Exhibit 10.1

OPERATING AGREEMENT

BY AND BETWEEN

EBAY INC.,

EBAY INTERNATIONAL AG,

PAYPAL HOLDINGS, INC.,

PAYPAL, INC.,

PAYPAL PTE, LTD.

AND

PAYPAL PAYMENTS PTE. HOLDINGS S.C.S.

DATED AS OF JULY 17, 2015

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TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS

     1   

ARTICLE II SERVICES

     11   

2.1

  

Provision of Services; Scope

     11   

2.2

  

Terms and Conditions of Services

     11   

2.3

  

Services to Acquired Properties and Developed Properties

     11   

2.4

  

No Exclusivity

     12   

2.5

  

Additional Services

     12   

ARTICLE III PRICING FOR EBAY MERCHANTS

     13   

3.1

  

Take Rate

     13   

3.2

  

Market Check

     13   

3.3

  

Response to Market Check

     14   

3.4

  

Competitive Platform Operators

     14   

3.5

  

Changes in Law

     16   

ARTICLE IV PERFORMANCE OF SERVICES; SERVICE LEVELS

     16   

4.1

  

Manner of Performance

     16   

4.2

  

Facilities; Personnel

     16   

4.3

  

Subcontracting

     17   

4.4

  

Service Levels

     17   

4.5

  

Root Cause Analysis

     17   

4.6

  

Monitoring

     17   

4.7

  

Disaster Recovery

     18   

ARTICLE V DATA SHARING; INFORMATION SECURITY; PRODUCT DEVELOPMENT

     18   

5.1

  

Data Sharing Addendum

     18   

5.2

  

Access to Facilities

     19   

5.3

  

Systems Policies

     19   

5.4

  

Security and Stability

     19   

5.5

  

Unauthorized Access

     19   

5.6

  

Product Development Agreement

     20   

ARTICLE VI REFERRAL SERVICES FEES; USAGE OF SERVICES; MARKETING

     20   

6.1

  

Referral Services Fee

     20   

6.2

  

Credit Services Referral Fees

     21   

6.3

  

Penetration Rate Payments

     21   

 

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6.4

  

Aggregate Quarterly Fees

     22   

6.5

  

Descriptions of PayPal on eBay Covered Properties

     23   

6.6

  

Integration of New PayPal Products

     23   

ARTICLE VII FEES AND PAYMENT

     23   

7.1

  

Payment Terms

     23   

7.2

  

Taxes

     24   

ARTICLE VIII COMPLIANCE WITH LAW; AUDITS

     25   

8.1

  

Compliance with Law; Books and Records

     25   

8.2

  

Audits

     26   

8.3

  

Audit Responses

     27   

ARTICLE IX CONFIDENTIALITY; USER DATA

     27   

9.1

  

Confidential Information

     27   

9.2

  

Additional Confidentiality Provisions

     28   

9.3

  

Competitive or Similar Materials

     28   

9.4

  

User Data

     28   

9.5

  

Privacy Policy

     29   

ARTICLE X TERM AND TERMINATION

     29   

10.1

  

Term

     29   

10.2

  

Termination by eBay or PayPal

     29   

10.3

  

Replacement Services

     30   

10.4

  

Effect of Termination

     30   

10.5

  

Termination Assistance Services

     30   

10.6

  

Survival

     30   

ARTICLE XI REPRESENTATIONS AND WARRANTIES

     31   

11.1

  

Representations and Warranties by the Parties

     31   

11.2

  

Representations and Warranties by PayPal

     31   

11.3

  

Representations and Warranties by eBay

     31   

11.4

  

Disclaimer of Warranty

     31   

ARTICLE XII INDEMNIFICATION

     32   

12.1

  

PayPal’s Indemnification of eBay

     32   

12.2

  

eBay’s Indemnification of PayPal

     32   

12.3

  

Indemnification Procedures

     32   

12.4

  

Infringement Claims

     32   

12.5

  

Exclusion of Other Indemnification Remedies

     33   

 

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ARTICLE XIII LIMITATION OF LIABILITY

     34   

13.1

  

Limitation of Liability

     34   

ARTICLE XIV MERCHANT OF RECORD; NON-COMPETE

     34   

14.1

  

Merchant of Record

     34   

14.2

  

eBay Non-Compete

     35   

14.3

  

PayPal Non-Compete

     35   

14.4

  

Exceptions to Non-Compete

     35   

ARTICLE XV GOVERNANCE

     36   

15.1

  

Designated Operational Representatives

     36   

15.2

  

Quarterly Reviews

     37   

15.3

  

Internal Audits; Security Review

     37   

15.4

  

Operational Review

     37   

ARTICLE XVI DISPUTE RESOLUTION

     38   

16.1

  

Good Faith Negotiation

     38   

16.2

  

Dispute Resolution Process

     38   

16.3

  

Litigation and Unilateral Commencement of Arbitration

     38   

16.4

  

Conduct During Dispute Resolution Process

     39   

ARTICLE XVII MISCELLANEOUS

     39   

17.1

  

Mutual Cooperation

     39   

17.2

  

Further Assurances

     39   

17.3

  

Relationship

     39   

17.4

  

No Third-Party Beneficiaries

     39   

17.5

  

Amendment

     39   

17.6

  

Compliance with Law

     40   

17.7

  

Assignability

     40   

17.8

  

Incorporation by Reference

     40   

 

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SCHEDULES

 

Schedule 1.1    Additional Jurisdictions Schedule 1.2    Buyer-Only
Jurisdictions Schedule 1.3    eBay Covered Properties Schedule 1.4    eBay
Excluded Properties Schedule 1.5    Excluded Jurisdictions Schedule 3.1   
Comparability Schedule 5.1    Data Sharing Addendum

 

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OPERATING AGREEMENT

This OPERATING AGREEMENT, dated as of July 17, 2015 (this “Agreement”), is made
and entered into by and between PayPal Holdings, Inc., a Delaware corporation,
PayPal, Inc., a Delaware corporation, PayPal Pte Ltd., a company organized under
the laws of Singapore, and PayPal Payments Pte Holdings, S.C.S., a company
organized under the laws of Luxembourg, on the one hand (collectively,
“PayPal”), and eBay Inc., a Delaware corporation, and eBay International AG, a
company organized under the laws of Switzerland, on the other hand
(collectively, “eBay”). PayPal and eBay are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
assigned to them in Article I.

WHEREAS, the board of directors of eBay has determined that it is appropriate
and advisable to separate the PayPal Business from the eBay Business;

WHEREAS, in order to effectuate the foregoing, eBay Inc. and PayPal Holdings,
Inc. have entered into a Separation and Distribution Agreement, dated as of
June 26, 2015 (the “Separation and Distribution Agreement”), which provides for,
among other things, the contribution from eBay to PayPal of certain assets, the
assumption by PayPal of certain Liabilities from eBay, the distribution by eBay
of PayPal common stock to eBay stockholders, and the execution and delivery of
certain agreements in order to facilitate and provide for the foregoing, in each
case subject to the terms and conditions set forth therein;

WHEREAS, PayPal currently provides certain Services to eBay and its customers;

WHEREAS, the Parties desire for PayPal to continue to provide such Services to
eBay and its customers following the Distribution and for eBay to encourage its
customers to use the Services following the Distribution; and

WHEREAS, the Parties have agreed to cooperate in fulfilling the purposes of this
Agreement and to create a mutually beneficial strategic partnership.

NOW, THEREFORE, in consideration of the premises, the mutual covenants,
agreements and respective representations and warranties contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

For the purposes of this Agreement, the following capitalized terms will have
the meanings ascribed to them below. All other capitalized terms not otherwise
defined in this Agreement have the meaning ascribed to them in the Separation
and Distribution Agreement.

“2014 Measurement Rate” shall have the meaning set forth in Section 6.3(e).

 

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“Account Nationality” means the country in which an eBay Merchant or eBay User
is resident according to information given by the eBay Merchant or eBay User in
registering for such eBay Merchant’s or eBay User’s eBay account.

“Acquired Property” means a Property acquired by eBay after the Effective Time,
by way of merger, acquisition, stock purchase or similar transaction, or by
acquiring all or substantially all of the assets of an entity or business line,
including an e-commerce storefront or marketplace, such that such Acquired
Property becomes an eBay Property.

“Action” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Activated New User” means, for any period, a PayPal User that had not sent or
received any payments utilizing PayPal’s payments network prior to the beginning
of the period and that successfully sent or received at least one payment
through PayPal’s payment networks during such period: (a) on an eBay Covered
Property; or (b) on a Property that is not an eBay Covered Property if such
PayPal User was referred by eBay to PayPal through an eBay Covered Property or
other trackable referral from eBay. A referral is “trackable” if eBay and/or
PayPal is able to determine (using a methodology to be mutually agreed upon by
the Parties) whether the PayPal User’s PayPal account was opened as a result of
such referral.

“Activated New Users Adjustment Amount” shall have the meaning set forth in
Section 6.1(b).

“Additional Jurisdiction Property” shall have the meaning set forth in
Section 2.3(b).

“Additional Jurisdictions” means the jurisdictions listed on Schedule 1.1.

“Affiliate” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Aggregate Quarterly Fee” shall have the meaning set forth in Section 6.4.

“Agreement” shall have the meaning set forth in the preamble.

“Ancillary Agreement” shall have the meaning set forth in the Separation and
Distribution Agreement.

“API” means an application programming interface.

“Audit” shall have the meaning set forth in Section 15.3(a).

“Audit Committees” shall have the meaning set forth in Section 15.3(a).

“Audited Party” shall have the meaning set forth in Section 8.2(a).

“Baseline Rate” means eighty percent (80%); provided, that, beginning with the
second Calendar Year during the Term, effective as of the first day of each such
Calendar Year, the Baseline Rate shall be increased or decreased by an amount
equal to (a) the Penetration Rate for

 

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the previous Calendar Year calculated using the foreign currency exchange rates
used by eBay for its internal planning and budgeting purposes for the current
Calendar Year (and not the actual foreign currency exchange rates in effect
during the previous Calendar Year) minus (b) the Penetration Rate for the
previous Calendar Year. For example, if the Penetration Rate for the previous
Calendar Year was 82% but the same Penetration Rate, when calculated using the
current Calendar Year’s foreign currency exchange rates used by eBay for its
internal planning and budget purposes, equals 83%, then the Baseline Rate for
the current Calendar Year will be increased by 1% to 81%.

“Baseline Referral Services Fee” shall have the meaning set forth in
Section 6.1(a).

“Buyer-Only Jurisdictions” means the jurisdictions listed in Schedule 1.2.

“Calendar Year” means the twelve (12)-Month period ending December 31; or,
(a) with respect to the first such twelve (12)-Month period that includes the
Effective Time, the portion of such twelve (12)-Month period after the Effective
Time, and (b) with respect to the twelve (12)-Month period that includes the
last day of the Tail Period, the portion of such twelve (12)-Month period before
the last day of the Tail Period.

“CEO Assessment” shall have the meaning set forth in Section 15.4.

“Change of Control” means, with respect to a Party, the occurrence after the
Effective Time of any of the following: (a) the sale, conveyance or disposition,
in one or a series of related transactions, of all or substantially all of the
assets of such Party to a third party that is not an Affiliate of such Party
prior to such transaction or the first of such related transactions; (b) the
consolidation, merger or other business combination of a Party with or into any
other Person, immediately following which the stockholders of the Party prior to
such transaction fail to own in the aggregate the Majority Voting Power of the
surviving Party in such consolidation, merger or business combination or of its
ultimate publicly traded parent Person; or (c) a transaction or series of
transactions in which any Person or “group” (as such term is used in
Section 13(d) of the Exchange Act) acquires the Majority Voting Power of such
Party (other than a reincorporation or similar corporate transaction in which
each of such Party’s stockholders own, immediately thereafter, interests in the
new parent company in substantially the same percentage as such stockholder
owned in such Party immediately prior to such transaction).

“Colocation Services Agreement” shall have the meaning set forth in the
Separation and Distribution Agreement.

“Commercial Agreement” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Common User Data” shall have the meaning set forth in Section 9.4(b).

“Competing Business” shall have the meaning set forth in Section 14.4(a).

“Competitive Platform Operator” means a PayPal Specified Person, together with
such Person’s wholly owned Subsidiaries.

 

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“Confidential Information” shall have the meaning set forth in Section 9.1.

“Contract” means any loan or credit agreement, bond, debenture, note, mortgage,
indenture, lease, supply agreement, license agreement, development agreement or
other contract, agreement, obligation, commitment or instrument, including all
amendments thereto.

“Covered Jurisdictions” shall mean the jurisdictions (other than Buyer-Only
Jurisdictions and Excluded Jurisdictions) that are included in the determination
of eBay Core GMV as of the Effective Time (based on user Account Nationality)
and any Additional Jurisdictions from which eBay Merchants or eBay Users access
Acquired Properties that have become eBay Covered Properties (also based on user
Account Nationality).

“CPO Conditions” shall have the meaning set forth in Section 3.4(a).

“CPO MFP” shall have the meaning set forth in Section 3.4.

“Credit Services” means (a) all actions, activities and operations of PayPal
that enable PayPal Users to make payments to eBay or to eBay Merchants in
connection with transactions effected through any service or offering available
on an eBay Covered Property that are funded in whole or in part through credit
extended through PayPal (including by credit issued by a third Person) and
(b) any applicable Related Services.

“Credit Usage Fee” shall have the meaning set forth in Section 6.2.

“Data Protection Laws” means any data protection Laws, privacy Laws, or other
Laws relating to the protection of Personal Information or other data or
information, including Laws relating to payment data security, whether currently
in force or enacted during the Term.

“Data Sharing Addendum” shall have the meaning set forth in Section 5.1(a).

“Designated Operational Representative” shall have the meaning set forth in
Section 15.1(a).

“Developed Property” means a Property established or developed by eBay after the
Effective Time, including an e-commerce storefront or marketplace (it being
understood that Developed Properties excludes all Acquired Properties).

“Development Project” shall have the meaning set forth in Section 5.6.

“Disaster Recovery Plan” shall have the meaning set forth in Section 4.7.

“Disclosing Party” shall have the meaning set forth in Section 9.1.

“Dispute” shall have the meaning set forth in Section 16.1.

“eBay” shall have the meaning set forth in the preamble. As used in this
Agreement, all references to “eBay” shall be deemed to refer to eBay and its
Subsidiaries.

 

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“eBay Addressable GMV” means, for any period, (a) the eBay Core GMV for such
period minus (b) the GMV for all eBay Properties (other than eBay Excluded
Properties) for such period that results from a transaction where (i) the eBay
Merchant’s Account Nationality is a Buyer-Only Jurisdiction or (ii) both the
eBay Merchant’s and eBay User’s Account Nationality is the same Excluded
Jurisdiction minus (c) if eBay creates a localized Property in China, the GMV
for such localized Property that results from a transaction where both the eBay
Merchant’s and eBay User’s Account Nationality is China.

“eBay Core GMV” means, for any period, (a) the GMV for all eBay Properties for
such period minus (b) the GMV for all eBay Excluded Properties for such period.

“eBay Covered Properties” means (a) all eBay Properties in existence as of the
Effective Time that are not eBay Excluded Properties, including the eBay
Properties set forth on Schedule 1.3, (b) all eBay Properties that become eBay
Covered Properties pursuant to the terms and provisions of this Agreement and
(c) any mobile applications made available by eBay from which an eBay User may
bid for, purchase, sell or list goods or services on or through the eBay
Properties described in clauses (a) and (b).

“eBay Excluded Properties” means the eBay Properties set forth on Schedule 1.4.

“eBay Group” shall have the meaning set forth in Section 12.1.

“eBay Merchant” means a third Person seller, merchant or other provider of goods
or services that makes use of or accesses the Services through an eBay Covered
Property.

“eBay Name and eBay Marks” shall have the meaning set forth in the Separation
and Distribution Agreement.

“eBay Property” means a Property that is directly or indirectly owned or
controlled by eBay (other than any such Property owned by a Person in which eBay
does not directly or indirectly own the Majority Voting Power of such Person).

“eBay Restricted Business” shall have the meaning set forth in Section 14.2.

“eBay User” means a registered user of services offered by eBay identified by a
unique account ID issued by eBay.

“eBay User Data” means customer or user information, including Personal
Information, collected during the term of this Agreement from an eBay Merchant
or from an eBay User that makes use of or accesses the Services through an eBay
Covered Property.

“Effective Time” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Escalation Committee” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Estimated Activated New Users” shall have the meaning set forth in
Section 6.1(b).

 

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“Excluded Jurisdictions” shall mean the jurisdictions listed in Schedule 1.5.

“External Audit” shall have the meaning set forth in Section 8.2(a).

“External Auditor” shall have the meaning set forth in Section 8.2(a).

“First-Party Transaction” shall have the meaning set forth in Section 14.1(a).

“GMV” means, for any period, the total value of all successfully closed
transactions between users on an eBay Property during such period, regardless of
whether the buyer and seller actually consummated the transaction, excluding
vehicles and real estate. In the event that eBay significantly changes its
definition of GMV for purposes of its public financial reporting, the Parties
will revisit the impact that any such change in definition could have on the
Penetration Rate and make any appropriate adjustments so that the intent of the
parties with respect to the Penetration Rate remains in effect.

“Governmental Authority” shall have the meaning set forth in the Separation and
Distribution Agreement.

“Group” means the eBay Group or the PayPal Group, as applicable.

