Document:

Exhibit 4.2

 

FORM OF

SECOND AMENDED AND RESTATED 
 INTELLECTUAL PROPERTY LICENSE AGREEMENT

 

by and among

 

ALIBABA GROUP HOLDING LIMITED,

 

浙江蚂蚁小微金融服务集团股份有限公司
 (ANT SMALL AND MICRO FINANCIAL SERVICES GROUP CO., LTD.),

 

and

 

支付宝(中国)网络技术有限公司
 (ALIPAY.COM CO., LTD.),

 

Dated as of [·], 2018

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I   DEFINITIONS AND CONSTRUCTIONS
    	
 
    	
2
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
 
    	
Definitions
    	
 
    	
2
    
	
Section 1.2
    	
 
    	
Cross-Reference of Other Definitions
    	
 
    	
13
    
	
Section 1.3
    	
 
    	
Construction
    	
 
    	
15
    
	
Section 1.4
    	
 
    	
Exhibits
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II   LICENSE GRANTS
    	
 
    	
16
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
 
    	
Alipay-Exclusive IP and New FIG Business-Exclusive   IP
    	
 
    	
16
    
	
Section 2.2
    	
 
    	
Alipay-Related IP and New FIG Business-Related IP
    	
 
    	
18
    
	
Section 2.3
    	
 
    	
Alibaba Delivery Obligation
    	
 
    	
19
    
	
Section 2.4
    	
 
    	
Sublicensing
    	
 
    	
19
    
	
Section 2.5
    	
 
    	
Restrictions
    	
 
    	
21
    
	
Section 2.6
    	
 
    	
Use of Trademarks
    	
 
    	
22
    
	
Section 2.7
    	
 
    	
Grant Back
    	
 
    	
24
    
	
Section 2.8
    	
 
    	
No Other Grant
    	
 
    	
25
    
	
Section 2.9
    	
 
    	
Injunctive Relief
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III   TERMINATION OF SERVICES; DEDICATED EMPLOYEES
    	
 
    	
25
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
 
    	
Termination of Software Technology Services
    	
 
    	
25
    
	
Section 3.2
    	
 
    	
Employment of the Dedicated Employees
    	
 
    	
25
    
	
Section 3.3
    	
 
    	
Dedicated Employee Severance
    	
 
    	
26
    
	
Section 3.4
    	
 
    	
Termination of Providers Addenda
    	
 
    	
26
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV   OWNERSHIP
    	
 
    	
26
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
 
    	
Licensed IP
    	
 
    	
26
    
	
Section 4.2
    	
 
    	
Alipay IT Materials
    	
 
    	
27
    
	
Section 4.3
    	
 
    	
Ownership of Enhancements
    	
 
    	
27
    
	
Section 4.4
    	
 
    	
New Patents, Trademarks and Domain Names
    	
 
    	
27
    
	
Section 4.5
    	
 
    	
Alipay Materials
    	
 
    	
30
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V   FEES AND PAYMENT
    	
 
    	
31
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
 
    	
Royalties and Other Amounts for Licensed IP
    	
 
    	
31
    
	
Section 5.2
    	
 
    	
Royalty Reporting and Payment Terms
    	
 
    	
32
    
	
Section 5.3
    	
 
    	
Taxes
    	
 
    	
33
    
	
Section 5.4
    	
 
    	
Books and Records; Audit Rights
    	
 
    	
33
    
	
Section 5.5
    	
 
    	
Disputed Royalty or Charges
    	
 
    	
34
    
	
Section 5.6
    	
 
    	
Alibaba Independent Committee
    	
 
    	
34
    

 

i

 

	
ARTICLE VI   INTELLECTUAL PROPERTY PROSECUTION AND ENFORCEMENT
    	
 
    	
34
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
 
    	
IP Prosecution and Registration
    	
 
    	
34
    
	
Section 6.2
    	
 
    	
Patent Enforcement
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII   WARRANTIES
    	
 
    	
39
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
 
    	
Alipay-Exclusive IP and New FIG Business-Exclusive   IP Warranty
    	
 
    	
39
    
	
Section 7.2
    	
 
    	
Warranty Disclaimer
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VIII   INDEMNIFICATION
    	
 
    	
40
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
 
    	
Purchaser Indemnification of Alibaba
    	
 
    	
40
    
	
Section 8.2
    	
 
    	
Indemnification Procedures
    	
 
    	
40
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IX   CONFIDENTIALITY
    	
 
    	
42
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
 
    	
Confidential Information
    	
 
    	
42
    
	
Section 9.2
    	
 
    	
Permitted Disclosures
    	
 
    	
42
    
	
Section 9.3
    	
 
    	
Disclosure in Compliance With Law
    	
 
    	
43
    
	
Section 9.4
    	
 
    	
Restricted Data
    	
 
    	
43
    
	
Section 9.5
    	
 
    	
Confidentiality of the Licensed IP
    	
 
    	
43
    
	
Section 9.6
    	
 
    	
Residuals
    	
 
    	
43
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE X   LIMITATION OF LIABILITY
    	
 
    	
44
    
	
 
    	
 
    	
 
    
	
Section 10.1
    	
 
    	
Limitation of Liability
    	
 
    	
44
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XI   NO EFFECT ON TRANSFEREE’S SEPARATE INTELLECTUAL PROPERTY RIGHTS
    	
 
    	
44
    
	
 
    	
 
    	
 
    
	
Section 11.1
    	
 
    	
No Effect on Acquirer’s Separate Intellectual   Property Rights
    	
 
    	
44
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XII   COMPLIANCE WITH LAWS
    	
 
    	
45
    
	
 
    	
 
    	
 
    
	
Section 12.1
    	
 
    	
Compliance with Laws
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIII   TERM AND TERMINATION
    	
 
    	
45
    
	
 
    	
 
    	
 
    
	
Section 13.1
    	
 
    	
Term
    	
 
    	
45
    
	
Section 13.2
    	
 
    	
Termination by Alibaba for Purchaser Bankruptcy
    	
 
    	
45
    
	
Section 13.3
    	
 
    	
No Termination by Purchaser
    	
 
    	
45
    
	
Section 13.4
    	
 
    	
Non-payment
    	
 
    	
46
    
	
Section 13.5
    	
 
    	
Effects of Termination
    	
 
    	
46
    
	
Section 13.6
    	
 
    	
Survival
    	
 
    	
46
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
ARTICLE XIV   OBLIGATION OF THE PARTIES REGARDING SUBSIDIARIES
    	
 
    	
47
    
	
 
    	
 
    	
 
    
	
Section 14.1
    	
 
    	
Obligations of the Parties Regarding Subsidiaries
    	
 
    	
47
    

 

ii

 

	
ARTICLE XV   GENERAL
    	
 
    	
47
    
	
 
    	
 
    	
 
    
	
Section 15.1
    	
 
    	
Relationship of the Parties as Independent   Contractors
    	
 
    	
47
    
	
Section 15.2
    	
 
    	
Alipay IP/Technology Providers Addenda
    	
 
    	
47
    
	
Section 15.3
    	
 
    	
Notices
    	
 
    	
47
    
	
Section 15.4
    	
 
    	
Headings
    	
 
    	
49
    
	
Section 15.5
    	
 
    	
Counterparts and Exchanges by Electronic   Transmission or Facsimile
    	
 
    	
49
    
	
Section 15.6
    	
 
    	
Arbitration
    	
 
    	
49
    
	
Section 15.7
    	
 
    	
Governing Law
    	
 
    	
51
    
	
Section 15.8
    	
 
    	
Assignment
    	
 
    	
51
    
	
Section 15.9
    	
 
    	
No Assignment of Alipay-Exclusive IP
    	
 
    	
51
    
	
Section 15.10
    	
 
    	
Remedies Cumulative; Specific Performance
    	
 
    	
51
    
	
Section 15.11
    	
 
    	
Waiver
    	
 
    	
51
    
	
Section 15.12
    	
 
    	
Amendments
    	
 
    	
52
    
	
Section 15.13
    	
 
    	
Severability
    	
 
    	
52
    
	
Section 15.14
    	
 
    	
Entire Agreement
    	
 
    	
52
    
	
Section 15.15
    	
 
    	
English Language Only
    	
 
    	
52
    
	
Section 15.16
    	
 
    	
Further Assurances
    	
 
    	
53
    
	
Section 15.17
    	
 
    	
Disclosure
    	
 
    	
53
    

 

iii

 

SECOND AMENDED AND RESTATED 
 INTELLECTUAL PROPERTY LICENSE AGREEMENT

 

This SECOND AMENDED AND RESTATED INTELLECTUAL PROPERTY LICENSE AGREEMENT (this “Amended IPLA”), dated as of [·], 2018 (the “Amendment Date”), is entered into by and among:

 

(1) Alibaba Group Holding Limited, a Cayman Islands registered company (“Alibaba”);

 

(2) 浙江蚂蚁小微金融服务集团股份有限公司 (Ant Small and Micro Financial Services Group Co., Ltd., formerly known as 浙江蚂蚁小微金融服务集团有限公司 (Zhejiang Ant Small and Micro Financial Services Group Co., Ltd.)), a company limited by shares organized under the Laws of Mainland China (“Purchaser”); and

 

(3) 支付宝(中国)网络技术有限公司 (Alipay.com Co., Ltd.), a limited liability company organized under the Laws of the Mainland China (“Alipay”).

 

The parties hereto are referred to collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Alipay was formerly a Subsidiary (defined below) of Alibaba, during which time technology and other intellectual property necessary or useful for the operation of the Alipay Business (as defined herein) were developed by Alibaba and its Subsidiaries, including Alipay;

 

WHEREAS, Purchaser now owns all of the equity of Alipay;

 

WHEREAS, Alibaba, Purchaser, Alipay and certain other parties previously entered into that certain Framework Agreement dated as of July 29, 2011, as amended (the “Framework Agreement”), setting forth such parties’ agreements as to Alipay’s continued operation of the Alipay Business (which was referred to as the “Business” in the Framework Agreement) and other matters; and

 

WHEREAS, in connection with the Framework Agreement, Alibaba and Alipay entered into that certain Intellectual Property License and Software Technology Services Agreement dated as of July 29, 2011, as amended and restated by the Parties in accordance with its terms on August 12, 2014 (the “Effective Date,” and such amended and restated agreement, the “2014 IPLA”), pursuant to which Alibaba, on behalf of itself and its Subsidiaries, licensed to Alipay and Purchaser certain technology and other intellectual property and performed various software technology services for Alipay and its Subsidiaries; and

 

WHEREAS, the Parties are also parties to the Share and Asset Purchase Agreement, by and among Alibaba, Purchaser and certain other parties named therein, dated as of August 12, 2014 (the “2014 Transaction Agreement”), pursuant to which the Framework Agreement was terminated; and

 

1

 

WHEREAS, the Parties have entered into an amendment to the 2014 Transaction Agreement, by and among Alibaba, Purchaser and certain other parties named therein, dated as of [•] (the “Transaction Agreement”), to better reflect the understanding and course of performance of the Parties with respect to the subject matter thereof and, pursuant to the Transaction Agreement, the Parties have agreed that the 2014 IPLA shall be further amended and restated; and

 

WHEREAS, the Parties desire to amend and restate the 2014 IPLA in its entirety as set forth in this Amended IPLA.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are acknowledged, the Parties, intending to be legally bound, hereby agree that the 2014 IPLA is amended and restated in its entirety as follows:

 

ARTICLE I

 

DEFINITIONS AND CONSTRUCTIONS

 

Section 1.1            Definitions.  As used herein, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided that, for the purposes of this definition, “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.  For the avoidance of doubt, Affiliates of a Person include Subsidiaries of such Person.

 

“Alibaba Business” means the businesses of Alibaba and its Subsidiaries (excluding, for the avoidance of doubt, the FIG Holdco Business) from time to time (together with any and all logical extensions of the business of Alibaba and its Subsidiaries).

 

“Alibaba Group” means Alibaba and its Subsidiaries.

 

“Alibaba Independent Committee” has the meaning ascribed to that term in the Transaction Agreement.

 

“Alibaba IT (A50)” means 阿里巴巴(中国)有限公司 (Alibaba (China) Co., Ltd.), the corporation known to the Parties as of the Amendment Date as A50 and a wholly-owned Subsidiary of Alibaba.

 

“Alibaba Services (A05)” means Alibaba Group Services Limited, a company incorporated in Hong Kong and commonly known to the Parties as of the Amendment Date as A05 and a wholly-owned subsidiary of Alibaba, or one or more other Subsidiaries of Alibaba that may be designated by Seller from time to time to license the New FIG Business-Exclusive IP and the New FIG Business-Related IP.

 

2

 

“Alipay Business” means the business of providing payment and escrow services, including: the provision of payment accounts, processing, clearing, settlement, network and merchant acquisition services; pre-paid, credit or debit cards or accounts; escrow accounts and processing; and cash on delivery services, whether provided through online, mobile, electronic or physical means.

 

“Alipay Business Product” means any product or service solely within the Alipay Business offered by Alipay and its Subsidiaries to its customers.

 

“Alipay-Exclusive Copyrights” means the Copyrights set forth on Exhibit A, which are solely in the Alipay-Exclusive Software or the Alipay-Exclusive Other Materials.

 

“Alipay-Exclusive Domain Names” means the Domain Names registered in the name of Alibaba or a Subsidiary of Alibaba that are set forth in Exhibit B, and any Domain Name that is a New Alipay Trademark/Domain Name that includes the word “ALIPAY” or is derivative of any other Alipay-Exclusive Domain Name set forth in Exhibit B and is registered or applied for in the name of Alibaba after the Amendment Date and during the Term pursuant to Section 4.4 and added to Exhibit B, in each case that relate solely to the Alipay Business.

 

“Alipay-Exclusive IP” means, collectively, the Alipay-Exclusive Copyrights, the Alipay-Exclusive Software, the Alipay-Exclusive Other Materials, the Alipay-Exclusive Patents, the Alipay-Exclusive Trademarks and the Alipay-Exclusive Domain Names.

 

“Alipay-Exclusive Other Materials” means the documentation, promotional materials, handbooks, and other copyrightable materials (other than software code), relating solely to the Alipay Business as of the Effective Time, owned by Alibaba or a Subsidiary of Alibaba and not used in the business of, and not in the possession of, Alibaba or any of its Subsidiaries (other than Alipay IT Company (Z53) and its Subsidiaries) at any time between January 1, 2009 and the Effective Time, as well as other documentation, promotional materials, handbooks, and other copyrightable materials (other than software code) authored solely by Dedicated Employees, or by Dedicated Employees and employees or Permitted Subcontractors of Alipay and its Subsidiaries, during the IPLA Period in the course of the Dedicated Employees’ providing the Software Technology Services under the 2014 IPLA and relating solely to the Alipay Business.  Notwithstanding the foregoing, Alipay-Exclusive Other Materials does not include any Stage 1 Retained IP (which Stage 1 Retained IP will be licensed to Alibaba as and to the extent set forth in the Cross-License Agreement to be executed in connection with its assignment by Alibaba to Purchaser pursuant to Section 2.2 of the Transaction Agreement) or SME Loan Know-How.

 

“Alipay-Exclusive Patents” means:

 

(i)                                     the Patents owned by Alibaba set forth in Exhibit C (including Patents issuing during the IPLA Period) that are based on inventions made solely by employees of Alipay and its Subsidiaries, Alipay IT Company (Z53), and/or any of their Subsidiaries;

 

(ii)                                  any Patent owned by Alibaba issuing after the Amendment Date during the Term, that claims an effective filing date based upon any of the Patents described in the foregoing clause (i), but only those claims in any such subsequently issuing Patent that are fully supported by the disclosure of one or more of the Patents described by the foregoing clause (i);

 

3

 

(iii)                               any Patent issuing after the Amendment Date during the Term based on any invention made solely by Dedicated Employees during the IPLA Period in the course of providing the Software Technology Services under the 2014 IPLA and relating solely to the Alipay Business;

 

(iv)                              any New Alipay Patent issuing after the Amendment Date during the Term and based on any invention made solely by employees or contractors of Purchaser and/or a Purchaser Subsidiary and assigned to Alibaba pursuant to Section 4.4;

 

(v)                                 any Patent issuing after the Amendment Date during the Term based on any invention made jointly by Dedicated Employees during the IPLA Period in the course of providing the Software Technology Services under the 2014 IPLA and at least one employee or contractor of Alipay or an Alipay Subsidiary; and

 

(vi)                              any Patent issuing after the Amendment Date during the Term based on any invention relating to the FIG Holdco Business developed by Alibaba or a Subsidiary of Alibaba solely on behalf of Purchaser or a Subsidiary of Purchaser pursuant to a separate written development agreement that may be entered into between Alibaba or its Subsidiary and Purchaser or its Subsidiary pursuant to which (a) Purchaser or its Subsidiary funds the development of the invention claimed in such Patent and (b) Alibaba or its Subsidiary and Purchaser or its Subsidiary agree that the applicable Patent is to be assigned by Alibaba to Alipay Hong Kong (as defined in the Transaction Agreement) or to another wholly owned Subsidiary of the Purchaser designated by Purchaser together with the other Alipay-Exclusive Patents.

 

Notwithstanding the foregoing, Alipay-Exclusive Patents do not include any Stage 1 Retained IP (which Stage 1 Retained IP will be licensed to Alibaba as and to the extent set forth in Section 2.7 and the Cross-License Agreement to be executed in connection with its assignment by Alibaba to Purchaser pursuant to Section 2.2 of the Transaction Agreement) or SME Loan Know-How.

 

“Alipay-Exclusive Software” means the software programs, in Source Code and Object Code form, (i) set forth in Exhibit A relating solely to the Alipay Business as of the Effective Time that are owned by Alibaba, Alipay IT Company (Z53) or their respective Subsidiaries and not used in the business of, and not in the possession of, Alibaba or any of its Subsidiaries (other than Alipay IT Company (Z53) and its Subsidiaries) at any time between January 1, 2009 and the Effective Time, and (ii) new software code, authored solely by Dedicated Employees, or by Dedicated Employees and employees or Permitted Subcontractors of Alipay and its Subsidiaries, during the IPLA Period in the course of the Dedicated Employees’ providing the Software Technology Services under the 2014 IPLA and that is used solely in the Alipay Business and set forth in Exhibit A.  Notwithstanding the foregoing, Alipay-Exclusive Software does not include any Stage 1 Retained IP (which Stage 1 Retained IP will be licensed to Alibaba as and to the extent set forth in Section 2.7 and the Cross-License Agreement to be executed in connection with its assignment by Alibaba to Purchaser pursuant to Section 2.2 of the Transaction Agreement) or SME Loan Know-How.

 

“Alipay-Exclusive Trademarks” means the Trademarks owned by Alibaba or its Subsidiaries as of the Amendment Date that are set forth in Exhibit D, and any Trademark that is a New  Alipay Trademark/Domain Name and is registered or applied for in the name of Alibaba after the Amendment Date and during the Term pursuant to Section 4.4 and added to Exhibit D, in each case that relate solely to the Alipay Business.

 

4

 

“Alipay Group” means, collectively, Alipay and its Subsidiaries, Alipay IT Company (Z53) and its Subsidiaries, and any of Purchaser or its Subsidiaries (other than Alipay, Alipay IT Company and their respective Subsidiaries) engaged in the Alipay Business.

 

“Alipay IP/Technology Provider” means Alibaba IT (A50).

 

“Alipay IT Company (Z53)” means支付宝(中国)信息  技术有限公司 (Alipay (China) Information Technology Co., Ltd.), a limited company known to the Parties as of the Amendment Date as Z53 and a wholly-owned Subsidiary of Alibaba.

 

“Alipay Materials” means data, information and any other materials made available by the Alipay Group to Alipay IT Company (Z53) and its Subsidiaries in connection with the performance by Alipay IT Company (Z53) and its Subsidiaries of the Software Technology Services pursuant to the 2014 IPLA.

 

“Alipay Non-Core IP” means software programs and other materials owned or licensable by Purchaser and its Subsidiaries of which copies (in Source Code or Object Code form) (i) are held by Alibaba or its Subsidiaries (other than Alipay IT Company (Z53) and its Subsidiaries) on or before the Amendment Date, or (ii) are provided by Purchaser or its Subsidiaries (including Alipay and/or Alipay IT Company (Z53)) to Alibaba or its Subsidiaries (other than Alipay IT Company (Z53) and its Subsidiaries) during the Term, but in either (i) or (ii), does not include software programs and related materials that are at the core of the FIG Holdco Business of Purchaser and its Subsidiaries, provided that the foregoing shall not exclude from the “Alipay Non-Core IP” any software or other materials that, prior to the Effective Date, constituted “Opco Non-Core IP” pursuant to that certain Intellectual Property License and Software Technology Services Agreement, by and between the Parties, dated as of July 29, 2011.

 

“Alipay Qualified IPO” has the meaning ascribed to that term in the Transaction Agreement.

 

“Alipay-Related Copyrights” means the Copyrights, other than the Alipay-Exclusive Copyrights, owned by Alibaba IT (A50) or its Subsidiaries in the Alipay-Related Software and Alipay-Related Other Materials.

 

“Alipay-Related IP” means, collectively, the Alipay-Related Copyrights, the Alipay-Related Software, the Alipay-Related Other Materials, and the Alipay-Related Patents.

 

“Alipay-Related Other Materials” means any documentation, promotional materials, handbooks, data, and other materials, other than the Alipay-Exclusive Other Materials, that are owned by Alibaba, Alibaba IT (A50) or their Subsidiaries as of the Amendment Date and that are used in or necessary for the operation of the Alipay Business as of the Amendment Date.

 

“Alipay-Related Patents” means the Patents, other than the Alipay-Exclusive Patents, (i) owned by Alibaba or an Alibaba Subsidiary as of the Amendment Date that are used in or necessary for the operation of the Alipay Business, or (ii) filed by Alibaba or an Alibaba Subsidiary during the Term that are used in or necessary for the operation of the Alipay Business.

 

5

 

“Alipay-Related Software” means (i) the software programs set forth in Exhibit G that are owned by Alibaba IT (A50) as of the Amendment Date, and (ii) any bug fixes, error corrections, updates and upgrades (including improvements) to the software programs set forth in clause (i) authored by employees or contractors of Alibaba IT (A50) or its Subsidiaries (or owned by Alibaba IT (A50) or its Subsidiaries) that Alibaba or its Subsidiaries deploy generally for use by Alibaba or its Subsidiaries during the Term.

 

“Alipay Software Ltd. (Z52)” means 支付宝软件(上海)有限公司 (Alipay Software (Shanghai) Co., Ltd.), the corporation known to the Parties as of the Amendment Date as Z52 and a wholly owned subsidiary of Alipay IT Company (Z53).

 

“Amended Shared Services Agreement” has the meaning ascribed to that term in the Transaction Agreement.

 

“Beneficial Owner” of any security means any Person who, directly or indirectly, through any Contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power, which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition of, such security.  “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

 

“Commercial Agreement” means the Commercial Agreement, entered into as of July 29, 2011, among Alibaba, Purchaser and Alipay, as amended and restated by the parties thereto as of [·].

 

“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.

 

“Cross-License Agreement” has the meaning ascribed to that term in the Transaction Agreement.

 

“Data Sharing Agreement” means the Data Sharing Agreement between Alibaba and Purchaser dated as of August 12, 2014.

 

6

 

“Dedicated Employees” means any employees of Alipay IT Company (Z53) and its Subsidiaries that, in each case, were dedicated under the 2014 IPLA on a full-time basis solely to the provision of the Software Technology Services and other technologies under the 2014 IPLA, in each such case to the extent that: (i) such employees were employed by Alipay IT Company (Z53) or any of its Subsidiaries during the IPLA Period, (ii) Alipay IT Company (Z53) and its Subsidiaries remained entities that were legally distinct from Alibaba and its other Subsidiaries during the IPLA Period, (iii) Alipay IT Company (Z53) and its Subsidiaries were under management separate and independent from the management of Alibaba and its other Subsidiaries during the IPLA Period (provided that the fact that a limited number of executives held positions in  both Alipay IT Company (Z53) and Alibaba will not, of itself, mean that management was not separate and independent), (iv) Alipay IT Company (Z53) and its Subsidiaries occupied premises physically distinct from those of Alibaba and its other Affiliates during the IPLA Period, (v) Alipay IT Company (Z53)’s and its Subsidiaries’ networks, electronic and physical document storage and email and similar systems remained segregated from those of Alibaba and its other Affiliates during the IPLA Period (other than systems used by Alibaba or its Affiliates to provide the Alibaba Services (as defined in the Shared Services Agreement and the Amended Shared Services Agreement) pursuant to the Shared Services Agreement and the Amended Shared Services Agreement), and (vi) Alipay IT Company (Z53) and its Subsidiaries remained solely dedicated to the provision of Software Technology Services and other technologies to the Purchaser Group during the IPLA Period, the results of which Software Technology Services, and which other technologies, were not provided to Alibaba or any of its Subsidiaries, other than Alipay IT Company (Z53) and its Subsidiaries, prior to the Amendment Date (provided that, for clarity, for purposes of this clause (vi), the use of such results and other technologies by the Alipay Group in providing Services (as defined in the Commercial Agreement) to Alibaba or its Subsidiaries under the Commercial Agreement shall not be deemed to be the provision of such results of Software Technology Services and other technologies). “Dedicated Employees” also means individual contractors of Alipay IT Company (Z53) and its Subsidiaries to the extent that such contractors, and Alipay IT Company (Z53) and the Subsidiaries engaging them, met the foregoing criteria for Dedicated Employees, except that (A) such contractors were engaged as contractors, rather than employees, of Alipay IT Company (Z53) and its Subsidiaries and (B) such contractors will not be disqualified from meeting the requirement of being dedicated on a full-time basis solely to the provision of the Software Technology Services and other technologies under the 2014 IPLA merely because they engaged in unrelated work for clients that are not Related Parties of Alibaba, Alipay, Purchaser or their Affiliates.

 

“Effective Time” means the time and date on which the “Closing” (as defined in the Framework Agreement) occurred under the Framework Agreement.

 

“Encumbrance” means any charge, claim, mortgage, lien, option, pledge, title defect, security interest or other restriction or limitation of any kind (other than those created under applicable securities Laws).

 

“Equity Securities” means, with respect to any entity, any equity interests of such entity, however described or whether voting or nonvoting, and any securities convertible or exchangeable into, and options, warrants or other rights to acquire, any equity interests or equity-linked interests of such entity, including, for the avoidance of doubt, Purchaser Equity where the subject entity is the Purchaser.

 

“Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a person, and shall include adoptive relationships of the same type.

 

“FIG Holdco Business” means (i) the provision and distribution of credit (including providing loans, factoring, guarantees and loan servicing) and insurance; (ii) the provision of investment management and banking services (including capital markets advice, deposit services, custody services, trust services and other financial advisory services); (iii) payment transaction  processing and payment clearing services for third parties (including issuance of physical, virtual, online or mobile credit, debit or stored value cards, operation of payment networks, and acquisition of merchants for rendering payment services); (iv) leasing, lease financing and related services; (v) trading, dealing and brokerage with respect to foreign exchange and financial instruments, including securities, indebtedness, commodities futures, derivatives, and currencies; (vi) distribution of securities, commodities, funds, derivatives and other financial products (including trading and brokerage services with respect to the same); and (vii) provision of credit ratings and credit profiles and reports.  For the avoidance of doubt, FIG Holdco Business includes the Alipay Business.

 

7

 

“Funded Amounts” has the meaning ascribed to that term in the Transaction Agreement.

 

“Governmental Authority” means any instrumentality, subdivision, court, administrative agency, commission, official or other authority of any country, state, province, prefect, municipality, locality or other government or political subdivision thereof, or any stock or securities exchange, or any multi-national, quasi-governmental or self-regulatory or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

 

“Highly Sensitive Information” means information confidential to Purchaser, Alipay, Alipay IT Company (Z53) or each of their Subsidiaries in the following categories: (i) user data, including Personal Information, that is not anonymized or aggregated; and (ii) algorithms, Source Code, Object Code, 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 FIG Holdco Business.  “Highly Sensitive Information” shall not, however, include any information which: (a) is or becomes commonly known within the public domain other than by breach of this Amended IPLA or any other agreement that Purchaser, Alipay, Alipay IT Company (Z53), Alipay Service (A05), Alibaba IT (A50) or any of their Subsidiaries has with any Person; (b) is obtained from a third Person (other than Purchaser, Alipay, Alipay IT Company (Z53) or any of their Subsidiaries) who is lawfully authorized to disclose such information free from any obligation of confidentiality; (c) is independently developed without reference to or use of any Highly Sensitive Information; or (d) is known to Alibaba or any of its Subsidiaries (other than Alipay IT Company (Z53) or any of its Subsidiaries) without any obligation of confidentiality prior to its receipt from Purchaser, Alipay, Alipay IT Company (Z53) or any of their Subsidiaries.

 

“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:

 

(i)                                     rights associated with works of authorship, including exclusive exploitation rights, copyrights and moral rights, and all extensions, renewals, registrations and applications therefor (“Copyrights”);

 

(ii)                                  rights in trademarks, trade names, service marks, service names and similar rights, and all registrations and applications therefor, as well as and all goodwill embodied therein (“Trademarks”);

 

(iii)                               rights in domain names and uniform resource locators, and all registrations and applications therefor (“Domain Names”);

 

(iv)                              trade secret rights (“Trade Secrets”);

 

8

 

(v)                                 patents and patent applications, including any continuations, divisions, reissues, and reexaminations, and other industrial property rights (“Patents”); and

 

(vi)                              all other proprietary rights in Technology.

 

“IPLA Period” means the period beginning upon the Effective Time and ending upon the Amendment Date.

 

“Issuance Closing” has the meaning ascribed to that term in the Transaction Agreement.

 

“Laws” means any federal, state, territorial, foreign or local law, common law, statute, ordinance, rule, regulation, code, measure, notice, circular, opinion or executive order of any Governmental Authority.

 

“Licensed IP” means, collectively, the Alipay-Exclusive IP, New FIG Business-Exclusive IP, Alipay-Related IP, and New FIG Business-Related IP.

 

“Mainland China” means the People’s Republic of China other than Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan.

 

“New FIG Business” means the FIG Holdco Business other than the Alipay Business as conducted by Purchaser and its Subsidiaries other than Alipay and its Subsidiaries.

 

“New FIG Business Product” means any product or service solely within the New FIG Business offered by Purchaser and its Subsidiaries, other than Alipay and its Subsidiaries, to its customers.  For clarity, the term “New FIG Business Product” excludes Alipay Business Products.

 

“New FIG Business-Exclusive Domain Names” means the Domain Names relating solely to the New FIG Business as of the Amendment Date owned by Alibaba or a Subsidiary Licensor that are set forth on Exhibit I, and any Domain Name that is a New Alipay Trademark/Domain Name that is derivative of any other New FIG Business-Exclusive Domain Name set forth in Exhibit I and is registered or applied for in the name of Alibaba after the Amendment Date and during the Term pursuant to Section 4.4 and added to Exhibit I, in each case that relate solely to the New FIG Business.

 

“New FIG Business-Exclusive IP” means, collectively, the New FIG Business-Exclusive Domain Names, New FIG Business-Exclusive Patents, and New FIG Business-Exclusive Trademarks.

 

“New FIG Business-Exclusive Patents” means the Patents relating solely to the New FIG Business as of the Amendment Date owned by Alibaba or a Subsidiary Licensor that are set forth on Exhibit J, and any New Alipay Patents issuing after the Amendment Date during the Term  and based on any invention made solely by employees or contractors of Purchaser and/or a Purchaser Subsidiary and assigned to Alibaba pursuant to Section 4.4.

 

9

 

“New FIG Business-Exclusive Trademarks” means the Trademarks relating solely to the New FIG Business as of the Amendment Date owned by Alibaba or a Subsidiary Licensor that are set forth on Exhibit K, and any Trademark that is a New Alipay Trademark/Domain Name and is registered or applied for in the name of Alibaba after the Amendment Date and during the Term pursuant to Section 4.4 and added to Exhibit K, in each case that relate solely to the New FIG Business.

 

“New FIG Business-Related Copyrights” means the Copyrights owned by Alibaba or its Subsidiaries in the New FIG Business-Related Other Materials.

 

“New FIG Business-Related IP” means, collectively, the New FIG Business-Related Copyrights, the New FIG Business-Related Other Materials, and the New FIG Business-Related Patents.

 

“New FIG Business-Related Other Materials” means any documentation, promotional materials, handbooks, data, and other materials, excluding software, that are owned by Alibaba or its Subsidiaries as of the Amendment Date and that are used in or necessary for the operation of the New FIG Business as of the Amendment Date.

 

“New FIG Business-Related Patents” means the Patents, other than the New FIG Business-Exclusive Patents, (i) owned by Alibaba or an Alibaba Subsidiary as of the Amendment Date that are used in or necessary for the operation of the New FIG Business, or (ii) filed by Alibaba or an Alibaba Subsidiary during the Term that are used in or necessary for the operation of the New FIG Business.

 

“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.

 

“Payor” means Purchaser or its designated Subsidiary, as applicable, that pays the Alipay Royalty and/or the New FIG Royalty pursuant to the obligations of Article V.

 

“Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a group, a Governmental Authority or any other type of entity.

 

“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 natural person as an individual, 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 or individual.

 

“Proceeding” means any action, suit, claim, hearing, proceeding, arbitration, mediation, audit, inquiry or investigation (whether civil, criminal, administrative or otherwise) by any Person or Governmental Authority.

 

“Providers Addendum” mean one or more agreements, in the forms mutually agreed to by the Parties hereto and when agreed to attached hereto as Exhibit F, between Alibaba, Alibaba Services (A05), the Alipay IP/Technology Provider and/or a Subsidiary Licensor, on the one hand, and Purchaser and/or a Purchaser Subsidiary (including Alipay and/or an Alipay Subsidiary, as applicable), on the other, whereby, as contemplated by this Amended IPLA, Alibaba, Alibaba Services (A05), the Alipay IP/Technology Provider and/or a Subsidiary Licensor grants to Purchaser or a Purchaser Subsidiary (including Alipay or an Alipay Subsidiary, as applicable) a license to the Alipay-Exclusive IP, New FIG Business-Exclusive IP, Alipay-Related IP and New FIG Business-Related IP owned by Alibaba, the Alipay IP/Technology Provider and/or the Subsidiary Licensor.  For clarity, “Providers Addendum” shall include any amendment(s) to any prior Providers Addenda entered into prior to the Amendment Date mutually agreed to by the Parties.

 

10

 

“Purchaser Equity” means (a) if the Purchaser is in the form of a limited liability company, registered capital of the Purchaser; or (b) if the Purchaser is in a form of a company limited by shares, shares of the Purchaser.

 

“Purchaser Group” means, collectively, Purchaser and its Subsidiaries.

 

“Purchaser Qualified IPO” has the meaning ascribed to that term in the Transaction Agreement.

 

“Related Party” of any Person means:

 

(a)                                 any Person who, individually or as part of a group, Beneficially Owns more than five percent (5%) of the Securities of such Person, determined on a fully-diluted basis, using the treasury stock method,

 

(b)                                 any officer or director, or individual performing an equivalent function, of such Person or any Person named in clause (a),

 

(c)                                  any Family Member of any such Person or any Person named in clause (a) or (b), or

 

(d)                                 any other Person in which any Person named in clauses (a), (b) or (c) Beneficially Owns more than twenty percent (20%) of the Securities of such Person, determined on a fully-diluted basis, using the treasury stock method.

 

“Remaining Retained IP” has the meaning ascribed to that term in the Transaction Agreement.

 

“Renminbi” means the lawful currency of the Mainland China.

 

“Securities” means any equity capital or equity security, and rights, options or warrants or other Contracts to purchase any equity capital or equity security, and any equity capital or equity securities or Contracts of any type whatsoever that are, or may become, convertible into or exchangeable for such equity capital or equity security or that derive value, in whole or in part,  from any equity capital or equity security (including Swap Agreements), or represent the right to share in the profits, income or revenues of the relevant Person.

 

“Seller Audit Committee” has the meaning ascribed to that term in the Transaction Agreement.

 

11

 

“Shared Services Agreement” has the meaning ascribed to that term in the Transaction Agreement.

 

“SME Loan” means a loan made by a lender in the small and medium enterprise financing market.

 

“SME Loan Know-How” means all know-how and Copyrights of Alibaba and/or its Subsidiaries relating solely to the management and operation of an SME Loan business as conducted by 浙江阿里巴巴小额贷款股份有限公司 (Zhejiang Alibaba Small Loan Co., Ltd.), 重庆市阿里巴巴小额贷款有限公司 (Chongqing Alibaba Small Loan Co., Ltd.) and/or商诚融资担保有限公司 (Shangcheng Finance Guarantee Co., Ltd.) as of the Effective Date, including the materials listed in Exhibit H, in each case that will be transferred to Purchaser or a Subsidiary of Purchaser in connection with the Transfer of the SME Loan Know-How pursuant to Section 2.2(a) of the Transaction Agreement.

 

“Software Technology Services” means those services performed by or on behalf of Alipay IT Company (Z53) and its Subsidiaries for the Alipay Group during the IPLA Period pursuant to the 2014 IPLA.

 

“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.

 

“Stage 1 Retained IP” has the meaning ascribed to that term in the Transaction Agreement.

 

“Subsidiary” means, with respect to any Person, each other Person in which the first Person (i) Beneficially Owns or controls, directly or indirectly, share capital or other equity interests representing more than fifty percent (50%) of the outstanding voting stock or other equity interests, (ii) holds the rights to more than fifty percent (50%) of the economic interest of such other Person, including interests held through a VIE Structure or other contractual arrangements, or (iii) has a relationship such that the financial statements of the other Person may be consolidated into the financial statements of the first Person under applicable accounting conventions.  For the avoidance of doubt, none of Purchaser or its Subsidiaries shall be deemed to be Subsidiaries of Alibaba or any of its Subsidiaries for purposes of this Amended IPLA.

 

“Subsidiary Licensor” means Alibaba Services (A05) or one or more other Subsidiaries of Alibaba that may be designated by Alibaba from time to time to license to Purchaser, or to one  or more Subsidiaries of Purchaser designated by Purchaser, the New FIG Business-Exclusive IP or the New FIG Business-Related IP.

