Korean Joint Venture Agreement

JOINT VENTURE AGREEMENT



THIS JOINT VENTURE AGREEMENT is made as of March 19, 1999 by and between LYCOS, INC. ("Lycos"), a corporation organized under the laws of the State of Delaware, United States of America, and MIRAE CORPORATION, a CHUSIK HOESA organized under the laws of the Republic of Korea ("Mirae").





A. Lycos provides a World Wide Web navigation, search, directory and community service which is supported by advertising and electronic commerce. Lycos has exclusive worldwide rights to certain technology and knowhow used in providing such service. Lycos is interested in providing a comparable service, as culturally adapte d and with suitable local content, for the Republic of Korea market through a joint venture with Mirae.



B. Mirae is interested in participating with Lycos in the joint venture, and has various knowledge, experience and resources which would be of benefit to the joint venture.



NOW, THEREFORE, the parties to this Agreement hereby agree as follows:



1. INCORPORATION OF LYCOS KOREA. As promptly as possible after the execution of this Agreement, the parties shall cause a CHUSIK HOESA to be incorporated under the laws of the Republic of Korea (the "Company") as follows:



1.1 NAME. The name of the Company shall be "Lycos Korea Chusik Hoesa" in Korean and "Lycos Korea, Inc." in English.



1.2 AUTHORIZED CAPITAL. The authorized capital of the Company shall be [***] consisting of one common class of shares, and the Company shall be authorized to issue 20,000 shares of [***] par value per share (collectively, the "Stock") at the time of establishment.



1.3 SUBSCRIPTION. At the time of establishment of the Company, each of Lycos and Mirae shall subscr ibe for 10,000 shares of Stock having an aggregate par value of [***] for a total subscription of 20,000 shares of Stock having an aggregate par value of [***].



1.4 LEGENDS ON SHARE CERTIFICATES. Any share certificate issued by the Company to evidence any shares of stock of the Company issued to Lycos or Mirae shall bear the following legend:



"TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS

CERTIFICATE IS SUBJECT TO THE JOINT VENTURE AGREEMENT

BETWEEN LYCOS, INC. AND



***A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE







MIRAE CORPORATION DATED _________, 1999, AND TO THE

SHAREHOLDERS AGREEMENT BETWEEN LYCOS, INC. AND MIRAE

CORPORATION DATED __________, 1999, COPIES OF WHICH ARE ON

FILE AT THE PRINCIPAL OFFICE OF THE COMPANY IN SEOUL,

KOREA."



1.5 INITIAL DIRECTORS. The initial directors of the Company shall be as follows:



Edward M. Philip

Eric J. Gerritsen

Moon Soul Chung

Kyung Dal Cho



1.6 ADDRESS OF REGISTERED OFFICE. The address of the registered office of the Company shall be initially as follows:



Lycos Korea, Inc.

c/o Mirae Corporation

#1309, Korea Stock Exchange, Annex Bldg.,

33, Yoidodong, Youngdungpo-gu

Seoul, Korea 150-010



1.7 FISCAL YEAR. The fiscal year of the Company shall end on July 31, and the initial fiscal year shall be the stub period from the date of incorporation of the Company through July 31, 1999.



1.8 ACCOUN TING AND BOOKS AND RECORDS. The Company shall keep accurate books of account and financial and related records in accordance with generally accepted Korean accounting principles, standards and procedures, consistently applied. Upon reasonable prior notice and during normal business hours, the Company shall make available at its principal office in Seoul, Korea for inspection by Lycos and Mirae, and their designated representatives, the books of account and records of the Company.



1.9 ARTICLES. The Articles of Incorporation of the Company shall be in the form of the attached EXHIBIT A.



1.10 COSTS AND EXPENSES. The Company shall bear all costs and expenses directly relating to the incorporation of the Company in the Republ ic of Korea, including without limitation registration fees, notary fees, stamp duties and the like, and, to the extent permitted by law, attorneys' fees. Mirae shall advance any such expenses when and as required, and Mirae shall be entitled to prompt re imbursement of such expenses by the Company upon the completion of its incorporation.





1.11 ASSISTANCE. Mirae shall provide such reasonable assistance in connection with the incorporation of the Company as may be required, including witho ut limitation assistance in connection with the preparation or filing of any reports, notices or other filings required to be made in the Republic of Korea by the Company to or with any Korean governmental authority.



