EX-99.(A)(1) 2 v372293_ex99a1.htm EXHIBIT 99.(A)(1)

Exhibit (a)-(1)

EXCEED COMPANY LTD.

March 21, 2014

Shareholders of Exceed Company Ltd.

Re: Notice of Extraordinary General Meeting of Shareholders

Dear Shareholder:

You are cordially invited to attend an extraordinary general meeting of shareholders of Exceed Company Ltd. (the “Company”) to be held on April 16, 2014 at 10:00 a.m. (Hong Kong time). The meeting will be held at United Conference Centre, 10/F, United Centre, 95 Queensway, Hong Kong. The attached notice of the extraordinary general meeting and proxy statement provide information regarding the matters to be acted on at the extraordinary general meeting, including at any adjournment or postponement thereof.

At the extraordinary 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 December 2, 2013 (the “merger agreement”), by and among the Company, Pan Long Company Limited (“Parent”), and Pan Long Investment Holdings 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 merge with and into the Company, with the Company continuing as the surviving corporation after the merger.

Immediately following the consummation of the transactions contemplated under the merger agreement, Parent will be beneficially owned by Mr. Lin Shuipan, the Company's Chairman and Chief Executive Officer (“Mr. Lin”) (and/or entities affiliated with or related to him), (the “Buyer”), together with seven other existing shareholders of the Company (and/or entities affiliated with or related to them) who have elected to transfer, prior to the closing, their ordinary shares of the Company to Parent in exchange for newly issued shares of Parent (together, the “Rollover Shareholders”). As of the date of the accompanying proxy statement, the Rollover Shareholders collectively beneficially own approximately 66.8% of the Company's outstanding ordinary shares (the “Shares”). If the merger is consummated, the Company will continue its operations as a privately held company and its Shares will no longer be listed on the NASDAQ Global Market.

At the effective time of the merger, each of the Shares issued and outstanding immediately prior to the effective time of the merger will be cancelled in exchange for the right to receive $1.78 in cash and without interest, except for the excluded Shares (the “Excluded Shares”), which include: (i) Shares legally owned by Parent; and (ii) dissenting Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their dissenter’s rights pursuant to Section 179 of the BVI Business Companies Act, 2004, as amended (the “BVI Companies Act”) (the “Dissenting Shareholders”). Each Excluded Share issued and outstanding immediately prior to the effective time of the merger will be cancelled and will cease to exist, and no consideration will be delivered with respect thereto. Each Dissenting Share will be cancelled at the effective time of the merger for the right to receive the fair value of such Shares as determined in accordance with the provisions of the BVI Companies Act.

Parent has received from Mr. Lin an equity commitment letter, pursuant to which Mr. Lin has committed to subscribe for ordinary shares in Parent in the amount of $19,545,858, subject to adjustment in certain cases. Mr. Lin has also entered into a limited guaranty in favor of the Company.

An independent committee of the board of directors of the Company (the “independent committee”), composed solely of independent and disinterested directors of the Company who are unaffiliated with any of Parent, Merger Sub, the Buyer, the Rollover Shareholders or any of the members of the Company’s management, 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 December 2, 2013, the independent committee unanimously (i) 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 and is fair to, and in the best interests of, those shareholders who are unaffiliated with the Buyer, the Rollover Shareholders or the Company; (ii) declared that it is advisable to enter into the merger agreement and the plan of merger; (iii) 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 (iv) 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 an extraordinary 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 December 2, 2013, the board of directors of the Company, after carefully considering all relevant factors, including the unanimous determination and recommendation of the independent committee, (i) 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 and is fair to, and in the best interests of, those shareholders who are unaffiliated with the Buyer, the Rollover Shareholders or the Company ; (ii) 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 (iii) 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 an extraordinary 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 extraordinary 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 extraordinary general meeting.

In considering the recommendation of the independent 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. In addition, 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 extraordinary 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 at least 70% of the outstanding Shares of the Company, present and voting in person or by proxy as a single class at an extraordinary general meeting of the Company's shareholders. The failure of any shareholder to vote in person or by proxy at the extraordinary general meeting will have the same effect as a vote AGAINST the proposal to approve 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, as a group, beneficially own 22,143,530 Shares, which represent approximately 66.8% of the total number of outstanding Shares eligible to vote. Accordingly, based on 33,141,016 Shares expected to be outstanding for voting purposes at the close of business in the British Virgin Islands on March 21, 2014, the Share record date, assuming the Rollover Shareholders will attend the extraordinary 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 extraordinary general meeting, approximately 1,055,181 Shares owned by the unaffiliated shareholders must be voted in favor of the proposal to be approved. Even if you plan to attend the extraordinary 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 submit your proxy card is April 15, 2014 at 10:00 a.m. (Hong Kong time). Voting at the extraordinary 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.

Shareholders who dissent from the merger will be entitled to exercise dissenters’ rights and seek 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 extraordinary general meeting, a written objection to the merger and subsequently comply with all procedures and requirements of Section 179 of the BVI Companies Act, as amended regarding the exercise of dissenters’ 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 dissenters’ 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 extraordinary 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 AST Phoenix Advisors, the firm assisting us with this proxy solicitation, at (877) 283-0323 in the U.S. or at (201) 806-2222 internationally.

Thank you for your ongoing support and consideration of this matter.

Sincerely,		Sincerely,

/s/ Jin Jichun		/s/ Shuipan Lin

Mr. Jin Jichun		Mr. Shuipan Lin

On behalf of the Independent Committee		Chairman of the Board

The accompanying proxy statement is dated March 21, 2014, and is first being mailed to shareholders on or about March 24, 2014.

EXCEED COMPANY LTD.

NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 16, 2014

Dear Shareholder:

Notice is hereby given that an extraordinary general meeting of the shareholders of Exceed Company Ltd., referred to herein alternately as the “Company,” “us,” “our” or “we,” will be held on April 16, 2014, beginning at 10:00 a.m. (Hong Kong time), at United Conference Centre, 10/F, United Centre, 95 Queensway, Hong Kong.

Only registered holders of ordinary shares, with par value of US$0.0001 per share, of the Company (the “Shares”), at the close of business in the British Virgin Islands on March 21, 2014, the Share record date, or their proxy holders are entitled to directly vote at this extraordinary 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 December 2, 2013 (the “merger agreement”) by and among Pan Long Company Limited (“Parent”), an exempted company with limited liability incorporated under the laws of the Cayman Islands, Pan Long Investment Holdings Limited (“Merger Sub”), a business company with limited liability incorporated under the laws of the British Virgin Islands, all of the issued and outstanding shares of which are owned by Parent, and the Company, a business company with limited liability incorporated under the laws of the British Virgin Islands, 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 Business Companies Act, 2004, as amended (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 merge with and into the Company (the “merger”), with the Company continuing as the surviving corporation, and any and all transactions contemplated by the merger agreement, including the merger, be authorized and approved and the directors of the Company be authorized to do all things and make such filings as necessary to give effect to the merger agreement; and

THAT the chairman of the extraordinary general meeting be instructed to adjourn or postpone the extraordinary 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 extraordinary general meeting to pass the shareholders resolutions to be proposed at the extraordinary general meeting.

A list of the shareholders of the Company will be available at its principal executive office at Level 12, China Minmetals Tower, 79 Chatham Road South, Tsim Sha Tsui, Kowloon, Hong Kong during ordinary business hours for the two business days immediately prior to the extraordinary general meeting.

After careful consideration and upon the unanimous recommendation of the independent committee of the board of directors of the Company (the “independent committee”) composed solely of independent and disinterested directors of the Company who are unaffiliated with any of Parent, Merger Sub, Mr. Lin Shuipan (the Company’s Chairman and Chief Executive Officer who beneficially owns Parent) (“Mr. Lin”), any Rollover Shareholder as defined below or any of the other members of the Company’s management, 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 extraordinary general meeting to adjourn or postpone the extraordinary 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 extraordinary general meeting to pass the resolutions to be proposed at the extraordinary general meeting.

Certain existing shareholders of the Company (and/or entities affiliated with or related to them), including Mr. Lin, Tiancheng Int’l Investment Group Limited, HK Haima Group Limited, Wisetech Holdings Limited, Windtech Holdings Limited, RichWise International Investment Group Limited, Mr. Ding Dongdong, and Eagle Rise International Limited (collectively, the “Rollover Shareholders”), have agreed to transfer their respective Shares to Parent to be cancelled and to subscribe for newly issued shares of Parent in connection with the merger pursuant to a contribution agreement with Parent and have entered into a voting agreement with Parent pursuant to which each has agreed, among other things, to vote all of his, her or its 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 66.8% of the total issued and outstanding Shares entitled to vote as of the date of this proxy statement. Mr. Lin (and/or entities affiliated with or related to him) (the “Buyer”), along with the other seven Rollover Shareholders comprise a consortium that 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 at least 70% of the Shares outstanding for voting purposes, present and voting in person or by proxy as a single class at an extraordinary general meeting of the Company's shareholders. The failure of any shareholder to vote in person or by proxy at the extraordinary general meeting will have the same effect as a vote AGAINST the proposal to approve the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger. Given the Rollover Shareholders' ownership as described above, and assuming all Rollover Shareholders will attend the extraordinary 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 for voting purposes on the Share record date, approximately 1,055,181 Shares owned by the unaffiliated shareholders (shareholders other than the Buyer, the other Rollover Shareholders and the directors and officers of the Company that are affiliated with the Buyer or the Rollover Shareholders (representing approximately 10% of the total Shares outstanding for voting purposes 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 extraordinary general meeting. Even if you plan to attend the extraordinary 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 15, 2014 at 10:00 a.m. (Hong Kong time). Voting at the extraordinary 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 extraordinary 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 extraordinary 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 extraordinary 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.

Shareholders who dissent from the merger will be entitled to exercise dissenters’ rights and request 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 extraordinary general meeting, 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 dissenters’ 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 dissenters’ rights with respect to your Shares.

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

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:

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.

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.

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

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.

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 offices before the commencement of the meeting or adjourned meeting at which the proxy is used.

		BY ORDER OF THE BOARD OF DIRECTORS,

		/s/ Shuipan Lin
		Mr. Shuipan Lin,
		Chairman of the Board

		Dated March 21, 2014

Registered Office:

Kingston Chambers

P.O. Box 173, Road Town

Tortola, British Virgin Islands

Head Office Address:

Level 12, China Minmetals Tower,
79 Chatham Road South, Tsim Sha Tsui,

Kowloon , Hong Kong.

TABLE OF CONTENTS

	Page

SUMMARY TERM SHEET	1

QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING AND THE MERGER	17

SPECIAL FACTORS	23

MARKET PRICE OF THE SHARES, DIVIDENDS AND OTHER MATTERS	61

THE EXTRAORDINARY GENERAL MEETING	62

THE MERGER AGREEMENT AND PLAN OF MERGER	65

PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS	82

DISSENTERS’ RIGHTS	82

FINANCIAL INFORMATION	84

TRANSACTIONS IN THE SHARES	90

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY	92

FUTURE SHAREHOLDER PROPOSALS	93

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	94

WHERE YOU CAN FIND MORE INFORMATION	96

ANNEX A: AGREEMENT AND PLAN OF MERGER	A-1

ANNEX B: OPINION OF HOULIHAN LOKEY (CHINA) LIMITED AS FINANCIAL ADVISOR	B-1

ANNEX C: BVI BUSINESS COMPANIES ACT, 2004—SECTION 179	C-1

ANNEX D: DIRECTORS AND EXECUTIVE OFFICERS OF EACH FILING PERSON	D-1

ANNEX E: CONTRIBUTION AGREEMENT	E-1

ANNEX F: VOTING AGREEMENT	F-1

ANNEX G: LIMITED GUARANTY	G-1

PROXY CARD

SUMMARY TERM SHEET

This “Summary Term Sheet,” together with the “Questions and Answers about the Extraordinary 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 extraordinary 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 96 . In this proxy statement, the terms “we,” “us,” “our,” “Exceed”, the “Company” refer to Exceed Company Ltd. and its subsidiaries. All references to “dollars” and “$” in this proxy statement are to U.S. dollars.

The Parties Involved in the Merger

The Company

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, 2012, as amended, originally filed on March 27, 2013 (as amended on September 12, 2013), which is incorporated herein by reference. Please see “Where You Can Find More Information” beginning on page 96 for a description of how to obtain a copy of our annual report.

Parent

Pan Long Company Limited (“Parent”), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly owned by Mr. Lin Shuipan, the Company's Chairman and Chief Executive Officer, 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 registered office of Parent is located at 4 ^th Floor, Harbour Centre, PO Box 613, George Town, Grand Cayman, Cayman Islands, British West Indies. The telephone number of Parent is +(86) 595 3630 6888.

Merger Sub

Pan Long Investment Holdings Limited (“Merger Sub”), a business company with limited liability 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 registered office of Merger Sub is located at 263 Main Street, Road Town, Tortola, British Virgin Islands. The telephone number of Merger Sub is +(86) 595 3630 6888.

The Buyer

Mr. Lin Shuipan is the Company’s Chairman and Chief Executive Officer. He has been the Company’s Chairman and Chief Executive Office Since 2008. Mr. Lin’s address is c/o No. 103 Qiancangong Road, Huatingkou Village, Chendai Township, City of Jinjiang, Fujian Province, People’s Republic of China and his telephone number is +(86) 595 3630 6888. Throughout this proxy statement, references to the “Buyer” mean Mr. Lin Shuipan.

Tiancheng Int’l Investment Group Limited

Tiancheng Int’l Investment Group Limited, a company formed under the laws of Hong Kong, is wholly owned by Ms. Chen Shuli, mother of the Buyer, for purposes of holding shares of the Company. Ms. Chen is responsible for making decisions concerning Tiancheng Int’l Investment Group Limited’s investment activities. Tiancheng Int’l Investment Group Limited’s business address is c/o No. 103, Qiancanggong Road, Huatingkou Village, Chendai Township, City of Jinjiang, Fuijan Province, People’s Republic of China. Its telephone number is +(86) 595 3630 6888.

Chen Shuli

Chen Shuli is the sole director and shareholder of Tiancheng Int’l Investment Group Limited. She has been director of the entity since 2008. Ms. Chen’s address is c/o No. 103, Qiancanggong Road, Huatingkou Village, Chendai Township, City of Jinjiang, Fuijan Province, People’s Republic of China. Her telephone number is +(86) 595 3630 6888.

Certain Rollover Shareholders

Ding Dongdong

Mr. Ding Dongdong (“Mr. Ding”) is the Company’s Executive Director. From 2008 to 2012, he was a Vice President of the Company. From 2012 to 2013 he was Executive Senior Vice President of the company. Since August of 2013, Mr. Ding has been serving as the Company’s Executive Director. Mr. Ding’s address is c/o No. 103, Qiancanggong Road, Huatingkou Village, Chendai Township, City of Jinjiang, Fujian Province, People’s Republic of China and his telephone number is +(86) 595 3630 6888.

Victory Summit Investments Limited

Victory Summit Investments Limited, a company formed under the laws of the British Virgin Islands, is a holding company that wholly owns New Horizon Capital Advisors Ltd., an investment advisory firm, and a number of entities that serve as general partners of limited partnerships that engage in investment activities, including New Horizon Capital Partners, Ltd. (“NH GP”) and New Horizon Capital Partners III, Ltd. (“NH GP III”). NH GP and NH GP III in turn serve as general partners of New Horizon Capital, L.P. (“NH LP”) and New Horizon Capital III, L.P. (“NH LP III”). NH LP and NH LP III respectively wholly own Wisetech Holdings Limited and Windtech Holdings Limited, which are investment vehicles that hold ordinary shares of the Company. New Horizon Capital Advisors Ltd. serves as investment advisor to NH GP and NH GP III. The directors of Victory Summit Investments Limited, Mr. Jianming Yu, Mr. Cher Teck Quek, and Mr. Herbert Kee Chan Pang, are responsible for making decisions concerning Victory Summit Investments Limited’s activities. Mr. Herbert Kee Chan Pang, one of the directors, is the sole shareholder of Victory Summit Investments Limited. Mr. Jianming Yu and Mr. Cher Teck Quek also serve on the investment and management committees of NH GP and NH GP III. Victory Summit Investments Limited’s business address is PO Box 314, 3rd Floor, 18 Fort Street, George Town, Grand Cayman KY1-1104, Cayman Islands. Its telephone number is +852 2801 6988.

Windtech Holdings Limited

Windtech Holdings Limited, a company formed under the laws of the British Virgin Islands, was formed for the purposes of holding shares in the Company. The directors of Windtech Holdings Limited are Mr. Wade Allan Kenny, Mr. Don Wayne Ebanks and Mr. Kok Wai Wong. Windtech Holdings Limited is indirectly controlled by Victory Summit Investments Limited. Windtech Holdings Limited’s business address is PO Box 314, 3rd Floor, 18 Fort Street, George Town, Grand Cayman KY1-1104, Cayman Islands. Its telephone number is +852 2801 6988.

Wisetech Holdings Limited

Wisetech Holdings Limited, a company formed under the laws of the British Virgin Islands, was formed for the purposes of holding shares in the Company. The directors of Wisetech Holdings Limited are Mr. Mr. Wade Allan Kenny, Mr. Don Wayne Ebanks and Mr. Kok Wai Wong. Wisetech Holdings Limited is indirectly controlled by Victory Summit Investments Limited. Wisetech Holdings Limited’s business address is PO Box 314, 3rd Floor, 18 Fort Street, George Town, Grand Cayman KY1-1104, Cayman Islands. Its telephone number is +852 2801 6988.

RichWise International Investment Group Limited

RichWise International Investment Group Limited, a company formed under the laws of the British Virgin Islands, was formed as an investment holding company. The sole director of RichWise International Investment Group Limited is Mr. Jinlei Shi. The sole shareholder of RichWise International Investment Group Limited is RichWise International Group Limited. The sole director and shareholder of RichWise International Group Limited is Mr. Jinlei Shi. RichWise International Investment Group Limited’s business address is Room 4101, Landmark, 4028 Jintian Road, Futian District, Shenzhen, P.R. China. Its telephone number is 86-755-8283-9998.

Eagle Rise Investments Limited

Eagle Rise Investments Limited, a company formed under the laws of the British Virgin Islands, was formed as an investment holding company. The sole director of Eagle Rise Investments Limited is Mr. Zenghong Liu. The sole shareholder of Eagle Rise Investments Limited is Eastern Jump Limited. The sole director and shareholder of Eastern Jump Limited is Mr. Zenghong Liu. Eagle Rise Investments Limited’s business address is Room 2303, No. 12 Building, 6 Dingtaifenghua, Qianhai Road, Nanshan District, Shenzhen, P.R. China. Its telephone number is 86-755-8283-9916.

HK Haima Group Limited

HK Haima Group Limited, a company formed under the laws of Hong Kong, was formed as an investment holding company. The sole director and sole shareholder of HK Haima Group Limited is Ms. Weixin Zhuang. HK Haima Group Limited’s business address is Room 18 Unit A 14/F, Shun On Commercial Building, 112-114 Des Voeux Road Central, Hong Kong. Its telephone number is 86-135-0501-5999.

During the last five years, none of the persons referred to above under the heading titled “The Parties Involved in the Merger”, or any other directors or executive officers of the Company, members of the buyer group and their affiliates as listed in Annex D of this proxy statement has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Weixin Zhuang

Ms. Weixin Zhuang is the sole director and shareholder of HK Haima Group Limited. Ms. Zhuang founded and served as general manager of Xiamen Junyongfeng Trading Company since 2003. Her business address is Room 18 Unit A 14/F, Shun On Commercial Building, 112-114 Des Voeux Road Central, Hong Kong. Her business telephone number is 86-135-0501-5999.

The Merger (Page 65)

You are being asked to vote to authorize and approve the agreement and plan of merger dated as of December 2, 2013 (the “merger agreement”) by and 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 corporation. The Company, as the surviving corporation, will continue to do business under the name “Exceed Company Ltd.” 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 ordinary shares, with par value of $0.0001 per share, (each, a “Share” and collectively, the “Shares”), issued and outstanding immediately prior to the effective time of the merger, other than the following excluded Shares (the “Excluded Shares”): (i) Shares legally owned by Parent; and (ii) Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 179 of the BVI Business Companies Act, 2004, as amended (the “BVI Companies Act”) (the “Dissenting Shareholders”), will be cancelled in exchange for the right to receive $1.78 in cash without interest, net of any applicable withholding taxes. Each Excluded Share (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 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 “Dissenters’ Rights” beginning on page 82 for additional information.

Treatment of 2010 Equity Incentive Plan (Page 66)

At the effective time of the merger, the Company’s 2010 Equity Incentive Plan and all outstanding awards thereunder will be assumed by Parent. At or prior to the effective time of the merger, the Company, the board of directors of the Company or the compensation committee of the board of directors of the Company, as applicable, will adopt any resolutions and take any actions which are reasonably necessary to effectuate the foregoing arrangement.

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 and the Company (the “Voting Agreement”), pursuant to which, among the other things, (i) the Rollover Shareholders agree, during the period commencing on the date of the Voting Agreement and continuing until termination of the Voting Agreement in accordance with its terms, except during such time as a Company Adverse Recommendation (as defined in the merger agreement) has occurred and is continuing, each Rollover Shareholder and each of his, her or its affiliates that acquires beneficial ownership of any Share will appear at the shareholders' meeting or otherwise cause their Shares to be counted as present thereat for purposes of establishing a quorum and vote (or cause to be voted) their 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 (ii) each Rollover Shareholder irrevocably appoints Parent and any designee thereof as its 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. In the Voting Agreement, each Rollover Shareholder also represents that all proxies, powers of attorney, instructions or other requests given by such Rollover Shareholder prior to the execution of the merger agreement in respect of the voting of such Rollover Shareholder's Shares, if any, are not irrevocable and such Rollover Shareholder revoked (or causes to be revoked) any and all previous proxies, powers of attorney, instructions or other requests with respect to such Rollover Shareholder's Shares. Each Rollover Shareholder also agreed to take such further action or execute such other instruments as may be necessary to effectuate the intent of this proxy statement.

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

Record Date and Voting (Page 63)

You are entitled to attend and directly vote at the extraordinary general meeting if you have Shares registered in your name at the close of business in the British Virgin Islands on March 21, 2014, the Share record date for voting at the extraordinary 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 extraordinary general meeting and any adjournment thereof. We expect that, as of the Share record date, there will be 33,141,016 Shares outstanding for voting purposes at the extraordinary 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 15, 2014 at 10:00 a.m. (Hong Kong Time). See “Summary Term Sheet—Voting Information” below.

Shareholder Vote Required to Authorize and Approve the Merger Agreement and Plan of Merger (Page 63)

Based on the number of Shares we expect to be issued and outstanding for voting purposes on the record date, approximately 23,198,711 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. The failure of any shareholder to vote in person or by proxy at the extraordinary general meeting will have the same effect as a vote AGAINST the proposal to approve 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 as a group beneficially owned in the aggregate 22,143,530 Shares, which represents 66.8% of the total outstanding voting Shares. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 92 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 extraordinary general meeting of the Company. Based on the number of Shares expected to be outstanding for voting purposes on the record date, approximately 10% 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 .

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 62)

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 extraordinary 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 submit your proxy card is April 15, 2014 at 10:00 a.m. (Hong Kong Time).

Dissenters’ Rights of Shareholders (Page 82)

Shareholders who dissent from the merger will have the right to exercise dissenters’ rights 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 dissenters’ 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 dissenters’ rights with respect to your Shares.

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

Purposes and Effects of the Merger (Pages 49, 50)

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 $1.78 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— The Buyer Parties’ Purpose of and Reasons for the Merger” beginning on page 49 for additional information.

The Shares are currently listed on the NASDAQ Global Market (“NASDAQ”) (under the symbol “EDS”). It is expected that, immediately following the completion of the merger, the Company will cease to be a publicly traded company and will instead become a privately held company directly owned by Parent. Following the completion of the merger, the Shares will cease to be listed on NASDAQ, and price quotations with respect to sales of the Shares in the public market will no longer be available. In addition, registration of the Shares under the Exchange Act may be terminated upon the Company's application to the SEC if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. 90 days after the filing of Form 15 in connection with the completion of the merger or such longer 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. Please see “Special Factors—Effect of the Merger on the Company” beginning on page 50 for additional information.

