Table of Contents

 

1.	Transfer of China Business; Issuance of Shares
	1.1	Transfer of China Business; Sale and Purchase of Shares
	1.2	Closing
	1.3	Allocation of Purchase Price
2.	Representations and Warranties of Yahoo!
	2.1	Authorization, etc
	2.2	Title to Shares, Capitalization, etc
	2.3	No Conflicts, etc
	2.4	Corporate Status
	2.5	Investments
	2.6	Financial Statements
	2.7	Undisclosed Liabilities, etc
	2.8	Absence of Changes
	2.9	Tax Matters
	2.10	Assets and Sufficiency
	2.11	Real Property
	2.12	Contracts
	2.13	Intellectual Property
	2.14	Insurance
	2.15	Litigation
	2.16	Compliance with Laws and Instruments; Consents
	2.17	Environmental Matters
	2.18	Affiliate Transactions
	2.19	Employees, Labor Matters, etc
	2.20	Employee Benefit Plans and Related Matters
	2.21	Accounts Receivable
	2.22	Resellers
	2.23	Bank Accounts
	2.24	Brokers, Finders, etc
	2.25	Acquisition for Investment
	2.26	Corrupt Practices
	2.27	Insolvency
	2.28	Disclosure
3.	Representations and Warranties of Alibaba
	3.1	Authorization, etc
	3.2	Capitalization, etc
	3.3	No Conflicts, etc
	3.4	Corporate Status
	3.5	Valid Issuance to Primary Shares
	3.6	Financial Statements
	3.7	Undisclosed Liabilities, etc
	3.8	Absence of Changes

 

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	3.9	Tax Matters
	3.10	Assets
	3.11	Real Property
	3.12	Contracts
	3.13	Intellectual Property
	3.14	Insurance
	3.15	Litigation
	3.16	Compliance with Laws and Instruments; Consents
	3.17	Environmental Matters
	3.18	Affiliate Transactions
	3.19	Employees, Labor Matters, etc
	3.20	Employee Benefit Plans and Related Matters
	3.21	Accounts Receivable
	3.22	Bank Accounts
	3.23	Brokers, Finders, etc
	3.24	Corrupt Practices
	3.25	Insolvency
	3.26	Disclosure
4.	Covenants of Yahoo!
	4.1	Conduct of Business
	4.2	No Solicitation
	4.3	Access and Information
	4.4	Subsequent Financial Statements and Reports
	4.5	Further Actions
	4.6	Further Assurances
	4.7	Taxes
5.	Covenants of Alibaba
	5.1	Conduct of Business
	5.2	No Solicitation
	5.3	Access and Information
	5.4	Subsequent Financial Statements and Reports
	5.5	Further Actions
	5.6	Further Assurances
	5.7	China Group Employees
	5.8	China Business Audit
6.	Covenants of Alibaba and Yahoo!
	6.1	Confidentiality
	6.2	Publicity
	6.3	COAL Shares
	6.4	Tax Treatment
	6.5	Funding of China Business

 

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7.	Conditions Precedent
	7.1	Conditions to Obligations of Each Party
	7.2	Conditions to Obligations of Alibaba
	7.3	Conditions to Obligations of Yahoo!
8.	Termination
	8.1	Termination
	8.2	Effect of Termination
9.	Indemnification
	9.1	Indemnification by Yahoo! and Alibaba
	9.2	Limitation
	9.3	Payment Adjustments, etc
	9.4	Indemnification Procedures
	9.5	Survival of Representations and Warranties, etc
10.	Definitions
	10.1	Terms Generally
	10.2	Certain Terms
11.	Miscellaneous
	11.1	Expenses
	11.2	Notices
	11.3	Governing Law and Dispute Resolution
	11.4	Binding Effect
	11.5	Assignment
	11.6	No Third Party Beneficiaries
	11.7	Amendment; Waivers, etc
	11.8	Entire Agreement
	11.9	Severability
	11.10	Headings
	11.11	Counterparts
	SCHEDULE A – OTHER ASSETS
	EXHIBIT A – MEMORANDUM AND ARTICLES
	EXHIBIT B – SHAREHOLDERS AGREEMENT
	EXHIBIT C – SECONDARY SHARE PURCHASE AGREEMENT
	EXHIBIT D – TAO BAO SHARE PURCHASE AGREEMENT
	EXHIBIT E – TAO BAO SHARE EXCHANGE AGREEMENT
	EXHIBIT F – TECHNOLOGY AND INTELLECTUAL PROPERTY LICENSE AGREEMENT
	EXHIBIT G – NON-COMPETITION AGREEMENT

 

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	EXHIBIT H – VOTING AGREEMENT
	EXHIBIT I – OPINIONS OF COUNSELS OF YAHOO!
	EXHIBIT J – OPINIONS OF COUNSELS OF ALIBABA
	EXHIBIT K – REGISTRATION RIGHTS AGREEMENT
	EXHIBIT L – YAHOO! INVESTMENT AGREEMENT
	EXHIBIT M – TAX OPINION REPRESENTATION LETTER

 

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STOCK PURCHASE AND CONTRIBUTION AGREEMENT

 

This STOCK PURCHASE AND CONTRIBUTION AGREEMENT (this “ Agreement ”), dated as of August 10, 2005, is made and entered into by and between Yahoo! Inc., a Delaware corporation (“ Yahoo! ”) and Alibaba.com Corporation, a Cayman Islands company (“ Alibaba ”).

 

W I T N E S S E T H :

 

WHEREAS, Yahoo! wishes to transfer or cause to be transferred (a) the Tao Bao Shares (as defined below) and (b) the China Business to Alibaba through a transfer to (A) Alibaba of (i) all issued and outstanding shares (the “ 3721 Shares ”) of Yahoo!’s indirect, wholly-owned subsidiary, 3721 Network Software Co., Ltd., a Hong Kong company (“ 3721 HK ”), (ii) all issued and outstanding equity interests (the “ WFOE Interests ”) in Beijing Yahoo! Consulting and Services Co., Ltd., a wholly-foreign-owned enterprise established under the Laws of China (the “ WFOE ”) by Yahoo! Holdings (Hong Kong) Ltd., a Hong Kong company (“ Yahoo! HK ”) and an indirect, wholly-owned subsidiary of Yahoo!, and (iii) certain other assets and properties used or held for use in connection with the China Business  set forth in Schedule A hereto that are not otherwise transferred to Alibaba under subclauses (i) or (ii) of this recital (the “ Other Assets ”), and (B) the Alibaba Designees, all of the issued and outstanding equity interests (the “ China ICP Shares ”) of the China ICP Companies, and Alibaba and the Alibaba Designees wish to accept the transfer of the foregoing from Yahoo!, on the terms and conditions and for the consideration described in this Agreement;

 

WHEREAS, Yahoo! wishes to subscribe for certain newly issued Ordinary Shares (as defined below) and Alibaba wishes to allot and issue to Yahoo! such Ordinary Shares, on the terms and conditions and for the consideration described in this Agreement;

 

WHEREAS, concurrently with the execution and delivery of this Agreement, Yahoo! and certain shareholders of Alibaba and Tao Bao have entered into the Voting Agreements, pursuant to which, among other things, each of such shareholders has agreed to vote its shares in favor of the adoption and approval of this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby; and

 

WHEREAS, it is a condition precedent to the consummation of the  transactions contemplated by this Agreement that the Ancillary Agreements shall have been entered into and delivered by the relevant parties thereto and the transactions contemplated thereby shall have been consummated on or prior to the Closing Date;

 

NOW, THEREFORE, in consideration of the mutual promises, covenants, representations and warranties made herein and of the mutual benefits to be derived herefrom, the parties hereto agree as follows:

 

 

1.                                        Transfer of China Business; Issuance of Shares .

 

1.1  Transfer of China Business; Sale and Purchase of Shares .  Subject to the terms and conditions hereof, Yahoo! will (i) cause to be transferred the Tao Bao Shares, the 3721 Shares, the WFOE Interests and the Other Assets to Alibaba, (ii) cause to be transferred to the Alibaba Designees the China ICP Shares and (iii) pay US$250 million (the “ Cash Consideration ”) to Alibaba, in consideration of the allotment and issuance of 201,617,750 Ordinary Shares (the “ Primary Shares ”) to Yahoo!, in the manner and at such time set forth in Section 1.2.

