Document:

Loan Facility Letter, dated July 12, 2012

 Exhibit 10.3 
 Our reference number: FL923A_ Changyou.com _new 
 12th July, 2012 

Confidential 
 Changyou.com Limited

 East Tower, Jing Yan Building 

No. 29 Shijingshan Road 
 Shijingshan
District 
 Beijing 100043, PRC 

Attn: Mr. Alex Ho 
 Dear Sirs,

  

	Re:	Changyou.com Limited 

 RMB630
Million Term Loan Facility 
 This letter (this “Facility Letter”) sets out the terms and conditions upon which The Bank of East
Asia, Limited will provide a RMB630 Million term loan facility to Changyou.com Limited. 
  

	(1)	Borrower: 

Changyou.com Limited, a company incorporated in Cayman Islands and having its registered office at Offshore Incorporations (Cayman)
Limited, Scotia Centre, 4th Floor, P.O. Box 2804, George
Town, Grand Cayman KY1-1112, Cayman Islands (the “Borrower”). 
  

	(2)	Lender: 

 The Bank of East Asia, Limited,
whose registered office is situated at No. 10 Des Voeux Road Central, Hong Kong (the “Lender”). 
  

	(3)	Nature and Facility Amount: 

 A term loan
facility (the “Facility”) of up to a maximum principal amount of RMB630,000,000.00 (Renminbi Six Hundred Thirty Million Only) (the “Facility Limit”). 

 

	(4)	Purpose: 

 To finance the dividend
distribution, overseas acquisitions and capital injection into overseas subsidiaries of the Borrower. 

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	(5)	Final Maturity Date: 

 The final maturity
date of each drawing/advance under the Facility (the “Final Maturity Date of each Advance”) shall be (i) the date falling 14 days before the expiry date of the respective Standby L/C (as hereinafter defined in Paragraph
(14) below) supporting such drawing/advance or (ii) the date falling 24 months from the date of the Lender’s receipt of the Borrower’s acceptance of this Facility Letter (the “Acceptance Date”), whichever is earlier.

  

	(6)	Drawing/Availability: 

 The Facility is
available for multiple drawings on any Business Day within 3 months (the “Availability Period”) from the Acceptance Date provided that:- 
  

	(a)	The Lender shall have received in form and substance satisfactory to it all of the documents and other evidence as listed in the “Conditions Precedent” as
stipulated in Paragraph (7) hereof; 

  

	(b)	Each drawing shall be in a minimum amount of RMB200 Million and if for a larger amount, an integral multiple of RMB10 Million; 

 

	(c)	The total loan(s) outstanding after taking into account of the amount of the proposed drawing(s) shall not exceed the Facility Limit; 

 

	(d)	Each drawing shall have been supported by the respective Standby L/C issued by the Issuing Bank (as hereinafter defined in Paragraph (14) below) in RMB for an
amount not less than 100% of the corresponding amount of drawing; 

  

	(e)	The Borrower shall have given not less than 3 Business Days’ prior written notice of drawing to the Lender specifying the date and the amount of the proposed
drawing; 

  

	(f)	The maximum number of drawings shall not exceed 3; and 

  

	(g)	Any undrawn balance at the end of the Availability Period will be cancelled automatically. 

  

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	(7)	Conditions Precedent: 

 The obligation of
the Lender to make available the Facility to the Borrower hereunder is conditional upon: 
  

	(a)	The Borrower having furnished to the Lender, prior to the date of first drawing (the “First Drawdown Date”) under the Facility, the following in form and
substance satisfactory to the Lender: 

  

	 	(i)	Certified true copy of the Borrower’s Certificate of Incorporation, Certificate of Incorporation on Change of Name (if any), Certificate of Incumbency, Certificate
of Good Standing and updated Memorandum and Articles of Association (or applicable constitutional documents); 

  

	 	(ii)	Certified true copy of the resolutions (with copy list of specimen signature(s) of authorised signatory(ies) enclosed thereon) duly passed at a duly convened and held
meeting of the Board of Directors of the Borrower evidencing (i) the approval of the Facility, (ii) the acceptance of the terms and conditions of this Facility Letter and (iii) the authorization of appropriate officer(s) to
countersign this Facility Letter and to sign on behalf of the Borrower all confirmations, notice of drawing and other notices, requests or other communications required to be made and given to the Lender hereunder or otherwise in connection with the
Facility; 

  

	 	(iii)	The duplicate of this Facility Letter duly signed by the authorised signatory(ies) of the Borrower; 

 

	 	(iv)	Copy of Hong Kong Identity Card or passport of each of the officers of the Borrower authorised to sign the documents as referred to in sub-paragraphs (ii) and
(iii) hereinabove; 

  

	 	(v)	Due payment by the Borrower of the Arrangement Fee as referred to in Paragraph (9) below; and 

 

	 	(vi)	Such other documents as the Lender may request. 

  

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	(b)	The Lender being satisfied with the corporate power and legal capacity of the Borrower to enter into the document as referred to in sub-paragraph (a)(iii) hereinabove
and for this purpose, the Lender may require legal opinions or such other documents relating to any of the matters contemplated herein to be provided in form and substance satisfactory to the Lender at the expense of the Borrower.

  

	(c)	There being no material adverse change in the financial market condition and in the financial condition of the Borrower. 