Plans for the Company after the Merger (Page 53)

Recommendations of the Independent Committee and the Board of Directors (Page 28)

The independent committee has unanimously (i) 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 and is fair to, and in the best interests of, those shareholders who are unaffiliated with the Buyer, the Rollover Shareholders or the Company; (ii) declared that it is advisable to enter into the merger agreement; (iii) 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 (iv) recommended that the board of directors direct that the authorization and approval of the merger agreement, the plan of merger, and the transactions contemplated under the merger agreement, including the merger, be submitted to a vote at an extraordinary 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 EXTRAORDINARY 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 EXTRAORDINARY GENERAL MEETING.

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

Each of the Buyer, Mr. Ding, Parent, Merger Sub, Chen Shuli, Tiancheng Int’l Investments Group Limited, Victory Summit Investments Limited, Windtech Holdings Limited, Wisetech Holdings Limited, RichWise International Investment Group Limited, Eagle Rise Investments Limited, HK Haima Group Limited and Weixin Zhuang believes that the merger is fair (both substantively and procedurally) to the Company's unaffiliated security holders. Their belief is based upon the factors discussed under the caption “Special Factors—Position of the Buyer Parties as to the Fairness of the Merger” beginning on page 33.

Each of the aforesaid persons 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.

Financing of the Merger (Page 55)

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 security holders pursuant to the merger agreement, is anticipated to be approximately $20 million. The funds necessary to complete the merger and the related transactions at the closing of the merger, including for the payment of the merger consideration will be paid from accounts outside China, and such payment will not be subject to any restriction, registration, approval or procedural requirements under applicable PRC laws, rules and regulations.

Limited Guaranty (Page 55, Annex G)

Mr. Lin Shuipan has agreed to guaranty certain payment obligations of Parent under the merger agreement in favor of the Company pursuant to a Limited Guaranty.

Contribution Agreement (Annex E)

Concurrently with the execution and delivery of the merger agreement, each of the Rollover Shareholders entered into a contribution agreement with Parent (the “Contribution Agreement”) whereby, subject to the conditions set forth in the Contribution Agreement, immediately prior to the effective time of the merger and without further action by the Rollover Shareholders, all of each Rollover Shareholder's right, title and interest in and to the Rollover Shares will be contributed, assigned, transferred and delivered to Parent. As consideration for the benefit received by Parent as a result of the contribution, assignment, transfer and delivery of the Rollover Shares, Parent will issue a number of Parent shares in the name of each Rollover Shareholder or a designee of the Rollover Shareholder equal to the number of Rollover Shares contributed by such Rollover Shareholder. Each Rollover Shareholder hereby acknowledges and agrees that (i) 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 applicable Rollover Shares; and (ii) on receipt of such Parent shares, such Rollover Shareholder will have no right to any merger consideration with respect to the Rollover Shares contributed to Parent by such Rollover Shareholder.

Share Ownership of the Company Directors and Officers and Voting Commitments (Page 92)

As of the record date, we expect that the Buyer will beneficially own approximately 38.0% of our issued and outstanding Shares. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 92 for additional information.

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 its Shares will no longer be listed on the NASDAQ.

Opinion of Houlihan Lokey (China) Limited (Page 39)

On December 2, 2013, Houlihan Lokey (China) Limited (“Houlihan Lokey”) rendered an oral opinion to our independent committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 2, 2013) to the effect that, as of December 2, 2013, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, the per share merger consideration to be received by holders of the Ordinary Shares (other than holders of the Excluded Shares) in the merger was fair, from a financial point of view, to such holders.

Houlihan Lokey’s opinion was directed to our independent committee and only addressed the fairness from a financial point of view of the per share merger consideration to be received by holders of the Ordinary Shares (other than holders of the Excluded Shares) in the merger and does not address any other aspect or implication of the merger. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute advice or a recommendation to our independent committee or any shareholder as to how to act or vote with respect to the merger or related matters. See “The Merger – Opinion of Houlihan Lokey (China) Limited”.

Interests of the Company's Executive Officers and Directors in the Merger (Page 56)

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 Buyer and the prospective beneficial ownership of equity interests in Parent by the other 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 Buyer and other seven Rollover Shareholders will beneficially own, as a result of the merger and future performance of the surviving corporation;

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assumption by Parent of the Company's 2010 Equity Incentive Plan;

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continued indemnification rights and rights to advancement of fees to be provided by the surviving corporation to former directors and officers of the Company;

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the aggregate compensation of $132,000 of Jin Jichun, Chen Yea-Mow, and Pang Xiaozhong, each of which is a member of the independent committee, in exchange for their services in such capacity (the payment of which is not contingent upon the completion of the merger or the independent committee's or the board's recommendation of the merger);

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contribution, assignment, transfer and delivery of the rights, titles and interests in the Rollover Shares by each Rollover Shareholders to Parent in exchange of newly issued shares of Parent; and

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

The independent 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 56 for additional information.

Conditions to the Merger (Page 77)

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

the merger agreement being approved by an affirmative vote of holders of Shares representing at least 70% of the outstanding Shares of the Company determined as of the record date; and

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.

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:

the representations and warranties of the Company contained in the merger agreement being true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of such date and time (except to the extent that (i) any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct only as of such earlier date; and (ii) any representations and warranties that have “material” or “Material Adverse Effect” qualifications, in which case such representations and warranties shall be true and correct in all respects);

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 of the merger;

since the date of the merger agreement, there having been no effect that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and

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

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

the representations and warranties of Parent and Merger Sub contained in the merger agreement being true and correct in all material respects as of the date of the merger agreement and as of the closing date as though made on and as of such date and time (except to the extent that (i) any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty must be true and correct only as of such earlier date; and (ii) any representations and warranties that have “material” qualifications, in which case such representations and warranties shall be true and correct in all respects);

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

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.

Please see “The Merger Agreement and Plan of Merger—Conditions to the Merger” beginning on page 77 for additional information.

Acquisition Proposals (Page 73)

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During the period beginning on the date of the merger agreement and continuing until January 11, 2014 (the “Go-Shop Period End Date”), the Company and its representatives may (acting under the direction of the independent committee) directly or indirectly, (i) solicit, initiate, facilitate and encourage any acquisition proposal provided that any material non-public information concerning the Company or its subsidiaries provided to such solicited person given such access and not previously disclosed to Parent will be disclosed to Parent as well; and (ii) enter into, continue or otherwise participate in any discussions or negotiations with respect to any acquisition proposal or otherwise cooperate with, assist, participate in, facilitate or take any other action in connection with any such inquiries, proposals, discussions or negotiations or any effort or attempt to make any acquisition proposal. “Acquisition proposal” is defined in the merger agreement as (a) any bona fide written inquiry, proposal or offer with respect to a merger, joint venture, partnership, consolidation, business combination or other similar transaction involving the Company or any of its subsidiaries, which if consummated would result in any person becoming the beneficial owner of, directly or indirectly, 20% or more of the total voting power of the equity securities of the company and (b) any acquisition by any person, or proposal or offer, which if consummated would result in any person becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 20% or more of the total voting power of any class of equity securities of the company, or 20% or more of the consolidated total assets (including the equity securities of the subsidiaries) of the Company, in each case, other than the transactions contemplated by the merger agreement.

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initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any acquisition proposal;

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engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information to any person relating to any acquisition proposal; or

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otherwise knowingly facilitate any effort or attempt to make an acquisition proposal. However, the Company may take and continue to take any of the actions permitted during the “go-shop” period as described in the immediately preceding paragraph and, subject to certain restrictions, from and after the Go-Shop Period End Date with respect to any solicited person that, prior to the Go-Shop Period End Date, has made a bona fide acquisition proposal that the independent committee determines in good faith constitutes or would reasonably be expected to result in a superior proposal (each such solicited person, an “Excluded Party”). Any Excluded Party will cease to be an Excluded Party for all purposes under the merger agreement immediately at such time as the acquisition proposal made by such party is withdrawn, is terminated or expires, or the independent committee determines in good faith that such acquisition proposal ceases to constitute, or ceases to be reasonably likely to lead to, a superior proposal (a “Terminated Acquisition Proposal”).

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Within 48 hours after the Go-Shop Period End Date, the Company will notify Parent of the material terms and conditions of the acquisition proposals (including any amendments or modifications thereof) received from any Excluded Party and the identity thereof. After the end of the “go-shop” period, other than with respect to persons who on the Go-Shop Period End Date are Excluded Parties, and at any subsequent time with respect to any person (including a formerly Excluded Party) that has made an acquisition proposal that becomes a Terminated Acquisition Proposal, the Company will immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with such person conducted theretofore by the Company, its subsidiaries or any of their respective representatives with respect to any acquisition proposal and will use reasonable best efforts to require such person to promptly return or destroy any confidential information previously furnished by the Company, any of its subsidiaries or any of their respective representatives. The term “superior proposal” means a bona fide acquisition proposal with all of the percentages included in the definition of “acquisition proposal” increased to 50% that was not obtained in violation of the “go-shop” provisions of the merger agreement and which the board of directors, acting through the independent committee, has determined in its good faith judgment is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal, and would, if consummated, result in a transaction more favorable to the Company's shareholders from a financial point of view than the merger.

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following receipt by the Company of an acquisition proposal from any person, the Company and its representatives may contact such person solely in order to (i) clarify such acquisition proposal so as to determine whether such acquisition proposal constitutes or would reasonably be expected to result in a superior proposal and (ii) notify such person of the non-solicitation restrictions as set forth under the merger agreement; and

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if the independent committee has determined in good faith based on the information then available that such acquisition proposal either constitutes a superior proposal or would reasonably be expected to result in a superior proposal, the Company and its representatives may (i) provide information in response to a request therefor by a person (other than any affiliate of the Company) who has made such an unsolicited written acquisition proposal that the board of directors believes in good faith to be bona fide and providing for the acquisition of more than 50% of the assets (on a consolidated basis) or more than 50% of the total voting power of the equity securities of the Company; and promptly discloses (and, if applicable, provides copies of) any such information to Parent and Merger Sub to the extent not previously provided to Parent and Merger Sub; and (ii) engage or participate in any discussions or negotiations with any person who has made such an acquisition proposal; or if the board of directors determines in good faith (after consultation with its independent financial advisor and outside legal counsel) that such acquisition proposal is a superior proposal, approve, recommend, or otherwise declare advisable or propose to approve, recommend or declare advisable (publicly or otherwise) such an acquisition proposal.

The Company will not, and will 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. Please see “The Merger Agreement and Plan of Merger —Acquisition Proposals” beginning on page 73 for additional information.

Change of Recommendation (Page 75)

Under the merger agreement, the board of directors of the Company and the independent 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 alternative acquisition agreement, including letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement (other than a confidentiality 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 unanimous recommendation of the independent committee, may (i) withhold, withdraw, qualify or modify the company recommendation 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 made after the date of the merger agreement, and to authorize the Company to terminate the merger agreement or enter into an alternative acquisition agreement with respect to such superior proposal if the board of directors of the Company (acting through the independent committee) determines in good faith, after consultation with outside legal counsel to the independent committee, that failing to do so would be inconsistent with its fiduciary obligations under applicable laws (a “Company Adverse Recommendation”); provided, however, that prior to making any such Company Adverse Recommendation:

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

during the five 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

following the end of the five business day period, the Company 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. 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.

Please see “The Merger Agreement and Plan of Merger —Change in Recommendation” beginning on page 75 for additional information.

Termination of the Merger Agreement (Page 78)

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 September 2, 2014; 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;

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 extraordinary general meeting duly convened therefor or at any adjournment or postponement thereof.

by the Company, if:

any of the representations and warranties of Parent or Merger Sub has become untrue after the date of the merger agreement or Parent or Merger Sub has breached or failed to perform any of their covenants or agreements contained in the merger agreement, which failure to be true and correct, breach or failure to perform (i) would give rise to the failure of a condition to each party's obligation to effect the merger or a condition to obligation of the Company to effect the merger; and (ii) cannot be cured by the termination date of the merger agreement, or if capable of being cured, will not have been cured within 30 business days following receipt by Parent or Merger Sub of written notice of such breach or failure to perform from the Company stating the Company's intention to terminate the agreement and the basis for such termination (or, if earlier, the termination date); provided, however, that, the Company will not have the right to terminate the merger agreement pursuant to this paragraph if it is then in material breach of any representations, warranties, covenants or other agreements hereunder that would result in any condition to each party's obligation to effect merger or any condition to obligations of Parent and Merger Sub to effect the merger not being satisfied;

prior to the receipt of the requisite shareholders' approval, the board of directors of the Company (upon the recommendation of the independent committee) has effected a Company Adverse Recommendation and/or authorized termination of the merger agreement in order to enter into an alternative acquisition agreement relating to a superior proposal, provided that the Company has complied in all material respects with the non-solicitation obligations set forth under the merger agreement; or

(i) all of the closing conditions that are the obligation of Parent and Merger Sub are otherwise satisfied (other than those conditions that by their nature are to be satisfied at the closing); and (ii) Parent and Merger Sub fail to complete the closing within ten business days following the date the closing should have occurred according to the merger agreement.

by Parent, if:

any of the representations and warranties of the Company has become untrue after the date of the merger agreement or the Company has breached or failed to perform any of their covenants or agreements contained in the merger agreement, which failure to be true and correct, breach or failure to perform (i) would give rise to the failure of a condition to each party's obligation to effect the merger or a condition to obligation of Parent and Merger Sub to effect the merger; and (ii) cannot be cured by the termination date of the merger agreement, or if capable of being cured, will not have been cured within 30 business days following receipt by the Company of written notice of such breach or failure to perform from Parent stating Parent's intention to terminate the agreement and the basis for such termination (or, if earlier, the termination date); provided, however, that, Parent will not have the right to terminate the merger agreement pursuant to this paragraph if it is then in material breach of any representations, warranties, covenants or other agreements hereunder that would result in any condition to each party's obligation to effect merger or any condition to obligations of the Company to effect the merger not being satisfied; or

(i) the board of directors has made a Company Adverse Recommendation, (ii) the board of directors of the Company approves, endorses or recommends an acquisition proposal other than the merger or (ii) the Company or the board of directors, acting on the recommendation of the independent committee, fails to include the recommendation of the board of directors to approve the merger agreement in this proxy statement.

Please see “The Merger Agreement and Plan of Merger—Termination of the Merger Agreement” beginning on page 78 for additional information.

Termination Fees and Expense Reimbursement (Page 80)

The Company is required to pay Parent a termination fee of $1 million if:

(i) a bona fide acquisition proposal has been made, proposed or communicated (and not withdrawn) by a third party after the date of the merger agreement and prior to the extraordinary shareholders' meeting (or prior to the termination of the agreement if there has been such extraordinary shareholders' meeting); (ii) the merger agreement is terminated by the Company or Parent pursuant to the merger agreement, because (a) the merger has not been consummated on or before September 2, 2014, or (b) the requisite shareholders' approval has not been obtained at the shareholders' meeting; and (iii) within 12 months of the termination of the merger agreement, any acquisition proposal by a third party is entered into or consummated by the Company;

the merger agreement is terminated by Parent due to a breach by the Company of its 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 because (i) the board of directors of the Company has made a Company Adverse Recommendation; (ii) the board of directors of the Company approves, endorses or recommends an acquisition proposal other than the merger; or (iii) the Company or the board of directors, acting on the recommendation of the independent committee, fails to include the recommendation of the board of directors to approve the merger agreement in this proxy statement; or

the merger agreement is terminated by the Company, if prior to the receipt of the requisite shareholders' approval, the board of directors of the Company (upon recommendation of the independent committee) has effected a Company Adverse Recommendation in order to enter into an alternative acquisition agreement relating to a superior proposal, provided that the Company has complied in all material respects with the non-solicitation obligations set forth under the merger agreement;

The Company is required to pay Parent a termination fee of $500,000 if the merger agreement is terminated by the Company in connection with an acquisition proposal received by the Company on or before the Go-Shop Period End Date.

Parent is required to pay the Company a termination fee of $2 million 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; or

the merger agreement is terminated by the Company in the event that (i) all of the closing conditions that are the obligation of Parent and Merger Sub are otherwise satisfied (other than those conditions that by their nature are to be satisfied at the closing); and (ii) Parent and Merger Sub fail to complete the closing within ten business days following the date the closing should have occurred according to the merger agreement.

In addition, the Company must reimburse all out-of -pocket fees and expenses incurred by Parent and Merger Sub and their respective affiliates in connection with the merger and the other transactions contemplated by the merger agreement up to a maximum amount of $500,000 if Parent terminates the merger agreement due to a breach by the Company of its 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.

Please see “The Merger Agreement and Plan of Merger —Termination Fees and Expense Reimbursement” beginning on page 80 for additional information.

Expenses (Page 81)

Except for the provisions described above in “Termination Fees” plus specified reimbursement and indemnification obligations of Parent and Merger Sub, 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 costs and expenses.

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.

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 60)

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 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.

Material British Virgin Islands Tax Consequences (Page 61)

The British Virgin Islands currently have 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 filing of the plan of merger (and supporting documentation as specified in the BVI Companies Act) with the Registrar of Corporate Affairs of the British Virgin Islands and in the event the merger becomes effective, a copy of the certificate of merger being given to the shareholders and creditors of the Company and Merger Sub as at the time of the filing of the plan of merger.

Accounting Treatment of the Merger (Page 57)

Upon completion of the merger, the Company will 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 61)

The closing price of the Shares on NASDAQ on August 16, 2013, the last trading date immediately prior to the Company's announcement on August 19, 2013 that it had received “a going private” proposal, was $1.49 per Share. The merger consideration of $1.78 per Share to be paid in the merger represents a premium of approximately 19.5% to that closing price.

QUESTIONS AND ANSWERS ABOUT THE EXTRAORDINARY GENERAL MEETING
AND THE MERGER

The following questions and answers address briefly some questions you may have regarding the extraordinary 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?

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 corporation after the merger. If the merger is completed, the Company will be a privately held company beneficially owned by the Buyer and the other Rollover Shareholders, 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?

If you own Shares and the merger is completed, you will be entitled to receive $1.78 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 dissenters’ 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 57 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: After the merger is completed, how will I receive the merger consideration for my Shares?

If you are a registered holder of Shares, promptly after the effective time of the merger (in any event within five business days after the effective time of the merger), a paying agent appointed by Parent will mail you (i) a form of letter of transmittal specifying how the delivery of the merger consideration to you will be effected and (ii) 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 $1.78 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.

Q: When and where will the extraordinary general meeting be held?

The extraordinary general meeting will take place on April 16, 2014, at 10:00 a.m. (Hong Kong Time) at United Conference Centre, 10/F, United Centre, 95 Queensway, Hong Kong.

Q: What matters will be voted on at the extraordinary general meeting?

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 extraordinary 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 extraordinary general meeting.

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

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 at least 70% of the Shares of the Company outstanding for voting purposes, present and voting in person or by proxy as a single class at an extraordinary general meeting of the Company's shareholders. The failure of any shareholder to vote in person or by proxy at the extraordinary general meeting will have the same effect as a vote AGAINST the proposal to approve the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger. At the close of business in the British Virgin Islands on March 21, 2014, the record date for the extraordinary general meeting, we expect that there will be 33,141,016 Shares issued and outstanding for voting purposes at the extraordinary 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 22,143,530 Shares, approximately 66.8% of the total Shares issued and outstanding for voting purposes. Based on the number of Shares expected to be outstanding for voting purposes on the record date, 1,055,181 Shares, approximately 10% of the total Shares outstanding for voting purposes 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 extraordinary general meeting.

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

After careful consideration and upon the unanimous recommendation of the independent committee, our board of directors by a unanimous vote 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 extraordinary 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 extraordinary general meeting.

Q: Who is entitled to vote at the extraordinary general meeting?

The share record date is March 21, 2014. 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 extraordinary general meeting or any adjournment thereof.

Q: What constitutes a quorum for the extraordinary general meeting?

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

Q: What effects will the merger have on the Company?

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 and other seven Rollover Shareholders. 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: How will the Company's 2010 Equity Incentive Plan be treated in the merger?

Immediately after the effective time of the merger, the Company's 2010 Equity Incentive Plan will be assumed by Parent from and after the effective time of the merger, in accordance with the terms and conditions of such plan. At or prior to the effective time of the merger, the Company, the board of directors of the Company or the compensation committee of the board of directors of the Company, as applicable, will adopt any resolutions and take any actions which are reasonably necessary to effectuate the foregoing arrangement.

Q: When do you expect the merger to be completed?

We are working toward completing the merger as quickly as possible and currently expect the merger to close in the first quarter of 2014. In order to complete the merger, we must obtain shareholder approval of the merger at the extraordinary 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?

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. Therefore, our shareholders will continue to be subject to similar risks and opportunities as they currently are with respect to their ownership of our Shares.

Under specified circumstances in which the merger agreement is terminated, the Company may be required to pay Parent a termination fee and reimburse Parent’s expenses, 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 Fees and Expense Reimbursement” beginning on page 80.

Q: What do I need to do now?

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?

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 extraordinary general meeting so that your Shares will be represented and may be voted at the extraordinary general meeting.

Alternatively, you can attend the extraordinary 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 extraordinary 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 extraordinary 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?

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.

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?

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 and will have the same effect as a vote AGAINST the proposal to approve the merger agreement, the plan of merger, and the transactions contemplated by the merger agreement, including the merger.

Q: May I change my vote?

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 extraordinary general meeting before the extraordinary general meeting commences. Any written notice revoking a proxy should be sent to Exceed Company Ltd., Level 12, China Minmetals Tower, 79 Chatham Road South, Tsim Sha Tsui, Kowloon , Hong Kong;

●

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 extraordinary general meeting; or

●

third, you may attend the extraordinary 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 extraordinary 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?

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?

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 dissenters’ rights?

Yes. Shareholders who dissent from the merger will have the right to exercise dissenters’ rights and seek 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 dissenters’ 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 dissenters’ 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 dissenters’ rights. Please see “Dissenters’ Rights” beginning on page 82 as well as “Annex C—BVI Business Companies Act, 2004—Section 179” to this proxy statement for additional information.

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

Yes. To assist in the solicitation of proxies, the Company has engaged AST Phoenix Advisors 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?

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

●

assumption by Parent the Company's 2010 Equity Incentive Plan;

●

continued indemnification rights and rights to advancement of fees to be provided by the surviving corporation to former directors and officers of the Company;

●

contribution, assignment, transfer and delivery of the rights, titles and interests in the Rollover Shares by each Rollover Shareholder to Parent in exchange of newly issued shares of Parent; and

●

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

Please see “Special Factors—Interests of Certain Persons in the Merger” beginning on page 56 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?

Pursuant to the Voting Agreement, all of the Rollover Shareholders (including certain officers and directors of the Company, such as Mr. Lin, the Company's Chairman and Chief Executive Officer) have agreed to vote, or cause to be voted, all of the Shares they beneficially own, representing an aggregate of approximately 66.8% of the total Shares outstanding for voting purposes as of December 2, 2013, plus any Shares that they may acquire after December 2, 2013, 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?

SPECIAL FACTORS

Background of the Merger

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

The Company’s share value has been experiencing decline since 2010. In October of 2012, Mr. Lin began to consider and evaluate a going private transaction as one of the potential alternatives relating to his stake in the Company. Mr. Lin considered a going private transaction for multiple reasons. In addition to the continued decline in the Company’s share value, the Company also faces costs and administrative burdens associated with its operation as a U.S. public-traded company, including the costs associated with regulatory filings and compliance requirements. As a publicly-traded company, Mr. Lin and members of the Company’s management are also subject to pressure to make decisions that may produce better short term results. By taking the Company private, the costs and burdens associated with the Company’s status as a publicly-traded company can be reduced and the Company will be able to turn its focus away from meeting the short-term expectations of its shareholders to undertaking long-term strategic planning and investments. After studying the feasibility of a going private transaction and learning about the successful completion of going private transactions involving a number of U.S.-listed China-based issuers, Mr. Lin began to seriously consider a going private transaction. In November of 2012, Mr. Lin discussed his preliminary thoughts of a potential going private transaction with Wisetech Holdings Limited and Windtech Holdings Limited, both of whom are large existing shareholders of the Company. In July of 2013, Mr. Lin discussed such preliminary thoughts with attorneys at Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”), who later served as his U.S. legal counsel in connection with a potential transaction. At about the same time, Mr. Lin discussed with the rest of the Consortium Members (as defined below) about working together to submit a proposal to the Company’s board of directors to take the Company private.

