Share Pledge Agreement - Tianqiao Chen, Danian Chen and Shengqu Information Technology (Shanghai) Co. Ltd.
SHARE PLEDGE AGREEMENT
This Share Pledge Agreement (this "Agreement") is executed by and among
the following parties on December 30, 2003.
PLEDGOR A: Tianqiao Chen
ID NUMBER: 310110730516681
ADDRESS: 1635 S. Pudong Road 29-203, Pudong, Shanghai
PLEDGOR B: Danian Chen
ID NUMBER: 310115197805162096
ADDRESS: 149 Pudian Road 29-203, Pudong, Shanghai
PLEDGEE: Shengqu Information Technology (Shanghai) Co., Ltd.
REGISTERED ADDRESS: 351 Guoshoujing Road 638-7 Bldg 2, Zhangjiang Hi-Tech Park,
Shanghai
Unless otherwise provided hereunder, Pledgor A and Pledgor B shall
hereinafter be referred to collectively as the "Pledgors".
WHEREAS:
1. Tianqiao Chen, Pledgor A, and Danian Chen, Pledgor B, are both citizens
of the People's Republic of China (the "PRC"), and each holds 70% and 30%
interests in Shanghai Shanda Networking Co., Ltd. ("Shanda Networking"),
respectively. Shanda Networking is a company registered in Shanghai, PRC,
engaged in the business of online gaming operation.
2. Pledgee is a limited liability company registered in Shanghai, PRC, with
approvals from the relevant PRC authorities to engage in the business of,
among others, internet technology consulting and technology services.
Shanda Networking and Pledgee have entered into the agreements listed in
Appendix 1 hereto (collectively, the "Service Agreements").
3. To secure the fees payable under the Service Agreements (the "Service
Fee") from Shanda Networking to Pledgee, Pledgors hereby pledge their
respective interests in Shanda Networking to Pledgee.
Pursuant to the provisions of the Service Agreements, Pledgors and
Pledgee have agreed to enter into this Agreement according to the
following terms and conditions.
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1. DEFINITIONS
Unless otherwise provided herein, the terms below shall have the
following meanings:
1.1 PLEDGE RIGHTS means the rights set forth in Article 2 of this Agreement.
1.2 SHARE EQUITY means the equity interest held by Pledgors in Shanda
Networking.
1.3 PLEDGED PROPERTY means the share interest and the dividends deriving
therefrom pledged by Pledgors to Pledgee under this Agreement.
1.4 SECURED INDEBTEDNESS means all the amounts payable by Shanda Networking
to Pledgee under the Service Agreements, including the Service Fee and
interests accrued thereon, liquidated damages, compensations, costs and
expenses incurred by Pledgee in connection with collection of such fees,
interest, damages and compensations, and losses incurred to Pledgee as a
result of any default by Shanda Networking and other expenses payable
under the Service Agreements.
1.5 TERM OF PLEDGE means the term stated in Section 4.1 of this Agreement.
1.6 SERVICE AGREEMENTS means all the agreements entered into by Shanda
Networking and Pledgee as set forth in Appendix 1 hereto.
1.7 EVENT OF DEFAULT means any event set forth in Article 9 of this
Agreement.
1.8 NOTICE OF DEFAULT means the notice issued by Pledgee in accordance with
this Agreement declaring an Event of Default.
2. PLEDGE RIGHTS
2.1 Pledgors hereby pledge to Pledgee all of their Share Equity in Shanda
Networking to secure the Secured Indebtedness of Shanda Networking.
Pledge Rights shall mean Pledgee's priority right in receiving
compensation from the sale or auction proceeds of the Pledged Property
(including the dividends generated by the Share Equity during the term of
this Agreement).
3. SCOPE OF PLEDGE SECURITY
3.1 The scope of pledge security hereunder shall cover all of the Secured
Indebtedness, including all the Service Fee and interest accrued thereon,
liquidated damages, compensation, costs and expenses incurred by Pledgee
to collect such fee, interests, damages and compensation, and losses
incurred to Pledgee as a result of any default by Shanda Networking and
all other expenses payable under the Service Agreements.
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4. TERM OF PLEDGE AND REGISTRATION
4.1 This Agreement shall become effective on the date when the Pledge
hereunder is registered in the Shareholders' List of Shanda Networking.
The term of the Pledge shall be same as the term of the Strategy
Consulting Services Agreement (should the term of the Strategy Consulting
Services Agreement be extended, the term of the Pledge shall be extended
accordingly). Pledgors shall cause Shanda Networking to register the
Pledge hereunder in its Shareholders' List within three (3) days after
this Agreement is executed.
4.2 In the event that any change of the matters registered in Shanda
Networking's Shareholders' List is required as a result of change of any
matters relating to the Pledge, Pledgors and Pledgee shall cause the
matters registered in Shanda Networking's Shareholders' List be changed
accordingly within fifteen (15) days after such change takes place.
