by and among
Alibaba Group Holding Limited,
the Management Members
(as defined herein),
certain other shareholders of Alibaba Group Holding Limited
Dated as of , 2014
TABLE OF CONTENTS
|1.||Definitions and Construction||3|
|2.1||General Rights and Obligations||8|
|2.3||SoftBank Observation Rights||9|
|2.4||Determination of Share Ownership||10|
|3.||Management Voting Share Rights||10|
|3.1||SoftBank Proxy Shares||10|
|3.2||Yahoo Proxy Shares||11|
|3.3||Termination and Limitations of Voting Share Rights||11|
|3.4||Calculation of Management Voting Shares||11|
|3.5||No Other Agreements||11|
|4.||Representations and Warranties||12|
|4.1||Power and Authority||12|
|4.3||Execution and Delivery||12|
|5.1||Beneficial Ownership Reporting||13|
|5.3||Company Facilitation of Sale||13|
|6.||Governing Law and Dispute Resolution||13|
|8.||Termination of Existing Agreements; Effectiveness||16|
|9.2||Management Members Representative||18|
|9.5||Amendment and Waiver||18|
|9.9||No Third Party Beneficiaries||19|
THIS VOTING AGREEMENT (this Agreement), dated as of , 2014, is made and entered into by and among Alibaba Group Holding Limited, a Cayman Islands company (the Company), Yahoo! Inc., a Delaware corporation (Yahoo), SoftBank Corp., a Japanese corporation (SoftBank), and each of the Management Members (as defined herein) (together with Yahoo and SoftBank, collectively, the Shareholders and individually, a Shareholder) and certain other shareholders named on Schedule A as Subordinate Shareholders.
W I T N E S S E T H:
WHEREAS, the Company, Yahoo, SoftBank, and the Management Members entered into a Shareholders Agreement dated as of October 24, 2005;
WHEREAS, the Company, Yahoo, SoftBank, and the Management Members entered into a First Amended and Restated Shareholders Agreement dated as of October 21, 2007;
WHEREAS, Yahoo, SoftBank and the Management Members Representative entered into the New Shareholders Agreement (the Shareholders Agreement), dated as of September 18, 2012;
WHEREAS, the Company is currently contemplating an underwritten initial public offering (IPO) of its ADSs (as defined below); and
WHEREAS, in connection with the IPO, the Company, Yahoo, SoftBank, and the Management Members Representative (as defined below) wish to terminate the Shareholders Agreement, effective as of the closing of the IPO and set forth certain understandings between such parties, including with respect to certain voting matters.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, and in reliance upon the representations, warranties and covenants herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions and Construction.
1.1 Definitions. For purposes of this Agreement, the following terms have the indicated meanings.
ADS means American Depositary Shares representing Ordinary Shares.
Affiliate of a Person means another Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the first Person, including but not limited to a Subsidiary of the first Person, a Person of which the first Person is a Subsidiary, or another Subsidiary of a Person of which the first Person is also a Subsidiary. Control (including the terms controlled by and under common control with) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract or other arrangement, as trustee or executor, or otherwise.
Agreement is defined in the first paragraph of this Agreement.
Agreement Among Management Members is defined in Section 9.2(a).
Alibaba Partnership means Lakeside Partners LP, a limited liability partnership formed under the Laws of the Cayman Islands.
Alibaba Partnership Designee is defined in Section 2.2(a).
Board means the board of directors of the Company.
Claimant is defined in Section 6.2(b).
Closing Date means the date and time of the initial closing of the Qualified IPO (as defined in the Share Repurchase Agreement).
Collateral Agent means Wilmington Trust (Cayman) Ltd.
Company is defined in the first paragraph of this Agreement.
Confidential Information means information delivered by a party to another party pursuant to this Agreement or the transactions contemplated hereby that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such party as being confidential information of such delivering party (it being agreed that any information provided by means of an online dataroom is Confidential Information regardless of whether it is marked or labeled as such), provided that such term does not include information that (a) was publicly known prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission in violation of this Agreement by such receiving party or any Person acting on such partys behalf, or (c) otherwise becomes known to such receiving party other than through disclosure by the delivering party or any Person with a duty to keep such information confidential.
Consent means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, certificate, exemption, order, registration, declaration, filing, report or notice of, with or to any Person.
Contracts means any loan agreements, indentures, letters of credit (including related letter of credit applications and reimbursement obligations), mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes, guarantees, surety obligations, warranties, licenses, franchises, permits, powers of attorney, purchase orders, Leases, and other agreements, contracts, instruments, obligations, offers, legally binding commitments, arrangements and understandings, written or oral.
Deed of Assignment and Novation means the deed of assignment and novation dated August 12, 2014 by JM, JT, PMH, and Wilmington Trust (Cayman), Ltd., pursuant to which JT (as assignor) assigned and transferred to PMH (as assignee) absolutely all of his rights and title to, and interest and benefit in, to and under the Original Legal Mortgage of IPCo Shares and novated to PMH all of his obligations and liabilities under the Original Legal Mortgage of IPCo Shares
Director Designee(s) means any Alibaba Partnership Designee or SoftBank Designee or any collection of such Persons.
Equity Securities means any Ordinary Shares and ADSs and any other equity interests or equity-linked interests of the Company, however described or whether voting or non-voting, and any securities convertible or exchangeable into, and options, warrants or other rights to acquire, any equity interests or equity-linked interests of the Company.
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Family Members means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of a Person, and shall include adoptive relationships of the same type.