 

“Swap Agreement” means any agreement with respect to any swap, hedge, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or Securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

 

12

 

“Technology” means any or all of the following:

 

(i)                                     works of authorship including computer programs, whether in Source Code or Object Code, and whether embodied in software, firmware or otherwise, documentation, designs, files, net lists, records and data;

 

(ii)                                  inventions (whether or not patentable), improvements and technology;

 

(iii)                               proprietary and confidential information, including technical data and customer and supplier lists, trade secrets and know how;

 

(iv)                              databases, data compilations and collections and technical data; and

 

(v)                                 all instantiations of the foregoing in any form and embodied in any media.

 

“Term” means the period commencing on the Effective Date and ending upon termination or expiration of this Amended IPLA pursuant to Article XIII.

 

“Trademark Agreement” means the Trademark Agreement between Alibaba and Purchaser dated as of the date hereof.

 

“Transaction Documents” has the meaning ascribed to that term in the Transaction Agreement.

 

“Transfer” means and includes any direct or indirect sale, assignment, Encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise or descent, or other transfer or disposition of any kind, including transfers to receivers, levying creditors, trustees or receivers in bankruptcy Proceedings or general assignees for the benefit of creditors, whether voluntary or by operation of Law, or by forward or reverse merger.

 

“VIE Structure” means the investment structure in which a Mainland China-domiciled operating entity and its Mainland China shareholders enter into a number of Contracts with a non-Mainland China investor (or a foreign-invested enterprise incorporated in Mainland China invested by the non-Mainland China investor) pursuant to which the non-Mainland China investor achieves control of the Mainland China-domiciled operating entity and also consolidates the financials of the Mainland China-domiciled entity with those of the non-Mainland China investor.

 

Section 1.2                                    Cross-Reference of Other Definitions.  Each capitalized term listed below is defined in the corresponding Section of this Amended IPLA:

 

	
Term
    	
 
    	
Section
    
	
2014 IPLA
    	
 
    	
Recitals
    
	
2014 Transaction Agreement
    	
 
    	
Recitals
    
	
Acquired Purchaser Subsidiary
    	
 
    	
4.4(g)
    
	
Alibaba
    	
 
    	
Preamble
    

 

13

 

	
Term
    	
 
    	
Section
    
	
Alibaba Indemnitees
    	
 
    	
8.1
    
	
Alibaba Marks
    	
 
    	
4.4(b)
    
	
Alipay
    	
 
    	
Preamble
    
	
Alipay End Users
    	
 
    	
2.4(c)
    
	
Alipay-Exclusive Prosecution Function
    	
 
    	
6.1(b)
    
	
Alipay IT Materials
    	
 
    	
4.2
    
	
Alipay-Retained IP
    	
 
    	
2.7(a)
    
	
Alipay Royalty
    	
 
    	
5.1(a)
    
	
Altaba
    	
 
    	
15.17
    
	
Amended IPLA
    	
 
    	
Preamble
    
	
Amendment Date
    	
 
    	
Preamble
    
	
Auditor
    	
 
    	
5.4(b)
    
	
Claimant
    	
 
    	
15.6(b)
    
	
Confidential Information
    	
 
    	
9.1
    
	
Copyrights
    	
 
    	
Within the definition of “Intellectual Property   Rights”
    
	
Disclosing Party
    	
 
    	
9.1
    
	
Domain Names
    	
 
    	
Within the definition of “Intellectual Property   Rights”
    
	
Effective Date
    	
 
    	
Recitals
    
	
End User License
    	
 
    	
2.4(c)
    
	
Enforcement Action
    	
 
    	
6.2(a)
    
	
Framework Agreement
    	
 
    	
Recitals
    
	
ICC
    	
 
    	
15.6(a)
    
	
IP Function Separation
    	
 
    	
6.1(c)
    
	
Losses
    	
 
    	
8.1
    
	
New Alipay Patents
    	
 
    	
4.4(a)
    
	
New Alipay Trademark/Domain Name
    	
 
    	
4.4(c)
    
	
New FIG Royalty
    	
 
    	
5.1(b)
    
	
Parties
    	
 
    	
Preamble
    
	
Patents
    	
 
    	
Within the definition of “Intellectual Property   Rights”
    
	
Permitted Subcontractors
    	
 
    	
2.4(b)
    
	
Purchaser
    	
 
    	
Preamble
    
	
Qualifying Infringement
    	
 
    	
6.2(b)
    
	
R1
    	
 
    	
5.1(a)
    
	
R2
    	
 
    	
5.1(b)
    
	
Receiving Party
    	
 
    	
9.1
    
	
Request
    	
 
    	
15.6(b)
    
	
Residual Information
    	
 
    	
9.6
    
	
Respondent
    	
 
    	
15.6(b)
    
	
Right of Refusal
    	
 
    	
6.2(c)
    
	
Similar Mark/Domain Name
    	
 
    	
4.4(b)
    
	
Subcontractor Agreement
    	
 
    	
2.4(b)
    
	
Sublicense Agreement
    	
 
    	
2.4(a)
    

 

14

 

	
Term
    	
 
    	
Section
    
	
Subsidiary Sublicensee
    	
 
    	
2.4(a)
    
	
Third Party Claim
    	
 
    	
8.2(a)
    
	
Trademarks
    	
 
    	
Within the definition of “Intellectual Property   Rights”
    
	
Trade Secrets
    	
 
    	
Within the definition of “Intellectual Property   Rights”
    
	
Transaction Agreement
    	
 
    	
Recitals
    
	
Transferee
    	
 
    	
11.1
    

 

Section 1.3                                    Construction.  In this Amended IPLA, unless the context otherwise requires:

 

(a)                                 references in this Amended IPLA to “writing” or comparable expressions includes a reference to facsimile transmission or comparable means of communication (but excluding email communications);

 

(b)                                 words expressed in the singular number shall include the plural and vice versa, and words expressed in the masculine shall include the feminine and neutral genders and vice versa;

 

(c)                                  references to Articles, Sections, Exhibits, Schedules and Recitals are references to articles, sections, exhibits, schedules and recitals of this Amended IPLA;

 

(d)                                 references to “day” or “days” are to calendar days;

 

(e)                                  references to this Amended IPLA or any other agreement or document shall be construed as references to this Amended IPLA or such other agreement or document, as the case may be, as the same may have been, or may from time to time be, amended, varied, novated or supplemented from time to time, provided that references to the 2014 IPLA shall not be construed as including amendments made on or after the Amendment Date;

 

(f)                                   a reference to a subsection without further reference to a Section is a reference to such subsection as contained in the same Section in which the reference appears, and this rule shall also apply to paragraphs and other subdivisions;

 

(g)                                  the table of contents to this Amended IPLA and all section titles or captions contained in this Amended IPLA or in any Schedule or Exhibit annexed hereto or referred to herein are for convenience only and shall not be deemed a part of this Amended IPLA and shall not affect the meaning or interpretation of this Amended IPLA;

 

(h)                                 “include,” “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words or words of similar import;

 

(i)                                     the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Amended IPLA as a whole and not to any particular provision; and

 

15

 

(j)                                    references to “the date hereof” are to the Effective Date, and references to events or actions occurring “concurrently herewith” are, unless otherwise noted, to events or actions occurring concurrently with the Effective Date; and

 

(k)                                 references to a Person are also to its permitted successors and assigns and, in the case of an individual, to his or her heirs and estate, as applicable.

 

Section 1.4                                    Exhibits.  The Exhibits to this Amended IPLA are incorporated into and form an integral part of this Amended IPLA.

 

ARTICLE II

 

LICENSE GRANTS

 

Section 2.1                                    Alipay-Exclusive IP and New FIG Business-Exclusive IP.

 

(a)                                 Alipay-Exclusive IP.  Subject to the terms and conditions of this Amended IPLA, Alibaba hereby grants to Alipay, and shall cause Alibaba IT (A50) to grant to Alipay or to one or more Subsidiaries of Alipay designated by Purchaser, pursuant to a Providers Addendum, the following worldwide, non-transferable and non-assignable (except pursuant to Section 15.8), non-sublicensable (except pursuant to Section 2.4) rights and licenses during the Term:

 

(i)                                     under the Alipay-Exclusive Patents it owns, (a) to make, have made (subject to Section 2.4(e)), use, sell, offer for sale, import, export and otherwise commercialize Alipay Business Products solely in the course of conducting the Alipay Business, and (b) to make, have made and use any device or process, in each case solely internally and solely in the course of conducting the Alipay Business;

 

(ii)                                  under the Alipay-Exclusive Trademarks it owns, and subject to Section 2.6, to use the Alipay-Exclusive Trademarks solely in connection with the sale, offer for sale, license and provision of Alipay Business Products in the course of conducting the Alipay Business;

 

(iii)                               under the Alipay-Exclusive Domain Names it owns, to use the Alipay-Exclusive Domain Names solely in connection with the sale, license, offer for sale or license and provision of Alipay Business Products in the course of conducting the Alipay Business; and

 

(iv)                              under the Alipay-Exclusive Copyrights it owns, to reproduce, distribute, modify, prepare derivative works of, perform and display the Alipay-Exclusive Software and Alipay-Exclusive Other Materials, solely in connection with the sale, offer for sale or license, license, making, using and provision of Alipay Business Products in the course of conducting the Alipay Business.

 

(b)                                 New FIG Business-Exclusive IP.  Subject to the terms and conditions of this Amended IPLA, Alibaba hereby grants to Purchaser, and shall cause a Subsidiary Licensor to grant to Purchaser or to one or more Subsidiaries of Purchaser designated by Purchaser (other than Alipay and its Subsidiaries), the following worldwide, non-transferable and non-assignable (except pursuant to Section 15.8), non-sublicensable (except pursuant to Section 2.4) rights and licenses during the Term:

 

16

 

(i)                                     under the New FIG Business-Exclusive Patents it owns, (a) to make, have made (subject to Section 2.4(e)), use, sell, offer for sale, import, export and otherwise commercialize New FIG Business Products solely in the course of conducting the New FIG Business, and (b) to make, have made and use any device or process, in each case solely internally and solely in the course of conducting the New FIG Business;

 

(ii)                                  under the New FIG Business-Exclusive Trademarks it owns, and subject to Section 2.6, to use the New FIG Business-Exclusive Trademarks solely in connection with the sale, offer for sale, license and provision of New FIG Business Products in the course of conducting the New FIG Business; and

 

(iii)                               under the New FIG Business-Exclusive Domain Names it owns, to use the New FIG Business-Exclusive Domain Names solely in connection with the sale, license, offer for sale or license and provision of New FIG Business Products in the course of conducting the New FIG Business.

 

In the event that Alibaba or its relevant Subsidiary Licensor determines that, for tax, regulatory or other reasons, a Providers Addendum (i) should be executed to confirm the grant of one or more of the licenses set forth in this Section 2.1(b) or (ii) is necessary in order for Purchaser or its designated Subsidiary to comply with any of its payment obligations pursuant to Article V, then upon request of Alibaba, Alibaba and/or a Subsidiary Licensor, on the one hand, and Purchaser and/or a Purchaser Subsidiary (other than Alipay and its Subsidiaries), on the other, shall promptly execute such Providers Addendum in a form mutually agreed between the executing parties, which Providers Addendum shall then be added to Exhibit F of this Amended IPLA, and obtain all necessary authorizations or consents with respect to such Providers Addendum from applicable Governmental Authorities in order for each Party to obtain the full benefits of this Amended IPLA.  For clarity, the fact that a Providers Addendum may later be executed pursuant to this Section 2.1(b) shall not relieve Purchaser of any of its payment obligations hereunder with respect to the New FIG Royalty or any other payments.

 

(c)                                  The rights and licenses granted to Alipay pursuant to Section 2.1(a) and to Purchaser pursuant to Section 2.1(b) are exclusive to the following (but only to the following) extent:

 

(i)                                     The rights and licenses granted to Alipay pursuant to Section 2.1(a)(ii) and (iii) and to Purchaser pursuant to Section 2.1(b)(ii) and (iii) are exclusive (even as to Alibaba and its Subsidiaries) throughout the world.

 

(ii)                                  The exclusivity of the rights and licenses granted to Alipay pursuant to Section 2.1(a)(i) and (iv) and to Purchaser pursuant to Section 2.1(b)(i) is co-extensive with, and in no case broader than, the scope of the activities that Alibaba and its Subsidiaries are expressly prohibited by Section 9.9(b) of the Transaction Agreement from performing, but only if and to the extent that, and only for as long as, Alibaba and its Subsidiaries are so prohibited.  The exclusivity of rights and licenses under Section 2.1(a)(i) and (iv) and under Section 2.1(b)(i) shall not preclude Alibaba or its Subsidiaries from engaging in any activities not expressly prohibited by Section 9.9(b) of the Transaction Agreement, including engaging third Persons for the procurement or provision of (and having such third Persons provide) services in accordance with Section 2.6 of the Commercial Agreement.  Nonetheless, other than in connection with engaging such third Persons, Alibaba and its Subsidiaries shall not have the right to grant to any third Person a license within the scope of Section 2.1(a)(i) or (iv) or Section 2.1(b)(i).  For the avoidance of doubt, the foregoing shall not affect any obligations or rights of Alibaba or its Subsidiaries pursuant to Section 9.9(b) of the Transaction Agreement.

 

17

 

Section 2.2                                    Alipay-Related IP and New FIG Business-Related IP.

 

(a)                                 Alipay-Related IP.  Subject to the terms and conditions of this Amended IPLA, Alibaba hereby grants to Alipay, and shall cause its relevant Subsidiaries to grant to Alipay, pursuant to a Providers Addendum, the following worldwide, non-exclusive, non-transferable and non-assignable, non-sublicensable (except pursuant to Section 2.4) rights and licenses during the Term:

 

(i)                                     under the Alipay-Related Patents it owns, (i) to make, have made (subject to Section 2.4), use, sell, offer for sale, import, export and otherwise commercialize Alipay Business Products solely in the course of conducting the Alipay Business, and (ii) to make, have made and use any device or process, in each case solely internally and solely in the course of conducting the Alipay Business; and

 

(ii)                                  under the Alipay-Related Copyrights its owns, to (i) reproduce, distribute, modify, prepare derivative works of, perform and display, in each case solely internally, the Alipay-Related Software and the Alipay-Related Other Materials, and (ii) to distribute, perform and display the Alipay-Related Software, solely in Object Code format, and the Alipay-Related Other Materials, in each case solely to the extent permitted pursuant to Section 2.4, and, with respect to both of clauses (i) and (ii), solely in connection with the sale, license or other provision of Alipay Business Products in the course of conducting the Alipay Business.

 

(b)                                 New FIG Business-Related IP.  Subject to the terms and conditions of this Amended IPLA, Alibaba hereby grants to Purchaser, and shall cause a Subsidiary Licensor to grant to Purchaser or to one or more Subsidiaries of Purchaser designated by Purchaser (other than Alipay and its Subsidiaries), the following worldwide, non-exclusive, non-transferable and non-assignable, non-sublicensable (except pursuant to Section 2.4) rights and licenses during the Term:

 

(i)                                     under the New FIG Business-Related Patents it owns, (i) to make, have made (subject to Section 2.4), use, sell, offer for sale, import, export and otherwise commercialize New FIG Business Products solely in the course of conducting the New FIG Business, and (ii) to make, have made and use any device or process, in each case solely internally and solely in the course of conducting the New FIG Business; and

 

(ii)                                  under the New FIG Business-Related Copyrights its owns, to (i) reproduce, distribute, modify, prepare derivative works of, perform and display, in each case solely internally, the New FIG Business-Related Other Materials, and (ii) to distribute, perform and display the New FIG Business-Related Other Materials, in each case solely to the extent permitted pursuant to Section 2.4, and, with respect to both of clauses (i) and (ii), solely in connection with the sale, license or other provision of New FIG Business Products in the course of conducting the New FIG Business.

 

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In the event that Alibaba or its relevant Subsidiary Licensor determines that, for tax, regulatory or other reasons, a Providers Addendum (i) should be executed to confirm the grant of one or more of the licenses set forth in this Section 2.2(b) or (ii) is necessary in order for Purchaser or its designated Subsidiary to comply with any of its payment obligations pursuant to Article V, then upon request of Alibaba, Alibaba and/or a Subsidiary Licensor, on the one hand, and Purchaser and/or a Purchaser Subsidiary (other than Alipay and its Subsidiaries), on the other, shall promptly execute such Providers Addendum in a form mutually agreed between the executing parties, which Providers Addendum shall then be added to Exhibit F of this Amended IPLA, and obtain all necessary authorizations or consents with respect to such Providers Addendum from applicable Governmental Authorities in order for each Party to obtain the full benefits of this Amended IPLA.  For clarity, the fact that a Providers Addendum may later be executed pursuant to this Section 2.2(b) shall not relieve Purchaser of any of its payment obligations hereunder with respect to the New FIG Royalty or any other payments.

 

Section 2.3                                    Alibaba Delivery Obligation.  At any time during the Term, upon reasonable request in writing of Alipay or its Subsidiary Sublicensee, Alibaba, Alibaba IT (A50) or a Subsidiary of Alibaba IT (A50) will deliver to Alipay or its Subsidiary Sublicensee copies of the Alipay-Related Software (in both Source Code and Object Code form) and bug fixes, error corrections, updates and upgrades (including improvements) developed after the Amendment Date and included in the Alipay-Related Software licensed under Section 2.2(a), in the form actually developed or owned by Alibaba, Alibaba IT (A50) or a Subsidiary of Alibaba IT (A50).  For clarity, any such bug fixes, error corrections, updates or upgrades (including improvements) provided hereunder will be provided “as-is” and “as available.”

 

Section 2.4                                    Sublicensing.

 

(a)                                 Subsidiaries.  Subject to this Section 2.4(a), Alipay or the applicable Alipay Subsidiary, or Purchaser or the applicable Purchaser Subsidiary, to whom rights are granted under Section 2.1 and Section 2.2 to the (1) Alipay-Exclusive IP and the Alipay-Related IP or (2) New FIG Business-Exclusive IP and the New FIG Business-Related IP, as applicable, may sublicense its rights to an Alipay Subsidiary, in the case of Alipay or such Alipay Subsidiary, or a Purchaser Subsidiary (other than Alipay or any Alipay Subsidiary), in the case of Purchaser or a Purchaser Subsidiary (a “Subsidiary Sublicensee”).  Any such sublicense of rights to a Subsidiary Sublicensee must be granted pursuant to an enforceable, written agreement with such Subsidiary Sublicensee that (i) requires, to the extent necessary to enable Alipay or Purchaser, as applicable, to comply with the ownership provisions set forth in this Amended IPLA, each such Subsidiary Sublicensee to assign to Alipay or its Subsidiary, in the case of a Subsidiary Sublicensee of Alipay, or Purchaser or its Subsidiary (other than Alipay or its Subsidiaries), in the case of a Subsidiary Licensee of Purchaser (in each case as designated by Alipay or Purchaser with notice to Alibaba) all right, title and interest in and to any Intellectual Property Rights arising from or related to the exercise of such Subsidiary Sublicensee’s rights thereunder, and (ii) contains terms that are at least as protective of Alibaba’s or the relevant Alibaba Subsidiary’s rights in, and confidentiality and Source Code security with respect to, the Alipay-Exclusive IP, the Alipay-Related IP, the New FIG Business-Exclusive IP and the New FIG Business-Related IP as those contained in this Amended IPLA (each, a “Sublicense Agreement”).  Purchaser shall provide Alibaba with complete and accurate copies of all Sublicense Agreements.

 

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(b)                                 Subcontractors.  Subject to Alipay’s and Purchaser’s compliance with Section 9.9(b) of the Transaction Agreement and with Section 3.3 of the Commercial Agreement, Alipay or Purchaser may sublicense any of its applicable rights to the Alipay-Exclusive Patents, the New FIG Business-Exclusive Patents, the Alipay-Exclusive Trademarks, the New FIG Business-Exclusive Trademarks, the Alipay-Exclusive Software, the Alipay-Exclusive Other Materials, the Alipay-Related Other Materials, and the New FIG Business-Related Other Materials to third Person subcontractors engaged by Alipay or Purchaser, or an Alipay Subsidiary or Purchaser Subsidiary, in connection with the conduct of the Alipay Business, in the case of Alipay or any Alipay Subsidiary, or the New FIG Business, in the case of Purchaser or any Purchaser Subsidiary (other than Alipay and its Subsidiaries) (“Permitted Subcontractors”), solely to the extent necessary to permit the Permitted Subcontractors to perform on behalf of Alipay or Purchaser, or an Alipay Subsidiary or Purchaser Subsidiary, the services for which the Permitted Subcontractors were engaged.  Any such engagement of Permitted Subcontractors shall be pursuant to an arm’s-length agreement that (i) requires, to the extent necessary to enable Alipay or Purchaser to comply with the ownership provisions set forth in this Amended IPLA, each such Permitted Subcontractor to assign to Alipay or its Subsidiary, or Purchaser or its Subsidiary (other than Alipay and its Subsidiaries) (in each case as designated by Alipay or Purchaser with notice to Alibaba) all right, title and interest in and to any Intellectual Property Rights arising from or related to the exercise of such Permitted Subcontractor’s rights thereunder, and (ii) contains terms that are at least as protective of Alibaba’s or the relevant Alibaba Subsidiary’s rights in, and confidentiality and Source Code security with respect to, the Alipay-Exclusive Patents, the New FIG Business-Exclusive Patents, the Alipay-Exclusive Trademarks, the New FIG Business-Exclusive Trademarks, the Alipay-Exclusive Software, the Alipay-Exclusive Other Materials, the Alipay-Related Other Materials, and the New FIG Business-Related Other Materials, as applicable, as those contained in this Amended IPLA (each, a “Subcontractor Agreement”).  Any Subcontractor Agreement permitting any use of an Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark by a Permitted Subcontractor shall obligate the Permitted Subcontractor to comply with the applicable trademark and brand usage guidelines for such Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks and shall provide that all goodwill arising from that Permitted Subcontractor’s use of any Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks inures to the benefit of Alibaba or a designated Alibaba Affiliate, and Alipay or Purchaser shall enforce these terms against any Permitted Subcontractor.

 

(c)                                  End Users.  Alipay and its Subsidiary Sublicensees may distribute certain elements of the Alipay-Exclusive Software, the Alipay-Related Software, the Alipay-Exclusive Other Materials and the Alipay-Related Other Materials comprising client-side end user software and related documentation and materials to Alipay’s and its Subsidiaries’ end user customers (“Alipay End Users”) and sublicense to Alipay End Users the limited right to use or reproduce such Alipay-Exclusive Software, Alipay-Related Software, Alipay-Exclusive Other Materials and Alipay-Related Other Materials, solely in Object Code in the case of software and solely as incorporated in or otherwise a part of an Alipay Business Product.  Any distribution or sublicense to an Alipay End User of the Alipay-Exclusive Software, the Alipay-Related Software, the Alipay-Exclusive Other Materials and/or the Alipay-Related Other Materials must be pursuant to an enforceable agreement with such Alipay End User containing terms that are at least as protective of Alibaba’s or the Alipay IP/Technology Provider’s rights in the Alipay-Exclusive Software, Alipay-Related Software, the Alipay-Exclusive Other Materials and/or the Alipay-Related Other Materials as those contained in this Amended IPLA (each, an “End User License”).  In addition, in an End User License, Alipay or a Subsidiary Sublicensee may grant Alipay End Users who are merchants a non-exclusive, non-transferable, non-assignable and revocable sublicense to use the Alipay-Exclusive Trademarks in connection with such Alipay End User’s use of Alipay Business Products, solely in connection with Alipay’s or the Subsidiary Sublicensee’s conduct of the Alipay Business.  Alipay and its Subsidiary Sublicensees shall require in such End User License that all Alipay End Users comply with all applicable trademark and brand usage guidelines for such Alipay-Exclusive Trademarks and that all goodwill arising from any Alipay End User’s use of the Alipay-Exclusive Trademarks inures to the benefit of Alibaba or a designated Alibaba Subsidiary, and Alipay or the applicable Subsidiary Sublicensee shall enforce these terms against any Alipay End User.

 

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(d)                                 Purchaser’s Rights and Obligations.  Each Sublicense Agreement and Subcontractor Agreement entered into by Alipay or Purchaser or their respective Subsidiary Sublicensees, and each End User License entered into by Alipay or its Subsidiary Sublicensee, in each case in connection with the exercise of its rights and obligations under this Amended IPLA, shall not contain any provision that is inconsistent with the terms of this Amended IPLA.  For the avoidance of doubt, (i) any rights and responsibilities performed or provided by Subsidiary Sublicensees, Permitted Subcontractors or Alipay End Users shall be deemed to be performed by Alipay or Purchaser (as applicable), and (ii) Alipay or Purchaser (as applicable) shall be responsible and liable for any breach of the terms and conditions of any Sublicense Agreement, Subcontractor Agreement or End User License by any Subsidiary Sublicensee, Permitted Subcontractor or Alipay End User (as applicable) to the same extent as if breach were committed by Alipay or Purchaser (as applicable).

 

(e)                                  Have Made Rights.  The “have made” rights granted in Sections 2.1 and 2.2 shall apply only to Alipay Business Products and New FIG Business Products (as applicable) which (i) have designs originating with and owned by Alipay or an Alipay Subsidiary, or Purchaser or a Purchaser Subsidiary (other than Alipay and its Subsidiaries), as applicable, and (ii) are sold or otherwise transferred or disposed of by the “have made” manufacturer only to Alipay or its Subsidiaries or Purchaser or its Subsidiaries (other than Alipay and its Subsidiaries), as applicable.

 

Section 2.5                                    Restrictions.  Alipay acknowledges that the Source Code of the Alipay-Exclusive Software and the Alipay-Related Software, constitutes and contains Trade Secrets of Alibaba and its Subsidiaries, and, in order to protect such Trade Secrets and other interests that Alibaba or its Subsidiaries may have in the Alipay-Exclusive Software or the Alipay-Related Software, Alipay shall not, and shall not permit any third Person to, except as expressly authorized in this Amended IPLA:

 

(a)                                 transfer, sublicense (other than pursuant to Section 2.4), disclose, distribute or otherwise expose the Source Code of the Alipay-Exclusive Software or the Alipay-Related Software to any third Person other than a Subsidiary Sublicensee or a Permitted Subcontractor in accordance with Section 2.4; or

 

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(b)                                 disassemble, decompile or reverse engineer any of the Alipay-Exclusive Software or the Alipay-Related Software provided to Alipay or its Subsidiary only in Object Code form, nor permit any third Person to do so, except to the extent such restrictions are prohibited by Law.

 

Alibaba’s and its relevant Subsidiaries’ license of Intellectual Property Rights pursuant to this Article II is granted:

 

(x)                                 only if, and for as long as, such Intellectual Property Rights are owned exclusively by Alibaba and/or its relevant Subsidiaries, as applicable, and may be licensed under applicable Law pursuant to this Article II without the need to obtain the consent or approval of any co- or joint owner of such Intellectual Property Rights;

 

(y)                                 solely to the extent of Alibaba’s and/or its relevant Subsidiary’s right to grant such license; and

 

(z)                                  only if Alibaba’s and/or its relevant Subsidiary’s grant of such license does not incur any obligation to pay royalties or other consideration to any third Person (except for payments between Alibaba and its relevant Subsidiary, or payments from Alibaba or its relevant Subsidiary to their respective employees or contractors for the use of the Intellectual Property Rights made or created by or for Alibaba, the relevant Alibaba Subsidiary, or such employees or contractors while employed or retained by Alibaba or its relevant Subsidiary).

 

Section 2.6                                    Use of Trademarks.

 

(a)                                 Trademark Usage Guidelines.  The use by Alipay and any of its Subsidiary Sublicensees of the Alipay-Exclusive Trademarks or by Purchaser and any of its Subsidiary Sublicensees of the New FIG Business-Exclusive Trademarks, as applicable, shall at all times adhere to Alibaba’s and Alibaba’s Subsidiary’s, as applicable, then-current trademark or brand usage guidelines, as such guidelines may be revised during the Term by Alibaba or Alibaba’s Subsidiaries.  Upon Alibaba’s request, Alipay, Purchaser or any of their respective Subsidiary Sublicensees shall provide Alibaba with samples of advertising and promotional materials developed by or for Alipay, Purchaser or the applicable Subsidiary Sublicensee(s) and using the Alipay-Exclusive Trademarks or New FIG Business-Exclusive Trademarks, as applicable, in order for Alibaba to assess compliance with this Section 2.6(a).  In the event of any breach with respect to Alipay’s, Purchaser’s or any of their respective Subsidiary Sublicensee’s failure to adhere to the then-current applicable Alibaba or Alibaba Subsidiary trademark or brand usage guidelines, Alipay, Purchaser and/or the applicable Subsidiary Sublicensee(s), as applicable, shall immediately cease all use of the materials not conforming with such brand usage guidelines and shall cure, or cause to be cured, within thirty (30) days, any breach with respect to Alipay’s, Purchaser’s or the applicable Subsidiary Sublicensee’s use thereof.  Alipay and Purchaser shall not use, nor permit the use of, and shall cause their respective Subsidiary Sublicensees not to use or permit the use of, the Alipay-Exclusive Trademarks or the New FIG Business-Exclusive Trademarks in any manner that could otherwise reasonably be expected to impair, tarnish, dilute or otherwise damage the value and goodwill associated with Alipay-Exclusive Trademarks or the New FIG Business-Exclusive Trademarks.

 

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(b)                                 Quality Control Standards/Limited Use.  Alipay and Purchaser each agrees, during the Term, to maintain, and to cause its Subsidiary Sublicensees to maintain, a level of quality for the Alipay Business Products and the New FIG Business Products, as applicable, in connection with which Alipay, Purchaser and their respective Subsidiary Sublicensees use, reproduce or display the Alipay-Exclusive Trademarks or the New FIG Business-Exclusive Trademarks, as applicable, that is at least as high as the level of quality of the comparable products and services in connection with which Alipay, Purchaser and their respective Subsidiary Sublicensees use, reproduce or display Trademarks owned by Alipay, Purchaser or their respective Subsidiaries.  Each of Alipay and Purchaser shall not use, nor permit the use of, and shall cause its Subsidiary Sublicensees not to use or permit the use of, the Alipay-Exclusive Trademarks or the New FIG Business-Exclusive Trademarks, as applicable, (i) in any manner that could otherwise reasonably be expected to impair, tarnish, dilute or otherwise damage the value and goodwill associated with Alipay-Exclusive Trademarks or the New FIG Business-Exclusive Trademarks, or any other Trademarks or Domains Names owned, held, or licensed by Alibaba or any Alibaba Subsidiary, or that are in the process of registration or application for registration by Alibaba or any Alibaba Subsidiary, anywhere in the world, or (ii) in connection with any unfair, misleading, illegal, vulgar, obscene, immoral or offensive materials, or any products or services that violate applicable Laws or are false or misleading.

 

(c)                                  No Adverse Claim.  Each of Alipay and Purchaser shall not and shall cause its Subsidiary Sublicensees not to, and each of Alipay and Purchaser shall not and shall cause its Subsidiary Sublicensees not to authorize any third Person to, at any time during the Term, assert any claim or interest in, or take any action which may in any way:

 

(i)                                     adversely affect the validity or enforceability of,

 

(ii)                                  result in the harm or misuse of, bring into disrepute, or adversely affect Alibaba’s or any Alibaba Subsidiary’s rights or interest in and to, or

 

(iii)                               result in obtaining registrations in or otherwise challenge the validity of, or Alibaba’s or any Alibaba Subsidiary’s ownership of or rights in:

 

(1) the Alipay-Exclusive Trademarks and the New FIG Business-Exclusive Trademarks and/or (2) except as otherwise expressly permitted in the Trademark Agreement, any other Trademark or Domain Name that is derivative of or similar to any Trademarks or Domain Names (including the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks) owned, held, or licensed by Alibaba or any Alibaba Subsidiary, both prior to and after the Effective Date, including any Trademarks or Domain Names commencing with the letters “ALI” or “TAO.”

 

(d)                                 Goodwill.  All goodwill arising from Alipay’s, Purchaser’s or their respective Subsidiary Sublicensees’ use of the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks, as applicable, prior to their assignment to Purchaser pursuant to Section 2.2 of the Transaction Agreement, will inure solely to the benefit of Alibaba or the applicable Alibaba Subsidiary, and Alipay and Purchaser and any applicable Subsidiary Sublicensee shall transfer and assign and do hereby transfer and assign to Alibaba or the applicable Alibaba Affiliate designated by Alibaba on an ongoing basis, prior to such assignment, all such goodwill arising from the use of the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks permitted hereunder.

 

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Section 2.7                                    Grant Back.

 

(a)                                 Subject to the terms and conditions of this Amended IPLA, Purchaser, on behalf of itself and its Subsidiaries, hereby grants (and agrees to grant and cause Purchaser and its Subsidiaries to grant) to Alibaba and its Subsidiaries during the Term a non-exclusive, irrevocable, worldwide, royalty-free, non-transferable (except to a successor of Alibaba in connection with a merger or consolidation, or to a transferee of Alibaba in connection with the transfer of all or any substantial portion of the assets of Alibaba and its Subsidiaries), right and license, under all Patents (including all New Alipay Patents and Patents constituting Stage 1 Retained IP) owned or licensable by Purchaser or any of Purchaser’s Subsidiaries during the Term (“Alipay-Retained IP”) to make, have made, use, sell, offer for sale, import, export and otherwise commercialize any products and services, including engaging third Persons by Alibaba or its Subsidiaries for the procurement by Alibaba or its Subsidiaries of (and having such third Persons provide) services for the benefit of Alibaba and/or its Subsidiaries.  For the avoidance of doubt, such third Persons will have immunity under such Patents only to the extent they are providing services for the benefit of Alibaba and/or its Subsidiaries and not for services provided to other customers of such third Persons.  For clarity, the Parties acknowledge that any New Alipay Patents, if they are owned solely by Alibaba or assigned to Alibaba as required by Section 4.4(a), and not owned by Purchaser or any of Purchaser’s Subsidiaries, will be subject to the provisions of this Amended IPLA relating to Alipay-Exclusive Patents and New FIG Business-Exclusive Patents and not to this Section 2.7.

 

(b)                                 Subject to the terms and conditions of this Amended IPLA, Purchaser, on behalf of itself and its Subsidiaries, hereby grants (and agrees to grant and cause Purchaser and its Subsidiaries to grant) to Alibaba and its Subsidiaries during the Term a non-exclusive, irrevocable, worldwide, royalty-free, non-transferable (except to a successor of Alibaba in connection with a merger or consolidation, or to a transferee of Alibaba in connection with the transfer of all or any substantial portion of the assets of Alibaba and its Subsidiaries), right and license to (i) reproduce, distribute, modify, prepare derivative works of, perform and display the Alipay Non-Core IP and the non-Patent Stage 1 Retained IP and (ii) to internally use and exploit the SME Loan Know-How, in each case solely in connection with the sale, license or provision of products and services of Alibaba and its Subsidiaries.  Such right and license (x) includes the right to have such activities performed on behalf of Alibaba and its Subsidiaries by third Persons and (y) includes the rights to reproduce, perform, display and distribute to merchants, distributors, customers, and other participants in the businesses of Alibaba and Alibaba Subsidiaries the portions, if any, of the Alipay Non-Core IP intended for use by such merchants, distributors, customers, or other participants.  Any such license to merchants, distributors, customers, and other participants shall be on the same terms that Alibaba and its Subsidiaries use for the licensing of their own accompanying software and other materials.  Notwithstanding anything to the contrary set forth in this Section 2.7(b), Alibaba and its Subsidiaries shall not disclose any Highly Sensitive Information to any third Persons, except to the extent expressly permitted by the Data Sharing Agreement with respect to Contributed Data (as defined in the Data Sharing Agreement), or user data to the extent that (i) disclosure of such user data is required for the purpose of engaging a third Person to provide services comparable to the Services (as defined in the Commercial Agreement) (provided that such third Person shall not use such data for any other purpose), (ii) disclosure of such user data to such third Person in accordance with this Amended IPLA does not violate applicable Law, and (iii) disclosure of such user data to such third Person in accordance with this Amended IPLA does not violate the terms of use or terms of service under which such data was collected.

 

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(c)                                  This Section 2.7: (i) does not require that Purchaser or any Purchaser Subsidiary deliver any Technology, including Alipay Non-Core IP, to Alibaba or its Subsidiaries and (ii) does not relieve Alibaba or its Subsidiaries from its obligations under Section 9.9(b) of the Transaction Agreement.

 

Section 2.8                                    No Other Grant.  Except as otherwise expressly provided herein, nothing in this Amended IPLA shall be deemed to grant, directly or by implication, estoppel or otherwise, any right, license or covenant from Alibaba or any Alibaba Subsidiary to Alipay, Purchaser, any of their respective Subsidiaries, or any third Person, or from Purchaser or any Purchaser Subsidiary to Alibaba or any Alibaba Subsidiary or any third Person.

 

Section 2.9                                    Injunctive Relief.  Each of Alipay and Purchaser acknowledges that any material breach of the provisions of this Article II may result in irreparable harm to Alibaba and Alibaba’s Subsidiaries, and in such event the exact amount of damages will be difficult to ascertain and the remedies at law for such breach may not be adequate.  Accordingly, in the event of any material breach of the provisions of this Article II by Alipay or Purchaser or any Alipay Subsidiaries or Purchaser Subsidiaries, Alibaba, in addition to any other relief available to it at law, in equity or otherwise, shall be entitled to seek temporary and permanent injunctive relief restraining Alipay, Purchaser or any of their respective Subsidiaries from engaging in the conduct constituting such material breach, without the necessity of proving actual damages or posting a bond or other security.

 

ARTICLE III

 

TERMINATION OF SERVICES; DEDICATED EMPLOYEES

 

Section 3.1                                    Termination of Software Technology Services.  The Parties acknowledge and agree that (a) Alipay IT Company (Z53) and its Subsidiaries have fulfilled all of its and their obligations to perform Software Technology Services pursuant to the 2014 IPLA and (b) following the Amendment Date, neither Alipay IT Company (Z53) nor any of its Subsidiaries shall have any obligation to perform (or to continue to perform) any Software Technology Services or other services for the Alipay Group except as may be otherwise agreed to in writing by the Parties.