2. TECHNOLOGY LICENSES..



2.1 LICENSING AGREEMENTS. As promptly as possible after the incorporation of the Company, Lycos shall enter into license agreements with the Company in the forms attached as EXHIBITS B-1 AND B-2 (the "License Agreements"). The rights o f the Company under the License Agreements shall continue in accordance with the terms thereof notwithstanding any change in the ownership of Lycos, any transfer of the assets or business of Lycos, or any merger, consolidation, reorganization or recapital ization affecting Lycos.



2.2 ADDITIONAL TECHNOLOGIES. Lycos shall from time to time enter into good faith negotiations with the Company regarding the licensing by Lycos to the Company of additional technologies used by Lycos and not covered by the License Agreem e nts, to the extent such additional technologies are required to maintain a similar look and feel between the services offered by Lycos and the services offered by the Company. The licensing of any such additional technologies by Lycos to the Company shall be subject to the execution of a definitive agreement on mutually acceptable terms and conditions, which may include provision for reasonable compensation to Lycos.



3. SHAREHOLDER AGREEMENT. In connection with the issuance of Stock to Lycos and Mirae, Lycos and Mirae shall enter into a shareholder agreement in the form of the attached EXHIBIT C (the "Shareholder Agreement").



4. MIRAE LOAN FACILITY. As promptly as possible after the incorporation of the Company, Mirae shall enter into a l oan agreement with the Company (the "Loan Agreement") by which Mirae agrees to make loans (collectively, the "Loans") to the Company as follows:



4.1 MAXIMUM AGGREGATE COMMITMENT. The maximum aggregate amount of the Loans shall be [***] (the "Maximum Aggregate Commitment").



4.2 ADVANCES. Advances of the Loans shall be made as follows:



(a) promptly after the execution of the Loan Agreement, Mirae shall advance to the Company [***] (the "Initial Advance");



(b) on the one (1) year anniversary date of the Initial Advance, or at such earlier time as may be agreed between Mirae and the Company, Mirae shall advance to the [***] Company (the "Second Advance"); and





***A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED

AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE







(c) after making the Second Advance, Mirae shall from time to time advance to t he Company such amounts as may be required by the Company to meet its financial obligations or Business Goals (as defined below); provided, however, that the maximum amount of Loans outstanding at any one time under the Loan Agreement shall not exceed the amount of the Maximum Aggregate Commitment.



4.3 MATURITY DATE. "Maturity Date" shall mean the 20th anniversary date of the Initial Advance, as automatically extended for up to four (4) consecutive five (5) year periods unless the Company , by unanimous affirmative vote of its board of directors, elects to fix the maturity date of the Loans at the end of the initial period or at the end of any subsequent extension period and gives written notice of such election to Mirae not less than six (6) months prior to the end of the initial period or any subsequent extension period. The principal amount of all Loans outstanding under the Loan Agreement on the Maturity Date shall be due and payable on the Maturity Date.



4.4 APPLICABL E RATE. "Applicable Rate" means, at any point in time, the higher of (a) eight percent (8%), or (b) the overdraft interest rate prescribed by Korean law (or such equivalent rate as may be required from time to time to avoid the generation of taxable incom e to Mirae solely by reason of payment of interest by the Company to Mirae at a rate lower than a benchmark rate prescribed by Korean tax law or the Korean tax authorities).



4.5 INTEREST. Interest shall accrue on the outstanding principal amount of the Loans at a rate per annum which is equal to the Applicable Rate, and the Company shall pay accrued interest, subject to any available offsets, to Mirae in arrears on the last business day of each calendar quarter and on the Maturity Date. I nterest shall be calculated based on a 360-day year and the actual number of days elapsed.



4.6 VOLUNTARY PREPAYMENT. Upon the unanimous affirmative vote of its board of directors, the Company may, without premium or penalty, voluntarily p repay all or any portion of the Loans outstanding from time to time. Amounts prepaid may not be reborrowed.



4.7 ACCELERATION. Mirae shall have the right to accelerate repayment of the Loans in the event (a) any voluntary or involuntary dissolution proceeding or any voluntary or involuntary bankruptcy proceeding is commenced by or against the Compa n y, (b) any of this Agreement, the License Agreements or the Shareholder Agreement is terminated for any reason, and (c) the Company is or becomes unable to meet its financial obligations when and as due, including without limitation the obligation of the Company to pay principal and interest under the Loan Agreement. Except as expressly set forth in this Section 4.7, Mirae shall not have any acceleration rights with respect to repayment of the Loans.