5. CUSTODY OF CERTIFICATES
Pledgors shall deliver to Pledgee the capital contribution certificates
with respect to their interest in Shanda Networking and Shanda
Networking's Shareholders' List within seven (7) days after this
Agreement is executed.
6. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
6.1 Pledgors are the legal owners of the Share Equity.
6.2 Pledgors fully understand the contents of the Service Agreements and have
entered into this Agreement voluntarily. The signatories signing this
Agreement on behalf of Pledgors have the rights and authorizations to do
so.
6.3 All documents, materials and certificates provided by Pledgors to Pledgee
hereunder are correct, true, complete and valid.
6.4 When Pledgee exercises its right hereunder in accordance with this
Agreement, there shall be no intervention from any other parties.
6.5 Pledgee shall have the right to dispose of and transfer the Pledge Rights
in accordance with the provisions hereof.
6.6 Pledgors have not created any pledge over the Share Equity other than the
Pledge created hereunder.
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7. COVENANTS OF PLEDGORS
7.1 For the benefit of Pledgee, Pledgors hereby make the following covenants,
during the term of this Agreement:
7.1.1 without the prior written consent of Pledgee, Pledgors shall not
transfer the Share Equity, or create or consent to any creation of
any pledge over, the Share Equity that may affect Pledgee's rights
and interests hereunder, or cause the shareholders' meetings of
Shanda Networking to adopt any resolution on sale, transfer,
pledge or in other manner disposal of the Share Equity or
approving the creation of any other security interest on the Share
Equity, provided that the Share Equity may be transferred to
Pledgee or any party designated by Pledgee according to Purchase
Option and Cooperation Agreement dated December 30, 2003 among
Pledgee, Pledgors and Shanda Networking and Pledgors may transfer
the Share Equity to each other to the extent such transfer will
not effect Pledgee's interest (the transferring Pledgor shall
deliver a prior notice to Pledgee before making the transfer).
7.1.2 Pledgors shall comply with all laws and regulations applicable to
the Pledge. Within five (5) days of receipt of any notice, order
or recommendation issued or promulgated by competent government
authorities relating to the Pledge, Pledgors shall deliver such
notice, order or recommendation to Pledgee, and shall comply with
the same, or make objections or statements with respect to the
same upon Pledgee's reasonable request or with Pledgee's consent.
7.1.3 Pledgors shall promptly notify Pledgee of any event or notice
received by Pledgors that may have a material effect on Pledgee's
rights in the Pledged Property or any portion thereof, as well as
promptly notify Pledgee of any change to any warranty or
obligation of Pledgors hereunder, or any event or notice received
by Pledgors that may have a material effect to any warranty or
obligation of the Pledgors hereunder.
7.2 Pledgors warrant that Pledgee's exercise of the Pledge Rights as a
pledgee pursuant to this Agreement shall not be interrupted or impaired
by Pledgors or any successors or representatives of Pledgors or any other
parties through any legal proceedings.
7.3 Pledgors hereby warrant to Pledgee that, to protect or perfect the
security interest created by this Agreement to secure the Secured
Indebtedness, Pledgors will execute in good faith, and cause other
parties who have an interest in the Pledge Rights to execute, all
certificates of rights and instruments as requested by Pledgee, and/or
take any action, and cause other parties who have an interest in the
Pledge Rights to take any action, as requested by Pledgee, and facilitate
the exercise by Pledgee of its rights and authority provided hereunder,
and execute all amendment documents relating to certificates of Share
Equity with Pledgee or its designated person(s) (natural persons/
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legal persons), and shall provide Pledgee, within a reasonable period of
time, with all notices, orders and decisions regarding the Pledge Rights
requested by Pledgee.
7.4 Pledgors hereby warrant to Pledgee that, for Pledgee's benefit, Pledgors
shall comply with all warranties, covenants, agreements, representations
and conditions provided hereunder. In the event that Pledgors fail to
comply with or perform any warranties, covenants, agreements,
representations and conditions, Pledgors shall indemnify Pledgee for all
of its losses resulting therefrom.