 

Section 3.2                                    Employment of the Dedicated Employees.  As soon as reasonably practicable following the Issuance Closing, Alibaba shall terminate the employment of each Dedicated Employee mutually agreed to by Alibaba and Purchaser and listed in Schedule 3.2.  The Purchaser shall, working in coordination with Alibaba, offer or cause one or more of its Subsidiaries to offer employment to each such Dedicated Employee as soon as reasonably practicable following the Issuance Closing; provided that the Parties agree that the Purchaser shall have no obligation to offer employment to Dedicated Employees that are contractors.  The Purchaser and its Subsidiaries shall use commercially reasonable efforts to deliver documentation to, and enter into employment agreements with, each such Dedicated Employee (for clarity, other than contractors) effecting the foregoing terms of employment, subject to acceptance by each such Dedicated Employee of such terms.  Alibaba and Purchaser shall use, and shall cause their respective Subsidiaries to use, commercially reasonable efforts to coordinate with respect to the termination of employment by Alibaba, and offer of employment by Purchaser or its Subsidiaries, of Dedicated Employees contemplated by this Section 3.2 and otherwise to cooperate in respect of any other matters related to the employment of the Dedicated Employees by Purchaser or its Subsidiaries.

 

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Section 3.3                                    Dedicated Employee Severance.  In the event that Alibaba terminates a Dedicated Employee on or after the Issuance Closing which results in any obligation of Alibaba or any of its Subsidiaries to pay any severance or other benefits (including such benefits required under applicable Laws) to such Dedicated Employee, the Purchaser shall promptly reimburse Alibaba for all costs incurred by Alibaba and its applicable Subsidiaries as a result of the termination of such Dedicated Employees and otherwise indemnify and hold harmless Alibaba and its applicable Subsidiaries from and against any and all Losses (including all such severance and other benefits) arising out of or relating to Alibaba’s or its Subsidiaries’ termination of such Dedicated Employees.

 

Section 3.4                                    Termination of Providers Addenda.  On the Amendment Date, each of Alibaba and the Purchaser shall cause their respective Subsidiaries to take all action so that (a) Alibaba IT (A50) and Alipay shall terminate the Provider Addendum, entered into between Alibaba IT (A50) and Alipay on August 12, 2104, and amended as of January 1, 2015 and (b) Alipay IT Company (Z53) shall terminate the Providers Addendum, entered into between Alipay and Alipay IT Company (Z53), on August 12, 2014; provided that Alibaba and the Purchaser acknowledge and agree, and shall cause their respective Subsidiaries to ensure, that any terms of the agreements referenced in clauses (a) and (b) that are necessary in order for Alipay and/or Purchaser to pay any Software Technology Services Fee, Alipay Royalty or New FIG Royalty accruing prior to the Amendment Date pursuant to Section 5.2(c) of this Agreement shall remain in force and effect following the termination of such agreements for as long as any of such Software Technology Services Fees, Alipay Royalties or New FIG Royalties remain payable pursuant to Section 5.2(c).

 

ARTICLE IV

 OWNERSHIP

 

Section 4.1                                    Licensed IP.  Subject to the express licenses granted in this Amended IPLA, as between the Parties, Alibaba or its Subsidiaries will retain exclusive right, title and interest in and to the Licensed IP, and all Intellectual Property Rights subsisting therein.  There are no implied licenses under this Amended IPLA, and all rights not expressly granted hereunder are reserved.  Purchaser and Purchaser’s Subsidiaries shall not delete or in any manner alter any Copyright, Trademark, Patent, confidentiality or other proprietary rights notices appearing on the Licensed IP as delivered to Purchaser or a Purchaser Subsidiary.  Purchaser and Purchaser’s Subsidiaries shall reproduce such notices on all copies they make of the Licensed IP.

 

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Section 4.2                                    Alipay IT Materials.  As between the Parties, Alipay IT Company (Z53) or its Subsidiaries will exclusively own all right, title and interest in and to any Technology of any kind developed solely by the Dedicated Employees of Alipay IT Company (Z53) or its Subsidiaries (collectively “Alipay IT Materials”), including all Intellectual Property Rights subsisting therein.  If the Alipay IT Materials include or constitute modifications, customizations, enhancements or extensions to the Alipay-Exclusive Software, the Alipay-Related Software, the Alipay-Exclusive Other Materials, the Alipay-Related Other Materials, or the New FIG Business-Related Other Materials, Alipay or Purchaser, as applicable, will have rights and licenses to such modifications, customizations, enhancements or extensions to the same extent that it has rights and licenses to the underlying Alipay-Exclusive Software, Alipay-Related Software, Alipay-Exclusive Other Materials, Alipay-Related Other Materials, or New FIG Business-Related Other Materials, respectively.

 

Section 4.3                                    Ownership of Enhancements.  Subject to Section 4.4, the Parties agree that, as between the Parties, all modifications, enhancements and derivative works of the Alipay-Exclusive Software, the Alipay-Related Software, the Alipay-Exclusive Other Materials, the Alipay-Related Other Materials, and the New FIG Business-Related Other Materials created by (or by a third Person on behalf of) Alipay or Purchaser or a Subsidiary Sublicensee under the licenses granted in Section 2.1 or 2.2 and otherwise in accordance with this Amended IPLA will be exclusively owned by Alipay or Purchaser or the relevant Subsidiary Sublicensee, as applicable.

 

Section 4.4                                    New Patents, Trademarks and Domain Names.

 

(a)                                 Any new Patents applied for or issued during the Term based on any invention made solely by employees or contractors of Alipay or Purchaser and/or employees or contractors of an Alipay Subsidiary or Purchaser Subsidiary during the Term (“New Alipay Patents”) will be applied for in the name of and owned by Alibaba and for the purposes of this Amended IPLA will be deemed Alipay-Exclusive Patents (if pertaining to the Alipay Business) or New FIG Business-Exclusive Patents (if pertaining to the New FIG Business).

 

(b)                                 Except as expressly authorized in the Trademark Agreement with respect to Licensed Trademarks and Domain Names, Component Trademarks and Component Domain Names (as the preceding terms are defined in the Trademark Agreement), each of Alipay and Purchaser shall not, and shall cause all its Subsidiaries not to, adopt, use or conduct any business using (except for any use of the Alipay-Exclusive Trademarks, New FIG Business-Exclusive Trademarks, the Alipay-Exclusive Domain Names and the New FIG Business-Exclusive Domain Names as expressly authorized by Section 2.1 and for any use of New Alipay Trademark/Domain Names as provided by Section 4.4(c) below), create, file, register, seek to register, or cause to be registered (other than any Trademark or Domain Name required by applicable Law to be held or registered in the name of Alipay or Purchaser or a Subsidiary of Alipay or Purchaser), any Trademarks or Domain Names that are derivative of or confusingly similar to any Trademarks (including the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks) or Domain Names (including the Alipay-Exclusive Domain Names and New FIG Business-Exclusive Domain Names) owned, held, or licensed by Alibaba or any Alibaba Subsidiary, or otherwise used in connection with any conduct of any business by Alibaba or any Subsidiary of Alibaba, both prior to and after the Effective Date (the “Alibaba Marks”).  Notwithstanding the foregoing, if any Alibaba Mark, Alipay-Exclusive Trademark, New FIG Business-Exclusive Trademark, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name or any Trademark or Domain Name that is derivative of or confusingly similar to any Alibaba Mark, Alipay-Exclusive Trademark, New FIG Business-Exclusive Trademark, Alipay-Exclusive Domain Name or New FIG Business-Exclusive Domain Name (each, a “Similar Mark/Domain Name”), other than any Trademark or Domain Name required by applicable Law to be held or registered in the name of Purchaser or a Purchaser Subsidiary, or any application therefor, is filed or registered by Alipay or Purchaser or any Alipay Subsidiary or Purchaser Subsidiary during the Term then, except as may be expressly permitted in the Trademark Agreement, such Similar Mark/Domain Name shall be assigned by Alipay or Purchaser or the applicable Alipay Subsidiary or Purchaser Subsidiary to Alibaba pursuant to this Section 4.4 and shall be exclusively owned by Alibaba.  To the extent required in the preceding sentence, each of Alipay and Purchaser hereby assigns, and shall cause each of its Subsidiaries to assign, to Alibaba, all of Alipay’s or Purchaser’s and such Alipay Subsidiary’s or Purchaser Subsidiary’s, as applicable, rights, title and interest in and to any and all Similar Marks/Domain Names, whether now existing or in the future created.  For clarity, following the Amendment Date, nothing in this Section 4.4(b) shall limit Alipay’s, Purchaser’s or any Alipay Subsidiary’s or Purchaser Subsidiary’s rights to file, register, seek to register, or cause to be registered any Trademarks or Domain Names that are derivative of, confusingly similar to or associated with any Trademarks (including the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks) or Domain Names (including the Alipay-Exclusive Domain Names and New FIG Business-Exclusive Domain Names) constituting Stage 1 Retained IP and assigned or transferred by or on behalf of Alibaba to Purchaser or a Purchaser Subsidiary pursuant to Section 2.2 of the Transaction Agreement, in each case to the extent such Trademarks or Domain Names are required by applicable Law to be held or registered in the name of Alipay, Purchaser or a Subsidiary of Alipay or Purchaser.

 

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(c)                                  If during the Term (i) Alipay or an Alipay Subsidiary desires to have filed or registered any new Trademark or Domain Name that includes the word “ALIPAY” or is derivative of any other Alipay-Exclusive Trademark set forth in Exhibit D (in the case of a new Trademark) or Alipay-Exclusive Domain Name set forth in Exhibit B (in the case of a new Domain Name) or (ii) Purchaser or a Purchaser Subsidiary desires to have filed or registered any new Trademark or Domain Name that is derivative of any New FIG Business-Exclusive Trademark set forth in Exhibit K (in the case of a new Trademark) or New FIG Business-Exclusive Domain Name set forth in Exhibit I (in the case of a new Domain Name) (each such Trademark or Domain Name within the scope of clause (i) or (ii), a “New Alipay Trademark/Domain Name”), in each case to the extent any such Trademark or Domain Name is not required by applicable Law to be held or registered in the name of Alipay or Purchaser or an Alipay Subsidiary or Purchaser Subsidiary, then, subject to Alibaba’s agreement, each such New Alipay Trademark/Domain Name will be filed and registered in the name of (at Alipay’s or Purchaser’s expense, as applicable) and solely owned by Alibaba following the Amendment Date during the Term, and for the purposes of this Amended IPLA will, in the case of clause (i), be deemed to be an Alipay-Exclusive Trademark or Alipay-Exclusive Domain Name, as applicable, or, in the case of clause (ii), be deemed to be a New FIG Business-Exclusive Trademark or New FIG Business-Exclusive Domain Name, in each case upon being added to the applicable Exhibit hereto.  For purposes of the foregoing, Alibaba’s agreement shall not be unreasonably withheld or delayed to the extent such desired New Alipay Trademark/Domain Name is not inconsistent with the provisions of the Trademark Agreement and does not contain any component (other than the word “ALIPAY” or product marks included in the Alipay-Exclusive Trademarks set forth in Exhibit D or New FIG Business-Exclusive Trademarks set forth in Exhibit K that are not confusingly similar to or derivative of other Trademarks owned, held or licensed by Alibaba or any Alibaba Subsidiary) that is derivative of or confusingly similar to any Trademarks or Domain Names owned, held, or licensed by Alibaba or any Alibaba Subsidiary (including any Trademarks or Domain Names commencing with the letters “ALI”, other than as used in “ALIPAY,” or with the letters “TAO”), or otherwise used in connection with any conduct of any business by Alibaba or an Alibaba Subsidiary, prior to and after the Effective Date.  For clarity, following the Amendment Date, (x) no Trademarks or Domain Names that are (1) derivative of, confusingly similar to or associated with any Trademarks (including the Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks) or Domain Names (including the Alipay-Exclusive Domain Names and New FIG Business-Exclusive Domain Names) constituting Stage 1 Retained IP and assigned or transferred by or on behalf of Alibaba to Purchaser or a Purchaser Subsidiary pursuant to Section 2.2 of the Transaction Agreement and (2) required by applicable Law to be held or registered in the name of Alipay or Purchaser or a Subsidiary of Alipay or Purchaser, shall constitute a “New Alipay Trademark/Domain Name” and (y) nothing in this Section 4.4(c) shall require Alipay, Purchaser or any Alipay Subsidiary or Purchaser Subsidiary to have any Trademark or Domain Name meeting the requirements of the foregoing subsection (x) to be filed and registered in the name of and solely owned by Alibaba during the Term.

 

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(d)                                 Alipay and Purchaser and each Alipay Subsidiary and Purchaser Subsidiary shall assist Alibaba in every reasonable way, at Alipay’s or Purchaser’s or Alipay’s Subsidiary’s or Purchaser’s Subsidiary’s expense (except with respect to maintaining Similar Mark/Domain Names), to obtain, secure, perfect, maintain, defend and enforce all Intellectual Property Rights with respect to the Similar Mark/Domain Names.  The prosecution of and registration for any New Alipay Patent or New Alipay Trademark/Domain Name owned by Alipay or Purchaser or a designated Alipay Subsidiary or Purchaser Subsidiary will be executed pursuant to Section 6.1.  The enforcement of any New Alipay Patent will be executed pursuant to Section 6.2.  Every twelve (12) months during the Term, or upon either Party’s reasonable request, the Parties shall amend this Amended IPLA by updating Exhibits B, C , D, I, J, or K as applicable, to add such newly issued, filed or registered New Alipay Patents and New Alipay Trademark/Domain Names.

 

(e)                                  Except as expressly authorized in the Trademark Agreement or except to the extent Alibaba is acting at the request of Alipay or an Alipay Subsidiary in filing, registering, seeking to register, or causing to be registered a Trademark or Domain Name, Alibaba shall not, and shall cause all its Subsidiaries not to, file, register, seek to register, or cause to be registered, or conduct any business using any Trademarks or Domain Names that contain the word “ALIPAY.”

 

(f)                                   Notwithstanding anything to the contrary in this Section 4.4, following the Amendment Date, any Patents based on new inventions relating to payment technologies solely developed by Purchaser or any of its Subsidiaries and pertaining to the Alipay Business or New FIG Business, as applicable, that are mutually agreed (acting reasonably) by Purchaser and Alibaba shall be applied for in the name of and owned by Purchaser or a Purchaser Subsidiary.  To the extent required by the preceding sentence, Alibaba or its applicable Subsidiaries hereby assigns and agrees to assign to Purchaser or a Purchaser Subsidiary designated by the Purchaser all of its or their respective rights, title and interest in and to any such Patents, including without limitation all rights to causes of action and remedies relating thereto, including the right to sue for past, present or future infringement.  For clarity, all Patents applied for and owned by Purchaser or a Purchaser Subsidiary pursuant to this Section 4.4(f) shall constitute (i) Alipay-Retained IP for purposes of this Amended IPLA, and be subject to the licenses, immunities and other rights granted by Purchaser and its Subsidiaries pursuant to Section 2.7(a) of this Amended IPLA and (ii) Purchaser Licensed Patents (as defined in the Cross-License Agreement) for purposes of the Cross-License Agreement, and be subject to the licenses and other rights granted by Purchaser and its Subsidiaries thereunder.

 

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(g)                                  Notwithstanding anything to the contrary in this Section 4.4 but without limiting Section 4.4(f), following the Amendment Date, any new registrable Intellectual Property Rights in inventions or other Technology (x) solely developed by employees or contractors of a Person acquired from a third Person by the Purchaser or any of its Subsidiaries (an “Acquired Purchaser Subsidiary”) and (y) pertaining to the Alipay Business, New FIG Business or business of such Acquired Purchaser Subsidiary at the time of such acquisition, as applicable, will be applied for in the name of and owned by the Acquired Purchaser Subsidiary if and to the extent:

 

(i)                                     Purchaser reasonably determines that the Acquired Purchaser Subsidiary’s applying for and owning such Intellectual Property Rights is required by applicable Law and provides advanced written notice thereof to Alibaba together with reasonable details regarding such determination;

 

(ii)                                  Purchaser reasonably determines that the Acquired Purchaser Subsidiary’s applying for and owning such Intellectual Property Rights is required pursuant to an order by or agreements with any court or any Governmental Authority and provides advanced written notice thereof to Alibaba together with reasonable details regarding such determination; or

 

(iii)                               Purchaser and Alibaba agree (acting reasonably), that the Acquired Purchaser Subsidiary’s applying for and owning such Intellectual Property Rights would be necessary or appropriate to avoid involving Alibaba in any regulatory investigation, examination or other procedures undertaken by any Governmental Authority in connection with the acquisition of such Acquired Purchaser Subsidiary that would increase Alibaba’s legal risks or exposures, or otherwise adversely impacting the interests of Alibaba.

 

For clarity, all Patents applied for and owned by an Acquired Purchaser Subsidiary pursuant to this Section 4.4(g) shall constitute (i) Alipay-Retained IP for purposes of this Amended IPLA, and be subject to the licenses, immunities and other rights granted by Purchaser and its Subsidiaries pursuant to Section 2.7(a) of this Amended IPLA and (ii) Purchaser Licensed Patents (as defined in the Cross-License Agreement) for purposes of the Cross-License Agreement, and be subject to the licenses and other rights granted by Purchaser and its Subsidiaries thereunder.

 

Section 4.5                                    Alipay Materials.  As between Alibaba and Alipay, Alipay will retain its right, title and interest in and to any Alipay Materials owned by Alipay, including all Intellectual Property Rights of Alipay subsisting therein; provided, however, that Alipay agrees to grant and does hereby grant to Alibaba and any applicable Alibaba Subsidiary a limited, royalty-free, non-exclusive, non-transferable (except to a successor in connection with a merger or consolidation of Alibaba or the applicable Alibaba Subsidiary, or to a transferee in connection with the transfer of all or any substantial portion of the assets of Alibaba) right and license to use such Alipay Materials if and for so long as, and only to the extent, such right and license is necessary in order for Alibaba or any of its Subsidiaries to carry out any obligations pursuant to this Amended IPLA.

 

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ARTICLE V

 

FEES AND PAYMENT

 

Section 5.1                                    Royalties and Other Amounts for Licensed IP.

 

(a)                                 Alipay Royalty. In consideration for the licenses granted pursuant to Article II with respect to Alipay-Related IP owned by Alibaba IT (A50), Alipay-Exclusive IP and Alipay-Related IP owned by Alibaba or any of its other Subsidiaries, Alipay shall incur an obligation to pay, or cause its designated Subsidiary to pay, to Alibaba IT (A50) and/or to Alibaba (as directed by Alibaba), ongoing royalties calculated pursuant to the following formula (the “Alipay Royalty”) in accordance with this Section 5.1(a); provided, however, that Alipay’s obligation to pay Alibaba the Alipay Royalty shall terminate upon the transfer of all of the Alipay-Exclusive IP constituting Remaining Retained IP pursuant to Section 2.2(c) of the Transaction Agreement:

 

Alipay Royalty = (consolidated revenue of the Alipay Group before taking into account the Alipay Royalty and the New FIG Royalty) multiplied by R1, where

 

“R1” means a percentage to be agreed between Alipay and Alibaba IT (A50) (and Alibaba, if in its sole discretion it decides to charge a royalty).

 

(b)                                 New FIG Royalty.  In consideration for the licenses of the New FIG Business-Exclusive IP and New FIG Business-Related IP owned by the Alibaba Group (including any Subsidiary Licensor), Purchaser shall incur an obligation to pay, or cause its designated Subsidiary to pay, to Alibaba or its designated Subsidiary an aggregate fee calculated pursuant to the following formula (the “New FIG Royalty”) in accordance with this Section 5.1(b), provided, however, that Purchaser’s obligation to pay Alibaba the New FIG Royalty shall terminate upon the transfer of all of the New FIG Business-Exclusive IP constituting Remaining Retained IP pursuant to Section 2.2(c) of the Transaction Agreement:

 

New FIG Royalty = (consolidated pre-tax income (after excluding any minority interest income and any initial gain or loss recognized upon entering into the Transaction Documents or consummating the transfers and issuances provided for in the Transaction Agreement, and any subsequent amortization of deferred charges or income resulting from such gain or loss) of the New FIG Business, as conducted by Purchaser Group other than the Alipay Group, before taking into account the New FIG Royalty) multiplied by R2, where

 

“R2” means a percentage to be agreed between Purchaser and Alibaba and at Alibaba’s election, its Subsidiaries, if in its sole discretion it decides to charge a royalty.

 

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Section 5.2                                    Royalty Reporting and Payment Terms.

 

(a)                                 Within ninety (90) days after the end of each fiscal year of the Payor in which any Funded Amount was due, the Payor shall provide to Alibaba and Alibaba IT (A50) (a) a report detailing with reasonable specificity the basis for the New FIG Royalty and Alipay Royalty payments, (b) true and complete income statements of the revenues and expenses of the Purchaser Group (including separate income statements for the Alipay Group) reflecting the consolidated pre-tax income of the Purchaser Group and Alipay Group during the applicable fiscal year, and (c) such additional information as Alibaba or Alibaba IT (A50) may reasonably request describing and further evidencing the calculation of the Alipay Royalty and/or New FIG Royalty payments.  The Payor shall pay all amounts due under this Amended IPLA in Renminbi or such other mutually agreed currency in the manner to be further agreed by the Parties.

 

(b)                                 The Alipay Royalty and New FIG Royalty shall be paid by Alipay or Purchaser, as applicable, to Alibaba or its designated Subsidiary at such times as an obligation to fund any Funded Amounts has accrued pursuant to Section 2.6(b)(i) and Section 2.6(b)(ii) of the Transaction Agreement, in such amounts agreed by Purchaser and the Alibaba Independent Committee pursuant to Section 2.6(b)(i) and 2.6(b)(ii) of the Transaction Agreement as needed to fund the Funded Amounts; provided  that in no event shall such payments exceed the amount of the obligation to fund any Funded Amount at such time, minus the amounts actually funded with respect to such Funded Amounts by or on behalf of Purchaser pursuant to the other funding methods contemplated under Section 2.6(b)(i) and 2.6(b)(ii) of the Transaction Agreement or otherwise mutually agreed to by Alibaba and Purchaser.  Subject to this Section 5.2, upon the termination of this Amended IPLA, any and all obligations of the Purchaser or Alipay or any of their respective Affiliates to pay the Alipay Royalty and the New FIG Royalty, including any amounts that have been incurred, have accrued or have otherwise become payable prior to such termination, shall be terminated and cancelled without any further obligation or liability pursuant to this Agreement.  Notwithstanding the foregoing, Purchaser’s and Alipay’s (and their respective Affiliates’) obligations hereunder to pay any amounts of the Alipay Royalty and New FIG Royalty that have been incurred, have accrued or have otherwise become payable prior to such termination shall survive any termination of this Amended IPLA with respect to, and to the extent of, any Funded Amounts that Purchaser has incurred an obligation to pay in accordance with Section 2.6(b) of the Transaction Agreement prior to such termination (even if not required to be paid until after such termination), including any Funded Amount Shortfall, in each case to the extent necessary to fulfill such Funded Amounts or Funded Amounts Shortfall (as defined in the Transaction Agreement) that remain outstanding and unpaid following the termination of this Amended IPLA as agreed by Purchaser and the Alibaba Independent Committee pursuant to Section 2.6(b)(i) and 2.6(b)(ii) of the Transaction Agreement.

 

(c)                                  Notwithstanding anything to the contrary set forth in this Article V or the Transaction Agreement, to the extent Purchaser and/or Alipay (or their respective Affiliates) have incurred any obligation to pay any Software Technology Services Fee (as defined in the 2014 IPLA), Alipay Royalty or New FIG Royalty pursuant to the terms and conditions of 2014 IPLA (including pursuant to any Providers Addendum entered into in connection with the 2014 IPLA) prior to the Amendment Date, including any such payments that have accrued or otherwise become payment prior to the Amendment Date but which remain unfulfilled as of the Amendment Date, Alipay’s or the applicable Payor’s obligation to pay such Software Technology Services Fee, Alipay Royalty or New FIG Royalty, as applicable, shall continue to be governed by, and paid by Alipay or the applicable Payor(s) to Alibaba IT (A50) and/or to Alibaba (as directed by Alibaba) pursuant to the terms and conditions of, the 2014 IPLA, and the terms of Article V of the 2014 IPLA shall remain in force and effect following the Amendment Date solely with respect to the fulfillment of such unfulfilled obligations.  Alibaba and Purchaser agree to cooperate in good faith to fulfill any such outstanding obligations and pay such amounts as soon as is reasonably practicable following the Amendment Date, provided that Alipay and/or the applicable Payor(s) shall pay any such unfulfilled payment obligations in full within ninety (90) days following the Amendment Date.  For the avoidance of doubt, any such obligation of Alipay and/or Purchaser to pay any Software Technology Services Fee, Alipay Royalty or New Fig Royalty accruing prior to the Amendment Date shall be actually paid by Alipay and/or the applicable Payor(s) to Alibaba IT (A50), Alibaba and/or any other designated Subsidiary of Alibaba, and not used to satisfy any obligation of Purchaser to fund any Funded Amounts pursuant to Section 2.6(b)(i) and Section 2.6(b)(ii) of the Transaction Agreement.

 

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Section 5.3                                    Taxes.  Subject to Section 2.6(b)(iii) of the Transaction Agreement, each Party and the Payor shall bear the taxes applicable to it in connection with this Amended IPLA, including but not limited to turnover tax, business tax, value-added tax, income tax, profits tax or other taxes.

 

Section 5.4                                    Books and Records; Audit Rights.

 

(a)                                 Purchaser and the other members of the Purchaser Group shall each maintain (and cause to be maintained) complete and accurate books and records, in accordance with International Financial Reporting Standards, for the purpose of supporting and documenting the Alipay Royalty and New FIG Royalty payable hereunder, and as otherwise reasonably necessary to confirm Purchaser’s and Payor’s compliance with the terms and conditions of this Amended IPLA.  All such books and records will be retained at each respective company’s, or its applicable Subsidiary’s, principal place of business for a period of at least three (3) years after the payments to which they pertain have been made.  The relevant books and records of the Purchaser Group will be open for inspection and audit during such three (3) year period for the purpose of verifying the accuracy of the payments and charges made hereunder.

 

(b)                                 Upon reasonable advance written request of Alibaba to Purchaser, the Parties shall conduct, no more than once per fiscal year a joint audit of the consolidated financials of Purchaser and the other members of the Purchaser Group for the purposes of calculating the Alipay Royalty and New FIG Royalty. The auditor for such audit will be Ernst & Young or another internationally recognized auditor agreed to by the Parties (Ernst & Young or such other agreed auditor, the “Auditor”), and the Auditor shall generate a reasonably detailed report, sufficient to document the accuracy of the applicable payments and charges made by Purchaser or the Payor, and any over- or under-payments or charges.  The report will be simultaneously provided to Purchaser and Alibaba.

 

(c)                                  If any audit discloses a shortfall in Alipay Royalty and New FIG Royalty payments made during the period audited, Purchaser or the Payor shall incur an obligation to pay to Alibaba IT (A50) or Alibaba (as directed by Alibaba) such underpaid amounts in accordance with Section 5.2.

 

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(d)                                 If any audit discloses that Purchaser or the Payor overpaid the Alipay Royalty and New FIG Royalty during the period audited, Alibaba IT (A50) or Alibaba shall credit the excess amount against the amounts of the Alipay Royalty and New FIG Royalty which the Payor then has an obligation to pay to Alibaba IT (A50) or Alibaba.

 

(e)                                  Each entity’s books and records for any applicable period may be audited or investigated only once, provided that in the event any such audit or investigation reveals an underpayment of Alipay Royalty and New FIG Royalty hereunder, Alibaba or Purchaser may, in its discretion, conduct one (1) additional audit or investigation of such entity’s books and records, according to the procedures set forth in this Section 5.4, in the twelve (12) months following the audit or investigation that revealed the underpayment or miscalculation.  For clarity, neither Party nor its Subsidiaries shall be required to disclose to the other, or its auditors, pursuant to this Section 5.4, any Source Code, any materials or information protected by attorney client, work product or similar privileges, or any information that the other Person or its auditors or investigators, as the case may be, is not permitted to access pursuant to applicable Law.  Before beginning its investigation, the Auditor shall execute a confidentiality agreement with Purchaser or other applicable members of the Purchaser Group that (A) limits the disclosure to Alibaba IT (A50) or Alibaba of information obtained by the firm as part of the audit or investigation, to the results of the audit or investigation, the determinations of the firm in connection therewith, and the basis for such determinations, but (B) does not permit the disclosure to Alibaba IT (A50) or Alibaba of any Personal Information, any Source Code or information that Alibaba IT (A50) or Alibaba is not permitted to access in accordance with this Amended IPLA pursuant to applicable Law.

 

Section 5.5                                    Disputed Royalty or Charges.  In the event Alibaba and Purchaser, or their applicable Subsidiaries, after reasonable consultation between representatives of each Party, cannot agree on the proper amounts to be paid and/or credited between Purchaser or Payor and Alibaba IT (A50) or Alibaba, after conducting any audit as described in Section 5.4, the dispute will be finally settled in accordance with the dispute resolution procedures set forth in Section 15.6.

 

Section 5.6                                    Alibaba Independent Committee.  Alibaba shall elect to have the Auditor conduct a joint audit, and shall exercise Alibaba’s and Alibaba IT’s (A50) other rights under this Article V, if and to the extent so requested by the Alibaba Independent Committee.

 

ARTICLE VI

 

INTELLECTUAL PROPERTY PROSECUTION AND ENFORCEMENT

 

Section 6.1                                    IP Prosecution and Registration.

 

(a)                                 Alibaba shall have the sole control and discretion over the filing for, prosecution and maintenance of any Alipay-Related IP and New FIG Business-Related IP.

 

(b)                                 Alibaba shall have the first right, at its option, but subject to the exceptions set forth in Section 6.1(c), to control at its own expense the filing for, and prosecution and maintenance of, any Alipay-Exclusive IP or New FIG Business-Exclusive IP (“Alipay-Exclusive Prosecution Function”).  For so long as there are personnel employed or engaged by Alibaba or its Subsidiaries (or operating under the management or supervision of a manager or supervisor employed or engaged by Alibaba or its Subsidiaries) who have responsibility for patent applications, domain name registrations, and/or trademark registrations of Purchaser or its Subsidiaries, or that comprise Alipay-Exclusive IP or New FIG Business-Exclusive IP (as the Parties acknowledge to be the case as of the Amendment Date), such personnel will (i) continue to have access to the prosecution files and docket system to review the status of any filings for, and prosecution of, the Alipay-Exclusive IP and the New FIG Business-Exclusive IP and (ii) have the responsibility and an obligation to raise with Purchaser or its designated Subsidiary and Alibaba any objections to the manner in which any Alipay-Exclusive IP or New FIG Business-Exclusive IP is being handled, including whether and how any Alipay-Exclusive Patents, New FIG Business-Exclusive Patents, Alipay-Exclusive Domain Names, New FIG Business-Exclusive Domain Names, Alipay-Exclusive Trademarks or New FIG Business-Exclusive Trademarks are being filed for, prosecuted and/or maintained.  Alibaba shall, at Purchaser’s or its designated Subsidiary’s request and at reasonable intervals, provide Purchaser or its designated Subsidiary with information reasonably requested by Purchaser or its designated Subsidiary regarding the status of filing, prosecution and maintenance of any Alipay-Exclusive Patents, New FIG Business-Exclusive Patents, Alipay-Exclusive Domain Names, New FIG Business-Exclusive Domain Names, Alipay-Exclusive Trademarks or New FIG Business-Exclusive Trademarks, or allow appropriate personnel of Purchaser or its designated Subsidiary to directly access such information (in either event, permitting the appropriate personnel of Purchaser or its designated Subsidiary or their outside counsel reasonable access to the files, or copies of the files, of the Alipay-Exclusive Patents, New FIG Business-Exclusive Patents, Alipay-Exclusive Domain Names, New FIG Business-Exclusive Domain Names, Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks) and considering, in good faith, any suggestions or recommendations such personnel or counsel may have with respect to the conduct of the prosecution and maintenance of such Alipay-Exclusive Patents, New FIG Business-Exclusive Patents, Alipay-Exclusive Domain Names, New FIG Business-Exclusive Domain Names, Alipay-Exclusive Trademarks and New FIG Business-Exclusive Trademarks.

 

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(c)                                  The Parties acknowledge that (i) on or about April 1, 2015, Purchaser or a designated Subsidiary established its own Intellectual Property Rights group capable of handling the filing for, or prosecution or maintenance of, patent applications, domain names, and/or trademark registrations (“IP Function Separation”) and (ii) notwithstanding the IP Function Separation, Purchaser has requested that Alibaba continue to assume certain responsibilities for the Alipay-Exclusive Prosecution Function.  The Parties acknowledge that if the Parties agree, after the Amendment Date, to authorize Purchaser or its designated Subsidiary to take actions in the name of Alibaba or its Affiliates in connection with the Alipay-Exclusive Prosecution Function, such process and procedures will include reasonable protections for Alibaba and its Affiliates.

 

(d)                                 In consideration of Purchaser’s determination not to assume responsibility for the Alipay-Exclusive Prosecution Function, Alibaba will (i) at Purchaser’s or its designated Subsidiary’s request, at reasonable intervals, provide Purchaser or its designated Subsidiary with information reasonably requested by Purchaser or its designated Subsidiary regarding the status of filing, prosecution and maintenance of any Alipay-Exclusive Patents, New FIG Business-Exclusive Patents, Alipay-Exclusive Domain Names, New FIG Business-Exclusive Domain Names,  Alipay-Exclusive Trademarks or New FIG Business-Exclusive Trademarks, or (ii) allow appropriate personnel of Purchaser or its designated Subsidiary to access such information (e.g., through access to Alibaba’s docket).  If personnel of Purchaser or its designated Subsidiary do not have such access, and Alibaba then elects to abandon, dedicate to the public, or otherwise allow to lapse any Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark, Alibaba shall use commercially reasonable efforts to notify Purchaser or its designated Subsidiary of such election, and Purchaser or its designated Subsidiary shall then have the right, at Alibaba’s election, (i) to undertake the prosecution and maintenance of such Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark, at Purchaser’s or its designated Subsidiary’s own expense, in the name of Alibaba, or (ii) to receive an assignment to Purchaser or its designated Subsidiary, subject to Section 2.7(a), of Alibaba’s entire right, title and interest in and to such Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark, together with the right to recover any damages for past infringement of any such Alipay-Exclusive Patent or New FIG Business-Exclusive Patent.  If Alibaba elects to allow Purchaser or its designated Subsidiary to prosecute an Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark in the name of Alibaba, such prosecution shall be subject to Alibaba’s approval, which approval shall not be unreasonably withheld.  In any event, Purchaser or its designated Subsidiary shall, at Alibaba’s reasonable request, provide Alibaba with reasonable information regarding the status of any applications or registrations for which Purchaser or its designated Subsidiary has undertaken the prosecution or maintenance or which Alibaba has assigned to Purchaser or its designated Subsidiary.  Until such time as Alibaba elects to abandon, dedicate to the public, or otherwise allow to lapse any Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark, Alibaba will, at Purchaser’s or its designated Subsidiary’s reasonable request, use commercially reasonable efforts to include notifications in its applicable Intellectual Property dockets, and to instruct its outside counsel responsible for Intellectual Property prosecution to include in its applicable Intellectual Property dockets maintained on behalf of Alibaba, that no Alipay-Exclusive Patent, New FIG Business-Exclusive Patent, Alipay-Exclusive Domain Name, New FIG Business-Exclusive Domain Name, Alipay-Exclusive Trademark or New FIG Business-Exclusive Trademark expressly identified as such in the applicable docket should be abandoned, dedicated to the public or otherwise allowed to lapse without providing advanced notice to Purchaser or its designated Subsidiary.

 

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(e)                                  Notwithstanding the foregoing, no failure of Alibaba to provide to Purchaser or its designated Subsidiary any notice or other information contemplated, or of Alibaba or its outside counsel to include any notifications in any Intellectual Property docket pursuant to this Article VI shall create any liability on the part of Alibaba or any of its Affiliates in excess of Twenty-Five Thousand United States Dollars (US$25,000) per patent or patent application, not to exceed One Hundred Twenty Five Thousand United States Dollars (US$125,000) per patent family.

 

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Section 6.2                                    Patent Enforcement.  Alibaba will have the sole control and discretion over the enforcement or defense of any Alipay-Related Patent and New FIG Business-Related Patent.  In the event that Purchaser or its designated Subsidiary reasonably believes that any Alipay-Exclusive Patent or New FIG Business-Exclusive Patent is being infringed by a third Person, Purchaser or its designated Subsidiary shall promptly notify Alibaba in writing, or in the event that a declaratory judgment action is brought against Purchaser or any of its Subsidiaries with respect to an Alipay-Exclusive Patent or New FIG Business-Exclusive Patent (or a reexamination request or post-grant challenge is filed against an Alipay-Exclusive Patent or New FIG Business-Exclusive Patent), it shall promptly notify Alibaba in writing.

 

(a)                                 As between the Parties hereto, Alibaba shall have the initial right (but not the obligation) to control the enforcement of the Alipay-Exclusive Patents and New FIG Business-Exclusive Patents, or defend any declaratory judgment action against Purchaser or any of its Subsidiaries (or reexamination request or post-grant challenge) with respect thereto (each, for purposes of this Section 6.2, an “Enforcement Action”).  All recoveries obtained by Alibaba from an Enforcement Action pursuant to this Section 6.2(a) will be first used to reimburse Alibaba for its out-of-pocket litigation expenses (including but not limited to any attorneys’ fees and court costs) in connection with the Enforcement Action and one hundred percent (100%) of any remaining recoveries will go to Purchaser or its designated Subsidiary.  For clarity, any such recoveries shall be included in the consolidated pre-tax income of the Purchaser Group for the applicable fiscal year in which they are accrued, and shall be taken into consideration in the calculation of the Alipay Royalty and New FIG Royalty pursuant to Article V.  At the request of Purchaser or its designated Subsidiary, Alibaba shall keep Purchaser or its designated Subsidiary reasonably informed of the progress of any such Enforcement Action brought or defended by Alibaba pursuant to this Section 6.2(a).

