Joint Venture Agreement - Sina.com and NCsoft Corp.
SINA.com
2988 Campus Drive, Suite 100, San Mateo, CA 94403, U.S.A.
Telephone: (650) 638-9228 Fax: (650) 645-8650
November 22, 2002
Mr. Taek-Jin Kim
NCsoft Corporation ("NCsoft")
Seung Kwang Building
143-3 Samsung-dong, Kangnam-ku
Seoul, Republic of Korea
Re: JOINT VENTURE IN PEOPLE'S REPUBLIC OF CHINA
Dear Kim:
We refer to certain shareholders agreement (the "SA") dated November 22, 2002
between NCsoft and SINA.com concerning a joint venture in the People's Republic
of China ("China"). Capitalized terms not otherwise defined herein shall have
the meaning ascribed thereto in the SA.
1. SINA.com and NCsoft agree that, in the event where the relevant Chinese
laws (or enforcement practice) relating to the business operation
conducted through the Company and the ICP Company are clarified or
modified (by way of legislative enactment or amendment, promulgation or
amendment of regulations, rules or guidelines, court or administrative
precedent, or other similar action) and if, in the opinion (set forth in a
formal legal opinion) of King & Wood or other reputable Chinese legal
counsel acceptable to SINA.com and NCsoft, (i) the structure through which
the Company and the ICP Company are conducting business could be modified
to reduce legal risks, SINA.com and NCsoft shall cooperate with each other
in good faith and modify the structure in a way recommended by such legal
counsel or (ii) the structure through which the Company and the ICP
Company are conducting business would be viewed as in violation of Chinese
law or otherwise contrary to a policy of any Chinese government authority,
SINA.com and NCsoft shall cooperate with each other in good faith and
cause the Company and the ICP Company to cease and wind up their business
operation as promptly as possible so as to minimize any sanctions or
liabilities that may be imposed in connection therewith. SINA.com and
NCsoft acknowledge
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Letter Agreement between
SINA.com and NCsoft Corporation
November 22, 2002
Page 2
and agree that any actions taken by each party in order to implement (i)
or (ii) above shall not be deemed as breach or violation of any terms of
the SA or other documents executed in connection therewith. Without
limiting the generality of the foregoing, SINA.com and NCsoft acknowledge
and agree that each party is entitled to request the immediate suspension
of all or any part of the business of the Company and ICP company when, in
such party's reasonable opinion based on reputable Chinese legal counsel's
advice acceptable to the other party, the legal risk involved becomes
serious or considerable so that it is highly recommendable to immediately
suspend the said business.
2. In consideration of the Parties' designation under the SA of an ICP
Company established (or to be established) by SINA.com ("Sina-ICP"), which
is an affiliate of SINA.com, as the ICP Company through which on-line game
services for Lineage and other games to be sub-licensed by the Company
will be provided to end users in the Territory, SINA.com represents,
warrants and covenants each of the following:
(i) Sina-ICP has duly obtained and will at all times maintain an ICP
license that is necessary for the conduct of on-line game operation
business and the collection of revenue of such on-line game
operation from end users directly or indirectly and will at all
times make commercially reasonable efforts to obtain all other
necessary and appropriate licenses to be required (by way of
legislative enactment or amendment, promulgation or amendment of
regulations, rules or guidelines, court or administrative precedent,
or other similar action) for the conduct of on-line game operation
business and the collection of revenue of such on-line game
operation from end users directly or indirectly.
(ii) Sina-ICP shall be bound by and subject to the same non-competition
restriction on SINA.com as set forth in the SA.
(iii) Sina-ICP will maintain separate financial books and records for its
on-line game service operation and other related business relating
to Lineage or other games licensed by NCsoft or the Company and keep
funds relating to such matters separate (not commingle them with
funds from its other businesses) and will at all times conduct its
business operations relating to Lineage and be subject to audit by
the Parties and the Company in accordance with the ICP Agreements.
