Houlihan Lokey relied upon and assumed, without independent verification, that (a) the
representations and warranties of all parties to the Merger Agreement and all other related documents and instruments that were referred to therein were true and correct, (b) each party to the Merger Agreement 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, and (c) the Merger would be consummated in a timely manner in accordance with the terms described in the Merger Agreement
and such other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey 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 foreign, 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 Lokeys analyses or its opinion. In addition,
Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the Plan of Merger would not differ in any respect from the form attached as an annex to the Merger Agreement.
Furthermore, in connection with such 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, Sohu.com, 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 undertook no independent analysis of any potential or actual
litigation, regulatory action, possible unasserted claims, or other contingent liabilities, to which the Company or Sohu.com was or may have been a party or was or may have been subject, or of any governmental investigation of any possible
unasserted claims or other contingent liabilities to which the Company or Sohu.com was or may have been a party or was or may have been subject.
Houlihan Lokey was not requested to, and did not, (a) initiate any discussions or negotiations with, or solicit any indications of
interest from, third parties with respect to the Merger, or the securities, assets, business or operations of the Company or any other party, or any alternatives to the Merger, (b) negotiate the terms of the Merger, or (c) advise the
Special Committee, the Changyou Board, the Company, or any other party with respect to alternatives to the Merger. Houlihan Lokeys opinion 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 such 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 such opinion.
Houlihan Lokeys opinion was furnished for the use of the Special Committee
(in its capacity as such) in connection with the Special Committees evaluation of the Merger, and may not be used for any other purpose without Houlihan Lokeys prior written consent. Houlihan Lokeys opinion should not be construed
as creating any fiduciary duty on Houlihan Lokeys part to any party, and was not intended to be, and did not constitute, a recommendation to the Special Committee, the Changyou Board, any security holder, or any other party as to how to act or
vote with respect to any matter relating to the Merger or otherwise.
Houlihan Lokey was not requested to opine as to, and its opinion did
not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Special Committee, the Changyou Board, the Company or its security holders, Sohu.com or 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 and the Per ADS Merger Consideration to the extent expressly specified in Houlihan Lokeys opinion), (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, Sohu.com, or to any other party, except if and only to the extent expressly set forth in the last sentence of Houlihan Lokeys opinion, (iv) the relative merits of the Merger as compared to any alternative
business strategies or transactions that might be available for the Company, Sohu.com, or any other party, (v) the fairness of any portion or aspect of the Merger to any one class or group of the Companys, Sohu.coms, or any other
partys security holders or other constituents vis-à-vis any other class or group of the Companys, Sohu.coms or such other partys 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 or its security holders, Sohu.com
or 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, Sohu.com, 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, (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 the Per ADS Merger Consideration or otherwise.
Furthermore, no opinion, counsel, or interpretation was intended in matters that require legal, regulatory, accounting, insurance, tax, or other similar professional advice. Houlihan Lokey assumed that such opinions, counsel, or interpretations were
or would be obtained from appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Special Committee, on the assessments by the Special Committee, the Changyou Board, the Company, Sohu.com, and their respective
advisors as to all legal, regulatory, accounting, insurance, tax, and other similar matters with respect to the Company and the Merger or otherwise.
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