REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE
SECURITIES AND EXCHANGE COMMISSION
PICC Secretariat Building, PICC Complex, Pasay City
(~~::::::~:~:==~~"'. .-"""~-'"'" '~''-''-~~''~~'''"'-"''''''''''"-~<~;'''''l

SPECIAL PANEL !
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IN RE: RAPPLER, INC.

AND RAPPLER HOLDINGS
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CORPORATION

SP Case No. 08-17-001

x-------------------------------------x

VERIFIED EXPLANATION
RAPPLER, INC. ("RAPPLER") and RAPPLER HOLDINGS
CORPORATION ("RHC"), by counsel, and in compliance with the 1
August 2017 Show Cause Order ("Order") of this Honorable Special
Panel, l respectfully state:

PREFATORY STATEMENT

The Order of this Honorable Special Panel came in the wake of

the 24 July 2017 State of the Nation Address of President Rodrigo
Duterte wherein he concluded, albeit erroneously, that RAPPLER was
a newspaper that is really owned by Americans, thus:

"Try to go out, sumama tayo - kayo sa akin. And try to see

how hard it is for them to survive. Now ito ang ... Gusto
rno ganito ang pangyayari, tutal sobra-sobra naman 'yang
The Order states that the Special Panel was authorized under the 8 July 2017 SEC Resolu-
tion 437, series of 2017. It directs RAPPLER and RHC to show cause and submit a sworn
statement/ explanation within fifteen (15) days from receipt as to why they should not be held li-
able for violation of certain laws.

RAPPLER and RHC received copies of the Order on 2 August 2017, and thus, had until 17
August 2017 within which to file their sworn statement/explanation.

On 17 August 2017, RAPPLER and RHC, through Ms. Maria A. Ressa, filed a letter-
request for extension of time to comply with the Order.

Through an Order dated 23 August 2017, a copy of which was received by RAPPLER and
RHC, on 24 August 2017, they were given a period of five (5) days from receipt thereof, or until 29
August 2017, within which to file their sworn statement/explanation.

Hence, this Verified Explanation, which is timely filed.

 pera ninyo, 'adre, sa totoo lang. Mayor ako eh, I can look
at your corporate earnings, your sister company, I can
pierce the corporate identity, kayo rin pala. And even di-
yan sa mga newspaper. When you are not supposed to ...
You know, .l!!!g newspaper ka you are supposed to
be 100 percent Filipino. And yet when you start to
pierce their identity, it is pala fully owned by
Americans. Ganun ang nangyari eh. It's just a
matter of piercing the ...

So wala masyado ako... ABS, Rappler kayo ba

'yan? Have you tried to pierce your identity and it
will lead you to America? Do you know that? And
yet the Constitution requires you to be 100 per-
cent = media = Filipino. Rappler, 1!:Y to pierce the
identity and you will end !!l! American owner-
ship."2

It is unfortunate that President Duterte has been misinformed

about the business of RAPPLER and its ownership. It is also unfor-
tunate that President Duterte has been made to believe that the in-
formation found on the various platforms of RAPPLER emanate
solely from those who own and manage the business, as contributions
from users of RAPPLER are an essential element of its content.

President Duterte would have lauded RAPPLER if he was told

the truth. The truth is RAPPLER is a Filipino intellectual creation. It
is a Filipino start up tech company. It does not run a newspaper.
RAPPLER's business is unique as it combines technology and infor-
mation dissemination from various sectors of society to generate so-
cial awareness and spur positive action. RAPPLER has gained the at-
tention and/or recognition of the global tech industry and relevant
impact investors because it is a Filipino company successfully operat-
ing, and making an impact on a huge part of the population, in an
emerging market and its success has surpassed the achievements of
other tech and information companies in the West/developed mar-
kets.

From its inception until today, RAPPLER remains Filipino be-

cause its success and development, now and always, has been de-
pendent on the Filipinos who created it.

More importantly, RAPPLER and RHC did not violate, and

could not have violated, any of the laws mentioned in the Order be-
cause both companies are owned and managed by Filipinos or corpo-
rations wholly owned and managed by Filipinos.

2 Emphasis and underscoring supplied.

2
 As RAPPLER begins to expand its reach outside of the Philip-
pines, it appeals to this Honorable Commission not to suspend or re-
voke its license or that of RHC Of, in any way, cause its stockholders
and directors to be sanctioned, because this would be tantamount to
our own government destroying the work and achievements of Filipi-
nos and preventing them from soaring to greater heights.

1. THE FACTS

1. To state the truth, correct misimpressions, and place mat-

ters in their proper perspective, RAPPLER and RHC respectfully set
forth the facts, as follows:

About RAPPLER

1.1. RAPPLER was incorporated on 25 July 2011 by Filipino

citizens. 3

1.2.Only Filipino citizens or corporations wholly owned or

managed by Filipino citizens have been stockholders4 of RAPPLER.
Only RAPPLER stockholders are entitled to vote, and have actually
voted, these shares.

1.3. Only Filipino citizens have held the position of Director or

Officer of RAPPLERs and only they have voted and decided on the
fate of RAPPLER in Board meetings of the company. Further, edito-
rial decisions and decisions on content, i.e., what is published on the
various platforms of RAPPLER, are, and have always been, made only
by Filipino journalists who comprise its Editorial Team.

3 See Articles of Incorporation of RAPPLER, which is on file with this Honorable Commis-
sion.
4 See Articles of Incorporation of RAPPLER, General Information Sheets of RAPPLER for
the years 2012 to 2016 and General Information Sheets of Dolphin Fire Group, Inc. for the years
2012 to 2016, DMT Ice Angels Holdings, Inc. for the years 2012 to 2016, Rappler Holdings Corpo-
ration for the years 2015 and 2016, and Cappadocia, Inc. for the year 2012, copies of which are on
file with this Honorable Commission.

At the 28 February 2017 Conference before this Honorable Commission's Company Reg-
istration and Monitoring Department, Dolphin Fire Group, Inc., a stockholder of RAPPLER, ad-
dressed the error in its General Information Sheets for the years 2013 to 2015 wherein a for-
eigner's name continued to appear as a stockholder when he no longer owned any shares in this
company as early as 2011 or 2012. Dolphin Fire Group, Inc. has since made the necessary
amendments to its General Information Sheets to accurately reflect the shareholdings of the com-
pany, which show that all of its stockholders, Directors and officers are Filipinos.

5 See Articles of Incorporation of RAPPLER, General Information Sheets of RAPPLER for

the years 2012 to 2016, copies of which are on file with this Honorable Commission.

3
 1.4. The Primary Purpose of RAPPLER, as stated in its Articles
of Incorporation, is as follows:

"xxx to design, develop, establish, market, sell, maintain,

support, distribute, customize, sell, re-sell and/or operate
news, information and social network services including
but not limited to contents, platforms, systems and/or
applications via web, internet, mobile and other deliver
formats; communications, advertising, corporate social
responsibility, marketing, PR, events, brand affinity and
other related services and packages provided it will not
act as an internet service provider."6

1.5. RAPPLER's business is unique, in that:

a. It provides a service that has not been previously of-

fered in the market. In fact, it owns a patent for its User-Based
Response Cluster Generation System, which is a key instrument
in carrying out its business.

b. It is a start-up company. It was set up as a small

business initially financed and operated by a few Filipinos who
offered a service, i.e., organized social journalism and positive
social movement through the use of the internet, not offered in
the market at that time. RAPPLER was different from every-
thing else in the market at that time. Like other start-ups, RAP-
PLER worked with a technology incubator focused on building
internet and mobile brands. Ninety percent (90%) of start-ups
fail globally, which makes RAPPLER one of the few start-ups
which has not only succeeded but has reached beyond our bor-
ders. Recognized and singled out as Filipino, RAPPLER has
been included in numerous reports for successful entrepreneurs
and investors globally.7

c. RAPPLER is a technology company that uses the

internet and other digital systems to report and disseminate
news and provide the public a forum for social interaction, i.e.,
discussion and sharing of information and moods.

d. Among others, RAPPLER also uses its technology to

help the government and citizens during times of national dis-
aster.
6 See Articles of Incorporation of RAPPLER, a copy of which is on file with this Honorable
Commission.
7 https:llwvvw.techinasia.coln/how-rappler-is-applving-counter-terrorislll-tactics-into-an-
9.nline::-..nJ~\vS-staJjJill, accessed on 23 August 2017 at 9:3 1 a.m.;
httQ.;llwww.niemap.lab.org/2o12 !o81in-the-12hiHppines-rappler-is-t.rying-to-Hgure-out-the-role··
of-emotion-in-the-news/, accessed on 23 August 2017 at 9:44 a.m.;
ht.:t.L2:lIwww.kas.delwfldo~~/10527:J...4..4.2:2-3Q.!.rulf. accessed on 23 August 2017 at 10:00 a.m.

4
 For example, in the past two years, RAPPLER partnered
with the Metro Manila Development Authority to house its
website and do a 360 degree emergency drill by live streaming
videos and live-tweeting/live posting video clips and multi-
media posts across different platforms, i.e., RAPPLER, Face-
book, YouTube and Twitter.

In September 2013, RAPPLER set up Agos, which is an in-

formation and communications platform that combines top
down government action with bottom up citizen involvement to
help communities adapt to climate change and be ready for dis-
asters. At the heart of Agos is the Alert Map, a pioneering tech
platform that crowdsources critical information during disaster
through SMS, Social Media and direct web reporting.

In January 2017, x.rappler.com became the official plat-

form used by student publications participating in the online
publishing demo competition in Department of Education's Na-
tional Schools Press Conference.

In April 2017, student publications who won that compe-

tition used x.rappler.com to report on Palarong Pambansa, our
national youth Olympics.

e. RAPPLER fosters a culture that develops fiercely

independent journalists, whose goal is to foster understanding
of issues by presenting facts as well as numerous, sometimes
conflicting, views and analysis. It adheres to the highest global
standards of investigative journalism free of vested interests.
The goal is to help give citizens accurate information and analy-
sis to strengthen Philippine democracy. It aims to build com-
munities of action, helping give every Filipino a stake in our na-
tion's future.

f. More importantly, RAPPLER's goal is to strengthen

civic engagement and enhance the commitment of every citizen
to participate and impact their world. RAPPLER's platform al-
lows free exchange of ideas and emotions with minimal mod-
eration.

1.5. RAPPLER is not engaged in the business of Print Media,

i.e., newspapers, periodicals, magazines, journals, and publications
and all advertising therein, and billboards, neon signs and the like.
RAPPLER is not also engaged in the business of Broadcast Media, i.e.,
radio and television broadcasting in all their aspects and other cine-
matographic or radio promotions and advertising.

5
On operating the business ofRAPPLER globally

1.6.From RAPPLER's conceptualization, the goal has been to

operate its business globally.

In 2013, RAPPLER's stockholders and Directors recog-

1.7.
nized that opportunity for growth globally when the business started
receiving recognition from the global business community.8

RAPPLER took its first step towards growing the business

1.8.
globally when it set up a News Bureau in Indonesia in 2014. In 2015,
business expansion in Singapore began.

1.9.In order, however, to successfully catapult the business of

RAPPLER globally, it needed a boost through additional funding, and
more importantly, the recognition by key global institutional impact
investors, which would provide value, build the brand, and generate
interest in the business.

At this point, it is important to state that one or some of

1.10.
the stockholders of RAPPLER had sufficient property, credit or assets
to provide the funding to boost the business globally. These stock-
holders were very much willing to provide the funding. Also, there
were a few prominent Filipino businessmen desiring to invest in the
business of RAPPLER.

It is also important to point out, however, that the stock-

1.11.
holders and Directors of RAPPLER are made up of independent in-
vestigative journalists, businessmen, and technology specialists who
all work together to come up with decisions on important matters.
Under this set up, the journalists in the group have been given both
commercial and editorial powers. If the businessmen stockholders
put up more capital, they may have the power to later override the
commercial or editorial powers given to the journalist stockholders.
As the journalist stockholders were keen on maintaining their inde-
pendence, they did not want to secure additional capital from the
businessmen stockholders. On the other hand, the businessmen and
technology specialist stockholders did not also want other business-
men to be shareholders because their stake in RAPPLER would be di-
luted. For these reasons, the stockholders of RAPPLER collectively
took interest only in investors they viewed would provide value to the
business but not want to control the running of the business.

8 See https:IIVvvvi,v.techinasia.com/how-rappler-is-applving-counter-terrorism-tactics-
intg..:.an..:..onlil1e -nevy..§.:.staltlJ.P.., accessed on 23 August 2017 at 9:31 a.m.;
http:/b.vww.ni.emanlab.Q~012LQ.8/in-t1}.~.::J2hili121~ine~:..rappler-h~:...t.ryin.g::to-f1guTe-. out-th.~-role:
of-emotion-in-the-news/, accessed on 23 August 2017 at 9:44 a.m.;
llUp:!!www"kas.de..bYfLQQ..{.110527-14.4.2-2-3.~ru1f, accessed on 23 August 2017 at 10:00 a.m.

6
 1.12.RAPPLER sought advice on how to properly and legally
structure its business for global growth and to secure investments
from relevant impact investors.

In this regard, RAPPLER was made aware that SkyCable,

1.13.
Globe Telecoms, Inc., CignalTV and even mass media companies such
as ABS-CBN and GMA 7 have secured funding from their holding
parent companies, which sold Philippine Depositary Receipts
("PDRs") to foreigners. With respect to ABS-CBN and GMA 7, their
PDRs were approved by the Philippine Stock Exchange ("PSE") and
this Honorable Commission since these companies and the parent
holding companies are listed in the stock exchange.

With the idea of raising funds through the issuance by a

1.14.
holding company of PDRs, RAPPLER started looking for relevant im-
pact investors, which would not own or control RAPPLER, and in-
deed would hold no equity or voting interests in RAPPLER, but would
provide funding and value for the business.

About Rappler Holdings Corporation

Pursuant to its plan of global expansion and fund raising,

1.15.
RHC was incorporated on 14 December 2014 by Filipino citizens. 9

1.16.Since its incorporation, only Filipino citizens or corpora-

tions wholly owned or managed by Filipino citizens have been stock-
holders 1o of RHC. Only RHC stockholders are entitled to vote, and
have actually voted, their shares. Further, only Filipino citizens have
held the position of Director or Officer of RHC.ll

The Primary Purpose of RHC, as stated in its Articles of

1.17.
Incorporation, is as follows:

"[To acquire] by purchase, exchange, assignment, gift or

otherwise, and to hold, own and use for investment or
otherwise, and to sell, assign, transfer, exchange, lease,
let, develop, mortgage, pledge, traffic, deal in and with
and otherwise operate, enjoy and dispose of real and per-
sonal properties of every kind and description and wher-
ever situated, as and to the extent permitted by law, in-
cluding but not limited to, shares of capital stock, bonds,

9 See Articles of Incorporation of RHC, a copy of which is on file with this Honorable
Commission.
10 See Articles of Incorporation of RHC, General Information Sheets of RHC for the years
2015 to 2016 and General Information Sheets of Dolphin Fire Group, Inc. for the years 2015 and
2016, Public Trust Media Group, Inc. for the years 2015 and 2016, and Hatchd Group, Inc. for the
years 2015 and 2016, copies of which are on file with this Honorable Commission.
11 See Articles of Incorporation of RHC, General Information Sheets of RHC for the years
2015 to 2016, copies of which are on file with this Honorable Commission.

7
 debentures, promissory notes, or other securities or obli-
gations, created negotiated or issued by any corporation,
association or other entity, foreign or domestic, and real
estate, whether improved or unimproved, and any interest
or right therein, as well as buildings, tenements, ware-
houses, factories, edifices and structures and other im-
provements, and while the owner, holder or possessor
thereof, to exercise any and all rights, powers and privi-
leges of ownership or any other interest therein, including
the right to vote on any proprietary or other interest on
any shares of capital stock, and upon any bonds, deben-
tures, or other securities having voting power, so owned
or held and the right to receive, collect and dispose of, any
and all rentals, dividends, interests and income derived
therefrom, except the management of fund portfolios and
similar assets of such managed entities; Provided it shall
not act as stockbroker or dealer of securities."

The relevant impact investors

A. North Base Media, Ltd.

1.18.RAPPLER's President, Maria Ressa ("RES SA") , came

across North Base Media, Ltd. in January 2014 when she read an arti-
cle about media investments in Taiwan and recognized that the Co-
Founder of this entity is a fellow veteran journalist, Marcus Brauchli
("BRAUCHLI"). On 26 January 2014, RESSA contacted BRAUCHLI
with a request for a chat on the premise that she is trying to get RAP-
PLER ready for "international investors (which help keep [it] inde-
pendent)". It was, however, only in the latter part of 2014 that seri-
ous discussions on a possible investment by North Base Media, Ltd.
were made and this eventually led to the purchase by NBM Rappler,
L.P. of PDRs issued by RHC.

1.19. It was made clear to North Base Media, Ltd. that any in-
vestment it makes will not result in owning shares in RAPPLER or
having any control over the company. The stockholders of RAPPLER,
in particular, the journalist shareholders, were very insistent on this.
As a few of the key executives of North Base Media, Ltd. were them-
selves journalists, they understood the importance of maintaining
this independence and were impressed by the fact that RAPPLER was
established by independent investigative journalists.

1.20.North Base Media, Ltd. never requested that it have con-

trol or ownership in RAPPLER. Neither did RAPPLER nor RHC offer
to give North Base Media, Ltd. or NBM Rappler, L.P. control or own-
ership of RAPPLER or RHC. This is clear from the following terms of

8
the Philippine Depositary Receipt Instrument that RHC issued to
NBM Rappler, L.P. (the "NBM PDR"):12

a. RHC issued PDRs, not shares in RHC or RAPPLER, to

NBM Rappler, L.P.13

b. The Underlying Shares in RAPPLER remain to be owned

by, and registered in the name of, RHC.14

c. NBM Rappler, L.P. has no voting rights with respect to

the Underlying Shares in RAPPLER; voting rights arising from
the Underlying Shares are retained and exercised by RHC.15

d. NBM Rappler, L.P. does not receive dividends from either

RAPPLER or RHC. Dividends accruing on the Underlying
Shares are due to, and received by, RHC. NBM Rappler, L.P.
, may receive cash distributions from RHC.16

At this point, it is important to state that North Base

1.21.
Media, Ltd. is not a foreign media entity. North Base Media,
Ltd. describes itself as "[a]n investment firm focused on media, jour-
nalistic enterprise and digitally-driven opportunities in growth mar-
kets".17 According to Bloomberg, "North Base Media, Ltd. operates as
a venture capital firm. The Company invests in media and technology
sectors. "18

RAPPLER and RHC, including their stockholders and di-

1.22.
rectors, did not establish, directly or indirectly, any foreign-registered
partnership, much less one with North Base Media, Ltd. or any of its
subsidiaries, affiliates, stockholders, officers or employees. Neither
RAPPLER nor RHC have any interest in the business of NBM Rap-
pIer, L.P.

1.23. In fact, the Audited Financial Statements of RAPPLER for

the years 2012 to 2016 and the Audited Financial Statements of RHC
for the years 2015 to 2016, which statements are on file with this
Honorable Commission, make no mention whatsoever of RAPPLER
or RHC entering into a partnership with North Base Media, Ltd.

12 A copy of the NBM PDR is attached hereto as Annex "A" and made an integral part
hereof.
13 See NBM PDR Clause 2.1.
14 See NBM PDR, Clause 4.1.
15 See NBM PDR, Clause 4.3.
16 See NBM PDR, Clause 9.
17 http://r!ort.hbasemedi~..:.com/, accessed on 21 August 2017 at 1:12 a.m.
18 httPS:!!W1VVIJ.bloomberg.com/profiles!companies!1218216D:lVIK-north-base-media-ltd,
accessed on 21 August 2017 at 1:07 p.m.

9
 1.24. The foreign-registered partnership known as NBM Rap-
pIer, L.P., which subsequently purchased RHC PDRs, was established
by North Base Media, Ltd. and its affiliates as its investment arm in
RHC. North Base Media, Ltd. requested the permission of RAPPLER
to use the name "Rappler" to identify the investment of this entity.

On the "partnership" between RAPPLER

and North Base Media, Ltd.

Other than funding, North Base Media, Ltd. offers to its

1. 2 5.
investees, which it refers to as "Partners", networking and access to
best practices between and among it, its Partners, and other resource
persons. Notably, North Base Media, Ltd. invests in different media
and technology companies, which "... have exceptional experience
running some of the world's leading news brands, as well as fostering
strong independent media in developing markets."19 "Among the
places they have fostered or invested in media in South Africa, Zim-
babwe, Russia, Ukraine, Georgia, Bulgaria, Croatia, Slovakia, Hun-
gary, Montenegro, Serbia, Indonesia, Malaysia, Philippines, Taiwan,
Nepal, Guatemala, Argentina, Australia, United States."20

1.26. North Base Media, Ltd. offers its "Partners" the opportu-
nity to interact with each other and share best practices. For exam-
ple, if one of them is in need of recommendations and it knows that
another "Partner" has the technology or know-how to provide such
recommendations, it puts them together so they could share informa-
tion and help each other. North Base Media, Ltd. itself also shares its
know-how with its Partners and may also put them in contact with
other persons or entities that could help improve their businesses.
The purpose of this networking and sharing of best practices is to en-
hance the businesses of all Partners during a time of dynamic change
in the industry.

1.27. While North Base Media, Ltd. makes available to RHC

and RAPPLER the best practices of its Partners and allowed for net-
working, neither RAPPLER nor RHC are obligated to avail of this.
North Base Media, Ltd. cannot, and has not, obligated RAPPLER or
RHC to implement any of the best practices shared to them. To be
clear, North Base Media, Ltd. and NBM Rappler, L.P. do not, in any
way, participate in the management or operations of RAPPLER or
RHC and neither do they control these companies.

19 See http://northbasemedia.com/mission, accessed on 23 August 2017 at 11:11 p.m.

20 Ibid.

10
 1.28. It is also relevant to state that North Base Media, Ltd.
could not possibly take control or management of RAPPLER, and at
the same time, ensure its success. This is because RAPPLER's busi-
ness is unique and still being developed by the Filipinos who created
it. RAPPLER is not a run-of-the-mill business that could simply be
bought and taken over. The Filipinos who conceptualized and created
it remain essential to its viability.

1.29. The article entitled Top Journalists' Inveshnent

Fund Invests in Rappler written by Natashya Gutierez and pub-
lished in the website of Rappler on 31 May 2015 very clearly supports
the afore-mentioned description of the relationship between North
Base Media, Ltd. and RAPPLER and RHC, thus:

"It was a perfect fit, Brauchli said. 'Rappler is a perfect

alignment of our interests and the goals of the founders.
Rappler is a company dedicated - as Maria Ressa likes to
say - to redefining journalism, keeping the soul and spirit
of journalism, but adapting to technology-driven changes
that have swept our world.'

He added, 'We're making ourselves available to

give Rappler advice. In exchange, what we want is
to be able to take many of their ideas, the pioneer-
ing concepts that Rappler is working with in the
Philippines and deploy them in other markets.
Because I think Rappler is one of the most inno-
vative digital media companies we have seen in
any market around the world.'

Rappler CEO and executive editor Maria Ressa said of the

partnership: 'Rappler is actually the personification of
what North Base Media's ideas are - journalism at its cen-
ter, technology built in, and our audience built into that.
That is the core.'

It's important to enable journalism, according to Ressa,

'but you need to understand the business practices that
gives it its independence. If you cannot bring in money for
a news group, that news group is not independent.'

xxx

=
This is what NBM does it searches for both me-
dia and technology companies which are doing in-
teresting things, and helps them succeed. The
network they are able to form will ideally ex-

11
 change ideas and continue innovating as they tap
one another and apply best practices.

The relationship is a symbiotic one - NBM hopes to help

Rappler continue its growth as it strengthens its first in-
ternational bureau in neighboring Indonesia, while taking
its ideas and sharing it with others."21

1.30. Further, that article did not speak of a creation of a for-

eign-registered partnership between North Base Media, Ltd. and
RAPPLER. Rather, it discussed a "Partnership" in the meaning given,
as follows:

"'Partnership'

'The investment is really a partnership. The way

to think of this is that we bring to Rappler our ex-
perience and whatever counselor advice the team
of Rappler wants from us,' Brauchli said.

Rappler is the Philippines' first social news network.

Founded in 2012 by Ressa, former ABS-CBN News Head
and CNN Jakarta bureau chief, Rappler focuses on audi-
ence engagement, crowdsourcing, and citizen journalism.

Like Brauchli, she pulled together her friends: author and

investigative journalist Glenda Gloria, co-founder of
Newsbreak & former head of ANC, then the Philippines'
only 24 hour English cable news channel; author, ethics
professor & investigative journalist Chay Hofilena; former
head of news production and newscasts at ABS-CBN Beth
Frondoso; and Newsbreak's founding editor in chief,
multi-awarded journalist Marites Daiiguilan Vitug.

Rappler began with 12 people, and in a little over a year-

and-a-half, became the 3rd most visited news website in
the country, according to Alexa.com. Rappler had its 3rd
birthday last January.

Ressa welcomes the partnership, saying Rappler and

NBM are joined together by their like-mindedness and
similar goals.

21 http://vV\fvvv.rappler.cOln!nation/94379 - top-journalists-independent-media-fund-
inYQ.sts-rappler, accessed on 12 August 2017 at 11:16 p.m. Emphasis and underscoring supplied.