GAAP means U.S. GAAP or IFRS, in each case, applied on a consistent basis.
Governance Guidelines means, with respect to an Observation Committee, the applicable provisions of the Memorandum and Articles, any corporate governance guidelines, code of ethics, code of conduct, related party transaction policy or other statements of governance or ethical principles adopted by the Company or the Board and the charter or other organizational documents of such Observation Committee.
Governmental Approval means any Consent of any Governmental Authority.
Governmental Authority means any nation or government, any state or other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality of any nation or any political subdivision thereof; any court, tribunal or arbitrator; any self-regulatory organization; and any securities exchange or quotation system.
ICC is defined in Section 6.2(a).
IFRS means International Financial Reporting Standards.
IPCo means APN Ltd., a company incorporated under the Laws of the Cayman Islands.
JM means Jack Ma Yun, the founder and the current Executive Chairman of the Company.
JT means Joseph C. Tsai, the current Executive Vice-Chairman of the Company.
Law means all applicable provisions of all (i) constitutions, treaties, statutes, laws (including the common law), codes, rules, stock exchange rules, regulations, guidance, ordinances or orders of any Governmental Authority, fiduciary duties under Cayman law, (ii) Governmental Approvals and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreements between the Company and any Governmental Authority.
Lease means any real property lease, sublease, license and occupancy agreement.
Lien means any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, burden, title defect, title retention agreement, lease, sublease, license, occupancy agreement, easement, covenant, condition, encroachment, voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy, lien, charge or other restrictions or limitations of any nature whatsoever, including but not limited to such Liens as may arise under any Contract, but excluding any such Lien arising under this Agreement or the Memorandum and Articles.
Management Members means JM and JT, each solely in his capacity as a shareholder of the Company.
Management Members Representative is defined in Section 9.2(a).
Management Successor is defined in Section 9.8(a).
Management Voting Shares means the SoftBank Proxy Shares, if any, plus the Yahoo Proxy Shares, if any.
Memorandum and Articles means the Memorandum and Articles of Association of the Company, to be adopted and approved by the shareholders of the Company on or prior to the Closing Date and filed with the appropriate Governmental Authority on or before and to become effective as of the Closing Date.
Necessary Action is defined in Section 2.1(a).
Novated Legal Mortgage of IPCo Shares means the Original Legal Mortgage of IPCo Shares, as assigned and novated by the Deed of Assignment and Novation.
Observation Committee is defined in Section 2.3.
Ordinary Share Equivalents means, (i) in the case of an Ordinary Share, one Ordinary Share or (ii) in the case of an ADS, the number of Ordinary Shares represented by such ADS. For purposes of calculating the number of Ordinary Share Equivalents outstanding, Ordinary Shares underlying ADSs shall not be counted separately as being outstanding (i.e., such shares shall be counted only once).
Ordinary Shares means the ordinary shares of the Company, par value US$0.000025 per share.
Original Legal Mortgage of IPCo Shares means the original legal mortgage dated October 21, 2011 whereby the Mortgaged Property (as defined therein) was mortgaged by JM and JT in favor of the Collateral Agent (as defined therein).
own, owned, ownership and the like: as owned is defined in Section 2.4.
Parent Shareholder is defined in Section 2.1(c).
Person means any natural person, firm, partnership, association, corporation, company, trust, business trust, Governmental Authority or other entity.
PMH means PMH Holding Limited, a company incorporated under the laws of the British Virgin Islands.
PRC means the Peoples Republic of China (for the purpose of this Agreement, not including Hong Kong Special Administrative Region, Macao Special Administrative Region or Taiwan).
Record Date is defined in Section 3.1(a).
Relying Shareholder is defined in Section 2.1(c).
Request is defined in Section 6.2(b).
Respondent is defined in Section 6.2(b).
SEC means the United States Securities and Exchange Commission.
Security Agreements means (i) the Legal Mortgage of Alibaba Shares, dated October 21, 2011, by IPCo in favor of the Collateral Agent (as defined therein), (ii) the Amended and Restated Legal Mortgage of Alibaba Shares, dated August 12, 2014, by IPCo in favor of the Collateral Agent (as defined therein), as amended or supplemented from time to time, (iii) the Legal Mortgage of IPCo Shares, dated October 21, 2011, by JM and JT, in favor of the Collateral Agent (as defined therein), as novated pursuant to the Deed of Assignment and Novation, as amended or supplemented from time to time, (iv) the Amended and Restated Legal Mortgage of IPCo Shares, dated August 12, 2014, by JM and PMH, in favor of the Collateral Agent, (as defined therein), as amended or supplemented from time to time, and (v) the Fixed and Floating Charge, dated October 21, 2011, by IPCo in favor of the Collateral Agent, as amended and restated pursuant to the Amended and Restated Fixed and Floating Charge, dated August 12, 2014, by IPCo in favor of the Collateral Agent (as defined therein), as amended or supplemented from time to time.
Security Interests means the Liens granted to or in favor of the Collateral Agent and/or the relevant secured party pursuant to the Security Agreements.
Share Repurchase Agreement means the Share Repurchase and Preference Share Sale Agreement, dated as of May 20, 2012, by and among the Company, Yahoo and Yahoo! Hong Kong Holdings Limited (YHK), as amended.
Shareholder(s) is defined in the first paragraph of this Agreement.
Shareholders Agreement is defined in the third recital to this Agreement.
Shareholders Meeting means any annual or extraordinary meeting of shareholders of the Company.
SoftBank is defined in the first paragraph of this Agreement.