4.8 CURRENCY DENOMINATION. All of the Loans shall be denominated in Korean Won, and all advances and payments in respect of the Loans shall be made in Korean Won.





4.9 METHOD OF PAYMENT. The Company shall pay all principal and interest owing to Mirae under the Loan Agreement to such account as Mirae may specify by written notice to the Company.



4.10 NO COLLATERAL OR GUARANTY. No collateral or guaranty for any of the Loans shall be required.



5. CAPITAL CONTRIBUTIONS AND STOCKHOLDER LOANS..



5.1 CAPITAL CONTRIBUTIONS. Neither party to this Agreement shall have any obligation to make capital contributions to the Company other than the [***] to be contributed as capital by each of Lycos and Mirae (for a total aggregate capital contribution of [***]) in connection with the incorporation of the Company.



5.2 LOANS. Except as expressly provided for in Section 4, neither party to this Agreement shall have any obligation to make loans to the Company.



6. MANAGEMENT.



6.1 DIRECTORS. The Company shall at all times have an even number of directors, and the initial number of directors shall be four (4). Mirae and Lycos shall have equal representation on the board of directors of the Compan y, and the parties shall cooperate in the election of directors, as more specifically provided in the Shareholder Agreement.



6.2 REPRESENTATIVE DIRECTOR. There shall be one representative director, who shall be a Mirae nominee.



6.3 STATUTORY AUDITOR. There shall be one statutory auditor, who shall be a Lycos nominee.



6.4 MEETINGS OF DIRECTORS. The Company shall bear all reasonable expenses of directors in connection with their attendance at meetings of directors, including without limitation travel, lodging and meals.



7. BUSINESS OBJECTIVES AND BUSINESS GOALS.



7.1 BUSINESS OBJECTIVES. The business objectives of the Company shall include, without limitation, the following:



(a) provide a World Wide Web navigation, search, directory and community service at www.lycos.co.kr, w hich is generally similar to, and of like quality with, the World Wide Web navigation, search, directory and community service provided by Lycos at www.lycos.com, but which is adapted culturally and in local content to be suitable for the Korean market (t he "Service");



*** A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.





(b) generate revenue from the Service, including without limitation revenue from the sale of advertising and electronic commerce;



(c) engage in all business activities relating to the development, maintenance, support, enhancement and promotion of the Service, including without limitation the development a nd acquisition of local content and the development and expansion of distribution channels for the Service; and



(d) engage in all business activities ancillary or incidental to the foregoing.



7.2 BUSINESS GOAL S. Set forth on the attached EXHIBIT D are specific business goals for the Company for the period from the date of this Agreement through December 31, 2001. Not less than three (3) months prior to the end of such period and each consecutive three (3) year period thereafter, the parties shall agree on specific business goals for the three (3) year period immediately following the current period. Such business goals, as from time to time in effect, are referred to as the "Business Goals."



8. START UP, OPERATION AND ADDITIONAL TECHNOLOGIES.



8.1 START UP. Initially, the Service shall be operated and maintained at the U.S. data center of Lycos. When and as feasible, as determined by Lycos and the Company, the operation and maint enance of the Service shall be transferred to a site in the Republic of Korea. For so long as the Service is operated and maintained at the U.S. data center of Lycos, the Company shall pay to Lycos a fee of [A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] cents (one quarter of one cent) for each query processed at the U.S. data center of Lycos in connection with the Service.



8.2 PERSONNEL. Mirae shall be responsible for assuring that the Company is adequately staffed with properly skilled personnel as required to enable the Company to meet its business objectives and the applicable Business Goals.



8.3 OPERATION. Mirae shall be responsible for assuring that the Service is operated on a twenty-four (24) hour a day, seven (7) day a week basis, both before and after transfer of the Service to the Republic of Korea.



9. COOPERATION. The parties shall in good faith cooperate with each other to enable the Company to maximize the success of the Company's business.



10. ADVERTISING AND REFERRALS.



10.1 PURCHASE OF ADVERTISING BY MIRAE. Mirae agrees to purchase advertising from the Company at the applicable rates from time to time offered by the Company to unrelated third parties and otherwise as more specifically described in the attached EXHIBIT E. Payments by Mirae for such advertising shall be subject to offset against obligations of the Company to Mirae.