12
 'We have the same values; independence is criti-
cal to that. And what they will do now is actually
help us move from the Philippines outward. The
minute you're on the Internet you're a global
news group. So how do you do that? These men
are at the frontlines of trying to figure out what
the future of journalism looks like. That's where
Rappler wants to be, and it's going to be a fun
partnership,' she said.

Rappler will remain fiercely independent, un-

changed by the entrance of new partners. Edito-
rial control remains solely with Rappler's editors,
and it remains free of vested interests.

'At the core of Rappler is independence and in or-

der to be independent, you don't only have to be
financially independent, which is why we created
a business model that we believe works in this day
and age, it is journalism and the way of doing
online media that incorporates technology,' Ressa
said.

She added, 'Rappler remains in the Philippines. It

is Filipino, it is us creating it together with our
audience. "'22

B. Omidyar Network

1.31. Omidyar Network is not a foreign media entity. It

is a philanthropic venture capital firm founded by Pierre Omidyar,
the founder of eBay.23 It describes itself, as follows:

22 Ibid. Emphasis and underscoring supplied.

23 "Pierre is an entrepreneur and philanthropist best known as the founder of eBay,
an online platform that gives people equal access to information, opportunity,
and tools to pursue their goals. Pierre created eBay in 1995 on the premise that
people are basically good, and continues to serve on the board of directors. To-
day, eBay enables more than 90 million buyers and sellers to connect and prosper
over shared interests.

After eBay became a public company in 1998, Pierre and his wife Pam co-founded
the Omidyar Foundation to support non-profits. Simultaneously, eBay's vast
scale and accelerating social impact were demonstrating that business could also
be an effective tool for creating social good. In response, they broadened their
scope in 2004 to form a new entity, Omidyar Network, to make investments in
for-profit companies as well as non-profit organizations. By supporting innova-
tive, market-based approaches, Omidyar Network creates opportunity for indi-
viduals to connect with others and discover their power to make a difference in
the world. Pierre provides Omidyar Network's strategic vision, stemming from
his values and innovative approach to investing for social good."

13
 "At Omidyar Network, we start from a fundamental be-
lief: People are inherently capable, but they often lack op-
portunity. We believe if we invest in people, through op-
portunity, they will create positive returns for themselves,
their families, and the world at large.

We also believe that businesses can be a powerful force

for good. Pierre Omidyar experienced this first hand as
the founder of eBay. Just as eBay created the opportunity
for millions of people to start their own businesses, we be-
lieve market forces can be a potent driver for positive so-
cial change. That's why we invest in both for-profit busi-
nesses and nonprofit organizations, whose complemen-
tary roles can advance entire sectors.

xxx

Omidyar Network invests in entrepreneurs who share our

commitment to advancing social good at the pace and
scale the world needs today. We are focused on five key
areas we believe are building blocks for prosperous, sta-
ble, and open societies: Education, Emerging Tech, Fi-
nancial Inclusion, Governance & Citizen Engagement, and
Property Rights."2 4

1.32. According to Bloomberg,

"Omidyar Network is a private equity and venture

capital firm specializing in seed, start-up, growth stage,
early, and mid venture investments. It invests in profit
and non-profit organizations. The firm seeks to invest in
consumer internet and mobile, enterprise software, artifi-
cial intelligence, local food production, renewable energy,
medical and financial technology, healthcare, waste re-
duction, education, mobile technology, entrepreneurship,
government transparency, governance and citizen en-
gagement, property rights, and financial inclusion sectors.
Within access to capital, the firm prefers to invest and
provide grants in areas including microfinance, small and
medium sized enterprises, emerging market ventures, and
property rights. Within media, markets, and transpar-
ency, it seeks to invest and provide grants in areas includ-
ing social media, marketplaces, government transparency,
trust, reputation, and identity. The firm typically invests
and support companies around the world with a focus on
ChJ1J)s:lIvV\vw.Olnid~111peopl~ierre-01njdvar, accessed on 13 August 2017
at 9:22 p.m.)
24 httPs: !!W"wvV.Oll1idyar.cOl1J.Lwh~!-wG":i:lre, accessed on 13 August 2017 at 9:27 p.m.

14
 India, United Kingdom, Southeast Asia, United States,
Europe, Latin America, and Sub-Saharan Africa. It seeks
to make initial investments greater than $1 million. The
firm invests between $1 million and $10 million in for-
profit companies and between $0.5 million and $5 million
in non-profit companies. It makes philanthropic invest-
ments and grants through access to capital and media,
markets, and transparency."25

1.33. Omidyar Network is known to make investments in com-

panies even if the monetary returns are minimal as long as the busi-
ness has the potential to give value to the greater community.26

1.34. On 29 October 2013, RESSA was introduced to a repre-

sentative of Omidyar Network who was then based in Singapore.
Significantly, around this time, the National Center for Asia Pacific
Economic Cooperation ("APEC") distributed a paper at the APEC
CEO Summit which featured profiles of eBay and RAPPLER as com-
panies which show "Innovative solutions to create economic divi-
dends".27

1.35. Following the introduction, the representative of Omidyar

Network got in touch with RESSA on 8 November 2013 to discuss a
collaboration between RAPPLER and Omidyar Network because in-
dependent media was something that the latter's founder, Pierre
Omidyar, cared about.

1.36. Unfortunately, as RESSA's attention was diverted to is-

sues surrounding Typhoon Haiyan, she was only able to reconnect
with the representative of Omidyar Network on 15 April 2014. Dis-
cussions for a possible investment began in earnest in 2015.

1.37. It is important to stress that, before Omidyar Network

(through its investment arm - Omidyar Network Fund, L.L.C.) pur-
chased the PDRs of RHC, RHC was already able to raise funds from
North Base Media, Ltd.

1.38. There was, therefore, no pressing financial need for RHC,

or even RAPPLER, to secure funds from Omidyar Network.

25
https:llwww.bloonlberg.com/research!~Q"~private/snapshot.asplp...r..iYrapld::::J13561~
g, accessed on 13 August 2017 at 9:37 p.m.
26 See https:llv\'\\'\v.forb~s.com!si.t~s/annefield/2016/1lL.'65.Lomidyar-networks-
if.).vesti ng:frsl111ewo.rJ< -is-good.-fQr-low-rejJlrn - high-:i.!11pact-soci'l1-enterpris~stJ! # 2 oaR7.42.9_~4.,
accessed on 13 August 2017 at 9;58 p.m.
27
h.t:!JEL/www.ncap"'~c.org/publication$..Ldocs/Leveraging%2oInnovative%2oSolutions%2ot
o%2oCreate%2o Economic%2oDividends%2oCase%2oStudies%2o From%2othe%20Asia %20 Pad
f.k2Q_~oRegioJl&df, accessed on 26 August 2017, at 11:00 a.m.

15
 RHC and RAPPLER wanted Omidyar Network as an in-
1.39.
vestor because of the prestige it would bring to the business. Global
investors and the public look at investments by Pierre Omidyar
alongside the investments of Bill Gates, Mark Zuckerberg and even
Warren Buffet. 28 Also an investment from Omidyar Network meant
that the business has been vetted to be one that greatly impacts a
large part of the population and empowers people to improve their
lives.

In order to grow the business globally, RAPPLER and

1.40.
RHC need the kind of attention and interest that an investor like Pi-
erre OmidyarjOmidyar Network would bring. This is the main rea-
son why RHC agreed to issue PDRs to Omidyar Network (through
Omidyar Network Fund, L.L.C.).

Since Omidyar Network acquired its PDRs after NBM

1.41.
Rappler, L.P. acquired its PDRs, and because Omidyar Network ac-
quired fewer PDRs than NBM Rappler, L.P., Omidyar Network was
concerned that it may not be given equal rights under the PDRs as
North Base Media, Ltd.

Omidyar Network, therefore, negotiated with RHC to re-

1.42.
vise some of the provision of the NBM PDR to ensure that Omidyar
Network is given equal rights as other PDR Holders of RHC. The
changes made in the PDR issued to Omidyar Network Fund, L.L.C.
("ON PDR") do not, and were never intended to, vest in Omidyar
NetworkjOmidyar Network Fund, L.L.C. ownership or control of
RAPPLER.

This is because Omidyar Network is very keen on having

1.41.
the companies it invests in to become self-sustaining. Omidyar Net-
work knew that RAPPLER was founded on the idea that it should be
independently run by Filipino journalists. In fact, Omidyar Network
appreciated this about RAPPLER. More importantly, the concepts
and technology being developed by RAPPLER was unique and its suc-
cess is dependent on the persons who created it. Omidyar Network
could not have taken control of RAPPLER nor did it want to.

28 See http://fortune.C01n!2017!03!20!satellites-bil1-gates-buffett-omidyar!, accessed on

15 August 2017 at 8:45 a.m., lltt,p...;.LL]]...pW.~llQX.!.Q.Qnlb\lhY.:ZtlQkQIberg-gateS-&ln.d-01nidY;:}J;..:...<1.r..~_:
jnvesti.!:!.g::i!l-finl~eh-for-t.hf..::Jloor, accessed on 15 August 2017 at 8:54 a.m. and
http://·w"\\'"\v.huffingtonpost.com!2014/o3/2o/tech-leaders-charity n 4995153.html, accessed
on 15 August 2017 at 8:57 p.m.

16
 2. DISCUSSION

RAPPLER AND RHC DID NOT VIOLATE ANY

LAW RELATING TO FOREIGN EQUITY RE-
STRICTIONS, INCLUDING SECTION 11 (1) OF
ARTICLE XVI OF THE CONSTITUTION IN RELA-
TION TO SECTION 19 OF ARTICLE II OF THE
CONSTITUTION, SECTION 2 OF PRESIDENTIAL
DECREE NO. 1018 AND SECTION 7 IN RELATION
TO SECTION 14 OF REPUBLIC ACT NO. 7042.

Through the Order, this Honorable Special Panel directed RAP-

PLER and RHC to explain why they should not be held liable for vio-
lation of Section 11 (1) of Article XVI in relation to Section 19 of Arti-
cle II of the Constitution, Section 2 of Presidential Decree No. 1018
and Section 7 in relation to Section 14 of Republic Act No. 7042.

Section 19 of Article II of the Constitution provides that "[tJhe

state shall develop a self-reliant and independent national economy
effectively controlled by Filipinos." In this regard, Section 11 (1) of Ar-
ticle XVI of the Constitution provides, in relevant part, that "[tJhe
ownership and management of mass media shall be limited to citizens
of the Philippines, or to corporations, cooperatives or associations,
wholly owned and managed by such citizens." This provision is ech-
oed in Section 2 of Presidential Decree No. 1018. Section 7 in relation
of Republic Act No. 7042 re-states these provisions, as follows:
"[nJon-Philippine nationals may own up to one hundred percent
(100%) of domestic market enterprises unless foreign ownership
therein is prohibited or limited by existing law... "

RAPPLER and RHC did not violate, and could not have vio-
lated, any law relating to foreign equity restrictions because only Fili-
pino citizens or corporations wholly owned and managed by Filipino
citizens have had full beneficial ownership in RAPPLER and RHC and
both companies have, since their incorporation, been managed and
controlled only by Filipino citizens.

A. FROM THE TIME OF THEIR INCORPORA-

TION AND UNTIL TODAY, ONLY FILIPINO
CITIZENS OR CORPORATIONS WHOLLY
OWNED AND MANAGED BY FILIPINO
CITZENS HAVE BEEN STOCKHOLDERS OF
RECORD OF RAPPLER AND RHC.

17
 Under Section 5 of the Corporation Code "[c]orporators are
those who compose a corporation whether as stockholders or mem-
bers." Further, "[s]tockholders are owners of shares in a stock corpo-
ration. "29

"A person who desires to be recognized as stockholder for

purposes of exercising stockholders' right must secure
standing by having his ownership of share recorded on
the stock and transfer book. Thus, only those whose own-
ership of shares are duly registered in the stock and trans-
fer book are considered stockholders of record and are en-
titled to all rights of a stockholder ... it is for this reason
that the SEC has ruled in one case that defendants are
neither stockholders, directors or officers of the Interna-
tional Broadcasting Corporation (IBC) ... as their names
do not appear in the corporate books" .3 0

Only Filipinos and corporations wholly owned and managed by

Filipinos are, and have been, registered in the Stock and Transfer
Books of RAPPLER and RHC. Legal title to the shares of stock of
RAPPLER and RHC, have been, and continue to be, held by Filipinos
or corporations wholly owned and controlled by Filipinos.

B. THE PURCHASE BY NBM RAPPLER, L.P.

AND OMIDYAR NETWORK FUND, L.L.C. OF
THE PDRs ISSUED BY RHC DID NOT VEST
THEM WITH OWNERSHIP OF RAPPLER
AND RHC. THE STOCKHOLDERS OF RAP-
PLER AND RHC RETAIN LEGAL TITLE TO,
AND FULL BENEFICIAL OWNERSHIP
OVER, THEIR SHARES OF STOCK IN
THESE COMPANIES BECAUSE THEY HAVE
FULL VOTING RIGHTS AND RECEIVE THE
ECONOMIC BENEFITS ACCRUING TO
THESE SHARES.

In the case of Roy v. Herbosa, et al.,3 1 the Supreme Court En

Bane ruled that

"Compliance with required Filipino ownership of a

corporation shall be determined on the basis of out-
standing capital stock whether fully paid or not, but only
such stocks which are generally entitled to vote are con-
sidered.

29 Lopez, THE CORPORATION CODE ANNOTATED, Volume 1, p. 81 (1994).

30 Ibid.
31 G. R. No. 207246, 22 November 2016.

18
 For stocks to be deemed owned and held by Philip-
pine citizens or Philippine nationals, mere legal title is not
enough to meet the required Filipino equity. Fully benefi-
cial ownership of the stocks, coupled with appropriate
voting rights is essential. Thus, stocks, the voting rights of
which have been assigned or transferred to aliens cannot
be considered held by Philippine citizens or Philippine na-
tional.

xxx

Stated inversely, if the Filipino has the 'specific

stock's' voting power (he can vote the stock or direct an-
other to vote for him), or the Filipino has the investment
power over the 'specific stock' (he can dispose of the stock
or direct another to dispose it for him), or he has both (he
can vote and dispose of the 'specific stock' or direct an-
other to vote or dispose of it for him), then such Filipino is
the 'beneficial owner' of that 'specific stock' ... "3 2

Gauged by the foregoing, it is clear that the PDRs issued by

RHC to NBM Rappler, L.P. and Omidyar Network Fund, L.L.C. did
not divest the stockholders of their full beneficial ownership in the
shares of stock of RAPPLER and RHC. The stockholders of RAP-
PLER and RHC retain title to their shares of stocks in these compa-
nies, the right to vote these shares, and receive the dividends accruing
to them.

By purchasing the PDRs of RHC, North Base Media, Ltd. jNBM

Rappler, L.P. and Omidyar Network jOmidyar Network Fund, L.L.C.
did not become ownersj stockholders of RAPPLER or RHC.

It is clear from the NBM PDR that NBM Rappler, L.P. will re-
ceive from RHC PDR Certificates, not certificate of stocks in RHC.
Thus, NBM Rappler, L.P. was issued PDR Certificates, not certificates
of stock representing shares in RHC.33 Clause 4.1 of the NBM PDR
clearly states that the Underlying Shares, which are common shares
in RAPPLER, shall be owned and registered in the name of RHC, not
NBM Rappler, L.P. Further, "[n]either the Escrow Agent nor any
Holder [NBM Rappler, L.P.] shall have voting rights with respect to
the Underlying Shares .... [RHC], as the owner of the Underlying
Shares, will retain and exercise such voting rights relating to the Un-
derlying Shares."34 NBM Rappler, L.P. will also not receive from
RAPPLER any dividends accruing to the Underlying Shares or divi-

32 Emphasis and underscoring supplied.

33 NBM PDR, Clause 2.1.
34 Ibid, Clause 4.3

19
dends from RHC.35 The dividends in RAPPLER are issued to its
stockholders of record, including RHC, which makes use of these
dividends for various purposes.

Similarly, by virtue of the PDR issued to ON PDR, it will receive

from RHC a PDR Certificate, not certificate of stocks in RHC.3 6
Clause 4.1 of the ON PDR also expressly states that the Underlying
Shares, which are common shares in RAPPLER, shall be owned and
registered in the name of RHC, not Omidyar Network Fund, L.L.C.
Further, "[n]either the Escrow Agent nor any Holder [Omidyar Net-
work Fund, L.L.C.] shall have voting rights with respect to the Under-
lying Shares .... [RHC], as the owner of the Underlying Shares, will re-
tain and exercise such voting rights relating to the Underlying
Shares."37 Omidyar Network Fund, L.L.C. will not also receive from
RAPPLER any dividends accruing to the Underlying Shares or divi-
dends from RHC.3 8

C. FROM THE TIME OF THEIR INCORPORA-

TION AND UNTIL TODAY, ONLY FILIPINO CITI-
ZENS HAVE HELD THE POSITION OF DIREC-
TOR OR OFFICER OF RAPPLERAND RHC.

Section 23 of the Corporation Code states that,

"[u]nless otherwise provided in this code, the corporate

powers of all corporations formed under this code shall be
exercised all business conducted, and all property of such
corporations controlled and held by the board of directors
or trustee to be elected from among the holders of stocks .
. . Every director must own at least one (1) share of the
capital stock of the Corporation of which he is a director,
which share shall stand in his name on the books of the
corporation."

Section 1 of Article III of the By-Laws of RAPPLER reiter-

ates that "the corporate power of the corporation shall be exercised,
all business conducted and all property of the corporation controlled
and held by the Board of Directors to be elected by and from among
the stockholders". Further, Section 2 of Article IV of the By-Laws of
RAPPLER states that "[t]he Chairman of the Board of Directors shall
preside at the meetings of the directors and the stockholders. He
shall also exercise such powers and perform such duties as the Board
of Directors may assign to him." Moreover, "[t]he President, who
shall be a director, shall be the Chief Executive Officer of the corpora-

35 Id., Clause 9.
36 ON PDR, Clause 2.1.
37 Ibid, Clause 4.3.
38 Id., Clause 9.

20
tion and shall also have administration and direction of the day-to-
day business affairs of the corporation" .39 The Secretary "shall be the
custodian of and shall maintain the corporate books and record and
shall be the recorder of the corporation's formal actions and transac-
tions".4 0 "The Treasurer of the corporation shall be its chief fiscal of-
ficer and the custodian of all its funds, securities and property". 41

Section 1 of Article III of the By-Laws of RHC also state that

"the corporate power of the corporation shall be exercised, all busi-
ness conducted and all property of the corporation controlled and
held by the Board of Directors to be elected by and from among the
stockholders". Article IV of the By-Laws of RHC also vests in its
President, Vice-President, Secretary and Treasurer certain powers
and responsibilities as regards the running of RHC.

It is clear that the law and By-Laws of RAPPLER and RHC con-
fer upon Directors and Officers management and control over these
companies. As only Filipino citizens have held the position of Director
or Officer of RAPPLER and RHC and as they have actually carried out
the duties and responsibilities attributed to these positions independ-
ently, then, there can be no doubt that only Filipinos have managed
and controlled by RAPPLER and RHC.

D. CLAUSE 12.2.2 OF THE ON PDR DOES NOT

CONFER UPON OMIDYAR NETWORK FUND,
L.L.C. THE POWER TO CONTROL OR MANAGE
RAPPLER. THE CLAUSE IS INTENDED TO
SAFEGUARD OMIDYAR NETWORK FUND,
L.L.C.'S RIGHTS IN RELATION TO THE ON PDR.
THE CLAUSE IS ACTUALLY SUPERFLUOUS AS
THE TERMS OF THE ON PDR ALREADY OBLI-
GATE RHC NOT TO ACT IN ANY WAY THAT
"PREJUDICE[S] THE RIGHTS [OF OMIDYAR
NETWORK] IN RELATION TO THE ON PDRS".

Through the Order, the Honorable Special Panel found that

"The ON PDRs contain a provision wherein the share-

holders are required to seek approval of the ON PDR
Holders on corporate matters, which reads thus:

39 RAPPLER By-Laws, Article IV, Sec. 3.

40 Ibid, Article IV, Sec. 5.
41 Id., Article IV, Sec. 6.

21
 "12.2 The Issuer undertakes to cause the Company
from the date hereof and while the ON PDRs are out-
standing:

xxx

12.2.2 not to, without prior good faith discussion

with ON PDR Holders and without the approval of
PDR Holders holding at least two thirds (2/3) of all is-
sued and outstanding PDRs, alter, modify or other-
wise change the Company Articles of Incorpora-
tion or By-Laws or take any other action where
such alteration, modification, change or action
will prejudice the rights in relation to the ON
PDRs".42

The Honorable Special Panel also found that 'Ttlhese PDRs [referring
to those issued to NBM Rappler, L.P.l do not contain a similar provi-
sion to that of the ON PDRs".43

Clause 12.2.2 of the ON PDR does not give Omidyar Network

Fund, L.L.C. or even NBM Rappler, L.P., any form of control over
RAPPLER.

First. It is clear from a reading of Clause 12.2.2 of the ON

PDR that the intention of the parties was not to allow Omidyar Net-
work Fund, L.L.C. to gain control over RAPPLER, but rather, the in-
tention was to ensure that "the rights [of Omidyar Network,
L.L.C. in relation to the ON PDRs" would not be prejudiced.
Clause 12.2.2 provides, as follows: -

"not to, without prior good faith discussions with ON PDR

Holders and without approval of PDR Holders holding at
least two-thirds (2/3s) of all issued and outstanding
PDRs, alter, modify or otherwise change [RAPPLER's] Ar-
ticles of Incorporation or By-laws or take any other action
where such alterations, modification, change or
action will prejudice the rights in relation to the
ON PDRs".44

42 RAPPLER By-Laws, Item 6, pp. 2 and 3; Emphasis supplied.

43 Ibid., Item 7, p. 3.
44 Ibid, Clause 12.2.2. Emphasis supplied.

22
 As Clause 12.2.2 of the ON PDR only requires RHC to secure
approval of two-thirds (2/3) of all the PDR Holders for actions it
takes that would prejudice the rights of Omidyar Network Fund,
L.L.C. in relation to the ON PDR, it is clear that the actions referred to
do not involve ownership or control over RAPPLER or RHC. This is
because under the ON PDR, Omidyar Network was not given the right
of ownership or control over RAPPLER or RHC.

To be clear, Clause 12.2.2 of the ON PDR does not add any other
rights, other than those already given in the ON PDR to Omidyar
Network Fund, L.L.C. Consequently, even if enforced, Clause 12.2.2 of
the ON PDR will not give rise to a situation that would vest ownership
or control in RAPPLER, or even RHC, to Omidyar Network Fund,
L.L.C.

Second. Clause 12.2.2 of the ON PDR is actually superfluous

because, by issuing the PDR, the corresponding obligation on the part
of RHC to honor the rights of Omidyar Network Fund, L.L.C. already
attaches and RHC is precluded from taking any action to prejudice it.

Notably, obligations arising from contracts have the force of law

between the contracting parties and should be complied with in good
faith.45 Contracts are perfected by mere consent, and from that mo-
ment the parties are bound not only to the fulfilment of what has
been expressly stipulated but also to all the consequences which, ac-
cording to their nature, may be in keeping with good faith, usage and
law. 46 Contracts shall be obligatory, in whatever form they may have
been entered into, provided all the essential requisites for their valid-
ity are present. 47

Thus, it was not even necessary to include such a clause in the

ON PDR, except only, that it emphasizes the obligation of RHC not to
prejudice the rights of Omidyar Network Fund, L.L.C. in relation to
the ON PDR.

Third. To give context to the intention of the parties to the

ON PDR as regards securing two-thirds (2/3) vote of all PDR Holders
of RHC, it is important to remember that, at the time Omidyar Net-
work Fund, L.L.C. decided to purchase the RHC PDR, NBM Rappler,
L.P. had already purchased PDRs from RHC. Also, NBM Rappler,
L.P. purchased more RHC PDRs than Omidyar Network Fund, L.L.C.

On account of this situation, Omidyar Network Fund, L.L.C.

was concerned that it was at a disadvantage because of the possibility
that RHC may later agree to give NBM Rappler, L.P. more benefits
45 CMLCODE, Art. 1159.
46 Ibid., Art. 1315.
47 Ibid., Art. 1356.

23
than Omidyar Network Fund, L.L.C. Also, Omidyar Network Fund,
L.L.C. did not want to be placed at a further disadvantage if RHC sells
PDRs to other investors.

For these reasons and to protect its investment, Omidyar Net-

work Fund, L.L.C. had RHC agree to secure the approval of at least
two-thirds (2/3) of all the PDR Holders before RHC takes any action
that would prejudice the rights of Omidyar Network under
the ON PDR, which rights do not include ownership and control
over RAPPLER or RHC. Since, NBM Rappler, L.P. does not have a
sufficient number of PDRs to muster two-thirds (2/3) of the total
number of all PDRs issued by RHC, these two (2) parties will not be
able to take action to prejudice the rights of Omidyar Network Fund,
L.L.C. without also securing its approval.

Parenthetically, the NBM PDR does not contain a clause such as

Clause 12.2.2 of the ON PDR because, at the time NBM Rappler, L.P.
purchased its PDRs, there were no other PDR Holders.