On August 17, 2013, our board of directors received a preliminary non-binding letter from Mr. Lin and his affiliate Tiancheng Int'l Investment Group Limited, HK Haima Group Limited, Wisetech Holdings Limited, Windtech Holdings Limited and RichWise International Investment Group Limited (collectively, the “Consortium Members”), pursuant to which the Consortium Members proposed to undertake a going-private transaction by acquiring all of the ordinary shares of the Company not already directly or indirectly beneficially owned by them, for a cash consideration of $1.72 per share (the “Proposal”).

On August 18, 2013, the board of directors, including Mr. Lin, held a telephonic meeting to discuss the Proposal. At the meeting, Mr. Lin gave a short presentation of the Proposal, after which the board of directors determined that Mr. Lin had material interest in the Proposal and Mr. Lin excused himself from the meeting. At the meeting, the board of directors formally established the mandate of and delegations of authority to the independent committee and appointed members of the board of directors to the independent committee. The independent committee consists of Messrs. Jin Jichun (“Mr. Jin”), Chen Yea-Mow and Pang Xiaozhong, each of whom was considered independent under the rules of NASDAQ, with Mr. Jin acting as Chairman of the independent committee. Each member of the independent committee is an independent member of the board under BVI law. None of the independent committee members has participated in management of the Company nor has any affiliation with the Buyer or any of the Rollover Shareholders. The independent committee was delegated the authority to, among other things, evaluate and respond to the Proposal, recommend to the board of directors what action, if any, should be taken by the Company with respect to the Proposal, including rejecting the proposal, and to retain independent financial and legal advisors to assist the independent committee in evaluating the Proposal and the proposed transaction.

Between August 19 and September 9, 2013, the independent committee conducted a search for legal advisors, carefully considering proposals from several highly qualified law firms experienced with going-private transactions. After conducting interviews with some of these law firms and considering the presentations made by each of them, including their respective qualifications, reputations and experience in going-private transactions, the independent committee selected K&L Gates LLP (“K&L Gates”) to serve as its U.S. legal counsel and Walkers Global (“Walkers”) as its British Virgin Islands legal counsel. The independent committee selected its legal advisors based on a number of factors including such advisors’ experience in the market and track record in transactions involving U.S. public companies.

Between August 24 and September 11, 2013, the independent committee interviewed several investment banking firms experienced with going-private transactions in order to select the financial advisor to the independent committee. After carefully considering the credentials of each candidate, the independent committee decided to retain Houlihan Lokey to act as its financial advisor. Houlihan Lokey was chosen by the independent committee largely because of its expertise in mergers and acquisitions transactions, substantial experience in going private transactions involving U.S.-listed Chinese companies, and its ability to communicate in both English and Mandarin.

On September 16, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey, K&L Gates and Walkers were present. At this meeting, representatives of K&L Gates explained to the independent committee the procedures and timetable for the proposed going-private transaction. Representatives of Houlihan Lokey discussed with the independent committee their work process as a financial advisor. Representatives of Walkers explained to the independent committee relevant fiduciary duties under the laws of the British Virgin Islands. In addition, the independent committee discussed with its advisors the due diligence work to be conducted by representatives of Houlihan Lokey for its analysis, the availability of financing of the Consortium Members and feedback from the minority shareholders of the Company. It was agreed that representatives of Houlihan Lokey would start conducting due diligence on the Company. The independent committee then decided that it and its advisors would conduct meetings periodically to discuss developments in connection with the Proposal.

Between September 16 to October 28, 2013, representatives of Houlihan Lokey conducted due diligence on the Company to facilitate its analysis.

On October 23, 2013, Skadden, counsel to the Consortium Members, delivered the initial draft of the merger agreement together with draft ancillary documents including a voting agreement, contribution agreement, limited guaranty and equity commitment (such ancillary documents, the “ancillary agreements”).

On October 28, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey and K&L Gates were present. At this meeting, the Company reported that it was preparing the financial projection model and organizing other requested documents for due diligence. Representatives of Houlihan Lokey reported to the independent committee that they had collected certain financial information from the Company and public sources and expected to present their preliminary financial analyses after they had interviewed the management of the Company, received the Company’s financial projection model and concluded the necessary due diligence. Representatives of K&L Gates reported to the independent committee that they had received the initial draft of the merger agreement and the ancillary agreements from representatives of Skadden and would review the draft merger agreement and the ancillary agreements along with Walkers and provide a major issues list to and discuss with the independent committee shortly thereafter. Meanwhile, a copy of the draft merger agreement and the ancillary agreements were sent by representatives of K&L Gates to the independent committee for its review. Additionally, the independent committee discussed with its advisors the due diligence work performed by representatives of Houlihan Lokey, feedback from minority shareholders of the Company, market check procedures and the timing of the preliminary and final valuation reports to be completed by Houlihan Lokey.

On October 30, 2013, representatives of K&L Gates delivered to the independent committee a major issues list associated with the initial draft merger agreement and the ancillary agreements prepared by representatives of Skadden.

On October 31, 2013, the independent committee held a meeting via teleconference with representatives of K&L Gates to discuss the major issues of the draft merger agreement and the ancillary agreements delivered by representatives of Skadden. After such discussion, the independent committee proposed to, among other things, (i) request that the Consortium Members increase the merger consideration, (ii) add a “go-shop” provision to the merger agreement to allow the Company to continue to actively solicit offers from third parties after entering into a merger agreement with the Consortium Members, (iii) reduce the termination fee payable by the Company if it were to enter into an alternative agreement with third parties during the “go-shop” period to avoid discouraging competing proposals, (iv) change the “simple majority of those present and voting” voting requirement under the current draft to the “majority of the unaffiliated shareholders present and voting” voting requirement to provide additional protection to the public shareholders not affiliated with the Consortium Members, (v) delete the “specific performance” provision that enables the Parent to force the Company to close the transaction, (vi) specify that the reverse termination fee to be paid by Parent should be higher than the termination fee to be paid by the Company and (vii) remove the “force the vote” provision that requires the submission of the merger agreement to the shareholders even if there has been a change in recommendation. In addition, representatives of K&L Gates reported to the independent committee that Mr. Lin proposed, in the equity commitment letter, to use a bank deposit letter that would indicate the required amount of merger consideration payable by Mr. Lin had been deposited in an offshore bank as proof of financing under the merger agreement. Representatives of K&L Gates advised the independent committee that such a bank deposit letter would not provide sufficient certainty of funding, and it would be advisable that the independent committee request that any funds be deposited into an escrow account prior to mailing of the proxy statement, which would bring more financing certainty. The independent committee agreed and instructed K&L Gates to provide in the equity commitment letter that the funds be deposited into an escrow account. Additionally, the Voting Agreement provided that the ordinary shares would be voted in favor of the merger and the merger agreement, irrespective whether there had been a change of recommendation resulting from a superior proposal. Representatives of K&L Gates advised the independent committee that this could further discourage any third party from considering a superior proposal. The independent committee agreed that this provision in the Voting Agreement should be modified so that the vote would not be required in the event of an adverse recommendation of the board of directors.

On November 1, 2013, representatives of K&L Gates provided a revised draft of the merger agreement to representatives of Skadden, and on November 7, 2013 sent revised versions of the ancillary agreements reflecting the independent committee’s positions discussed above.

On November 7, 2013, representatives of K&L Gates received feedback from representatives of Skadden on the revised merger agreement. The Consortium Members rejected certain proposed changes by the independent committee, including (i) inclusion of the “go shop” provision, (ii) changing the “simple majority of those present and voting” voting requirement to the “majority of the unaffiliated shareholders present and voting” voting requirement, and (iii) removing the “force the vote” provision that requires the submission of the merger agreement to the shareholders even if there has been a change in recommendation.

On November 11, 2013, Skadden provided revised versions of the ancillary agreements. The equity commitment letter provided that Mr. Lin was required to provide evidence prior to the shareholders meeting that a sufficient amount of cash to cover the purchase price had been deposited with a bank outside of the PRC. However, the Voting Agreement retained the requirement that the shares held by Consortium Members be voted in favor of the merger irrespective of a change in recommendation in response to a superior proposal.

On November 11, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey and K&L Gates were present. At this meeting, representatives of K&L Gates discussed with the independent committee the abovementioned feedback from the Consortium Members on the draft merger agreement and the ancillary agreements. In addition, representatives of Houlihan Lokey discussed with the independent committee their preliminary financial analyses of the Company. The independent committee also discussed with representatives of Houlihan Lokey the possibility of identifying potential alternative buyers in a market check process. The independent committee and Houlihan Lokey considered, among other things, (i) the current difficult environment for the sportswear industry in China; and (ii) the fact that in the original Proposal the Consortium Members expressed their reluctance to sell their Shares to any third party or form a buyer-side consortium with any third party. After further discussion with its advisors, the independent committee proposed to (i) request a price increase from the original proposed price, (ii) continue to insist on the “go-shop” provision, (iii) continue to insist on the “majority of the unaffiliated shareholders present and voting” voting requirement, (iv) provide for the termination fee payable by the Company to $1 million plus a $500,000 cap of expenses spent by the Consortium Members, while providing that the reverse termination fee payable by the Consortium Members would be $2 million, (v) insist on removing the “force the vote” provision requiring the submission of the merger agreement to the shareholders even if there has been a change in recommendation, (vi) provide that the Company may terminate the merger agreement in the event of a change in recommendation, (vii) provide in the Voting Agreement that the requirement that rollover shareholders vote in favor of the merger terminate if there has been a change in recommendation in response to a superior proposal, and (viii) insist on requesting an equity commitment letter providing for proof of funds prior to the mailing of the proxy statement with such funds maintained from that date forward until the closing.

From November 12 to November 20, 2013, representatives of Houlihan Lokey and K&L Gates continued negotiations with the Consortium Members and representatives of Skadden based on the independent committee’s instructions discussed above.

On November 21, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey and K&L Gates were present. Representatives of Houlihan Lokey reported to the independent committee that (i) the Consortium Members objected to the “majority of the unaffiliated shareholders present and voting” voting requirement because it was not required under the BVI laws, but would be willing to consider a more stringent voting requirement based on the total votes eligible to be cast by all of the shareholders entitled to vote in the shareholders’ meeting in lieu of the “simple majority present and voting” voting requirement stipulated in the current draft merger agreement; and (ii) the Consortium Members proposed a price increase to $1.75 from the initial proposed price of US$1.72. The independent committee discussed with representatives of Houlihan Lokey and representatives of K&L Gates this revised proposal and negotiation strategies aiming at a further increase of the price. After such discussion, the independent committee directed representatives of Houlihan Lokey and K&L Gates to further negotiate with the Consortium Members based on the outstanding issues for a price above $1.75.

Subsequently on the same day, representatives of Houlihan Lokey and K&L Gates further negotiated with the Consortium Members and representatives of Skadden based on the independent committee’s instructions discussed above.

On November 21, 2013, Skadden circulated revised versions of the merger agreement and the ancillary agreements (i) maintaining that the voting requirement is “simple majority present and voting” as provided under BVI law, (ii) providing for a 30 day “go-shop” period, (iii) removing the “force the vote” provision, and (iv) allowing the board of directors to terminate the merger agreement in the event of a change in recommendation. The revised equity commitment letter included an obligation of Mr. Lin to show evidence of deposit of funds prior to the mailing of the proxy statement. The Voting Agreement required a vote in favor of the merger by the Consortium Members unless there was a change in recommendation by the board of directors.

On November 22, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey, K&L Gates and Walkers were present. Representatives of Walkers confirmed their advice previously delivered with regard to fiduciary duties of the board under BVI law and the required vote in transactions such as the merger. Representatives of Houlihan Lokey reported to the independent committee that it communicated the independent committee’s positions described above to the Consortium Members , and the Consortium Members responded that the final offer price would be $1.78, and that they would not consider any further increases to the offer price. Representatives of K&L Gates advised the independent committee that the independent committee needs to consider (i) whether to accept the price of $1.78 offered by the Consortium Members or request a further price increase, (ii) the voting requirement that should be adopted that would be in the best interest of the Company and its shareholders, and (iii) whether the Company should agree to the “go shop” provision in the merger agreement. After discussion with its advisors, the independent committee decided that they would need some time to deliberate over these issues before making any decisions. The independent committee decided to re-convene on November 26, 2013.

On November 26, 2013, the independent committee held a meeting via teleconference at which representatives of Houlihan Lokey, K&L Gates and Walkers were present. The independent committee discussed with representatives of its advisors (i) pros and cons of the “go shop” process and the term of the “go-shop,” (ii) options for the voting requirement so as to best protect the minority shareholders, (iii) the latest price offered by the Consortium Members, and (iv) the possibilities of and the negotiation strategies for a further increase in offer price. Representatives of Houlihan Lokey reported to the independent committee that the Consortium Members had indicated that it would be very difficult for the Consortium Members to further raise the offer price with a meaningful margin. Representatives of K&L Gates discussed with the independent committee that currently the Consortium Members held in the aggregate approximately 64% of the total outstanding ordinary shares of the Company, therefore, in order to ensure some representation in the voting by minority shareholders, the voting requirement would need to be (i) a certain percentage of the total outstanding ordinary shares instead of the total shares being voted by the shareholders participating in the shareholders meeting, and (ii) that the percentage of the total outstanding ordinary shares that must be voted in favor of the merger agreement and the merger must be higher than 64%. After further discussion with its advisors, the independent committee directed representatives of Houlihan Lokey to further negotiate with the Consortium Members to (i) request a price increase to $1.80, (ii) include a “go shop” for 40 days, and (iii) request the shareholder approval requirement be 66.7% or 70% of the total votes that may be cast by shareholders entitled to vote in the shareholders’ meeting (with the specific approval threshold dependent on the negotiation of the price increase).

Immediately after the independent committee meeting, on the same day, representatives of Houlihan Lokey communicated the independent committee’s positions above to the Consortium Members. The Consortium Members responded to the representatives of Houlihan Lokey that (i) they insisted on the final offer price of $1.78, and (ii) they accepted the voting requirement being 70% of the total votes as of the record date that may be cast by shareholders entitled to vote in the shareholders’ meeting and (ii) they agreed to the inclusion of the 40-day “go shop” provision on condition that the merger agreement would be signed by November 29, 2013. These responses were subsequently reported to the independent committee. Between November 26 and November 27, 2013, each member of the independent committee deliberated and responded via email to representatives of K&L Gates that he would agree to accept the counter proposal made by the Consortium Members on November 26, pending confirmation from Houlihan Lokey regarding their opinion as to the fairness of the consideration. Subsequently, representatives of Houlihan Lokey communicated to the Consortium Members that the independent committee would meet early in the week of December 2 to finalize their determination.

Between November 26 to December 2, 2013, representatives of K&L Gates and representatives of Skadden revised and finalized the draft merger agreement and the ancillary agreements. On November 26, Mr. Ding Dongdong, a director of the Company, and Eagle Rise International Limited joined the Consortium and agreed to be a Rollover Shareholders.

On December 2, 2013, the independent committee held a meeting in person in the Beijing office of K&L Gates in which representatives of Houlihan Lokey, K&L Gates and Walkers participated. At this meeting, representatives of Houlihan Lokey presented the updated financial analysis to the independent committee. The independent committee also reviewed a hypothetical liquidation analysis performed by management of the Company. This hypothetical liquidation analysis assumed a liquidation of the Company and the recoverability of assets, including accounts receivable, in the event of such a liquidation. The analysis also took into account existing contractual obligations of the Company. The analysis yielded a valuation range of $1.32 to $1.80 per share, compared to the offer price of $1.78 per share. A more detailed summary of such analysis can be found on page 16 of Exhibit (c)(2) to the Schedule 13E-3.

The independent committee discussed with representatives of Houlihan Lokey the methodology of its financial analyses. After the discussion, representatives of Houlihan Lokey delivered its oral opinion to the independent committee to the effect that, as of December 2, 2013, and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, the per share merger consideration to be received by holders of the Shares (other than holders of the Excluded Shares) in the merger is fair, from a financial point of view, to such holders. Such opinion was subsequently confirmed by delivery by Houlihan Lokey of its written opinion dated December 2, 2013 to the independent committee. The independent committee then unanimously determined that the merger agreement and the merger and the other transactions contemplated by the merger agreement were advisable and fair to and in the best interests of the Company and its shareholders, and were fair to, and in the best interests of, those shareholders who are unaffiliated with the Buyer, the Rollover Shareholders or the Company and recommended that the board of directors of the Company adopt a resolution approving and declaring the advisability of the merger agreement and the merger and the other transactions contemplated by the merger agreement and recommending that the shareholders of the Company adopt the merger agreement. Representatives of Walkers, based on BVI law and the memorandum and articles of association of the Company, advised the independent committee that interested directors may participate in the meeting of the board of directors and are entitled to vote at such meeting; provided that such directors have disclosed their interest in the transactions in the outset of the board meeting, prior to any discussion of the matters to be discussed at the meeting.

Immediately following the independent committee’s meeting, the board of directors of the Company convened a meeting. Among the directors that attended the meeting, in addition to the independent committee members, were Mr. Lin, as the Buyer, and Mr. Ding Dongdong, as a Rollover Shareholder in the proposed transaction. Therefore, at the beginning of the board meeting, Mr. Lin and Mr. Ding disclosed their interest in the proposed transaction as the Buyer and a rollover shareholder. The independent committee then discussed with the entire board (i) the transaction, (ii) the benefits and detriments of the transaction, and (iii) the process it undertook to arrive at its recommendation, including its advice from its outside financial and legal advisors. Based upon the unanimous recommendation of the independent committee, the board of directors unanimously approved and declared advisable the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommended that the shareholders of the Company adopt the merger agreement.

The merger agreement and the ancillary agreements were executed by the Company, Parent, Merger Sub and the Rollover Shareholders on December 2, 2013 following the board meeting.

Between December 2, 2013 and January 11, 2014, Houlihan Lokey contacted 27 potential buyers to formally solicit their interest in putting forth a competing offer to acquire the Company as part of the go-shop process. None of the parties contacted by Houlihan expressed any indication of interest in the Company. Among the 27 potential buyers contacted, 12 responded (including acknowledgements of receipt of solicitations) and two potential buyers formally declined. The other potential buyers who were contacted did not respond.

On March 13, 2014, Parent waived the Buyer’s obligation under the equity commitment letter to deposit the equity committment funds into a bank account outside of the PRC prior to the mailing of the proxy statement, subject to the condition that the Buyer provides evidence to the independent committee’s reasonable satisfaction that such amount has been deposited into a bank account outside of the PRC prior to the date of the shareholders’ meeting, which meeting will be adjourned or otherwise postponed until such funds have been deposited into such bank account. The Company consented to the waiver (acting at the direction of the independent committee which determined that the change in timing of the required deposit of funds outside of the PRC provided substantially the same level of certainty regarding the Buyer’s obligation to fund the equity commitment).

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

Our board of directors, acting upon the unanimous recommendation of the independent committee, which independent 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 December 2, 2013, the independent committee unanimously recommended that our board of directors adopt resolutions that:

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 its shareholders and is fair to, and in the best interests of, those shareholders who are unaffiliated with the Buyer, the Rollover Shareholders or the Company, and declare it advisable to enter into the merger agreement;

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

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 an extraordinary 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.

On December 2, 2013, our board of directors approved and adopted the resolutions recommended by the independent committee. Board members Mr. Lin and Mr. Ding, the Buyer and a Rollover Shareholder, respectively, disclosed to the board at the outset of the meeting their role in the transaction and the conflicts of interest arising from their respective roles as members of the board of directors of the Company and their interests in the transactions contemplated under the merger agreement and the Contribution Agreement, including the merger. Please see “Special Factors—Interests of Certain Persons in the Merger” beginning on page 56 for additional information.

In connection with reaching their respective determinations, the independent committee and our board of directors considered the following substantive factors and potential benefits of the merger, each of which the independent committee and our board of directors believed supported their respective decisions. Such factors are not listed in any relative order of importance:

the current and historical market prices of our Shares, including the fact that the merger consideration offered to our unaffiliated shareholders represents a 19.5% premium to the closing price of Shares on August 16, 2013, the last trading day immediately prior to the Company's announcement on August 19, 2013 that it had received “a going private” proposal. The $1.78 per Share merger consideration to be paid to unaffiliated shareholders in the merger also represents a (i) 17.1% premium over the closing price of $1.52 per Share on November 29, 2013, the trading day immediately before the merger agreement was signed; and (ii) 24.4% and 27.9% premium over the volume-weighted average closing price of the Shares during the 30 and 60 days, respectively, prior to the Company's announcement on August 19, 2013 that it had received a “going private” proposal;

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

the negotiations with respect to the merger consideration and the independent committee's determination that, following extensive negotiations with the Buyer, $1.78 per Share was the highest price that the Buyer was willing to agree to pay;

our ability to conduct a go-shop process for a period of 40 days following the signing of the merger agreement on December 2, 2013 to solicit, initiate, facilitate and encourage any “acquisition 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 73). Although the Buyer had expressed to the independent committee an intent not to sell his shares to any third party, the independent committee still determined to explore the possibility of alternate offers that, if received, could change the Buyer’s position, to the extent they arose;

the financial analysis reviewed by Houlihan Lokey with our independent committee, and the oral opinion to our independent committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 2, 2013) to the effect that, as of December 2, 2013, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, the per share merger consideration to be received by holders of the Shares (other than holders of the Excluded Shares) in the merger was fair, from a financial point of view, to such holders. Please see “Special Factors—Opinion of the Independent Committee's Financial Advisor” beginning on page 39 for additional information;

the equity commitment of the Buyer and the fact that such commitment required availability of funding prior to the mailing of this proxy statement;

the belief, after a review of strategic alternatives with the assistance of the advisors to the independent committee, including the possibility of remaining independent, a liquidation analysis and potential combinations with other merger partners, that other alternatives were less favorable to the unaffiliated shareholders than the merger, given the potential risks, rewards and uncertainties associated with those alternatives;

the independent committee's belief that it was questionable whether any third party could complete an alternative transaction in light of the Buyer's express intent not to sell its Shares to any third party and the fact that the Buyer had obtained support from certain other shareholders as set forth in the proposal and communicated to the independent committee, who collectively own approximately 66.8% of the Company;

the increased costs of regulatory compliance for public companies, including, for example, legal and accounting costs in complying with rules applicable to public companies, including rules under The Sarbanes Oxley Act of 2002 and The Dodd-Frank Wall Street Reform and Consumer Protection Act and rules requiring XBRL reporting;

the recognition of the challenges to increase shareholder value as an independent publicly traded company due to our small market capitalization;

the limited trading volume of our Shares on NASDAQ;

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 per Share merger consideration of $1.78, as adjusted for present value, and the possibility that such value might never be obtained;

the understanding and recognition that, as a privately held entity, the Company's management may have greater flexibility to focus on improving the Company's financial performance without the constraints caused by the public equity market's valuation of the Company and potential on short-term emphasis on period-to-period performance;

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

the fact that under BVI law, the required approval for the merger is only a majority of the shares voting at a meeting, and the independent committee was able to obtain an approval threshold of 70% of the outstanding Shares;

our management’s estimated forecasts of our future financial performance, together with our management's view of our financial condition, results of operations, business and prospects, acknowledging that we may face uncertain business conditions in China;

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 $2 million termination fee, and the guaranty of such payment obligation by the Buyer pursuant to a limited guaranty;

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 73);

the two-tier break-up fee mechanism that allows the Company to be responsible only for half of the otherwise applicable company termination fee in the event the company termination fee becomes payable as a result of the termination by Parent or the Company of the merger agreement in connection with an alternative acquisition proposal received by the Company during the go-shop period;

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;

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

in considering the merger with the Buyer, the independent committee was chartered to and did act solely to represent the interests of the unaffiliated security holders, and the independent committee had independent control of the negotiations with the Buyer and its independent legal advisor on behalf of such unaffiliated security holders;

In addition, the independent 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 security holders and to permit the independent committee and our board of directors to represent effectively the interests of such unaffiliated security holders. These procedural safeguards, which are not listed in any relative order of importance, are discussed below:

all of the directors serving on the independent committee during the entire process were and are independent directors and free from any affiliation with the Buyer or the Rollover Shareholders; none of such directors 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 security holders other than (i) the directors’ receipt of board compensation in the ordinary course; (ii) the directors’ receipt of compensation in connection with its evaluation of the merger (which is not contingent upon the completion of the merger or the independent committee's or board's recommendation of the merger); and (iii) the director's indemnification rights under the merger agreement;

following its formation, the independent committee's independent control of the sale process with the advice and assistance of Houlihan Lokey, as its independent financial advisor, and K&L Gates, and Walkers, as its independent legal advisors, each reporting solely to the independent committee;

the independent committee was empowered to consider and take any and all actions in connection with the original written proposal from the Buyer and the transactions contemplated thereby from August 19, 2013, 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 until such time that the independent committee had recommended such action to our board of directors;

the independent committee met regularly with counsel and its financial advisor to consider and review the terms of the merger;

the understanding of the independent committee and our board of directors that the independent committee had no obligation to recommend the authorization and approval of the proposal from the Buyer or any other proposed transaction, and in fact that the independent committee had the authority to reject the terms of any strategic transaction, including the merger;

the understanding of the independent committee and our board of directors that, under the terms of the merger agreement, the independent committee 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

the availability of dissenters’ rights to the unaffiliated shareholders who comply with all of the required procedures under the BVI Companies Act for exercising dissenters’ rights, which allow such holders to seek payment of the fair value of their shares.

