-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B34qCwsYvuEo5IqKklbixiDz/CpOAkzCW43A3leihiudcyAx5P5tZFDhGycxPsUa 6S0+oqf6q+n4qyLxR2DjjA== 0001145549-05-001560.txt : 20050830 0001145549-05-001560.hdr.sgml : 20050830 20050830081649 ACCESSION NUMBER: 0001145549-05-001560 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050830 DATE AS OF CHANGE: 20050830 GROUP MEMBERS: ASIAN GROOVE, INC. GROUP MEMBERS: EZER INC. GROUP MEMBERS: MASAYOSHI SON GROUP MEMBERS: NICHIEI RYU GROUP MEMBERS: TAIZO SON SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GRAVITY Co., Ltd. CENTRAL INDEX KEY: 0001313310 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 000000000 STATE OF INCORPORATION: M5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80768 FILM NUMBER: 051057067 BUSINESS ADDRESS: STREET 1: SHINGU BUILDING, 620-2 SHINSA-DONG STREET 2: GANGNAM-GU CITY: SEOUL STATE: M5 ZIP: 135-894 BUSINESS PHONE: 822-516-5438 MAIL ADDRESS: STREET 1: SHINGU BUILDING, 620-2 SHINSA-DONG STREET 2: GANGNAM-GU CITY: SEOUL STATE: M5 ZIP: 135-894 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Techno Groove Co.,Ltd CENTRAL INDEX KEY: 0001335905 IRS NUMBER: 000000000 STATE OF INCORPORATION: M0 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: SUNRISE SHINJUKU BLDG 8TH FLOOR STREET 2: 2-4-15 OOKUBO,SHINJUKU-KU CITY: TOKYO STATE: M0 ZIP: 169-1072 BUSINESS PHONE: 81-3-3232-1071 MAIL ADDRESS: STREET 1: SUNRISE SHINJUKU BLDG 8TH FLOOR STREET 2: 2-4-15 OOKUBO,SHINJUKU-KU CITY: TOKYO STATE: M0 ZIP: 169-1072 SC 13D 1 k00995sc13d.txt TECHNO GROOVE CO., LTD. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. ___)* GRAVITY CO., LTD. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE WON 500 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 38911N107 ------------------------------------- (CUSIP Number) Eiji Deyama Techno Groove, Inc. Sunrise Shinjuku Bldg 8th Floor 2-4-15, Ookubo Shinjuku-ku, Tokyo Japan 81-3-3232-1071 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 30, 2005 ------------------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Sections 240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 38911N107 13D PAGE 1 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). TECHNO GROOVE CO., LTD. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 3,649,619 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,649,619 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,649,619 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- CUSIP NO. 38911N107 13D PAGE 2 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). ASIAN GROOVE, INC. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 3,640,619 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,640,619 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,640,619 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- CUSIP NO. 38911N107 13D PAGE 3 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). TAIZO SON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION KOREA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 3,640,619 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,640,619 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,640,619 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- CUSIP NO. 38911N107 13D PAGE 4 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). EZER INC. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 3,640,619 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,640,619 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,640,619 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- CUSIP NO. 38911N107 13D PAGE 5 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). NICHIEI RYU - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION KOREA - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 3,640,619 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 3,640,619 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,640,619 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 52.