Chinacast Education DFAN14A Additional proxy materials by non-management

ChinaCast Stockholders:

Vote FOR an Independent Voice in the Board Room

Elect the Independent Nominees

on the

GREEN Proxy Card

Ned Sherwood

ZS EDU L.P.

ZS EDU GP LLC

Exhibit 3

Important Information

SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT FILED

WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) AND OTHER

DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY NED SHERWOOD, ZS EDU

L.P., ZS EDU GP LLC, ROBERT HORNE AND THE NOMINEES FROM THE STOCKHOLDERS OF

CHINACAST EDUCATION CORPORATION (THE “ISSUER”) FOR USE AT THE ISSUER’S

ANNUAL MEETING BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION.

INVESTORS CAN GET THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT

DOCUMENTS AT NO CHARGE AT THE SEC’S WEBSITE AT HTTP://WWW.SEC.GOV.

2

CAST Stock Price has Dramatically Underperformed

•

CAST revenues have grown 37% year-over-year, yet CAST’s share price is down 20%

from the 52-week high of $7.76 per share in December 2010 (as of December 22, 2011)

Indexed Simple Return (1 Year)

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

CAST

NDX

3

The Board Does Not Appear to be Looking out for the Best

Interests of Stockholders

•

Given CAST excellent operating results and its strong cash position, but with its stock

trading at less than 3x EBITDA, why is the Board so reluctant to

share the cash flow

with the stockholders?

–

CAST

announced

a

$50

million

stock

buy-back

plan

on

March

16,

2011,

when

the

share

price

was $5.57, which was unanimously approved by the then five-member Board.

–

Since that time, CAST has reported three record quarters of earnings and the share price has

dropped below the March

16 prices.

–

With new university acquisitions valued at 7.5x to 9.0x EBITDA and CAST’s stock trading well

below that EBITDA multiple, new acquisitions would be quite dilutive.

–

However, we believe that CAST has repurchased less than 10% of the announced buy-back

shares to date.

•

Actively exploring a strategic transaction involving a sale of the company without

appointing a special committee consisting of Board members with the most investment

and M&A experience.

–

Current Special Committee members consist of two directors that were appointed (never

elected)

to

the

Board

and

a

third

director

who,

we

believe,

is

a

proxy

for

Ron

Chan.

•

Keeping a “poison pill”

in place making it more difficult for potential suitors to purchase

the company.

–

Poison Pill not submitted to stockholders for approval despite Directors Sherwood and Tseung

voting against the adoption of a poison pill.

4

The Board Appears to be Manipulating Corporate Governance and

the Election Process to Create an Entrenched Board of “Yes-Men”

We believe the Board is “rigging”

a management-friendly Board by manipulating the

election process to eliminate any dissenting voices from the Board room.

–

The Board attempted to hold a stockholder meeting just days after removing Ned

Sherwood from its slate in an effort to deprive stockholders of an independent voice in

the Board room.

–

We believe the Board removed Ned Sherwood from its slate to remove a dissenting

voice from the Board room.

–

We believe the current Board has removed directors from various committees

(Sherwood –

Audit and Nominating Committees, Tseung –

Nominating Committees) to

retaliate for expressing differing views in the Board room

–

The Delaware Court of Chancery issued a Temporary Restraining Order to force

CAST to adjourn the annual meeting to January 10, 2012 in order to provide

stockholders with sufficient time to evaluate director nominees.

–

The Board previously rejected another stockholder’s director nomination on purported

technicalities in order to keep a unified Board of “yes-men”.

5

It is ALL about Stockholder Value!

If successful, we are committed to the following simple plan:

1.

Follow a simple philosophy of sharing the CAST success and cash flow with the stockholders via

dividends, share buybacks and, of course, constantly evaluating strategic alternatives. Be assured that

we

will

always

be

alert

to

maximizing

value

for

all

stockholders

if

an

appropriate

opportunity

arises,

and

we do not plan to stop the process of exploring strategic alternatives. We recommend that the Special

Committee of the Board for this process consist of highly experienced investment professionals.

2.

Maintain the commitment to improving and enhancing the quality of education and the facilities at CAST’s

three

existing

universities,

with

the

goal

to

provide

a

“world

class”

education

to

all

of

the

matriculating

students.

When possible, we should also search for additional private universities to acquire and improve and

expand. Currently CAST trades at a multiple net of cash of approximately 3x EBITDA, but most university

acquisition candidates sell for multiples between 7.5 and 9 times EBITDA. Therefore, we strongly believe

our first task at hand is to work to convince the financial markets to properly value CAST stock so that

new university acquisitions would make financial sense and not be dilutive.

3.

Subject to the approval of China’s State Administration of Foreign Exchange, restart CAST’s previously

announced $50

million share buyback program in earnest. Unfortunately, after announcing its buyback

program in March 2011, we believe CAST has not purchased any shares since late June and has only

purchased $4.7

million worth of shares in total to date.

4.

Consult with the relevant Chinese authorities with regard to continuing cash remittance to the United

States and, as soon as possible, initiate a twenty-cent per share annual dividend payable quarterly.

5.

Eliminate

the

“poison

pill”

and

stop

Board

action

to

remove

independent

voices

from

the

Board.

6

The Delaware Court of Chancery

Forced CAST to Delay the Annual Meeting

In its December 20

th

opinion, the Delaware Court of Chancery held that:

•

“Plaintiffs make a colorable claim that, to whatever degree Sherwood may have been obstinate,

that obstinance relates to sincere policy disputes between him and [directors Chan, Santos and

Tang], and a desire to avoid those disputes may have motivated [directors Chan, Santos and

Tang] to remove him from their slate.”

•

“[I]t also is important that directors be able to register effective dissent, even if that might offend

the sensibilities of some of their co-directors.”

•

“The [company’s] Proxy Supplement may be materially misleading in its failure to disclose the

board’s “motivations candidly….””

•

“The board should have foreseen that [removing Sherwood from the management slate] would

generate controversy, and that ChinaCast’s shareholders generally, not just Sherwood, would

lose the opportunity to express their fully informed views on that controversy via a fair election.”

•

Defendants have not simply expressed their disagreement with Sherwood’s positions or

dissatisfaction with his personal behavior; they have also excluded him from merely running for

election.

In

this

way,

holding

the

Annual

Meeting

on

December

21

would

not

comport

with

the

“scrupulous

fairness”

required

of

corporate

elections.”

(emphasis

added)

7

Vote

FOR Independent Stockholder

Voices in the Board Room

on the

Green

Proxy Card

If you have questions or need assistance in voting your shares, please

call our proxy solicitor, Innisfree M&A Incorporated, at 212-750-5833.

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