 

1.2  Closing .  The closing (the “ Closing ”) of the transfer of the Tao Bao Shares, the 3721 Shares, the WFOE Interests, the Other Assets and the China ICP Shares, and the payment of the Cash Consideration in exchange for the issuance of the Primary Shares, shall be simultaneous and shall take place at the offices of Debevoise & Plimpton LLP, 13/F Entertainment Building, 30 Queen’s Road, Central, Hong Kong on a date (the “ Closing Date ”) as soon as practicable following the satisfaction or waiver of the conditions precedent to the Closing set forth in Section 7 of this Agreement (other than those conditions that, by their terms, cannot be satisfied until the Closing) but in no event before October 5, 2005, or at such other location as Yahoo! and Alibaba may mutually agree.  At the Closing:

 

(a)  Yahoo! will (i) deliver to Alibaba, free and clear of any Lien, one or more certificates representing the Tao Bao Shares, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, (ii) deliver to Alibaba, free and clear of any Lien, one or more certificates representing the 3721 Shares, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, and bearing or accompanied by all requisite stock transfer stamps, (iii) deliver to Alibaba, documentary evidence of the transfer of the WFOE Interests to Alibaba, free and clear of any Lien, in form and substance reasonably satisfactory to Alibaba, (iv) deliver to Alibaba the Other Assets, free and clear of any Lien, except for Permitted Liens, (v) deliver to the Alibaba Designees, free and clear of any Lien, the China ICP Shares, (vi) deliver to Alibaba a copy of the register of members of 3721 HK dated the Closing Date and duly certified by a duly authorized officer of 3721 HK, and (vii) pay the Cash Consideration to Alibaba, by wire transfer of immediately available funds to the account of Alibaba designated in writing to Yahoo! at least five Business Days prior to the Closing Date;

 

(b)  Alibaba will deliver to Yahoo!, or a direct or indirectly wholly-owned Subsidiary of Yahoo! designated by Yahoo!, free and clear of any Lien, one or more certificates representing the Primary Shares, duly executed and registered in the name of Yahoo!; and

 

(c)  the consideration, if any, required to be delivered pursuant to the terms and conditions of any of the Ancillary Agreements shall be delivered.

 

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1.3  Allocation of Purchase Price .

 

(a)  Allocation Schedule .  Prior to the Closing Date, Yahoo! will prepare a schedule setting forth the allocation of the Primary Shares to each of the Tao Bao Shares, the 3721 Shares, the WFOE Interests, the China ICP Shares, the Other Assets and the Cash Consideration transferred by Yahoo! to Alibaba pursuant to this Agreement.  Yahoo! and Alibaba will consult with each other during the process of preparing such schedule.  The Yahoo! Group and the Alibaba Group agree to follow and report the transaction consistent with such allocation for all purposes.

 

(b)  Transfer Documentation .  Amounts allocated in accordance with the schedule referred to in Section 1.3(a) may be referenced in the specific transfer documentation with respect to such assets.

 

2.                                        Representations and Warranties of Yahoo! .

 

Except as set forth in the disclosure schedule delivered by Yahoo! to Alibaba on or prior to the execution of this Agreement (the “ Yahoo! Disclosure Schedule ”), Yahoo! represents and warrants to Alibaba as follows:

 

2.1  Authorization, etc .  Yahoo! has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it shall be 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 Ancillary Agreements to which Yahoo! or any of its Affiliates shall be a party, the performance of such party’s obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate action of such party.  Yahoo! has duly executed and delivered this Agreement and on the Closing Date, Yahoo! and its relevant Affiliates will have duly executed and delivered the Ancillary Agreements to which it shall be a party.  This Agreement constitutes, and each such Ancillary Agreement when so executed and delivered will constitute, the legal, valid and binding obligation of Yahoo! and any such Affiliate enforceable against Yahoo! or such Affiliate in accordance with its respective terms, except as (i) the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally, and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

 

2.2  Title to Shares, Capitalization, etc .

 

(a)  Title .  Yahoo! owns, directly or indirectly, the 3721 Shares, the WFOE Interests and the Other Assets, free and clear of any Lien, except, with respect to the Other Assets, Permitted Liens.  Subject to receipt of all necessary Governmental Approvals and other Consents, upon the delivery of the certificate(s) representing the Primary Shares to Yahoo! at the Closing as provided for in this Agreement, Alibaba will acquire good and valid title to the Tao Bao Shares (to the fullest extent that such title was acquired by Yahoo! from Softbank pursuant to the Tao Bao Share Purchase Agreement, free and clear of any Lien created by Yahoo! or

 

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its Affiliates), the 3721 Shares, the WFOE Interests and Other Assets, free and clear of any Lien, except (i) Liens in favor of the China Group, Alibaba or any of its Subsidiaries, and (ii) with respect to the Other Assets, Permitted Liens.  The Yahoo! Designees own, directly, the China ICP Shares free and clear of any Lien.  Subject to receipt of all Governmental Approvals and other Consents, at the Closing, the Alibaba Designees will acquire good and valid title to the China ICP Shares, free and clear of any Lien.

 

(b)  Authorized Share Capital of the 3721 HK and the WFOE .  The authorized share capital of 3721 HK consists of 10,000,000 ordinary shares, par value HK$0.1 per share, of which only the 3721 Shares are issued and outstanding.  The 3721 Shares have been duly authorized and are validly issued, fully paid and nonassessable.  The registered capital of the WFOE is US$1,470,000, all of which has been fully contributed by Yahoo! HK.  All such registered capital contribution has been duly verified by a duly licensed accounting firm in China, which has issued a capital verification report in respect thereof, and has been reflected in the certificate of approval of the WFOE.  The WFOE Interests have been duly authorized and are validly issued, fully paid and nonassessable.

 

(c)  Authorized Share Capital of the China Group .  Section 2.2(c) of the Yahoo! Disclosure Schedule contains a complete and correct description of the share capital that is authorized, or issued and outstanding, of each member of the China Group (other than 3721 HK and the WFOE).  All of such outstanding share capital are duly authorized, validly issued, fully paid and nonassessable, and are owned beneficially and of record by the member of the China Group or other Person set forth on Section 2.2(c) of the Yahoo! Disclosure Schedule, free and clear of any Lien.

 

(d)  No Equity Rights .  Except as set forth in Section 2.2(d) of the Yahoo! Disclosure Schedule, there are no preemptive or similar rights granted by any member of the China Group or, to the knowledge of any member of the China Group, by any other Person, with respect to any equity securities of any member of the China Group.  Except for this Agreement, no subscriptions, options, calls, warrants, convertible or exchangeable securities, conversion rights, repurchase rights, redemption rights, stock appreciation rights, phantom stock or other rights, plans, agreements, commitments, arrangements or understandings of any kind obligating any member of Yahoo! Group, contingently or otherwise, to issue or sell, or cause to be issued or sold, any shares of share capital of any class of any member of the China Group, or any securities convertible into or exchangeable for any such shares, are outstanding, and no authorization therefor has been given.  Except as set forth in Section 2.2(d) of the Yahoo! Disclosure Schedule, there are no outstanding contractual or other rights or obligations to or of any member of the Yahoo! Group to repurchase, redeem or otherwise acquire any outstanding shares or other equity interests of any member of the China Group.

 

2.3  No Conflicts, etc .  The execution, delivery and performance of this Agreement and the Ancillary Agreements by Yahoo! and each other member of the

 

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Yahoo! Group that is a party thereto, and the consummation of the transactions contemplated hereby and thereby by Yahoo! or such member of the Yahoo! Group do not and will not conflict with, contravene, result in a violation or breach of, or default under (with or without the giving of notice or the lapse of time or both), create in any other Person a right or claim of termination, amendment, or require modification, acceleration or cancellation of, or result in the creation of any Lien (or any obligation to create any Lien) upon the 3721 Shares, WFOE Interests, the Assets (except for Permitted Liens), the China ICP Shares or any of the properties, assets or rights of any member of the China Group (except for Permitted Liens) under, (a) any Law applicable to any member of Yahoo! Group or any of their respective properties or assets, (b) any provision of any of the Organizational Documents of such member of Yahoo! Group or (c) any Contract, or any other agreement or instrument to which any member of Yahoo! Group is a party or by which any of their respective properties or assets may be bound, except, in the case of clauses (a) and (c) of this Section 2.3, for such conflict, contravention, violation, breach, default, right or claim of termination, amendment, modification, acceleration, cancellation, creation of a Lien or other occurrence which would not reasonably be expected to have a Material Adverse Effect.

 

2.4  Corporate Status .

 

(a)  Organization .  Except as set forth in Section 2.4(c) of the Yahoo! Disclosure Schedule, each of Yahoo! and each member of the China Group is a corporation duly organized, validly existing, and if applicable under the Laws of its respective jurisdiction, in good standing under the Laws of its respective jurisdiction of incorporation, which jurisdiction is set forth on Section 2.4(a) of the Yahoo! Disclosure Schedule, and has full corporate power and authority to conduct its business as currently conducted and to own or lease and to operate its properties.

 

(b)  Qualification .  Each member of the China Group is duly qualified or licensed to do business and is in good standing as a foreign person in each of the jurisdictions set forth in Section 2.4(b) of the Yahoo! Disclosure Schedule, which includes each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary, except where the failure to be so qualified, licensed to do business or in good standing would not reasonably be expected to have a Material Adverse Effect.