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- CUSIP NO. 38911N107 13D PAGE 6 OF 6 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY). MASAYOSHI SON - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION JAPAN - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ------------------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES 0 BENEFICIALLY ------------------------------------------------------------ OWNED BY 9 SOLE DISPOSITIVE POWER EACH 0 REPORTING ------------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER WITH 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER This statement relates to the Common Stock, par value Won 500 per share (the "Common Stock") of Gravity Co., Ltd. (the "Company"). The principal executive offices of the Company are located at Shingu Building, 620-2 Shinsa-dong, Gangnam-gu, Seoul 135-894, Korea. ITEM 2. IDENTITY AND BACKGROUND This statement is filed by Techno Groove Co., Ltd. ("Techno Groove"), Asian Groove, Inc. ("Asian Groove"), Taizo Son, EZER Inc. ("EZER"), Nichiei Ryu and Masayoshi Son. Techno Groove, Asian Groove, Taizo Son, EZER, Nichiei Ryu and Masayoshi Son are collectively referred to as the "Reporting Persons." Techno Groove, Asian Groove and EZER are all incorporated in Japan. The principal business of Asian Groove is investing in and managing technology-related businesses. The address of Asian Groove's principal business and office is Sunrise Shinjuku Bldg 8th Floor, 2-4-15, Ookubo, Shinjuku-ku, Tokyo, Japan, which is also the business address of Taizo Son. Taizo Son directly or indirectly owns 81.7% of the issued share capital of Asian Groove. Techno Groove is a wholly-owned subsidiary of Asian Groove. Techno Groove had no significant assets or business at the time of entering into the transactions described herein. The address of Techno Groove's principal business and office is Sunrise Shinjuku Bldg 8th Floor, 2-4-15, Ookubo, Shinjuku-ku, Tokyo, Japan. EZER had no significant assets or business at the time of entering into the transactions described herein. The address of EZER's principal business and office is 4-20-19, Minami-aoyama, Minato-ku, Tokyo, Japan. EZER and Techno Groove have entered into a contractual relationship known as a "tokumei kumiai", which is often used in Japan as a means of making and managing investments. A tokumei kumiai is generally considered to be similar to a limited partnership in the United States, except that the relationships of the parties are purely contractual. The tokumei kumiai has no separate legal existence under Japanese law, and therefore is not a Reporting Person under this Schedule 13D. Pursuant to the agreement (the "TK Agreement") governing the tokumei kumiai (the "TK"), EZER will serve as the "operator" of the TK, will own and control assets acquired in EZER's capacity as the operator of the TK and will distribute the proceeds of any such assets to Techo Groove as the "investor" of the TK. The TK will be operated under the trade name "Asian Star Fund". The TK Agreement is filed as Exhibit C to this Schedule 13D. Unless specified otherwise, references to "EZER" in this Schedule 13D refer to EZER acting in its capacity as operator of the TK. Taizo Son and Nichiei Ryu are Korean citizens. Masayoshi Son is a Japanese citizen. Taizo Son's principal occupation is president and representative director of Asian Groove. Masayoshi Son's principal occupation is president and representative director of SOFTBANK Corp. ("SOFTBANK"). Masayoshi Son directly or indirectly owns 32.7% of the common stock of SOFTBANK. SOFTBANK owns all of the issued share capital of SOFTBANK BB Corp., which owns 44.6% of the common stock of GungHo Online Entertainment, Inc. ("GungHo"). Masayoshi Son is president and representative director, and Taizo Son is a director, of SOFTBANK BB Corp. Taizo Son and Masayoshi Son are brothers. Nichiei Ryu's principal occupation is president and representative director of TechnoBlood Inc., and his principal business address is 8-14-24, Nishi-Shinjuku, Shinjuku-ku, Tokyo. Nichiei Ryu is representative director of EZER and owns all of the issued share capital of EZER. None of the Reporting Persons nor, to the best knowledge and belief of the Reporting Persons, any executive officer or director of Techno Groove, Asian Groove or EZER, has during the last five years been convicted of a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, and is or was, as a result of such proceeding, subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or finding any violation with respect to such laws. - i - ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION On August 30, 2005, EZER entered into a stock purchase agreement (the "Purchase Agreement") with Jung Ryool Kim, who is one of the Company's directors and the Company's largest shareholder, Ji Young Kim, Young Joon Kim and Ji Yoon Kim (collectively, the "Sellers") to purchase an aggregate of 3,640,619 outstanding shares of Common Stock owned by the Sellers for an aggregate cash payment of 40 billion Japanese yen (the "Purchase"). The Purchase is being financed as follows. Son Assets Management Inc. ("SAM"), a company