“Highly Sensitive Information” means, with respect to a Party, information
confidential to such Party in the following categories: (a) user data, including
Personal Information, that is not anonymized or aggregated; (b) algorithms,
Source Code, Object Code; and (c) specifications and technical documentation
regarding system security, fraud and abuse protection systems and detection of
illegal or unusual activities that, in each case, relate primarily to the PayPal
Business (in the case of eBay as the Receiving Party) or the eBay Business (in
the case of PayPal as the Receiving Party), as applicable. “Highly Sensitive
Information” shall not, however, include any information which: (i) is or
becomes commonly known within the public domain other than by breach of this
Agreement or any other agreement that the Receiving Party has with any Person;
(ii) is obtained from a third Person (other than Personnel of the Receiving
Party) who is lawfully authorized to disclose such information free from any
obligation of confidentiality; or (iii) is independently developed without
reference to or use of any Highly Sensitive Information or Confidential
Information of the Disclosing Party.

“Indemnified Party” shall have the meaning set forth in Section 12.3(a).

“Indemnifying Party” shall have the meaning set forth in Section 12.3(a).

“Independent Expert” shall have the meaning set forth in Section 3.2.

“Initial Notice” shall have the meaning set forth in Section 16.1.

“Initial Term” shall have the meaning set forth in Section 10.1.

“Integration Work” shall have the meaning set forth in Section 2.3(b).

 

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“Intellectual Property Matters Agreement” shall have the meaning set forth in
the Separation and Distribution Agreement.

“Intellectual Property Rights” shall have the meaning set forth in the
Intellectual Property Matters Agreement.

“Interest Rate” means a rate per annum equal to the Prime Rate plus two percent
(2%) or the maximum rate under applicable Law, whichever is lower.

“Internal Audit” shall have the meaning set forth in Section 15.3(a).

“Internal Audit Party” shall have the meaning set forth in Section 15.3(a).

“Law” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Losses” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Majority Voting Power” means a majority of the voting power in the election of
directors of all outstanding voting securities of the Person in question.

“Market Check” shall have the meaning set forth in Section 3.2.

“Market Check Report” shall have the meaning set forth in Section 3.2(c).

“Merchant of Record” means, except as otherwise agreed by the Parties, the
entity that PayPal holds financially liable for all full and partial returns as
well as any chargebacks initiated by the customer.

“Month” means, unless the context requires otherwise, a calendar month or, with
respect to the first calendar month that includes the Effective Time, the
portion of such calendar month after the Effective Time.

“Non-eBay Merchants” means sellers, merchants or other providers of goods or
services that make use of or access PayPal’s payment processing services other
than through an eBay Property.

“Object Code” means the fully compiled, machine-readable version of a software
program that can be executed by a computer and used by an end user without
further compilation.

“Operational Review Group” shall have the meaning set forth in Section 15.4.

“Party” shall have the meaning set forth in the preamble.

“Payment Gateway” means point of sale Software that links a merchant’s website
or selling application to such merchant’s processing network and merchant
account.

“Payment Services” means (a) all actions, activities and operations of PayPal
that enable eBay Merchants to receive payments from PayPal Users, and/or other
eBay buyers using a guest check-out flow or other PayPal processing service such
as Braintree or Pro, in any manner offered by PayPal in connection with
transactions effected through any service or offering available on an eBay
Covered Property and (b) any applicable Related Services.

 

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“PayPal” shall have the meaning set forth in the preamble. As used in this
Agreement, all references to “PayPal” shall be deemed to refer to PayPal and its
Subsidiaries.

“PayPal Group” shall have the meaning set forth in Section 12.2.

“PayPal Net TPV” means, for any period and of any Property, the total U.S.
dollar volume of payments, net of payment reversals, successfully completed
during such period through Services available through such Property (but
excluding payments sent or received through PayPal’s Payment Gateways or through
PayPal products that are not substantially similar to the PayPal products
offered on eBay Properties).

“PayPal Net TPV Off eBay” means, for any period, the PayPal Net TPV of all
Properties other than eBay Properties for such period.

“PayPal Restricted Business” shall have the meaning set forth in Section 14.3.

“PayPal User” means a registered user of the payment processing services offered
by PayPal that enable users to make or receive payments using a PayPal account
(also known as a PayPal wallet) identified by a unique account ID and/or an eBay
Merchant.

“PayPal User Data” means customer or user information, including Personal
Information, collected from merchants and users of PayPal’s services during the
term of this Agreement.

“Penetration Rate” means, for any period, (a) the eBay Addressable GMV
successfully completed through Services available through eBay Covered
Properties (including Services executed utilizing a “guest” check-out feature
but excluding payments sent or received through (i) PayPal’s Payment Gateways or
(ii) any PayPal product that the Parties agree from time to time should be
excluded because the Take Rate for such product is calculated using a
“cost-plus” formula) for such period divided by (b) the eBay Addressable GMV for
such period.

“Penetration Rate Payment” shall have the meaning set forth in Section 6.3.

“Permitted Recipient” shall have the meaning set forth in Section 3.2(d).

“Person” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Personal Information” means any information that identifies, or could
reasonably be used by or on behalf of the recipient of such information to
identify, any Person, including names, addresses, bank or other account numbers,
and national identification numbers, but excludes anonymized and aggregated
information that cannot be used to identify any Person.

“Personnel” means, with respect to any Person, any of such Person’s directors,
officers, employees, agents, independent contractors, permitted subcontractors
and consultants. Subcontractors of eBay shall be deemed Personnel of eBay, and
subcontractors of PayPal shall be deemed Personnel of PayPal.

 

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“Platform” means the technology, software, content, functionality, equipment,
networks, Systems and any other materials delivered or used by PayPal in
connection with providing the Services.

“Product Development Agreement” shall have the meaning set forth in Section 5.6.

“Product Development Plan” shall have the meaning set forth in Section 5.6.

“Prohibited Conditions” shall have the meaning set forth in Section 3.4(b).

“Property” means a website or mobile application, including an e-commerce
storefront or marketplace.

“Providing Party” shall have the meaning set forth in Section 12.4(b).

“Quarter” means any of the following during any calendar year: the three
(3)-Month period ending March 31, June 30, September 30 or December 31; or, with
respect to the first three (3)-Month period that includes the Effective Time,
the portion of such three (3)-Month period after the Effective Time.

“Quarterly Statement” shall have the meaning set forth in Section 7.1(a).

“Receiving Party” shall have the meaning set forth in Section 9.1.

“Referral Services Fee” shall have the meaning set forth in Section 6.1(a).

“Related Services” means, with respect to Credit Services or Payment Services,
as applicable, (a) providing an available web or client-end application
interface for eBay Merchants to accept payment and for PayPal Users to fund
their accounts (where applicable) and transfer payments, processing and settling
such payments, and maintaining records of transactions and balances through and
in the accounts of such eBay Merchants and PayPal Users, (b) any and all
services, functions, or responsibilities not specifically described in the
definition of the applicable Services that are within the scope of the
applicable Services and/or that are inherent in, required for, implied by, or
incidental to the proper performance and provision by PayPal of the applicable
Services and (c) any and all improvements and upgrades to, extensions of,
successors to or substitutes for any of the applicable Services or any of the
foregoing developed or offered by PayPal at any time during the Term.

“Renewal Term” shall have the meaning set forth in Section 10.1.

“Requesting Party” shall have the meaning set forth in Section 8.2(a).

“Residual Information” means information in non-tangible form that may be
retained in the unaided memory of Personnel of the Receiving Party who have had
access to the Confidential Information of the Disclosing Party.

“Security Review” shall have the meaning set forth in Section 15.3(b).

 

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“Separation and Distribution Agreement” shall have the meaning set forth in the
recitals.

“Service Levels” shall have the meaning set forth in Section 4.4.

“Services” means the Credit Services, the Payment Services and the Related
Services.

“Source Code” means the human-readable version of a software program that can be
compiled into Object Code, including programmer’s notes and materials and
documentation, sufficient to allow a reasonably skilled programmer to understand
the design, logic, structure, functionality, operation and features of such
software program and to use, operate, maintain, modify, support and diagnose
errors pertaining to such software program.

“Specified Change of Control” means a Change of Control of PayPal with any eBay
Specified Person or their direct or indirect Subsidiaries or controlled
Affiliates.

“Subsidiary” shall have the meaning set forth in the Separation and Distribution
Agreement.

“Systems” means, with respect to a Person, such Person’s computer equipment,
software, servers, network infrastructure and other hardware or information
systems (and components thereof) used in the operation of each Party’s
respective business and otherwise used in connection with and/or necessary to
provide or receive, as applicable, the Services hereunder.

“Tail Period” shall have the meaning set forth in Section 10.4(a).

“Take Rate” means the fee PayPal charges a merchant to process a payment using
PayPal’s payment services or offerings, measured as (a) net revenues received by
PayPal from the transaction divided by (b) the amount of such payment (including
any portion thereof paid to PayPal), in each case of clauses (a) and (b), in
local currency.

“Take Rate Offset” shall have the meaning set forth in Section 3.3.

“Take Rate Overage” shall have the meaning set forth in Section 3.3.

“Tax” means any income, gross income, gross receipts, profits, capital stock,
franchise, withholding, payroll, social security, workers compensation,
unemployment, disability, property, ad valorem, stamp, excise, severance,
occupation, service, sales, use, license, lease, transfer, import, export, value
added, alternative minimum, estimated or other tax (including any fee,
assessment, or other charge in the nature of or in lieu of any tax) imposed by
any governmental entity or political subdivision thereof, and any interest,
penalties, additions to tax, or additional amounts in respect of the foregoing.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.

“Transaction Taxes” shall have the meaning set forth in Section 7.2(a).

 

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“Technology” shall have the meaning set forth in the Intellectual Property
Matters Agreement (including Software).

“Term” shall have the meaning set forth in Section 10.1.

“Termination Assistance Services” shall have the meaning set forth in
Section 10.5.

“Test Jurisdiction” shall have the meaning set forth in Section 14.1(d).

“Third-Party Claim” means any Action, whether civil or criminal, at Law or in
equity, made or brought by a third Person.

“Transition Services Agreement” shall have the meaning set forth in the
Separation and Distribution Agreement.

“User Data” means eBay User Data together with PayPal User Data.

“Viruses” means any and all viruses and other contaminants (including code,
commands, instructions, devices, techniques, bugs, web bugs, or design flaws)
that are intended to be used to access (without authorization), alter, delete,
threaten, infect, assault, vandalize, defraud, disrupt, damage, disable,
inhibit, or shut down either Party’s Systems or other information or property.

ARTICLE II

SERVICES

2.1 Provision of Services; Scope. During the Term, PayPal shall provide the
Services to eBay Merchants and eBay Users that make use of or access the
Services through the eBay Covered Properties. This Agreement does not address
PayPal’s provision of the Services through any eBay Excluded Property. eBay and
PayPal shall mutually agree on any additional Properties that should be included
in the eBay Covered Properties or the eBay Excluded Properties and shall jointly
amend Schedules 1.3 and 1.4 to reflect such mutual agreement.

2.2 Terms and Conditions of Services. The Services shall be subject to the terms
and conditions set forth herein and in the applicable User Agreement for each
PayPal User, including the policies set forth therein. If any terms of this
Agreement conflict with the terms and conditions of the applicable User
Agreement, then as between PayPal and such PayPal User, the terms of the User
Agreement shall govern to the extent of the conflict.

2.3 Services to Acquired Properties and Developed Properties. Except as set
forth below, all Acquired Properties and all Developed Properties shall be
Excluded Properties:

(a) If an Acquired Property or a Developed Property is incorporated into an eBay
Covered Property or into a mobile application supporting or relating to an eBay
Covered Property in a Covered Jurisdiction, such Acquired Property or Developed
Property shall be included in the eBay Covered Properties; if the Acquired
Property or Developed Property continues to exist as a separate and distinct
Property, the Parties shall jointly amend Schedules 1.3 and 1.4, as applicable,
to reflect such inclusion. For purposes of this Agreement, an Acquired Property
or a Developed Property shall be “incorporated” into an eBay Covered Property,
as

 

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described in this Section 2.3(a), if: (i) eBay Users who attempt to access such
Acquired Property or Developed Property are directed or redirected to an eBay
Covered Property or to a web page or series of web pages that directs such eBay
Users to an eBay Covered Property; (ii) the functions available or previously
available on or through such Acquired Property or Developed Property are made
available on or through an eBay Covered Property; or (iii) if such Acquired
Property or Developed Property is primarily located in an Additional
Jurisdiction, the total inventory of goods and services available on or through
such Acquired Property or Developed Property is substantially equivalent to the
total inventory of goods and services available on or through an eBay Covered
Property.

(b) If an Acquired Property is primarily located in an Additional Jurisdiction
and, as of the date eBay consummates the acquisition of such Acquired Property,
PayPal provides payment processing services to non-eBay Merchants in such
Additional Jurisdiction (such Acquired Property, an “Additional Jurisdiction
Property”), the Parties shall mutually cooperate in good faith to determine the
scope and cost of the integration work that would be required to enable the
Services to be made available through such Additional Jurisdiction Property in a
manner that is substantially equivalent to the manner in which the Services are
made available through the eBay Covered Properties as of such date (“Integration
Work”) and shall use good faith efforts to negotiate any changes to the Product
Development Plan required to complete the Integration Work; provided, that
neither Party shall be required to agree to a change to the Product Development
Plan that would materially delay or impede the completion of any current or
projected Development Project or require such Party to invest a materially
higher amount of resources into the Product Development Plan. If the Parties
mutually agree on the required changes to the Product Development Plan in
accordance with the immediately preceding sentence, the applicable Party or
Parties shall perform the Integration Work on the timeline set forth in the
revised Product Development Plan. Upon the completion of such Integration Work,
the Acquired Property shall be included (or shall be deemed to be included) in
the eBay Covered Properties and the Parties shall jointly amend Schedules 1.3
and 1.4, as applicable, to reflect such inclusion.

(c) If an Acquired Property is a customer of PayPal at the time such Property is
acquired by eBay, PayPal shall continue to provide to such Property all Services
provided by PayPal to such Property prior to its acquisition by eBay in
accordance with the terms of the then-existing agreement(s) governing the
provision of such Services for a period ending on the later of (i) the
expiration of the then-current term of any such existing agreement and (ii) the
earlier of the completion of Integration Work for such Property and/or the
incorporation of such Property into an eBay Covered Property.

2.4 No Exclusivity. This Agreement shall be non-exclusive, and any Party (and
any Party’s Subsidiaries) may, subject to Article 14, contract with other
Persons for the procurement or provision of comparable (or unrelated) services,
including the provision of services to eBay Merchants and eBay Users that are
PayPal Users on eBay Excluded Properties.

2.5 Additional Services. PayPal may also provide through eBay Properties
services different from and in addition to the Services as eBay may reasonably
request or require from time to time. The use of such additional services
through eBay Properties will be governed by the terms and conditions of, and
subject to the fees for, such additional services (a) as found on the applicable
PayPal website in the jurisdiction in which such additional services are
provided or (b) as mutually agreed upon by the Parties.

 

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ARTICLE III

PRICING FOR EBAY MERCHANTS

3.1 Take Rate. It is the intention of the Parties that the Take Rate charged to
eBay Merchants immediately following the Effective Time shall remain generally
consistent with the Take Rates charged to such eBay Merchants as of immediately
prior to the Effective Time. Furthermore, following the Effective Time and at
all times during the Term, PayPal shall use reasonable best efforts to cause the
Take Rate charged to comparable eBay Merchants (determined on an aggregate or
average basis) to be comparable to the Take Rate charged to Non-eBay Merchants
for comparable payment services in each Covered Jurisdiction using a methodology
to be mutually agreed from time to time by eBay and PayPal. The Parties shall
determine whether eBay Merchants and Non-eBay Merchants are “comparable” by
segmenting such eBay Merchants and Non-eBay Merchants using the characteristics
set forth on Schedule 3.1.

3.2 Market Check. Annually during the Term (or more frequently as mutually
agreed by the Parties), a third-party, independent expert mutually agreed upon
by the Parties (the “Independent Expert”) will, with respect to each Covered
Jurisdiction, review the actual Take Rate for comparable (x) eBay Merchants with
an Account Nationality in such Covered Jurisdiction (determined on an aggregate
or average basis) and (y) Non-eBay Merchants in such Covered Jurisdiction,
including Non-eBay Merchants that use or access PayPal’s services through
Properties operated by a Competitive Platform Operator (other than Non-eBay
Merchants that are also Competitive Platform Operators) (each such review, a
“Market Check”), in accordance with the following procedures:

(a) The Independent Expert shall be an independent, external internationally
recognized firm with appropriate qualifications and experience in conducting
reviews of this nature.

(b) Before beginning a Market Check for a Covered Jurisdiction, the Independent
Expert shall execute a confidentiality agreement with PayPal and eBay (or their
respective Subsidiaries in such Covered Jurisdiction), the terms of which shall
not frustrate or impede the purpose of the review or the disclosure of the
results thereof to the Parties. If the Independent Expert has executed a
confidentiality agreement in accordance with this Section 3.2(b) during the Term
and such confidentiality agreement remains in full force and effect, the
Independent Expert shall not be required to reexecute a second confidentiality
agreement.

(c) The Independent Expert shall create a detailed written report of the results
and findings of the Market Check for such Covered Jurisdiction (each, a “Market
Check Report”) and simultaneously provide copies of each Market Check Report to
both eBay and PayPal. The Independent Expert shall not disclose any Highly
Sensitive Information that, if disclosed to eBay or PayPal, as applicable, would
cause PayPal or eBay, as applicable, competitive harm, and shall not disclose
any information to the extent disclosure of such information to such Party would
violate applicable Law (including the law of a Covered Jurisdiction). Neither
Party shall be required to disclose to the Independent Expert any information to
the extent disclosure of such information to such Independent Expert would
violate applicable Law (including the law of a Covered Jurisdiction).