 

(c)  Organizational Documents .  Yahoo! has made available in the Yahoo! Online Dataroom to Alibaba complete and correct copies of the Organizational Documents of each member of the China Group, as amended, modified or waived through and in effect on the date hereof.  Each of the Organizational Documents of each member of the China Group, as so made available to Alibaba, is in full force and effect.  No member of the China Group is in material violation or breach of any of the provisions of its Organizational Documents.  The minute books of each member of the China Group that are in the possession or control of the Yahoo! Group have heretofore been made available to Alibaba.  Such minute books contain materially accurate and complete records of all meetings held of, and

 

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corporate action taken by, the stockholders, the boards of directors, and committees of such boards of directors of the China Group.

 

2.5  Investments .  No member of the China Group owns any share capital or other securities of, or interest in, any other Person, except as set forth in Section 2.2(c) of the Yahoo! Disclosure Schedule.

 

2.6  Financial Statements .

 

(a)  Section 2.6(a) of the Yahoo! Disclosure Schedule sets forth complete and correct copies of the China Group Financial Statements.

 

(b)  The China Group Financial Statements (i) present fairly in all material respects the financial condition and results of operations of the consolidated China Group (excluding COAL) as of the date thereof or for the period covered thereby and (ii) have been prepared in accordance with GAAP throughout the periods presented in the China Group Financial Statements (except as indicated in the notes thereof).

 

2.7  Undisclosed Liabilities, etc .  No member of the China Group has any liabilities or obligations of any nature, whether known, unknown, absolute, accrued, contingent or otherwise and whether due or to become due, except (a) as are not required by GAAP to be disclosed or reserved against in the China Group Balance Sheet and (b) for liabilities and obligations that (i) are incurred after the date of the China Group Balance Sheet in the Ordinary Course of Business and are not prohibited by this Agreement and (ii) individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  Since December 31, 2004, there has not occurred or come to exist any Material Adverse Effect or any event, occurrence, fact, condition, change, development or effect that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

2.8  Absence of Changes .  Since June 30, 2005 through the date hereof, except as set forth in Section 2.8 of the Yahoo! Disclosure Schedule, no member of the China Group has:

 

(a)  declared, set aside, made or paid any dividend or other distribution in respect of its share capital or otherwise purchased or redeemed, directly or indirectly, any shares of its share capital;

 

(b)  issued or sold any shares of any class of its share capital, or any securities convertible into or exchangeable for any such shares, or issued, sold, granted or entered into any subscriptions, options, calls, warrants, conversion rights, repurchase rights, redemption rights or other rights, agreements, commitments, arrangements or understandings of any kind, contingently or otherwise, to purchase or otherwise acquire any such shares or any securities convertible into or exchangeable for any such shares;

 

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(c)  incurred any indebtedness for borrowed money, issued or sold any debt securities or prepaid any debt (including, without limitation, any borrowings from or prepayments to any member of Yahoo! Group), or incurred, assumed, guaranteed or otherwise become directly or indirectly liable with respect to any liability or obligation in excess of US$500,000 in each case or US$1,000,000 in the aggregate at one time outstanding, except for borrowings, prepayments and guarantees in the Ordinary Course of Business;

 

(d)  mortgaged, pledged or otherwise subjected to any Lien, any of its Real Property or other properties or assets, tangible or intangible, except for Permitted Liens;

 

(e)  forgiven, cancelled, compromised, waived or released any material debts, claims or rights, except for debts, claims and rights against Persons other than any member of Yahoo! Group, which are forgiven, cancelled, compromised, waived or released in the Ordinary Course of Business;

 

(f)  modified any existing Material Contract, or entered into any agreement, commitment or other transaction, other than agreements entered into in the Ordinary Course of Business and involving an expenditure of less than US$500,000 in each case and US$1,000,000 in the aggregate;

 

(g)  paid any bonus to any officer, director, employee, sales representative, agent or consultant, or granted to any officer, director, employee, sales representative, agent or consultant any other increase in compensation in any form, except for bonus payments and raises in the Ordinary Course of Business;

 

(h)  except in the Ordinary Course of Business, entered into, adopted or amended any employment, consulting, retention, change-in-control, collective bargaining, bonus or other incentive compensation, profit-sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other employment, compensation or benefit plan, policy, agreement, trust, fund or arrangement for the benefit of any officer, director, employee, sales representative, agent, consultant or Affiliate (whether or not legally binding);

 

(i)  suffered any damage, destruction or loss (whether or not covered by insurance), or any strike or other employment-related problem, or any change in relations with or any loss of a supplier, customer or employee, that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect;

 

(j)  amended or modified any of its Organizational Documents;

 

(k)  changed in any respect its accounting policies or principles, except as required by GAAP or applicable Tax Law;

 

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(l)  except in accordance with Section 4.5(f), transferred or granted any rights or licenses under, or entered into any settlement regarding the infringement of, China Intellectual Property or entered into or modified any licensing or similar agreements or arrangements, in each case, other than in the Ordinary Course of Business;

 

(m)  sold any assets with a value in excess of US$500,000 in each case or US$1,000,000 in the aggregate, other than inventory in the Ordinary Course of Business;

 

(n)  taken any action or omitted to take any action that would result or has resulted in the occurrence of any of the foregoing.

 

2.9  Tax Matters .

 

(a)  Except as set forth on Section 2.9(a) of the Yahoo! Disclosure Schedule, (i) all Tax Returns relating to each member of the China Group or the business or assets thereof that were required to be filed on or before the date hereof or the Closing Date, as the case may be, have been (or by the Closing Date will be) duly and timely filed and are (or will be) correct and complete in all material respects, (ii) all Taxes shown as owing on such Tax Returns have been (or by the Closing Date will have been) paid and (iii) no member of the China Group is, on the date of this Agreement, the beneficiary of any extension of time within which to file any Tax Return.

 

(b)  Except as set forth on Section 2.9(b) of the Yahoo! Disclosure Schedule, (i) all material Taxes that are payable by any member of the China Group or chargeable as a Lien upon its assets as of the date hereof or the Closing Date, as the case may be, have been (or by the Closing Date will be) duly and timely paid or reflected on the China Group Financial Statements, (ii) each member of the China Group has duly and timely withheld all material Taxes required to be withheld in connection with the business, employees or assets of such member, and such withheld Taxes have been either duly and timely paid to the proper Governmental Authorities or properly set aside in accounts for such purpose and (iii) the China Group Financial Statements reflect an adequate reserve for all Taxes payable or asserted to be payable by the China Group for all taxable periods or portions thereof through the date of the China Group Financial Statements.

 

(c)  Except as set forth on Section 2.9(c) of the Yahoo! Disclosure Schedule, there has been no claim or issue (other than a claim or issue that has been finally settled) concerning any material liability for Taxes of any member of the China Group asserted, raised or threatened in writing by any taxing authority.

 

(d)  Section 2.9(d) of the Disclosure Schedule lists all Income Tax Returns that have been filed with respect to any member of the China Group for taxable periods ended on or after December 31, 2003 and that have not yet been audited or are currently the subject of audit.

 

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(e)  Except as set forth on Section 2.9(e) of the Yahoo! Disclosure Schedule, no member of the China Group has (i) waived any statute of limitations, (ii) agreed to any extension of the period for assessment or collection or (iii) executed or filed any power of attorney with respect to Taxes, which waiver, agreement or power of attorney is currently in force.

 

(f)  Except as set forth on Section 2.9(f) of the Yahoo! Disclosure Schedule, (i) there are no outstanding adjustments for Income Tax purposes applicable to any member of the China Group required as a result of changes in methods of accounting effected on or before the Closing Date and (ii) no material elections for Income Tax purposes have been made by any member of the China Group that are currently in force or by which any member of the China Group is bound.

 

(g)  Except as set forth in Section 2.9(g) of the Yahoo! Disclosure Schedule, no member of the China Group (i) is a party to or bound by or has any obligation under any Tax allocation, sharing, indemnity or similar agreement or arrangement or (ii) is or has been a member of any group of companies filing a consolidated, combined or unitary Income Tax Return.

 

2.10  Assets and Sufficiency .

 

(a)  Assets .  The members of the China Group collectively own, or otherwise have full, sufficient and legally enforceable rights to use, all of the material properties, assets and rights (real, personal or mixed, tangible or intangible), used or held for use in connection with the China Business including without limitation, the Other Assets and the Real Property, excluding any assets covered by the Technology and Intellectual Property License Agreement (the “ Assets ”).  Yahoo! owns or has full, sufficient and legally enforceable rights to use all of the material properties, assets and rights (real, personal or mixed, tangible or intangible) covered by the Technology and Intellectual Property License Agreement.

 

(b)  Sufficiency of Assets .  The Assets, together with the rights, services and arrangements as contemplated by the Technology and Intellectual Property License Agreement, comprise all properties, assets, rights and services required by Alibaba to conduct the China Business as now being conducted by the China Group.

