Document:

Exhibit 10.3

 

EXECUTION VERSION

 

CROSS LICENSE AGREEMENT

 

by and between

 

ALIBABA GROUP HOLDING LIMITED

 

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.)

 

Dated as of September 23, 2019

 

 

	
TABLE OF CONTENTS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
RECITALS
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE I DEFINITIONS
    	
2
    
	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
2
    
	
Section 1.2
    	
Cross-Reference of   Other Definitions
    	
11
    
	
Section 1.3
    	
Construction
    	
12
    
	
Section 1.4
    	
Exhibits
    	
13
    
	
 
    	
 
    
	
ARTICLE II LICENSE GRANTS
    	
13
    
	
 
    	
 
    
	
Section 2.1
    	
Grant of License to   Purchaser Under Alibaba Licensed Patents
    	
13
    
	
Section 2.2
    	
Grant of License to   Alibaba Under Purchaser Licensed Patents
    	
14
    
	
Section 2.3
    	
Grant of Technology   Licenses
    	
14
    
	
Section 2.4
    	
No Obligation to   Provide Maintenance and Support
    	
15
    
	
Section 2.5
    	
Grant of Trademark   License
    	
15
    
	
Section 2.6
    	
Rights Requiring   Third-Party Consents or Payments
    	
17
    
	
Section 2.7
    	
Right to Grant   Sublicenses to Subsidiaries
    	
18
    
	
Section 2.8
    	
Right to Grant   Sublicenses to Minority Affiliates
    	
19
    
	
Section 2.9
    	
Further Obligations in   Respect of Sublicensees
    	
20
    
	
Section 2.10
    	
No Other Licenses or   Rights
    	
20
    
	
 
    	
 
    
	
ARTICLE III RELEASES AND IMMUNITIES
    	
21
    
	
 
    	
 
    
	
Section 3.1
    	
Release of Purchaser   and Its Subsidiaries
    	
21
    
	
Section 3.2
    	
Release of Alibaba and   Its Subsidiaries
    	
21
    
	
Section 3.3
    	
Application of Immunity
    	
21
    
	
 
    	
 
    
	
ARTICLE IV APPLICATION OF AGREEMENT
    	
22
    
	
 
    	
 
    
	
Section 4.1
    	
Effect of Agreement on   Subsidiaries
    	
22
    
	
Section 4.2
    	
Obligation of the   Parties Regarding Subsidiaries
    	
22
    
	
Section 4.3
    	
Coordination under   Agreement
    	
22
    
	
 
    	
 
    
	
ARTICLE V INTELLECTUAL PROPERTY COOPERATION
    	
23
    
	
 
    	
 
    
	
Section 5.1
    	
Patent Prosecution;   Maintenance
    	
23
    
	
Section 5.2
    	
Infringement Claim   Defense
    	
23
    
	
Section 5.3
    	
Intellectual Property   Enforcement
    	
25
    
	
Section 5.4
    	
Patent Advocacy
    	
26
    
	
Section 5.5
    	
Third-Party   Co-Development
    	
26
    
	
Section 5.6
    	
Patent Right of First   Offer
    	
26
    
	
Section 5.7
    	
Patent Acquisitions
    	
27
    
	
Section 5.8
    	
Common-Interest   Agreement
    	
27
    
	
 
    	
 
    
	
ARTICLE VI TERM AND TERMINATION
    	
27
    
	
 
    	
 
    
	
Section 6.1
    	
Term
    	
27
    
	
Section 6.2
    	
Termination
    	
28
    
	
Section 6.3
    	
Effect of Termination
    	
29
    
	
Section 6.4
    	
Survival
    	
29
    
	
 
    	
 
    
	
ARTICLE VII REPRESENTATIONS AND WARRANTIES
    	
29
    
	
 
    	
 
    
	
Section 7.1
    	
Mutual Representations   and Warranties
    	
29
    
	
Section 7.2
    	
Representation and   Warranty by Purchaser
    	
29
    

 

i

 

	
Section 7.3
    	
Limitations. Except as   expressly set forth herein, nothing in this Agreement shall be construed as:
    	
30
    
	
Section 7.4
    	
Disclaimer of Other   Warranties
    	
30
    
	
 
    	
 
    
	
ARTICLE VIII INDEMNIFICATION
    	
31
    
	
 
    	
 
    
	
Section 8.1
    	
Indemnification
    	
31
    
	
Section 8.2
    	
Indemnification   Procedures
    	
31
    
	
 
    	
 
    
	
ARTICLE IX LIMITATION OF LIABILITY
    	
32
    
	
 
    	
 
    
	
Section 9.1
    	
Limitation of Liability
    	
32
    
	
 
    	
 
    
	
ARTICLE X ASSIGNMENT, CHANGE OF CONTROL AND   NEW BUSINESSES
    	
33
    
	
 
    	
 
    
	
Section 10.1
    	
Assignment by a Party
    	
33
    
	
Section 10.2
    	
Change of Control and   Transfer
    	
33
    
	
Section 10.3
    	
New Businesses
    	
35
    
	
 
    	
 
    
	
ARTICLE XI CONFIDENTIALITY
    	
35
    
	
 
    	
 
    
	
Section 11.1
    	
Confidentiality
    	
35
    
	
Section 11.2
    	
Permitted Disclosures
    	
36
    
	
Section 11.3
    	
Disclosure in Compliance   With Law
    	
36
    
	
Section 11.4
    	
Restricted Data
    	
37
    
	
Section 11.5
    	
Confidentiality of the   Licensed IP
    	
37
    
	
 
    	
 
    
	
ARTICLE XII ADDITIONAL PROVISIONS
    	
37
    
	
 
    	
 
    
	
Section 12.1
    	
Arbitration
    	
37
    
	
Section 12.2
    	
Disclosure
    	
39
    
	
Section 12.3
    	
No Waiver
    	
40
    
	
Section 12.4
    	
Relationship of the   Parties as Independent Contractors
    	
40
    
	
Section 12.5
    	
No Third-Party Rights
    	
40
    
	
Section 12.6
    	
Entire Agreement
    	
40
    
	
Section 12.7
    	
Governing Law
    	
40
    
	
Section 12.8
    	
Amendment
    	
40
    
	
Section 12.9
    	
Further Acts
    	
41
    
	
Section 12.10
    	
Headings
    	
41
    
	
Section 12.11
    	
Compliance With Laws
    	
41
    
	
Section 12.12
    	
Severability
    	
41
    
	
Section 12.13
    	
Notices
    	
42
    
	
Section 12.14
    	
Remedies Cumulative;   Specific Performance
    	
43
    
	
Section 12.15
    	
Counterparts and   Exchanges by Electronic Transmission or Facsimile
    	
43
    
	
Section 12.16
    	
English Language Only
    	
43
    

 

ii

 

CROSS LICENSE AGREEMENT

 

This CROSS LICENSE AGREEMENT (the “Agreement”), dated as of September 23, 2019 (the “Effective Date”), is made by and between the following parties (each of which shall be referred to individually as a “Party” and which are referred to collectively as the “Parties”):

 

ALIBABA GROUP HOLDING LIMITED, a Cayman Islands registered company (“Alibaba”), on behalf of itself and its Subsidiaries; 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”), on behalf of itself and its Subsidiaries.

 

RECITALS

 

WHEREAS, 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 Mainland China (“Alipay”), was formerly a Controlled (defined below) Affiliate of Alibaba, during which time technology and other intellectual property necessary or useful for the operation of the FIG Holdco Business (defined below) 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 (the “Framework Agreement”), setting forth such parties’ agreements as to Alipay’s continued operation of the FIG Holdco Business and other matters;

 

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 in accordance with its terms on August 12, 2014 (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 Purchaser and its Subsidiaries (including Alipay);

 

WHEREAS, the Parties are also parties to the Shared 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;

 

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 February 1, 2018 (the “2018 Amendment”), to better reflect the understanding and course of performance of the Parties with respect to the subject matter thereof;

 

 

WHEREAS, pursuant to the 2014 Transaction Agreement as amended by the 2018 Amendment (the “Transaction Agreement”), the Parties have further amended and restated the 2014 IPLA in its entirety as set forth in that certain Second Amended and Restated Intellectual Property License Agreement (the “Amended IPLA”), which Amended IPLA became effective concurrently with the Issuance Closing Date;

 

WHEREAS, Section 2.2(b) of the Transaction Agreement provides that, on or before the transfer of the Stage 1 Retained IP (defined below), the Parties will enter into a cross license agreement to grant certain licenses to each other with respect to the Stage 1 Retained IP, Remaining Retained IP and other asserts transferred pursuant to Section 2.2 of the Transaction Agreement; and

 

WHEREAS, the Parties now desire to set forth such cross licenses, as well as provide for the additional cross licensing of certain patents, trademarks and technology between the Parties, and the terms and conditions on which they are granted in this Agreement.

 

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, agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                    Definitions. As used herein, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Transaction Agreement.

 

“Alibaba Licensed Patents” means all Patents owned or Licensable (subject to Section 2.6) by Alibaba or any of its Subsidiaries as of the Effective Date or at any time thereafter during the Term, provided that, with respect to any Patents Licensable by Alibaba or any of its Subsidiaries, only for as long as such Patents remain Licensable. For clarity, the term “Alibaba Licensed Patents” shall include any Patents owned or Licensable by a Subsidiary that is a New Business, including New Businesses to which Alibaba is prohibited from sublicensing pursuant to Section 2.7, Section 2.8 or Section 10.3, if such Patents are, at any time during the Term, owned or Licensable by such Subsidiary.

 

“Alibaba Licensed Products and Services” means (a) products and services used, sold, offered for sale, leased, distributed, or otherwise disposed of by Alibaba or Alibaba’s Sublicensed Subsidiaries at any time during the Term, and (b) products and services used, sold, offered for sale, leased, distributed, or otherwise disposed of by a shared business engaged in by Alibaba or Alibaba’s Sublicensed Subsidiaries at any time during the Term to the extent permitted by Section 9.9(b)(i) of the Transaction Agreement; except that in all cases of (a) and (b) Alibaba Licensed Products and Services do not include Foundry Products and Services.

 

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“Alibaba Licensed Technology” means:

 

(a)                                 all Technology that is both (i) owned or Licensable (subject to Section 2.6) by Alibaba or any of its Subsidiaries as of the Effective Date pursuant to the terms hereof, and (ii) in the possession of Purchaser (or any of its Subsidiaries) as of the Effective Date; and

 

(b)                                 all Technology, if any, that is both (i) provided by Alibaba (or any of its Subsidiaries) to Purchaser (or any of its Subsidiaries) during the Term in the ordinary course of business, and (ii) is at such time owned or Licensable (subject to Section 2.6) by Alibaba (or any of its Subsidiaries) pursuant to the terms hereof.

 

“Alibaba Licensed Trademarks” means (a) all Trademarks owned by Alibaba or any of its Subsidiaries as of the Effective Date (including any trademark registrations that issue from trademark applications included in such Trademarks) and (b) all Trademarks owned by Alibaba or any of its Subsidiaries at any time during the Term, in each case that are the subject of a Joint Marketing Campaign agreed to by the Parties pursuant to Section 2.5(a).

 

“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-Exclusive Patents” means:

 

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

 

(b)                                 any Patent owned by Alibaba issuing during the term of the Amended IPLA that claims an effective filing date based upon any of the Patents described in the foregoing clause (a), 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 (a);

 

(c)                                  any Patent issuing during the term of the Amended IPLA 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;

 

(d)                                 any New Alipay Patent issuing during the term of the Amended IPLA based on any invention made solely by employees or contractors of Purchaser and/or a Purchaser Subsidiary and is assigned to Alibaba pursuant to Section 4.4 of the Amended IPLA;

 

3

 

(e)                                  any Patent issuing during the term of the Amended IPLA 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

 

(f)                                   any Patent issuing during the term of the Amended IPLA 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 this Agreement upon its assignment by Alibaba to Purchaser pursuant to Section 2.2 of the Transaction Agreement) or SME Loan Know-How.

 

“Alipay-Related Patents” has the meaning ascribed to that term in the Amended IPLA.

 

“Alipay IT Company (Z53)” means 瀚宝(上海)信息技术有限公司, formerly known as 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 Effective Date as Z53 and a wholly-owned Subsidiary of Alibaba.

 

“Amended IPLA Termination Date” means the date upon which the Amended IPLA terminates in accordance with its terms, other than any termination by Alibaba pursuant to Section 12.2 thereof.

 

“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.

 

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions located in Beijing, Hong Kong or New York are authorized or obligated by Laws to close.

 

“Change of Control” means, as to a Party, any transaction or event (or series of transactions or events), whether an acquisition of securities, merger, consolidation, proxy contest

 

4

 

or other transaction or event (or series of transactions or events), as a result of which any Person (whether alone or with other Persons) that did not directly or indirectly Control such Party or such Party’s business prior to the transaction or event (or series of transactions or events) thereafter directly or indirectly Controls such Party or such Party’s business, whether or not such Party survives such transaction or event (or series of transactions or events). Without limitation to the generality of the foregoing, Change of Control of a Party includes the acquisition by another Person (whether directly or indirectly, and whether alone or in combination with related Persons) of (a) more than fifty percent (50%) of the voting securities of such Party or of any Person that Controls such Party or (b) the right or power (whether directly or indirectly, and whether alone or in combination with related Persons) to direct or cause the direction of management of or policies of such Party or Person (whether through ownership of securities or other ownership interest, by Contract or otherwise). Notwithstanding the foregoing, Change of Control of a Party shall not include (i) the reincorporation of a Party or any internal reorganization conducted by a Party for tax, corporate or similar purposes, to the extent that such reincorporation or reorganization does not result in any Person (whether alone or with other Persons) that did not directly or indirectly Control such Party or such Party’s business prior to the reincorporation or reorganization thereafter directly or indirectly Controlling such Party or such Party’s business or (ii) any transaction or event (or series of transactions or events) resulting in the acquisition of Control, directly or indirectly, of such Party by one or more Persons consisting solely of Jack Ma Yun, his Family Members and/or trusts, funds and/or Persons Controlled by Jack Ma Yun and his Family Members (collectively, “Jack Ma Yun Persons”), provided that, in addition to the acquisition of Control, (A) following such transaction or event (or series of transactions or events), the Jack Ma Yun Persons maintain more than fifty percent (50%) of the equity and other economic interests in such Party, and (B) there is no integration or combination of such Party’s business with any other material business as a result of such transaction or event (or series of transactions or events).

 

“Competing New Business” shall have the meaning set forth in Section 10.3(b).

 

“Confidential Information” has the meaning set forth in Section 11.1.

 

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

 

“Control” (including, with correlative meanings, the terms “Controlled” and “Controlling”) means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management of such Person, whether through the ownership of voting securities, by Contract or otherwise.

 

“Dedicated Employees” means any employees of Alipay IT Company (Z53) and its Subsidiaries that during the IPLA Period were dedicated on a full-time basis solely to the provision of the Software Technology Services and other technologies under the 2014 IPLA, or individual contractors engaged by Alipay IT Company (Z53) and its Subsidiaries in connection with the provision of the same, in each case that qualified as “Dedicated Employees” under the definition of that term in the 2014 IPLA, during the IPLA Period.

 

5

 

“Disclosing Party” has the meaning set forth in Section 11.1.

 

“End User License” means an enforceable written agreement between (i) Purchaser (or any Purchaser Subsidiary) or Alibaba (or any Alibaba Subsidiary), on the one hand, and (ii) an End User or contractor of Purchaser or Alibaba, on the other hand, containing terms that are at least as protective of Alibaba’s and its Subsidiaries’ or Purchaser’s and its Subsidiaries’, as applicable, rights and interests in and to its Licensed Technology as those contained in the Amended IPLA, this Agreement or as may otherwise be required by Licensor from time to time during the Term.

 

“End Users” means any contractors or end user customers of Purchaser and/or its Subsidiaries or Alibaba and/or its Subsidiaries, as applicable, to whom certain elements of the Licensed Technology of the other Party are distributed in the form of client-side end user software and related documentation and materials and licensed solely in Object Code in the case of software and solely as incorporated in or otherwise a part of a Purchaser Licensed Product or Service, in the case of Purchaser, or Alibaba Licensed Product or Service, in the case of Alibaba, pursuant to an End User License.

 

“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 natural 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.

 

“Foundry Products and Services” means services provided by a Licensee to or on behalf of, or products manufactured by a Licensee for or on behalf of, a Third Party using designs or specifications received in a substantially completed form from or on behalf of such Third Party, for resale or re-license or offering to or on behalf of such Third Party, except in the case where:

 

(a)                                 such Licensee or its Subsidiary owns, controls, developed or acquired a design or specification for the service or product, and such service or product is not specifically designed for the sole commercial exploitation by or on behalf of such Third Party; and/or

 

6

 

(b)                                 such design or specification resulted from a bona fide joint development arrangement between or the joint participation of such Licensee or any of its Subsidiaries and such Third Party, including but not limited to a standards body or community organization, in which a substantial portion of the design or specification is provided or developed by such Licensee or its Subsidiary.

 

“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.

 

“Infringement” means, with respect to any Intellectual Property Right, any infringement, misappropriation, passing off, dilution, or other violation, as applicable, of such Intellectual Property Right.

 

“Intellectual Property Rights” means all rights of the following types, which may exist or be created under the Laws of any jurisdiction in the world:

 

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

 

(b)                                 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”);

 

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

 

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

 

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

 

(f)                                   all other proprietary rights in Technology.

 

“IP Coordinator” has the meaning set forth in Section 4.3.

 

“IPLA Period” means the period beginning upon the time and date on which the “Closing” (as defined in the Framework Agreement and not as defined in the Transaction Agreement) occurred under the Framework Agreement and ending upon the effective date of the Amended IPLA.

 

7

 

“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.

 

“Licensable” means, with respect to a Person and an Intellectual Property Right, that (a) such Person does not own such Intellectual Property Right and (b) such Person has the right to grant a sublicense under such Intellectual Property Right on the terms contemplated hereunder.

 

“License Term” means, with respect to a license granted by Licensor to Licensee hereunder, the period commencing from the Effective Date and ending on the earlier of (a) the end of the Term or (b) the date such license is terminated in accordance with the terms hereof.

 

“Licensed Patents” means Purchaser Licensed Patents or Alibaba Licensed Patents, as applicable.

 

“Licensed Products and Services” means Purchaser Licensed Products and Services or Alibaba Licensed Products and Services, as applicable.

 

“Licensed Technology” means Purchaser Licensed Technology or Alibaba Licensed Technology, as applicable.

 

“Licensed Trademarks” means Purchaser Licensed Trademarks or Alibaba Licensed Trademarks, as applicable.

 

“Licensee” means a Party that is the recipient of a license granted under Article II hereof.

 

“Licensor” means either Alibaba or Purchaser, as applicable.

 

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

 

“New Alipay Patent” has the meaning ascribed to that term in the Amended IPLA.

 

“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-Exclusive Patents” means the Patents relating solely to the New FIG Business as of the effective date of the Amended IPLA and owned by Alibaba or a Subsidiary Licensor that are set forth on Exhibit J of the Amended IPLA as of the effective date thereof, and any New Alipay Patents issuing after the effective date of the Amended IPLA during the term thereof 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 of the Amended IPLA.

 

“New FIG Business-Related Patents” has the meaning ascribed to that term in the Amended IPLA.

 

8

 

“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.

 

“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 legal entity.

 

“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.

 

“Purchaser Licensed Patents” means all Patents owned or Licensable (subject to Section 2.6) by Purchaser or any of its Subsidiaries as of the Effective Date or at any time thereafter during the Term, provided that, with respect to any Patents Licensable by Purchaser or any of its Subsidiaries, only for as long as such Patents remain Licensable. For clarity, the term “Purchaser Licensed Patents” shall include any Patents owned or Licensable by a Subsidiary that is a New Business, including New Businesses to which Purchaser is prohibited from sublicensing pursuant to Section 2.7, Section 2.8 or Section 10.3, if such Patents are, at any time during the Term, owned or Licensable by such Subsidiary.

 

“Purchaser Licensed Products and Services” means (a) products and services used, sold, offered for sale, leased, distributed, or otherwise disposed of by Purchaser or Purchaser’s Sublicensed Subsidiaries at any time during the Term to the extent permitted by Section 9.9 of the Transaction Agreement, and (b) products and services used, sold, offered for sale, leased, distributed, or otherwise disposed of by a shared business engaged in by Purchaser or Purchaser’s Sublicensed Subsidiaries at any time during the Term to the extent permitted by Section 9.9(a)(i) of the Transaction Agreement; except that in all cases of (a) and (b) Purchaser Licensed Products and Services do not include Foundry Products and Services.

 

“Purchaser Licensed Technology” means:

 

(a)                                 all Technology that is both (i) owned or Licensable (subject to Section 2.6) by Purchaser or any of its Subsidiaries as of the Effective Date pursuant to the terms hereof, and (ii) in the possession of Alibaba (or any of its Subsidiaries) as of the Effective Date; and

 

(b)                                 all Technology, if any, that is both (i) provided by Purchaser (or any of its Subsidiaries) to Alibaba (or any of its Subsidiaries) during the Term in the ordinary course of business, and (ii) is at such time owned or Licensable (subject to Section 2.6) by Purchaser (or any of its Subsidiaries) pursuant to the terms hereof.

 

“Purchaser Licensed Trademarks” means (a) all Trademarks owned by Purchaser or any of its Subsidiaries as of the Effective Date (including any trademark registrations that issue from trademark applications included in such Trademarks) and (b) all Trademarks owned by Purchaser or any of its Subsidiaries at any time during the Term, in each case that are the subject of a Joint Marketing Campaign agreed by the Parties pursuant to Section 2.5(a).

 

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“Receiving Party” has the meaning set forth in Section 11.1.

 

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

 

“Renminbi” means the lawful currency of Mainland China.

 

“Retained IP” 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 of the 2014 IPLA, including the materials that are listed in Exhibit H of the Amended IPLA as of the effective date thereof, in each case that were or 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 the services described in Exhibit E of the 2014 IPLA, or that were otherwise mutually agreed in writing by the Parties to constitute “Software Technology Services” during the IPLA Period.

 

“Source Code” means the human-readable version of a software program that can be compiled into Object Code (in the case of compiled programming languages) or interpreted directly (in the case of any other programming languages), 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. For clarity, Stage 1 Retained IP includes both Stage 1a Retained IP and Stage 1b Retained IP (each as defined in the Transaction Agreement).

 

“Subsidiary” means, with respect to any Person, each other Person in which the first Person (i) Beneficially Owns, 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. Notwithstanding the foregoing, references to a Party’s (as Licensee) “Subsidiary” or “Subsidiaries” shall be deemed to exclude such Party’s Competing New Business; provided, however, that nothing in this sentence will limit either Party’s (as Licensor) obligation to license

 

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to the other Party any Intellectual Property Rights owned by any of its Subsidiaries constituting a Competing New Business in accordance with the terms hereof. 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 Agreement.

 

“Technology” means any or all of the following:

 

(a)                                 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;

 

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

 

(c)                                  proprietary and confidential information, including technical data and customer and supplier lists, Trade Secrets and know how;

 

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

 

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

 

“Third Party” means any Person that is neither a Party nor a Subsidiary of a Party.

 

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

 

“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 Agreement:

 

	
Term
    	
 
    	
Section
    
	
2014 IPLA
    	
 
    	
Recitals
    
	
2014 Transaction Agreement
    	
 
    	
Recitals
    
	
2018 Amendment
    	
 
    	
Recitals
    
	
Agreement
    	
 
    	
Preamble
    
	
Alibaba
    	
 
    	
Preamble
    
	
Alipay
    	
 
    	
Recitals
    
	
Amended IPLA
    	
 
    	
Recitals
    
	
Jack Ma Yun Persons
    	
 
    	
Within the definition   of “Change of Control”
    
	
Claimant
    	
 
    	
Section 12.1(c)
    
	
Common-Interest Agreement
    	
 
    	
Section 5.8
    
	
Copyrights
    	
 
    	
Within the definition   of “Intellectual Property Rights”
    

 

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Cutoff Date
    	
 
    	
Section 10.2
    
	
Defending Party
    	
 
    	
Section 5.2(a)
    
	
Domain Names
    	
 
    	
Within the definition   of “Intellectual Property Rights”
    
	
Effective Date
    	
 
    	
Preamble
    
	
Framework Agreement
    	
 
    	
Recitals
    
	
ICC
    	
 
    	
Section 12.1(b)
    
	
Indemnified Party
    	
 
    	
Section 8.1
    
	
Indemnifying Party
    	
 
    	
Section 8.1
    
	
Joint Claim
    	
 
    	
Section 5.2(b)
    
	
Joint Marketing Campaign
    	
 
    	
Section 2.5(a)
    
	
License Payment
    	
 
    	
Section 2.6(c)
    
	
Losses
    	
 
    	
Section 8.1
    
	
Minority Affiliate
    	
 
    	
Section 2.8
    
	
New Business
    	
 
    	
Section 10.3
    
	
Party
    	
 
    	
Preamble
    
	
Parties
    	
 
    	
Preamble
    
	
Patents
    	
 
    	
Within the definition   of “Intellectual Property Rights”
    
	
Purchaser
    	
 
    	
Preamble
    
	
Request
    	
 
    	
Section 12.1(c)
    
	
Respondent
    	
 
    	
Section 12.1(c)
    
	
Revenue Cap
    	
 
    	
Section 10.2(a)(i)
    
	
ROFO Negotiation Period
    	
 
    	
Section 5.6
    
	
ROFO Notice Period
    	
 
    	
Section 5.6
    
	
Single-Party Claim
    	
 
    	
Section 5.2(c)
    
	
Sublicensed Minority Affiliate
    	
 
    	
Section 2.8
    
	
Sublicensed Subsidiary
    	
 
    	
Section 2.7
    
	
Successor Party
    	
 
    	
Section 10.1
    
	
Term
    	
 
    	
Section 6.1
    
	
Third Party Claim
    	
 
    	
Section 8.2(a)
    
	
Trademarks
    	
 
    	
Within the definition   of “Intellectual Property Rights”
    
	
Trade Secrets
    	
 
    	
Within the definition   of “Intellectual Property Rights”
    
	
Transaction Agreement
    	
 
    	
Recitals
    

 

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

 

(a)                                 references in this Agreement 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 Agreement;

 

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

 

(e)                                  references to this Agreement or any other agreement or document shall be construed as references to this Agreement 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 effective date of the Amended IPLA;

 

(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 Agreement and all section titles or captions contained in this Agreement 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 Agreement and shall not affect the meaning or interpretation of this Agreement;

 

(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 Agreement as a whole and not to any particular provision; and

 

(j)                                    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 Agreement or referenced in this Agreement are incorporated into and form an integral part of this Agreement.

 

ARTICLE II

 

LICENSE GRANTS

 

Section 2.1                                    Grant of License to Purchaser Under Alibaba Licensed Patents. Subject to the terms of this Agreement, Alibaba (on behalf of itself and its Subsidiaries) agrees to grant and hereby grants to Purchaser a worldwide, royalty-free, fully paid-up, nonexclusive, non-transferable (subject to Article X) license under the Alibaba Licensed Patents, during the License Term, to make, have made, use, sell, offer for sale, lease, import, export, distribute and otherwise dispose of Purchaser Licensed Products and Services; provided, however, that prior to the Amended IPLA Termination Date, Alibaba Licensed Patents that constitute Alipay-Exclusive Patents, Alipay-Related Patents, New FIG Business-Exclusive Patents and New FIG Business-Related Patents shall be licensed to Purchaser (to the extent not earlier assigned by Alibaba to Purchaser or any of its Subsidiaries in accordance with Section 2.2 of the Transaction Agreement) pursuant to the terms of the Amended IPLA rather than this Agreement, and on and after the Amended IPLA Termination Date (to the extent not earlier assigned to Purchaser or any of its Subsidiaries in accordance with Section 2.2 of the Transaction Agreement), shall be licensed to Purchaser pursuant to the terms of this Agreement. The foregoing license excludes

 

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the right to grant sublicenses except as specifically provided in Section 2.7 and Section 2.8 below. For clarity, the license as to each Alibaba Licensed Patent shall continue until the earliest of (a) the expiration of such Alibaba Licensed Patent, (b) termination of Purchaser’s license to such Licensed Patent pursuant to Section 6.2(b) or Section 6.2(c), or (c) the expiration or termination of this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, if, as of the Effective Date, Alibaba or its Subsidiary owns a Patent which it does not have the right as of the Effective Date to license on the terms contemplated hereunder (e.g., because it has granted exclusive rights to a Third Party), then the license granted under this Section 2.1 with respect to such Patent shall be limited to the extent of Alibaba’s or its Subsidiary’s rights to grant such license.

 

Section 2.2                                    Grant of License to Alibaba Under Purchaser Licensed Patents.

 

(a)                                 Subject to the terms of this Agreement, Purchaser (on behalf of itself and its Subsidiaries) agrees to grant and hereby grants to Alibaba a worldwide, royalty-free, fully paid-up, nonexclusive, non-transferable (subject to Article X) license under the Purchaser Licensed Patents, during the License Term, to make, have made, use, sell, offer for sale, lease, import, export, distribute and otherwise dispose of Alibaba Licensed Products and Services. The foregoing license excludes the right to grant sublicenses except as specifically provided in Section 2.7 and Section 2.8 below. For clarity, the license as to each Purchaser Licensed Patent shall continue until the earliest of (i) the expiration of such Purchaser Licensed Patent, (ii) termination of Alibaba’s license to such Licensed Patent pursuant to Section 6.2(b) or Section 6.2(c), or (iii) the expiration or termination of this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, if, as of the Effective Date, Purchaser or its Subsidiary owns a Patent which it does not have the right as of the Effective Date to license on the terms contemplated hereunder (e.g., because it has granted exclusive rights to a Third Party), then the license granted under this Section 2.2 with respect to such Patent shall be limited to the extent of Purchaser’s or its Subsidiary’s rights to grant such license.

 

(b)                                 Notwithstanding the foregoing, the license granted to Alibaba pursuant to this Section 2.2 under the Purchaser Licensed Patents does not include the right to provide any generally available payment processing service of a Third Party service provider that is made generally available by Alibaba to Third Party customers as a stand-alone payment processing business of Alibaba that is not integrated with or ancillary to any other non-de minimis non-payment-processing business of Alibaba or any of its Subsidiaries, if the service as made generally available by Alibaba is provided without substantial modifications designed or specified by Alibaba or any of its Subsidiaries from the form in which the service is supplied by the Third Party service provider to its other customers. For the avoidance of doubt, the foregoing limitation does not apply to any payment processing service that is integrated with or ancillary to any non-de minimis non-payment-processing business of Alibaba or any of its Subsidiaries or any service that is not sourced from a Third Party service provider.

 

Section 2.3                                    Grant of Technology Licenses. Each of Alibaba and Purchaser (on behalf of itself and its respective Subsidiaries), as Licensor, hereby grants to the other Party, as Licensee, a royalty-free, fully paid-up, non-exclusive, worldwide, non-transferable (subject to Article X) right and license, during the License Term, to (a) reproduce, display, modify, prepare derivative works of and otherwise use the Licensor’s Licensed Technology in connection with

 

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the Licensee’s respective Licensed Products and Services and the conduct of any business by the Licensee to the extent permitted by Section 9.9 of the Transaction Agreement; and (b) to distribute, provide or otherwise make available the Licensor’s Licensed Technology solely as incorporated into an Alibaba Licensed Product and Service (in the case of Alibaba) or Purchaser Licensed Product and Service (in the case of Purchaser), solely in Object Code format, and solely to End Users pursuant to the terms of an End User License. Such license shall in each case include the right of the Licensee to (x) grant sublicenses only as provided in Section 2.7 and Section 2.8 and (y) authorize Third Parties to exercise the foregoing rights solely on behalf of Licensee and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates. For clarity, neither Party (as Licensee) shall have the right to provide or make available to any Third Party at any time any Source Code constituting Licensor’s Licensed Technology without Licensor’s express prior written consent. Notwithstanding anything to the contrary set forth in this Agreement, if, as of the Effective Date, a Party as Licensor (or its Subsidiary) owns Licensed Technology which it does not have the right as of the Effective Date to license on the terms contemplated hereunder (e.g., because it has granted exclusive rights to a Third Party), then the license granted under this Section 2.3 with respect to such Licensed Technology shall be limited to the extent of Licensor’s or its Subsidiary’s rights to grant such license.

 

Section 2.4                                    No Obligation to Provide Maintenance and Support. For clarity, the Parties acknowledge that, unless otherwise agreed between the Parties in writing, neither Party nor its Subsidiaries shall have any obligation hereunder to provide the other Party with any training, support, maintenance or other services or assistance with respect to such other Party’s use of the Licensed Technology pursuant to Section 2.3, or to provide the other Party or its Subsidiaries with any bug fixes, error corrections, updates and upgrades (including improvements) with respect to such Licensed Technology, whether developed prior to or after the Effective Date.

 

Section 2.5                                    Grant of Trademark License.

 

(a)                                 Each of Alibaba and Purchaser (on behalf of itself and its respective Subsidiaries), as Licensor, hereby grants to the other Party, as Licensee, a royalty-free, fully paid-up, non-exclusive, non-transferable (subject to Article X) right and license, subject to Article VI, to use, reproduce and display the Alibaba Licensed Trademarks or Purchaser Licensed Trademarks, as applicable, solely in connection with joint promotional and marketing campaigns mutually agreed in advance between the Parties (each, a “Joint Marketing Campaign”). In connection with each Joint Marketing Campaign, the Parties shall mutually agree in writing prior to the commencement thereof as to (i) those jurisdictions where the Joint Marketing Campaign will be conducted, (ii) the products and services that are the subject of the applicable Joint Marketing Campaign, (iii) the term of such Joint Marketing Campaign, and (iv) other details thereof as may be reasonably requested by either Party. The Parties acknowledge and agree that neither Party shall be required to license any of its Licensed Trademarks to the other Party for use in any jurisdiction where such Licensed Trademarks are not registered, in connection with any goods or services not covered by the existing registration for any such Licensed Trademark, or where such use is restricted by applicable Law. Upon the Licensee’s request in connection with any proposed Joint Marketing Campaign, the Licensor shall provide the Licensee with reasonable information regarding the jurisdictions where, and classes of goods and services for which, any relevant Licensed Trademark is registered. The

 

15

 

license set forth in this Section 2.5 shall in each case include the right of the Licensee to grant sublicenses only as provided in Section 2.7 and Section 2.8. Notwithstanding anything to the contrary set forth in this Agreement, if, as of the Effective Date, a Party as Licensor (or its Subsidiary) owns Licensed Trademarks which it does not have the right as of the Effective Date to license on the terms contemplated hereunder (e.g., because it has granted exclusive rights to a Third Party), then the license granted under this Section 2.5 with respect to such Licensed Trademarks shall be limited to the extent of Licensor’s or its Subsidiary’s rights to grant such license.

 

(b)                                 The Licensee shall ensure that its and its Subsidiaries’ use, reproduction and display of the Licensed Trademarks at all times complies with Licensor’s then-current trademark guidelines (including usage, design and/or quality guidelines) as communicated to Licensee from time to time, as such guidelines may be revised by Licensor from time to time during the Term. The Licensee shall display applicable symbols (including the ® symbol for registered Trademarks) and notices clearly in connection with all uses of the Licensed Trademarks and in a manner sufficient to indicate the Licensed Trademarks’ trademark status and the Licensor’s ownership thereof in accordance with the applicable trademark guidelines. All right, title and interest in and to the Licensed Trademarks, and the goodwill associated therewith are and shall remain the exclusive property of Licensor, and all goodwill arising from Licensee’s use (including use by its Subsidiaries) of the Licensed Trademarks shall inure to the sole benefit of Licensor or its Subsidiary (if the Subsidiary owns the Licensed Trademark).