 

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(d) The Independent Expert shall conduct the Market Check in a manner that does
not unreasonably interfere with eBay’s or PayPal’s business operations. Each
Party and its respective Subsidiaries shall reasonably cooperate with the
Independent Expert in connection with the Market Check, including by providing
the Independent Expert with access to relevant financial and accounting books
and statements, management and operating data, records and sample or survey data
previously collected by such Party, financial statements, Systems, facilities,
operations, and management Personnel and other Personnel, but only as reasonably
necessary for the purposes of the Market Check, and ensure that its Personnel
cooperate with the Market Check and all other reasonable requests by the
Independent Expert for additional information or documentation related to the
Market Check.

(e) Each of the Parties acknowledges that the Market Check Reports will contain
information that is commercially sensitive and, accordingly, each Party agrees
to restrict access to the Market Check Reports to its Personnel to whom
disclosure is essential to execute their job responsibilities (each, a
“Permitted Recipient”), which Permitted Recipients shall be mutually agreed in
writing by the Parties from time to time. Before receiving a Market Check
Report, each Permitted Recipient shall agree in writing not to distribute the
Market Check Report to any Person that is not a Permitted Recipient. Upon the
consummation of a Change of Control of eBay, eBay shall, at its option and as
promptly as practicable after such Change of Control, either (i) return to
PayPal all Market Check Reports in its possession or (ii) confirm to PayPal that
it has destroyed such Market Check Reports (other than any such information
located in back-up, archival electronic storage that is accessed only by eBay’s
information technology Personnel).

3.3 Response to Market Check. If the Independent Expert concludes following a
Market Check for a Covered Jurisdiction that the Take Rate charged to comparable
eBay Merchants with an Account Nationality in such Covered Jurisdiction
(determined on an aggregate or average basis) is higher than the Take Rate
charged to Non-eBay Merchants for comparable payment services in such Covered
Jurisdiction (the amount of such excess, the “Take Rate Overage”), then
(a) PayPal shall cause the Take Rate charged to comparable eBay Merchants with
an Account Nationality in such Covered Jurisdiction (in aggregate) for the
remainder of the Term to be comparable to the Take Rate charged to Non-eBay
Merchants for comparable payment services in such Covered Jurisdiction and
(b) eBay and PayPal shall cooperate in good faith and mutually agree on actions
to be taken by PayPal and by eBay (if any) to communicate such change in the
Take Rate to, and to remedy the Take Rate Overage during the previous year or
years of the Term for, some or all of the eBay Merchants with an Account
Nationality in such Covered Jurisdiction, including by means of a refund,
discount or otherwise (the “Take Rate Offset”). If the Parties cannot mutually
agree on the Take Rate Offset for a Covered Jurisdiction, the Parties shall
resolve such dispute through the dispute resolution provisions set forth in
Sections 16.1 and 16.2.

3.4 Competitive Platform Operators. In the event that PayPal offers to Non-eBay
Merchants that use or access PayPal’s services through Properties operated by a
Competitive Platform Operator in a Covered Jurisdiction (other than Non-eBay
Merchants that are also Competitive Platform Operators) (a) overall economic
terms that are more favorable than the

 

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economic terms offered at such time to eBay Merchants accessing the Services
through the eBay Covered Properties primarily located in such Covered
Jurisdiction or (b) any non-economic term that is not offered at such time to
eBay Merchants accessing the Services through the eBay Covered Properties
primarily located in such Covered Jurisdiction (unless such non-economic term is
exclusively offered at such time to Non-eBay Merchants who use or access
PayPal’s services through Properties operated by such Competitive Platform
Operator in such Covered Jurisdiction and is not offered at such time to other
Non-eBay Merchants) (any such term described in clauses (a) or (b), whether
temporary or permanent, a “CPO MFP”):

(a) Offer to eBay. Promptly after offering a CPO MFP to one or more Competitive
Platform Operator(s), PayPal shall offer to eBay, on behalf of comparable eBay
Merchants in such Covered Jurisdiction, the same CPO MFP, along with all other
terms and conditions directly related to such CPO MFP, including any terms and
conditions required to comply with applicable Law and any amendments or
modifications to any Contracts to which eBay is a party (the “CPO Conditions”),
other than any Prohibited Conditions. As part of such offer, PayPal shall
provide to eBay the material terms of the CPO MFP and of the CPO Conditions in
sufficient detail to enable eBay to evaluate the material terms and determine
whether to choose to accept the CPO MFP and to comply with the CPO Conditions
(other than the Prohibited Conditions). eBay shall notify PayPal in writing no
later than ninety (90) days following eBay’s receipt of such material terms
whether to accept the CPO Conditions (other than any Prohibited Conditions). If
eBay chooses to accept the CPO MFP, eBay shall use reasonable efforts to comply
with the CPO Conditions (other than any Prohibited Conditions) as soon as
commercially reasonable following the date eBay communicates its acceptance to
PayPal, and the CPO MFP shall be effective with respect to eBay Merchants
immediately upon eBay’s compliance with the CPO Conditions (other than any
Prohibited Conditions).

(b) Prohibited Conditions. If one or more of the CPO Conditions is: (i) a term
or condition with which eBay is not reasonably capable of complying, (ii) a term
or condition applicable to merchants with which the eBay Merchants (in the
aggregate) are not reasonably capable of complying, as described below;
(iii) unique to such Competitive Platform Operator (such that only the
Competitive Platform Operator could comply); or (iv) designed or intended to, or
operates to, frustrate or interfere with, or otherwise has the effect of,
discriminating against eBay or eBay Merchants or frustrating or circumventing
the application of this Section 3.4 (collectively, the “Prohibited Conditions”),
then eBay and the eBay Merchants shall receive the CPO MFP without having to
comply with such CPO Condition (provided, that eBay complies with all CPO
Conditions that are not Prohibited Conditions). By way of example: (A) eBay and
eBay Merchants will be deemed to be not “reasonably capable of complying” with
any and all terms or conditions to the extent that they (1) impose a condition
or requirement of size or ranking (in aggregate or with respect to a specific
jurisdiction) that is unrelated to the Competitive Platform Operator’s payments
volume on PayPal and that exceeds the size or ranking of the applicable eBay
Covered Properties, (2) require eBay or eBay Merchants to violate any applicable
Law or Contract (other than any Contract that may be amended by eBay without the
consent of the other party or parties thereto to eliminate such violation) or
(3) would require eBay to operate a Property that is not an eBay Covered
Property or own or control operations in a jurisdiction that is not a Covered
Jurisdiction; and (B) subject to clause (A), eBay shall not be deemed to be not
“reasonably capable of complying” with a term or condition solely because such
term or condition requires eBay to pay or commit to pay any amount or incur any
obligation in favor of or offer or grant any accommodation (financial or
otherwise) to the Competitive Platform Operator or in respect of such CPO MFP.

 

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(c) In connection with the Market Check, the Independent Expert shall review the
CPO MFPs, if any, offered by PayPal during the year covered by such Market Check
and PayPal’s compliance with the terms of this Section 3.4. The Independent
Expert’s review shall be conducted in a manner consistent with the procedures
and policies for the Market Check set forth in Sections 3.2(b), (c) and (d), and
PayPal shall provide the same level of cooperation to the Independent Expert
that PayPal is required to provide in connection with the Market Check.

3.5 Changes in Law. If PayPal changes the terms, conditions or manner of
performing the payment processing services it offers or the Take Rate charged to
merchants for payment processing services in a Covered Jurisdiction in response
to a change in Law, PayPal shall use its reasonable best efforts to implement
such change in a manner that does not have a disproportionately adverse effect
on the Take Rate charged to, and the terms, conditions or manner of performing
payment processing services for, eBay Merchants relative to the impact on
Non-eBay Merchants.

ARTICLE IV

PERFORMANCE OF SERVICES; SERVICE LEVELS

4.1 Manner of Performance. PayPal shall, at all times, ensure that the Services,
and PayPal’s obligations under this Agreement, are performed at the highest
level of quality provided, or required to be provided, by PayPal with respect to
comparable services provided to or for Non-eBay Merchants and PayPal Users, and
by appropriately trained and qualified Personnel in a timely, professional and
workmanlike manner. PayPal shall promptly notify eBay upon becoming aware of any
circumstances that could reasonably be expected to jeopardize the performance of
the Services or PayPal’s obligations under this Agreement in accordance with
this Article 4, and eBay shall promptly notify PayPal upon becoming aware of any
circumstances that could reasonably be expected to jeopardize the performance by
eBay of its obligations under this Agreement in accordance with this Article 4.

4.2 Facilities; Personnel. Except as otherwise expressly provided herein,
(a) each Party shall be responsible for providing all facilities, Personnel and
other resources necessary to perform its obligations under this Agreement and
(b) without limiting the foregoing, PayPal shall be responsible for providing
all facilities, Personnel and other resources necessary to perform the Services;
provided, that if eBay has agreed pursuant to another Ancillary Agreement or
Commercial Agreement to provide to PayPal any facilities, Personnel or other
resources used by PayPal in performing the Services, then eBay shall be
responsible for providing such facilities, Personnel and other resources
pursuant to the applicable Ancillary Agreement(s) and Commercial Agreement(s).
Each Party shall manage, supervise and provide direction to its respective
Personnel in connection with this Agreement, and shall cause them to comply with
all obligations and restrictions applicable to such Party under this Agreement
and, to the extent set forth in the proviso to clause (b) of the immediately
preceding sentence, any other Ancillary Agreement or Commercial Agreement.

 

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4.3 Subcontracting. Each of eBay and PayPal shall remain fully responsible and
liable for the performance of all of its obligations under this Agreement even
if performed, or failed to be performed, by a subcontractor. Each subcontracting
arrangement entered into by either Party in connection with the performance of
its obligations under this Agreement shall be documented in a written Contract,
and each Party shall use reasonable best efforts to cause any such Contract not
to contain any provision that is inconsistent with the terms of this Agreement.
Unless otherwise requested by eBay, PayPal shall be eBay’s sole point of contact
with respect to PayPal’s subcontractors and any subcontracting arrangements
entered into by PayPal under this Agreement, and unless otherwise requested by
PayPal, eBay shall be PayPal’s sole point of contact with respect to eBay’s
subcontractors and any subcontracting arrangements entered into by eBay under
this Agreement.

4.4 Service Levels. Without limiting Section 4.1, during the Term, PayPal shall
perform the Services in a manner that meets or exceeds the applicable service
level requirements agreed by the Parties from time to time (the “Service
Levels”). The Parties shall cooperate in good faith to update the service level
requirements from time to time in order to reflect a Service Level that equals
or exceeds the performance and quality standards set forth in Section 4.1, and
PayPal’s provision of Services shall satisfy or exceed the requirements of the
then-current Service Level.

4.5 Root Cause Analysis. Each time there occurs a failure to provide any
Services due to system outages or interruptions, the Parties shall each promptly
use commercially reasonable efforts to: (a) conduct a root cause analysis of the
failure and prepare a written report identifying and describing in reasonable
detail such root cause(s), (b) discuss the root cause(s) of the failure and each
Party’s position with regard to such root cause(s), (c) correct the problem and
begin providing the impacted Services as soon as practicable and (d) regularly
advise the other Party of the status of such corrective efforts and respond
promptly to any request by the other Party for an update regarding such efforts
(it being agreed that, except as mutually agreed by the Parties, each Party may
satisfy the requirements of the foregoing clauses (a) through (d) by using the
same degree of effort that such Party used to analyze and discuss system outages
and interruptions prior to the Effective Time). Each Party shall prioritize any
root cause analysis performed hereunder at a level equal to or higher than that
afforded to such Party’s testing or quality assurance investigations or
activities conducted internally or for any other of such Party’s customers of
services reasonably comparable to the Services. The Parties shall apportion the
cost of correcting the problem based on the results of the root cause analysis
and the relative contribution of each Party to the root cause(s) of the failure.
All Service Levels shall remain in effect notwithstanding the subsequent
correction of any performance problem.

4.6 Monitoring. As part of the Services, PayPal shall implement measurement and
monitoring tools and procedures necessary to measure its performance of the
Services against the Service Levels on a monthly basis. Subject to the
provisions of Article 15, PayPal shall provide eBay with information and
documentation regarding the measurement and monitoring tools necessary to verify
compliance by PayPal with the Service Levels and shall provide eBay with such
access to the measurement and monitoring tools as is necessary to conduct such
analysis.

 

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4.7 Disaster Recovery. In order to facilitate an orderly transition in
connection with the Separation and Distribution, PayPal shall implement and
maintain disaster recovery facilities and a written disaster recovery plan that
is consistent with the terms of the Colocation Services Agreement and that is
designed to ensure that in the case of a disaster within or around the
geographic location of PayPal’s Systems used in connection with the Services,
PayPal shall be able to switch to a redundant site (or colocated site hosted by
eBay or a third Person) capable of meeting the requirements of this Agreement
without disruption or lapse in service (such disaster recovery plan, the
“Disaster Recovery Plan”). Subject to the foregoing, the Disaster Recovery Plan
shall be consistent with, and be at least as protective as, the most protective
disaster recovery plan that PayPal then provides or is required to provide to
any other customer (other than eBay) of PayPal or any of its Subsidiaries. Upon
PayPal’s discovery of circumstances requiring disaster recovery in connection
with the Services, PayPal shall implement the Disaster Recovery Plan and shall
promptly notify eBay of such circumstances. In the event that a disaster causes
PayPal to allocate limited resources between or among its customers, PayPal
shall allocate such resources to eBay in a manner no less favorable to eBay than
PayPal allocates such resources to its most favored customers.

ARTICLE V

DATA SHARING; INFORMATION SECURITY; PRODUCT DEVELOPMENT

5.1 Data Sharing Addendum.

(a) eBay and PayPal shall execute and deliver a data sharing addendum in the
form set forth on Schedule 5.1 (a “Data Sharing Addendum”), effective as of the
Effective Time, providing for each Party and its Subsidiaries to share data with
the other Party and its Subsidiaries for use in risk, trust and fraud modeling
and for the purpose of facilitating customer transactions and customer service.
If there is any inconsistency or conflict between the terms of this Agreement
and the terms and conditions of the Data Sharing Addendum, then the terms of the
Data Sharing Addendum shall govern to the extent of the conflict.

(b) The Data Sharing Addendum shall provide that: (i) all data sharing will
comply with all applicable Laws, including Data Protection Laws; and
(ii) notwithstanding anything to the contrary in the Data Sharing Addendum,
neither Party shall be required to share any data with the other Party in
violation of any applicable Law; provided, that the Parties shall use
commercially reasonable efforts to cooperate in seeking to find a way to permit
compliance with the data sharing obligations contained in the Data Sharing
Addendum to the extent and in a manner that avoids any violation of Law,
including through (A) the amendment of the applicable privacy policy or (B) the
redaction or anonymization of data so that the provision of such redacted or
anonymized data to the other Party pursuant to the Data Sharing Addendum does
not violate applicable Law.

(c) Upon the consummation of a Specified Change of Control, eBay can terminate
all or any portion of the Data Sharing Addendum (without triggering the
termination of this Agreement or any related arrangements) by delivering a
written notice to PayPal at any time beginning at the effective date of such
Specified Change of Control and ending ninety (90) days thereafter, with such
termination to become effective on the date specified by eBay in such written
notice.

 

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5.2 Access to Facilities. To the extent that eBay’s or PayPal’s Personnel will
access the other Party’s sites or facilities in connection with this Agreement,
such Party shall cause its Personnel, while working at such sites or facilities,
to comply with all applicable safety and security policies and procedures that
have been provided to such Personnel, and shall be liable for any violation of
any such policies and procedures by such Party’s Personnel.

5.3 Systems Policies. To the extent that eBay’s (or its Subsidiaries’) or
PayPal’s (or its Subsidiaries’) Personnel will access the Systems of the other
Party or its Subsidiaries in connection with this Agreement, that Party shall
cause such Personnel, while accessing such Systems, to (a) comply with all
applicable security policies and procedures that have been provided to such
Personnel, (b) not tamper with, compromise or circumvent any security or audit
measures employed by the other Party and (c) if requested by the other Party,
execute a confidentiality agreement in the form provided by that Party. For
clarity, access or use of APIs of a Party or its Subsidiaries shall not
constitute access to Systems of such Party or its Subsidiaries. Each Party shall
also:

(a) Ensure that only those of its Personnel who are specifically authorized to
have access to the other Party’s Systems gain such access, prevent its
Personnel’s unauthorized access to, or use, destruction, alteration or loss of,
any information contained therein, and notify its Personnel of the restrictions
set forth in this Agreement; and

(b) Use commercially reasonable efforts to ensure that its Personnel who are
authorized to have access to the other Party’s Systems shall access and use only
those Systems, and only such data and information within such Systems, to which
such Personnel have been granted the right to access and use.

5.4 Security and Stability. Each Party acknowledges that it is in the best
interests of all Parties for each Party maintain a secure and stable environment
and, to that end, except as set forth in the Data Sharing Addendum, each Party
reserves the right to change at any time the method by which its applicable
databases and/or data may be accessed by the other Party (and in the case of
PayPal, the eBay Merchants); provided, that such access method shall not
negatively affect, in any material way, the quality of or provision of the
Services or either Party’s compliance with the obligations set forth in this
Agreement. Each Party shall provide the other Party with advance written notice
of any such changes to the method of access to the applicable databases and/or
data and shall ensure that any such change does not materially and adversely
impact the quality of or provision of the Services or either Party’s compliance
with the obligations set forth in this Agreement. Each Party also agrees that,
in the event of degradation or instability of the Platform or the other Party’s
Systems or an emergency with respect to the Platform or such Systems, the other
Party may, in its sole discretion, temporarily suspend access to the applicable,
API, database and/or data under this Agreement in order to minimize threats to
and protect the operational stability and security of the Platform and such
other Party’s Systems.

