Purchase Option and Cooperation Agreement - Shengqu Information Technology (Shanghai) Co. Ltd., Tianqiao Chen, Danian Chen and Shanghai Shanda Networking Co. Ltd.
PURCHASE OPTION AND COOPERATION AGREEMENT
Among
SHENGQU INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
TIANQIAO CHEN
DANIAN CHEN
and
SHANGHAI SHANDA NETWORKING CO., LTD.
DECEMBER 30, 2003
SHANGHAI, PRC
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PURCHASE OPTION AND COOPERATION AGREEMENT
THIS PURCHASE OPTION AND COOPERATION AGREEMENT ("this Agreement") is
entered into in Shanghai, People's Republic of China (the "PRC") on this 30th
day of December 2003 by and among:
Party A: Shengqu Information Technology (Shanghai) Co., Ltd.
Address: Room 638-7, Building 2, No.351 Guoshoujing Road, Zhangjiang
Hi-Tech Park, Shanghai
Party B: Tiaoqiao Chen
Address: Room 203, Number 29, 1635 Nong, South Pudong Road, Pudong New
Area, Shanghai, PRC
ID Number: 310110730516681
Party C: Danian Chen
Address: Room 203, Number 29, 149 Nong, Pudian Road, Pudong New Area,
Shanghai, PRC
ID Number: 310115197805162096
Party D: Shanghai Shanda Networking Co., Ltd.
Address: 21/F, Huarong Plaza, 1289 South Pudong Road, Shanghai, PRC
WHEREAS,
(1) Party B and Party C are shareholders of Party D and each holds 70% and
30% equity interests in Party D, respectively;
(2) Party A, a company with limited liability duly organized and validly
existing under the laws of the PRC, provides certain technical support,
strategic consulting and other services to Party D, and currently is a
major business partner of Party D;
(3) The Parties hereto wish to grant Party A the exclusive purchase option to
acquire, at any time upon satisfaction of the requirements under the PRC
law, the entire or a portion of Party D's share equity/assets owned by
Party B and/or Party C.
NOW AND THEREFORE, in accordance with the principle of sincere
cooperation, mutual benefit and joint development and after friendly
negotiations, the Parties hereby enter into the following agreements pursuant to
the provisions of relevant laws and regulations of the PRC:
ARTICLE 1 DEFINITIONS
The terms used in this Agreement shall have the meanings set forth below:
1.1. "THIS AGREEMENT" means this Purchase Option and Cooperation Agreement and
all appendix thereto, including written instruments as originally
executed and as may
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from time to time be amended or supplemented by the Parties hereto
through written agreements;
1.2. "PRC" means, for the purpose of this Agreement, the People's Republic of
China, excluding Hong Kong, Taiwan and Macao;
1.3. "DATE" means the year, month and day. In this Agreement, "within" or "no
later than", when used before a year, month or day, shall always include
the relevant year, month or day.
ARTICLE 2 THE GRANT AND EXERCISE OF PURCHASE OPTION
2.1 The Parties hereto agree that Party A shall be granted an exclusive
purchase option to acquire, at any time upon satisfaction of the
requirements under applicable laws and conditions as agreed in this
Agreement (including, without limitation, when Party B and/or Party C
cease to be Party D's directors or employees, or Party B and/or Party C
attempt to transfer their share equity in Party D to any party other than
the existing shareholders of Party D), the entire or a portion of Party
D's share equity owned by Party B and/or Party C, or the entire or
portion of the assets owned by Party D. The purchase option granted
hereby shall be irrevocable during the term of this Agreement and may be
exercised by Party A or any eligible entity designated by Party A.
2.2 Party A may exercise the aforesaid purchase option by delivering a
written notice to any of Party B, Party C and Party D (the "Exercise
Notice").
2.3 Within thirty (30) days of the receipt of the Exercise Notice, Party B,
Party C or Party D (as the case may be) shall execute a share/asset
transfer contract and other documents (collectively, the "Transfer
Documents") necessary to effect the respective transfer of share equity
or assets with Party A (or any eligible party designated by Party A).