Fourth. Also, control and management of RAPPLER rest in its

Directors and Officers. Clause 12.2.2 of the ON PDR did not confer
upon either Omidyar Network Fund, L.L.C. or NBM Rappler, L.P. the
power to elect a Director of RAPPL:ER, appoint an Officer, or in any
way, control their actions or participate in the management of RAP-
PLER.

In this regard, in the case of Gamboa v. Teves, et al.,4 8 the

Supreme Court En Bane explained that a stockholder of a corporation
exercises control over the corporation through the election of a direc-
tor who is part of the board that controls the corporation, thus:

"Indisputably, one of the rights of a stockholder is

the right to participate in the control or management of
the corporation. This is exercised through his vote in the
election of directors because it is the board of directors
that controls or manages the corporation. In the absence
of provision in the articles of incorporation denying voting
rights to preferred shares, preferred shares have the same
voting rights as common shares. However, preferred
shareholders are often excluded from any control, that is,
deprived of the right to vote in the election of directors
and on other matters, on the theory that the preferred
shareholders are merely investors for income in the same
manner as bondholders."

48 G.R. No. 176579, 28 June 2011.

24
 As Clause 12.2.2 of the ON PDR did not, in any way, give Omid-
yar Network Fund, L.L.C. any power over the Directors or Officers of
RAPPLER or the selection of persons to these positions, it cannot be
argued that the Clause allowed Omidyar Network Fund, L.L.C. to
have control or management of RAPPLER.

Fifth. Clause 12.2.2 of the ON PDR is in the nature of a nega-

tive covenant put into place to protect the interest of an investor.
Such negative covenant (including covenants restricting the investee
or borrower from amending its constitutive documents) is not prohib-
ited in financial agreements between foreign investors and Philippine
counter parties (even Philippine counter parties who are subject to a
nationality restriction).

The following examples of similar negative covenants have long

been accepted in this jurisdiction and are being used in standard con-
tracts:

a. Both mortgage and pledge are accessory contracts

constituted to secure the fulfilment of the obligation under the
principal contract.49 Considering that the purpose of the mort-
gage and pledge is to secure the fulfilment of the obligation un-
der the principal contracts, the mortgagee and pledgee may im-
pose provisions which that may restrict the use and/or disposi-
tion over the thing mortgaged or pledged, provided these are
not contrary to law, laws, morals, good customs, public order,
or public policy.5 0

Negative covenants are standard provisions under loan

agreements, mortgages, and pledge agreements to further pro-
tect the financial interests of the lender, mortgagee, and
pledgee. 51 Negative covenants are provisions which require a
party to refrain from doing something or the borrower's prom-
ise to the lender not to encumber or transfer the real estate as
long as the loan remains unpaid. In the case of Security Bank
& Trust v. Cuenca, 52 the Loan Agreement executed by the
parties contained both positive and negative covenants. In
Philnico Industrial Corp. v. Privatization and Man-
agement Office,53 the Pledge Agreement executed by the par-
ties contained a negative covenant.

A more specific type of a negative covenant is a negative

pledge clause. It is a clause requiring a borrower, who borrows

49 Manila Surety & Fidelity Co. vs. Velayo, G.R. No. L-21069, 26 October 19 6 7.
50 CIVIL CODE,Art. 1306.
51 Ibid.
52 G.R. No. 138544, 3 October 2000.
53 G.R. No. 19942, 27 August 2014.

25
 funds without giving security, to refrain from gIVIng future
lenders any security without the consent of the first lender. 54 In
bond indenture, it is a provision stating that the issuing entity
will not pledge its assets if it will result in less security to the
bondholders under the indenture agreement. 55

Further, the law imposes upon the pledgor the obligation

to seek the consent and approval of the pledgee before the thing
pledged may be alienated.56 In the case of Estate ofG. Litton
v. Mendoza,57 the purpose for the provision was explained in
this wise:

"To allow the assignor to dispose of or alienate the

security without notice to and consent of the as-
signee will render nugatory the very purpose of a
pledge or an assignment of credit."

b. In insurance policies, the insurer may minimize its

exposure to risk and potential liability by limiting the use or the
condition of a particular property that will be covered by insur-
ance. 58 In case of change of the use or the condition of the in-
sured property without the consent of the insurer, the law pro-
vides that the insurer may rescind the contract.59 Thus, when
the property was insured as a residential house and it was sub-
sequently converted into a factory without the consent of the in-
surer, the court considered such change as a material alteration,
warranting the right of the insurer to rescind the contract.60

c. In employment contracts, non-compete or exclusiv-

ity clauses may be stipulated to protect the interest of the em-
ployer. 61 By restricting the former employee from engaging in
the same line of business, within the same geographical area,
and within a certain period, the employer's interest is protected
such that employee cannot use the business formula obtained
from his previous employment against the employer.

Sixth. Clause 12.2.2 of the ON PDR has never been en-

forced and none of the parties have sought its enforcement.

54 BLACK'S LAw DICTIONARY, 9th Edition.

55 Ibid.
56 CIVIL CODE, Art. 2097.
57 163 SCRA 246 (1988).
58 Rep. Act No. 10607, Sec. 170.
59 Ibid.
60 Malayan Insurance Company Inc. v. PAP Co. Ltd., G.R. No. 200784,7 August 2013.
61 See Ollendorff v. Abrahamson, G.R. No. 13228, 13 September 1918, where the court con-
sidered the clause restraining trade and employment as a negative covenant.

26
 E. THERE HAS BEEN NO INSTANCE WHEN
NORTH BASE MEDIA, LTD. jNBM RAPPLER,
L.P. OR OMIDYAR NETWORKjOMIDYAR NET-
WORK FUND, L.L.C. EXERCISED OWNERSHIP
OR CONTROL OVER RAPPLER OR RHC.

At no time have North Base Media, Ltd. jNBM Rappler, L.P. or

Omidyar NetworkjOmidyar Network Fund, L.L.C. exercised, or have
been permitted to exercise, any ownership or control over RAPPLER
or RHC.

II

RHC AND THE OTHER STOCKHOLDERS OF

RAPPLER DID NOT VIOLATE SECTION 1 OF THE
ANTI-DUMMY ACT.

Through its Order, the Honorable Special Panel directed RAP-

PLER and RHC to show cause why they should not be held liable for
violation of Section 1 of Commonwealth Act No. 108, otherwise
known as the Anti-Dummy Act, which provides, as follows:

"Section 1. Penalty - In all cases in which any constitu-

tional or legal provisions requires Philippine or any other
specific citizenship as a requisite for the exercise or en-
joyment of a right, franchise or privilege, any citizen of the
Philippines or of any other specific country who allows his
name or citizenship to be used for the purpose of evading
such provision, and any alien or foreigner profiting
thereby, shall be punished by imprisonment for not less
than five nor more than fifteen years, and by a fine of not
less than the value of the right franchise or privilege,
which is enjoyed or acquired in violation of the provisions
hereof but in no case less than five thousand pesos.

The fact that the citizen of the Philippines or of any spe-

cific country charged with a violation of this Act had, at
the time of the acquisition of his holdings in the corpora-
tions or associations referred to in section two of this Act,
no real or personal property, credit or other assets the
value of which shall at least be equivalent to said holdings,
shall be evidence of a violation of this Act."

With respect to companies with Philippine equity restrictions,

the presence of all of the following elements will constitute a violation
of this provision:

27
 a. There exists a constitutional or legal provision re-
quiring Philippine citizenship as a requisite for the exercise or
enjoyment of a right, franchise or privilege;

b. The Filipino allows his name or citizenship to be

used for the purpose of evading such provision;

c. The alien profits from enjoying this right, franchise

or privilege; and

d. At the time of the acquisition by the Filipino of his

holding in the corporation that has a foreign equity restriction,
he had no real or personal property, credit or other assets, the
value of which shall at least be equivalent to said holdings.

As will be discussed below, none of these elements exist, and

therefore, RAPPLER and RHC cannot be held liable for violation of
Section 1 of the Anti-Dummy Law.

A. RAPPLER IS NOT ENGAGED IN THE BUSI-

NESS OF MASS MEDIA, AND THEREFORE, IT IS
NOT OBLIGATED TO ENSURE THAT THE OWN-
ERSHIP AND MANAGEMENT OF ITS BUSINESS
IS LIMITED TO CITIZENS OF THE PHILIPPINES,
OR CORPORATIONS OR ASSOCIATIONS
WHOLLY OWNED AND MANAGED BY SUCH
CITIZENS.

Through the Order, the Honorable Special Panel directed RAP-

PLER and RHC to explain why they should not be held liable for vio-
lating Section 11(1) of Article XVI of the Constitution and Section 2 of
Presidential Decree No. 1018, which pertain to the prohibition against
foreigners owning or managing mass media.

The Constitution does not define "mass media". During the de-
liberations of Section 11(1), Article XVI of the Constitution, however,
the Constitutional Commission of 1986 made clear that "mass media"
referred only to Print Media and Broadcast Media, as follows:

"MR. FOX. No, in this provision we would like to di-

vide mass media into print and broadcast.

MR. MONSOD. Only two - print and broadcast?

MR. FOX. Yes, broadcast would include TV and ra-

dio as one form.

28
 xxx

MR. COLAYCO. Thank you, Mr. Presiding Officer.

I would like to address a question to Commissioner Foz
on the second paragraph of Section 11. I understood the
Commissioner said by one form, does, he mean the classi-
fication of the various media? So we classify TV and radio
into one, is that right?

MR. FOZ. Yes, Mr. Presiding Officer.

MR. COLAYCO. Newspapers and, I suppose, maga-

zines into another one.

MR. FOZ. Yes, Mr. Presiding Officer.

xxx

MR. COLAYCO ...

We define that there are only two forms. It is clear

that we cannot own the two forms. In other words, TV and
newspaper. But my question is, if we are going to follow
the words strictly, a person can own more than one of the
same form. "62

Parenthetically, it was clear that Broadcast media referred to

those which required the use of band of frequencies, thus:

"MR. OPLE. In the case of the broadcast media, it is

understood that these are licensed by the Bureau of Tele-
communications but only with respect to the allotment of
bands of frequencies. And this really has nothing to do
with the regulation of contents. But in the case of the
newspapers, may I have the assurance of the committee,
in line with the previous 'questions of Commissioners
Bernas and Aquino that were will be no attempt to compel
newspapers to register for the purpose of doing business,
since in this country right now anybody may publish
without the requirement of registration except for strictly
business purposes, let us say, in the SEC or in the Bureau
of Domestic Trade. Would that be correct, Madam Presi-
dent.

62 Record of the 1996 Constitutional Commission Proceedings and Debates, Volume Five,
pp. 110 to 111.

29
 MR. FOZ. That is correct contemplation."63

That "mass media" is only categorized into Print Media and

Broadcast Media is affirmed by Section 1 of Presidential Decree No.
1018, which defined "mass media", as follows:

"The term 'mass media' refers to the print medium of

communications, which includes all newspapers, periodi-
cals, magazines, journals and publications and all adver-
tising therein, and billboards, neon signs and the like, and
the broadcast medium of communication, which includes
radio and television broadcasting in all their aspects and
all other cinematographic or radio promotions and adver-
tising."

Further, during the 25 September 1986 deliberations on Section

11 of Article XVI of the Constitution, the reason, among others, be-
hind prohibiting foreign ownership of mass media, is that the infor-
mation flows from once source, i.e., the owners of the mass media
companies, to the public, or from top to the bottom, to promote the
acceptance of approved ideas, thus:

"The mass media have such a powerful socializing effect

that they could tell audiences how to think and behave.
They have a tremendous influence in shaping opinions
and attitudes and could lead to cultural alienation and so-
cial uniformity. The growing dependence on advertising
tends to produce a commercial mentality in which con-
sumption becomes an end in itself. Instead of fostering a
culture based on plurality, they often encourage homog-
enization of ideas. They discourage productivity since they
encourage consumerism. Where the flow is from top
to bottom, the media are likely to promote the ac-
ceptance of approved ideas at the expense of in-
dependent thought and critical judgment. We have,
for instance, a position paper from a group of concerned
citizens where they say that pornography could be censor-
ship because they prevent independent thought; they pre-
vent critical thinking and the entry of positive programs
into the existing channels. "64

Gauged by the foregoing definitions and discussion, it is clear

that RAPPLER is not engaged in "mass media". RAPPLER is not en-
gaged in the business of Print Media or Broadcast Media. More im-
portantly, unlike the "mass media" companies envisioned by the

63 Ibid, p. 197.
64 Id., pp. 82 to 83. Emphasis supplied.

30
framers of the Constitution, the information found on the website and
other platforms of RAPPLER does not emanate from one source and
does not promote the acceptance of approved ideas. Rather, RAP-
PLER provides platforms or online venues for everyone, i.e., journal-
ists, government, public at large (people from all over the world) to
share information about various topics. It then elicits feelings,
thoughts and ideas from those who access these platforms through its
Mood Meter and various other forms of crowdsourcing. It is from the
information elicited and shared by the community that ideas are
brought about. Further, the platforms are available and may be ac-
cessed worldwide. The activities of RAPPLER are more akin to the
way Facebook, Twitter, YouTube and blogs operate. Clearly, RAP-
PLER's business is not to influence ideas but to generate information
that would allow people to form their own independent thoughts.
This is what distinguishes RAPPLER from a Philippine "mass media"
company as defined and contemplated by the Constitution and re-
lated laws.

Also, the case of Happler, Inc. v. Andres D. Bautista,65

which was decided by the Supreme Court En Bane, clearly shows that
even the Commission on Elections did not treat RAPPLER in the
same way as companies engaged in print media or Broadcast media
such as ABS-CBN, GMA Network, Inc., TVS Network, Inc., Philippine
Daily Inquirer, Manila Bulletin and the like. In the Memorandum of
Agreement between the Commission on Elections and various media
groups, RAPPLER was lumped together with Google because they
were requesting to provide online streaming of the elections through
their platforms. Further, RAPPLER's right to disseminate informa-
tion about the elections was not based on the law but on the Memo-
randum of Agreement. Clearly, RAPPLER was not treated or consid-
ered, by a government agency, as engaged in the same business as
mass media companies.

As such, the laws reserving the right of ownership and man-

agement in mass media to Filipinos should not be applied to RAP-
PLER.

B. ASSUMING, WITHOUT ADMITTING, THAT

RAPPLER IS ENGAGED IN THE BUSINESS OF
MASS MEDIA, NONE OF ITS STOCKHOLDERS,
IN PARTICULAR RHC, ALLOWED THEIR NAMES
OR CITIZENSHIP TO BE USED FOR THE PUR-
POSE OF EVADING LAWS THAT REQUIRE THE
OWNERSHIP AND MANAGEMENT OF MASS
MEDIA TO BE LIMITED TO FILIPINOS OR COR-

65 G.R. No. 222702,5 April 2016.

31
 PO RATIONS WHOLLY OWNED AND MANAGED
BY FILIPINOS.

The following may be surmised from the 1 August 2017 Show

Cause Order:

a. The Honorable Special Panel believes that there was

an intention on the part of RAPPLER or RHC to conceal the
transactions of RHC with NBM Rappler, L.P. and Omidyar
Network Fund, L.L.C. because RHC filed a notice of exemption
in respect of the registration of the PDRs,66 and that only the
ON PDR was presented during the 28 February 2017 conference
with the Company Registration and Monitoring Department of
this Honorable Commission (the "CRMD");67 and

b. The Honorable Special Panel considers RAPPLER to

be engaged in the business of mass media as understood from
Section 11 (1) of Article XVI of the Constitution in relation to
Presidential Decree No. 1018 68 and assumes there has been a
violation of these provisions because (i) RHC issued PDRs to
NBM Rappler, L.P. and Omidyar Network Fund, L.L.C.,69 (ii)
NBM Rappler, L.P. is "a foreign-registered partnership between
Rappler, Inc. and North Base Media (a foreign media entity)",7o
and (iii) Clause 12.2.2 of the ON PDR is one "wherein the
shareholders [of RAPPLER] are required to seek approval of the
ON PDR Holders on corporate matters"71 •

For these reasons, the Honorable Panel made a preliminary

finding that there was a violation of Section 1 of the Anti-Dummy Act.

A reading of Section 1 of the Anti-Dummy Act shows that the

persons punished by this Act are those who allow their names or citi-
zenship to be used to circumvent the provisions of law requiring Phil-
ippine citizenship as a requisite for the exercise or enjoyment of a
right, franchise or privilege. Applying this to this case, it is clear that
the persons liable, if at all, under this law are the Filipino stockhold-
ers of RAPPLER who allow their names and citizenship to be used to
circumvent such law.

None of the stockholders of RAPPLER, in particular RHC, have

allowed their names or citizenship to be used to circumvent any law.

66 Order, Item 8, p. 3.
67 Ibid, Item 5, p. 2.
68 Id., p. 1.
69 Id., Items 1 and 3, p. 2.
70 Id., Item 2, p. 2.
71 Id., Item 6, p. 2.

32
 First. At the outset, it is important to state that there was
no intention whatsoever by RHC to conceal the transaction with NBM
Rappler, L.P. and Omidyar Network as it timely filed a notice of ex-
emption of registration of these instruments, and in such notice, there
was a disclosure by RHC that it had issued PDRs to these entities. In
fact, in the Order, the Honorable Special Panel acknowledged such
disclosure. 72

The notice of exemption of registration of these instruments

was filed not because RHC intended to conceal these transactions, but
because, Section 10.1 (k) of the Securities Regulation Code states that
"[t]he requirement of registration under Subsection 8.1 shall not ap-
ply to the sale of any security... [where] the sale of securities by an is-
suer to fewer than twenty (20) persons in the Philippines during a
twelve month period". As RHC only issued two (2) PDRs, i.e., the
NBM PDR and ON PDR, and three (3) corresponding PDR certifi-
cates, in 2015, it was not required to register these instruments.73

Significantly, after RHC issued PDRs to NBM Rappler, L.P. and

Omidyar Network Fund, L.L.C., there were articles published in
RAPPLER about the investment for the primary purpose of showing
that such impact investors have vetted and believe in what RAPPLER
is doing and to generate interest in RAPPLER.

Further, Item 7 of the Order states that the NBM PDR was pro-
duced during that conference, which supposedly was not provided to
the CRMD. This shows that there was no intention whatsoever to
conceal the PDRs.

There was, therefore, no intention whatsoever to conceal these

investments from anyone.

Second. As mentioned above other companies, including

listed companies such as Globe, ABS-CBN and GMA7, have long since
secured funding from their holding parent companies, which raised
funds by issuing PDRs to foreigners. The PDRs issued to the holding
parent companies of listed companies were approved by the PSE and
this Honorable Commission.

Since such investments have been in existence and allowed by

both the PSE and this Honorable Commission, there is no reason for
this Honorable Special Panel to rule that by availing of such similar
investments through the issuance of PDRs to NBM Rappler, L.P. and
Omidyar Network, RHC had allowed its name and citizenship to be
used to circumvent Section 1 (1) of Article XVI of the Constitution,
72 Id., Item 8, p. 3.
73 Copies of the ON PDR and PRD Certificate Nos. 1 to 3 are attached hereto as Annexes "B"
to "E".

33
Section 2 of Presidential Decree No. 1018 and Section 7 in relation to
Section 14 of Republic Act No. 7042, assuming, without admitting,
RAPPLER is covered by these laws.

Also, to the extent applicable, RHC patterned the terms of its

PDRs with the PDRs issued by the holding companies of listed com-
panies which PDRs have undergone review and approval by this
Honorable Commission. RHC also patterned the terms of its PDRs
with the PDRs specific to ABS-CBN and GMA 7, both of which have
comparable business operations to RAPPLER.

A review of the terms of the ABS-CBN and GMA. PDRs vis-a.-vis

the NBM PDR and ON PDR shows that they are similar in almost all
respects. Moreover, the NBM PDR and ON PDR contains all provi-
sions also found in the ABS-CBN and GMA Network, Inc. PDRs which
are applicable to the former. The only provisions in the ABS-CBN and
GMA Network, Inc. which are not found in the NBM PDR and ON
PDR are the provisions that are specific to listed PDRs. By way of ex-
ample, both the NBM and ON PDRs provide that the shares underly-
ing the RHC PDRs shall be put in escrow while in the ABS-CBN and
GMA 7 PDRs the underlying shares are pledged. This is because listed
shares are scriptless and are lodged and deposited with the Philippine
Depository and Trust Corporation whereas the shares underlying the
NBM and ON PDRs are certificated and not required to be deposited
with any facility. Thus, an escrow with an escrow agent becomes more
appropriate than a pledge.

Third. As previously explained, NBM Rappler, L.P. is not a for-

eign registered partnership between RAPPLER and North Base Me-
dia, Ltd.

The fact that the word "Partnership" was used to describe the
relationship between RAPPLER and North Base Media, Ltd. in the 31
May 2015 article of Natashya Gutierrez entitled Top Journalists'
Investment Fund Invests in Happier does not give rise to the
conclusion that these parties have created a juridical entity or that
they did so to circumvent the law. This is because

"[o]ne who alleges a partnership cannot prove it merely

by evidence of an agreement wherein the parties call
themselves partners, since use of the term 'partner' in
popular sense, or as a matter of business convenience, will
not necessarily import an intention that a legal partner-
ship should result."74

74 De Leon, COMMENTS AND CASES ON PARTNERSHIP, AGENCY, AND TRUST, pp. 46-47 (2005).

34
 The partnership between RAPPLER and North Base Media, Ltd.
is simply one that allows these parties and other Partners of North
Base Media, Ltd., i.e., other companies it has invested in, to share
best practices and knowledge, with no strings attached, for the pur-
pose of enhancing their individual businesses. To be clear, such part-
nership was not intended to enable North Base Media, Ltd. to exer-
cise any form of ownership or control over RAPPLER.

Fourth. As explained above, Clause 12.2.2 of the ON PDR

does not, and was never intended, to enable Omidyar Network Fund,
L.L.C. to exercise any form of ownership or control over RAPPLER.

Consequently, RHC and the stockholders of RAPPLER cannot

be accused of allowing their names and citizenship to be used by any-
one to circumvent any law.

C. THE ANTI-DUMMY ACT DOES NOT PRE-

CLUDE NBM RAPPLER, L.P. AND OMIDYAR
NETWORK FUND, L.L.C. FROM PROFITING
FROM THEIR INVESTMENT IN RHC. THIS IS
BECAUSE THEIR PROFITS ARE NOT DERIVED
FROM THEIR OWNING EQUITY IN, OR HAVING
CONTROL OVER, RAPPLER.

The Anti-Dummy Law does not preclude a foreigner from in-

vesting and profiting from the investment, provided that, by such in-
vestment the foreigner is not made to exercise or enjoy a right, fran-
chise or privilege reserved for Filipinos.

In several cases, the Supreme Court stated that the fact that
funds used to purchase shares of stock in a corporation came from a
foreigner will not give rise to a violation of the laws prohibiting or re-
stricting foreign ownership.

In the case of Chan Sui Bi v. Court ofAppeals,75 the com-

mon-law Filipina wife and children of a Chinese national were ac-
cused of circumventing Republic Act No. 1180, otherwise known as
the Retail Trade Law, and the Anti-Dummy Law, which prohibited
the foreigners from engaging in retail trade and from owning land. It
was alleged that the Filipina and her children acquired the money for
their business and to buy land from the Chinese national. In ruling
that the Filipina and her children were not guilty of violating the
Anti-Dummy Law, the Supreme Court, ruled as follows:

"But even if Ong Chuan gave Sofia money, we agree with

the Court of Appeals when it cited People vs. Aurelia

75 G.R. No. 129507, 29 September 2000.

35
 Altea et. al., that if an alien gave or donated his money to
a citizen of the Philippines so that the latter could invest it
in the purchase of private agricultural lands, or purchased
private agricultural lands for a citizen of the Philippines,
such acts, provided they are done in good faith, do not
violate our laws. What was prohibited by the anti-dummy
law and the retail trade law then prevailing were the ac-
quisition by an alien for himself of private lands in the
Philippines, and the conduct of retail trade by the alien,
respectively. "

In the case of People of the Philippines v. William H.

Quasha,76 Quasha was accused of Falsification because, when he
prepared and effected the registration of Pacific Airways Corpora-
tion, a public utility, he failed to disclose that the only Filipino who
subscribed to shares of stock in that company was only holding these
shares in trust for an American who provided the capital to purchase
these shares. In deciding to acquit Quasha, the Supreme Court
ruled, as follows:

"If the Constitution does not prohibit the

mere formation of a public utility corporation
with alien capital, then how can the accused be charged
with having wrongfully intended to circumvent that fun-
damentallaw by not revealing in the articles of incorpora-
tion that Baylon was a mere trustee of his American co-
incorporator and that for that reason the subscribed capi-
tal stock of the corporation was wholly American? For the
mere formation of the corporation such revelation was not
essential, and the Corporation Law does not require it.
Defendant was, therefore under no obligation to make it.
In the absence of such obligation of the alleged wrongful
intent, defendant cannot be legally convicted of the crime
with which he is charged.

xxx

...A corporation formed with capital that is en-

tirely alien may subsequently change the nation-
ality of its capital through transfer of shares to
Filipino citizens."77

Further, several laws have been passed allowing foreigners to

profit from land, which they are prohibited from owning.