5.5 Unauthorized Access. Each Party shall be responsible for implementing and
appropriately updating reasonable policies, procedures and technology to prevent
unauthorized access to the eBay Properties or PayPal’s Systems in connection
with the usage or provision of the Services. Each Party shall apply appropriate
internal information security practices, including: using appropriate firewall
and anti-virus software; maintaining such countermeasures,

 

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operating systems, and other applications with up-to-date virus definitions and
security patches; installing and operating security mechanisms in the manner in
which they were intended sufficient to ensure that the eBay Properties or
PayPal’s Systems will not be impacted nor operations disrupted in connection
with the usage or provision of the Services; and permitting only authorized
users access to computer systems and applications. Each Party shall also use
up-to-date anti-virus tools to remove known Viruses from any email message or
data transmitted to an eBay Property or PayPal’s Systems in connection with the
usage or availability of the Services. Each Party shall be responsible for
maintaining and providing the other Party with appropriate access to audit its
policies, procedures and technology for safeguarding customer information. Each
Party acknowledges and understands that such policies, procedures and technology
are considered Confidential Information. Additionally, each of PayPal and eBay
shall not knowingly compromise the security of the other Party’s Systems,
including by tampering with, compromising, or attempting to circumvent any
physical or electronic security or audit measures employed by such Party in the
course of its business operations.

5.6 Product Development Agreement. eBay and PayPal shall execute and deliver a
product development agreement (the “Product Development Agreement”), effective
as of the Effective Time, that provides for eBay and PayPal to mutually discuss
in good faith and agree on a product development plan for improving the PayPal
experience on eBay Covered Properties and to prioritize those improvements to be
incorporated into the experience on the eBay Covered Properties (the “Product
Development Plan”). The Product Development Plan shall set forth, at a minimum,
a description of each development project to which eBay and PayPal mutually
agree (each such project, a “Development Project”), the primary owner (eBay or
PayPal), the Party with primary responsibility for the achievement of each
action item or deliverable for each such Development Project, the expected
timeline and key milestones for each such Development Project, the anticipated
budget for each such Development Project, and the resource commitments by eBay
and PayPal towards completing each such Development Project. The Product
Development Agreement shall also provide, among other things, for each of eBay
and PayPal to agree to commit resources and development staff, as mutually
agreed by eBay and PayPal, to the Development Projects included in the Product
Development Plan.

ARTICLE VI

REFERRAL SERVICES FEES; USAGE OF SERVICES; MARKETING

6.1 Referral Services Fee.

(a) Baseline Referral Services Fee. eBay shall be entitled to receive from
PayPal, for each Quarter during the Term in which the Penetration Rate as of the
beginning of such Quarter exceeds sixty percent (60%), an amount equal to
$12,000,000 (the “Baseline Referral Services Fee”), subject to adjustment
pursuant to Sections 6.1(b) (the Baseline Referral Services Fee, as so adjusted,
the “Referral Services Fee”).

(b) Adjustment Payments. Immediately following the Effective Time, PayPal and
eBay shall mutually determine in good faith an estimate of (i) the number of
Activated New Users for the period commencing on such date and ending at the
beginning of the following Quarter and (ii) the number of Activated New Users
for subsequent Quarters during the Term (clause (i) (with respect to the first
Quarter following the Effective Time) and clause (ii) (with

 

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respect to all other Quarters during the Term), the “Estimated Activated New
Users”). Within three (3) business days of the end of each Month and each
Quarter, PayPal shall calculate and deliver to eBay a report of the number of
Activated New Users since the beginning of the previous Month or Quarter, as
applicable. If the number of Activated New Users for a Quarter exceeds the
Estimated Activated New Users, then the Referral Services Fee for such Quarter
shall equal (i) the Baseline Referral Services Fee plus (ii) an amount equal to
(A) the absolute value of (I) the Activated New Users for such period minus (II)
the Estimated Activated New Users multiplied by (B) an amount that is mutually
determined by eBay and PayPal (such amount for such Quarter, the “Activated New
Users Adjustment Amount”). If the Estimated Activated New Users for a Quarter
exceeds the number of Activated New Users for such Quarter, then the Referral
Services Fee for such Quarter shall equal (I) the Baseline Referral Services Fee
for such Quarter minus (II) the Activated New Users Adjustment Amount for such
Quarter.

(c) Revisions to Baseline Referral Services Fee. If there occur three (3) or
more consecutive Quarters in which the Activated New Users Adjustment Amount for
each such Quarter exceeds five percent (5%) of the Baseline Referral Services
Fee for the corresponding Quarter and either (i) the Referral Services Fee for
each such Quarter exceeds the Baseline Referral Services Fee or (ii) the
Referral Services Fee for each such Quarter is less than the Baseline Referral
Services Fee, the Parties shall mutually adjust the Baseline Referral Services
Fee for subsequent Quarters in the Term, in a manner to be mutually agreed by
the Parties, to reflect the average number of Activated New Users over such
consecutive Quarters.

6.2 Credit Services Referral Fees. eBay shall be entitled to receive from
PayPal, for each Quarter during the Term, an amount equal to 0.30% of the PayPal
Net TPV of eBay Properties for such Quarter completed through the Credit
Services (the “Credit Usage Fee”). No later than three (3) business days
following the end of each Month and each Quarter during the Term, the Parties
shall calculate the PayPal Net TPV of eBay Properties for such Month or Quarter,
as applicable, completed through the Credit Services and the resulting Credit
Usage Fee.

6.3 Penetration Rate Payments. Either eBay or PayPal shall, subject to
Section 6.3(d), be entitled to receive from the other Party, for each Quarter
during the Term, a payment in respect of the Penetration Rate for such Quarter,
calculated in accordance with this Section 6.3 (the “Penetration Rate Payment”),
as follows:

(a) Calculation. No later than the last business day of each Month during the
Term, eBay will provide to PayPal the following: the Penetration Rate for the
previous Month and an estimate of the Penetration Rate for the Quarter in which
the current Month is included. The data provided by eBay will include country
level detail of the Penetration Rate for at least the highest ten Covered
Jurisdictions, measured by eBay Addressable GMV. In making its calculations,
eBay will utilize foreign exchange rates consistent with those utilized by eBay
for its internal planning and budgeting purposes. Each Party acknowledges that
the Penetration Rate data to be provided by eBay is commercially sensitive and,
accordingly, each Party agrees to restrict access to the Penetration Rate data
to its senior executive team and those of its Personnel who need access to such
information to execute their job responsibilities, including accounting and
financial reporting Personnel.

 

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(b) Penetration Rate Above Baseline Rate. If the Penetration Rate for such
Quarter exceeds the Baseline Rate, eBay shall be entitled to a Penetration Rate
Payment in an amount equal to (i) $3,250,000 multiplied by (ii) (A) the
Penetration Rate for such Quarter minus (B) the Baseline Rate, (C) rounded to
the nearest hundredth of a percentage point, multiplied by (iii) one hundred
(100). By way of example, if the Penetration Rate for a Quarter were 82.253%,
eBay would be entitled to a Penetration Rate Payment for such Quarter equal to
$3,250,000 multiplied by 2.25% multiplied by 100, or $7,312,500.

(c) Penetration Rate Less than Baseline Rate (0 to 5%). If the Baseline Rate
exceeds the Penetration Rate for such Quarter, PayPal shall be entitled to a
Penetration Rate Payment in an amount equal to (i) $3,250,000 multiplied by
(ii) the Baseline Rate minus the Penetration Rate for such Quarter, (C) rounded
to the nearest hundredth of a percentage point, multiplied by (iii) one hundred
(100). By way of example, if the Penetration Rate for a Quarter were 78.253%,
PayPal would be entitled to a Penetration Rate Payment for such Quarter equal to
$3,250,000 million multiplied by 1.75% multiplied by 100, or $5,687,500.

(d) Penetration Rate Less than Baseline Rate (More than 5%). If the Baseline
Rate exceeds the Penetration Rate for such Quarter by more than five percent
(5%), then PayPal shall be entitled to a Penetration Rate Payment in an amount
equal to (i) $16,250,000, (ii) plus (A) $12,500,000 multiplied by (B) (I) the
Baseline Rate minus (II) the Penetration Rate minus (III) five percent (5%),
(IV) rounded to the nearest hundredth of a percentage point, multiplied by
(C) one hundred (100). By way of example, if the Penetration Rate for a Quarter
were 74.253%, PayPal would be entitled to a Penetration Rate Payment equal to
$16,250,000 (calculated pursuant to Section 6.3(c)) + $12,500,000 multiplied by
0.75 multiplied by 100 = $25,625,000.

(e) Elimination of Penetration Rate Payment. Notwithstanding the foregoing:
(i) PayPal shall not be entitled to any Penetration Rate Payments for any
Quarter ending after December 31, 2015 if PayPal Net TPV Off eBay in the
calendar year ended December 31, 2015 is less than (A) eighty eight percent
(88%) multiplied by (B) the PayPal Net TPV Off eBay for the calendar year ending
December 31, 2014 (such product, the “2014 Measurement Rate”); (ii) PayPal shall
not be entitled to any Penetration Rate Payments for any Quarter ending after
December 31, 2016 if PayPal Net TPV Off eBay in the calendar year ended
December 31, 2016 is less than the greater of: (A) the 2014 Measurement Rate and
(B) (I) eighty eight percent (88%) multiplied by (II) the highest PayPal Net TPV
Off eBay in the previous two (2) calendar years; and (iii) for the calendar
years ending on December 31, 2017, December 31, 2018 or December 31, 2019,
PayPal shall not be entitled to any Penetration Rate Payments for any Quarter
following the end of any calendar year in which PayPal Net TPV Off eBay is less
than (A) eighty eight percent (88%) multiplied by (B) the highest PayPal Net TPV
Off eBay in the previous three consecutive calendar years.

6.4 Aggregate Quarterly Fees. The “Aggregate Quarterly Fee” for each Quarter
shall equal (a) the Referral Services Fee for such Quarter plus (b) the Credit
Usage Fee for such Quarter plus (c) if eBay is entitled to a Penetration Rate
Payment for such Quarter, the Penetration Rate Payment for such Quarter minus
(d) if PayPal is entitled to a Penetration Rate Payment for such Quarter, the
Penetration Rate Payment for such Quarter. At the end of every Quarter during
the Term, PayPal shall pay to eBay, in accordance with the provisions of Article
7, the Aggregate Quarterly Fee for such Quarter.

 

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6.5 Descriptions of PayPal on eBay Covered Properties. All text descriptions of
PayPal on the eBay Covered Properties pursuant to this section shall be
preapproved in writing by PayPal.

6.6 Integration of New PayPal Products. eBay agrees to review and consider in
good faith implementation of any new PayPal products and related offerings but
shall have no obligation, now or in the future, to implement any such PayPal
products or related offerings.

ARTICLE VII

FEES AND PAYMENT

7.1 Payment Terms.

(a) Within three (3) business days following the end of each Quarter, PayPal
shall deliver to eBay (i) a calculation of the estimated Aggregate Quarterly Fee
payable by eBay or PayPal, as applicable, for such Quarter, including each of
the component fees, and (ii) a calculation of the estimated Activated New Users
for such Quarter, PayPal Net TPV on eBay Properties completed through the Credit
Services for such Quarter and the PayPal Net TPV Off eBay for such Quarter (each
such statement and associated information, an “Initial Quarterly Statement”).
The Initial Quarterly Statement shall also include the estimated Penetration
Rate for such Quarter (calculated using the Penetration Rate for each Month
included in such Quarter that has been delivered by eBay to PayPal pursuant to
Section 6.3(a)). Within thirty (30) days following the end of each Quarter,
PayPal shall deliver to eBay (i) a calculation of the actual Aggregate Quarterly
Fee payable by eBay or PayPal, as applicable, for such Quarter, including each
of the component fees, and (ii) true and complete statements of the actual
Activated New Users for such Quarter, PayPal Net TPV on eBay Properties
completed through the Credit Services for such Quarter and the PayPal Net TPV
Off eBay for such Quarter (each such statement and associated information, a
“Quarterly Statement”). The Parties will determine amongst themselves what
additional information shall be included in the Quarterly Statements and the
form, substance and recipients of any invoices issued in respect of the
Aggregate Quarterly Fee or otherwise under this Article VII payable by eBay or
PayPal, as applicable, for each Quarter.

(b) Subject to Section 7.1(c), if a Quarterly Statement indicates that eBay is
entitled to receive a payment from PayPal, then PayPal shall, or shall cause its
applicable Affiliates to, pay to eBay the undisputed amount due pursuant to such
Quarterly Statement within thirty (30) days after PayPal’s delivery of such
Quarterly Statement. Subject to Section 7.1(c), if the Quarterly Statement
indicates that PayPal is entitled to receive a payment from eBay, then eBay
shall, or shall cause its applicable Affiliates to, pay to PayPal the undisputed
amount due pursuant to such Quarterly Statement within thirty (30) days after
eBay’s receipt of such Quarterly Statement.

(c) Each Party may dispute in whole or in part any Initial Quarterly Statement,
any Quarterly Statement or any component thereof prepared by the other Party, by
providing written notice to such other Party within thirty (30) days from the
receipt of the relevant Initial Quarterly Statement or Quarterly Statement (or
component thereof), it being understood that any undisputed amounts on any
Quarterly Statement (or components thereof) shall be paid when due by PayPal or
eBay in accordance with Section 7.1(b). eBay and PayPal shall attempt in

 

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good faith to negotiate a resolution of any dispute within thirty (30) days from
the receipt of the written notice by the Party that prepared the disputed
Quarterly Statement (or component thereof). If the resolution of any such
dispute with respect to a Quarterly Statement is that one Party owes a payment
of any amount to the other Party or that one Party’s payment was in excess of
the actual amount due, the Party that owes such payment or that received the
excess payment, as applicable, shall pay such amount due or amount in excess to
the other Party, plus interest accruing at the Interest Rate from the date that
is thirty (30) days following the date set forth in Section 7.3(a) for PayPal to
deliver to eBay the Quarterly Statement to the time of the payment, promptly,
and in any event within thirty (30) days, after eBay and PayPal agree to such
resolution. If a dispute regarding any Quarterly Statement is not resolved
within such thirty (30)-day period, the dispute may be resolved in accordance
with Section 16.2. The existence of a dispute (pursuant to this Section 7.1(c)
or otherwise) shall not excuse any Party from any other obligation under this
Agreement, including eBay’s or PayPal’s applicable obligation to pay any
undisputed amounts and PayPal’s obligation to continue to perform Services
hereunder, unless and until this Agreement is validly terminated pursuant to
Section 10.2.

(d) The Parties hereby agree that the consideration payable pursuant to this
Agreement also constitutes compensation for the services rendered by each Party
under the Product Development Agreement and the Data Sharing Addendum, and that
no additional payments shall be required to be made by one Party to another
Party as consideration for such services.

7.2 Taxes.

(a) The amounts payable to eBay or PayPal, as applicable, pursuant to
Section 7.1 shall be exclusive of any and all value added, goods and services,
sales, use, consumption, excise, service, transfer, stamp, documentary, filing,
recordation taxes or similar taxes and any related interest and penalties
(collectively, “Transaction Taxes”). The Party receiving any services hereunder
for which it would be required to pay a component fee but for the aggregation of
such fees pursuant to Sections 6.4 and 7.1 shall be responsible for any
Transaction Taxes imposed or assessed with respect thereto. The Party providing
any services hereunder shall issue proper invoices usable by the Party receiving
any services hereunder in order to recover (by way of credit or refund) in
jurisdictions where they are recoverable. The Parties shall cooperate to
minimize any Transaction Taxes and in obtaining any refund, return or rebate, or
applying an exemption or zero-rating for services giving rise to any Transaction
Taxes, including by filing any exemption or other similar forms or providing
valid tax identification number or other relevant registration numbers,
certificates or other documents. The Parties shall cooperate regarding any
requests for information, audit, or similar request by any Taxing Authority
concerning Transaction Taxes payable with respect to services provided pursuant
to this Agreement.

(b) The Party receiving services hereunder shall be entitled to deduct and
withhold Tax required by applicable Law to be withheld on payments made to the
Party providing any service hereunder. To the extent any amounts are so
withheld, the Party receiving any service hereunder shall timely remit such
deducted and withheld amount to the relevant Taxing Authority and promptly
provide the Party providing any services hereunder with evidence of such
payment. The Party providing any services hereunder agrees to complete and
provide to the Party receiving any services hereunder or if required, to the
relevant Taxing Authority, at least

 

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ten (10) days prior to the payment due date, such forms, certifications or other
documents as may be reasonably requested by the Party receiving any services
hereunder, in order to reduce or exempt the withholding of any Tax with respect
to payments made to the Party providing any services hereunder when and where
applicable by Law. The Parties shall cooperate regarding any requests for
information, audit, or similar request by any Taxing Authority concerning the
withholding of any Tax payable with respect to services provided pursuant to
this Agreement.

(c) Any penalties or interested imposed on any Transaction Taxes described in
Section 7.2(a) or Tax described Section 7.2(b) shall be the responsibility of
the Party receiving any services hereunder unless the penalties or interested
are the result of an action or failure to act by the Party providing any
services hereunder.

ARTICLE VIII

COMPLIANCE WITH LAW; AUDITS

8.1 Compliance with Law; Books and Records.

(a) Each Party shall ensure that the performance of its obligations hereunder
complies with all applicable Laws (including all Data Protection Laws), and
shall, at its sole expense, obtain and maintain in force all licenses, consents
and permits required for it to comply with all such Laws. Without limiting the
foregoing, neither Party shall be required to pay or commit to pay any amount or
incur any obligation in favor of or offer or grant any accommodation (financial
or otherwise) to enable the other Party to comply with such applicable Laws.
Each Party shall notify the other Party of any requirements under applicable Law
that require disclosures with respect to the Services to be made on any eBay
Property or that require any other change to any such Property in connection
with the Services, in each case to the extent such disclosure is required due to
the nature of the Services. Notwithstanding the foregoing, to the extent
required by applicable Law, PayPal and eBay shall be jointly responsible for
notifying any Governmental Authority of this Agreement and of any modification
hereto. The Parties shall, upon the reasonable request of the other Party, share
information with each other as necessary to enable each Party to satisfy its
obligations under this Section 8.1.