2.4 When applicable laws permit the exercise of the purchase option provided
hereunder and Party A elects to exercise such purchase option, Party B,
Party C and Party D shall unconditionally assist Party A to obtain all
approvals, permits, registrations, filings and other procedures necessary
to effect the transfer of relevant share equity or assets.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Each party hereto represents to the other parties that:
3.1 It has all the necessary rights, powers and authorizations to enter into
this Agreement and perform its duties and obligations hereunder; and
3.2 The execution or performance of this Agreement shall not violate any
significant contract or agreement to which it is a party or by which it
or its assets are bounded.
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ARTICLE 4 EXERCISE PRICE
When it is permitted by applicable laws, Party A (or any eligible party
designated by Party A) shall have the right to acquire, at any time, all of
Party D's assets or its share equity owned by Party B and Party C, at a total
price of RMB 10,000,000 (or the lowest price permitted by applicable laws if the
lowest price permitted by applicable laws is less than RMB 10,000,000). If Party
A (or any eligible party designated by Party A) elects to purchase a portion of
Party D's share equity or assets, the exercise price for such purpose shall be a
pro rata portion of the above total price.
ARTICLE 5 COVENANTS
The Parties further agree as follows:
5.1 Before Party A has acquired all the equity/assets of Party D by
exercising the purchase option provided hereunder, Party D shall not:
5.1.1 sell, assign, mortgage or otherwise dispose of, or create any
encumbrance on, any of its assets, operations or any legal or
beneficiary interests with respect to its revenues (unless such
sale, assignment, mortgage, disposal or encumbrance is relating to
its daily operation or has been disclosed to and agreed by Party A
in writing);
5.1.2 enter into any transaction which may materially affect its assets,
liability, operation, equity or other legal rights (unless such
transaction is relating to its daily operation or has been
disclosed to and agreed by Party A in writing); and
5.1.3 distribute any dividend to its shareholders in any manner.
5.2 Before Party A has acquired all the equity/assets of Party D by
exercising the purchase option provided hereunder, Party B and/or Party C
shall not individually or collectively:
5.2.1 supplement, alter or amend the articles of association of Party D
in any manner to the extent that such supplement, alteration or
amendment may have a material effect on Party D's assets,
liability, operation, equity or other legal rights (except for pro
rata increase of registered capital mandated by applicable laws);
5.2.2 cause Party D enter into any transaction to the extent such
transaction may have a material effect on Party D's assets,
liability, operation, equity or other legal rights (unless such
transaction is relating to Party D's daily operation or has been
disclosed to and agreed by Party A in writing); and
5.2.3 cause Party D's board of directors adopt any resolution on
distributing dividends to its shareholders.
5.3 After the execution of this Agreement, Party B and Party C (the
"Principals") shall each execute and deliver a proxy to Mr. Hanbin Qu and
Mr. Quanzhao Tan,
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respectively, (the "Agents") to grant the Agents the right to appoint and
elect Party D's directors, general manager and other senior officers in
Party D's shareholders meetings. Such proxies shall be conditioned upon
the employment relationship between Party A and the Agents and subject to
Party A's consent. Once the Agents cease to be employed by Party A or
Party A delivers a written notice to the Principals requesting the
proxies to be terminated, the Principals shall revoke the relevant proxy
immediately and grant the same rights as provided in the proxies to other
PRC citizens employed and designed by Party A. The Agents have agreed to
act with due care and diligence in exercising their rights under the
proxies and indemnify and keep the Principals harmless from any loss or
damages caused by any action in connection with exercise of their rights
under the proxies (unless any loss or damage is caused by the Principals'
own intentional or material negligent actions).
5.4 Party B and Party C shall, to the extent permitted by applicable laws,
cause Party D's operational term to be extended to equal the operational
term of Party A.
5.5 When Party B and/or Party C cease to be shareholders or directors of
Party D, Party B and/or Party C (as the case may be) shall cause their
respective successors to undertake in writing to continue to fulfill the
rights and obligations provided hereunder.
5.6 Party A shall provide or arrange other parties to provide financings to
Party D to the extent Party D needs such financing to finance its
operation. In the event that Party D is unable to repay such financing
due to its losses, Party A shall waive or cause the relevant parties to
waive all recourse against Party D with respect to such financing.