76 G.R. No. L-6055, 12 June 1953.

77 Emphasis and underscoring supplied.
 Section 1 of Republic Act No. 133, as amended by Republic Act
No. 4882, provides, as follows:

"SEC. 1. Any provision of law to the contrary notwith-

standing, private real property may be mortgaged in favor
of any individual, corporation, or association, but the
mortgagee or his successor-in- interest, if disqualified to
acquire or hold lands of the public domain in the Philip-
pines, shall not take possession of the mortgaged property
during the existence of the mortgage and shall not take
possession of mortgaged property except after default and
for the sole purpose of foreclosure, receivership, enforce-
ment or other proceedings and in no case for a period of
more than five years from actual possession and shall not
bid or take part in any sale of such real property in case of
foreclosure: Provided, That said mortgagee or successor-
in-interest may take possession of said property after de-
fault in accordance with the prescribed judicial proce-
dures for foreclosure and receivership and in no case ex-
ceeding five years from actual possession."

Further, Section 9 of Republic Act No. 10641, otherwise known

as An Act Allowing the Full entry of Foreign Banks in the Philippines,
amending for the purpose Republic Act No. 7721, provides, as follows:

"Section 9. Participation in Foreclosure Proceedings.

Foreign banks which are authorized to do banking busi-
ness in the Philippines through any of the modes of entry
under Section 2 hereof shall be allowed to bid and take
part in foreclosure sales of real property mortgaged to
them, as well as to avail of enforcement and other pro-
ceedings, and accordingly take possession of the mort-
gaged property, for a period not exceeding five (5) years
from actual possession: Provided, That in no event shall
title to the property be transferred to such foreign bank.
In case said bank is the winning bidder, it shall, during
the said five (s)-year period, transfer its rights to a quali-
fied Philippine national, without prejudice to a borrower's
rights under applicable laws. Should the bank fail to
transfer such property within the five (s)-year period, it
shall be penalized one half (1/2) of one percent (1%) per
annum of the price at which the property was foreclosed
until it is able to transfer the property to a qualified Phil-
ippine national."

37
 That the Constitution does not preclude a foreigner from invest-
ing, and profiting from its investment, in a corporation with national-
ity restriction, is confirmed in the case of Roy v. Herbosa, et al. 78

By way of background, that case arose from the issue surround-

ing the capital structure of the Philippine Long Distance Telephone
Company ("PLDT"). As a public utility, PLDT is mandated by the
Constitution to maintain a 60:40 equity ratio between Filipinos and
foreigners such that foreigners cannot own more than forty percent
(40%) of the capital. On account of several changes in ownership,

"... data culled from the official website of the New York
Stock Exchange showed that those foreign entities, which
own at least vie percent of common equity, will collec-
tivelyown 81.47 percent ofPLDT's common equity."79

Under the circumstances, a shareholder of PLDT wanted to

know whether there was a violation by PLDT of the foreign equity re-
striction.

In the earlier case of Gamboa v. Teves,80 the Supreme Court

ruled that "the term 'capital' in Section 11, Article XII of the 1987
Constitution refers only to shares of stock entitled to vote in the elec-
tion of directors."

Taking off from this ruling, the Supreme Court, in the case of
Roy v. Herbosa, et al.,8! explained that such a ruling was made

"in furtherance of 'the intent and letter of the Constitution

that the 'State shall develop a self-reliant and independent
national economy effectively controlled by Filipinos [be-
cause a] broad definition unjustifiably disregards who
own the all-important voting stock, which necessarily
equates to control of the public utility...

xxx

In this regard, it would be apropos to state that since Fili-

pinos own at least 60% of the outstanding shares of stock
entitle to vote directors, which is what the Constitution
precisely requires, then the Filipino stockholders control
the corporation, i.e., they dictate the corporate actions
and decisions, and they have all the rights of owner-
ship, including but not limited to, offering certain
78 G.R. No. 207246, 22 November 2016.
79 Gamboa v. Teves, G.R. No. 176579,28 June 2011.
80 Ibid.
81 G.R. No. 207246, 22 November 2016.
 preferred shares that may have greater economic
interest to foreign investors = as the need for
capital for corporate pursuits (such as expan-
sion), may be good for the corporation that they
own... "82

In this instant, the preferred shares that did not grant the right
to elect a Director to the Board, were not taken into account in deter-
mining the 60:40 ratio. However, these preferred shares, which the
foreigners could subscribe to, were offered greater economic benefit
than the common shares that were entitled to elect Directors to the
Board. Effectively, therefore, the Supreme Court affirmed that a for-
eigner investor may validly profit from a corporation with a foreign
equity restriction.

In the case of NBM Rappler, L.P. and Omidyar Network Fund,

L.L.C., they did not acquire ownership or control over RAPPLER, and
even RHC, by purchasing the PDRs. To reiterate, NBM Rappler, L.P.
and Omidyar Network Fund, L.L.C. did not become stockholders of
RAPPLER or RHC. They were not given any power to vote the shares
of RHC in RAPPLER and they were not given the right to receive
dividends from either RAPPLER or RHC. They profit from cash dis-
tributions, if any, that RHC would give them.

Pursuant to the afore-mentioned laws and cases, the investment

and any corresponding profit NBM Rappler, L.P. and Omidyar Net-
work Fund, L.L.C. would receive from RHC does not amount to a vio-
lation of the Anti-Dummy Law.

D. AT THE TIME THEY ACQUIRED THEIR

SHARES OF STOCK IN RAPPLER AND RHC, THE
STOCKHOLDERS OF THESE COMPANIES HAD
REAL AND PERSONAL PROPERTY, CREDIT OR
OTHER ASSETS THE VALUE OF WHICH IS
EQUIVALENT TO THEIR HOLDINGS. IN FACT,
IN THE YEARS 2012, 2013 AND 2014, SOME OF
THE STOCKHOLDERS OF RAPPLER, WHICH
ARE ALSO STOCKHOLDERS OF RHC, MADE DE-
POSITS FOR FUTURE SUBSCRIPTIONS TO
RAISE CAPITAL FOR OPERATING EXPENSES.
ONE OR SOME OF THESE STOCKHOLDERS ARE
ALSO ABLE TO MATCH THE PURCHASE PRICE
PAID BY NBM RAPPLER, L.P. AND OMIDYAR
NETWORK FUND, L.L.C. FOR THE RHC PDRs.

82 Emphasis and underscoring supplied.

39
 All of the stockholders of RAPPLER and RHC paid for their eq-
uity in these companies and had real and personal properties, credit
or other assets, the value of which is equivalent to their holdings. The
individual stockholders were, prior to setting up RAPPLER, known
news executives who worked for a broadcast company and successful
entrepreneurs who had the capacity to acquire equity in RAPPLER
andRHC.

In the years 2012 to 2014 (even prior to the purchase by NBM

Rappler, L.P. and Omidyar Network Fund, L.L.C. of RHC PDRs in
2015), capital calls were made and some of the stockholders of RAP-
PLER paid advances on their subscription in the millions of pesos to
raise additional capital that was used in the operations of RAPPLER.

Also, one or some of the stockholders of RAPPLER and RHC are

very well able to match the amounts invested by NBM Rappler, L.P.
and Omidyar Network Fund, L.L.C. for the RHC PDRs.

As the stockholders of RAPPLER and RHC could well afford to

put up and raise capital, there is no reason to believe that NBM Rap-
pIer, L.P. or Omidyar Network had used them to circumvent the law.

In sum, the elements that would constitute a violation of any of

the laws cited by the Honorable Special Panel in the Order are not
present in this case. Thus, RAPPLER, RHC and/or their stockhold-
ers, directors and officers should not in any way be penalized or held
accountable for violating such laws.

PRAYER

WHEREFORE, RAPPLER and RHC respectfully pray that this

Honorable Special Panel ACCEPT this Verified Explanation as com-
pliance with the 1 August 2017 Show Cause Order, ISSUE an Order
which finds that RAPPLER and RHC did not violate any laws, includ-
ing those stated in the 1 August 2017 Show Cause Order, and TER-
MINATE and CLOSE this investigation.

Rappler, Inc. and Rappler Holdings Corporation likewise pray

for such further or other reliefs as may be deemed just or equitable
under the premises.

Muntinlupa City for Pasay City, 26 August 2017.

40
 BODEGON ESTORNINOS
GUERZON & GOZOS LAW OFFICES
Counsel for RAPPLER, INC. and
RAPPLER HOLDING, CORPORATION
5th Floor Park Trade Centre, 1716 Investment Drive
Madrigal Business Park, Alabang 1780
Muntinlupa City
Telephone No. 772-5289

By:

ADO ON
PTR No. 2439192, 13 ITan. 2017, Muntinlupa City
IBP (Lifetime) LRN4755, 19 Mar. 2001
Roll of Attorneys No. 25611
MCLE Compliance No. V-02012259, 25.11.15
adolpho.guerzon@yahoo.com

Verifications follow ...

41
'\

VERIFICATION

I, MARIA A. RESSA, Filipino, of legal age, with office address

at Level 3, North Wing, Estancia Offices, Capitol Commons, Pasig
City, Metro Manila, Philippines, after having been duly sworn,
depose and state:

1. I am the President of Rappler, Inc. ("RAPPLER"), a

corporation duly organized and existing under Philippine laws with
office address at Level 3, North Wing, Estancia Offices, Capitol
Commons, Pasig City.

2. As shown by the Secretary's Certificate attached hereto as

Annexes A", I have been duly authorized by RAPPLER to execute
II

this verification.

3. I caused the preparation of the foregoing Verified

Explanation.

4. I have read the Verified Explanation and all the allegations

therein are true and correct based on my personal knowledge and/ or
authentic records.

MARIA A. RESSA

SUBSCRIBED AND SWORN to before me this AUG 2 6 200'ay of

__ ~1 at Pasig City, Philippines, affiant who is personally known
to me, exhibiting to me her Voter's ID No. 7687-1212D-J0263MAR-
20000 issued at Taguig City and Passport No. EC0529292 valid until
10 March 2019 issued at Pasay City, Philippines.

Doc. No. 17~ :

Page No. ~: .LAGMAN
Public asig City
Book No. ~: Appal t No. 126 ntiI December 31,2018
Series of 2017. Roll No: 65993,IBP No. 1056284, Quezon CHy,04 Jan 2017
PTR No. 2362210, Pasig CHy, 04 Jan 2017
Unit 3104 Ante! Global Corporate Center.
Dona !Jlia vargas Ave•• Ortigas Center, Pasig CHy
Admitted to fie Bar 2016
 SECRETARY'S CERTIFICATE
~NNEX"A" I
1, JOSE MARIA G. HOFILEN°A, a Filipino citizen, married, of legal age, and
with principal office address at 105 Paseo de Roxas, Makati City, l\1etro Manila,
Philippines, being the duly elected and incumbent Corporate Secretary of
RAPPLER., INC. (hereafter, the "Corporation"), a corporation duly organized and
existing under and by virtue of the laws of the Philippines hereby certify that at a
Special Meeting of the Board of Directors of the Corporation held on August 14,
2017, during which a quorum 'Nas present and acting throughout, the following
resolutions were duly made and approved:

"RESOLVED, AS IT IS HEREBY RESOLVED, that MARIA

ANGELITA RESSA, acting through herself or her duly authorized
representative/ s, are hereby authorized to institute proceedings
and represent the Corporation in any and all proceedings pending
or to be initiated against RAPPLER, INC. and the members of its
Board of Directors before any court, tribunal, agency or office,
including arbitral tribunals or mediation centers, with full and
special power and authority to do and perform on behalf of the
Corporation whatever act they may deem necessary including, but
not limited to:

1. Cause the preparation and filing of all petitions, complaints,

pleadings, motions, appeals and other papers, verifying the
allegations therein, executing affidavits or sworn statements,
giving testimonies, and making certifications against forum
shopping with full power and authority to do and perform
all and every act and thing whatsoever requisite and
necessary to be done in and about the premises;

2. Execute, sign, subscribe, and/ or swear to, any pleading,

motion, verification, certification against forum shopping,
affidavit, and such other document or statement as may be
necessary or appropriate and take all steps as may be
required under the prelnises;

3.
!
To withdraw or dismiss the cases instituted by the
Corporation;

4. To appear, personally or through counsel, act for, otherwise

represent the Corporation, in any judicial, quasi-judicial or
administrative or arbitration hearing, preliluinary
investigation, oral arguments, other alternative dispute
resolution proceeding or, in particular, the pre-trial
conference, judicial dispute resolution or mediation
conference and, in connection therewith, to do any and all of
the following acts and deeds:
 a. to negotiate, conclude, enter into and execute a
compromise or amicable settlement of the case, under
such terms and conditions as they may deem just and
reasonable;
j

b. to submit the case to alternative lTIodes of dispute

resolution and undergo alternative dispute resolution;

c.
!
to agree on the simplification of the issues;

d. to amend the pleadings;

e. to obtain stipulations or admissions of facts and of

documents to avoid unnecessary proof;

f. to limit the number of witnesses;

g. to undertake a preliminary reference of the issues to a

cornmissioner;

h. to do and agree on such other matters as may aid in

the prompt disposition of the action; and

5. To 40 and perform any and all other acts and things

necessary and proper to be done in and about the prentises.

HEREBY GIVING AND GRANTING unto said attorney-

in-fact the authority and power to perform every act and thing
whatsoever requisite and necessary to be done in the above
premises, and hereby ratifying and confirming that the said
attorney-in-fact shall lawfully do or cause to be done by virtue of
these presents and, for this purpose, the said attorney-in--fact is
hereby authorized to execute the appropriate Special P01Ner of
Attorney in favor of her appointed agent and/ or counsel, word the
same in such lTIam1er as to give full force and effect to this resolution
and under such terms and conditions as he may be deelTI beneficial
for the Corporation."

The foregoing Resolutions are valid, existing, in full force and effect, and
have neither been amended nor revoked.

IN WITNESS WHEREOF, I have hereunto affixed my signature this 16 th

day of August 2017.

cr·~-·
JOSE MAR~~~ ~OFILENA
Corporate Secretary
Rappler, Inc.

2
 SUBSCRIBED AND SWORN to before me this 16 th day of August 2017,
at Pasig City, Philippines, affiant who is personally known to me, exhibiting to
Ine his Driver's License No. N07-79-021259 issued on September 2015 (expiring
September 27, 2018) at Quezon City, Philippines.

Doc. No. l:L:

Page No. ~:
BookN·o. ~ AT . A .NE. Q. aONAiJENTE
Series of 2017. ry blic for Pasig City
Appointment No. 121 Untlt December ~1, ~! 201.
Roll No: 66027, IBP No. 1056285, ~04 :2017
PTR No. 2362211, Pasig City,
Unit 3104 Antal Global Corp«ate ~,
Dof\a Jolla vargas Ave., Qftigas Genter, pastg City
Admitted to the Bar 2016

3
-"

VERIFICATION

I, MARIA A. RESSA, Filipino, of legal age, with office address

at Level 3, North Wing, Estancia Offices, Capitol Commons, Pasig
City, after having been duly sworn, depose and state:

1. I am the President of Rappler Holdings Corporation

("RHC"), a corporation duly organized and existing under Philippine
laws with office address at Level 3, North Wing, Estancia Offices,
Capitol Commons, Pasig City.

2. As shown by the Secretary's Certificate attached hereto as

Annexes A", I have been duly authorized by RHC to execute this
1/

verification.

3. I caused the preparation of the foregoing Verified

Explanation.

4. I have read the Verified Explanation and all the allegations

therein are true and correct based on my personal knowledge and/ or
authentic records.

U-iL MARIA A. RESSA

SUBSCRIBED AND SWORN to before me this AUG 2 6 20Hay of

August 2017 at Pasig City, Philippines, affiant who is personally
known to me, exhibiting to me her Voter's ID No. 7687-1212D-
J0263MAR-20000 issued at Taguig City and Passport No. EC0529292
valid until 10 March 2019 issued at Pasay City, Philippines.

Doc. No. 1/(, :

Page No. -W-: .LAGMAN
Book No. ~. Pu Pasig City
Appointment No.1 Until December 31,2018
Series of 2017 Roll No: 65993, IBP No. 1056284, Quezon City, 04 Jaft 2011
PTR No. 2362210, Pasig City, 04 Jan 2017
Unit 3104 Ante! Global Corporate Center,
Dona Julia Vargas Ave., ortigas Center, Pasig City
Admitted to the Bar 2016
 ~NEX "A" I
SECRETARY'S CERTIFICATE

I, JOSE MARIA G. HOFILENA, a Filipino citizen, rnarried of legal age, and

with principal office address at 105 Paseo de Roxas, Makati City, Ivt:etro Manila,
Philippines, being the duly elected and inculnbent Corporate Secretary of
RAPPLER HOLDINGS CORPORATION (hereafter, the "'Corporation"), a
corporation duly organized and existing under and by virtue of the laws of t1;1e
Philippines hereby certify that at a Special Meeting of the Board of Directors of
the Corporation held on August 14, 2017, during which a quorum was present
and acting throughout, the following resolutions were duly made and approved:

"RESOLVED, AS IT IS HEREBY RESOLVED, that MARIA

ANGELITA RESSA, acting through herself or her duly authorized
representative/ s, are hereby authorized to institute proceedings
and represent the Corporation in any and all proceedings pending
or to be initiated against RAPPLER HOLDINGS CORPORA.TION
and the melnbers of its Board of Directors before any court,
tribunal, agency or office, including arbitral tribunals or rnediation
centers, with full and special power and authority to do and perform
on behalf of the Corporation whatever act they may deem necessary
including, but not limited to:

1. Cause the preparation and filing of all petitions, complaints,

pleadings, motions, appeals and other papers, verifying the
allegations therein, executiniaffidavits or sworn statements,
giving testin1.onies, and making certifications against forum
shopping with full power and authority to do and perform
all and every act and thing whatsoever requisite and
necessary to be done in and. about the premises;

2. Execute, sign, subscribe, and/ or swear to, any pleading,

motion, verification, certification against forum shopping,
affidavit, and such other document or statement as rnay be
necessary or appropriate and take all steps as nlay be
required under the premises;

3. To withdraw or dismiss the cases instituted by the

Corporation;

4. To appear, personally or through counsel, act for, otherwise

represent the Corporation, in any judicial, quasi-judicial or
adlninistrative or arbitration hearing, preliminary
investigation, oral arguments, other alternative dispute
resolution proceeding or, in particular, the pre-trial
conference, judicial dispute resolution or mediation
conference and, in connection therewith, to do any and all of
the following acts and deeds:
 I

a. to negotiate, conclude, enter into and execute a

compromise or amicable settlement of the case, under
such terms and conditions as they may deem just and
reasonable;

b. to submit the case to alternative modes of dispute

resolution and undergo alternative dispute resolution;

c. to agree on the simplification of the issues;

d. to amend the pleadings;

e. to obtain stipulations or admissions of facts and of

documents to avoid unnecessary proof;

f. to limit the number of witnesses;

g. to undertake a preliminary reference of the issues to a

commissioner;

h. to do and agree on such other matters as may aid in

the prompt disposition of the action; and

5. To do and perform any and all other acts and things

necessary and proper to be done in and about the prernises.

HEREBY GIVING AND GRANTING unto said attorney-

in-fact the authority and power to perform every act and thing
whatsoever requisite and necessary to be done in the above
premises, and hereby ratifying and confirming that the said
attorney-in-fact shall lawfully do or cause to be done by virtue of
these presents and, for this purpose, the said attorney-in-fact is
hereby authorized to execute the appropriate Special Power of
Attorney in favor of her appointed agent and/ or counsel, word the
saIne in such ll'lanner as to give full force and effect to this resolution
and under such terms and conditions as he may be deem beneficial
for the Corporation."

The foregoing Resolutions are valid, existing, in full force and effect, and
have neither been amended nor revoked.

IN WITNESS WHEREC,F, I have hereunto affixed my signature this 16th

day of August 2017.

J~~~NA Corporate Secretary

Rappler Holdings Corporation

2
·
,

SUBSCRIBED AND S\VORN to before me this 16th day of August 2017,

at Pasig City, Philippines, affiant who is personally known to me, exhibiting to
lue his Driver's License No. N07-79-021259 issued on September 2015 (expiring
September 27, 2018) at Quezon City, Philippines.

Doc. No. 113:

Page No. :24 : fl'U'\ll\l1nE Q. BONAVENTE
BookNo.~: Pu ic for Pasig City
Series of 2017. Appointment No.1 UntIl December 31,2018
Roll No: 66027, IBP No. 1056285, Quezon City, 04 Jan 201.
PTR No. 2382211, Pasig City, 04 Jan 2017
Un~3104Ante1 GIobaJ Corporate c,enlter,
Dot\a Julia vargas Ave., Ortigas Center, Pasig City
Admitted to the Bar 2016

3
'1.-'1

[ ANNEX "A" I

/
I

PlIIIJIJ1 P1NE ))EP()S11'ARY REC_EIP'f INSI'RlJMENl'

(Relating to up to 264,601..lhilippine Deposilm-y Receipts
issued by Rappler Holdings Corp6ration granlillg the right to the Delivery
of Existing Shares in Rappler, Inc.)

RAPPLER HOLDINGS COIlP()RATION

Issuer

- favor of -

{IOLDERS OF TIlE PHILIPPINE DEPOSlTAR'lllECEIPTS

/
 This PHILIPPINE DEPOSITARY RECEIPT INSTRUMENT (the "lnstt'umcnC) is
executed this 29th day of May, 2015 by RAPI'LER HOLDINGS CORPORATlON (the "Issuer"), a
cOI]Joralion duly organized and existing under and by virtlle of the laws of the Republic: of the
Philippine.!>, witil principal office at Unit 2501 Antel Global Corporate Center, Julia Vargas
A venue, Ortigns Center, Pasig City 1605, in favor of the holders for the time bc:ing (til,;
'-Boldus") of the Philippine Deposilary Receipts (the "PJDJRs") to be issued by the RIle.

\VITNESI That

WHEREAS:

(J\) The Iswer is, and shall become, upon npproval by the Philippine Securities and Exchange
Commission (the "SEC") of the increase in authorized capital stock of RappIer Inc, (tbe
"Company") the regislered and beneficial owner of certain shares of the Company ',.vitb a
par value ofl-l 1.00 per share.

(13) nBC has autborized, subject to the satisfaction of certain conditions, the issuaJlce anJ
sale. of up to 12,028,718 PDRs~on[errjng rights upon the Holders thereoC exercisable ill
whole or in part at any time: (i) to the delivery of existing com1110Il shares in the
Company now or as lllay hereafter be owned by the Issuer and in respect of which the
PDRs will be issued, at the PDR Subscription Plice of Ill11 ,474,554.1 0 or lhe PDR
Subscription Price as adjusted under (he tenns and conditions of this lnstmment; (ii) to
fldditional PDRs or adjustments to the tenns of the PDRs. upon the occun-ence of ci'lpital
events in respect of stock dividends and other stock distributions, rights isslIes, capital
reorganizations, offers aIld analogous events relating (0 the Underlying Shares (subject to
the payment of applicable taxes and operating expenses by the Holder); and (iii) cash
distributions (less applicable taxes and operating expenses) upon the declaration of cash
dividends or similar distributions on the Underlying Shares.

(C) RHC has agreed to execute this Instrument ill favor of the Holders ill order to plOvide flJr,
and to protect, their rights and interests_

NOW THEREFORE, RHC hereby agrees as follows:

1. Definitions.

In this Instrument, the words and expressions set out below shall have the t()llowing
meanings:

"Auditor" means Reyes Tacandong & Co" or such other reputable independent exlcma!
auditing finn appointed by the Issuer;

"IHR" means the Philippine Bureau of Internal Revenue;

"Bushwss Day" means a day upon which the banks in Metro .Manila, Philippines are not
required to close;

"Company" means Rappler, Inc,; /

/
"ColldHions" means the terms and conditions contained in this Instrument as the same
may frol11 time to time be modified in accordance with the provisions set out herein, and
"ColldiHon" J efers to the relative numbered paragraphs of this Instrument;
 2

"Deposit" means the amount equal to PDR Subscription Plice ullocable to the
Underlying Shares (as hereinafter defined), subject to such adjustments as provided
herein, received by the Issuer upon the issue of the PDRs;

"Escrow Agel)t" means the escrow agent to be appointed by the Issuer and the Ht)lder
with whom the stock certificates representing the Shares will be 11\11 in escrow.