 

(c)  Patents Representations .  Notwithstanding anything to the contrary in this Section 2.10, Yahoo! makes no representations in this Section 2.10 (i) with respect to patents owned by any third parties or any patents outside China and (ii) with respect to infringement or non-infringement of any Intellectual Property of any third party.  For the avoidance of doubt, the foregoing sentence shall not restrict the independent representation given in Section 2.13(d).

 

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2.11  Real Property .

 

(a)  Owned Real Property .  Section 2.11(a) of the Yahoo! Disclosure Schedule contains a complete and correct list of all Owned Real Property of each member of the China Group setting forth the address and owner of each parcel of Owned Real Property.  Each member of the China Group has good and marketable fee simple title to its Owned Real Property, free and clear of any Lien other than Permitted Liens and other than as set forth in Section 2.11(a) of the Yahoo! Disclosure Schedule.

 

(b)  Leases .  Section 2.11(b) of the Yahoo! Disclosure Schedule contains a complete and correct list of all Leases of each member of the China Group setting forth the address, landlord, tenant and expiration date for each Lease.  Yahoo! has made available to Alibaba correct and complete copies of the Leases.  Each Lease is legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be so enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  No member of the China Group is, and, to the knowledge of any member of the China Group, no other party is, in default, violation or breach in any respect under any Lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach in any respect under any Lease, except to the extent such default, violation or breach would not reasonably be expected to have a Material Adverse Effect.  Each Lease grants the tenant under the Lease the right to use and occupy the premises and rights demised and intended to be demised thereunder.  Each member of the China Group has title to the leasehold interests under its respective Leases, free and clear of any Lien, except Permitted Liens.  Each member of the China Group enjoys peaceful and undisturbed possession in all material respects under its respective Leases for the Leased Real Property.

 

(c)  No Proceedings .  Except as would not reasonably be expected to have a Material Adverse Effect, (i) there are no proceedings in eminent domain or other similar proceedings pending or, to the knowledge of any member of the China Group, threatened affecting any portion of the Real Property and (ii) there exists no writ, injunction, decree, order or judgment outstanding, nor any Litigation, pending or threatened, relating to the ownership, lease, use, occupancy or operation by any Person of any Real Property.

 

(d)  Current Use .  The use and operation of the Real Property in the conduct of the China Business does not violate in any material respect any instrument of record or agreement affecting the Real Property.  There is no material violation of any covenant, condition, restriction, easement or agreement or order of any Governmental Authority that affects the Real Property or the ownership, operation, use or occupancy thereof.  No material damage or destruction has occurred with respect to any of the Real Property that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect.

 

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2.12  Contracts .

 

(a)  Disclosure .  Except as set forth in Section 2.12(a) of the Yahoo! Disclosure Schedule, as of the date hereof no member of the China Group is a party to or bound by any Material Contract.  Yahoo! has made available to Alibaba complete and correct copies of all written Material Contracts, and accurate descriptions of all material terms of all oral Material Contracts, set forth or required to be set forth in Section 2.12(a) of the Yahoo! Disclosure Schedule.

 

(b)  Enforceability .  All Material Contracts are legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  As of the date hereof, no member of the China Group is in material violation, breach or default under, nor is there any event or condition that, after notice or lapse of time or both, would constitute a material violation, material breach or material default thereunder, on the part of any member of the China Group or, to the knowledge of any member of the China Group, any other Person.  Except as set forth in Section 2.12(b) of the Yahoo! Disclosure Schedule, no Material Contract contains any change of control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

 

2.13  Intellectual Property .

 

(a)  Disclosure .  Section 2.13(a) of the Yahoo! Disclosure Schedule sets forth a complete and correct list of all Intellectual Property registrations or applications, filed before any governmental Intellectual Property office, that are material to the China Business and is owned by any member of the China Group.

 

(b)  Title .  Each member of the China Group owns the China Intellectual Property free and clear of any Lien, other than Permitted Liens and licenses.  Except as expressly provided elsewhere in this Agreement or in the Ancillary Agreements, immediately after the Closing, the China Group or Alibaba shall own all the China Intellectual Property, in each case free from all Liens, other than Permitted Liens and licenses, and on the same terms and conditions as in effect prior to the Closing.

 

(c)  Licensing and Similar Arrangements .  Section 2.13(c) of the Yahoo! Disclosure Schedule sets forth all material written agreements and arrangements (other than licenses for commercially available software having fees, whether up-front or annual, in the aggregate, of less than US$50,000) (i) pursuant to which any member of the China Group has licensed China Intellectual Property to, or the use of such China Intellectual Property is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) by, any other Person (including any member of Yahoo! Group), and (ii) pursuant to which any member of the China Group currently has Intellectual Property licensed to it, or is otherwise permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise); provided that web content agreements providing for

 

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aggregate payments of less than $50,000 over the term of such agreement need not appear on Section 2.13(c) of the Yahoo! Disclosure Schedule.  All of the agreements and arrangements set forth or required to be set forth in Section 2.13(c) of the Yahoo! Disclosure Schedule: ( x ) are in full force and effect and enforceable in accordance with their terms, except to the extent any failure to be enforceable, individually or in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect,  ( y ) no default exists or is threatened thereunder by any member of the China Group, or to the knowledge of any member of China Group, by any other Person, except for such defaults that, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect, or to materially impair the ability of any member of China Group to perform its respective obligations hereunder and under the Ancillary Agreements, and ( z ) do not contain any change in control or other terms or conditions that will operate to terminate, or otherwise adversely affect any right currently available to members of the China Group holding such rights as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.  Yahoo! has made available to Alibaba complete and correct copies of all licenses and arrangements (including amendments, supplements, waivers and other modifications) set forth or required to be set forth in Section 2.13(c) of the Yahoo! Disclosure Schedule.

 

(d)  No Infringement .  Except as set forth in Section 2.13(d) of the Yahoo! Disclosure Schedule and except as would not have a Material Adverse Effect, the conduct of the China Business as presently conducted does not infringe or misappropriate any rights of any Person in respect of any Intellectual Property.  Except as set forth in Section 2.13(d) of the Yahoo! Disclosure Schedule, none of the China Intellectual Property is being infringed or misappropriated by any Person, except as would not reasonably be expected to have or result in a Material Adverse Effect.

 

(e)  No Intellectual Property Litigation .  Except as set forth in Section 2.13(e) of the Yahoo! Disclosure Schedule, no written claim or demand by any Person has been made or, to the knowledge of any member of China Group, threatened, nor is there any Litigation that is pending or, to the knowledge of any member of China Group, threatened against any member of the China Group, that (i) challenges the rights of any member of the China Group in respect of any China Intellectual Property, (ii) asserts that any member of the China Group is infringing or misappropriating, or (except pursuant to the license agreements required to be set forth in Section 2.13(c)(ii) of the Yahoo! Disclosure Schedule) is required to pay any royalty, license fee, charge or other amount with regard to, any Intellectual Property, or (iii) claims that any default exists under any agreement or arrangement set forth or required to be set forth in Section 2.13(c) of the Yahoo! Disclosure Schedule, that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect.  None of the China Intellectual Property is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, tribunal, arbitrator or other Governmental Authority.

 

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(f)  Due Registration, Etc .  The China Intellectual Property has been duly registered with, filed in or issued by, as the case may be, China’s State Patent Bureau, State Trademark Bureau, State Copyright Bureau or other filing offices, domestic or foreign, to the extent necessary or desirable to ensure protection under any applicable Law, and such registrations, filings, issuances and other actions remain in full force and effect, in each case, to the extent material to the China Business and in accordance with the exercise of reasonable business judgment.  The China Group takes reasonable measures to protect the confidentiality of its trade secrets, including requiring their employees to execute written agreements covering the protection of trade secrets and intellectual property and non-competition, substantially in the form made available to Alibaba.

 

2.14  Insurance .  Section 2.14 of the Yahoo! Disclosure Schedule contains a complete and correct list of all insurance policies currently maintained by any member of the China Group.  Yahoo! has made available to Alibaba complete and correct copies of all such policies together with all riders and amendments thereto.  Such scheduled policies and all other policies maintained during the past three years are in full force and effect with respect to the time periods covered thereunder, and all premiums due thereon have been paid.  Each member of the China Group has complied in all material respects with the terms and provisions of such scheduled policies and such other policies.

 

2.15  Litigation .  Except as set forth on Section 2.15 of the Yahoo! Disclosure Schedule, as of the date hereof, there is no Litigation pending or, to the knowledge of any member of the China Group, threatened by, against or affecting any member of China Group or any of its properties or assets, that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect.  There are no outstanding orders, judgments, decrees or injunctions issued by any Governmental Authority against any member of the China Group that would reasonably be expected to have or result in a Material Adverse Effect.