SoftBank Affiliate means, with respect to SoftBank, another Person that directly or indirectly through one or more intermediaries, is controlled by, or under common control with, SoftBank, including but not limited to a Subsidiary of SoftBank, provided, however, that, in addition to such control or common control SoftBank either (i) owns, directly or indirectly, share capital or other equity interests representing more than 75% of the outstanding voting stock or other equity interests (disregarding, for the avoidance of doubt, any carried interest or similar economic participation rights of any Person formed as a fund, provided such interest or rights do not confer voting rights as to the governance of such Person on the holder thereof), (ii) owns, directly or indirectly, share capital or other equity interests representing more than 50% of such outstanding voting stock or other equity interests and has the right to designate at least two-thirds (2/3) of the directors of such Person, or (iii) consolidates such Person for accounting purposes under IFRS. Control, for purposes of this definition, has the meaning set forth in the definition of Affiliate.
SoftBank Designee is defined in Section 2.2(b).
SoftBank Director is defined in Section 2.2(b).
SoftBank Proxy Shares means a number of Ordinary Share Equivalents, rounded down to the nearest whole number, equal to the amount, if any, by which the Ordinary Shares owned by SoftBank, directly or through ADSs, exceed 30% of the Ordinary Shares of the Company then outstanding.
Subordinate Shareholder is defined in Section 2.1(b).
Subsidiary means, with respect to any Person, each other Person in which the first Person (i) owns or controls, directly or indirectly, share capital or other equity interests representing more than fifty percent (50%) of the outstanding voting stock or other equity interests, (ii) holds the rights to more than fifty percent (50%) of the economic interest of such other Person, including an interest held through a VIE Structure or other contractual arrangements or (iii) has a relationship such that the financial statements of the other Person may be consolidated into the financial statements of the first Person in accordance with GAAP.
Threshold Number means, as of a given date, a number of Ordinary Share Equivalents equal to 15%, rounded to the nearest whole number, of Ordinary Shares of the Company then outstanding.
U.S. GAAP means United States generally accepted accounting principles.
VIE Structure means the investment structure a non-PRC investor uses when investing in a PRC company or business that typically operates in a regulated industry. Under such investment structure, the onshore PRC operating entity and its PRC shareholders enter into a number of Contracts with the non-PRC investor and/or its onshore subsidiary (a foreign invested enterprise incorporated in the PRC) pursuant to which the non-PRC investor achieves control of the onshore PRC operating entity and also consolidates the financials of the onshore PRC operating entity with those of the offshore non-PRC investor.
Written Consent means any written consent executed in lieu of such a meeting of shareholders of the Company.
Yahoo is defined in the first paragraph of this Agreement.
Yahoo Proxy Shares means a number of Ordinary Share Equivalents owned by Yahoo representing the lesser of (i) 121,500,000 Ordinary Shares, as adjusted for stock splits, stock dividends, reverse splits, recombinations and the like, and (ii) the aggregate number of Ordinary Shares then owned by Yahoo, directly or through ADSs.
1.2 Construction. In this Agreement, unless the context otherwise requires:
(a) references in this Agreement to writing or comparable expressions includes a reference to facsimile transmission, email or comparable means of communication, words expressed in the singular number shall include the plural and vice versa, and words expressed in the masculine shall include the feminine and neutral genders and vice versa;
(b) references to Articles, Sections, Schedules and Recitals are references to articles, sections, schedules and recitals of this Agreement;
(c) references to day or days are to calendar days, and references to business days are to days that are not a Saturday, Sunday or other day on which banks are required or authorized by Law to be closed in New York, Beijing or Hong Kong;
(d) references to this Agreement or any other agreement or document shall be construed as references to this Agreement or such other agreement or document, as the case may be, as the same may have been, or may from time to time be, amended, varied, novated or supplemented from time to time;
(e) a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions;
(f) the table of contents to this Agreement and all section titles or captions contained in this Agreement or in any Schedule annexed hereto or referred to herein are for convenience only and shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of this Agreement;
(g) include, includes and including are deemed to be followed by without limitation whether or not they are in fact followed by such words or words of similar import; and
(h) the words herein, hereof, hereunder and other words of similar import refer to this Agreement as a whole and not to any particular provision.
2.1 General Rights and Obligations.
(a) In order to effectuate the provisions of this Agreement, each Shareholder and each Subordinate Shareholder hereby agrees to take, in its capacity as a shareholder of the Company, all actions reasonably necessary to give effect to the provisions of this Agreement (such actions, Necessary Action), including, without limitation, (i) when any action or vote is required to be taken by such Shareholder or such Subordinate Shareholder pursuant to this Agreement, using its commercially reasonable efforts to call, or cause the appropriate officers and directors of the Company to call, one or more Shareholders Meetings, to take such action or vote, (ii) to attend all Shareholders Meetings in person or by proxy for purposes of obtaining a quorum that are called for the election of directors of the Company or for the purpose of taking any action required by this Agreement, (iii) to vote or cause to be voted all Equity Securities over which such Shareholder or Subordinate Shareholder has voting power (including, for the avoidance of doubt, by operation of this Agreement or otherwise) at Shareholders Meetings or to act by Written Consent so as to cause the election of the Director Designees in accordance with this Agreement and otherwise effectuate the provisions of this Agreement and, (iv) with respect to the Management Members, SoftBank and their respective Subordinate Shareholders, to use its best efforts to cause the Board to adopt, either at a meeting of the Board or by unanimous written consent of the Board, all the resolutions necessary to effectuate the provisions of this Agreement, including causing members of the Board to be removed in the event they take actions inconsistent with the provisions of this Agreement.