(b) Each Party and its Subsidiaries shall each maintain (and cause to be
maintained) complete and accurate books and records for the purpose of
supporting and documenting the accuracy of the Quarterly Statements and the
calculation of the Aggregate Quarterly Fees, eBay Addressable GMV, PayPal Net
TPV on eBay Properties and PayPal Net TPV Off eBay, including any financial,
operating and market data with respect to the Services, and as otherwise
reasonably necessary to confirm such Party’s compliance with this Agreement
(except for Sections 3.1 and 3.2). All such books and records will be retained
at the applicable Party’s, or its applicable Subsidiary’s, principal place of
business for a period of at least eighteen (18) months after the payments to
which they pertain have been made. Each Party’s books and records will be open
for inspection and review (as set forth in this Article 8) during such eighteen
(18)-month period for the purpose of verifying the accuracy of the payments and
charges made hereunder and such Party’s compliance with this Agreement.

 

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8.2 Audits.

(a) Each Party shall have the right (but not the obligation) to engage an
independent auditor to conduct (and such Party shall be permitted to cause such
independent auditor to so conduct), at such Party’s sole cost and expense,
audits (each, an “External Audit”) of the other Party to confirm: the accuracy
of the Quarterly Statements and any financial, operating and market data used to
determine the Aggregate Quarterly Fees. The Party causing the External Audit to
be conducted is referred to herein as the “Requesting Party,” and the Party that
that is the subject of the External Audit is referred to herein as the “Audited
Party.” The scope of the External Audit referred to in the preceding sentence
shall be set forth in an auditor’s review instruction letter that the Requesting
Party shall provide to the auditor performing such External Audit (such auditor,
the “External Auditor”). Any External Audit conducted pursuant to this
Section 8.2 shall be conducted by an independent, external,
internationally-recognized firm as mutually agreed upon by the Parties with
appropriate qualifications and experience in conducting audits of this nature.
Before beginning an External Audit, the External Auditor shall execute a
confidentiality agreement with the Audited Party, the terms of which shall not
frustrate or impede the purpose of the External Audit or the disclosure of the
results thereof to the Requesting Party; provided, that if the External Auditor
has executed a confidentiality agreement in accordance with this Section 8.2(a)
during the Term and such confidentiality agreement remains in full force and
effect, the External Auditor shall not be required to reexecute a second
confidentiality agreement. The External Auditor shall create a detailed written
report of the results and findings of each External Audit, and simultaneously
provide copies of the report to both eBay and PayPal; provided, that such report
shall not contain any Highly Sensitive Information that, if disclosed to the
Requesting Party, would cause the Audited Party competitive harm, and shall not
disclose any information to the extent disclosure of such information to the
Requesting Party would violate applicable Law.

(b) The Requesting Party may, through an External Auditor, conduct External
Audits under Section 8.2(a) no more than once per Calendar Year. The External
Auditor shall conduct all audits during normal business hours and shall endeavor
to conduct them in a manner that does not unreasonably interfere with the
Audited Party’s business operations. The Audited Party shall reasonably
cooperate with the External Auditor in connection with any External Audit,
including by providing the External Auditor with access to financial and
accounting books and statements, management and operating data, records,
accounts, financial statements and management Personnel and other Personnel, but
only as reasonably necessary for the purposes of the External Audit, and ensure
that its Personnel cooperate with any such External Audit and all other
reasonable requests by the External Auditor for additional information or
documentation required to complete such External Audit. The Audited Party shall
not be required pursuant to this Section 8.2 to disclose to the External Auditor
any information to the extent disclosure of such information to the External
Auditor would violate applicable Law.

(c) If an audit by a Governmental Authority having jurisdiction over either
Party results in a finding that either Party is not in compliance with any
generally accepted accounting principle or other audit or accounting requirement
or any Law relating to the performance of its obligations under this Agreement,
the Party that is found to be non-compliant shall, at its own expense and within
the time period specified by such Governmental Authority auditor, address and
resolve the deficiencies identified by such Governmental Authority.

 

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8.3 Audit Responses.

(a) Subject to Section 8.3(c), if any External Audit conducted pursuant to
Section 8.2 or any Internal Audit conducted pursuant to Section 15.3 reveals
that eBay overpaid any amount due or is owed any amount under this Agreement
(except for any portion thereof disputed in good faith), PayPal shall within ten
(10) business days after such determination reimburse eBay the amount of such
underpayment or pay to eBay the amount owed, in each case plus interest accruing
at the Interest Rate from the date of payment by eBay or the date such payment
should have been made to eBay to the time of reimbursement or payment by PayPal.
If any External Audit reveals any material inaccuracy of the Quarterly
Statements or Aggregate Quarterly Fees resulting from the conduct of or
information provided by PayPal that equals or exceeds two hundred fifty thousand
Dollars ($250,000) and also amounts to ten percent (10%) or more of the total
amount payable by eBay for any period covered by the review, PayPal shall
reimburse eBay for the cost of such External Audit.

(b) Subject to Section 8.3(c), if any External Audit conducted pursuant to
Section 8.2 or any Internal Audit conducted pursuant to Section 15.3 reveals
that eBay underpaid any amount due or received any amount under this Agreement
to which it was not entitled (except for any portion thereof disputed in good
faith), eBay shall within ten (10) business days after such determination pay to
PayPal the amount of such underpayment or reimburse PayPal the amount to which
eBay was not entitled, in each case plus interest accruing at the Interest Rate
from the date such payment originally should have been made by eBay or the date
of payment by PayPal to the time of payment or reimbursement by eBay. If any
External Audit reveals any material inaccuracy of the Quarterly Statements or
Aggregate Quarterly Fees resulting from the conduct of or information provided
by eBay that equals or exceeds two hundred fifty thousand Dollars ($250,000) and
also amounts to ten percent (10%) or more of the total amount payable by eBay
for any period covered by the review, eBay shall reimburse PayPal for the cost
of such External Audit.

(c) Either Party may dispute the results of an Audit by providing written notice
to the other Party within thirty (30) days of the completion of the Audit and
delivery of the applicable Audit report, in which case the Parties shall attempt
in good faith to negotiate a resolution of any dispute within thirty (30) days
of the receipt of such written notice. If the Parties are unable to resolve any
such dispute after such thirty (30)-day period, the Parties shall resolve the
dispute pursuant to Section 16.2.

ARTICLE IX

CONFIDENTIALITY; USER DATA

9.1 Confidential Information. Each of eBay (and its Affiliates) and PayPal (and
its Affiliates) (in such capacity, the “Receiving Party”) agrees to hold, and to
cause its Personnel to hold, in strict confidence, the Confidential Information
of the other Party (in such capacity, the “Disclosing Party”) using at least the
same standard of care to prevent the public disclosure and dissemination thereof
as the Receiving Party uses to protect its own comparable Confidential
Information. “Confidential Information” of the Disclosing Party means
information including marketing plans, product plans, business strategies,
financial information, forecasts, Personal Information, Highly Sensitive
Information, customer lists and customer data, technical documents and
information and any similar materials and information, regarding the Disclosing
Party and its Affiliates, or their representatives or customers, disclosed by
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the Receiving Party under or in connection with this Agreement, whether orally,
electronically, in writing, or otherwise, including copies thereof, that is, in
each case, (a) if disclosed in a tangible form, marked using a legend such as
“Confidential” or “Proprietary” or if not so marked, should be reasonably
understood by the Receiving Party from the context of disclosure or from the
information itself, to be confidential, or (b) if disclosed orally or visually,
declared to be confidential or, if not so declared, should be reasonably
understood by the Receiving Party from the context of disclosure or from the
information itself to be confidential. Each of eBay and PayPal agrees, on its
behalf and on behalf of its Affiliates, not to use any Confidential Information
of the other Party other than for such purposes as shall be expressly permitted
under this Agreement, except, in each case, to the extent that such Confidential
Information has been (i) in the public domain or generally available to the
public, other than as a result of a disclosure by the Receiving Party or any of
its Affiliates or any of their Personnel in violation of this Agreement,
(ii) later lawfully acquired from other sources by such Party (or any of its
Affiliates) which sources are not themselves bound by a confidentiality
obligation or other contractual, legal or fiduciary obligation of
confidentiality with respect to such Confidential Information or
(iii) independently developed or generated without reference to or use of any
proprietary or confidential information of the other Party or any of its
Affiliates. If any Confidential Information of one Party or any of its
Affiliates is disclosed to the other Party or of its Affiliates in connection
with providing the Services under this Agreement, then such disclosed
Confidential Information shall be used by the Receiving Party only as required
to perform such Services.

9.2 Additional Confidentiality Provisions. Sections 6.9(b) and 6.10 of the
Separation and Distribution Agreement are incorporated by reference into this
Agreement, mutatis mutandis, except that each reference in the Separation and
Distribution Agreement to “Section 6.9” or “the confidentiality provisions
hereof” shall be deemed to refer to Section 9.1. Notwithstanding anything to the
contrary herein, the Receiving Party shall be free to use for any purpose the
Residual Information resulting from access to any Confidential Information of
the Disclosing Party disclosed to it under this Agreement. Receiving Party’s
receipt of Confidential Information under this Agreement shall not create any
obligation that in any way limits or restricts the assignment and/or
reassignment of the Receiving Party’s Personnel. The Parties acknowledge and
understand that the foregoing does not constitute a license under any patents or
copyrights.

9.3 Competitive or Similar Materials. Subject to Article 14, and without
relieving either Party of its obligations under this Article 9, in no event
shall either Party be precluded from discussing, reviewing, developing for
itself, having developed, acquiring, licensing or developing for third parties,
as well as marketing and/or distributing, materials that are competitive with
the other Party’s products and/or services, regardless of their similarity to
current products or services or products or services that may be developed after
the date of this Agreement.

9.4 User Data.

(a) As between the Parties, PayPal owns all PayPal User Data and PayPal does not
in any way assign, transfer, or convey title to PayPal User Data. PayPal User
Data may not be used by eBay for any reason other than for the purpose of
carrying out eBay’s obligations under this Agreement and the Data Sharing
Addendum. As between the Parties, eBay owns all eBay User Data and eBay does not
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eBay User Data. eBay User Data may not be used by PayPal for any reason other
than for the purpose of carrying out PayPal’s obligations under this Agreement
and the Data Sharing Addendum; provided, that following the consummation of a
Specified Change of Control, eBay User Data may not be used by the eBay
Specified Person involved in such Specified Change of Control (or any of such
Person’s direct or indirect Subsidiaries or controlled Affiliates, other than
PayPal and its Subsidiaries existing as of the consummation of such Specified
Change of Control) for any purpose.

(b) To the extent that eBay User Data includes information that also meets the
definition of PayPal User Data, eBay and PayPal shall have overlapping ownership
rights in such information, and the information shall be deemed both eBay User
Data and PayPal User Data. eBay and PayPal shall use eBay User Data and PayPal
User Data, respectively, in accordance with their respective privacy policies.

(c) In the event that the Disclosing Party discloses User Data to the Receiving
Party that would not ordinarily be collected by the Receiving Party in the
course of performing its obligations under this Agreement or the Data Sharing
Addendum, that information shall be the Confidential Information of the
Disclosing Party and, except as set forth in the Data Sharing Addendum, the
Receiving Party shall keep such Confidential Information only as long as
necessary to perform its obligations under this Agreement and shall not have the
right to use, reproduce, display, perform, or modify such Confidential
Information and any derivative works thereof except as strictly required to
perform Services under this Agreement.

9.5 Privacy Policy. The terms of each Party’s privacy policy shall be adequately
displayed within such Party’s respective websites and meet current legal and
industry standards applicable within such Party’s reasonable determination.

ARTICLE X

TERM AND TERMINATION

10.1 Term. This Agreement shall commence on the Effective Time and shall remain
in full force and effect for an initial term of five (5) years (the “Initial
Term”). Thereafter, this Agreement may be renewed by mutual written agreement of
the Parties for additional renewal terms of one (1) year each (each a “Renewal
Term”). This Agreement may otherwise be terminated only as expressly provided in
this Article 10. Collectively, the Initial Term and any Renewal Term(s)
constitute the “Term”; provided, that the Term shall end if and when this
Agreement is terminated in accordance with this Article 10.

10.2 Termination by eBay or PayPal. Neither Party shall have any right to
terminate this Agreement or any of the Services before the end of the Term
except if the other Party (a) becomes insolvent or makes an assignment for the
benefit of creditors; or (b) commits a material breach of this Agreement that is
not cured within one hundred twenty (120) days after the breaching Party
receives of notice of such breach, or is incapable of being cured within one
hundred twenty (120) days of the receipt of such notice; provided, that no Party
may terminate this Agreement pursuant to Section 10.2(b) until the Parties have
completed the dispute resolution procedures set forth in Sections 16.1 and 16.2.

 

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10.3 Replacement Services. If either Party commits a material breach of this
Agreement in its provision or usage of Services that has a significant impact on
the non-breaching Party’s ability to conduct a material aspect of its business
and the breaching Party is unable to cure such breach within twenty-four
(24) hours of notice of such breach, the non-breaching Party may obtain
replacement services from a third party that are comparable to the Services
until the breach is cured or this Agreement is terminated, and the breaching
Party will reimburse all commercially reasonable costs incurred by the
non-breaching Party to obtain such replacement services until the breach is
cured or this Agreement is terminated.

10.4 Effect of Termination. In connection with termination of this Agreement for
any reason:

(a) Tail Period. During the one (1)-year period following the termination of
this Agreement (the “Tail Period”), all of the provisions of this Agreement will
continue to apply as if the Tail Period was part of the Term, except for:
(i) the Parties ability to extend the Agreement for additional Renewal Terms
pursuant to Section 10.1; (ii) the Parties’ obligations under the Product
Development Agreement; (iii) Article 14 and (iv) eBay’s obligation to make
Penetration Rate Payments if the Penetration Rate is less than the Baseline
Rate.

(b) Unpaid Amounts. No Party shall be relieved from its obligation to pay any
fees, payments or other amounts incurred and payable to the other Party prior to
termination of this Agreement, including, as applicable, the Aggregate Quarterly
Fees.

10.5 Termination Assistance Services. During the Tail Period, each Party shall
use reasonable best efforts to cooperate in good faith with the other Party to
transition off of the Services provided under this Agreement, including by
providing each other with all information and assistance necessary and requested
by the other Party to assist in such transition, cooperating to develop a
written disengagement plan and taking such other actions as may be reasonably
required to allow the Parties to operate their respective businesses without the
mutual arrangements set forth in this Agreement (the “Termination Assistance
Services”). The Parties will discuss and agree to the appropriate service levels
applicable to the Termination Assistance Services, which service levels may be
different from the Service Levels applicable to the services provided under this
Agreement; provided, that failure of the Parties to agree on a service level for
Termination Assistance Services shall not affect the Parties’ respective
obligations to provide such Termination Assistance Services. Notwithstanding the
foregoing, neither Party has any obligation to provide the other Party or any
third Person with any (a) Highly Sensitive Information pursuant to this
Section 10.5 other than data regarding the eBay Merchants and PayPal Users to
the extent (i) required for the purpose of facilitating any Services that are
continuing to be provided pursuant to this Agreement (provided, that such third
Person shall not use such data for any other purpose), (ii) that disclosure of
such data to a Party or a third Person, as the case may be, in accordance with
this Agreement does not violate applicable Law and (iii) disclosure of such data
to a Party or a third Person, as the case may be, in accordance with this
Agreement does not violate the terms of use or terms of service under which such
data was collected, or (b) other information or materials, to the extent that
disclosure of such other information or materials to a Party or such third
Person, as the case may be, would violate applicable Law.

10.6 Survival. Article 1, Section 7.1, Section 8.2 (for six (6) months after the
payment due date of the final Quarterly Statement issued in accordance with this
Agreement), Article 9, Section 10.4, Section 10.5, this Section 10.6, Article
11, Article 12, Article 13, Article 16 and Article 17 shall survive any
termination of this Agreement. Any and all liabilities accrued prior to
termination shall survive any termination of this Agreement.

 

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ARTICLE XI

REPRESENTATIONS AND WARRANTIES

11.1 Representations and Warranties by the Parties. Each of eBay and PayPal
hereby represents and warrants to the other Party as follows:

(a) The execution and performance of this Agreement by such Party does not
violate, conflict with, or result in a material default under any other material
Contract to which it is a party, or by which its assets or property is bound.

(b) It holds all the necessary licenses, consents and authorizations required to
engage in the sale and performance of the Services.

11.2 Representations and Warranties by PayPal. PayPal hereby represents and
warrants to eBay as follows:

(a) It has the skill and experience necessary to perform its obligations under
this Agreement, including performing the Services, in a professional manner.

(b) The Services will be performed according to specifications set forth in any
and all accompanying documents.

(c) The Services shall comply with all applicable Laws, including all Data
Protection Laws.

11.3 Representations and Warranties by eBay. eBay hereby represents and warrants
to eBay as follows:

(a) It has the skill and experience necessary to perform its obligations under
this Agreement in a professional manner.

(b) The Services will be made available through the eBay Properties according to
specifications set forth in any and all accompanying documents.

(c) The eBay Properties shall comply with all applicable Laws in connection with
the Services, including all Data Protection Laws.