 

2.16  Compliance with Laws and Instruments; Consents .

 

(a)  Compliance .  Except as set forth in Section 2.16(a) of the Yahoo! Disclosure Schedule, since January 1, 2004, each member of China Group is not, and has not been, in conflict with or in violation or breach of or default under (and there exists no event that, with notice or passage of time or both, would constitute a conflict, violation, breach or default with, of or under) ( x ) any Law applicable to it or any of its properties, assets, operations or business, ( y ) any provision of its Organizational Documents, or ( z ) any Contract, or any other agreement or instrument to which it is a party or by which it or any of its properties or assets is bound or affected, and no member of China Group has received any notice or has knowledge of any claim alleging any such conflict, violation, breach or default, except, in the case of clauses (x) and (z) of this Section 2.16, for any such conflict, contravention, violation, breach, default or other occurrence which would not reasonably be expected  to have a Material Adverse Effect.  This Section 2.16 is not intended to address any matter related to the topics described in Section 2.9 (Tax

 

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Matters), 2.11 (Real Property), 2.17 (Environmental Matters), 2.19 (Employees, Labor Matters), 2.20 (Employee Benefit Plans and Related Matters), or 2.26 (Corrupt Practices).

 

(b)  Consents .

 

(i)  Except as specified in Section 2.16(b)(i) of the Yahoo! Disclosure Schedule, no Governmental Approval or other Consent is required to be obtained or made by any member of Yahoo! Group in connection with the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby or thereby, except where the failure to obtain such approval or consent would not be reasonably expected to have a Material Adverse Effect.

 

(ii)  Section 2.16(b)(ii) of the Yahoo! Disclosure Schedule contains a complete and correct list of all material Governmental Approvals and other Consents necessary for, or otherwise material to, the conduct of the China Business.  All such Governmental Approvals and other Consents have been duly obtained and are held by a member of the China Group and are in full force and effect.  Each member of the China Group is, and at all times has been, in compliance with all Governmental Approvals and other Consents held by such member, except for such failures to comply that, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  There is no Litigation pending or, to the knowledge of any member of the China Group, threatened that would result in the revocation, cancellation, suspension or modification or nonrenewal of any material Governmental Approval or Consent; no member of China Group has been notified that any material Governmental Approval or Consent will be modified, suspended or cancelled or cannot be renewed in the Ordinary Course of Business; and there is, to the knowledge of any member of the China Group, no reasonable basis for any such revocation, cancellation, suspension, modification or nonrenewal, in each case except where such revocation, cancellation, suspension, modification or nonrenewal would not be reasonably expected to have or result in a Material Adverse Effect.

 

(c)  Governmental Filings .  Each registration, report, statement, notice or other filing required to be filed by any member of the China Group or Yahoo! with any Governmental Authority under any applicable Law affecting the China Business has been filed, and when filed complied and continues to comply with applicable Law, except to the extent that any failure to so file or comply would not be reasonably expected to have or result in a Material Adverse Effect.

 

2.17  Environmental Matters .  Each member of the China Group has materially complied and is in material compliance with all applicable material Environmental Laws pertaining to any of the properties and assets of such member (including the Real Property) and the use and ownership thereof, and to the operation of the China Business.  To the knowledge of any member of the China Group, no violation by any member of the China Group is being alleged of any applicable

 

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Environmental Law relating to any of the properties and assets of the China Group or the use or ownership thereof, or to the operation of the China Business.  Except as would not be reasonably expected to have a Material Adverse Effect, no member of the China Group used, generated, treated, stored, recycled or disposed of any hazardous substances on any property now owned, operated or leased by any member of the China Group.

 

2.18  Affiliate Transactions .

 

(a)  Section 2.18(a) of the Yahoo! Disclosure Schedule contains a complete and correct list of all agreements, contracts, arrangements, understandings, Indebtedness, transfers of assets or liabilities or other commitments or transactions, whether or not entered into in the Ordinary Course of Business, to or by which any member of the China Group, on the one hand, and Yahoo! or any of its Affiliates (other than any member of the China Group), on the other hand, are or have been a party or otherwise bound or affected, and that involve continuing liabilities and obligations that, individually or in the aggregate, have been, are or will be material to or from any member of the China Group.  Each agreement, contract, arrangement, understanding, Indebtedness, transfer of assets or liabilities or other commitment or transaction set forth or required to be set forth in Section 2.18(a) of the Yahoo! Disclosure Schedule was on terms and conditions as favorable to the relevant member of the China Group as would have been reasonably obtained by it at the time in a comparable arm’s-length transaction with a Person other than Yahoo! or any of its Affiliates.  True and complete copies of each such agreement have been made available to Alibaba.

 

(b)  No stockholder, officer, director or employee of any member of the China Group, or any family member, relative or Affiliate of any such stockholder, officer, director or employee, (i) owns, directly or indirectly, and whether on an individual, joint or other basis, any interest in ( x ) any property or asset, real or personal, tangible or intangible, used in or held for use in connection with or pertaining to the China Business, or ( y ) any Person, that is a supplier, customer or competitor of any member of the China Group, (ii) serves as an officer, director or employee of any Person that is a supplier, customer or competitor of any member of the China Group or (iii) has received any loans from or is otherwise a debtor of, or made any loans to or is otherwise a creditor of, any member of the China Group.

 

2.19  Employees, Labor Matters, etc .  No member of the China Group is a party to or bound by any collective bargaining agreement, and there are no labor unions or other organizations representing, purporting to represent or, to the knowledge of any member of the China Group, attempting to represent any employees employed by any member of the China Group.  Since January 1, 2004, there has not occurred or been threatened any strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar concerted labor activity with respect to any employees of any member of the China Group.  There are no labor disputes currently subject to any grievance procedure, arbitration or litigation and there is no representation petition pending or threatened with respect to any employee

 

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of any member of the China Group.  The China Group has complied with all applicable Laws pertaining to the employment or termination of employment of their respective employees, including, without limitation, all such Laws relating to labor relations, equal employment opportunities, fair employment practices, prohibited discrimination or distinction and other similar employment activities, except for any failure so to comply that, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.

 

2.20  Employee Benefit Plans and Related Matters .  Neither any member of the China Group nor any of its Subsidiaries has any Benefit Plans subject to the Law of the United States.  With respect to each Benefit Plan:

 

(a)  all employer and employee contributions to each Benefit Plan required by applicable Law or by the terms of such Benefit Plan have been made, or, if applicable, accrued in accordance with GAAP;

 

(b)  the fair market value of the assets of each funded Benefit Plan, the liability of each insurer for any Benefit Plan funded through insurance or the book reserve established for any Benefit Plan, together with any accrued contributions, are sufficient to procure or provide for the accrued benefit obligations, as of the Closing Date, with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Benefit Plan and none of the transactions contemplated by this Agreement and the Ancillary Agreements shall cause such assets or insurance obligations to be less than such benefit obligations; and

 

(c)  Each of the Benefit Plans has been operated and administered in all respects in compliance with its terms, all applicable Laws and all applicable collective bargaining agreements, except for any failure so to comply that, individually and in the aggregate, would not reasonably be expected to result in a material liability or obligation on the part of any member of the China Group or Yahoo! or any of its Affiliates, or to have or result in a Material Adverse Effect.  There are no material pending or, to the knowledge of any member of the China Group, threatened claims by or on behalf of any of the Benefit Plans, by any employee of any member of the China Group or otherwise involving any such Benefit Plan or the assets of any such Benefit Plan (other than routine claims for benefits, all of which have been fully reserved for on the regularly prepared balance sheets of the China Group).

 

2.21  Accounts Receivable .  Yahoo! has delivered or caused to be delivered to Alibaba a complete and accurate aging of all accounts receivable of the consolidated China Group (excluding COAL) as of December 31, 2004 and June 30, 2005.  All accounts receivable reflected on the China Group Balance Sheet have been generated in the Ordinary Course of Business and reflect a bona fide obligation for the payment of goods or services provided by the China Group.

 

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2.22  Resellers .  Section 2.22 of the Yahoo! Disclosure Schedule sets forth for the twelve-month period ended December 31, 2004 and the six-month period ended June 30, 2005 (a) the names of the 10 largest resellers of the China Group based on cash receipts net of discounts and rebates generated by such resellers during each such period and (b) the amount of such cash receipts during each such period.

 

2.23  Bank Accounts .  Section 2.23 of the Yahoo! Disclosure Schedule sets forth a complete and correct list containing the names set forth of each bank in which any member of the China Group has an account or safe deposit or lock box, and the account or box number, as the case may be.

 

2.24  Brokers, Finders, etc .  All negotiations relating to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby have been carried on without the participation of any Person acting on behalf of any member of Yahoo! Group in such a manner as to, and the transactions contemplated hereby and thereby will not otherwise, give rise to any valid claim against any member of the Yahoo! Group or Alibaba for any brokerage or finder’s commission, fee or similar compensation, or for any bonus payable to any officer, director, employee, agent or representative of or consultant to any member of the Yahoo! Group upon consummation of the transactions contemplated hereby or thereby, other than the fee payable to Banc of America Securities LLC, which will be paid solely by Yahoo!.