5.7 To the extent Party B and/or Party C are subject to any legal or economic
liabilities to any institution or individual other than Party A as a
result of performing their obligations under this Agreement or any other
agreements between them and Party A, Party A shall provide all support
necessary to enable Party B and/or Party C to duly perform their
obligations under this Agreement and any other agreements and to hold
Party B and/or Party C harmless against any loss or damage caused by
their performance of obligations under such agreements.
ARTICLE 6 CONFIDENTIALITY
Each Party shall keep confidential all the content of this Agreement.
Without the prior consent of all Parties, no Party shall disclose any content of
this Agreement to any other party or make any public announcements with respect
to any content of this Agreement. Notwithstanding the forgoing provisions of
this Article 6, the following disclosure shall be permitted: (i) disclosure made
pursuant to any applicable laws or any rules of any stock exchange; (ii)
disclosure of information which has become public information other than due to
any breach by the disclosing party; (iii) disclosure to any Party's
shareholders, legal counsel, accountants, financial advisors or other
professional advisors, or (iv) disclosure to any potential purchasers of a Party
or its shareholders' equity/assets, its other investors, debts or equity
financing providers, provided that the receiving party of confidential
information has agreed to keep the relevant information confidential (such
disclosure
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shall be subject to the consent of Party A in the event that Party A is not the
potential purchaser).
ARTICLE 7 APPLICABLE LAW AND EVENTS OF DEFAULT
The execution, effectiveness, interpretation, performance and dispute
resolution of this Agreement shall be governed by the laws of the PRC.
Any violation of any provision hereof, incomplete performance of any
obligation provided hereunder, any misrepresentation made hereunder, material
concealment or omission of any material fact or failure to perform any covenants
provided hereunder by any Party shall constitute an event of default. The
defaulting Party shall assume all the legal liabilities pursuant to the
applicable laws.
ARTICLE 8 DISPUTE RESOLUTION
8.1 Any dispute arising from the performance of this Agreement shall be first
subject to the Parties' friendly consultations. In the event any dispute
cannot be solved by friendly consultations, the relevant dispute shall be
submitted for arbitration;
8.2 The arbitration shall be administered by the Shanghai branch of China
International Economic and Trade Arbitration Commission in accordance
with the then effective arbitration rules of the Commission.
8.3 The arbitration award shall be final and binding on the Parties. The
costs of the arbitration (including but not limited to arbitration fee
and attorney fee) shall be borne by the losing party, unless the
arbitration award stipulates otherwise.
ARTICLE 9 EFFECTIVENESS
This Agreement shall be effective upon the execution hereof by all
Parties hereto and shall remain effective thereafter.
This Agreement may not be terminated without the unanimous consent of all
the Parties except Party A may, by giving a thirty (30) days prior notice to the
other Parties hereto, terminate this Agreement.
ARTICLE 10 AMENDMENT
All Parties hereto shall fulfill their respective obligations hereunder.
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 under the Sarbanes-Oxley Act, the NASDAQ Rules under the board
of
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directors of its overseas holding company - Shanda Interactive
Entertainment Limited).
ARTICLE 11 COUNTERPARTS
This Agreement is executed in four (4) counterparts. Party A, Party B,
Party C and Party D shall each hold one counterpart.
ARTICLE 12 MISCELLANEOUS
12.1 Party B and Party C's obligations, covenants and liabilities to Party A
hereunder are joint and several, and Party B and Party C shall assume
joint and several liabilities with respect to such obligations, covenants
and liabilities. With respect to Party A, a default by Party B shall
automatically constitute a default by Party C, and vice versa;
12.2 The title and headings contained in this Agreement are for convenience of
reference only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement;
12.3 The Parties may enter into supplementary agreements to address any issue
not covered by this Agreement. The supplementary agreements so entered
shall be an appendix hereto and shall have the same legal effect as this
Agreement.
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[EXECUTION PAGE]
Party A: SHENGQU INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD.
(Company seal)
Authorized Representative (Signature):
Party B: TIANQIAO CHEN
(Signature):
Party C: DANIAN CHEN
(Signature):
Party D: SHANGHAI SHANDA NETWORKING CO., LTD.
(Company seal)
Authorized Representative (Signature):
Date of Execution: December 30, 2003
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