11.4 Disclaimer of Warranty. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 11,
NO PARTY MAKES, AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS FOR ITSELF AND ON
BEHALF OF ITS AFFILIATES, ANY REPRESENTATION OR WARRANTY, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

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ARTICLE XII

INDEMNIFICATION

12.1 PayPal’s Indemnification of eBay. PayPal agrees to defend, indemnify, and
hold harmless eBay, its Subsidiaries, and its and their respective directors,
officers, employees, representatives and agents (the “eBay Group”) from and
against any and all Losses arising out of or resulting from any Third-Party
Claim to the extent arising out of or resulting from (a) the violation by PayPal
of any Data Protection Laws in connection with the Services, (b) any breach (or
a claim by a third Person that if true would be a breach) or alleged breach of
any of PayPal’s representations or warranties set forth in Article 11 or the
covenants of PayPal in this Agreement or (c) subject to Section 12.4, the
infringement or misappropriation of any Intellectual Property Right of any third
Person as a result of the eBay Group’s use of any Services, Systems, Platform or
other Technology provided by PayPal under this Agreement.

12.2 eBay’s Indemnification of PayPal. eBay agrees to defend, indemnify, and
hold harmless PayPal, its Subsidiaries, and its and their respective directors,
officers, employees, representatives and agents (the “PayPal Group”) from and
against any and all Losses arising out of or resulting from any Third-Party
Claim to the extent arising out of or resulting from (a) the violation by eBay
of any Data Protection Laws in connection with the Services, (b) any breach (or
a claim by a third Person that if true would be a breach) or alleged breach of
any of eBay’s representations or warranties set forth in Article 11 or the
covenants of eBay in this Agreement or (c) subject to Section 12.4, the
infringement or misappropriation of any Intellectual Property Right of any third
Person as a result of the PayPal Group’s use of any Services, Systems, Platform
or other Technology provided by eBay under this Agreement.

12.3 Indemnification Procedures.

(a) Promptly after receipt by the Party seeking indemnification pursuant to this
Article 12 (the “Indemnified Party”) of notice of the commencement or threatened
commencement of any Third-Party-Claim in respect of which such Indemnified Party
intends to seek indemnification pursuant to Section 12.1 or Section 12.2, the
Indemnified Party shall notify the other Party (the “Indemnifying Party”) of
such Third-Party Claim in writing. Any such notice shall describe the
Third-Party Claim in reasonable detail, including the facts and circumstances
giving rise to such claim for indemnification, and include copies of all notices
and documents (including court papers) received by the Indemnified Party
relating to the Third-Party Claim. No failure to so notify the Indemnifying
Party shall relieve it of its obligations under this Agreement, except to the
extent that it can demonstrate that it was prejudiced by such failure.

(b) The Parties shall resolve any Third-Party Claim for which indemnification is
sought pursuant to this Article 12 in accordance with the provisions, procedures
and rules set forth in Sections 4.5(b) through (g), 4.6 and 4.7 of the
Separation and Distribution Agreement.

12.4 Infringement Claims.

(a) Exclusions. Notwithstanding any other provision in this Agreement, PayPal
and eBay, as applicable, shall not have any obligation under Sections 12.1, 12.2
or otherwise to the extent that any Third-Party Claim of infringement (including
direct infringement, inducement

 

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to infringe, or contributory infringement) or misappropriation of Intellectual
Property Rights is based on or arises in whole or in part out of: (i) the other
Party’s (or any member of its Group’s) breach of this Agreement, where such
infringement or misappropriation would not have occurred but for such breach;
(ii) modifications of or enhancements to any of the Indemnifying Party’s
Services, Systems, Platform or other Technology by any Person other than the
Indemnifying Party (or any member of its Group), where such infringement or
misappropriation would not have occurred but for such modifications or
enhancements; (iii) the use of any of any of the Indemnifying Party’s Services,
Systems, Platform or other Technology in combination with other software or
technologies not provided by the Indemnifying Party, where such infringement or
misappropriation would not have occurred but for such combination; (iv) the
other Party’s (or any member of its Group’s) willful infringement of any
Intellectual Property Rights of any third Person, or (v) the other Party’s (or
any member of its Group’s) use of any of the Indemnifying Party’s Services,
Systems, Platform or other Technology not in accordance with this Agreement.

(b) Mitigation. In addition to any other rights of or remedies available to the
Parties, if the Services, Systems, Platform or any other Technology provided by
eBay or PayPal (in such capacity, the “Providing Party”) is found or alleged to
infringe or misappropriate any Intellectual Property Right of any third Person,
or, in the Providing Party’s reasonable opinion is likely to be so found, then
the Providing Party may, at its option and sole expense: (i) modify such
infringing Services, Platform or Technology to make it (or them) non-infringing,
provided, that such modification does not adversely affect in any material way
the functionality, completeness, or accuracy of any of the Services or any
Service Levels applicable thereto; (ii) procure for the other Party the right to
continue using such Services, Systems, Platform or Technology; or, (ii) if
neither (i) nor (ii) are possible within a reasonable time, replace such
Services, Systems, Platform or Technology with substantially equivalent services
or Technology that are non-infringing. If, after using commercially reasonable
efforts, the Providing Party determines that it cannot implement one of the
foregoing steps (i), (ii) or (iii) within a reasonable time, it shall promptly
notify the other Party. Upon receiving any such notice, such other Party may, at
its option and without limitation to any other rights of or remedies available
to such Party, either cease offering such Services, Systems, Platform or
Technology on eBay Covered Properties and adjust the Services offered on eBay
Covered Properties and calculation of Penetration Rate appropriately.

(c) Sole Remedy. This Article 12 states each Party’s sole and exclusive remedy
with respect to any direct or indirect infringement (whether actual or alleged)
or misappropriation of any Intellectual Property Rights of any other Person (and
any claim or action relating thereto) based on any Services, Systems, Platform
or other Technology provided by the other Party under this Agreement.

12.5 Exclusion of Other Indemnification Remedies. The provisions of this Article
12 shall, to the maximum extent permitted by applicable Law, be the sole and
exclusive remedies of the eBay Group and the PayPal Group, as applicable, for
any Liability arising out of or resulting from any Third-Party Claim arising out
of or resulting from this Agreement, whether such Third-Party Claim arises from
statute, principle of common or civil law, principles of strict liability, tort,
contract or otherwise under this Agreement.

 

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ARTICLE XIII

LIMITATION OF LIABILITY

13.1 Limitation of Liability.

(a) THE CUMULATIVE AGGREGATE LIABILITIES OF EACH PARTY AND ITS SUBSIDIARIES AND
THEIR RESPECTIVE REPRESENTATIVES UNDER THIS AGREEMENT DURING ANY CALENDAR YEAR
FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE
OR BREACH OF THIS AGREEMENT), OR FOR ANY OTHER MATTER UNDER THIS AGREEMENT,
WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR
OTHERWISE, SHALL NOT EXCEED FIFTY PERCENT (50%) OF THE AGGREGATE REVENUE
RECEIVED BY PAYPAL DURING SUCH CALENDAR YEAR GENERATED BY PAYPAL NET TPV ON EBAY
COVERED PROPERTIES.

(b) IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR THEIR RESPECTIVE
REPRESENTATIVES BE LIABLE TO THE OTHER PARTY (OR ANY MEMBER OF ITS GROUP) FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, EXEMPLARY, REMOTE,
SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER
PARTY OR ANY MEMBER OF ITS GROUP (INCLUDING LOST PROFITS OR LOST REVENUES) IN
CONNECTION WITH THIS AGREEMENT (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO A
THIRD-PARTY CLAIM), AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS
SUBSIDIARIES AND ITS REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, WHETHER ARISING
IN CONTRACT, TORT OR OTHERWISE.

ARTICLE XIV

MERCHANT OF RECORD; NON-COMPETE

14.1 Merchant of Record.

(a) During the Term, except as set forth in Sections 14.1(b), (c) and (d), eBay
shall not declare itself as the Merchant of Record for transactions between
users effected through any service or offering available on (i) an eBay Covered
Property (excluding transactions that are excluded from the definition of eBay
Addressable GMV) or (ii) any third party payments platform where the value of
such transactions is included in the definition of eBay Addressable GMV (with
all references in such definition to “eBay” being deemed to refer to such third
party payments platform). Notwithstanding the foregoing, if and to the extent
that eBay is the owner of inventory sold on an eBay Covered Property and takes
financial responsibility for all full and partial returns and any chargebacks
initiated by the customer (a “First Party Transaction”), eBay may elect to
declare itself as the Merchant of Record solely with respect to such First Party
Transaction.

(b) If PayPal provides payment processing services to a Competitive Platform
Operator as a Merchant of Record for third party merchant transactions effected
by or on such Competitive Platform Operator’s platform, eBay shall also be
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Record for transactions effected by eBay Merchants on eBay Covered Properties,
and the Parties shall cooperate in good faith to mutually develop a transition
plan and adjustment to the Product Development Plan to enable eBay to become a
Merchant of Record as described in this Section 14.1(b).

(c) Upon the consummation of a Specified Change of Control, eBay may elect to
become a Merchant of Record (without triggering the termination of this
Agreement or any related arrangements) by delivering a written notice to PayPal
at any time beginning at the effective date of such Specified Change of Control
and ending ninety (90) days thereafter, with such Merchant of Record election to
become effective on a date, specified by eBay in such written notice, that is no
less than fifteen (15) months nor greater than twenty-one (21) months following
the consummation of such Specified Change of Control.

(d) Following the three (3) year anniversary of the Effective Time, eBay shall
be permitted to declare itself as a Merchant of Record for transactions effected
by third Persons in up to two (2) Covered Jurisdictions as selected by eBay in
its sole discretion (each, a “Test Jurisdiction”); provided, that (i) the GMV
transacted as a Merchant of Record on all eBay Covered Properties in each Test
Jurisdiction during the fourth (4th) year of the Term shall not exceed five
percent (5%) of the GMV on all eBay Covered Properties in such Test Jurisdiction
during such year, and (ii) the GMV transacted as a Merchant of Record on all
eBay Covered Properties in each Test Jurisdiction during each of the fifth
(5th) year of the Term and the Tail Period shall not exceed ten percent (10%) of
the GMV on all eBay Covered Properties in such Test Jurisdiction during each
such year.

14.2 eBay Non-Compete. During the Term, except as otherwise expressly
contemplated in this Agreement or the Transition Services Agreement, eBay and
its controlled Affiliates shall not, directly or indirectly, engage in the
business of marketing, distributing, promoting or selling their own proprietary
payment solution for use (i) on the eBay Covered Properties or (ii) on any
Properties in the Covered Jurisdictions that are not eBay Properties (the “eBay
Restricted Business”).

14.3 PayPal Non-Compete. During the Term, except as otherwise expressly
contemplated in this Agreement or the Transition Services Agreement, PayPal and
its controlled Affiliates shall not, directly or indirectly, engage in the
business of marketing, distributing, promoting or selling their own proprietary
marketplace offering for the sale of physical goods, other than the Tradera
marketplace (the “PayPal Restricted Business”).

14.4 Exceptions to Non-Compete. Notwithstanding anything to the contrary set
forth in Section 14.2 or 14.3:

(a) Nothing in this Agreement shall prohibit, preclude or in any way restrict
eBay and its controlled Affiliates, on the one hand, or PayPal and its
controlled Affiliate, on the other hand, from: (i) purchasing or acquiring, or
being the holder or beneficial owner of, up to the greater of five percent
(5%) or $100 million of the outstanding equity securities of any Person;
(ii) acquiring and, after such acquisition, owning an interest in any Person (or
its successor) that is engaged in a business activity that would otherwise
violate Section 14.2 or Section 14.3, as applicable, (a “Competing Business”) if
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Business in the last completed fiscal year of such Person did not exceed the
greater of (A) ten percent (10%) of such Person’s consolidated annual revenues
for such fiscal year and (B) the lesser of fifty percent (50%) of such Person’s
consolidated annual revenues for such fiscal year and $500 million.

(b) Nothing in this Agreement shall prohibit, preclude or in any way restrict
any director of eBay or PayPal from, whether in such director’s personal
capacity or as a manager, partner, director, officer or other control person of
an investment fund, investing in, participating in or directing the investment
in, serving on the board of directors or similar governing body of, receiving
information rights in or participating in other customary activities related to
investments in, any Person that is engaged in the Competing Business.

(c) If the restrictions set forth in Section 14.2 are not enforceable for any
portion of the Term or with respect to any portion of the eBay Restricted
Business in any jurisdiction under the antitrust/competition laws of such
jurisdiction, the Parties shall negotiate in good faith and agree upon a
suitable and equitable alternative that, to the fullest extent permitted under
the antitrust/competition laws of such jurisdiction, effects the original intent
of Section 14.2. If the restrictions set forth in Section 14.3 are not
enforceable for any portion of the Term or with respect to any portion of the
PayPal Restricted Business in any jurisdiction under the antitrust/competition
laws of such jurisdiction, the Parties shall negotiate in good faith and agree
upon a suitable and equitable alternative that, to the fullest extent permitted
under the antitrust/competition laws of such jurisdiction, effects the original
intent of Section 14.3. Any such alternative agreed upon by the Parties pursuant
to this Section 14.4 may include the payment of a fee or other lump sum amount
by one Party to the other Party.

ARTICLE XV

GOVERNANCE

15.1 Designated Operational Representatives. eBay and PayPal shall each appoint
and designate an individual to act as its initial designated representative
(collectively, the “Designated Operational Representative”). Each Designated
Operational Representative shall be directly responsible for coordinating and
managing the delivery and use of the Services and the compliance with the other
obligations of the designating Party under this Agreement, and shall have
authority to act on eBay’s and PayPal’s behalf, as applicable with respect to
the provision and use of such Services and such other obligations. Each
Designated Operational Representative shall work with the Personnel of the Party
appointing such Designated Operational Representative to periodically address
issues and matters raised by the other Party relating to the provision of
Services. The Designated Operational Representatives shall meet at least once
per Month to review and discuss the delivery and use of the Services (including
the results of any Account Review) and the Parties’ compliance with their
respective obligations under this Agreement. In connection with such meetings,
PayPal shall deliver to eBay, at least once per Month, reports regarding
PayPal’s ongoing performance under the Service Levels. All communications
between the Parties pursuant to this Agreement regarding routine matters
involving the Services and the other obligations of the Parties under this
Agreement shall be directed to the applicable Designated Operational
Representative. Each Party shall notify the other Party of the resignation of
its Designated Operational Representative or appointment of a new Designated
Manager at least ten (10) business days prior to such appointment.

 

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15.2 Quarterly Reviews.

(a) At least once per Quarter, the Parties shall review in good faith each
then-current Service Level to evaluate PayPal’s performance under such Service
Level, including any remedial steps PayPal has taken to address any Service
Level failures, during such period. As part of such review, the Parties shall
discuss any ongoing improvements to the Services that are necessary to ensure
continued adherence to the applicable Service Levels (including the Service
Levels as updated, if applicable). PayPal shall also use reasonable efforts to
identify any processes used by PayPal in connection with other customers that
would benefit eBay to improve the performance of Services hereunder against the
Service Levels, and shall consult with eBay as to the implementation of any such
methods of improving such performance against the Service Levels approved by
eBay.

(b) At least once per Quarter, the Chief Executive Officer of each of eBay and
PayPal shall meet to review and discuss the Services, the performance by each
Party of its respective obligations under this Agreement and the other aspects
of the relationship between the Parties set forth in this Agreement.

15.3 Internal Audits; Security Review.

(a) At least annually, each Party shall conduct, at its sole cost and expense,
an internal audit of its compliance with this Agreement (each, an “Internal
Audit” and, together with an External Audit, an “Audit”). The Party conducting
the Internal Audit is referred to herein as the “Internal Audit Party.” The
Internal Audit shall be conducted in accordance with the Internal Audit Party’s
customary internal audit procedures and policies. The Internal Audit Party shall
create a detailed written report of the results and findings of each review, and
simultaneously provide copies of the report to the Audit Committees of the
boards of directors of each of eBay and PayPal (the “Audit Committees”);
provided, that such report shall not contain any Highly Sensitive Information
that, if disclosed to such Audit Committees, would cause the Internal Audit
Party competitive harm, and shall not disclose any information to the extent
disclosure of such information to the Audit Committees would violate applicable
Law.

(b) At least annually, each Party shall complete a security review (a “Security
Review”), or provide certification of such Security Review, by an industry
recognized third party firm agreed upon by the Parties that specializes in
information systems security audits and assessments. The definition of passing
criteria from the results of the Security Review shall include vulnerability
findings with no greater than a risk categorization of “LOW.” Any findings from
the Security Review categorized as “MEDIUM” or “HIGH” must be resolved to the
other Party’s reasonable satisfaction as promptly as practicable following the
date of the review. The Parties shall use reasonable best efforts to coordinate
with each other so that each Party’s Security Review occurs at approximately the
same time of the Calendar Year as such Party’s Internal Audit.

15.4 Operational Review. During the Month of December of each Calendar Year
during the Term (or such other Month as is mutually agreed by the Parties), the
Chief Executive Officer of each of eBay and PayPal shall prepare a written
assessment of each Party’s compliance under this Agreement and the Product
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of this Agreement and the Product Development Agreement to eBay or PayPal, as
applicable, the Product Development Plan for the upcoming Calendar Year, the
Parties’ performance of the Development Projects included in the Product
Development Plan for the current Calendar Year and any other aspect of the
relationship between the Parties governed by this Agreement and the Product
Development Agreement as such Chief Executive Officer deems relevant (a “CEO
Assessment”). The CEO Assessments shall be distributed to the Chairman of the
board of directors, Chief Executive Officer and Chairman of the Audit Committee
of eBay and PayPal as well as any member of the eBay or PayPal board of
directors who served as the Chief Executive Officer or Chief Financial Officer
of eBay immediately prior to the Effective Time (the “Operational Review
Group”). The Operational Review Group shall meet within thirty (30) days of the
distribution of the CEO Assessments to review the CEO Assessments and other
aspects of the relationship between the Parties governed by this Agreement as
the Operational Review Group shall deem relevant. The Operational Review Group
will also consider any findings noted in each Audit report produced in an
External Audit or an Internal Audit and develop and agree upon an action plan to
promptly address and resolve any deficiencies, concerns and/or recommendations
in such Audit report, and, unless mutually agreed by the Parties, the Party
responding to a deficiency, concern and/or recommendation in an Audit report,
shall, at its own expense, undertake remedial action in accordance with such
action plan. During the Month of June of each Calendar Year during the Term (or
such other Month as is mutually agreed by the Parties), the boards of directors
of each of eBay and PayPal shall meet with each other and discuss the aspects of
the relationship between the Parties governed by this Agreement, including
opportunities for additional or expanded commercial relationships on arm’s
length terms.