 

(c)                                  Licensee shall submit to Licensor for its review and approval all promotional, marketing or similar materials, and any other proposed uses of the Licensed Trademarks, in connection with which Licensee proposes using or displaying any Licensed Trademarks. Following its receipt of such proposed uses from Licensee, Licensor shall review and provide comments regarding such materials and uses, and subsequently approve or decline to approve the same. The Licensee may publish, distribute and otherwise make use of the Licensed Trademarks only in connection with such materials and uses, and solely in the manner and for the purpose, which Licensor has approved in writing in advance. For clarity, Licensor shall have no obligation to approve any use of its Licensed Trademarks by Licensee outside of the scope of the agreed Joint Marketing Campaign.

 

(d)                                 Licensee shall not, shall cause its Subsidiaries (including any Sublicensed Subsidiaries and Sublicensed Minority Affiliates) not to, and shall not permit or authorize any Third Party to: (a) use, reproduce or display any Licensed Trademark to identify or market any product or service other than those to which the applicable, agreed Joint Marketing Campaign expressly pertains; (b) use any Licensed Trademark in combination with any other name or Trademark in a manner that creates a combination or composite Trademark; (c) modify the appearance or content of any Licensed Trademark; (d) contest the validity of the Licensed Trademarks; (e) challenge Licensor’s ownership of the Licensed Trademarks or registration thereof; (f) attempt to register any Licensed Trademark or any Trademark confusingly similar to any Licensed Trademark as a Trademark; or (g) establish any entity name, Internet Domain Name, social media account or any similar asset incorporating any Licensed Trademark, unless approved in writing in advance by Licensor.

 

16

 

(e)                                  Licensee shall, and shall cause its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to, comply with all applicable Laws relating to or otherwise concerning (i) the use of Licensed Trademarks or (ii) the marketing, promoting, advertising, distributing, leasing or selling of any products or services in connection with any Joint Marketing Campaign, including all applicable import and export restrictions.

 

Section 2.6                                    Rights Requiring Third-Party Consents or Payments.

 

(a)                                 Notwithstanding anything to the contrary contained in this Agreement, if (i) either Party (as the Licensor) or any of its Subsidiaries has any rights in or to any Patents or Technology that would be included within the Licensed Patents or Licensed Technology licensed under this Agreement as of the Effective Date but for the fact that granting such a license would require such Party or Subsidiary to obtain the consent of any Third Party and (ii) Licensor is aware of such required consent or, following Licensee’s reasonable request to Licensor to confirm if any consent is required, Licensor becomes aware of such required consent, then the Licensor shall notify Licensee of such required consent. Thereafter, if Licensee requests that Licensor attempt to obtain such Third Party’s consent to license the applicable Patents or Technology, Licensor will use commercially reasonable efforts to obtain a consent from the applicable Third Party to sublicense the applicable Patents or Technology to Licensee on the same terms (including as to the scope of rights) as Licensor’s rights to such Patents or Technology; provided, however, that nothing hereunder shall require Licensor to obtain (or attempt to obtain) any consent from a Third Party if Licensor believes it may damage its relationship with such Third Party or where Licensor reasonably believes that such consent will not be granted. Without limiting the foregoing, with respect to any Patents or Technology requiring the consent of a Third Party, Licensor may attempt to obtain a consent to sublicense rights to such Patents or Technology to Licensee subject to the terms of Section 2.1 or Section 2.2, as applicable, with respect to such Patents, or Section 2.3 with respect to such Technology, or, if such consent cannot be obtained, to sublicense such Technology to Licensee under narrower or more restrictive terms than such Third Party has granted to Licensor (e.g., for a shorter term, subject to additional license restrictions, etc.). For clarity, unless and until any such consent is obtained, the applicable Third Party Patents or Technology shall not constitute a Licensed Patent or Licensed Technology for purposes of this Agreement and, if any consent obtained by Licensor from a Third Party only permits the applicable Technology to be sublicensed to Licensee under narrower or more restrictive terms, such Technology shall constitute Licensed Technology only to the extent permitted by the applicable consent (the scope of which shall be communicated by Licensor to Licensee).

 

(b)                                 Notwithstanding anything to the contrary contained in this Agreement and without limitation to Section 2.6(a), if, following the Effective Date, either Party (as Licensor) or any of its Subsidiaries enters negotiations to obtain a license under Patents or Technology from a Third Party, such Party shall use commercially reasonable efforts to obtain from the applicable Third Party such rights as is necessary to either (i) include the other Party as a licensee within the grant of the rights obtained for such Third Party or (ii) obtain the right to sublicense to the other Party and its Subsidiaries such rights in the applicable Patents or Technology, in each case on the same terms (including as to the scope of the rights) as Licensor’s rights to such Patents or Technology and subject to terms substantially consistent with those set forth in this Agreement. Without limiting the foregoing, with respect to any Patents or Technology requiring the consent

 

17

 

of a Third Party, Licensor may attempt to (A) obtain a consent to include Licensee as a direct licensee of such Third Party or obtain rights to sublicense such Patents or Technology to Licensee, in each case, subject to the terms of Section 2.1 or Section 2.2, as applicable, with respect to such Patents, or Section 2.3 with respect to Technology or (B) if such consent cannot be obtained, to obtain consent to include Licensee as a direct licensee of such Third Party or obtain rights to sublicense such Patents or Technology to Licensee, in each case, under narrower or more restrictive terms than such Third Party has granted to Licensor (e.g., for a shorter term, subject to additional license restrictions, etc.). For clarity, if such Party is unable to include the other Party (or its Subsidiaries) within the scope of such license rights obtained from a Third Party or is unable to obtain the rights to sublicense to the other Party the rights to use or exploit the applicable Patents and/or Technology, then the applicable Third Party Patents and/or Technology shall not be included within the scope of Licensed Patents or Licensed Technology, as applicable, licensed to the other Party pursuant to this Agreement and, if any consent obtained by Licensor from a Third Party only permits the applicable Patents or Technology to be licensed by a Third Party to licensee or sublicensed by Licensor to Licensee under narrower or more restrictive terms, such Patents shall constitute Licensed Patents or such Technology shall constitute Licensed Technology, as applicable, only to the extent permitted by the applicable consent (the scope of which shall be communicated by Licensor to Licensee).

 

(c)                                  Notwithstanding anything to the contrary contained in this Agreement, and without limitation to Section 2.6(a), if either Party (as the Licensor) or any of its Subsidiaries has as of the Effective Date, or obtains following the Effective Date, any rights in or to a Patent or Technology that would be included within the Patents or Technology licensed under this Agreement but for the fact that (i) granting such a license would require such Party or Subsidiary to make payments (including of royalties or other compensation) on or after the Effective Date to any Third Party (other than former Subsidiaries or an inventor who is or was an employee or contractor, or a Person employing or contracting with a contractor, retained by such Licensor or its Subsidiaries) (a “License Payment”), or (ii) if the exercise of any rights under such Patents or Technology would require a License Payment under any preexisting agreement relating to such Patents or Technology, then, in the case of (i) and (ii), subject to Licensor’s confidentiality and other contractual obligations owed to Third Parties, the Licensor shall notify the Licensee of the nature and amount (or pricing structure) of such License Payment, and such Patents or Technology shall be included within the Licensed Patents or Licensed Technology, as applicable, only if the Licensee agrees to reimburse (and only for as long as the Licensee continues to reimburse) the Licensor or its applicable Subsidiary for all such License Payments.

 

Section 2.7                                    Right to Grant Sublicenses to Subsidiaries. The licenses granted in Sections 2.1, 2.2, 2.3 and 2.5 in each case include the right of the Licensee to grant sublicenses to one or more of its Subsidiaries (each a “Sublicensed Subsidiary”), only for so long as they remain a Subsidiary; provided that these rights of sublicense exclude the right to grant a sublicense to any future Subsidiary acquired by the Licensee that is a Competing New Business within the prohibitions of Section 10.3. Any sublicense granted to a Sublicensed Subsidiary shall automatically terminate if and when the Sublicensed Subsidiary ceases to be a Subsidiary. The Parties acknowledge and agree that no written intra-corporate agreements or other formalities are required for the granting of such sublicenses to Sublicensed Subsidiaries, provided that: (a) such entities meet the requirements for Subsidiaries set forth in this Agreement and are bound by this Agreement in accordance with the foregoing; (b) the Licensor

 

18

 

shall be a third party beneficiary with respect to any rights sublicensed by a Licensee to its Subsidiary (and, if a written agreement governing such sublicense is entered into by Licensee and the Sublicensed Subsidiary, such agreement shall expressly identify Licensor as a third party beneficiary thereunder), and shall have the right to independently enforce the terms of the applicable sublicense with regard to any Licensed Patent, Licensed Trademark or Licensed Technology against the Sublicensed Subsidiary as if Licensor were directly granting a license to such Subsidiary (and Licensee shall take all actions requested by Licensor to enforce the terms of this Agreement as against any Sublicensed Subsidiary to give Licensor such rights as if it were a third party beneficiary thereof); and (c) the Sublicensed Subsidiaries are informed of the terms and conditions of this Agreement, including all restrictions on the use of the Licensed Patents, Licensed Trademarks and Licensed Technology (as applicable) set forth herein and the fact that Licensor shall be a third party beneficiary with the right to directly enforce the terms of this Agreement against such Sublicensed Subsidiary.

 

Section 2.8                                    Right to Grant Sublicenses to Minority Affiliates. Subject to this Section 2.8, the licenses granted in Sections 2.1, 2.2, 2.3 and 2.5 in each case include the right of Licensee to grant sublicenses to Persons (other than a Subsidiary of the Licensee) in which the Licensee either:

 

(a)                                 Beneficially Owns, directly or indirectly, share capital or other equity interests representing at least:

 

(i)                                     thirty-three and four-tenths percent (33.4%), or

 

(ii)                                  twenty-five percent (25%), provided that such equity is acquired by Licensee in connection with entering into a strategic cooperation agreement with such Person,

 

but (in either case) no more than fifty percent (50%), of the outstanding voting stock or other equity interests; or

 

(b)                                 holds the rights to economic interests of such Person representing more than:

 

(i)                                     thirty-three and four-tenths percent (33.4%), or

 

(ii)                                  twenty-five percent (25%), provided that such rights are acquired by Licensee if in connection with entering into a strategic cooperation agreement with such Person,

 

but (in either case) no more than fifty percent (50%), of such Person’s total economic interests;

 

(each, a “Minority Affiliate”); provided that (x) these rights of sublicense exclude the right to grant a sublicense to any Minority Affiliate that is a Competing New Business within the prohibitions of Section 10.3, and (y) subject to this Section 2.8, any such sublicense under the Licensed Patents or Licensed Technology shall be granted under the same agreement and subject to the same terms (including as to duration, scope, license restrictions, obligations to assign or

 

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license back to Licensee any improvements or modifications, etc.) as, and in effect only for as long as, Licensee licenses its own material Patents and/or Technology to the applicable Minority Affiliate. Any sublicenses granted by Licensee to a Minority Affiliate shall remain in effect only for so long as the applicable Person remains a Minority Affiliate. The Parties acknowledge and agree that any sublicense of rights by Licensee to a Minority Affiliate (each a “Sublicensed Minority Affiliate”) shall be subject to the execution of an enforceable, written agreement between Licensee and the Sublicensed Minority Affiliate that: (A) expressly provides for Licensor’s ownership of all right, title and interest (including all Intellectual Property Rights) in and to the Licensed Patents, Licensed Trademarks and Licensed Technology, as applicable; (B) does not contain terms that are inconsistent with those set forth in this Agreement and are at least as protective of Licensor’s rights in, and confidentiality with respect to, the Licensed Patents, Licensed Trademarks and Licensed Technology, as applicable, as those contained in this Agreement; (C) contains termination rights consistent with those set forth in this Agreement; (D) identifies Licensor as an intended third party beneficiary of such agreement and grants Licensor the right to enforce any and all obligations of the Sublicensed Minority Affiliate under such agreement to the same extent as if Licensor was a party to such agreement (and Licensee agrees to take all actions requested by Licensor to enforce the terms of such agreement as against any Sublicensed Minority Affiliate); and (E) if and to the extent required by Licensor hereunder prior to entering into any such sublicense agreement, provides for the assignment or license to Licensee and/or Licensor of any improvements to the sublicensed Licensed Technology authored, invented or developed by the Sublicensed Minority Affiliate in exercising its license rights thereunder (each, a “Sublicense Agreement”). Licensee shall provide Licensor with an executed copy of each Sublicense Agreement entered into by Licensee pursuant to this Section 2.8.

 

Section 2.9                                    Further Obligations in Respect of Sublicensees. Each Party shall take all reasonable actions that are necessary to cause each of its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to comply with the terms and conditions of this Agreement and, in the case of a Sublicensed Minority Affiliate, the applicable Sublicense Agreement. If either Party becomes aware of any non-compliance of any Sublicensed Subsidiary or Sublicensed Minority Affiliate with the terms of this Agreement or Sublicense Agreement, as applicable, or any other unlicensed use by a Sublicensed Subsidiary or Sublicensed Minority Affiliate of any Licensed Patent, Licensed Trademark or Licensed Technology, as applicable, such Party shall promptly notify the other Party and take all necessary actions to either cause such Sublicensed Subsidiary or Sublicensed Minority Affiliate to cure such breach within thirty (30) days. If such Sublicensed Subsidiary or Sublicensed Minority Affiliate does not fully cure such breach within such thirty (30)-day period, Licensee shall, upon request of the Licensor, terminate the applicable grant of the sublicense rights and/or Sublicense Agreement, and cause such Sublicensed Subsidiary or Sublicensed Minority Affiliate to cease exercising any such sublicense rights. Each Party shall be liable for any non-compliance with the terms of this Agreement and Sublicense Agreement, as applicable, by its Sublicensed Subsidiaries and Sublicensed Minority Affiliates, and all acts or omissions of a Party’s Sublicensed Subsidiaries and Sublicensed Minority Affiliates shall be deemed the acts or omissions of such Party for purposes of this Agreement.

 

Section 2.10                             No Other Licenses or Rights. Except as otherwise expressly provided herein, nothing in this Agreement shall be deemed to grant, directly or by implication,

 

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estoppel or otherwise, any right, license or covenant from the Licensor or its Subsidiaries, including but not limited to any license or rights under Patents, Trade Secrets, know-how, Copyrights, or other Intellectual Property Rights of a Licensor. All rights not expressly granted by a Licensor hereunder are reserved and retained by the Licensor.

 

ARTICLE III

 

RELEASES AND IMMUNITIES

 

Section 3.1                                    Release of Purchaser and Its Subsidiaries. Alibaba, on behalf of itself, its Subsidiaries, and its and their successors and assigns, fully and forever releases and discharges Purchaser and each of its Subsidiaries and their respective officers, directors, employees, agents, predecessors, successors and assigns, from any known or unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, claims or liability for Infringement or alleged Infringement of the Alibaba Licensed Patents prior to the Effective Date by products or services that would have (if used, sold, offered for sale, leased, distributed, or otherwise disposed of after the Effective Date) constituted Purchaser Licensed Products and Services.

 

Section 3.2                                    Release of Alibaba and Its Subsidiaries. Purchaser, on behalf of itself, its Subsidiaries and any transferees, and its and their successors and assigns, fully and forever releases and discharges Alibaba and each of its Subsidiaries and their respective officers, directors, employees, agents, predecessors, successors and assigns, from any known or unknown, suspected and unsuspected, disclosed and undisclosed, accrued and unaccrued, claims or liability for Infringement or alleged Infringement of the Purchaser Licensed Patents prior to the Effective Date by products or services that would have (if used, sold, offered for sale, leased, distributed, or otherwise disposed of after the Effective Date) constituted Alibaba Licensed Products and Services.

 

Section 3.3                                    Application of Immunity. The license by each Party (as Licensor) to the other Party (as Licensee) as set forth in Sections 2.1 and 2.2 shall constitute a grant of immunity against, and each Party (as Licensor) hereby covenants not to bring, or to assist or finance any Third Party in bringing, any claim or action for Infringement (whether direct or contributory infringement, inducement to infringe, or otherwise) of either Party’s Licensed Patents against the Licensee, the Licensee’s Sublicensed Subsidiaries, and its and their resellers, distributors and customers, provided that the immunity shall apply only with respect to Alibaba Licensed Products and Services, in the case of Alibaba, and Purchaser Licensed Products and Services, in the case of Purchaser, directly or indirectly sold or otherwise commercialized by the Licensee or any of its authorized Sublicensed Subsidiaries or Sublicensed Minority Affiliates. The immunities and covenants set forth in this Section 3.3 shall apply to and be binding on any permitted assignees, licensees or other transferees of either Party’s Licensed Patents subject to Section 2.7, Section 2.8 and Article X. To the extent that such immunities and covenants may not automatically be binding upon any such assignees, licensees or other transferees, the assigning Party shall cause such immunities and covenants to be so binding and shall indemnify and hold harmless the other Party from and against all damages, costs and other liabilities (including reasonable attorneys’ fees and expenses) incurred by such Party and its Subsidiaries that result from or relate to any failure to cause such immunities and covenants to be so binding.

 

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ARTICLE IV

 

APPLICATION OF AGREEMENT

 

Section 4.1                                    Effect of Agreement on Subsidiaries.

 

(a)                                 Each of Alibaba and Purchaser (as Licensor) acknowledges and agrees that the licenses, immunities and covenants set forth in Article II and Article III shall automatically be binding on all of such Party’s (as Licensor) Subsidiaries, such that all such Subsidiaries of the Licensor have granted and will grant to the other Party (as Licensee) licenses and immunities of the scope contemplated by this Agreement under all Patents of such Subsidiaries that constitute Licensed Patents, all Technology of such Subsidiaries that constitutes Licensed Technology, and all Trademarks of such Subsidiaries that constitute Licensed Trademarks.

 

(b)                                 To the extent that this Agreement is not automatically binding on any such Subsidiaries, each Party (as Licensor) shall (i) cause its Subsidiaries to grant licenses and immunities of the scope contemplated by this Agreement with respect to their Patents that constitute Licensed Patents, their Technology that constitutes Licensed Technology, and their Trademarks that constitute Licensed Trademarks, and to be bound by the terms and conditions of this Agreement applicable to Subsidiaries, to the same extent as if such Subsidiaries were parties hereto and (ii) indemnify and hold harmless the other Party (as Licensee) against all damages, costs and other liabilities (including reasonable attorneys’ fees and expenses) incurred by the Licensee and its Sublicensed Subsidiaries that result from or relate to any failure to cause the granting of any licenses and immunities of the scope contemplated by this Agreement with respect to any such Patents, Technology or Trademarks.

 

Section 4.2                                    Obligation of the Parties Regarding Subsidiaries. Each Party shall require its respective Subsidiaries to fulfill each such Subsidiary’s duties and comply with its obligations under this Agreement, including having its Subsidiaries that own Licensed Patents, Licensed Technology or Licensed Trademarks consent in writing to the grant of licenses and immunities under such Licensed Patents, Licensed Technology or Licensed Trademarks that are set forth herein to the extent necessary to fully effectuate such grant. Any act or failure to act or to grant any necessary consent by any Subsidiary of either Party shall be deemed an act or failure to act of such Party, and any failure of a Party’s Subsidiaries to perform any obligation, duty or responsibility or to grant any necessary consent set forth in this Agreement, or to take or fail to take any action in accordance with this Agreement, shall be deemed a breach of this Agreement by such Party.

 

Section 4.3                                    Coordination under Agreement. Within thirty (30) days of the Effective Date, each Party shall internally appoint and notify the other Party of one or more individuals with requisite knowledge and skill who shall be responsible for managing issues under this Agreement on its behalf, including communications regarding the subject matter hereof and addressing any disputes that may arise under this Agreement (the “IP Coordinator”). Each Party shall maintain an IP Coordinator during the Term, and may change such IP Coordinator at any time upon written notice to the other Party. During the Term, the Parties will also discuss in good faith the creation of more formal policies and procedures (including the

 

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formation of one or more committees) for purposes of facilitating coordination and cooperation contemplated by this Agreement, managing issues or disputes that may arise during the Term, or otherwise facilitating each Party’s performance of its obligations hereunder. Notwithstanding the foregoing, all disputes arising out of or in connection with this Agreement shall initially be addressed to the chief legal officer or head of intellectual property of such Party, as opposed to the IP Coordinator (if constituting different persons) in accordance with Section 12.1(a).

 

ARTICLE V

 

INTELLECTUAL PROPERTY COOPERATION

 

Section 5.1                                    Patent Prosecution; Maintenance.

 

(a)                                 Each Party, as Licensor, shall have the sole right and authority to determine whether (and in what jurisdictions) to seek Patent protection for any Technology owned by such Party or its Subsidiaries, and to prepare, file, prosecute and maintain its Licensed Patents on a worldwide basis. As used herein, “prosecution” of Patents shall include all communication and other interaction with any patent office or patent authority having jurisdiction over a patent application in connection with pre-grant proceedings. Without limiting the foregoing, the Parties agree to keep the other Party reasonably informed of and discuss their respective Patent prosecution strategies in general with the other Party on a periodic basis during the Term, with the scope of frequency of such discussions as mutually agreed by the IP Coordinators and subject to confidentiality and other contractual obligations owed to Third Parties. Where such strategies are discussed, each Party agrees to consider in good faith the other Party’s views in connection with its prosecution decisions, provided that each Party shall be entitled to make its prosecution decisions in its discretion. Each Party shall treat the existence of such discussions, and any nonpublic information provided by the other Party in such discussions, as the Confidential Information of the other Party; provided, however, that this obligation shall not limit the Licensor’s use of such information for purposes of prosecuting the Patents that are the subject of such discussions.

 

(b)                                 If either Party, as Licensor, determines to abandon any Patent included within its Licensed Patents, it shall provide reasonable prior written notice thereof to the Licensee. If, within thirty (30) days of receiving any such notice, the Licensee notifies the Licensor that it wishes to prosecute or maintain such Patent at its own expense, then Licensee shall thereafter pay all issuance, maintenance and similar fees (if any) then due in respect of Patent. Promptly following such payment, the Licensor shall assign such Patent to the Licensee (and will continue to prosecute and maintain such Patent at the Licensee’s direction and cost until such assignment becomes effective). Upon such assignment, the Patent shall be deemed a Licensed Patent of the assignee Party and licensed back to the original Licensor pursuant to Section 2.1 or 2.2, as applicable.

 

Section 5.2                                    Infringement Claim Defense.

 

(a)                                 If either Party (or any of its respective Subsidiaries) (a “Defending Party”) receives a written notice from a Third Party threatening to initiate a legal action or proceeding, or demanding such Party cease and desist from certain actions, and alleging (i) that the Defending

 

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Party is Infringing any Patent owned by such Third Party (a “Patent Infringement Claim”) or (ii) that the Defending Party’s use of the other Party’s (or its Subsidiary’s) Licensed Technology Infringes such Third Party’s non-Patent Intellectual Property Rights (a “Non-Patent Infringement Claim” and, together with Patent Infringement Claims, “Infringement Claims”), then the Parties shall promptly thereafter discuss the applicable written notice.

 

(b)                                 With respect to any Infringement Claim by a Third Party alleging any Infringement by both Parties (or any of their respective Subsidiaries), or for which a Party not yet alleged against reasonably believes that it or any of its Subsidiaries will likely be named as a defendant in any resultant action or proceeding (each, a “Joint Claim”):

 

(i)                                     The Parties may agree to jointly retain outside counsel to defend both of the Parties against the Joint Claim, and will cooperate in the defense and settlement of such Joint Claim.

 

(ii)                                  Either Party may, at any time, elect to be represented by separate counsel with respect to the Joint Claim, in which case each Party shall instruct its counsel to communicate with the other Party’s counsel under the terms of a Common-Interest Agreement in order to seek to preserve privilege and allow for ongoing coordination of defense.

 

(iii)                               Each Party shall at all times have the right to settle the Joint Claim in its own name (or the name of its applicable Subsidiary) in its sole discretion.

 

(iv)                              Unless otherwise agreed by the Parties in writing, (A) the Parties shall share equally in the costs of joint counsel incurred by the Parties in connection with the defense of the Joint Claim, and (B) each Party shall be responsible for all costs of its own separate counsel incurred in connection with the defense of the Joint Claim.

 

(c)                                  With respect to any Infringement Claim by a Third Party alleging any Infringement by only one Party or its Subsidiary, for clarity excluding Joint Claims (each, a “Single-Party Claim”):

 

(i)                                     The Defending Party shall solely control the defense and settlement of the Single-Party Claim, and may select counsel of its choosing, but shall keep the other Party reasonably informed of the status of such defense and settlement in a manner consistent with and pursuant to the terms of any applicable Common-Interest Agreement. Upon request of the other Party, the Defending Party shall reasonably consult with the other Party and consider in good faith any suggestions or comments such other Party may have.

 

(ii)                                  With respect to a Single-Party Claim constituting a Patent Infringement Claim, where the non-Defending Party or its Subsidiary owns one or more Licensed Patents that either Party believes (acting in good faith) could reasonably be asserted by the Defending Party in a defensive capacity against the Third Party asserting the applicable Single-Party Claim, then, upon the Defending Party’s request, the non-Defending Party shall transfer to the Defending Party such Licensed Patent(s) under terms and conditions consistent with this Agreement and agreed by the Parties in good

 

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faith. The Parties agree that such terms and conditions shall include consideration to be paid by the Defending Party for the transfer of such Licensed Patent(s) (including the costs of transferring the same) and the non-Defending Party’s right to reacquire such Licensed Patent(s) from the Defending Party. The Parties shall cooperate in good faith to ensure that the non-Defending Party will transfer only those Licensed Patents that are reasonably necessary for providing the Defending Party with material leverage in connection with defending the applicable Single-Party Claim and otherwise take into consideration any concerns or considerations raised by the non-Defending Party with respect to the transfer thereof. For clarity, any Patent(s) transferred under this Section 5.2(c)(ii) shall be deemed a Licensed Patent (with the Defending Party as Licensor) for the duration of the time the Defending Party owns such Patent(s). The Parties shall discuss in good faith and cooperate with respect to all such defensive Patent transfers.

 

(iii)                               Following abandonment, settlement or other resolution of a Single-Party Claim constituting a Patent Infringement Claim, at the non-Defending Party’s request and in consideration for the payment by the Defending Party of the same amount, if any, as the Defending Party paid the non-Defending Party for the transfer of the applicable Licensed Patent(s) pursuant to Section 5.2(c)(ii) as well as reimbursement for the costs of transferring the same, the Defending Party shall transfer back to the non-Defending Party any such Licensed Patent(s) transferred under Section 5.2(c)(ii).

 

(iv)                              If, in connection with any such Single-Party Claim constituting a Patent Infringement Claim where the non-Defending Party transfers to the Defending Party Licensed Patent(s) pursuant to Section 5.2(c)(ii) for defensive purposes and the Defending Party requests that the non-Defending Party join as a party to the Single-Party Claim (e.g., to avoid a challenge by the Third Party plaintiff (or counterclaim-defendant) to standing on the basis that the Defending Party does not own or possess all of the rights in the applicable Patents), the non-Defending Party shall join as a party provided that the Defending Party shall reimburse the non-Defending Party for all cost and expenses incurred in connection with its participation in such Single-Party Claim. In the event that the non-Defending Party joins such Single-Party Claim as a party, the non-Defending Party may use the Defending Party’s counsel or may engage its own counsel as determined in its discretion.

 

Section 5.3                                    Intellectual Property Enforcement.

 

(a)                                 Each Party, as Licensee, shall promptly notify the Licensor in writing if it suspects, or otherwise becomes aware of, any Infringement of the Licensor’s Intellectual Property Rights by any Third Party.

 

(b)                                 Each Party (the “Enforcing Party”) shall have the sole and exclusive right, but not the obligation, to bring an action against any Third Party for the Infringement of its Intellectual Property Rights. The other Party shall provide the Enforcing Party with reasonable assistance in connection with any such action, at the Enforcing Party’s reasonable request and expense, including assistance in gathering and sharing relevant documentation or information demonstrating such Infringement. In addition, the non-Enforcing Party will agree to join any such action as a plaintiff if required under applicable Law in order to assert or litigate such action

 

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and where the applicable Third Party is also Infringing the non-Enforcing Party’s Intellectual Property Rights; provided that the non-Enforcing Party shall not be obligated to join any such action if the non-Enforcing Party reasonably determines that joining such action would be expected to result in disproportionate adverse effects to the non-Enforcing Party’s rights or interests (including on the non-Enforcing Party’s business, operations or reputation) as compared to the benefits to Parties’ collective rights or interests. The Enforcing Party shall keep the other Party reasonably informed (as appropriate given the degree of cooperation requested and provided) of the status and progress of such enforcement efforts. Unless otherwise mutually agreed by the Parties in writing, the Enforcing Party shall pay all legal fees and expenses incurred by either Party in connection with their respective performance under this Section 5.3(b).

 

(c)                                  If (i) the Parties mutually agree to a cost-sharing allocation with respect to legal fees and other enforcement costs pursuant to Section 5.3(b), and (ii) the Enforcing Party recovers any monetary damages from any Third Party in connection with any action commenced under this Section 5.3, or any royalties or other fees from an agreement with a Third Party arising out of its enforcement under this Section 5.3, then such monetary recovery shall be allocated first to the reimbursement of any expenses incurred by the Parties in connection with such action or enforcement, according to the applicable allocation of expenses mutually agreed by the Parties pursuant to Section 5.3(b). Any remaining amounts shall retained by the Enforcing Party.

 

Section 5.4                                    Patent Advocacy. Without limiting Section 5.1(a), Section 5.2 or Section 5.3, during the Term, the IP Coordinators or other mutually agreed representatives of the Parties will meet periodically to discuss issues regarding each Party’s respective public positions regarding its Patent portfolio and its Patent policies generally. In connection with such discussions, the Parties will also discuss if and how to coordinate with regard to such public statements and public positions regarding each of their respective Patent portfolios and with regard to Patent policy generally.

 

Section 5.5                                    Third-Party Co-Development. The Parties will on a periodic basis as determined by the IP Coordinators, discuss and coordinate regarding Technology co-development projects with Third Parties, including with respect to Intellectual Property Right ownership policies for any Intellectual Property Rights developed in connection with such projects.

 

Section 5.6                                    Patent Right of First Offer. Before a Party (as Licensor) or its Subsidiary actively solicits Third Party interest in any transaction, or enters into a bona fide discussion regarding the definitive terms and conditions of any transaction, the primary purpose of which is the sale or transfer of Licensed Patents, substantially on a stand-alone basis, for cash (i.e., excluding any sale or transfer of Licensed Patents in connection with the purchase or sale of equities, businesses or other assets, a merger, in connection with the formation of a joint venture or spin-off, or similar corporate transactions), the Licensor shall promptly notify the Licensee. The Licensor’s notice shall identify the specific Licensed Patents that would be the subject of such sale or transfer, but need not specify the identity of a prospective purchaser (if any), nor the details (if any) of the prospective sale or transfer. Upon receipt of such notice, the Licensee will have ten (10) days (the “ROFO Notice Period”) to notify the Licensor if it is interested in

 

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exercising its right of first offer with respect to any or all of the designated Licensed Patents. If the Licensee so notifies the Licensor during such period, then the Parties will negotiate with one another in good faith exclusively for a period of sixty (60) days (the “ROFO Negotiation Period”) regarding the terms and conditions pursuant to which Licensee would acquire such Licensed Patents, and the Licensor will not negotiate with any Third Party for the sale or transfer of such Licensed Patents during the ROFO Negotiation Period. If the Licensee does not notify the Licensor that it is exercising its right of first offer during the ROFO Notice Period, or if the Licensee provides such notice during ROFO Notice Period but the Parties fail to agree on the terms of a sale or transfer of the applicable Licensed Patents during the ROFO Negotiation Period, then for the period of sixty (60) days after the end of the ROFO Notice Period or ROFO Negotiation Period, as the case may be, the Licensor shall be free to negotiate with Third Parties to sell or transfer such Licensed Patents to a Third Party, but only on terms and conditions (including price) that, in the aggregate, are more favorable to the Licensor than those offered by the Licensee for the transfer of such Licensed Patent(s). For clarity, if Licensor does not enter into a definitive agreement providing for the sale or transfer of such Licensed Patent(s) to a Third Party within such sixty (60)-day period, the provisions of this Section 5.6 shall reapply with respect to any transfers of any such Licensed Patent(s).

 

Section 5.7                                    Patent Acquisitions.

 

(a)                                 Subject to any confidentiality, non-disclosure or similar obligations either Party may owe to a Third Party, the Parties shall discuss and, if mutually agreed, collaborate on strategic Patent acquisitions. In connection with the foregoing, during the Term hereof, each Party shall maintain an internally-staffed group of employees or advisors as each Party determines as reasonable in its discretion for purposes of collaborating with the other Party with respect to such Patent acquisitions.

 

(b)                                 If a Party (or its Subsidiary) is offered an opportunity to acquire Patent(s) from a Third Party but elects not to do so, it shall (subject to any confidentiality, non-disclosure or similar obligations either Party may owe to a Third Party) share the opportunity with the other Party and reasonably facilitate (through introductions, diligence sharing, etc.) the other Party’s (or its Subsidiary’s) efforts to acquire the Patent(s), at such other Party’s expense.

 

Section 5.8                                    Common-Interest Agreement. The Parties will, promptly following the Effective Date and thereafter from time to time as mutually agreed during the Term, enter into one or more common-interest agreements (each, a “Common-Interest Agreement”) in order to seek to protect the confidentiality and privilege of information and materials exchanged between the Parties with respect to the subject matter of this Article V.

 

ARTICLE VI

 

TERM AND TERMINATION

 

Section 6.1                                    Term. This Agreement shall be effective on the Effective Date and shall remain in full force and effect until August 11, 2064 unless earlier terminated pursuant to Section 6.2 (the “Term”).

 

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Section 6.2                                    Termination.

 

(a)                                 In the event that:

 

(i)                                     Section 9.9 of the Transaction Agreement is terminated, invalidated or otherwise held unenforceable by a court of law for any reason, and within sixty (60) days following such termination, invalidation or holding of unenforceability the Parties have neither agreed to an amendment of Section 9.9 of the Transaction Agreement, nor referred the matter to arbitration (each as contemplated by Section 12.10 of the Transaction Agreement); or

 

(ii)                                  Section 9.9 of the Transaction Agreement is amended for any other reason (whether due to a termination, invalidation, holding of unenforceability, or for any other reason), including as the result of any arbitration conducted pursuant to Section 12.10 of the Transaction Agreement, and such amendment materially changes the scope of the restrictions imposed on each Party’s operation of its respective business thereunder (e.g., to permit Alibaba or Purchaser, as applicable, to materially engage in the commercialization of any products or services that are not Alibaba Licensed Products and Services or Purchaser Licensed Products and Services, respectively);

 

then the Parties will promptly meet and discuss in good faith any necessary amendments to this Agreement that, in either Party’s reasonable discretion, are necessary to preserve for each Party the balance of their respective rights and obligations under this Agreement as of the Effective Date. If the Parties are unable to mutually agree as to a written amendment to this Agreement within sixty (60) days following the commencement of such discussions, a Change of Control of each Party shall be deemed to have occurred (with the termination date of such amendment, termination, termination, invalidation or unenforceability of Section 9.9 of the Transaction Agreement constituting the Cutoff Date), and each Party’s licenses and other rights thereafter shall be subject to the terms and conditions of Section 10.2.

