EFTA Document EFTA01771110

From: Ian Osborne <[email protected]> Sent: Wednesday, January 4, 2012 12:28 AM To: Jeffrey Epstein Subject: FW: new investment - fund set up by Ian [VCC-Imanage.FID206339) Jeffrey, <=iv>Please see below for the lawyers' comments acting for Solina and Li Ka S=ing. Slaughter and May have added their proposed r=sponses below, but I wanted you to see this before I finalise their respons=. Best wishes, Ian <=iv> From: Jonat=an Cohen [email protected] <mailto:[email protected]» Date: Tue, 3 Jan 2012 13:46:33 -0000 To: </=pan> Ian Osborne <[email protected]</=», Jacob Burda «mailto:[email protected]> [email protected] <mailto:[email protected]» Cc: Mark Horton <[email protected] <mailto:[email protected]», Henry Gladwyn <[email protected] <mailto:[email protected]» Subject: RE: new investment - fund set up =y Ian [VCC-Imanage.FID2063391 CONFIDEN=IAL EMAIL FROM SLAUGHTER AND MAY - THIS EMAIL AND ANY ATTACHMENT MAY BE PRIVILEGED Ian, Jacob, Jonathan From: Koo Annama= [mailto:annamae.koo@vcclaws=rvices.com <mailto:[email protected]> ] Sent: 03 January 2012 10:01 To: Ian Osborne; Cohen, Jonathan; HORTON, Mark Cc: Subject= RE: new investment - fund set up by Ian [VCC-Imanage.FID2O6339] EFTA_R1_00082471 EFTA01771110 1. Investment type: Due to the investment restrictions of t=e Li Ka Shing Foundation ("Foundation"), we would require the agreement to expressly exc=ude gambling or alcohol-related investments unless written approval is obtained. The restrictions on gambling and alcohol related investments [will) be included. It is&nbs=;anticipated that investments would be made solely in the internet/social media sector. 2. Commitment: a) Please clarify whether the commitment paid by investors is =o be paid entirely upfront or based on a capital call format via the subscription of =articipating Preference Shares ("PPS"). The commitment is to be paid by investors in full upfront. b) &=bsp; Annual budget of the Company or running costs of the joint =enture vehicle (whichever applicable) should be subject to a cap and the investor&=8217;s total commitment should be capped at the originally agreed total initial commitment per investor. &nb=p; There should be a timeline for the return of commitment to =he investor if the investor's commitment is not used within a certain pe=iod of time, if applicable.&nb=p;=o:p> 1= is intended that the fund will be fully invested inside =12) months, ideally 6 months. =/span>Distribution: a) There is currently no definite timeframe as to when an inve=tor will be able to receive a distribution as this depends upon when the Company can= realize capital gains. Please elaborate on the exit mechanism of investors =nd a long stop date whereby the initial commitment is to be returned e.g. buy ba=k of the PPS at a designated price if it is not invested. There should be a mini=um IRR hurdle of at least 8% return on the commitment invested. Capital and/or distributions on investments will be returned to investors as soon as =strong>each investment is realised, whether through an IPO or other exit. In the event that the Company still retains an investment(s) [= years) from the date that investors paid their commit=ent, then We are instructed that 30% carry on profits after the recur= of initial capital is rather high. Investment Criteria for Projects:<=p> There should be an IRR hurdle of at least 8% for investment=. It is not anticipated for there to be a minimum IRR hurdle on the commitment invested. b)<=pan style="FONT: 7pt 'Times New Roman"> There should be a capital limit per transaction for investm=nts. It is not anticipated for there to be a capital limit per transaction for= investments. Investor's Rights: a) We understand that the investor will be investing as a PPS =older which does not carry any voting rights or board control. Please however cla=ify the investor's rights as an observer e.g. reporting obligations of th= Company, rights of investors to receive financial reports, rights to inspection and =he right to control the Company upon the occurrence of certain events or reach=ng of a certain timeframe. There will be quarterly report= produced for investors providing details on the investments made and the financial position of the company. It is not anticip=ted for investors to have any contingent control right= over the company. b) &nb=p; Please clarify whether there will be any liquidation prefer=nce to the PPS holders. A Participating Preference Share takes=priority (and so has preference) over an ordinary share in the event of a =iquidation event. As per Jason's email earlier today, the Foundation's =ttributable interest in the vehicle cannot exceed 20% at any time. We would therefore require there to be a pre-agreed transfer mechanism in the event that the 2=% is exceeded in future for any reasons, such that the Foundation's shareholding=in the vehicle will be transferred to any other entity as 2 EFTA_R1_00082472 EFTA01771111 directed by Mr Li.