ARTICLE XVI

DISPUTE RESOLUTION

16.1 Good Faith Negotiation. Subject to Section 16.3, either Party seeking
resolution of any dispute, controversy or claim arising out of or relating to
this Agreement, including the breach, termination or validity of this Agreement
(a “Dispute”), shall provide written notice thereof to the other Party (the
“Initial Notice”), and within thirty (30) days of the delivery of the Initial
Notice, the Parties shall attempt in good faith to negotiate a resolution of the
Dispute. The negotiations shall be conducted by executives who hold, at a
minimum, the title of senior vice president or general counsel and who have
authority to settle the Dispute. All such negotiations shall be confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence. If the Parties are unable for any reason to
resolve a Dispute within thirty (30) days after the delivery of such notice or
if a Party reasonably concludes that the other Party is not willing to negotiate
as contemplated by the preceding sentences of this Section 16.1, the Dispute
shall be resolved in accordance with Section 16.2.

16.2 Dispute Resolution Process. Any Dispute that cannot be resolved by good
faith negotiations between the Parties shall be submitted to the Escalation
Committee and resolved in accordance with Sections 7.2 to 7.6 of the Separation
and Distribution Agreement.

16.3 Litigation and Unilateral Commencement of Arbitration. Notwithstanding the
foregoing provisions of this Article 16 or Sections 7.2 to 7.4 of the Separation
and Distribution Agreement, a Party may seek preliminary provisional or
injunctive judicial relief with respect to a Dispute without first complying
with the procedures set forth in Section 16.1, Section 16.2 or Sections 7.2 to
7.4 of the Separation and Distribution Agreement if such action is reasonably
necessary to avoid irreparable damage.

 

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16.4 Conduct During Dispute Resolution Process. Unless otherwise agreed in
writing, the Parties shall, and shall cause their respective Subsidiaries to,
continue to honor all commitments under this Agreement to the extent required by
this Agreement during the course of dispute resolution pursuant to the
provisions of this Article 16, unless such commitments are the specific subject
of the Dispute at issue. Notwithstanding the foregoing, PayPal agrees that its
interruption of the Services may cause irreparable harm to eBay for which no
adequate remedy exists at Law and agrees, during the pendency of any Dispute not
to deny, withdraw, restrict or delay its provision of the Services to eBay
Merchants or PayPal Users except as required by court order, by the resolution
of the Dispute or as a result of the termination of this Agreement (subject to
the Termination Assistance Services).

ARTICLE XVII

MISCELLANEOUS

17.1 Mutual Cooperation. Each Party shall, and shall cause its Subsidiaries to,
cooperate with the other Party and its Subsidiaries in connection with the
performance of the Services hereunder; provided, that such cooperation shall not
unreasonably disrupt the normal operations of such Party or its Subsidiaries;
provided, further, that this Section 17.1 shall not require such Party to incur
any out-of-pocket costs or expenses unless and except as expressly provided in
this Agreement or otherwise agreed to in writing by the Parties.

17.2 Further Assurances. Each Party shall take, or cause to be taken, any and
all reasonable actions, including the execution, acknowledgment, filing and
delivery of any and all documents and instruments that any other Party may
reasonably request in order to effect the intent and purpose of this Agreement
and the transactions contemplated hereby.

17.3 Relationship. The Parties each acknowledge and agree that they are separate
entities, each of which has entered into this Agreement for its own independent
business reasons. Nothing contained in this Agreement shall be construed as
creating a joint venture, partnership, agency, fiduciary or employment
relationship among or between any of the Parties.

17.4 No Third-Party Beneficiaries. Except for the indemnification rights under
this Agreement of any member of the eBay Group or the PayPal Group in their
respective capacities as such, (a) the provisions of this Agreement are solely
for the benefit of the Parties and are not intended to confer upon any Person
except the Parties any rights or remedies hereunder, and (b) there are no
third-party beneficiaries of this Agreement and neither this Agreement nor any
Ancillary Agreement shall provide any third person with any remedy, claim,
Liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement or any Ancillary Agreement.

17.5 Amendment. No provisions of this Agreement shall be deemed waived, amended,
supplemented or modified by a Party, unless such waiver, amendment, supplement
or modification is in writing and signed by the authorized representative of the
Party against whom it is sought to enforce such waiver, amendment, supplement or
modification. If the Parties have

 

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each determined that it is necessary or advisable to amend this Agreement but
cannot agree on the terms of such amendment, the Parties shall resolve the
dispute pursuant to Sections 16.1 and 16.2.

17.6 Compliance with Law. Notwithstanding anything to the contrary in this
Agreement, none of the covenants or obligations in this Agreement shall require
either Party to violate any applicable Law.

17.7 Assignability. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns;
provided, that neither Party nor any such party thereto may assign its rights or
delegate its obligations under this Agreement without the express prior written
consent of the other Party hereto or other parties thereto, as applicable.
Notwithstanding the foregoing, no such consent shall be required for (i) the
assignment of a Party’s rights and obligations under this Agreement in whole or
in part to any of its Subsidiaries; provided, that no such assignment shall
release such Party from any liability or obligation under this Agreement; or
(ii) the assignment of all of a Party’s rights and obligations under in whole
(i.e., the assignment of a party’s rights and obligations under this Agreement,
the Separation and Distribution Agreement and all other Ancillary Agreements all
at the same time) in connection with a change of control of a Party so long as
the resulting, surviving or transferee Person assumes all the obligations of the
relevant party thereto by operation of Law or pursuant to an agreement in form
and substance reasonably satisfactory to the other Party. Nothing in this
Section 17.7 is intended to, or shall be construed to, prohibit eBay or PayPal
from being party to or undertaking a change of control.

17.8 Incorporation by Reference. Sections 10.1 (excluding Sections 10.1(c)),
10.2, 10.5 through 10.14 and 10.16 through 10.19 of the Separation and
Distribution Agreement are incorporated by reference into this Agreement,
mutatis mutandis, except that each reference to “this Agreement”, “any Ancillary
Agreement” or “each Ancillary Agreement” in the Separation and Distribution
Agreement shall be deemed to refer to this Agreement.

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement by persons
duly authorized as of the date and year first above written.

 

EBAY INC. By:

/s/ Devin N. Wenig

Name: Devin N. Wenig Title: President and CEO-Designee, Marketplaces EBAY
INTERNATIONAL AG By:

/s/ Anthony Glasby

Name: Anthony Glasby Title: Authorized Signatory PAYPAL HOLDINGS, INC. By:

/s/ Daniel H. Schulman

Name: Daniel H. Schulman Title: President and CEO-Designee PAYPAL, INC. By:

/s/ Daniel H. Schulman

Name: Daniel H. Schulman Title: President PAYPAL PTE. LTD. By:

/s/ Anthony Glasby

Name: Anthony Glasby Title: Authorized Signatory PAYPAL PAYMENTS PTE. HOLDINGS
S.C.S. By:

/s/ Robert Caplehorn

Name: Robert Caplehorn Title: Director

[Signature Page to Operating Agreement]

--------------------------------------------------------------------------------

Schedule 1.1

Additional Jurisdictions

 

1. Austria.

 

2. Belgium.

 

3. Bulgaria.

 

4. Croatia.

 

5. Cyprus.

 

6. Czech Republic.

 

7. Denmark.

 

8. Estonia.

 

9. Finland.

 

10. Greece.

 

11. Hungary.

 

12. Ireland.

 

13. Latvia.

 

14. Lithuania.

 

15. Luxembourg.

 

16. Malta.

 

17. Netherlands.

 

18. Norway.

 

19. Poland.

 

20. Portugal.

 

21. Romania.

 

22. Slovakia.

 

23. Slovenia.

 

24. Sweden.

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Schedule 1.2

Buyer-Only Jurisdictions

 

1. India.

 

2. Russia.

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Schedule 1.3

eBay Covered Properties

 

1. ebay.com.

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Schedule 1.4

eBay Excluded Properties

 

1. StubHub.

 

2. Enterprise.

 

3. Magento.

 

4. Classifieds.

 

5. Shopping.com.

 

6. brands4friends.

 

7. GittiGidiyor.

 

8. Gmarket.

 

9. IAC.

 

10. Half.com.

 

11. eBay Local.

 

12. RedLaser.

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Schedule 1.5

Excluded Jurisdictions

 

1. Argentina.

 

2. Belize.

 

3. Bolivia.

 

4. Brazil.

 

5. Chile.

 

6. Colombia.

 

7. Costa Rica.

 

8. Ecuador.

 

9. El Salvador.

 

10. Guatemala.

 

11. Guyana.

 

12. Honduras.

 

13. Mexico.

 

14. Nicaragua.

 

15. Panama.

 

16. Paraguay.

 

17. Peru.

 

18. Suriname.

 

19. Uruguay.

 

20. Venezuela.

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Schedule 3.1

Comparability

 

1. Jurisdiction (i.e., the country in which the eBay Merchant or non-eBay
Merchant is resident according to information given by such person in
registering for such Person’s PayPal account).

 

2. Size of the eBay Merchant or non-eBay Merchant (measured by PayPal Net TPV).

 

3. PayPal Product.

 

4. Average selling price.

 

5. Such other factors as are mutually agreed by eBay and PayPal.

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Schedule 5.1

Data Sharing Addendum

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DATA SHARING ADDENDUM

This Data Sharing Addendum (this “Addendum”) is incorporated by this reference
as an addendum to the Operating Agreement (“Operating Agreement”) entered into
by and between eBay Inc., a Delaware corporation with its principal place of
business at 2065 Hamilton Ave, San Jose, California 951255 and its Affiliates,
and eBay International AG, a company organized under the laws of Switzerland, on
the one hand, (also collectively referred to as “eBay”) and PayPal Holdings,
Inc., a Delaware corporation with its principal place of business at 2211 North
First Street, San Jose, California 95131, PayPal, Inc., a Delaware corporation,
PayPal Pte Ltd., a company organized under the laws of Singapore, and PayPal
Payments Pte Holdings, S.C.S., a company organized under the laws of Luxembourg,
and their Affiliates, on the other hand (also collectively referred to as
“PayPal”), as of the Addendum Effective Time (defined below). eBay and PayPal
are each a “Party” to this Agreement.

WHEREAS, as of the date hereof, eBay and PayPal are affiliate companies within
the same corporate group. It is intended, however, that, following the Effective
Time, and pursuant to the transactions set forth in the Separation and
Distribution Agreement, dated as of June 26, 2015, between eBay Inc. and PayPal
Holdings, Inc. (also referred to as the “Separation and Distribution
Agreement”), the Parties will no longer form part of the same corporate group
(“Separation”);

WHEREAS, eBay and PayPal, consistent with applicable Law, share certain data
that may include information or data relating to an identified or identifiable
person, employee or customer (also referred to in the Operating Agreement as
“Personal Information”), and each Party desires to continue, following the
Separation, sharing certain data and Personal Information with the other Party
for the other Party’s use for certain limited purposes, to the extent such
sharing is consistent with applicable Law and is in accordance with the Party’s
respective privacy policies;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Parties agree to the following terms and conditions, which set forth
the rights, duties and obligations of the Parties:

 

1. DEFINITIONS

All capitalized terms not defined herein shall have the meaning ascribed to them
in the Operating Agreement.

1.1 “Addendum Effective Time” means 12:00:00 a.m. New York City time immediately
following the Effective Time.

1.2 “Law” has the meaning set forth in the Separation and Distribution
Agreement.

1.3 “Effective Time” has the meaning set forth in the Separation and
Distribution Agreement.

 

2. EACH PARTY’S RIGHTS AND OBLIGATIONS

2.1 Updated Privacy Policies. Each Party has issued an updated user privacy
notice/policy that will be effective at or before Separation that, among other
things, explains the ways in which such Party may share its data with the other
Party, including sharing with the other Party for the uses permitted under
Section 2.2 below (each, an “Updated Privacy Policy”).

 

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2.2 Mutual Grant of Rights.

(a) Use of Data for Customer Service Purposes. Subject to the terms and
conditions of this Addendum and any other applicable agreement(s), each Party
hereby grants the other Party a restricted, non-exclusive, personal,
nontransferable, revocable license and right, during the Term, to access, view
and use certain of the granting Party’s data, including Personal Information, to
the extent consistent with applicable Law for the purpose of providing Customer
Service. “Customer Service” means setting up an account, responding to questions
from a customer relating to his/her account or transactions, updating account
information, and other similar customer service purposes.

(b) Use of Data for Fraud Prevention Purposes. Subject to the terms and
conditions of this Addendum and any other applicable agreement(s), each Party
hereby grants the other Party a restricted, non-exclusive, personal,
nontransferable, revocable license and right, during the Term, to access, view
and use certain of the granting Party’s data, including Personal Information, to
the extent consistent with applicable Law for the purpose of Fraud Prevention.
“Fraud Prevention” means protecting against or preventing actual or potential
fraud, illegal conduct, unauthorized transactions, claims, credit risk, or other
liability with respect to the Parties’ platforms and payment ecosystem,
including by administering seller standards for specialized seller programs,
such as the “Top Seller” program (as may be modified) to protect the Parties’
payment ecosystem and the Parties’ platforms from actual or potential fraud,
unauthorized transactions, claims and other liability, and for other similar
fraud prevention purposes.

(c) Use of Data for Employment Purposes. Subject to the terms and conditions of
this Addendum and any other applicable agreement(s), each Party hereby grants
the other Party a restricted, non-exclusive, personal, nontransferable,
revocable license and right, during the Term, to access, view and use certain of
the granting Party’s data, including Personal Information to the extent
consistent with applicable Law for purposes of processing employment related
transactions, including, but not limited to, proper processing of payroll,
obtaining employment history, hiring and termination of employment, processing
of employee benefits and equity compensation, and such other purposes as agreed
by the Parties.

(d) Use of Data for Other Purposes. Subject to the terms and conditions of this
Addendum and any other applicable agreement(s), each Party hereby grants the
other Party a restricted, non-exclusive, personal, nontransferable, revocable
license and right, during the Term, to access, view and use certain of the
granting Party’s data, including Personal Information to the extent consistent
with applicable Law for purposes as agreed by the Parties.

2.3 Restrictions.

(a) Use Limitations & Prohibitions. Without limiting the restrictions set forth
in Section 2.2 above, unless the Parties have entered into a separate agreement
that expressly permits a specific data use or disclosure or expressly authorizes
specific conduct, a Party shall not, without the other Party’s prior express
written consent:

 

  (i) access, use or disclose the other Party’s data, including Personal
Information for any purpose not expressly permitted by this Addendum or other
applicable agreement, including, without limitation, direct marketing or
interest-based advertising, or on behalf of any other person or entity;

 

2

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  (ii) access, use or disclose the other Party’s data, including Personal
Information to the extent that such access, use, or disclosure, is or becomes
inconsistent with applicable Law or the order or direction of a government
entity;

 

  (iii) use the other Party’s Personal Information for purposes that would cause
it to be deemed a “consumer report” for purposes of Section 603(d) of the Fair
Credit Reporting Act (15 U.S.C. § 1681a(d)) or other similar Laws, including,
without limitation, to use the other Party’s Personal Information (excluding
Personal Information comprised of information solely as to transactions or
experiences between the consumer and the person making the report, consistent
with Section 603(d)(2)(A)(i) of the Fair Credit Reporting Act (15 U.S.C. §
1681a(d)(2)(A)(i))) to determine an individual’s eligibility for credit,
insurance, employment, or any other “permissible purpose” provided in
Section 604 of the Fair Credit Reporting Act (15 U.S.C. § 1681b).

 

  (iv) use the other Party’s Personal Information to take any action within the
other Party’s systems, whether or not on behalf of the customer to whom the data
relate (including, without limitation, by entering a transaction or expanding or
limiting a customer’s ability to transact with the other Party);

 

  (v) engage in any deceptive, misleading, unfair or otherwise illegal business
practices that may reflect unfavorably on the other Party;

 

  (vi) permit any unauthorized person or entity to have access to the other
Party’s data, database, systems or Personal Information; or

 

  (vii) engage in any activity with respect to the other Party’s database or
systems that interferes with, disrupts, damages or accesses in an unauthorized
manner the Personal Information or any servers, networks, systems, products or
other properties or services of the other Party or of any third party.

 

  (viii) violate any policies or procedures adopted by the other Party pursuant
to Section 2.1 above.

(b) Data Limitations. In connection with accessing the granting Party’s Personal
Information for a use permitted under Section 2.2 above, the accessing party
shall not access any of the following data relating to the granting Party’s
customer:

 

  (i) any data, record, or file that could be deemed a consumer report or credit
score as those terms are defined in Sections 603 and 609 of the Fair Credit
Reporting Act (15 U.S.C. §§ 1681a, 1681g) or other similar Laws;

 

  (ii) any data relating to a specific customer(s) that the granting Party
identifies as a customer(s) with respect to which access is not permitted; or

 

  (iii) other specific data elements identified by the granting Party from time
to time. In order to facilitate compliance with these limitations, each Party
shall identify those data elements or customers within its customer database
that are covered by these limitations via a flag or similar notation and will
provide at least ten days’ notice before modifying the list of specific data
elements to which this clause applies.