controlled by Masayoshi Son, has entered into a share lending agreement (the "SAM Share Lending Agreement") with Deutsche Securities Limited. Under this agreement, Deutsche Securities Limited has borrowed from SAM certain shares of the common stock of SOFTBANK Corp. which SAM has borrowed from Masayoshi Son and has pledged to SAM as collateral for such shares cash in the amount of 42 billion yen. SAM has, in turn, entered into a loan agreement (the "Techno Groove Loan Agreement") whereby it has provided an unsecured loan (the "Techno Groove Loan") in the amount of 40 billion yen to Techno Groove. Techno Groove has, in turn, as its investment in the TK, contributed 40 billion yen to EZER pursuant to the TK Agreement. Asian Groove, which owns 100% of Techno Groove, has entered into an agreement (the "Custody Agreement") with Techno Groove, pursuant to which the shares of GungHo owned by Asian Groove have been placed in custody with Techno Groove. Under the terms of the Techno Groove Loan Agreement, Techno Groove has placed such shares of GungHo in custody with SAM. The Purchase Agreement is filed as Exhibit B to this Schedule 13D. The SAM Share Lending Agreement will be filed as Exhibit D to this Schedule 13D. The Techno Groove Loan Agreement will be filed as Exhibit E to this Schedule 13D. The Custody Agreement will be filed as Exhibit F to this Schedule 13D. ITEM 4. PURPOSE OF TRANSACTION The primary purpose of the acquisition of the shares of Common Stock of the Company under the Purchase Agreement is to secure for the benefit of GungHo a continuing license for "Ragnarok", an online game designed and owned by the Company. Asian Groove, which is controlled by Taizo Son, owns directly and indirectly 39.6% of the common stock of GungHo. Asian Groove's investment in GungHo represents a substantial majority of its business and most of the value of its assets. Taizo Son is chairman and representative director of GungHo and directly owns as of the date hereof 160 shares of common stock of GungHo, representing 0.2% of its common stock. Asian Groove owns 100% of the shares of Techno Groove. Since 2002, GungHo has been the exclusive licensee of the Company's "Ragnarok" online game in Japan. During the course of seeking to extend this license and to procure a license for future versions of this game, Jung Ryool Kim advised Taizo Son that Jung Ryool Kim would be willing to transfer a controlling interest in the Company to Asian Groove or its affiliates, in order to secure for the benefit of GungHo ongoing rights to "Ragnarok". Taizo Son and Asian Groove thereafter commenced negotiations with Mr. Kim which resulted in the execution of the Purchase Agreement. Pursuant to the Purchase Agreement, the Sellers have sold all of the shares of Common Stock owned by them, which constitute 52.4% of the outstanding Common Stock. These include 3,396,671 shares owned by the Sellers prior to August 29, 2005 and an additional 243,948 shares that Ji Young Kim, Young Joon Kim and Ji Yoon Kim purchased from another shareholder, Rhoceo Co., on such date. At the Company's previously-announced extraordinary shareholders' meeting to be held on September 21, 2005, EZER intends to nominate and cause to be elected a majority of the members of the board of directors of the Company. Jung Ryool Kim has agreed under the Purchase Agreement to resign as a director of the Company and to cause six other directors of the Company to resign immediately prior to this extraordinary shareholders' meeting. It is the intention of EZER to nominate and cause to be elected to the Company's board of directors persons designated by EZER to replace all such resigning directors. Because EZER was not the holder of record of the shares of Common Stock sold pursuant to the Purchase Agreement on the record date for determination of voting eligibility for this upcoming extraordinary shareholders' meeting, under the Purchase Agreement the Sellers have agreed to provide or cause to be provided to EZER proxies to vote all of the shares of Common Stock purchased by EZER under the Purchase Agreement. With such proxies, EZER will be able to vote more than 50% of the outstanding shares of Common Stock, and thus will be able to elect seven of nine of the Company's directors at this extraordinary shareholders' meeting. - ii - Following the Purchase, if the Reporting Persons deem market and other conditions as favorable, or if they otherwise decide, the Reporting Persons may increase their ownership stake in the Company through open market purchases, negotiated