 

(b)                                 In the event that Alibaba does not initiate an Enforcement Action to enforce the Alipay-Exclusive Patents or New FIG Business-Exclusive Patents against a commercially significant infringement by a third Person in the field of the FIG Holdco Business (“Qualifying Infringement”), within ninety (90) days after a formal, written request by Purchaser or its designated Subsidiary to initiate such Enforcement Action, Alipay or its designated Subsidiary (in the case of an Alipay-Exclusive Patent) or Purchaser or its designated Subsidiary (in the case of a New FIG Business-Exclusive Patent) may initiate an Enforcement Action against such infringement.  In the event that Alibaba does not promptly undertake, at Alibaba’s expense, the defense of a declaratory judgment action against Purchaser or any of its Subsidiaries (or a reexamination request or post-grant challenge) with respect to any of the Alipay-Exclusive Patents or New FIG Business-Exclusive Patents, Alipay or its designated Subsidiary (in the case of an Alipay-Exclusive Patent) or Purchaser or its designated Subsidiary (in the case of a New FIG Business-Exclusive Patent) shall have the right to do so at its own expense.  Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary, as applicable, must consult with Alibaba prior to initiating any Enforcement Action or defending any declaratory judgment action (or reexamination) pursuant to this Section 6.2(b) with respect to an Alipay-Exclusive Patent or New FIG Business-Exclusive Patent, and shall not assert any Alipay-Exclusive Patent or New FIG Business-Exclusive Patent against any third Person if, in the written opinion of outside patent counsel mutually agreed to by the Parties, it is more likely than not that such third Person is not infringing the Alipay-Exclusive Patent or New FIG Business-Exclusive Patent in the field of the FIG Holdco Business.  Alibaba shall have the right (but not the obligation) to cooperate, at Alipay’s or its designated Subsidiary’s expense or Purchaser’s or its designated Subsidiary’s expense, in any Enforcement Action initiated or defended by Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary under this Section 6.2(b) (including joining such Enforcement Action as a party plaintiff if necessary or desirable for initiation or continuation of such Enforcement Action) and shall have the right (but not the obligation) to participate and be represented in any such Enforcement Action with counsel of its choice at Alibaba’s own expense.  In any event, Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary shall keep Alibaba reasonably informed of the progress of any such Enforcement Action initiated or defended by Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary pursuant to this Section 6.2(b) and, upon Alibaba’s request, shall seek Alibaba’s input on any substantive submissions or positions it takes in the litigation regarding the scope, validity and enforceability of the Alipay-Exclusive Patents and New FIG Business-Exclusive Patents.  Alipay or its designed Subsidiary or Purchaser or its designated Subsidiary, as applicable, shall have the right to enter into an agreement in settlement of any Enforcement Action brought or defended pursuant to this Section 6.2(b), including the grant of a license within the field of the Alipay Business (in the case of an Alipay-Exclusive Patent) or New FIG Business (in the case of a New FIG Business-Exclusive Patent), but shall not enter into any settlement agreement which would impose any obligation or cost on, or otherwise adversely affect, Alibaba or any of its Subsidiaries (for clarity, for purposes or the foregoing, the Parties acknowledge that a non-exclusive license consistent with this Amended IPLA that is granted to the defendant in any such Enforcement Action shall not be regarded as adversely affecting Alibaba or its Subsidiaries), or make any admission relating to the validity or enforceability of any Alipay-Exclusive Patents or New FIG Business-Exclusive Patents, without the prior written consent of Alibaba, such consent not to be unreasonably withheld or delayed.  All recoveries obtained by Purchaser or its designated Subsidiary from an Enforcement Action pursuant to this Section 6.2(b) will be first used to reimburse Alibaba for its out-of-pocket litigation-related expenses (including reasonable attorneys’ fees and court costs) in connection with the Enforcement Action and any remaining recoveries will be retained one hundred percent (100%) by Purchaser and/or its Subsidiaries (as designated by Purchaser) and included in the consolidated pre-tax income of the Purchaser Group in the fiscal year in which such recoveries are accrued.

 

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(c)                                  Notwithstanding anything set forth in Section 6.2(b), Alibaba may, in its sole discretion, refuse to cooperate with Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary in connection with, or otherwise participate in, any Enforcement Action (“Right of Refusal”), and Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary shall not seek to join Alibaba or any Alibaba Subsidiary as a party in any Enforcement Action.  In the event Alibaba exercises its Right of Refusal with respect to any Alipay-Exclusive Patents or New FIG Business-Exclusive Patents, then, upon Alipay’s or its designated Subsidiary’s or Purchaser’s or its designated Subsidiary’s written request, Alibaba agrees to cooperate with Alipay or designated Subsidiary or Purchaser or its designated Subsidiary to determine if the assignment of any Alipay-Exclusive Patent or New FIG Business-Exclusive Patent to Alipay or its designated Subsidiary, or to Purchaser or its designated Subsidiary, as applicable, or waiver of Alibaba’s right to enforce the subject Alipay-Exclusive Patent or New FIG Business-Exclusive Patent would be necessary for the purposes of Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary to pursue or defend the applicable Enforcement Action.  If Alibaba and Alipay or its designated Subsidiary, or Purchaser or its designated Subsidiary, determine that such an assignment of any Alipay-Exclusive Patent(s) or New FIG Business-Exclusive Patent(s), as applicable, or waiver of Alibaba’s rights is necessary, then Alibaba will elect, in its sole discretion and subject to the unanimous approval of the Alibaba Independent Committee as to which option to elect:  (i) to join in the applicable Enforcement Action, (ii) file appropriate papers with the applicable court confirming that it waives its rights to enforce the applicable Alipay-Exclusive Patent or New FIG Business-Exclusive Patent and agrees that Alipay or its designated Subsidiary or Purchaser or its designated Subsidiary may enforce such Alipay-Exclusive Patent or New FIG Business-Exclusive Patent, as applicable, or (iii) to assign to Alipay or its designated Subsidiary, or to Purchaser or its designated Subsidiary, as applicable, at Alibaba’s sole cost and expense and subject to Section 2.7(a), Alibaba’s entire right, title and interest in and to such Alipay-Exclusive Patent(s) or New FIG Business-Exclusive Patent(s), together with the right to recover any damages for past infringement of such Alipay-Exclusive Patent(s) or New FIG Business-Exclusive Patent(s).  For clarity, any Alipay-Exclusive Patent or New FIG Business-Exclusive Patent assigned to Alipay or its designated Subsidiary, or to Purchaser or its designated Subsidiary, pursuant to this Section 6.2(c) will constitute Alipay-Retained IP licensed to Alibaba and its Subsidiaries pursuant to Section 2.7(a).

 

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ARTICLE VII

 

WARRANTIES

 

Section 7.1                                    Alipay-Exclusive IP and New FIG Business-Exclusive IP Warranty.   Purchaser represents and warrants to Alibaba as of the Amendment Date that (a) the Stage 1 Retained IP and each of the Alipay-Exclusive Copyrights (including the Alipay-Exclusive Software and Alipay-Exclusive Other Materials) set forth in Exhibit A, the Alipay-Exclusive Domain Names set forth in Exhibit B, the New FIG Business-Exclusive Domain Names set forth in Exhibit I, the Alipay-Exclusive Trademarks set forth in Exhibit D and the New FIG Business-Exclusive Trademarks set forth in Exhibit K, in each case, is exclusively used in and relates solely to the Alipay Business or the New FIG Business, as applicable, as conducted by Alipay and its Subsidiaries or by Purchaser and its Subsidiaries (other than Alipay and its Subsidiaries), as applicable, and is not used in, or necessary for use by, Alibaba or its Affiliates in connection with the conduct of the Alibaba Business, and (b) each of the Alipay-Exclusive Patents set forth in Exhibit C and the New FIG Business-Exclusive Patents set forth in Exhibit J is based solely on inventions made solely by employees or contractors of Alipay IT Company (Z53), Alipay Software Ltd. (Z52), Purchaser or Purchaser’s Subsidiaries.

 

Section 7.2                                    Warranty Disclaimer.  ALIBABA AND THE RELEVANT ALIBABA SUBSIDIARIES HEREBY DISCLAIM ALL WARRANTIES, REPRESENTATIONS OR CONDITIONS OF ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT.  WITHOUT LIMITATION TO THE GENERALITY OF THE FOREGOING, THE LICENSED IP IS LICENSED BY ALIBABA AND THE RELEVANT ALIBABA SUBSIDIARIES TO ALIPAY, ALIPAY SUBSIDIARIES, PURCHASER AND PURCHASER SUBSIDIARIES, AND THE SOFTWARE TECHNOLOGY SERVICES AND RELATED WORK PRODUCT PROVIDED UNDER THE 2014 IPLA WERE PROVIDED, IN EACH CASE, “AS IS,” WITHOUT WARRANTY OF ANY KIND, AND SHALL NOT BE SUBJECT TO ANY STANDARDS, SERVICE LEVELS, REVIEWS, MODIFICATIONS OR ACCEPTANCE CRITERIA OF ANY KIND UNLESS OTHERWISE EXPRESSLY AGREED BY THE PARTIES IN WRITING.

 

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ARTICLE VIII

 

INDEMNIFICATION

 

Section 8.1                                    Purchaser Indemnification of Alibaba.  Purchaser agrees on behalf of itself and its Subsidiaries, to defend, indemnify, and hold harmless Alibaba, the Alipay IP/Technology Provider, and Alibaba’s other Affiliates, and each of their respective directors, officers, employees, representatives and agents (the “Alibaba Indemnitees”) from and against any and all claims, actions, causes of action, judgment, awards, liabilities, losses, costs or damages (including reasonably attorneys’ fees and expenses) (collectively, “Losses”) arising out of or relating to any claim by any third Person arising out of or relating to Purchaser’s and/or the Purchaser Subsidiaries’ use of, or the exercise of its rights in and to, the Licensed IP, the Stage 1 Retained IP and the SME Loan Know-How.  For clarity, the Parties acknowledge that to the extent that a claim arises out of or relates to the Services (as defined in the Commercial Agreement) provided to Alibaba or its Subsidiaries under the Commercial Agreement, the indemnification provisions of the Commercial Agreement (rather than this Section 8.1) shall apply.

 

Section 8.2                                    Indemnification Procedures.

 

(a)                                 Promptly after receipt by Alibaba of notice of the commencement or threatened commencement of any action, suit, proceeding, claim, arbitration, investigation or litigation, whether civil or criminal, at Law or in equity, made or brought by a third Person (each a “Third Party Claim”), in respect of which Alibaba will seek indemnification pursuant to Section 8.1, Alibaba shall notify Purchaser of such Third Party Claim in writing.  No failure to so notify Purchaser shall relieve it of its obligations under this Amended IPLA, except to the extent that it can demonstrate that it was materially prejudiced by such failure.

 

(b)                                 Purchaser shall have thirty (30) days after receipt of notice to elect, at its option, to assume and control the defense of, at its own expense and by its own counsel, any such Third Party Claim, and shall be entitled to assert any and all defenses available to Alibaba, Alibaba’s Subsidiaries, including the Alipay IP/Technology Provider to the fullest extent permitted under applicable Law; provided, however, that Purchaser shall have no right to assume and control, and Alibaba shall at all times remain in sole control of (including selecting counsel), the defense of any Third Party Claim related to taxes.  If Purchaser shall undertake to compromise or defend any such Third Party Claim, it shall promptly, but in any event within ten (10) days of the receipt of notice from Alibaba of such Third Party Claim, notify Alibaba of its intention to do so, and Alibaba shall cooperate fully with Purchaser and its counsel in the compromise of, or defense against, any such Third Party Claim; provided, however, that (A) Purchaser shall not settle, compromise or discharge, with respect to, any such Third Party Claim without Alibaba’s prior written consent (which consent shall not be unreasonably withheld, delayed, or conditioned) and (B) Purchaser shall not admit any liability with respect to any such Third Party Claim without Alibaba’s prior written consent (which consent shall not be unreasonably withheld, delayed, or conditioned).

 

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(i)            Notwithstanding an election by Purchaser to assume the defense of any Third Party Claim, Alibaba and/or the applicable member of the Alibaba Indemnitees shall have the right to employ separate counsel and to participate in the defense of such Third Party Claim, and Purchaser shall bear the reasonable fees, costs and expenses of such separate counsel if (1) Alibaba shall have determined in good faith that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by Purchaser inappropriate, or (2) Purchaser shall have authorized Alibaba to employ separate counsel at Purchaser’s expense.

 

(ii)           Alibaba, Purchaser, and their respective counsel shall cooperate in the defense of any Third Party Claim subject to Section 8.1, keep such persons informed of all developments relating to any such Third Party Claims, and provide copies of all relevant correspondence and documentation relating thereto, except as necessary to preserve attorney-client, work product and other applicable privileges.  All reasonable costs and expenses incurred in connection with Alibaba’s cooperation shall be borne by Purchaser.  In any event, Alibaba and/or the applicable member of the Alibaba Indemnitees shall have the right at its own expense to participate in the defense of such asserted liability.

 

(c)           If Purchaser does not elect to defend a Third Party Claim pursuant to Section 8.2(b), or does not defend such Third Party Claim in good faith, Alibaba and/or the Alipay IP/Technology Provider or Alibaba Affiliate shall have the right, in addition to any other right or remedy it may have hereunder, at Purchaser’s expense, to defend such Third Party Claim; provided, however, that Alibaba and/or the Alipay IP/Technology Provider or Alibaba Affiliate shall not settle, compromise or discharge, or admit any liability with respect to, any such Third Party Claim without Purchaser’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned.

 

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ARTICLE IX

 

CONFIDENTIALITY

 

Section 9.1            Confidential Information.  Each Party (the “Receiving Party”) shall use the same standard of care to prevent the public disclosure and dissemination of the Confidential Information of the other Party or its Subsidiaries (the “Disclosing Party”) as the Receiving Party uses to protect its own comparable Confidential Information.  “Confidential Information” of a Party means confidential, non-public 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 confidential, non-public materials and information, regarding such Party and its Affiliates, or their representatives or customers, disclosed by the Disclosing Party to the Receiving Party under or in connection with the IPLA or this Amended IPLA, whether orally, electronically, in writing, or otherwise, including copies thereof, in each case to the extent expressly marked in writing as “Confidential,” or, if disclosed orally, identified as confidential at the time of disclosure and set forth or summarized in a written document expressly marked as “Confidential” delivered to the Receiving Party no later than thirty (30) days after the date of the initial oral disclosure thereof, or, if not so marked or identified as “Confidential,” shall nevertheless be regarded as Confidential Information if a reasonable person under the circumstances would know the information is considered confidential by the Disclosing Party.  Confidential Information of Alibaba includes the Source Code of the Alipay-Exclusive Software and the Source Code and Object Code of the Alipay-Related Software.  Notwithstanding the foregoing, (a) Confidential Information may be disclosed on an as needed basis to personnel or subcontractors (in the case of Purchaser, solely to Permitted Subcontractors) of the Receiving Party and its Subsidiaries solely as and to the extent required for the purpose of fulfilling the Receiving Party’s obligations or exercising the Receiving Party’s rights under any Transaction Document (including, in the case Alibaba and its Subsidiaries, its rights to contract with other Persons for the procurement by Alibaba or its Subsidiaries of services comparable to the Services (as defined in the Commercial Agreement)), (b) Confidential Information may be disclosed and used as expressly permitted pursuant to the Data Sharing Agreement with respect to Contributed Data (as defined in the Data Sharing Agreement), and (c) nothing in this Section 9.1 shall be deemed to prevent Purchaser and its Subsidiaries from engaging in the FIG Holdco Business or Alibaba and its Subsidiaries from engaging in the business of Alibaba and its Subsidiaries or otherwise preventing Purchaser or Alibaba and their respective Subsidiaries from exercising their rights in and to the Licensed IP, Alipay-Retained IP or Alipay Non-Core IP.  Nonetheless, each Receiving Party (x) shall, except as expressly permitted by the Data Sharing Agreement with respect to Contributed Data (as defined in the Data Sharing Agreement), limit the disclosure of the Disclosing Party’s Confidential Information to third Persons to what is necessary for a reasonable purpose in the conduct of the business of the Receiving Party (including its Subsidiaries), and (y) Alibaba and its Subsidiaries shall not disclose any Highly Sensitive Information to any third Persons, except as expressly permitted in the Data Sharing Agreement with respect to Contributed Data (as defined in the Data Sharing Agreement), or with respect to user data to the extent that (i) disclosure of such user data is required for the purpose of engaging a third Person to provide services comparable to the Services (as defined in the Commercial Agreement) (provided that such third Person shall not use such user data for any other purpose), (ii) disclosure of such user data to such third Person in accordance with this Amended IPLA does not violate applicable Law, and (iii) disclosure of such user data to such third Person in accordance with this Amended IPLA does not violate the terms of use or terms of service under which such data was collected.  Each Receiving Party shall take all reasonable steps to ensure that any such Confidential Information disclosed to any personnel or subcontractors in accordance with this Section 9.1 is treated as confidential by the personnel, Subsidiary Sublicensees, Permitted Subcontractors, and Alipay End Users to whom it is disclosed, and shall require the foregoing to enter into an agreement which imposes confidentiality obligations no less protective of the Confidential Information than those imposed under this Amended IPLA.

 

Section 9.2            Permitted Disclosures.  The provisions of this Article IX shall not apply to any Confidential Information which:  (a) is or becomes commonly known within the public domain other than by breach of this Amended IPLA or any other agreement that the Disclosing Party has with any Person; (b) is obtained from a third Person who is lawfully authorized to disclose such information free from any obligation of confidentiality; (c) is independently developed without reference to or use of any Confidential Information of the Disclosing Party; or (d) is rightfully known to the Receiving Party without any obligation of confidentiality prior to its receipt from the Disclosing Party.

 

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Section 9.3            Disclosure in Compliance With Law.  Nothing in this Article IX shall prevent the Receiving Party from disclosing Confidential Information where it is required to be disclosed by judicial, administrative, governmental, or regulatory process in connection with any action, suit, Proceeding or claim, or otherwise by applicable Law; provided, however, that the Receiving Party shall, if legally permitted, give the Disclosing Party prior reasonable notice as soon as possible of such required disclosure so as to enable the Disclosing Party to seek relief from such disclosure requirement or measures to protect the confidentiality of the disclosure.

 

Section 9.4            Restricted Data.  Notwithstanding anything to the contrary set forth herein, nothing in this Amended IPLA shall require Purchaser or its Subsidiaries to disclose to Alibaba or its Subsidiaries any information, communications or documents that are protected by attorney-client privilege, work product privilege or is protected under similar legal principles in foreign jurisdictions, or Personal Information of any person, or any other information or data where such disclosure would be prohibited by applicable Law, including Laws of Mainland China relating to payment data security or state economic security.

 

Section 9.5            Confidentiality of the Licensed IP.  In addition to the obligations set forth in Section 9.1 and Section 2.4(c), Purchaser and its Subsidiary Sublicensees shall comply with the obligations set forth in this Section 9.5 with respect to the Alipay-Exclusive Software and Alipay-Related Software.  Purchaser and the Subsidiary Sublicensees shall take reasonable steps, during the Term with respect to Alipay-Exclusive Software, and both during and after the Term with respect to Alipay-Related Software, to ensure that no unauthorized copy, in whole or in part, of the Alipay-Exclusive Software or Alipay-Related Software will be made available to any third Person.  Purchaser and the Subsidiary Sublicensees shall use the Alipay-Exclusive Software and Alipay-Related Software disclosed to each of them hereunder under carefully controlled conditions, shall distribute such Alipay-Exclusive Software and Alipay-Related Software only to each of its respective employees with a need to have access thereto, and solely to the extent necessary to exercise their license or sublicense rights set forth in this Amended IPLA, and Purchaser and each Subsidiary Sublicensee shall observe, at a minimum, the same level of security, copy restrictions and non-disclosure as it exercises with respect to confidential Alipay-Exclusive Software and Alipay-Related Software and related documentation for each of their own products, which in no event shall be less than a reasonable degree of care.  Purchaser shall be fully responsible for the conduct of its employees, agents, representatives, Subsidiary Sublicensees and Permitted Subcontractors who may in any way breach this Amended IPLA, and Purchaser shall immediately notify Alibaba of any known breach of this Amended IPLA including any act or omission by any Purchaser Affiliate that, if committed by Purchaser, would constitute a breach of this Amended IPLA.

 

Section 9.6            Residuals.  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 disclosed to it under this Amended IPLA.  “Residual Information” means information in non-tangible form which may be retained in the memory of employees of the Receiving Party who have had access to the Confidential Information of the Disclosing Party.  Receiving Party’s receipt of Confidential Information under this Amended IPLA shall not create any obligation that in any way limits or restricts the assignment and/or reassignment of the Receiving Party’s employees.  For the avoidance of doubt, the foregoing does not constitute a license under any Patent or otherwise affect any Party’s (or its Subsidiaries’) rights or obligations under Section 9.9 of the Transaction Agreement.

 

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ARTICLE X

 

LIMITATION OF LIABILITY

 

Section 10.1          Limitation of Liability.  IN NO EVENT WILL ALIBABA, ANY ALIBABA AFFILIATE OR THE ALIPAY IP/TECHNOLOGY PROVIDER BE LIABLE TO PURCHASER, ANY PURCHASER AFFILIATE OR TO ANY THIRD PERSON FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE, DATA, BUSINESS OR PROFITS) ARISING OUT OF OR IN CONNECTION WITH THE 2014 IPLA (INCLUDING THE SOFTWARE TECHNOLOGY SERVICES PERFORMED THEREUNDER OR ANY RESULTS OR WORK PRODUCT ARISING FROM SUCH SOFTWARE TECHNOLOGY SERVICES), THIS AMENDED IPLA, OR THE LICENSED IP, HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF ALIBABA, THE ALIBABA AFFILIATE OR THE ALIPAY IP/TECHNOLOGY PROVIDER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  ALIBABA’S, ALIBABA AFFILIATES’ AND THE ALIPAY IP/TECHNOLOGY PROVIDER’S TOTAL LIABILITY TO PURCHASER AND PURCHASER AFFILIATES, FROM ALL CAUSES OF ACTION AND ALL THEORIES OF LIABILITY UNDER THIS AMENDED IPLA, WILL BE LIMITED TO AND WILL NOT EXCEED THE TOTAL AMOUNTS ACTUALLY PAID TO ALIBABA AND THE ALIPAY IP/TECHNOLOGY PROVIDER BY THE PURCHASER GROUP UNDER THIS AMENDED IPLA DURING THE TWELVE (12) MONTHS IMMEDIATELY PRECEDING THE DATE OF THE EVENT GIVING RISE TO THE MOST RECENT CLAIM OF LIABILITY.

 

ARTICLE XI

 

NO EFFECT ON TRANSFEREE’S SEPARATE INTELLECTUAL PROPERTY RIGHTS

 

Section 11.1          No Effect on Acquirer’s Separate Intellectual Property Rights.   Notwithstanding anything to the contrary set forth herein, in the event Alibaba merges with or acquires a third Person, or assigns or transfer this Amended IPLA to a third Person (any such third Person, “Transferee”), whether by merger, assignment, transfer of assets (including but not limited to this Amended IPLA) or otherwise, the licenses granted pursuant to Section 2.2 will extend only to the Alipay-Related IP and New FIG Business-Related IP owned by Alibaba or the Alipay IP/Technology Provider immediately prior to such merger, acquisition, assignment or transfer and will not affect or otherwise encumber in any manner the Transferee’s Intellectual Property Rights, except only any Alipay-Related IP and New FIG Business-Related IP owned by Alibaba or the Alipay IP/Technology Provider immediately prior to such merger, acquisition, assignment or transfer and acquired by the Transferee from Alibaba or the Alipay IP/Technology Provider and any subsequently filed patents and patent applications that claim an effective filing date based upon Alipay-Related Patents and New FIG Business-Related Patents that were owned by Alibaba or the Alipay IP/Technology Provider immediately prior to such assignment or transfer.

 

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ARTICLE XII

 

COMPLIANCE WITH LAWS

 

Section 12.1                             Compliance with Laws.  At all times during the Term, Purchaser shall comply, and shall cause its Subsidiaries to comply, with all Laws applicable to Purchaser and Purchaser’s Subsidiaries concerning the FIG Holdco Business, any Alipay Business Product and/or any New FIG Business Product.  Without limiting the foregoing, Purchaser acknowledges that the Licensed IP and all related technical data and materials may be subject to export controls under the applicable export, import and/or use control Laws in any territory where the Licensed IP is used.  Notwithstanding anything in this Amended IPLA to the contrary, Alibaba and the Alipay IP/Technology Provider shall not be required to supply to Purchaser, any Purchaser Subsidiaries or any third Persons, and Purchaser and Purchaser Affiliates shall not export or re-export, any Licensed IP or technical data supplied by Alibaba or the Alipay IP/Technology Provider, directly or through third Persons, to any source for use in any country or countries in contravention of any Laws.

 

ARTICLE XIII

 

TERM AND TERMINATION

 

Section 13.1                             Term.  This Amended IPLA will enter into effect upon the Issuance Closing (as defined in the Transaction Agreement) and continue in full force and effect until the earliest of (i) the completion of payment of the Funded Amounts up to the Funded Payments Cap by Purchaser pursuant to the Transaction Agreement, (ii) the first to occur of the closing of a Purchaser Qualified IPO or an Alipay Qualified IPO and (iii) all Remaining Retained IP has been assigned or transferred by or on behalf of Alibaba to Purchaser or a Subsidiary of Purchaser pursuant to Section 2.2 of the Transaction Agreement, unless earlier terminated in accordance with this Article XIII.

 

Section 13.2                             Termination by Alibaba for Purchaser Bankruptcy.  Alibaba shall have the right to terminate this Amended IPLA on the occurrence of any of the following events if:

 

(a)                                 Purchaser files a petition for bankruptcy or is adjudicated a bankrupt;

 

(b)                                 Purchaser becomes insolvent and makes an assignment for the benefit of its creditors or an arrangement for its creditors pursuant to any bankruptcy Law;

 

(c)                                  Purchaser discontinues the FIG Holdco Business; or

 

(d)                                 an administrator is appointed for Purchaser or its business.

 

Section 13.3                             No Termination by Purchaser.  Purchaser and Alipay shall have no right to terminate this Amended IPLA based on any breach hereof or for any other reason, and Purchaser’s and Alipay’s sole and exclusive remedy with respect to any breach hereof by Alibaba or the Alipay IP/Technology Provider will be to seek monetary damages for the breach and, in the case of Alibaba’s or the Alipay IP/Technology Provider’s breach of its obligations under Article IX, injunctive or other equitable remedies to cure, limit and restrain any such breach or threatened breach.

 

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Section 13.4                             Non-payment.  If Purchaser, Alipay, and/or any Payor fails to make payment of any amounts due and payable to Alipay IT Company (Z53), Alibaba IT (A50) or Alibaba under this Amended IPLA by the date such payment is due, the Parties agree that Alipay IT Company (Z53), Alibaba IT (A50) or Alibaba, as applicable, is entitled to charge interest on such unpaid amounts at twelve percent (12%) annual rate, commencing from the date on which payment was due.  Purchaser’s, Alipay’s, or any Payor’s failure to pay the Alipay Royalty or the New FIG Royalty due under this Amended IPLA will not entitle Alibaba to terminate this Amended IPLA.

 

Section 13.5                             Effects of Termination.

 

(a)                                 Licenses.  All licenses and sublicenses granted under this Amended IPLA will terminate upon the termination or expiration of this Amended IPLA; provided, however, that the termination of such licenses and sublicenses pursuant to this Section 13.5 shall have no effect on any license of rights in and to Intellectual Property or Intellectual Property Rights in accordance with Section 2.2(b) of the Transaction Agreement or as otherwise agreed to by the Parties.

 

(b)                                 Return of Confidential Material.  Within thirty (30) days after the termination or expiration of this Amended IPLA, each Party shall either deliver to the other, or destroy, all copies of any tangible Confidential Information of the other Party provided hereunder in its possession or under its control, and shall furnish to the other Party an affidavit signed by an officer of its company certifying that such delivery or destruction has been fully effected.

 

(c)                                  Payment of Unpaid Royalty and Fee.  Within sixty (60) days of the expiration or termination of this Amended IPLA, Purchaser shall pay, or cause to be paid, to Alibaba or an Alibaba Affiliate designated by Alibaba, all sums, if any, due and owing pursuant to the terms of this Amended IPLA as of the date of expiration or termination of this Amended IPLA.

 

Section 13.6                             Survival.  The respective rights and obligations of the Parties under Sections 2.5 (clauses (a) and (b)), 5.1 and 5.2 (to the extent set forth in Section 5.2(b)), 5.3, 5.4, 5.5, 13.5, 13.6, and Articles I, IV, VII, VIII, IX, X, XIV and XV (except Section 15.9) of this Amended IPLA will survive expiration or termination of this Amended IPLA.  No termination or expiration of this Amended IPLA shall relieve any Party from any liability for any breach of or liability accruing prior to the effective date of termination.

 

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ARTICLE XIV

 

OBLIGATION OF THE PARTIES REGARDING SUBSIDIARIES

 

Section 14.1                             Obligations of the Parties Regarding Subsidiaries.  Each Party shall require its respective Subsidiaries (including, in the case of Purchaser, Payor) to fulfill each such Subsidiary’s duties and comply with its obligations, all as set forth in this Amended IPLA.  Without limiting the generality of the foregoing, Purchaser and Alipay shall each cause its Subsidiaries to carry out all obligations, duties and responsibilities of Purchaser and Alipay set forth in this Amended IPLA, including without limitation all obligations to take any actions or refrain from taking any actions, and any act or failure to act by any Subsidiary of Purchaser or Alipay shall be deemed an act or failure to act of Purchaser or Alipay.  Purchaser and Alipay shall each be liable for the performance of all obligations, duties and responsibilities of its Subsidiaries in this Amended IPLA and for all actions or failures to act of its Subsidiaries, and any failure of Purchaser Subsidiaries or Alipay Subsidiaries to perform any obligation, duty or responsibility set forth in this Amended IPLA, or to take or fail to take any action in accordance with this Amended IPLA, shall be deemed a breach of this Amended IPLA by Purchaser or Alipay, as applicable.  Alipay and its Subsidiaries are deemed Subsidiaries of Purchaser for purposes of this Section 14.1.

 

ARTICLE XV

 

GENERAL

 

Section 15.1                             Relationship of the Parties as Independent Contractors.  The Parties are and at all times will be and remain independent contractors as to each other, and at no time will either Party be deemed to be the agent or employee of the other.  No joint venture, partnership, agency, or other relationship will be created or implied as a result of the 2014 IPLA or this Amended IPLA.  Nothing in this Amended IPLA will be construed as establishing an employment, agency, partnership or joint venture relationship between Purchaser or any Purchaser Subsidiary or Alipay or any Alipay Subsidiary, on the one hand, and Alibaba, the Alipay IP/Technology Provider or any of their personnel, on the other.  Alibaba and the Alipay IP/Technology Provider have no authority to bind Purchaser, Alipay or Purchaser’s Subsidiaries or Alipay’s Subsidiaries by contract or otherwise, and Purchaser and Purchaser’s Subsidiaries and Alipay and Alipay’s Subsidiaries have no authority to bind Alibaba or the Alibaba Group (including the Alipay IP/Technology Provider) by contract or otherwise.  Alibaba and the Alipay IP/Technology Provider acknowledge and agree that their personnel are not eligible for or entitled to receive any compensation, benefits or other incidents of employment that Purchaser and Purchaser’s Subsidiaries or Alipay or Alipay’s Subsidiaries makes available to any employees of Purchaser or any Purchaser Subsidiaries or of Alipay or any Alipay Subsidiaries.  Except as explicitly set forth herein, Alibaba and the Alipay IP/Technology Provider are solely responsible for all taxes, expenses, withholdings and other similar statutory obligations arising out of the relationship between Alibaba and the Alipay IP/Technology Provider and their personnel.

 

Section 15.2                             Alipay IP/Technology Providers Addenda.  Each Providers Addendum shall be in the form set forth in Exhibit F or as otherwise agreed between the executing parties.  In the event of any conflict between any Providers Addendum and any term or condition of this Amended IPLA, this Amended IPLA will control.

 

Section 15.3                             Notices.  All notices and other communications hereunder shall be in writing, shall be made by personal delivery, internationally recognized courier service, facsimile or electronic mail and shall be deemed received (i) on the date of delivery if delivered personally (ii) on the date of confirmation of receipt if delivered by an internationally recognized courier service (or, the first (1st) Business Day following such receipt if (a) the date is not a Business Day or (b) receipt occurs after 5:00 p.m., local time of the recipient) or (iii) on the date of receipt of transmission by facsimile or electronic mail (or, the first (1st) Business Day following such receipt if (a) the date is not a Business Day or (b) receipt occurs after 5:00 p.m., local time of the recipient), to the Parties at the following addresses, facsimile numbers or email addresses (or at such other addresses or facsimile numbers or email addresses for a Party as shall be specified by like notice):

 

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To Alibaba:

 

c/o Alibaba Group Services Limited

26/F, Tower One, Times Square

1 Matheson Street

Causeway Bay

Hong Kong

Attention:   

Facsimile No.: 

Email:  

 

and

 

Morrison & Foerster
 Shin-Marunouchi Building, 29th Floor
 5-1, Marunouchi 1-Chome
 Tokyo, 100-6529
 Japan
 Attention:                                         
 Facsimile No.:                   
 Email:                                                            

 

To Purchaser or Alipay:

 

Ant Small and Micro Financial Services Group Co., Ltd.

Z Space, No. 556 Xixi Road,

Hangzhou 310013

People’s Republic of China

Attention:           

Facsimile No.:    
 Email:                                                            

 

with a copy (which shall not constitute notice) to:

 

Wachtell, Lipton, Rosen & Katz
 51 West 52nd Street
 New York, NY 10019
 United States
 Attention:                                         
                                                                                                 
 Facsimile No:                      
 Email:                                                            
                                                                                                 

 

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Section 15.4                             Headings.  The bold-faced headings contained in this Amended IPLA are for convenience of reference only, will not be deemed to be a part of this Amended IPLA and will not be referred to in connection with the construction or interpretation of this Amended IPLA.

 

Section 15.5                             Counterparts and Exchanges by Electronic Transmission or Facsimile.  This Amended IPLA may be executed in several counterparts and such counterparts may be delivered in electronic format (including by email), all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

 

Section 15.6                             Arbitration.

 

(a)                                 Any dispute, controversy or claim arising out of, relating to, or in connection with this Amended IPLA, including the breach, termination or validity hereof, shall be finally settled exclusively by arbitration.  The arbitration shall be administered by, and conducted in accordance with the rules of the International Chamber of Commerce (the “ICC”) in effect at the time of the arbitration, except as they may be modified by mutual agreement of the Parties.  The seat of the arbitration shall be Singapore, provided, that, the arbitrators may hold hearings in such other locations as the arbitrators determine to be most convenient and efficient for all of the Parties to such arbitration under the circumstances.  The arbitration shall be conducted in the English language.

 

(b)                                 The arbitration shall be conducted by three (3) arbitrators.  The Party (or the Parties, acting jointly, if there is more than one (1)) initiating arbitration (the “Claimant”) shall appoint an arbitrator in its request for arbitration (the “Request”).  The other Party (or the other parties, acting jointly, if there are more than one (1)) to the arbitration (the “Respondent”) shall appoint an arbitrator within thirty (30) days of receipt of the Request and shall notify the Claimant of such appointment in writing.  If within thirty (30) days of receipt of the Request by the Respondent, either Party has not appointed an arbitrator, then that arbitrator shall be appointed by the ICC.  The first two (2) arbitrators appointed in accordance with this provision shall appoint a third arbitrator within thirty (30) days after the Respondent has notified Claimant of the appointment of the Respondent’s arbitrator or, in the event of a failure by a Party to appoint, within thirty (30) days after the ICC has notified the Parties and any arbitrator already appointed of the appointment of an arbitrator on behalf of the Party failing to appoint.  When the third (3rd) arbitrator has accepted the appointment, the two (2) arbitrators making the appointment shall promptly notify the Parties of the appointment.  If the first two (2) arbitrators appointed fail to appoint a third arbitrator or so to notify the Parties within the time period prescribed above, then the ICC shall appoint the third (3rd) arbitrator and shall promptly notify the Parties of the appointment.  The third (3rd) arbitrator shall act as chair of the tribunal.

 

(c)                                  The arbitral award shall be in writing, state the reasons for the award, and be final and binding on the Parties.  The award may include an award of costs, including reasonable attorneys’ fees and disbursements.  In addition to monetary damages, the arbitral tribunal shall be empowered to award equitable relief, including an injunction and specific performance of any obligation under this Amended IPLA.  The arbitral tribunal is not empowered to award damages in excess of compensatory damages, and each Party hereby irrevocably waives any right to recover punitive, exemplary or similar damages with respect to any dispute, except insofar as a claim is for indemnification for an award of punitive damages awarded against a Party in an action brought against it by an independent third Person.  The arbitral tribunal shall be authorized in its discretion to grant pre-award and post-award interest at commercial rates.  Any costs, fees or taxes incident to enforcing the award shall, to the maximum extent permitted by Law, be charged against the Party resisting such enforcement.  Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant Party or its assets.

 

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(d)                                 In order to facilitate the comprehensive resolution of related disputes, and upon request of any Party to the arbitration Proceeding, the arbitration tribunal may, within ninety (90) days of its appointment, consolidate the arbitration Proceeding with any other arbitration Proceeding involving any of the Parties relating to the Transaction Documents.  The arbitration tribunal shall not consolidate such arbitrations unless it determines that (i) there are issues of fact or law common to the Proceedings, so that a consolidated Proceeding would be more efficient than separate Proceedings, and (i) no Party would be prejudiced as a result of such consolidation through undue delay or otherwise.  In the event of different rulings on this question by the arbitration tribunal constituted hereunder and any tribunal constituted under the Transaction Agreement, the ruling of the tribunal constituted under the Transaction Agreement will govern, and that tribunal will decide all disputes in the consolidated Proceeding.

 

(e)                                  The Parties agree that the arbitration shall be kept confidential and that the existence of the Proceeding and any element of it (including any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the tribunal, the ICC, the Parties, their counsel and any person necessary to the conduct of the Proceeding, except as may be lawfully required in judicial Proceedings relating to the arbitration or otherwise, or as required by NASDAQ rules or the rules of any other quotation system or exchange on which the disclosing Party’s securities are listed or applicable Law.

 

(f)                                   The costs of arbitration shall be borne by the losing Party unless otherwise determined by the arbitration award.

 

(g)                                  All payments made pursuant to the arbitration decision or award and any judgment entered thereon shall be made in United States dollars (or, if a payment in United States dollars is not permitted by Law and if mutually agreed upon by the Parties, in Renminbi), free from any deduction, offset or withholding for taxes.