 

(b)                                 Either Party (as Licensor) may terminate this Agreement as a whole, or may terminate any of the licenses under the Licensed Patents, Licensed Trademarks, or Licensed Technology granted by it to the Licensee, upon written notice to the Licensee, in the event that the Licensee becomes insolvent, makes a general assignment for the benefit of creditors, files a voluntary petition of bankruptcy, suffers or permits the appointment of a receiver for its business or assets, or becomes subject to any Proceeding under any bankruptcy or insolvency law, whether domestic or foreign, or ceases doing business or liquidates, voluntarily or otherwise. In the event that any of the preceding events occurs, the Licensee will immediately notify the Licensor in writing of its occurrence.

 

(c)                                  Either Party (as Licensor) may terminate any of the licenses under the Licensed Patents, Licensed Trademarks, or Licensed Technology granted by it to the Licensee, upon written notice to the Licensee, in the event that the Licensee materially breaches any of the terms of this Agreement regarding its use or practice of the Licensed Patents, Licensed Trademarks or Licensed Technology, as applicable, and fails to cure such material breach within sixty (60) days of receiving written notice thereof from the non-breaching Party.

 

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Section 6.3                                    Effect of Termination. If this Agreement is terminated pursuant to Section 6.2(a), then all of the licenses granted by each Party to the other Party shall terminate in accordance with the terms of Section 6.2(a), subject to the survival period specified in such section. If any of the licenses under the Licensed Patents, Licensed Trademarks, or Licensed Technology, as applicable, are terminated by a Licensor pursuant to Section 6.2(b) or Section 6.2(c), then all of the licenses (in the case of termination of this Agreement) or the applicable licenses (in the case of termination of any of the licenses under the Licensed Patents, Licensed Trademarks, or Licensed Technology, as applicable) granted to the terminated Licensee and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates shall terminate as of the effective date of such termination, but the licenses granted to the non-terminated Party and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates shall survive such termination for the remainder of the Term, subject to the non-terminated Party’s and its Sublicensed Subsidiaries’ continued compliance with the terms and conditions of this Agreement and the terms of this Article VI. For the avoidance of doubt, all licenses granted by either Party (as Licensor) to the other Party (as Licensee) in effect immediately prior to the end of the Term shall terminate at the end of the Term.

 

Section 6.4                                    Survival. Articles I, VIII (strictly with respect to claims arising prior to the expiration or termination of this Agreement), IX, XI, and XII and Sections 2.4, 2.10, 3.1, 3.2, 4.1, 4.2, 6.3, 6.4, 7.3 and 7.4 will survive termination of this Agreement. No termination of this Agreement shall relieve any Party for any liability for any breach of or liability accruing prior to the effective date of termination.

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES

 

Section 7.1                                    Mutual Representations and Warranties. Each Licensor represents and warrants to its Licensee, as of the Effective Date, that:

 

(a)                                 it has the right to enter into this Agreement and to perform its obligations hereunder, including the right to grant on behalf of itself and its Subsidiaries the licenses and immunities granted hereunder by the Licensor to the Licensee under the Licensor’s and its Subsidiaries’ Licensed Patents;

 

(b)                                 this Agreement is binding on and enforceable against the Licensor and its Subsidiaries in accordance with its terms; and,

 

(c)                                  it is not a party to any existing assignments, grants, licenses, encumbrances, obligations, or agreements, written or oral, inconsistent with this Agreement, and the compliance by Licensor and its Subsidiaries with their obligations hereunder will not conflict with or result in a breach of any agreement to which the Licensor or any of its Subsidiaries is a party or is otherwise bound.

 

Section 7.2                                    Representation and Warranty by Purchaser. Purchaser represents and warrants to Alibaba that the Purchaser Licensed Patents include all Patents that are, as of the

 

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Effective Date, utilized in or pertinent to the operation of the FIG Holdco Business as conducted by Purchaser or any of its Subsidiaries as of the Effective Date.

 

Section 7.3                                    Limitations. Except as expressly set forth herein, nothing in this Agreement shall be construed as:

 

(a)                                 a warranty or representation as to the validity, enforceability or scope of any Licensed Patent; or

 

(b)                                 a warranty or representation with respect to either Party’s or its Subsidiaries’ right to grant any right or license with respect to any Licensed Technology; or

 

(c)                                  a warranty or representation that anything made, used, sold, or otherwise disposed of pursuant to this Agreement is or will be free from Infringement of Patents or other Intellectual Property Rights of Third Parties; or

 

(d)                                 a requirement that a Party or its Subsidiaries shall file any Patent, Trademark or Copyright application, secure any Patent, Trademark or Copyright, or maintain any Patent, Trademark or Copyright in force; or

 

(e)                                  conferring upon either Party hereto or its Subsidiaries any license, immunity or other right under any Patents or to any Technology or other Intellectual Property Rights, except the licenses, immunities and other rights expressly granted hereunder; or

 

(f)                                   an obligation on the part of a Party or its Subsidiaries to bring or prosecute actions or suits against Third Parties for Infringement, or agreement conferring any right to bring or prosecute actions or suits against Third Parties for Infringement, of the Licensed Patents, Licensed Trademarks or Licensed Technology; or

 

(g)                                  a warranty or representation that (i) the Licensed Technology will be free of errors, bugs, viruses or other defects which may impede the operation or use of any software included therein or (ii) the other Party’s use of the Licensed Technology will be uninterrupted, error free or appropriate for any particular purpose; or

 

(h)                                 conferring any right to use, in advertising, publicity, or otherwise, any Trademark or any contraction, abbreviation or simulation thereof, of either Party; or

 

(i)                                     an obligation to furnish any Source Code, Object Code, manufacturing or technical information, or other Technology or know-how.

 

Section 7.4                                    Disclaimer of Other Warranties. THE EXPRESS WARRANTIES IN SECTIONS 7.1THROUGH 7.3 ARE IN LIEU OF, AND EACH PARTY HEREBY DISCLAIMS, ALL OTHER 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, EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 7.1THROUGH 7.3, THE LICENSED PATENTS, LICENSED TRADEMARKS

 

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AND LICENSED TECHNOLOGY ARE LICENSED AND PROVIDED BY THE LICENSOR AND ITS SUBSIDIARIES “AS IS,” WITHOUT WARRANTY OF ANY KIND, AND EACH LICENSOR AND ITS SUBSIDIARIES ASSUME NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO THE MANUFACTURE, USE, SALE, OR OTHER DISPOSITION BY LICENSEE OR ITS SUBLICENSED SUBSIDIARIES OR MINORITY AFFILIATES, OR THEIR RESPECTIVE CUSTOMERS OF PRODUCTS OR SERVICES INCORPORATING OR UTILIZING INVENTIONS, TRADEMARKS OR TECHNOLOGY LICENSED UNDER THIS AGREEMENT.

 

ARTICLE VIII

 

INDEMNIFICATION

 

Section 8.1                                    Indemnification. Each Party (the “Indemnifying Party”) agrees on behalf of itself and its Subsidiaries, to defend, indemnify, and hold harmless the other Party and its Subsidiaries, and each of their respective directors, officers, employees, representatives and agents (the “Indemnified Party”) from and against any and all claims, actions, causes of action, judgment, awards, liabilities, losses, costs or damages (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) arising out of or relating to any claim by any Third Party arising out of or relating to breach of the representations and warranties set forth in Article VII.

 

Section 8.2                                    Indemnification Procedures.

 

(a)                                 Promptly after receipt by the Indemnified Party of notice of the commencement or threatened commencement of any Proceeding, made or brought by a third Person (each a “Third Party Claim”), in respect of which such Indemnified Party will seek indemnification pursuant to Section 8.1, the Indemnified Party shall notify the Indemnifying Party of such Third Party Claim in writing. No failure to so notify the Indemnifying Party shall relieve it of its obligations under this Agreement, except to the extent that it can demonstrate that it was materially prejudiced by such failure.

 

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

 

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such Third Party Claim without the Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned.

 

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

 

(ii)                                  The Indemnified Party, the Indemnifying Party, 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 the Indemnified Party’s cooperation shall be borne by the Indemnifying Party. In any event, the Indemnified Party shall have the right, at its own expense except as otherwise provided in clause (i) above, to participate in the defense of such asserted liability.

 

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

 

ARTICLE IX

 

LIMITATION OF LIABILITY

 

Section 9.1                                    Limitation of Liability. NEITHER PARTY (AND NONE OF ITS SUBSIDIARIES) SHALL BE LIABLE TO THE OTHER PARTY OR ANY OF ITS SUBSIDIARIES (OR ITS SUBLICENSED MINORITY AFFILIATES, IF ANY) FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE, DATA, BUSINESS OR PROFITS), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE LICENSED PATENTS, LICENSED TRADEMARKS, OR LICENSED TECHNOLOGY, HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF IT OR ITS REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

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ARTICLE X

 

ASSIGNMENT, CHANGE OF CONTROL AND NEW BUSINESSES

 

Section 10.1                             Assignment by a Party. This Agreement may not be assigned, delegated or otherwise transferred by a Party (whether voluntarily or involuntarily and whether by merger, transfer of assets, by operation of law, or otherwise), without the express written consent of Alibaba (in the case of an assignment, delegation or other transfer by Purchaser) or of Purchaser (in the case of an assignment, delegation or other transfer by Alibaba), which may be granted or denied in the sole discretion of Purchaser or Alibaba; provided, however, that this Agreement may be assigned, delegated or otherwise transferred by a Party, together with all of such Party’s rights and obligations hereunder, without the consent of the other Party, subject to the provisions of Section 10.2, to a successor solely in connection with (a) a merger or consolidation of such Party with the successor or (b) the transfer of the assets of a Party to a successor, in each case (whether a merger, consolidation or transfer) involving all or substantially all of the assets of the business of such Party to which its license as a Licensee hereunder relates (any such successor, a “Successor Party”). Subject to this Section 10.1 and the other terms and conditions of this Agreement, this Agreement shall inure to the benefit of and be binding on the Parties and their respective permitted successors and assigns. Any attempt to assign or transfer this Agreement other than as permitted in this Section 10.1 shall be void.

 

Section 10.2                             Change of Control and Transfer.

 

(a)                                 Effect on the Rights Granted to a Licensee. In the event of any Change of Control of a Licensee or of a permitted assignment, delegation or other transfer of this Agreement by a Licensee pursuant to Section 10.1, effective as of the effective date of such Change of Control or assignment, delegation or other transfer (the “Cutoff Date”), the licenses granted under Article II will automatically become limited as follows:

 

(i)                                     The licenses granted to such Licensee and such Successor Party under Section 2.1 or 2.2 and any sublicenses granted by Licensee to any Sublicensed Subsidiary and Sublicensed Minority Affiliate under Section 2.7 or Section 2.8, as applicable, will automatically become limited: (A) to the Licensed Patents that have issued and are owned or Licensable by the Licensor (or its Subsidiaries) as of the Cutoff Date; (B) to the Licensed Products and Services used, sold, offered for sale, leased, distributed, or otherwise disposed of by such Licensee, its Sublicensed Subsidiaries and its Sublicensed Minority Affiliates as they exist as of the Cutoff Date, and to future versions of such Licensed Products and Services (except that the license shall not cover any new features or functionality added to such products and services after the Cutoff Date, whether by Licensee, the Successor Party, or otherwise); and (C) only to the volume of Licensed Products and Services by the Licensee, Successor Party and Licensee’s Sublicensed Subsidiaries and Sublicensed Minority Affiliates, in the aggregate, during any twelve (12)-month period generating gross revenues up to the Revenue Cap applicable to such twelve (12)-month period. For purposes of the foregoing, “Revenue Cap” means (1) during the first twelve (12)-month period following the Cutoff Date, one hundred twenty-five percent (125%) of the gross revenues from the use, sale, lease, distribution, or other disposing of Licensed Products and Services by the

 

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Licensee, its Sublicensed Subsidiaries and its Sublicensed Minority Affiliates during the preceding twelve (12) month period and (2) during each subsequent twelve (12)-month period, one hundred twenty-five percent (125%) of the Revenue Cap applicable to the preceding twelve (12)-month period. For clarity, the rights granted by such Licensee to the Licensor (including its right to sublicense to its Subsidiaries and Minority Affiliates) under Section 2.1 or 2.2, as applicable, shall remain in effect following the Cutoff Date, provided that such license shall be limited to the Licensed Patents that have issued and are owned or Licensable by the Licensee (or its Subsidiaries) as of the Cutoff Date and shall otherwise be subject to the other terms and conditions of this Agreement.

 

(ii)                                  The license and other rights granted to such Licensee and Successor Party and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates under Section 2.3 will continue for a period of six (6) months, subject to the other terms and conditions of this Agreement, but will automatically become limited and shall apply only to the operation of the business of the Licensee, its Sublicensed Subsidiaries and/or its Sublicensed Minority Affiliates, as applicable, as such businesses existed as of the Cutoff Date. Following such period, the rights granted to such Licensee and Successor Party and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates under Section 2.3 will automatically terminate without the need for further action by the Parties. For clarity, the rights granted by such Licensee to the Licensor (including its right to sublicense to its Subsidiaries and Minority Affiliates) under Section 2.3 shall remain in effect following the Cutoff Date, provided that such license shall be limited to the Licensed Technology that was owned or licensable by the Licensee (or its Subsidiaries) as of the Cutoff Date and shall otherwise be subject to the other terms and conditions of this Agreement.

 

(iii)                               The license and other rights granted by each Party under Section 2.5 will continue for a period of six (6) months, subject to the other terms and conditions of this Agreement, but will automatically become limited and shall apply only to Joint Marketing Campaigns already active as of the Cutoff Date. Following such period, the rights granted by each Party under Section 2.5 will automatically terminate without the need for further action by the Parties.

 

(b)                                 With respect to the Parties’ obligations under Article V, the performance of which remain ongoing as of the Cutoff Date, either Party may elect to engage separate counsel in the defense of any Joint Claim pending as of the Cutoff Date, or to terminate the Common-Interest Agreement. The provisions of Section 5.1, Section 5.3, Section 5.4, Section 5.5, Section 5.6 and Section 5.7, and all other of each Party’s respective obligations under Article V, will cease to bind the Parties (on a prospective basis) as of the Cutoff Date, and, for clarity, the Parties shall have no further obligation to cooperate with respect to any new Proceedings related to Intellectual Property Rights initiated, or any other matters relating to the subject matter of Article V arising, on or after the Cutoff Date.

 

(c)                                  Notwithstanding anything in Section 10.2(a) to the contrary, (i) in no event will the licenses granted to the Licensee undergoing a Change of Control under Section 2.1, 2.2, 2.3 or 2.5, as applicable, extend after the Cutoff Date to any products,

 

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technologies, processes, or services of the Successor Party or any other Third Party(ies), whether or not related to the business of the Licensee.

 

(d)                                 Each Party’s compliance with the terms and conditions of this Section 10.2, including the scope of Licensed Products and Services offered for sale and sold by each Party (or Successor Party) and its Sublicensed Subsidiaries and the revenues generated in connection with the sale thereof, shall be subject to verification via audit upon reasonable advance written notice by the other Party.

 

Section 10.3                             New Businesses.

 

(a)                                 If, after the Effective Date, a Licensee directly or indirectly (e.g., through a Subsidiary) acquires (or acquires Control of) a legal entity that does not constitute a Subsidiary of such Licensee prior to such acquisition or acquires the business or assets of such legal entity, then such acquisition shall constitute a “New Business” and shall be subject to the terms and conditions of and, subject to Section 2.7 and Section 10.3(b), shall have the benefits of, this Agreement to the same extent as any other Person to which this Agreement is applicable (i.e., to the same extent as the Licensee itself if such New Business becomes a part of the Licensee, and to the same extent as a Subsidiary if such New Business meets the requirements of a Subsidiary).

 

(b)                                 Notwithstanding Section 10.3(a), however, if such New Business is a Competing New Business (as defined below) and, following Licensee’s written request to Licensor, Licensor does not provide its consent to have such Competing New Business covered under the licenses granted under this Agreement to Licensee, then the licenses granted to such Licensee hereunder shall not extend to (and shall not be sublicensable by such Licensee to) the New Business, nor to any Licensed Products and Services of such New Business, as the case may be. As used herein, “Competing New Business” means (a) in the case of a New Business of Alibaba, a New Business primarily engaged in the conduct of the FIG Holdco Business; or (b) in the case of a New Business of Purchaser, a New Business primarily engaged in the conduct of the Seller Business (as defined in the Transaction Agreement). For clarity, notwithstanding the foregoing, a Party’s obligation to license to the other Party its Licensed Patents, Licensed Trademarks and Licensed Technology shall include any Patents, Trademarks or Technology owned by a Competing New Business constituting a Subsidiary of such Party that would otherwise be licensed hereunder, notwithstanding the fact that the licenses granted by the other Party hereunder shall not extend to such Competing New Business.

 

ARTICLE XI

 

CONFIDENTIALITY

 

Section 11.1                             Confidentiality. 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, customer lists and customer data, technical documents and information and any similar confidential, non-public materials and

 

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information, regarding such Party and its Subsidiaries and Minority 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 the information is considered confidential by the Disclosing Party. Confidential Information includes all Source Code disclosed pursuant to this Agreement. Notwithstanding the foregoing, (a) Confidential Information may be disclosed on an as needed basis to personnel or subcontractors of the Receiving Party and its Sublicensed Subsidiaries and Sublicensed Minority Affiliates 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 this Agreement, the Transaction Agreement and any other related document, and (b) nothing in this Section 11.1 shall prevent Purchaser or Alibaba and their respective Sublicensed Subsidiaries and Sublicensed Minority Affiliates from exercising their rights in and to the Intellectual Property Rights expressly granted in Article II in accordance with this Agreement. Nonetheless, each Receiving Party shall limit the disclosure of the Disclosing Party’s Confidential Information to Third Parties to what is necessary for a reasonable purpose in the conduct of the business of the Receiving Party (including its Sublicensed Subsidiaries and Sublicensed Minority Affiliates). Each Receiving Party shall take all reasonable steps to ensure that any such Confidential Information disclosed to any Person in accordance with this Section 11.1 is treated as confidential by the personnel, Sublicensed Subsidiaries, Sublicensed Minority Affiliates, permitted subcontractors and 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 Agreement.

 

Section 11.2                             Permitted Disclosures. The provisions of this Article XI 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 Party 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.

 

Section 11.3                             Disclosure in Compliance With Law. Nothing in this Article XI 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, unless legally prohibited, 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.

 

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Section 11.4                             Restricted Data. Notwithstanding anything to the contrary set forth herein, nothing in this Agreement shall require either Party or its Subsidiaries to disclose to the other Party or its Subsidiaries any information, communications or documents that are protected by attorney-client privilege, work product privilege or 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 the People’s Republic of China relating to payment data security or state economic security.

 

Section 11.5                             Confidentiality of the Licensed IP. In addition to the obligations set forth in Section 11.1, each Party shall (and shall cause its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to) comply with the obligations set forth in this Section 11.5 with respect to the Licensed Technology of the other Party. Each Party shall (and shall cause its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to) take reasonable steps, during the Term to ensure that no unauthorized copy, in whole or in part, of such Licensed Technology will be made available to any Third Party. Each Party shall (and shall cause its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to) use the Licensed Technology disclosed to each of them hereunder only under carefully controlled conditions, shall distribute such Licensed Technology 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 Agreement, and each Party shall (and shall cause its Sublicensed Subsidiaries and Sublicensed Minority Affiliates to) observe, at a minimum, the same level of security, copy restrictions and non-disclosure as it exercises with respect to its own Licensed Technology and related documentation for each of their own products, which in no event shall be less than a reasonable degree of care. Each Party shall be fully responsible for the conduct of its employees, agents, representatives, Sublicensed Subsidiaries and Sublicensed Minority Affiliates who may in any way breach this Agreement, and such Party shall immediately notify the other Party of any known breach of this Agreement including any act or omission by any Sublicensed Subsidiary or Sublicensed Minority Affiliate that, if committed by such Party, would constitute a breach of this Agreement.

 

ARTICLE XII

 

ADDITIONAL PROVISIONS

 

Section 12.1                             Arbitration.

 

(a)                                 In the event of any dispute, controversy or claim arising out of, relating to, or in connection with this Agreement, including the breach, termination or validity hereof (but, for clarity, excluding any Infringement Claim involving a Third Party that is the subject of Article V), each Party shall refer such matter to its respective chief legal officer or head of intellectual property, and the Parties agree to discuss such matter in good faith for a period of at least sixty (60) days to attempt to resolve the dispute, controversy or claim, provided that either Party may at any time seek interim injunctive or equitable relief pursuant to Section 12.1(i), including before the sixty (60) day period provided for in this Section 12.1(a) has expired.

 

(b)                                 If the Parties are unable to resolve any such dispute, controversy or claim regarding this Agreement in accordance with the foregoing Section 12.1(a) within such sixty

 

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(60)-day period, such dispute, controversy or claim 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.

 

(c)                                  The arbitration shall be conducted by three 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 (3rd) 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 (3rd) 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 arbitrator shall act as Chair of the tribunal.

 

(d)                                 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, 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 Party. 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.

 

(e)                                  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

 

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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 Agreement, the ruling of the tribunal constituted under the Transaction Agreement will govern, and that tribunal will decide all disputes in the consolidated Proceeding.

 

(f)                                   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 New York Stock Exchange rules or the rules of any other quotation system or exchange on which the disclosing Party’s securities are listed or applicable Law.

 

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

 

(h)                                 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.

 

(i)                                     Notwithstanding this Section 12.1 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. 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 Agreement or the other Transaction Documents, except for a court proceeding to compel arbitration or otherwise enforce this Agreement 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.

 

Section 12.2                             Disclosure. The terms of this Agreement are confidential information and shall not be disclosed to any Third 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 Agreement, the identity of the Parties, and the existence of Licensed Patents (but not the particular Licensed Patents themselves), (b) disclosing the terms of this Agreement (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 Agreement (including the financial terms) as required by any regulation, law, or

 

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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 Agreement (e.g., a customer or potential Successor Party) the terms and conditions relevant to such Third Party, including the identity of particular Licensed Patents.

 

Section 12.3                             No Waiver. No failure on the part of a Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, 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 Agreement, or any power, right, privilege or remedy under this Agreement, 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.

 

Section 12.4                             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 a Party be deemed to be agent or employee of another Party. No joint venture, partnership, agency, or other relationship will be created or implied as a result of this Agreement.

 

Section 12.5                             No Third-Party Rights. Except as otherwise expressly provided herein, nothing express or implied in this Agreement is intended to confer, or confers, upon any Person other than the Parties and their Subsidiaries or permitted assigns of the same, any rights, obligations, or remedies hereunder, whether as a third party beneficiary or otherwise.

 

Section 12.6                             Entire Agreement. This Agreement (including all Exhibits), and the other Transaction Documents contain the entire understanding among the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters. 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 Agreement and (ii) a provision of this Agreement that is more specific or detailed with respect to such subject matter, then the provision of this Agreement 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 12.7                             Governing Law. THIS AGREEMENT 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 12.8                             Amendment. 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

 

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case of Alibaba, by the Alibaba Independent Committee or its designees, but only with respect to amendments of this Agreement and waiver or discharge of any material rights of Alibaba or obligations of Purchaser under this Agreement.

 

Section 12.9                             Further Acts. Each Party hereto agrees to execute, acknowledge, and deliver or cause to be executed and delivered all such further instruments, and to do or cause to be done all such further acts, as may be necessary or appropriate to carry out the intent and purposes of this Agreement. If (a) one or more of the licenses granted under this Agreement triggers any filing or registration requirements under any applicable Laws, or (b) if either Party determines that recordation of the licenses granted in this Agreement with an applicable Governmental Authority is necessary, then the Parties shall cooperate to take all necessary actions, including but not limited to executing necessary additional legal documents in a form mutually agreed by the Parties, to fulfill such filing or regulatory requirements in a manner consistent with the terms and conditions of this Agreement, provided that (i) the Parties will cooperate in good faith to minimize the disclosure of the terms of this Agreement (including in connection with recording the licenses with an applicable Governmental Authority) and (ii) in the event of any conflict between any such additional legal documents, including any forms or Contracts executed by the Parties to fulfill any such filing or regulatory requirements, and any term or condition of this Agreement, this Agreement will control.

 

Section 12.10                      Headings. The headings contained in this Agreement are for convenience of reference only, will not be deemed to be a part of this Agreement and will not be referred to in connection with the construction or interpretation of this Agreement.

 

Section 12.11                      Compliance With Laws. In performing its obligations and exercising its rights hereunder, each Party shall, and shall require its Subsidiaries and Minority Affiliates (if applicable) to, comply with all Laws applicable to it. Without limiting the generality of the foregoing, each Party acknowledges that the Parties’ obligations in this Agreement are subject to their compliance with all applicable Laws relating to restraint of trade, antitrust, collusion, and competition.

 

Section 12.12                      Severability. Each provision of this Agreement shall be deemed a material and integral part hereof. Except as otherwise provided in this Section 12.12, 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 Transaction Documents, as applicable) or to enter into a new agreement 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 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 12.1 of this Agreement) shall determine, as part of their arbitral award, such amendments or new agreements to provide the Parties (to the extent the arbitrators determine to be possible) with the benefits, rights and obligations that are equivalent in all material respects as provided by the Agreement as if the stricken provision(s) had been valid, legal and enforceable.

 

41

 

Section 12.13                      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 address (or at such other address, or email address or facsimile number for a Party as shall be specified by like notice):

 

	
To Alibaba:
    
	
 
    
	
c/o Alibaba   Group Services Limited
    
	
26/F, Tower   One, Times Square
    
	
1 Matheson   Street
    
	
Causeway Bay
    
	
Hong Kong
    
	
Attention:
    	
General Counsel
    
	
Facsimile   No.:
    	
 +852 2215   5200
    
	
Email:
    	
vivanotice@alibaba-inc.com
    
	
 
    	
 
    
	
with   a copy (which shall not constitute notice) to:
    
	
 
    
	
Morrison &   Foerster
    
	
Shin-Marunouchi   Building, 29th Floor
    
	
5-1,   Marunouchi 1-Chome
    
	
Tokyo,   100-6529
    
	
Japan
    
	
Attention:
    	
Kenneth A. Siegel
    
	
Facsimile   No.: 
    	
+81 3 3214 6512
    
	
Email:
    	
ksiegel@mofo.com
    
	
 
    	
 
    
	
To   Purchaser:
    
	
 
    
	
Ant Small   and Micro Financial Services Group Co., Ltd.
    
	
Z Space,   No. 556 Xixi Road,
    
	
Hangzhou   310013
    
	
People’s   Republic of China
    
	
Attention:
    	
General Counsel
    
	
Facsimile   No.: 
    	
+ (86571) 8656 2095
    
	
Email:
    	
legalnotice@alipay.com
    
	
 
    	
 
    	
 
    
	
with   a copy (which shall not constitute notice) to:
    
	
 
    
	
Wachtell,   Lipton, Rosen & Katz
    
	
51 West 52nd   Street
    

 

42

 

	
New York, NY   10019
    
	
United   States
    
	
Attention:
    	
Mark Gordon
    
	
 
    	
DongJu Song
    
	
Facsimile   No: 
    	
+1 212 403 2000
    
	
Email:
    	
mgordon@wlrk.com
    
	
 
    	
dsong@wlrk.com
    

 

Section 12.14                      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 Agreement, 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 12.15                      Counterparts and Exchanges by Electronic Transmission or Facsimile. This Agreement 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 12.16                      English Language Only. This Agreement 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 Agreement will be in the English language.

 

[Remainder of page intentionally blank]

 

43

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the signature page hereof.

 

Alibaba Group Holding Limited

 

	
By:
    	
/s/ Timothy   Alexander Steinert
    	
 
    
	
 
    	
 
    	
 
    
	
Printed   Name:
    	
Timothy   Alexander Steinert
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Authorized   Officer
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    

 

[Project Viva - Signature Page to Cross License Agreement]

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the signature page hereof.

 

	
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.)
    	
[Seal]
    
	
 
    	
 
    
	
By:
    	
/s/ Leiming   Chen
    	
 
    
	
 
    	
 
    	
 
    
	
Printed   Name:
    	
Leiming Chen
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Authorized   Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

[Project Viva - Signature Page to Cross License Agreement]Exhibit 10.4

 

 

SHARE PURCHASE AGREEMENT

 

BY AND AMONG

 

TAOBAO HOLDING LIMITED

 

HQG, INC.

 

NETEASE E-COMMERCE, INC.

 

and

 

NETEASE, INC.

 

Dated as of September 6, 2019

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article I   Definitions
    	
4
    
	
Section 1.1
    	
Certain Definitions
    	
4
    
	
Section 1.2
    	
Interpretation and   Rules of Construction
    	
18
    
	
 
    	
 
    	
 
    
	
Article II   Sale and Purchase of Shares
    	
20
    
	
Section 2.1
    	
Sale and Purchase of   Shares
    	
20
    
	
Section 2.2
    	
Purchase Price
    	
20
    
	
Section 2.3
    	
Closing Date
    	
21
    
	
Section 2.4
    	
Closing Deliverables by   the Company
    	
21
    
	
Section 2.5
    	
Closing Deliverables by   the Seller
    	
23
    
	
Section 2.6
    	
Closing Deliverables by   the Purchaser
    	
24
    
	
Section 2.7
    	
Post-Closing   Examination Adjustment
    	
24
    
	
Section 2.8
    	
Repayment of   Shareholder Loans
    	
26
    
	
Section 2.9
    	
Release of the   Indemnity Withheld Amount
    	
26
    
	
 
    	
 
    	
 
    
	
Article III   Representations and Warranties with Respect to Group Companies
    	
28
    
	
Section 3.1
    	
Organization and Good   Standing
    	
28
    
	
Section 3.2
    	
Authorization
    	
28
    
	
Section 3.3
    	
Conflicts; Consents of   Third Parties
    	
28
    
	
Section 3.4
    	
Capitalization
    	
29
    
	
Section 3.5
    	
Group Companies
    	
30
    
	
Section 3.6
    	
Corporate Books and   Records
    	
31
    
	
Section 3.7
    	
Financial Statements
    	
31
    
	
Section 3.8
    	
Absence of Undisclosed Liabilities
    	
32
    
	
Section 3.9
    	
Absence of Certain   Changes
    	
32
    
	
Section 3.10
    	
Litigation
    	
34
    
	
Section 3.11
    	
Title to Properties;   Liens and Encumbrances
    	
35
    
	
Section 3.12
    	
Intellectual Property
    	
36
    
	
Section 3.13
    	
Taxes
    	
37
    
	
Section 3.14
    	
Material Contracts
    	
40
    
	
Section 3.15
    	
Compliance with Laws   and Other Instruments
    	
42
    
	
Section 3.16
    	
Data Compliance
    	
43
    
	
Section 3.17
    	
Employee Matters
    	
44
    
	
Section 3.18
    	
Transactions with   Related Parties
    	
45
    
	
Section 3.19
    	
Required Licenses
    	
47
    
	
Section 3.20
    	
Environment
    	
47
    
	
Section 3.21
    	
Insurance
    	
47
    
	
Section 3.22
    	
Brokers
    	
47
    
	
Section 3.23
    	
Accuracy of Information
    	
48
    
	
 
    	
 
    	
 
    
	
Article IV   Representations and Warranties with Respect to Warrantors
    	
48
    
	
Section 4.1
    	
Capacity
    	
48
    
	
Section 4.2
    	
Authorization
    	
48
    
	
Section 4.3
    	
Conflicts; Consents of   Third Parties
    	
48
    
	
Section 4.4
    	
Ownership and Transfer   of Shares
    	
49
    
				

 

i

 

	
Article V   Representations and Warranties with Respect to Purchaser
    	
49
    
	
Section 5.1
    	
Organization and Good   Standing
    	
49
    
	
Section 5.2
    	
Authorization
    	
49
    
	
Section 5.3
    	
Conflicts; Consents of   Third Parties
    	
49
    
	
Section 5.4
    	
Subject Shares
    	
50
    
	
 
    	
 
    	
 
    
	
Article VI   Covenants
    	
50
    
	
Section 6.1
    	
Access to Information
    	
50
    
	
Section 6.2
    	
Notice of Developments
    	
50
    
	
Section 6.3
    	
Conduct of the Business   Pending the Closing
    	
51
    
	
Section 6.4
    	
Further Assurances
    	
51
    
	
Section 6.5
    	
Confidentiality and   Publicity
    	
52
    
	
Section 6.6
    	
No Promotion
    	
53
    
	
Section 6.7
    	
Exclusivity
    	
54
    
	
Section 6.8
    	
Tax Filings and   Payments
    	
55
    
	
Section 6.9
    	
Release and Discharge
    	
57
    
	
Section 6.10
    	
Withholding Rights
    	
58
    
	
Section 6.11
    	
Treatment of Company   Share Awards and NetEase RSUs
    	
58
    
	
Section 6.12
    	
No Leakage
    	
60
    
	
Section 6.13
    	
Pre-Closing Covenants   to Continue
    	
61
    
	
Section 6.14
    	
Ongoing Cooperation and   Assistance
    	
61
    
	
Section 6.15
    	
Optimization of Workforce   Structure
    	
63
    
	
Section 6.16
    	
Intellectual Property   Arrangements
    	
63
    
	
Section 6.17
    	
Non-compete
    	
63
    
	
Section 6.18
    	
Non-solicit
    	
64
    
	
Section 6.19
    	
Rights with respect to   Investment in NetEase Yanxuan
    	
65
    
	
Section 6.20
    	
Lock-up Requirements
    	
65
    
	
Section 6.21
    	
Replacement of Seller   Guarantee
    	
65
    
	
 
    	
 
    	
 
    
	
Article VII   Conditions to Closing
    	
66
    
	
Section 7.1
    	
Conditions Precedent to   Obligations of Each Party
    	
66
    
	
Section 7.2
    	
Conditions Precedent to   Obligations of the Purchaser
    	
66
    
	
Section 7.3
    	
Conditions Precedent to   Obligations of the Seller
    	
67
    
	
 
    	
 
    	
 
    
	
Article VIII   Termination
    	
67
    
	
Section 8.1
    	
Termination of   Agreement
    	
68
    
	
Section 8.2
    	
Procedure Upon   Termination
    	
68
    
	
Section 8.3
    	
Reversal of Certain   Steps upon Termination
    	
68
    
	
Section 8.4
    	
Effect of Termination
    	
69
    
	
 
    	
 
    	
 
    
	
Article IX   Indemnification
    	
69
    
	
Section 9.1
    	
Survival of   Representations, Warranties and Covenants
    	
69
    
	
Section 9.2
    	
Indemnification
    	
69
    
	
Section 9.3
    	
Limits on   Indemnification
    	
73
    
	
Section 9.4
    	
Duty to Mitigate
    	
74
    
	
Section 9.5
    	
Exclusivity
    	
74
    
	
Section 9.6
    	
Tax Treatment of   Indemnification Payments
    	
74
    
	
Section 9.7
    	
Deduction from   Indemnity Withheld Amount
    	
74
    
	
 
    	
 
    	
 
    
	
Article X   Miscellaneous
    	
74
    
	
Section 10.1
    	
Expenses
    	
74
    

 

ii

 

	
Section 10.2
    	
Governing Law
    	
74
    
	
Section 10.3
    	
Arbitration
    	
74
    
	
Section 10.4
    	
Entire Agreement;   Amendments and Waivers
    	
76
    
	
Section 10.5
    	
Amendments and Waivers
    	
76
    
	
Section 10.6
    	
Specific Performance
    	
76
    
	
Section 10.7
    	
Notices
    	
76
    
	
Section 10.8
    	
Severability
    	
77
    
	
Section 10.9
    	
Binding Effect; Assignment
    	
77
    
	
Section 10.10
    	
Non-Recourse
    	
78
    
	
Section 10.11
    	
Counterparts
    	
78
    
	
 
    	
 
    	
 
    
	
SCHEDULES   AND EXHIBITS
    	
 
    
	
 
    	
 
    
	
Schedule A
    	
List of Outgoing   Directors
    	
 
    
	
Schedule B-1
    	
Balance Sheet Date Net   Debt Calculation Principles
    	
 
    
	
Schedule B-2
    	
Net Working Capital Calculation   Principles
    	
 
    
	
Schedule C
    	
List of Exempted   Businesses
    	
 
    
	
Schedule D-1
    	
List of Group Company   Award Grantees
    	
 
    
	
Schedule D-2
    	
List of NetEase Group   Award Grantees
    	
 
    
	
Schedule E
    	
List of Non-Solicit   Persons
    	
 
    
	
Schedule F
    	
List of Intellectual   Property to be De-registered
    	
 
    
	
Schedule G
    	
List of Offshore Group   Companies for which Directors will be Replaced at Closing
    	
 
    
	
Schedule H
    	
Disclosure Schedule
    	
 
    
	
Schedule I
    	
Licensed Back   Intellectual Property
    	
 
    
	
Schedule J
    	
Certain Offer Letter   Information
    	
 
    
	
Schedule K
    	
Warrantor Transferred   IP
    	
 
    
	
Schedule L
    	
Group Company   Transferred IP
    	
 
    
	
Exhibit A
    	
Form of   Resignation and Release Letters
    	
 
    
	
Exhibit B
    	
Form of Instrument   of Transfer
    	
 
    
	
Exhibit C
    	
Form of   Transitional Services Agreement
    	
 
    
	
Exhibit D
    	
Form of Onshore   Equity Transfer Agreement
    	
 
    
	
Exhibit E
    	
Form of   Termination Agreements
    	
 
    
	
Exhibit F
    	
Form of   Replacement Control Agreements
    	
 
    
	
Exhibit G
    	
Form of NetEase   Agreement
    	
 
    
	
Exhibit H
    	
Form of   Non-compete Undertaking
    	
 
    
	
Exhibit I
    	
Form of Waiver   Letter
    	
 
    
	
Exhibit J
    	
Form of Related   Party Termination Agreement
    	
 
    
				

 

iii

 

SHARE PURCHASE AGREEMENT

 

This SHARE PURCHASE AGREEMENT (this “Agreement”), dated as of September 6, is entered into by and among (i) Taobao Holding Limited, a company incorporated under the Laws of the Cayman Islands (the “Purchaser”), (ii) HQG, Inc., a company incorporated under the Laws of the Cayman Islands (the “Company”), (iii) NetEase E-Commerce, Inc., a company incorporated under the Laws of the Cayman Islands (the “Seller”), and (iv) NetEase, Inc., a company incorporated under the Laws of the Cayman Islands (the “Seller Parent”).

