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Transaction ID 56230851
Case No. N14C-10-186 TBD CCLD
IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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COMPLAINT
Plaintiffs 1 Oak Private Equity Venture Capital Limited, a Cayman Islands exempt limited
company acting for itself and as manager for and on behalf of plaintiff Bluebird Access 1 LP, a
Cayman Islands exempt limited partnership, in their own rights and as successors-in interest to
1 Oak Group Limited, a Cayman Islands exempt limited company, 1 Oak Financial Group Limited,
a Cayman Islands exempt limited company, and 1OAK New Digital Age (NDA) TOP Fund, a
Cayman Islands segregated portfolio of JP SPC5, a Cayman Islands segregated portfolio company,
for their Complaint, allege on knowledge with respect to their own acts and information and belief
with respect to all other matters, as follows:
PARTIES
1.
Plaintiffs 1 Oak Private Equity Venture Capital Limited, a Cayman Islands exempt
limited company acting for itself and as manager for and on behalf of plaintiff Bluebird Access 1
LP, a Cayman Islands exempt limited partnership, in their own rights and as successors-in interest
to 1 Oak Group Limited, a Cayman Islands exempt limited company, 1 Oak Financial Group
Limited, a Cayman Islands exempt limited company, and 1OAK New Digital Age (NDA) TOP
Fund, a Cayman Islands segregated portfolio of JP SPC5, a Cayman Islands segregated portfolio
company (collectively Plaintiffs or 1OAK) is a wealth management and advisory firm and a
group of related funds.
2.
its principal place of business in San Francisco, California, and its registered agent at Incorporating
Services, Ltd., 3500 S. Dupont Highway, Dover, Delaware 19901. Twitter is an online social
networking service that allows registered users to post and send 140-character messages referred
to as tweets.
JURISDICTION AND VENUE
3.
This Court has subject matter jurisdiction over this matter pursuant to 10 Del. C.
and/or otherwise constitutes a complex commercial litigation matter, Plaintiffs maintain that this
case qualifies for assignment to the Complex Commercial Litigation Division (the CCLD) of
the Superior Court of the State of Delaware in and for New Castle County, pursuant to the
Administrative Directive of the President Judge of the Superior Court of the State of Delaware,
No. 2010-3. Plaintiffs elect to have this case heard by the CCLD. Therefore, venue is proper in
this Court.
STATEMENT OF FACTS
5.
and private equity executives to acquire and manage assets for sophisticated institutional and high
net worth investors. In 2011, 1OAK launched the 1OAK New Digital Age Funds to make late
stage pre-IPO Internet and mobile platform investments.
6.
In around early 2012, 1OAK began discussions with Twitter about an arrangement
under which 1OAK would assemble and vet a group of sophisticated investors who would invest
a minimum of $100 million to purchase pre-IPO Twitter shares from Twitter employees or Series
A and/or B early stage investors. Under the proposed arrangement, all involved parties benefitted:
Twitter shareholders would be able to liquidate Twitter shares pre-IPO and avoid post-IPO lockup restrictions; Twitter would provide its shareholders with a pre-approved vehicle for pre-IPO
liquidation of their shares and Twitter would obtain new shareholders with whom Twitter already
had negotiated share restrictions, such as proxy voting rights in favor of its Board of Directors;
1OAK would provide its clients with a pre-IPO internet investment, the value of which (it was
believed) would increase significantly post-IPO; and 1OAK would benefit from management fees
and gain-based participation in the investments. Twitter was an essential participant in the sale of
pre-IPO shares by its shareholders because the shares held by Twitter shareholders were subject
to a right of first refusal (ROFR) held by Twitter and managed by its Board of Directors. As a
practical matter, the ROFR put Twitter in the exclusive position of being able to establish and
determine the pre-IPO market for Twitter shares.
7.
On January 20, 2012, Twitter and a 1OAK entity entered into a mutual non-
disclosure agreement under which confidential business information would be disclosed by each
party and used solely to evaluate business between the parties. The non-disclosure agreement
broadly protects 1OAK and Twitter against the unauthorized use of confidential information
supplied by each party, including but not limited to investor related information.
8.