 

2.25  Acquisition for Investment .  Yahoo! is purchasing the Primary Shares solely for investment, with no present intention to resell the Primary Shares.  Yahoo! hereby acknowledges that the Primary Shares have not been registered pursuant to the Securities Act of 1933, as amended, or the securities Laws of any other jurisdiction, and may not be transferred in the absence of such registration or an exemption therefrom under such act or such Laws, as the case may be.

 

2.26  Corrupt Practices .  Neither Yahoo!, nor any member of the China Group, nor, to the knowledge of any member of the China Group, any of their respective officers, employees, directors, representatives or agents has within the past three years knowingly offered, promised, authorized or made, directly or indirectly, (i) any unlawful payments or (ii) payments or other inducements to any governmental officials, including any official of any entity owned or controlled by a government, with the intent or purpose of:

 

(a)  influencing any act or decision of such official in his official capacity;

 

(b)  inducing such official to do or omit to do any act in violation of the lawful duty of such official; or

 

(c)  inducing such official to use his influence with a government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality;

 

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in order to assist Yahoo! or any member of the China Group in obtaining or retaining business for or with, or directing business to, any Person.  To the knowledge of any member of the China Group, no such payments or other inducements have been provided to government officials described above in violation of any applicable Law against improper payments or inaccurate recordkeeping.

 

2.27  Insolvency .

 

(a)  No order has been made and no resolution has been passed for the winding up of any member of the China Group, or for a provisional liquidator to be appointed in respect of any member of the China Group and, so far as any member of the China Group is aware, no petition has been presented and no meeting has been convened for the purpose of winding up any member of the China Group.

 

(b)  No receiver (which expression shall include an administrative receiver) has been appointed in respect of any member of the China Group or all or any of their respective assets or properties.

 

(c)  No member of the China Group is insolvent and/or has stopped paying debts as they fall due.

 

(d)  No guarantee, loan capital, borrowed money or interest for which any member of the China Group is liable is overdue for payment and no other obligation or Indebtedness of any member of the China Group is outstanding which is substantially overdue for performance or payment.

 

(e)  So far as any member of the China Group is aware, no distress, execution or other process for the execution of a court judgment has been levied against any member of the China Group that has not been satisfied in full.  So far as any member of the China Group is aware, no unsatisfied judgment is outstanding against any member of the China Group.

 

(f)  So far as any member of the China Group is aware, no floating charge, except for Permitted Liens, has been created by any member of the China Group over their respective assets or properties.

 

2.28  Disclosure .  This Agreement and each Ancillary Agreement, and each certificate or other instrument or document furnished by or on behalf of any member of Yahoo! Group to Alibaba or any agent or representative of Alibaba pursuant hereto or in connection herewith, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein in light of the circumstances under which they were made, not misleading.  No member of Yahoo! Group knows of any fact (other than matters of a general economic or political nature that do not affect the business of the China Group uniquely or that are set forth in Section 2.28 of the Yahoo! Disclosure Schedule) that would reasonably be expected to have or result in, a Material Adverse Effect.

 

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3.                                        Representations and Warranties of Alibaba .  Except as set forth in the disclosure schedule delivered by Alibaba to Yahoo! on or prior to the execution of this Agreement (the “ Alibaba Disclosure Schedule ”), represents and warrants to Yahoo! as follows:

 

3.1  Authorization, etc .

 

(a)  Alibaba has full corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it shall be 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 Ancillary Agreements to which Alibaba or any member of the Alibaba Group shall be a party, the performance of such party’s obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate action of such party except for the Alibaba Shareholders Approvals.  Alibaba has duly executed and delivered this Agreement and on the Closing Date, Alibaba or the relevant member of the Alibaba Group will have duly executed and delivered the Ancillary Agreements to which it shall be a party.  This Agreement constitutes, and each such Ancillary Agreement when so executed and delivered will constitute, the legal, valid and binding obligation of Alibaba and the relevant member of the Alibaba Group enforceable against Alibaba and such member of the Aladdin Group and, to Alibaba’s knowledge, the other parties thereto, in accordance with its respective terms, except as (i) the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally, and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

 

(b)  Alibaba has obtained the Alibaba Shareholders Approvals; the Alibaba Shareholders Approvals comprise a sufficient number of voting shares to approve the matters set forth in the Voting Agreements, including the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.  The Voting Agreements are enforceable against Alibaba in accordance with their terms, except as (i) the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally, and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

 

3.2  Capitalization, etc .

 

(a)  As of the date hereof, the authorized share capital of Alibaba consists of 250,000,000 Ordinary Shares, 56,454,546 Series A Preferred Shares, 79,769,189 Series B Preferred and 45,000,000 Series C Preferred Shares and 68,776,265 undesignated preferred shares of par value US$0.0001 per share (of which on the date hereof no shares are issued and outstanding).  As of July 31, 2005, the issued and outstanding share capital of Alibaba consisted of 89,607,702 Ordinary Shares, 56,454,546 Series A Preferred Shares, 79,769,189 Series B Preferred Shares

 

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and 8,426,685 Series C Preferred Shares.  As of the date hereof, 323,204,026 Ordinary Shares were (i) outstanding, (ii) issuable upon the exercise or conversion of options, warrants, Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares or convertible notes or (iii) reserved for issuance under any Benefit Plan.  As of the Closing Date, after giving effect to the transactions contemplated hereby and in the other Ancillary Agreements, there will be 700,000,000 authorized Ordinary Shares, of which no more than 654,103,386 will be (i) issued and outstanding, (ii) issuable upon the exercise of any options or warrants, or (iii) reserved for issuance under any Benefit Plan.

 

(b)  Section 3.2(b) of the Alibaba Disclosure Schedule contains a complete and correct description of the share capital that is authorized, or issued and outstanding, of each member of the Alibaba Group (other than Alibaba).  All of such outstanding share capital are duly authorized, validly issued, fully paid and nonassessable, and are owned beneficially and of record by the member of the Alibaba Group or other Person set forth on Section 3.2(b) of the Alibaba Disclosure Schedule, free and clear of any Lien.

 

(c)  All of the issued and outstanding share capital of Alibaba (i) are duly authorized, validly issued, fully paid and nonassessable, (ii) as of the date hereof are held of record by the Persons and in the amounts as set forth in Section 3.2(c)(ii) of the Alibaba Disclosure Schedule, (iii) immediately after the Closing and the consummation of the transactions contemplated by the Ancillary Agreements will be held of record by the Persons and in the amounts set forth in Section 3.2(c)(iii) of the Alibaba Disclosure Schedule, and (iv) were not issued in violation of any preemptive rights or the Organizational Documents of Alibaba.

 

(d)  Except as set forth in Section 3.2(d) of the Alibaba Disclosure Schedule, there are no preemptive or similar rights granted by any member of the Alibaba Group or, to the knowledge of any member of the Alibaba Group, by any other Person, with respect to any equity securities of any member of the Alibaba Group.  Except as set forth in Section 3.2(d) of the Alibaba Disclosure Schedule, no subscriptions, options, calls, warrants, convertible or exchangeable securities, conversion rights, repurchase rights, redemption rights, stock appreciation rights, phantom stock, or other rights, plans, agreements, commitments, arrangements or understandings of any kind obligating any member of the Alibaba Group, contingently or otherwise, to issue or sell, or cause to be issued or sold, any shares of share capital of any member of the Alibaba Group, or any securities convertible into or exchangeable for any such shares, are outstanding, and no authorization therefor has been given.  Except as set forth in Section 3.2(d) of the Alibaba Disclosure Schedule, there are no outstanding contractual or other rights or obligations to or of any member of the Alibaba Group to repurchase, redeem or otherwise acquire any outstanding shares or other equity interests of any member of the Alibaba Group.

 

(e)  Section 3.2(e) of the Alibaba Disclosure Schedule sets forth the current ownership of Alibaba, the identity of the persons that will transfer property to Alibaba in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, the number of shares such persons will own following the consummation of the transactions contemplated by this Agreement and the

 

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Ancillary Agreements, and the total number of shares of Alibaba share capital outstanding following such transfers and other transactions contemplated by this Agreement and the Ancillary Agreements.

 

3.3  No Conflicts, etc .  The execution, delivery and performance of this Agreement and the Ancillary Agreements by Alibaba or each other member of the Alibaba Group that is a party thereto, and the consummation of the transactions contemplated hereby and thereby by Alibaba or each other member of the Alibaba Group, do not and will not conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), create in any other Person a right or claim of termination, amendment, or require modification, acceleration or cancellation of, or result in the creation of any Lien (or any obligation to create any Lien) upon any of the properties, assets or rights of any member of the Alibaba Group (except for Permitted Liens) under, (a) any Law applicable to any member of the Alibaba Group or any of their respective properties or assets, (b) any provision of any of the Organizational Documents of such member of the Alibaba Group or (c) any Contract, or any other agreement or instrument to which any member of the Alibaba Group is a party or by which any of their respective properties or assets may be bound, except, in the case of clauses (a) and (c) of this Section 3.3, for such conflict, contravention, violation, breach, default, right or claim of termination, amendment, modification, acceleration, cancellation, creation of a Lien or other occurrence which would not reasonably be expected to have a Material Adverse Effect.