 

W I T N E S S E T H:

 

WHEREAS, the Seller owns 85,000,000 Shares, representing 100% of the issued Shares of the Company (the “Purchased Shares”);

 

WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, the Purchased Shares, on the terms and subject to the conditions set forth herein; and

 

WHEREAS, the Seller Parent holds 100% of the equity interests in the Seller.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements hereinafter contained, and intending to be legally bound, the Parties hereby agree as follows:

 

Article I

 

Definitions

 

Section 1.1                                    Certain Definitions.  For the purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

 

“Accounting Firm” has the meaning ascribed to it in Section 2.7(a).

 

“Action” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Government Authority.

 

“Affiliate” means, (a) with respect to any Person that is an individual, his or her Immediate Family Members and (b) with respect to any Person that is not an individual, any other Person that directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.

 

“Affiliated Persons” means the Company or its Affiliates, or any of their shareholders, directors, supervisors, executives, employees, agents, consultants, service providers, or any other party acting on behalf of the Persons identified above.

 

“Agreed Enterprise Value” means an amount equal to US$2.0 billion.

 

“Agreement” has the meaning ascribed to it in the Preamble.

 

“Alibaba Group” means Alibaba Group Holding Limited, a company listed on the New York Stock Exchange under the ticker symbol “BABA.”

 

4

 

“Alibaba Shares” means ordinary shares of Alibaba Group, par value US$0.000025 per share.

 

“Annual Consolidated Financial Statements” has the meaning ascribed to it in Section 3.7(a).

 

“Anti-Corruption Laws” has the meaning ascribed to it in Section 3.15(d).

 

“Applicable Accounting Standard” means GAAP, applied consistently with the accounting principles, standards, methodologies, assumptions and policies that were used in the preparation of the Financial Statements.

 

“Award Grantees” means, collectively, the Group Company Award Grantees and the NetEase Group Award Grantees.

 

“Balance Sheet Date” means August 31, 2019.

 

“Benefit Plan” has the meaning ascribed to it in Section 3.17.

 

“Big Four” means Deloitte Touche Tohmatsu, Ernst & Young, KPMG and PricewaterhouseCoopers and their respective PRC Affiliates.

 

“Business” means, in respect of a Group Company, the business of such Group Company as currently conducted and as proposed to be conducted and, in respect of the Group Companies, the businesses of the Group Companies as currently conducted.

 

“Business Day” means a day that is not a Saturday or Sunday or any other day on which banks in the PRC or Hong Kong are required or authorized to be closed.

 

“Business Partners” has the meaning ascribed to it in Section 3.15(e).

 

“Calculation Principles” means (a) with respect to the Net Debt, the calculation principles and procedures set forth in Schedule B-1 hereto; and (b) with respect to the Net Working Capital, the calculation principles and procedures set forth in Schedule B-2 hereto; in the cases of (a) and (b), the component items of which shall be determined on a basis consistent with the Applicable Accounting Standard. For the avoidance of doubt, no item taken into account in the calculation of Net Debt pursuant to Schedule B-1 shall be included in the calculation of Net Working Capital pursuant to Schedule B-2, and vice versa.

 

“Circular 7” means Circular No. 7 issued by the PRC State Administration of Taxation on February 3, 2015, titled “Circular on Certain Questions relating to the Enterprise Income Tax of Indirect Transfers of Assets by Non-Resident Enterprises (关于非居民企业间接转让财产企业所得税若干问题的公告)”, and any amendment, implementing rules, or official interpretation thereof or any replacement, successor or alternative legislation having the same subject matter thereof.

 

“Closing” has the meaning ascribed to it in Section 2.3.

 

“Closing Examination” has the meaning ascribed to it in Section 2.7(a).

 

5

 

“Closing Examination Final Purchase Price” has the meaning ascribed to it in Section 2.7(a).

 

“Closing Date” has the meaning ascribed to it in Section 2.3.

 

“Closing Statement” has the meaning ascribed to it in Section 2.7(a).

 

“Company” has the meaning ascribed to it in the Preamble.

 

“Company Fundamental Warranties” has the meaning ascribed to it in Section 7.2(a).

 

“Company Intellectual Property” has the meaning ascribed to it in Section 3.12(a).

 

“Company IP Agreements” means (a) licenses of Company Intellectual Property by any Group Company to any third party, (b) licenses of Intellectual Property by any third party to any Group Company, (c) agreements between any Group Company and any third party relating to the development or use of Intellectual Property, and (d) consents, settlements, decrees, orders, injunctions, judgments or rulings governing the use, validity or enforceability of Company Intellectual Property.

 

“Company Representatives” has the meaning ascribed to in Section 3.15(d).

 

“Company Share Awards” means the share-based awards granted under the Company Share Incentive Plan.

 

“Company Share Incentive Plan” means the HQG, Inc. 2015 Share Incentive Plan, as amended from time to time.

 

“Contract” means any contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease, franchise, Permit or license (whether written or oral).

 

“Control” (including the terms “Controlled by” and “under common Control with”) with respect to any Person means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the management, policies or affairs of such Person, whether through ownership of voting securities, as trustee, personal representative or executor, by contract or otherwise.

 

“Control Documents” has the meaning ascribed to it in Section 3.5(c).

 

“Cyber Security and Data Protection Related Laws” means laws and regulations relating to cyber security, Personal Information protection and Important Data protection that apply to the Business and dealings of any Group Company, including but not limited to PRC Laws, regulations and national standards relating to cyber security, Personal Information protection, the General Data Protection Regulation of European Union, and any other applicable law and regulation relating to cyber security and data protection in any other country.

 

“Disclosure Schedule” means the Disclosure Schedule attached hereto as Exhibit H.

 

6

 

“Drug Administration Laws” means all applicable Laws relating to selling drugs and displaying drugs and medical devices related information on the internet, including without limitation, the Drug Administration Law of the PRC (中华人民共和国药品管理法) and Interim Administration on Approval of Internet Drug Transaction Services (互联网药品交易服务审批暂行规定).

 

“E-commerce Laws” means all applicable Laws relating to e-commerce platforms that provide online data processing and transaction services and entities that sell products on such e-commerce platforms, including without limitation, the E-commerce Law of the PRC (中华人民共和国电子商务法), Notice of the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance on Improving the Supervision over Cross-border E-commerce Retail Imports (商务部、发展改革委、财政部等关于完善跨境电子商务零售进口监管有关工作的通知) and Administrative Measures for Online Trading (网络交易管理办法).

 

“Environmental Law” means all applicable Laws relating to the protection, conservation and recovery of the environment, as well as the sustainable use of natural resources in order to enhance the lives of individuals, thus procuring for public health and safety.

 

“ESOP Fees” means RMB1,471,795,673, the total amount of payment to be made by the Purchaser’s PRC Affiliate(s) to the Seller’s PRC Affiliate(s) and the relevant Group Company Award Grantees, as applicable, in the PRC in RMB.

 

“Estimated Balance Sheet Date Net Debt” has the meaning ascribed to it in Section 2.2(a)(i).

 

“Estimated Balance Sheet Date Net Working Capital” has the meaning ascribed to it in Section 2.2(a)(iii).

 

“Estimated Purchase Price” has the meaning ascribed to it in Section 2.2(a)(iv).

 

“Estimated Reference Date Net Working Capital” has the meaning ascribed to it in Section 2.2(a)(ii).

 

“Exempted Business” has the meaning ascribed to it in Section 6.18.

 

“Existing Articles” means the Memorandum and Articles of Association of the Company adopted on September 30, 2014, as may be amended from time to time.

 

“Expert” has the meaning ascribed to it in Section 6.13(f).

 

“Filing Agent” has the meaning ascribed to it in Section 6.8(a).

 

“Final Balance Sheet Date Net Debt” has the meaning ascribed to it in Section 2.7(a).

 

7

 

“Final Balance Sheet Date Net Working Capital” has the meaning ascribed to it in Section 2.7(a).

 

“Final Purchase Price” has the meaning ascribed to it in Section 2.7(e).

 

“Final Purchase Price Determination Date” has the meaning ascribed to it in Section 2.7(e).

 

“Final Reference Date Net Working Capital” has the meaning ascribed to it in Section 2.7(a).

 

“Financial Statements” has the meaning ascribed to it in Section 3.7(a).

 

“First Installment Payment” has the meaning ascribed to it in Section 2.2(b).

 

“Food Safety Laws” means Laws relating to selling food on the internet, including without limitation, Food Safety Laws of the PRC (中华人民共和国食品安全法), Administrative Measures for Food Distribution Licensing (食品经营许可管理办法) and Measures for the Investigation and Handling of Illegalities of Online Food Safety (网络食品安全违法行为查处办法).

 

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

 

“Government Authority” means supranational, national, federal, state, municipal or local court, administrative body or other governmental or quasi-governmental entity or authority with competent jurisdiction exercising legislative, judicial, regulatory or administrative functions of or pertaining to supranational, national, federal, state, municipal or local government, including any department, commission, board, agency, bureau, subdivision, instrumentality or other regulatory, administrative, judicial or arbitral authority, and any securities exchange on which the securities of any Party or its Affiliates are listed.

 

“Government Entity” means any (a) Government Authority, (b) public international organization, (c) any agency, division, bureau, department or other sector of any government, entity or organization described in the foregoing subsections (a) or (b) of this definition, (d) any state-owned or state-controlled enterprise or (e) any company, business, enterprise or other entity owned or controlled by any government, entity or organization described in subsections (a), (b), (c) or (d) of this definition.

 

“Government Official” means (a) any officer, employee or other individual acting in an official capacity for a Government Authority or agency or instrumentality thereof (including any state-owned or state-controlled enterprise) (e.g., legislative, administrative, judicial, military or public education departments) at any level (e.g., county and municipal level, provincial or central level), or any department or agency thereof; (b) political party officials and candidates for political office; (c) directors, officers and employees of state-owned, state-controlled or state-operated enterprises; (d) officers, employees and other persons working in an official capacity on behalf of any public international organization (regardless of seniority), e.g., the United Nations or the World Bank; or (e) close relatives of

 

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persons identified above (e.g., parents, children, spouse and parents-in-law), close friends and business partners.

 

“Qualifying Grantees” means (a) with respect to the individuals listed in Part A of Schedule D-2, those that have entered into both the NetEase Agreement and the Waiver Letter, (b) with respect to the individuals listed in Part B of Schedule D-2 who have been granted no less than 500 Company Share Awards, those that have entered into both the Undertaking Letter and the Waiver Letter, and (c) with respect to the individuals listed in Part B of Schedule D-2 who have been granted less than 500 Company Share Awards, those that have entered into (i) the Waiver Letter, and (ii) the Undertaking Letter or a written confirmation to waive any rights to payment in connection with or arising from the Company Share Awards.

 

“Group Companies” means the Company and any Person (other than a natural person) (i) that is directly or indirectly Controlled by the Company, or (ii) whose results of operation and financial condition are consolidated with those of the Company for financial reporting purposes in accordance with the Applicable Accounting Standard. For the avoidance of doubt, Group Companies shall include Hangzhou Youmai, Zhejiang Anxiong and Ningbo Youmai.

 

“Group Company Award Grantees” means the Persons set forth in Schedule D-1 hereto that have been granted the Company Share Awards and/or NetEase RSUs in accordance with the Company Share Incentive Plan and the 2009 Restricted Share Unit Plan of NetEase, Inc., as applicable.

 

“Hangzhou Wuweixiong” means NetEase Wuweixiong (Hangzhou) Technology Co., Ltd. (网易无尾熊(杭州)科技有限公司).

 

“Hangzhou Youmai” means Hangzhou Youmai Internet Technology Co., Ltd. (杭州优卖网络科技有限公司).

 

“Hangzhou Youmai Technology” means Hangzhou Youmai Technology Co., Ltd. (杭州优买科技有限公司).

 

“HKIAC Rules” has the meaning ascribed to it in Section 10.3(a).

 

“Hong Kong” means the Hong Kong Special Administrative Region of the PRC.

 

“Immediate Family Members”, with respect to any natural Person, means (a) such Person’s spouse, parents, parents-in-law, grandparents, children, grandchildren, siblings and siblings-in-law (in each case whether adoptive or biological), (b) spouses of such Person’s children, grandchildren and siblings (in each case whether adoptive or biological) and (c) estates, trusts, partnerships and other Persons which directly or indirectly through one or more intermediaries are Controlled by the foregoing.

 

“Important Data” means any data that is closely related to national security, economic development and public interest.

 

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“Indebtedness” of any Person means, without duplication, (a) the principal of and, accreted value, accrued and unpaid interest, prepayment premiums or penalties and fees and expenses or similar breakage costs or other fees required to be paid under such indebtedness to be satisfied and discharged in full in respect of (i) indebtedness of such Person for borrowed money and (ii) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all obligations (contingent or otherwise) of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention in the ordinary course of business consistent with the past practice of such Person); (c) all capitalized lease obligations; (d) all obligations and Liabilities payable upon termination of interest rate protection agreements, foreign currency exchange agreements or other interest rate or exchange rate hedging or swap arrangements; (e) all obligations of the type referred to in subsections (a) through (d) of any Persons the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise; and (f) all obligations of the type referred to in subsections (a) through (e) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).

 

“Indemnified Party” has the meaning ascribed to it in Section 9.2(c)(i).

 

“Indemnifying Party” has the meaning ascribed to it in Section 9.2(c)(i).

 

“Indemnity Withheld Amount” means the higher of (a) twenty percent (20%) of the Estimated Purchase Price, and (b) US$200 million.

 

“Intellectual Property” means any and all (a) patents, patent rights and applications therefor and reissues, reexaminations, continuations, continuations-in-part, divisions, and patent term extensions thereof, (b) inventions (whether patentable or not), discoveries, improvements, concepts, innovations and industrial models, (c) registered and unregistered copyrights, copyright registrations and applications, mask works and registrations and applications therefor, author’s rights and works of authorship (including artwork, Software, computer programs, source code, object code and executable code, firmware, development tools, files, records and data, and related documentation), (d) URLs, web sites, web pages and any part thereof, (e) technical information, know-how, trade secrets, drawings, designs, design protocols, specifications, proprietary data, customer lists, databases, proprietary processes, technology, formulae, and algorithms and other intellectual property, (f) trade names, trade dress, trademarks, domain names, service marks, logos, business names, and registrations and applications therefor, and (g) the goodwill symbolized or represented by the foregoing.

 

“Intellectual Property Laws” means all applicable Laws relating to Intellectual Property in all applicable jurisdictions.

 

“Interim Consolidated Financial Statements” has the meaning ascribed to it in Section 3.7(a).

 

“Knowledge of the Warrantors” means the actual knowledge of William Lei Ding, Charles Zhaoxuan Yang, Lei Zhang and the other Senior Managers, and knowledge they ought to have if each of them had made due and careful enquiries of any director, other officer or employees of any Group Company who are directly reporting to such Persons.

 

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“Law” means any foreign, federal, state, municipal or local law, statute, code, ordinance, rule, decree, regulation or any common law of any Government Authority or jurisdiction.

 

“Leakage” means (a) any dividend or distribution (whether in cash or in kind) or any payments in lieu of any dividend or distribution, declared, paid or made; (b) any redemption, repurchase, repayment or return of shares or other securities, or return of capital (whether by reduction of capital or otherwise and whether in cash or in kind); (c) any payments made, or agreed to be made to the benefit of the Seller or any of its Affiliates (including any management, monitoring or other shareholder’s or directors’ fees or bonuses or payments of a similar nature); (d) any amount owed to any Group Company by the Seller or any of its Affiliates which has been waived; (e) any asset which has been transferred by any Group Company to the Seller or any of its Affiliates; (f) any fees, costs or expenses of the Seller or any of its Affiliates (including the Group Companies), relating to the transactions contemplated hereby (including any fees, expenses and costs of legal counsel, investment bankers, brokers, accountants and other representatives and consultants), which have been paid or incurred, by or on behalf of any Group Company to or for the benefit of the Seller or any of its Affiliates; (g) any change-of-control, transaction bonus, retention payment, severance or similar amounts payable by any Group Company to any director, officer, employee, consultant or independent contractor in connection with the entry into or consummation of the transactions contemplated hereby; (h) any amendment of the terms of its borrowing or indebtedness in the nature of borrowing owed by any Group Company to the Seller or any of its Affiliates that would result in additional payment by the Group Companies; (i) any liabilities which have been assumed or incurred (or any guarantee or indemnity or similar arrangement given in respect thereof) for the benefit of the Seller or any of its Affiliates; (j) any agreement, understanding or arrangement entered into (whether with the Seller or any of its Affiliates) whereby the person directly benefitting from any of the matters referred to in subsections (a) through (i) above confers (directly or indirectly) a benefit to the Seller or any of its Affiliates, and (k) any agreement or commitment by any Group Company to do any of the things set out in subsections (a) through (j) above; but, in each case, not including any Permitted Leakage. For the purposes of this definition, an Affiliate of the Seller shall not include a Group Company.

 

“Leakage Amount” means the amount in respect of any Leakage which has accrued or been paid, incurred, assumed, indemnified, waived or committed by any Group Company between the Balance Sheet Date and the Closing Date.

 

“Leakage Notice” has the meaning ascribed to it in Section 6.13(c).

 

“Legal Proceeding” means any judicial, administrative or arbitral actions, suits, proceedings or investigations (whether civil or criminal, judicial or administrative, at law or in equity, or public or private) by or before a Government Authority.

 

“Liability” means any indebtedness, liability or obligation (whether direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due), including those arising under any Law, Order, Legal Proceeding or Contract and including all costs and expenses relating thereto.

 

“Licensed Intellectual Property” means Intellectual Property licensed to any Group Company pursuant to the Company IP Agreements to which it is a party.

 

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“Lien” means any lien (including, without limitation, tax lien), encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease, charge, option, restrictive covenant, right of first refusal, right of first offer, easement, servitude or restriction of any kind, including, without limitation on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

“Lock-up Period” has the meaning ascribed to it in Section 6.21.

 

“Long Stop Date” means the date that is one (1) month after the date hereof.

 

“Losses” has the meaning ascribed to it in Section 9.2(a).

 

“Material Adverse Effect” means (x) with respect to the Warrantors or the Company, any change, circumstance, condition, event or effect that, individually or in the aggregate, is or would reasonably be expected to be materially adverse to (a) the Business, operations, assets, Liabilities, condition (financial or otherwise) or results of operations of the Group Companies, taken as a whole; or (b) the ability of the Company or any Warrantor to consummate the transactions contemplated by this Agreement and to perform its obligations hereunder and under any other Transaction Documents without any material delay; provided, however, that with respect to subsection (a) only, none of the following, either alone or in combination, shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be likely to occur: (i) changes in the economy or financial markets generally in the PRC; (ii) changes that are the result of factors generally affecting the industry in which the Group Companies operate; (iii) changes in any Law of general applicability or in GAAP or other accounting standards or interpretations thereof used by the Group Companies after the date hereof; (iv) changes resulting from any weather event or natural disaster, or any outbreak of illness or other public health event, in the PRC, whether or not caused by any Person (other than the Warrantors, Group Companies or any of their respective Affiliates); (v) changes in regional, national or international political conditions (including any outbreak or escalation of hostilities or any acts of war, trade war or terrorism or any other national or international calamity, crisis or emergency); (vi) any failure by the Group Companies to meet any estimates of revenues or earnings for any period ending on or after the date hereof and prior to the Closing; provided, that the exception in this subsection (vi) shall not prevent or otherwise affect a determination that any change, effect, circumstance or development underlying such failure has resulted in, or contributed to, a Material Adverse Effect; (vii) any action or inaction by the Warrantors or Group Companies taken or omitted to be taken at the Purchaser’s express written request after the date hereof; or (viii) any action taken by the Warrantors or Group Companies which is expressly required by this Agreement; provided, further, that, with respect to subsections (i) through (v), such change, event, circumstance or development (as the case may be) shall not be excluded from determining whether a Material Adverse Effect has occurred or would be reasonably be likely to occur to the extent any such change, event, circumstance or development (as the case may be) has a disproportionate effect on the Business compared to other businesses of similar size operating in the industry of in which the Group Companies operate; and (y) with respect to the Purchaser, any change, circumstance, condition, event or effect that, individually or in the aggregate, is or would reasonably be expected to be materially adverse to the ability of the Purchaser to consummate the transactions contemplated by this Agreement and to perform its obligations hereunder and under any other Transaction Documents without any material delay.

 

“Material Contract” has the meaning ascribed to it in Section 3.14(a).

 

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“Net Debt” means an amount in US$ that equals: (a) the sum of the amounts attributable to each of the line items under the heading “indebtedness” in Schedule B-1 as of such time, minus (b) the sum of the amounts attributable to each of the line items under the heading “Cash and Cash Equivalents” in Schedule B-1 as of such time, calculated in accordance with the Calculation Principles.

 

“Net Working Capital” means an amount in US$ that equals the sum of the amounts attributable to each of the line items set forth in Schedule B-2 as of such time, calculated in accordance with the Calculation Principles.

 

“NetEase Agreement” means the agreement to be entered into by and between the Seller Parent and each of the individuals listed in Part A of Schedule D-2 in the form set forth in Exhibit G hereto.

 

“NetEase Group Award Grantees” means the Persons set forth in Schedule D-2 hereto (with the names of the individuals listed in Part B redacted) that are employed by the Seller Parent or its Affiliates (excluding the Group Companies) and have been granted the Company Share Awards in accordance with the Company Share Incentive Plan.

 

“NetEase RSUs” means the restricted share units granted under the 2009 Restricted Share Unit Plan of NetEase, Inc.

 

“NetEase Yanxuan” means NetEase Yanxuan Trading Co., Ltd. (网易严选贸易有限公司) or another Affiliate of the Seller that operates the e-commerce platform NetEase Yanxuan (网易严选).

 

“Ningbo Youmai” means Ningbo Youmai E-commerce Co., Ltd. (宁波优买电子商务有限公司), in which HQG, Limited owns 50% of the equity interest.

 

“Non-compete Undertaking” means the non-compete undertaking to be executed by each of the individuals listed in Part B of Schedule D-2 hereto for the benefit of the Purchaser and its Affiliates in the form set forth in Exhibit H hereto.

 

“Offshore Group Company” means each Group Company that is incorporated outside the PRC.

 

“Offshore Shareholder Loans” means the shareholder loans extended by the Seller or its offshore Affiliates (excluding the Group Companies) to the Offshore Group Companies with a total principal amount of (a) RMB 4,918,914,422, plus (b) EUR 2,721,846, plus (c) HK$ 525,905,618.  For the avoidance of doubt, the Offshore Shareholder Loans have not accrued, and shall not accrue, any interests thereon.

 

“Onshore Equity Transfers” has the meaning ascribed to it in Section 2.4(i).

 

“Onshore Purchase Price” has the meaning ascribed to it in Section 2.4(i).

 

“Onshore Shareholder Loans” means the shareholder loans extended by the Seller’s Affiliates (excluding the Group Companies) established in the PRC to the PRC

 

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Group Companies with a total principal amount of RMB1,591 million and accrued interests of RMB51,006,498 as of the Closing.

 

“Order” means any written order, injunction, judgment, decree, legally binding notice, ruling, writ, assessment or arbitration award of a Government Authority.

 

“Outgoing Directors” means the individuals indicated as an “Outgoing Director” in Schedule A hereto.

 

“Party” means a party to this Agreement.

 

“Permit” means any approval, authorization, consent, license, permit or certificate of or issued by a Government Authority.

 

“Permitted Leakage” means (a) any Leakage in relation to, or arising from, any payment made or agreed to be made or liability incurred in respect of any matter undertaken at the written request of the Purchaser; (b) payments in respect of compensation for employment services rendered or for holding an office as director of any Group Company, employment-related benefits and expense reimbursement, in each case to the extent made in the ordinary course of business consistent with past practice; (c) any Leakage in respect of the cancellation, termination or forfeiture of the Company Share Awards or NetEase RSUs as required by the Transaction Documents and having been included in the ESOP Fees; (d) any Leakage arising from any transaction that is at least as favorable to the Group Companies as would have been obtainable by it at the time in a comparable arm’s-length transaction with an unrelated party as set forth in Section 3.18 of the Disclosure Schedule, and (e) any other payment specifically agreed by the Purchaser in writing after the date hereof as Permitted Leakage.

 

“Permitted Liens” means (i) Liens for Taxes, assessments or other governmental charges (A) not yet delinquent (or which may be paid without interest or penalties) or (B) the amount or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP or other accounting standards used by the Group Companies; (ii) mechanics’, materialmens’, warehousemans’, landlords’, carriers’, workers’, repairers’ and similar Liens granted, arising or incurred in the ordinary course of business or the amount or validity of which is being contested in good faith by appropriate proceedings in the ordinary course of business; (iii) pledges, deposits or other Liens to the performance of leases incurred or made in the ordinary course of business; (iv) zoning, building code, entitlement and other land use and environmental Laws by any Governmental Entity and that would not, individually or in the aggregate, reasonably be likely to materially impair the value, current occupancy or current use of a Party’s leased or owned real property; (v) non-exclusive licenses to and covenants not to sue under Intellectual Property granted in the ordinary course of business; (vi) any matters of public record; (vii) easements, permits, rights of way, restrictions, covenants, reservations or encroachments, minor defects or irregularities in and other similar matters affecting title to any real property that do not materially impair the value or current use and operation of the affected real property, and (viii) title of a lessor under a capital or operating lease.

 

“Person” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Government Authority or other entity.

 

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“Personal Information” means any information that is recorded electronically or in any other way that could identify a specific natural person or reflect any activity of such a person, either by its own or in combination with other information.

 

“PRC” or “China” means the People’s Republic of China, excluding, for the purposes of this Agreement, Hong Kong, Macau Special Administrative Region of the PRC and the island of Taiwan.

 

“PRC Anti-Unfair Competition Law” means the Anti-Unfair Competition Law of the PRC (中华人民共和国反不正当竞争法) promulgated by the Standing Committee of the National People’s Congress of the PRC and effective on September 2, 1993, as amended from time to time.

 

“PRC Group Companies” means, collectively, each of the Group Companies incorporated under the Laws of the PRC.

 

“Prohibited Payment” has the meaning ascribed to it in Section 3.15(d).

 

“Purchased Shares” has the meaning ascribed to it in the Recitals.

 

“Purchaser” has the meaning ascribed to it in the Preamble.

 

“Purchaser Indemnitee” has the meaning ascribed to it in Section 9.2(a).

 

“Purchaser Nominees” has the meaning ascribed to it in Section 2.4(i).

 

“Real Property” has the meaning ascribed to it in Section 3.11(b).

 

“Related Parties” means (a) the members or shareholders or equity interest holders (in each case, whether direct or indirect, but excluding any Group Company) of any Group Company immediately prior to the Closing, other than the direct or indirect shareholders or equity interest holders of the Seller Parent, (b) the directors or executive officers of any Group Company immediately prior to the Closing, and (c) the Affiliates of the Persons enumerated under subsections (a) and (b).

 

“Related Party Contracts” has the meaning ascribed to it in Section 3.18(a)

 

“Release” has the meaning ascribed to it in Section 6.9(a).

 

“Released Claims” has the meaning ascribed to it in Section 6.9(a).

 

“Released Persons” has the meaning ascribed to it in Section 6.9(a).

 

“Released Portion” has the meaning ascribed to it in Section 2.9(b).

 

“Releasing Persons” has the meaning ascribed to it in Section 6.9(a).

 

“Relevant PRC Tax Authority” has the meaning ascribed to it in Section 6.8(a).

 

“Reporting Transactions” has the meaning ascribed to it in Section 6.8(a).

 

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“Required License” means all franchises, permits, licenses, approvals, authorizations and any similar document issued or granted by any Government Authority that are required for the conduct of the Business of the Group Companies.

 

“Reserved Loss” has the meaning ascribed to it in Section 2.9(b).

 

“Review Firm” has the meaning ascribed to it in Section 2.7(d).

 

“RMB” means Renminbi, the lawful currency of the PRC.

 

“RSU Compensation Fees” means US$ equivalent to RMB57,720,821, which the total amount of payment to be made by the Purchaser’s PRC Affiliate(s) to the relevant Group Company Award Grantees in the PRC in RMB.

 

“SAFE” means the State Administration of Foreign Exchange.

 

“SAFE Regulations” means all the applicable laws, regulations and rules promulgated by SAFE.

 

“SAMR” means the State Administration for Market Regulation of the PRC or, with respect to the issuance of any business license or filing or registration to be effected by or with the State Administration for Market Regulation, any Government Authority which is similarly competent to issue such business license or accept such filing or registration under the Laws of the PRC.

 

“Second Installment Payment” has the meaning ascribed to it in Section 2.7(f).

 

“Second Installment Payment Conditions” has the meaning ascribed to it in Section 6.11(h).

 

“Second Installment Payment Date” has the meaning ascribed to it in Section 2.7(f).

 

“Seller” has the meaning ascribed to it in the Preamble.

 

“Seller Guarantee” means the customs guarantees provided by the Seller’s Affiliates (excluding the Group Companies) to and for the benefit of the operation of warehouses of the Group Companies as of the date of this Agreement.

 

“Seller Parent” has the meaning ascribed to it in the Preamble.

 

“Selling Taxes” has the meaning ascribed to it in Section 6.8(d).

 

“Senior Managers” means the chief executive officer (or equivalent), chief financial officer, chief operating officer, president, vice presidents and business unit leaders of the Group Companies and all other members of management who report directly to the board of directors of the Company or the chief executive officer (or equivalent) of the Group Companies.

 

“Shares” means the ordinary shares, par value US$0.0005 per share, in the share capital of the Company.

 

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“Specified Laws” means the Cyber Security and Data Protection Related Laws, Drug Administration Laws, E-commerce Laws, Food Safety Laws, Intellectual Property Laws, PRC Anti-Unfair Competition Law, Telecommunication Regulation of the PRC (中华人民共和国电信条例), Content of Categories of Telecommunication Business (2015) (电信业务分类目录(2015年版)), Notice of Ministry of Industry and Information Technology on Removing the Restrictions on Foreign Equity Ratios in Online Data Processing (Operating E-commerce) Business (工业和信息化部关于放开在线数据处理与交易业务(经营类电子商务)外资股比限制的通告) and the International Tax Co-operation (Economic Substance) Law (2018) of the Cayman Islands.

 

“Straddle Period” means any taxable period that includes but does not end on the Closing Date.

 

“Subject Shares” has the meaning ascribed to it in Section 2.6.

 

“Subsidiary” means, with respect to any given Person, any other Person that is Controlled directly or indirectly by such given Person.

 

“Subsidy” has the meaning ascribed to it in Section 3.13(r).

 

“Tax” or “Taxes” means (a) in the PRC: (i) any national, provincial, municipal, or local taxes, charges, fees, levies, or other assessments, including, without limitation, all net income (including but not limited to enterprise income tax and individual income withholding tax), turnover (including but not limited to value-added tax, business tax, and consumption tax), resource (including but not limited to urban and township land use tax), special purpose (including but not limited to land value-added tax, urban maintenance and construction tax, and additional education fees), property (including but not limited to urban real estate tax and land use fees), documentation (including but not limited to stamp duty and deed tax), filing, recording, social insurance (including but not limited to pension, medical, unemployment, housing, and other social insurance withholding), tariffs (including but not limited to import duty and import value-added tax), and estimated and provisional taxes, charges, fees, levies, or other assessments in the nature of taxes, in each case, imposed by a Government Authority, (ii) all interest, penalties (but not limited to administrative, civil or criminal), or additional amounts imposed by any Government Authority in connection with any item described in subsection (i) above, and (iii) any form of transferor liability imposed by any Government Authority in connection with any item described in subsections (i) and (ii) above, and (b) in any jurisdiction other than the PRC: all similar liabilities as described in subsection (a) above.

 

“Tax Return” means any return, report or statement required to be filed with a Government Authority with respect to any Tax (including any attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, consolidated or unitary returns for any group of entities that includes any Group Company.

 

“Third Party Claim” has the meaning ascribed to it in Section 9.2(c)(ii).

 

“Transaction Documents” means this Agreement, the Transitional Services Agreement, the NetEase Agreements, the Non-compete Undertakings, the Waiver Letters, the

 

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transaction documents contemplated by Section 6.11, and other agreements, documents, or instruments or certificates that are executed and delivered by any party to any other party concurrently with or in connection with the transactions contemplated by this Agreement.

 

“Transaction Expenses” has the meaning ascribed to it in Section 10.1.

 

“Transfer” means, with respect to any Subject Shares, directly or indirectly, by operation of Law, contract or otherwise, (a) to sell, contract to sell, give, assign, hypothecate, pledge, encumber or create or permit to subsist any Liens over, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such Subject Shares (or any interest therein), (b) to engage in any hedging, swap, forward contract or other transaction that is designed to or which reasonably could be expected to lead to or result in a sale or disposition of beneficial ownership of, or pecuniary interest in, such Subject Shares, including any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to such Subject Shares, or (c) to enter into a short sale of, or trade in, derivative securities representing the right to vote or economic benefits of, such Subject Shares.