The independent 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:

the fact that the Company's shareholders, other than the Rollover Shareholders, will have no on going 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;

the possibility that the Rollover Shareholders 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;

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 Rollover Shareholders;

the restrictions on the conduct of the Company's business prior to the completion of the merger, which potentially could 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;

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

the fact that Parent and Merger Sub are newly formed corporations with essentially no assets other than the Buyer’s 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 may be limited to receipt of a termination fee of $2 million (the payment of which is guaranteed by the Buyer), but that under certain circumstances the Company may not be entitled to a termination fee at all. See “The Merger Agreement and Plan of Merger—Termination of the Merger Agreement” beginning on page 78 and “The Merger Agreement and Plan of Merger—Termination Fees and Expense Reimbursement” beginning on page 80 for additional information;

under certain circumstances, the Company will be required to, pay Parent a termination fee of $1 million or $500,000 plus reimbursement of Parent’s expenses in connection with the termination of the merger agreement;

the terms of the Rollover Shareholders 's participation in the merger and the fact that the Rollover Shareholders may have interests in the transaction that are different from, or in addition to, those of our unaffiliated security holders, 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 56 for additional information; and

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

The forgoing discussion of information and factors considered by the independent committee and our board of directors is not intended to be exhaustive, but includes the material factors considered by the independent committee and our board of directors. In view of the wide variety of factors considered by the independent committee and our board of directors, neither the independent 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 independent 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 independent 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 security holders 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 independent committee considered financial analyses presented by Houlihan. These analyses included, among others, a selected companies analysis and a discounted cash flow analysis. While the independent committee was presented with the comparative data regarding selected going-private transactions involving US-listed Chinese companies summarized below under the caption “Special Factors—Opinion of the Independent Committee's Financial Advisor” beginning on page 39, such data did not have a meaningful impact on the special committee’s determination of the fairness of the merger to the unaffiliated security holders as such data is merely a collection of publicly available information relating to companies with characteristics, such as operating environment, market segment, geographic coverage, scale of operation, and competitive strengths, different from those of the Company and with securities traded on different markets. The independent committee also considered the fact that this information did not have a meaningful impact on Houlihan Lokey’s fairness opinion in evaluating the impact of such information on its determination of the fairness of the merger. All of the material analyses as presented to the independent committee on December 2, 2013 are summarized below under the caption “Special Factors—Opinion of the Independent Committee's Financial Advisor” beginning on page 39. The independent committee expressly adopted these analyses and the opinion of Houlihan Lokey among other factors considered, in reaching its determination as to the fairness of the transactions contemplated by the merger agreement, including the merger.

The independent committee and the board of directors considered the liquidation value of Company's assets but did not focus on liquidation as a viable alternative because it 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 independent committee and the board of directors believe that the value of the Company's assets that might be realized in a liquidation would be less than its going concern value. As indicated in the Company’s financial statements, while the Company has significant cash balances, a large amount of its current assets are subject to certain significant commitments and contingencies, primarily relating to certain capital commitments and construction projects. In addition, if the Company were liquidated, a significant amount of the Company’s current billed and unbilled accounts receivable would become doubtful. In addition, if the Company were to proceed with a liquidation process, related expenses such as severance, wind down costs and dividend tax could be significant and which would reduce any expected net recovery value on liquidated assets. Each of the independent committee and the board of directors believes the analyses and additional factors it reviewed provided an indication of our going concern value. Each of the independent committee and board of directors also considered the historical market prices of our Shares as described under the caption “Market Price of the Shares” beginning on page 61. Each of our independent committee and the board of directors considered the purchase prices paid in previous purchases as described under the caption “Transactions in the Shares.” Neither the independent 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 independent 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, 2013 was $10.89, which is calculated as total equity divided by ordinary shares as of September 30, 2013. 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 are fair to and in the best interests of our unaffiliated security holders, our board of directors as a group did not undertake its own formal analysis of the merger agreement and the merger. Our board of director’s 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 independent committee and each of the factors examined by the independent committee as described above under this section and adopted such recommendations and analysis as its own. 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 fair to and in the best interests our unaffiliated security holders.

Except as discussed in “Special Factors—Background of the Merger,” “Special Factors—Reasons for the Merger and Recommendation of the Independent Committee and our Board of Directors,” and “Special Factors—Opinion of the Independent 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 security holders for purposes of negotiating the terms of the transaction and/or preparing a report concerning the fairness of the transaction.

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

Under the rules governing “going private” transactions, each of the Buyer, Mr. Ding, Parent, Merger Sub, Chen Shuli, Tiancheng Int’l Investments Group Limited, Victory Summit Investments Limited, Windtech Holdings Limited, Wisetech Holdings Limited, RichWise International Investment Group Limited, Eagle Rise Investments Limited, HK Haima Group Limited and Ms. Weixin Zhuang (collectively, the “buyer parties” and each, a “buyer party”), may be 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 party 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 parties 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. The buyer parties have 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 56 for additional information. The buyer parties 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 Independent Committee and Our Board of Directors” beginning on page 28 and the additional factors described below.

The interests of the Company’s unaffiliated shareholders were represented by the independent committee, which negotiated the terms and conditions of the merger agreement with the assistance of its legal and financial advisors. The buyer parties attempted to negotiate a transaction that would be most favorable to them, 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 parties did not participate in the deliberations of the independent committee regarding, and did not receive any advice from the independent committee’s legal or financial advisors as to, the fairness of the merger to the Company’s unaffiliated shareholders. Furthermore, the buyer parties 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, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and the analysis and resulting conclusions of, the independent committee and the Company’s board of directors discussed in “Special Factors – Reasons for the Merger and Recommendation of the Independent Committee and Our Board of Directors” beginning on page 28, the buyer parties believe the merger is substantively and procedurally fair to the Company’s unaffiliated shareholders. In particular, the buyer parties believe that the proposed merger is both procedurally and substantively fair to the unaffiliated shareholders of the Company based on their consideration of the following factors, which are not listed in any relative order of importance, among others:

the fact that the independent committee and, acting upon the unanimous recommendation of the independent committee, the Company’s board of directors determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of the Company’s unaffiliated shareholders;

the fact that the independent committee, consisting entirely of directors who are not officers or employees of the Company and who are not affiliated with any buyer party, 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;

the fact that the members of the independent 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) independent committee members’ compensation in connection with its evaluation of the merger (which is not contingent upon the completion of the merger or the independent committee’s or board’s recommendation of the merger), and (iii) the directors’ indemnification rights under the merger agreement;

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

the fact that the independent 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;

the current and historical market prices of the Company's Shares, including the fact that the merger consideration offered to the unaffiliated shareholders represents a 19.5% premium to the closing price of the Shares on August 16, 2013, the last trading day immediately prior to the Company’s announcement on August 19, 2013 that it had received “a going private” proposal. The $1.78 per Share merger consideration to be paid to unaffiliated shareholders in the merger also represents a (i) 17.1% premium over the closing price of $1.52 per Share on November 29, 2013, the trading day immediately before the merger agreement was signed, and (ii) a 24.4% and 27.9% premium over the volume-weighted average closing price of the Shares during the 30 and 60 days, respectively, prior to the Company’s announcement on August 19, 2013 that it had received a “going private” proposal;

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;

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 independent committee, its advisors and the Buyer;

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 and Merger Sub to use their reasonable best efforts to obtain the financing;

the fact that the independent committee received from its financial advisor, Houlihan Lokey, an opinion, dated December 2, 2013, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, the per share merger consideration to be received by holds of the Shares (other than holders of the Excluded Shares) in the merger was fair, from a financial point of view, to such holders;

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

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 73);

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

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

the fact that adoption of the merger agreement is subject to approval by an affirmative vote of holders of Shares representing at least 70% of the outstanding Shares determined as of the record date for the Shareholders Meeting;

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

the fact that none of the buyer parties or any of their advisors participated in or sought to influence the deliberative process of the independent committee.

The buyer parties did not consider the Company’s net book value, which is an accounting concept based on historical costs, as a factor because it believed that net book value is not a material indicator of the Company’s value as a going concern but rather is indicative of historical costs.

In its consideration of the fairness of the proposed merger, the buyer parties did not undertake an appraisal of the assets of the Company to determine the Company’s liquidation value for the Company’s unaffiliated shareholders due to the impracticability of determining a liquidation value given the significant execution risk involved in any breakup, since it considered the Company to be a viable going concern where value is derived from cash flows generated from its continuing operations, and because the Company will continue to operate its business following the merger.

The buyer parties did not seek to establish a pre-merger going concern value for the Company’s Shares to determine the fairness of the merger consideration to the Company’s unaffiliated shareholders because following the merger, the Company will have a significant different capital structure. However, to the extent the pre-merger going concern value was reflected in the pre-announcement price of the Company’s Shares, the merger consideration represented a premium to the going concern value of the Company.

The buyer parties are not aware of the terms of, and thus did not consider in their fairness determination, any offers or proposals made by any unaffiliated third parties with respect to (i) a merger or consolidation of the Company with or into another company, (ii) a sale of all or a substantial part of the Company’s assets, or (iii) the purchase of the Company voting securities that would enable the holder to exercise control over the Company.

The foregoing discussion of the information and factors considered and given weight by the buyer parties in connection with its evaluation of the substantive and procedural fairness of the merger to the Company’s unaffiliated shareholders is not intended to be exhaustive, but is believed to include all material factors considered. The buyer parties found it impracticable to assign, and did not assign, relative weights to the foregoing factors considered in reaching its conclusions as to the substantive and procedural fairness of the merger to the Company’s unaffiliated shareholders. Rather, the buyer parties made the fairness determinations after considering all of the foregoing as a whole.

The buyer parties believe these factors provide a reasonable basis for its belief that the merger is both substantively and procedurally fair to the Company’s unaffiliated shareholders. This belief, however, is not intended to be and should not be construed as a recommendation by the buyer parties to any shareholder of the Company to approve the merger agreement. The buyer parties do not make any recommendation as to how such shareholders should vote relating to the proposal to approve the merger agreement and the merger at the extraordinary general meeting.

None of the buyer parties performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the proposed merger to the Company’s unaffiliated shareholders.

Certain Financial Projections

The Company does not generally make public detailed financial forecasts or internal projections as to future performance, revenues, earnings or financial condition. However, the Company's management prepared certain financial projections (set forth below) for the calendar years ending 2013 through 2018 for the independent committee and Houlihan Lokey in connection with the financial analysis of the merger. These financial projections, which were based on Company management's estimates of the Company's future financial performance as of the date provided, were prepared by the Company's management for internal use and for use by Houlihan Lokey 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 underlying material assumptions taken into account by management in the preparation of such projected financial information are as follows: (i) the average selling prices for footwear, apparel and accessories will decrease slightly; (ii) the Company’s capital expenditures for 2013 through 2016 reflect the construction of a new manufacturing facility in Jiangxi province; (iii) after the new Jiangxi province manufacturing facility is completed (a) the percentage of revenue attributable to in-house production will increase as compared to outsourced production and (b) inventory levels will increase as the Company procures additional raw materials to satisfy its increased production capacity; (iv) gross margins will reflect positive impacts from the Jiangxi province facility construction through reduced cost of goods sold, but will be offset by the impact of (a) increasing competition in the sportswear sector, which is expected to result in lower average selling prices, (b) increasing raw material costs, and (c) increasing labor costs in China; (v) accounts receivable days are projected to decrease from historical highs as the sportswear sector is expected to recover; and (vi) no material acquisitions are assumed.

Management Financial Projections

Exceed Company Ltd.
Income Statement
(RMB in millions)	Fiscal Year Ending December 31,
	2013E			2014E			2015E			2016E			2017E			2018E

Reported Revenue	$	1,517.1		$	1,580.9		$	1,689.1		$	1,881.8		$	2,015.2		$	2,103.3
Cost of Goods Sold		(1,109.8	)		(1,161.9	)		(1,228.3	)		(1,358.0	)		(1,463.9	)		(1,536.9	)
Gross Profit	$	407.3		$	419.1		$	460.8		$	523.9		$	551.3		$	566.4
Selling & Distribution Expenses		(241.2	)		(237.8	)		(263.1	)		(308.4	)		(325.2	)		(336.1	)
General & Administrative Expenses		(53.8	)		(56.0	)		(59.9	)		(66.7	)		(71.4	)		(73.5	)
Research and Development Expenses		(44.0	)		(44.3	)		(47.3	)		(50.8	)		(53.4	)		(54.7	)
Depreciation & Amortization		22.4			50.3			69.0			73.7			81.3			85.1

EBITDA¹	$	90.8		$	131.3		$	159.5		$	171.7		$	182.5		$	187.2

Depreciation & Amortization		(22.4	)		(50.3	)		(69.0	)		(73.7	)		(81.3	)		(85.1	)

EBIT²	$	68.4		$	81.0		$	90.5		$	98.0		$	101.2		$	102.1
Other Income		13.2			2.8			2.8			2.8			2.8			2.8
Finance Cost		(1.1	)		(7.2	)		(13.2	)		(13.2	)		(13.2	)		(13.2	)
Profit Before Tax	$	80.4		$	76.6		$	80.1		$	87.6		$	90.8		$	91.7
Tax Rate		25.0	%		20.0	%		20.0	%		20.0	%		20.0	%		20.0	%
Tax Expense		(20.1	)		(15.3	)		(16.0	)		(17.5	)		(18.2	)		(18.3	)
Net Income	$	60.3		$	61.3		$	64.1		$	70.1		$	72.7		$	73.4

Exceed Company Ltd.
Selected Items of Cash Flows
(RMB in millions)	Fiscal Year Ending December 31,
	2013E		2014E		2015E		2016E		2017E		2018E

Depreciation & Amortization	$	22.4	$	50.3	$	69.0	$	73.7	$	81.3	$	85.1
Capital Expenditures		489.0		363.3		111.4		110.0		30.0		30.0
Capital Commitments³		1.1		356.3		0.0		2.4		0.0		0.0

Exceed Company Ltd.
Selected Items of Balance Sheet
(RMB in millions)	Fiscal Year Ending December 31,
	2013E		2014E		2015E		2016E		2017E		2018E
Accounts Receivable	$	1,011.4	$	966.1	$	938.4	$	940.9	$	1,018.8	$	1,104.2
Inventory		30.8		64.5		102.4		132.0		162.7		170.8
Accounts Payable		46.2		48.4		51.2		56.6		61.0		64.0
Net Working Capital⁴	$	996.0	$	982.3	$	989.6	$	1,016.4	$	1,120.5	$	1,210.9

Exceed Company Ltd.

Estimated Unlevered Free Cash Flow Calculated by Houlihan LokeyandApproved by the Independent Committee⁵

(US$ in millions)	Fourth Quarter			Fiscal Year Ending December 31,																		Terminal Year
	2013E			2013E			2014E			2015E			2016E			2017E			2018E			Calculation

Reported Revenue	$	61.9		$	245.5		$	257.4		$	273.3		$	302.7		$	322.8		$	337.0		$	337.0
Cost of Goods Sold		(45.5	)		(179.6	)		(189.2	)		(198.7	)		(218.4	)		(234.5	)		(246.3	)		(242.6	)
Gross Profit	$	16.4		$	65.9		$	68.2		$	74.5		$	84.3		$	88.3		$	90.8		$	94.4
Selling & Distribution Expenses		(9.2	)		(39.0	)		(38.7	)		(42.6	)		(49.6	)		(52.1	)		(53.9	)		(53.9	)
General & Administrative Expenses		(2.8	)		(8.7	)		(9.1	)		(9.7	)		(10.7	)		(11.4	)		(11.8	)		(11.8	)
Research and Development Expenses		(1.9	)		(7.1	)		(7.2	)		(7.7	)		(8.2	)		(8.6	)		(8.8	)		(8.8	)
Depreciation & Amortization⁶		1.4			3.6			8.2			11.2			11.9			13.0			13.6			10.0

EBITDA¹	$	3.9		$	14.7		$	21.4		$	25.8		$	27.6		$	29.2		$	30.0		$	30.0

Depreciation & Amortization⁶		61.934			(3.6	)		(8.2	)		(11.2	)		(11.9	)		(13.0	)		(13.6	)		(10.0	)

EBIT²	$	2.5		$	11.1		$	13.2		$	14.6		$	15.8		$	16.2		$	16.4		$	20.0

Tax Expense⁷	$	(0.6	)	$	(2.8	)	$	(2.6	)	$	(2.9	)	$	(3.2	)	$	(3.2	)	$	(3.3	)	$	(5.0	)
Depreciation & Amortization⁶		1.4			3.6			8.2			11.2			11.9			13.0			13.6			10.0
Change in Net Working Capital⁸		1.7			12.9			1.3			(0.2	)		(3.4	)		(16.0	)		(14.5	)		(9.9	)

Capital Expenditures		(40.4	)		(79.1	)		(59.1	)		(18.0	)		(17.7	)		(4.8	)		(4.8	)		(4.8	)
Capital Commitments³		0.2			0.2			58.2			0.0			0.4			0.0			0.0			0.0
Adjusted Capital Expenditures⁹		(40.2	)		(79.0	)		(0.9	)		(18.0	)		(17.3	)		(4.8	)		(4.8	)		(4.8	)

Unlevered Free Cash Flow	$	(35.3	)	$	(54.2	)	$	19.1		$	4.6		$	3.7		$	5.1		$	7.4		$	10.3

Notes:

(1) "EBITDA" refers to earnings before interest, taxes, depreciation and amortization.

(2) "EBIT" refers to earnings before interest and taxes.

(3) Capital Commitments refers to the RMB 359.8 million (or US$58.8 million) near-term capital commitments (based on management estimates as of 9/30/2013) the Company has made in connection with the ongoing construction projects in Fujian and Jiangxi provinces, which are expected to be incurred by the end of 2016 and cannot be cancelled without incurring substantially all the costs as break fees.

(4) Net Working Capital is calculated as Accounts Receivable plus Inventory minus Accounts Payable.

(5) Numbers converted to US$ using average of forward rate per Bloomberg; cash flow and balance sheet items are converted using the average rate at the beginning and end of the respective period; balance sheet items are converted using the rate at the end of the respective period.

(6) Terminal year depreciation and amortization expense is greater than terminal year capital expenditures to account for the long average depreciation life of the Company’s fixed assets.

(7) Applies normalized tax rate at 25%, except for 2014-2018, where the tax rate is projected to be 20% due to the near term tax benefits received from the Jinjiang government, per Company management.

(8) Terminal year change in debt free net working capital is adjusted downward pro-rata to account for the reduction in growth assumed in the terminal period.

(9) Adjusted Capital Expenditures is calculated by Capital Expenditures minus Capital Commitments.

The financial projections are not a guaranty of performance. They involve significant risks, uncertainties and assumptions. In compiling the projections, our management took into account historical performance, combined with estimates regarding net revenue, gross profit, operating expenses, operating income 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. However, this information is not 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 transactions 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 completion of the merger or any changes to our operations or strategy that may be implemented after the time the projections were prepared. As a result, there can be no assurance that the projections will be realized, and actual results may be significantly different from those contained in the projections.

Neither the Company, its independent registered public accounting firm nor any other independent accounts have examined, compiled, or performed any procedures with respect to the financial projections or any amounts derived therefrom or built thereupon, nor have they given any opinion or any other form of assurance on such information or its achievability. The financial projections included in this proxy statement are included solely to give shareholders access to certain information that was made available to the independent committee and Houlihan Lokey, and are not included in this proxy statement in order to induce any holder of Shares to vote in favor of approval of the merger agreement or to elect not to exercise dissenters’ rights for his or her Shares.

Opinion of Houlihan Lokey (China) Limited

On December 2, 2013, Houlihan Lokey rendered an oral opinion to our independent committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion dated December 2, 2013) to the effect that, as of December 2, 2013, based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion, the per share merger consideration to be received by holders of the Ordinary Shares (other than holders of the Excluded Shares) in the merger was fair, from a financial point of view, to such holders.

In arriving at its opinion, Houlihan Lokey, among other things:

reviewed a draft, dated December 2, 2013, of the merger agreement;

reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company made available to Houlihan Lokey by the Company, including financial projections prepared by the management of the Company relating to the Company for the calendar years ending 2013 through 2018;

reviewed a liquidation analysis prepared by the management of the Company based on the Company’s consolidated balance sheet as of September 30, 2013 (the “Liquidation Analysis”);

spoke with certain members of the management of the Company and certain of its representatives and advisors regarding the business, operations, financial condition and prospects of the Company, the Transaction and related matters;

compared the financial and operating performance of the Company with that of other public companies that Houlihan Lokey deemed to be relevant;

considered the publicly available financial terms of certain transactions that Houlihan Lokey deemed to be relevant;

reviewed the current and historical market prices and trading volume for the Ordinary Shares, and the current and historical market prices and trading volume of the publicly traded securities of certain other companies that Houlihan Lokey deemed to be relevant; and

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and does not assume any responsibility with respect to such data, material and other information. In addition, management of the Company has advised Houlihan Lokey, and Houlihan Lokey assumed, that the financial projections reviewed by Houlihan Lokey have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of the Company, and Houlihan Lokey expressed no opinion with respect to such projections or the assumptions on which they were based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to Houlihan Lokey’s analyses or their opinion, and that there was no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading. In addition, Houlihan Lokey understood that financial projections for the Company had been prepared by the management of the Company in Renminbi (“RMB”), the legal currency of China. Houlihan Lokey utilized certain publicly available RMB to United States dollar exchange rates and Houlihan Lokey assumed, with the consent of the independent committee, that such exchange rates were reasonable to utilize for purposes of Houlihan Lokey’s analyses. Houlihan Lokey expressed no view or opinion as to any currency or exchange rate fluctuations and assumed, with the consent of the independent committee, that any such fluctuations would not in any respect be material to Houlihan Lokey’s analyses or their opinion. Further, management of the Company advised Houlihan Lokey that (i) the financial projections provided to Houlihan Lokey were the only projections prepared by management of the Company (or any affiliated entity) in connection with the merger, (ii) they had not received, reviewed, approved, commented on or otherwise contributed to any other projections or similar information prepared by any other party in connection with the merger, nor had they updated or otherwise revised the financial projections since the last date they were provided to Houlihan Lokey and (iii) to the best of their knowledge and belief, no other projections or similar information had been provided to any party involved in the merger, and the independent committee had received all projections and/or similar information that had been received by any other party involved in the merger.