"Exet'cise Notice" means written instructions by a lIolder as to its exercise of PD\Zs in

1he fOfm printed 011 the back of each POR certificate or in the fonn from time to time
available from the Issuer, a copy of which is attached herewith as AnJlex "A";
i
"Exenise Period" means the period dyi"ing v.,'hidllhe }lolder is the registered holder of
the PDRs under tbe PDR Registry Book and during which tbe Holder may exercise the
PDR Exercise Right;

"Exercise Price" means the sum of the (a) PDR Subscription Price allocable 10 the
Underlying Shares; and (b) the applicable taxes due on the transfer of lhe PDR when the
Holder exercises its PDR Exercise Right. Applic.able taxes shall include any and all
transfer and documentary stamp taxes due on Lhe transfer of the Underlying Shan.:s being
transferred from RHC to the Holder to be computed based on the adjusted book value or
such Underlying Shares as may be calculated under Revenue Regulations No. 6-2013 as
the same may be amended from time to time and such other applicable issuances of the
Philippine BUTeau of Internal Revenue ("BIR") in force 81 the time of the exercise by the
Holder of its PDR Exercise Right less the Subscription Pr·ice allocable to said Underlying
Shares, subject to adjustment as descIibed in Condition 10.6; and (c) a reasonable fee for
the processing and securing of the electronic certificates uuthorizing registration in
respect of lhe transfer of the Underlying Shares and for securing the necessary apprai.saJ
report required by the BIR;

"HoJder" means, in relation to any PDR, the person or persons who is or are for the time
being registered in the PDR Registry Book as owning the PORs;

"Instrument" means this Philippine Depositary Receipt Instrument, and any amendment
or supplement hereto (as from to time to time modified in accordance with the provisions
hereof);

"l'DR Certificate" means the certificate issued in respect of the PDRs which may, from
time to time, be modified in accordance with the provisions of this Instrument aud which
is attached herewith us Annex «B";

"PDR Exercise Right" means the right of a Holder \0 the delivery of the Shares
exercisable in the manner provide-d under Condition 6;

U;'PDR Option Price" means the tolal plice of r 10,000.00 representing the: consideration
for the grant of the rights under all of the PDRs;

"PDR SUbscription Price" means the Philippine Peso equivalent of the foreign currency
amollnt that the Holder paid for the PDR using the exchange rIlte actually applied by the
bank to'which such foreign currency amount was remitted to convert all or a pOltion of
such foreign cuneney amount illto Philippine Pesos less bank charges imposed by said
bank; ./

"!'OR Rcgistr·y Book" means the register of Holders required to be maintailled by the
Issuer;

"Peso or po" means the Philippine Peso, the legal tender of the Republic of the
Philippines;
 "Philippine Person" means any person who is a ciHzen of the Pbilippines or a
corporation, paJ1nership or association who is qualified under Philippine law to hold
shares in the COlllpallY;

"Shares" means coml11on shares of par value t~ 1.00 each of the capitaJ stock of the
Company or shares of any class or classes resulting from any subdivision, consolidation
or re-dassification of such Shares, which as among theillseives have no preference in
respect of dividends; and

"Shareholder" Illeans, ill relation to any ~are,

the person or persons who is or are Io,r
the lime being registered in the stock and transfer books of the Company or is or are
beneficially the owner of such Share.

"Underlying Shares" means common share of par value 10) 1.00 each of the capital stock
of the Company which are covered by the PDn.. Exercise Rights or shares of any class or
classes resulting from any subdivision, consolidation or re·-c1assification of such common
shares, which as among themselves have no preference in respect of dividends.

2. Form, Title, Tnmsfer and Certificates

2.1 The PDRs shall be issued in certificated tOrJIL Each Holder shall, subject to the
payment of the appropriate fees and expen~,es, be entitled Lo the issuance of a
PDR Certificate which shall state the number of PDRs it represents and tenn.s and
cOIlditions of the PDRs. Each PDR Celiificate will have an identifying Humber
which will be recorded all the relevant PDR Certificate and ill the PDR Registry
Book.

2.2 Each person who is for the time being shown in the PDR Registry Book as
ownillg a particular number of PDRs, shall be treat.ed by the Issuer as the Holder
of such number of PDRs. No person claiming beneficial i,ntelest in the PDlb,
unless such interest is recorded in the PORs Registry 13oo~, shall be entitled to
any rights granted under the PDRs.

2.3 If a POR Certificate is defaced, wom out, lost, stolen or destroyed, it may be
replaced on such terms (if any) as to eviclenc,:; and indemnity and payment of the
expenses incurred by the Issue. in investigatiJlg sucb evidence, and upon payment
by the Holder of such fee as may be reasonably required alld in the case of
defacement or \vearing out, 5uITender of the old PDR CCl1ificnte. Replacement of
lost, stolen or destroyed PDR Certificates mw;l comply with (he procedure set out
in Section 63 of Batas Pambansa Big. 68, otherv... ise known as the Co[voralioll
Code of the Philippines.

2.4 Unless othenvise agreed by the Issuer and the PDR IIolder in writing, the PDRs
shall be transferable only with the prior written consent of the Issuer (which
consent shall not be unreasonably withheld) and by completing the endorsement
at tile back of the POR Certificate, surrendering the same to the Issuer, alld
submitting to the Issuer a copy of deed of sale,. assignment or transfer in respect of
the PDRs subject of the transfer. For this purpose, the Issuer shall maintain a
PDR RegisllY Book which shall contain a record of all transfers of the PDRs.
Unless recorded in the PDR Registry Book, any transfer of certified PORs shall
JlO! be binding on the Issuer. Transferors of lh~~ PDRs shall pay nil applicable
taxes, including documentary sta1Jlp taxes, capital gains tuxes and other transkr
taxes clue Oll the transfer of thePDRs, and shall present proof of such payment
(including, but not iill1iled to, an electronic certificate authorizing registration) to
the Issuer before such transfer may be recorded in the PDR Registry Book.
 2.5 The Issuer, the Holders and all persons claiming under the PDRs, shall comply
with the terms of the PORs and the Conditions in nil respects, and the PDRs shall
be held subject to such provisions and the Conditions which shall be binding on
(he Issuer, the Holders, nnd all persons claiming through or under the PDlts.

2.6 The Issuer shall, upon exercise of all or any of (he PDR Exercise Right during (he:
Exercise Period, convey to the exercising Holder title to the appropriate nUlI1ber·
of Shares, free and clear from any liens, in accordance with and subject (0 the
Conditions.

3. Status and Security of PDRs

/
3.1 The PDRs are ullsubordillated anel unsecured obligations of lhe IsslIc::r Lind n:mk
puri passJI and raLably without any preference among themselves.

3.2 The Ilumber of PDRs outstanding will always be matched by an equal number of
Underlying Shares, and the stock certificates repres.;:nting slIch Underlying Shares
shall be placed in escrow.

4. Q'wnership of Shares and Voting Rights

4.1 Pending exercise of the PDRs (as describ!~d below), the Underlying Shnres
deliverable 011 exercise of the PDRs shall be owned by nnd registered ill the name
of the Issuer.

4.2 The stock certificates representing the Underlying Shares shall be placed by lhe
Issuer in escrow with the Escrow Agent.

4.3 Neither the Escrow Agent 1101' any Holder shall have voting rights with respect to
the Underlying Shur·es. Until an exercise of a PDR. Exercise Right, the Issuer, as
OWller of the Underlying Shares, \vili retain and exercise stich voting rights
relating to the Underlying Shares.

5. PDR Rights

5. I The Issuer hereby grants, upon payment of tbe amount stated in Condilioll 5,5
hereof, the PDR Exercise Right unto euch Holder, in respect of each PDR La be
issued pursuunt 10 this IJlstrument.

5.2 Each FDR grants unto the Holder, $UbjecL to the provisions of this Instrument, (he
right [0:

5.2.1 delivery 10 the Holder of the Und,::dying Shan::s as set out ill Conditioll 6;

:5.2.2 certain cash distributions as set out ill Condition 9; and

5.2.3 additional PDRs or adjustment to the terms of the PI)Rs upon the
occun·ence of celiain events as sel out. in Condition 10,

5.3 ]n consideration of the rights granted~nder

the PDRs, the Holder shall pay, upon
issuaIlce of the PDRs, and in addition to the PDR Subscription Pries. the PDt<.
Option Price.
 5.4 The PDR Exercise Right is exercisable 011 <lily Business Day upon payment of the
Exercise Price and compliance with Condilioll 6, and entitles the Holder to
delivery by the Issuer to the Holder of the corresponding number of Underlying
Shares (subject to Condition 6 and to the issu.ance of additional PDRs OJ
adjustment in accordance with Condition 10). Where the Holder is not a person
pem1itted under Philippine law to own the Shares, the Holder may transfer the
PDRs in accordance with and subject (0 Condition 2.4. The Issuer's obligations
in respect to a PDR Exercise Right are disclwrgcd upon delivery of the Shares to
the Holder.

5.5 Where rORs are issued for cash, theU.~DR Sul)scriptioll Price..j-eceived by the
Issuer shull be treated by the Issuer a7al( eposil-t:lhe "Deposit") to be applie.d by
the Issuer on exercise of the PDRjExerc.lse towards payment for the relevant
Underlying Shares, \vilhoul prejudice to (he Issuer's use or lhe PDR Subscriptioll
Price pending exercise of the PDR Exercise fUght. The Issuer agrees that on
exercise, only the Exercise Price shall be payable. The consideration lor the
Underlying Shares 10 be delivered on exercise of the PORs shall be the Exercise
Price and the application of the Deposit aiJoc(lble to the Underlying Shares.

5.6 The Issuer's only obligation in respect of the Deposit is to apply the Deposit
allocable to the Underlying Shares towards ex~rcise of tIle PDR.

5.7 On tbe exercise of a PDR., the exercising Holder shall pay the Exercise Price to
the Issuer, except that pod ion of the Exercise Price which conesponds to the POR
Subscription Price. TlJe Exercise Price is denominated and payable only in Pesos.

6. Exel·cise

6.1 The POR Exercise Right may be exercised by the Bolder on any Business Day
firom (and including) May 29,2015 by giving a notice to the Issuer at least thirty
(30) Business Days prior to its submission of atl Exercise Notice. The PDRs
subject of such PDR Exercise Right shall be deemed tennilJated and cancelled
UPOll completion, execution and delivery to the Issuer, at the Holder's OWll
expense, of (he following: (a) tbe Exercise Notic(~; (b) the PDR Certificate. in
relation to the PDR exercised; (c) payment of the Exercise Price for the lota!
number of PDRs to be exercised, the amount of which shall be conveyed by the
Issuer to the exercising Holder not later than fifteen (15) Business Days aner the
Exercise Date; (d) execution of the deed of sale or assigIUnent between the Issuer
as seller und Holder as purchaser of the Shares underlying the PDRs tbe P DR
Exercise Right pertaining to which have been exercised,

6,2 An Exercise Notice, once received by the lssuer, 5:hall constitute an inevocable
election and undertaking to exercise the PDRs specified therein and may not be
\'v'ithdrawn without the consent in writing of the Issuer. If an Exercise Notice is
not duly completed, is matelially inaccurate, or the number of PDRs specified in
its exceeds the number of PDRs registered in the name of the Holder thereof as of
the date of delivery of the Exercise Notice to the Issller, the Issuer may reject such
Exercise Notice and any exercise shall not be effected until a duly COJ11I)!eted aIld
llllaterially accurate notice is duly received by the I:,sller.

6.3 Exercise of a POR by a Holder shall be deemed to have laken place on the
Business Dayan which delivery of an Exercise Notice to Issuer lakes place if
delivered on or before 11 :00 a.m. (Manila time) in such Business Day (the
"Exen:ise Date"). I f such Exerc!,,se Notice is recei ved after 11 :00 a.m. (rVlnnila
",

time) on such Business Days, the Exercise Dtlle will be deemed to be the
succeeding Business Day.

6.4 The Issuer shall not be obliged to deljyei· the UJl(lerlying Shares pursuant to
Conditions 5 and 7 Juring any period which the register of shareholders or the
Company is closed for the purpose of establishing any dividend or other rights
altaching to the Shares.

7. Delivery of Underlying Shares to Holder

7.1 If the _Holder exercises the pnR Exercise Right and is qualified to hold the Shares
in accordance with Condition 5.4, the IsslI!er shall use best efforts promptly
procure delivery of the relevant ceI1ificate~: and documentation necessary fIX
transfer of Shares to the Holderfwitbin forty-five (45) BusiIless Days from the
Exercise Notice. /

7.2 Exercised PDRs shall not be entitled to any additional PDRs or adjustment (0 tbe
terms of the PDRs in accordance with Condition 10 which relate to the events
declared with reference to a record dale which is on or after the relevant Exercise
Date.

8. Taxatj,oJl and Stamp and Other Duties

8.1 Any and all documentary stamp tax, capital gains tax, donor's tax, and any
trunsfer or similar fees due 011 the delivery of the Underlying Shares upon
exercise by the Holder of a PDR Exercise Right shall be for the account of the
I rolder.

8.2 In the event that Philippine law imposes withholding taxes on any payment to be
made by the Issuer hereunder, the Issuer shall withhold the sallle at (he applicable
rates which may from time to time be in effect.

8.3 Notwithstanding anything III this Agreement, within five (5) Business Days froll1
the Exercise Notice, the Holder must settle any and all outstanding Sllms due as of
the date of the Exercise Notice pursuant to this A_gfeement including its pro rata
share of the Operating Expenses and the Operating Fund (as hereinafter defined)
as a condition precedent to the Holder's exercise of its PDR Exercise Right.

9. Cash Dividends and Other Cash Distribution:)

9.1 PDRs which have not yet been exercised Hnd which remaiu outstandillg are
,entitled to cash distributions in accordance with this Condition 9"

9.2 If and whenever the Company sbaH issue .any cash dividends or other cash
distributions paid in respect of the Shares, ~;uch cash dividends or other cash
distributions shall be applied to the following:

9.2.1 the Shareholders' pro rata portion or the operating expenses [hen due
(including but not. limited to appli:cable taxes, 3udi1ors' fees, and
administrative expenses, in conneCilion with, among other things,
distribution of notice to Holders) (the "Operating Expenses") of the
Issuer for the preceding and c/ent year as cenitled by the AuditOl"; ulld
 9.2.2 3 fllJ-tiJer arnouni equal to the Sha.reholders' pro raw portion of the
Operating Expenses in the preceding year as certifjed by the Auditor (1 he
"Operating Fund"), which shall be set aside to meet operating or other
expenses for the sllcceeding year; and

9.2.3 any amount remaining in excess of the aggregate of the Operating Fund,
for such period (as cel1ified by the Auditor), shall be distributed to
Holders pro rata not less than the first Business Day after such cash
dhlidends are received by the Issuer.

10. AddiHonal PDRs and Rela(ed Adjustments

Upon the occurrence of any of the followinl. events, the Issuer shall, subject to Condition
11, issue additional PDRs or make such adjustments to the tenllS of the PORs set out
herein. Should allY event giving rise to any such additiollal PDRs or adjustment be such
tbat it would be capable of falling within more than olle of Conditions. 10.1 to 10.5
inclusive, it shall full within the first of the applicable Conditions to the exclusion of the
remaining Conditions.

10.1 Distribution of Shares

If and whenever the Issuer shall receive or become entitled 10 receive from the
Company any distribution in respect of the Underlying Shares which consist of
free distribution of Shares, including but not limiteD to stock dividends, the Issuer
shall, with reganl to the additional Shares re.:::eived, grant additional PDRs to the
Holder and shall put ill Escrow the stock certificates representing such additional
Underlying Shares with the Escrow Agent.

III the event (hat the Company grants an option to receive Shares or cash in
respect of a dividend, the Issuer shall seek instructions from the Holder as to "",hat
type of dividend the Issuer should receive.

10.2 Distribution other tban in Cash or Shares

If amI whenever the Issuer shall receive or become entitled to receive franl the
Company any distribution in securities (other than Shares) or in other propcI1y
(other than cash) ill respect 0 f the Underlying Shares, the Issuer shall forthwith
procure delivery such securities or other property pro rota to the Hollier, subject
to compliance with applicable laws and regulations in the Philippines, including
but not limited to payment of applicable taxes.

If JclivCI)f of such securities or other property (or any part thereof) 1'1'0 raw to the
HolJers is not permitted under Philippine law, the !Issuer, in lieu of slIch delivery,
shall cause the sale of such securities Of other propel1y in accordance with
applicable laws and regulations in the Philippines and procure that the net
proceeds of such sale are applied as provided in Condition 9.

10.3 Rights Issues

If and whenever the Company announces its inltention to make any offer 0)
invitation to the holders of Shares to subscribe for or to acquire shares, securities
or other assets by way of rights, the Issuer shall give notice of slIch rights olTer to
the Holder ill nccordance with Condition J 6. The Issuer shall, upon receipt of an
amount cOlTesponding to the relevant subscription price (including all costs and
expenses related to the exercise of the rights) from the Holder,'be J'equircd to
exercise such rights and, subject to applicable laws and regulations in 1he

/
 Philippines, shall exercise such rights in respect 0[' the Underlying Shares with
respec( to such Shares, securities or other 8S!;elS offered by way of rights. New
Shares acquired by way or rights shall be treatt~d as a distribution of Shares as
described in Condition 10.1. Securities or other assets acquired by way of rights
shall be treated as a distribution other than ill cash or Shares CIS described in
Condition 10.2.

III such event, an amollnt equivalent 10 tile price paid for such new Shares shall be
allocated by the Issuer as the Deposit attributable to each such new PDR.

Any rights in respect of Underlying Shares not so exercised tv,,'O (2) Business
Days before the offer or invitation is due to expire shall be permitted by the Issuer
to lapse.

J 0.4 Changes in Capital Stock, Merger or C01lsolidalion

If there shall be a change in the .par value, subdivisioll, consolidation or other

reclassirication of the Shares, q/ upon filly reduction of capital. or UpOll any
reorganization, merger or conso 1i datiol1,of the Company or to which the Company
is a party, the Issuer shall give notice of such event to the Holders. The issuer
shall, in conslIltation with at) iJ{vestmellt bank of illtemationul repute, adjust the
[lDR Exercise Right ill respect to the number of Underlying Shares to be
delivered 011 exercise of a Holder~or the exchange of I")DRs for new PDRs which
reflect the effect of such change. The Issuer may, as may be necessary, withdraw
the share certificates representing the Underlying Shares from the Escrow Agent
and replace them immediately thereafter \vith the new stock certifi~ates in
accordance with the results of the events described in this Condition 10.4,

10.5 Analogous Events

]n the event that the Shares become entitled to any rights which are not provided
above, or on event occurs which is onalogous. to any event described above, the
Issuer shall, in consultation with an investment bank of international repute, treat
such entitlement or event in any manner set out herein or otherwise so as to
distribute or other·wise pass on the economic equivalent of such rights {lr
analogous event under the PDRs.

10.6 Adjustment to the PDR Exercise Right, Exerci:)e Price and Deposit

Upon any ofihe occulTence of the events described in Section 10.1 to 10.5 above,
t.he Issuer shall, upon the recommendation of an investment bank of intenlutional
repute, make such adjustments 10 the Exercise Price and the Deposit or the FDR
Exercise Rights if it determines that the issuance of additional PDRs is
inadequate, and such adjustment is necessary to preserve the economic equivalent
of the obligations of the Issuer under the PDRs.

10.7 Taxes

Any and all costs and taxes (including when applicable surcharges, interest, alld
penulties on those taxes) due in respect of any distribution under this Condition 10
shall be for the account 0[' the Holder. The Issuer shall, upon notice fi-ol11 the
Company that a taxable nOll-cash dish-ibution is to be madc, require f10m the
Holder the monies for the payment of such taxes und if applicable, additions to
tuxes. Taxes due on cash_distributions to the Holder shall be withheld by the
Issuer therefwlTl for remittance to Philippine tax authorities. [n both situations,

persolls which are nOl entitled to u7

the Issuer shall compute taxes based on ralesapplicable to nOll-resident foreign
special rates under Philippine tax laws

I
 unless the Holder call timely show cOlllpljanc{~ wilh Philippine lax laws,
regulations and issuances that would entitle the Holder to a lower withholding tax
rate. RIle shall use its reasonable commercial efforts to provide the Holder with
assistance 10 recoup any and all excess amounts withheld and remitted to
Philippine lax authorities to be reclaimed by the Hotder under any treaty or
otherwise.

11. Fractiollal Elltiflcmfl)(s and Odd Lots

11. J If more t.han one PDR is exercised at allY one time or additional Unuerlying
Shares are to be received in accordance with Condition 10, the number of
Underlying Shares to be delivered upon exercise or received by the Issuer
following slIch exercise or adjustment will be calculated on the b(L<;is of the
aggregate number of PDRs to be exercised or which have not been exercised, as
the case may be. /)

11.2 t'-Jo fraction of a Share shall be delivered or received by the Issuer on exercise of
the PDRs following an udjustment to the Shares hdJ by the Issuer in accordance
with Condition 10.

11.3 Additional PDRs will only be issued ill accordance with Condiljon 10 if it is
possible to issue at least one rDR to each Ho\derpro raIn 10 his holding ofPDRs.

12. Under-takings in relation to lhe PDlls

12_1 The Issuer undertakes and commits as and {i-om the date hereof and '..vhile lite
PDRs are outstanding and remain unexercised:

J 2.1.1 it will, unless prohibited by applicable laws and regulation, give its
consent and use its best endeavors to facilitate any distribution, sale or
subscription pursuant to the PDIZs in accordance with Condition 10;

12_1.2 it will not alter, modify or othenNise change its Altic!es of lncorporation
or By-laws or take any other action so ;:\s to materially prejudice any rights
in relation to the PDRs;

12.1.3 it will, at all times within the period stated herein, own sufficient
Underlying Shares to discharge its obligation under the PDRs, and for this
purpose, it shall immediately put ill escrow with the Escrow Agent the
stock certificates covering the total Underlying Share~; as may be adjusted
from time to time to be conveyed to the Holders assuming l"d! exercise of
the PDRs. all of whid' Underlying Shul-es are fully p<>id and non-
assessable, ;july indorsed )1- with transfer powers attached, I ree from pre-
emptive right, right of first refusal or other similar righit. held by or
~
granted for the benefit of any other person other than as provided in this
Instrument; ensure that the same are not withdrawn hom the escrow.
eschealed, sequestered, sold, disposed of, mortgaged, pledged or otherwise
encumbered or attached or gamished upon orders of any govemmental
Agencies, courts or tribunals; and guarantee that upon exercise of the PDR
Exercise Right, the Underlying Shares will be duly and validly transfem::d
or solei to Holdcr exercising the PDR Exercise Right, fi.lIly paid and £1011-
assessab Ie;

J 2.1A it will not amend 01- make uny supplement to this Instrument or in any Wily
modify the PDR Exercise Right or attach any restrictions thereto without

/
 10

the approval of the Holders in an Extraordinary Resolution (as hereinalter

defined);

12.1.5 it will only carryon the business c.f holding Shares and allier equity
interests in Rappler or and/or alTilialcs amI subsidiaries of Raprler.

12. J.6 it will not incur any obligation, debt or liability, or incur or permit to e;.; is!
nny indebtedness, act as surety, endon;c any draIt, bill or note on behalf of
third parties (unless the same will favc,r the Company's subsidiaries andlor
affiliates) or otherwise incur any monetary obligation which would in any
way materially or adversely alfect (be its ability to meet its obligations
under this lnstrurnelll; and

12.1.7 it will maintain its status as a Philippine PeniOIl.

12.2 The Issuer undertakes to c~use the Company fj'om the Jate hereof and while the
PDRs are outstanding:

12.2.1 unless prevented by applicable Jaw 01' regu lation, to give its consent and
use its best endeavors tq/facilitate any distributions, sale or subscription
pursuant to the PDRs in accordance with C-:'ol1dilion 10;

12.2.2 not to alter, modif~,' or olherwise change its Articles of Incorporation Of

By-laws or take any other action so as to materiaJly prejudice the rights in
relation to the PDRs; and

12.2.3 to send the Holder, at the same timE as the same are sent to its
shareholders, audited accounts and all other !Iotices, reports and
comll1unications dispatched by it to shareholders generally, including the
OCClllTence of any of the events described in COllditions 9 and 10, il being
understood that this is only for purposes of '"itlforrnatio,~. and Iho.l the
Holder shall not be entitled to dividenc!s...{excq5"i as otherwise provided in
Conditions 9 and 10), voting lights o~ 01.ller shareholders rights until
exercise of the PDR Exercise Rights.

13. Payrnelnts

Any payments of cash in relation to the PDRs shall be made to the Holder in Peso by
check drawn against a bank in Metro Ivlanila.

14. Issue olfNew "DRs

Subject to applicable Philippine laws and regulations, the lssucr may issue additiollal
PDRs with the same or different tenns and conditions as existing PDRS from time to
lime, which new PDRs may be consolidated, and fonn a single series with existing PDRs,
or {ann a new series ofPDRs.

15. Expropdation or Liquidation

In the even! that:

15.1 all the Shares or all the assets or substantially all of the assets of the Company are
expropriated or otherwise required to be transferred to any guvernmental agency,
authority or entity; or

/
,/
 11

) 5.2 by reason of the liquidation, winding lip or dissolution of the Company (i) all the
Shares are required 10 be lransfen-ed to allY II ustte-, receiver, liquidator or other
similar official or (ii) all holders of the Shares become legally prohibited Ii-om
transferring them;

then the Issller shall payor deliver 10 the Holder such cash or assets received upon
expropriation or liquidation pm rata to their inlerest in the PDRs, aner which, the PDR
Exercise Right alld other rights under the PDRs, shall forthwith terminate.

J6. Notices

All notices, PDR Certificates, checks and olher doeurnenls required or pennilteci herein to
be sell I to the Holder or to which the Hol~er is entitled or which the Issuer shall have
agreed to deliver to the Holder may be delivered by personal delivery or by mail
addressed to the I-lolclcr (otherwise than in accordance with an Exercise Notice) at his
registered address, and by intemational cour~F shall be us(;d jf that address is not in the
Philippines. All documents delivered or senylll accordance herewith shall be delivered or
sent at the risk of the relevant Holder.

17. Meetings of Holders; Modification

17.1 The Issuer may, on its own initiative or at any time upon a request in writing of
the Holders holding not less than one-tenth (1/1 0) in number of the PDRs issued
under this Instmment for the time being outstanding, convene a meeting of
Holders.

] 7.2 Notice specifying the day, time and place of the meeting shall be given to the
Holders at least fifteen (15) Business Days prior to the dale set for the meeting
(exclusive of the Jay on which notice is given and of the day on which the
1l1eeting is to be held.)