(b) Each Shareholder has entered into this Agreement on behalf of itself and on behalf of each Person whose Equity Securities are owned by such Shareholder pursuant to Section 2.4 (each, a Subordinate Shareholder). Each Shareholder shall cause its Subordinate Shareholder(s) to take all actions necessary to perform all obligations hereunder, and to be deemed to have hereby made all representations and warranties hereunder as if such Subordinate Shareholder were such Shareholder.
(c) Each Shareholder (each, a Relying Shareholder) shall be entitled to rely upon the decision, actions, consents or instructions of each of the other Shareholders that has any Subordinate Shareholder (each, a Parent Shareholder) as being the decision, action, consent or instruction of each of such Parent Shareholders Subordinate Shareholders with respect to this Agreement or with respect to any matter related hereto. Each Relying Shareholder is hereby relieved from any liability to any of such Subordinate Shareholders for any lawful acts done by them in accordance with such decision, action, consent or instruction of its Parent Shareholder.
(d) Each Shareholder shall use its commercially reasonable efforts to cause any other Person with whom such Shareholder jointly files a statement (or an amendment to a statement) on Schedule 13D or Schedule 13G, pursuant to the Exchange Act with respect to Equity Securities bearing voting rights to execute a joinder to and become a party to this Agreement and be deemed a Shareholder for all purposes herein if such Person is not otherwise a party to this Agreement (either as a Shareholder or a Subordinate Shareholder). Nothing in this Section 2.1(d) shall be deemed to release any Shareholder or Subordinate Shareholder from any obligations pursuant to this Agreement with respect to any Equity Securities owned by such Shareholder or Subordinate Shareholder.
2.2 Director Designees.
(a) Alibaba Partnership Designees. Each Shareholder and Subordinate Shareholder hereby agrees, to the fullest extent permitted by Law, to take all Necessary Action to cause the election or appointment as directors of the Persons nominated or designated for appointment, as applicable, by the Alibaba Partnership in accordance with the Memorandum and Articles (such Persons, the Alibaba Partnership Designees) provided, however, that that this Section 2.2(a) shall have no force or effect from and after the first time that SoftBank owns less than the Threshold Number of Equity Securities.
(b) SoftBank Designee. Each Shareholder and Subordinate Shareholder hereby agrees, to the fullest extent permitted by Law, to take all Necessary Action to cause the election or appointment as director of one Person nominated or designated for appointment, as applicable, by SoftBank as a director in Group III (as defined in the Memorandum and Articles) (such Person, the SoftBank Designee and following such election or appointment, the SoftBank Director), provided, however, that that this Section 2.2(b) shall have no force or effect from and after the first time that SoftBank owns less than the Threshold Number of Equity Securities.
(c) The Company hereby agrees to include the Director Designees in the slate of nominees recommended by the Board for election at any meeting of shareholders called for the purpose of electing directors (to the extent that directors of such Director Designees class are to be elected at such meeting for so long as the Board is classified), recommend each such individual to be elected as a director as provided herein and solicit proxies or consents in favor thereof. The Company is entitled to publicly identify Director Designees as Alibaba Partnership Designees or SoftBank Designees, as applicable, pursuant to this Agreement.
2.3 SoftBank Observation Rights. Until the first time that SoftBank owns less than the Threshold Number of Equity Securities, the SoftBank Director shall be entitled to receive the same notice of meetings of each committee of the Board as is provided to members of such committees and to receive copies of all materials distributed to committee members generally in connection with such meetings, in each case at the same time that such notice and such materials are provided to committee members. Upon prior notice to the relevant committee, the SoftBank Director may attend, observe and participate in any discussions at any meeting of a committee to which he has not been appointed by the Board (an Observation Committee), provided, however, that the SoftBank Director shall in no circumstances have any right to participate in any vote, consent or other action of an Observation Committee; and provided, further, that the SoftBank Director may be excluded from any meeting of an Observation Committee or portion thereof and may be prohibited from receiving any related materials or portion thereof, to the extent (a) required by Law, (b) any communication from counsel protected by attorney-client privilege will be delivered during such meeting or in such materials and the presence or receipt, as applicable, of the SoftBank Director would be reasonably likely to cause such communication to not be privileged, or (c) the Board determines in good faith that there exists, with respect to the subject matter of such committee meeting or related materials, an actual or potential conflict of interest between the SoftBank Director or SoftBank and the Company such that a similarly positioned member of such Observation Committee would be recused from such matter in accordance with the Governance Guidelines. The parties to this Agreement shall take Necessary Action to cause the Governance Guidelines to implement the rights of SoftBank set forth in this Section 2.3.