10.2 REFERRALS BY LYCOS. Lycos shall, when there is the opportunity to do so, refer advertising and electronic commerce business to the Company, and the Company shall pay to Lycos, as a commission, an amount equal to fifteen percent (15% ) of all gross revenues generated by the Company from such referrals, and shall reimburse to Lycos, on demand, all costs incurred by Lycos in connection with any such referrals. Within thirty days after the end of each calender quarter during the term of t h is Agreement, the Company shall submit to Lycos a statement setting forth the calculation of all such commissions which are payable with respect to gross revenues attributable to such referrals and received by the Company in such quarter, and shall concur rently make payment to Lycos of the amount of such commissions shown in such calculation, as converted to U.S. Dollars at the then current rate of exchange.



11. EXCLUSIVITY. For so long as this Agreement remains in effect, Mirae shall not, directl y or indirectly, alone or in combination with others, purchase, establish, maintain, invest in or otherwise promote, or agree to purchase, establish, maintain, invest in or otherwise promote, any navigation, search, directory or community service (other t h an the Service), except that the foregoing restriction shall not apply to passive portfolio investments in an entity not in excess of five percent (5%) of the total equity of such entity. For so long as this Agreement remains in effect, Lycos shall not, d i rectly or indirectly, alone or in combination with others, purchase, establish, maintain, invest in or otherwise promote, or agree to purchase, establish, maintain, invest in or otherwise promote, any navigation, search, directory or community service (ot h er than the Service) operated from the Republic of Korea specifically for the local Korean market, except that the foregoing restriction shall not apply to passive portfolio investments in an entity not in excess of five percent (5%) of the total equity o f such entity.



12. REPRESENTATIONS AND WARRANTIES OF LYCOS. Lycos hereby represents and warrants to Mirae as follows:



12.1 ORGANIZATION, POWER AND AUTHORITY. Lycos is a corporation duly organized, validly existing and in good st anding under the laws of the State of Delaware, United States of America. Lycos has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.



12.2 AUTHORIZATION AND BINDING OBLIGATIONS. Lycos has taken all requisite corporate action to authorize and approve the execution, delivery and performance of this Agreement by Lycos. This Agreement has been duly executed and delivered by Lycos, and constitutes the legal, valid and binding obligations o f Lycos, enforceable against Lycos in accordance with its terms.



12.3 NO CONFLICTS. The execution, delivery and performance of this Agreement by Lycos, and the consummation of the transactions contemplated hereby, will not (a) violate any provision of the Certificate of Incorporation or Bylaws of Lycos, (b) violate, conflict with or result in (or with notice or lapse of time or both result in) a breach of or default under any term or provision of any contract or agreement to which Lycos i s a party or by which Lycos or any of its assets or properties is or may be bound, or (c) violate any order, judgment, injunction, award or





decree of any court or arbitration body, or any governmental, administrative or regulatory authority, by which Lycos or any of its assets or properties is or may be bound.



12.4 NO PENDING LITIGATION. No action, suit or proceeding which seeks to prevent the consummation of the transactions contemplated by this Agreement, or would impair the ability of Lycos to consummate the transactions contemplated by this Agreement, is pending against Lycos, and no such action, suit or proceeding has been threatened against Lycos.



13. REPRESENTATIONS AND WARRANTIES OF MIRAE. Mirae hereby represents and warrants to Lycos as follows:



13.1 ORGANIZATION, POWER AND AUTHORITY. Mirae is a CHUSIK HOESA duly organized and validly existing under the laws of the Republic of Korea. Mirae has all requisite power and authority to execute, deliver and p erform its obligations under this Agreement.



13.2 AUTHORIZATION AND BINDING OBLIGATIONS. Mirae has taken all requisite corporate action to authorize and approve the execution, delivery and performance of this Agreement by Mirae. This Agr eement has been duly executed and delivered by Mirae, and constitutes the legal, valid and binding obligations of Mirae, enforceable against Mirae in accordance with its terms.