 

(h)                                 Notwithstanding this Section 15.6 or any other provision to the contrary in this Amended IPLA, no Party shall be obligated to follow the foregoing arbitration procedures where such Party intends to apply to any court of competent jurisdiction for an interim injunction or similar equitable relief against any other Party, provided there is no unreasonable delay in the prosecution of that application.  None of the Parties shall institute a proceeding in any court or administrative agency to resolve a dispute arising out of, relating to or in connection with this Amended IPLA or the other Transaction Documents, except for a court proceeding to compel arbitration or otherwise enforce this Amended IPLA to arbitrate, to enforce an order or award of the arbitration tribunal or petition for the provisional or emergency remedies provided for herein.  The Parties waive objection to venue and consent to the nonexclusive personal jurisdiction of the courts of Singapore in any action to enforce this arbitration agreement, any order or award of the arbitration tribunal or the provisional or emergency remedies provided for herein.  In any such permitted court action, the Parties agree that delivery of the complaint or petition by international courier, with proof of delivery, shall constitute valid and sufficient service, and they individually and collectively waive any objection to such service.

 

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Section 15.7                             Governing Law.  THIS AMENDED IPLA IS MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, AND, TO THE EXTENT POSSIBLE, ALL OTHER TRANSACTION DOCUMENTS SHALL BE CONSTRUCTED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES.

 

Section 15.8                             Assignment.  No Party shall transfer this Amended IPLA, or assign any rights or delegate any obligations hereunder, in whole or in part, whether voluntarily or by operation of Law, without the prior written consent of the other Parties.  Any purported transfer, assignment or delegation by a Party without the appropriate prior written approval will be null and void and of no force or effect.  Subject to the foregoing, this Amended IPLA is binding upon the Parties’ successors, heirs and assigns.

 

Section 15.9                             No Assignment of Alipay-Exclusive IP.  Alibaba, on behalf of itself and its Subsidiaries, agrees not to assign or transfer any ownership interest in or to any Alipay-Exclusive IP or New FIG Business-Exclusive IP to any third Person (other than to its own Subsidiary), except as explicitly permitted by Section 6.2(c) of this Amended IPLA.

 

Section 15.10                      Remedies Cumulative; Specific Performance.  The rights and remedies of the Parties hereto will be cumulative (and not alternative).  Each Party agrees that: (a) in the event of any breach or threatened breach by the other Party of any covenant, obligation or other provision set forth in this Amended IPLA, such Party will be entitled (in addition to any other remedy that may be available to it) to seek:  (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision; and (ii) an injunction restraining such breach or threatened breach; and (b) no Party will be required to provide any bond or other security in connection with any such decree, order or injunction or in connection with any related Proceeding.

 

Section 15.11                      Waiver.  No failure on the part of either Party to exercise any power, right, privilege or remedy under this Amended IPLA, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Amended IPLA, will operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy will preclude any other or further exercise thereof or of any other power, right, privilege or remedy.  No Party will be deemed to have waived any claim arising out of this Amended IPLA, or any power, right, privilege or remedy under this Amended IPLA, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party; and any such waiver will not be applicable or have any effect except in the specific instance in which it is given.

 

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Section 15.12                      Amendments.  No amendment, waiver, or discharge hereof (including any exhibit or schedule hereto) shall be valid unless in writing and signed (a) by the Party against which such amendment, waiver or discharge is sought to be enforced, and (b) in the case of Alibaba, with respect to amendments of this Amended IPLA (including any amendments to the Alipay Royalty and the New FIG Royalty) and waivers or discharges of any material right of Alibaba or obligations of Purchaser under this Amended IPLA, including those pertaining to Article V, after obtaining consent of the Seller Audit Committee (or the Alibaba Independent Committee for matters for which the consent of the Alibaba Independent Committee is expressly required by this Amended IPLA).

 

Section 15.13                      Severability.  Each provision of this Amended IPLA shall be deemed a material and integral part hereof.  Except as otherwise provided in this Section 15.13, in the event of a final determination of invalidity, illegality or unenforceability of any provision of this Amended IPLA, the Parties shall negotiate in good faith to amend this Amended IPLA (and any other Transaction Documents, as applicable) or to enter into new agreements to replace such invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provisions providing the Parties with benefits, rights and obligations that are equivalent in all material respects as provided by the Amended IPLA (and any other Transaction Documents, as applicable) as if the invalid, illegal or unenforceable provision(s) had been valid, legal and enforceable.  In the event the Parties are not able to reach agreement on such amendments or new agreements, then the arbitrators (pursuant to the procedures set forth in Section 15.6 of this Amended IPLA) shall determine, as part of their arbitral award, such amendments or new agreements such to provide the Parties with benefits, rights and obligations that are equivalent in all material respect as provided by the Amended IPLA as if the stricken provision(s) had been valid, legal and enforceable. No Party shall, or shall permit any of its Related Parties to, directly or indirectly assert that any provision of any Transaction Document is invalid, illegal or unenforceable.

 

Section 15.14                      Entire Agreement.  This Amended IPLA and all provisions of any Transaction Documents referred to herein, including all schedules and exhibits hereto and thereto, sets forth the entire understanding of the Parties relating to the subject matter hereof and thereof and supersedes all prior agreements and understandings among or between any of the Parties relating to the subject matter thereof.  To the extent there is any inconsistency between (i) a provision of the Transaction Agreement or another Transaction Document that pertains to the subject matter of this Amended IPLA and (ii) a provision of this Amended IPLA that is more specific or detailed with respect to such subject matter, then the provision of this Amended IPLA shall govern and control.  Otherwise, the provision of the Transaction Agreement, or of the other Transaction Document (provided it is not inconsistent with a more specific or detailed provision of the Transaction Agreement), shall govern and control to the extent of such inconsistency.

 

Section 15.15                      English Language Only.  This Amended IPLA is in the English language only, which language will be controlling in all respects, and all versions hereof in any other language will be for accommodation only and will not be binding upon the Parties hereto.  All communications to be made or given pursuant to this Amended IPLA will be in the English language.

 

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Section 15.16                      Further Assurances.  During and after the Term, a Party shall, at the request of the other Party: (i) execute, deliver, or cause to be executed or delivered, all such assignments, consents, documents or further instruments of transfer or license consistent with the provisions of this Amended IPLA; and (ii) take, or cause to be taken, all such other actions that the requesting Party may reasonably deem necessary or desirable in order for such Party to obtain the full benefits of this Amended IPLA and the transactions contemplated hereby.

 

Section 15.17                      Disclosure. The terms of this Amended IPLA are confidential information and shall not be disclosed by a Party to any Person that is not a Party or a Subsidiary of a Party without prior written consent from the other Party, except that nothing herein shall prevent a Party from (a) disclosing or acknowledging the existence of this Amended IPLA, the identity of the Parties, and the existence of Licensed IP (but not the particular Licensed IP), (b) disclosing the terms of this Amended IPLA (including the financial terms) in confidence to such Party’s legal counsel and professional advisors, tax preparers, accountants, auditors, insurers, and directors, (c) disclosing the terms of this Amended IPLA (including the financial terms) as required by any regulation, law, or court order, but only to the extent required to comply with such regulation, law, or order and only after providing reasonable advance notice to the other Party to allow such Party to contest such disclosure, or (d) disclosing in confidence to a third party affected by this Amended IPLA (e.g., a customer or potential successor party) the terms and conditions relevant to such third party, including the identity of particular Licensed IP.  The Parties acknowledge and agree that notwithstanding anything in this Amended IPLA to the contrary, Altaba Inc. (f/k/a Yahoo! Inc.) (“Altaba”) may file with the U.S. Securities and Exchange Commission a Form 8-K and other U.S. Securities and Exchange Commission forms summarizing the material terms of this Amended IPLA and otherwise complying with the requirements of such forms.  Altaba shall provide a draft of such Form 8-K to Purchaser at a reasonable time in advance of its filing and shall consider in good faith any comments from Purchaser thereto.

 

[Remainder of page intentionally blank]

 

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The Parties to this Amended IPLA have caused this Amended IPLA to be executed and delivered as of the date first written above.

 

	
 
    	
ALIBABA   GROUP HOLDING LIMITED,
    
	
 
    	
a Cayman Islands   registered company
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
浙江蚂蚁小微金融服务集团股份有限公司
    
	
 
    	
(ANT SMALL   AND MICRO FINANCIAL SERVICES GROUP CO., LTD.),
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
支付宝(中国)网络技术有限公司
    
	
 
    	
(ALIPAY.COM CO., LTD.),
    
	
 
    	
a Chinese limited   liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Second Amended and Restated Intellectual Property License Agreement]Exhibit 4.3

 

EXECUTION VERSION

 

AMENDED AND RESTATED COMMERCIAL AGREEMENT

 

This AMENDED AND RESTATED COMMERCIAL AGREEMENT, dated as of February 1, 2018 (the “Agreement”) is made and entered into by and between Alibaba Group Holding Limited (“Recipient”), on the one hand, and 浙江蚂蚁小微金融服务集团股份有限公司 (Ant Small and Micro Financial Services Group Co., Ltd. (formerly known as 浙江阿里巴巴电子商务有限公司 (Zhejiang Alibaba E-Commerce Co., Ltd.) and 浙江蚂蚁小微金融服务集团有限公司 (Zhejiang Ant Small and Micro Financial Services Group Co., Ltd.)) (collectively, “HoldCo”) and 支付宝(中国)网络技术有限公司 (Alipay.com Co., Ltd.) (“Provider”), on the other hand (HoldCo, Provider and Recipient are sometimes referred to herein individually as a “Party” and collectively as the “Parties”).

 

WHEREAS, Provider was formerly a subsidiary of Recipient and provided certain Services (as defined below) to Recipient’s Subsidiaries (as defined below);

 

WHEREAS, the Parties (and other parties named therein) entered into a Framework Agreement, dated as of July 29, 2011 (the “Framework Agreement”), setting forth the Parties’ agreements for the Provider’s independent pursuit of the Business (as defined below) under the ownership of HoldCo and other matters;

 

WHEREAS, in connection with the Framework Agreement, the Parties entered into a Commercial Agreement, dated as of July 29, 2011, as amended (the “2011 Commercial Agreement”), pursuant to which the Recipient and its Subsidiaries have the right to receive services from Provider and its Subsidiaries on the terms specified therein, effective as of the Effective Date (as defined below);

 

WHEREAS, the Parties (and other parties named therein) entered into the Share and Asset Purchase Agreement, dated August 12, 2014, as amended from time to time prior to the date of the Agreement (the “2014 Purchase Agreement”), pursuant to which the Framework Agreement was terminated;

 

WHEREAS, concurrently herewith, the Parties and certain other parties under the 2014 Purchase Agreement are amending the 2014 Purchase Agreement (as so amended, the “Purchase Agreement”) and, in connection therewith, the Parties now desire to also amend and restate the 2011 Commercial Agreement.

 

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:

 

1.                                      DEFINITIONS. For the purposes of this Agreement, in addition to the capitalized terms defined elsewhere in 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 Framework Agreement.

 

1.1                               “Acquired Business” means a Subsidiary acquired by Recipient or by a Subsidiary of Recipient after the Effective Date, 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 such that such Acquired Business becomes a direct or indirect Subsidiary of Recipient, or, with respect to any Recipient Party, that portion of such Recipient Party’s business that is acquired after the Effective Date through the purchase of all or substantially all of the assets of a third Person or of a third Person’s line of business, including an e-commerce storefront or marketplace.

 

 

1.2                               “Actions” means all actions, consents, determinations, decisions, directions, approvals, enforcement of rights, authorizations, registrations, declarations and filings specified in such agreements to be taken by, or with the unanimous approval of, the Independent Directors.

 

1.3                               “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person; provided that, for the purposes of this definition, “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.

 

1.4                               “Agreement” has the meaning set forth in the preamble.

 

1.5                               “Applicable Bank Fees” has the meaning set forth in Schedule 7.1.

 

1.6                               “Appointed Banks” has the meaning set forth in Schedule 7.1.

 

1.7                               “Approved Fee Rate” has the meaning set forth in Schedule 7.1.

 

1.8                               “Bank Fees” has the meaning set forth in Schedule 7.1.

 

1.9                               “Bank Funding Channel” has the meaning set forth in Schedule 7.1.

 

1.10                        “Base TPV” has the meaning set forth in Schedule 7.1.

 

1.11                        “Budgeted Service Costs” has the meaning set forth in Schedule 7.1.

 

1.12                        “Business” means the business of providing payment and escrow services, including but not limited to provision of (a) payment accounts, processing, clearing, settlement, network and merchant acquisition services; (b) pre-paid, credit or debit cards or accounts; (c) escrow accounts and processing; and (d) cash on delivery services, whether provided through online, mobile, electronic or physical means.

 

1.13                        “Calendar 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.

 

1.14                        “Claimant” has the meaning set forth in Section 15.2.

 

1.15                        “Confidential Information” has the meaning set forth in Section 9.1.

 

1.16                        “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.

 

1.17                        “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 Chinese laws relating to payment data security or state economic security) whether currently in force or enacted during the Term.

 

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1.18                        “Developed Services” has the meaning set forth in Section 2.4(a).

 

1.19                        “Disaster Recovery Plan” has the meaning set forth in Section 6.1.

 

1.20                        “Disclosing Party” has the meaning set forth in Section 9.1.

 

1.21                        “Effective Date” means January 1, 2012.

 

1.22                        “End Customer” means a seller, merchant or other provider of goods or services to Members, that makes use of or accesses the Services through a Recipient Party.

 

1.23                        “Final Payment Date” means the earlier of (a) Issuance Closing Date (as defined in the Purchase Agreement) and (b) the date upon which the Secured Obligations (as defined in the Purchase Agreement) have been satisfied and discharged in full.

 

1.24                        “Governmental Authority” means any instrumentality, subdivision, court, administrative agency, commission, official or other authority of any country, state, province, prefect, municipality, locality or other government or political subdivision thereof, or any stock or securities exchange, or any multi-national, quasi-national or self-regulatory or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

 

1.25                        “Highly Sensitive Information” means information confidential to Provider or its Subsidiaries in the following categories: (i) user data, including Personal Information, that is not anonymized or aggregated; and (ii) algorithms, Source Code, Object Code, 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 Business. “Highly Sensitive Information” shall not, however, include any information which: (a) is or becomes commonly known within the public domain other than by breach of this Agreement or any other agreement that Provider or any of its Subsidiaries has with any Person; (b) is obtained from a third Person (other than Provider or any of its Subsidiaries) who is lawfully authorized to disclose such information free from any obligation of confidentiality; (c) is independently developed without reference to or use of any Highly Sensitive Information; or (d) is known to Recipient or any of its Subsidiaries without any obligation of confidentiality prior to its receipt from Provider or any of its Subsidiaries).

 

1.26                        “HoldCo” has the meaning set forth in the preamble.

 

1.27                        “Impact Payment” has the meaning set forth in Schedule 7.1.

 

1.28                        “Independent Directors” means the Alibaba Independent Committee (as defined in the Purchase Agreement).

 

1.29                        “Initial Term” has the meaning set forth in Section 10.1.

 

1.30                        “Intellectual Property” means all:

 

(a)                                 patents, patent applications, and patent disclosures, including all provisionals, reissuances, continuations, continuations-in-part divisions, revisions, extensions, reexaminations and counterparts thereof, inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereto;

 

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(b)                                 trademarks, service marks, trade dress, logos, brand names, trade names, domain names and corporate names, and all goodwill associated therewith and all applications, registrations, and renewals in connection therewith;

 

(c)                                  copyrights, works of authorship and copyrightable works, including software, data and databases, website and other content, documentation and all applications, registrations, and renewals in connection therewith; and

 

(d)                                 trade secrets, know-how, information and/or technology of any kind (including processes, procedures, research and development, ideas, concepts, formulas, algorithms, compositions, production processes and techniques, technical data, designs, drawings, specifications, research records and records of inventions).

 

1.31                        “Intellectual Property License Agreement” means the Second Amended and Restated Intellectual Property License Agreement, dated the Issuance Closing Date (as defined in the Purchase Agreement), by and among, HoldCo, Provider and Recipient.

 

1.32                        “Intellectual Property Rights” means any and all rights with respect to Intellectual Property, throughout the world.

 

1.33                        “Interest Rate” means two percent (2%) plus the two (2)-year U.S. Treasury rate as published in The Wall Street Journal New York edition on the date in the United States that any Impact Payment becomes payable or if such rate ceases to be available or is not published, the most closely comparable rate.

 

1.34                        “Invoice” has the meaning set forth in Section 7.2(a).

 

1.35                        “Law” means any federal, state, territorial, foreign or local law, common law, statute, ordinance, rule, regulation, code, measure, notice, circular, opinion or executive order of any Governmental Authority.

 

1.36                        [Reserved]

 

1.37                        [Reserved]

 

1.38                        “Losses” mean any claims, actions, causes of action, judgments, awards, liabilities, losses, costs or damages (including reasonable attorneys’ fees and expenses but excluding lost profits, lost revenues, lost opportunities, cost of cover or consequential, indirect, incidental, punitive and other special damages, regardless of the legal theory and regardless of any notice regarding the possibility of such damages).

 

1.39                        “Mature Service” has the meaning set forth in Section 2.4(c).

 

1.40                        “Member” means a registered user of payment processing services offered by Provider or its Subsidiaries identified by a unique account ID issued by Provider or any of its Subsidiaries. Members include all End Customers.

 

1.41                        “Minimum Payment” has the meaning set forth in Section 10.3.

 

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1.42                        “New Services” has the meaning set forth in Section 2.4(b).

 

1.43                        “Non-Standard SLA Customer” means any of the Persons listed on Appendix 1 of Schedule 4.1.

 

1.44                        “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.

 

1.45                        “Off-Recipient Services” has the meaning set forth in Section 2.5.

 

1.46                        “Payment Processing Fee” has the meaning set forth in Section 7.1.

 

1.47                        “Person” means an individual, a partnership, a corporation, an association, a limited liability company, a joint stock company, a trust, a joint venture, an unincorporated organization, a group, a Governmental Authority or any other type of entity.

 

1.48                        “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 natural person as an individual, 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 or individual.

 

1.49                        “Personnel” means a Party’s directors, officers, employees, agents, independent contractors, permitted subcontractors and consultants. Subcontractors of Provider shall be deemed Personnel of Provider.

 

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

 

1.51                        “PRC” means the People’s Republic of China (for the purpose of this Agreement, not including Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan).

 

1.52                        “Provider Increase” has the meaning set forth in Schedule 7.1.

 

1.53                        “Provider Parties” has the meaning set forth in Section 2.1.

 

1.54                        “Receiving Party” has the meaning set forth in Section 9.1.

 

1.55                        “Recipient” has the meaning set forth in the preamble.

 

1.56                        “Recipient Decrease” has the meaning set forth in Schedule 7.1.

 

1.57                        “Recipient Group” has the meaning set forth in Section 12.1.

 

1.58                        “Recipient Parties” has the meaning set forth in Section 2.1.

 

1.59                        “Renewal Term” has the meaning set forth in Section 10.1.

 

1.60                        “Request” has the meaning set forth in Section 15.2.

 

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1.61                        “Respondent” has the meaning set forth in Section 15.2.

 

1.62                        “Residual Information” has the meaning set forth in Section 9.4.

 

1.63                        “Restricted Service” has the meaning set forth in Section 2.9.

 

1.64                        “Resumption Notice” has the meaning set forth in Section 2.7(b).

 

1.65                        [Reserved]

 

1.66                        “Service Credits” has the meaning set forth in Section 4.2(a).

 

1.67                        “Service Levels” has the meaning set forth in Section 4.1.

 

1.68                        “Services” means all actions, activities and operations of Provider Parties that enable End Customers to receive payments from Members in any manner offered by Provider Parties in connection with transactions effected through any service or offering of a Recipient Party, including but not limited to providing an available web or client-end application interface for End Customers to accept payment and for Members to fund their accounts and transfer payments, processing and settling such payments, and maintaining records of transactions and balances through and in the accounts of such End Customers and Members. Any services, functions, or responsibilities not specifically described in this definition that are within the scope of the Services, and/or that are inherent in, required for, implied by, or incidental to the proper performance and provision by Provider Parties of Services, shall also be deemed included within the Services. All improvements and upgrades to, extensions of, successors to or substitutes for any of the foregoing developed or offered by Provider Parties at any time during the Term shall be deemed included within the Services. “Services” includes Developed Services and New Services, each as defined in Section 2.4

 

1.69                        “Shared Services Agreement” means the Amended and Restated Shared Services Agreement, dated August 12, 2014, by and between Recipient and HoldCo.

 

1.70                        [Reserved].

 

1.71                        “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.

 

1.72                        “Subsidiary” means, with respect to any Person, each other Person in which the first Person (i) owns or controls, directly or indirectly, share capital or other equity interests representing more than fifty percent (50%) of the outstanding voting stock or other equity interests, (ii) holds the rights to more than fifty percent (50%) of the economic interest of such other Person, including interest held through a VIE Structure or other contractual arrangements, or (iii) has a relationship such that the financial statements of the other Person may be consolidated into the financial statements of the first Person under applicable accounting conventions.

 

1.73                        “Suspended Services” has the meaning set forth in Section 2.7(b).

 

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1.74                        “Systems” means a Provider Party’s or a Recipient Party’s, as applicable, 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.

 

1.75                        [Reserved]

 

1.76                        “Term” has the meaning set forth in Section 10.1.

 

1.77                        “Third Bank” has the meaning set forth in Schedule 7.1.

 

1.78                        “Third Party Claim” has the meaning set forth in Section 12.1.

 

1.79                        “Total Payment Volume” has the meaning set forth in Schedule 7.1.

 

1.80                        “Transaction Documents” has the meaning set forth in the Purchase Agreement.

 

1.81                        “Transition Services” has the meaning set forth in Section 2.8.

 

1.82                        “VIE Structure” means the investment structure a non-PRC investor uses when investing in a PRC company or business that typically operates in a regulated industry. Under such investment structure, the onshore PRC operating entity and its PRC shareholders enter into a number of Contracts with the non-PRC investor (or a foreign invested enterprise incorporated in the PRC) and/or its onshore WFOE pursuant to which the non-PRC investor achieves control of the onshore PRC operating entity and also consolidates the financials of the onshore PRC entity with those of the offshore non-PRC investor.

 

1.83                        “Weighted Average Bank Fee Rate” has the meaning set forth in Schedule 7.1.

 

1.84                        “WFOE” means wholly foreign owned enterprise formed under the Laws of the PRC.

 

2.                                      SERVICES

 

2.1                               Services. During the Term, Provider and the Subsidiaries of Holdco (collectively, the “Provider Parties”) shall provide the Services to Recipient and/or the Recipient’s Subsidiaries that are not Acquired Businesses, in each case as and to the extent requested by Recipient (the “Recipient Parties”). The Recipient Parties, and their primary domain names and “doing business as” names as of August 12, 2014 are listed in Schedule 2.1. Recipient shall provide Provider with notice from time to time of additional Subsidiaries that wish to become Recipient Parties. Each additional Recipient Party that is not an Acquired Business shall be entitled to receive Services hereunder as soon as practicably possible and Provider Parties shall promptly complete any integration work necessary to enable such Recipient Party’s receipt of Services. Prior to the Term, Provider shall continue providing Services to Recipient and the Recipient’s Subsidiaries in substantially the same manner as provided prior to the Effective Date. References to “Provider” in this Agreement shall be deemed to include the Provider Parties, and the Provider shall remain wholly liable for any acts and omissions of each Provider Party.

 

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2.2                               Services to Acquired Businesses. Notwithstanding anything to the contrary set forth in Section 2.1, if Recipient notifies Provider that an Acquired Business desires to receive Services then:

 

(a)                                 If the applicable Acquired Business is a customer of Provider at the time such Acquired Business is acquired by Recipient, then Provider shall continue to provide to such Acquired Business all Services provided by Provider to such Acquired Business prior to its acquisition by Recipient in accordance with the terms and conditions of the then-existing agreement(s) governing the provision thereof, for a period lasting at least the longer of (i) the then-current term of any such existing agreement between Provider and such Acquired Business and (ii) a period of one (1) year from the date of the closing of the transaction pursuant to which such Acquired Business is acquired by Recipient; and

 

(b)                                 If the applicable Acquired Business is not a customer of Provider at the time such Acquired Business is acquired by Recipient or if such Acquired Business is no longer entitled to receive Services pursuant to Section 2.2(a) or pursuant to its existing agreement(s) with Provider, Provider shall negotiate in good faith with Recipient as to the terms and conditions pursuant to which Provider will provide or continue to provide Services to such Acquired Business, such terms and conditions to be based on arm’s-length commercial terms and conditions typical in the market, and if Provider and Recipient agree on such terms and conditions (such agreement not to be unreasonably withheld), Provider will provide such Acquired Business with the Services in accordance therewith.

 

2.3                               Service Recipients. Provider shall take such actions as are reasonably required to facilitate usage of the Services by all Recipient Parties in accordance with this Agreement. References to “Recipient” in this Agreement shall be deemed to include the Recipient Parties; provided that the Recipient shall remain wholly liable for the acts and omissions of each Recipient Party.

 

2.4                               Additional Services.

 

(a)                                 Provider will ensure that, during the Term, all services developed by or for or offered by Provider or its Subsidiaries, other than Restricted Services (for so long as they are Restricted Services), that are within the scope of the Business but are not being provided to Recipient will, if requested by Recipient, be included in the Services provided to Recipient pursuant to this Agreement. Provider shall promptly notify Recipient when it offers or makes available any new services within the scope of the Business, and, if reasonably requested by Recipient and subject to Article 9, Provider shall promptly notify Recipient of any services already under development by or for Provider or its Subsidiaries but not yet offered or made available, subject to (i) any contractual confidentiality obligations of Provider to third Persons and (ii) after the Final Payment Date, preserving the confidentiality of non-public aspects of Provider’s product development roadmap that constitute trade secrets and the disclosure of which to Recipient in accordance with this Agreement would result in competitive harm to Provider. Upon Recipient’s request, Provider shall include such services when available, other than Restricted Services (for so long as they are Restricted Services), within the scope of Services offered to Recipient under the terms of this Agreement. Any such new service that is a Restricted Service when requested by Recipient will be included within the scope of Services offered to Recipient under this Agreement when such service ceases to be a Restricted Service. All services added to the Services pursuant to this Section 2.4(a) constitute “Developed Services.” If a Developed Service is initially provided to a Recipient Party prior to June 30 of a calendar year, prior to providing the Developed Service, the Approved Fee Rate for a Recipient Party receiving such Developed Services during the then-current calendar year will be adjusted in accordance with Schedule 7.1 to reflect any additional recurring expenses, subject to the unanimous approval of the Independent Directors (such approval not to be unreasonably withheld). If a Developed Service is initially provided to a Recipient Party on or after June 30 of a given calendar year, the Approved Fee Rate for the Recipient Party receiving such Developed Services will remain unchanged for the remainder of the then-current calendar year, but the Approved Fee Rate for the subsequent calendar year will be adjusted in accordance with Schedule 7.1 to account for additional recurring expenses of such Developed Services being provided, subject to the unanimous approval of the Independent Directors (such approval not to be unreasonably withheld). Provider shall have no obligation to provide Recipient or any Recipient Party any Developed Services if the adjusted Approved Fee Rate to account for the addition of Developed Services to the Services is not unanimously approved by the Independent Directors (such approval not to be unreasonably withheld).

 

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(b)                                 If, during the Term, Recipient desires to receive additional services within the scope of the Business that are not then offered by (and are not already under development by or for) Provider, then, upon Recipient’s request, Provider shall use commercially reasonable efforts to deliver such services and include and integrate them in the Services, except to the extent that (i) the development of such requested services would be commercially impracticable or (ii) the provision of such requested services by Provider would violate applicable Law (including cases in which Provider then lacks any regulatory license necessary under applicable Law for the provision or such requested services). All services added to the Services pursuant to this Section 2.4(b) constitute “New Services.” All actual development and non-recurring implementation costs incurred by Provider as a direct consequence of developing and providing a New Service (i.e., development and non-recurring implementation costs that would not have been incurred by Provider but for the development and implementation of the New Services due to a request from Recipient) to Recipient or any Recipient Party (“New Services Development Costs”) shall be borne by Recipient, and the payment terms for such New Services Development Costs shall be agreed to in good faith between the Parties. If a New Service is initially provided to a Recipient Party prior to June 30 of a calendar year, prior to providing the New Service, the Approved Fee Rate for a Recipient Party receiving such New Services for the then-current calendar year will be adjusted in accordance with Schedule 7.1 to reflect any additional recurring expenses of such New Services, subject to the unanimous approval of the Independent Directors (such approval not to be unreasonably withheld). If a New Service is provided to a Recipient Party on or after June 30 of a given calendar year, the Approved Fee Rate for the Recipient Party receiving such New Services will remain unchanged for the remainder of the then-current calendar year, but the Approved Fee Rate for the subsequent calendar year will be adjusted in accordance with Schedule 7.1 to account for the additional recurring expenses of such New Services, subject to the unanimous approval of the Independent Directors (such approval not to be unreasonably withheld). Provider shall have no obligation to provide Recipient or any Recipient Party any New Services if the Recipient Party has not paid the New Services Development Costs in full prior to the provision of such New Services or if the adjusted Approved Fee Rate to account for such New Services is not unanimously approved by the Independent Directors (such approval not to be unreasonably withheld). Provided that the New Services Development Costs are paid in full by Recipient, each New Service shall be exclusive to the Recipient Parties for a period of six (6) months from the date on which such New Service is first commercially launched by any Recipient Party. Provider shall not, and shall ensure that its Subsidiaries do not, provide the applicable New Service (or a service substantially similar thereto, regardless of name) to any customer that is not a Recipient Party for such period of six (6) months.

 

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(c)                                  Recipient and Provider will discuss in good faith the appropriate service levels to apply to each Developed Service and New Service, which service levels may be different from the Service Levels applicable to other Services. Unless Recipient and Provider agree to higher service levels, the service levels applicable to each Developed Service shall be no lower than the most-favorable service levels applicable to any other customer of Provider or its Subsidiaries with respect to such Developed Service (other than any Non-Standard SLA Customer). With respect to each New Service as to which a reasonably similar Mature Service (as defined below) exists in the PRC, unless Recipient and Provider agree to higher service levels, the service levels applicable to such New Service shall be no lower than the most-favorable service levels provided or required to be provided by the third Person provider of such Mature Service to any of its customers of such Mature Service. With respect to each New Service as to which no reasonably similar Mature Service exists in the PRC, the service levels applicable to such New Service will be as agreed by Provider and Recipient in good faith (such agreement not to be unreasonably withheld). If any New Service is at any time provided by Provider or any of its Subsidiaries to any third Person customer, then the service levels applicable to such New Service for Recipient shall in any event be no lower than the most-favorable service levels applicable to any other customer of Provider or its Subsidiaries with respect to such New Service. Failure of the Parties to agree on a service level for any Developed Service or New Service shall not affect Provider’s obligation to provide such Developed Service or New Service subject to all other applicable terms and conditions of this Agreement. As used herein, “Mature Service” means any service within the scope of the Business provided on a commercial basis in the PRC by any service provider, in connection with which such service provider processes or has processed an average of at least one hundred thousand (100,000) transactions per day for at least three (3) consecutive months during the twelve (12) month period prior to the date the New Service is first launched.

 

2.5                               Off-Recipient Services. The Parties acknowledge and agree that, separate and apart from the Services provided by Provider to Recipient Parties pursuant to this Agreement, Provider may solicit and separately provide to merchants and sellers, including End Customers of the Platform, doing business on the e-commerce marketplaces and store fronts operated by Recipient Parties, services similar to the Services hereunder for which such merchants and sellers will be directly billed by and pay fees to Provider (“Off-Recipient Services”). This Agreement shall not apply to Provider’s provision of Off-Recipient Services.

 

2.6                               No Exclusivity. This Agreement shall be non-exclusive, and any Party (and any Party’s Subsidiaries) may, subject to Section 2.4(b), contract with other Persons for the procurement or provision of comparable services. Provided that Provider is not in breach of any of its obligations hereunder, Recipient will deliver to Provider a single notice at least three (3) months prior to first making generally available to End Customers, on any e-commerce marketplace or store front operated by a Recipient Party, a third Person service that is reasonably comparable to the Services then being used by Recipient.

 

2.7                               Suspension and Resumption of Services.

 

(a)                                 Recipient may, with the unanimous approval of the Independent Directors, elect to suspend its receipt of all or any portion of the Services at any time during the Term, for any or no reason and for any period of time (including permanently), by providing Provider with at least one (1) year’s advanced written notice (a “Suspension Notice”). Within thirty (30) days following the effective date of any such suspension of receipt of Services hereunder by Recipient, Provider shall deliver to Recipient an Invoice for the last Calendar Quarter (or portion thereof) during which Services were provided by Provider, which Recipient shall pay in accordance with Section 7.2. Thereafter, Recipient will have no obligation to pay any Payment Processing Fee with respect to the suspended Services beyond those set forth in such Invoice for the duration of the suspension of such Services.

 

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(b)                                 Notwithstanding the foregoing, if, at any time after issuing a Suspension Notice pursuant to this Section 2.7, Recipient desires that Provider resume the provision of all or any of such Services hereunder, then Recipient may cancel such notice or, if the Services have been suspended, require that Provider resume the provision of all or any of such suspended Services (“Suspended Services”), by delivering notice to Provider (a “Resumption Notice”). Provision of any Suspended Services will be resumed no later than six (6) months after the date of the applicable Resumption Notice, subject to Section 2.7(c).

 

(c)                                  With respect to resumption of Suspended Services for use by a Recipient Party on any site other than the Taobao Marketplace (at the domain www.taobao.com) or the Tmall (at the domain www.tmall.com), no additional fees or charges (beyond the Payment Processing Fee due in consideration of the resumption of such Suspended Services in accordance with Section 7.1) will apply, regardless of the timing of delivery of the applicable Resumption Notice. With respect to the resumption of Suspended Services for use by a Recipient Party on the Taobao Marketplace (at the domain www.taobao.com) or the Tmall (at the domain www.tmall.com), the following will apply:

 

(i)                                    If Recipient delivers a Resumption Notice for such Suspended Services on or prior to the date that is three (3) months after the date of the suspension of such Suspended Services, subject to Section 2.7(d), no additional charge will apply to the resumption of the Suspended Services.

 

(ii)                                If Recipient delivers a Resumption Notice for such Suspended Services on a date that is after the end of such three (3)-month period, but on or prior to the date that is fifteen (15) months after the date of the suspension of such Suspended Services, resumption of such Suspended Services on the Taobao Marketplace and/or the Tmall, as the case may be, will be subject to Recipient’s payment of a resumption fee equal to the Payment Processing Fee paid by Recipient with respect to the Suspended Services used on the Taobao Marketplace and/or the Tmall, as the case may be, during the twelve (12) months preceding the date of suspension of such Suspended Services. Subject to Section 2.7(d), such resumption fee will be the only charge to Recipient in connection with the costs or expenses of Provider incurred in connection with resuming the provision of the Suspended Services on the Tmall or the Taobao Marketplace, as the case may be, and no fees, costs, expenses or other charges associated with such resumption (other than the resumption fee described in this Section 2.7(c)(ii)) will be charged to or due from Recipient in connection therewith.

 

(iii)                            If Recipient delivers a Resumption Notice for such Suspended Services on a date that is later than fifteen (15) months after the suspension of the applicable Services, resumption of such Suspended Services on the Taobao Marketplace and/or Tmall, as the case may be, will be subject to payment by Recipient of a resumption fee in an amount to be agreed by Recipient and Provider in good faith (which agreement will not be unreasonably withheld).

 

(d)                                 Upon Provider’s resumption of providing any Suspended Services hereunder, the applicable Recipient Party shall resume paying the Payment Processing Fee applicable to such Services in accordance with Section 7.1.

 

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2.8                               Transition Services. Provider shall provide to Recipient or a Recipient Party, upon Recipient’s request, reasonable assistance to facilitate the smooth transition of any of the Services (or any portion thereof) to a Recipient Party’s own service or a replacement service provider designated by Recipient (“Transition Services”). For clarity, any Transition Services requested by Recipient shall be deemed “Services.” To the extent there are not already service levels applicable to the Transition Services, the Parties will discuss and agree to the appropriate service levels applicable to such Transition Services, which service levels may be different from the Service Levels applicable to other Services but shall not be less favorable than the most-favorable service level applicable to any other customer of Provider or its Subsidiaries with respect to any services similar to the Transition Services. If the Parties agree to a service level for Transition Services, such agreement not to be unreasonably withheld, Provider will provide such Transition Services in accordance with that service level; provided that if the Parties are unable to agree to a service level applicable to the Transition Services, such Transition Services shall be provided by Provider in accordance with Section 4.1(b). Failure of the Parties to agree on a service level for Transition Services shall not affect Provider’s obligation to provide such Transition Services, provided that such Transition Services shall be subject to the other terms and conditions of this Agreement. Transition Services may include, as reasonably requested by Recipient, refunding to Recipients’ End Customers the balance of their accounts on the Platform or any service or offering of a Recipient Party using the Services, transferring the balance of such accounts to a Recipient Party or alternate service providers, mapping and converting data, transferring data or other information maintained by Provider to the relevant Recipient Party or to one or more third Persons designated by Recipient, in the manner, methods, format(s) and at the time(s) that Recipient reasonably requests, handling trailing transactions, and/or such other transition assistance as Recipient may reasonably request, but in all cases solely for the purpose of enabling a Recipient Party to receive services comparable to the Services from a third Person. Notwithstanding the foregoing, Provider has no obligation to provide any Recipient Party or any third Person with any (a) Highly Sensitive Information pursuant to this Section 2.8 other than data regarding Recipient Parties’ users to the extent (i) required for the purpose of engaging third Persons to provide services comparable to the Services (provided that such third Person shall not use such data for any other purpose), (ii) that disclosure of such data to a Recipient Party or 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 Recipient Party or 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) any other information or materials, to the extent that disclosure of such other information or materials to a Recipient Party or such third Person, as the case may be, would violate applicable Law.