Houlihan Lokey relied upon, with the consent of the independent committee, representations made by management of the Company as of September 30, 2013 as to the US$58.8 million of capital commitments made by the Company through 2016 for (i) operating leases, (ii) staff quarter construction at the Company’s existing production center in Jinjiang, Fujian Province, (iii) construction, land purchases, and other investments in the Company’s new production center in Ruichang City, Jiangxi Province, (iv) advertisement contracts, and (v) research and development commitments, and the associated liabilities of the Company should these commitments be cancelled. Houlihan Lokey understood that management of the Company took into account the effects of these capital commitments in preparing the financial projections. Houlihan Lokey also assumed, with the consent of the independent committee, that the Liquidation Analysis, including the underlying assumptions as to the recovery rate of the Company’s assets and liabilities, its contractual obligations and estimated wind down charges, were reasonably prepared based on the best currently available estimates and judgments as to the matters covered thereby.

Houlihan Lokey understood that Mr. Shuipan Lin (the “Chairman”) had no intention to sell his shares and had no agreement, arrangement or other understanding regarding the sale or other disposal of any Ordinary Shares (or interest therein, direct or indirect) to a minority equity investor or any other third party. Furthermore, Houlihan Lokey understood that the Chairman had indicated that he was only willing to consider entering into an agreement with Parent and the Rollover Shareholders in relation to the merger and had no interest in entering into any agreement, arrangement or understanding with other parties as an alternative thereto. It was represented to Houlihan Lokey that the Chairman would independently obtain financing to fulfill his equity commitments to Parent as they become due and that none of the Company’s cash balance would be utilized in any manner towards payment of the consideration in the merger.

Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the merger and all other related documents and instruments that are referred to therein were true and correct, (b) each party to the merger and such other related documents and instruments would fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the merger would be satisfied without waiver thereof, and (d) the merger would be consummated in a timely manner in accordance with the terms described in all such agreements and other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey also relied upon and assumed, without independent verification, that (i) the merger would be consummated in a manner that complies in all respects with all applicable international, federal and state statutes, rules and regulations, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the merger would be obtained and that no delay, limitations, restrictions or conditions would be imposed or amendments, modifications or waivers made that would have an effect on the merger or the Company that would be material to Houlihan Lokey’s analyses or its opinion. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the merger agreement would not differ in any material respect from the last draft of the merger agreement it reviewed.

Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and did not make, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey did not estimate, and expressed no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey has undertaken no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company is or may be a party or is or may be subject.

The opinion of Houlihan Lokey was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date of the opinion. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of its opinion. Houlihan Lokey did not express any opinion as to what the value of each Ordinary Share actually would be when exchanged pursuant to the merger or the price or range of prices at which the Ordinary Shares may be purchased or sold at any time.

Houlihan Lokey’s opinion was furnished for the use of the independent committee (solely in its capacity as such) in connection with its evaluation of the merger and may not be used for any other purpose without Houlihan Lokey’s prior written consent. The opinion should not be construed as creating any fiduciary duty on Houlihan Lokey’s part to any party. The opinion was not intended to be, and does not constitute, a recommendation to the independent committee, the board of directors, any security holder or any other person as to how to act or vote with respect to any matter relating to the merger or otherwise. Houlihan Lokey has duly consented to the inclusion of its opinion as Annex B to the proxy statement and its presentation to the independent committee, dated December 2, 2013, as Exhibit (c)(2) to the Schedule 13E-3.

Houlihan Lokey was not requested to opine as to, and its opinion did not express a view as to or otherwise address, among other things: (i) the underlying business decision of the independent committee, the board of directors, the Company, its security holders or any other party to proceed with or effect the merger, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the merger or otherwise (other than the per share merger consideration to the extent expressly specified in the opinion of Houlihan Lokey), (iii) the fairness of any portion or aspect of the merger to the holders of any class of securities, creditors or other constituencies of the Company, or to any other party, except if and only to the extent expressly set forth in the last sentence of Houlihan Lokey’s opinion, (iv) the relative merits of the merger as compared to any alternative business strategies that might exist for the Company or any other party or the effect of any other transaction in which the Company or any other party might engage, (v) the fairness of any portion or aspect of the merger to any one class or group of the Company’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s or such other party’s security holders or other constituents (including, without limitation, the allocation of any consideration amongst or within such classes or groups of security holders or other constituents), (vi) whether or not the Company, its security holders or any other party is receiving or paying reasonably equivalent value in the merger, (vii) the solvency, creditworthiness or fair value of the Company or any other participant in the merger, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to or consideration payable to or received by any officers, directors or employees of any party to the merger, any class of such persons or any other party, relative to the per share merger consideration or otherwise. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the independent committee, on the assessments by the independent committee, the board of directors, the Company and their respective advisors, as to all legal, regulatory, accounting, insurance and tax matters with respect to the Company and the merger or otherwise.

In preparing its opinion to our independent committee, Houlihan Lokey performed a variety of analyses, including those described below. The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of a fairness opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither a fairness opinion nor its underlying analyses is readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors or focusing on information presented in tabular format, without considering all analyses, methodologies and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques.

In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of the opinion. Houlihan Lokey’s analyses involved judgments and assumptions with regard to industry performance, general business, economic, regulatory, market and financial conditions and other matters, many of which are beyond the control of our Company, the independent committee or Houlihan Lokey, such as the impact of competition on the business of our Company and on the industry generally, industry growth and the absence of any material change in the financial condition and prospects of our Company or the industry or in the markets generally. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to our Company or the proposed merger and an evaluation of the results of those analyses is not entirely mathematical. Houlihan Lokey believes that mathematical derivations (such as determining average and median) of financial data are not by themselves meaningful and should be considered together with qualities, judgments and informed assumptions. The estimates contained in our Company’s analyses and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of our Company, the independent committee or Houlihan Lokey. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

Houlihan Lokey’s opinion was provided to our independent committee in connection with its evaluation of the proposed merger and was only one of many factors considered by our independent committee in evaluating the proposed merger. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the merger consideration or of the views of our independent committee with respect to the merger or the merger consideration. The type and amount of consideration payable in the merger were determined through negotiation between the independent committee and Parent, and the decision to enter into the merger was solely that of our independent committee and board of directors.

The following is a summary of the material analyses reviewed by Houlihan Lokey with our independent committee in connection with Houlihan Lokey’s opinion rendered on December 2, 2013. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses.

For purposes of its analyses, Houlihan Lokey reviewed a number of financial metrics, including:

Enterprise Value calculated as the value of the relevant company’s outstanding equity securities (taking into account its outstanding warrants and other convertible securities) based on the relevant company’s closing stock price, or equity value, plus net debt (calculated as outstanding indebtedness, preferred stock and capital lease obligations less the amount of cash on its balance sheet net of capital expenditure related capital commitments), as of a specified date.

Earnings before interest, taxes, depreciation, and amortization, or EBITDA.

Unless the context indicates otherwise, enterprise values and equity values derived from the selected companies analysis described below were calculated using the closing price of our common stock and the common stock of the selected sportswear companies listed below as of November 29, 2013. Accordingly, this information may not reflect current or future market conditions. Estimates of 2013 and 2014 EBITDA for our Company were based on estimates provided by our management. Estimates of 2013 and 2014 EBITDA for the selected sportswear companies listed below were based on certain publicly available research analyst estimates for those sportswear companies.

Selected Companies Analysis. Houlihan Lokey calculated multiples of enterprise value based on certain financial data for the Company and the selected sportswear companies listed in the table below. The calculated multiples included enterprise value as a multiple of estimated 2014 EBITDA.

The table below sets forth a summary of relevant information reviewed by Houlihan Lokey for conducting its selected public company analysis. Although none of the companies under the selected companies analysis is directly comparable to the Company, the selected companies are sportswear companies with operations and/or other criteria, such as lines of business, markets, business risks, growth prospects, maturity of business and size and scale of business that, for the purposes of its analysis, Houlihan Lokey and the management of the Company considered generally relevant in evaluating the Company. The foregoing criteria were consistently applied to all selected companies. Information for each of the selected public companies was based on each company’s most recent publicly available financial information and closing share prices as of November 29, 2013.

Selected Companies Trading Statistics
(dollars and shares in millions, except per share or per share values)
								Enterprise Value / EBITDA
		Price 11/29/2013		Eq. Market Value ¹		EnterpriseValue ²		LTM			NFY			NFY+ 1			Eq. Market Value / Net Book Value
Company	Ticker	($)		($mm)		($mm)		(x)			(x)			(x)			LTM (x)
Selected Companies
ANTA Sports Products Limited	SEHK:2020	$	1.48	$	3,693.2	$	2,922.3		11.7	x		11.1	x		10.1	x		3.56	x
Li Ning Company Limited	SEHK:2331		0.96		1,305.0		1,309.4		NM			NM			NM			3.21	x
Xtep International Holdings Limited	SEHK:1368		0.50		1,105.2		685.4		4.1	x		4.8	x		4.9	x		1.53	x
361 Degrees International Limited	SEHK:1361		0.28		586.8		223.0		2.4	x		2.3	x		1.8	x		0.75	x
China Dongxiang (Group) Company Ltd	SEHK:3818		0.16		871.3		118.2		10.9	x		6.0	x		6.2	x		0.80	x
Peak Sport Products Co., Ltd.	SEHK:1968		0.23		492.6		133.6		3.0	x		2.6	x		1.9	x		0.74	x
Ever-Glory International Group, Inc.	AMEX:EVK		4.38		65.7		102.3		3.9	x		NM			NM			1.27	x
Meike International Holdings Limited	SEHK:953		0.07		85.6		76.1		NM			NM			NM			0.73	x
Flyke International Holdings Ltd.	SEHK:1998		0.06		51.4		55.0		NM			NM			NM			0.42	x
East Asia Holdings Investment Limited	KOSE:A900110		1.40		38.6		38.4		NM			NM			NM			NM
China Great STAR International Limited	KOSE:A900040		1.71		122.6		30.2		0.4	x		NM			NM			0.46	x
XiDeLang Holdings Limited	KLSE:XDL		0.10		75.4		29.3		1.1	x		1.4	x		NM			0.49	x
Naibu Global International Company Plc	AIM:NBU		1.20		67.5		3.9		0.1	x		0.1	x		0.1	x		0.36	x

High				$	3,693.2	$	2,922.3		11.7	x		11.1	x		10.1	x		3.56	x
Low				$	38.6	$	3.9		0.1	x		0.1	x		0.1	x		0.36	x

Mean				$	658.5	$	440.6		4.2	x		4.0	x		4.2	x		1.20	x
Median				$	122.6	$	102.3		3.0	x		2.6	x		3.4	x		0.75	x

Exceed Company Ltd. (Current Price)	NasdaqGS:EDS	$	1.49	$	51.3	$	25.3		1.9	x		1.7	x		1.2	x		0.14	x
Exceed Company Ltd. (Offer Price)	NasdaqGS:EDS	$	1.78	$	60.1	$	34.0		2.5	x		2.3	x		1.6	x		0.17	x

Sources: Capital IQ, Company public filings, analyst reports

Notes:

1. Equity Market Value refers to share price * (common shares outstanding + options and warrants per the treasury stock method)

2. Enterprise Value refers to equity market value + debt + preferred stock + derivative liabilities + minority interest – cash and short term investment (less capital expenditure related capital commitments)

LTM refers to the most recently completed twelve month period for which financial information has been made public

NFY refers to next fiscal year; NFY+1 refers to the year after next fiscal year

NA refers to not available figure, NM refers to not meaningful figure

No company used in this analysis for comparative purposes is identical to the Company

Converted to US$ using relevant rates as of 11/29/2013

Based on Houlihan Lokey's professional judgment and after taking into account qualitative and quantitative factors with respect to the Company and the selected companies, including as to size, growth and profitability, Houlihan Lokey applied the following selected multiple ranges derived from the selected companies to corresponding financial data for the Company:

Multiple Description	Selected Multiple Range
	Low		High
Enterprise Value as a multiple of 2014E EBITDA		1.0		3.0

The selected companies analysis indicated the following implied per share reference range for the Company, as compared to the proposed per share merger consideration:

Implied Per Share Equity Reference Range for the Company	Per Share Merger Consideration

$1.41 - $2.67 (based on 2014 estimated EBITDA)	$	1.78

Discounted Cash Flow Analysis. Houlihan Lokey performed a discounted cash flow analysis for the purpose of determining an illustrative range of implied equity value per Ordinary Share. A discounted cash flow analysis is a method of evaluating an asset using estimates of the unlevered free cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value”. “Present value” refers to the current value of one or more future cash payments from the asset, which is referred to as that asset’s cash flows, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, capitalized returns and other appropriate factors. “Terminal value” refers to the capitalized value of all cash flows from an asset for periods beyond the final forecast period. Based on internal estimates provided by the Company’s management, which are disclosed under “Special Factors—Financial Projections”, Houlihan Lokey applied discount rates ranging from 13.5% to 17.5% to the unlevered, after- tax free cash flows that the Company was forecasted to generate through fiscal 2018 to derive estimated net present values of such unlevered free cash flows ranging from approximately US$(5.2) million to US$(3.4) million. The chosen discount rates resulted from Houlihan Lokey’s calculation of the Company’s weighted average cost of capital, which is a measure of the weighted average expected return on a given company’s equity and debt securities based on their relative proportions in such company’s capital structure. Houlihan Lokey calculated the Company’s weighted average cost of capital by estimating the weighted average of the Company’s cost of equity and the Company’s after- tax cost of debt. The Company’s cost of equity was estimated using the capital asset pricing model. Houlihan Lokey 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. Houlihan Lokey then calculated terminal values for the Company by applying a range of perpetuity growth rates of 2.0% to 3.0% to the Company’s estimated terminal year unlevered free cash flow provided by management of the Company. Applying the same range of discount rates used above, Houlihan Lokey derived estimated present values of the Company’s terminal value ranging from approximately US$32.2 million to US$62.9 million. By adding the present values of unlevered free cash flows to the present values of terminal value, Houlihan Lokey calculated the implied enterprise value of the Company ranging from approximately US$27.1 million to US$59.4 million. With the consent of the independent committee, Houlihan Lokey calculated the Company’s implied equity value by adding to this range of estimated implied enterprise values an amount of approximately US$26 million, which is the sum of the Company’s cash and cash equivalents, less estimated amounts of the Company’s capital commitments through 2016 as provided by management of the Company as of September 30, 2013, and less total debt. The foregoing resulted in a range of the Company’s implied equity values of approximately US$53.1 million to US$85.5 million. By dividing the range of implied equity values of the Company by its total number of outstanding shares of 33,736,313 as of September 30, 2013 provided by management of the Company, Houlihan Lokey derived the following reference range of implied value per share for the Company, as compared to the proposed per share merger consideration:

Implied Per Share Equity Reference Range for the Company	Per Share Merger Consideration

$1.57 - $2.53	$	1.78

Additional Information

The following information was compiled from publicly available sources and included for informational purposes only in the appendix to the materials presented to the independent committee by Houlihan Lokey. This information did not have any meaningful impact on the analyses performed by Houlihan Lokey in connection with the delivery of its fairness opinion.

Implied Premiums Paid in Selected Transactions. Houlihan Lokey compiled data with regard to the premiums represented by the per share consideration paid or to be paid in each of the following going-private transactions involving US-listed Chinese companies to the various undisturbed reference prices of the target’s shares. The data presented in the table below pertains to transactions that have been announced but not closed.

Initial			Offer		Price Premium
Offer Announced	Closing Date	Company Name	Price¹ (US$)		1-Day Prior			30-Day VWAP²			60-Day VWAP²			90 -Day VWAP²			180-Day VWAP²			52-Week VWAP²			52-Week High³
On-Going Deals
11/25/2013	-	Giant Interactive Group, Inc.	$	11.75		16.0	%		28.8	%		30.9	%		34.6	%		44.6	%		58.7	%		(83.1	)%
9/30/2013	-	Charm Communications Inc.		4.70		17.2	%		14.3	%		13.2	%		9.2	%		5.2	%		13.5	%		(20.2	)%
9/4/2013	-	China Hydroelectric Corporation		2.97		33.2	%		37.5	%		30.6	%		25.2	%		35.6	%		44.1	%		(8.6	)%
6/20/2013	-	China Edu Corporation		7.00		19.9	%		32.7	%		13.2	%		14.0	%		15.7	%		18.3	%		(86.3	)%
6/6/2013	-	iSoftStone Holdings Limited		5.45		12.6	%		32.7	%		20.1	%		16.8	%		15.8	%		12.8	%		(23.1	)%
5/21/2013	-	Le Gaga Holdings Ltd		4.01		16.6	%		20.5	%		15.2	%		14.3	%		8.6	%		6.3	%		(87.6	)%
5/20/2013	-	Pactera Technology International Ltd.		7.30		38.8	%		34.5	%		19.9	%		14.0	%		8.1	%		2.5	%		(33.0	)%
3/12/2013	-	Camelot Information Systems Inc.		1.85		23.3	%		27.6	%		53.7	%		51.5	%		20.7	%		(20.0	)%		(54.5	)%
3/11/2013	-	Simcere Pharmaceutical Group.		9.56		20.1	%		21.9	%		21.4	%		20.3	%		20.0	%		17.1	%		(83.8	)%
11/2/2012	-	Trunkbow International Holdings, Ltd.		1.46		24.8	%		48.6	%		54.8	%		49.3	%		6.6	%		1.1	%		(39.4	)%
10/15/2012	-	American Lorain Corporation		1.60		28.5	%		30.6	%		34.2	%		36.6	%		23.8	%		20.3	%		(8.6	)%
10/15/2012	-	Yongye International, Inc.		6.69		39.7	%		49.2	%		64.0	%		72.7	%		86.9	%		75.5	%		13.4	%
10/12/2012	-	Ninetowns Internet Technology Group Company Ltd.		2.00		85.2	%		79.4	%		81.9	%		73.7	%		62.7	%		62.7	%		(84.4	)%
3/1/2012	-	Tibet Pharmaceuticals, Inc.		3.00		78.6	%		86.4	%		88.9	%		89.6	%		88.7	%		76.9	%		(42.3	)%
1/20/2012	-	AsiaInfo-Linkage, Inc.		12.00		21.0	%		50.8	%		43.2	%		38.7	%		(0.1	)%		(13.9	)%		(47.6	)%
1/6/2012	-	Jingwei International Limited		2.20		64.2	%		66.6	%		57.0	%		48.2	%		8.3	%		(5.7	)%		(46.5	)%
12/13/2011	-	WSP Holdings Ltd.		3.20		60.0	%		49.2	%		52.5	%		48.0	%		(33.0	)%		(43.3	)%		(61.7	)%

Mean						35.3	%		41.8	%		40.9	%		38.6	%		24.6	%		19.2	%		(46.9	)%
Median						24.8	%		34.5	%		34.2	%		36.6	%		15.8	%		13.5	%		(46.5	)%

8/19/2013	-	Exceed Company Ltd (Revised Offer Price)	$	1.78		19.5	%		24.4	%		27.9	%		30.4	%		30.2	%		24.4	%		(84.2	)%

Note:

1. As of announcement date or any revised offers received after announcement date

2. VWAP refers to Volume Weighted Average Price for specified number of days before announcement of transaction

3. 52-Week VWAP prior to going private announcement

The data presented in the table below pertains to transactions that have closed (with the exception of the Company).

Initial			Offer		Price Premium
Offer Announced	Closing Date	Company Name	Price¹ (US$)		1-Day Prior			30-Day VWAP²			60-Day VWAP²			90 -Day VWAP²			180-Day VWAP²			52-Week VWAP²			52-Week High³
Closed Deals
8/13/2012	7/30/2013	LJ International Inc.	$	2.00		24.2	%		21.4	%		29.2	%		17.6	%		4.7	%		(4.1	)%		(31.3	)%
2/15/2013	5/17/2013	China Shenghuo Pharmaceutical Holdings, Inc.		0.16		18.5	%		61.5	%		42.8	%		46.0	%		(33.0	)%		(36.6	)%		(78.6	)%
9/26/2012	7/8/2013	7 Days Group Holdings Limited		13.80		30.6	%		43.2	%		45.3	%		42.5	%		24.3	%		15.6	%		(87.5	)%
10/3/2012	6/27/2013	Feihe International, Inc.		7.40		21.3	%		23.6	%		14.9	%		22.9	%		42.8	%		47.9	%		(20.4	)%
3/27/2012	6/27/2013	Zhongpin, Inc.		13.50		46.6	%		46.5	%		38.6	%		40.3	%		44.7	%		24.4	%		(22.0	)%
9/12/2012	5/30/2013	3SBio Inc.		16.70		44.1	%		45.7	%		39.6	%		33.8	%		33.6	%		37.2	%		8.9	%
8/13/2012	5/23/2013	Focus Media Holding Ltd.		27.50		17.6	%		36.6	%		33.9	%		28.2	%		28.2	%		26.2	%		(16.5	)%
9/7/2012	4/9/2013	Syswin Inc.		2.05		28.1	%		45.7	%		39.9	%		43.5	%		112.5	%		103.3	%		(12.4	)%
7/6/2012	3/28/2013	ShangPharma Corporation		9.00		30.8	%		44.8	%		34.2	%		20.4	%		13.0	%		4.8	%		(26.5	)%
5/9/2012	2/7/2013	China Nuokang Bio-Pharmaceutical Inc.		5.80		56.8	%		74.0	%		95.9	%		102.9	%		41.3	%		37.3	%		(1.4	)%
5/21/2012	12/28/2012	Yucheng Technologies Limited		3.90		26.4	%		28.0	%		32.4	%		42.5	%		52.7	%		43.5	%		0.8	%
11/3/2010	12/27/2012	Fushi Copperweld, Inc.		9.50		4.4	%		1.6	%		8.0	%		9.4	%		(2.0	)%		0.0	%		(26.6	)%
4/2/2012	12/11/2012	Winner Medical Group Inc.		4.50		32.3	%		29.2	%		40.1	%		46.4	%		31.7	%		12.7	%		(15.1	)%
1/9/2012	11/9/2012	Pansoft Company Limited		4.15		106.5	%		83.2	%		93.2	%		79.6	%		36.7	%		27.4	%		(16.0	)%
5/3/2012	11/2/2012	China Mass Media Corp.		5.00		115.5	%		133.1	%		38.9	%		(3.2	)%		(35.0	)%		(38.2	)%		(97.0	)%
2/21/2012	10/31/2012	China TransInfo Technology Corp.		5.80		12.6	%		26.6	%		40.0	%		52.6	%		67.7	%		47.7	%		11.5	%
2/24/2012	10/17/2012	Gushan Environmental Energy Limited		1.65		34.1	%		28.1	%		27.7	%		10.0	%		(13.6	)%		(31.8	)%		(94.7	)%
11/14/2011	4/17/2012	China GrenTech Corp. Ltd.		3.15		23.0	%		34.3	%		42.4	%		45.7	%		18.4	%		11.6	%		(86.6	)%
10/28/2011	4/20/2012	China Real Estate Information Corporation		5.73		6.1	%		20.1	%		7.0	%		(5.8	)%		(13.3	)%		(21.8	)%		(46.3	)%
10/17/2011	2/14/2012	Shanda Interactive Entertainment Ltd.		41.35		23.5	%		26.6	%		25.1	%		20.6	%		2.3	%		2.5	%		(88.0	)%
6/27/2011	8/11/2011	Tiens Biotech Group (USA), Inc.		1.72		67.0	%		44.2	%		31.5	%		27.6	%		21.5	%		16.5	%		(13.1	)%
3/25/2011	8/25/2011	Funtalk China Holdings Limited		7.20		17.1	%		34.2	%		30.6	%		26.7	%		2.9	%		3.9	%		(17.5	)%
3/7/2011	11/4/2011	China Fire & Security Group, Inc.		9.00		43.8	%		52.4	%		40.1	%		28.1	%		12.1	%		(13.5	)%		(45.4	)%
1/28/2011	9/16/2011	China Security & Surveillance Technology, Inc.		6.50		33.2	%		30.1	%		26.1	%		21.3	%		24.9	%		11.9	%		(26.9	)%
11/11/2010	8/19/2011	Chemspec International Limited		8.10		28.2	%		29.2	%		27.0	%		22.8	%		10.4	%		14.2	%		(86.5	)%
10/11/2010	11/1/2011	Harbin Electric, Inc.		24.00		20.2	%		36.3	%		35.1	%		37.7	%		24.8	%		22.3	%		(7.7	)%
4/8/2010	4/15/2011	Tongjitang Chinese Medicines Company		4.50		19.0	%		22.3	%		21.9	%		21.0	%		17.9	%		18.4	%		(87.1	)%

Closed Deals
Mean						34.5	%		40.8	%		36.4	%		32.6	%		21.2	%		14.2	%		(38.1	)%
Median						28.1	%		34.3	%		34.2	%		28.1	%		21.5	%		14.2	%		(26.5	)%

Overall
Mean						34.8	%		41.2	%		38.1	%		35.0	%		22.5	%		16.1	%		(41.5	)%
Median						27.3	%		34.4	%		34.2	%		31.0	%		19.2	%		13.8	%		(32.2	)%

8/19/2013		Exceed Company Ltd (Revised Offer Price)	$	1.78		19.5	%		24.4	%		27.9	%		30.4	%		30.2	%		24.4	%		(84.2	)%

Note:

1. As of announcement date or any revised offers received after announcement date

2. VWAP refers to Volume Weighted Average Price for specified number of days before announcement of transaction

3. 52-Week VWAP prior to going private announcement

Revisions of Offer Price in Selected Transactions. Houlihan Lokey reviewed the changes in the acquiror’s offer price during the process leading up to the signing of each of the following going-private transactions involving US-listed Chinese companies.