 

“Transitional Services Agreement” means the transitional services agreement to be entered into by and among the Seller and certain Seller’s Affiliates as designated by the Seller, on the one hand, and the Company, in the form set forth in Exhibit C hereto.

 

“Unresolved Claim” has the meaning ascribed to it in Section 2.9(b).

 

“US$” means United States dollars, the lawful currency of the United States.

 

“Waiver Letters” means the waiver letters to be executed by each of the NetEase Group Award Grantees for the benefit of the Company in the form set forth in Exhibit I hereto.

 

“Warrantors” means, collectively, the Seller and the Seller Parent.

 

“Warrantor Fundamental Warranties” has the meaning ascribed to it in Section 7.2(a).

 

“Zhejiang Anxiong” means Zhejiang Anxiong Internet Technology Co., Ltd. (浙江桉熊网络科技有限公司).

 

Section 1.2                                     Interpretation and Rules of Construction.

 

(a)                                 Unless otherwise expressly provided, for the purposes of this Agreement, the following rules of interpretation shall apply:

 

(i)                                     the provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement;

 

(ii)                                  any reference in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or a

 

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Schedule or Exhibit to, this Agreement, unless otherwise indicated. All Exhibits and Schedules hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein;

 

(iii)                               any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa;

 

(iv)                              the word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it;

 

(v)                                 words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires;

 

(vi)                              when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded; and

 

(vii)                           if the conversion between US$ and RMB is necessary for the purposes of this Agreement, unless specifically provided otherwise, such conversion shall be conducted at the US$:RMB middle exchange rate last published by the People’s Bank of China as of the date that is one (1) Business Day prior to the date hereof; if the conversion between US$ and other currencies (other than RMB) is necessary for the purposes of this Agreement, the applicable exchange rate should be the spot rate at which such currency may be exchanged into US$, as set forth on the China Foreign Exchange Trade System (http://www.chinamoney.com.cn/chinese/ mkdatapfx/) at 12:00 noon (Beijing time) as of the date that is one (1) Business Day prior to the date hereof.

 

(b)                                 The Parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

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Article II

 

Sale and Purchase of Shares

 

Section 2.1                                    Sale and Purchase of Shares.  Upon the terms and subject to the conditions contained herein, at the Closing, the Seller shall sell to the Purchaser, and the Purchaser shall purchase from the Seller, the Purchased Shares free and clear of all Liens.

 

Section 2.2                                     Purchase Price.

 

(a)                                           On the date hereof, the Seller shall execute and deliver to the Purchaser a notice setting out:

 

(i)                                               the good faith estimated Net Debt of the Group as of the Balance Sheet Date (the “Estimated Balance Sheet Date Net Debt”);

 

(ii)                                            the good faith estimated Net Working Capital of the Group as of June 30, 2019 (the “Estimated Reference Date Net Working Capital”);

 

(iii)                                         the good faith estimated Net Working Capital of the Group as of the Balance Sheet Date (the “Estimated Balance Sheet Date Net Working Capital”); and

 

(iv)                                        the estimated purchase price which is calculated as follows:

 

(A)         the Agreed Enterprise Value,

 

(B)         minus the Estimated Balance Sheet Date Net Debt,

 

(C)         (x) plus the difference between the Estimated Balance Sheet Date Net Working Capital and the Estimated Reference Date Net Working Capital in its absolute value if the Estimated Balance Sheet Date Net Working Capital exceeds the Estimated Reference Date Net Working Capital by more than RMB10,000,000, or (y) minus the difference between the Estimated Reference Date Net Working Capital and the Estimated Balance Sheet Date Net Working Capital in its absolute value if the Estimated Reference Date Net Working Capital exceeds the Estimated Balance Sheet Date Net Working Capital by more than RMB10,000,000,

 

(D)         minus the Onshore Purchase Price,

 

(E)          plus the total amount of onshore loans and the accrued interests to be repaid by the existing shareholders of Hangzhou Youmai and Zhejiang Anxiong to Hangzhou Wuweixiong in accordance with the Control Documents, provided that the Seller shall reimburse the Purchaser for the Tax actually incurred (if any) by Hangzhou Wuweixiong in connection with the foregoing repayment,

 

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and the Purchaser shall be entitled to deduct such amount from the Indemnity Withheld Amount,

 

(F)           minus the ESOP Fees,

 

(G)         minus the RSU Compensation Fees,

 

inclusive of all applicable Taxes (the “Estimated Purchase Price”);

 

in the cases of (i), (ii) and (iii), each calculated in accordance with the Calculation Principles.  For clarity, references to the “Balance Sheet Date” in (i), (ii) and (iii) mean 11:59 pm on the Balance Sheet Date.

 

(b)                                 The Final Purchase Price will be paid by the Purchaser in combination of cash and Alibaba Shares, in which US$299,999,983 will be paid in Alibaba Shares to be newly issued by Alibaba Group in accordance with Section 2.6 (the “First Installment Payment”) and the remaining portion of the Final Purchase Price will be paid in US$.

 

Section 2.3                                    Closing Date.  Subject to the terms and conditions of this Agreement, the sale and purchase of all Purchased Shares as contemplated by this Agreement (the “Closing”) shall take place via the remote exchange of electronic documents and signatures on a date that is no later than the 1st (first) Business Day after the satisfaction or valid waiver of each of the conditions set forth in Article VII (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time), unless another time, date or place is agreed in writing by the Purchaser and the Seller (the date on which the Closing occurs, the “Closing Date”).

 

Section 2.4                                    Closing Deliverables by the Company.  At the Closing, the Company shall, and the Warrantors shall procure the Company to, deliver or cause to be delivered to the Purchaser:

 

(a)                                 a copy of the register of members of the Company, dated as of the Closing Date and duly certified by the registered office provider of the Company, evidencing the ownership by the Purchaser of all the Purchased Shares;

 

(b)                                 a copy of the register of directors of each of the Offshore Group Companies set forth on Part A of Schedule G hereto, dated as of the Closing Date and duly certified by the registered agent (or equivalent) of such Offshore Group Company, evidencing the replacement of each of the directors of such Offshore Group Company with individuals designated by the Purchaser;

 

(c)                                  a copy of the resolutions duly and validly adopted by the board of directors of the Company and certified by a director of the Company, evidencing the authorization by the board of directors of the Company of the execution and delivery of this Agreement and the other Transaction Documents to which the Company is a party and the consummation of the transactions contemplated hereby and thereby, including (A) the replacement of each of the Outgoing Directors of the Company with individuals designated by the Purchaser (the effectiveness of which may be conditioned upon the Closing); (B) the transfer of the Purchased Shares as

 

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contemplated by this Agreement, and (C) such additional resolutions with respect to the termination of the Company Share Incentive Plan and cancellation of the Company Share Awards as necessary to give effect to Section 6.12, in each case of (A) through (C), effective no later than the Closing;

 

(d)                                 a copy of the resolutions duly and validly adopted by the board of directors and shareholders of each of the Offshore Group Companies (excluding the Company) set forth on Part B of Schedule G hereto and certified by a director of such Offshore Group Company, evidencing the replacement of each of the Outgoing Directors of such Offshore Group Company with individuals designated by the Purchaser (the effectiveness of which may be conditioned upon the Closing), in each case, effective no later than the Closing;

 

(e)                                  duly executed resignation and release letters (the effectiveness of which may be conditioned upon the Closing), dated no later than the Closing Date, of each of the Outgoing Directors of each Offshore Group Company, in the form set forth in Exhibit A hereto;

 

(f)                                   the official chop, financial chop and contract chop of each Group Company and all other chops capable of representing any Group Company (if any), the books and accounts of each Group Company together with a checklist on which all these delivered items are listed;

 

(g)                                  the originals of all the forms and documents required by the relevant banks to effect the change of authorized signatures to all bank accounts of each Group Company, duly affixed with the company chop of such Group Company;

 

(h)                                 the following items in respect of each of the PRC Group Companies:

 

(i)                                     its current business license;

 

(ii)                                  the USB Keys (U盾) and other electronic devices to operate all of its existing bank accounts (if applicable); and

 

(iii)                               duly executed originals of all the forms and documents required by the relevant banks to effect the change of authorized signatures to all of its bank accounts, as determined by the Purchaser;

 

(i)                                     with respect to (A) the transfer of all of the equity interests in each of the Hangzhou Youmai and Zhejiang Anxiong to be transferred to one or more Persons designated by the Purchaser (the “Purchaser Nominees”), for purchase prices provided in the Onshore Equity Transfer Agreements in the form set forth in Exhibit D hereto (the aggregate amount of all such purchase prices, the “Onshore Purchase Price”) and on such other terms and conditions therein (the “Onshore Equity Transfers”), and (B) termination of the existing Control Documents with respect to Hangzhou Youmai and Zhejiang Anxiong and the entry into new control agreements between Purchaser Nominees and Hangzhou Wuweixiong with respect to each of Hangzhou Youmai and Zhejiang Anxiong:

 

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(i)                                     the originals of all filings and documents required by the relevant Government Authorities (including without limitation, the SAMR) executed by such PRC Group Company and its existing legal representative and other supporting/application documents necessary to effect the Onshore Equity Transfers (other than those that shall be signed by the individual(s) nominated by the Purchaser), each in such form and contain such information as required by the relevant Government Authorities;

 

(ii)                                  the termination agreements, each in the form set forth in Exhibit E hereto, in respect of the termination of the existing Control Documents with respect to Hangzhou Youmai and Zhejiang Anxiong, each in the form set forth in Exhibit E hereto, duly executed by each party thereto; and

 

(iii)                               the new control agreements, each in the form set forth in Exhibit F hereto, with respect to each of Hangzhou Youmai and Zhejiang Anxiong, duly executed by each party thereto, other than the Purchaser Nominees;

 

(j)                                    all the accounting book ledgers (whether in electronic or hard copies) of the financial system, the accounting documents, financial statements, audit reports, contracts, documents and certificates of each Group Company since its incorporation to the Closing Date;

 

(k)                                 a certificate of good standing of the Company, dated as of a date no earlier than ten (10) Business Days prior to the Closing Date, issued by the Registrar of Companies of the Cayman Islands; and

 

(l)                                     a copy of the related party termination agreement, dated as of the Closing Date and duly executed by each party thereto in the form set forth in Exhibit J hereto.

 

provided, in the case of the items described in (f) to (h) and (j) above, such item shall be deemed to have been delivered if it is made available for inspection by the Purchaser or its representatives at the principal place of business of any Group Company.

 

Section 2.5                                    Closing Deliverables by the Seller.  At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser:

 

(a)                                 an instrument of transfer in the form of Exhibit B hereto with respect to the Purchased Shares of the Seller, duly executed by the Seller;

 

(b)                                 affidavit evidencing the loss of the original share certificate(s) representing the Purchased Shares in form and substance reasonably satisfactory to the Purchaser;

 

(c)                                  duly executed resignation and release letters, dated no later than the Closing Date, of each of the Outgoing Directors, in each case, in the form set forth in Exhibit A hereto; and

 

(d)                                 a copy of the resolutions or other internal authorizations duly and validly adopted by the board of directors, shareholders and/or other equivalent

 

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corporate organs of the Seller and certified by a duly authorized signatory of the Seller evidencing its authorization of the execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby.

 

Section 2.6                                    Closing Deliverables by the Purchaser.  At the Closing, the Purchaser shall deliver to the Seller a copy of an extract from the register of members of Alibaba Group, dated as of the Closing Date and duly certified by the registered agent of Alibaba Group, evidencing the ownership by the Seller of 14,329,896 Alibaba Shares (the “Subject Shares”).

 

Section 2.7                                    Post-Closing Examination Adjustment.

 

(a)                                 After the Closing Date, the Purchaser shall engage one of the Big Four (other than PricewaterhouseCoopers or its Affiliates, the “Accounting Firm”) to conduct an examination of the consolidated balance sheet, statement of income and statement of cash flows of the Group (including without limitation, the inventory age and stock count) as of the Balance Sheet Date and as of June 30th, 2019 and for the period beginning on January 1, 2019 and ended as of the Balance Sheet Date in conformity with the Applicable Accounting Standards (the “Closing Examination”). The Purchaser shall direct the Accounting Firm to deliver to the Purchaser and the Seller, as soon as practicable following the Closing Date but in any event within forty-five (45) days after the Closing Date, a statement based on the results of the Closing Examination (as may be modified by the Review Firm, the “Closing Statement”) setting forth the Accounting Firm’s calculation of (i) the Group’s Net Debt as of the Balance Sheet Date (the “Final Balance Sheet Date Net Debt”), (ii) the Group’s Net Working Capital as of June 30, 2019 (the “Final Reference Date Net Working Capital”), (iii) the Group’s Net Working Capital as of the Balance Sheet Date (the “Final Balance Sheet Date Net Working Capital”), and (iv) the final purchase price calculated as follows:

 

(A)         the Agreed Enterprise Value,

 

(B)         minus the Final Balance Sheet Date Net Debt,

 

(C)         (x) plus the difference between the Final Balance Sheet Date Net Working Capital and the Final Reference Date Net Working Capital in its absolute value if the Final Balance Sheet Date Net Working Capital exceeds the Final Reference Date Net Working Capital by more than RMB10,000,000, or (y) minus the difference between the Final Reference Date Net Working Capital and the Final Balance Sheet Date Net Working Capital in its absolute value if the Final Reference Date Net Working Capital exceeds the Final Balance Sheet Date Net Working Capital by more than RMB10,000,000,

 

(D)         minus the Onshore Purchase Price,

 

(E)          plus the total amount of onshore loans and the accrued interests to be repaid by the existing shareholders of

 

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Hangzhou Youmai and Zhejiang Anxiong to Hangzhou Wuweixiong in accordance with the Control Documents, provided that the Seller shall reimburse the Purchaser for the Tax actually incurred (if any) by Hangzhou Wuweixiong in connection with the foregoing repayment which shall first be paid out of the Indemnity Withheld Amount, to the extent any such amount remains,

 

(F)           minus the ESOP Fees,

 

(G)         minus the RSU Compensation Fees,

 

inclusive of all applicable Taxes (the “Closing Examination Final Purchase Price”);

 

in the cases of (i), (ii) and (iii), each calculated in accordance with the Calculation Principles.  For clarity, references to the “Balance Sheet Date” in (i), (ii) and (iii) mean 11:59 pm on the Balance Sheet Date.

 

(b)                                 The Company shall, and the Purchaser shall cause each Group Company to, provide the Accounting Firm with reasonable access to all relevant books and records and other documents, personnel and representatives of the Group Companies and other items reasonably requested by the Accounting Firm in connection with the Closing Examination or for the purposes of delivering the Closing Statement, and such Parties shall otherwise reasonably cooperate with the Accounting Firm in connection therewith. The Seller shall, and shall cause its Affiliates to, upon written request from the Accounting Firm, promptly provide all documents in their possession that are necessary for the Accounting Firm to conduct the Closing Examination. Notwithstanding anything to the contrary contained in this Agreement, the fees and expenses of the Accounting Firm shall be borne by the Purchaser.

 

(c)                                  Within five (5) Business Days after delivery of the Closing Statement, the Seller shall deliver a notice to the Purchaser confirming whether it agrees to the Accounting Firm’s calculation of the Closing Examination Final Purchase Price.  If the Seller agrees to such calculation, then the Purchaser shall make the Second Installment Payment in accordance with Section 2.7(f).  If the Seller disagrees with such calculation, any such notice of disagreement shall specify those items or amounts as to which the Seller disagrees, and the Seller shall be deemed to have agreed with all other items and amounts contained in the Closing Statement.

 

(d)                                 If a notice of disagreement is duly delivered pursuant to Section 2.7(c), the Purchaser and the Seller shall, during the ten (10) Business Days following such delivery, use their reasonable best efforts to reach agreement on the disputed items or amounts in order to determine the amount of the Final Purchase Price. If the Purchaser and the Seller are unable to reach such agreement during such period, they shall jointly engage another Big Four (other than PricewaterhouseCoopers, the Accounting Firm and their respective Affiliates) (the “Review Firm”) to promptly review this Agreement and the disputed items or amounts for the purpose of calculating the Final Purchase Price in accordance with the Calculation Principles. In making such calculation, the Review Firm shall consider only those items or amounts

 

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as to which the Seller has disagreed. The Seller and the Purchaser shall cause the Review Firm to deliver to the Purchaser and the Seller, as promptly as practicable (but in no event later than 30 days from its engagement), a report setting forth its calculation of each of the disputed items and resulting calculation of the Closing Examination Final Purchase Price.  In resolving any disputed item, the Review Firm may not assign a value to any item greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party.  Such report shall be final and binding upon the Purchaser and the Seller.  The fees and expenses of the Review Firm shall be borne by the Seller, on the one hand, and/or the Purchaser, on the other hand proportionately, based on the amount assigned by each Party to items in dispute, on a net basis, relative to the amount finally determined by the Review Firm (or equally in the event the Parties’ assigned amounts were, on a net basis, equally far from the amount finally determined by the Review Firm).

 

(e)                                  The Closing Examination Final Purchase Price as finally determined in accordance with Section 2.7(a) and/or Section 2.7(d), based on (i) the calculations of the Accounting Firm (if not disputed by the Seller), (ii) the agreement of the Seller and the Purchaser, or (iii) the determination of the Review Firm, as the case may be, is referred to herein as the “Final Purchase Price.”, and the date of such final determination, is referred to herein as the “Final Purchase Price Determination Date”)

 

(f)                                   On the fifth (5th) Business Day after the Final Purchase Price Determination Date (such date, the “Second Installment Payment Date”) and subject to the Seller’s fulfillment of each of the Second Installment Payment Conditions prior to such date, the Purchaser shall deliver or cause to be delivered to the Seller an amount that equals (i) the Final Purchase Price, minus (ii) the First Installment Payment, minus (iii) the Indemnity Withheld Amount, by wire transfer of immediately available funds in US$ to the Seller’s designated bank account (the “Second Installment Payment”), provided, that, in the event that any Second Installment Payment Condition is not satisfied by the Second Installment Payment Date and the Second Installment Payment is not made on the Second Installment Payment Date as a result thereof, the Purchaser shall make the Second Installment Payment to the Seller within five (5) Business Days following the satisfaction of the last Second Installment Payment Condition to be satisfied.

 

Section 2.8                                    Repayment of Shareholder Loans.  The Purchaser shall, or shall cause the relevant Group Companies to, fully repay (a) the Onshore Shareholder Loans within five (5) Business Days after the Closing Date, and (b) the Offshore Shareholder Loans within five (5) Business Days after it receives the Seller’s notice in accordance with Section 2.7(c), regardless of whether the Seller agrees or disagrees with the Accounting Firm’s calculation of the Closing Examination Final Purchase Price.

 

Section 2.9                                    Release of the Indemnity Withheld Amount.  On the second (2nd) anniversary of the Closing Date, the Purchaser shall pay to the Seller such amount that equals (i) the remaining Indemnity Withheld Amount (after deducting all amounts required to be paid or reimbursed by the Seller hereunder out of the Indemnity Withheld Amount, including without limitation, those specified in Section 2.7(a)(iv)(E), Section 6.13, Section 6.16 and Section 9.2), if any, minus (ii) the aggregate amount of claimed Losses (each, a “Reserved Loss”) for which a claim for indemnification has been validly asserted but not yet

 

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finally resolved or determined (each, an “Unresolved Claim”) as of such date. At any time following such date, upon final resolution of any Unresolved Claim and to the extent that it is finally determined that no Purchaser Indemnitee is entitled to any portion of the corresponding Reserved Loss (such portion, the “Released Portion”), the Purchaser shall, within five (5) Business Days following such final resolution, release to the Seller, from the Indemnity Withheld Amount, an amount equal to the lesser of (A) the remaining Indemnity Withheld Amount, and (B) the Released Portion.

 

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Article III

 

Representations and Warranties with Respect to Group Companies

 

Subject to such exceptions as may be specifically set forth in the Disclosure Schedule (it being agreed that disclosure of any item in any section or subsection of the Disclosure Letter shall be deemed disclosure with respect to any other section or subsection therein to which the relevance of such item is readily apparent on its face based on a plain reading of such disclosure), each of the Warrantors, severally and jointly, represents and warrants to the Purchaser that the statements contained in this Article III are true, correct and complete as of the date hereof and as of the Closing (unless any representations and warranties expressly relate to another date, in which case as of such other date).

 

Section 3.1                                    Organization and Good Standing.  The Company (i) is a company duly organized, validly existing and in good standing under the Laws of the Cayman Islands, (ii) has all requisite corporate power and authority to own, lease and operate its properties and to carry on its Business as now conducted, and (iii) is duly qualified or authorized to do Business and is in good standing under the laws of each jurisdiction in which the conduct of its Business or the ownership of its properties requires such qualification or authorization, except in the case of clause (iii) where the failure to be so qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect.  Complete and correct copies of the Existing Articles, which are in full force and effect as of the date hereof and as of the Closing and which have not been amended in any way, have been made available to the Purchaser.

 

Section 3.2                                    Authorization.  The Company has all requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which the Company is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which the Company is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Company. This Agreement has been, and each of the other Transaction Documents to which the Company is a party will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and the other Transaction Documents to which the Company is a party will constitute, the legal, valid and binding obligations of the Company, enforceable against it in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and as limited by Laws relating to general equitable remedies.

 

Section 3.3                                    Conflicts; Consents of Third Parties.

 

(a)                                 Except as disclosed in Section 3.3(a) of the Disclosure Schedule, none of the execution, delivery and performance by the Company of this Agreement or the other Transaction Documents to which the Company is a party, the consummation of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will breach or conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) or loss of a benefit under, or give rise to a right of termination, consent or cancellation or increase in any fee, liability or obligation under, any provision of (i)

 

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the Existing Articles or the memorandum and articles of association or comparable organizational documents of any other Group Company; (ii) any Material Contract or Required License; (iii) any Order applicable to any Group Company or by which any of the properties or assets of any Group Company are bound; or (iv) any applicable Law, except, in the case of subsection (ii),  (iii) or (iv) above, for any such breach, violation, termination, default, consent, cancellation or increase that would not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect.

 

(b)                                 No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Government Authority or any other Person is required on the part of any Group Company in connection with the execution and delivery of this Agreement or the other Transaction Documents or the compliance by the Company with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby.

 

Section 3.4                                    Capitalization.

 

(a)                                 The authorised share capital of the Company consists of US$50,000 divided into 100,000,000 authorized Ordinary Shares of a par value of US$0.0005 each, of which 85,000,000 Shares are issued and outstanding, and 15,000,000 Shares have been reserved for issuance to officers, directors, employees, consultants or service providers of the Company pursuant to the Company Share Incentive Plan as of the date hereof.

 

(b)                                 All of the issued and outstanding Shares are duly authorized, validly issued, fully paid and non-assessable. All issued and outstanding Company Share Awards are duly authorized.

 

(c)                                  Part A of Schedule D-1 hereto and Schedule D-2 hereto, when taken as a whole, set forth a complete and accurate list of (i) all of the holders of any issued and outstanding Company Share Award, indicating the total number of issued and outstanding Company Share Awards and, for each such holder, the name (redacted for the purposes of Part B of Schedule D-2 hereto), number, type, grant date, vesting schedule and status (as of the date hereof and as of the Closing) and exercise price of the Company Share Awards of such holder. Part B of Schedule D-1 hereto sets forth a complete and accurate list of all of the Group Companies’ employees that have been granted the NetEase RSUs which are unvested as of the Closing, indicating the name, number, type, grant date and vesting schedule for each such holder. Except as described in Section 3.4(a) and except as set forth in Part A of Schedule D-1 and Schedule D-2 hereto, there are no outstanding Shares, any other shares or equity of the Company, or any securities convertible into or exercisable or exchangeable for any of the foregoing, or any other options, warrants, rights (including conversion or preemptive rights and rights of first refusal), subscriptions, or other rights, proxy or shareholders agreements or Contracts of any kind, either directly or indirectly, entitling the holder thereof to purchase or otherwise acquire or to compel the Company to issue, repurchase or redeem any share or other securities of the Company. Except as contemplated by the Transaction Documents, the Company is not a party or subject to any Contract that affects or relates to the voting or giving of written consents with respect to, or the right to cause the registration of, any share or other security of the Company.  As of the Closing, the Company Share Incentive

 

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Plan shall have been terminated and all the Company Share Awards shall have been cancelled.

 

Section 3.5                                    Group Companies.

 

(a)                                 Section 3.5(a) of the Disclosure Schedule sets forth a complete and accurate list of the Group Companies (other than the Company) and, for each such Group Company, its name, the jurisdiction in which it is incorporated or organized, the names of its shareholders and the amount of share capital or other equity interest in such Group Company held by each such shareholder. Each such Group Company (i) is a duly organized and validly existing company or other entity and, where applicable, in good standing under the laws of the jurisdiction of its incorporation or organization; (ii) is duly qualified or authorized to do Business as a foreign corporation or entity and, where applicable, is in good standing under the laws of each jurisdiction in which the conduct of its Business or the ownership of its properties requires such qualification or authorization; and (iii) has all requisite corporate or entity power and authority to own, lease and operate its properties and carry on its Business as now conducted.  Except as set forth in Section 3.5(a) of the Disclosure Schedule, none of the Group Companies is a participant in any joint venture, partnership or other similar arrangement, or otherwise owns or Controls (directly or indirectly) any share or interest in any Person.  Except as disclosed in Section 3.5(a) of the Disclosure Schedule, the Group Companies do not maintain any office or branch.  As of the date of this Agreement, Amber Wings Limited, Hangzhou Youmai Technology Co., Ltd. Suzhou Branch (杭州优买科技有限公司苏州分公司), Shanghai Wangzhixiong Trading Co., Ltd. (上海网之熊贸易有限公司) and Hangzhou Anbao E-commerce Co., Ltd. (杭州桉宝电子商务有限公司) have not engaged in any business operations.

 

(b)                                 Except as disclosed in Section 3.5(b) of the Disclosure Schedule, all the outstanding share capital, registered capital or other equity interest of each Group Company is validly issued, fully paid and non-assessable and are owned free and clear of all Liens (other than any Liens created under the Control Documents) by the Persons and in such amounts as indicated in Section 3.5(a) of the Disclosure Schedule.  Except as disclosed in Schedule D-1 and Schedule D-2 hereto and except as pursuant to the Control Documents, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), subscriptions, or other rights, proxy or shareholders agreements or Contracts of any kind, either directly or indirectly, entitling the holder thereof to purchase or otherwise acquire or to compel any Group Company (other than the Company) to issue, repurchase or redeem any share or other securities of any Group Company.  Except as pursuant to the Control Documents, no Group Company is a party or subject to any Contract that affects or relates to the voting or giving of written consents with respect to, or the right to cause the registration of, any share or other securities of any Group Company.

 

(c)                                  The Company has effective Control of each of Hangzhou Youmai and Zhejiang Anxiong and is the sole beneficiary of each of Hangzhou Youmai and Zhejiang Anxiong.  The Contracts and other documents set forth in Section 3.5(c) of the Disclosure Schedule (collectively, the “Control Documents”) are

 

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adequate to establish and maintain the intended captive structure, under which the financial statements of Hangzhou Youmai and Zhejiang Anxiong will be consolidated with those of the other Group Companies in accordance with the Applicable Accounting Standard.

 

(d)                                 Each person serving as a director, Senior Manager, supervisor or legal representative of any Group Company is an employee of the Group Companies or Seller and its Affiliates. No person is serving as an observer on the board of directors of any Group Company, and no Person has the right to appoint any observer to any Group Company (except as pursuant to the Existing Articles).

 

Section 3.6                                    Corporate Books and Records To the Knowledge of the Warrantors, (i) true and complete copies of all minute books of each Group Company have been provided to the Purchaser and such copies contain all material amendments and all material minutes of meetings and actions taken by the applicable Group Company’s shareholders and directors since the date of its incorporation, and reflects all transactions referred to in such minutes accurately in all material respects, and (ii) true and complete copies of all material resolutions of the board and the shareholders of each Group Company have been provided to the Purchaser and such copies contain resolutions of all meetings of directors and shareholders of each Group Company and all material actions by written consent without a meeting by the directors and shareholders of each Group Company since the date of its incorporation and accurately reflects all material actions by the directors (and any committee thereof) and shareholders of each Group Company with respect to all transactions referred to in such resolutions. All board and shareholder resolutions, charter documents (and any amendments thereto) and any other required filings of the Group Companies have been duly filed with the relevant Government Authority within the required deadlines, except to the extent any failure to do so would not materially impair the validity or enforceability of such resolutions, documents or filings. The Company has kept all records required by the Companies Law (2018 Revision) of the Cayman Islands and has done so in compliance with the provisions thereof in all material respects.

 

Section 3.7                                    Financial Statements.

 

(a)                                 True and complete copies of (i) the unaudited consolidated balance sheet of the Company for each of the three (3) fiscal years ended December 31, 2016, December 31, 2017 and December 31, 2018, and the related unaudited consolidated statements of income, consolidated cash flow statements, shareholders’ equity and changes in financial position of the Company, together with all related notes and schedules thereto (collectively referred to herein as the “Annual Consolidated Financial Statements”), (ii) the unaudited consolidated balance sheet of the Company as of March 31, 2019 and June 30, 2019, respectively, and the related consolidated statements of income, consolidated cash flow statements, shareholders’ equity and changes in financial position of the Company, together with all related notes and schedules thereto, and (iii) the calculation details of the Estimated Balance Sheet Date Net Debt and the Estimated Balance Sheet Date Net Working Capital ((ii) and (iii) are collectively referred to herein as the “Interim Consolidated Financial Statements”) have been delivered by the Company to the Purchaser. True and complete copies of the unaudited consolidated balance sheet of the Company as of August 31, 2019, and the related consolidated statements of income, consolidated cash flow statements, shareholders’ equity and changes in financial position of the Company, together with all related notes and schedules thereto (together with the

 

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Annual Consolidated Financial Statements and the Interim Consolidated Financial Statements, the “Financial Statements”), will be delivered to the Purchaser before the commencement of the Closing Examination.  The Financial Statements (A) were or will be, as applicable, prepared in accordance with the books of account and other financial records of the Group Companies in all material respects, (B) present or will present, as applicable, fairly in all material respects the consolidated financial condition and results of operations of the Group Companies as of the dates thereof and for the periods covered thereby, (C) have been or will have been, as applicable, prepared in accordance with the Applicable Accounting Standard applied on a basis consistent with the past practices of the Group Companies in all material respects, and (D) include or will include, as applicable, all adjustments that are necessary for a fair presentation in all material respects of the consolidated financial condition of the Group Companies and the results of the operations of the Group Companies as of the dates thereof and for the periods covered thereby.

 

(b)                                 The books of account and other financial records of the Company and other Group Companies (i) reflect all items of income and expense and all assets and Liabilities required to be reflected therein in accordance with Applicable Accounting Standard, and in each case, applied on a basis consistent with the past practices of the Company, (ii) are complete and correct in all material respects, and do not contain or reflect any material inaccuracies or discrepancies, and (iii) have been maintained in accordance with all applicable Laws (including Anti-Corruption Laws) and good business and accounting practices.

 

(c)                                  All of the accounts receivable owing to any Group Company constitute valid and enforceable claims and are good and collectible, and have arisen from bona fide transactions, in the ordinary course of business consistent with past practice, and reserves therefor shown on the Financial Statements are or will be adequate and on a basis consistent with the Applicable Accounting Standard. No further goods or services are required to be provided in order to complete the sales and to entitle the respective Group Company to collect such accounts receivable in full. There are no material contingent or asserted claims, refusals to pay, or other rights of set-off with respect to any Group Company.

 

(d)                                 All merchandise prepayment made by any Group Company constitute valid and enforceable claims and have arisen from bona fide transactions, in the ordinary course of business consistent with past practice.

 

(e)                                  All accounts payable of the Group Companies reflected in the Financial Statements or arising after the date thereof are or will be the result of bona fide transactions in the ordinary course of business and have been paid or are not yet due and payable.

 

Section 3.8                                    Absence of Undisclosed Liabilities.  No Group Company has any Liabilities other than (a) Liabilities reflected or reserved in the Interim Consolidated Financial Statements, (b) Liabilities incurred in the ordinary course of business, (c) incurred pursuant to this Agreement, and (d) incurred pursuant to Material Contracts disclosed to the Purchaser on or prior to the date hereof.

 

Section 3.9                                    Absence of Certain Changes.  Except as specifically contemplated by the Transaction Documents or otherwise disclosed in Section 3.9(s) of the

 

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Disclosure Schedule, since the Balance Sheet Date, each Group Company has operated its Businesses and assets in the ordinary course consistent with past practice in all material respects. Without limitation to the generality of the foregoing, none of the Group Companies has, since the Balance Sheet Date:

 

(a)                                 entered into any transaction that was not in the ordinary course of business consistent with past practice; or made any material changes in the customary methods of operations of any Group Company;

 

(b)                                 acquired, sold, transferred, leased, subleased, licensed or otherwise disposed of any material properties or assets, other than the sale of inventories in the ordinary course of business consistent with past practice; or permitted or allowed any assets to be subject to any Liens (other than Liens for Taxes in the ordinary course of business consistent with past practice that are not yet due and payable), or, except in the ordinary course of business consistent with past practice, discharged or otherwise obtained the release of Liens related to any Group Company or paid or otherwise discharged any Liability;

 

(c)                                  written down or written up (or failed to write down or write up in accordance with the Applicable Accounting Standard consistent with past practice) the value of any accounts receivable or revalued any of the assets of the Group Companies, other than in the ordinary course of business consistent with past practice and in accordance with the Applicable Accounting Standard;

 

(d)                                 made any change in any method of accounting or accounting practice or policy used by any Group Company, other than such changes required by the Applicable Accounting Standard;

 

(e)                                  amended, terminated, cancelled or compromised any material claim of any Group Company or waived any other material right of value to any Group Company;

 

(f)                                   issued or sold any equity or debt securities, or any option, warrant or other right to acquire the same, of any Group Company; or redeemed any equity interest in any Group Company or declared, made or paid any dividends or other distributions (whether in cash, securities or other property) to the holders of equity interests in any Group Company;

 

(g)                                  made any capital expenditure or commitment for any capital expenditure in excess of US$1,000,000 (or the equivalent thereof in another currency) individually or US$2,000,000 (or the equivalent thereof in another currency) in the aggregate;

 

(h)                                 made, revoked or changed any Tax election or method of Tax accounting or settled or compromised any material Liability with respect to Taxes of any Group Company;

 

(i)                                     incurred any Indebtedness or failed to pay any creditor any amount owed to such creditor when due; or incurred any Liability except Liabilities incurred in the ordinary course of business consistent with past practice that do not

 

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exceed US$1,000,000 individually (or the equivalent thereof in another currency) or US$2,000,000 (or the equivalent thereof in another currency) in the aggregate;

 

(j)                                    made any loan to, guaranteed any Indebtedness of or otherwise incurred any Indebtedness on behalf of any Person, other than travel advances and other advances made to employees in the ordinary course of business consistent with practice;

 

(k)                                 made any material change in any compensation or benefit arrangement or agreement with any employee of any Group Company; or made any amendments or modifications to the Company Share Incentive Plan or issued any Company Share Award thereunder; or amended, modified or supplemented award agreement relating to any Company Share Award; or accelerated the vesting of any Company Share Award other than in pursuant to this Agreement and the transactions contemplated hereby;

 

(l)                                     entered into any transaction with any Related Party other than in the ordinary course of business consistent with past practice;

 

(m)                             terminated the employment of, or received any resignation from, any Senior Manager of any Group Company;

 

(n)                                 suffered any material labor dispute involving any Group Company or any of its respective employees;

 

(o)                                 amended, modified or consented to the termination of any Material Contract or the Group Companies’ rights thereunder (other than termination in accordance with its terms), or entered into any Material Contract, in each case, except in the ordinary course of business consistent with past practice;

 

(p)                                 unreasonably terminated any material lease arrangements;

 

(q)                                 amended or restated the memorandum and articles of association (or equivalent organizational documents) of any Group Company;

 

(r)                                    merged or consolidated any Group Company with any other Person or acquired all or substantially all of the assets of any other person;

 

(s)                                   liquidated, dissolved, recapitalized, reorganized or otherwise wound up the Business or operations of any Group Company;

 

(t)                                    suffered any Material Adverse Effect; or

 

(u)                                 agreed, whether in writing or otherwise, to take any of the actions specified in this Section 3.9 or granted any options to purchase, rights of first refusal, rights of first offer or any other similar rights or commitments with respect to any of the actions specified in this Section 3.9, except as expressly contemplated by this Agreement and the other Transaction Documents.