13.3 NO CONFLICTS. The execution, delivery and performance o f this Agreement by Mirae, and the consummation of the transactions contemplated hereby, will not (a) violate any provision of the charter documents of Mirae, (b) violate, conflict with or result in (or with notice or lapse of time or both result in) a br e ach of or default under any term or provision of any contract or agreement to which Mirae is a party or by which Mirae or any of its assets or properties is or may be bound, or (c) violate any order, judgment, injunction, award or decree of any court or a rbitration body, or any governmental, administrative or regulatory authority, by which Mirae or any of its assets or properties is or may be bound.



13.4 NO PENDING LITIGATION. No action, suit or proceeding which seeks to prevent the consu mmation of the transactions contemplated by this Agreement, or would impair the ability of Mirae to consummate the transactions contemplated by this Agreement, is pending against Mirae, and no such action, suit or proceeding has been threatened against Mi rae.







14. CONFIDENTIALITY. For so long as this Agreement remains in effect and for a period of three (3) years after any termination of this Agreement, each party shall keep strictly confidential, and shall not disclose, use, divulge, publish or otherw i se reveal, directly or through any third party (including without limitation the Company), any confidential or proprietary information of the other party which was disclosed by or received pursuant to this Agreement, or in connection with the preparation a nd negotiation of this Agreement, or by reason of the performance by the parties of their obligations hereunder or their involvement in activities of the Company, including, but not limited to, documents and/or information regarding customers, costs, prof i ts, markets, sales, products, product development, key personnel, pricing policies, operational methods, technology, know-how, technical processes, formulae or plans for future development (collectively, "Confidential Information"), except as may be neces s ary in connection with filings with governmental agencies as required under applicable law, including, in the case of Lycos, the rules and regulations promulgated under the Securities Exchange Act of 1934, provided, however, that neither party shall make a ny disclosure required under applicable law before providing the other party with a reasonable opportunity to seek a protective order. Upon termination of this Agreement, each party shall either destroy or return to the other all memoranda, notes, records , reports and other documents (including all copies thereof) relating to the Confidential Information of the other party which such party may then possess or have under its control. Notwithstanding the foregoing, Confidential Information of a party shall n o t include (a) information which was already known to the recipient at the time of its receipt, (b) information which is or becomes freely and generally available to the public through no wrongful act of the recipient, (c) information which is rightfully r e ceived by the recipient from a third party legally entitled to disclose such information free of confidentiality restrictions, or (d) information disclosed in connection with legal action initiated by a party to enforce rights under this Agreement, or any agreement executed pursuant to this Agreement, PROVIDED that adequate safeguards (such as protective orders) are maintained.



15. FAILURE TO MEET BUSINESS GOALS. If the Company fails to meet the applicable Business Goals for the period commencing from the date of this Agreement and ending on December 31, 2001 or for any consecutive three (3) year period thereafter, then, within sixty (60) days after the end of such period, either party shall have the right, at its option and in addition to any oth er rights and remedies it may have, to:



(a) elect to dissolve the Company by giving written notice thereof to the other party, in which case the parties shall cooperate to take all such steps as may be necessary to dissolve the Company; and/or



(b) elect to terminate this Agreement by giving written notice thereof to the other party and the Company, in which case this Agreement, the License Agreements, the Shareholder Agreement and the funding commitment under the Loan Agreement shall automatically terminate notwithstanding any provision to the contrary in this Agreement, the License Agreements, the Shareholder Agreement or the Loan Agreement.



16. DEADLOCK.



16.1 MAJOR MATTERS. As used in Section 16.2, "Major Matters" shall mean:





(a) liquidation, winding-up, dissolution or commencement of any bankruptcy or other similar proceeding;



(b) merger, consolidation, reorganization, recapitalization, and the like;



(c) sale of all or substantially all of the assets of the Company, or the sale of any assets individually or in the aggregate exceeding in amount;



(d) issuance, redemption, repurchase or retirement of any securities (including any option, warrant or right to acquire any securities or any instrument convertible into securities);



(e) increase or decrease of authorized capital; or



(f) approval of annual business plan (including annual budget and marketing plans, distribution plans and pricing policies), and any major modifications to or departures from the approved annual business plan.



16.2 DEADLOCK. In the event (a) the board of directors of the Company deadlocks on any Major Matters, or (b) the board of directors of the Company cannot, by majority or unanimous vote, agree on the management of the affairs of the Company, such that the business of the Company can no longer be conducted to advantage, then either party shall have the right, at its option and in addition to any other righ ...