 

	(8)	Interest Rate: 

  

	(a)	Normal Interest 

 Interest on all the
loan(s) outstanding of the Facility shall be calculated at the fixed rate of 3.75% per annum. Interest shall be calculated on the basis of the actual number of days elapsed on a 360-day year. Interest accrued shall be payable quarterly in
arrears by the Borrower on the last Business Day of each calendar quarter (each an “Interest Payment Date”) and on the corresponding Final Maturity Date of each Advance. 

 

	(b)	Default Interest 

 In respect of the
loan(s) outstanding under the Facility, interest thereon and other sums in respect of the Facility not repaid or paid on the due date or dates provided hereunder, interest shall be payable on demand from the due date or dates for payment thereof
until the date of actual payment in full of such loan(s) outstanding and/or interest and/or other sums (as the case may be) at the rate of 5% per annum over the rate of interest as determined by the Lender in accordance with sub-paragraph
(a) of this Paragraph (8) (both before and after judgement). For so long as the default continues, the relevant rate of interest shall be re-determined by the Lender on the same basis thereafter and shall be compounded at weekly intervals.

  

	(9)	Arrangement Fee: 

 An arrangement fee of
RMB100,000.00 (Renminbi One Hundred Thousand Only) (the “Arrangement Fee”) shall be payable by the Borrower on the earlier of (i) the date falling 14 Business Days after the Acceptance Date and (ii) the First Drawdown Date and is
non-refundable in any event. 
  

	(10)	Undrawn Balance Fee: 

 Waived. 

  

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	(11)	Repayment: 

 Subject to Paragraph
(13) hereinbelow, all outstanding amounts of each drawing/advance of the Facility including but not limited to the principal outstanding, the accrued interest and any other sums owing to the Lender shall be repaid in full on the corresponding
Final Maturity Date of each Advance. Amount repaid is not available for re-drawing. 
  

	(12)	Voluntary Prepayment: 

 The Borrower may
on any Interest Payment Date prepay in whole or in part the loan(s) outstanding under the Facility provided that: 
  

	(a)	The Borrower shall have given not less than 5 Business Days’ prior written notice of prepayment to the Lender, specifying the amount to be prepaid and the date of
such prepayment; 

  

	(b)	Each partial prepayment shall be in a minimum amount of RMB200 Million and if for a larger amount, an integral multiple of RMB10 Million; 

 

	(c)	Each prepayment shall be made together with accrued interest on the amount prepaid and any other amounts (including but not limited to funding loss, if any) payable by
the Borrower in respect thereof on the date of prepayment; and 

  

	(d)	Amount prepaid is not available for re-drawing. 

  

	(13)	Lender’s Overriding Rights: 

Notwithstanding anything contained herein to the contrary (in particular, Paragraphs (5) and (11)), the Facility is subject to the Lender’s
review, amendment of any terms and/or cancellation of all or any part thereof from time to time at the sole discretion of the Lender and the loan(s) outstanding, interest thereon and any other sums owing or payable under the Facility are subject to
the Lender’s customary overriding right of repayment on demand. The Lender hereby expressly reserves the unfettered right of terminating the Facility and/or requiring repayment of all monies owing from or payable by the Borrower to the Lender
at any time by notice in writing to the Borrower, whereupon the Facility or any part thereof as stipulated in the Lender’s notice shall forthwith be terminated and/or all monies owing from or payable by the Borrower to the Lender or any part
thereof as stipulated in the Lender’s notice shall forthwith be repaid by the Borrower. 

  

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	(14)	Security: 

 Standby Letter of Credit(s)
(the “Standby L/C”) in form and substance as approved by the Lender for the amount of not less than 100% of the corresponding advance(s)/drawing(s) under the Facility in RMB, to be issued by The Bank of East Asia (China), Limited, Beijing
Branch (the “Issuing Bank”) in favour of the Lender as the beneficiary, whereby the Issuing Bank shall honour its payment obligation to the Lender up to the amount as stipulated in the respective Standby L/C upon and subject to the terms
and conditions contained therein. 
 (This Facility Letter and the Standby L/C are collectively referred to as the “Finance
Documents”.) 
  

	(15)	Payments: 

  

	(a)	On the date of each drawing under the Facility, the Lender shall make the advance available to the Borrower by crediting the same in Renminbi in same day funds to the
account designated in the notice of drawing given by the Borrower or in such other manner as the Borrower may specify in the irrevocable notice of drawing given by the Borrower (provided that such other manner as specified by the Borrower must be
acceptable to the Lender); 

  

	(b)	On each date on which any sum is due or payable by the Borrower under or in connection with the Facility, the Borrower shall either (i) make such sum available
before 11:00 a.m. (Hong Kong time) in same day funds in its CorporatePlus account maintained with the Lender (Account No.: 015-514-68-00423-4) (the “CorporatePlus Account”), (ii) by CHATS before 11:00 a.m. (Hong Kong time) in same day
funds to the Lender’s account no. 015-514 (S.W.I.F.T. BEASHKHH) or (iii) in such other manner as instructed by the Lender. The Borrower hereby irrevocably authorises the Lender to debit the CorporatePlus Account on any date on which any
sum is due or payable under or in connection with the Facility without further consent from or notice to the Borrower; 

  