 

3.4  Corporate Status .

 

(a)  Organization .  Each member of the Alibaba Group is a corporation duly organized, validly existing and, if applicable under the Laws of its respective jurisdiction, in good standing under the Laws of its respective jurisdiction of incorporation, which jurisdiction is set forth in Section 3.4(a) of the Alibaba Disclosure Schedule, and has full corporate power and authority to conduct its business as currently conducted and to own or lease and to operate its properties.

 

(b)  Qualification .  Each member of the Alibaba Group is duly qualified or licensed to do business and is in good standing as a foreign person in each of the jurisdictions set forth in Section 3.4(b) of the Alibaba Disclosure Schedule, which includes each jurisdiction in which the nature of its business or the properties owned or leased by it makes such qualification or licensing necessary, except where the failure to be so qualified, licensed to do business or in good standing would not reasonably be expected to have a Material Adverse Effect.  No member of the Alibaba Group has operations or assets in Hong Kong that are material to the Alibaba Group taken as a whole.

 

(c)  Organizational Documents .  Alibaba has made available in the Alibaba Online Dataroom to Yahoo! complete and correct copies of the

 

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Organizational Documents of each member of the Alibaba Group, as amended, modified or waived through and in effect on the date hereof.  Each of the Organizational Documents of each member of the Alibaba Group, as so made available to Yahoo!, is in full force and effect.  No member of the Alibaba Group is in material violation or breach of any of the provisions of its Organizational Documents.  The minute books of each member of the Alibaba Group have heretofore been made available to Yahoo!.  Such minute books contain materially accurate and complete records of all meetings held of, and corporate action taken by, the stockholders, the boards of directors, and committees of such boards of directors of the Alibaba Group.

 

3.5  Valid Issuance to Primary Shares .  The Primary Shares being subscribed by Yahoo! hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, and will, on the date of issuance thereof, be free of restrictions on transfer and other Liens, other than such restrictions on transfer or other Liens as may be imposed by this Agreement, the Ancillary Agreements or the Memorandum and Articles, and will be issued in accordance with applicable securities and other Laws.

 

3.6  Financial Statements .

 

(a)  Section 3.6(a) of the Alibaba Disclosure Schedule sets forth complete and correct copies of the Alibaba Financial Statements and the Tao Bao Financial Statements.

 

(b)  The Alibaba Financial Statements and the Tao Bao Financial Statements (i) present fairly in all material respects the financial condition and results of operations of Alibaba and its Subsidiaries on a consolidated basis, and Tao Bao and its Subsidiaries on a consolidated basis, respectively, as of the dates thereof or for the periods covered thereby (subject, in the case of unaudited balance sheets and related statements of operations, to normal year end audit adjustments, methods of presentation and the absence of full footnote disclosure) and (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods presented in the Alibaba Financial Statements and the Tao Bao Financial Statements, respectively (except as may be indicated in the notes thereto).

 

3.7  Undisclosed Liabilities, etc .  No member of the Alibaba Group has any liabilities or obligations of any nature, whether known, unknown, absolute, accrued, contingent or otherwise and whether due or to become due, except (a) as are not required by GAAP to be disclosed or reserved against in the Alibaba Balance Sheet or the Tao Bao Balance Sheet and (b) for liabilities and obligations that (i) are incurred after the date of the Alibaba Balance Sheet and the Tao Bao Balance Sheet in the Ordinary Course of Business and are not prohibited by this Agreement and (ii) individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  Since December 31, 2004, there has not occurred or come to exist any Material Adverse Effect or any event, occurrence, fact,

 

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condition, change, development or effect that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

3.8  Absence of Changes .  Since June 30, 2005 through the date hereof, except as set forth in Section 3.8 of the Alibaba Disclosure Schedule, no member of the Alibaba Group has:

 

(a)  declared, set aside, made or paid any dividend or other distribution in respect of its share capital or otherwise purchased or redeemed, directly or indirectly, any shares of its share capital;

 

(b)  issued or sold any shares of any class of its share capital, or any securities convertible into or exchangeable for any such shares, or issued, sold, granted or entered into any subscriptions, options, calls, warrants, conversion rights, repurchase rights, redemption rights or other rights, agreements, commitments, arrangements or understandings of any kind, contingently or otherwise, to purchase or otherwise acquire any such shares or any securities convertible into or exchangeable for any such shares;

 

(c)  incurred any indebtedness for borrowed money, issued or sold any debt securities or prepaid any debt (including, without limitation, any borrowings from or prepayments to any member of the Alibaba Group) or incurred, assumed, guaranteed or otherwise become directly or indirectly liable with respect to any liability or obligation in excess of US$500,000 in each case or US$1,000,000 in the aggregate at one time outstanding, except for borrowings, prepayments and guarantees in the Ordinary Course of Business;

 

(d)  mortgaged, pledged or otherwise subjected to any Lien, any of its Real Property or other properties or assets, tangible or intangible, except for Permitted Liens;

 

(e)  forgiven, cancelled, compromised, waived or released any material debts, claims or rights, except for debts, claims and rights against Persons other than any member of the Alibaba Group, which are forgiven, cancelled, compromised, waived or released in the Ordinary Course of Business;

 

(f)  modified any existing Material Contract, or entered into any agreement, commitment or other transaction, other than agreements entered into in the Ordinary Course of Business and involving an expenditure of less than US$500,000 in each case and US$1,000,000 in the aggregate;

 

(g)  paid any bonus to any officer, director, employee, sales representative, agent or consultant, or granted to any officer, director, employee, sales representative, agent or consultant any other increase in compensation in any form, except for bonus payments and raises in the Ordinary Course of Business;

 

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(h)  except in the Ordinary Course of Business, entered into, adopted or amended any employment, consulting, retention, change-in-control, collective bargaining, bonus or other incentive compensation, profit-sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other employment, compensation or benefit plan, policy, agreement, trust, fund or arrangement for the benefit of any officer, director, employee, sales representative, agent, consultant or Affiliate (whether or not legally binding);

 

(i)  suffered any damage, destruction or loss (whether or not covered by insurance), or any strike or other employment-related problem, or any change in relations with or any loss of a supplier, customer or employee, that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect;

 

(j)  amended or modified any of its Organizational Documents;

 

(k)  changed in any respect its accounting policies or principles, except as required by GAAP or applicable Tax Law;

 

(l)  transferred or granted any rights or licenses under, or entered into any settlement regarding the infringement of, Alibaba Intellectual Property or entered into or modified any licensing or similar agreements or arrangements, in each case, other than in the Ordinary Course of Business;

 

(m)  sold any assets with a value in excess of US$500,000 in each case or US$500,000 in the aggregate, other than inventory in the Ordinary Course of Business;

 

(n)  taken any action or omitted to take any action that would result or has resulted in the occurrence of any of the foregoing.

 

3.9  Tax Matters .

 

(a)  Except as set forth on Section 3.9(a) of the Alibaba Disclosure Schedule, (i) all Tax Returns relating to each member of the Alibaba Group or the business or assets thereof that were required to be filed on or before the date hereof or the Closing Date, as the case may be, have been (or by the Closing Date will be) duly and timely filed and are (or will be) correct and complete in all material respects, (ii) all Taxes shown as owing on such Tax Returns have been (or by the Closing Date will have been) paid and (iii) no member of the Alibaba Group is, on the date of this Agreement, the beneficiary of any extension of time within which to file any Tax Return.

 

(b)  Except as set forth on Section 3.9(b) of the Alibaba Disclosure Schedule, (i) all material Taxes that are payable by any member of the Alibaba Group or chargeable as a Lien upon its assets as of the date hereof or the Closing Date, as the

 

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case may be, have been duly and timely paid or reflected on the Alibaba Financial Statements or the Tao Bao Financial Statements, (ii) each member of the Alibaba Group has duly and timely withheld all material Taxes required to be withheld in connection with its business or assets, and such withheld Taxes have been either duly and timely paid to the proper Governmental Authorities or properly set aside in accounts for such purpose and (iii) the Alibaba Financial Statements and the Tao Bao Financial Statements reflect an adequate reserve for all Taxes payable or asserted to be payable by the Alibaba Group for all taxable periods or portions thereof through the date of the Alibaba Financial Statements and the Tao Bao Financial Statements.

 

(c)  Except as set forth on Section 3.9(c) of the Alibaba Disclosure Schedule, there has been no claim or issue (other than a claim or issue that has been finally settled) concerning any material liability for Taxes of any member of the Alibaba Group asserted, raised or threatened in writing by any taxing authority.

