payment obligations of Parent with respect to the payment of  (i) payment obligations of Parent to the Company under the merger agreement in respect of the termination fee and the payment of the entire expense reimbursement in connection with the enforcement of such termination fee; and (ii) any damages that may be awarded to the Company as a result of a breach of the merger agreement by Parent or Merger Sub (collectively with (i) and (ii) , as “Guarantee Obligations”), provided that in no event will any guarantor’s aggregate liability under this Limited Guarantee exceed such guarantor’s guaranteed percentage of the Guaranteed Obligations. which is 72% for Mr. Li and 28% for Forebright Fund.

The Limited Guarantee shall terminate and each guarantor shall have no further obligations under the Limited Guarantee as of the earliest of: (i) the effective time of the merger, (ii) the payment in full of the Guaranteed Obligations; and (iii) the date falling six (6) months from the date of the termination of the merger agreement in accordance with its terms if the Company has not presented a written claim for payment of any Guaranteed Obligation to each guarantor by such date; provided that if the Company has presented such a written claim by such date, this Limited Guarantee shall terminate upon the date that such claim is finally resolved and payment in full of any amounts required to be paid in respect of such final resolution.

Interim Investors Agreement

Currently with the execution of the merger agreement, Mr. Li, Forebright SPV and Parent entered into the Interim Investors Agreement. Pursuant to the Interim Investors Agreement, absent the written consent of each of Forebright SPV and Mr. Li: (i) none of Forebright SPV and Mr. Li shall present to the Company or any subsidiary of the Company any request that such entity take or omit to take any action, which action or omission (the “Prohibited Action or Omission”) will or will reasonably be expected to (x) cause the Company to be in breach of any representation, warranty, covenant or agreement under the merger agreement, (y) constitute, either alone or in combination with any other circumstance, a Material Adverse Effect; and (ii) none of Forebright SPV and Mr. Li shall consent to any Prohibited Action or Omission in writing; provided, that nothing in the Interim Investors Agreement shall prevent Mr. Li from discharging his fiduciary duties as a director and officer of the Company. The Interim Investors Agreement also provides that all actions of Parent and Merger Sub relating to the merger agreement shall require the approval of each of Forebright SPV and Mr. Li.

Remedies and Limitations on Liability

The parties to the merger agreement will be entitled to an injunction or injunctions, or any other appropriate form of specific performance or equitable relief, to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement in any court of competent jurisdiction, pursuant to the merger agreement, this being in addition to any other remedy to which they are entitled under the terms of the merger agreement at law or in equity. Each party to the merger agreement accordingly agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such party under the merger agreement.

Until such time as the Company pays the termination fee or Parent pays the termination fee, as the case may be, the remedies available to each party shall be in addition to any other remedy to which they are entitled at law or in equity, and the election to pursue an injunction or specific performance shall not restrict, impair or otherwise limit Parent or Merger Sub from, in the alternative, seeking to terminate the merger agreement and collect the termination fee in accordance with the merger agreement or the Company from, in the alternative, seeking to terminate the merger agreement and collect the termination fee in accordance with the merger agreement. The maximum amount of the monetary damages the Company on one hand, and the Parent, on the other hand, will be entitled to under the merger agreement shall be the aggregate amount of the termination fee payable by the other side plus the expense reimbursement.

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Interests of Certain Persons in the Merger

In considering the recommendation of the Special Committee and our board of directors with respect to the merger, you should be aware that the Rollover Shareholders have interests in the transaction that are different from, and/or in addition to, the interests of our shareholders generally. The Company’s board of directors and Special Committee were aware of such interests and considered them, among other matters, in reaching their decisions to authorize and approve the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, and recommend that our shareholders vote in favor of authorizing and approving the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger.

Interests of Buyer Group

As a result of the merger, Mr. Li, Ms. Jing and Forebright SPV will hold 64.69%, 7.31% and 28.00%, respectively, of the equity interest of Parent, which will own 100% of the Company immediately following the completion of the merger. Because of the equity ownership of Mr. Li, Ms. Jing and Forebright SPV in Parent, the Buyer Group will enjoy the benefits from any future earnings and growth of the Company after the merger which, if the Company is successfully managed, could exceed the value of their original investments in the Company, including the amount paid by Parent as merger consideration to the unaffiliated shareholders. The Buyer Group will also bear the corresponding risks of any possible decreases in the future earnings, growth or value of the Company and they will have no certainty of any future opportunity to sell their shares in Parent at an attractive price, or that any dividends paid by Parent will be sufficient to recover their investment.

The merger may provide additional means to enhance shareholder value for the Buyer Group, including improved profitability due to the elimination of the expenses associated with public company reporting and compliance, increased flexibility and responsiveness in management of the business to achieve growth and respond to competition without the restrictions of short-term earnings comparisons, and additional means for making liquidity available to them, such as through dividends or other distributions.

Shares and Options Held by Officers and Directors

As of March 17, 2016, our directors and executive officers (as set forth in “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 90), as a group and excluding members of the Buyer Group, beneficially own an aggregate of outstanding and unexercised options to purchase 253,617 Shares. As of March 17, 2016, none of the options held by our directors and executive officers other than the Buyer Group have vested and no exercise price for such options has been paid.

Immediately after the effective time of the merger, each outstanding option of the Company to purchase Shares under the Company’s Stock Plan, whether vested or unvested, shall be cancelled and converted into the right of the holder of such option to receive cash in the amount equal to: (i) the total number of Shares subject to such option immediately prior to the effective time (without regard to vesting); multiplied by (ii) the excess, if any, of  (x) US$6.00 in cash per Share without interest over (y) the exercise price per Share under such option, which amount shall be paid, net of any applicable withholding taxes, as soon as reasonably practicable after the effective time. No holder of an option that has an exercise price per Share that is equal to or greater than the merger consideration of US$6.00 per share shall be entitled to any payment with respect to such cancelled option before or after the effective time.

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The following table shows, as of the date of this proxy statement, for each director and executive officer of the Company, (a) the number of Shares owned, (b) the cash payment that will be made in respect of the Shares at the effective time of the merger, (c) the number of options to purchase Shares granted under the Stock Plans, whether vested or unvested, and (d) the cash payment that will be made in respect of the options to purchase Shares granted under the Stock Plans at the effective time of the merger, in all cases before applicable withholding taxes.