 

Section 3.10                             Litigation.  Except as disclosed in Section 3.10 of the Disclosure Schedule, there are no Legal Proceedings against any Group Company, or against any Senior Manager or director of any Group Company in connection with their relationship

 

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with the Group Companies, pending or, to the Knowledge of the Warrantors, threatened, that (a)(i) relate to the Business, and (ii) if adversely determined against the Company or the applicable Subsidiary of the Company, would be reasonably likely to result in any material Liability, or (b) questions (i) the validity of the Transaction Documents, (ii) the right of the Company or the Warrantors to enter into the Transaction Documents to which the Company or any Warrantor is a party, (iii) the rights and obligations of the Company or the Warrantors to consummate the transactions contemplated by such Transaction Documents, in each (a) or (b) that would result, either individually or in the aggregate, in a Material Adverse Effect. There is no Order in effect against the Company or any Warrantor that would result, either individually or in the aggregate, in a Material Adverse Effect. Except as disclosed in in Section 3.10 of the Disclosure Schedule, there are no material Legal Proceedings initiated by any Group Company pending or which any of them intends to initiate.

 

Section 3.11                             Title to Properties; Liens and Encumbrances.

 

(a)                                 Title.  Each Group Company has good and marketable title to all of its material assets, whether real, personal or mixed, purported to be owned by it (including but not limited to all such assets reflected in the Financial Statements), in each case free of any Liens, except for Permitted Liens.    Except for leased items, no Person other than a Group Company owns any interest in any such assets.  All leases of real or personal property to which a Group Company is a party are fully effective and afford the Group Company valid leasehold possession of the real or personal property that is the subject of the lease.  With respect to the material property and assets it leases, each Group Company is in compliance with such leases and such Group Company holds valid leasehold interests in such assets free of any Lien other than the existing rights of lessors of such property and assets.

 

(b)                                 Real Property.  Section 3.11(b) of the Disclosure Schedule sets forth a complete list of all real property, easements, licenses, rights of way, or other interests in or to real property (“Real Property”) owned by any Group Company.  The Group Company named as the owner of the Real Property in Section 3.11(b) of the Disclosure Schedule is the sole registered legal and beneficial owner of the relevant Real Property and any building erected on the land, free and clear of any Liens.  No Group Company has any ownership right or interest in any premises or land other than the Real Property of which it is listed as the owner in Section 3.11(b) of the Disclosure Schedule.  All leasehold properties of the Group are held under valid, binding and enforceable leases of a Group Company.  The occupation, construction and use of the Real Property owned or leased by the Group Companies are in compliance with the applicable PRC Laws (including without limitation the fire control related Laws) in all material respects, and do not violate any land use rights grant contracts to which a Group Company is a party in any material respects.  To the Knowledge of the Warrantors, all structures, improvements and appurtenances on the Real Property lie wholly within the boundaries of such Real Property and do not encroach upon the property of, or otherwise conflict with the property rights of, any adjoining property owner.  To the Knowledge of the Warrantors, all structures and improvements on the Real Properties, and appurtenances thereto, and the roof, walls and other structural components which are part thereof, and the heating, air conditioning, plumbing and other mechanical facilities thereof, are in good condition and repair in all material respects (reasonable wear and tear excepted) and without any material structural defects.

 

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(c)                                  Personal Property.  All machinery, vehicles, equipment and other tangible personal property owned or leased by a Group Company are (i) in good condition and repair in all material respects (reasonable wear and tear excepted) and (ii) not obsolete or in need in any material respect of renewal or replacement, except for renewal or replacement in the ordinary course of business.

 

(d)                                 Sufficiency of Assets.  As of immediately following the Closing, the property, rights and assets owned, leased, licensed or otherwise used by the Group Companies (including Intellectual Property, other intangible assets and the property, rights and assets that will be available to the Group Companies pursuant to the Transitional Services Agreement) and as delivered from the Seller to the Purchaser pursuant to this Agreement comprise all of the property, rights and assets necessary for the carrying on of the Business in the ordinary course in materially the same manner in which it is currently being conducted.

 

Section 3.12                             Intellectual Property.

 

(a)                                 Section 3.12(a) of the Disclosure Schedule sets forth (i) a complete list of (i) all material Intellectual Property other than trade secrets owned by the Group Companies, (ii) a description of material trade secrets (collectively, the “Company Intellectual Property”), and (iii) all material Company IP Agreements (other than those for “shrink-wrap” or “off-the-shelf” commercially available Software).

 

(b)                                 Each Group Company is the exclusive owner of the entire and unencumbered right, title and interest in and to the Company Intellectual Property (except for those still under application), and has a valid license to use the Licensed Intellectual Property in connection with its Business. Each Group Company is entitled to use all Company Intellectual Property and the Licensed Intellectual Property in the continued operation of its Business without limitation, subject only to the terms of the Company IP Agreements and applicable Laws.

 

(c)                                  The Company Intellectual Property and the Licensed Intellectual Property include all of the material Intellectual Property required for the conduct of or used in connection with the Business, and there are no other items of Intellectual Property that are material to the conduct of the Business.  Section 3.12(c) of the Disclosure Schedule includes a list of all material Intellectual Property (other than trade secrets) licensed or provided by the Warrantors or their Affiliates (excluding the Group Companies) to the Group Companies. The Company Intellectual Property (except for those still under application) and, to the Knowledge of the Warrantors, the Licensed Intellectual Property are subsisting, valid and enforceable, and have not been adjudged invalid or unenforceable in whole or in part. Each item of Company Intellectual Property registered with a Government Authority is in compliance with all applicable Laws, and all filings, payments and other actions required by applicable Laws to be made or taken to maintain such Intellectual Property rights in full force and effect have been made or taken.

 

(d)                                 To the Knowledge of the Warrantors, the conduct of the Business and the use of the Company Intellectual Property and the Licensed Intellectual Property, do not conflict with, infringe, misappropriate or otherwise violate the Intellectual Property of any third party, and no Action alleging any of the

 

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foregoing is pending, and no claim has been asserted against any Group Company alleging any of the foregoing.  To the Knowledge of the Warrantors, there are no infringements or other violations of any Company Intellectual Property by any third party. No Company Intellectual Property is subject to any pending, or to the Knowledge of the Warrantors, threatened governmental Order or Action challenging or restricting the use of such Company Intellectual Property or that would reasonably be expected to impair the validity or enforceability of such Company Intellectual Property.

 

(e)                                  None of the Group Companies has granted in writing any license or other right to any third party with respect to the Company Intellectual Property or Licensed Intellectual Property other than in the ordinary course of business. Neither the execution, delivery and performance of this Agreement or any other Transaction Documents nor the consummation of any of the transactions contemplated hereby and thereby will reasonably be expected to alter or impair the validity or enforceability of Company Intellectual Property or Licensed Intellectual Property.

 

(f)                                   Each of the directors of, current and former employees employed, and current and former consultant engaged, by each Group Company as of the Closing is under written obligation for the benefit of the Group Companies, to maintain in confidence all confidential and proprietary information acquired by them during the course of their employment and all rights and title to and ownership of all inventions made by them within the scope of their employment by the Group Companies during such employment and for a reasonable period thereafter are vested in and remain with the Group Companies. Each Group Company has taken commercially reasonable measures to protect the secrecy, and confidentiality of all of their trade secrets and, to the Knowledge of the Warrantors, there has been no unauthorized disclosure of any data or information which, but for any such unauthorized disclosure, such Group Company would consider to be a trade secret owned by such Group Company.

 

Section 3.13                             Taxes.

 

(a)                                 Each Group Company has registered with all competent Tax authorities and has duly and timely filed all applicable Tax Returns as required by Law to have been filed by it and all such Tax Returns are true, correct, and complete in all material respects and were prepared in compliance with all applicable Laws in all material respects.  Each Group Company has paid in full all Taxes (whether or not shown on any Tax Returns) required to be paid by it. No Tax Liens (other than for current Taxes not yet due or payable) are currently in effect against any of the assets of any Group Company.

 

(b)                                 The provisions for Taxes in the Financial Statements fully reflect all unpaid Taxes of each Group Company (including without limitation, all applicable Taxes with respect to the cross-border e-commerce business), whether or not assessed or disputed as of the date of the applicable Financial Statements.  The unpaid Taxes of any Group Company (i) did not, as of the date of the Financial Statements, exceed the reserve for Tax Liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Financial Statements (other than in any notes thereto) and (ii)

 

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do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of each Group Company in filing their Tax Returns.

 

(c)                                  Each Group Company has kept and preserved all such records and information as may be needed to enable it to deliver correct and complete Tax Returns for its accounting periods. The books and other records of each Group Company relating to Taxes, including documentation required for intercompany transactions, have been properly maintained, are in all material respects correct and complete, and are physically or electronically available for inspection on the premises of the relevant Group Company.

 

(d)                                 No tax audits or administrative or judicial Tax proceedings by any Government Authority with respect to the each Group Company is currently in progress or, to the Knowledge of the Warrantors, is currently threatened.  No assessment of Tax has been proposed in writing against any Group Company or any of their assets or properties.  No Group Company has received from any Government Authority (including jurisdictions where a member of the Group Company has not filed Tax Returns) any (i) notice indicating an intent to open audit or other review, (ii) unattended or unsettled request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Government Authority against any Group Company.  No Group Company is subject to any waivers or extensions of applicable statutes of limitations with respect to Taxes for any year.  Except for extensions applied for and granted in the ordinary practice of the applicable jurisdiction, no Group Company currently is the beneficiary of any extension of time within which to file any Tax Return.

 

(e)                                  Since the Balance Sheet Date, no Group Company has incurred any Taxes other than in the ordinary course of business consistent with past custom and practice.  No Group Company has received any claim from a Government Authority in a jurisdiction where a Group Company does not file Tax Returns that such Group Company is or may be subject to taxation by that jurisdiction.

 

(f)                                   Each Group Company has withheld, paid or made provisions for, all Taxes required to be withheld, paid or made provisions for in connection with any amounts due, owing to or paid to any Person (including without limitation, all applicable Taxes with respect to the cross-border e-commerce business).

 

(g)                                  Each Group Company is in compliance in all material respects with all terms, conditions and formalities necessary for the continuance of any Tax exemption, Tax holiday, Tax credit, Tax incentive, Tax refund or other Tax reduction agreement or order available under any applicable Law. Each such Tax exemption, Tax holiday, Tax credit, Tax incentive, Tax refund or other Tax reduction agreement or order (i) is expected to remain in full effect throughout the current effective period thereof after the Closing Date and is not subject to reduction, revocation, cancellation or any other changes (including retroactive changes) in the future, and no Group Company has received any notice to the contrary or is aware of any event that may result in repeal, cancellation, revocation, or return of such entitlements.  All exemptions, reductions and rebates of material Taxes granted to any Group Company by a Government Authority are in full force and effect and have not been terminated as evidenced with valid governmental approvals.  No Group Company is responsible

 

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for Taxes of any other Person (other than any Group Company) by reason of contract, successor liability, operation of Law or otherwise.  No Group Company is, or has been, a party to, involved with, bound by or otherwise subject to any Tax-sharing agreement, Tax-allocation agreement or similar agreement with any Person other than any Group Company.

 

(h)                                 No Group Company will be required to include material amounts in income, or exclude material items of deduction, or qualification for Tax exemption, Tax holiday, Tax credit, Tax incentive or Tax refund, in any taxable period beginning after the Closing Date as a result of (i) a change in method of accounting occurring on or prior to the Closing Date, (ii) agreement with any Government Authority executed on or prior to the Closing Date, (iii) installment sale or open transaction disposition made on or prior to the Closing Date, or (iv) prepaid amount received on or prior to the Closing Date.  To the Knowledge of the Warrantors, the transactions contemplated under this Agreement and the other Transaction Documents to which any Group Company is a party are not in violation of any applicable Law regarding Tax, and will not result in any Tax exemption, Tax holiday, Tax credit, Tax incentive, Tax refund being revoked, cancelled or terminated or trigger any Tax liability for the Group Company.

 

(i)                                     No Group Company (i) has been a member of an Affiliated filing a consolidated Tax Return (other than an Affiliated the common parent of which is the Company) or (ii) has any Liability for the Taxes of any Person (other than any Group Company) as a result of the Group Company being part of or owned by, or ceasing to be part of or owned by, an Affiliated, combined, consolidated, unitary or other similar group prior to the Closing, as a transferee or successor, by contract or otherwise.

 

(j)                                    No Group Company is a party to any tax indemnity, tax collection or tax sharing or similar agreement or arrangement with any Person other than any Group Company pursuant to which it could have any obligation to make any payments after the Closing.

 

(k)                                 Since incorporation, none of the Group Companies has received or is subject to any Tax ruling, Tax decision or entered into any agreements with any Tax authorities.

 

(l)                                     None of the Group Companies has entered into: (i) any transaction the sole or main purpose of which was the avoidance or deferral or reduction of tax by any Group Company or any associated person; or (ii) any transaction the object of which was the exclusion or reduction of the amount of any income, profits, gains, sales, supplies or imports made or enjoyed by any Group Company or any associated Person for any tax purpose, or the creation or increase of the amount of any deduction, loss, allowance or credit claimed or intended to be claimed by any Group Company or any associated person for any Tax purpose, that may be challenged, disallowed or investigated by any Government Authority.

 

(m)                             Each Group Company is in material compliance with all transfer pricing requirements in all jurisdictions in which they are required to comply with applicable transfer pricing regulations (including without limitation the transfer pricing principles, laws, documentation requirements), and all the transactions

 

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between any Group Company and other related Persons have been effected on an arm’s length basis.

 

(n)                                 To the Knowledge of the Warrantors, there are no circumstances which have caused or could cause any Government Authority to make any transfer pricing adjustment to the profits of any Group Company, or require any such adjustment to be made to the terms on which any such transaction is treated as taking place, and no such adjustment has been made or threatened.

 

(o)                                 Each Group Company has complied with all statutory provisions, rules, regulations, orders and directions in respect of any value added or similar Tax on consumption, has promptly submitted accurate returns, maintains full and accurate records, and has never been subject to any interest, forfeiture, surcharge or penalty and is not a member of a group or consolidation with any other company for the purposes of value added or similar Tax on consumption.

 

(p)                                 No Group Company has filed any U.S. Tax election, including any entity classification election pursuant to any applicable U.S. Treasury Regulations.  The Company is not a “passive foreign investment company” within the meaning of Code Section 1297(a).  No Group Company owns a less than 25% equity interest (by value) in any other entity.

 

(q)                                 No Group Company residing outside the PRC is or has ever been a real estate corporation.

 

(r)                                    Each Group Company is in compliance with, and has not breached in any material respect, any representation, condition or undertaking made by it to obtain or to maintain any financial subsidies or other preferential treatment granted by any Government Authorities (the “Subsidy”). Neither the execution of this Agreement, nor the performance of any transactions contemplated herein will, pursuant to the express terms of any Subsidy, result in the cancellation, limitation or reduction of any such Subsidy or require any repayment of, any reapplication for or reissuance of, or any posting of additional security for the maintenance of, any Subsidy.

 

Section 3.14                              Material Contracts.

 

(a)                                 For the purposes of this Agreement, “Material Contract” means a Contract to which a Group Company is a party or otherwise bound that:

 

(i)                                     the top 53 supplier contracts (in terms of the payments made by the Group Companies pursuant thereto in the first half of 2019) that collectively represent 50% of the aggregate payments made to all the suppliers by the Group Companies in the first half of 2019, (y) is a top 20 contract (in terms of gross merchandise volume in 2019) entered with a third party seller selling on the Group Companies’ platform, (z) involves payments (or a series of payments) not otherwise covered in the preceding clauses (x) and (y), contingent or otherwise, of US$2,000,000 (or the equivalent thereof in another currency) or more individually or US$5,000,000 (or the equivalent thereof in another currency) or more in the aggregate, in cash, property or services;

 

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(ii)                                  is with a Government Authority that is material to the Business;

 

(iii)                               limits or restricts any Group Company’s ability to compete or otherwise conduct the Business in any manner, time or place, or that contains any exclusivity or change in control provision;

 

(iv)                              involves any provisions providing for exclusivity, non-compete, “change in control,” “most favored nations,” rights of first refusal or first negotiation or similar rights against any Group Company, or grants a power of attorney, agency or similar authority by any Group Company, in each case, material to the conduct of the Business;

 

(v)                                 relates to Indebtedness, provides for an extension of credit, provides for indemnification or any guaranty, or provides for a “keep well” or other agreement to maintain any financial statement condition of another Person, except for intra-group loans or Indebtedness;

 

(vi)                              relates to any Company Intellectual Property or Licensed Intellectual Property, other than “shrink-wrap” or “off-the-shelf” commercially available Software;

 

(vii)                           is a Control Document;

 

(viii)                        is a Related Party Contract;

 

(ix)                              is a lease on real or personal property that is material to the conduct of the Business;

 

(x)                                 relates to the acquisition of the business, material assets or equity of another Person (whether by merger, sale of equity, sale of assets or otherwise);

 

(xi)                              relates to any partnership, joint venture, strategic alliance or collaboration, global affiliation or business cooperation or sharing of profits or proprietary information or similar arrangement; or

 

(xii)                           is a futures, swap, hedge, collar, put, call, floor, cap option or other Contract that is intended to benefit from or reduce or eliminate the risk of fluctuations in interest rates, exchange rates or the price of commodities.

 

Section 3.14(a) of the Disclosure Schedule sets forth a true and complete list of the foregoing Material Contracts. The Seller has made available to the Purchaser true and correct copies of the Material Contracts except as otherwise indicated in Section 3.14(a) of the Disclosure Schedule.

 

(b)                                 (i) Each Material Contract is a valid and binding agreement of the parties thereto, the performance of which does not and will not violate, in any material respects, any applicable Law or Order, and is in full force and effect and enforceable in accordance with its terms; and (ii) each Group Company has duly performed all of its obligations in all material respects under each Material Contract

 

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to which it is a party to the extent that such obligations to perform have accrued, and no material breach or default, alleged breach or alleged material default, or event which would (with the passage of time, notice or both) constitute a material breach or default thereunder by such Group Company or any other party or obligor with respect thereto, has occurred, or as a result of the execution, delivery, and performance of the Transaction Documents will occur. To the Knowledge of the Warrantors, no Group Company has given notice (whether or not written) that it intends to terminate a Material Contract or that any other party thereto has materially breached, violated or defaulted under any Material Contract.  To the Knowledge of the Warrantors, no Group Company has received any notice (whether written or not) that it has materially breached, violated or defaulted under any Material Contract or that any other party thereto intends to terminate such Material Contract.

 

Section 3.15                             Compliance with Laws and Other Instruments.

 

(a)                                 Except as disclosed in Section 3.15(a) of the Disclosure Schedule, each of the Group Companies is in compliance in all material respects with all Laws and Orders that are applicable to it or to the conduct or operation of the Business (including without limitation, the gift card business) or the ownership or use of any of its properties, assets and Intellectual Property.

 

(b)                                 No event has occurred or circumstances exist that (with or without notice or lapse of time) (i) may constitute or result in a violation by any Group Company of, or a failure on the part of such Group Company to comply with, any Law (including without limitation, the Specified Laws) or Order in any material respect or (ii) may give rise to any material obligation on the part of any Group Company to undertake, or to bear all or any portion of the cost of, any remedial action that would require any material change to the Business in the future.

 

(c)                                  Except as disclosed in Section 3.15(c) of the Disclosure Schedule, none of the Group Companies has received any notice or other communication (whether oral or written) from any Government Authority regarding (i) any actual, alleged, possible, or potential violation of, or failure to comply with, any Law (including without limitation any Specified Laws) or Order in any material respect or (ii) any actual, alleged, possible, or potential material obligation on the part of such Group Company to undertake, or to bear all or any portion of the cost of, any remedial action that would require any material change to the Business in the future.

 

(d)                                 To the Knowledge of the Warrantors, none of the Group Companies, nor any shareholder, executive officer, employee, director or supervisor of any of the Group Companies, and no representative, distributor, reseller, consultants, agent, service provider or other party acting on behalf of persons identified above (individually and collectively, “Company Representatives”) has made, offered, promised, authorized or condoned, or shall make, offer, promise, authorize or condone any Prohibited Payment in connection with the activities of the Company or the negotiation, approval or performance of the Transaction Documents. A “Prohibited Payment” means any gift, transfer or payment of money or anything of value that is offered, promised or given to any Government Entity, Government Official or Person, directly or indirectly, under circumstances where any Group Company or Company Representative knows or ought to know that all or a portion of the Prohibited Payment is (A) made in violation of laws relating to anti-bribery or

 

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anti-corruption (governmental or commercial) that apply to the business and dealings of any Group Company, including the PRC Criminal Law, the PRC Law on Anti-Unfair Competition, the Interim Rules on Prevention of Commercial Bribery issued by the PRC State Administration of Industry and Commerce on November 15, 1996, the U.S. Foreign Corrupt Practices Act of 1977, as amended from time to time, the U.K. Bribery Act or other applicable laws (collectively, the “Anti-Corruption Laws”), (B) made with the intent or purpose of: (w) influencing any act or decision of any Government Official in his official capacity, (x) inducing any Government Official or Person to do or omit to do any act in violation of his lawful duty, (y) securing any improper advantage, or (z) inducing such Government Official to use his influence with a Government Entity to affect or influence any act or decision of such Government Entity, in order to assist the Company or any Group Company in obtaining or retaining business for or with, or directing business to, any Person or (C) made to any Person while aware of a high probability that all or any portion of such thing of value would be paid, promised, offered or give to any Government Official with the intent or purpose described in subsection (B).

 

(e)                                  None of any Group Company nor any of Company Representatives has ever violated the principle of fair competition, by offering or taking property or other interests to obtain business opportunities or other improper benefits, such as making payments or paying anything of value to existing or potential business partners (“Business Partners”), in order to impose undue influence on Business Partners or to obtain inappropriate commercial advantage.  Business Partners may include: Government Entities, non-government customers, suppliers or distributors, owners, directors, managers or other employees of the entities identified above, entities or individuals entrusted by Business Partners to handle relevant matters, entities or individuals that may take advantage of the work position or influential power to exercise influence on the transactions between the Group Companies and Business Partners.

 

(f)                                   Except as disclosed in Section 3.15(f) of the Disclosure Schedule, no Government Official or Government Entity presently owns an interest, whether direct or indirect, in the Company or any other Group Company or has any legal or beneficial interest in the Company or to payments made to the Company by the Purchaser hereunder.

 

(g)                                  None of the Group Companies is in violation of its business license, memorandum of association or articles of association, as appropriate, or equivalent constitutive documents as in effect.

 

Section 3.16                              Data Compliance.

 

(a)                                 Both the Group Companies and any of their Affiliated Persons have, abided by applicable Cyber Security and Data Protection Related Laws, adopted sufficient technical measures and other necessary measures to protect data security when collecting, storing, using, processing, sharing, transferring, publicly disclosing and cross-border transmitting Personal Information.

 

(b)                                 Neither the Group Companies nor any of their Affiliated Persons have taken any action that constitutes data breach, infringement of Personal

 

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Information or violation of Laws related to Personal Information protection and cyber security, including but not limited to:

 

(i)                  collecting or using Personal Information without obtaining prior consent of the Persons whose information is collected unless otherwise stipulated by laws;

 

(ii)               collecting or using Personal Information without expressly indicating the purpose, methods and scope of collecting and using Personal Information to the Person whose Personal Information is collected, or collected Personal Information unrelated to the provided services;

 

(iii)            not strictly keeping confidential the Personal Information obtained during the course of providing services, or disclosed, damaged, tampered or illegally (including without obtaining authorization or beyond the authorization scope) provided such information to others;

 

(iv)           collecting, using or processing its stored Personal Information in violation of Laws or agreements with the Person whose Personal Information is collected; and

 

(v)              stealing or otherwise unlawfully obtaining Personal Information, including obtaining Personal Information from sources that may be illegal.

 

(c)                                            Except as disclosed in Section 3.16(c) of the Disclosure Schedule, neither the Group Companies nor any of their Affiliated Persons have been investigated, inquired or been subject to any other actions by the regulatory authorities against the Group Companies or any of their Affiliated Persons, or sued or claimed compensation by any third party as a result of data mismanagement or illegal use of data.

 

Section 3.17                             Employee Matters.  To the Knowledge of the Warrantors, all employees of each Group Company are devoting their full professional time to such Group Company. To the Knowledge of the Warrantors, no employee of any Group Company is in violation of any provision of any Contract that would bring material adverse impact on any Group Company. Except for the Company Share Incentive Plan, as required by applicable Law or as disclosed in Section 3.17 of the Disclosure Schedule, none of the Group Companies has any Benefit Plan.  For the purposes hereof, “Benefit Plan” means any plan, Contract or other arrangement, formal or informal, whether oral or written, providing any benefit to any present or former officer, director or employee, or dependent or beneficiary thereof, including any employment agreement or profit sharing, deferred compensation, share option, performance share, employee share purchase, bonus, severance, retirement, health or insurance plan. To the Knowledge of the Warrantors, no Senior Manager, key employees or any group of employees (such key employees or group employees being determined in the reasonable discretion of the Seller) intends to terminate their employment with the Group Company, and none of the Group Companies has a present intention to terminate the employment of any of the foregoing except as may be required pursuant to this Agreement or transaction contemplated hereby. Except for liabilities as may arise from offer letters of

 

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certain employees of the Group Companies relating to Company Share Awards and NetEase RSUs, details of which are set forth in Schedule J hereto, no employee of the Group Companies is owed any back wages or other compensation for services rendered except as set forth on the Financial Statements or arising in the ordinary course of business between the Balance Sheet Date and the Closing Date. There is no labor strike, labor slow down, labor claim, labor dispute or labor union organization activities pending or, to the Knowledge of the Warrantors, threatened between any Group Company and its employees. Each Group Company has complied with all applicable Laws related to employment and related to the Benefit Plans (including Laws related to the contribution of social insurance, housing funds and related benefits).

 

Section 3.18                             Transactions with Related Parties.

 

(a)                                 All Contracts (other than (A) the Transaction Documents, (B) the employment agreements, (C) the confidential information, invention assignment, non-compete and non-solicitation agreements, (D) the award agreements entered into pursuant to the Company Share Incentive Plan, (E) the Control Documents, and (F) any Contract entered in the ordinary course of the business of the Group Companies) to or by which any Group Company, on the one hand, and any Related Party, on the other hand, are or have been a party or otherwise bound or affected (the “Related Party Contracts”) are set forth in Section 3.18(a) of the Disclosure Schedule.  Each Related Party Contract was made on terms and conditions as substantially favorable or more favorable to such Group Company as would have been obtainable by it at the time in a comparable arm’s-length transaction with an unrelated party.

 

(b)                                 No Related Party has any direct or indirect ownership in any Person with which any Group Company has a material business relationship, or any Person that competes with or could reasonably be expected to compete with any Group Company, except for ownership of less than five percent (5%) of any class or other equity of publicly traded companies. Except for transactions in the ordinary course of the business of a Group Company on terms and conditions at least as favorable to the Group Companies as would have been obtainable by them at the time in a comparable arm’s-length transaction with an unrelated party, no Related Party has any Contract, understanding, business relationship with, proposed transaction with, or is indebted to, any Group Company, nor is any Group Company indebted (or committed to make loans or extend or guarantee credit) to any of them (other than for accrued salaries, reimbursable expenses or other standard employee benefits). To the Knowledge of Warrantors, no Related Party has had, either directly or indirectly, a material equity interest in: (i) any Person which purchases from or sells, licenses or furnishes to a Group Company any goods, property, intellectual or other property rights or services; or (ii) any Contract to which a Group Company is a party or by which it may be bound or affected.

 

(c)                                  None of the Group Companies has any obligation to pay for any intra-group accounts payable to the Warrantors or their Affiliates (other than the Group Companies) that are not provided for in the Financial Statements, other than those arising between June 30, 2019 and the Closing Date and reflected in the Closing Statement.

 

(d)                                 As of 11:59 pm August 31, 2019, the sum of (i) the total amount payable by Ningbo NetEase Shangli Information Technology Co., Ltd. (宁波

 

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网易尚礼信息技术有限公司) to relevant Group Companies under the NetEase Gift Card Business Operation Agreements (网易礼品卡业务合作协议), and (ii) the total amount of the outstanding gift cards issued pursuant to the foregoing agreement was approximately RMB6,818,426.

 

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Section 3.19                             Required Licenses.  Each Group Company has all the necessary Required Licenses and has fulfilled any and all necessary fillings and registration requirements with the relevant Government Authorities required for the material conduct of the Business as now being conducted. No other Required License is necessary for, or otherwise material to, the conduct of the Business by any such Person. The consummation of the transactions contemplated under the Transaction Documents will not result in the termination or revocation of any of the Required Licenses material to the conduct of the Business. None of the Group Companies is in default under any of its Required Licenses material to the conduct of the Business and has not received any notice (whether written or not) relating to the suspension, revocation or modification of any such Required Licenses or the need for compliance or remedial actions in respect of the activities carried out directly or indirectly by any Group Company. Each Group Company has been conducting its business activities within the permitted scope of business. Except as disclosed in Section 3.19 of the Disclosure Schedule, to the Knowledge of the Warrantors, none of authorization of any Government Authority, license or permit requisite for the material conduct of the Business which is subject to periodic renewal will not be granted or renewed by the relevant Government Authorities.

 

Section 3.20                             Environment.  Except as would not, individually or in the aggregate, result in Material Adverse Effect to the Group Companies, (i) no property that any Group Company currently or previously occupied has had any release of any substance, in any form, or has been used in any manner, so as to create any liability for the Group Company under any Environmental Laws, (ii) no Group Company has received any notice, demand letter, claim or request for information alleging any environmental damage, disaster or any violation of, or liability of the Group Company under, any Environmental Law, and (iii) no Group Company is subject to any order, judgment, injunction or other agreement with any Government Authority or any third party relating to the environment.

 

Section 3.21                             Insurance.  The Group Companies have insurance policies (a) for such amounts as are sufficient for all requirements of Law and all agreements to which the Company or any of the Subsidiaries is a party or by which it is bound, and (b) which are in such amounts, with such deductibles and against such risks and losses, substantially as are in accordance with normal industry practice for similarly situated companies in the same industry.  Section 3.21 of the Disclosure Schedule sets forth a true, correct and complete list of each insurance policy maintained by each Group Company that is material to the conduct of the Business.  The Seller has made available to the Purchaser true, correct and complete copies of all such insurance policies.  There is no material claim by any Group Company pending under any such policies as to which coverage has been denied or disputed by the insurer.  Such insurance policies are in full force and effect, no coverage provided thereby will terminate or lapse by reason of this Agreement, all premiums with respect thereto are paid and each applicable Group Company is in compliance in all material respects with the terms thereof.  No Group Company has received any written notice of any threatened termination of, material premium increase with respect to or material alteration of coverage under any such insurance policy.

 

Section 3.22                             Brokers.  No broker, finder or investment banker is entitled to receive from any Group Company any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of any Group Company.

 

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Section 3.23                             Accuracy of Information.  The Warrantors and the Group Companies have not intentionally withheld any information or material in response to the Purchaser’s written due diligence request in connection with the transactions contemplated in this Agreement and none of the written due diligence materials or written information provided by the Warrantors and/or the Group Companies contains any untrue statement of any material fact.

 

Article IV

 

Representations and Warranties with Respect to Warrantors

 

Each of the Warrantors, severally and jointly, represents and warrants to the Purchaser that the statements contained in this Article IV are true, correct and complete as of the date hereof and as of the Closing Date (unless any representations and warranties expressly relate to another date, in which case as of such other date).

 

Section 4.1                                    Capacity.  Each Warrantor is duly organized, validly existing and in good standing under the Laws of the place of its incorporation or formation, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted.

 

Section 4.2                                    Authorization.  Each Warrantor has all requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which each Warrantor is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of such Warrantor. This Agreement has been, and each of the other Transaction Documents to which each Warrantor is a party will be at or prior to the Closing, duly and validly executed and delivered by such Warrantor and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and the other Transaction Documents to which such Warrantor is a party will constitute, the legal, valid and binding obligations of such Warrantor, enforceable against it in accordance with their respective terms.

 

Section 4.3                                    Conflicts; Consents of Third Parties.

 

(a)                                 None of the execution, delivery and performance by each Warrantor of this Agreement or the other Transaction Documents to which such Warrantor is a party, the consummation of the transactions contemplated hereby or thereby, or compliance by such Warrantor with any of the provisions hereof or thereof will breach or conflict with, or result in any violation of or default under (with or without notice or lapse of time, or both), any provision of (i) the memorandum and articles of association or comparable organizational documents of such Warrantor, or (ii) any Law or Order applicable to such Warrantor; in each case of (i) and (ii), except as would not, individually or in the aggregate, materially and adversely affect the ability of such Warrantor to carry out its obligations hereunder and under the other Transactions Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.

 

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(b)                                 No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Government Authority or any other Person is required on the part of each Warrantor in connection with the execution and delivery of this Agreement or the other Transaction Documents or the compliance by such Warrantor with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except as would not, individually or in the aggregate, materially and adversely affect the ability of any Warrantor to carry out its obligations hereunder and under the other Transactions Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.

 

Section 4.4                                    Ownership and Transfer of Shares.  The Seller is the record owner of the Purchased Shares, free and clear of all Liens.  The Seller Parent is the sole shareholder of the Seller, free and clear of all Liens.  The Seller has the power to sell, transfer, assign and deliver the Purchased Shares as provided in this Agreement, and such delivery will convey to the Purchaser good and marketable title to the Purchased Shares, free and clear of all Liens. The Purchased Shares are duly authorized, validly issued, fully paid and non-assessable.

 

Article V

 

Representations and Warranties with Respect to Purchaser

 

The Purchaser represents and warrants to the Seller that the statements contained in this Article V are true and correct as of the date hereof and as of the Closing (unless any representations and warranties expressly relate to another date, in which case as of such other date).

 

Section 5.1                                    Organization and Good Standing.  The Purchaser is duly organized, validly existing and in good standing under the Laws of the Cayman Islands, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted.

 

Section 5.2                                    Authorization.  The Purchaser has all requisite power and authority to execute and deliver this Agreement and the other Transaction Documents to which the Purchaser is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which the Purchaser is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Purchaser. This Agreement has been, and each of the other Transaction Documents to which the Purchaser is a party will be at or prior to the Closing, duly and validly executed and delivered by the Purchaser and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and the other Transaction Documents to which the Purchaser is a party will constitute, the legal, valid and binding obligations of the Purchaser, enforceable against it in accordance with their respective terms.