(iv) If NCsoft (a) has a basis to deem it desirable to replace Sina-ICP
with another ICP Company from a legal risk reduction or business
improvement perspective (which basis shall be reasonably acceptable
to SINA.com and shall not be based solely on NCsoft's lack of share
ownership or shareholder voting right over Sina-ICP) or (b) finds in
its reasonable discretion that Sina-ICP is in breach of any
obligations, representations or provisions set forth in the ICP
Agreements (provided that such breach is not due to the Company's
failure to provide services or assistance to Sina-ICP in accordance
with the Technical Services Agreement (the "TSA") entered into
between the Company and Sina-ICP) or herein or that other
termination cause (excluding termination by the Company at will
pursuant to Section 11(b)(vi) of the ICP License Agreement ("ICP
License Agreement")
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Letter Agreement between
SINA.com and NCsoft Corporation
November 22, 2002
Page 3
relating to Lineage between the Company and Sina-ICP or Section 5.2(f) of
the TSA) set forth under the ICP Agreements has occurred, NCsoft and the
Company shall have the right to terminate all relationship with Sina-ICP
immediately (in the case of breach of obligations or representations under
the ICP Agreements or occurrence of other cause for termination in the ICP
Agreements, upon expiration of a 60-day cure period; except that, in the
case of Section 11(b)(ii) of the ICP License Agreement or Section 5.2(b)
of the TSA, the cure period set forth in such provisions shall apply))
without any obligation or liabilities for such termination to Sina-ICP or
any other parties, and SINA.com and NCsoft shall lend full cooperation
such that the existing ICP Agreements are promptly terminated and a new
ICP Company to replace Sina-ICP is established, obtains all necessary
licenses and approvals, enters into the ICP Agreements with the Company in
the form and substance satisfactory to the Parties, is transferred all
customer relationship and other relevant matters in a smoothest possible
manner and is ready to continue the operation of on-line game services as
promptly as possible.
(v) SINA.com shall indemnify and hold NCsoft and the Company harmless
against any and all claims, liabilities, costs, expenses and other
losses arising out of any breach or failure to comply with the
foregoing in this Section 2; provided that SINA.com shall not be
held liable under this paragraph (v) if such breach or failure was
caused by the factor that is beyond control of Sina-ICP or SINA.com.
3. SINA.com shall:
(i) Assist the ICP Company (whether Sina-ICP or a new ICP Company
established to replace Sina-ICP) in acquiring any and all necessary
governmental permission, license and registrations for
products/services of the ICP Company;
(ii) Assist the ICP Company in obtaining the approval for new
product/service development or project proposals from the relevant
Chinese authorities;
(iii) Coordinate and promote the relationship between the ICP Company and
the relevant Chinese government authorities;
(iv) Assist the ICP Company in obtaining possible preferential policies
or exemptions from the Chinese government with respect to taxes and
other charges, and assist in completing the customs clearance
procedure with respect to all the materials and equipment that are
imported for the construction, facilitation and operation;
(v) Assist the ICP Company as requested in purchasing local materials,
equipments, supplies and services in China at the best quality and
conditions as possible;
(vi) Help the ICP Company obtain the possible preferential treatment in
terms of
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Letter Agreement between
SINA.com and NCsoft Corporation
November 22, 2002
Page 4
taxation, duties, foreign exchange control and RMB or foreign
exchange loans from financial institutions of China;
(vii) Assist the ICP Company in obtaining water supply, power supply,
transportation and other utility services, and arrange for the
design, construction and facilitation of the buildings and other
engineering service facilities on an as-needed basis; and
(viii) Assist the ICP Company in obtaining the possible preferential
treatment for the ICP Company in terms of use of land.
4. In consideration of the acceptance by Sina-ICP of the designation as the
ICP Company and SINA.com's representations, warranties and covenants under
Section 2 of this letter, NCsoft agrees to keep confidential and cause its
employees and representatives to keep confidential all information and
discussions obtained by it from Sina-ICP as a result of its audit of
Sina-ICP's books and records pursuant to the ICP License Agreement. NCsoft
shall indemnify and hold SINA.com and Sina-ICP harmless against any and
all claims, liabilities, costs, expenses and other losses incurred by
SINA.com or Sina-ICP (as the case may be) arising out of any breach of
NCsoft's obligation in this Section 4.
5. Each of SINA.com and NCsoft acknowledges and agrees that any of its
obligations or liabilities arising hereunder may be enforced against
assets directly or indirectly owned by it whether located inside or
outside China.
6. Each party represents and warrants that it has completed (if any) all its
internal and external approval, report, filing and any other similar
procedures required or desired to make this letter effective and
enforceable against it.
7. This letter shall be governed by the substantive laws of the State of
Washington in the U.S.A. Any dispute concerning this letter shall be
settled by arbitration held in Seattle, Washington, U.S.A. in accordance
with the ICC (International Chamber of Commerce) rules of arbitration.
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Letter Agreement between
SINA.com and NCsoft Corporation
November 22, 2002
Page 5
Best regards,
SINA.com
By: /s/ Daniel Mao
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Title: Chief Executive Officer
Name: Daniel Mao
Acknowledged and accepted by:
NCsoft Corporation
By: /s/ Taek-Jin Kim
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Title: Representative Director
Name: Taek-Jin Kim