	(c)	Whenever any payment under this Facility Letter (including but not limited to the principal repayment and interest payment) or otherwise in connection with the Facility
shall become due on a day which is not a Business Day, the due date thereof shall be extended to the next Business Day in the same calendar month (if there is one) or on the preceding Business Day (if there is no succeeding Business Day in the same
calendar month); and 

  

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	(d)	All payments by the Borrower hereunder shall be made free and clear of any deduction or withholding on account of tax, levy, impost, duty or charges of whatsoever
nature (“Tax Payment”). The Borrower shall as soon as practicable deliver to the Lender relevant receipts for any Tax Payment required to be made by it. If any withholding or deduction is required, the amount to be paid by the Borrower
must be increased to the extent that the Lender will receive such amount as it would otherwise have been entitled to receive had there been no such deduction or withholding. 

 

	(16)	Increased Costs: 

 If as a result of
(i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation (which shall include, without limitation, any law or regulation concerning capital adequacy, prudential limits,
liquidity, reserve assets or tax); or (ii) compliance with any law, regulation, direction, request or requirement (whether or not having the force of law) of any competent governmental or other authority made after the date of this Facility
Letter, any increased costs are incurred or suffered by the Lender, which shall include (1) a reduction in the rate of return from the Facility or on the Lender’s overall capital (including, without limitation, as a result of any reduction
in the rate of return on capital brought about by more capital being required to be allocated by the Lender); and/or (2) a reduction of any amount due and payable under the Finance Documents (“Increased Costs”), the Borrower shall:

  

	(a)	pay on demand to the Lender such additional amounts as the Lender may certify (which certificate shall be conclusive and binding on the Borrower, save for any manifest
error) to be necessary to compensate the Lender for such Increased Costs; and 

  

	(b)	be at liberty at any time after its receipt of any such demand and so long as the circumstances giving rise to such Increased Costs may continue and subject to its
giving to the Lender not less than 15 Business Days’ prior written notice, to prepay to the Lender in whole (but not in part) the loan(s) outstanding, interest thereon and any other sums owing or payable under the Facility (subject to
Paragraphs (12)(c) to (d) and (24)(a)). 

  

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 Any demand as referred to in sub-paragraph (a) of this Paragraph (16) may be made at any time
before or after the end of any period or any time before or after any prepayment or repayment of all or part of the Facility to which such demand relates. 
  

	(17)	Representations and Warranties: 

 The
Borrower represents and warrants to the Lender throughout the whole term of the Facility and for so long as any amount is outstanding under the Facility that: 
  

	(a)	The Borrower has the corporate power and authority to (i) borrow the Facility from the Lender on the terms and conditions herein and (ii) give
security/indemnity/assurance as support for the borrowing of the Facility from the Lender, and no event, state of affairs, conditions or act which constitutes or with the passing of time, giving of notice, or with the fulfillment of any condition
will or may constitute an Event of Default (as defined in Paragraph (19) below) has occurred or will occur on the date of making a drawing by the Borrower under the Facility or as a result thereof; 

 

	(b)	The Borrower is duly incorporated and validly existing under the laws of its place of incorporation, (ii) has full legal right, capacity, power and authority to
enter into the Finance Documents to which it is party and (iii) has taken all necessary actions to authorise the borrowing of the Facility on the terms and conditions hereunder; 

 

	(c)	This Facility Letter, when signed/executed by the Borrower, will constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in
accordance with the terms herein; 

  

	(d)	The Borrower’s entering into this Facility Letter does not and will not violate or exceed any borrowing or similar limit or other power or restriction granted or
imposed by any law to which the Borrower is subject or under its Memorandum and Articles of Association (or applicable constitutional documents); 

  

	(e)	The Borrower entering into, exercising of its rights and/or performing of or complying with its obligations under this Facility Letter does not and will not violate, to
an extent or in a manner which has or is likely to have a material adverse effect on its financial condition or operation, any agreement to which it is a party or which is binding on it or its assets; 

  

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	(f)	Any information (written or otherwise) provided by the Borrower in connection with the Facility and the financial condition of the Borrower is/are true and accurate as
of the date of providing them; 

  

	(g)	The Borrower’s obligations under this Facility Letter are direct, unconditional and unsubordinated obligations of the Borrower and rank at least pari passu with
all other present and future unsecured borrowings of the Borrower, save as otherwise provided by law; and 

  

	(h)	The representations and warranties contained in sub-paragraphs (a) to (g) of this Paragraph (17) shall be deemed to be repeated and will remain to be
true and accurate in all respects as if made on each date on which any amount is outstanding under the Facility or any part of the Facility remains available or subsisting. 