2.4 Determination of Share Ownership. Throughout this Agreement, for purposes of determining the number or percentage of Equity Securities owned (owned), (a) with respect to Yahoo, such number or percentage shall include any Equity Securities owned by Yahoo or any of Yahoos wholly-owned Subsidiaries or controlled Affiliates (including, for the avoidance of doubt, any Yahoo Proxy Shares owned by Yahoo), (b) with respect to SoftBank, such number or percentage shall include any Equity Securities owned by SoftBank or any of SoftBanks wholly-owned Subsidiaries or any SoftBank Affiliate (including, for the avoidance of doubt, any SoftBank Proxy Shares owned by SoftBank) and (c) with respect to each Management Member, such number or percentage shall include any Equity Securities owned by (i) such Management Member, (ii) any of such Management Members wholly-owned Subsidiaries or controlled Affiliates in which such Management Member owns or is entitled to more than 50% of the combined economic interests (in capital and profits) (provided, that with respect to IPCo, other than the extent to which any Security Interests have been foreclosed upon or are subject to foreclosure proceedings, the determination of whether IPCo is a controlled Affiliate in which such Management Member owns or is entitled to more than 50% of the combined economic interests (in capital and in profits) and whether IPCo owns any Equity Securities of the Company will be made assuming that the obligations underlying the Security Interests have been satisfied and that the Security Agreements have been terminated in accordance with their terms such that the Equity Securities of the Company are held by or revert to IPCo absolutely) and (iii) any of such Management Members Family Members, trusts formed by such member for the benefit of himself or his Family Members (including any holding company directly or indirectly held by such trusts), family limited partnerships and other entities formed for the principal benefit of such Management Member and his Family Members (provided, that, the determination of whether such an entity has been formed for the principal benefit of such Management Member or his Family Members shall be conclusively established in the affirmative if such Management Member or his Family Members own or are entitled to more than 50% of the combined economic interests (in capital and in profits) of such entity). All Equity Security numbers contained herein shall be adjusted appropriately for stock splits, stock dividends, reverse splits, recombinations and the like.
3. Management Voting Share Rights.
3.1 SoftBank Proxy Shares.
(a) SoftBank and each of its Subordinate Shareholders hereby irrevocably and unconditionally grant a proxy to, and appoint, the Management Members, and each of them individually, as its proxies and attorneys-in-fact, with full power of substitution and resubstitution, for and in the name, place and stead of SoftBank or such Subordinate Shareholder, as applicable, to vote, act by written consent or execute and deliver a proxy for the SoftBank Proxy Shares held as of each record date established by the Board in respect of any action or proposed action that requires the affirmative vote of shareholders of the Company (each such date, a Record Date). SoftBank and its Subordinate Shareholders each hereby (i) affirms that such irrevocable proxy is (A) coupled with an interest by reason of the obligations of the Management Members under this Agreement and (B) executed and intended to be irrevocable in accordance with the provisions of the Laws of the State of New York, and (ii) revokes any and all prior proxies granted by SoftBank or such Subordinate Shareholder with respect to the SoftBank Proxy Shares and no subsequent proxy shall be given by SoftBank and its Subordinate Shareholders (and if given shall be ineffective) with respect to the SoftBank Proxy Shares. This Section 3.1(a) is qualified by and subject to the provisions of Section 3.3 below.
(b) SoftBank and its Subordinate Shareholders shall, in their sole discretion, have the right to sell or otherwise transfer any Equity Securities owned by SoftBank at any time. Upon transfer to any Person other than SoftBank, SoftBanks wholly-owned Subsidiaries, a SoftBank Affiliate or any Subordinate Shareholder of SoftBank, such Equity Securities shall no longer be subject to this Article 3; provided, however, that nothing in this Section 3.1(b) shall be deemed to relieve SoftBank or its Subordinate Shareholders of any obligations pursuant to Section 3.1(a) hereof with respect to the SoftBank Proxy Shares held by such Person as of a Record Date. This Section 3.1(b) is qualified by and subject to the provisions of Section 3.3 below.
(c) SoftBank and each of its Subordinate Shareholders hereby agree to take all actions and execute and deliver all other agreements, forms of proxy, deeds and other documents reasonably requested by the Management Members to give effect to the provisions of this Section 3.1. This Section 3.1(c) is qualified by and subject to the provisions of Section 3.3 below.
(d) For the avoidance of doubt, the obligations of SoftBank and its Subordinate Shareholders pursuant to this Article 3 do not apply to any Equity Securities held by SoftBank or its Subordinate Shareholders that are not SoftBank Proxy Shares.
3.2 Yahoo Proxy Shares.
(a) Yahoo and each of its Subordinate Shareholders hereby irrevocably and unconditionally grant a proxy to, and appoint, the Management Members, and each of them individually, as its proxies and attorneys-in-fact, with full power of substitution and resubstitution, for and in the name, place and stead of Yahoo or such Subordinate Shareholder, as applicable, to vote, act by written consent or execute and deliver a proxy for the Yahoo Proxy Shares held as of each Record Date. Yahoo and its Subordinate Shareholders each hereby (i) affirms that such irrevocable proxy is (A) coupled with an interest by reason of the obligations of the Management Members under this Agreement and (B) executed and intended to be irrevocable in accordance with the provisions of the Laws of the State of New York, and (ii) revokes any and all prior proxies granted by Yahoo or such Subordinate Shareholder with respect to the Yahoo Proxy Shares and no subsequent proxy shall be given by Yahoo and its Subordinate Shareholders (and if given shall be ineffective) with respect to the Yahoo Proxy Shares. This Section 3.2(a) is qualified by and subject to the provisions of Section 3.3 below.
(b) Yahoo and its Subordinate Shareholders shall, in their sole discretion, have the right to sell or otherwise transfer any Equity Securities owned by Yahoo at any time. Upon transfer to any Person other than Yahoo, any of Yahoos wholly-owned Subsidiaries or controlled Affiliates or any Subordinate Shareholder of Yahoo, such Equity Securities shall no longer be subject to this Article 3; provided, however, that nothing in this Section 3.2(b) shall be deemed to relieve Yahoo or its Subordinate Shareholders of any obligations pursuant to Section 3.2(a) hereof with respect to any Yahoo Proxy Shares held by such Person as of a Record Date. This Section 3.2(b) is qualified by and subject to the provisions of Section 3.3 below.