 

Section 5.3                                    Conflicts; Consents of Third Parties.

 

(a)                                 None of the execution, delivery and performance by the Purchaser of this Agreement or the other Transaction Documents to which the

 

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Purchaser is a party, the consummation of the transactions contemplated hereby or thereby, or compliance by the Purchaser with any of the provisions hereof or thereof will breach or conflict with, or result in any violation of or default under (with or without notice or lapse of time, or both), any provision of (i) the memorandum and articles of association of the Purchaser; or (ii) any Order or Law applicable to the Purchaser, in each case of (i) and (ii), except as would not, individually or in the aggregate, materially and adversely affect the ability of the Purchaser to carry out its obligations hereunder and under the other Transactions Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.

 

(b)                                 No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing with, or notification to, any Government Authority or any other Person is required on the part of the Purchaser in connection with the execution and delivery of this Agreement or the other Transaction Documents or the compliance by the Purchaser with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby or thereby, except as would not, individually or in the aggregate, materially and adversely affect the ability of the Purchaser to carry out its obligations hereunder and under the other Transactions Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.

 

Section 5.4                                    Subject Shares.  The Subject Shares, when issued, sold and delivered in accordance with the provisions of this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and will be owned by the Seller free and clear of all Liens.

 

Article VI

 

Covenants

 

Section 6.1                                    Access to Information.  Following the date hereof until the Closing, the Purchaser and its representatives shall be entitled to make such investigation of the properties, assets, businesses and operations of the Group Companies and such examination of the books and records of the Group Companies as it may request from time to time and to make extracts and copies of such books and records. The Company and the Warrantors shall cause the Group Companies and each of the Group Companies’ respective officers, directors, employees, consultants, agents, accountants, attorneys and other representatives to: (a) afford the officers, employees, agents, accountants, attorneys and other representatives of the Purchaser access, during regular business hours, to the offices, properties, facilities, books and records of each Group Company, and (b) furnish to the officers, employees, agents, accountants, attorneys and other representatives of the Purchaser such additional financial, operating data, customer data and other data and information regarding the operation, assets, properties, Liabilities and goodwill of each Group Company as the Purchaser may from time to time request (including without limitation, the due diligence materials previously requested by the Purchaser but yet to be provided as of the date hereof).

 

Section 6.2                                    Notice of Developments.  Prior to the Closing, the Warrantors and the Company shall promptly notify the Purchaser in writing of (a) all events, circumstances, facts and occurrences arising subsequent to the date of this Agreement which could reasonably be expected to result in any breach of a representation or warranty or covenant or agreement of any Warrantor or the Company in this Agreement or which could

 

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have the effect of making any representation or warranty of any Warrantor or the Company untrue or incorrect in any respect, and (b) all other material developments affecting the assets, Liabilities, business, financial condition, operations, result of operations, client relationships, employee relations, projections or prospects of any Group Company.

 

Section 6.3                                    Conduct of the Business Pending the Closing.  Between the date hereof and the time of the Closing, except (x) as expressly required by this Agreement or (y) with the prior written consent of the Purchaser (which consent may be given or withheld in the Purchaser’s sole and absolute discretion), the Company shall, and shall cause the other Group Companies to, and the Warrantors shall cause the Group Companies to:

 

(a)                                 conduct the respective Businesses of the Group Companies in the ordinary course and consistent with the Group Companies’ past practice;

 

(b)                                 continue the respective promotional activities and pricing and purchasing policies of the Group Companies consistent with past practice;

 

(c)                                  maintain the validity of all the customs guarantees with respect to the Group Companies’ warehouses located in bonded areas as required by applicable Laws;

 

(d)                                 store and preserve all the data generated from the Group Companies’ operation in the same manner as they are currently stored and preserved;

 

(e)                                  renew any licenses, permits, insurance policies and contracts (including without limitation supply contracts) that have expired or will expire in a timely manner;

 

(f)                                   preserve all the present assets and Real Property of the Group Companies;

 

(g)                                  use their best efforts to (i) preserve the present business operations, organization and goodwill of the Group Companies, (ii) keep available the services of its current officers and employees, (iii) preserve the present relationships with clients of the Group Companies, and (iv) not engage in any practice, take any action, fail to take any action or enter into any transaction which could cause any representation or warranty of the Company or the Warrantors in this Agreement to be untrue or result in a breach of any covenant made by the Company or any Warrantor in this Agreement;

 

(h)                                 not change the accounting methods, estimation techniques, principles or practices affecting the reported assets, liabilities or results of operations of any Group Company or change any Group Company’s cash management procedures or management of working capital, including by accelerating collections or receivables or by delaying payment of any payables or other liabilities; and

 

(i)                                     not take any action if such action would constitute a breach of the representations and warranties set forth in Section 3.9.

 

Section 6.4                                    Further Assurances.  Each Party shall use (and the Company shall cause each other Group Company to use) its reasonable best efforts to (a) take all actions necessary or appropriate and do all things (including to execute and deliver

 

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documents and other papers) necessary, proper or advisable to consummate the transactions contemplated by this Agreement, and (b) cause the fulfillment at the earliest practicable date of all the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

 

Section 6.5                                    Confidentiality and Publicity.

 

(a)                                 Each Warrantor agrees to, and shall cause its agents, representatives, Affiliates, employees, officers and directors to: (i) treat and hold as confidential (and not disclose or provide access to any Person to) all confidential or proprietary information with respect to the Purchaser or the Group Companies or relating to the transactions contemplated hereby, (ii) in the event that any Warrantor or any such agent, representative, Affiliate, employee, officer or director becomes legally compelled to disclose any such information and to the extent reasonably practicable and legally permissible, provide the Purchaser and the Company with prompt written notice of such requirement so that the Purchaser or the applicable Group Company may seek a protective order or other remedy or waive compliance with this Section 6.5(a), and (iii) in the event that such protective order or other remedy is not obtained prior to the date such disclosure is required to be made, or the Purchaser and the Company waive compliance with this Section 6.5(a), furnish only that portion of such confidential information which is legally required to be provided and exercise its reasonable best efforts to obtain assurances that confidential treatment will be accorded to such information, provided, however, that to the extent legally permissible, each Warrantor shall have provided a draft of the proposed disclosure to the Purchaser and the Company reasonably in advance and shall in good faith consider any comments to the content of such proposed disclosure; provided, further, that this Section 6.5(a) shall not apply to any information that, at the time of disclosure, is in the public domain and was not disclosed in breach of this Agreement by any Warrantor or any of its agents, representatives, Affiliates, employees, officers or directors.

 

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(b)                                 No Party shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the Purchaser (in the case of a proposed release or announcement by the Seller, the Seller Parent or the Company), or of the Seller (in the case of a proposed release or announcement by the Purchaser), unless otherwise required by Law or Government Authority (in which case the Party being required to make such press release or public announcement shall, to the extent legally permissible, provide the Purchaser (if such Party is the Seller or the Seller Parent) or the Seller (if such Party is the Purchaser) with a draft of the proposed press release or public announcement reasonably in advance and shall in good faith consider any comments from the Purchaser or the Seller, as applicable, to the content of such proposed press release or public announcement).

 

Section 6.6                                    No Promotion.  Subject to Section 6.5(b), without the prior written consent of or as otherwise agreed in writing to by the Purchaser, and whether or not the Purchaser is then a shareholder of the Company and whether or not the Closing is consummated, each Warrantor shall not and shall cause its Affiliates not to:

 

(a)                                 use in advertising, publicity, announcements, duplication or otherwise, the name of Ant, Alibaba Group Holding Limited or any of their respective Affiliates, either alone or in combination of, including “阿里巴巴” (Chinese equivalent for “Alibaba”), “淘宝” (Chinese equivalent for “Taobao”), “天猫” (Chinese equivalent for “Tmall”), “1688”, “聚划算” (Chinese equivalent for “Juhuasuan”), “全球速卖通” (Chinese brand for “AliExpress”), “飞猪” (Chinese equivalent for “Fliggy”), “阿里妈妈” (Chinese equivalent for “Alimama”), “阿里云” (Chinese equivalent for “Alibaba Cloud”), “阿里通信” (Chinese equivalent for “AliTelecom”), “一达通” (Chinese brand for “OneTouch”), “友盟” (Chinese equivalent for “Umeng”), “盒马” (Chinese equivalent for “Freshippo”), “闲鱼” (Chinese equivalent for “XianYu”), “优酷” (Chinese equivalent for “YOUKU”), “土豆” (Chinese equivalent for “TUDOO”), “优视” (Chinese equivalent for “UC/UCWeb”), “阿里游戏” (Chinese equivalent for “Alibaba Games”),”九游” (Chinese equivalent for “9Game”), “阿里文学” (Chinese equivalent for “Alibaba Literature”), “书旗小说” (Chinese equivalent for “Shuqi”), “大麦” (Chinese equivalent for “Damai”), “虾米” (Chinese equivalent for “Xiami”), “高德地图” (Chinese brand for “AMAP”), “阿里” (Chinese equivalent for “Ali”), “淘” (Chinese equivalent for “Tao”), “钉钉” (Chinese brand for “DingTalk”), “口碑” (Chinese equivalent for “Koubei”), “饿了么” (Chinese equivalent for “Eleme”), “蚂蚁金服” (Chinese brand for “Ant Financial”), “蚂蚁” (Chinese equivalent for “Ant”), “支付宝” (Chinese brand for “Alipay”), “余额宝” (Chinese equivalent for “Yu’e Bao”), “芝麻信用” (Chinese equivalent for “Zhima Credit”), “网商银行” (Chinese brand for

 

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“MYbank”), “花呗” (Chinese equivalent for “HUABEI”), “Alibaba”, “Taobao”, “Tmall”, “Juhuasuan”, “AliExpress”, “Fliggy”, “Alimama”, “Alibaba Cloud”, “AliOS”, “AliTelecom”, “OneTouch”, “Umeng”, “Freshippo”, “YOUKU”, “TUDOO”, “TUDOU”, “UC”, “UCWeb”, “Alibaba Games”, “9Game”, “Alibaba Literature”, “Shuqi”, “Damai”, “Xiami”, “AMAP”, “Ali”, “Tao”, “DingTalk”, “Koubei”, “Eleme”, “Ant Financial”, “Ant”, “Alipay”, “Yu’e Bao”, “Zhima Credit”, “MYbank”, “HUABEI”, the associated devices and logos of the above brands (including but not limited to the smiling face device of Alibaba Group, the cow device of Alibaba.com, the Tao doll device of Taobao, the cat device of Tmall, the Ju doll device of Juhuasuan, the pig device of Fliggy, the bracket device of Alibaba Cloud, the hippo device of Freshippo, the fish device of XianYu, the doughnut device of YOUKU, the smiling face device of TUDOO and TUDOU, the 9 Games device, the Shuqi device of Shuqi, the hand device of Damai, the shrimp device of Xiami, the Gaoxiaode device and the paper aeroplane device of AutoNavi, the wing device of Dingtalk, the ant device of Ant Financial, the Zhi device of Alipay, the Zhima Credit device, etc.) or any company name, trade name, trademark, service mark, domain name, device, design, symbol or any abbreviation, contraction or simulation thereof owned or used by the Purchaser, Alibaba Group or any of their respective Affiliates; or

 

(b)                                 represent, directly or indirectly, that any product or services provided by such Party or its Affiliates has been approved or endorsed by the Purchaser or any of its Affiliates.

 

Section 6.7                                    Exclusivity.  Between the date of this Agreement and the earlier of (a) the Closing and (b) the termination of this Agreement pursuant to Section 8.1, none of the Warrantors and the Company or any of their respective Affiliates, officers, directors, representatives or agents shall, and the Warrantors and the Company shall cause the other Group Companies and their respective Affiliates, officers, directors, representatives and agents not to, (i) solicit, initiate, consider, encourage or accept any other proposals or offers from any Person (A) relating to any acquisition or purchase of all or any portion of the equity interests in the Company or any other Group Company or all or any material portion of the assets of the Group Companies, or (B) to enter into any merger, consolidation, business combination, recapitalization, reorganization or other extraordinary business transaction involving or otherwise relating to any Group Company, or (ii) participate in any discussions, conversations, negotiations and other communications regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing. The Warrantors and the Company shall, and shall cause the other Group Companies to, immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing. The Warrantors and the Company shall notify the Purchaser promptly if any such proposal or offer, or any inquiry or other contact with any Person with respect thereto, is made and shall, in any such notice to the Purchaser, indicate in reasonable detail the identity of the Person making such proposal, offer, inquiry or contact and the terms and conditions of such proposal, offer, inquiry or other contact. The Warrantors and the Company agree not to, and to cause the other Group Companies not to, without the prior written consent of the Purchaser, release any Person from, or waive any provision of, any confidentiality or standstill agreement to which any Warrantor or Group Company is a party.

 

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Section 6.8                                    Tax Filings and Payments.

 

(a)                                 The Parties hereby acknowledge, covenant and agree that (i) the Purchaser shall have no obligation to pay any Tax of any nature that is required by applicable Law to be paid by the Seller or its Affiliates or their respective direct and indirect partners, members and shareholders arising out of the transactions contemplated by this Agreement and the other Transaction Documents; and (ii) the Seller agrees to bear and pay any Tax of any nature that is required by applicable Laws to be paid by it arising out of the transactions contemplated by this Agreement and the other Transaction Documents.

 

(b)                                 The Seller shall engage, at its own cost and expense, and hereby authorize one of the Big Four (the “Filing Agent”) to, and shall cause the Filing Agent to, as soon as possible after the date hereof, and in any event, within thirty (30) days  after the date hereof, duly and timely make with the applicable PRC Tax Authority (being the PRC Tax Authority to which such filings are to be made pursuant to applicable Law) (the “Relevant PRC Tax Authority”) the relevant Tax filings and disclosures that are required by (and shall make such filings and disclosures in accordance with the requirements of) applicable Law (including Circular 7) in connection with the transactions contemplated by this Agreement and the other Transaction Documents (the foregoing transactions, collectively, the “Reporting Transactions”), and shall (A) provide the whole package of tax reporting documents to the Purchaser for any comment at least seven (7) Business Days before the formal submission and consider any reasonable comments from the Purchaser, (B) permit the Purchaser to make a joint filing with the Seller in respect of the Reporting Transactions (or to sign on the filing) if the Purchaser so elects, (C) allow one representative of the Purchaser or its tax advisor to accompany the Filing Agent to the Relevant PRC Tax Authority’s offices to witness the Filing Agent submitting such Tax filings on behalf of the Seller, and (D) provide the Purchaser with adequate evidence (as specified below in this Section 6.8(a)) that such Tax filings have been made in accordance with applicable Law as soon as reasonably practicable. The Seller agrees to use its reasonable best efforts to promptly submit, or cause the Filing Agent to submit, all documents subsequently requested by the Relevant PRC Tax Authority in connection with such Tax filing with a copy delivered to the Purchaser and the Company simultaneously therewith for review and comments, and the Seller shall cause the Filing Agent to give regular updates to the Purchaser and the Company as to the determination (and delivers to the Purchaser and the Company assessment notices, if any, issued by the Relevant PRC Tax Authority in connection with such determination) and payment status of any Taxes assessed by the Relevant PRC Tax Authority in respect of the Seller in connection with the Reporting Transactions. For purposes of this Section 6.8(a), the following shall be adequate evidence that a Tax filing has been made in respect of the Seller:

 

(i)                                     an acknowledgement or receipt in respect of the filing by or on behalf of the Seller issued by the Relevant PRC Tax Authority or the original signature of an official of the Relevant PRC Tax Authority on the duplicate of the filing documents submitted by or on behalf of the Seller; or

 

(ii)                                  an original written confirmation issued by the Filing Agent and executed by an authorized signatory thereof, attaching a copy of the filing made and confirming that they have submitted the filing on behalf of the

 

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Seller with the Relevant PRC Tax Authority in accordance with this Section 6.8(a), and confirming that the Relevant PRC Tax Authority does not issue, and has not issued, any acknowledgement or receipt in respect of the filing.

 

(c)                                  The Seller shall cause the Filing Agent to, on a monthly basis, follow up with the Relevant PRC Tax Authority on the Tax filings of the Seller and shall promptly respond to any requests by the Relevant PRC Tax Authorities for additional information or materials and give regular (and in any event not less frequently than monthly) updates to the Purchaser as to any development in the assessment of any Taxes by the Relevant PRC Tax Authority.  Without prejudice to the foregoing, if the Seller or any of its Affiliates receives any notice or demand from any PRC Tax Authority in respect of the Reporting Transactions, the Seller shall promptly provide a true and complete copy of such notice or demand to the Purchaser.

 

(d)                                 To the extent that the Seller is determined by the Relevant PRC Tax Authority to be required by applicable Law (including Circular 7) to pay Taxes in connection with the Reporting Transactions (the “Selling Taxes”), the Seller shall promptly pay the Selling Taxes and shall provide the Purchaser, as soon as reasonably practicable, with evidence in the form of a payment receipt issued by the Relevant PRC Tax Authority (together with the details of Tax calculation and supporting documents) demonstrating that the Selling Taxes have been paid.  If (i) no such evidence is received by the Purchaser within such period of time as the Selling Taxes are required to be paid by the Relevant PRC Tax Authority, and (ii) the Purchaser has received a written notice from the Relevant PRC Tax Authority demanding the payment of the Selling Taxes by the Purchaser, then the Purchaser may, following reasonable consultation with the Seller, pay the Selling Taxes out of the Indemnity Withheld Amount (and the Purchaser shall provide the Seller, as soon as reasonably practicable, with evidence in the form of a payment receipt issued by the Relevant PRC Tax Authority demonstrating that the Selling Taxes have been paid).  The Indemnity Withheld Amount shall be deemed to have been reduced by the amount of the Selling Taxes paid on behalf of the Seller pursuant to the foregoing clause.

 

(e)                                  Notwithstanding anything in this Agreement to the contrary, (i) the Seller and its Affiliates, on the one hand, and the Purchaser and its Affiliates (including, for the avoidance of doubt, the Group Companies after the Closing Date), on the other hand, shall each cooperate, and shall cause its Affiliates (including the Group Companies) to cooperate, with the other as and to the extent reasonably requested by the Seller or the Purchaser, as applicable, in connection with the filing of any Tax Returns, calculating or paying any Taxes as is required under this Agreement (including, without limitation, any Seller Taxes) and making any Tax filings as is required under this Agreement (including any Tax filing required pursuant to Section 6.8), and in any threatened or actual audit or other proceeding with respect to Taxes, including the retention and (upon request) the provision of records (it being understood and agreed that, following the Closing Date.  Following the Closing, the Seller and its Affiliates, on the one hand, and the Purchaser and its Affiliates (including, for the avoidance of doubt, the Group Companies after the Closing Date), on the other hand, shall make its, or shall cause their respective Affiliates to make its, employees and facilities available during normal business hours on a mutually convenient basis to provide reasonable explanation of any documents or information provided hereunder.

 

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(f)                                   Notwithstanding anything to the contrary in this Agreement, neither the Purchaser nor any of its Affiliates (including, after the Closing Date, the Group Companies) (i) file (except as expressly contemplated by this Agreement), re-file, supplement or amend any Tax Return relating to a Tax period (or portion thereof) ending on or prior to the Closing Date, (ii) make any election with an effective date on or before the Closing Date, (iii) except as otherwise expressly contemplated by this Agreement, voluntarily approach any taxing authority, or make any voluntary disclosure, amnesty or similar filing, in respect of Taxes relating to any Tax period (or portion thereof) ending on or prior to the Closing Date or (iv) or take any action that could increase Seller’s or any of its Affiliate’s obligations in respect of Taxes (including any obligation pursuant to Article IX or any other provision of this Agreement), without the prior written consent of Seller, which consent shall not be unreasonably withheld, conditioned or delayed.

 

Section 6.9                                    Release and Discharge.

 

(a)                                 Effective as of and contingent upon the Closing, to the fullest extent permitted by applicable Law, each of the Warrantors, on behalf of itself and on behalf of its shareholders or members, as applicable, assigns and beneficiaries and, to the extent acting in a representative capacity, its creditors, directors, officers, managers, employees, investors, Affiliates, representatives (including any investment banking, legal or accounting firm retained by such Warrantor), successors and assigns of any of them (collectively, the “Releasing Persons”), hereby knowingly, voluntarily, unconditionally and irrevocably waives, fully and finally releases, acquits and forever discharges each Group Company and its shareholders or members, as applicable, assigns and beneficiaries, creditors, directors, officers, managers, employees, investors, Affiliates, representatives (including any investment banking, legal or accounting firm retained by any of them), successors and assigns of any of them, Affiliates and predecessors, successors and assigns of any of them (collectively, the “Released Persons”) from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, obligations, claims, counterclaims, debts, demands, damages, costs, expenses, compensation or liabilities of every kind and any nature whatsoever, in each case whether absolute or contingent, liquidated or unliquidated, known or unknown, direct or derivative on behalf of any Person, and whether arising under any agreement or understanding or otherwise at Law or equity (“Released Claims”), which such Releasing Persons, or any of them, had, has, or may have had arising from, connected or related to, or caused by any event, occurrence, cause or thing, of any type whatsoever, or otherwise, arising or existing, or occurring, in whole or in part, at any time in the past until and including the Closing against any of the Released Persons with respect to any Group Company, whether arising out of, relating to or in connection with the Seller’s investment in securities in any Group Company, the Existing Articles or otherwise (the “Release”). The Release shall be effective as a full, final and irrevocable accord and satisfaction and release of all the Released Claims.

 

(b)                                 Effective as of and contingent upon the Closing, each of the Warrantors hereby irrevocably and unconditionally covenants to refrain from, directly or indirectly, asserting any claim or demand, or commencing, instituting or causing to be commenced, any proceeding of any kind against any Released Person, based upon the Release or to seek to recover any amounts in connection therewith or thereunder

 

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from and after the Closing. Any Released Person may plead this Release as a complete bar to any Released Claims brought in derogation of this covenant not to sue.

 

(c)                                  Each of the Warrantors agrees that if it violates any provision of this Section 6.9, such Warrantor will pay the costs and expenses of defending against any related or resulting Legal Proceedings incurred by the Released Persons, including attorney’s fees.

 

(d)                                 The provisions of the foregoing Section 6.9(a) to (c) shall not apply to any liability or claim (i) arising from the Seller Guarantee, (ii) arising from Onshore Shareholder Loans or the Offshore Shareholder Loans, (iii) arising from any transaction that is at least as favorable to Group Companies as would have been obtainable by them at the time in a comparable arm’s-length transaction with an unrelated party, (iv) arising under the governing documents of the Group Companies, including in respect of exculpation and indemnification, or any indemnification agreement, (v) arising under the Transaction Documents, or (vi) arising from employment relationship with the Group Companies, including accrued but unpaid salary, benefits, reimbursable expenses and other types of compensation and benefits to the extent reflected in the Financial Statements or the Closing Statement.

 

(e)                                  For the avoidance of doubt, the Warrantors shall, and shall cause their respective Affiliates to, knowingly, voluntarily, unconditionally and irrevocably waive, fully and finally release, acquit and forever discharge (i) each employee of the Group Companies from all Liabilities and claims arising from any non-competition obligations under his or her existing labor contract with the relevant Group Company, and (ii) the Group Companies from all Liabilities and claims for any liquidated damages or penalties due to a breach of non-compete or similar obligations as a result of the transactions contemplated hereby under any of their existing business contract with the Warrantors or their Affiliates (excluding the Group Companies), to the extent such contact is not terminated at the Closing.

 

Section 6.10                             Withholding Rights.  Notwithstanding anything herein to the contrary, the payor of any amount payable pursuant to this Agreement shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Agreement such amounts as such payor is required to deduct and withhold under the any applicable Tax Law with respect to the making of such payment.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.

 

Section 6.11                             Treatment of Company Share Awards and NetEase RSUs.

 

(a)                                 As soon as practicable after the date hereof, and in any event prior to the Closing, the Warrantors shall take all such actions as may be necessary to or cause the Company to terminate the Company Share Incentive Plan and cancel all Company Share Awards issued thereunder.

 

(b)                                 The Warrantors shall use their reasonable best efforts to enter into the NetEase Agreement with each of the individuals listed in Part A of Schedule D-2 hereto prior to the Second Installment Payment Date.

 

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(c)                                  The Warrantors shall use their reasonable best efforts to cause each of the individuals listed in Part B of Schedule D-2 hereto to sign the Non-compete Undertaking prior to the Second Installment Payment Date.

 

(d)                                 The Warrantors shall use their reasonable best efforts to cause each of the NetEase Group Award Grantees to sign a Waiver Letter prior to the Second Installment Payment Date.

 

(e)                                  Following the Second Installment Payment Date, to the extent that there remains any NetEase Group Award Grantee that is yet to execute the NetEase Agreement, the Non-compete Undertaking and/or the Waiver Letter, as applicable, the Warrantors shall continue to use their respective reasonable best efforts to cause all of the NetEase Group Award Grantees to execute the NetEase Agreements, the Non-compete Undertakings and the Waiver Letters, as applicable, in accordance with Section 6.12(b), (c) and (d).

 

(f)                                   Except as may be consented to in writing by the Purchaser, the Company shall not permit the exercise of any Company Share Award.

 

(g)                                  The Warrantors agree to use their respective reasonable best efforts to cause each of the individuals listed in Part A of Schedule D-2 hereto to comply with his or her obligations provided under the relevant NetEase Agreement to which he or she is a party.

 

(h)                                 The Warrantors shall (i) use their reasonable best efforts to ensure that the number of Qualifying Grantees represent no less than 90% of the total number of the NetEase Group Award Grantees prior to the Second Installment Payment Date, (ii) deliver to the Purchaser the Waiver Letters and the NetEase Agreements that have been duly executed by the individuals listed in Part A of Schedule D-2 hereto prior to such date, and (iii) make the Waiver Letters and the Non-compete Undertakings that have been duly executed by the individuals listed in Part B of Schedule D-2 hereto prior to such date available for inspection by Purchaser’s counsel (each of the conditions the Warrantors are required to use their reasonable best efforts to satisfy prior to the Second Installment Payment Date set forth in the immediately preceding sub-sections (i), (ii) and (iii) above, the “Second Installment Payment Condition”).

 

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Section 6.12                             No Leakage.

 

(a)                                 Each of the Warrantors undertakes that it will cause the Group Companies not to incur any Leakage during the period from the Balance Sheet Date to the Closing Date, unless with the prior written consent of the Purchaser.

 

(b)                                 Subject to the Closing having taken place, if the Seller or any of its Affiliates (other than any Group Company) has received (or is entitled to receive as a result of a binding agreement or binding commitment by any Group Company) a Leakage Amount in respect of any Group Company occurring between the Balance Sheet Date and the Closing Date, the Seller shall be liable to pay to the Purchaser the aggregate sum equal to the Leakage Amount, which amount shall be paid following final determination thereof in accordance with this Section 6.13 and first out of the Indemnity Withheld Amount, to the extent any such amount remains.

 

(c)                                  If the Purchaser wishes to make a claim for any Leakage under this Section 6.13, it must send a written notice (a “Leakage Notice”) to the Seller.  A Leakage Notice shall not be valid unless it specifies in reasonable detail the factual basis of the alleged Leakage and evidence on which the Purchaser relies and sets out the Purchaser’s estimate of the amount of the Leakage Amount (including its calculation of the relevant Leakage Amount).  The Seller shall not have any liability under this Section 6.13 unless a Leakage Notice has been sent to the Seller in writing on or before the expiry of 24 months after the Closing.

 

(d)                                 Unless within twenty (20) Business Days after the date on which the Seller receives the Leakage Notice the Seller notifies the Purchaser in writing that it does not accept the Leakage Notice, the Seller shall be deemed to have accepted such Leakage Notice.

 

(e)                                  If, within the period of twenty (20) Business Days referred to in Section 6.13(d), the Seller has sent the Purchaser a written notice stating the grounds on which it does not accept the Leakage Notice, the Parties shall negotiate in good faith with a view to reaching an agreement on the matter.

 

(f)                                   In the event that the Seller and the Purchaser are unable to reach an agreement as aforesaid within twenty (20) Business Days of the Seller giving the notice referred to in Section 6.13(e), the matter shall be submitted for determination by an Expert.  For the purposes of this Agreement, an “Expert” means one of the Big Four or any other accounting firm mutually agreed upon by the Purchaser and the Seller, or any other accounting firm selected by the secretary general of the Hong Kong International Arbitration Center in accordance with Section 10.3. Any firm proposed or nominated to be an Expert shall be required to declare in writing any current and past associations with the Purchaser, the Seller, and/or their respective Affiliates before appointment and shall have reasonably satisfied the Seller and the Purchaser of such firm’s independence. Each of the Purchaser and the Seller shall use its reasonable efforts to agree upon the terms of engagement for the Expert and appoint an Expert expeditiously within five (5) Business Days after the other Party’s written request for the nomination of the Expert.

 

(g)                                  Such Expert shall act as an independent expert in connection with the giving of such decision which shall be rendered within thirty (30) Business

 

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Days of its appointment.  In giving such decision, the Expert shall state whether or not any Leakage, which does not constitute Permitted Leakage, has occurred and, if yes, the Leakage Amount.

 

(h)                                 The decision of the Expert shall (except in case of manifest error) be final and binding on the Seller and the Purchaser.

 

(i)                                     Any engagement fees, any fees charged by the Expert, and any fees and expenses incurred by the Expert shall be borne by the Party whose proposed figure is the furthest away from the figure finally determined by the Expert.

 

(j)                                    The Seller and the Purchaser shall promptly provide (and shall procure that their respective advisers promptly provide) to one another (and to one another’s advisers) and to any Expert appointed pursuant to Section 6.13(f) such documents and information within their possession or control (or that of their respective Affiliates) as may be required for the purposes of giving effect to this Section 6.13(j).

 

(k)                                 Any payment hereunder by the Seller shall be deemed to be a reduction in the Final Purchase Price paid by the Purchaser.

 

Section 6.13                             Pre-Closing Covenants to Continue.  If any Warrantor is required to perform any covenant or agreement herein prior to the Closing but has failed to fully perform such covenant or agreement prior to the Closing, then, without prejudice to any other rights or remedies the Purchaser may have in respect of such failure, and notwithstanding any waivers that may be granted by the Purchaser in respect of the conditions to its obligation to proceed to the Closing, such Warrantor shall continue to perform such covenant or agreement after the Closing until such covenant or agreement is fully performed.

 

Section 6.14                             Ongoing Cooperation and Assistance.

 

(a)                                 The Warrantors shall cause the existing nominee shareholders, directors, legal representatives and general managers of Hangzhou Youmai and Zhejiang Anxiong and existing shareholders, directors, legal representatives and general managers of the other PRC Group Companies to provide all assistance reasonably requested by the Purchaser to complete all filings with respect to the Onshore Equity Transfers and the replacement of the directors, supervisors, officers and legal representatives of each of the other PRC Group Companies with nominees of the Purchaser with the applicable Government Authorities (including without limitation the SAMR) as soon as reasonably practicable after the Closing.

 

(b)                                 Each of the Warrantors agrees that after the Closing, it shall, and shall cause its Affiliates, as applicable, to, provide all assistance reasonably requested by the Purchaser to complete all filings with respect to the replacement of the Outgoing Directors of the Offshore Group Companies that are listed in Part B of Schedule G hereto.

 

(c)                                  Each of the Warrantors agrees that after the Closing, it shall, and shall cause its Affiliates, as applicable, to, provide such assistance as may be

 

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reasonably requested by the Purchaser in order to wind up Lion Trading Company S.r.l.

 

(d)                                 In the case of any dispute or claim for indemnification against any Group Company by any third party after the Closing, which involves any agreement or contract entered into by any Warrantor, its Affiliates or any Group Company prior to the Closing, the Warrantors shall afford the Purchaser or its Affiliates, as applicable, reasonable access to the employees of the Seller and its Affiliates during normal business hours, to assist such Persons resolving such dispute, provided, however, that such access shall be subject to any applicable Laws relating to privacy or data protection and shall only be upon reasonable notice, shall not unreasonably disrupt personnel, operations and properties of the Seller or any of its Affiliates, and shall be at the Purchaser’s sole risk and expense, provided, further, that no such employee shall be required to give any testimony, or attend any conferences, discovery proceedings, hearings, trials or appeals.

 

(e)                                  Each of the Warrantors agrees that after the Closing, it shall, and shall cause its Affiliates, as applicable, to provide such assistance as may be reasonably requested by the Purchaser in the event that the competent Government Authorities initiate any Tax audit or other investigations of any Group Company (including any such audit or investigation initiated during the liquidation process of any Group Company), in each case at the cost of the Purchaser.

 

(f)                                   Each of the Warrantors shall, and shall cause its Affiliates to, continue granting the Group Companies a perpetual, worldwide, irrevocable, non-exclusive, fully-paid up, royalty-free license to use, make, have made, import, sell, offer to sell, distribute, copy, modify, perform and otherwise exploit, solely in the conduct of the Business, the Intellectual Property owned by such Warrantor or its Affiliates at Closing (which, for clarity, does not include any trade name, logo or brand image of the Warrantors or its Affiliates (excluding the Group Companies)) that is necessary for the Group Companies to operate the Business in substantially the same manner as currently conducted.

 

(g)                                  Each of the Warrantors agrees that after the Closing (i) it shall not, and shall cause its Affiliates not to, use its master USB Keys (U盾) to do anything to interfere with the Business or the operation of the Group Companies.  Each of the Warrantors agrees that after the Closing; and (ii) it shall, and shall cause its Affiliates, as applicable, to take all necessary actions to cancel such master USB Keys’ authorization over, or any other access to, the bank accounts of the Group Companies within one (1) month after the Closing. The Purchaser and the Group Companies shall provide all necessary assistance in connection with the foregoing.

 

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Section 6.15                             Optimization of Workforce Structure.  The Warrantors agree to bear, and to reimburse the Purchaser, promptly upon demand, for, 50% of all documented costs (but in no event more than RMB50 million) actually incurred by the Group Companies in connection with the optimization of the existing workforce structure of the Group Companies during the twelve (12)-month period following the Closing, which reimbursement shall first be paid out of the Indemnity Withheld Amount, to the extent any such amount remains.

 

Section 6.16                             Intellectual Property Arrangements.

 

(a)                                 Except as set forth in Section 6.16(d), each of the Warrantors agrees that after the Closing, it shall not, and shall cause its Affiliates not to, (a) use any Intellectual Property that is currently exclusively used, or held for exclusive use, by the Group Companies (excluding commercial off-the-shelf Software) as set forth on Schedule F hereto, or any Intellectual Property that includes the trade name, logo or brand image of the Group Companies (including but not limited to Kaola (考拉)), which, for clarity, does not include any trade name, logo or brand image of the Warrantors or its Affiliates (excluding the Group Companies), or (b) retain or use any Confidential Information with respect to the Business, or any Intellectual Property created by any employees during their employment with, and used or held for use by, the relevant Group Companies. Each of the Warrantors agrees that as soon as practical, and in any event within three (3) months after the Closing, it shall, and shall cause its Affiliates to file with the competent Government Authorities to seek cancellation of the registrations of the Intellectual Property set forth on Schedule F hereto, and assist the Group Companies, at Purchaser’s expense, in providing reasonable assistance in applying for new Intellectual Property registrations derived from or in connection with those set forth on Schedule F hereto to the extent that such new registrations do not include any trade name, logo or brand image of the Seller Parent or any of its Affiliates and such assistance is requested by relevant Government Authority.