purchases, tender offers or other transactions. However, if the Reporting Persons do not deem market and other conditions as favorable or if they otherwise decide, they may not do so. If their ownership stake increases significantly, it is the intention of the Reporting Persons to cause the American Depositary Shares ("ADSs") representing shares of the Common Stock to be removed from trading on the NASDAQ Stock Market, Inc. ("NASDAQ") and for the Common Stock to be de-registered under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as is permitted thereunder. In general, the Company may voluntarily remove the ADSs from trading on NASDAQ at any time and de-registration under the Exchange Act will be possible after the number of U.S. shareholders declines to below 300. Thereafter the Company will no longer be subject to ongoing NASDAQ compliance or periodic financial and other reporting under the Exchange Act. In furtherance of this intention, to the extent the Reporting Persons deem market and other conditions as favorable, or if they otherwise decide, the Reporting Persons may, within a few months after completion of the Purchase, conduct a cash tender offer for any and all remaining outstanding shares of Common Stock. Any such tender offer will be conducted in accordance with applicable rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), including the "going private" provisions under Section 13(e) and Rule 13e-3 under the Exchange Act. As indicated below, the Reporting Persons do not intend to offer a price in excess of US$28.40 per share or US$7.10 per ADS, as the case may be, in any such tender offer even if the reported market price of the ADSs is higher. Immediately after any such tender offer, EZER intends to cause the ADSs to be removed from trading on NASDAQ and, if permitted under the Exchange Act, for the Common Stock to be de-registered under the Exchange Act. THE REPORTING PERSONS DO NOT INTEND TO PURCHASE SHARES OR ADSs OTHER THAN THE SHARES ACQUIRED FROM THE SELLERS UNDER THE PURCHASE AGREEMENT AT ANY PRICE IN EXCESS OF US$28.40 PER SHARE OR US$7.10 PER ADS (EACH ADS REPRESENTING ONE-FOURTH OF ONE SHARE OF COMMON STOCK), AS THE CASE MAY BE, US$7.10 BEING THE CLOSING PRICE FOR THE ADSs AS REPORTED BY NASDAQ ON THE DAY PRIOR TO THE DATE OF THIS SCHEDULE 13D. THE PER-SHARE PRICE (AND PER-ADS EQUIVALENT) FOR ANY SUCH PURCHASE WILL BE SIGNIFICANTLY LESS THAN THE PER-SHARE PRICE (AND PER-ADS EQUIVALENT) PAID TO THE SELLERS UNDER THE PURCHASE AGREEMENT, WHICH CONSTITUTED A PURCHASE OF A CONTROLLING STAKE IN THE COMPANY. If the Reporting Persons deem market and other conditions as favorable, or if they otherwise decide, the Reporting Persons may, whether or not any of the other transactions described herein are pursued or consummated, take such steps and actions that will result in the Company or its business becoming wholly-owned by EZER or a company controlled by EZER. For example, if the Reporting Persons are unable to acquire all of the Company's outstanding Common Stock through open market purchases, negotiated purchases, tender offers or other share acquisition transactions as described above, then EZER or a company controlled by EZER may seek to acquire all of the Company's assets and business. Depending on the structure of such a transaction, approval by the Company's then-remaining shareholders may be required to authorize such transaction. Moreover, depending on such structure, EZER may or may not be required to recuse itself from voting to authorize a sale of the Company's assets and business to itself. If it is able to vote in this regard, and if it then holds sufficient shares of Common Stock to control the outcome thereof, then any such required approval will be assured. Following any such acquisition, EZER may cause the Company to liquidate, which will have the effect of eliminating the interests of all remaining shareholders of the Company. If EZER is unable to vote in connection with any shareholder approval required for a sale of the Company's assets and business to EZER or a company controlled by EZER and the subsequent liquidation of the Company, and if the Company's other remaining shareholders do not approve each such transaction, then the Company would continue its operations as a company controlled by EZER. In such case, the Reporting Persons may or may not consider other alternatives that would result in the Company or its business becoming wholly-owned by EZER or a company controlled by EZER. Any sale by the Company of its assets and business may give rise to