17.3 At any meeting, where at least the number of persons present, in person holding
PDRs or being proxies, and holding in aggregate not less than one-tenth (1/1 0) in
number of the PDRs issued under this Instrument fiJI' the time being outstanding
shall except for the purpose of passing a resolution proposed by the Issuer and
which modifies or varies the rights of the HoldeI-s under the PDRs (1lI1
"Extrllordinary Resolution") form a quorum for the transaction of business and
no business (other thun the choosing of a chairman) shall be transacted at any
meeting unless the requisite quorum (except for the purpose of passing an
Extraordinary Resolution) be present at the commencement of business. Any
resolution, except an Extraordinary Resolution, shall be considered approved
when passed ill a duly convened meeting by not less than a majodty of the votes
cast by Holders as being entitled \0 do so, whether voting ill perSOll l¥rby proxy.

17.4 The quorum at any meeting for passing an Extraordinary Resolution to modify or
vary the rights of Holders shall be at least one person, presently holding PDRs
issued under this Instrurnent or being proxies and holding in the aggregat~~ t\\lO-
thirds (2/3) of the outstanding PDRs under this Instrument for the time being. All
Extraordinary Resolution shall be passed in a duly convened meeting upon the
affirmative vote of at least two-thirds (2/3) of the outslanding PDRs under this
Instrument. An Extraordinary Resolution passed at a meeting of Holders duly
convened and held shall be binding upon the Holders, whether or not present at
such meeting, and each of the Holders shall be bound to give erfed to it
accordingly.

/
, '.

11

J 7.5 PORs which have not been exercised but in respect of which an Exercise Notice
has been deposited will not confer the right to attend or vote at, or join 111
convening, or be counted in the quorum for, any meetillg of the Holders.

17,6 At any meeting, on show of hands, every Holder \/..'ho is present in person or in the
case of a corporation, by duly auulOrized representatives, and person who is all
holder of a proxy from a Holder shan have one vote in respect of each PDR
registered in his name or in respect of which he is proxy or a corporate
representative. Any person entitled to more than one vote need not use ,,11 his
votes or cast all the votes to which he is entitled ill the same way.

17.7 The fights to the PDRs may be varied or abrogated by an instrument or other
executed by or on behalf of the Issuer subject to the proposed variation or
abrogatioll first being approved by an Extraordinary Resolution of the Holders.
The Issuer may, WitilOut the consent of the Holders, effect allY modification ofthe
provisions of the PDRs or this Instnmlent to elm; allY ambiguity or correct or
supplement any provjsion hereof that lllay be incomplete or inconsistent with any
other provision hereo f, so long as such amendmen t under this Condition 17.7 does
not adversely affect the interests of any Holder or \vhich is necessary in order to
comply with mandatory provisions of the laws of the Philippines. Any such
modification shall be binding on the Holders and shall be notified to them by the
Issuer in accordance with Condition 16 as soon as practicable thereafter. The
issuance of new PDRs pursuant to Condition 14 or the temiination or the PUR
Exercise Rights pursuant to Condition 15 shallllot be subject to an Extraordinary
Resolution of the Holders.

18. Closure of PDR Registry Book

The registration of transfer may be suspended and the rDR Registry Book may be closed
for such period as the Directors of the Issuer may from time to time announce, provided
that the same cmmot be closed for a period of' more thall fifteen (15) Business Days at
anyone time; or more than sixty (60) days throughout the Exercise Period. Any trans fer
of the PDR or exercise of the PDR Exercise Right made while the POR Registry Book is
so closed shall, as bct\.veen the Issuer and the person claiming under the relevant transfer
of PDRs or, as the case may be, as between the issuer and the Holder who has so
exercised the POR Exercised Right, be considered as made immediately after the
reopening of the POR Registry Book

19. Governing Law

The PDR.s and this Instrument are governed by, and shall be construed in accordance
with, the laws of the Republic of the Philippines.

[SiglllIture page follows]

I
 13

IN WITNESS WHEREOF, the Issuer through its respective representutive hereto has signed this
agreement at the place and 011 the date first above writtcIl_

Issuer:

RAPl'LEH HOLDINGS CORPORATION

By:

~f. t~
Name_- Maria A. Ressa
Position: President·

J
 ANNEXA

EXERCISE NOTICE

RAPPLER HOLDINGS CORPORATION

PhiHppine Depositary Receipts (PDlh")
Relating to Shares {)f

RAPPLER, INC.

EXERCISE NOTICE,

The undersigned, being the registered holder of the Philippine Depositary Receipts ("PDI~s")
represented by the attached PDR Celiificate:

(n) hereby incvocably elect(s) to ex.ercise the PDR Exercise Right to the extent of
_____________ PDR.s, being in whole or part.of lhe PDRs represented herein, (but
in any case not to result in the issuance of fractional shares) and hereby insttlJct(s) the:
Issuer 1.0 deliver the Shares 10 the undersigned.

(b) regucsl(S) that the balance of PDRs remaining unex.ercUsed and (alter deducting ~hc
Ilumber set out in (a) above), be issued in the name(s) of the person \".'hose namc(s)
sland(s) in the pon. RegistIy Book as th~ PDR holder (or joint PDR holders in the case of
ajoint holding).

The undersigned acknow!edge(s) and rcprcsent(s) thaI it j~; the beneficial ovmer of the PDRs
subject of this Exercise Notice. The undersigned agrees that Rappler Holdings Corporation's
obligations in respect of the PDR Exercise Right are discharged upon delivery of the Share(s) to
the Undersigned pursuant to this Exercise Notice and the PDI<. Instrument executed by Rappler
Holdings Corporation dated as of __________.____..

Signature

Nationality

Date

Confirmation Receipt:
Rappler Holdings COllJorution
By:

Name:
Position:
Date and time of Receipt:

/
~ 'I

ANN_E:X B

PDF.. CERTIFICATE
._-------------------------------------------------

J'l-IlLlI'PIN£ DEPOSITr\HV RECEIPT C£ftTl FICATE

RAJ'PLER HOLDINGS CORPOHAT[OI'l

Il1corpoJ"(//ed Ullder the Laws aIlile Republic oI/he PhilippiJles
Issuer

Relating 10 Existing Shares of Rnpplcr, Inc-

Ullf/er/yi/lg Shares

This Certifies Ilul( _ is;/are lhe registered hlllder(s) ol"\hc Philippine Depositary Reeeipls
("'l'DRs") contained herein und is/are enlitled, upon payment orllle POR Exercise Price in accordance wilh the PDR
Instrument executed by RarpIer I-Ioldings CorpoHltion dated as 9"_. _ _ {Ill<; "PDR Instrument"), to the ddivery
of onc (I) existing share of stock of Rap pier. Inc_ for everyone (I) PDR held_

The right granted under this FOR Illay be e:tercistd cOlllmencing (In ______________ alld at any tillie thereafter.

This PDn. (orms parI of an authorized issue of PDRs granting the Holder the right LO delivery of the share, at the
POR Exercise Price in llccor<illnce wilh the PDR InstnlJnellt, which I'DRs have been issued subject to and with the
benefit of the POR Instrument and arc enforceable by the Holycr (lgainstthc Issuer. Copies of the POll. Instrument
afe uvailable filr inspection by the Holders aI, ilnd may be objiinccl by them Ii-Olll, the principal place of busilless of
the Issuer. The Ill)lder shnll be deemed to huvc notice ortile provisio[IS contained in {he said I'DI{ Instnlllll'llt (and
any instllllnent supplemented thereto)_

7he PDf? represeIJted by rhis Cerlijicml! does NOT represent sil(Jres OJ'SIOc/; buf OIl(Y cOJ[ters (f rig},t to fbe delil''')),
or safe oj' exisring shores oj stock (!{ Rappler. ll1c_ OlFned by (he issuer I/Iula Ihe Ie/illS and co1lditions stated herein
(lJId iii the PDR InSIrl/meilf.

III Witncss whereof, the lssuCf has caused this Celiificnte to be signed by its duly authorized 0 flicC\"s and \() be
~calcd with the Seal orlhe COIllorution this ____ day nf __________ .__ -

I'n:sident Corporate Sccrclmy

I061.107v(J ()) 53 7H.O 1()4

 I ANNEX "Bit I

(Relating to up to 7,217,257 PhHippinc Depositary Receipts

issued by Happier Holdings Corporation granting the right (0 the Delivery
of Existing Shares in RappJcI', Inc.)

RAPPLER IIOLDINGS CO:RPOPJ\Tl()l\T

fssucr

- favor of-

lIOJ-1J)ERS OF PfIILIPPINE DEPOSIT.AH,Y JRECEIPTS

/
·
,

This PHILIPFINE nEPOSITAHY RECEIIJT JNSITnJ[\1J~NT (the "PUR IJlstnllllent") is

executed this 2015 by RAI'pu::n HOLDINGS CORPORATION (lhe "ISStlCl-" (n
('RIle"), u corporation duly organized and e'xisting under and by virlue of t.he lLl\vS of the
Republic of the PhilipPines, ·wll.h principal offke at Unit 250 I Anlel Global Curporale Center)
Julia Vargas Avenue, Ortigas Center, Pasig City 160\ in favor of Ule holders fur -Ole time bein.g
(UlC "ON .PDR Holders") of the Philippine Depositary Receipts (the "ON PDH.s") to b,:; issued
by (ho RHC.

WITNESS: Thut

\VHERE/\S:

(1\) TlJe 1ssuer js a shareholder i.n RappJer lnc. (the "Company").

/
{B) Prior La the date llereo( RHC has issued an aggregate 12,028,718 Philippi.nc Deposilary
Hcccipts ill favor ofNBfvf Fnpp1er, L.P. ("NBM"; the PDR<: l,)."llCd In NHM, the: '·NBM
lIDRs"; the ON FDRs, the NBM PDRs, and ,my OU1CJ ~ypes, seriEs or classes 0 ,-
Philippine DejJositmy Receipts to be issued hy the Issuer, the "VDRs"; the holders the or
ON PDRs and of the NBM PDRs, the "PDH HoJders").

(C) RHC bas authorized, subjccl. to the satisfaction of certain conditions, Lhe issuarlce and
sale of up to 7,217,257 PDRs COnfCIT.1Ilg rights upon the HoldeJs thereof: exercisable ill
whole or in part at a.ny lime: (1) to the delivery of existing common shares in th(~
Company owned by the lssuer and~ in respe,:t of which the ON PDRs \vill be issued, al
the PDR Subscription Price ofUS$O.2078 per ON PDR or tbe POR SubsCJiplion P1ice m;
al~ius(ed under lbe terms and conditions of Lhis Instrumel1t, to the Holders thereof or thei[-
desi6TT1ces, and to the rcgistnJtioll of such Sh,llCS in the; 1.ILlmes of lhe liolder::; 0[' liJeir
designees (subject to the COL1ditiollS that the Holders or lheir designees arc qnnliflcd to
hold the shares and that the desig.nation of the designee shall be :mbject to the consent of
tho Issuer, whidt consent sball not be unreasonably withheld); (ii) 1.0 additional O/\{" PDRs
nc [tcliustmcnts to the terms of the ON PDns upun the occurrence of C:lpital events in
respect of slock dividends and other ~;toGk distributions, rights iss1Jcs, cllpitcd
reorganizations, offers alJd analogous events relating to the Underlying Shares (subject to
tbe payment of appJjcab1e laxes and operating expenses by the Holdcr lhe:rcoJ\ and (ji i)
to cash distributions (tess applicable taxes on such distributions, direct expenses incurred
in rc1(l.t)nl1 to 5,1.lc;.h distdb11tiQns CaR applicable:) nne! such Holder:::' pro rata share in ccrt,ll11
general administrative expenses incuned by the t5suer and taxes for which it may b~
liable in the ordinary course of business) upon the declaration of cash dividends or
simill1x distributions 011 tlte: relevant Uodedying Shares.

(D) lure has agreed [0 execute (his 11lstLUl1lellt in favoe of lhe Holders in order to provide 10J,
and to protect, their rights and interEsts.

NOvV THERFFO[\E, RHC hereby agrees as follnws:

L DeJiuitions:

]n tJlis lstrutnetlt, the V-lords and expressions set out bclo'vv slHlII I.ui've the fl~dlcrwil1g
111 eanln gs:

"AudttOl,1! means Reyes Tacandong & Co., or Duch other reputable independent extemal
auditing finn appoitlted by the fSSli/;
"BIrr' means the Philippine Bmeau of [ntelll.al Revenue;
,.,

"13usiIlC!.i2i nay" rnc:.Ins tl day upon which the banks in Metro M~Uli!a, Philippines arc l10l
required 10 close;

"CoJllpany" means Rappler, Inc_;

"Conditions" means the terms alld conditions cOl1tained in LlllS Ioslrument as the same
may from lime to time be modified in acconlalJcc wilh the provisions se[ out herein, and
"Condition" rciers to the lelatlve numhered paragrapbs of th1s InSlllJmenl;

"Deposit" means the alllount equal to Eighty-Five. Percent (85.0%») DC PUR :3ubscripliol1
Price lhat was allocated to the Underlying Shares (as hereinafter defined) mUltiplied bv
the vv'eighted average exchange rate reflected on tbe websile of tbe Philippine De:alin~r
System as of (he end of the Jay whin the PDR SUbscription Price was actually leceive~l
by the Issue.r; I

"Escnn'\' Agent" m.eans the escrow ltgcnt to be appointed by tho Issuer and the Holder
with ,vhom the stock cc.rtificates n?presel1ting the Shares wUl be put in CSClO\V.

"ESOP Shares" means the 9,077,253 shares of Rappler to be issued by RappicI to its
cmploycl3!3 w1Jer Rappler's Employees Slock Option Progldm;

"ExeHj~e Notice" means written iuslmctions by a Holder as to its exercise of PDRs in

tbe form printed 011 the back of each PDR certific8te or in the form horn time' to lime
available fl-om lhe fssuer, 1J. copy ohvhich is attached herev.,'ith as Annex: "i\";

"J.C),:erd,5~ Period" \HG;W!'; the pc;rio\l dl.l,ripg which Ule Holder is the r~gislered 1101<1cl- o(
the PDRs tmdcr the PDR lZegislty Book and during which U]l~ Holder may exercise lbe
PDR Excl'cisc Right;

"Huhler" means, in relation to any PDR, Ule pe.rson or persons \>','bo is or me for the tinlC
being registered in the PDR Registry Book as owning the PURs;

"hl5tnnnenC' means this PhllippilJe Depositary Receipt InSU1Jlllenl, <mel ,111Y amendment
or supplt::mcul hereto (as [rom to lime to lime amended or modified in accordance with
tIle pl-ovisions hereof);

"ON ron. Execcise Pdcc" means tile sum of the (a) the Philippine Peso equi\lalcnl of
Eighty-Five Percent (85_0%) of the PDR Subscription Price that was allocated to the
Underlying Shares 11sing the 'weighted average exchange rate reOected on the \veb~;ite of
the Philippine Dealing System as of end of the uay \vhen the PDP. Subscriptlou Price: was
actually received by thc Issuer; (b) the applicabJe (;1.,'<.e5 due on the transfer of lhe relevant
Umlerlyiug Shares (including allY and all transfer and documeu.tary stamp laxe·s d1.JC on
SLTch lrtUlSfcr to be computed biL<;ed OJ) tbe a~justed book vaJue of such Undcrtyillg S!lart~S
as rnay be calc.ulated under Revenue Regulations '1'10. 6~2013, as [he same ma.y be
amended from time to time, Bud such other applicable issuances of the BIH in force Ett lhe
time of the excrGisc by the Holder of its PDR Exercise Right less Ule PDR SuhscriptioJ]
Price allocable to said Underlying Shares, subject to adjustmenL as described ill C:olluilion
10,6; and (c) aotual, documEnted and reasonable costs for the processing emd secmillg o(
the dectr-onic ccrtifictltcs aurJlOrizing rcgjstmtiol1 .in respect of the transfer oj" lile
Underlying Shares am1 for securiT1g the necessary appraisal repolt (if required) by the
BlR;

"PDR Cerlilkale" rnCCU1S Lhe certi fica;~ issued in respect of the PDRs which mEl)', rrom
tirne to tilnc, be modified in 8cconlanc'e ,"lith the provisions of this Instrument awt \vhiel!
is altaellcd berewith as Annex "B";
, .,

"PDT{ Exercise IUght" meflm the right of a Holder to the delivery of lhe Slmrcs to SLlclt
Holder or its desiguee excrcisEl.ble in the manner provided under COlJdilion 6;

"VDR Option Pdce" means the total price of f' 10,.000.00 representing the consideration
for the grant of the righLs under aU ofihe ON PDRs;

"PDR Subsc.ription Price" mCaI1S fOl-eign currellcy amount remilled by the Holtler an.d
3ctual1y received by the Jssuer. Any bank charges imposed by (Jle bank lhat the O}·r PDP.
Holder used ill remitti.ng said fi.ll10S is not P81t of the PDR Subs.cription Price;

"PDll H.egislry Book" means the regis.ter or Holders required to be lnaintaine:d by the
Issuer; l
"Peso or T'" me<UlS the Philippine Peso, the legal temler of the Republic of' the
Philippines;

"l'hiJippine Penon" means allY persoll who is a citizen of UJC PhiliprfllCS DC a

corporation, partnersh.ip or asgocialloll who is qualified ill1Jer Philippine lmv to hold
shares in the Company;

"Shares" meallS common shares of par value f'J .00 each of the capital slock of (he
Company or shares of any class or classes re!mltillg fiom allY subdivision. consolidation
or rc-cJasslficatjoD of such Shares, which as among tbemselves have 110 preference in nil
respects;

"Shareholder" mean::>, ill rela.tion to ~lny Share, the per;;on pr persons ,vl\O is or are fin-
(he lime bdng registered in the stock <U1d tram[er books of lhe C01np~U1y 01 is 01- an:
beneficial1y the owner of such Share;

"Transaction Documents" means l11is Instrument, tbe PDF. Investment 1\ grecll1ent., the
PDR Sub!.)criplioll Agreernenl, the Mutua! Assislance Agreemenl and the Escrow
Agreement, all executed by the Issuer, ON and such other parties named therein OJ] or
about SepLember 29,2015; and

"Underlying Shares" means common share of pur vClll1e of 'P LOa each of the capital
stock of the Company which are bncked up UJe OJ'-1 PDRfi' and ilre covered by the ON
PDR Exercise Rights or shares of any class or cI(lsses resulting from any subdiviSion.,
suclt C01.l11110n shares,which ElS among Utemselves
consolidation or re-classification of
have no preference in all respects_

2. Fonn, TWe, Tnl.llSfer and CertWc;aies

2.1 TIle ON PURs shall be issued in certificated forrn. Each ON PDR Holder thereof'
c;hL'\I1, :mhject t() the pnymcnt of the. appropriate re(':~ EIlHl e-Xpellses, be entitled to
the issuance of an ON PDR Certificate \vbich shall slate the lluluber of ON FDR::;
it represents and lenTIs and COIlllitions o[ such ON PDRs. Each ON PDR
Certificate will have all jdcntifyillg number ,-vhieh will be recorded 011 the rcleV<lllt
ON PDR Certificate and in the PDR R\~gistry Book.

2.2 .Each person \vho is for the time being shown in the PDR Registry Book as
owning a particular numbe~· or ON PDH.5, tlhall be treat.ed by the Tssuer as the
Holder of such number of ON PDRs. No perso11 claiming beneficial interest in the
ON PDRs, unless such interest is recorded in the PDR Reg,i,stry Book, !;Illd.l be
entitlEd to ilJ1Y .rjghts gramedlllder s(Jid ON PDR.s_
'\

1.3 ff on ON PDR Ccni fic~lte is defaced, worn uUl, 10s(, stolen or destroyed, it I1wy be
replaced on such terms (if any) relating to evidence and indelDnity and payment
of the ex.penses incuned by the lssucr ill investigating sucb evidence, and UpOIl
payment by the ON Holder of such fee as may be reasonably I-equ(red and 111 the
cnse df de.bcement or wearing; out, surrender of the old ON PDF Certificate.
Replacement of lost, slo[en or deslroyeo ON PDR Certificates lnust cumply wtth
the procedure set out 111 Section 63 or BatHs Pambansa BIg. 68, otherwise knO\Vll
as the Corporalion Code of the PhUippjnes,

2.4 Unless otherwise agreed by Ole Issuer and the ON PDR [folder in ",vdtillg, the ON
PDRs shall be trallsferable Qnlywlth the pr:ior wl'itten consent of the l,ssllcr (which
Gon,sent shall not be unreasonably vvithhetd) and by cOHlpleting ihe endorsement
at the back of the ON PDR Certificate, surrendering the same to the Issuer, and
subrni.lting to lbe Issuer a copy of uced of sale, assignmenl Of transfer in respect or'
Guc.h ON r~Rs subject of ~1ejtransfer. FO,l ulis purpose, the lsfiller shall rnainlain
u PDR RegIstry Book whIch shall cotHam a record of all tnlJlsfers 0 f the ON
PDRs. Uuless recorded in lbe PDR Registry Book, allY tnmsfer or ON PDRs sllal1
not be binding all tllC ISSUGr. Tra:nsfcIOfs or tbe ON PDRs shall pay nil applicuble
taxes 1 Inc:luding documentary stamp taXES, capital gain:; taxes and other transfer
taxes due on lho Lransfcr of such ON PDRs, and. shall prescot proof of such
paym.enl (including, but not limited to, an electronic certificate tllltllOrizing
regislra1jon, to the: extent applicable) to the Issuer before such transfer may be
recorded in the PDR Registry Book.

2.5 The Issuer, the ON PDR Holders and all persons claiming under the: Ol\) PDRs,
Rhnll \.:o01ply with lh(:: tYrrn~ of the ON FURs and the ('Ol1dit.irHlR in all respects,
3110 the ON PDRs shall be held suujcct lu such provisions and lhe COOdlliollS
which shall be binding on the Issuer, the ON PDrz IIolders, and all persons
claiming through or lll1dcr the ON PDRs.

2._6 The Issuer shall, upon exercise of all or any oCthe POR Exercise Right durillg the
Exercise Period, convey to the eXerCi!iing ON PDR Holder title to the appropriate
Dumber of Shares, free and clear from any liens, in accordance with and subject to
the Conditions.

3. Sta.tus and Security of the ON PDRs

The ON PDRs are unsubOldinBted and unsecured obl.igations of the lsSUEI- Ctnd
rWlk jJori paSSH and ratably Witlluut (lilY preference tll11O!lg LhcmseJvcs.

3.2 The. ON PURs shflll be at least pari passu in all respects with all other Pl)JRs as
may have been issued by the Issuer as of Closing Date as well as such other PDRs
th<:\t may be issued by the Issuer where the pre-money valuation 8ttlibutecl to (a)
the Shares held by the Issuer (exclusive of the underlyj)1g shares beld by lhe
l,c;,'>ue;r to h,iCk up lhe N8M prHZf;) illld (b) the ESOP Sh;ll-CS is equivalent [0 (lr n(li
more tban US$23.0 million.

3,3 Tbe 111l1llber of ON PDRs outstallding \viU aJways be malched by an equalllLll1lber

of U nLterl ying Sllflres.
,I
IL OWllcn:;hip orShares nod Voting Hights

1\,1 Pending exercise of the ON PDRs (\s de:;cribcd below), 1he Underlying Share!;
deJ.(verable 011 exercise of such PDEs shall be owned by 8JJd. n~gis,~ercd in llle:
name of the Issuer.
 6

il.l The stock certificates representing the Underlying Slmres shall be placed by the
Issuer in escrow 'with tile Escrow Agent.

11.3 Neither the Escro-v'v Agel)t nor uny Holder shall have voting fights willI resped (0
U.lC Underlying Shares. Utltil nn exercise of 11 PDIZ Exerei!;c Right, the Issuer, as
owner of lhc Underlying Shares, will retain and exercise such vOlillg right,:;
relaLing Lo the Underlying Shares.

5. PUI{ I\'ights

5_1 The Issuer hereby grants, upon payment of the PDR Option Price, Lhe PDR
Exercise Right Ullto each I-lo/Uer,ill respect of each ON PDR to be i:jlillcd
pursuant to this PDR Instrument.

5_ 2 Each ON PDI<. gnmts unto the HolckT, subject to the provisions of Ibis 11lstrlllnent,
the r1 ght to:

5,?., J d\"liv\'Ty 10 th~: HoJder or its t(\laJificd (ksiglIec (1f (he TTll(lerlYlllg ,(~harcs,
and regislratiOll of the ~;a1DC in the narnc of the Holder or its qmdified
designee, 3S set out in Condition 6:

5,2.2 certain cash distributions as set out in Condition 9; and

5_2,3 addilional PDRs or adjuslment to the terms or

the ON PDRs upon tile
OCCUlTencc of certain events ,Hi set out ill Condition 10.

5.3 I1\ consideration of the rights granted under the PDRs, the ON PDR Holder shall
pay, upon issuance of tllcPDRs, ami ill addition to the PDR Sub;;criptio[l Price,
the PUR Option Price.