8. EVENTS OF DEFAULT
8.1 Each of the following events shall constitute an Event of Default:
8.1.1 Shanda Networking fails to pay in full any Secured Indebtedness on
time;
8.1.2 Any representation or warranty made by Pledgors under Article 6 of
this Agreement is misleading or untrue, or Pledgors have violated
any of the warranties in Article 6 of this Agreement;
8.1.3 Pledgors breach any of the covenants in Article 7 of this
Agreement;
8.1.4 Pledgors breach any other provisions of this Agreement;
8.1.5 Pledgors give up all or any part of the Pledged Property, or
transfer all or any part of the Pledged Property without the
written consent of Pledgee (except the transfers permitted
hereunder);
8.1.6 Any of Pledgors' loans, guarantees, indemnification, commitment or
other indebtedness to any third party (1) have been subject to a
demand of early repayment due to an event of default; or (2) have
become due but failed to be repaid in a timely manner, thus
leading Pledgee to believe that Pledgors' ability to perform their
obligations under this Agreement has been impaired;
8.1.7 Pledgors are unable to repay any other material debts;
8.1.8 Any applicable laws have rendered this Agreement illegal or made
it impossible for Pledgors to continue to perform their
obligations hereunder;
8.1.9 All approvals, licenses, permits or authorizations from government
agencies that make this Agreement enforceable, legal and effective
have been withdrawn, terminated, invalidated or substantively
revised;
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8.1.10 Any adverse change has taken place to any properties owned by
Pledgors, which leads Pledgee to believe that Pledgors' ability to
perform their obligations under this Agreement has been affected;
8.1.11 The successor or trustee of Shanda Networking is only able to
partially perform or refuses to perform the payment obligations
under the Service Agreements;
8.1.12 Any breach of other provisions of this Agreement resulting from
any action or omission by Pledgors; and
8.1.13 Any other event whereby Pledgee is unable to exercise its right
with respect to the Pledge hereunder pursuant to relevant laws.
8.2 Pledgors shall immediately notify Pledgee in writing of any event set
forth in Section 8.1 or any circumstance which many lead to any such
event as soon as Pledgors know or are aware of such event.
8.3 Unless an Event of Default set forth in this Section 8.1 has been
resolved to the satisfaction of Pledgee, Pledgee may, upon the occurrence
of an Event of Default or at any time thereafter, issue a Notice of
Default to Pledgors in writing and demand that Pledgors to immediately
pay all the amounts due under the Service Agreements and all other
amounts payable due to Pledgee, or exercise Pledge Rights in accordance
with the provisions of this Agreement.
9. EXERCISE OF PLEDGE RIGHTS
9.1 Prior to the full payment of Secured Indebtedness under the Service
Agreements, Pledgors shall not assign, or in any manner dispose of, the
Pledged Property without Pledgee's written consent.
9.2 Pledgee shall issue a Notice of Default to Pledgors when exercising the
Pledge Rights.
9.3 Subject to the provisions of Section 8.3, Pledgee may exercise the right
to dispose of the Pledged Property concurrently with the issuance of the
Notice of Default in accordance with Section 8.3 or at any time after the
issuance of the Notice of Default.
9.4 Pledgee shall have the right to dispose of the Pledged Property under
this Agreement in part or in whole in accordance with legal procedures
(including but not limited to negotiated transfer, auction or sale of the
Pledged Property) and receive a priority payment from the proceeds of the
Pledged Property until all of the Secured Indebtedness have been fully
repaid.
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9.5 When Pledgee exercises its rights under the Pledge in accordance with
this Agreement, Pledgors shall not create any impediment, and shall
provide necessary assistance to enable Pledgee to exercise the Pledge
Rights.
10. ASSIGNMENT
10.1 Without Pledgee's prior consent, Pledgors cannot give away or assign to
any party their rights and obligations under this Agreement.
10.2 This Agreement shall be valid and binding on each Pledgor and their
respective successors.
10.3 Pledgee may assign any and all of its rights and obligations under the
Service Agreements to its designated person(s) (natural/legal persons)
at any time, in which case the assignees shall have the rights and
obligations of Pledgee under this Agreement, as if it were a party to
this Agreement.
10.4 In the event that the Pledgee changes due to any transfer permitted
hereunder, the new parties to the Pledge shall execute a new pledge
agreement.
11. TERMINATION
This Agreement shall be terminated when the Secured Indebtedness has been
fully repaid and Shanda Networking is no longer obliged to undertake any
obligations under the Service Agreements. In this circumstance, Pledgee
shall cancel or terminate this Agreement as soon as reasonably
practicable.
12. HANDLING FEES AND OTHER EXPENSES
12.1 All fees and out of pocket expenses relating to this Agreement, including
but not limited to legal fees, cost of documentation, stamp duty and any
other taxes and fees, shall be borne by Pledgors. In the event that the
law requires Pledgee to pay any taxes, Pledgors shall reimburse Pledgee
for such taxes paid by Pledgee.
12.2 In the event that Pledgors fail to pay any taxes or fees in accordance
with the provisions of this Agreement, or due to any other reasons,
Pledgee has to recover such taxes and fees payable by Pledgors through
any means or in any manner, all costs and expenses (including but not
limited to all the taxes, handling fees, management fees, cost of
litigation, attorney's fees and insurance premiums) resulting therefrom
shall be borne by Pledgors.