(c) Yahoo and each of its Subordinate Shareholders hereby agree to take all actions and execute and deliver all other agreements, forms of proxy, deeds and other documents reasonably requested by the Management Members to give effect to the provisions of this Section 3.2. This Section 3.2(c) is qualified by and subject to the provisions of Section 3.3 below.
(d) For the avoidance of doubt, the obligations of Yahoo and its Subordinate Shareholders pursuant to this Article 3 do not apply to any Equity Securities held by Yahoo or its Subordinate Shareholders that are not Yahoo Proxy Shares.
3.3 Termination and Limitations of Voting Share Rights. Notwithstanding anything to the contrary contained herein:
(a) the obligations of SoftBank, Yahoo and their respective Subordinate Shareholders pursuant to Sections 3.1(a), 3.1(b), 3.1(c), 3.2(a), 3.2(b) and 3.2(c) (each, as applicable) hereof do not apply to, and SoftBank, Yahoo and each of their respective Subordinate Shareholders shall retain all powers as holders of Equity Securities (including, without limitation, the power to vote Equity Securities, attend meetings of the holders of Equity Securities, and act by written consent) with respect to, any proposal, resolution, or other matter submitted for approval by the shareholders of the Company (including, without limitation, any merger or consolidation of the Company) and that may result in the issuance of Equity Securities (including, without limitation, any Equity Securities issuable pursuant to an earn-out provision or similar type of provision, Equity Securities to be issued pursuant to any employee equity incentive plan, or securities convertible into or exercisable for Equity Securities) in an amount equal to or greater than, or having voting rights equal to or greater than, three percent (3%) of the outstanding Ordinary Share Equivalents as of the Record Date with respect to such action by the holders of Equity Securities.
(b) Sections 3.1(a), 3.1(b), 3.1(c), 3.2(a), 3.2(b) and 3.2(c) (each, as applicable) hereof shall terminate upon the earlier of (i) the date on which JM does not own (including, without limitation, both economic and voting power) at least one percent (1%) of the Ordinary Share Equivalents, calculated on a fully-diluted basis, or (ii) the material breach of this Agreement by the Company.
3.4 Calculation of Management Voting Shares. Following each Record Date, the Company shall determine the number of Management Voting Shares as of such Record Date based on the number of outstanding Ordinary Shares as of such date and the number of Ordinary Share Equivalents owned by SoftBank, in respect of the SoftBank Proxy Shares, and Yahoo, in respect of the Yahoo Proxy Shares, as of such Record Date. In performing such calculation, the Company shall be entitled (but not required) to rely on the Equity Security ownership information in respect of SoftBank and Yahoo set forth on Schedule A hereto, as such information is amended or supplemented from time to time by SoftBank and Yahoo, respectively, pursuant to Section 5.1(a) hereof. The Company shall notify (a) the Management Members of the number of Management Voting Shares, (b) SoftBank of the number of SoftBank Proxy Shares, and (c) Yahoo of the number of Yahoo Proxy Shares, with respect to each Record Date, promptly following such Record Date and, in any event, at least three business days prior to the scheduled shareholder action in respect of such Record Date.
3.5 No Other Agreements. Subject to Sections 3.1(b) and 3.2(b), hereof, none of SoftBank, Yahoo or their respective Subordinate Shareholders may enter into any agreement with any Person the effect of which would prevent compliance by such party with any provision contained in this Article 3.
4. Representations and Warranties.
Each of the Shareholders and the Subordinate Shareholders represents and warrants to the Company and each other Shareholder and Subordinate Shareholder that:
4.1 Power and Authority. Such Shareholder or Subordinate Shareholder has the power, authority and capacity (or, in the case of any Shareholder or Subordinate Shareholder that is a corporation, limited liability company or limited partnership, all corporate limited liability company or limited partnership power and authority, as the case may be) to execute, deliver and perform this Agreement.
4.2 Due Authorization. In the case of a Shareholder or Subordinate Shareholder that is a corporation, limited liability company or limited partnership, the execution, delivery and performance of this Agreement by such Shareholder or Subordinate Shareholder has been duly and validly authorized and approved by all necessary corporate limited liability company or limited partnership action, as the case may be. In the case of a Shareholder or Subordinate Shareholder that is an individual, the execution, delivery and performance of this Agreement by such Shareholder or Subordinate Shareholder are within such Shareholders or Subordinate Shareholders full power and legal rights and no other action on the part of such Shareholder or Subordinate Shareholder (including, without limitation, obtaining spousal or other consents) is necessary to authorize this Agreement or the transactions contemplated hereby.
4.3 Execution and Delivery. This Agreement has been duly and validly executed and delivered by such Shareholder or Subordinate Shareholder and constitutes a valid and legally binding obligation of such Shareholder or Subordinate Shareholder enforceable against such Shareholder or Subordinate Shareholder in accordance with its terms.
4.4 No Conflict. The execution, delivery and performance of this Agreement by such Shareholder or Subordinate Shareholder does not and will not conflict with, violate the terms of or result in the acceleration of any obligation under (i) any material contract, commitment or other material instrument to which such Shareholder or Subordinate Shareholder is a party or by which such Shareholder or Subordinate Shareholder is bound, (ii) in the case of a Shareholder or any of its Subordinate Shareholders that is a corporation, limited liability company or limited partnership, the certificate of incorporation, by-laws, certificate of formation, limited liability company agreement, certificate of limited partnership or limited partnership agreement, as the case may be, of such Shareholder or Subordinate Shareholder or (iii) any applicable Law.