&=bsp; Investors will be able to transfer their shareholdings in the vehicle intra-group, which would permit Mr =i to transfer the Foundation's shareholding to another intra-group entity should=the 20% level be exceeded for any reason. d) Please include the standard provisions regarding right of f=rst refusal, pre-emptive right, co-sale, tag along, drag along, etc. Investors will not have any pre-emption rights (or other drag or tag rights). The intention is for this small group of sophistocated investors to follow through to fruition the small number of focussed investments being made at the launch of the vehicl=, with sale proceeds returned to investors on exit. <= style="TEXT-INDENT: -18pt; MARGIN-LEFT: 36pt; mso-para-margin-left: 0gd; m=o-list: IS levell IfoS" class="MsolistParagraph"> 6. Possible Future Investments: a) &nbs=; Initial investors should be given the right of first refusa= for the subscription of further PPS in the Company to avoid dilution. With regards =o the setting up of a second company, similarly, there should be provisions t=at the investor is given the first right to subscribe as shareholder in such s=cond company. (There will not be further subscription of PPSs in the vehicle and so dilution of investor shareholdings should not be a concern). (In the event that a second investment vehicle is established, the investors who invested in the first investment vehicle (will/will not) be given a first ri=ht to subscribe for an interest in the second vehicle.) b) &nbs=; All investment opportunities should be directed to the Comp=ny so that the investors are given the right to invest in such opportunities. Directors should not be allowed to divert potential investment opportunities to any affiliates including company controlled or =eld by the individual, the spouse, children, parents and siblings, etc., other =nvestors or investment vehicles. In order to pre=ent conflicts of interest, the directors of the investment vehicle will agree, for a period up to&=bsp;(6/12) months from t=e point at which the Company's investment funds have been fully invested, only to make investments in the internet/social=media sector through the investment vehicle. This will exclude any ongoing or future advisory/consultancy agreements entered into b= Ian Osborne (or one of his entities) with companies who elect to pay his remuneration, in whole or in part, through t=e issuance of shares. =/font> <=pan style="COLOR: black; FONT-SIZE: lipt" lang="EN-US"> 7. General a) Please clarify the governing law and jurisdiction of the ag=eement to be executed. The documentation ill be governed by and fall within the jurisdiction of Guernsey. b) &nb=p; Please clarify whether the Company will bear part of the in=estors' counsel's expenses. Each investor should bear the=r own expenses <=pan class="869441911-03012012">c) &=bsp; Confidentiality of investors is to be maintained at all tim=s and identity of investors should not be disclosed or used by the Company for an= promotional purposes. The confidentiality of investors will be maintained and the identity of investors will not be disclosed for promotional purposes subject to any overriding requirements of applicable law and regulation. Warm regards, h=ng kong I <=pan style="text-transform: uppercase; color: black; font-size: 9pt; font-fa=ily: Arial, sans-serif; " lang="EN- US"> beijing I shanghai 3 EFTA_R1_00082473 EFTA01771112 Hong Kong Office:=/span> 38/F Cosco Tower, 183 Queen's Road Central T: (852) 2522 9183</=pan> F: (852) 2845 9205LOCAL INTELLIGENCE. GLOBAL PERSPECTIVE. TAILORED SOLUTIONS. DISCIPLINED DELIVERY Pi =span style="font-size: lOpt; font-family: Tahoma, sans-serif; " lang="EN-US=>3 El 10:10 To: Ian Osborne Cc: Tse Owen; Jacob Burda; Koo Annamae; Mark Horton; Jonathan