significant tax liabilities for the Company, and such taxes would need to be paid prior to liquidation of the Company. The amount of such taxes would reduce amounts that would otherwise be distributable to remaining shareholders of the Company at the time of the Company's liquidation. The price at which the Company's business may be acquired by EZER or a company controlled by EZER has not been determined. However, the amount received by the Company therefor, after payment by the Company of taxes and other liabilities, is not expected to result in a per-share distribution to remaining shareholders upon a liquidation of the Company thereafter that is higher, and may result in a per-share distribution that is significantly lower, than any price or prices at which EZER theretofore would have paid for shares in any tender offer or other purchases as described above. If the Reporting Persons deem market and other conditions as favorable, or if they otherwise decide, then at some time after the Company's assets and business becoming wholly-owned by EZER or a company controlled by EZER, EZER - iii - may seek to transfer such assets and business to GungHo, through a merger, asset sale or otherwise. Thereafter EZER may distribute to Techno Groove, as the TK investor, the consideration received from GungHo, or the proceeds from a sale thereof. Techno Groove in turn may repay the Techno Groove Loan to SAM, thereby returning to SAM the amount of the cash collateral under the SAM Share Lending Agreement. If the Reporting Persons deem market and other conditions not to be favorable, or if they otherwise decide, the Reporting Persons may choose not to make further purchases of shares of Common Stock or ADSs or to pursue any of the transactions described above. For example, if the price of the ADSs as reported by NASDAQ were to increase significantly following the Purchase, the Reporting Persons may decide not to conduct a tender offer for, or otherwise purchase, further shares or ADSs. THE REPORTING PARTIES MAY, IN ANY EVENT, DECIDE NOT TO PURSUE, FOR ANY OR NO REASON, ANY OF THE TRANSACTIONS DESCRIBED ABOVE, REGARDLESS OF WHETHER ANY OF THE OTHER TRANSACTIONS DESCRIBED ABOVE HAVE BEEN CONSUMMATED. If the Reporting Persons do not, for any reason, consummate some or all of the transactions described above, then the remaining shareholders of the Company will be minority shareholders of a company that may be not be listed on any exchange, and there may be no liquid trading market for the Common Stock or the ADSs. Moreover, if the Company is de-registered under the Exchange Act, then financial and other information regarding the Company of the type required for reporting companies under the Exchange Act may not be prepared or available to shareholders of the Company. The Company's shares are not listed in Korea. In the event the Reporting Persons decide not to pursue the transactions described above, funds necessary in order to repay the Techno Groove Loan may be generated by sales of common stock of GungHo currently owned by Asian Groove. Asian Groove may thereafter cause Techno Groove to exercise its rights under the TK Agreement to cause the shares of Common Stock owned by EZER to be delivered to Techno Groove as the TK investor, thereby placing such shares under Techno Groove's direct control and Asian Groove's indirect control through its control of Techno Groove. Notwithstanding the foregoing, the relevant Reporting Persons may choose to repay all or portions of the loans discussed herein through other means. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Pursuant to the Purchase Agreement described in Item 3 above, EZER has purchased 3,640,619 shares of Common Stock on August 30, 2005. According to information provided by the Company, 6,948,900 shares of Common Stock are currently outstanding. Consequently, EZER directly owns 52.4% of the Common Stock. Nichiei Ryu beneficially owns such 3,640,619 shares of Common Stock because he owns all of the issued share capital of EZER. Techno Groove beneficially owns such 3,640,619 shares of the Common Stock, because of its interest therein as the investor under the TK Agreement. Asian Groove beneficially owns such 3,640,619 shares of the Common Stock, because Techno Groove is a wholly-owned subsidiary of Asian Groove. Taizo Son beneficially owns such 3,640,619 shares, since he is a controlling person of Asian Groove and owns 81.7% of its issued share capital. Masayoshi Son does not own, directly or indirectly, any shares of Common Stock as a consequence of the Purchase. However, Masayoshi Son may be deemed to be acting in concert with the other Reporting Persons and thus may be deemed to have a beneficial interest in the Common Stock acquired by EZER. Pursuant to Rule 13d-4 under the U.S. Securities Exchange Act of 1934 (the "Exchange Act"), Masayoshi Son hereby declares that the filing of this statement on Schedule 13D shall not be construed as an admission that he is, for the purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of any securities covered by this statement on Schedule 13D and disclaims beneficial ownership of such securities for such purposes. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The information required by this item is contained in Items 3 and 4 of this statement on Schedule 13D. - iv - ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit A Agreement of Joint Filing, dated as of August 30, 2005, by and among the Reporting Persons. Exhibit B Stock Purchase Agreement dated August 30, 2005, by and among Jung Ryool Kim, Ji Young Kim, Young Joon Kim, Ji Yoon Kim and EZER Inc. Exhibit C Tokumei Kumiai Agreement, dated August 30, 2005, between EZER, Inc. and Techno Groove Co., Ltd. Exhibit D Share Lending Agreement, dated August 30, 2005, between Son Assets Management Inc. and Deutsche Securities Limited * Exhibit E Loan Agreement, dated August 30, 2005, between Son Assets Management Inc. and Techno Groove Co., Ltd. * Exhibit F Custody Agreement, dated August 30, 2005, between Techno Groove Co., Ltd. and Asian Groove, Inc.* - -------- * To be filed by amendment as soon as English language translations can be prepared. - v - SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: August 30, 2005 Techno Groove Co., Ltd. By: /s/ Masami Shimada _________________________ Name: Masami Shimada Title: President Asian Groove, Inc. By: /s/ Taizo Son _________________________ Name: Taizo Son Title: President and Representative Director /s/ Taizo Son ________________________________ Taizo Son EZER Inc. By: /s/ Nichiei Ryu _________________________ Name: Nichiei Ryu Title: Representative Director /s/ Nichiei Ryu ________________________________ Nichiei Ryu /s/ Masayoshi Son ________________________________ Masayoshi Son EX-99.A 2 k00995exv99wa.txt EX-99.A AGREEMENT OF JOINT FILING, DATED AS OF AUGUST 30, 2005, BY AND AMONG THE REPORTING PERSONS. EXHIBIT A In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the following: (i) the joint filing on behalf of each of them of a statement on Schedule 13D (including subsequent amendments thereto) with respect to the Common Stock, par value Won 500 per share, of Gravity Co., Ltd., a limited liability company organized under the laws of Korea (the "Schedule 13D"), and (ii) the inclusion of this Joint Filing Agreement as an exhibit to such joint filing, provided that, as contemplated by Section 13d-1(k)(1)(ii), no person shall be responsible for the completeness and accuracy of the information concerning the other persons making the filing unless such person knows or has reason to believe that such information is inaccurate. The Joint Filing Agreement may be executed in any number of counterparts all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement as of this 30th day of August, 2005. Techno Groove Co., Ltd. By: /s/ Masami Shimada _________________________ Name: Masami Shimada Title: President Asian Groove, Inc. By: /s/ Taizo Son _________________________ Name: Taizo Son Title: President and Representative Director /s/ Taizo Son ________________________________ Taizo Son EZER Inc. By: /s/ Nichiei Ryu _________________________ Name: Nichiei Ryu Title: Representative Director /s/ Nichiei Ryu ________________________________ Nichiei Ryu /s/ Masayoshi Son ________________________________ Masayoshi Son EX-99.B 3 k00995exv99wb.txt EX-99.B STOCK PURCHASE AGREEMENT DATED AUGUST 30, 2005, BY AND AMONG JUNG RYOOL KIM, JI YOUNG KIM, YOUNG JOON KIM, JI YOON KIM AND EZER INC. EXHIBIT B STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT, dated as of August 30, 2005 (this "Agreement"), between: (1) Mr. Jung Ryool Kim, Ms. Ji Young Kim, Mr. Young Joon Kim and Ms. Ji Yoon Kim, all being individuals residing in Korea (the "Sellers"); and (2) EZER Inc., a Japanese corporation (the "Buyer"). RECITALS A. GRAVITY Co., Ltd., a Korean corporation (the "Company"), is a developer and distributor of online games whose principal product is Ragnarok Online. B. The Sellers currently own in aggregate 3,396,671 (48.9%) shares of the common stock of the Company and will acquire prior to the Closing Date another 243,948 (3.5%) shares of the common stock of Company (such 3,640,619 shares being collectively referred to as the "Shares"). C. The Buyer desires to purchase the Shares from the Sellers, and the Sellers desire to sell the Shares to the Buyer, in each case upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, IT IS AGREED: 1. Sale and Purchase. 