4.5 Share Ownership. With respect to each Shareholder, Schedule A hereto sets forth (a) the number and type of Equity Securities owned by such Shareholder, and (b) the name of each Person that directly owns Equity Securities that are deemed to be owned by such Shareholder pursuant to Section 2.4 and the number and type of Equity Securities directly owned by each such Person.
5.1 Beneficial Ownership Reporting.
(a) Each Shareholder shall notify each other Shareholder of any changes to the information contained in Schedule A with respect to such Shareholder or any of its Subordinate Shareholders within four (4) days of such change occurring and shall, upon request, provide such additional information as required for the Shareholders and Subordinate Shareholders to satisfy their respective reporting obligations pursuant to Section 13(d) of the Exchange Act or any successor provision thereof. Any report that a Shareholder files with or furnishes to the SEC and which report is made publicly available on the SECs EDGAR system within four (4) days of such change occurring shall be deemed to constitute prompt notification pursuant to this Section 5.1(a) by such filing or furnishing Shareholder of changes in ownership described in such report.
(b) For so long as SoftBank or Yahoo (as applicable) or their respective Subordinate Shareholders own Equity Securities, the Company shall promptly provide upon request by SoftBank, Yahoo or their respective Subordinate Shareholders written evidence to the requesting party of its ownership of such Equity Securities. Such documentation may include, without limitation, a certified copy of the portion of the Companys register of members and capitalization table demonstrating such partys ownership, a certificate of an officer of the Company or such other form of documentation reasonably satisfactory to the requesting party.
5.2 Confidentiality. Each party shall maintain the confidentiality of Confidential Information in accordance with procedures adopted by such party in good faith to protect confidential information of third parties delivered to such party, provided that such party may deliver or disclose Confidential Information to (a) such partys representatives, Affiliates, shareholders (other than holders of such partys publicly traded shares), limited partners, members of its investment committees, advisory committees, similar bodies, and Persons related thereto, who are informed of the confidentiality obligations of this Section 5.2 and such party shall be responsible for any violation of this Section 5.2 made by any such Person, (b) any Governmental Authority having jurisdiction over such party or other Person to the extent required by applicable Law or (c) any other Person to which such delivery or disclosure may be necessary or appropriate (i) to effect compliance with any Law applicable to such party, or (ii) in response to any subpoena or other legal process, provided that, in the cases of clauses (b) and (c), the disclosing party shall provide each other party with prior written notice thereof so that the appropriate party may seek (with the cooperation and reasonable efforts of the disclosing party) a protective order, confidential treatment or other appropriate remedy, and in any event shall furnish only that portion of the information which is reasonably necessary for the purpose at hand and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information to the extent reasonably requested by any other party, provided, further, that the foregoing proviso shall not apply to information required by Law to be included in filings, submissions, or disclosures made by Yahoo or SoftBank with the SEC or any stock or securities exchange.
5.3 Company Facilitation of Sale. The Company hereby agrees that as and when requested by any Shareholder in accordance with applicable Law, the Company shall promptly take, to the extent consistent with applicable Law, all actions within its control reasonably necessary to facilitate the conversion of any Ordinary Shares owned by such Shareholder into ADSs and the removal of any restrictive legends or stop orders on such Ordinary Shares through the customary processes to be established with the depositary for such ADSs.
6. Governing Law and Dispute Resolution.
6.1 Governing Law. The internal laws, and not the laws of conflicts (other than Section 5-1401 of the General Obligations Law and any successor provision thereto), of the State of New York shall govern this Agreement, including the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties hereunder.
(a) Any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement, or the breach, determination of rights and obligations, termination or validity hereof, shall be finally settled exclusively by arbitration. In accordance with Section 6.1 of this Agreement, the laws of the State of New York shall be the substantive law applicable to the arbitration. The arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce International Court of Arbitration (the ICC) in effect as of the date of this Agreement (the Rules), except as they may be modified by mutual agreement of the parties. Service of a request for arbitration shall be deemed effective if made in accordance with the notice provisions delineated in Section 9.1 of this Agreement. The seat of the arbitration shall be Singapore, provided, however, that, the arbitrators may hold hearings in such other locations as the arbitrators determine to be most convenient and efficient for all of the parties to such arbitration under the circumstances. The arbitration shall be conducted in the English language.
(b) The arbitration shall be conducted by three arbitrators. The party (or the parties, acting jointly, if there are more than one) initiating arbitration (the Claimant) shall nominate an arbitrator in its request for arbitration (the Request). The other party (or the other parties, acting jointly, if there are more than one) to the arbitration (the Respondent) shall nominate an arbitrator within thirty (30) days of receipt of the Request and shall notify the Claimant of such nomination in writing. If within thirty (30) days of receipt of the Request by the Respondent, either party has not nominated an arbitrator, then that arbitrator shall be appointed by the ICC. The first two arbitrators appointed in accordance with this provision shall nominate a third arbitrator within thirty (30) days after the Respondent has notified Claimant of the nomination of the Respondents arbitrator or, in the event of a failure by a party to nominate, within thirty (30) days after the ICC has notified the parties and any arbitrator already nominated of the appointment of an arbitrator on behalf of the party failing to nominate. When the third arbitrator has accepted the nomination, the two arbitrators making the nomination shall promptly notify the parties of the nomination. If the first two arbitrators appointed fail to nominate a third arbitrator or so to notify the parties within the time period prescribed above, then the ICC shall appoint the third arbitrator and shall promptly notify the parties of the appointment. The third arbitrator shall act as Chair of the tribunal.