 

	(18)	Undertakings: 

 The Borrower undertakes to
the Lender throughout the whole term of the Facility and for so long as any sum remains owing or payable under the Facility that: 
  

	(a)	The Borrower shall deliver to the Lender its (i) audited consolidated financial statements as soon as available and in any event within 120 days after the end of
its financial years, and (ii) interim half-year unaudited consolidated financial statements as soon as practicable and in any event within 90 days after the end of the relevant first 6-month period in its financial years;

  

	(b)	The Borrower shall deliver to the Lender any circular, document or other information (written or otherwise) as the Lender may from time to time reasonably request;

  

	(c)	The Borrower shall maintain its corporate existence and conduct its business and operations in compliance with all applicable laws and in a proper manner;

  

	(d)	The Borrower shall maintain (i) 100% beneficial ownership of the issued share capital of Changyou.com HK Limited, a company incorporated in Hong Kong and having
its registered office at 12th Floor, Ruttonjee House, No. 11 Duddell Street, Central, Hong Kong (“Changyou.com HK”) and Beijing AmazGame Age Internet Technology Co., Ltd, a company incorporated in the People’s Republic of China
and having its registered office at Room 1210, Building 3, No. 3 Badachu High-tech Science Park, Shijingshan District, Beijing, the People’s Republic of China (“Beijing AmazGame”) and (ii) the management control of
Changyou.com HK and Beijing AmazGame; 

  

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	(e)	The shares of the Borrower shall remain listed on the NASDAQ Global Select Market shall not be suspended from trading on NASDAQ Global Select Market for a period
exceeding consecutive 14 trading days except for obtaining approval in writing from the Lender; 

  

	(f)	The Borrower shall place RMB deposit(s) in the CorporatePlus Account for an amount equivalent to the interest payable of each drawing/advance of the next calendar
quarter under the Facility within 5 Business Days from each drawing/advance throughout the loan life of the Facility and for so long as any amount remains owing or payable under the Facility; 

 

	(g)	The Borrower shall fully comply with the legal and regulatory requirements of the People’s Republic of China (“PRC”) on the loan usage and the flow of
loan money and shall not directly or indirectly remit, transfer or channel the proceeds of the Facility to the PRC (but excluding Hong Kong, Macau and Taiwan); 

 

	(h)	The Borrower shall forthwith notify the Lender in writing of (i) the occurrence of any Event of Default as referred to in Paragraph (19) below and/or
(ii) the occurrence of any event, state of affairs, conditions or act which with the passing of time, giving of notice, or with the fulfillment of any condition will or may constitute an Event of Default; and 

 

	(i)	The Borrower shall promptly upon the request of the Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the
Lender in order for the Lender to conduct any “Know Your Customer” or other similar procedures under applicable laws and regulations. 

  

	(19)	Events of Default: 

 Upon the occurrence
of any of the following events at any time (each an “Event of Default”): 
  

	(a)	The Borrower or the Issuing Bank fails to pay on the due date to the Lender any sum (including but not limited to any repayment of principal and interest payment) that
the Borrower or the Issuing Bank is obliged to pay in connection with the Facility; or 

  

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	(b)	The Borrower or the Issuing Bank defaults in the performance of any other obligations hereunder and/or under the Finance Documents (as the case may be); or

  

	(c)	The Borrower or the Issuing Bank becomes insolvent or any liquidator/trustee in bankruptcy or receiver has been appointed over all or part of the assets of the Borrower
or the Borrower is unable or admits inability to pay its debts as they fall due; or 

  

	(d)	There occurs, in the opinion of the Lender, a material adverse change in the financial condition of the Borrower or the Issuing Bank or there occurs, in the opinion of
the Lender, any situation which has materially and adversely affected or may materially and adversely affect the ability of the Borrower to perform any or all of its obligations hereunder; or 

 

	(e)	A petition is presented or a proceeding is commenced or an order is made or an effective resolution is passed or any other step is taken by any person for the
winding-up, insolvency, administration, reorganization, reconstruction, dissolution or bankruptcy of the Borrower or the Issuing Bank or for the appointment of a liquidator, receiver, administrator, trustee or similar officer of the Borrower or the
Issuing Bank or of all or any part of its business or assets; or 

  

	(f)	Any indebtedness of the Borrower or the Issuing Bank becomes due before its stated maturity or when called, or the Borrower or the Issuing Bank defaults under or
commits a breach of any instrument or agreement relating to any such indebtedness; or 

  

	(g)	Any step is taken by any person for the purpose of a reconstruction, amalgamation, reorganization, merger or take-over involving the Borrower or the Issuing Bank
(except for a solvent merger or take-over on terms approved by the Lender in writing before such step is taken); or 

  

	(h)	The Borrower ceases to maintain (i) 100% beneficial ownership of the issued share capital of Changyou.com HK and Beijing AmazGame and (ii) the management
control of Changyou.com HK and Beijing AmazGame; or 

  

	(i)	The shares of the Borrower, for any reason (other than technical in nature as determined by the Lender in its sole discretion) cease or are suspended from trading on
NASDAQ Global Select Market for more than 14 consecutive trading days except for obtaining approval in writing from the Lender; or 

  

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	(j)	Any representation, warranty, undertaking or statement made by the Borrower hereunder is not complied with or is or proved to be incorrect or misleading in any material
respect when made, repeated or deemed to be repeated; or 

  

	(k)	There occurs any event or circumstance which, with the giving of notice and/or the lapse of time and/or the making of any necessary determination under this Facility
Letter and/or the satisfaction of any applicable condition, or any combination of any of the foregoing might constitute an Event of Default; 

 then the Lender may, at any time when any one of the above-mentioned Events of Default occurs and/or is continuing, terminate the Facility and demand immediate payment and/or repayment of all amounts
outstanding (together with interest accrued thereon and any other amounts owing to the Lender) under or in connection with the Facility from the Borrower whereupon the security constituted by the Finance Documents shall forthwith become enforceable
without prior notice. 
 This Paragraph (19) is without prejudice to the Lender’s overriding rights as set out in Paragraph
(13) above. 
  