Cohen; Joe Pang Subject: Re: new investment - fund set up by Ian Hi Ian, We have been informed that Mr Li would like to use his Canadian Foundation to inves= in the vehicle. As such, the Foundation's attributable interest in the vehicle cannot exceed 20% at any time. I think we are safe there but =n the event that this 20% is exceeded in future for whatever reasons, the Foundation's shareholding in the vehicle will have to be transferred to anorher entity as directed by Mr Li but which otherwise is unrelated to the Foundation. &nb=p; Please also let us have a cap table of the investment company and details of the o=her investors. &nbs=; We will let you have our other comments on the investment proposal. Jason &=bsp; The idea is that this vehicle will be fully invested in a 6 month timeframe, and subject to investors approving the continued strategy, we wo=Id replicate the same structure for the next iteration. <=div> 4 EFTA_R1_00082474 EFTA01771113 Since all investors are known to =s, we will adjust the final amounts based on the pipeline we see, but a total in the region of $60 million. W= aim to close by late January, so that we can commit to the first investments on January 31. Best wishes, Ian =span style="color: black; font-size: 9pt; font-family: Arial, sans-serif; "=lang="EN-US"> From: =span style="color: black; font-size: llpt; font-family: Calibri, sans-serif= " lang="EN-US">Jason Wong <[email protected] <mailto:[email protected]» Date: Thu, 29 Dec 2011 08:59:47 +0000 To: Ian Osborne <[email protected]> Cc: Solina Chau <[email protected] <mailto:[email protected]», Owen T=e <[email protected]<=a», Vivien Chan & Co «mailto:[email protected]> [email protected] <mailto:[email protected]», Annamae Koo <annamae.koo=vcclawservices.com <mailto:[email protected]», Jacob Burda <jburda@osbor=eandpartners.com <mailto:[email protected]», Mark Horton <[email protected] <mailto:[email protected]», Jonathan Cohen <[email protected] <mailto:[email protected]» Subject: Re: new investment - fund set up by Ian <=iv> Hi Ian, We will get back to you asap once w= have had a chance to go through the structure. <=pan style="color: black; font-size: 9pt; font-family: Adal, sans-serif; " =ang="EN-US"> In the meantime, can you let us have an idea of the composition o= the investor group? When do you expect initial closing to take place =pproximately? Is it dependent on reaching a certain level of commitment? 5 EFTA_R1_00082475 EFTA01771114 Regards<=o:p> =span style="color: black; font-size: 9pt; font-family: Anal, sans-serif; "=lang="EN•US">Jason On 29 Dec, 2011, at 4:37 PM, "Ian Osborne" <[email protected] <mailto:[email protected]» wrote: Solina, Thank you. Yes I know Vivien is indeed=the best in the business! That's absolutely fine and I look forward to lunch next time in HK. Jason — I look forward to hearin= from you, Vivien and the team. I am copying Mark Horton and Jonathan Cohen at Slaughter and May, who are advising me on the structure and also coordinating with the other investors. Best wishes, Ian From: Solina Chau <[email protected] <mailto:[email protected]»=br>Date: Thu, 29 Dec 2011 08:58:13 +0800 To: Jason Wong <[email protected] <mailto:[email protected]», Owen Tse <owentse@vcclawse=vices.com <mailto:[email protected]», Vivien Chan & Co <[email protected] <mailto:[email protected]», Annamae Koo <[email protected] <mailto:[email protected]», Ian Osborne <[email protected] <mailto:[email protected]> &=t; Subject: new investment - fund set up by Ian Hi Jason, Mr. Li and I are inclined to=participate in Ian's new fund to 10M USD , he has forwarded the blueprints of his structure , coul= you work with Owen and Annamae to review/comment and expedite this as Ian wan=s to seize on some investments opportunities soonest . Ian, Vivien's f=rm is best of the best with insightful advice , sorry they have to act from =he other side of the table this time . Please let me host a lunch for you to=meet with Vivien and her team next time you are in HK . S 6 EFTA_R1_00082476 EFTA01771115 =br> SLAUGHTER AND MAY, One Bunhill Row, London EC1Y 8YY For more information, go to www.slaughterandmay.com TEI:= +44 (0)20 7600 1200 FAX: +44 (0)20 7090 5000 Authorised and regulate= by the Solicitors Regulation Authority. Firm SRA number 55388 A list of= partners is available for inspection at the above address 7 EFTA_R1_00082477 EFTA01771116