For the next several months, 1OAK and Twitter engaged in extensive discussions
concerning the terms and structure of their business relationship for pre-IPO investments. Between
February and October 2012 Twitter allowed 1OAK to carry out extensive due diligence on the
company, its management, its past and forward-looking financials and business metrics and its
business model and strategy, also via various meetings held at Twitters San Francisco
premises between both companies top executives. At all times, the transaction contemplated
between the parties was one in which 1OAK would act as an approved buyer of Twitter shares
in private, pre-IPO transactions consummated with Twitter shareholders who desired to sell their
shares. In April 2012, Twitter advised 1OAK that it was satisfied with 1OAKs qualifications as
a potential buyer of Twitter shares, after a review of 1OAKs fund offering memorandum by
Twitters counsel. On April 7, 2012, Twitter drafted and forwarded to 1OAK an Approved Buyer
Agreement. The Approved Buyer Agreement stated that Twitter would designate 1OAK as an
Approved Eligible Purchaser which meant that 1OAK would be eligible to purchase Twitter
secondary market shares, subject to various restrictions related to voting proxies that Twitter knew
were acceptable to 1OAK.
Approved Buyer Agreement meant that Twitter intended to move ahead with the relationship,
1OAK signed and returned the Approved Buyer Agreement to Twitter on April 8, 2012. Twitter
encouraged 1OAK to begin to raise the minimum $100 million as promptly as possible, assuring
1OAK that a fully-executed Approved Buyer Agreement would be forthcoming. Twitter claimed
the agreement was on the desk of busy Twitter managers, waiting to be signed. 1OAK proceeded
to spend substantial time, effort, money and reputation assembling an investor pool to acquire
Twitter pre-IPO employee shares a pool which ultimately far exceeded the minimum $100
million that Twitter said would be required. In September/October 2012, 1OAK provided Twitter
with documents reflecting that 1OAK had obtained investor commitments for $500 million.
9.
Twitters oral and written assurances to 1OAK that it had approved buyer status
continued from April 2012 onward. On April 27, 2012, Twitter forwarded to 1OAK a letter
confirming that an approved buyer relationship was effective and ending with the statement We
look forward to having the [1OAK] NDA Fund as a shareholder in Twitter, Inc. In reliance on
these and other representations, promises, and assurances, 1OAK continued to devote resources to
gathering investment commitments for a large fund to acquire Twitter pre-IPO shares. 1OAK also,
at Twitters request and under the protection of the 1OAK/Twitter non-disclosure agreement,
disclosed to Twitter several of 1OAKs potential investors and facilitated contacts between Twitter
and these investors.
10.
Twitters written and oral assurances kept coming, and 1OAK continued to work
to accumulate investors. On October 12, 2012, Twitters Investor Relations Director Nils Erdmann
(Erdmann) wrote to Emmanuel Lumineau, a 1OAK manager, an e-mail in which Erdmann said:
if these managers [from whom 1OAK was seeking to raise funds to acquire Twitter shares] need
affirmation of your status as an approved buyer, Im also willing to convey that. Erdmann
confirmed 1OAK was the only sizeable ROFR fund approved by Twitter (as well as the only
international fund) during several conference calls in October 2012, organized by 1OAK with
numerous of its prospective institutional and high net worth investors.
11.
of suitable wealth and sophistication to participate in the fund, 1OAK procured BlackRock, Inc.
(BlackRock). BlackRock is the largest asset manager in the world and as such, it was deemed
an appropriate participant in 1OAKs Fund. BlackRock was interested in the transaction and, on
October 17, 2012, BlackRock entered into a non-disclosure agreement with 1OAK and carried out
due diligence on 1OAK. 1OAK delivered to BlackRock its proprietary research on Twitter and
offered BlackRock a governance tie-up option, at all times keeping Twitter, via Erdmann,
informed about the development of the 1OAK-BlackRock relationship. 1OAK also informed
Twitter that BlackRock was very interested in investing in its NDA TOP Fund and that their
expected investment was of sheer size.
12.
In an October 22, 2012 conference call arranged by 1OAK, among 1OAK, Twitter
and BlackRock, Twitters Erdmann described Twitters anticipated involvement in the secondary
market in detail and noted that numerous legal safeguards had been put in place to assure that
Twitter shares only went to shareholders with whom Twitter was comfortable. Erdmann stated
that Twitter could control all share transfers and confirmed again that 1OAK was one of a small
number of funds that would have access to Twitter pre-IPO shares.
13.