(c) Access Limitations. An accessing Party may not access the granting Party’s
data, including Personal Information for a use permitted under Section 2.2 above
unless the accessing Party: (i) adopts policies and procedures designed to
ensure that the accessing Party accesses only those elements of the granting
Party’s data that are needed for the permitted use, and does not access any data
identified in Section 2.3(b) above; (ii) adopts policies and procedures designed
to ensure that appropriate customer consent is obtained, when required;
(iii) trains its relevant employees on such policies and procedures; and
(iv) monitors and documents employees’ compliance with such policies and
procedures.

 

3

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2.4 Use of Contractors.

(a) Engagement of Contractors. A Party shall not have its rights or licenses
under this Addendum exercised by any third party, except a Party may engage a
third-party contractor (“Contractor”) to exercise such Party’s rights under
Section 2 on behalf, and solely for the benefit, of such Party, and the
Contractor agrees in writing: (i) that the exercise of such rights (including
any access to or use of the other Party’s Personal Information) must be for the
sole benefit of the Party that engages it, and (ii) to confidentiality and
non-disclosure requirements, including, without limitation, restrictions on
disclosure and use of, and requirements relating to the safeguarding of, the
other Party’s Personal Information, no less strict than those set forth in this
Addendum and those required by all applicable Laws, as well as by the engaging
Party for its own comparable confidential and proprietary information (a
Contractor that satisfies the foregoing requirements, an “Authorized
Contractor”).

(b) Responsibility. Notwithstanding Section 2.4(a), (i) the Party that engages
an Authorized Contractor will remain fully responsible for any act or omission
of any Authorized Contractor where such act or omission, if committed by the
engaging Party, would be a breach of any obligation set forth in this Addendum,
(ii) the engaging Party will actively monitor and manage all Authorized
Contractors for compliance with this Addendum, and (iii) the engaging Party will
remain fully responsible for all payment obligations relating to all Authorized
Contractors and (iv) the engaging Party will ensure that all Personal
Information is returned or destroyed following the instructions given by the
Engaging Party and that the Authorized Contractor ceases the processing of such
Personal Information upon the termination or expiration of the contract between
the Authorized Contractor and the engaging Party.

2.5 Means of Access. The Parties will work together in good faith to create the
means by which one Party may access the other Party’s data or Personal
Information to satisfy the terms of the Operating Agreement or other applicable
agreement(s).

2.6 Historical Data. The Parties understand that the other Party will continue
to use and otherwise process Personal Information shared prior to the Separation
in a manner and for a purpose in which such Personal Information was used prior
to the Separation and in accordance with all applicable privacy notices and
policies, applicable Laws, data retention limitations, and any restrictions,
obligations, and license limitations set forth in prior agreements between the
Parties.

2.7 Cooperation and Servicing. Service levels may be prescribed as agreed by the
parties. In the absence of a defined service level or right to remediate within
an applicable agreement one Party may request, upon fourteen (14) days of
notice, that each Party shall designate an employee to cooperate in good faith
with the designated employee of the other Party to facilitate the data sharing
contemplated by this Addendum and to address any issues that may arise in
connection with it.

 

3. AUDIT

3.1 Self Audit. Each Party (the “Audited Party”) shall annually perform a
detailed and accurate review of all data uses and retention practices allowed
under this Addendum, and other applicable agreement(s), including maintenance of
appropriate records and documentation necessary to provide verification to the
other Party (the “Auditing Party”) that its use and deletion of accessed data is
aligned with the purposes described within this Addendum, and other applicable
agreement(s). All such records shall be kept for at least two years or for such
longer period as may be required by applicable Law.

 

4

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Promptly after any request by the Auditing Party, the Audited Party shall
provide such information, in such manner as agreed to by the Parties. Each Party
shall bear its own costs and expenses in connection with such audit.

3.2 Right to Audit. The Audited Party shall permit the Auditing Party and the
Auditing Party’s designated representatives (or their designated third-party
auditors), upon reasonable notice to the Audited Party, to audit and inspect, at
the Auditing Party’s sole expense, and no more often than once per year (unless
otherwise required by the Auditing Party’s regulators or as otherwise agreed):
(a) the facilities of the Audited Party and any third-party service providers of
the Audited Party previously approved by the Auditing Party where the Auditing
Party’s data or Personal Information is received, accessed, stored or maintained
by, or on behalf of, the Audited Party; (b) any computerized or paper systems
used to access, use or otherwise handle the Auditing Party’s data or Personal
Information; and (c) the Audited Party’s security practices and procedures,
facilities, resources, plans, procedures and books and records relating to the
privacy and security of the Auditing Party’s data or Personal Information,
including any records of the Audited Party’s annual Self Audit. Such audit and
inspection rights shall be, at a minimum, for the purpose of verifying the
Audited Party’s compliance with the Operating Agreement, and other applicable
agreement(s).

 

4. DATA DELETION

4.1 The accessing Party shall, upon termination of this Addendum, or upon the
request of the granting Party, return to the granting Party, all data of the
granting party, including Personal Information (together with all copies) in any
media in its power, possession or control, and/or securely delete and erase all
of the data of the granting party, including Personal Information from the
accessing Party’s systems, except to the extent required to be maintained for
transactional or regulatory purposes. If such return or deletion is
impracticable, the accessing Party will notify the granting Party and will
ensure that proper technical, physical, and organizational security controls
will continue to be employed with regard to control of any retained data. All
data retained by the accessing Party will be maintained only as long as
necessary for legitimate business purposes and shall be securely destroyed in
accordance with applicable Law, including, but not limited to, applicable data
retention regulations.

 

5. INTELLECTUAL PROPERTY RIGHTS

5.1 This Addendum shall not be deemed to assign to either Party any Intellectual
Property Rights that are owned or held by the other Party and existing at the
Addendum Effective Time, or any Intellectual Property Rights that are otherwise
created by such Party independently of this Agreement. This Addendum shall not
be deemed to grant to either Party any licenses or rights to such other party’s
Intellectual Property Rights other than those rights expressly granted in
Section 2.2. All rights not expressly granted by a Party are hereby reserved.
“Intellectual Property Rights” means all rights of the following types, which
may exist or be created under the Laws of any jurisdiction in the world:
(a) rights associated with works of authorship, including exclusive exploitation
rights, copyrights and moral rights; (b) trademark and trade name rights and
similar rights; (c) trade secret rights; (d) patent and industrial property
rights; (e) any other intellectual proprietary rights; and (f) rights in or
relating to registrations, renewals, extensions, combinations, divisions, and
reissues of, and applications for, any of the rights referred to in clauses
(a) through (e) of this definition.

 

5

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6. CONFIDENTIALITY

6.1 In performing the obligations under this Agreement, each Party will comply
with the provisions regarding the protection of confidential information
(including Highly Sensitive Information) set forth in the Operating Agreement.

 

7. DATA PROTECTION

7.1 Each Party will establish and maintain documented policies or standards
appropriate to govern the handling of data of the granting party, including
Personal Information, in compliance with this Addendum and any other applicable
agreement(s).

7.2 Each Party shall implement and shall maintain appropriate and sufficient
technical, physical, and organizational security measures to protect the data of
the granting party, including Personal Information in any form or media, whether
electronic, hardcopy or otherwise, against accidental, unauthorized, or unlawful
destruction, loss, damage, alteration, disclosure, access, acquisition or other
processing, including without limitation with respect to processing that
involves the transmission of data over a network, which security measures shall
meet or exceed those required or appropriate under applicable Law. Without
limiting the generality of the forgoing, each Party agrees to implement a
Security Program as follows:

 

  (a) Scope and Content. Each Party will develop, implement, maintain and
enforce a written information privacy and security program (“Security Program”)
that (i) complies with an Industry Recognized Framework, (ii) includes
administrative, technical and physical safeguards reasonably designed to protect
the confidentiality, integrity and availability of Personal Information and
(iii) is appropriate to the nature, size and complexity of each Party’s business
operations. “Industry Recognized Framework” means a global industry recognized
information security management system (“ISMS”), such as ISMS standard ISO/IEC
27001:2005 – Information technology – Security techniques – Information security
management systems – Requirements, as published by the International
Organization for Standardization and the International Electrotechnical
Commission (“ISO 27001”) and the Control Objectives for Information and related
Technology best practices framework established by the Information Systems and
Control Association and the IT Governance Institute (“COBIT”).

 

  (b) Security Program Changes. Each Party will provide details of any major
changes to its Security Program that may affect the security of any Personal
Information. Such details must be communicated in writing to the Security
Operations Center of each Party within ten (10) business days prior to the
effectiveness of any changes.

 

  (c) Security Officer. Each Party has and will continue to designate a senior
employee to be responsible for overseeing and carrying out its Security Program
and for communicating with the other Party on information security matters (the
“Security Officer”). Each Party’s Security Officer will provide the other Party
with the contact information of one or more representatives who will be
available to discuss any security concerns (e.g., discovered vulnerability,
exposed risk, reported concern) with such other Party and to communicate the
level of risk associated with such concerns and any remediation thereof. A
representative for each Party must be available during normal business hours.
Any changes to the contact information of a Security Officer or any designated
representatives must be communicated to the other Party’s Security Officer.

 

6

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  (d) Training. Each Party will provide training on its Security Program and any
other data privacy and security policies at its own expense, to all of its
employees who assist in the performance of services or other activities for eBay
under the Addendum and who may have access to Personal Information. Each Party
will maintain records documenting the name of each such employee who receives
data privacy and security training and the date on which the training was
completed and will make such records available for the other Party’s inspection
upon request.

 

  (e) Vulnerability Management. Each Party must run internal and external
network vulnerability scans at least quarterly and after any material change in
the network configuration (e.g., new system component installations, changes in
network topology, firewall rule modifications, or product upgrades).
Vulnerabilities identified and rated as high risk by the scanning Party will be
remediated within ninety (90) days of discovery.

 

  (d) For all Internet-facing applications that collect, transmit or display the
other Party’s Personal Information, each Party agrees to conduct an application
security assessment review to identify common security vulnerabilities as
identified by industry-recognized organizations (e.g., OWASP Top 10
Vulnerabilities; CWE/SANS Top 25 vulnerabilities) annually or for all major
releases, whichever occurs first. The scope of the security assessment will
primarily focus on application security, including, but not limited to, a
penetration test of the application, as well as a code review.

7.3 Each Party agrees to comply with all data protection obligations applicable
to each Party. Where the Personal Information shall be construed as “Personal
Data” under EU Directive 95/46/EC, or any subsequent legislation, the Parties
shall act as data controller with respect to their own Personal Information and
the Personal Information they access from the other Party. The accessing Party
shall access and process the Personal Information of the granting Party solely
for the purposes stipulated in this Addendum and any other applicable
agreement(s), and in compliance with the obligations set forth in applicable
data protection legislation and other applicable Laws. If the granting Party is
considered a Data Controller and the accessing Party a Data Processor, Data
Processor shall act also in accordance with Data Controller’s written
instructions regarding the processing of the Personal Data. Any perceived
conflict in obligations under applicable Law or contract shall be escalated to
the other Party’s Privacy Officer or other representative as may be designated,
with a copy to its General Counsel.

7.4 Each Party represents and warrants that it has fulfilled and will continue
to fulfill, in relation to the Personal Information granted to the accessing
Party, all formal and substantive obligations under the applicable Law,
including, but not limited to, those requiring the notification of a breach of
their data systems to the competent authorities and/or the individuals who are
the subject of the data, as applicable, the collection of Personal Data in
compliance with the duties of informed and adequate consent, the adoption of the
technical, physical and organizational measures and the nondisclosure of
Personal Data to third parties (except as consistent with applicable data
protection legislation and other applicable Law). Any perceived conflict in
obligations under Law or contract should be escalated to the other Party’s
Privacy Officer, with a copy to its General Counsel.

7.5 If the accessing Party intends to transfer the Personal Data to a Country
outside of the European Economic Area, the accessing Party shall maintain a
mechanism to legally transfer data as prescribed in Article 26(2) of Directive
95/46/EC by the European Commission, or applicable subsequent legislation. The
accessing Party represents and warrants that it shall comply with the Laws of
all jurisdictions from which and to which it transfers, or causes to be
transferred, Personal Information.

 

7

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7.6 Each Party will establish a procedure by which individuals can exercise
their rights of data access, correction, deletion and blocking of data,
consistent with applicable Law. Where the accessing Party is not legally
obligated to respond to an individual request(s), the procedure required to be
adopted by the accessing Party will include a mechanism to refer the individual
to the other Party to allow the individual to make a request concerning his/her
Personal Data, if applicable.

7.7 The accessing Party shall notify the granting Party in the most expedient
time possible under the circumstances and without unreasonable delay of any
accidental, unauthorized, or unlawful destruction, loss, damage, alteration, or
disclosure of, access to, acquisition of, or other processing of the granting
Party’s data, including Personal Information (“Security Breach”) upon becoming
aware or developing a reasonable suspicion of such Security Breach. The
accessing Party shall also provide the granting Party with a detailed
description of the Security Breach, the type of data that was the subject of the
Security Breach and the identity of each affected person (or an identification
of the group of potentially affected persons, if individual identities cannot be
reasonably known) as soon as such information can be collected or otherwise
becomes available, as well as any other information the granting Party may
reasonably request relating to the Security Breach. The accessing Party agrees
to take action immediately to investigate the Security Breach and to identify,
prevent and make reasonable efforts to mitigate the effects of any such Security
Breach, with the granting Party’s prior agreement, and to carry out any recovery
or other action necessary to remedy the Security Breach, all of which shall be
at the accessing Party’s own cost and expense. Except as otherwise required by
Law, the accessing Party may not release or publish any filing, communication,
notice, press release, or report concerning any Security Breach in respect of
the granting Party’s Personal Information without the granting Party’s prior
approval. Except as otherwise required by Law, if the granting Party reasonably
determines that notification to its customers should occur, the accessing Party
must ensure that affected third parties are notified of the Security Breach, at
the granting party’s sole discretion, either by notifying such third parties
after the granting Party has reviewed and approved the language and method of
notice, or by enabling the granting Party to notify such third parties itself.
The accessing Party agrees to cover the costs of any such notification,
including reimbursing the granting Party for any reasonable costs such as to
provide credit monitoring services to affected customers.

 

8. WARRANTIES

8.1 Mutual Warranties. Each Party hereby represents and warrants to the other
Party that: (a) it has all necessary power and authority to execute and deliver
this Addendum and to perform its obligations under this Addendum; (b) the
execution and delivery of this Addendum have been duly and validly authorized by
all necessary corporate action applicable to such party, and no other corporate
action is necessary to authorize such party’s execution and performance of this
Addendum; (c) it is not a party to any agreement or understanding with any third
party that interferes with or will interfere with its performance of its
obligations under this Addendum; and (d) it will comply with all applicable
Laws, rules and regulations in its performance of its rights and obligations
pursuant to this Addendum, including, without limitation, in connection with its
use of the other Party’s Personal Information.

8.2 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, AND TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY MAKES, AND EACH PARTY
HEREBY SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE OR NONINFRINGEMENT OF THIRD PARTY RIGHTS, OR
WARRANTIES ARISING FROM A COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OR
TRADE PRACTICE. WITHOUT IN ANY WAY LIMITING THE GENERALITY OF THE FOREGOING,
EACH PARTY ACKNOWLEDGES THAT THE OTHER PARTY’S PERSONAL INFORMATION, AND THE
ACCESS TO SAME, ARE PROVIDED ON AN “AS-IS” BASIS.

 

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9. TERM AND TERMINATION

The term of this Addendum (the “Addendum Term”) shall commence on the Effective
Date and, unless sooner terminated by either Party in accordance with the
Operating Agreement, shall continue in full force and effect for the period of
the Operating Agreement. Termination of this Addendum shall not affect Sections
2.3, 3, 4, 5, 6 or 7.

 

10. GENERAL PROVISIONS

10.1 Relationship of the Parties. Nothing contained in this Addendum shall be
deemed or construed as creating a joint venture, partnership, agency, employment
or fiduciary relationship between the Parties. Neither Party nor its agents has
any authority of any kind to bind the other Party in any respect whatsoever, and
the relationship of the Parties is, and at all times shall continue to be, that
of independent contractors.

10.2 Entire Agreement. This Addendum, and the Operating Agreement constitute the
entire agreement between the Parties concerning the subject matter hereof and
supersedes all prior or contemporaneous representations, discussions, proposals,
negotiations, conditions, agreements and communications, whether oral or
written, between the Parties relating to the subject matter of this hereof.

10.3 Incorporation by Reference. Sections 17.1, 17.2 and 17.4 through 17.8 of
the Operating Agreement are incorporated by reference into this Addendum,
mutatis mutandis, except that (a) any such provision that conflicts with this
Addendum shall not be so incorporated, and (b) each reference to “this
Agreement” in the Operating Agreement shall be deemed to refer to this Addendum.

 

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IN WITNESS WHEREOF, the Parties have caused this Addendum to be executed by duly
authorized representatives of the Parties as of the Effective Date.

 

EBAY INC.     PAYPAL HOLDINGS, INC. BY:  

 

    BY:  

 

NAME:   Devin N. Wenig     NAME:   Daniel H. Schulman TITLE:   President and
CEO-Designee, eBay Marketplaces     TITLE:   President and CEO-Designee EBAY
INTERNATIONAL AG     PAYPAL, INC. BY:  

 

    BY:  

 

NAME:   Anthony Glasby     NAME:   Daniel H. Schulman TITLE:   Authorized
Signatory     TITLE:   President       PAYPAL PTD. LTD.       BY:  

 

      NAME:   Anthony Glasby       TITLE:   Authorized Signatory       PAYPAL
PAYMENTS PTE. HOLDINGS SCS.       BY:  

 

      NAME:   Robert Caplehorn       TITLE:   Director

[Signature Page to Data Sharing Addendum]