Initial Offer Announced	Target	Acquiror	Domiciled Location	Initial Offer Date	Initial Offer Price ($)		Revised Offer Date	Revised Offer Price ($)		% Change			# of Revisions
Announced Deals
6/6/2013	iSoftStone Holdings Limited	Tianwen Liu (Chairman and CEO), China Asset Management Limited, etc.	Cayman	6/6/2013	$	5.85	11/4/2013	$	5.45		(6.8	)%		1
5/20/2013	Pactera Technology International Ltd.	Chris Chen (non-executive chairman), Tiak Koon Loh (CEO), Blackstone, GGV Capital, etc.	Cayman	5/20/2013		7.50	10/17/2013		7.30		(2.7	)%		2
10/15/2012	Yongye International, Inc.	Zishen Wu (Chairman), Xingmei Zhong, Full Alliance, MSPEA, Lead Rich	Nevada	10/15/2012		6.60	9/23/2013		6.69		1.4	%		1
1/6/2012	Jingwei International Limited	Jianguo Du (Chairman and CEO)	Nevada	1/6/2012		1.56	2/9/2012		2.20		41.0	%		1
12/13/2011	WSP Holdings Ltd.	Longhua Piao (Chairman and CEO), H.D.S. Investments, and UMW Holdings	Cayman	12/13/2011		3.00	2/21/2013		3.20		6.7	%		1

Closed Deals
2/13/2013	China Shenghuo Pharmaceutical Holdings, Inc.	Guihua Lan (Chairman and CEO)	Delaware	2/13/2013	$	0.15	4/16/2013	$	0.16		6.7	%		1
9/26/2012	7 Days Group Holdings Limited	Boquan He (Co-Chairman and Founder), Nanyan Zheng (Co-Chairman and Founder), Carlyle, Sequoia Capital, Actis	Cayman	9/26/2012		12.70	2/28/2013		13.80		8.7	%		1
9/12/2012	3SBio Inc.	Jing Lou (Chairman and CEO), CITIC PE	Cayman	9/12/2012		15.00	4/22/2013		16.70		11.3	%		2
8/13/2012	Focus Media Holding Ltd.	Jason Nanchun Jiang (Chairman and CEO), China Everbright, FountainVest Partners, CITIC Capital Partners, The Carlyle Group, Fosun International	Cayman	8/13/2012		27.00	12/19/2012		27.50		1.9	%		1
9/7/2012	Syswin Inc.	Liangsheng Chen (CEO and President)	Cayman	9/7/2012		2.00	12/24/2012		2.05		2.5	%		1
5/21/2012	Yucheng Technologies Limited	Weidong Hong (Chairman and CEO)	BVI	5/21/2012		3.80	8/13/2012		3.90		2.6	%		1
2/24/2012	Gushan Environmental Energy Ltd.	Jianqiu Yu (Chairman and Principal Executive Officer)	Cayman	2/24/2012		1.60	9/13/2012		1.65		3.2	%		2
2/21/2012	China TransInfo Technology Corp.	Shudong Xia (Chairman and CEO), Danxia Huang (Vice President and Director), SAIF Partners	Nevada	2/21/2012		5.65	6/8/2012		5.80		2.7	%		1
1/9/2012	Pansoft Company Limited	Hugh Wang (Chairman) and Guoqiang Lin (CEO)	BVI	1/9/2012		3.76	5/17/2012		4.15		10.4	%		1
11/14/2011	China GrenTech Corp. Ltd.	Yingjie Gao (Chairman and CEO), Rong Yu (CFO), Yin Huang	Cayman	11/14/2011		3.10	1/12/2012		3.15		1.6	%		1
3/25/2011	Funtalk China Holdings Limited	Kuo Zhang (Chairman), Dongping Fei (CEO), Hengyang Zhou (President of Subsidairy), ARC Capital, PAG Asia, Golden Meditech Holdings	Cayman	3/25/2011		7.10	5/11/2011		7.20		1.4	%		1
11/11/2010	Chemspec International Limited	Jianhua Yang (Chairman and CEO), Primavera Capital Management	Cayman	11/11/2010		8.00	3/9/2011		8.10		1.3	%		1
11/3/2010	Fushi Copperweld, Inc.	Li Fu (Chairman and Co-CEO), Yuyan Zhang, Xin Liu, and Abax Global Capital	Nevada	11/3/2010		11.50	12/28/2011		9.50		(17.4	)%		2

			Mean								4.2	%
			Median								2.6	%

			Mean (Excluding price reductions)								6.9	%
			Median (Excluding price reductions)								2.7	%

8/19/2013	Exceed Company Ltd.	Shuipan Lin (Chairman & CEO), New Horizon Capital, HK Haima Group Limited; Tiancheng Int'l Investment Group Limited; Wisetech Holdings; Windtech Holdings, etc.	BVI	8/19/2013	$	1.72	11/20/2013	$	1.78		3.5	%		2

Other Matters

Houlihan Lokey was engaged by the Company to act as its financial advisor in connection with the merger and provide financial advisory services, including the issuance of an opinion to our independent committee regarding the fairness from a financial point of view of the per share merger consideration to be received by holders of the Ordinary Shares (other than holders of the Excluded Shares) in the merger. The Company engaged Houlihan Lokey based on Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide advisory services in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to the engagement letter between Houlihan Lokey and the independent committee, a fixed fee of US$100,000 was paid to Houlihan Lokey upon execution of the engagement letter, a fixed fee of US$100,000 became payable to Houlihan Lokey upon delivery of its opinion, a fixed fee of US$110,000 will be payable to Houlihan Lokey upon stockholders’ approval of the merger, and a fixed fee of US$250,000 may be paid entirely at the discretion of the independent committee upon closing of the merger. The Company has also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws arising out of or relating to Houlihan Lokey’s engagement.

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company or any other party that may be involved in the merger and their respective affiliates or any currency or commodity that may be involved in the merger.

Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and other financial services to the Company, other participants in the merger or certain of their respective affiliates in the future, for which Houlihan Lokey and such affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of Houlihan Lokey’s and their respective employees may have committed to invest in private equity or other investment funds managed or advised by participants in the merger or certain of their respective affiliates, and in portfolio companies of such funds, and may have co-invested with the Company, other participants in the merger or certain of their respective affiliates, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, other participants in the merger or certain of their respective affiliates, for which advice and services Houlihan Lokey and such affiliates have received and may receive compensation.

The Buyer Parties’ Purpose of and Reasons for the Merger

Under the rules governing “going private” transactions, each buyer party may be 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 party 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 the Exchange Act.

For the buyer parties, 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. The buyer parties believe 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 $1.78 per Share in cash for their Shares, and it also allows the Rollover Shareholders to maintain a significant portion of their investment in the Company through their respective commitments to subscribe for equity interests of Parent.

The buyer parties 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 parties 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 parties did not consider alternative transaction structures.

Effect of the Merger on the Company

Private Ownership

Shares of the Company are currently listed on NASDAQ under the symbol “EDS.” It is expected that, immediately following the completion of the merger, the Company will cease to be a publicly traded company and will instead become a privately held company directly owned by Parent. Following the completion of the merger, the Shares will cease to be listed on NASDAQ, and price quotations with respect to sales of the Shares in the public market will no longer be available. In addition, registration of the Shares under the Exchange Act may be terminated upon the Company's application to the SEC if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. 90 days after the filing of Form 15 in connection with the completion of the merger or such longer period as may be determined by the SEC, registration of the Shares under the Exchange Act will be terminated. At such time, the Company will no longer be required to file periodic reports with the SEC or otherwise be subject to the United States federal securities laws, including Sarbanes-Oxley, applicable to public companies, and our shareholders will no longer enjoy the rights or protections that the United States federal securities laws provide, including reporting obligations for directors, officers and principal securities holders of the Company. The Company expects that after the termination of the registration of the Shares, it will save approximately $500,000 in compliance-related costs annually. The Company does not expect to apply any operating loss carryforwards to shelter its future income.

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each outstanding Shares will be cancelled in exchange for the right to receive $1.78 per Share in cash, without interest and net of any applicable withholding taxes, except for the following excluded Shares (the “Excluded Shares”): (i) Shares legally owned by Parent; and (ii) Shares (the “Dissenting Shares”) owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their rights to dissent from the merger pursuant to Section 179 of the BVI Companies (the “Dissenting Shareholders”). 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 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 Parent, 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 Parent, will not have the opportunity to participate in the earnings and growth of the Company and they will not have the right to vote on corporate matters. Similarly, our current shareholders, other than Parent, 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 award under the Company's 2010 Equity Incentive plan, whether vested or unvested, will be assumed by Parent from and after the effective time of the merger, in accordance with the terms and conditions of such plan.

Directors and Management of the Surviving Corporation

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 corporation, except that, Article I of the memorandum and articles of association of the surviving corporation will be amended to provide that the name of the surviving corporation is “Exceed Company Ltd.,” 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 of the merger, the directors of Merger Sub at the effective time of the merger (identified below in “Annex D—Directors and Executive Officers of Each Filing Person”) will become the directors of the surviving corporation and the officers of the Company immediately prior to the effective time of the merger will become the officers of the surviving corporation, 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 security holders include, without limitation, the following:

the receipt by such security holders of $1.78 per Share in cash, representing a premium of 24.4% over the Company's 30 trading day volume-weighted average closing price as quoted by NASDAQ on August 16, 2013, the last trading day prior to the Company's announcement on August 19, 2013 that it had received a “going private” proposal;

the avoidance of the risk associated with any possible decrease in our future revenues and free cash flow, growth or value following the merger; and

the reduction of the costs and administrative burden associated with operating the Company as a publicly-traded company, including the costs associated with regulatory filings and compliance requirements.

The primary detriments of the merger to the Company's unaffiliated security holders include, without limitation, the following:

such security holders 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

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 may 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 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.”

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

the aggregate compensation of $132,000 of Jin Jichun, Chen Yea-Mow and Pang Xiaozhong, each of which is a member of the independent committee, in exchange for their services in such capacity. These payments are neither contingent upon the completion of the merger nor the independent committee's or the board's recommendation of the merger;

the continuation of service of the executive officers of the Company with the surviving corporation in positions that are substantially similar to their current positions; and

continued indemnification rights and rights to advancement of certain fees;

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

those officers and directors 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

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.

The primary benefits of the merger to the Buyer and the Rollover Shareholders include the following:

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

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

the Company will no longer be subject to pressure to meet quarterly forecasts set by analysts. As a public company, the Company is subject to pressure to make decisions that may produce better short term results. It is possible that such decisions may, over the long term, not lead to a maximization of its equity value. In addition, the Company may be able to change (without worry about the short term consequences on the stock price because of lack of revenues) its business focus or product line and invest in significant strategies that may not, in the short term, produce quarterly revenue;

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 the payment of dividends, if any, that will accrue to Parent; and

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 legal and accounting costs associated with regulatory filings and compliance requirements.

The primary detriments of the merger to the Buyer and the Rollover Shareholders include the following:

following the merger, there will be no trading market for the surviving corporation's equity securities;

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 and the Rollover Shareholders;

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

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

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. Lin and the Rollover Shareholders before and immediately after the merger, based on the historical net book value as of September 30, 2013 and the net earnings of the Company for the nine months ended September 30, 2013.

	Ownership Prior to the Merger										Ownership After the Merger
	Net Book Value					Earnings					Net Book Value					Earnings
	$'000		%			$'000		%			$'000		%			$'000		%
Shuipan Lin		139,613		38.69	%		16,969		38.69	%		259,351		71.88	%		31,523		71.88	%
Tiancheng Int'l Investment Group Limited		22,179		6.15	%		2,696		6.15	%		22,179		6.15	%		2,696		6.15	%
HK Haima Group Limited		11,089		3.07	%		1,348		3.07	%		11,089		3.07	%		1,348		3.07	%
Wisetech Holdings Limited		17,237		4.78	%		2,095		4.78	%		17,237		4.78	%		2,095		4.78	%
Windtech Holdings Limited		25,855		7.17	%		3,143		7.17	%		25,855		7.17	%		3,143		7.17	%
RichWise International Investment Group Limited		20,765		5.75	%		2,524		5.75	%		20,765		5.75	%		2,524		5.75	%
Dongdong Ding		1,089		0.30	%		132		0.30	%		1,089		0.30	%		132		0.30	%
Eagle Rise International Limited		3,266		0.91	%		397		0.91	%		3,266		0.91	%		397		0.91	%

Plans for the Company after the Merger

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. The buyer parties have considered the possibility of re-listing the Company on another exchange after the merger. However, the buyer parties have not made definite plans or taken definite action with respect to any potential re-listing. Neither have the buyer parties retained any potential advisor in connection with the same.

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 amount of assets. However, Parent 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 initiate a process for the sale of the Company. The independent committee was formed on August 19, 2013 in response to the receipt of the going private proposal letter from the Buyer on August 16, 2013. From this date, the independent committee discussed with its advisors other potential alternatives available to the Company as opposed to the transaction offered by the Buyer (including continuing to operate the Company as an independent public company or potentially liquidating the Company). From the date of the public announcement on August 19, 2013 to date, the Company has not received any actionable offer from any third party for (i) a merger or consolidation of the Company with another company, (ii) the sale or transfer of all or substantially all of the Company’s assets or (iii) the purchase of all or a substantial portion of the shares that would enable such person to exercise control of or significant influence over the Company. The independent committee also took into account that, (a) 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 $1 million; or (b) the Company can terminate the merger agreement in connection with an acquisition proposal received by the Company on or before January 11, 2014 (which is 40 days following the date of the merger agreement), subject to the payment to Parent of a termination fee of $500,000, pursuant to the merger agreement. In this regard, the independent 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).

The independent committee considered (i) the possible alternatives to the merger (including the possibility of continuing to operate the Company as an independent entity and any risks presented by that alternative, such as operational risks in execution of its expansion plans and the increased competitive nature of the industry), (ii) the range of potential benefits to its shareholders of the possible alternatives and (iii) the timing and the likelihood of accomplishing the goals of such alternatives given the number of Shares owned by the Buyer and the Rollover Shareholders. Taking such factors and the ones described above into account, the independent committee determined that none of these alternatives were reasonably likely to present superior opportunities for the Company or to create greater value for its shareholders than the proposed sale of the Company to the Buyer, taking into account risks of execution as well as business, financing, regulatory approval, competitive, industry and market risks.

The Buyer did not consider any other form of transaction because the Buyer believed that the merger was the most direct and effective way to enable the Buyer to acquire 100% control of the Company.

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 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 assumption 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 $1 million or $500,000, as the case may be, plus reimbursement of certain expenses of Parent, or Parent may be required to pay the Company a termination fee of $2 million, in each case, as described under the caption “The Merger Agreement and Plan of Merger—Termination Fees and Expense Reimbursement” beginning on page 80.

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

Parent estimates the total amount of funds necessary to complete the merger, including for payment of the merger consideration is approximately $20 million. On December 2, 2013, the Chairman entered into an equity commitment letter with Parent pursuant to which the Chairman committed to purchase equity interests of Parent at or immediately prior to the effective time of the merger for approximately $19.5 million. The equity commitment of the Chairman is conditioned upon the satisfaction or waiver of each of the conditions to Parent’s and Merger Sub’s obligations to effect the merger (other than those conditions that by their nature are to be satisfied at the effective time of the merger). The equity commitment of the Chairman is subject to pro rata reduction to a level sufficient to, in combination with the other financing arrangements contemplated by the merger agreement, fully fund the merger and other transactions contemplated by the merger agreement, in a circumstance where Parent does not require the full amount of the equity commitments to consummate the merger. The equity commitment will terminate automatically and immediately upon the earliest to occur of: (i) the valid termination of the merger agreement in accordance with its terms; (ii) the closing of the merger (provided that the Chairman shall, at or prior to the Closing, have fully funded and paid to Parent the equity commitment). The Buyer is borrowing cash in the amount of $20,000,000 to fund his equity commitment. The Buyer is borrowing $10,000,000 from Ms. Weixin Zhuang, a personal friend of the Buyer. Ms. Zhuang is a shareholder of the Company and one of the Rollover Shareholders (she is the sole officer and director of HK Haima Group Limited). The Buyer is borrowing $10,000,000 from Mr. Guomin Chen, another personal friend of the Buyer who is neither a party to the transactions contemplated by the merger agreement nor related in any way to the Company. The terms of the two loans are identical, which are each evidenced by a promissory note executed on February 25, 2014. Both loans are scheduled to be repaid by September 30, 2015. Both loans are unsecured. Interest rates of both loans are set at 8.5% per annum. The Buyer currently does not have any plan or arrangements to finance or repay the loans.

Contributed Equity

Subject to the conditions set forth in the Contribution Agreement, immediately prior to the effective time of the merger and without further action by the Rollover Shareholders, all of each Rollover Shareholder's right, title and interest in and to the Rollover Shares will be contributed, assigned, transferred and delivered to Parent. As consideration for the benefit received by Parent as a result of the contribution, assignment, transfer and delivery of the Rollover Shares, Parent will issue a number of Parent shares in the name of each Rollover Shareholder or a designee of the Rollover Shareholder equal to the number of Rollover Shares contributed by such Rollover Shareholder. Each Rollover Shareholder hereby acknowledges and agrees that (i) 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 applicable Rollover Shares; and (ii) on receipt of such Parent shares, such Rollover Shareholder will have no right to any merger consideration with respect to the Rollover Shares contributed to Parent by such Rollover Shareholder.

Limited Guaranty

The Buyer has entered into a limited guaranty in favor of the Company. The Buyer has guaranteed the due and punctual payment, performance and discharge as and when due of the payment obligations of Parent with respect to the payment of the total termination fee for which Parent is obligated to pay under the merger agreement; provided that in no event will the aggregate liability of the members of the Buyer under the limited guaranty exceed $2,000,000.

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. While the Company, Parent and Merger Sub may pursue both a grant of specific performance and monetary damages, none of them will be permitted or entitled to receive both a grant of specific performance that results in the completion of the merger and monetary damages.

Interests of Certain Persons in the Merger

Interests of the Rollover Shareholders

Concurrent with the execution of the merger agreement, the Rollover Shareholders entered into the Contribution Agreement pursuant to which, subject to the terms and conditions set forth therein, the Rollover Shareholders have agreed to the subscription of newly issued shares in Parent in exchange for the contribution by such Rollover Shareholders of certain number of Shares held by each of them having an aggregate value of approximately $39.4 million. At the closing of the merger, the Rollover Shareholders will own 100% of the outstanding interests in Parent.

Given the Company will become a privately-held company following the completion of the merger, the Rollover Shareholders’ interests in the surviving company will be illiquid, with no public trading market for the surviving company’s shares and no certainty of an opportunity to sell their beneficial interests in the surviving company at an attractive price, or that any dividends paid by the surviving company will be sufficient to recover their investment. Each of the Rollover Shareholders may also enjoy benefits from future earnings and growth of the surviving company.

Position with the Surviving Corporation

After completion of the merger, the Chairman expects to continue to serve as chairman of the board of directors of the surviving corporation and chief executive officer of the surviving corporation. It is anticipated that the other executive officers of the Company will hold positions with the surviving corporation that are substantially similar to their current positions.

Related Party Transactions

We have adopted an audit committee charter, which requires the audit committee to review and approve all related party transactions on an ongoing basis. For a description of our related party transactions, please see “Item 7. Major Shareholders and Related Party Transactions” included in our annual report on Form 20-F for the fiscal year ended December 31, 2012, incorporated by reference into this proxy statement. Please see “Where You Can Find More Information” beginning on page 96 for a description of how to obtain a copy of our annual report.

Fees and Expenses

Fees and expenses incurred or to be incurred by the Company and the Buyer in connection with the merger are estimated at the date of this proxy statement and set forth in the table below. Such fees are subject to change pending completion of the merger.

Description	Amount
Legal fees and expenses	$	850,000
Financial advisory fees and expenses	$	600,000
Independent committee fees	$	132,000
Printing, proxy solicitation and mailing costs	$	15,000
Filing fees	$	2,518
Total	$	1,599,518

These expenses will not reduce the merger consideration to be received by the Company shareholders. If the merger is completed, the party incurring any costs and expenses in connection with the merger and the merger agreement will pay those costs and expenses.

Voting by the Rollover Shareholders at the Extraordinary General Meeting

Pursuant to the Voting Agreement, the Rollover Shareholders have agreed to vote all of the Shares they beneficially own 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 extraordinary general meeting of the Company. As of the record date, we expect that the Rollover Shareholders as a group will beneficially own, in the aggregate, 22,143,530 outstanding Shares, which represents 66.8% of the total Shares outstanding for voting purposes.

Accounting Treatment of the Merger

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.

Regulatory Matters

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 plan of merger (and supporting documentation as specified in the BVI Companies Act) with the Registrar of Corporate Affairs of the British Virgin Islands and, in the event the merger becomes effective, a copy of the certificate of merger being given to the shareholders and creditors of the Company and Merger Sub as a the time of the filing of the plan of merger, and notification of the merger being published in the British Virgin Islands Government Gazette.

Dissenters’ Rights

Please see “Dissenters’ Rights” beginning on page 82.

Material U.S. Federal Income Tax Consequences

The following is a discussion of certain material U.S. federal income tax consequences of the merger to U.S. Holders (as defined below) of the Shares who exchange Shares for cash pursuant to the merger agreement or receive cash as a result of exercising their Dissenters’ Rights. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the “Code”, final and temporary U.S. Treasury Regulations promulgated thereunder, administrative pronouncements, and judicial decisions as of the date hereof, all of which are subject to change, possibly on a retroactive basis, and to differing interpretation, which may result in tax consequences different from those described below. This discussion is not binding on the U.S. Internal Revenue Service, or the “IRS”, and the IRS may challenge any of the conclusions set forth below and a U.S. court may sustain such a challenge.

This discussion does not address any U.S. federal estate, gift, or other non-income tax, or any state, local, or non-U.S. tax, consequences of the merger. This discussion is for general information purposes only and does not consider all aspects of U.S. federal income taxation that may be relevant to particular shareholders in light of their individual investment circumstances or to certain types of shareholders subject to special tax rules, including holders that are (i) banks, financial institutions, or insurance companies; (ii) regulated investment companies, mutual funds, or real estate investment trusts; (iii) brokers or dealers in securities or currencies or traders in securities that elect to apply a mark–to–market accounting method; (iv) tax-exempt organizations; (v) holders that own Shares as part of a straddle, hedge, constructive sale, conversion transaction, or other integrated investment; (vi) holders that acquired Shares in connection with the exercise of employee share options or otherwise as compensation for services; (vii) U.S. Holders (as defined below) that have a “functional currency” other than the U.S. dollar; (viii) retirement plans, individual retirement accounts, or other tax-deferred accounts; (ix) U.S. expatriates; (x) persons subject to alternative minimum tax; (xi) U.S. Holders that actually or constructively own 10% more of our voting stock; (xii) holders that are related under certain attribution rules to Parent; or (xiii) holders that are not U.S. Holders. In addition, this discussion does not discuss any consequences to holders of Shares that will directly or indirectly hold an ownership interest in Parent or the Company after the merger. This discussion assumes that Shares are held as capital assets, within the meaning of Section 1221 of the Code, at all relevant times.