After the October 22, 2012 conference call, Twitter abruptly informed BlackRock
that Twitter would terminate 1OAKs status as an approved buyer, which predictably caused
BlackRock to cease working with 1OAK. Twitter began to work with BlackRock directly.
14.
In January 2013, Twitter and BlackRock announced an $80 million pre-IPO share
purchase transaction with Twitter employees, which was the type of investment that Twitter agreed
that 1OAK would develop and for which: (1) 1OAK had been designated the approved buyer by
Twitter; (2) 1OAK developed and procured BlackRocks interest in an investment to be made
through 1OAK; and (3) 1OAK disclosed BlackRocks interest to Twitter under a non-disclosure
agreement that precluded Twitter from using confidential customer information except for a
potential business transaction involving 1OAK.
15.
On February 4, 2013, 1OAK sent Twitter and BlackRock a demand that 1OAK be
Twitter and 1OAK were parties to express and/or implied contracts under which
1OAK was a pre-approved buyer of Twitter pre-IPO employee shares for sophisticated investors
to be procured by 1OAK and both parties were operating at all times under an express nondisclosure agreement. Twitter repeatedly confirmed its agreements with 1OAK through its
statements and course of dealing, which included repeated requests that 1OAK procure potential
investors who would purchase Twitter pre-IPO shares through 1OAK and affirmations of 1OAKs
status. All parties understood that 1OAK was not making its efforts gratuitously and that 1OAK
expected to participate financially as the manager of investment funds that held the Twitter IPO
shares.
18.
1OAK performed all of its obligations or was excused from performing by Twitter.
19.
Twitter breached its contracts with 1OAK by, among other things, purporting to
terminate Twitters relationship with 1OAK abruptly after 1OAK procured BlackRock (a potential
huge and credible investor), which was ready, willing and able to make the investment and by
using confidential information provided by 1OAK for purposes other than a transaction with
1OAK.
20.
As the direct and proximate result of Twitters breach, 1OAK has been damaged in
There is an implied covenant of good faith and fair dealing in the contracts between
Twitter and 1OAK, under which neither side may do anything to unfairly or unreasonably interfere
with the right of the other party to receive and enjoy the benefits of the contracts.
23.
Twitter violated the implied covenant of good faith and fair dealing by engaging in
conduct which frustrated 1OAKs ability to receive the benefits of its agreements with Twitter,
after procuring ready, willing and able buyers of Twitter pre-IPO shares and by diverting all
benefits of 1OAKs successful efforts to itself and other parties.
24.
As the direct and proximate result of Twitters actions, 1OAK has been damaged
Twitter made and reiterated all of the clear and continuous representations and
promises to 1OAK described above, to the effect that 1OAKs efforts in raising funds and
procuring investors would be rewarded by 1OAKs pre-approved access to pre-IPO Twitter
employee shares and related financial benefits.
27.
Twitter reasonably expected and was aware that its representations and promises
would induce, and did induce, 1OAK to dedicate time, money and goodwill to find investors who
were ready, willing and able to invest funds to purchase of pre-IPO employee shares.
28.
It would be inequitable for Twitter and its affiliates to enjoy the benefits of its
relationship with BlackRock, while failing and refusing to compensate 1OAK for its efforts in
reliance on Twitters promises, which efforts directly resulted in the procurement of BlackRock as
an investor.
29.
As the direct and proximate result of Twitters actions, 1OAK has been damaged
1OAK and BlackRock when it induced BlackRock to cease doing business with 1OAK, after
1OAK procured BlackRock (which occurred prior to Twitters purported termination of 1OAK)
and refused to permit 1OAK to participate in the January 2013 transaction by which BlackRock
bought Twitter shares.
32.
As the direct and proximate result of Twitters actions, 1OAK has been damaged
(2)
(3)
(4)
Such other and further relief as this Court deems just and appropriate.
B. As to the Second Claim for Relief for Breach of Implied Covenant of Good Faith and
Fair Dealing:
(1)
(2)
(3)
(4)
Such other and further relief as this Court deems just and appropriate.
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(2)
(3)
(4)
Such other and further relief as this Court deems just and appropriate.
D. As to the Fourth Claim for Relief for Interference with Prospective Business
Advantage:
(1)
(2)
(3)
(4)
(5)
Such other and further relief as this Court deems just and appropriate.
JURY DEMAND
Pursuant to Superior Court Rule 38, Plaintiffs hereby demand a trial by a jury of 12
persons on all issues so triable.
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