 

2.9                               Restricted Services. Provider will have the right to provide a particular new service (i.e., a service that has not previously been provided by Provider or any of its Subsidiaries to any customer (including the Recipient Parties)) on an exclusive basis to a third Person customer and such customer’s Subsidiaries for a period of no longer than six (6) months from the first launch of such service, if and only if the following conditions are met (any such service provided on an exclusive basis to such a customer in accordance with this Section 2.9, for so long as permitted under this Section 2.9, a “Restricted Service”):

 

(a)                                 the Total Payment Volume processed by Provider for the customer receiving (or to receive) the new Restricted Service and such customer’s Affiliates (for all services provided to such customer and its Affiliates), during the Calendar Quarter immediately preceding the Calendar Quarter in which provision of the new Restricted Service will commence and for the duration of the provision of the new Restricted Service, does not exceed five percent (5%) of the combined Base TPV of the Taobao Marketplace (at the domain www.taobao.com) and the Tmall (at the domain www.tmall.com) during such Calendar Quarter and for the duration of the provision of the new Restricted Service; and

 

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(b)                                 the aggregate Total Payment Volume processed by Provider for all customers receiving (or to receive) Restricted Services and such customers’ Affiliates (for all services provided to such customers and their Affiliates), during the Calendar Quarter immediately preceding the Calendar Quarter in which provision of the new Restricted Service will commence and for the duration of the provision of the new Restricted Service, does not exceed ten percent (10%) of the combined Base TPV of the Taobao Marketplace (at the domain www.taobao.com) and the Tmall (at the domain www.tmall.com) during such Calendar Quarter and for the duration of the provision of the new Restricted Service; and

 

(c)                                  no customer (including such customer’s Affiliates) may receive more than one (1) Restricted Service at any one time.

 

Upon the earlier of (i) the date that is six (6) months after the first launch of a particular Restricted Service or (ii) the date on which any of the above conditions ceases to be true, the applicable service shall cease to be a Restricted Service, and the Recipient Parties will then and thereafter have the right to receive such service in accordance with the terms of this Agreement.

 

3.                                      PERFORMANCE OF SERVICES

 

3.1                               Manner of Performance. Without limitation to Section 4.1, Provider shall, at all times, ensure that the Services and Provider’s obligations hereunder are performed at the highest level of quality provided, or required to be provided, to or for any other customers of Provider or its Subsidiaries (other than the Non-Standard SLA Customers), and by appropriately trained and qualified Personnel in a timely, professional and workmanlike manner. Provider shall promptly notify Recipient upon becoming aware of any circumstances that could reasonably jeopardize the timely and successful performance of the Services or Provider’s obligations hereunder.

 

3.2                               Facilities; Personnel. Except as set forth in the Shared Services Agreement and the Intellectual Property License Agreement, or as otherwise expressly provided herein, Provider shall be responsible for providing all facilities, Personnel and other resources necessary to perform the Services. Provider shall manage, supervise and provide direction to its Personnel in connection with this Agreement, and shall cause them to comply with all obligations and restrictions applicable to Provider under this Agreement.

 

3.3                               Subcontracting. Until the Final Payment Date, Provider shall not subcontract the performance of all or any portion of the Services to any third Person without Recipient’s prior written consent given with the unanimous approval of the Independent Directors (such approval not to be unreasonably withheld), except (a) to Provider’s Affiliates or (b) with respect to merchant acquisition, customer service or software development services received by Provider from third Person vendors to facilitate the provision of Services and subject, in the case of any such software development services, to obtaining all license and other rights necessary to enable the Recipient Parties to receive and exploit the Services in accordance with this Agreement. Provider shall remain fully responsible and liable for the performance of all Services hereunder (even if performed, or failed to be performed, by a subcontractor), and shall ensure that no subcontractor may further subcontract the performance of any Services. Provider shall provide Recipient with prior written notice of each instance of the subcontracting of any of the Services (or any portion thereof) hereunder. Each subcontractor (and all directors, officers, employees, agents and independent contractors thereof) shall be deemed “Personnel” of Provider. Each subcontract entered into by Provider in connection with the performance of Services shall be in writing and shall not contain any provision that is inconsistent with the terms of this Agreement. Unless otherwise requested by Recipient, Provider shall be Recipient’s sole point of contact regarding this Agreement.

 

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3.4                               Cooperation. Provider shall, at its own cost, follow and comply with any reasonable instructions, directions or requests in connection with the performance of, and within the scope of, Services, given by Recipient which are consistent with the terms of this Agreement. Upon Provider’s reasonable request, Recipient shall use reasonable efforts to take such actions (including making available Systems interfaces and enabling Recipient’s Systems and web page integration) and provide Provider with such information and documentation (including product and service specifications) as is necessary to enable Provider to fulfill its obligations under this Agreement.

 

3.5                               Third Party Licenses and Cooperation. Provider acknowledges and agrees that its performance of Services hereunder may require certain third Person approvals, consents, services, licenses or sublicenses under or for use of third Person Intellectual Property or Intellectual Property Rights, or other third Person cooperation. Provider shall be responsible for obtaining and maintaining, and shall bear all costs of, any such approvals, consents, services, licenses or sublicenses, or other cooperation; provided, however, that if and as long as Provider is not in breach of any of its obligations under the Intellectual Property License Agreement, then Provider shall not be liable for any failure to obtain or maintain any approvals, consents, services, licenses or sublicenses of Recipient that Recipient is obligated to provide thereunder. Without limiting the generality of the foregoing, Provider shall be responsible for obtaining and maintaining, and shall bear all costs of, any regulatory licenses and approvals from Governmental Authorities that are (a) necessary or, in Recipient’s reasonable opinion (based on the advice of legal counsel), desirable for its provision of the Services, or (b) customary to be sought or obtained in connection with the operation of services reasonably comparable to the Services and/or businesses reasonably comparable to the Business. Upon Provider’s request, Recipient shall use reasonable efforts to provide Provider with information and documentation reasonably requested by Provider and necessary to fulfill Provider’s obligations pursuant to this Section 3.5, except to the extent that Recipient is prohibited from providing such information or documentation under applicable Law. During the Term, Provider shall promptly notify Recipient if Provider fails to maintain, or reasonably anticipates it will fail to maintain, any approval, consent, service, license or sublicense contemplated by this Section 3.5, and Provider shall use commercially reasonable efforts to promptly remedy any such failure to maintain any requirement under this Section 3.5 thereafter.

 

3.6                               Improvements. Provider shall, throughout the Term, ensure that the Services and Platform remain competitive in scope and quality, and current with, like services provided by any third Person provider of services reasonably comparable to the Services, including those services reasonably comparable to the Services that Provider then provides or is required to provide to or for any other customer (other than Recipient) of Provider. The evolution of the Services shall include at a minimum the use and integration into the Services of new functionality offered by Provider to any of its other customers of services reasonably comparable to the Services provided by Provider hereunder. If Provider improves, upgrades, or otherwise enhances its Systems, Provider shall promptly implement such enhanced Systems and other changes in the Platform and the Services as soon as, and in any event no later than, Provider provides any such improved Systems to any of its other customers. Notwithstanding the foregoing, Provider shall not change or modify the Platform or Services in any manner that would reasonably be expected to have a material adverse impact upon the Services or any Recipient Party’s or its End Customers’ use of the Services and/or Platform, in each case without Recipient’s prior written approval. This Section 3.6 shall not apply to a Restricted Service so long as it remains a Restricted Service.

 

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4.                                      SERVICE LEVELS

 

4.1                               Service Levels. Beginning as of the date on which Provider first delivers the applicable Service and continuing for the remainder of the Term, and without limiting its obligations under Section 3, Provider shall perform the Services in a manner that meets or exceeds the highest of (a) the applicable service level requirements then set forth in Schedule 4.1 hereto or applicable pursuant to Section 2.4(c), and (b) the highest performance and quality level that Provider then provides or is required to provide to or for any other customer (other than Recipient or any Non-Standard SLA Customer) of Provider or any of its Subsidiaries with respect to such Services (collectively, the “Service Levels”).

 

4.2                               Service Credits.

 

(a)                                 If, during a given day or such other measurement period as may be set forth in Schedule 4.1, Provider fails to perform any Service in accordance with all applicable Service Levels set forth therein, Recipient shall be entitled to receive the applicable credits or other remedies set forth in Schedule 4.1 (“Service Credits”). The Service Credits accrued during any Calendar Quarter shall be used to offset and reduce the Payment Processing Fee payable by the relevant Recipient Party to Provider for such Calendar Quarter pursuant to Section 7.2.

 

(b)                                 Notwithstanding the application of any Service Credits, except for those Service Level failures for which Service Credits are expressly stated in Schedule 4.1 as the sole and exclusive remedy of Recipient, Recipient shall also retain all other rights and remedies available to Recipient under the Transaction Documents or at law or in equity.

 

4.3                               Root Cause Analysis. Each time Provider fails to meet any Service Levels, Provider shall promptly: (a) conduct a root cause analysis of the failure and deliver to Recipient a written report identifying and describing in reasonable detail such root cause(s), (b) discuss with Recipient the root cause(s) of the failure and Provider’s position with regard to such root cause(s), (c) correct the problem and begin meeting such Service Level as soon as practicable, and (d) regularly advise Recipient of the status of such corrective efforts and respond promptly to any request by Recipient for an update regarding such efforts. Provider shall prioritize any root cause analysis performed hereunder at a level equal to or higher than that afforded to Provider’s testing or quality assurance investigations or activities conducted internally or for any other of Provider’s customers of services reasonably comparable to the Services. All Service Levels and applicable Service Credits remain in effect notwithstanding Provider’s subsequent correction of any performance problem.

 

4.4                               Review of Service Levels. The Parties shall review in good faith each then-current Service Level once during each calendar year to evaluate Provider’s performance under such Service Level, including any remedial steps Provider 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), and Provider shall promptly integrate any such improvements into the Services. Provider shall also use reasonable efforts to identify any processes used by Provider in connection with other customers that would benefit Recipient to improve the performance of Services hereunder against the Service Levels, and shall implement any methods of improving such performance against the Service Levels approved by Recipient. If Recipient identifies any Service Level issues prior to any scheduled Service Level review, it may require a meeting with Provider prior to the next scheduled Service Level review to discuss and determine a resolution for such issue, but no more than once per Calendar Quarter.

 

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4.5                               Service Level Updates and Improvements. If requested by Recipient, the then-current Service Levels shall be improved, and Schedule 4.1 shall be updated, from time to time but at least once per calendar year, in order to reflect the highest performance and quality levels then provided by Provider or any of its Subsidiaries to any customer (other than Recipient or any Non-Standard SLA Customer) of services reasonably comparable with the Services. Provider’s provision of Services shall satisfy or exceed the requirements of the then-current Service Level.

 

4.6                               Monitoring; Reporting. As part of the Services, Provider shall implement measurement and monitoring tools and procedures necessary to measure its performance of the Services against the Service Levels. Subject to the provisions of Section 8.2, Provider shall provide Recipient, or its auditors, with information and documentation regarding the measurement and monitoring tools necessary to verify compliance by Provider with the Service Levels, and shall provide Recipient, or its auditors, with such access to the measurement and monitoring tools as is necessary to conduct such analysis. Provider shall deliver to Recipient, on a Calendar Quarter and annual basis, reports regarding Provider’s ongoing performance under the Service Levels and the Service Credits granted or due to Recipient.

 

5.                                      INFORMATION SECURITY; DATA PROTECTION

 

5.1                               Security Standards. Provider shall implement and maintain physical and information security measures with respect to the Services, Personal Information, and all Platforms used in connection with the provision of Services or the hosting of Personal Information that (a) comply with all applicable Laws and applicable industry standards and (b) are consistent with best practices for the business activities in which it is engaged and applicable industry standards and practices. Provider shall implement promptly any reasonable additions, changes or adjustments to its security measures that are necessary to comply with applicable Laws or such applicable industry standards.

 

5.2                               Security Breaches. In the event that Provider or any Recipient Party experiences an actual or suspected material breach of physical or information security measures related to the Services or Personal Information, (a) the Recipient (in the case of a breach experienced by a Recipient Party) or Provider shall immediately report such breach to the senior management of the other Party, and (b) with respect to actual breaches, the Parties shall, subject to applicable Law, cooperate with each other regarding the timing and manner of notifications to Governmental Authorities and their respective individual End Customers and potential End Customers, Personnel and/or agents concerning a breach or potential breach of security. Each Party shall be responsible for its own costs incurred in connection with responding to any such breach, including the costs of implementing credit monitoring and other protective measures for affected Persons; provided that the Party suffering the security breach shall bear all such costs if such breach resulted from such Party’s violation of applicable Law, failure to comply with its obligations under this Article 5, or from its gross negligence or willful misconduct.

 

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5.3                               Viruses. At all times during the Term, Provider shall take commercially reasonable measures to prevent the introduction into Recipient’s Systems of any viruses or any 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 Recipient’s Systems or other information or property. Additionally, each of Provider and Recipient 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.

 

5.4                               Access to Facilities. To the extent that Recipient’s or Provider’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.

 

5.5                               Systems Policies. To the extent that Recipient’s (or its Subsidiaries’) or Provider’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 (i) comply with all applicable security policies and procedures that have been provided to such Personnel, (ii) not tamper with, compromise or circumvent any security or audit measures employed by the other Party, and (iii) 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.

 

5.6                               Response to Security Threats. Recipient and Provider may each take any steps reasonably necessary to protect the security and integrity of its respective Systems against security threats arising out of any interconnection between such Systems and those of the other Party, including termination of any such interconnection; provided that: (a) such Party shall take such steps in a manner designed not to adversely affect the performance of the Services, and to minimize any such adverse effect that could occur; and (b) if such steps result in any interruption in access or use of the Services, such Party shall restore such access or use as soon as reasonably practicable after such threat has been resolved. Without limiting the foregoing, if, at any time, Recipient or Provider determines that (i) the other Party or its Personnel has sought to circumvent, or has circumvented, any security policies or procedures communicated pursuant to Section 5.4, (ii) any unauthorized Personnel of the other Party has accessed its Systems, (iii) the other Party or any of its Personnel has engaged in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data, information (including Personal Information) or Systems, or (iv) any of the other Party’s Personnel poses a security threat, such Party may immediately suspend or terminate any such Personnel’s access to the Systems in addition to other rights or remedies it may have pursuant to this Agreement, and shall promptly notify the senior management of the other Party in writing of such action.

 

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6.                                      DISASTER RECOVERY

 

6.1                               Disaster Recovery Plan. Provider shall implement and maintain disaster recovery facilities and a written disaster recovery plan designed to ensure the continued provision of Services in accordance with this Agreement, notwithstanding any disaster or event which would otherwise adversely affect the provision of Services (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 Provider then provides or is required to provide to any other customer (other than Recipient) of Provider or any of its Subsidiaries. The Disaster Recovery Plan shall address the following objectives:

 

(a)                                 identify issues and problems arising in connection with disasters that could potentially disrupt Provider’s ability to provide the Services in both the short and long term;

 

(b)                                 develop, maintain and document containment measures that mitigate the risk of disruptions to the provision of Services resulting from such issues and problems; and

 

(c)                                  develop and maintain continuity of business procedures, including (i) declaration of an emergency, (ii) notification and escalation both within Provider and to Recipient; (iii) the recovery both on and off site of Services, data related to the Services, the Platform, and any applicable Systems; and (iv) an annual management review of the disaster recovery facilities and Disaster Recovery Plan.

 

6.2                               Implementation. Upon Provider’s discovery of circumstances requiring disaster recovery in connection with the Services, Provider shall implement the Disaster Recovery Plan and shall promptly notify Recipient of such circumstances. In the event that a disaster causes Provider to allocate limited resources between or among its customers, Provider shall allocate such resources to Recipient in a manner no less favorable to Recipient than Provider allocates such resources to its most favored customers.

 

7.                                      FEES AND PAYMENT

 

7.1                               Payment Processing Fees.

 

(a)                                 In consideration for the Services provided during the Term, each Recipient Party receiving Services shall pay to Provider, on a Calendar Quarter basis, a payment processing fee determined as set forth in Schedule 7.1 (the “Payment Processing Fee”).

 

(b)                                 With respect to all Off-Recipient Services provided by Provider during the Term, (i) Provider may negotiate the fees charged by Provider to merchants receiving Off-Recipient Services in Provider’s discretion, (ii) no Recipient Party shall be required to pay any Payment Processing Fee in connection with any Off-Recipient Services, and (iii) the Total Payment Volume processed by Provider in connection with Off-Recipient Services shall be excluded from the Base TPV for each Recipient Party.

 

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(c)                                  The Payment Processing Fee shall be subject to revision pursuant to the process set forth in Section 6 of Schedule 7.1.

 

7.2                               Payment Terms.

 

(a)                                 Within thirty (30) days following the end of each Calendar Quarter during the Term, Provider shall deliver to each Recipient Party (with a copy to Recipient) (i) an invoice for the Payment Processing Fee payable by such Recipient Party for such Calendar Quarter, and (ii) true and complete statements of the Base TPV actually processed by Provider as part of the Services provided to such Recipient Party during the applicable Calendar Quarter, including a detailed explanation of how such Base TPV and the applicable Payment Processing Fee were calculated (each such invoice and associated statements, an “Invoice”). Subject to Section 7.2(b), each Recipient Party shall pay, and Recipient shall cause each Recipient Party to pay, all undisputed amounts due pursuant to each Invoice within thirty (30) days after the applicable Recipient Party’s receipt thereof.

 

(b)                                 A Recipient Party may, with the unanimous approval of the Independent Directors, dispute any Invoice, or the Payment Processing Fee set forth therein, in whole or in part, it being understood that any undisputed amounts shall be paid when due in accordance with Section 7.2(a). The Recipient Party and Provider shall work together in good faith to resolve such dispute within thirty (30) days from the receipt of the relevant Invoice by the Recipient Party. If the resolution of such a dispute is that Recipient Party owes a payment of any amount to Provider or that Recipient Party’s payment was in excess of the actual Payment Processing Fees due, the Recipient Party or Provider, as applicable, shall pay such amount to the other Party promptly, and in any event within thirty (30) days after, the Recipient Party and Provider agree to such resolution. If a dispute regarding an Invoice is not resolved within such thirty (30)-day period, the dispute may be resolved by arbitration in accordance with Section 15.2. The existence of a dispute (pursuant to this Section 7.2(b) or otherwise) shall not excuse any Party from any other obligation under this Agreement, including the Recipient Party’s obligation to pay undisputed Payment Processing Fees and Provider’s obligation to continue to perform Services hereunder, unless and until this Agreement is rightfully terminated pursuant to Section 10.3.

 

7.3                               Representation Regarding Fee Statements. HoldCo hereby represents, warrants and covenants that, at the time of delivery, each Invoice shall be true and complete, will not include or omit any fact that renders the information therein misleading, and will be calculated in accordance with Section 7.1.

 

7.4                               Costs and Expenses. Except as expressly set forth in this Agreement, each Party shall be solely responsible for all costs and expenses incurred by it in connection with providing or receiving the Services. Without limiting the generality of the foregoing, Provider shall be solely responsible for all costs and expenses incurred by it in connection with obtaining any third Person licenses, approvals, consents or services as required hereunder or as otherwise may be necessary for Provider to deliver the Services in accordance with this Agreement.

 

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7.5                               Taxes.

 

(a)                                 The consideration payable to Provider pursuant to Section 7.1 shall, except as otherwise provided in this Section 7.5(a), exclude any and all taxes imposed on the sale of the Services, and any and all taxes otherwise imposed on, sustained or incurred with respect to, or applicable to, the Services; provided, that the applicable Recipient Party shall bear any and all business, sales, use, value added and other similar taxes imposed on the Payment Processing Fee, which taxes shall be payable by Recipient Party at the same time the related Payment Processing Fee is due pursuant to Section 7.2. Provider shall properly and timely collect from each Recipient Party and remit any such business, sales, use, value added and other similar taxes to the taxing authorities if required to do so by applicable Law.

 

(b)                                 Provider, on the one hand, and each Recipient Party, on the other hand, will cooperate and take any reasonably requested action which does not cause such Party to incur any material cost or inconvenience in order to minimize any business, sales, use, value added or other similar taxes imposed on the sale of the Services, including providing sales and use tax exemption certificates or other documentation necessary to support tax exemptions. Provider, on the one hand, and each Recipient Party, on the other hand, agrees to provide to the other such information and data as is reasonably requested from time to time, and to fully cooperate with the other, in connection with (i) the reporting of any business, sales, use, value added or other similar taxes payable pursuant to this Agreement, (ii) any audit relating to any business, sales, use, value added or other similar taxes payable pursuant to this Agreement, or (iii) any assessment, refund, claim or proceeding relating to any such business, sales, use, value added or other similar taxes.

 

8.                                      COMPLIANCE WITH LAW; AUDIT

 

8.1                               Compliance with Law. Provider shall ensure that the performance of its obligations hereunder, and its delivery of the Services, 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. To the extent required by applicable Law, Provider shall be responsible for notifying any Governmental Authority of this Agreement and of any modification hereto. In addition, Provider shall notify the Recipient Parties of any requirements under applicable Law that require disclosures with respect to the Services to be made on any site operated by or on behalf of any Recipient Party or that require any other change to any such site in connection with the Services, in each case to the extent such disclosure is required due to the nature of the Services. Recipient shall, upon Provider’s reasonable request, share information with Provider as necessary to enable Provider to satisfy its obligations under this Section 8.1.

 

8.2                               Reviews.

 

(a)                                 Provider shall maintain (and cause to be maintained) complete and accurate books and records for the purpose of supporting and documenting the accuracy of Invoices and the calculation of the Approved Fee Rates pursuant to Schedule 7.1 (including in comparison with Provider’s audited financial statements), including any financial, operating and market data with respect to any Developed Services or New Services, and (the accuracy of any New Services Development Costs, and as otherwise reasonably necessary to confirm Provider’s compliance with this Agreement. All such books and records will be retained at Provider’s, or its applicable Subsidiary’s, principal place of business for a period of at least three (3) years after the payments to which they pertain have been made. Provider’s books and records will be open for inspection and review (as set forth in this Article 8) during such three (3) year period for the purpose of verifying the accuracy of the payments and charges made hereunder and Provider’s compliance with this Agreement.

 

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(b)                                 Recipient’s external auditors shall have the right to conduct (and Recipient shall cause Recipient’s external auditors to so conduct, including when requested to do so by the Independent Directors), at Recipient’s own cost, periodic reviews to confirm: (i) Provider’s compliance with this Agreement; and (ii) the accuracy of Invoices and any financial, operating and market data used to determine the Approved Fee Rate with respect to the Services (including any Developed Services or New Services) pursuant to Schedule 7.1 (including in comparison with Provider’s audited financial statements), and (iii) the accuracy of any New Services Development Costs. The scope of the review referred to in clause (ii) of the preceding sentence shall be set forth in an auditor’s review instruction letter (“Auditor’s Review Instructions”) which Recipient shall provide to the external auditor performing such review. Any review conducted pursuant to this Section 8.2 shall be conducted by an independent, external internationally-recognized firm of Recipient’s choice with appropriate qualifications and experience in the PRC conducting reviews of this nature; with respect to review of the matters set forth in clause (ii), such external auditor shall be an internationally-recognized, independent accounting firm of Recipient’s choice. Before beginning its review, the firm selected by Recipient to conduct the review shall execute a confidentiality agreement with Provider, the terms of which shall not frustrate or impede the purpose of the review or the disclosure of the results thereof to Recipient. The auditors shall create a detailed written report of the results and findings of each review, and simultaneously provide copies of the report to both the Recipient and Provider. The auditor’s report shall limit the disclosure to Recipient of information reviewed in connection with the review to the conclusions of the reviews, the determination of the auditor in connection therewith (including as to whether the Payment Processing Fees have been appropriately invoiced and paid), and the basis for such conclusions. The auditor shall not disclose any Highly Sensitive Information that, if disclosed to Recipient in accordance with this Agreement, would cause Provider competitive harm, and shall not disclose any information to the extent disclosure of such information to Recipient in accordance with this Agreement would violate applicable Law.

 

(c)                                  Provider may dispute the results of a review conducted pursuant to Section 8.2(b), in which case the Parties shall work together in good faith to resolve such dispute within thirty (30) days of Recipient’s demand for compensation or reimbursement arising out of the result of such review. If the Parties are unable to resolve any such dispute after such thirty (30)-day period, Provider may commence arbitration pursuant to Section 15.2 of the Agreement; provided, however, that commencing arbitration will not excuse Provider from paying any amounts due to Recipient or any other Recipient Party.

 

(d)                                 Recipient will, through its external auditors, conduct reviews under Section 8.2(b) no more than once per year, unless any review reveals any breach by Provider of any terms or conditions of this Agreement, or any material inaccuracy with respect to Invoices or the costs used in determining the Approved Fee Rate, in which case, Recipient may, through its external auditors, conduct one (1) additional review in the following twelve (12) months. Recipient’s external auditors shall conduct all reviews during normal business hours and shall endeavor to conduct them in a manner that does not unreasonably interfere with Provider’s business operations. Provider shall reasonably cooperate with Recipient’s auditors in connection with any review under Section 8.2(b), including by providing Recipient’s auditors with access to all financial and accounting books and statements, management and operating data, records, working papers of Provider’s auditors (to the extent permitted by such auditors, provided that Provider shall not withhold any consents necessary to permit Provider’s auditors from providing access to such working papers), accounts, financial statements, Systems, facilities, operations, and management Personnel and other Personnel, but only as reasonably necessary for the purposes set forth in Section 8.2(b), and ensure that its Personnel cooperate with any such review and all other reasonable requests by Recipient’s auditors for additional information or documentation related to such review. For clarity, Provider shall not be required pursuant to this Section 8.2 to disclose to Recipient any Highly Sensitive Information that, if disclosed to Recipient in accordance with this Agreement, would cause Provider competitive harm, or to disclose to Recipient or Recipient’s auditors any information to the extent disclosure of such information to Recipient or Recipient’s auditors, as the case may be, in accordance with this Agreement, would violate applicable Law.

 

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(e)                                  If any review reveals that Recipient or any Recipient Party overpaid any amount due hereunder (except for any portion thereof disputed in good faith), Provider shall promptly refund the overpayment to Recipient, subject to Section 8.2(d) hereof. If any such overpayment amounts to five percent (5%) or more of the total amount payable by Recipient or such Recipient Party (as the case may be) for any period covered by the review, but not less than one Calendar Quarter, or if a review reveals any material non-compliance or material breach by Provider of any terms or conditions of this Agreement, Provider shall reimburse Recipient for the cost of such review.

 

9.                                      CONFIDENTIALITY

 

9.1                               Confidential Information. Each of Recipient (and its Affiliates) and Provider (and its Affiliates) (in such capacity, the “Receiving Party”) shall use the same standard of care to prevent the public disclosure and dissemination of the Confidential Information of the other Party (in such capacity, the “Disclosing Party”) as the Receiving Party uses to protect its own comparable Confidential Information. “Confidential Information” of Disclosing Party means confidential, non-public 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 confidential, non-public materials and information, regarding the Disclosing Party and its Affiliates, or their representatives or customers, disclosed by the Disclosing Party to the Receiving Party under or in connection with this Agreement, whether orally, electronically, in writing, or otherwise, including copies thereof, in each case to the extent expressly marked in writing as “Confidential,” or, if disclosed orally, identified as confidential at the time of disclosure and set forth or summarized in a written document expressly marked as “Confidential” delivered to the Receiving Party no later than thirty (30) days after the date of the initial oral disclosure thereof, or, if not so marked or identified as “Confidential,” shall nevertheless be regarded as Confidential Information if a reasonable person under the circumstances would know that such information or materials are considered confidential information by the Disclosing Party. Notwithstanding the foregoing, (a) Confidential Information may be disclosed on an as needed basis to personnel or subcontractors (in the case of Provider, solely as permitted pursuant to Section 3.3) of the Receiving Party solely as and to the extent required for the purpose of fulfilling the Receiving Party’s obligations or exercising the Receiving Party’s rights under any Transaction Document (including, in the case Recipient and its Subsidiaries, its rights to contract with other Persons for the procurement or provisions of services for the benefit of Recipient comparable to the Services pursuant to Section 2.6), and (b) nothing in this Agreement shall be deemed to prevent Recipient or any of its Subsidiaries from engaging in the businesses of Recipient and such Subsidiaries. Nonetheless, each Receiving Party (x) shall limit the disclosure of the Disclosing Party’s Confidential Information to third Persons to what is necessary for a reasonable purpose in the conduct of the business of the Receiving Party and its Subsidiaries and (y) shall not disclose any of the Disclosing Party’s Highly Sensitive Information to any third Persons, except user data to the extent that (i) disclosure of such data is required for the purpose of engaging a third Person to provide services comparable to the Services (provided that such third Person shall not use such data for any other purpose), (ii) disclosure of such data to such third Person in accordance with this Agreement does not violate the terms of use or terms of service under which such data was collected, and (iii) disclosure of such data to such third Person in accordance with this Agreement does not violate applicable Law. Each Receiving Party shall take all reasonable steps to ensure that any such Confidential Information of Disclosing Party disclosed to any Personnel or subcontractors in accordance with this Section 9.1 is treated as confidential by the Personnel and subcontractors to whom it is disclosed, and shall require the foregoing to enter into an agreement which imposes confidentiality obligations no less protective of the Confidential Information than those imposed under this Agreement.

 

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9.2                               Permitted Disclosures. The provisions of this Article 9 shall not apply to any Confidential Information which: (a) is or becomes commonly known within the public domain other than by breach of this Agreement or any other agreement that the Disclosing Party has with any Person; (b) is obtained from a third Person who is lawfully authorized to disclose such information free from any obligation of confidentiality; (c) is independently developed without reference to or use of any Confidential Information of the Disclosing Party; or (d) is known to the Receiving Party without any obligation of confidentiality prior to its receipt from the Disclosing Party.

 

9.3                               Disclosure in Compliance With Law. Nothing in this Article 9 shall prevent the Receiving Party from disclosing Confidential Information where it is required to be disclosed by judicial, administrative, governmental, or regulatory process in connection with any action, suit, proceeding or claim, or otherwise by applicable Law; provided, however, that the Receiving Party shall, if legally permitted, give the Disclosing Party prior reasonable notice as soon as possible of such required disclosure so as to enable the Disclosing Party to seek relief from such disclosure requirement or measures to protect the confidentiality of the disclosure.

 

9.4                               Residuals. 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 disclosed to it under this Agreement. “Residual Information” means information in non-tangible form which may be retained in the memory of Personnel of the Receiving Party who have had access to the Confidential Information of the Disclosing Party. 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. For the avoidance of doubt, the foregoing does not constitute a license under any patent or otherwise affect any Party’s (or its Subsidiaries’) rights or obligations under Section 9.9 of the Purchase Agreement.

 

9.5                               Unauthorized Disclosures. The Receiving Party shall immediately inform the Disclosing Party in the event that it becomes aware of the actual or suspected possession, use, or knowledge of any of the Confidential Information of the Disclosing Party by any Person not authorized to possess, use, or have knowledge of the Confidential Information and shall, at the request of the Disclosing Party, provide such reasonable assistance as is required by the Disclosing Party to mitigate any damage caused thereby.

 

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10.                               TERM AND TERMINATION

 

10.1                        Term. This Agreement shall commence on the Effective Date and shall remain in full force and effect for an initial term of fifty (50) years (the “Initial Term”). Thereafter, this Agreement shall automatically renew for additional renewal terms of fifty (50) years each (each a “Renewal Term”), unless Recipient, with the unanimous approval of the Independent Directors, provides Provider with notice of non-renewal at least one (1) year prior to the end of the Initial Term or then-current Renewal Term, as applicable. 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. For clarity, the Term shall not be affected by the occurrence of the Final Payment Date.

 

10.2                        Termination by Recipient. Recipient may, with the approval of the Independent Directors, terminate this Agreement, for any or no reason, at any time upon one (1) year’s prior written notice to Provider specifying that it is a notice hereunder and that Recipient’s decision to so terminate this Agreement, and the written notice, have been reviewed and approved by the Independent Directors.

 

10.3                        Termination by Provider Only for Certain Non-Payments.

 

(a)                                 Provider shall have no right to terminate this Agreement or any of the Services other than for non-payment of amounts owed and only pursuant to this Section 10.3(a). If, for any disputed Invoice, the Parties have not resolved the dispute within thirty (30) days after the original payment due date of such Invoice pursuant to Section 7.2, Provider shall provide the Recipient Party with written notice of the failure to pay such disputed Payment Processing Fees when due (which notice shall specify the possibility of termination of this Agreement) (a “Payment Default Notice”), with copies to Recipient and the Independent Directors at the addresses specified for notices in Section 16.14. If after sixty (60) days after the date of the Payment Default Notice, (i) the Recipient Party has failed to pay either the disputed portion of the Invoice or the Minimum Payment (defined below) and (ii) the Independent Directors have voted in favor of an Action to withhold both such payments or have voted against all Actions to pay either payment, or abstained from voting at, or failed to attend, all duly called board meetings of Recipient during such sixty (60) period called to discuss such Payment Default Notice at which it would have been possible to vote in favor of an Action to pay either such payment elected by the Independent Directors, then Provider shall have the right to terminate this Agreement or any of the Services upon written notice to Recipient. Payment of the Minimum Payment will not affect Provider’s or Recipient’s right under Section 7.2 to commence arbitration pursuant to Section 15.2 for the resolution of any dispute over any disputed Invoice.

 

(i)                                    A “Minimum Payment” in connection with any Invoice in dispute between the Parties is an amount equal to the difference between the (x) lesser of (1) the full amount payable under such Invoice, and (2) an amount equal to the average amount payable by the applicable Recipient Party to Provider as set forth in the applicable Invoices during the immediately preceding four (4) Calendar Quarters less (y) any undisputed portion of such Invoice previously paid by the Recipient Party.

 

(b)                                 Except as expressly set forth in Section 10.3(a), Provider’s sole and exclusive remedy with respect to any breach will be to seek monetary damages for the breach or injunctive or other equitable remedies to cure, limit and restrain any breach or threatened breach of Section 9. In no event may Provider terminate or suspend, or fail to provide, any Services it is obligated to provide pursuant to this Agreement unless this Agreement has been terminated in accordance with this Section 10.3.

 

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

 

(a)                                 Transition. During a transition period requested by Recipient of not more than six (6) months prior to the effective date of such termination, Provider shall provide the Transition Services as set forth in Section 2.8 in addition to the Services as requested by any Recipient Party. Unless otherwise agreed in writing by the Parties, the terms and conditions of this Agreement shall continue to apply to the provision of all such Services until the expiration of the Agreement. During the transition period and until the expiration of the Agreement, Recipient shall continue to pay the Payment Processing Fee to Provider, and each Party shall be responsible for its own costs and expense in accordance with Section 7.4.

 

(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 Payment Processing Fee, any Service Credits and the Impact Payment.

 

10.5                        Survival. Article 1, Section 2.7(a), Section 7.2, Section 8.2 (for six (6) months after the payment due date of the final Invoice issued in accordance with this Agreement), Article 9, Section 10.3, Section 10.4, this Section 10.5, Section 11.3, Article 12, Article 13, Article 14, Article 15 and Article 16 shall survive any termination of this Agreement. Any and all accrued liabilities shall survive any termination of this Agreement.

 

11.                               REPRESENTATIONS AND WARRANTIES

 

11.1                        Mutual Representations and Warranties. HoldCo, on behalf of itself and the Provider Parties, hereby represents and warrants to Recipient, and Recipient, on behalf of itself and the other Recipient Parties, hereby represents and warrants to Provider, that:

 

(a)                                 The warranting Party and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, with all requisite corporate or other entity power and authority to own, operate and lease its properties and assets and to carry on its business as currently conducted, and is duly qualified to do business and is in good standing (where applicable) as a foreign corporation in each jurisdiction where the ownership, operation or leasing of its properties and assets or the conduct of its business as currently conducted requires such qualification, except for those jurisdictions where the failure to be so qualified or to be in good standing, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the warranting Party or any of its Subsidiaries; and

 

(b)                                 The warranting Party has all necessary power and authority to make, execute and deliver this Agreement on behalf of itself and its Subsidiaries, and to perform, and to cause its Subsidiaries to perform, all of the obligations to be performed by it or its Subsidiaries hereunder. The making, execution, delivery and performance by the warranting Party of this Agreement, and the performance of the Agreement and the agreement so to perform, has been duly and validly authorized by all necessary corporate action on the part of such Party and its Subsidiaries. This Agreement has been duly and validly executed and delivered by such Party, and assuming the due authorization, execution and delivery by the other Party, this Agreement will constitute the valid, legal and binding obligation of such Party and its Subsidiaries, enforceable against it and them in accordance with its terms, except as the enforceability hereof may be limited by bankruptcy, insolvency, moratorium or other similar Law, now or hereafter in effect, relating to or affecting the rights of creditors generally and the availability of specific remedies may be limited by legal and equitable principles of general applicability.

 

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11.2                        Representations and Warranties by Provider. HoldCo, on behalf of itself, and the Provider Parties, hereby represents and warrants to Recipient as follows:

 

(a)                                 The Services and the Platform, and the use thereof in accordance with this Agreement, do not and will not infringe any Intellectual Property Right of any third Person; and

 

(b)                                 The Services, as provided to Recipient and its Subsidiaries, comply and will comply with all applicable Laws; and,

 

(c)                                  The Services are and will be free of material defects and errors.

 

11.3                        Disclaimer of Warranty. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 7.3 AND 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.

 

12.                               INDEMNIFICATION

 

12.1                        Provider’s Indemnification of Recipient. HoldCo agrees, on behalf of itself, Provider and Provider’s Subsidiaries, to defend, indemnify, and hold harmless Recipient, its Subsidiaries, and its and their respective directors, officers, employees, representatives and agents (“Recipient Group”) from and against any and all Losses arising out of or resulting from (a) Provider’s performance of the Services, or other acts or omissions in connection therewith, following the Effective Date, or the use by a Recipient Party or an End Customer of the Services in the manner intended (excluding any use by a Recipient Party or End Customer that violates applicable Law due to no fault of Provider or 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 the representations or warranties set forth in Article 11, or (c) any actions or failures to act for which HoldCo is deemed liable pursuant to Section 16.1.

 

12.2                        Indemnification Procedures.

 

(a)                                 Promptly after receipt by Recipient of notice of the commencement or threatened commencement of any action, suit, proceeding, claim, arbitration, investigation or litigation, whether civil or criminal, at Law or in equity, made or brought by a third Person (each a “Third Party Claim”), or after becoming aware of having incurred any other Losses, in respect of which Recipient will seek indemnification pursuant to Section 12.1, Recipient shall notify Provider of such Third Party Claim in writing. No failure to so notify Provider shall relieve it of its obligations under this Agreement, except to the extent that it can demonstrate that it was materially prejudiced by such failure.