As used herein, a “U.S. Holder” is any beneficial owner of Shares that is (i) a citizen or individual resident of the United States for U.S. federal income tax purposes; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust which (a) is subject to the primary jurisdiction of a court within the United States and for which one or more U.S. persons have authority to control all substantial decisions, or (b) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

If a partnership (including any entity classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of Shares, the U.S. federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. Any partner of a partnership holding Shares is urged to consult its own tax advisor.

ALL HOLDERS OF SHARES SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THEIR PARTICULAR SITUATIONS, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER LAWS.

PFIC Considerations

In general, we will be a passive foreign investment company, or “PFIC,” for any taxable year in which (i) at least 75% of our gross income is passive income or (ii) at least 50% of the value of our assets (based on an average of the quarterly values of the assets during the year) is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). If we own, directly or indirectly, at least 25% (by value) of the stock of another corporation, we will be treated, for purposes of the PFIC tests, as owning our proportionate share of the other corporation's assets and receiving our proportionate share of the other corporation's income. The determination of whether we are a PFIC is made annually. As disclosed in our Annual Report on Form 20-F for the year ended December 31, 2012, we did not believe that we were a PFIC for the taxable year ended December 31, 2012. Our actual PFIC status for the current taxable year will not be determinable until the close of the current taxable year. Because the PFIC determination is dependent on a number of factors, some of which are beyond our control, including the amount of our operating income and the market valuation of our assets, including goodwill, and because the PFIC rules are complex and certain aspects are not entirely certain, we cannot assure you with respect of our status as a PFIC for the current taxable year or any prior taxable year. As described below, the U.S. federal income tax treatment of a U.S. Holder's disposition of Shares pursuant to the merger or exercise of Dissenters’ Rights will depend on whether we have been a PFIC in any taxable year in which the U.S. Holder held Shares.

Disposition of Shares Pursuant to the Merger or Exercise of Dissenters’ Rights

The receipt of cash, either as consideration in the merger or as a result of a U.S. Holder exercising its Dissenters’ Rights, in exchange for Shares will be a taxable transaction for U.S. federal income tax purposes, and a U.S. Holder will be taxed in the same manner as with respect to any other sale or taxable disposition of Shares, including a sale on a securities exchange. A U.S. Holder that receives cash, either as consideration in the merger or as a result of the U.S. Holder exercising its Dissenters’ Rights, will recognize gain or loss in an amount equal to the difference between (i) the amount of cash received and (ii) such U.S. Holder's adjusted tax basis in the Shares exchanged therefor. If a U.S. Holder acquired different blocks of Shares at different times and different prices, such U.S. Holder must determine the adjusted tax basis and holding period separately with respect to each such block of Shares.

If we are a PFIC and the U.S. Holder has not made a valid mark-to-market election, as discussed below, or we were a PFIC in a prior taxable year during which a U.S. Holder held Shares and the U.S. Holder did not make a deemed sale election when we ceased to be a PFIC, any gain recognized by a U.S. Holder on the disposition of Shares pursuant to the merger or the exercise of Dissenters’ Rights would be allocated ratably over such U.S. Holder's holding period for the Shares. The amount allocated to the taxable year of the disposition and to any year before we became a PFIC would be treated as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for that year and the interest charge applicable to underpayments of tax would be imposed on the resulting tax attributable to each such year. The tax liability for amounts allocated to years prior to the year of disposition cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Shares cannot be treated as capital gains, even if a U.S. Holders holds the Shares as capital assets.

If a U.S. Holder has made a valid mark-to-market election with respect to its Shares, any gain the U.S. Holder recognizes would be treated as ordinary income (after taking into account basis adjustments resulting from prior inclusions due to the mark-to-market election), and any loss would be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange or other market, as defined in applicable U.S. Treasury Regulations. Our Shares are traded on the NASDAQ Stock Market, or NASDAQ, which should be a qualified exchange for purposes of the applicable U.S. Treasury Regulations. Because a mark-to-market election cannot be made for equity interests in any lower-tier PFICs that we own, a U.S. Holder would have continued to be subject to the PFIC rules with respect to its indirect interest in any investments held by us that are treated as equity interest in a PFIC for U.S. federal income tax purposes even if it had made a valid mark-to-market election. A timely mark-to-market election is made by filing IRS Form 8621 with an original or amended U.S. federal income tax return for the first taxable year in which a non-U.S. corporation is a PFIC and a U.S. Holder holds an equity interest in the PFIC by the due date of the return (including extensions). A U.S. Holder who directly holds our Shares should consult its tax advisors as to the availability of a mark-to-market election and the application of the mark-to-market election to a disposition of shares pursuant to the merger or an exercise of Dissenters’ Rights.

If we are a PFIC for the current taxable year or have been a PFIC during any prior year in which a U.S. Holder held Shares, a U.S. Holder would be required to file IRS Form 8621 (or any other form specified by the U.S. Department of the Treasury) with respect to the disposition of Shares, generally with the U.S. Holder's federal income tax return for the year of merger. The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the applicable consequences of the merger to it if we are a PFIC or have been a PFIC during any prior year in which a U.S. Holder held Shares.

Subject to certain limitations, a U.S. person may make a “qualified electing fund” election (“QEF Election”), which serves as a further alternative to the foregoing rules, with respect to such person's investment in a PFIC in which such person owns shares (directly or indirectly) of the PFIC. If a U.S. Holder has made a QEF election with respect to the Shares, and the special tax and interest charge rules do not apply to such Shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such Shares or a purge of the PFIC taint pursuant to a purging election), any gain the U.S. Holder recognizes from the merger generally will be taxable as capital gain and no interest charge will be imposed.

If we are not a PFIC for the current taxable year and have not been a PFIC in any previous taxable year in a U.S. Holder's holding period for its Shares, any gain or loss recognized will be capital gain or loss, and will constitute long-term capital gain or loss if the U.S. Holder's holding period for the Shares exchanged is greater than one year at the effective time of the merger. Long-term capital gains of non-corporate U.S. Holders are currently subject to U.S. federal income tax at a reduced rate. The ability to use any capital loss to offset other income or gain is subject to certain limitations under the Code.

Any gain or loss recognized by a U.S. Holder generally should be treated as U.S. source gain or loss for U.S. foreign tax credit limitation purposes. As discussed under “Special Factors—Material PRC Income Tax Consequences” beginning on page 60, we do not believe that we should be considered a PRC “resident enterprise” under the EIT Law. However, in the event that we are deemed to be a PRC resident enterprise and gain from the disposition of the Shares is subject to tax in the PRC, a U.S. Holder may be eligible to treat such gain as PRC-source gain under the income tax treaty between the United States and the PRC (the Agreement Between the Government of the United States of America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion With Respect to Taxes on Income, or the “Treaty”). If we are not eligible for the benefits of the Treaty, then such U.S. Holder may not be able to use the foreign tax credit arising from any PRC tax imposed on the disposition of Shares pursuant to the merger agreement unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if PRC tax is imposed on gain on a disposition of our Shares, including the availability of the foreign tax credit under their particular circumstances.

Information Reporting and Backup Withholding

A U.S. Holder will generally be subject to information reporting with respect to the amount of cash received in the merger, unless such U.S. Holder is a corporation or other exempt recipient. A U.S. Holder may also be subject to backup withholding unless the U.S. Holder is an exempt recipient and, when required, demonstrates this fact or provides a taxpayer identification number, makes certain certifications on IRS Form W–9, and otherwise complies with the applicable requirements. A U.S. Holder that does not provide its correct taxpayer identification number may also be subject to penalties imposed by the IRS.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against a U.S. Holder's U.S. federal income tax liability, if any, provided that the required procedures are followed. U.S. Holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining such an exemption.

Medicare Tax

For taxable years beginning after December 31, 2012, a U.S. Holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) such holder's “net investment income” (or undistributed “net investment income” in the case of an estate or trust) for the relevant taxable year and (2) the excess of such holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual's circumstances). A U.S. Holder's net investment income will generally include gains from the sale or other disposition of capital assets. U.S. Holders that are individuals, estates or trusts should consult their tax advisors regarding the effect, if any, of this tax on the disposition of their Shares pursuant to the merger.

Company

No gain or loss is expected to be recognized by the Company.

Rollover Shareholders

Rollover Shareholders that do not receive any cash are not expected to recognize any gain or loss for U.S. federal income tax purposes. Rollover Shareholders that do not receive cash will be taxed as described above under the heading “ Disposition of Shares Pursuant to the Merger or an Exercise of Dissenters’ Rights to the extent such holders are treated as exchanging Share for such cash.

Material PRC Income Tax Consequences

The Company does not believe that it should be considered a resident enterprise under 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.

Material British Virgin Islands Tax Consequences

The British Virgin Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax. No taxes, fees or charges will 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 to the Registrar of Corporate Affairs of the British Virgin Islands to register the plan of merger.

MARKET PRICE OF THE COMPANY' SHARES, DIVIDENDS AND OTHER MATTERS

Market Price of the Shares

The following table provides the high and low sales prices for our Shares on the NASDAQ under the symbol “EDS,” for each quarter during the past two years:

	Sales Price Per Share (in $)
	High		Low
Quarterly:
2011
First quarter		8.58		5.88
Second quarter		7.63		4.46
Third quarter		5.70		2.83
Fourth quarter		5.45		3.20
2012
First quarter		4.98		2.98
Second quarter		3.65		1.81
Third quarter		2.35		1.60
Fourth quarter		1.83		1.18
2013
First quarter		1.55		1.22
Second quarter		1.46		1.10
Third quarter		1.70		1.07
Fourth quarter		1.85		1.40

Dividend Policy

Since our inception, we have not declared or paid any dividends on our ordinary shares. We do not anticipate paying any cash dividends in the foreseeable future and the merger agreement prohibits us from paying dividends without the prior written consent of Parent.

Cash dividends on our Shares, if any, will be paid in U.S. dollars.

THE EXTRAORDINARY GENERAL MEETING

We are furnishing this proxy statement to you, as a holder of our Shares, as part of the solicitation of proxies by the Company's board of directors for use at the extraordinary general meeting described below.

Date, Time and Place of the Extraordinary General Meeting

The extraordinary general meeting will be held on April 16, 2014, at 10:00 a.m. (Hong Kong Time) at United Conference Centre, 10/F, United Centre, 95 Queensway, Hong Kong.

Proposals to be Considered at the Extraordinary General Meeting

At the meeting, you will be asked to consider and vote upon proposals:

THAT the agreement and plan of merger dated as of December 2, 2013 (the “merger agreement”) among Parent, Merger Sub and the Company (such merger agreement being in the form attached as Annex A to this proxy statement, which will be produced and made available for inspection at the extraordinary general meeting), the plan of merger among Merger Sub and the Company required to be registered with the Registrar of Corporate Affairs of the British Virgin Islands for the purposes of the merger (such plan of merger being in the form attached to the merger agreement and which will be produced and made available for inspection at the extraordinary general meeting), pursuant to which Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation, and any and all transactions contemplated by the merger agreement, including the merger, be authorized and approved and the directors of the Company be authorized to do all things and make such filings as necessary to give effect to the merger agreement; and

THAT the chairman of the extraordinary general meeting be instructed to adjourn the extraordinary 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 extraordinary general meeting to pass the shareholders resolution to be proposed at the extraordinary general meeting.

If the merger is completed, at the effective time of the merger, each outstanding Share, other than the Excluded Shares, will be cancelled in exchange for the right to receive $1.78 in cash without interest, net of any applicable withholding taxes, in accordance with the terms and conditions set forth in the merger agreement. At the effective time of the merger, all of the Shares will be cancelled and cease to exist. Each Dissenting Share will thereafter represent only the right to receive the fair value of such Share as determined under the BVI Companies Act. Each Excluded Share other than Dissenting Share will be cancelled for no consideration. At the effective time of the merger, each ordinary share, par value $1.00 per share, of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one fully paid and non-assessable ordinary share, par value $1.00 per share, of the surviving corporation.

Our Board's Recommendation

Our board of directors, acting upon the unanimous recommendation of the independent committee of our board of directors:

determined that it is fair to and in the best interests of the Company and its shareholders (other than holders of Excluded Shares) and is fair to and in the best interests of its unaffiliated shareholders, and declared that it is advisable, to enter into the merger agreement;

authorized and approved the execution, delivery and performance of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger; and

resolved to 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 an extraordinary general meeting of the shareholders of the Company.

Quorum

A quorum of our shareholders is necessary to have a valid shareholders' meeting. The required quorum for the transaction of business at the extraordinary general meeting is the presence, in person or by proxy, of shareholders holding not less than an aggregate of one-half of the votes of Shares that are outstanding for voting purposes on the record date. We expect, as of the record date, there will be 33,141,016 Shares outstanding for voting purposes at the extraordinary general meeting. In the event that a quorum is not present at the extraordinary general meeting, we currently expect that we will adjourn the extraordinary general meeting to solicit additional proxies in favor of the adoption of the merger agreement.

Record Date; Shares Entitled to Vote

You are entitled to attend and directly vote at the extraordinary general meeting if you have Shares registered in your name at the close of business in the British Virgin Islands on March 21, 2014, the Share record date for voting at the extraordinary general meeting, respectively. 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 extraordinary general meeting and any adjournment thereof. We expect that, as of the share record date, there will be 33,141,016 Shares outstanding for voting purposes the extraordinary 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 15, 2014 at 10:00 a.m. (Hong Kong Time). Please see “The Extraordinary General Meeting—Procedures for Voting” below for additional information. If the merger is not completed, the Company would continue to be a public company in the U.S. and the Company's Shares would continue to be listed on NASDAQ.

Vote Required

Under the BVI Companies Act and the merger agreement, we cannot complete the merger unless the merger agreement, the transactions contemplated by the merger agreement, including the merger, are adopted by an affirmative vote of shareholders representing at least 70% of the Shares outstanding for voting purposes, present and voting in person or by proxy as a single class at an extraordinary general meeting of the Company's shareholders. As the date of this proxy statement, the Rollover Shareholders as a group beneficially own, in the aggregate, 22,143,530 Shares, which represents 66.8% of the total Shares issued and outstanding for voting purposes. Please see “Security Ownership of Certain Beneficial Owners and Management of the Company” beginning on page 92 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 the transactions contemplated by the merger agreement, including the merger, at the extraordinary general meeting of the Company. Based on the number of Shares expected to be outstanding for voting purposes on the record date, 1,055,181 Shares, approximately 10% of the total Shares outstanding for voting purposes owned by the remaining shareholders, must be voted in favor of the proposal in order for the merger to be approved.

Shareholders Entitled to Vote; Voting Materials

Only holders of Shares entered in the register of members of the Company at the close of business on March 21, 2014 (British Virgin Islands time), the share record date, will receive the final proxy statement and proxy card directly from the Company. Shareholders registered in the register of members of the Company as of the share record date or their proxy holders are entitled to vote and may participate in the extraordinary general meeting or any adjournment thereof. Shareholders wanting to vote by proxy should simply indicate on their proxy card how they want to vote, sign and date the proxy card, and mail the proxy card in the return envelope as soon as possible but in any event so that it is received by the Company no later than 10:00 a.m. on April 15, 2014 (Hong Kong Time).

Persons who have acquired Shares and whose names are entered in the Company's register of members before the close of business on March 21, 2014 (British Virgin Islands time) will receive the proxy form (including the voting material) before the extraordinary general meeting. Shareholders who have acquired Shares after the close of business on March 21, 2014 (British Virgin Islands time) may not attend the extraordinary general meeting unless they receive a proxy from the person or entity who had sold them the Shares.

Proxy Holders for Registered Shareholders

Shareholders registered in the register of members of the Company as of the share record date who are unable to participate in the extraordinary general meeting may appoint as a representative another shareholder, a third party or the Company as proxy holder by completing and returning the form of proxy in accordance with the instructions printed thereon. With regard to the items listed on the agenda and without any explicit instructions to the contrary, the Company as proxy holder will vote in favor of the merger according to the recommendation of the board of directors of the Company. If new proposals (other than those on the agenda) are put forth before the extraordinary general meeting, the Company as proxy holder will vote in accordance with the position of the board of directors of the Company.

Voting of Proxies and Failure to Vote; Discretionary Proxy of the Company Under the Deposit Agreement

All Shares represented by valid proxies will be voted at the extraordinary general meeting in the manner specified by the holder. If a shareholder returns a properly signed proxy card but does not indicate how the shareholder wants to vote, Shares represented by that proxy card will be voted 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 extraordinary 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 extraordinary general meeting unless the shareholder appoints a person other than the chairman of the meeting as proxy, in which case the Shares represented by that proxy card will be voted (or not submitted for voting) as the proxy determines. Shareholders who fail to cast their vote in person or by proxy will not have their votes counted.

Revocability of Proxies

Registered holders of our Shares may revoke their proxies in one of three ways:

first, a registered shareholder may revoke a proxy by written notice of revocation given to the chairman of the extraordinary general meeting before the extraordinary general meeting commences. Any written notice revoking a proxy should be sent to Exceed Company Ltd., Level 12, China Minmetals Building, 79 Chatham Road South, Tsim Sha Tsui, Kowloon, Hong Kong.

second, a registered shareholder 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 extraordinary general meeting; or

third, a registered shareholder may attend the extraordinary 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 extraordinary general meeting.

If a shareholder holds Shares through a broker, bank or other nominee and has instructed the broker, bank or other nominee to vote the shareholder's Shares, the shareholder must follow directions received from the broker, bank or other nominee to change those instructions.

Rights of Shareholders Who Object to the Merger

Shareholders who continue to hold their Shares in their own name until the completion of the merger will have the right to dissent from the merger and receive 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 subsequently comply with all procedures and requirements of Section 179 of the BVI Companies Act, which is attached as Annex C to this proxy statement, for the exercise of dissenters’ 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 dissenters’ rights with respect to your Shares.

Whom to Call for Assistance

Solicitation of Proxies

We have engaged AST Phoenix Advisors to assist in the solicitation of proxies from banks, brokerage firms, nominees, institutional holders and individual investors for the extraordinary general meeting. We expect that fees for its services will be approximately $7,000 plus certain costs associated with telephone solicitations, if required, and reimbursement of out-of-pocket expenses. In addition, proxies may be solicited by mail, in person, by telephone, by internet or by facsimile by certain of our officers, directors and employees. These persons will receive no additional compensation for solicitation of proxies but may be reimbursed for reasonable out-of-pocket expenses. We will reimburse banks, brokers, nominees, custodians and fiduciaries for their reasonable expenses in forwarding copies of this proxy statement to the beneficial owners of our Shares and in obtaining voting instructions from those owners.

Other Business

We are not currently aware of any business to be acted upon at the extraordinary general meeting other than the matters discussed in this proxy statement.

THE MERGER AGREEMENT AND PLAN OF MERGER

This section of the proxy statement describes the material terms of the merger agreement and the plan of merger but does not purport to describe all of the terms of the merger agreement and the plan of merger. The following summary is qualified in its entirety by reference to the complete text of the merger agreement and the plan of merger, which is attached as Annex A to this proxy statement and incorporated into this proxy statement by reference. 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. This description of the merger agreement and the plan of merger have been included to provide you with information regarding their terms.

Structure and Completion of the Merger

The merger agreement provides for the merger of Merger Sub with and into the Company upon the terms, and subject to the conditions, of the merger agreement and the plan of merger, with the Company as the surviving entity of the merger. If the merger is completed, the Company will cease to be a publicly traded company. The closing will occur on the third business day immediately after all of the closing conditions have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of such conditions) or another date agreed in writing by Parent and the Company. At the closing, Merger Sub and the Company will execute articles of merger and the plan of merger and file the plan of merger and other related documents with the Registrar of Corporate Affairs of the British Virgin Islands. The merger will become effective at the time when the plan of merger has been registered by the Registrar of Corporate Affairs of the British Virgin Islands or at such other subsequent date (not exceeding 30 days after the date the plan of merger is registered) as Merger Sub and the Company may agree and specify in the plan of merger in accordance with the BVI Companies Act.

We currently anticipate that the merger will be completed in towards the end of the first quarter of 2014, after all conditions to the merger have been satisfied or waived. We cannot specify when, or assure you that, all conditions to the merger will be satisfied or waived; however, we intend to complete the merger as promptly as practicable.

Memorandum and Articles of Association; Directors and Officers of the Surviving Corporation

Merger Consideration

At the effective time of the merger, each outstanding Share (other than Excluded Shares) will be cancelled in exchange for the right to receive $1.78, in cash, without interest and net of any applicable withholding taxes.

At the effective time of the merger, 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 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 “Dissenters’ Rights” beginning on page 82 for additional information.

At the effective time of the merger, each ordinary share, with no par value, of Merger Sub issued and outstanding immediately prior to the effective time of the merger will be converted into one fully paid and non-assessable ordinary share, with no par value, of the surviving corporation.

Treatment of Equity Incentive Plan

At effective time of the merger, the Company’s 2010 Equity Incentive Plan and all awards issued thereunder will be assumed by Parent, in accordance with the terms and conditions of such plan. At or prior to the effective time of the merger, the Company, the board of directors of the Company or the compensation committee of the board of directors of the Company, as applicable, will adopt any resolutions and take any actions which are reasonably necessary to effectuate the foregoing arrangement.

Exchange Procedures

Prior to the effective time of the merger, Parent will designate a paying agent for making the payments required to be made pursuant to the merger agreement, and will enter into an agreement with the paying agent in a form reasonably satisfactory to the Company. At or prior to the effective time of the merger, Parent will deposit, or will cause to be deposited, with the paying agent, for the benefit of the holders of Shares, a cash amount in immediately available funds sufficient for the paying agent to make payments under the merger agreement.

Promptly after the effective time of the merger (and in any event within (i) five business days in the case of registered holders of the Shares and (ii) three business days in the case of the depository trust company on behalf of the holders holding the Shares through brokers, nominees, custodians or through a third party), Parent and the surviving corporation will cause the paying agent to mail (or, in the case of the depository trust company, to deliver), to each person who was, at the effective time of the merger, a registered holder of Shares entitled to receive the per Share merger consideration pursuant to the merger agreement: (a) a letter of transmittal (which will be in customary form reasonably acceptable to Parent and the Company, and will specify how the delivery of the merger consideration to registered holders of the Shares will be effected and contain such other provisions as Parent and the Company may mutually agree); and (b) instructions for use in effecting the surrender of any issued share certificates and book-entry shares and/or such other documents as may be required in exchange for the per Share merger consideration.

Upon surrender of a share certificate (or affidavit of loss in lieu of the share certificate) or book-entry shares, an executed letter of transmittal, and such other documents as may be required pursuant to instructions from the paying agent, each registered holder of the Shares represented by such share certificate (or affidavit of loss in lieu of the share certificate) and each registered holder of book-entry shares will be entitled to receive a check in the amount equal to (x) the number of Shares represented by such share certificate or the number of book-entry shares multiplied by (y) the per Share merger consideration, without interest.

Representations and Warranties

The merger agreement contains representations and warranties made by the Company to Parent and Merger Sub and representations and warranties made by Parent and Merger Sub to the Company, in each case, as of specific dates. The statements embodied in those representations and warranties were made for purposes of the merger agreement and are subject to important qualifications and limitations agreed by the parties in connection with negotiating the terms of the merger agreement. In addition, some of those representations and warranties may be subject to a contractual standard of materiality different from that generally applicable to shareholders, may have been made for the principal purposes of establishing the circumstances in which a party to the merger agreement may have the right not to close the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise and allocating risk between the parties to the merger agreement rather than establishing matters as facts. Moreover, the representations and warranties made by the Company were qualified by its public disclosure with the SEC prior to, and for the matters that Mr. Lin has actual knowledge of.