	(20)	Set-off: 

  

	(a)	The Borrower hereby irrevocably authorises the Lender to apply (without prior notice) any credit balance (whether or not then due) to which the Borrower is at any time
beneficially entitled on any account at, any sum held to the order of the Borrower by and/or any liability of any office of the Lender, either singly or jointly, in or towards satisfaction of any sum then due from the Borrower to the Lender in
connection with the Facility and unpaid. For this purpose, the Lender is authorised to use all or any part of any such credit balance to buy such other currencies as may be necessary to effect such application. 

 

	(b)	The Lender shall not be obliged to exercise any of its rights under this Paragraph (20), which shall be without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which it is at any time otherwise entitled (whether by operation of law, contract or otherwise). 

  

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	(21)	Severability: 

 Any provision of this
Facility Letter prohibited by or becoming unlawful or unenforceable under any applicable law actually applied by any court of competent jurisdiction shall, to the extent required by such law, be severed from this Facility Letter and be rendered
ineffective so far as is possible without modifying the remaining provisions of this Facility Letter. Where, however the provisions of any such applicable law may be waived, they are hereby waived by the parties hereto to the full extent permitted
by such law to the effect that this Facility Letter shall be a valid and binding agreement enforceable in accordance with its terms. 
  

	(22)	Entire Agreement: 

 This Facility Letter
constitutes the entire agreement of the Lender and the Borrower and supersedes any previous expressions of intent or understanding in respect of the Facility. 
  

	(23)	Expenses: 

 All costs, charges, taxes,
fees and expenses (including legal fee on a full indemnity basis) incurred by the Lender in connection with the preparation, negotiation, administration, execution, perfection, enforcement and/or amendment of, supplement to or waiver in respect of
the Finance Documents and all other relevant documents or otherwise in connection with the Facility shall be borne and paid by the Borrower on demand, irrespective of whether or not any part of the Facility is subsequently utilized. 

 

	(24)	Indemnity: 

  

	(a)	The Borrower shall on demand indemnify the Lender in full against any cost, loss, expense, tax, fee, claims, proceeding or liability whatsoever incurred, suffered or
sustained and as conclusively certified by the Lender as a result of (i) any drawing not being made following the giving of a notice of drawing by the Borrower due to non-fulfillment of any condition of this Facility Letter, or (ii) the
making of any drawing pursuant to this Facility Letter or otherwise, or (iii) any prepayment under the Facility on a non-Interest Payment Date. 

  

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	(b)	If any amount is received or recovered in a currency other than the currency (the “Account Currency”) in which payment has been demanded pursuant to the
Finance Documents (whether as a result of, or of the enforcement of, a judgment or order of a court, tribunal or authority of any jurisdiction, or in the dissolution of the Borrower or otherwise), it shall only constitute a discharge by the Borrower
to the extent of the amount in the Account Currency which the Lender is able to purchase with the amount so received or recovered in that other currency on the date of receipt or recovery. If that amount is less than the Account Currency amount
expressed to be due to the Lender, the Borrower shall on demand indemnify the Lender against any loss/shortfall sustained by it as a result. 

  

	(25)	Evidence: 

 Any certificate issued by the
Lender as to the amount of the loan(s) outstanding, the rate of interest applicable to the amount of any sums owing or payable in connection with the Facility or any other matters relating to this Facility Letter shall, save to the extent of
manifest error, be conclusive evidence against the Borrower as to the matter(s) covered thereby. 
  

	(26)	Process Agent: 

 The Borrower irrevocably
appoints Changyou.com HK to be its agent (the “Process Agent”) for the service of process in Hong Kong. Any documentation in connection with the proceedings in the courts of Hong Kong delivered to the Process Agent at its registered office
from time to time shall be treated as duly delivered to and served on the Borrower. The Borrower shall procure the Process Agent to forthwith notify the Lender in writing of any change in the address of its registered office. 

 

	(27)	Governing Law and Jurisdiction: 

 This
Facility Letter and all other relevant documents and the rights and obligations of the Lender and the Borrower hereunder/thereunder shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region of the
People’s Republic of China (“Hong Kong”) and each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the courts of Hong Kong. 
  

	(28)	Miscellaneous: 

  

	(a)	Reference to the time of a day is to Hong Kong time (unless otherwise stated), and time is of the essence hereof; 

  

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	(b)	“Business Day” as used in this Facility Letter means a day (other than Saturday and Sunday) on which dealings in RMB may be carried out in the relevant
interbank market and on which banks are generally open for business in Hong Kong and the PRC; 

  

	(c)	For the purpose of this Facility Letter, any determination as to whether any event, situation, circumstance or document is “material”, “adverse”,
“reasonable”, “expedient” or “necessary” shall be determined by the Lender whose determination shall be conclusive and binding on the Borrower; and 

 

	(d)	Headings on this Facility Letter are for ease of reference only and shall not affect the interpretation of the terms and conditions of this Facility Letter.