SA Tho ON PDR Exercise Rigbt is exerclsable on any BnGines5 Day [-rom, and
including, October 6, 2015 ("Closing Dale") amI as long as the ON 1'DH,"; arc
outstanding, ll}JOli payment of the ON PDT\' Exercise Price and entitles tlle Ol\[
PDR Holder to dc:1ivery by the Issuer to tbe ON PDR I-Jolder of Lbo corresponding
number of Underlying Shares (subject 10 Condition 6 and to the issuam:e or
additional PDRs or aJjustment in accorci,U1cewitll Condition I D). 'Where the
Holder is not a pe;r.o:;()n re:rl11itli~~d under Philippille law to own 11j(~ ShiUUi, the
1101dcf may trallsfer the PDRs in accor-dance with and subject to Comiilioll 2.'1
The Issuer's obligations in l"cspect of an ON PDP- Exercise Right arc dischcllW:::d
upon delivery of the Shares to tllC Holder.

5.5 WhC1T ON PDRs nre issued for cash, Eighty Five Percellt (85J)%) fJf the Of',! PDn
Subscription Price received by the Issuer shull be treatecl by the Issuer as H (!cp " "!!
(rhe "Deposit") to be applied by tlJC I:;suer against the GN PDR E:lerci:;e Price (in
exerdse of the ON PDR Exercise Right towards payment rOt- the relevanL
Underlying Shares, without prejudice to the Issuer's use of the ON {'DR
Subsctiptiol1 Price pending exercise of lhe ON PDR ExerciSE Right. The Iss\\cr
ngrees that on exercise, only the ON PDI\ EX'''Tcise Price. shall be pP'yabk. '/ 'hl"
consideration for the Underlyipg SLllu-es to be delivered on exercise !.)f the ON
PDRs shall be the 01"1 PDR Exercise. I'llce..",. and Lte application of tile DiposiL

The Issuer's only obligation itl resp':;ct of the Deposit is to npply llIe Lkpl)sil
cowards excJcise of the ON PDR Exercise Right

!
/
;
 5.6 On lhe exerci~c of an ON PDH., the exercising ON PDR lfoldcr shn.ll pay the ON
PDR Exercise Price to the Issuer, except that portion of (he ON PDR Exercise
})rice which corresponds to the Deposit. The ON f'DR Exe.rcise Price is
denominated and payable only ill Pesos.

6. Exercise

6.1 The PDR Exercise Right maybe ex.ercised by the ON PDR Holder 01\ any
Business Day from (and includi1Jg) Closing Date up to such dllte (the "'ExpJr:y
Date") in respect of which the Tssucc has been given at least thicty (30) Busilless
Days prior notice, as being the terminatiun date (the "Expky Pcdod "), llPon
compJetion, execution and/or delivery to the Issuer, at tbe Holder's o\vn expense,
of the following: (a) the Ex~rcjse Nolice; (b) the FDR Certil'1catc in relaLlol1 to the
ON PDR exercised (lJ10 lhe relevant slock cerliJicales (which the ON PDR Holder
shull CLll1Se Ule Escrow Agent \0 tcleasc to the ISSUCI}i (c) paymcllt oC the ON
PDR Exercise Price for the total JJW1Jber of ON PDR.s to be exercised, tile aJtIl)Wl(
of which sball be agreeu l\!writjng between the Issuer a:nd the eXErcising CH--l
PDn.. Holder no less than fifteen, (15) Business Days prior to the: Expiry Date; (d)
execution of the deed of saJe or assignment belwecn the Issller as seller and ON
PDR Holder (or its designee) as purchaser of the Shares ullderlying lhe ON PDRs
the PDR Exercise Right pertainjng to which JJave been exercised llnd delivery by
the Issuer to the ON PDR Holder (or its designee) of duly endorsed stocK
certificates and other uocuments as are llsually delivered ill similar trIlTlSac.Liul1s.

G,l Wl1~re an ON PDR Holder intends to callse llw de1iv~.ry nflhe Underlying Shul'es
to a ucsigllce, such ON PDR Bolder shall, no later [han lhirty (30) BUSlllCSS Day::;
ptior to the date of the intended delivery of the Exercise Notice to the Issuer,
noti ly the Issuer in writing of UlC ide-utity of the proposed designee. The Issuer
shaU, within twenty-one (21) Business Days from rece.ipt oC such vnlltcn nolicc,
in/onn the ON PDR Holderin writing of whether or not it COll!1Cnts to tile delivery
of the Underlying ShaJes to such proposed designee, provided that such COI1~el1{
sball not be unreclsonably withhe1d. In the evenl that the Issuer fails to Inform the
PDR Holder in writing of its deGi~;j.oll 011 lhe proposed designee withill the
aforesaid twenty-one (21) Business Day period, such consent shall be deernl:d
givcu. AJIY such consent OIl the pmpo!;ed designee (whether given ill writing or by
inaction) shall be deemed irrevocably given by the Issl.ler~ subject t.o Condition
6.2.2.

6.2.1 \Vhere the Issuer consents to the delivery oC the Underlying Shares to lhe
proposed designee or the Issuer fails lo inform lhe f'DR Holder of the
Issuer's decision within tbe aforesaid l\.vcllty-one. (21) Busi.ness Day
period) the ON PDR Hoider may proceed wilb the sending of the Exercise
Notice, provided that tl1e Exercise Nolice must be sent by the ON POR
Holder to tlh) 1::f.\Jer no later tht111 lhirty (30) Bu~dnes.'; Day." li'oln Ihe dale
tJmt lhe ON PDR Holder notified Ule Issuer in writing or the identiLy or the
proposed designee. Where the Exercise Nolicc is not sent within that
period, the consent of the: Issuer to the delivery of the lJn(\c.rlying Shares
to the PI-oposccI dcsigni'e shall be deemed wlthclm\vlJ, <lIld (he ON PDR
Holder must comply anew with this Condition 6.2 ill the eventlhal. it again
desires to GaUse the delivery of the Underlying Shares to tl designee.

6,2.2 The Issuer's consent to the delivery of the Shares to a proposed designee
shall be deemed to expire tbilty (30) Business Days allee tile ON F'DE
Holder notified the Issuer III wriliJ1g of (he ideJl(ity of its proposed
designee withoul the ON PDF Holrler sending the Exercise Nolicc.: l..viLhil1
said lhiHy (30) Business Day period. After said LhLrty (30) Bl.l:;illCSS Day
,,,

period, any exercise by such or atly olbcr ON PDR Holder oC its PDR
Exercise Right through the delivery of the: Shares to any proposed
designee must again comply 'Vitll1:hc provisions of this Condi.tioll 6.2.

0.2.3 Where the Issuer does not consent to the delivery of the Shares to the
proposed designee, the Holder may, also in vv'riting, plopose a new
desjgncc, subject to cotpJiance WiUl this Condilion 6.2.

6.3 An Exercise Notice, once received by the ]ssucr, shaH constitute an irrevocable
election and undertaking to exercise the ON PDR.s specified therein alld may not
be withdrawn without the consent in ,,,,riling of the fssuel-. ff an Excr·cise Noticl~
is not duly compJeted, .is materiaHy 11Hlcc.tlratc, or the number or ON PDRs
specified in it exceeds the number ofPDR.s registcrcd 111 the name of the Ol'·j PUR
HolJcr thereof' 115 of the dale of delivety of tlJe Exercise Notice to the Issuer, the
Issuer may reject such Exercise Notice and any exercise shaH nol be cHccic0 until
a duly completed and materially accurate llotice is duly received by the Issuer.

(iA Exercise of a PDR by a Holder Sbill! be deemed to huve laken plac,:. on the
Business Day Oil which delivery of an Exerci:ic Notice to Tssue:r lakEs plaCE if
delivered on Df before 1] :00 a.tn. (ivhUlila time) in such Business Day (the
"Exercise Date"). If such Exercise Nolice is received aLler 11 :00 a.l11. (Manila
lime) on such Business Day, the Exercise Date will be deemed tu be tlJ(~
succeeding Business Day.

<l.S The [;lsuer shall not bo obligeu to deliver tile Underlying Shares PlllS11f1llt to
Conditions 5 and 7 during any period Wllich the register of sha.rehuJder,':; (If the
Company is closet! for the ptllvose of eSlablishiug any dividend or other rigl1U)
attaching to the Shares.

'7. Delive r .'( ofUl1dcd Jring Shares to an ON rDR Holder or i{s !\pprOl'cd DcsiglHec

7.1 fr the ON PDR Holder exercises lhe PDF{ Exercise ltighl and is (or its designee
is) qualilJed to hold the Underlying Sha.res in acconJance with Conclilion 5.4, the
Issuer shull usc best drorts to proolptly procure delivery of the relevRnt
certificates ilnd documentation llcccssary f()r transfer of tbe Underlying Sbarcs 10
the ON PDl<. Holder or its approved designee within forty-five r·4.5) Dusiness
Day.s ti.-om tbe Exercise: Notice.

7,2 F~cr(+:;ed PDF,) shaH )lot be endUed to any ac1diUona! rDf{s or ac\juf'lrnenl to the
terms of lhc PDns in accordance with Conditioll 10 v"hic:h relale: to the: evenls
declared vVilh rcfel-cnce: to a record. dt'.tc which is on or after the relevant Exercise
Date.

7.3 Notwithstanding anytbing ju U11s Agreement, "\.vithin five (5) BusiJless Days hort!
the .Exct·cise Notice, the ON PUR H.oJdel· must settle any and all outstanding sums
due as of the dale of the Exercise Nl1lice pursuant to lhis Agreemenl (other {hetll
the ON PDR Exercise Price which must hc settled \vithin Thirty (30) Business
Days from the Exerci:)c Notice) including its pro rata slmre or
the Operating
Expenses H.llCl the Operating Fund (as hereinafter derlned) HS a cundillUIl
precedent to the ON PDF:. Holder's exercise of its PUR Ex.en:ise Rig.ht.

8. Ti)}CntioH uncI Stamp and Other Duties

R.I Any a.l1d all docw.nentary,slacnp (ax, capita! gaim: tax, d.ollor's lax, alld allY
Lransfcr or sill1iJar fees due on t.he delivery of Ibe Underlying Shares upon
"1-'1,

cxcn:isc by the ON PDR Holder of it!) Exercise Right shall be for the accouut 0/
the ON rDR Holdel/.

S.2 Til the event that Ph lippine JRW impm;c;.; 'withholding taxes on any distributions to
be made by the l:-;st~r to thePDR Holder hereuIlder, the hSllcr shall 1;Vii.ltllOld [he
smne at the applica, le rates which may from time to time be in ctTect, provided
however, that .if tbf PDR Holder LiLnely sLlbmits a [ax Lreaty relief application
properly filed wit11 land stamped teceived by lhc BIl<. or proof of tax exclllpLioll
uuder the tax sparit/g provision of appJicable lRW, tlle Issuer shall wifhhold [·rom
such payments an on written instructions ftom the PDR [{older tlte applicable.
tax at raLes provid d under the tt-eaty provided, 01· the tax sparing prov1sion.
H.o-vvever, in the Ilvent the ElR issues all assessment against the IsslIer in
cOill.lectioll with tb i. same, tile Issuer and the ON PDR [-folder shalt enter into
good faith discussic Ins regarding hov,r 1.0 respond to the BUt Tn all Gllch cases, Lhe
amount of the. addillonal tax assessment and any additions to taxes due tbereon as
well as all related cost of litigatioll shall be for the nccount or the ON PDR
Holder. Notwiti.lsta.ldillg an~Ytbiilg to the contrary, the Issul::r, through its Board of
Direclors, and upo the aHirmD.tive vote of PDR Holde.rs holdillg at least t\VO-
thirds (2/35) of uJl ulstandin~ PDRs, ruay obtajn financing specifically to settle
6l:\.iJ tllX !:1.13seSS11lCn if il js iryl1w best inlerest of the Issuer to seale the same :llld
all costs relaled Lo 'ibc same. (includi11g financing costs) sball be for the account. of
the ON PDR Hold I·.

9. Cash Dividends and Othl 'r Cnsh Ui.',tributions

I
9.1 PDR$ which have !lot yet beell exercised and which remain outstanding HIe
entitled to cash dis dbuL10ns ·in accorda.tlce with this Condition 9.

9.2 Tf and whenever he Company shall isslle {lny cash dividends or other c[lsh
distributions paid n l"espect of the Shares cegisterc:d ill the name of the Issuer,
such cash dividenu1t. or uther l:ash wstributions shall be. applied to the lldlo\ving:
I
9.2.1 the opcrnti: g expetisGs then due (including but not limited [0 ;1pplicablc
trD{CS, aucU tors' fees, all d admi IJ is lTative expenses, ill COllLlcct i.on v\lith,
llmong ol1,cr things, djstribudon of noLice to tI-.IC PDR Fl01dcl's) (the
"Openlttl1l Expenses") of [he Jssner for lhe preceding nnd current ye;tr as
certified b) the Auditor;

9.2.2 a furlb y [ m .ounL equal to the Operating ExpGns<::s in lhG preceding year as
certLficd bj Auditor (the "Operating Ji'mHl"), whjch shall be set aside
to lT1Cct OP( or otber expenses for the succeeding year; aud

9.2.3 liny amount temainingin excess of the !\ggre.gate of the Operating

.Expen. os and the Operating Fund, shaH be promptly distributed to the
PDR }- -pro rata after sllch casb dividends are received by lbe Iswer,
llet of app abte taxes 91~. such distr.ibulioDS and direct expenses illCUlTed
in relation to such djstributlOllS (as applicable), The pro rata sbare of each
PDR Holder in such distIibution :dJell[ lJe detcrmitH.:d by ChEll certain
fractiol1 the numerator of whidl shall be the number of undedying shures
pertailling to the PDRs held by suchPDR Holder and the. denmninatur or
which shall be the total number of Shares registererl in the [mille: of lhe
Issuer.

10. AddWonaJ PURs and Helaled Adjustn1ents

 10

Upon the OCClllTCllCe of [lilY or the following cvenls, the lsSllcr sllilU, s.ubject to Conditiol1
] 1, issue addilional PDRs or ll1ake such <1cljUSll1lcnl.s to tbe tel1l1S of (he ON PDRs set out.
herein. SllOUld any event giving rise to the isslHUlce of nny such lldditional PDRs 01
ac~justment such that it would be capable of fulling within more than one of Conditions
lO.1 to 10.5, it shall fall within the first of the applicable Conditions to tile exclusiun uf
the rcmairling Conditions. i

10.1 Distribution of Shares

If Clud whenever the Issuer shaH receiVE or become entitle.d to receive from the
Company Hny distribution ill respect of the Underlying ~;hareswhjch consist of"
free distribution of Shares, including but not limited to stock dividends, the J:;suer
shall, \oVittl regard to the additiona.l Sb3Jes received, grant additional PDR~; lo (he
ON PDR Holder Rnd shall put in ESGTOW the stock ccrlitlcal.es representing sucb
additional Underlying Sbares \vilb the Escrow Agent.

In the event tiJat tire Compauy gn:mts [I.lT option ~o fece:ivc Shares or cash if!
respect of [1 divjdend, the Issuer !)!Jall seek instl1lctiol1s lJ·nm the ON PDR Holder
a::; to what type of dividend the Issuer should receive.

l (L2 Distribution other than in Cash OJ Shales

If and whenever the Issller shnl] rccc.lvC or become cntit.lcd to recei..,.'e from file
Company any distribution Tn securitie8 (other than Shares} or in other property
(otber than cash) in re.r;pect of the Underlying Sbales, the Issuer shall fcntll\vitb
pnwnre <.klivery or
fluch securijies or other properLy pro rnto lo Ihe ON PDR
Holder, subject to compHance ,yiiJl applicable laws and reglllaL!ons [11 the
Philippines, including bnl not limited to payment of applicable tax.t~s.

If de livery of suell securities or other properly (or any part there.of) pro rota to the
ON PDR Holders 1S not pennitted unde.r Philippine law, the lssuel·, in lieu of!3ur.;h
deliver}', shall cause the sale of sllch secucities or other propeliy in accorc.bnce
'"vith applicable laws and regulatiol1s in the Philippines and procu[-e tbat tlie nel
proceeds of su.ch sale arc applied as pnwided jn ConcUtiol1 9.

10.3 Rights ]ssues

If a.t](l whenevel· the Company anl10unces its intention to make any otler or
invitation to tbe holders of Shaws to subscr.ibe for or to acquire shares, senuities
or olher assets byway of rights, lhe ls~;uer shall give notice of such rights UfCtT t.o
lhe ON "PD.R Holder ill accordance with Condition 16. The Issuer r;ha.ll, upon
receipt of an amount cOJTcsponuing to the relevant subscliprion price (includi.l1g
all costs imd expenses related to Ule exercise of the riglJts) from the ON PDf(
Holder, be required to exercise suell rights und, subject to applicable Itllvs Hnd
regul[ltionR in tlH; Philippincfi, shall c5\ercisG (,l]ch rights ill respect of the
Underlying SlHu·e:i wilh respect to Slleb Sbares, securilies or other assets utTered
by way or rights. New Shares acquired by way of right;) shaH be trcaleJ :liS a
distribution of Shares as described in Condition 10. J. Securities or other assets
acquired by v.,ray of tigbts shall be treated as a distribution other tbemin cash. or
Shares us described in Condition IO.L

In such event, an amount equivalenl to the price paid ror such new Shares shall be
allocated by the Issuer as the Deposit attributable Lo each such new PDR,

Any rights in respect of Underlying SlJares nor so exercised two (2) Business
Days bcfmc the offer or invitation 1S due to expire shall be permilLecl by the ls:;ncr
Lo lapse.

/
 II

10.11 Changes in Cnpital Stock, Merger or Consolidalion

Tf there shall be a change in the par value, subdivision, consolidatiun or other

reclassi11cation of Ule ShElres, or upon Hny reduction of capital or upon any
reorganization, merger or rynsolidali()? of the Compal1Y or to which the COlllpany
is a party, tile Issuer shall give-notice of such event lo the ON PDR .HolJ.c:rs. 'rhc
Issuer sllall, in consultallon wilh al~l' investment bank of intenJaLlonul repute.,
ac.\iust the relevant l)DR Exerci~;e Right ii1 respect to the llmnbcr of Underlying
Shares to be delivered on exercise of" an ON PDR Holder or the exchange of ON
PDR:. for new Series PDRs which reflect (he effect of such change. The Issuer
may, as may be necessary, ,vithdraw the share cenificates representing the:
Underlying Shares from the Escro'Yv Agent and replace them il1l11lcdintdy
Lhcrealter wilh tbo new stock cerLiftcaLes in accordance wilh lhe resultR (] C the
events described ill this Cond.ltloll 10.'1.

10.5 Analoguus Evcnts

In tile event that the ShlUTS become: entitled to allY rights wlJich ale not provided
ubuvc, or an event occurs which is analogous to any event described above, the
Issuer shall, in cOllsullalion with an lnves!menL bank of international repule, Ireal
SUdl entitlement or event irany 1Twnncr set out herein or other'wise so as to
cli.slribtlte or otherwise pass on the economic cqujvalen! of sud righL<; (11
analogous event under the PDRs.

10.6 Adju;:;lIne.nt 1() the ON T'DR Exercil'c Right, ON PDR [<::~el cisc Price ancj Depwlit

Upon any of the: occurrence of the events described in Conditions! 0.1 to 10.5
above, the JSSUCl" shall, upon the rccomt:nenc1atioll of an investment ba1Jk or
international repute, make such adjustments to the ON PDR Exercise Price iLlld
the Deposit or the ON PDR Exercise Rights if it determines [hat the issuance uf
adcLilional PDRs is inadequate, and s\lch ac\justment is necessary to preserve the.
economic equivalent of the. obligadons of the lfisucr under the ON PDRs.

! 0.7 Taxcs

Any and all costs and taxe,') (includilIg when applicable f,urcharges, intel"est. and
penalties on those ttL-Xes} due in respect of Blly distribution under this Comlitic'rI I ()
shull be for llie account of Ole ON PDR l-!older, subject to Con(Lition 8.2. The
Issuer shall, upon nolice from lhG Company that a Laxable non-cash dislribulioJ1 lS
to be made, reqtlirc from the ON PDR Holder the monieS for the payment of slIch
ta.xcs aod if applicable, additions to taKes, subjeGt to Condition 8.2.. Taxes clue. un
c<lsh_distributions to tJH~ o.N PDR Holder shall be v;ritll1JeJd by tile Issuer
therdi·orn for remillance to Philjppine tax aUlhorities, s\.1bjed to Condition 8.2. 111
both situations, the Issuer shall compute taxes based on rates applicable to non-
resident foreign persons which are not entitled to <Iny special rales under
Philippine lax 1aws unlcss the Holder can timely show compliance vliLh Philipplne
tax laws. regulations and issuances that would eJ1tiLle tbe ON PDT<. .Holder to a
lower lvithJlOlding lax raLe pursuant to Condition 8.2. RIlC :;11al1 llse its
rEllSOllab!e cOlllmercial eftorts to pnrvide the ON PDH- I-llJlder s\'ilh assislance tu
recoup any and all excess amounts withheld 3ud remitLed tu Philippine tax
iluthorities to ht:: reclainll.d by the ON PDP. Holder UlH\er any treaty or nlh!:rwi,<;e

10.B Period for Delivery

The :Issuer shall deliver all such d.isLributions pcrlainil1g 10 the ON PDR Holdel
wiLhin {hirly (30) daysn'om the submission by lhe ON POR. Holder of satisfacLory
, 1

11

evidence that it has complied with its obligatiol1S tmdcr CondiLion iL2. hcrc~l)r
unless such longer period will be ngrecd in writing bet-ween the lssuer <lnd llle OJ'!
PDR Holdee For avoidance ,clf doubt, tile [ssuer shall compute laxe~; based 011
rates applicable to nOll-resident foreign persons whidl are not entitled lu allY
special rales under Philippine (a,,,\: la"\ls unless the Holder call timely !;how
compliance with Pl1iIippine tax la.vV!}, regulations 3.nd iSSt1:3.1ICeS that would entitle
the ON PDR Holder to i1 lower withholding tax ralc pursuant to Condition g2.

11. FrndioH1l1 Entitlements and Odd LO($

1 L] If more than Olll.~ ON PDR is excn~ised at anyone r.ime or additional tJrH.lerlying

SlIares are to be received in acconicU1ce wit.h Condition 10, the number ur
Underlying SlJares (0 be delivered upon exercise or received by the Issuer
folll)wing such exercise or (lcUuslmcnl \vIII he c:alcl.llaled on the basis of the
aggregate Dumber uf ON PDRs to be exercised or whicll have not beell cx:crciscd,
<IS the case may be.

11.2 No fractioD of a Share shalt be delivered or received by [he T~suer 011 excrci::;c oj
lhc 01"[ PDRs foflowi.ng an (lttju5lmcul La lbe SlwreH held by the l:;:;u(:1 in
acconlulJce with Conditioll 10.

11.3 Additional PDRs will only be issued ill accordance: with Condition I () if it is
possible to issue at least one PDR to each ON PUR Holder pro "o/a to iU, holding
o[ON PORi).

11. Undedakings

12.1 The Issuer undertakes cUld commits as and n'olT\ the. dlLte bere,ofal1dwhik the ON
PD1Zs are outstllnding and remain une)a~.I"cist'u that:

12.1.1 it will, unJess prohibited by applicable ];:t\W; Olnd regulation, give its
GOf1,')cnl anrl US~~ ils bc~<:t endeavors to 1acilitale any dif,I~·ihu(iDll ..~ak (11-
subscription pmSLlal1t to tbe ON PDns in accordance with COllditioll
10;

12.1.2 it "vill not, witbout prior good fu.ith cUscussiol1s \li.rlth ON PDR Bo Iders
and \Ntlbout the appruval of Hollkrs holding at !east two-·Lllirds (2/J01)
of all issued !li1d outstanding PDRs, aller, modify or otherwise change
its Arlides of Incorporation or By-laws or fake any other action \vilb
the objcclivc of chang1ng itspril\lary purpose as a holding Gornpany or
expanding its buslness as presently set out tn its conSlitutive
dOGUlllents, or where such altera.tion, modification, clwngc UI ad ion
\vill prejudice any rights in relation to the PDR-:;

12.1.3 it will, at 1111 limes wilhin the period staled lJerei!l, 0\'1'11 slllTICient
Underlying Slwxcs to discharge its obligation under Ule ON PDRs, amI
for tllis purpose., it shalJ immccUatdy put in cscro\:<,1 with lht: Fscrow
Agent the stock c.ertificates cove:ring the total Underlying Shares ilS
may be ac\jllsted frDm time to time. to be cO[fveyed to the Or'! PDR
Holders assuming fllll exercise () r the ON PDRs. all of \vhicl!
lJmkrlyillg Sh<1re.<: f\n~fully paid rind norHl,~~~:;;;able) c1uly im!o!scu ur
willI tmnsi'er powers attached, free from pre-emptive. rh~hl, light 01
filSl refusal or olher similar rights hdd by or gr<1ntelt ("or the benefit uf
any other person other lhan as ptovidcd in t.he rc\,;;v<lllt agreements
bellvcclI lhc ISSllcr and the ON ]lDR JIoldcr; CI1:)U1C that the same Ole

;'
I
,"

IJ

not withcl.rawn from the c.scrmv, cschealecl, s.equestered. sole\, disposed.

or mortgaged, pledged or oLben:visc el1cumbered other thaD as agreed
by and bet'ween the Issuer and the ON PDR Holder or attached or
gamished upon orders of allY governmental agencies) courts 01
lTibl1Ilnls; and gunranle.e that upon exercise or
the PDll Exercise Right,
the Underlying Shares will be duly and validly tranRferred to [he ON
PDR Holder exercising {he PDR Exercise Right, fully paid awl 11011-
asse.ssab Ie;

12.1A it \vill not amend or rnake allY supplemenl to this fns(rUInCllt or in ally
way lTludify the PDR Exercise Right or attacl, any restrictions ther'do
without prior good filitll discussions with ON PDR liolde:rs and
without the approve!j of the PDR Holden; ill all ExtrHordimllY
Resolution (ns hereinafter deCincd);

12.1.5 it. will only catTY on the hlJsiness or holding ~;harcs alld other equily
interests ill the Company Of alld/or' nJIiliates flJlU subsidiaries of dle
Company;

12.1.6 it 'willnot, witholll prior good fltith discussionswilh ON PDR Iloldc.n;

and wi.lbout the approval. of PDJZ Holders balding at least lwo-lhinls
(2/3s) of all issued and ontstaBcLing PDHs, .incur any obligatioll, debt
or liability, or incur Dr pennit to exist any indebtedness, act ,lS surety,
endo[-se any dran/bill or ilote on behalf of third parties (ulliess the
same: is beneficlal to Dr connected to tile business of the Compaoy or
or its ~;Hh;;i(\isrie~ (.Ind/or nrrilii:tles) or- otltenNiso incm allY In(lIldary
obligation which ,vould iu allY way materially or adversely affect its
ability to meet its obligations \HH.le:r this IllstnlIm.:nt (ulllc:ss such
obligation, debt, liability or indebtedness is ill the lJatnrc of payabks or
accmals arising from administrative e:xpcnseEi);

12.1. 7 it ,vill maintain it!., status as a Philippine Person, ql.wlified to hold

share~) in lhe Company;

12.l.S it will declare and payor otherwise transfer distributions to t'1f'~ ON

PDRHoIc/cr promptly after receipt of a dividend disrributi,)Jl {rOil I ehe
Company within such period as reguired under Conclilion I 0.2 ~ltl.d
Condition 10.8; and

11.1. 9 il will ensure Htal its obligaLiolls under the ON PDRs and lbe
Tra.1lsacllon Documents rank at least pari passu in all rcspccL') with ull
other obligations under the .PDRs issued by RHe 3S artlle date: of thjs
Inst.rume.nt u.s well/ as PDRs issued Ul1der the same terms aml
conditions as the. PDRs issued under lhe Scl;nlC tenns Hnd conditions as
the ON PDR;q.