 

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(b)                                 Provider shall have thirty (30) days after receipt of notice to elect, at its option, to assume and control the defense of, at its own expense and by its own counsel, any such Third Party Claim, and shall be entitled to assert any and all defenses available to Recipient or the Recipient Group to the fullest extent permitted under applicable Law; provided, however, that Provider shall have no right to assume and control, and Recipient shall at all times remain in sole control of (including selecting counsel), the defense of any Third Party Claim related to taxes. If Provider shall undertake to compromise or defend any such Third Party Claim, it shall promptly, but in any event within ten (10) days of the receipt of notice from Recipient of such Third Party Claim, notify Recipient of its intention to do so, and Recipient shall cooperate fully with Provider and its counsel in the compromise of, or defense against, any such Third Party Claim; provided, however, that (A) Provider shall not settle, compromise or discharge, with respect to, any such Third Party Claim without Recipient’s prior written consent (which consent shall not be unreasonably withheld, delayed, or conditioned) and (B) Provider shall not admit any liability with respect to any such Third Party Claim without Recipient’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned.

 

(c)                                  Notwithstanding an election by Provider to assume the defense of any Third Party Claim, Recipient and/or the applicable member of the Recipient Group shall have the right to employ separate counsel and to participate in the defense of such Third Party Claim, and Provider shall bear the reasonable fees, costs and expenses of such separate counsel if (1) Recipient shall have determined in good faith that an actual or potential conflict of interest makes representation by the same counsel or the counsel selected by Provider inappropriate, or (2) Provider shall have authorized Recipient to employ separate counsel at Provider’s expense.

 

(d)                                 Recipient, Provider, and their respective counsel shall cooperate in the defense of any Third Party Claim subject to Section 12.1, keep such persons informed of all developments relating to any such Third Party Claims, and provide copies of all relevant correspondence and documentation relating thereto, except as necessary to preserve attorney-client, work product and other applicable privileges. All reasonable costs and expenses incurred in connection with Recipient’s cooperation shall be borne by Provider. In any event, Recipient and/or the applicable member of the Recipient Group shall have the right at its own expense to participate in the defense of such asserted liability.

 

(e)                                  If Provider does not elect to defend a Third Party Claim pursuant to Section 12.2(b), or does not defend such Third Party Claim in good faith, Recipient and/or the applicable member of the Recipient Group shall have the right, in addition to any other right or remedy it may have hereunder, at Provider’s expense, to defend such Third Party Claim; provided, however, that Recipient and/or the applicable member of the Recipient Group shall not settle, compromise or discharge, or admit any liability with respect to, any such Third Party Claim without Provider’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned.

 

12.3                        Infringement Remedies. In addition to any other rights of or remedies available to Recipient, if the Services, Provider’s Systems, the Platform or any other Intellectual Property used or provided by Provider in connection therewith is found or alleged to infringe or misappropriate any Intellectual Property Right of any third Person, or, in Provider’s or Recipient’s reasonable opinion is likely to be so found, then Provider shall, at Provider’s option and sole expense: (a) modify such infringing Services, Platform or Intellectual Property to make it non-infringing, provided that such modification does not adversely affect the functionality, completeness, or accuracy of any of the Services or any Service Levels applicable thereto; (b) procure for Recipient Parties and their End Customers the right to continue using such Services, Platform or Intellectual Property; or, if neither (a) nor (b) are possible within a reasonable time, (c) replace such Services, Platform or Intellectual Property with substantially equivalent services or Intellectual Property that are non-infringing. If, after using commercially reasonable efforts, Provider determines that it cannot implement one of the foregoing steps (a), (b), or (c) within a reasonable time, Provider shall promptly notify Recipient. Upon receiving any such notice, Recipient may, at its option and without limitation to any other rights of or remedies available to Recipient, either (i) cease using the infringing Services, Platform or Intellectual Property and adjust its use of the Services appropriately, or (ii) if such adjustment is not possible and/or the Services are or would be materially adversely affected, terminate this Agreement upon thirty (30) days’ written notice to Provider.

 

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13.                               INJUNCTIVE RELIEF. The Parties have agreed that the Services will be provided to the Recipient Parties in accordance with this Agreement and it is an essential element of the bargain between the Parties (in the absence of which this Agreement and the other Transaction Documents would not have been entered into) that Provider will provide such Services as described in this Agreement notwithstanding any dispute between the Parties, except in the case of a rightful termination as set forth in Article 10. Therefore, Recipient Parties shall be entitled to equitable relief, including injunctive relief, in addition to all of its other rights and remedies hereunder, at Law or in equity, to enforce the provisions of this Agreement.

 

14.                               LIMITATION OF LIABILITY.

 

14.1                        Non-Direct Damages. IN NO EVENT WILL A PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE SERVICES, HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

14.2                        Liability Cap. EXCEPT WITH RESPECT TO ANY LIABILITY ARISING OUT OF OR IN CONNECTION WITH (i) ANY WILLFUL OR INTENTIONAL BREACH OF THIS AGREEMENT, OR (ii) ANY THIRD PARTY CLAIM SUBJECT TO INDEMNIFICATION PURSUANT TO ARTICLE 12, IN NO EVENT SHALL ANY PARTY’S OR ITS AFFILIATES’ LIABILITY TO ANY OTHER PARTY OR ITS AFFILIATES EXCEED, IN THE AGGREGATE, FOR ANY AND ALL CLAIMS UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE SERVICES, AN AMOUNT EQUAL TO ONE HUNDRED FIFTY PERCENT (150%) OF THE TOTAL PAYMENT PROCESSING FEES PAYABLE BY THE RECIPIENT PARTIES TO PROVIDER FOR SERVICES PROVIDED IN THE FOUR (4) COMPLETE CALENDAR QUARTERS PRECEDING THE DATE OF THE EVENT GIVING RISE TO THE CLAIM UPON WHICH LIABILITY IS BASED.

 

14.3                        Claims Against Recipient. Before HoldCo, Provider or any of their respective Subsidiaries (each, an “Asserting Party”) asserts a claim for breach of this Agreement by Recipient or any of its Subsidiaries, the Asserting Party will provide written notice to the Independent Directors of the breach or alleged breach (a) setting forth all claims and a description of the breach or alleged breach giving rise to such claims and (b) specifying that such notice is given in accordance with this Section 14.3 in anticipation of bringing a claim for breach of this Agreement. If after thirty (30) days after the date of such written notice to the Independent Directors specifying such breach or alleged breach, (i) Recipient or any of its Subsidiaries, as applicable, fails to cure such breach (if such breach is capable of being cured) and (ii) the Independent Directors have voted in favor of an Action to direct a Recipient or Recipient Party not to cure such breach or have voted against all Actions to cure such breach, or abstained from voting at, or failed to attend, all duly called board meetings of Recipient during such thirty (30) period called to discuss such notice at which it would have been possible to vote in favor of an Action to direct Recipient or a Recipient Party, as applicable, cure such breach elected by the Independent Directors, then the Asserting Party shall have the right to assert such claim for breach of this Agreement.

 

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15.                               GOVERNING LAW; DISPUTE RESOLUTION

 

15.1                        Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THAT COULD LEAD TO THE APPLICATION OF ANY LAW OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

 

15.2                        Arbitration.

 

(a)                                 Any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement, including the breach, termination or validity hereof, shall be finally resolved exclusively by arbitration. The arbitration shall be conducted in accordance with the rules of the International Chamber of Commerce (the “ICC”) in effect at the time of the arbitration, except as they may be modified by mutual agreement of the Parties. The seat of the arbitration shall be Singapore, provided, that, the arbitrators may hold hearings in such other locations as the arbitrators determine to be most convenient and efficient for all of the Parties to such arbitration under the circumstances. The arbitration shall be conducted in the English language.

 

(b)                                 The arbitration shall be conducted by three arbitrators. The Party (or the Parties, acting jointly, if there are more than one) initiating arbitration (the “Claimant”) shall appoint an arbitrator in its request for arbitration (the “Request”). The other Party (or the other Parties, acting jointly, if there are more than one) to the arbitration (the “Respondent”) shall appoint an arbitrator within thirty (30) days of receipt of the Request and shall notify the Claimant of such appointment in writing. If within thirty (30) days of receipt of the Request by the Respondent, either Party has not appointed an arbitrator, then that arbitrator shall be appointed by the ICC. The first two arbitrators appointed in accordance with this provision shall appoint a third arbitrator within thirty (30) days after the Respondent has notified Claimant of the appointment of the Respondent’s arbitrator or, in the event of a failure by a Party to appoint, within thirty (30) days after the ICC has notified the Parties and any arbitrator already appointed of the appointment of an arbitrator on behalf of the Party failing to appoint. When the third arbitrator has accepted the appointment, the two arbitrators making the appointment shall promptly notify the Parties of the appointment. If the first two arbitrators appointed fail to appoint a third arbitrator or so to notify the Parties within the time period prescribed above, then the ICC shall appoint the third arbitrator and shall promptly notify the Parties of the appointment. The third arbitrator shall act as Chair of the tribunal.

 

(c)                                  The arbitral award shall be in writing, state the reasons for the award, and be final and binding on the Parties. The award may include an award of costs, including, without limitation, reasonable attorneys’ fees and disbursements. In addition to monetary damages, the arbitral tribunal shall be empowered to award equitable relief, including, but not limited to, an injunction and specific performance of any obligation under this Agreement. The arbitral tribunal is not empowered to award damages in excess of compensatory damages, and each Party hereby irrevocably waives any right to recover punitive, exemplary or similar damages with respect to any dispute, except insofar as a claim is for indemnification for an award of punitive damages awarded against a Party in an action brought against it by an independent third Person. The arbitral tribunal shall be authorized in its discretion to grant pre-award and post-award interest at commercial rates. Any costs, fees or taxes incident to enforcing the award shall, to the maximum extent permitted by Law, be charged against the Party resisting such enforcement. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant Party or its assets.

 

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(d)                                 In order to facilitate the comprehensive resolution of related disputes, and upon request of any Party to the arbitration proceeding, the arbitration tribunal may, within ninety (90) days of its appointment, consolidate the arbitration proceeding with any other arbitration proceeding involving any of the Parties relating to this Agreement and the Transaction Documents. The arbitration tribunal shall not consolidate such arbitrations unless it determines that (i) there are issues of fact or law common to the proceedings, so that a consolidated proceeding would be more efficient than separate proceedings, and (ii) no Party would be prejudiced as a result of such consolidation through undue delay or otherwise. In the event of different rulings on this question by the arbitration tribunal constituted hereunder and any tribunal constituted under the Transaction Documents (other than this Agreement), the ruling of the tribunal constituted under this Agreement will govern, and that tribunal will decide all disputes in the consolidated proceeding.

 

(e)                                  The Parties agree that the arbitration shall be kept confidential and that the existence of the proceeding and any element of it (including but not limited to any pleadings, briefs or other documents submitted or exchanged, any testimony or other oral submissions, and any awards) shall not be disclosed beyond the tribunal, the ICC, the Parties, their counsel and any person necessary to the conduct of the proceeding, except as may be lawfully required in judicial proceedings relating to the arbitration or otherwise, or as required by NASDAQ rules or the rules of any other quotation system or exchange on which the disclosing Party’s securities are listed or applicable Law.

 

(f)                                   The costs of arbitration shall be borne by the losing Party unless otherwise determined by the arbitration award.

 

(g)                                 All payments made pursuant to the arbitration decision or award and any judgment entered thereon shall be made in United States dollars (or, if a payment in United States dollars is not permitted by Law and if mutually agreed upon by the Parties, in PRC currency), free from any deduction, offset or withholding for taxes.

 

(h)                                 Notwithstanding this Section 15.2 or any other provision to the contrary in this Agreement, no Party shall be obligated to follow the foregoing arbitration procedures where such Party intends to apply to any court of competent jurisdiction for an interim injunction or similar equitable relief against any other Party, provided there is no unreasonable delay in the prosecution of that application.

 

16.                               MISCELLANEOUS

 

16.1                        Obligation of the Parties Regarding Subsidiaries. Each Party shall require its respective Subsidiaries to fulfill each such Subsidiaries’ duties and to comply with each such Subsidiaries’ obligations, as specified in this Agreement to the same extent as if such Subsidiaries were parties hereto. Without limiting the generality of the foregoing, HoldCo shall cause Provider to carry out all obligations, duties and responsibilities of Provider set forth in this Agreement, including without limitation all obligations to take any actions or refrain from taking any actions, and any act or failure to act by any Subsidiary of HoldCo shall be deemed an act or failure of HoldCo. HoldCo shall be liable for the performance of all obligations, duties and responsibilities of Provider set forth in this Agreement and for all actions or failures to act of Provider, and any failure of Provider to perform any obligation, duty or responsibility set forth in this Agreement, or to take any action or fail to take any action in accordance with this Agreement, shall be deemed a breach of this Agreement by HoldCo.

 

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16.2                        Implementation Agreements. Provider will provide Services to Recipient Parties pursuant to separate implementation agreements to be entered into between Provider and such Recipient Parties consistent with the term and conditions of this Agreement, to the extent that such implementation agreements are actually entered into by Provider and each Recipient Party. If Provider fails to enter into an implementing agreement with any Recipient Party, Provider shall provide to such Recipient Party the Services hereunder pursuant to the terms and conditions of this Agreement. In the event of any conflict between any implementation agreement and any term or condition of this Agreement, this Agreement will control. Such agreements shall be in the form mutually agreed to by the Parties.

 

16.3                        Non-Contravention. During the Term, no Party shall, directly or indirectly, take any action having a purpose of circumventing or having an effect of circumventing or rendering inapplicable, in whole or in part, the rights or obligations of Provider or Recipient under this Agreement or under the applicable provisions of the Purchase Agreement.

 

16.4                        Construction. For the purposes of this Agreement, (a) words (including capitalized terms defined herein) in the singular shall be held to include the plural and vice versa and words (including capitalized terms defined herein) of one gender shall be held to include the other gender as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules) and not to any particular provision of this Agreement, and section, paragraph, and schedule references are to the sections, paragraphs, and schedules to this Agreement, unless otherwise provided; (c) the words “including” and “such as” and words of similar import when used in this Agreement shall mean “including, without limitation”; and (d) all references to any period of days shall be deemed to be to the relevant number of calendar days unless otherwise provided.

 

16.5                        Further Assurances. Each Party shall take such action as another Party may reasonably request to effect, perfect or confirm such other Party’s rights as set forth in this Agreement, including by promptly (a) executing instruments of assignment, declarations, affirmations or other documents in connection with the applicable provisions of this Agreement, and (b) confirming in writing all waivers and consents under this Agreement, that are requested by a Party from time to time.

 

16.6                        Assignment. No Party may assign or otherwise transfer this Agreement, in whole or in part, or any of its rights or obligations hereunder, including by way of merger or change of control, by operation of law or otherwise, without the express, prior written consent of Provider, in the case of assignment or transfer by Recipient, or without approval by the Independent Directors (such approval not to be unreasonably withheld), in the case of assignment or transfer by HoldCo, and any attempted assignment or transfer in violation of this  Section 16.6 shall be null and void. Notwithstanding the foregoing, HoldCo may assign and transfer (and, at the request of the Independent Directors, shall assign and transfer) this Agreement to Provider or to a successor to substantially all of the business of Provider in connection with a merger, acquisition, reorganization, sale of Provider or all or substantially all of Provider’s assets, or “spin-off” of Provider, without Recipient’s consent (and HoldCo shall not (and shall not permit any of its Affiliates to) sell, transfer, or “spin-off” any substantial portion of the business or operations relating to the Business except as part of such a merger, acquisition, reorganization, sale of assets or “spin-off”). The assigning or transferring Party will require any permitted assignee, transferee or successor expressly to agree to be bound by the terms and conditions of this Agreement as a condition to the effectiveness of such assignment or transfer. Notwithstanding any of the foregoing, no such assignment or transfer by a Party shall relieve such Party of its obligations to the other Parties hereunder, except that, in the event of an assignment or transfer of this Agreement by Holdco to Provider or to a successor to substantially all of the business of Provider in connection with a merger, acquisition, reorganization, sale of all or substantially all of Provider’s assets, or “spin-off” of Provider, Holdco shall have no further obligations under this Agreement.

 

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16.7                        Successors; Assigns. The provisions of this Agreement shall be binding upon the Parties and their respective permitted successors and assigns.

 

16.8                        Section Headings. The section headings of this Agreement are for organizational purposes only and shall not be used in interpreting this Agreement. References to a section include reference to all subsections of that section.

 

16.9                        Severability. Each provision of this Agreement shall be deemed a material and integral part hereof. Except as otherwise provided in this Section 16.9, in the event of a final determination of invalidity, illegality or unenforceability of any provision of this Agreement, the Parties shall negotiate in good faith to amend this Agreement (and any other Transaction Documents, as applicable) or to enter into new agreements to replace such invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provisions providing the parties with benefits, rights and obligations that are equivalent in all material respects as provided by the Agreement (and any other Transaction Documents, as applicable) as if the invalid, illegal or unenforceable provision(s) had been valid, legal and enforceable. In the event the Parties are not able to reach agreement on such amendments or new agreements, then the arbitrators (pursuant to the procedures set forth in Section 15.2 of this Agreement) shall determine, as part of their arbitral award, such amendments or new agreements such to provide the Parties with benefits, rights and obligations that are equivalent in all material respect as provided by the Agreement as if the stricken provision(s) had been valid, legal and enforceable.

 

16.10                 Relationship. 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.

 

16.11                 Waiver. The failure by a Party to enforce any section of this Agreement shall not be construed as a waiver of such provisions or of the right to enforce that, or any other, provision of this Agreement. No waiver shall be construed as a continuing waiver.

 

16.12                 Amendments. No amendment or material waiver or discharge hereof (including any schedule hereto) shall be valid unless in writing and signed by (a) the Party against which such amendment waiver or discharge is sought to be enforced, and (b) in the case of Recipient, the Independent Directors.

 

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16.13      Entire Agreement. This Agreement and all provisions of any Transaction Documents referred to herein, including all Schedules hereto and thereto, constitute the entire agreement among the Parties with respect to the subject matter hereof, and supersedes all previous or contemporaneous agreements, proposals, understandings and representations, written or oral, with respect to the terms and conditions hereof.

 

16.14      Notice. Any notice pursuant to this Agreement, if specified to be in writing, shall be in writing and shall be deemed given (a) if by hand delivery, upon receipt thereof, (b) if by electronic mail, upon receipt of confirmation electronic mail message, if promptly followed by a confirmation copy registered mail, return receipt requested, or (c) if by internationally recognized courier delivery service (such as Federal Express), upon such delivery. All notices shall be addressed as follows (or such other address as a Party may in the future specify in writing to the others):

 

	
To Recipient:
    
	
 
    
	
c/o Alibaba Group Services Limited
   26/F, Tower One, Times Square
   1 Matheson Street
   Causeway Bay
   Hong Kong
   Attention: 
   Facsimile No.: 
   Email: 
    
	
 
    
	
with a copy to the Independent Directors at their   addresses set forth below.
    
	
 
    
	
To Softbank’s Independent Director:
    
	
 
    
	
SOFTBANK CORP.
   1-9-1 Higashi-shimbashi, Minato-ku
   Tokyo 105-7303, Japan
   Attention: 
   Facsimile No: 
    
	
 
    
	
with a copy (not notice) to:
    
	
 
    
	
Morrison & Foerster LLP
   Shin-Marunouchi Building 29F, 1-5-1 Marunouchi, Chiyoda-ku
   Tokyo 100-6529, Japan
   Attention: 
   Facsimile No: 
    

 

33

 

	
To all other Independent Directors:

c/o Alibaba Group Services Limited
   26/F, Tower One, Times Square
   1 Matheson Street
   Causeway Bay
   Hong Kong
   Attention: 
   Facsimile No.: 
   Email: 
    
	
 
    
	
To Holdco or Provider:
    
	
 
    
	
Ant Small and Micro Financial Services Group   Co., Ltd.
   Z Space, No. 556 Xixi Road,
   Hangzhou 310013
   People’s Republic of China
   Attention: 
   Facsimile No.: 
   Email: 
    
	
 
    
	
with a copy (not notice) to:
    
	
 
    
	
Wachtell, Lipton, Rosen & Katz
   51 West 52nd Street
   New York, NY 10023
   Attention: 
   Facsimile No: 

and

Fangda Partners
   20/F, Kerry Center
   1515 Nan Jing West Road
   Shanghai 200040, China
   Attention: 
   Facsimile No: 
    

 

16.15      Force Majeure. Neither Party will be responsible for any failure or delay in its performance under this Agreement (except for the payment of money) due to causes beyond its reasonable control, such as shortages of or inability to obtain energy, raw materials or supplies, war, acts of terror, riot, acts of God or action of any Governmental Authority.

 

16.16      Interpretation. The Parties agree and acknowledge that this Agreement has been freely negotiated and entered into by each Party and that no arbitral tribunal or court shall in any manner construe any ambiguity against the draftsman solely by virtue of its role as draftsman.

 

34

 

16.17      Counterparts. This Agreement may be executed in several counterparts, which may be delivered by facsimile transmission (provided that originals are thereafter promptly delivered by registered mail, return receipt requested), all of which taken together shall constitute the entire agreement among the Parties hereto.

 

16.18      Actions by Recipient. The Parties agree that so long as this Agreement remains in effect, all Actions specified to be taken, done with the unanimous approval of, or made by the Independent Directors shall be taken or made solely by the unanimous decision of the Independent Directors pursuant to the procedures specified in, and the terms of, the Purchase Agreement.

 

35

 

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

 

	
 
    	
Alibaba Group Holding Limited
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Zhang Yong
    
	
 
    	
 
    	
Name:
    	
Zhang Yong
    
	
 
    	
 
    	
Title:
    	
Director and Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
浙江蚂蚁小微金融服务集团股份有限公司(盖章)
    
	
 
    	
Ant Small and Micro Financial Services Group Co., Ltd.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Seal:
    	
/s/ Jing Xiandong
    
	
 
    	
 
    	
Name:
    	
Jing Xiandong
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
支付宝(中国)网络技术有限公司(盖章)
    
	
 
    	
Alipay.com Co., Ltd.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Seal:
    	
/s/ Jing Xiandong
    
	
 
    	
 
    	
Name:
    	
Jing Xiandong
    
	
 
    	
 
    	
Title:
    	
Director
    
					

 

[Signature Page to the Amended and Restated Commercial Agreement]

 

 

Schedule 2.1

 

RECIPIENT PARTIES

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
1.
    	
 
    	
阿里巴巴(中国)网络技术有限公司   /

 

杭州阿里巴巴广告有限公司
    	
 
    	
中文站
    	
 
    	
china.alibaba.com;

http://china.alibaba.com/

1688.com; http://www.1688.com/

alibaba.com.cn;

http://www.alibaba.com.cn/
    
	
2.
    	
 
    	
Alibaba.com Hong Kong Limited /

 

阿里巴巴(中国)网络技术有限公司
    	
 
    	
国际站
    	
 
    	
alibaba.com;

http://www.alibaba.com/

alibaba.co.uk;

http://www.alibaba.co.uk/

uk.alibaba.com;

http://uk.alibaba.com/
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
3.
    	
 
    	
杭州阿里巴巴广告有限公司   /

 

阿里巴巴(中国)网络技术有限公司   /

 

Alibaba.com Singapore E-Commerce Private Limited /

 

Alibaba.com Hong Kong Limited
    	
 
    	
速卖通
    	
 
    	
aliexpress.com;

http://www.aliexpress.com/
    
	
4.
    	
 
    	
阿里巴巴云计算(北京)有限公司

 

(formerly known as 阿里巴巴通信技术(北京)有限公司)
    	
 
    	
万网
    	
 
    	
net.cn; http://www.net.cn/
    
	
5.
    	
 
    	
阿里巴巴云计算(北京)有限公司

 

(formerly known as 阿里   巴巴通信技术(北京)有限公司)
    	
 
    	
阿里通信
    	
 
    	
Aliqin.cn: http://www.aliqin.cn/

Aliqin.tmall.com;

http//www.aliqin.tmall.com
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
6.
    	
 
    	
阿里巴巴(中国)软件有限公司
    	
 
    	
阿里软件
    	
 
    	
alisoft.com;

http://www.alisoft.com/
    
	
7.
    	
 
    	
阿里巴巴(中国)教育科技有限公司   /

 

杭州阿里科技有限公司
    	
 
    	
淘宝大学
    	
 
    	
alibado.com;

http://www.alibado.com/

www.daxue.taobao.com

http:// daxue.taobao.com
    
	
8.
    	
 
    	
淘宝(中国)软件有限公司   /

 

浙江淘宝网络有限公司
    	
 
    	
淘宝网
    	
 
    	
taobao.com;

http://www.taobao.com/

taobao.com.cn;

http://www.taobao.com.cn/

taobao.cn; http://www.taobao.cn/

taobao.org; http://www.taobao.org/

tb.cn
    
	
9.
    	
 
    	
浙江天猫技术有限公司   /

浙江天猫网络有限公司
    	
 
    	
天猫
    	
 
    	
tmall.com; http://www.tmall.com/

juhuasuan.com / ju.tmall.com
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
10.
    	
 
    	
淘宝(中国)软件有限公司   /

 

杭州阿里科技有限公司(淘宝客软件产品)

 

浙江淘宝网络有限公司   /

杭州阿里科技有限公司(如意投软件产品)
    	
 
    	
阿里妈妈
    	
 
    	
alimama.com;

http://www.alimama.com/

alimama.cn;

http://www.alimama.cn/
    
	
11.
    	
 
    	
浙江捉急网络有限公司

(formerly known as   华数淘宝数字科技有限公司)
    	
 
    	
淘花网
    	
 
    	
taohua.com;

http://www.taohua.com/
    
	
12.
    	
 
    	
淘宝(中国)软件有限公司   /

浙江淘宝网络有限公司
    	
 
    	
一淘网
    	
 
    	
etao.com;

http://www.etao.com/
    
	
13.
    	
 
    	
湖南快乐淘宝文化传播有限公司
    	
 
    	
嗨淘网
    	
 
    	
hitao.com;

http://www.hitao.com/
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
14.
    	
 
    	
浙江口碑网络技术有限公司   /

杭州口口相传网络技术有限公司 
    	
 
    	
口碑网
    	
 
    	
koubei.com;

http://www.koubei.com/

koubei.cn; http://www.koubei.cn/
    
	
15.
    	
 
    	
阿里云计算有限公司
    	
 
    	
阿里云
    	
 
    	
aliyun.com;

http://www.aliyun.com/

manyi.taobao.com;
    
	
16.
    	
 
    	
杭州淘必中科技有限公司

(formerly known as   杭州阿里会展有限公司)
    	
 
    	
阿里会展
    	
 
    	
alihz.com;

http://www.alihz.com/

e-businessmen.org;

http://www.e-businessmen.org/
    
	
17.
    	
 
    	
浙江阿里巴巴小额贷款股份有限公司/浙江融信技术有限公司
    	
 
    	
阿里小贷
    	
 
    	
respect of aliloan.com;

http://www.aliloan.com
    
	
18.
    	
 
    	
阿里巴巴(中国)网络技术有限公司   /

杭州阿里巴巴广告有限公司
    	
 
    	
天下网商
    	
 
    	
wshang.com;

http://www.wshang.com/

ws.1688.com;

http://ws.1688.com/
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
19.
    	
 
    	
浙江天下网商网络传媒有限公司
    	
 
    	
商闻通
    	
 
    	
newstong.com.cn;

http://newstong.com.cn/
    
	
20.
    	
 
    	
阿里巴巴(中国)网络技术有限公司   /

杭州阿里巴巴广告有限公司
    	
 
    	
国际展览产业联盟
    	
 
    	
expo-ieia.com;

http://www.expoieia.com/
    
	
21.
    	
 
    	
杭州魅俪信息技术有限公司

(formerly known as   杭州阿里巴巴网货贸易有限公司)
    	
 
    	
Ali-cool网络旗舰店
    	
 
    	
alicool.net;

http://www.alicool.net/
    
	
22.
    	
 
    	
淘宝(中国)软件有限公司   /

浙江淘宝网络有限公司
    	
 
    	
淘网址
    	
 
    	
tao123.com;

http://www.tao123.com/
    
	
23.
    	
 
    	
淘宝(中国)软件有限公司   /

浙江淘宝网络有限公司
    	
 
    	
淘日本
    	
 
    	
japan.taobao.com;

http://japan.taojapan.com/
    
	
24.
    	
 
    	
河北慧眼医药科技有限公司
    	
 
    	
95095医药
    	
 
    	
http://yao.95095.com;

www.95095.com
    

 

 

	
No.
    	
 
    	
Name of Legal Entity of the
   Recipient Party
    	
 
    	
Business
   Name
    	
 
    	
Primary Domain Names
   (including any successor web
   sites to the following, and sub-
   domain names to the Primary
   Domain Names and successor
   web sites)

 

The Domain Names listed in this
   Schedule 2.1 are provided for
   illustrative purposes only and
   shall in no way limit Provider’s
   obligation to provide the Services
   to Recipient Parties pursuant to
    Section 2 and as otherwise set
   forth in this Agreement or the
   sites in connection with which
   Recipient Parties may use
   Services.
    
	
25.
    	
 
    	
淘宝中国控股有限公司

Taobao China Holding Limited
    	
 
    	
天猫国际
    	
 
    	
www.tmall.hk
    
	
26.
    	
 
    	
淘宝(中国)软件有限公司   /

浙江淘宝网络有限公司
    	
 
    	
淘宝海外
    	
 
    	
tw.taobao.com

(www.taobao.com.tw)

hk.taobao.com

(www.taobao.com.hk)

sea.taobao.com

www.taobao.com
    
	
27.
    	
 
    	
淘宝(中国)软件有限公司   /

浙江淘宝网络有限公司
    	
 
    	
闲鱼
    	
 
    	
Xianyu.mobi
    

 

 

Schedule 4.1

SERVICE

LEVELS

 

1.                                      Definitions

 

Capitalized terms used but not defined in this Schedule 4.1 have the meanings ascribed to them in this Agreement.

 

“Business Day” means on any day that is not a Saturday or Sunday, or a public holiday, in the People’s Republic of China.

 

“Coordination Meeting” means the meetings between representatives of Provider and Recipient designated by each of the Parties held in accordance with Section 6.2 of this Schedule 4.1.

 

“Critical Business Functions” means, with respect to the Services or the Platform, the actions, activities and operations of Provider that enable merchants, sellers or other end users of services to (a) order, request, use or purchase Services from Provider, (b) pay or receive payments from merchants, sellers or other users of services in any manner offered by Provider, including the web or client-end application interface for merchants, sellers or other customers of services to accept payment and for Members to fund accounts and transfer payments, processing and settling such payments, and the maintenance of records of transactions and balances through the accounts of End Customers and merchants, sellers and other customers of services, and (c) commence, register for, or cancel the Services.

 

“Force Majeure Event” means major outages of a telecommunication carrier’s network connections, interface Incidents of partner banks and financial institutions, gateway Incidents of mobile carriers, unexpected Incidents resulting from changes in End Customers’ Systems, unexpectedly large increases in traffic volume as a direct result of any orders of a Governmental Authority, and Governmental Authority intervention that results in the seizure or confiscation of Provider’s Systems, in each case to the extent used in or necessary for the provision of the Services and only to the extent such event(s) are beyond the control of the affected party and only for as long as such event(s) persist.

 

“Incident” means a Major or Minor Performance Event or an error, bug, incompatibility or malfunction, which (a) causes the Services or Platform to operate other than as designed or in accordance with the terms and conditions of this Agreement, (b) delays or interferes with the execution of, or renders End Customers unable to process, Transactions using the Services, and/or (c) otherwise causes any Unavailability or interruption to, or reduction of the quality of, the Services or functionality or availability of the Services or Platform.

 

“Measurement Period” means a Calendar Quarter, commencing on the first calendar day of the applicable Calendar Quarter at 12:00 a.m. and ending on the last calendar day of such Calendar Quarter at 11:59 p.m., in each case Beijing local time.

 

 

“Non-Critical Business Functions” means, with respect to the Platform or the Services, functions that do not fall within the category of Critical Business Functions.

 

“Planned Downtime” means periods (measured in minutes) during which there is a shut down, suspension or other disruption in the provision of Services or operation of the Platform planned in advance by Provider and for the limited purposes of (a) launching new Services or upgrading existing Services provided to the Recipient Parties, (b) performing preventative maintenance of Systems, (c) installing or implementing major adjustments to infrastructure, or (d) maintenance of the Services and Platform as Provider and Recipient may otherwise agree.

 

“Predicted TPV” means a prediction for the total TPV to be processed by Provider and its Subsidiaries in connection with the Services provided to a Recipient Party during any applicable period, generated in real-time by a Party (or a third Person designated such Party), based upon available data and other information available to Recipient and Provider, including historical and real-time data (including the number of Member accounts and payment transactions processed by Provider and its Subsidiaries in connection with the Services during at least each of the pervious four (4) Calendar Quarters), and derived from the results of mathematical analysis of the history and tendency of the Transactions processed of all users of Provider and its Subsidiaries in the conduct of the Business, taking into account seasonal and other variations in the use of the Services (e.g., promotions, product launches, etc.).

 

“Predicted Transaction Volume” means a prediction for the total number of Transactions to be processed by Provider and its Subsidiaries from, to or through the Services and the Platform provided to a Recipient Party during any applicable period, generated in real- time by a Party (or a third Person designated such Party), based upon available data and other information available to Recipient and Provider, including historical and real-time data (including the number of Member accounts and payment transactions processed by Provider and its Subsidiaries in connection with the Services during at least each of the pervious four (4) Calendar Quarters), and derived from the results of mathematical analysis of the history and tendency of the Transactions processed of all users of Provider and its Subsidiaries in the conduct of the Business, taking into account seasonal and other variations in the use of the Services (e.g., promotions, product launches, etc.).

 

“Response Time” means the period of time commencing when an End Customer or a Recipient Party contacts Provider’s Service Desk with a Service Request and ending at the time when Provider has provided a Recipient Party or End Customer with acknowledgement of such Service Request.

 

“Resolution” means a correction, temporary patch, or workaround being provided that allows the Services and the Platform to continue to function as normal without material direct impact on End Customers’ use thereof, and that allows Transactions to be processed by such End Customers and the Services to function in accordance with this Agreement.

 

“Service Credits” means, collectively, Availability Credits, Performance Event Credits, Emergency or High Priority Incidents Failure Credit, and Medium Priority Incidents Failure Credit.

 

2

 

“Service Availability” refers to the measurement, expressed as a percentage of the overall time during any given Measurement Period, when the Services and/or the Platform are not Unavailable to Recipient Parties and their End Customers.

 

“Total Payment Volume” or “TPV” has the meaning set forth in Schedule 7.1. 

 

“Transactions” means transactions conducted by End Customers for the purchase of goods or services from merchants, sellers or other customers of services via the Services and Platform.

 

“Transaction Volume” means the total number of Transactions processed from, to or through the Services and Platform by Provider during any applicable period.

 

“Unavailable” or “Unavailability” means any period of one (1) hour or more during which either (a) the actual TPV processed by Provider in connection with the Services and/or Platform is sixty percent (60%) or less of the Predicted TPV, or (b) the actual Transaction Volume processed by Provider in connection with the Services and/or Platform is sixty percent (60%) or less of the Predicted Transaction Volume, in each case other than unavailability of the Services and/or Platform due to a Force Majeure Event or Planned Downtime.  For the purposes of this Schedule 4.1, Provider shall use TPV as set forth in (a) above as the basis for measuring unavailability, provided that, if Provider notifies Recipient prior to the Effective Time that it will use Transaction Volume set forth in (b) as the basis for measuring unavailability hereunder, Provider shall thereafter use (b) for the purposes of this Schedule 4.1.  The determination to use (a) or (b) hereunder may be amended during the Term upon the mutual agreement of the Parties.

 

2.                     Service Levels. Beginning as of the Effective Time, and thereafter on the date on which Provider first delivers any Service pursuant to this Agreement, the Service Levels set forth in Section 2 of this Schedule 4.1 shall be effective and Provider shall perform the Services in a manner that meets or exceeds the applicable Service Level requirements set forth herein. The Service Levels set forth in this Section 2 of Schedule 4.1 are subject to amendment by the Parties in the manner set forth in Section 2.1.6 of this Schedule 4.1. Provider shall use commercially reasonable efforts, and dedicate such personnel of necessary skill and experience, to ensure that all Critical Business Functions of the Services and Platform are fully functional in all material respects and operate in substantial conformance with the description of such Services and the Platform set forth in this Agreement and in all applicable documentation and service descriptions made available by Provider to Recipient Parties and/or End Customers.

 

2.1                                      Service Availability

 

2.1.1                            Data Delivery.  Commencing on the Effective Time, Provider shall generate on a continuous basis and provide to Recipient, in real-time via FTP or as otherwise agreed to by the Parties, all data generated and/or maintained by Provider and its Subsidiaries (or a third Person designated by Provider) in the normal course of its Business used to determine (a) the actual TPV processed by Provider and its Subsidiaries in connection with the Services provided to each Recipient Party, and (b) Provider’s determination of the Predicted TPV with respect to the Services provided to each Recipient Party (collectively “Provider Data”).  During those periods in which Provider fails to provide to Recipient such Provider Data as set forth herein, Recipient may use its own data regarding actual TPV processed by Provider and its Subsidiaries for all purposes set forth in this Schedule 4.1.

 

3

 

2.1.2                            Service Availability Service Level.  Provider shall achieve Service Availability of 99.8%, not including periods of Unavailability resulting from a Force Majeure Event and not including Planned Downtime permitted hereunder, as measured over each Measurement Period starting from the Effective Time (the “Service Availability Service Level”).  Any failure to meet the Service Availability Service Level pursuant to this Section 2 of Schedule 4.1 shall constitute a Default for which Availability Credits shall be awarded by Provider to the applicable Recipient Party pursuant to Section 3 of this Schedule 4.1.