 Please signify your acceptance of the above terms and conditions by signing and returning to us the duplicate of this Facility
Letter within 1 month from the date hereof, failing which our offer will automatically lapse. Upon our receipt of your acceptance of this Facility Letter, this Facility Letter will be legally binding upon your goodselves as the Borrower and this
Bank as the Lender with immediate effect. 
 If you have any query in relation to the terms and conditions of this Facility Letter, please feel
free to contact our Christine Wong or Lawrence Tang of Corporate Lending and Syndication Department at 3608 0968 or 3608 0923. 
 Yours
faithfully, 
 For and on behalf of 

The Bank of East Asia, Limited 
  

					
	Jennifer Leung	 		 	Sally Lam
	Officer	 		 	Senior Credit Administration Manager
	Trade and Loan Services Department	 		 	
	Operations Support Division	 		 	

  

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 In consideration of the Lender agreeing to grant to the Borrower the Facility pursuant to the terms and
conditions of this Facility Letter:- 
  

					
	The Borrower	 		 	The Process Agent
	We hereby agree to be bound by and accept all the terms and conditions of this Facility Letter.	 		 	We hereby agree to the appointment as the Process Agent of the Borrower in accordance with Paragraph (26) of this Facility Letter.
			
	For and on behalf of	 		 	For and on behalf of
	Changyou.com Limited	 		 	Changyou.com HK Limited
			
	  
	 		 	  

	Name:	 		 	Name:
	Date:	 		 	Date:
			
	Witness:	 		 	Witness:Loan Facility Letter, dated August 7, 2012

 Exhibit 10.4 

 
 

 
  

					
	Our Ref.        	 	:	 	LC-2012005413826-6547
			
	To	 	:	 	Changyou.com HK Limited

  

 Date        : 7 August 2012

  

			
	Important Notice:	  	This letter sets out the terms and conditions upon which our bank would provide/continue/revise general banking facilities to you. The Borrower(s), Mortgagor(s), Chargor(s) and
Guarantor(s) are advised to read and understand the terms and conditions herein carefully before accepting the banking facilities. The Borrower(s), Mortgagor(s), Chargor(s) and Guarantor(s) are entitled to seek separate independent legal advice from
solicitors of their choice if they wish to understand the legal commitments which they will assume on signing this letter.

 Dear Sirs, 
  

	Re:	General Banking Facilities 

 With
reference to our recent discussion, we, Bank of Communications Co., Ltd. Hong Kong Branch, are pleased to grant the following facilities (the “Facilities”) to Changyou.com HK Limited with Certificate of Incorporation No.1158141 (the
“Borrower”) subject to the General Agreement for Banking Facilities and the terms stated below. Words and expressions defined in the General Agreement for Banking Facilities shall have the same meaning in this letter. 

 

	1.	Facilities 

  

	•	 	 Uncommitted Term Loan 

 Limit: USD100,000,000.00*** 
 Remarks: 

 

	 	(1)	Availability Period: The proposed date of each advance must be a business day and the Term Loan facility shall be available for drawdown within 10 months from the
acceptance date of this facility letter subject to the Bank’s satisfaction of all conditions precedent under this facility letter (“Availability Period”). 

 

	 	(2)	The utilization and withholding of the Facilities will be subject to the terms and conditions under the 

 (as defined under clause 2 of this letter, the 

). 

  

	 	(3)	Maximum amount of each advance in aggregate with the other term advances made under the Facilities shall not exceed 100% of the amount of the corresponding 

 issued by Bank of Communications Co., Ltd. Beijing Municipal Branch (“BoCom Beijing”) and shall not at any time exceed USD100,000,000.00. 

 

	 	(4)	Supporting documents evidencing the purpose of utilization of the drawdown proceeds in form and substance satisfactory to the Bank shall be provided to the Bank within
one month from the drawdown date of each term advance. 

  

	 	(5)	Each drawdown request shall be made by the Borrower in writing at least two (2) business days prior to the proposed date of advance. 

 

	 	(6)	The drawdown notice once given is irrevocable. 

  

	 	(7)	Interest rate: at 2.2% p.a. over LIBOR. 

  

	 	(8)	Interest Period: two (2) weeks, one (1), three (3) or (subject to availability) six (6) months as mutually agreed between the Borrower and the Bank from
time to time in writing. No interest period shall extend beyond the Maturity Date. 

  

	 	(9)	The Bank is hereby authorized and instructed by the Borrower to deduct an amount equal to 3% of each advance for interest payment of the Facilities due and to be
payable by the Borrower to the Bank (the “Retention Amount”) from the drawdown proceeds upon each drawdown. The Retention Amount shall be deposited and withheld in the Borrower’s designated account maintained with the Bank.

  

	 	(10)	Each drawdown shall be made in minimum amount of USD5,000,000.00 and in integral multiples of USD1,000,000.00. 

  
 

 

 

 
  

					
	Our Ref.        	 	:	 	LC-2012005413826-6547
			
	To	 	:	 	Changyou.com HK Limited

  

	 	(11)	Interest of each advance shall be payable at the end of its relevant interest period. All outstanding principal, accrued interests and any other monies owing under the
Facilities shall be repaid in full on the Maturity Date. 

  

	 	(12)	Default Interest: 4.25% p.a. (the Default Margin) over the USD Best Lending Rate of the Bank. 

 

	 	(13)	Any amounts undrawn after the Availability Period shall be automatically cancelled. 