1.1 Agreement to Sell and to Purchase. On the Closing Date (defined below) and upon the terms and subject to the conditions set forth in this Agreement, the Sellers shall sell and deliver the Shares to the Buyer, and the Buyer shall purchase and accept the Shares from the Sellers. Any obligations of the Sellers under this Agreement (including but not limited to the obligation to sell and deliver the Shares pursuant to this Section 1.1) shall be joint and several, and Mr. Jung Ryool Kim shall jointly and severally guarantee the performance of the other Sellers under this Agreement. 1.2 Closing. The closing of such sale and purchase (the "Closing") shall take place at 10:00 a.m., Korea standard time, on August 30, 2005, or at such other time and date as the parties hereto shall agree in writing (the "Closing Date"), at the main office of the Company or at such other place as the parties hereto shall agree in writing. At the Closing, the Sellers shall deliver to the Buyer stock certificates representing the Shares. In full consideration and exchange for the Shares, the Buyer shall pay the Purchase Price in the manner contemplated in Section 1.3. Purchase Price. The aggregate purchase price for the Shares (the "Purchase Price") shall be 40 billion yen, which shall be payable on the Closing Date. Payment of the Purchase Price shall be made by bank wire transfer of immediately available funds to the bank in Woori Bank account (branch: Apgujeong-Yeok; account number: 1081-900-245991, account name: Jung Ryool Kim). 2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS The Sellers hereby jointly and severally represent and warrant as follows: 2.1 Title to the Shares. The Sellers will have at the Closing valid and marketable title to all the Shares, free and clear of any liens, claims, charges, security interests, limitations or restrictions. The Sellers are not subject to any rights of a third party to purchase any Shares. 2.2 Validity of Agreements. This Agreement, when executed by the Sellers, will constitute the valid and legally binding obligations of the Sellers, enforceable in accordance with its terms and conditions. 2.3 No Conflict or Violation. The execution, delivery and performance by the Sellers of this Agreement does not and will not violate or conflict with any provision of the organizational documents of the Company and does not and will not violate any provision of law, or any order, judgment or decree of any governmental authority, nor violate nor will result in a breach of or constitute (with due notice or lapse of time or both) a default under any contract, lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which the Sellers or the Company is a party or by which any of them is bound or to which any of their respective properties or assets is subject, nor will result in the creation or imposition of any lien, charge or encumbrance of any kind whatsoever upon any of the properties or assets of the Company, nor will result in the cancellation of any of the licenses, permits or approvals applicable to the Company; provided, however, that this Section 2.3 shall not apply if the breach or default to any agreement to which the Company is a party, or the cancellation of the licenses, permits or approvals has no material adverse effect on operations or financial condition of the Company. 2.4 Consents and Approvals. Except for the report on acquisition of shares to be filed with a foreign exchange bank pursuant to the Foreign Investment Promotion Law of Korea, the business combination report to be filed with the Fair Trade Commission of Korea pursuant to the Monopoly Regulation and Fair Trade Act of Korea, and Schedule 13D to be filed with the Securities and Exchange Commission of the United States ("SEC") pursuant to the U.S. Securities Exchange Act, no consent, waiver, authorization or approval of or filing or registration with any governmental authority is required in connection with the execution and delivery of this Agreement by any of the Sellers or the performance by any of the Sellers of their obligations 2 hereunder. 