 

Calculation of Service Availability is based on the following formula:

 

System Availability over each Measurement Period (excluding Planned Downtime)

 

X = [(A-B) ÷ A] ×100%

 

Where:

 

“X” means the Service Availability for the relevant Measurement Period (specified as a percentage)

 

“A” means the total number of minutes for the relevant Measurement Period

 

“B” means the total number of minutes of Unavailability for the relevant Measurement Period

 

2.1.3                            Planned Downtime.  Provider agrees that it shall not commence any Planned Downtime unless first (a) receiving Recipient’s prior approval or (b) notifying the applicable Recipient Parties affected by such Planned Downtime at least four (4) Business Days in advance indicating the time of such Planned Downtime.  Any Planned Downtime not meeting the foregoing criteria shall constitute periods of Unavailability of the Services and/or the Platform and result in a Default by Provider, in each case for the purposes of this Schedule 4.1.  Provider shall use commercially reasonable efforts to minimize the duration of any Planned Downtime, and shall limit the total amount of Planned Downtime affecting Critical Business Functions to thirty (30) hours per Measurement Period without receiving Recipient’s prior written consent.  Provider shall carry out all Planned Downtime during off-peak times to the extent commercially practicable (between 1:00 a.m. to 5:00 a.m., Beijing local time).

 

2.1.4                            Performance Events.  In each case that Recipient reasonably determines that the actual TPV processed by Provider in connection with the Services and/or Platform is less than ninety percent (90%) of the corresponding Predicted TPV over the course of any ten (10) minute period during the Term (each a “Minor Performance Event”), Recipient shall notify Provider and Provider shall use commercially reasonable efforts to resolve such Minor Performance Event and any issue or Incident related thereto as soon as reasonably practicable.  In each case that Recipient reasonably determines that the actual TPV processed by Provider in connection with the Services and/or Platform is less than eighty percent (80%) of the corresponding Predicted TPV over the course of any twenty (20) minute period during the Term (each, a “Major Performance Event”), Recipient shall notify Provider and Provider shall use commercially reasonable efforts to resolve such Performance Event and any issue or Incident related thereto as soon as reasonably practicable.  In addition, each such Major Performance Event shall constitute a Default for which Performance Event Credits shall be awarded by Provider to the applicable Recipient Party pursuant to Section 3.2 of this Schedule 4.1.

 

4

 

2.1.5                            Defaults.  Any failure to comply with the Service Levels set forth in this Section 2, other than failures resulting from a Force Majeure Event that affects a substantial portion of the Services or Platform, will be considered a “Default.” In the event of any Default, the applicable Recipient Party shall notify Provider of the nature of such Default and, upon Provider’s request, shall provide to Provider Recipient’s information and data regarding the nature and timing thereof, including Recipient’s Predicted TPV and the actual TPV processed by Provider and its Subsidiaries in connection with the Services and/or the Platform, to the extent reasonably necessary to demonstrate such Default of the applicable Service Availability Service Level pursuant to this Section 2 of Schedule 4.1.  Provider may dispute any Default reported by any Recipient Party hereunder, in which case the Parties shall work together in good faith to resolve such dispute within thirty (30) days of Recipient’s claim for the awarding of any Service Credits arising out of such Default.  If the Parties are unable to resolve any such dispute after such thirty (30)-day period, Provider may commence arbitration pursuant to Section 15.2 of the Agreement; provided, however, that commencing arbitration will not excuse Provider from awarding any Service Credit due to any Recipient Party pursuant to Section 3 of this Schedule 4.1.  In addition, at the next Coordination Meeting following any notification by Recipient of any Default hereunder, Provider and Recipient will cooperate in good faith to determine such actions reasonably necessary to prevent a recurrence of such Default and, if necessary, update Provider’s Disaster Recovery Plan.  Any Default will also result in the applicable Recipient Party’s being credited with a Service Credit as further set forth herein.  Nothing in this Schedule 4.1 is intended to limit or otherwise affect any Recipient Party’s rights and remedies specified in the Agreement or otherwise available to any Recipient Party under applicable Law arising from Provider’s failure to comply with any of the Service Levels set forth herein.  No election by Recipient not to enforce a remedy available to Recipient pursuant to this Schedule 4.1 or otherwise, or to accept the award of any Service Credit shall constitute a waiver of Recipient’s rights to enforce any remedy available to Recipient.

 

2.1.6                            Service Level Updates.  Commencing on the date that is five (5) years after the Effective Time, and at least once each calendar year thereafter, if requested by Recipient and in accordance with and without limitation to Section 4.5 of the Agreement, the Service Levels set forth in Section 2 of this Schedule 4.1 shall be updated to reflect the Service Levels (including the metrics by which such Service Levels are measured and service credits offered by vendors) then used by other vendors representing a significant portion of the PRC market providing Mature Services reasonably comparable to any Service provided by Provider hereunder (“Updated Service Levels”).  In the event any Updated Service Levels are identified by the Parties, including metrics other than TPV (or the difference between actual TPV and Predicted TPV) as a basis for measuring the Service Availability under this Schedule 4.1, the Parties shall cooperate in good faith and use commercially reasonable efforts to adopt and integrate into the then-existing Service Levels any such Updated Service Levels, including any alternate metrics for measuring the Service Availability of the Services and/or Platform, in each case that are not commercially impracticable to so integrate, in a manner intended to reasonably replicate the service levels and metrics employed by such other vendors of Mature Services in the marketplace for services reasonably comparable to the Services.

 

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3.                     Service Credits.

 

3.1                                      Availability Credits.  Provider’s failure to comply with Service Availability Service Level shall be deemed a Default for the purposes of this Schedule 4.1 for which service credits shall be awarded to the applicable Recipient Party (“Availability Credits”).

 

Availability Credits shall be awarded for a Default regarding Provider’s obligations pursuant to Section 2.1.2 of this Schedule 4.1 in accordance with the following table:

 

	
Service Availability
    (for each Measurement Period)
    	
 
    	
Availability Credits
    (as a percentage of the Payment Processing
   Fees payable for such Measurement Period)
    
	
Greater than or equal to 99% but less than 99.8%
    	
 
    	
0.2% for every 0.1% below 99.8%
    
	
Greater than or equal to 90% but less than 99%
    	
 
    	
0.15% for every 0.5% below 99%
    
	
Greater than or equal to 50% but less than 90%
    	
 
    	
0.1% for every 1% below 90%
    
	
Lower than 50%
    	
 
    	
100%
    

 

For example, if the Service Availability over a Measurement Period pursuant to Section 2.1.2 of this Schedule 4.1 is determined to be 98% for a Recipient Party, Provider shall award an Availability Credit to such Recipient Party in an amount equal to 1.9% of the Payment Processing Fees payable by such Recipient Party to Provider for such Measurement Period (i.e., the sum of (a) (99.8-99.0)/0.1) x 0.2% and (b) (99.0-98.0)/0.5) x 0.15%).

 

3.2                                      Performance Event Credits.  If more than ten (10) Major Performance Events occur during any Measurement Period, then the occurrence of such Performance Events shall constitute a Default for the purposes of this Agreement and Provider shall award to the applicable Recipient Party Service Credits in accordance with the table below (each a “Performance Event Credit”):

 

	
 
    	
 
    	
Performance Credits
    	
 
    
	
Major Performance Events
   (frequency over each Measurement
   Period)
    	
 
    	
(as a percentage of the Payment Processing
   Fees payable for such Measurement
   Period)
    	
 
    
	
11-20
    	
 
    	
0.1
    	
%
    
	
21-30
    	
 
    	
0.2
    	
%
    
	
31+
    	
 
    	
0.3
    	
%
    

 

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For clarity, the Performance Event Credits set forth in the table above are cumulative in nature and shall be awarded in the event that each threshold in the table is reached during the applicable Measurement Period.

 

3.3                                      Cumulative Service Credits.  Availability Credits and Performance Event Credits awarded by Provider to a Recipient Party pursuant to this Section 3 of Schedule 4.1 are cumulative in nature, and shall be awarded by Provider to the applicable Recipient Party, in accordance with Section 2.1.5, in the Measurement Period in which a Recipient Party notifies Provider that the Default resulting in the award of such Service Credit occurred. Availability Credits will be calculated over each Measurement Period, and reflected as a credit against the Payment Processing Fees payable by the applicable Recipient Party in the applicable Invoice for the Calendar Quarter in which the Measurement Period falls pursuant to Section 7.2.  Provider’s liability to a Recipient Party for Availability Credits, Performance Event Credits, Emergency and High Priority Incident Service Level Credits, and Medium Priority Incident Service Level Credits are collectively capped at 100% of the total Payment Processing Fees paid by that Recipient Party during the applicable Measurement Period.

 

4.                     Incident Handling and Resolution

 

4.1.                                       Primary Contact Information. Provider and Recipient will exchange current contact information (“Primary Contact Information”) for designated personnel (“Primary Contacts”) responsible for working to resolve Incidents (including Performance Events), including Personnel assigned to Provider’s designated central point of contact for reporting of Incidents and requests from Recipient Parties or End Customers for Support and/or additional information, advice or documentation in connection with any Incident affecting the Services and/or Platform (each a “Service Request”), and serving as the central point of contact for Incident Notifications and Service Requests (“Service Desk”). Primary Contacts shall include respective designated account managers, technical support personnel, and operations centers.

 

4.2.                                       Support Responsibilities and Categories. Provider shall provide to End Customers and Recipient Parties Incident resolution and additional technical support services (“Support”). Provider shall at all times provide such End Customers and Recipient Parties with Support at the highest performance and quality level that Provider then provides or is required to provide to or for any other customer (other than Recipient) of Provider or any of its Subsidiaries. Provider will staff its Service Desk with appropriately trained and qualified Personnel and provide the Support hereunder in a timely, professional and workmanlike manner. Provider shall promptly notify Recipient upon becoming aware of circumstances that reasonably jeopardize the timely and successful provision of Support hereunder. For clarity, Provider’s obligations with respect to the Response Times and Resolution times set forth in Table 4.4 of this Schedule 4.1, shall apply only with respect to those requests for Support received from a Recipient Party.

 

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4.3.                                              Service Desk. Provider will make the Service Desk available on a 24/7/365 basis. The contact information for the Service Desk is as follows:

 

Telephone:

Facsimile:

E-mail:

 

4.4.                                              Issue Classification. Upon receipt of any notification to Provider via the Service Desk that an Incident exists (each an “Incident Notification”), Provider shall promptly notify the applicable Recipient Party of such Incident Notification, and such Recipient Party shall assess and assign the classification of the Incident in accordance with the table below. Provider shall communicate with the applicable Recipient Party regarding the Incident and provide a Resolution to the Incident in accordance with this Section 5. Resolution steps may include, without limitation, checking against known errors or problems so that previously identified workarounds, error corrections and other resolutions can be quickly implemented, following documented procedures (including the Disaster Recovery Plan, if applicable) to correct the Incident or dispatching the Incident to an appropriate third Person for resolution.

 

Provider’s responsibility to provide Support to each Recipient Party and End Customers receiving or using Services under this Agreement commences upon the receipt of any Incident Notification. If, during the Term, a Recipient Party’s own Personnel or help desk is contacted by any End Customer with a request for assistance with an Incident regarding the Services or operation of the Platform, the applicable Recipient Party will forward such inquiry to Provider’s Service Desk, which forwarded request shall constitute an Incident Notification for the purposes of this Schedule 4.1.

 

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Table 4.4

 

	
Priority
   Level
    	
 
    	
Definition
    	
 
    	
Response Times
    	
 
    	
Resolution Times
    
	
Emergency
    	
 
    	
a. An Incident affecting the Critical Business   Functions with impact to greater than 30% of a Recipient Party’s End   Customers
    	
 
    	
Within thirty (30) minutes after receipt of report   of Incident or discovery of Incident through Provider’s monitoring system;   Provide on-going status reports every two (2) hours   thereafter
    	
 
    	
Within six (6) hours after receipt of report of   Incident or discovery of Incident through Provider’s monitoring system
    
	
High
    	
 
    	
An Incident affecting the Critical Business Functions with   impact to over 15% but no more than 30% of a Recipient Party’s End   Customers
    	
 
    	
Within two (2) hours after receipt of report or discovery   of Incident through Provider’s monitoring system; Provide on-going   status reports every four (4) hours thereafter
    	
 
    	
Within three (3) Business Days after receipt of report or discovery   of Incident through Provider’s monitoring system
    
	
Medium
    	
 
    	
An Incident affecting the Critical Business   Functions with impact to less than 15% of a Recipient Party’s End Customers;   or

   An Incident affecting the Non-Critical Business Functions with impact to   greater than 80% of a Recipient Party’s End Customers
    	
 
    	
Within five (5) hours after receipt of report   or discovery of an Incident through Provider’s monitoring system; Provide   on-going status reports every one (1) Business Day thereafter
    	
 
    	
Within six (6) Business Days after receipt of   report or discovery of Incident through Provider’s monitoring system
    
	
Low
    	
 
    	
An Incident affecting the Non-Critical Business   Functions with impact to no more than 80% of a Recipient Party’s End   Customers
    	
 
    	
Within one (1) Business Day after receipt of   report or discovery of the Incident through Provider’s monitoring system;   Provide on-going status reports every two (2) Business   Days thereafter
    	
 
    	
Within ten (10) Business Days after receipt of   report or discovery of the Incident through Provider’s monitoring system
    

 

Notwithstanding the applicable Recipient Party’s initial classification of any Incident in accordance with the table above, if the Provider disagrees with the classification of any Incident made by such Recipient Party following an Incident Notification, upon Provider’s request, each of Provider’s and the applicable Service Recipient’s Primary Contacts will discuss in good faith the appropriate Incident classification and, upon agreement of the Parties, such Incident classification (and the Support related to such Incident as provided by Provider) shall be adjusted accordingly. If the Parties are unable to agree on the appropriate Incident classification, the applicable Incident shall be escalated in accordance with Section 4.5.2 below.

 

4.5.                                              Resolution of Reported Incidents.

 

4.5.1                                  [Intentionally Omitted].

 

4.5.2                                  Escalation. In the event of any failure by Provider to comply with any Response Time or Resolution Time set forth in the table above, the applicable Recipient Party shall be entitled to invoke the Escalation Process set forth in the Table below:

 

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Error Severity
    	
 
    	
Level
    	
 
    	
Frequency
    	
 
    	
ESCALATION
   CONTACTS
    
	
EMERGENCY / HIGH
    	
 
    	
1st Escalation

2nd Escalation

3rd Escalation
    	
 
    	
Within 1 hour
    Within 16 hours
 Within   24 hours
    	
 
    	
-system maintenance manager
    -system maintenance director
 -CTO
    
	
MEDIUM
    	
 
    	
1st Escalation

2nd Escalation

3rd Escalation
    	
 
    	
Within 24 hours
    Within 48 hours
 Within   72 hours
    	
 
    	
-system maintenance manager
    -system maintenance director
 -CTO
    
	
LOW
    	
 
    	
1st Escalation

2nd Escalation
    	
 
    	
Within 5 days
    As agreed with client
    	
 
    	
-system maintenance manager
    -system maintenance director
 -CTO
    

 

4.6.                                                  Emergency and High Priority Incidents

 

4.6.1.                                   Emergency and High Priority Incident Resolution. Provider shall use its best efforts to adopt Resolution strategies and procedures appropriate for Emergency and High priority Incidents, respond to Resolution to any Emergency and High Priority Incidents as soon as practicable after they arise in accordance with Table 4.4, and provide the applicable Recipient Party with an initial analysis of the Incident and the actions Provider proposes to take to remedy the situation. Provider shall continuously work on any Emergency or High Priority Incidents and any Services Requests related thereto on a 24x7 basis until Resolution.

 

4.6.2.                                   Emergency or High Priority Incidents Failure Credit. Any failure of Provider to meet the Response Times or Resolution Times in connection with any Emergency or High Priority Incidents shall constitute a Default for the purposes of this Schedule 4.1; provided, however, that if Provider has used its best efforts to provide a Resolution to an Emergency or High Priority Incident within the applicable Resolution Time, such Default shall not constitute a breach of this Agreement. With respect to each Recipient Party, if Provider fails to provide a Resolution within the Resolution Times set forth in Table 4.4 for more than six (6) Emergency or High Priority Incidents reported by such Recipient Party to the Service Desk during any Measurement Period (the “Emergency or High Priority Incidents Service Level”), Provider shall award the applicable Recipient Party a credit in an amount equal to two percent (2%) of the Payment Processing Fee owed by such Recipient Party to Provider for the applicable Measurement Period in the next Invoice issued pursuant to Section 7.2 (“Emergency or High Priority Incidents Failure Credit”). Notwithstanding the foregoing, if Provider’s failure to resolve any Emergency or High Priority Incident is due to a Force Majeure Event or any other deficiency or outage in the Services, Platform or Provider’s Systems such that Provider is already bound to award the applicable Recipient Party an Availability Credit or Performance Event Credit as a result of such Incident under the terms of this Schedule 4.1, then the Recipient Party shall not be entitled to an Emergency or High Priority Incidents Failure Credit pursuant to this Section 4.6.2.

 

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4.7.                                                  Medium and Low Priority Incidents

 

4.7.1.                         Medium and Low Priority Incident Resolution. Provider shall use commercially reasonable efforts to adopt resolution strategies and procedures appropriate for Medium and Low priority Incidents and provide each affected Recipient Party with a Resolution to any Medium and Low Priority Incident as soon as practicable after they arise, but in any event within the Resolution Times set forth in Table 4.4 above.

 

4.7.2.                         Medium Priority Incident Failure Credit. Any failure of Provider to meet the Response Times or Resolution Times in connection with the resolution of any Medium or Low Priority Incidents shall constitute a Default for the purposes of this Schedule 4.1; provided, however, that if Provider has used its commercially reasonable efforts to provide a Resolution to a Medium or Low Priority Incident within the applicable Resolution Time, such Default shall not constitute a breach of this Agreement. With respect to each Recipient Party, if Provider fails to provide a Resolution within the Resolution Times set forth in Table 4.4 for more than twenty (20) Medium Priority Incidents during such Measurement Period reported by such Recipient Party to the Service Desk during any Measurement Period (the “Medium Priority Incidents Service Level”), Provider shall credit the applicable Recipient Party an amount equal to one percent (1%) of the Payment Processing Fee owed by such Recipient Party to Provider for the applicable Measurement Period in the next Invoice issued pursuant to Section 7.2 (“Medium Priority Incidents Failure Credit”). Notwithstanding the foregoing, if Provider’s failure to resolve any Medium Priority Incident is due to a Force Majeure Event or any other deficiency or outage in the Services, Platform or Provider’s Systems such that Provider is already bound to award the applicable Recipient Party an Availability Credit or Performance Event Credit as a result of such Incident under the terms of this Schedule 4.1, then the Recipient Party shall not be entitled to an Medium Priority Incidents Failure Credit pursuant to this Section 4.7.2.

 

4.8.                                       Resolution.

 

4.8.1                            Resolution. An Incident shall be deemed to be resolved when the each Party deems the Resolution therefor provided by Provider acceptable and the Parties agree in good faith that the Incident has been resolved.

 

4.8.2                            Updates. In connection with the Resolution of any Incident pursuant to this Schedule 4.1, Provider shall integrate into the Services provided to the Recipient Parties, any patches, updates, upgrades, bug fixes, error corrections, work arounds and all other software and documentation developed during the course of providing the Support hereunder which is reasonably likely to reduce or minimize the risk of any future Default of Provider’s obligations pursuant to this Schedule 4.1.

 

5.                     Monitoring, Reporting and Audits.

 

5.1.           Reporting Obligations. Once per Calendar Quarter, together with the issuance of each Invoice pursuant to Section 7.2 of the Agreement, Provider shall provide to each Recipient Party, with a copy to Recipient (and to the Independent Directors, upon any such Independent Director’s request, at the addresses specified for notices in Section 16.14), a report summarizing the Service Availability and Response Times during the previous Calendar Quarter (and setting forth reasonable information regarding the methodology and metrics used by Provider to determine the Service Availability and Resolution Times), and Provider’s performance against the Service Availability and Service Levels set forth herein, in each case as necessary for each Recipient Party (and the Independent Directors, as applicable) to understand and confirm the contents thereof (each a “Service Level Report”). Without limiting the foregoing, each Service Level Report shall include: (a) Provider’s Projected TPV for the previous and subsequent Calendar Quarters, (b) a log of any Major Performance Events during the previous Calendar Quarter; (c) the number of Incidents and Defaults during the previous Calendar Quarter; and (d) major hardware or software changes to Provider’s network or Systems during the next Calendar Quarter.

 

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5.2.           Monitoring. Provider shall dedicate skilled personnel to monitor the Services and the Platform on a 24/7/365 basis, and undertake to implement (to the extent not already in place) or test and validate, as applicable, the Systems necessary to operate the Platform and provide the Services from time to time, but no less than once per Measurement Period, including the (a) database and software to ensure the continued functionality of back-end and End Customer- facing Services and Platform, (b) hardware, network and Systems, including load-balancing and redundancy measures, (c) alarms or other indicators of deficiencies in Provider’s hardware and software capabilities necessary to maintain Service Availability and the functionality of the Services and Platform as set forth herein, and (d) any other measures reasonably necessary for the maintenance of Provider’s Disaster Recovery Plan.

 

5.3.           Coordinator Meetings. Designated representatives of each of Provider and Recipient shall meet once per calendar month during the Term for the purposes of coordinating Provider’s efforts to maintain the quality and availability of the Services and Platform and cooperate in providing the other, subject to Article 9, with End Customer data and related information on an aggregated and/or anonymized basis for the purposes of understanding the performance and use of the Services and Platform during the previous month (each a “Coordinator Meeting”).

 

5.4.           Audit Rights. Recipient’s rights pursuant to Section 8 of the Agreement include the right to have Recipient’s external auditor conduct audits of Provider’s compliance with this Schedule 4.1.

 

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Schedule 4.1

 

Appendix 1

 

NON-STANDARD SLA CUSTOMERS

 

1.                                      Beijing Century Joyo Information Technology Co., Ltd.

 

2.                                      安利(中国)日用品有限公司 (Amway (China) Commodity Products Co., Ltd.)

 

3.                                      苹果电子产品商贸(北京)有限公司 (Apple Electronics Products Commerce (Beijing) Co. Limited)

 

4.                                      Global Collect Services B.V.

 

5.                                      耐克体育(中国)有限公司 (Nike Sports (China) Co., Ltd.)

 

6.                                      Nokia Alliance Internet Services Limited

 

7.                                      Singapore Airlines Limited

 

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Schedule 7.1

 

PAYMENT PROCESSING FEE; APPROVED FEE RATE

 

1.                                      Definitions.

 

(a)                                 “Applicable Bank Fees” means, as to each Recipient Party, the Weighted Average Bank Fee Rate multiplied by the relevant Base TPV of the applicable Recipient Party with respect to the applicable Calendar Quarter.

 

(b)                                 “Bank Fees” means the sum of all fees payable by Provider to third Person banks in consideration for funds transfers from accounts maintained by Members with such banks to such Members’ accounts with Provider through Bank Funding Channels.  For the avoidance of doubt, Bank Fees do not include fees payable by Provider to third Person banks in connection with credit card payments by Members through Provider’s System to merchants or sellers that are directly invoiced by, and pay fees directly to, Provider.

 

(c)                                  “Bank Funding Channel” means a channel via which a Member transfers funds from its account with a third Person bank to such Member’s account with Provider or any of its Subsidiaries, including: (i) transfer through a consumer Internet banking web site, (ii) direct debit through a debit card account, and (iii) any other means of funding specified in Provider’s agreement with such third Person bank.   For the avoidance of doubt, “Bank Funding Channel” does not include the transfer of funds through Provider’s Platform directly from a Member’s credit card account (other than credit card-funded transfers through a consumer Internet banking web site).

 

(d)                                 “Total Payment Volume” means the total dollar (or other currency) amount of the transactions from, to or through any service, offering, system or platform of Provider during any applicable period, expressed in the currency of the transaction.

 

(e)                                  “Weighted Average Bank Fee Rate” means the fraction (i) the denominator of which is the Total Payment Volume of funds transferred from accounts maintained by Members with third Person banks to such Members’ accounts with Provider through Bank Funding Channels, and (ii) the numerator of which is Bank Fees.

 

2.                                      Payment Processing Fee.  The “Payment Processing Fee” shall be an amount equal to the product of (a) the Approved Fee Rate (as defined and adjusted pursuant to Section 3 below), multiplied by (b) the applicable Total Payment Volume actually processed by Provider as part of the Services provided to the applicable Recipient Party pursuant to this Agreement during the applicable Calendar Quarter (such Total Payment Volume, excluding Total Payment Volume with respect to Off-Recipient Services and Packaged Services, the “Base TPV”).  The Payment Processing Fee shall be invoiced and paid in accordance with Section 7.2 in PRC currency (or as otherwise agreed by the Parties) and shall be subject to the true-up provisions set forth in Section 4 of this Schedule 7.1.

 

3.                                      Approved Fee Rate.  The “Approved Fee Rate” applicable to each Recipient Party during each applicable fiscal year shall be a fixed percentage determined as set forth in this Section 3 in accordance with a methodology that may take into account the Provider’s budgeted costs, including Applicable Bank Fees, of providing the Services to the applicable Recipient Party (“Budgeted Service Costs”), and other applicable factors which may include, among other things, market benchmark rates applicable to services provided by other providers that are similar to the Service, rates that provider offers to third Person customers, and appropriate discounts applicable to large volume customers.  For clarity, all references to “fiscal year” in this Schedule 7.1 are, unless otherwise expressly stated, to the fiscal year of Recipient.  The Approved Fee Rate shall be determined as follows:

 

 

(a)                                                    The Approved Fee Rate applicable for Recipient Parties for fiscal year 2012 shall be 0.27% until such time as a new Approved Fee Rate is determined pursuant to Section 3(c) of this Schedule 7.1.

 

(b)                                                    [Reserved]

 

(c)                                                     The Approved Fee Rate for all Services performed pursuant to this Agreement during each fiscal year of the Term after fiscal year 2012, and any changes to the Approved Fee Rate for fiscal year 2012 set forth in Section 3(a) of this Schedule 7.1, shall be determined by the unanimous agreement of the Independent Directors when Recipient’s board of directors meets to approve Recipient’s annual budget for the applicable fiscal year.  Any changes to the Approved Fee Rate (i) for fiscal year 2012 set forth in Section 3(a) of this Schedule 7.1, or (ii) for each fiscal year after 2012 during the Term from the previous year’s Approved Fee Rate, shall be based on changes to Provider’s Budgeted Service Costs.  The annual proposal to the Independent Directors for the Approved Fee Rate shall be based on the results of all audits and cost reviews relating to the immediately prior fiscal year conducted in accordance with Section 8.2 of this Agreement and/or this Section 3 of this Schedule 7.1.  Provider and HoldCo shall make available to representatives of the Independent Directors all such budget information, market information, third party customer rate information and other financial information and documentation, including information and documentation relating to Provider’s historical costs and cost structure, including all such information and documentation that Provider or HoldCo is required to provide to Recipient pursuant to, but subject to the limitations set forth in, Section 9.2 of the Purchase Agreement, to the extent necessary for such representatives to review, determine and approve the applicable Approved Fee Rate.  For clarity, an IPO (as defined pursuant to Section 6(a) below) shall not affect or otherwise limit Provider’s and HoldCo’s obligations to make the foregoing information and documentation available to representatives of the Independent Directors during the Term of this Agreement, notwithstanding any effect such IPO may have with respect to Recipient’s, HoldCo’s and Provider’s respective rights and obligations pursuant to Section 9.2 of the Purchase Agreement, except, solely with respect to such rights and obligations pursuant to Section 9.2 of the Purchase Agreement, if and to the extent required by any relevant stock exchange or Governmental Authority or for the purpose of obtaining the legal opinion that is required in connection with the submission of a compliant application for an IPO. In connection with its review of Provider’s Budgeted Service Costs, the Independent Directors may appoint an internationally recognized accounting firm (which shall initially be PricewaterhouseCoopers LLP) to review the financial and operating data used in preparing Provider’s calculation and the working papers of Provider’s auditors (if not prohibited by Provider’s auditors, provided that Provider will not withhold any consents necessary to permit Provider’s auditors to provide access to such working papers) related thereto in accordance with the Auditor’s Review Instructions.  Provider acknowledges and agrees that it is responsible for controlling its overall expenses to prevent costs from exceeding the Budgeted Service Costs that were used to determine the Approved Fee Rate.  Each Approved Fee Rate determined under this Section 3(c) shall be subject to approval by the unanimous agreement of the Independent Directors in connection with such annual budget meeting, and until such time as such approval by the Independent Directors is obtained, the Approved Fee Rate for fiscal year 2012 set forth in Section 3(a) of this Schedule 7.1, or, during subsequent fiscal years during the Term, for the immediately preceding year, shall remain in effect.  For clarity, the Independent Directors are under no obligation to approve any annual budget or any increase in the Approved Fee Rate which they find unreasonable.  Upon such approval, the Approved Fee Rate shall be adjusted retroactively to the commencement of the applicable fiscal year.

 

 

(d)                                                    Off-Recipient Service Fees.  As set forth in Section 7.1(b), in no event will any Recipient Party be required to pay any Payment Processing Fee in connection with any Off-Recipient Services, and all Total Payment Volume processed by Provider and its Subsidiaries in connection with Off-Recipient Services shall be excluded from the Base TPV for each Recipient Party.

 

4.                                      Annual True-Up.  Within forty-five (45) days of the end of each fiscal year, the Parties shall cooperate in good faith to determine the actual amount of Applicable Bank Fees paid by Provider in connection with providing the Services to each Recipient Party pursuant to this Agreement during such fiscal year, and compare such amount to the amount budgeted for Applicable Bank Fees for each Recipient Party for such fiscal year.  If the Parties mutually determine that such actual amount is greater than such budgeted amount, then the applicable Recipient Party shall, within thirty (30) days of such determination, pay to Provider the difference between such actual and budgeted amounts.  In the event the Parties mutually determine that such actual amount is less than such budgeted amount, Provider shall, within thirty (30) days of such determination, pay to each Recipient Party the difference between such actual and budgeted amounts.  For the avoidance of doubt, no costs other than the Applicable Bank Fees shall be subject to the true-up procedures set forth in this Section, but the actual costs and expenses of Provider shall, together with the actual Applicable Bank Fees, serve as a basis for determining the subsequent fiscal year’s Budgeted Service Costs for such fiscal year pursuant to Section 3(c) of this Schedule 7.1.

 

5.                                      Packaged Services.  The Parties acknowledge and agree that, other than the Packaged Services (as defined below) provided through the airline ticketing platform of Taobao Marketplace, as of the Effective Date, no Recipient Party charges any End Customers a fee for the use of Services provided by Provider and that as of the Effective Date no such Services are or will be deemed to be bundled with any other services offered by any Recipient Party, whether or not fees are charged for any such other services.  If Recipient (or any Recipient Party) proposes during the Term to charge End Customers of any e-commerce marketplace or storefront operated by a Recipient Party a fee for use of any Services provided by Provider pursuant to this Agreement, whether as an independent service offering or as part of a bundle of services expressly offered by a Recipient Party on a “bundled” or “package” basis (“Packaged Services”), then Provider and the applicable Recipient Party will discuss in good faith and jointly propose to the board of directors of Recipient a proposed revenue share or additional fees or a different fixed fee rate (“Negotiated Fee Rate”) solely with respect to such Packaged Services as between Provider and Recipient.  Except for Packaged Services already offered as of the Effective Date, unless and until such proposal is approved by Provider and the unanimous agreement by the Independent Directors, no such fee bearing (to End Customers) Services or fee-bearing (to End Customers) bundle of Services that includes such Services, and no applicable fees to End Customers therefor, will be implemented by a Recipient Party.  For clarity, any such approval by the Independent Directors (including any revenue share, Negotiated Fee Rate or other value allocation approved by the Independent Directors) shall apply only to the specific Packaged Services expressly identified in writing in such approval.  For the avoidance of doubt, this Section 5 of this Schedule 7.1 shall not apply to prevent a Recipient Party from charging to End Customers any fees unrelated to the Services.  For the further avoidance of doubt, any revenue share pursuant to this Section 5 of this Schedule 7.1, to the extent approved by the Independent Directors as set forth herein, may be freely negotiated between Provider and Recipient and shall not be limited to methodologies for determining the Approved Fee Rate under this Schedule 7.1.

 

 

6.                                      Adjustments In Event of an IPO.

 

(a)                                 Notwithstanding the foregoing, if applicable regulatory authorities seek any increase in the Approved Fee Rate in the event of or in connection with an IPO (as defined below), each of Provider, Provider’s Subsidiaries and HoldCo shall first use commercially reasonable efforts to avoid any requirement to increase the Approved Fee Rate.  If, despite such efforts, applicable regulatory authorities require an increase in the Approved Fee Rate in connection with an IPO, then the Approved Fee Rate will be adjusted on a going-forward basis, solely as necessary to and solely to the extent required to comply with the regulatory requirements applicable in connection with such IPO, and solely from and after the effectiveness thereof.  Following the adjustment of such Approved Fee Rate, HoldCo shall pay, or cause to be paid, in accordance with Section 6(d) below of this Schedule 7.1, an amount (the “Impact Payment”) equal to the change in value of Recipient’s business caused by such adjustment to the Approved Fee Rate, calculated as the (x) the Recipient Decrease less (y) thirty-seven and one-half percent (37.5%) of the Provider Increase (each as hereinafter defined).  The “Recipient Decrease” means the amount by which the equity value of Recipient is reduced as a result of such adjustment of the Approved Fee Rate, disregarding for these purposes Recipient’s economic interest in any Impact Payment.  The “Provider Increase” means the amount by which the equity value of Provider is increased as a result of such adjustment of the Approved Fee Rate, taking into account anticipated effects to the equity value of Provider in connection with an IPO to the extent provided herein.  Each of the Recipient Decrease and the Provider Increase shall be determined using the same valuation methodology for each of Recipient and Provider, provided that use of the same valuation methodology shall not require use of the same valuation inputs (e.g., the valuations need not assume that Recipient and Provider have the same weighted average cost of capital or would trade at the same multiples of revenue, EBITDA, cash flow or earnings; provided, that these examples are for illustrative purposes only and shall not affect the methodology that may be used), and in accordance with subsections (b) and (c) of this Section 6 of this Schedule 7.1.  For the avoidance of doubt, the Provider Increase could be greater than or less than the Recipient Decrease.  “IPO” means an initial public offering, covering the offer and sale of securities of Provider or HoldCo.

 

(b)                                 In connection with any adjustment in the Approved Fee Rate in connection with an IPO pursuant to this Schedule 7.1, Recipient and Provider shall discuss in good faith the amounts of the Recipient Decrease, Provider Increase (if applicable) and Impact Payment resulting therefrom.  If Recipient and Provider are unable to reach agreement on the amount of the Recipient Decrease and/or Provider Increase (if applicable) within thirty (30) days of the first request to initiate such discussions, the Recipient Decrease and Provider Increase (if applicable) shall finally be determined by independent, internationally recognized investment banks, not involved in the public offering of Provider, as set forth in Section 6(c) of this Schedule 7.1.

 

 

(c)                                  If Recipient and Provider are unable to reach agreement on the amount of the Recipient Decrease and/or Provider Increase (if applicable) pursuant to Section 6(b) of this Schedule 7.1, then, within fifteen (15) days thereafter, each of Recipient and HoldCo shall appoint one (1) independent, internationally recognized investment bank, not involved in the public offering of Provider, to determine the amount of the Impact Payment (collectively, the “Appointed Banks”).  Each Appointed Bank’s determination shall be made and delivered to Recipient and HoldCo within forty-five (45) days following the date on which the second Appointed Bank was appointed simultaneously at a mutually-agreed time, date and place (or, failing such arrangement, at 5:00 p.m. local time on such 45th day at the offices of Morrison & Foerster LLP located at Edinburgh Tower, 33/F The Landmark, 15 Queen’s Road Central, Hong Kong).  If the determinations of the Impact Payment made by each of the Appointed Banks are within ten percent (10%) of each other (i.e., the difference between the two determined Impact Payments is equal to or less than ten percent (10%) of the higher determined Impact Payment), then the average of the two determined Impact Payments shall be the final Impact Payment.  If the determinations of the Impact Payment made by the Appointed Banks are not within ten percent (10%) of each other, then the Appointed Banks, within twenty (20) days, shall appoint an independent, internationally recognized investment bank (the “Third Bank”) to determine the amount of the Impact Payment.  The determination of the Third Bank shall be delivered to Recipient and HoldCo within thirty (30) days after the appointment of the Third Bank.  The determination of the Impact Payment by such Third Bank, together with the determinations provided by the Appointed Banks, will be used to determine the final Impact Payment as follows: (i) if the determination made by the Third Bank falls within the middle third of the range between the determinations made by the two Appointed Banks, then the final Impact Payment for the purposes of this Agreement shall be the Impact Payment determined by the Third Bank; and (ii) if the Impact Payment determined by the Third Bank falls outside the middle third of the range between the determinations of the Appointed Banks, then the final Impact Payment shall be the Impact Payment determined by the Appointed Bank that is closer to the Impact Payment determined by the Third Bank.  None of the Appointed Banks shall have access to the valuations of any other Appointed Bank in connection with the foregoing process (i.e., each valuation will be made independently, without knowledge of or reference to the valuation of any other Appointed Bank).

 

(d)                                 HoldCo shall become obligated to pay the Impact Payment to Recipient at the times and in the manner provided as follows:

 

(i)                                     If an Impact Payment is due in connection with an IPO, and if the proceeds of such IPO (net of applicable taxes payable by Provider or HoldCo) are in excess of or equal to the Impact Payment amount, HoldCo will pay the Impact Payment to Recipient as soon as reasonably practicable and in any event within ninety (90) days following the consummation of such IPO;

 

 

(ii)                                  If an Impact Payment is due in connection with an IPO, and if the proceeds of such IPO (net of applicable taxes payable by Provider or HoldCo) are less than the Impact Payment amount, HoldCo will pay all of the proceeds of such IPO (net of applicable taxes payable by Provider or HoldCo) to Recipient as soon as reasonably practicable and in any event within ninety (90) days following the consummation of such IPO, with the remainder of the Impact Payment to be paid in three (3) equal installments due twelve (12), eighteen (18) and twenty-four (24) months after the date of such initial public offering; and

 

(iii)                               Following an IPO giving rise to an Impact Payment pursuant to clause (i) or (ii) above, interest shall (A) accrue daily at an annual rate equal to the Interest Rate on the aggregate unpaid amount of the Impact Payment, (B) compound monthly (provided that the monthly rate will be calculated so that the effective annual rate remains the rate set forth in clause (A)), (C) be paid by HoldCo in arrears on each date on which payment is made, and (D) be computed on the basis of a three hundred sixty (360)-day year comprised of twelve (12) thirty (30)-day months.

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