 

(b)                                 The Group Companies hereby grant to Seller Parent and its Affiliates a perpetual, worldwide, irrevocable, non-exclusive, fully-paid up, royalty-free license to use, make, have made, import, sell, offer to sell, distribute, copy, modify, perform and otherwise exploit the Intellectual Property set forth on Schedule I hereto. The foregoing license shall be effective upon Closing, and may be sublicensed, transferred and otherwise exercised for any purposes, subject to Section 6.17.

 

(c)                                  Promptly following the Closing, the Parties shall cooperate with each other to complete the transfer of (a) the Intellectual Property set forth on Schedule K hereto from the Group Companies to the Warrantors or its Affiliates, and (b) the Intellectual Property set forth on Schedule L from the Warrantors and its Affiliates to the Group Companies, in each case for no consideration.

 

(d)                                 Nothing in this Agreement shall (i) prevent the Seller or its Affiliates from using, for any purpose and without compensating the Group Companies, information retained in the unaided memory of the personnel of the Seller or its Affiliates who have had access to Confidential Information or Company Intellectual Property prior to the Closing, or (ii) obligate the Seller or its Affiliates to restrict the scope of employment of such personnel.

 

Section 6.17                             Non-compete.

 

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(a)                                 Each of the Warrantors agrees that for a period of two (2) years after the Closing Date, it shall not, and shall cause its Affiliates not to, without the prior consent of the Purchaser, directly or indirectly, (i)(1) acquire more than twenty percent (20%) of the outstanding equity interests in any business, if at the time of such acquisition, annual revenue generated from e-commerce business with respect to the sale of physical consumer goods as set forth in its most recent audited financial statements or management accounts exceeds 50% of the total annual revenue of such business during the same period, or (2) enter into any strategic cooperation with any business in the area of cross-border e-commerce business that primarily targets consumers located in the PRC, if (x) the Warrantors and their Affiliates hold more than twenty percent (20%) of the outstanding equity interests in such business, and (y) annual revenue generated from e-commerce business with respect to the sale of physical consumer goods as set forth in its most recent audited financial statements or management accounts exceeds 50% of the total annual revenue of such business during the same period; or (ii) Control or operate any e-commerce business with respect to the sale of physical consumer goods, other than (A) any Exempted Business as set forth on Schedule C, or (B) any e-commerce business of any existing or future business unit of such Warrantor or its Affiliates that is not an Exempted Business so long as the annual revenue generated from any such e-commerce business (to the extent for the sale of physical consumer goods) as set forth in its most recent audited financial statement or management accounts does not exceed 20% of the total annual revenue of such business unit during the same period. Without prejudice to the foregoing, each Warrantor hereby agrees that, for a period of five (5) years after the Closing Date, it shall not, and shall cause its Affiliates not to, without the prior consent of the Purchaser, directly or indirectly, Control or operate any Exempted Business or any other existing or future business unit of such Warrantor or any of its Affiliates if the annual revenue generated from as set forth in its most recent audited financial statements or management accounts, or annual gross merchandise volume transacted in connection with cross-border e-commerce business that primarily targets consumers located in the PRC exceeds 20% of the total annual revenue or total annual gross merchandise volume, as applicable, of such Exempted Business or such other business unit, as applicable, during the same period.

 

(b)                                 The Parties agree that, if any court or arbitral tribunal of competent jurisdiction determines that a specified time period, geographical area, a specified business limitation or any other relevant feature of this Section 6.18 or Section 6.19 is unreasonable, arbitrary or against public policy, then a lesser period of time, geographical area, business limitation or other relevant feature which is determined by such court or arbitral tribunal to be reasonable, not arbitrary and not against public policy may be enforced against the applicable Warrantor under this Section 6.18 or Section 6.19, as applicable.

 

Section 6.18                             Non-solicit.  Each of the Warrantors agrees that for a period of four (4) years after the Closing, it shall not, and shall cause its Affiliates not to, directly or indirectly

 

(a)                                 recruit, solicit or employ any Senior Managers of any Group Company, provided that the foregoing shall not prohibit the recruitment, solicitation or employment of any such person (i) resulting from general advertisements for employment (including any recruitment efforts conducted by any recruitment agency,

 

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provided that neither Warrantor nor any of its Affiliates has directed such recruitment efforts at such person), (ii) if such person approaches any Warrantor or any of its Affiliates on an unsolicited basis, or (iii) following the cessation of such person’s employment with any Group Company without any solicitation by any Warrantor or any of its Affiliates;

 

(b)                                 solicit or recruit any of the Persons set forth in Schedule E; or

 

(c)                                  knowingly induce or encourage any such persons described in subsection (a) and (b) to terminate, reduce or materially alter its relationship with the Group Companies.

 

Section 6.19                             Rights with respect to Investment in NetEase Yanxuan.  Each of the Warrantors agrees, and it shall cause its Affiliates to agree that, with respect to the investment in NetEase Yanxuan during the four (4) year period following the Closing Date:

 

(a)                                 in the event that NetEase Yanxuan issues any new equity securities to one or more Person other than the Seller Parent or any of its Affiliates, the Purchaser or any of its designated Affiliates shall have a right of first refusal, exercisable within twenty (20) Business Days following notice, to subscribe for up to all of such new equity securities, at the same price and otherwise on the same terms and conditions, and

 

(b)                                 if any existing shareholder (other than employees, officers, directors, contractors, advisors or consultants of NetEase Yanxuan or any of its Affiliates whose equity interests were acquired pursuant to any equity incentive program of NetEase Yanxuan) of NetEase Yanxuan proposes to transfer its equity interests in NetEase Yanxuan to one or more Person other than the Seller Parent or any of its Affiliates, the Purchaser or any of its designated Affiliates shall have a right of first refusal, exercisable within twenty (20) Business Days following notice, to purchase up to all such equity interests proposed to be transferred, at the same price and otherwise on the same terms and conditions,

 

provided that the foregoing subsection (a) shall not apply to any issuance (i) in connection with any share split, share dividend, reclassification or other similar event, (ii) in connection with a public offering, or (iii) to the employees, officers, directors, contractors, advisors or consultants of the NetEase Yanxuan or any of its Affiliates pursuant to any equity incentive program of NetEase Yanxuan.

 

Section 6.20                             Lock-up Requirements.  The Seller agrees that it will not, and the Seller Parent agrees to cause the Seller not to, Transfer any Subject Shares during the eighteen (18) months period following the Closing Date (the “Lock-up Period”).

 

Section 6.21                             Replacement of Seller Guarantee.  Promptly following the Closing but in any event within fifteen (15) Business Days after the Closing Date, the Purchaser shall provide guarantee that are sufficient to replace the Seller Guarantee, such that the Seller Guarantee may be unconditionally released within fifteen (15) Business Days after the Closing Date.

 

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Article VII

 Conditions to Closing

 

Section 7.1                                    Conditions Precedent to Obligations of Each Party.  The respective obligation of each Party to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by such Party, in its sole discretion, in whole or in part to the extent permitted by applicable Law):

 

(a)                                 there shall not be in effect any Law or Order by a Government Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; and

 

(b)                                 no Legal Proceeding shall have been commenced by or before any Government Authority against any Party hereto seeking to restrain or materially and adversely alter the transactions contemplated by this Agreement which would render it impossible or unlawful to consummate such transactions, provided, however, that the provisions of this Section 7.1(b) shall not apply if such Party has directly or indirectly solicited or encouraged any such Legal Proceeding.

 

Section 7.2                                    Conditions Precedent to Obligations of the Purchaser.  The obligation of the Purchaser to consummate the transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by the Purchaser, in its sole discretion, in whole or in part to the extent permitted by applicable Law):

 

(a)                                 (i) the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.4, and Section 3.5 (the foregoing representations and warranties, collectively, the “Company Fundamental Warranties”) and the representations and warranties set forth in Section 4.1, Section 4.2 and Section 4.4 (the foregoing representations and warranties, collectively, the “Warrantor Fundamental Warranties”) shall be true and correct in all respects, in each case, as of the date of this Agreement and as of the Closing as though made at and as of the Closing, except to the extent such representations and warranties expressly speak as of  another date (in which case such representations and warranties shall be true and correct in all respects as of such other date as though made at and as of such other date), and (ii) the representations and warranties with respect to the Group Companies and/or the Warrantors set forth in Article III and Article IV (other than the representations and warranties enumerated in Section 7.2(a)(i)) (A) that are not qualified by “materiality”, “Material Adverse Effect” or similar qualifiers shall be true and correct in all material respects, in each case, as of the date of this Agreement  and as of the Closing, as though made at and as of the Closing, and (B) that are qualified by “materiality”, “Material Adverse Effect” or similar qualifiers shall be true and correct in all respects, in each case, as of the date of this Agreement and as of the Closing, as though made at and as of the Closing, in each case of (A) and (B), other than such representations and warranties that relate to another date (in which case such representations and warranties shall be true and correct in all respects as of such other date as though made as of such other date);

 

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(b)                                 the Company and the Warrantors shall have performed and complied with, in all material respects, each of the obligations and agreements required by this Agreement to be performed or complied with by them on or prior to the Closing Date;

 

(c)                                  since the Balance Sheet Date there shall not have been or occurred any change, circumstance, condition, event or effect that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect;

 

(d)                                 each of the Transaction Documents (excluding the NetEase Agreements, the Non-compete Undertakings and the Waiver Letters) shall have been duly executed by all of the parties thereto (other than the Purchaser and its Affiliates) and delivered to the Purchaser;

 

(e)                                  each of the Warrantors or their respective Affiliates to whom any Indebtedness is owed by any Group Company as of the date hereof shall have entered into a letter agreement with each relevant Group Company in form and substance satisfactory to the Purchaser, which shall specify the details of such Indebtedness including the outstanding principal, interest amount and payment schedule and copies of each such letter agreement shall have been delivered to the Purchaser;

 

(f)                                   the Company shall have delivered to the Purchaser a legal opinion from each of the Cayman Islands, Hong Kong and PRC counsel for the Company, dated as of the Closing Date, in form and substance satisfactory to the Purchaser; and

 

(g)                                  the Purchaser shall have received a certificate signed by a director or executive officer of the Seller and an executive officer of the Company, dated the Closing Date, certifying that each of the conditions set forth in Section 7.2(a) through (g) have been satisfied.

 

Section 7.3                                    Conditions Precedent to Obligations of the Seller.  The obligation of the Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions (any or all of which may be waived by the Seller, in its sole discretion, in whole or in part to the extent permitted by applicable Law):

 

(a)                                 the representations and warranties in Article V shall be true and correct in all respects when made and as of the Closing with the same force and effect as if made as of the Closing; and

 

(b)                                 the Purchaser shall have performed and complied with, in all material respects, each of the obligations and agreements required by this Agreement to be performed or complied with by the Purchaser on or prior to the Closing Date.

 

Article VIII

 Termination

 

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Section 8.1                                    Termination of Agreement. This Agreement may be terminated at any time prior to the Closing as follows:

 

(a)                                 by the Purchaser if there has been any breach of any representation or warranty set forth in this Agreement or failure to perform any covenant or agreement set forth in this Agreement on the part of the Company or any Warrantor, which breach or failure to perform would cause any of the conditions set forth in Section 7.1 and Section 7.2 not to be satisfied on or before the Long Stop Date and such breach or failure to perform cannot be cured, or if curable, is not cured within ten (10) days after written notice of such breach or failure to perform is given to the Company or such Warrantor by the Purchaser;

 

(b)                                 by the Seller if there has been any breach of any representation or warranty set forth in this Agreement or failure to perform any covenant or agreement set forth in this Agreement on the part of the Purchaser, which breach or failure to perform would cause any of the conditions set forth in Section 7.1 and Section 7.3 not to be satisfied on or before the Long Stop Date and such breach or failure to perform cannot be cured, or if curable, is not cured within ten (10) days after written notice of such breach or failure to perform is given to the Purchaser by the Seller;

 

(c)                                  by the Purchaser on or after the Long Stop Date, if the Closing shall not have occurred by the close of business on the Long Stop Date, provided that the right to terminate this Agreement pursuant to this Section 8.1(c) shall not be available to the Purchaser if its breach of any representation or warranty or failure to perform any of its obligations under this Agreement shall have resulted in the failure of the Closing to be consummated by the Long Stop Date;

 

(d)                                 by the Seller on or after the Long Stop Date, if the Closing shall not have occurred by the close of business on the Long Stop Date, provided that the right to terminate this Agreement pursuant to this Section 8.1(d) shall not be available to the Seller if the breach of any representation or warranty by any Warrantor or the Company, or the failure by any Warrantor or the Company to perform any of their respective obligations under this Agreement, shall have resulted in the failure of the Closing to be consummated by the Long Stop Date; or

 

(e)                                  by mutual written consent of the Seller and the Purchaser.

 

Section 8.2                                    Procedure Upon Termination.  In the event of termination by the Purchaser or the Seller pursuant to Section 8.1, written notice of such termination shall forthwith be given to the other Parties, and this Agreement shall thereupon terminate without further action by any Party.

 

Section 8.3                                    Reversal of Certain Steps upon Termination.  In the event that this Agreement is validly terminated in accordance with Section 8.1 and Section 8.2 and some or all of the actions with respect to the Onshore Equity Transfers have been completed, the Purchaser, the Company and the Warrantors shall promptly (and in any event within twenty (20) Business Days thereafter) take all actions necessary to reverse and unwind such completed actions, including (i) the full refund of any and all Onshore Purchase Price (without any offset, deduction or withholding) that has been paid by, on behalf of or at the direction of the Purchaser and procuring the applicable Group Company to reimburse the

 

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applicable Affiliate of the Purchaser for any and all Taxes that may have been paid in connection therewith, and (ii) the reversal of any equity transfer that may have been completed in connection with the Onshore Equity Transfers prior to such termination.

 

Section 8.4                                    Effect of Termination.  In the event that this Agreement is validly terminated in accordance with Section 8.1 and Section 8.2, each of the Parties shall be relieved of their duties and obligations arising under this Agreement after the date of such termination and such termination shall be without liability to any Party; provided, that no such termination shall relieve any Party hereto from liability for a breach of any of its covenants or agreements or its representations and warranties contained in this Agreement prior to such termination, and provided, further, that Section 6.5, Section 6.6, this Section 8.4, and Article X shall survive any such termination.

 

Article IX

 

Indemnification

 

Section 9.1                                   Survival of Representations, Warranties and Covenants.  The representations, warranties and covenants of the Company and the Warrantors contained in this Agreement and any certificate delivered by the Company or the Warrantors pursuant to this Agreement shall survive the Closing until the date that is twenty-four (24) months following the Closing Date; provided, however, that the Company Fundamental Warranties and the Warrantor Fundamental Warranties shall survive the Closing indefinitely, and the representations and warranties set forth in Section 3.13 (Taxes) shall survive the Closing until the lapse of the statute of limitation.  Notwithstanding the foregoing, the covenants or other agreements of the Company and/or the Warrantors contained in this Agreement (other than those set forth in Section 6.8 (Tax Filings and Payments), which shall survive the Closing until lapse of the statute of limitation) that by their terms are to be performed after the Closing shall survive the Closing in accordance with their terms for the time period contemplated for performance or, if no time period for performance is contemplated, for a period of twenty-four (24) months following the Closing, unless and only to the extent that non-compliance with such covenants or agreements is waived in writing by the Purchaser.  If written notice of a claim for indemnification has been given in accordance with Section 9.2 prior to the expiration of the applicable representations, warranties or covenants, then the relevant representations, warranties or covenants shall survive as to such claim, until such claim has been finally resolved.  The rights of the Purchaser to indemnification or any other remedy under this Agreement shall not be impacted or limited by any knowledge that the Purchaser may have acquired, or could have acquired, at any time whether before or after the execution and delivery of this Agreement or the Closing Date, nor by any investigation or diligence by the Purchaser. The Warrantors hereby acknowledge that, regardless of any investigation made (or not made) by or on behalf of the Purchaser, and regardless of the results of any such investigation, the Purchaser has entered into the transactions contemplated by this Agreement in express reliance upon the representations and warranties of the Warrantors made in this Agreement.

 

Section 9.2                                   Indemnification.

 

(a)                                 Indemnification by Warrantors.  From and after the Closing, each of the Warrantors shall, severally and jointly, indemnify, defend and hold harmless the Purchaser and its Affiliates (including, for the avoidance of doubt, the Group Companies from and after the Closing) and their respective officers, directors,

 

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employees, stockholders, agents, attorneys, successors and assigns (collectively, the “Purchaser Indemnitees”) from and against all Liabilities, losses, damages, claims, costs and expenses (including reasonable attorneys’ fees and expenses incurred in connection with the investigation or defense of any of the same or in responding to or cooperating with any governmental investigation), interest, awards, judgments, fines and penalties suffered or incurred by the Purchaser Indemnitees (hereinafter “Losses”) arising out of:

 

(i)                                     any inaccuracy in or breach of any representation or warranty with respect to the Group Companies set forth in Article III, any representation or warranty with respect to the Warrantors set forth in Article IV, or any other representations, warranties or statements set forth in the other certificates, schedules or other Transaction Documents delivered by or on behalf of any Warrantor hereunder;

 

(ii)                                  any breach or non-fulfillment of any covenant or obligation to be performed by the Company prior to Closing or any Warrantor under this Agreement or any other Transaction Document;

 

(iii)                               any Tax obligations of the Purchaser, its Affiliates or the Group Companies arising from (any other failure of any Group Company or the Warrantors to properly withhold or pay to any Tax authority amounts required to be withheld or paid by it pursuant to applicable Laws (including, for the avoidance of doubt, any Tax liabilities incurred during the post-Closing winding-up of any Group Company that may be attributed to the Warrantors’ or such Group Company’s actions or inactions prior to the Closing), disregarding, for the purposes of this Section 9.2(a)(iii), in determining the existence of such failure and the amount of Losses relating thereto, any disclosure contained in the Disclosure Schedule;

 

(iv)                              any Tax of the Group Companies for all taxable periods ending on or before the Closing Date and the portion of any Straddle Period through the end of the Closing Date, except to the extent that such Taxes are reflected, accrued or reserved for in the Interim Consolidated Financial Statements; provided that, in the case of any Straddle Period, (A) the amount of any Taxes of the Group Companies based upon or measured by net income or gain which relate to the portion of the Straddle Period through the end of the Closing Date will be determined based on the Closing Statement, and (B) the amount of any other Taxes of the Group Companies which relate to the portion of the Straddle Period through the end of the Closing Date will be determined based on the Closing Statement to the greatest extent possible, and otherwise shall be deemed to be the amount of such Tax for the entire Straddle Period (except to the extent that such Taxes are reflected, accrued or reserved for in the Interim Consolidated Financial Statements) multiplied by a fraction, the numerator of which is the number of days in the portion of the Straddle Period through the end of the Closing Date and the denominator of which is the number of days in such Straddle Period;

 

(v)                                 any inaccuracy in or breach of any representation or warranty set forth in Section 3.11(b), Section 3.15, Section 3.16, or Section 3.17 (including the non-payment or underpayment of social insurance and/or

 

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housing fund contributions prior to the Closing), disregarding, for the purposes of this Section 9.2(a)(v), in determining the existence of such breach and the amount of Losses relating thereto, any disclosure contained in the Disclosure Schedule;

 

(vi)                              any and all claims and Legal Proceedings against any Group Company arising out of or in connection with such Group Company’s infringement of any third party’s rights (including without limitation Intellectual Property rights) that occurred or existed within three (3) years prior to the Closing, disregarding, for the purposes of this Section 9.2(a)(vi), in determining the existence and the amount of Losses relating thereto, any disclosure contained in the Disclosure Schedule; and

 

(vii)                           failure by certain individuals to fully repay the loan extended by Ningbo Youmai when due in the amount of RMB5,000,000.

 

(b)                                 Indemnification by Purchaser.  From and after the Closing, Purchaser shall, severally and jointly, indemnify, defend and hold harmless the Seller and its Affiliates and their respective officers, directors, employees, stockholders, agents, attorneys, successors and assigns (collectively, the “Seller Indemnitees”) from and against all Losses actually suffered or incurred by the Seller Indemnitees arising out of:

 

(i)                                     any inaccuracy in or breach of any representation or warranty with respect to the Purchaser set forth in Article V, or any other representations, warranties or statements set forth in the other certificates or schedules delivered by or on behalf of the Purchaser hereunder; and

 

(ii)                                  any breach or non-fulfillment of any covenant or obligation to be performed by the Purchaser under this Agreement.

 

(c)                                  Procedures Relating to Indemnification.

 

(i)                                     Any Party seeking indemnification under this Section 9.2 (an “Indemnified Party”) shall promptly give the Party from whom indemnification is being sought (an “Indemnifying Party”) notice of any matter which such Indemnified Party has determined has given or could reasonably be expected to give rise to a right of indemnification under this Agreement stating in reasonable detail the nature of the claim, the amount of the Losses if known or reasonably ascertainable at the time such claim is made, or if not then reasonably ascertainable, the maximum amount of such claim reasonably estimated by the Indemnified Party and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Section 9.2 except to the extent the Indemnifying Party is prejudiced by such failure. With respect to any recovery or indemnification sought by an Indemnified Party from the Indemnifying Party that does not involve a Third Party Claim, if the Indemnifying Party does not notify the Indemnified Party within thirty (30) days from its receipt of the notice from the Indemnified Party that the Indemnifying Party disputes such claim, the

 

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Indemnifying Party shall be deemed to have disputed such claim. If the Indemnifying Party has disputed (or been deemed to have disputed) a claim for indemnification (including any Third Party Claim), the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution to such dispute.  If the Indemnifying Party and the Indemnified Party cannot resolve such dispute in thirty (30) days after delivery of the dispute notice by the Indemnifying Party, or upon expiry of the thirty (30) days’ period from the Indemnifying Party’s receipt of the notice from the Indemnified Party, such dispute shall be resolved by arbitration pursuant to Section 10.3.

 

(ii)                                  If an Indemnified Party shall receive notice of any Legal Proceeding, audit, demand or assessment (each, a “Third Party Claim”) against it or which may give rise to a claim for Loss under this Section 9.2, within twenty (20) days of the receipt of such notice, the Indemnified Party shall give the Indemnifying Party notice of such Third Party Claim; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Section 9.2 except to the extent that the Indemnifying Party is prejudiced by such failure. If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then the Indemnifying Party shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Indemnified Party within thirty (30) days of the receipt of such notice from the Indemnified Party (or within thirty (30) days following the Closing with respect to any Third Party Claim that exits at the Closing which have been disclosed in Section 3.10 of the Disclosure Schedule); provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate for the same counsel to represent both the Indemnified Party and the Indemnifying Party, then the Indemnified Party shall be entitled to retain its own counsel, at the expense of the Indemnifying Party. In the event that the Indemnifying Party exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Indemnified Party shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under the Indemnified Party’s control relating thereto as is reasonably required by the Indemnifying Party.  Similarly, in the event the Indemnified Party is, directly or indirectly, conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party’s expense, all such witnesses, records, materials and information in the Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is reasonably required by the Indemnified Party. No such Third Party Claim may be settled by the Indemnifying Party without the prior written consent of the Indemnified Party (not to be unreasonably withheld, delayed or conditioned) unless the terms of such settlement or compromise (i) call only for a payment to the Indemnified Party (or of the Third Party Claim directly), the full amount of which is indemnified  hereunder, (ii) does not impose an injunction or other

 

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equitable relief upon the Indemnified Party, and (iii) contains an unconditional release of the Indemnified Party in respect of such claim. Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge, or offer to settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent (not to be unreasonably withheld, delayed or conditioned).

 

Section 9.3                                         Limits on Indemnification.  Notwithstanding anything to the contrary contained in this Agreement:

 

(a)                                 the maximum aggregate amount of indemnifiable Losses that may be recovered from the Warrantors collectively by all Purchaser Indemnitees pursuant to Section 9.2(a)(i) and Section 9.2(a)(vi) (other than with respect to the Company Fundamental Warranties and the Warrantor Fundamental Warranties) shall be US$700,000,000;

 

(b)                                 no Warrantor shall be liable to any Purchaser Indemnitee for any claim for indemnification unless and until the aggregate amount of indemnifiable Losses that may be recovered from the Warrantors equals or exceeds $5,000,000, in which case the Warrantors shall indemnify such Purchaser Indemnitee for the Losses from the first dollar (subject to other limitations provided in this Article IX) (provided, that in each such case, in determining the existence of, or amount of Losses resulting from, arising out of, or related to, any breach of or inaccuracy in any such representation or warranty, the terms “material”, “materiality”, “Material Adverse Effect” or other similar terms shall be disregarded and deleted from such representations and warranties for all purposes);

 

(c)                                  the Warrantors shall not be obligated to indemnify any Purchaser Indemnitee with respect to any Loss to the extent (i) that a specific accrual or reserve for the amount of such Loss was reflected on the Financial Statements or the notes thereto which accrual or reserve does not constitute a breach of Section 3.7, (ii) reflected in the Closing Statement; provided that the Loss reflected in the Closing Statement has been taken into account in the calculation of the Final Purchase Price;

 

(d)                                 no Person shall have a right to make a claim for any Loss for contingent or inchoate claims and may claim only for a Loss that has, in fact, been paid or incurred;

 

(e)                                  the Warrantors shall not have any liability under any provision of this Agreement for any punitive, incidental, consequential or special damages, except in each case awarded by a court of competent jurisdiction in connection with a Third Party Claim or are otherwise reasonably foreseeable results of the applicable breach;

 

(f)                                   the Purchaser Indemnitees’ right to indemnification pursuant to this Agreement shall be reduced by (i) all insurance or other proceeds actually recovered (but net of all costs and expenses incurred in order to obtain such recovery) by Purchaser Indemnitees from third parties, including, pursuant to indemnification obligations of third parties in favor of the Group Companies, and (ii) the amount of any Tax benefit actually realized by any Purchaser Indemnitee or its Affiliates as a result of such Losses (determined on a with and without basis) in the year such Losses are incurred or the indemnity payment is made;

 

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(g)                                  in no circumstances shall the Indemnified Parties be entitled to recover an amount of Losses more than once under this Agreement in respect of the same Loss;

 

(h)                                 notwithstanding anything herein to the contrary, the limitations set forth in this Section 9.3 shall not apply to fraud.

 

Section 9.4                                         Duty to Mitigate.  Each Indemnified Party shall take, and cause its Affiliates to take, all commercially reasonable steps to mitigate any Losses upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto.

 

Section 9.5                                         Exclusivity.  After the Closing, except in respect of fraud and the matters covered by Section 2.7, this Article IX will provide the sole and exclusive remedy against any Warrantor for any breach of any representation, warranty, covenant or other claim arising out of or relating to this Agreement and/or the transactions contemplated hereby.  Notwithstanding the foregoing, the provisions of this Section 9.5 shall not, however, prevent or limit a cause of action under Section 10.6 to obtain an injunction or injunctions to prevent breaches of this Agreement and other Transaction Documents and to enforce specifically the terms and provisions hereof and thereof.

 

Section 9.6                                   Tax Treatment of Indemnification Payments.  All indemnification payments made under this Article IX shall be treated as adjustments to the Final Purchase Price for Tax purposes, unless otherwise required by applicable Law.

 

Section 9.7                                   Deduction from Indemnity Withheld Amount. Any amount of indemnifiable Losses any Purchaser Indemnitee is entitled to under Section 9.2 shall be paid first out of the Indemnity Withheld Amount, to the extent any such amount remains.

 

Article X

 

Miscellaneous

 

Section 10.1                            Expenses.  Except as otherwise provided in this Agreement, each Party shall bear its own costs and expenses incurred in connection with the negotiation and execution of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby (the “Transaction Expenses”), provided that the Company shall not incur or bear (or pay on behalf of any other Party), and no Party shall cause the Company to incur or bear (or pay on behalf of such Party), any Transaction Expenses.

 

Section 10.2                            Governing Law. This Agreement shall be governed by and construed exclusively in accordance with the laws of Hong Kong (without giving effect to any choice of law principles thereof that would cause the application of the laws of another jurisdiction).

 

Section 10.3                            Arbitration.

 

(a)                                 Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration in Hong Kong in accordance with the Hong Kong International Arbitration Center Administered Arbitration Rules (the “HKIAC Rules”) in force when the notice of arbitration is submitted in

 

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accordance with the HKIAC Rules. The HKIAC Rules are deemed to be incorporated by reference to this section. The tribunal shall be comprised of three (3) arbitrators. The Purchaser, on the one hand, and the Warrantors, on the other hand, shall each nominate one arbitrator and the third, who shall serve as president of the tribunal, shall be nominated by the party-nominated arbitrators. The arbitration shall be conducted in English.  Each Party irrevocably and unconditionally consents to such arbitration as the sole and exclusive method of resolving any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, other than any proceedings to seek the remedies of specific performance as contemplated by Section 10.6.

 

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(b)                                 The award of the arbitral tribunal shall be final and binding on the Parties. The Parties agree that they will not have recourse to any judicial proceedings, in any jurisdiction whatsoever, for the purposes of seeking appeal, annulment, setting aside, modification or any diminution or impairment of its terms or effect insofar as such exclusion can validly be made. Judgment upon any award rendered may be entered in any court having jurisdiction thereof, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

 

Section 10.4                            Entire Agreement; Amendments and Waivers.  This Agreement (including the schedules and exhibits hereto) and the other Transaction Documents represent the entire understanding and agreement among the Parties with respect to the subject matter hereof and thereof, and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to their subject matter.

 

Section 10.5                            Amendments and Waivers This Agreement can be amended, supplemented or changed only by written instrument making specific reference to this Agreement signed by the Purchaser, the Warrantors and the Company, and any provision hereof can be waived only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such waiver is sought. No action taken pursuant to this Agreement, including any investigation by or on behalf of any Party, shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

Section 10.6                            Specific Performance.  The Parties acknowledge and agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that each Party shall be entitled to specific performance of the terms hereof.  It is accordingly agreed that prior to termination of this Agreement in accordance with its terms, each Party shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically (without proof of actual damages or harm, and not subject to any requirement for the securing or posting of any bond in connection therewith) the terms and provisions of this Agreement, this being in addition to any other remedy to which each Party is entitled at law or in equity.

 

Section 10.7                            Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed effectively given (i) when delivered personally by hand (with written confirmation of receipt), (ii) when sent by fax (with written confirmation of transmission) or email (provided that the sender of email shall not have received any message that such email was not timely delivered) or (iii) two Business Days following the day sent by overnight courier (with written confirmation of receipt), in each case at the following addresses and facsimile numbers (or to such other address or facsimile number as a party may have specified by notice given to the other party pursuant to this provision):

 

If to the Purchaser or, after the Closing, to the Company, to:

 

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26th Floor, Tower One, Times Square, 1 Matheson Street Causeway Bay,
 Hong Kong S.A.R.
 Attention: General Counsel 
 E-mail: legalnotice@hk.alibaba-inc.com

 

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

 

Fangda Partners
  26/F, One Exchange Square, 8 Connaught Place, Central
 Hong Kong
 Attention: Jonathan Zhou
 Email: jzhou@fangdalaw.com

 

If to the Seller or the Seller Parent or, before the Closing, to the Company, to:

 

PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

Attention: Legal Department

Email: malegal@service.netease.com

 

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

 

Gibson, Dunn & Crutcher

32/F Gloucester Tower, The Landmark, 15 Queen’s Road Central

Hong Kong

Attention: Paul Boltz Jr.

Email: PBoltz@gibsondunn.com

 

Section 10.8                            Severability.  If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

 

Section 10.9                            Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any person or entity not a party to this Agreement except as provided in Section 9.2 hereof. No assignment of this Agreement or of any rights or obligations hereunder may be made by (i) the Seller, the Seller Parent or the Company, directly or indirectly (by operation of law or otherwise), without the prior written consent of the Purchaser, or (ii) the Purchaser directly or indirectly (by operation of law or otherwise), without the prior written consent of the Seller, and any attempted assignment in violation of this Section 10.9 shall be void; provided, that the Purchaser may assign its rights under this Agreement (including the Purchaser’s rights to purchase the Purchased Shares and Purchaser’s rights to seek indemnification hereunder) to any of its Affiliates. Each obligation of the Seller shall be deemed to be also the obligation of the Seller Parent on a joint and several basis, and vice versa.

 

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Section 10.10                     Non-Recourse.  No past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or representative of the Purchaser or any Warrantor shall have any liability for any obligations or liabilities of the Purchaser or any Warrantor, as applicable, under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

 

Section 10.11                     Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

	
 
    	
Taobao Holding   Limited
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Timothy   A. Steinert
    
	
 
    	
Name: Timothy A. Steinert
    
	
 
    	
Title: Authorized Signatory
    

 

[Project Venus E - Signature Page to Share Purchase Agreement]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

	
 
    	
HQG, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ William Lei Ding
    
	
 
    	
Name: William Lei Ding
    
	
 
    	
Title: Authorized Signatory
    

 

[Project Venus E - Signature Page to Share Purchase Agreement]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

	
 
    	
NetEase   E-Commerce, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ William Lei Ding
    
	
 
    	
Name: William Lei Ding
    
	
 
    	
Title: Authorized Signatory
    

 

[Project Venus E - Signature Page to Share Purchase Agreement]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

	
 
    	
NetEase, Inc.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ William Lei Ding
    
	
 
    	
Name: William Lei Ding
    
	
 
    	
Title: Authorized Signatory
    

 

[Project Venus E - Signature Page to Share Purchase Agreement]

 

 

SCHEDULE A

 

LIST OF OUTGOING DIRECTORS

 

 

SCHEDULE B-1

 

BALANCE SHEET DATE NET DEBT CALCULATION PRINCIPLES

 

 

SCHEDULE B-2

 

NET WORKING CAPITAL CALCULATION PRINCIPLES

 

 

SCHEDULE C

 

LIST OF EXEMPTED BUSINESSES

 

 

SCHEDULE D-1

 

LIST OF GROUP COMPANY AWARD GRANTEES

 

 

SCHEDULE D-2

 

LIST OF NETEASE GROUP AWARD GRANTEES

 

 

SCHEDULE E

 

LIST OF NON-SOLICIT PERSONS

 

 

SCHEDULE F

 

LIST OF INTELLECTUAL PROPERTY TO BE DE-REGISTERED

 

 

SCHEDULE G

 

LIST OF OFFSHORE GROUP COMPANIES FOR WHICH DIRECTORS WILL BE REPLACED AT CLOSING

 

 

SCHEDULE H

 

DISCLOSURE SCHEDULE

 

 

SCHEDULE I

 

LIST OF INTELLECTUAL PROPERTY TO BE LICENSED BACK TO NETEASE

 

 

SCHEDULE J

 

CERTAIN OFFER LETTER INFORMATION

 

 

SCHEDULE K

 

LIST OF INTELLECTUAL PROPERTY TO BE TRANSFERRED FROM KAOLA TO NETEASE

 

 

SCHEDULE L

 

LIST OF INTELLECTUAL PROPERTY TO BE TRANSFERRED FROM NETEASE TO KAOLA

 

 

EXHIBIT A

FORM OF RESIGNATION AND RELEASE LETTERS

 

 

EXHIBIT B

FORM OF INSTRUMENT OF TRANSFER

 

 

EXHIBIT C

 

FORM OF TRANSITIONAL SERVICES AGREEMENT

 

 

EXHIBIT D

 

FORM OF ONSHORE EQUITY TRANSFER AGREEMENT

 

 

EXHIBIT E

 

FORM OF TERMINATION AGREEMENTS

 

 

EXHIBIT F

 

FORM OF REPLACEMENT CONTROL AGREEMENTS

 

 

EXHIBIT G

 

FORM OF NETEASE AGREEMENT

 

 

EXHIBIT H

 

FORM OF NON-COMPETE UNDERTAKING

 

 

EXHIBIT I

 

FORM OF WAIVER LETTER

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