(c) Except as modified by agreement by the parties, the tribunal shall use its best efforts to resolve all disputes no later than 6 months after the appointment of the third arbitrator, to the extent practicable. Nothing in this subsection (c) shall be interpreted to preclude the arbitral panel from rendering an arbitration award in a shorter time, provided however, that such is consistent with ICC rules or an agreement of the parties.
(d) The arbitral award shall be in writing, state the reasons for the award, and be final and binding on the parties. In addition to monetary damages, the arbitral tribunal shall be empowered to award equitable relief, including, but not limited to, an injunction and specific performance of any obligation under this Agreement. In the event such relief is sought to enforce any of the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law. The arbitral tribunal is not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any right to recover punitive, exemplary, consequential or similar damages with respect to any dispute, except insofar as a claim is for indemnification for an award of punitive damages awarded against a party in an action brought against it by an independent third party. The arbitral tribunal shall be authorized in its discretion to grant pre-award and post-award interest at the rate of nine percent (9%) per annum. Any costs, fees or taxes, incident to enforcing the award shall, to the maximum extent permitted by Law, be charged against the party resisting such enforcement. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant party or its assets.
(e) The parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including but not limited to any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the tribunal, the ICC, the parties, their counsel and any person necessary to the conduct of the proceeding, except as may be lawfully required in judicial proceedings relating to the arbitration or otherwise, or as required by the rules of any quotation system or exchange on which the disclosing partys securities are listed or applicable Law.
(f) The costs of arbitration, including, without limitation, reasonable attorneys fees and disbursements, shall be borne by the losing party unless otherwise determined by the arbitral tribunal.
(g) All payments made pursuant to the arbitration decision or award and any judgment entered thereon shall be made in United States dollars, free from any deduction, offset or withholding for taxes.
On 1 December 2015, the Supreme Court confirmed a judgment of the Court of Appeal of Antwerp (the "Court of Appeal") which had imposed a substantial fine on Yahoo! for failing to comply with the obligation to cooperate with Belgian law enforcement officials in an investigation of fraud committed on the basis of Yahoo! e-mail accounts.
The case brought before the Supreme Court concerned a fraudulent purchase of, and subsequent failure to pay for, electronic equipment from a shop in Dendermonde, Belgium (See,VBB on Business Law, Volume 2009, No 4, p. 9,available atwww.vbb.com for the decision at first instance and VBB on Business Law, Volume 2011, No 1, p. 11, available atwww.vbb.com for the judgment on appeal).
Yahoo! Inc, a company registered in California, US, had been requested to hand over the IP addresses associated with e-mail accounts of alleged criminals registered to Yahoo!'s e-mail service but refused to comply. Yahoo! claimed that Belgium was imposing its criminal laws extraterritorially. However, the Court of Appeal held that the accusations of extraterritoriality could only be accepted had there been a request for the handover of data or objects which are located in the USA and present no territorial link with Belgium, and if the holder of these objects or data is not accessible in Belgium.
The Court of Appeal held that Yahoo! is territorially present in Belgium through its active participation in the Belgian economy and is thus voluntarily submitting itself to the jurisdiction of the Belgian authorities. In particular, the Court of Appeal maintained that Yahoo! participated in the Belgian economy through the use by Yahoo! of the domain name "www.yahoo.be", the use of the local language(s) on that website, pop-up advertisements linked to the location of the users and accessibility in Belgium of Belgium-focused customer services. The Court of Appeal thus concluded that Yahoo!'s refusal to provide IP addresses of the alleged criminals violated Belgian criminal procedure law.
For its part, the Supreme Court confirmed all of the Court of Appeal's considerations, essentially linking them to the objective territoriality principle.
The Supreme Court started by recalling that, as a general rule, a state can only take coercive measures to enforce its laws in its own territory. A State is considered as taking a coercive measure in its own territory when there is a sufficient connecting factor between its territory and the measure in question. What qualifies as a sufficient territorial connecting factor is determined by, inter alia, the nature and scope of the coercive measure. The Supreme Court went on by noting that the criminal sanction provided for in Article 46bis � 2 of the Belgian Code of Criminal Procedure is only intended to force operators of an electronic communications network or providers of an electronic communications service active on the Belgian territory to cooperate by issuing identification information following a crime whose investigation falls within the competence of the Belgian criminal law bodies. The above provision contains compulsory measures of limited scope, the implementation of which does not require an intervention outside the Belgian territory. The Supreme Court further noted that Article 3 of the Belgian Criminal Code explicitly stipulates that its provisions apply not only to offences committed by Belgians, but also to offences attributable to foreigners present on the Belgian territory. The offence defined in Article 46bis � 2, section 4 of the Code of Criminal Procedure is considered as being committed in the place where the requested data are to be received. Consequently, the operator or provider, which refuses to share this data, is punishable in Belgium irrespective of its place of establishment.
The Supreme Court concluded that (i) the measure consisting in the obligation to provide the data at issue is taken on the Belgian territory with regard to any operator or provider whose economic activity actively targets consumers in Belgium; and (ii) the Belgian judge, who condemns an operator or provider established abroad which refuses to comply with a measure taken in Belgium, does not exercise extraterritorial jurisdiction.
The Supreme Court dismissed Yahoo!'s appeal and thus confirmed the company's fine of EUR 44,000 for infringing Article 46bis � 2 of the Belgian Code of Criminal Procedure.
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