12.2 The Issuer undertakes to cause the Company Hom lilt date hereor ;lJJcl ,vhile the
ON' PD1zs arc outstauding:

IL2.! unless' prevented by applicnble law or regulatioll, to give. the

Compuny's consent uno llse its best endeavors to tUcilitale any
llistributiollS, sale or s.u\J:;cripliol1 pmSUatit to the ON PDPdi ill
acconlance \vith ConditiOll 10;

12.2.2 [lOt to, without pIlor good faith discussions '\viih ON PD1:Z 1'[oldl:1 S fwd
wifhout the approval of PDR Holders holdi!lG; at least (\-I/o-thi,d.') (;?/Js)
of Ldl issued anti oUlstandiog PDRs, aILe!", modifY or olll!~I'wise: c1Hlllge:
 [he Compllny's Artif.lcs of Illcorponllion or By~hJ\.V5 or take allY other
action whc:rc sl1d~ aitcralil)l1, modification, change or acLioJ) \Iv'itl
prejudice lbe rights ill relatioD to 11K ON PDRs; and

IL1.3 to send the ON PD.R Holder, at the same time as the $,Une al e ~'ien( to
the COl11party's .sharehold.ers, audLlecl aCGolJ.nl~) anti all Utill.'T llOrices,
reporLs and commuuications dispalched by the C'OlllpalJ)' to
shareholders generalJy. induding the occurrence of any of the events
u.cscribed in COllditiolls 9 and 10, it being understood that thi~; is only
for purposes of information, and that the OtT PDR HoWer shall not b~
el1titlcJ to dividends (excl::pt as othervvise provided in Conditions 9 and
J 0), voting rights or Dlher shareholders rights lUlUJ exercise uf the l'DR
Exercise Right.

13. Pnymen!l:S

Any payments of cash in relation to the ON l'DRs shull be Hl(l(ie to lllfJ 01'" PDR Hulder
in Pesos by cheek dr<:lwn against a bank in lvktro ~/Ial1i!a.

14. Issue or Ne"Y PDRs

Subject to applicable Philippine laws alJd regulations, the Issuer may is:-l\lt; additional
PDRs for as long ns the pari passu ranking or the ON PDRs a:, set Ollt in Condition 3 ! is
maintained.

l5. Expropriation or Liquidation

III the event tlHlt:

15.l all the Shares or all the assds or substanLially all of lllC assels of" the Cl)JnpciJ1j' are
expropriated oX othc:nvisc required to be transferred to 3ny governmental agency,
authority or elltily; or

15.2 l)'y rem;Of1 of the liquidation) wiT1ding Hp or dissolution of lhe COl11pany (i) all (he
Sll1lres are required. to btl transferred to nuy trm;tee, receiver, liquidator OJ oLher
similar oHlcial or (it) all holders of the Shares become ll.~gally proldhiled from
u;lllsfening them:

thell tbe Issuer shall payor deliver to the 1folder such cash or assets received upon
cxpLOpciaUol1 or liquidation pro ]'(1[0 to their interest in the 01',T PDRs, llel of applicabk
taxes, Edler· which, the related PDR Exercise Tl.ight and other rights under the ON PDl.zs,
slinIlF.Htl)\yitb tel1l1inate. The Issuer shall promptly payor deli VET such Cl\f,!J m ns~;elS
pmsllilll! to C:(~ndiLi()n 10.R. /\l1y such taxt::, n:~ Jl1'ly due on fiuch dclivEr'Y or cash or W;,';(:Ic;
to the ON PDIZ Bolder shall be subject Lo Condition g,].

16. Notices

/\1I notices, PDIZ. Certificales, checks and other documents required or' permitted herein to
be sent to Lhe ON PDR Holder or to which the ON PDR H.older is entitled or 'which the
Issuer shaH have agreed to deliver to the 01.\1 PDF. Holder may be delivered by persunal
delivery Of by llHliJ addressed to lbe ON PDR Holder (otherwise than in accordance with
Btl Exncisc Notice) at iu; registered address, HlId by illtcrnaliona! courier sha.1l /Ie used if
" "

t5

that address is nol in the Philippines. All uocuments clclivercJ or HCJ]t ill l1CCmdHllCC
herewith shall be uelivCl"ed or sent allhe fisk of the rele"\lanl ON PDR Holder.

17. J'Vlectilll!,s of' Holders; JHod.ificat.ion

17.! The I:;suer may, al any lime prior to Expiry Date OIl lln own initialive ur al uny
cime upon a request .ill writing of the Holders holding mIL less I.tmn Olle·[el1[11
(1110) in number of tbe iSS11Ccl and outstanding PDRs, convene (\ meeting of PDR
Bolders.

17.2 Notice specifying the day, time (lod place of the meeting shall be given to L1le
Holders at le.ast fifteen (15) Business Days prior to lhe da.te set for the rneetlng
(exclusive of the day 011 \vhich nolice is given allli or !lie doy OJ\ which the
meclfng is to be hetel.)

L7.3 At any meeting, 'where at least the number of persons present, in pel'son holdiilg
rIm.s or beiog proxies, (md iloIding in aggregate not less than oIle-(enth (1/10) in
mU1Jber of the issued and outstanding; PDRs at such time shall except for lilt:
purpose of passing 3 resolution proposed by [he Issuer and ,,,bieh lUOlUJic;; or
varies Lbe righls of the HoJde1s umJer UlC 1'DH.5 (tll1 "Extraordinary Resolution")
rann a quorum for the t1'lIllsaclion of business and no business (uCher tfrall the
choosing of a chairman) shaH be transacted at any meeting unless the requisite
gU011lJl1 (except for the pUl]Jose of' passing an ExtmordiJlf.Jry He:~:;DluJ:iull) be
present at: the com1Jl.cncement of business. Any resolution, except an
Ex(raurdinary Resolution, sh,~t be GOns.ltie:reJ approved when passed il1 a dllly
convened meeting by l10l less th,m a lllD.jority of the votl~:S C<l:'iL by Holde!'s as
being euLitled to 00 so, whether voting in person or by proxy.

17.·4 The C]uonU11 at any meeting for passing a.n Extraordinary Resolutio1l to modify or
vury the righls of Holders shall be Holders holding in lhe aggregate two-tilirds
(2/3) of lhe issued UlH.l out.~tn.ndillg PDRs. All Extraordinr:uy HesCJlnlion shall be
passed in a duly convened J)1cetjng upon the affirmative vote: or Holders holding
at leas1 tvvo-tbirds (2/3) of all iSEued and outstal1Uijlg PUR:). ;\n EXttaOld(\1;ll'Y
Resolution passed at a meeting of Holders cluly convcnt~d 8lHl held shall be
bindillg upon the Holders, whether or not pre;:ent at such meeting, ulld each uf the
Ho.idels shuJI be bound to give effect to it accordingly.

t7.5 PDRs which have not been exercised but in respect of which all Exercise Nutlce
hR.S been deposited will not cOl~fer the right to attclld or vote aI, or joill ill
c.unvening. or be counled in the quomm fol', allY meeting of the H.oldcrs.

J 7. 6 Allln)' meeting, 011 shoyV of hands, eller)' Holder who is present jl1 person or ill !he
case of a corporatioll, by duly aUlhorized representatives, and allY person who i:i a
holder of a proxy :from a Holder shall have one vote in re.spcct of each PUF
r~gic;l.ered in hi;; IHllnt~ or in reRpcct or
'which he: is pr{)xy ()r a corporate.
represElltativc_ Any perSall entitled to more llIm! one voLe lIeed DoL Wi!.: all hiG
votes or cast all the voles to wbich he is entitled in the same way.

17.7 'The rights to the PDRs may be varied or abrogated by an Ins.trument ,)1 otl1(T'.vise
executed by or on behalf of the Issuer subject to the proposed variatiun or
abr.ogation first being approved by an Extraordinary Resolution of the 1I oldet·:'i.
The Issuer may, wilhout the consent oCtheHolders, effect uny mod! licaliull I)f the
pruvisions of the PDRs or tlljS IJtstrument to cure any iUnbiguity or CUlItX! or
supplement emy provision hereof that may be incomplete 01 inconsistent wiih allY
oClier provision hereof, so loog as such amendment Llflc/.C(' (IIis Com1i(inn r 7.? tI\les
nol aclvcrsely arfect lhe interests of any Holder or which is necessary in un\t>r ll)
 16

compJy wiLh mandatory proVJ!i'lOJlS ort]1I::: \Cl\'V5 of Lilt: Pbilippines. Any such
modification shall be binding on (he Holders and sb.al! be 110Iificd [0 them by (he
Issuer in accordance with CODdjtioll J 6 as soon as practicable: lhercaf1er. The
issuance of Ilev; PDRs pursuant to Condition ! 11 or lhe termination of the PDR
Exercise Rigl.1ts pursuant to Condition 15 sball not be subject to 811 EXlraurdinary
Resolution ofthe Holders.

1 iJ. Clo5uH: of l}DR Registry Bool{

The registration of transrer may be sllsjJelH.lecl, and the PUR Regislry Book may be clused'
r()f sllch period as the Directors or the Issuer may thllTl time to time announce, provided
that the same cannot be closed for a period or more than nfteen (15) Business Days at
any onc time; or more than sixty (60) days throughout the Exercise Period. Any lranSrCl
of Lhe PDR or eXeJCise of the PDR ExercisE Righl made while the PDT<. Registry Bonk is
so closed shall, as between the Issuer and the person claiming un del' the relevant trallsfer'
of PDRs or, as the case may be, as bctweeJJ the Issuer 3ud the Holder wl1() has so
exercised the PUn.. E.;xercise Rigbt, be considered as made immediately altcr lIJC
l"eopelling of the PDR Registry Book.

19. Goyerning Law

The ON PDRs and this PDl< [nsttUmcnt ale governed by, and shall be construed itl
l.lccon.lance wid.!, the laws of the Republic oflhc Philippines.

{Signature pugefi.Ii'lowsJ

I
[N WITNESS WHEREOF, the Issuer tlwOl1gh jts respective representative hereto has signed lllis
agreemenl at the place and 011 the dale flrst above writtel1.

Issuer:

By:

Name: rV(aria A Ressa

PU5itio.'l: P!Tsiden1

/
·, ,
/

ANI'ffiX A

EXERCISE NOTICE

RAPPLF~R HOIJDINGS CORPORA rrON

Philippille Depositary Receipts (PDHs")
Hclatin g [0 Shan:s or
IlAPPLEH,llNC.

EXEHCISE N 01'1 CE

The unJersigl1t':c\, being the regis(cn:d holder of the Philippine Depnsitary Receipts C'PDRs")
(cprcscl1lcd by the attached PDIZ Certificate:

(a) hereby inevocably eleet(s) to exercise the PUR Exercise Right tu tbe: eKlcnl 01
___.______._._ _ _ _ PDlZs, being in \','hole or part oflhe PUR:; represented .herein, (bue
ill. any case not to 1esult in the issuance uf i.i.-acli.unal shares) and hereby ilWlrucl(s) the
Jssller to deliver the Shares to the undersig:ned.

(b) rcquest(s) that U1C balance of PDRs JCllmining ullc:xcrclsed auu (dOer dccil1ding the
Humber set out 111 (ct) above), be issued in the name(;;) or the person whm:e 11(\111e(5)
stond(s) in the PDR Registry Book as tbe PDH. holder (or joint PI:)R holders in tIJ(:' \'8~;e oi'
a jOl(1t lJoldiog).

The lUldcrsigllcd ackJlo\vledgc(s) LU1d Jeprescnt(s) that it is 111e benc1Jc.ial OWller of the r'IJRs
subject of this Ex.ercise NOLice. 'I'he undersigned agrees that Rappler Holdings Corpomt.lon's
obligations in respect of the PDR Exercise Right arc dischargell upon delivery of the Slwfc(s) to
the UmlersigneJ pursuant to this f-:xercisc Notice and the. PDf( Instrument executed by Rapplel
Holdjngs Corporation dat.ed as of _________________ .

Signalme

NationnUty

Date

Coul1rll1atiOll Heccip!:
Rappler Holdings COlvoralion
By:

l'-lamc:
POtll!ion:
Date and lirne. of Receipt:

/
 ANNEXB

PDR CEHTIFICATIL

PHILJPPINE DEPOSITARY RECEIPT CERTIFICATE

RAP_PLER110LDINGS CORl'ORATION
Incolporalcd Under /he Lmvs of/he Repuhlic o./llze Pill'Jippines
Issue/'

l{e1Rting to Existing SIl:); cs of H2ppln, Iue.

U1Iderlying SlulI-es

TI115 Certifies tbat ______________ is/are the [cgi1itcred holder(s) of the Phijippine Dcp()sitI1ryRcccipt~
("PDJZ.s") conlained herein and is/are entitled, upon paymellt oflhc T'UR Exclcise Price in 3ccnrdal1cc; with tbe PDR
lusb-ulnent executed by RHppkr IJoldillgs Corporation dated ni; of ____ (the "PDR InstlllmcnC), [0 the delivery
of olle (I) existing share of stock of Rapplcr, Inc_ for everyone (l) PUR beld.

The rigflt grflntcciullder lhis PDR may be exercised comrncncitlg on _______._______ and fl.!: arry' time thereafter.

TlIts PDR forms part of an autborized isslie of PDRs granting the Holuer tlJe r.ight 10 deJivery ofLllC slJares at [be
PDR Exercise Price in accordance with the PDR Instrument. which PDRshave been issued subjecl tu Hnd with lhe
bClleiiL of tlIe P[)H. Instrument and (lre enforceable by the Holder against UJC Issuer. Copies of tJIG )'))1<. Instrument
arc available fur U15pGction by [be Holders at, amI Dlay be obtuiueu by them Horn, tbe principtLl place 0 r business () I'
Ole Issuer. The Holder sbaU be decmcu to have notice of the provisions containEu in lllc sl1id PDT( InstrulllclJ( (and
::wy instruJ11Cnl SUpplC11lCllted thereto)_ j
n,t: PlJT( represented 7)), this Cel-ffjicule docs i,lOT represent s/1Ures (!/"stock bllt OIlZJ' COlfji!, . ., {/ r(ghr. 10 {he delivf?1J'
or .'-wle (~rexislil1g shores a/stock o.fRappler, Inc. oJ.1med hy {he issuer /llJder the terms alld condilio)).r sEaled herein
w/d il1 file PDR JII-S{71J.fIIE?nL

lit Witness whet-coL, Lile .Issuer has caused this Certi(lc';lle lo be signed by its duly authorized off-jeers find to be
sealed 'with the Senl of the Corporation thi;-; ____ day of_.____________ -

Prcsi.dcut CorporaLe Secrctclry

/
ANNEX" e" I
[_-.-:::~--..J

- -~

-:~'"
. . . . .s-:
'-
".

~§~
::.~ ...
~~.

~. ",

":'~"
 PDrt Certificate No. 00 I

PHILn)PINI~ OEPOSITARY UECEU)T CERTIJi'ICATII

ItAPPLEH. HOLDINGS CORPnnATION

Incorporated Uflder the Laws of the Republic offhe Philippines
Issuer

Relating to Eristing Sha.'es of Rapph~t', Inc.

264,601 Umlcr(JJinff A)'lwres

This CertifIes that NB1Vl' RAPPLER, L.P. is the registered holder of the Philippine Depositary
Receipts C'PDRs") contained herein and is entitled, upon payment of the PDR Exercise Price in
accordance wjth the PDR Instfumeht executed by Rappler I-Ioldings Corporation dniee! as oftvIay 29,
2015 (the "PDR Instrument"), to the delivery of one (1) existing share of stock of Rappler, Inc. for
every OIle (1) PDT\. held.

The right granted under this PDR luay be exercised commencing on 1\.1ay 29, 2015 and at any lime
thereafter.

This PDR forms part of an authorized issue of PDRs granting the Holder 1be right to delivery of the
shares at the PDR Exercise Price iin accordance witl11he PDR Instrument, which PDRs have been
issued subject to and vvith the benefit of the PDR Jnstrumenl and are enforceable by the F{older
against the Issuer. Copies of the BDR Instrulnent artl
available for inspection by the {-.folders at, and
may be obtained by them from, the principal place of business of the Issuer. The Holder shall be
deemed Lo have notice of the pro\1isions contained in the said PDR lnslrument (and any illslfurnent
supplernented thereto)_
/
111e PDR represented by fhis Cert(ficare does NOT Jyepresent shares (~f slock bul only cOI!fers a right
to the del~l,'.elY or sale of ex.jsting _~·jwres ~fstock. o.lll~ppler, Inc. oll'ned by the issuer under Ihe lerms
and condlf1017S stoied herem and 1JJ the J-'DR InSlI1I1Jlt'l1f.

In Witness whereof, the Issuer hasicaused this Ce~lificate ~o be signed by its duly authorized offIcers
and to be scaled with the Seal ofth:e Corporation this ~~_ day of M4j_dDL.r=-_-

lL_ f ~
________ ~
t-~c _ _ _ _:
_________
i _ __ c;);:a6J-;)~)CJ}.,!----
tv1J\JU/\ A. RESSi\ t/ JOSE 1:VfJ-(. G. f.fOFlLENA
President Corporate Secretary
 ~~~NEX "D" I
pnlLIPPINE DEPOSiTAH.')' f{,ECEfPT CERTIFIC.;\Tr·~

RAPPLER HOLDINGS CORPORAT!O!\!

!(?colpororcd Under the LOlI:S (~/thc Rf/mhlic eli/Ie P/ulippil.'c:.i
Issuer

Relating to Existing Shan.:~; of H.appler, Inc

11,764,1 J 7 U/lderlying S/wres

This ('crtiJl(~S that NB;\l R . \PPLEn., L.P. is the registered holder the 11hi!ippin [)tT'i.hll:lry
tlf l.'

Receipts C-PDRs") contained herein and is entitled, UpOI1 payment (Jf the PDI< E\c'I'~l'':'(' IJ!ic\,' ll)
(lccordal1c~ with the PDf\' lnslrument execmed by Rappler l10ldings C~ol'p()r~ltio!1 Cblc:d ,I:) Ui \ Ltv
29,2015 (the ;'l'DR Instrument"), to tIte delivery or
.JIlC (1) l'>~istjllg sl~.~lre ul' slock .,d' i).i.t:)lli~'[,.
lnc. (()f eVt~ry one (1) PDP... held.

'[ !)i-: right granted unck'l' this PDR !11~ly b\..: exercised u)JrI11lcl1cil1l~), on JI.1I,')() :~CI i :~lil,1 ;\l :11)'

lime lhL~rcajhT.

This PU1{ Corms liar! lll'~lll <1Ulhuriz(:d lSSUt: ofPDRs gr~llllil1g the llClkkl rhe' J,(1 ,Ii ::\<,i ,I
lh.~ shmcs nll.he PDI'~ LXl't'clsc Price in ~lc(:'Jrdan·..:e with the PDR hblrLllrCl1l. \\hi:.:I- i'\J:'~' ! i \ ;
Lk,:'il issued subjt'Cl to tlnd \\'ith (he: benefit of lhe PD1Z Inslrument tlnd ,11\" !~ilJ()r\,,:~!L;;(' :', iil','
lkiein tlgaillst tile Issller. C'upleS 0[' UH~ PUR IIlSlrLlJncl\t (lIT ~n'l\ilabk Ill; ilhP'.:.'I.::U\d Ii' :il'. l

!lutd;::~rs dl, ~1Il\.I may be' obt1inecl by them 1'rU111 , lhe pl'il1cip(J] pbce of bl.lsines:i .,1' !)jl: i:;~IL!\..'!, !)
Hulder sball be deemed 10 have notice of the provisions contained ill the s;\id PU1< Jil'rl'lil;!t['il
(,Illd ~ll1y i nstru1l1cnt supp h:'l11cnted thereto).

-(11t! IJ{J/( /)J? llli,~ (.·.'eriijicclfe L/()t!S i\/()T I'cj)}'eS(!J1t Si7(IFC.Y (~!(,)'/()cJ.- l1ir'( (i;l/'j ,_'Ci}1/c tl
Ft'!-Jrl.?Sc)IIt'(/ 1 '\:

nghf 10 the dc!ivel:\1 ur sule (~lc'xisril7g shure:; qljs,Iock r~,rR({ppler. inc. ()wllcd hi lilt' /\1/11'( i'.'/Ih'i
[hI' {((IllS Lind ('(Judi/iolls sloled herein u17d iii the PDN inS/l'liliJenf.

In \VilncSS whereof the Issuer has clIllsed this Ccni:1cnlc: to be signed by it:; t..illl\ dUlll(ll!LLd
officers and to be scakd \\,1111 tht: Senl of the Corp.Jl'ati')l1 this 29 th clay oCJuly 2015,

1';

,L,,?'7-<- (~~~i%{, :;2~~i:t)r~1~--~-

l\,L\IUA A. RESSA ...- "-JOs-i~\I . ~'.-(;~il~)·i~~~·::·,:. t'~ ,',
Pn:.~sidcnl CI)rporatC' S(:crcUI'\
 PDR Certificate No. 003
/
/
ANNEX "E" I
PIIILJPlpJNJI: DEPOSITARY It.ECEIPT C.ERTIFICATr~

I~J\J>J>LER HOLDINGS COHJPORATION

Incorporated Under the La)!IS of the .l?2]Jublic of the Ph.ilippines
l"isller

Relating to Existing Shares of JRnppler1 Inc.

7,217,257 Underlying Shares

This Ce.rtifies that OlVIIDYAH. NETVVORK FUND LLC is the registered holder of the PhilippIne
Depositary Receipts CPDRs") contained herein and is entitled, upon pcryment of the PDR
Exercise Price in accordance with the PDR Instrument executed by Rappler Holuings
Corporation dated as of October 2) 2015 (lhe "PDR Instrument"), to the delivery of one (1)
existing slmre of stock of Rappler, Inc, for every one (1) PDR held.

The right granted under thjs PDR may be exercised commencing on October 2, 20 J 5 and at any
time thereafter.

This PDR forms part of an authorized issue ofPDRs granting the ·Holder the right to delivery of
the shares at the PDR Exercise Price in accordance with the PDR Instrument, \;<,lhich PDRs have
been issued suhject to and wjth the benefit of the PDR lnstnnnent and are enft)fCeable by the
Holder against the Issuer. Copies of the PDR Instrument are available for inspection by the
Holders at, and may be obtained by them from, the pri.ncipal place of business of the Issuer. The
Holder shall b(~; deemed to have notice of the provi:sions contained in the said PD.R Instnrmellt
(and. any instrument supplemented thereto).

7he PDR represented by this Cert{/icafe does NOT represent share.y of stock but on~}) COI!iers 0
right to the delivery 01' sale ofexis'ting shares afstack (?fRappler, inc. owned by the issuer under
the terms and condifions stated herein and in the PDf? Instrument.

In Witness whereof~ the Issuer has caused this CeJiificate to be signed by its duly authorized
offlcers and to be seaJed ·with the Seal of the COJporatiol1 this 1st day ofDecembcr 20] s.

IVIARIA A. RESSA
President