The representations and warranties made by the Company to Parent and Merger Sub include representations and warranties relating to, among other things:

due organization, existence, good standing and authority to carry on the Company's businesses;

the Company's capitalization, the absence of preemptive or other rights with respect to securities of the Company, or any securities that give their holders the right to vote with the Company's shareholders;

the Company's corporate power and authority to execute and deliver, to perform its obligations under and to consummate the transactions under the merger agreement, and the enforceability of the merger agreement against the Company;

the declaration of advisability and recommendation to the shareholders of the Company of the merger agreement and the merger by the independent committee and by the board of directors of the Company, and the authorization and approval of the merger agreement, the plan of merger and the transactions contemplated under the merger agreement, including the merger by the board of directors of the Company;

the required vote of the Company's shareholders to adopt the merger agreement;

the absence of violations of, or conflict with, the governing documents of the Company, laws applicable to the Company and certain agreements of the Company as a result of the Company entering into and performing under the merger agreement and consummating the transactions contemplated by the merger agreement;

the Company's SEC filings since January 1, 2010 and the financial statements included therein;

the Schedule 13E-3 and this proxy statement;

the Company's disclosure controls and procedures and internal controls over financial reporting;

the absence of any “Material Adverse Effect” (as defined below) on the Company or certain other changes or events since December 31, 2012;

the absence of any legal proceedings against the Company;

employee benefits;

compliance with applicable laws and licenses;

material contracts and the absence of any default under, or breach or violation of, any material contract;

real property;

environmental matters;

tax matters;

labor and employment matters;

intellectual property;

insurance matters;

the receipt of opinion from Houlihan Lokey;

the absence of affiliated transactions;

the absence of any undisclosed broker's or finder's fees; and

acknowledgement by Parent and Merger Sub as to the absence of any other representations and warranties by the Company, other than the representations and warranties made by the Company contained in the merger agreement.

Many of the representations and warranties made by the Company are qualified as to “knowledge”, “materiality” or “Material Adverse Effect.” For purposes of the merger agreement, a “Material Adverse Effect” means any change, effect, event, violation, circumstance, occurrence, development or fact, that is, or would reasonably be expected to be, either individually or in the aggregate with all other effects, materially adverse to the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole. However, no effect related to or arising out of any of the following items will be taken into account, individually or in the aggregate, in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur:

(i)

the announcement of the merger agreement or pendency of the merger or the identity of Parent or its shareholders as the acquirer of the Company, including litigation or other legal proceedings related to the merger agreement or the merger;

(ii)

any change in the price of the Shares or trading volume (it being understood that any change in the Company underlying or contributing to such change in Share price or trading volume may be taken into be taken into account in determining whether a Material Adverse Effect exists);

(iii)

actions or omissions of the Company or any of its subsidiaries taken pursuant to the merger agreement with the written consent or at the written request of Parent, Merger Sub;

(iv)

any breach of the merger agreement by Parent or Merger Sub;

(v)

effects effecting the financial, credit or securities markets in the United States, the PRC or any other country or region in the world, including changes in interest rates or foreign exchange rates;

(vi)

effects affecting the industry in which the Company and its subsidiaries operate;

(vii)

changes in general business, economic or political conditions;

(viii)

acts of armed hostility, sabotage, terrorism or war (whether or not declared), including any escalation or worsening thereof;

(ix)

earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides or other natural disasters, or other similar force majeure events;

(x)

changes or modifications in the generally accepted accounting principles applicable to the Company and its subsidiaries occurring after the date of the merger agreement, or applicable law or the interpretation or enforcement thereof;

(xi)

the failure by the Company or any of its subsidiaries to meet any internal or industry estimates, expectations, forecasts, projections or budgets for any period (it being understood that the underlying cause of such failure may be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur);

(xii)

any change or prospective change in the Company’s credit ratings; and

(xiii)

any loss of, or change in, the relationship of the Company or any of its subsidiaries, contractual or otherwise, with its customers, suppliers, vendors, lenders, employees, investors, or joint venture partners arising out of the execution, delivery or performance of the merger agreement, the consummation of the merger or the announcement of the merger agreement or the merger.

provided, however, that events, violations, circumstances, changes or effects set forth in clauses (v), (vi), (vii) and (x) may be taken into account in determining whether there has been a “Material Adverse Effect” to the extent such events, violations, circumstances, changes or effects have had a materially disproportionate adverse effect on the Company and its subsidiaries, taken as a whole, as compared to the other participants in the industry in which the Company and its subsidiaries operate (in which case the incremental materially disproportionate impact or impacts may be taken into account in determining whether or not a Material Adverse Effect has occurred or is reasonably be expected to occur).

The representations and warranties made by Parent and Merger Sub to the Company include representations and warranties relating to, among other things:

their due organization, existence and good standing;

their corporate power and authority to execute, deliver and perform their obligations under and to consummate the transactions contemplated by the merger agreement, and the enforceability of the merger agreement against them;

the equity commitment letter and the sufficiency of funds for paying the aggregate per Share merger consideration, subject to certain conditions;

capitalization of Parent and Merger Sub, Parent ownership of Merger Sub and the operations of Parent and Merger Sub;

governmental consents and approvals;

the absence of violations of, or conflict with, the governing documents of Parent or Merger Sub, laws applicable to Parent or Merger Sub and certain agreements of Parent or Merger Sub as a result of Parent and Merger Sub entering into and performing under the merger agreement and consummating the transactions contemplated by the merger agreement;

the absence of legal proceedings against Parent and Merger Sub;

the absence of any undisclosed broker's or finder's fees;

the accuracy of certain information included in the Schedule 13E-3 and this proxy statement;

solvency of the surviving corporation immediately following completion of the merger;

the absence of undisclosed Shares or other securities of, any rights to acquire the Shares or other securities of, or any other economic interest in, the Company, beneficially owned by Parent or Merger Sub;

the Voting Agreement and Contribution Agreement being in full force and effect and being legal and binding obligations of Parent, and to the knowledge of Parent, the other parties thereto;

the absence of any other agreements (except for the Contribution Agreement, the Voting Agreement, and the limited guaranty) (i) between Parent, Merger Sub or any of their affiliates on one hand, and any member of the Company's management, directors, or shareholders, on the other hand, that relate to the Company or the transactions contemplated by the merger agreement or (ii) pursuant to which any holder of Shares would be entitled to receive consideration different than the merger consideration or pursuant to which a shareholder agreed to vote to approve the merger or against any superior proposal;

non-reliance by the Parent and Merger Sub on Company estimates, projects and forecasts; and

acknowledgement by the Company as to the absence of any other representations and warranties by Parent or Merger Sub, other than the representations and warranties made by Parent or Merger Sub contained in the merger agreement.

Conduct of Business Prior to Closing

The Company has agreed that from the date of the merger agreement until the effective time of the merger (or the termination of the merger agreement) (i) the business of the Company and its subsidiaries will be conducted in the ordinary course in all material respects and (ii) the Company and its subsidiaries will use their respective reasonable efforts to preserve their business organizations substantially intact and maintain their existing relations and goodwill with governmental entities, key customers, suppliers, licensors, licensees, distributors, creditors, lessors, employees and other persons with whom the Company or any subsidiary of the company has material business relations.

From the date of the merger agreement until the effective time of the merger (or the termination of the merger Agreement), without the prior written consent of Parent, the Company will not and will not permit any of its subsidiaries to, among other things:

adopt or propose any change in the memorandum and articles of association or equivalent organizational documents of the Company or any of its subsidiaries;

effect any scheme of arrangement, or merge or consolidate the Company or any of its subsidiaries with any other person, except for any such transactions among wholly owned subsidiaries of the Company that are not obligors or guarantors of third party indebtedness, or other than in the ordinary course, restructure, reorganize or completely or partially liquidate or otherwise enter into any contracts imposing material changes or material restrictions on assets, operations or businesses of the Company and its subsidiaries;

acquire, whether by purchase, merger, consolidation, scheme of arrangement or acquisition of stock or assets or otherwise, any assets, securities, properties, interests, or businesses or make any investment (whether by purchase of stock or securities, contributions to capital, loans to, or property transfers), in each case, other than in the ordinary course of business, (it being understood and agreed that the acquisition of all or substantially all of the assets or outstanding shares or other equity securities of any person is not in the ordinary course of business);

issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guaranty or encumbrance of, or redeem, purchase or otherwise acquire, any share capital of the Company or any of its subsidiaries, or securities convertible or exchangeable into or exercisable for any share capital, or any options, warrants or other rights of any kind to acquire any share capital or such convertible or exchangeable securities;

create or incur (i) any lien or other security interest on any intellectual property owned by the Company or any of its subsidiaries or exclusively licensed or that is material and non-exclusively licensed by the Company or any of its subsidiaries outside the ordinary course of business or (ii) any lien on any other material assets of the Company or any of its subsidiaries, in each case, other than permitted liens and liens incurred in the ordinary course of business;

make any loans, advances, guaranties or capital contributions to or investments in any person (other than the Company or any direct or indirect wholly owned subsidiary of the Company), except pursuant to contracts in effect as of the date of the merger agreement which have been filed as exhibits to the Company reports filed with the SEC;

declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its share capital (except for dividends paid by any subsidiary to the Company or to any other subsidiary and periodic dividends and other periodic distributions by non-wholly owned subsidiaries in the ordinary course consistent with past practices), or enter into any contract with respect to the voting of its share capital;

reclassify, split, combine, subdivide, directly or indirectly, any of its share capital or securities convertible or exchangeable into or exercisable for any of its share capital;

incur, alter, amend or modify, any indebtedness for borrowed money or guaranty such indebtedness of another person, or permit any subsidiary of the Company to guaranty any indebtedness of the Company, other than the incurrence or guaranty of indebtedness in the ordinary course of business not to exceed $3,500,000 in the aggregate, including any borrowings under the existing credit facilities of the Company and its subsidiaries to fund working capital needs, and such other actions taken in the ordinary course of business consistent with past practice;

issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company or any of its subsidiaries;

make or authorize any capital expenditure in excess of $1,000,000 per project or related series of projects of $2,000,000 in the aggregate, other than expenditures necessary to maintain existing assets in good repair, consistent with past practice;

make any changes with respect to accounting policies or procedures materially affecting the reported consolidated assets, liabilities or results of operations of the Company and its subsidiaries, except as required by changes in applicable generally accepted accounting principles or law;

settle any action before a governmental entity by or against the Company or any of its subsidiaries or relating to any of their business, properties or assets, other than settlements (i) entered into in the ordinary course of business consistent with past practice, (ii) requiring of the Company and its subsidiaries only the payment of monetary damages not exceeding $1,000,000 and (iii) not involving the admission of any wrongdoing by the Company or any of its subsidiaries;

engage in the conduct of any new line of business material to the Company and its subsidiaries, taken as a whole;

create any new subsidiaries;

enter into, amend or modify, in any material respect, or terminate, or waive any material rights under, any material contract (or contract that would be a material contract if such contract had been entered into prior to the date of the merger agreement);

make or change any material tax election, materially amend any tax return (except as required by applicable law), enter into any material closing agreement with respect to taxes, surrender any right to claim a material refund of taxes, settle or finally resolve any material controversy with respect to taxes or materially change any method of tax accounting;

with regard to material intellectual property owned by the Company or any of its subsidiaries, transfer, sell, license, mortgage, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any such material intellectual property, other than licenses or other contracts granted in the ordinary course of business, or cancellation, abandonment, allowing to lapse or expire such intellectual property that is no longer used or useful in any of the Company's or its subsidiaries' respective businesses or pursuant to contracts in effect prior to the date of the merger agreement; and (b) with regard to other assets, transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any material assets, licenses, operations, rights, product lines, businesses or interests therein of the Company or its subsidiaries, including capital stock of any of its subsidiaries, except in connection with services provided in the ordinary course of business, sales of products in the ordinary course of business and sales of obsolete assets and except for sales, leases, licenses or other dispositions of assets with a fair market value not in excess of $300,000 in the aggregate, in each case, other than pursuant to Contracts in effect as of the merger agreement;

except as required pursuant to existing written plans or contracts in effect as of the date of the merger agreement, as otherwise required by applicable law or in the ordinary course of business, (i) enter into any new employment or compensatory agreements (including the renewal of any consulting agreement) with any employee, consultant or director of the Company or any of its subsidiaries except employment agreements with newly hired employees in the ordinary course of business consistent with past practice; (ii) grant or provide any severance or termination payments or benefits to any director, officer or employee of the Company or any of its subsidiaries; (iii) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any director, officer or employee of the Company or any of its subsidiaries, in each case, except increases in compensation and bonus in the ordinary course of business consistent with past practice; (iv) establish, adopt, amend or terminate any Company benefit plan (except as required by Law) or amend the terms of any outstanding equity-based awards; (v) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any Company benefit plan, to the extent not already required in any such Company benefit plan; (vi) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company benefit plan or to change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP; or (vii) forgive any loans to directors, officers or employees of the Company or any of its subsidiaries; or

agree, authorize or commit to do any of the foregoing.

Shareholders' Meeting

Subject to the “Go-shop” provisions described below, the Company will use reasonable best efforts, in accordance with applicable law and its memorandum and articles of association to convene an extraordinary general meeting of the shareholders as promptly as reasonably practicable after the SEC confirms that it has no further comments on the Schedule 13E-3 to consider and vote upon the approval and authorization of the merger agreement and the plan of merger, provided that the Company will not be required to call, give notice of or hold the shareholders' meeting on or before 11:59 p.m. (Hong Kong time) on January 11, 2014 (the “Go-Shop Period End Date”). The Company may adjourn or postpone the shareholders' meeting to the extent necessary to ensure that any supplement or amendment to the proxy statement is provided to its shareholders within a reasonable number of days prior to the shareholders' meeting, and the Company may adjourn or postpone the shareholders' meeting if as of the time for which the shareholders' meeting is originally scheduled there are insufficient Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the shareholders' meeting or if the Company deems necessary to solicit more proxies.

In the event that the board of directors of the Company changes, withholds, withdraws, qualifies or modifies its recommendation to the shareholders of the Company, the Company will have the right not to submit the merger agreement to the holders of Shares for the approval at, and will have the right not to hold the shareholders' meeting.

Acquisition Proposals

During the period beginning on the date of the merger agreement and continuing until the Go-Shop Period End Date, the Company and its representatives may (acting under the direction of the independent committee) directly or indirectly, (i) solicit, initiate, facilitate and encourage any acquisition proposal, provided that any material non-public information concerning the Company or its subsidiaries provided to such solicited person given such access and not previously disclosed to Parent will be disclosed to Parent as well; and (ii) enter into, continue or otherwise participate in any discussions or negotiations with respect to any acquisition proposal or otherwise cooperate with, assist, participate in, facilitate or take any other action in connection with any such inquiries, proposals, discussions or negotiations or any effort or attempt to make any acquisition proposal.

“Acquisition proposal” is defined in the merger agreement as (i) any bona fide written inquiry, proposal or offer with respect to a merger, joint venture, partnership, consolidation, business combination or other similar transaction involving the Company or any of its subsidiaries, which if consummated would result in any person becoming the beneficial owner of, directly or indirectly, 20% or more of the total voting power of the equity securities of the company and (ii) any acquisition by any person, or proposal or offer, which if consummated would result in any person becoming the beneficial owner of, directly or indirectly, in one or a series of related transactions, 20% or more of the total voting power of any class of equity securities of the company, or 20% or more of the consolidated total assets (including the equity securities of the subsidiaries) of the company, in each case, other than the transactions contemplated by the merger agreement.

From the Go-Shop Period End Date 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: (i) initiate, solicit or knowingly encourage any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any acquisition proposal; (ii) engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information to any person relating to any acquisition proposal or (iii) otherwise knowingly facilitate any effort or attempt to make an acquisition proposal. However, the Company may take and continue to take any of the actions permitted during the “go-shop” period as described in the immediately preceding paragraph and, subject to certain restrictions, from and after the Go-Shop Period End Date with respect to any solicited person that, prior to the Go-Shop Period End Date, has made a bona fide acquisition proposal that the independent committee determines in good faith constitutes or would reasonably be expected to result in a superior proposal (each such solicited person, an “Excluded Party”). Any Excluded Party will cease to be an Excluded Party for all purposes under the merger agreement immediately at such time as the acquisition proposal made by such party is withdrawn, is terminated or expires, or the independent committee determines in good faith that such acquisition proposal ceases to constitute, or ceases to be reasonably likely to lead to, a superior proposal (a “Terminated Acquisition Proposal”).

Within 48 hours after the Go-Shop Period End Date, the Company will notify Parent of the material terms and conditions of the acquisition proposals (including any amendments or modifications thereof) received from any Excluded Party and the identity thereof. After the end of the “go-shop” period, other than with respect to persons who on the Go-Shop Period End Date are Excluded Parties, and at any subsequent time with respect to any person (including a formerly Excluded Party) that has made an acquisition proposal that becomes a Terminated Acquisition Proposal, the Company will immediately cease and cause to be terminated any solicitation, encouragement, discussion or negotiation with such person conducted theretofore by the Company, its subsidiaries or any of their respective representatives with respect to any acquisition proposal and will use reasonable best efforts to require such person to promptly return or destroy any confidential information previously furnished by the Company, any of its subsidiaries or any of their respective representatives. The term “superior proposal” means a bona fide acquisition proposal (with all of the percentages included in the definition of” acquisition proposal” increased to 50% that was not obtained in violation of the “go-shop” provisions of the merger agreement and which the board of directors, acting through the independent committee, has determined in its good faith judgment is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial and regulatory aspects of the proposal, and would, if consummated, result in a transaction more favorable to the Company's shareholders from a financial point of view than the merger.

Prior to the receipt of the required shareholder authorization and approval of the merger agreement, the plan of merger and the transactions contemplated by the merger agreement, including the merger, if the Company has otherwise complied in all material respects with its obligations set forth in the immediately preceding paragraph, (i) following receipt by the Company of an acquisition proposal from any person, the Company and its representatives may contact such person solely in order to (a) clarify such acquisition proposal so as to determine whether such acquisition proposal constitutes or would reasonably be expected to result in a superior proposal and (b) notify such person of the non-solicitation restrictions as set forth under the merger agreement; and (ii) if the independent committee has determined in good faith based on the information then available that such acquisition proposal either constitutes a superior proposal or would reasonably be expected to result in a superior proposal, the Company and its representatives may (a) provide information in response to a request therefor by a person (other than any affiliate of the Company) who has made such an unsolicited written acquisition proposal that the board of directors believes in good faith to be bona fide and providing for the acquisition of more than 50% of the assets (on a consolidated basis) or more than 50% of the total voting power of the equity securities of the Company; and promptly discloses (and, if applicable, provides copies of) any such information to Parent and Merger Sub to the extent not previously provided to Parent and Merger Sub; and (b) engage or participate in any discussions or negotiations with any person who has made such an acquisition proposal; or if the board of directors determines in good faith (after consultation with its independent financial advisor and outside legal counsel) that such acquisition proposal is a superior proposal, approve, recommend, or otherwise declare advisable or propose to approve, recommend or declare advisable (publicly or otherwise) such an acquisition proposal.

After the Go-Shop Period End Date, 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 initially sought to be initiated or continued with, it or any of its representatives (in each case received after the Go-Shop Period End Date) indicating, in connection with such notice, the name of such person, the material terms and conditions of any proposals or offers (including, if applicable, copies of any written requests, proposals or offers, including proposed agreements) and whether the Company has any intention to provide confidential information to such person, and thereafter will use reasonable efforts to 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. Without limiting the foregoing, the Company will 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. The Company will not, and will cause its subsidiaries not to, enter into any confidentiality agreement with any person subsequent to the date of the merge agreement that prohibits the Company from providing such information to Parent or Merger Sub.

Change of Recommendation

The board of directors of the Company and the independent committee will not:

However, prior to obtaining the required shareholder authorization and approval of the merger agreement, the board of directors of the Company, based on the unanimous recommendation of the independent committee, may (i) withhold, withdraw, qualify or modify the company recommendation 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 made after the date of the Merger Agreement, and to authorize the Company to terminate the merger agreement or enter into an alternative acquisition agreement with respect to such superior proposal if the board of directors of the Company (acting through the independent committee) determines in good faith, after consultation with outside legal counsel to the independent committee, that failing to do so would be inconsistent with its fiduciary obligations under applicable laws (a “Company Adverse Recommendation”); provided, however, that prior to making any such Company Adverse Recommendation:

Indemnification

The merger agreement provides that the indemnification, advancement and exculpation provisions of indemnification agreements by and among the Company and its directors and certain executive officers, as in effect at the effective time of the merger will survive the merger and will not be amended, repealed or otherwise modified for a period for six years from the effective time of the merger in any manner that would adversely affect the rights of the current and former directors, officers or employees of the Company. In addition, the memorandum and articles of association of the Company will contain provisions with respect to exculpation and indemnification that are at least as favorable to the directors, officers or employees of the Company as those contained in the memorandum and articles of association of the Company as in effect on the date of the merger agreement, except to the extent prohibited by applicable law, which provisions will not be amended, repealed or otherwise modified for a period of five years from the effective time in any manner that would adversely affect the rights of the current and former directors, officers or employees of the Company . For a period of six years after the after the effective time of the merger, the surviving corporation will comply with all of the company’s obligations, and will cause its subsidiaries to comply with their respective obligations to indemnify and hold harmless (including any obligations to advance funds for expenses) current and former directors, officers or employees of the Company against (i) all costs or expenses, judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any damages in connection with (a) the fact that such person is or was a director, officer or employee of the Company or a subsidiary or (b) any acts or omissions occurring or alleged to occur prior to or at the effective time of the merger to the extent provided under the Company or such subsidiaries’ respective organizational and governing documents in effect as of the date of the merger agreement, including the approval of the merger agreement, the merger or the other transactions contemplated by the merger agreement and actions to enforce the indemnification provisions of the merger agreement and (ii) against all damages arising out of acts or omissions in connection with such persons serving as and officer, director or other fiduciary in any entity if such service was at the request or for the benefit of the company or its subsidiaries.

If Parent, the surviving corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and will not be the continuing or surviving corporation or entity of such consolidation or merger; or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then the obligations of Parent or the surviving corporation, as the case may be, that are described in the forging paragraph will survive, and to the extent necessary, proper provision will be made so that the successors and assigns of Parent or the surviving corporation, as the case may be, will assume such obligations.

Financing

The Company and Parent estimate that the total amount of funds required to pay the aggregate merger consideration is anticipated to be approximately $19.5 million . This amount is expected to be funded from the proceeds from the equity commitment letter.

As of the date of the merger agreement, Parent has delivered to the Company (i) an equity commitment letter by which Buyer committed to purchase or cause the purchase of equity interests of Parent immediately prior to the merger and (ii) Contribution Agreements by which Mr. Yih, the Rollover Shareholders and the Mr. Shi Shareholders committed to subscribe for newly issued shares in Parent immediately prior to the closing of the merger agreement.

Parent shall use its reasonable best efforts to arrange and consummate the financing on the terms and conditions described in the equity commitment letter including using its reasonable best efforts to satisfy all conditions thereto. Parent and Merger Sub may not amend or modify the equity commitment letter in any way not contemplated by Section 6.9 of the merger agreement without the prior written consent of the Company (acting upon the recommendation of the independent committee).

Other Covenants

The merger agreement contains additional agreements between the Company and Parent and/or Merger Sub relating to, among other things:

the filing of this proxy statement and the Rule 13e-3 transaction statement on Schedule 13E-3 with the SEC (and cooperation in response to any comments from the SEC with respect to either statement);

access by Parent’s officers and other authorized representatives to the Company’s employees, properties, books, contracts and records between the date of the merger agreement and the effective time (subject to all applicable legal or contractual obligations and restrictions);

delisting and deregistration of the shares;

coordination of press releases and other public announcements or filings relating to the merger;

notification of certain events;

resignation of the directors of the Company and its subsidiaries;

participation in litigation relating to the merger; and

maintenance of employee benefits for at least one year after the merger on terms no less favorable, in the aggregate, than those immediately prior to closing.

Actions Taken at the Direction of Mr. Lin

The Company will not be deemed to be in breach of any representation, warranty, covenant or agreement in the merger agreement if the alleged breach is the proximate result of action or inaction taken by the Company at the direction of Mr. Lin Shuipan without the approval or direction of the independent committee.

Conditions to the Merger