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13. FORCE MAJEURE
13.1 In the event that the performance of this Agreement is delayed or impeded
by "an event of force majeure", the party affected by such event of force
majeure shall not be liable for any liability hereunder with respect to
the part of performance being delayed or impeded. "An event of force
majeure" means any event beyond the reasonable control of the effected
party and cannot be avoided even if the affected party has exercised
reasonable care, which include but not limited to government actions,
acts of God, fire, explosions, geographic changes, storms, flood,
earthquakes, tides, lightning and war. Notwithstanding the foregoing, a
lack of credit, funds or financing shall not be deemed as a circumstance
beyond the reasonable control of an effected party. The party affected by
"an event of force majeure" and seeking to relieve the performance
liability under this Agreement or any provisions thereof shall notify the
other party of its intention for seeking such relief and the measures it
will take to reduce the impact of the force majeure as soon as possible.
13.2 The party affected by force majeure shall not be liable for any liability
with respect to the part of performance being delayed or impeded if the
effected party has taken reasonable efforts to perform this Agreement. As
soon as the course of such relief is eliminated, the Parties shall use
their best efforts to resume the performance of this Agreement.
14. RESOLUTION OF DISPUTES
14.1 This Agreement shall be governed by and construed according to the laws
of PRC.
14.2 In the event of any dispute with respect to the construction and
performance of the provisions of this Agreement, the parties shall first
try to resolve the dispute through friendly consultations. Upon failure
of such consultations, any party may submit the relevant disputes to the
China International Economic and Trade Arbitration Commission for
arbitration in accordance with its then effective arbitration rules. The
arbitration shall be administered in Shanghai and the language used for
the arbitration shall be Chinese. The arbitration award shall be final
and binding on all parties.
15. NOTICES
Notices sent by the parties hereto shall be in writing ("in writing"
shall include facsimiles and telexes). If sent by hand, such notice shall
be deemed to have been delivered upon actual delivery; if sent by telex
or facsimile, such notice shall be deemed to have been delivered at the
time of transmission. If the date of transmission is not a business day
or if transmission is after working hours, then the next business day
shall be deemed as the date of delivery. The address of delivery
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shall be the addresses of the Parties stated on the first page of this
Agreement or addresses notified in writing at any time after this
Agreement is executed.
16. AMENDMENTS, TERMINATION AND CONSTRUCTION
16.1 No amendment to this Agreement shall be effective unless such amendment
has been agreed by all of the Parties and Party A and Party D have
obtained necessary authorization and approvals with respect to such
amendment (including the approval that Party A must obtain from the audit
committee or other independent body established according to the
Sarbanes-Oxley Act and the NASDAQ Rules under the board of
directors of its overseas holding company - Shanda Interactive
Entertainment Limited).
16.2 The provisions to this Agreement are severable from each other. The
invalidity of any provision hereof shall not effect the validity or
enforceability of any other provision hereof.
17. EFFECTIVENESS AND OTHERS
17.1 This Agreement shall take effect upon satisfaction of the following
conditions:
(1) This Agreement has been executed by all parties hereto; and
(2) Pledgors have recorded the Pledge hereunder in the Shareholders'
List of Shanda Networking.
17.2 This Agreement is written in Chinese in three counterparts. Each of the
Parties shall hold one counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement executed by their
duly authorized representatives in Shanghai on the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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[EXECUTION PAGE]
Pledgor A: Tianqiao Chen
Signature: _____________
Pledgor B: Danian Chen
Signature: _____________
Pledgee: Shengqu Information Technology (Shanghai) Co., Ltd.
(Company Seal)
Authorized representative: ___________
(Signature)
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APPENDIX 1
LIST OF AGREEMENTS ("SERVICE AGREEMENTS")
1. Amended and Restated Technical Support Agreement (signed on December 9,
2003)
2. Amended and Restated Strategic Consulting Agreement (signed on December
9, 2003)
3. Software Licensing Agreement (signed on December 9, 2003) (with respect
to E- Sales System 2.0)
4. Software Licensing Agreement (signed on December 9, 2003) (with respect
to Instant Messenging Software (keep-in-touch))
5. Software Licensing Agreement (signed on December 9, 2003) (with respect
to Shanda Xintianyou 1.0)
6. Amended and Restated Online Game Software Marketing and License Agreement
(signed on December 9, 2003) (with respect to the Woool V1.5)
7. Amended and Restated Equipment Lease Agreement (signed on December 9,
2003)
8. Amended and Restated Billing Technology Licensing Agreement (signed on
December 9, 2003)
9. Any other agreements to be entered into between Shanda Networking and
Pledgee from time to time with respect to services or licenses provided
by Pledgee to Shanda Networking in exchange for fees.
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ATTACHMENT:
10. Shareholders' List of Shanda Networking.
11. Pledgors's Capital Contribution Certificates for the Share Equity.
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