 

(d)  Section 3.9(d) of the Alibaba Disclosure Schedule lists all Income Tax Returns that have been filed with respect to any member of the Alibaba Group for taxable periods ended on or after December 31, 2003 and that have not yet been audited or are currently the subject of audit.

 

(e)  Except as set forth on Section 3.9(e) of the Alibaba Disclosure Schedule, no member of the Alibaba Group has (i) waived any statute of limitations, (ii) agreed to any extension of the period for assessment or collection or (iii) executed or filed any power of attorney with respect to Taxes, which waiver, agreement or power of attorney is currently in force.

 

(f)  Except as set forth on Section 3.9(f) of the Alibaba Disclosure Schedule, (i) there are no outstanding adjustments for Income Tax purposes applicable to any member of the Alibaba Group required as a result of changes in methods of accounting effected on or before the Closing Date and (ii) no material elections for Income Tax purposes have been made by any member of the Alibaba Group that are currently in force or by which any member of the Alibaba Group is bound.

 

(g)  Except as set forth in Section 3.9(g) of the Alibaba Disclosure Schedule, no member of the Alibaba Group (i) is a party to or bound by or has any obligation under any Tax allocation, sharing, indemnity or similar agreement or arrangement or (ii) is or has been a member of any group of companies filing a consolidated, combined or unitary Income Tax Return.

 

3.10  Assets .  The members of the Alibaba Group collectively own, or otherwise have full, sufficient and legally enforceable rights to use, all of the material properties, assets and rights (real, personal or mixed, tangible or intangible), used or held for use in connection with their respective business.

 

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3.11  Real Property .

 

(a)  Owned Real Property .  Section 3.11(a) of the Alibaba Disclosure Schedule contains a complete and correct list of all Owned Real Property of each member of the Alibaba Group setting forth the address and owner of each parcel of Owned Real Property.  Each member of the Alibaba Group has good and marketable fee simple title to the Owned Real Property, free and clear of any Lien other than Permitted Liens and other than as set forth in Section 3.11(a) of the Alibaba Disclosure Schedule. A

 

(b)  Leases .  Section 3.11(b) of the Alibaba Disclosure Schedule contains a complete and correct list of all Leases of each member of the Alibaba Group setting forth the address, landlord, tenant and expiration date for each Lease.  Alibaba has made available to Yahoo! correct and complete copies of the Leases.  Each Lease is legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be so enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  No member of the Alibaba Group is, and to the knowledge of any member of the Alibaba Group, no other party is, in default, violation or breach in any respect under any Lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach in any respect under any Lease, except to the extent such default, violation or breach would not reasonably be expected to have a Material Adverse Effect.  Each Lease grants the tenant under the Lease the right to use and occupy the premises and rights demised and intended to be demised thereunder.  Each member of the Alibaba Group has title to the leasehold interests under its respective Leases, free and clear of any Lien, except Permitted Liens.  Each member of the Alibaba Group enjoys peaceful and undisturbed possession in all material respects under its respective Leases for the Leased Real Property.

 

(c)  No Proceedings .  Except as would not be reasonably expected to have a Material Adverse Effect, (i) there are no proceedings in eminent domain or other similar proceedings pending or, to the knowledge of any member of the Alibaba Group, threatened affecting any portion of the Real Property and (ii) there exists no writ, injunction, decree, order or judgment outstanding, nor any Litigation, pending or threatened, relating to the ownership, lease, use, occupancy or operation by any Person of any Real Property.

 

(d)  Current Use .  The use and operation of the Real Property in the conduct of its business does not violate in any material respect any instrument of record or agreement affecting the Real Property.  There is no material violation of any covenant, condition, restriction, easement or agreement or order of any Governmental Authority that affects the Real Property or the ownership, operation, use or occupancy thereof.  No material damage or destruction has occurred with respect to any of the Real Property that, individually or in the aggregate, would reasonably be expected to have or result in a Material Adverse Effect.

 

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3.12  Contracts .

 

(a)  Disclosure .  Except as set forth in Section 3.12(a) of the Alibaba Disclosure Schedule, as of the date hereof, no member of the Alibaba Group is a party to or bound by any Material Contract.  Alibaba has made available to Yahoo! complete and correct copies of all written Material Contracts, and accurate descriptions of all material terms of all oral Material Contracts, set forth or required to be set forth in Section 3.12(a) of the Alibaba Disclosure Schedule.  Except as set forth in Section 3.12(a) of the Alibaba Disclosure Schedule, to the knowledge of any member of the Alibaba Group, there is no agreement among the Key Executives or between the Key Executives and Alibaba relating to the ownership, voting or disposition of the shares of Alibaba held by the Key Executives or the exercise of rights under this Agreement or any of the Ancillary Agreements.  Except as set forth in Section 3.12(a) of the Alibaba Disclosure Schedule, no member of the Alibaba Group is a party to any Contract (other than this Agreement, the Ancillary Agreements and any agreement relating to the transfer of COAL to Alibaba) that, as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, would impose any material obligations or duties on Yahoo! or its Subsidiaries (other than the China Group) following the Closing Date.

 

(b)  Enforceability .  All Material Contracts are legal, valid, binding, in full force and effect and enforceable against each party thereto, except to the extent that any failure to be enforceable, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect.  As of the date hereof, no member of the Alibaba Group is in material violation, breach or default under, nor is there any event or condition that, after notice or lapse of time or both, would constitute a material violation, material breach or material default thereunder, on the part of any member of the Alibaba Group or, to the knowledge of any member of the Alibaba Group, any other Person.  Except as set forth in Section 3.12(b) of the Alibaba Disclosure Schedule, no Material Contract contains any change of control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

 

3.13  Intellectual Property .

 

(a)  Disclosure .  Section 3.13(a) of the Alibaba Disclosure Schedule sets forth a complete and correct list of all Intellectual Property registrations or applications, filed before any governmental Intellectual Property office, that are material to the business of the Alibaba Group and is owned by any member of the Alibaba Group.

 

(b)  Title .  Each member of the Alibaba Group owns the Alibaba Intellectual Property free and clear of any Lien, other than Permitted Liens and licenses.  Except as expressly provided elsewhere in this Agreement or in the Ancillary Agreements, immediately after the Closing, the Alibaba Group shall own all the Alibaba Intellectual Property, in each case, free and clear of all Liens, other than Permitted Liens and licenses, on the same terms and conditions as in effect prior to the Closing.

 

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(c)  Licensing and Similar Arrangements .  Section 3.13(c) of the Alibaba Disclosure Schedule sets forth all material written agreements and arrangements (other than licenses for commercially available software having fees, whether up-front or annual, in the aggregate, of less than $50,000) (i) pursuant to which any member of the Alibaba Group has licensed Alibaba Intellectual Property to, or the use of such Alibaba Intellectual Property is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) by, any other Person, and (ii) pursuant to which any member of Alibaba Group currently has Intellectual Property licensed to it, or is otherwise permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise).  All of the agreements and arrangements set forth or required to be set forth in Section 3.13(c) of the Alibaba Disclosure Schedule: ( x ) are in full force and effect and enforceable in accordance with their terms except to the extent any failure to be enforceable, individually or in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect, ( y ) no default exists or is threatened thereunder by any member of the Alibaba Group, or to the knowledge of the Alibaba Group, by any other Person, except for such defaults that, individually and in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect, or to materially impair the ability of any member of the Alibaba Group to perform its respective obligations hereunder and under the Ancillary Agreements, and ( z ) do not contain any change in control or other terms or conditions that will operate to terminate, or otherwise adversely affect any right currently available to members of the Alibaba Group holding such rights as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.  Alibaba has made available to Yahoo! complete and correct copies of all licenses and arrangements (including amendments, supplements, waivers and other modifications) set forth or required to be set forth in Section 3.13(c) of the Alibaba Disclosure Schedule.

 

(d)  No Infringement .  Except as set forth in Section 3.13(d) of the Alibaba Disclosure Schedule and except as would have a Material Adverse Effect, the conduct of its business as presently conducted does not infringe or misappropriate any rights of any Person in respect of any Intellectual Property.  Except as set forth in Section 3.13(d) of the Alibaba Disclosure Schedule, none of the Alibaba Intellectual Property is being infringed or misappropriated by any Person, except in each case as would not reasonably be expected to have or result in a Material Adverse Effect.

 

(e)  No Intellectual Property Litigation .  Except as set forth in Section 3.13(e) of the Alibaba Disclosure Schedule, no written claim or demand by any Person has been made or, to the knowledge of any member of the Alibaba Group, threatened, nor is there any Litigation that is pending or, to the knowledge of any member of the Alibaba Group, threatened against any member of the Alibaba Group, that (i) challenges the rights of any member of the Alibaba Group in respect of any Alibaba Intellectual Property, (ii) asserts that any member of the Alibaba Group is infringing or misappropriating, or (except pursuant to the license agreements required to be set for