 

	 	(14)	The “Maturity Date” shall mean the earliest of 

  

	 	(i)	the date falling two (2) years from the acceptance date of this facility letter or 

 

	 	(ii)	the date falling one month before the expiry date of the corresponding 

 issued by BoCom Beijing or 

  

	 	(iii)	from the first anniversary of the first drawdown date of the Facilities, the “Maturity Date” (which shall be absolutely determined by the Bank) as notified in
writing by the Bank to the Borrower whereupon all outstanding principal, accrued interests and any other monies owing under the Facilities shall be repaid in full by the Borrower. 

 

	 	(15)	Prepayment in whole or in part is allowed subject to five (5) business days’ prior written notice to the Bank. The Borrower shall pay all break funding costs
incurred by the Bank if prepayment is not made on an interest payment date. Amount prepaid cannot be re-borrowed. 

  

	 	(16)	If any interest period shall end on a day which is not a business day, such interest period shall end on the next succeeding business day unless such succeeding
business day falls within the next calendar month in which case such interest period shall end on the immediately preceding business day and interest shall be adjusted accordingly. 

 

	 	(17)	Under any circumstances, the Bank shall have the sole discretion to decide whether to make available such advance(s) or not. 

 

	2.	Conditions Precedent / Collateral Securities 

  

	•	 	 The following collateral securities and/or legal documents shall be provided : - 

 

	 	•	 	 Duplicate copy of this facility letter to be duly accepted and executed by the Borrower, the Guarantor(s) and/or the Security Provider(s) (as the case
may be). 

  

	 	•	 	 General Agreement for Banking Facilities duly accepted and executed by the Borrower. 

 

	 	•	 	 Certified extract of board resolutions (and shareholders’ minutes where appropriate) from the relevant parties approving the terms of this letter,
the General Agreement for Banking Facilities and other condition precedent documents. 

  

	 	•	 	 

 (Master Agreement no.LC-2012005413826A-6547) duly accepted and executed by the Borrower, 

, Bank of Communications Co., Ltd. Hong Kong Branch and Bank of Communications Co., Ltd. Beijing Municipal Branch (the 

). 

  

	 	•	 	 Letter of confirmation 

 issued by Bank of Communications Co., Ltd. Beijing Municipal Branch in form and substance satisfactory to the Bank. 

  

	 	•	 	 Letter of Undertaking 

 issued by the Borrower in form and substance satisfactory to the Bank. 

  

	 	•	 	 The original audited consolidated annual financial statements of 

 or copies of such audited consolidated annual financial statements duly certified by the director of 

 for the financial year 2011. 

  

	•	 	 In respect of any or all documents supplied by you to us in support of your credit application, you shall, upon our request, produce the originals of
such documents for our inspection. 

  

	•	 	 Such other documents as we may reasonable request including without limitation those as may be required to evidence any and all licenses,
authorization, consents or approvals, necessary for the performance by you or the security provider(s) of their respective obligations under this letter and the security or condition precedent documents. 

 

	3.	Fees & Expenses 

  

	•	 	 Handling charge of 0.4% on the Term Loan limit made available to the Borrower (the “Available Limit”) shall be payable by the Borrower on the
date which each such Available Limit is made available to the Borrower. 

  
 

 

 

 
  

					
	Our Ref.        	 	:	 	LC-2012005413826-6547
			
	To	 	:	 	Changyou.com HK Limited

  

	•	 	 Whether or not the Facilities are drawn or utilized by you, all reasonable expenses including but not limited to legal fees, communications and other
out-of-pocket expenses reasonably incurred by us in connection with the Facilities or other documents executed in respect of the Facilities or any enforcement, or attempted enforcement, of our rights under this facility letter or other documents
executed in respect of the Facilities, are to be borne by you on a full indemnity basis. 

  

	•	 	 We reserve the right to charge you administrative charge of HKD200.00 or such other reasonable amount as determined by us from time to time,
each time when you fail to make a payment on its due date. 

  

	•	 	 Apart from all costs, expenses, administrative charge and default interest (if applicable) arising from your failure to make payment on its due date,
the Bank reserves the right to charge you collection charge of HKD1,500.00 (or such other reasonable amount as determined by the Bank from time to time) upon each issuance of solicitor’s demand letter to you and/or the security
provider(s). This collection charge shall be borne by you on a full indemnity basis. 

  

	•	 	 Unless agreed by us, all monies paid under this Clause 3 shall not be refunded once paid. 

 

	4.	Authorization to debit account(s) 

  

	•	 	 We shall be authorized to debit any account opened or to be opened with the Bank in name of Changyou.com HK Limited at any time and from time to time
for all or any of the instalment payment, interest, fees, charges, commissions, costs, expenses and other sums due and payable by the captioned Borrower(s) without prior notice to the captioned account holder. Such sums shall be deemed duly drawn or
overdrawn from the captioned account(s) by the captioned account holder. The captioned account holder hereby agree and guarantee that all payments from the captioned debited account in payment of any indebtedness of the Borrowers shall not confer
any right, whether by way of subrogation or otherwise, on the captioned account holder in respect of any security now or at any time hereafter, and from time to time given by the Borrowers/Chargor(s)/Guarantor(s) to us in respect of any of the
captioned Banking Facilities. 

