Page 6 of 11 – SEC Filing
Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to Securities of the Issuer
The information set forth and/or incorporated by reference in Items 2, 3, 4 and 5 of this Schedule 13D is hereby incorporated by reference into this Item 6.
Board Appointment Rights
Pursuant to the Issuers Ninth Amended and Restated Memorandum and Articles of Association (the Articles), AIL has the right to appoint two members (the Alibaba Directors) to serve on the Board on behalf of the holders of Class B Ordinary Shares. If any Existing AGHL Director or Alibaba Director, as the case may be, ceases to be a member of the Board for any reason, AIL will have the right to appoint an Alibaba Director to replace such Existing AGHL Director or Alibaba Director, as applicable, as long as AIL, CIL (the only holder of Class B Ordinary Shares other than AIL) and their affiliates (collectively, the Class B Holders) hold any shares of the Issuer. At any time when the aggregate number of shares held by the Class B Holders represent less than 10% of the issued and outstanding shares of the Issuer and more than one Existing AGHL Director or Alibaba Director, as the case may be, serves on the Board, Alibaba will be required to remove an Existing AGHL Director or Alibaba Director, as applicable, and will not be entitled to exercise its Board appointment rights to replace such Existing AGHL Director or Alibaba Director, as applicable.
Shareholders Agreement
On September 6, 2017, the Issuer entered into Amendment No. 1 (the Amendment) to the Seventh Amended and Restated Shareholders Agreement (the Shareholders Agreement) entered into by and among the Issuer and its then existing shareholders, its subsidiaries and its variable interest entity (VIE) on April 5, 2016. Pursuant to the Amendment, upon the completion of the IPO, except for the VIE shareholder and VIE director nomination right of AIL, certain non-compete undertakings of the Issuer to AIL and certain registration rights of holders of the Issuers registrable securities (as described below), all other rights and obligations of the Issuer and its shareholders under the Shareholders Agreement has been terminated.
VIE Shareholder and VIE Director Nomination Right. Pursuant to the Shareholders Agreement, as long as AIL holds no less than 10% of the total outstanding shares of the Issuer on a fully-diluted basis, AIL will have the right to designate an affiliated company domiciled in the Peoples Republic of China to hold its proportional share of the equity interests in the VIE and designate one person to serve as a director of the VIE.
Non-Compete. Pursuant to the Shareholders Agreement, as long as AIL and its affiliates hold in the aggregate no less than 10% of the total outstanding shares of the Issuer on a fully-diluted basis, without AILs prior written consent, the Issuer shall not (i) issue or sell, directly or indirectly, any of the Issuers securities to any competitor of AIL as mutually designated by the Issuer and AIL from time to time, except for issuance or sale to the public in a public offering, or (ii) directly or indirectly form or enter into any joint venture, partnership or strategic alliance with any competitor of AIL as mutually designated by the Issuer and AIL from time to time. However, any working relationship or business cooperation in the Issuers ordinary course of business with any competitor of AIL will not constitute formation of a joint venture, partnership or strategic alliance with such competitor of AIL.
Registration Rights. Pursuant to the terms of the Shareholders Agreement, the Reporting Persons have granted customary registration rights to holders of the Issuers registrable securities, including demand registration rights, piggyback registration rights, shelf registration rights and rights to request the Issuer to pay registration expenses and to bear indemnification liability.
The description of the Articles, the Shareholders Agreement and the Amendment contained herein are qualified in their entirety by reference to Exhibits B, C and D, which Exhibits are hereby incorporated by reference into this Item 6.
To the best knowledge of the Reporting Persons, except as set forth in this Schedule 13D, there are no contracts, arrangements, understandings or relationships (legal or otherwise), including, but not limited to, transfer or voting of any of the securities, finders fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, between the Reporting Persons and between the Reporting Persons and any other person, in each case with respect to any securities of the Issuer, including any securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities other than standard default and similar provisions contained in loan agreements.
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