  

	5.	Other Conditions 

  

	5.1	The Borrower hereby undertakes with the Bank that for so long as any moneys are owing under this facility letter or any part of the Facilities commitment remains
outstanding :- 

  

	 	(a)	the Borrower shall directly and beneficially own 100% shareholding interests in 

 at all times; 

  

	 	(b)	to procure 

 shall be remained as the business profit center of the Borrower’s group companies in PRC; 

  

	 	(c)	to procure the annual dividend payment or other profit distribution of 

 in an amount of not less than the aggregate of all outstanding principal, accrued interests and any other monies owing under the Facilities shall be credited to the designated account of the Borrower maintained with
the Bank and such dividend distribution shall not be under any kind of restriction from any other third party; 

  

	 	(d)	to procure Changyou.com Limited shall maintain its listing status on NASDAQ and shall directly and beneficially hold 100% shareholding interest in the Borrower at all
times; 

  

	 	(e)	to procure the distributable profits of 

 shall not be less than RMB3,500,000,000.00 for financial year 2012. 

  

	 	(f)	to procure 

 shall have commenced all regulatory procedures and other necessary applications for its dividend distribution on the earlier of (i) the date falling eight months from the first drawdown date under the
Facilities and (ii) 31 May 2013 and the related application progress report shall be submitted to the Bank every six months; 

  

	 	(g)	the banking facilities granted by the financial institutions to the Borrower under which the related facilities agreements have certain restrictions on dividend
distribution of 

 shall not in aggregate exceed USD500,000,000.00 (including the Facilities to the Borrower under this Facility Letter and the USD200,000,000 facilities granted by the Bank to Changyou.com Limited);

  

	 	(h)	the audited financial statements or management accounts of 

 shall be submitted to the Bank every 6 months; 

  

	 	(i)	to procure 

 to provide the Bank with the semi-annual report on all outstanding banking facilities and the respective loan maturity date which related facilities agreements have certain restrictions on dividend distribution of

 

  
 

 

 

 
  

					
	Our Ref.        	 	:	 	LC-2012005413826-6547
			
	To	 	:	 	Changyou.com HK Limited

  

	5.2	The Facilities shall become immediately due and payable by the Borrower if the Borrower defaults or receives notice of default under any agreement or obligation
relating to borrowing or any indebtedness of the Borrower or such borrowing or indebtedness becomes payable or capable of being declared payable before its stated maturity or is not paid when due or any encumbrance, guarantee or other security now
or hereafter created by the Borrower becomes enforceable. 

  

	5.3	The Borrower hereby confirms and agrees that if the undistributed profits of 

 minus the outstanding banking facilities granted by other financial institutions to the Borrower under which the related facilities agreements have certain restrictions on dividend distribution of 

 is less than 1.5 times of the outstanding loan under the Facilities in this Facility Letter, the Borrower shall procure that 

 must immediately commence all regulatory procedures and other necessary applications for its dividend distribution. 

  

	6.	Miscellaneous 

  

	•	 	 The drawdown date of any facilities must be made on a Business Day. 

 

	•	 	 You, as the Borrower of the Facilities, hereby consent that in the case of a remittance transaction at your request, our Bank is authorized to disclose
your relevant information to, or used and retained by the receiving bank (whether within or outside Hong Kong) including but not limited to your company name, account number, address/registered office, date of establishment, business registration
certificate number/company number etc. (if applicable). 

  

	•	 	 You confirm that, at present, you do not have any relationship with any of the directors or employees of our Bank or any other subsidiaries of our
Bank. If the Facilities are secured by any guarantee(s) or securities provided by any third party(ies) (the “Security Provider”), you also confirm that none of the Security Provider is so related. You further agree and undertake that if
the foregoing is not true and correct or you or any of the Security Provider becomes related with any of the directors or employees of our Bank or any other subsidiaries of our Bank, you will promptly notify us in writing.

  

	•	 	 If there is any conflict or inconsistency between the (provisions) hereof and the provision(s) of the General Agreement for Banking Facilities and
other collateral securities it is agreed that the provision(s) hereof shall prevail. 

  

	7.	Date of Review 

  

	•	 	 Unless the Facilities are cancelled by us, they are subject to our review on a regular basis. 

  
 

 

 

 
  

					
	Our Ref.        	 	:	 	LC-2012005413826-6547
			
	To	 	:	 	Changyou.com HK Limited

  

 Please signify your acceptance of this offer by signing and returning to us duplicate copy of this
facility letter within 30 days from the date of this letter, failing which this offer shall lapse. Further, if the condition precedent and security documents listed above are not provided to us to our satisfaction within 30 days from your acceptance
of this offer, the Facilities will not be made available to you or subject to our review of the terms and conditions thereof by notice to you. 

We hope you would avail yourself the banking facilities frequently to our mutual benefit and we assure you of our best services at all times. 

 

	
	Yours faithfully,
	For Bank of Communications Co., Ltd.
	Hong Kong Branch
	
	  

	Authorized Signature(s)

 After due and careful consideration of the contents of this facility letter, I/we hereby accept the Facilities and agree
to be bound by the terms and conditions set out herein. 
 

 
  

	
	For and on behalf of
	Changyou.com HK Limited
	
	  

	Borrower
	

	Date:
	

  

	
	  

	Witness:

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