2.5 Absence of Undisclosed Liabilities. The cash (including cash equivalents) and debt shown in the financial statements of the Company for the first semiannual period ended June 30, 2005 on Form 6-K as filed with SEC on August 22, 2005 present fairly the status of the cash (including cash equivalents) and debt of the Company as of such date. Since June 30, 2005, the Company has operated in the ordinary course of business consistent with past practice and there has not been any material adverse change in the assets, properties, business, operations, net income or financial condition of the Company (for the cash (including cash equivalents) and debt of the Company, there has not been a decrease or increase of more than 5%). 2.6 Intellectual Properties. All copyrights, trademarks, service marks, rights in internet web sites and internet domain names, trade secrets and proprietary know-how (either registered, applied for, or common law), including without limitation, with respect to Ragnarok Series (the "Intangible Assets"), are duly owned by the Company free and clear of all liens. Except as set forth in Schedule 2.6, there is no restriction affecting the Company's use of any of the Intangible Assets. The Company's rights in each of the Intangible Assets is valid and in good standing, is not currently being challenged, is not involved in any pending or threatened administrative or judicial proceeding, and does not conflict with any rights of any other person, firm or corporation. 2.7 Survival. Each of the representations and warranties set forth in this Section 2 shall be deemed represented and made by the Sellers at the Closing as if made at such time and shall survive the Closing. 3. Representations and Warranties of Buyer. The Buyer hereby represents and warrants as follows: 3.1 Corporate Organization. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of Japan and has all requisite power and authority (corporate and other) to own its properties and assets and to conduct its business as now conducted. 3.2 Authorization and Validity of Agreements. The Buyer has the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the performance of the Buyer's obligations hereunder have been duly authorized by the Board of Directors of the Buyer, and no other corporate proceedings on the part of the Buyer are necessary to authorize such execution, delivery and performance. This Agreement, when executed by the Buyer, will constitute the valid and legally binding obligations of the Buyer, enforceable in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the rights and remedies of creditors generally and to general principles of equity (regardless of 3 whether in equity or at law). 3.3 No Conflict or Violation. The execution, delivery and performance by the Buyer of this Agreement do not and will not violate or conflict with any provision of the organizational documents of the Buyer, and do not and will not violate any provision of any agreement or instrument to which the Buyer is a party or by which it is bound, or of any order, judgment or decree of any governmental authority to which the Buyer is subject. 3.4 Consents and Approvals. Except for the report on acquisition of shares to be filed with a foreign exchange bank pursuant to the Foreign Investment Promotion Law of Korea, the business combination report to be filed with the Fair Trade Commission of Korea pursuant to the Monopoly Regulation and Fair Trade Act of Korea, and Schedule 13D to be filed with the Securities and Exchange Commission of the United States pursuant to the U.S. Securities Exchange Act, no consent, waiver, authorization or approval of or filing or registration with any governmental authority is required in connection with the execution and delivery of this Agreement by the Buyer or the performance by the Buyer of its obligations hereunder. 4. Additional Covenants. 4.1 Certain Changes and Conduct of Business. From and after the date of this Agreement and to and including the extraordinary shareholders' meeting to be convened pursuant to Section 4.4, the Sellers will not, except as required or permitted pursuant to the terms hereof, permit the Company to conduct its business other than in the ordinary course consistent with past practices. 4.2 Access to Properties and Records. To the extent permitted by applicable laws and regulations, the Sellers shall afford, and shall cause the Company to afford as a shareholder of the Company, to the Buyer and the Buyer's accountants, counsel and representatives access during normal business hours, immediately after the date hereof to and including the Closing Date, to the Company's properties, books, contracts, commitments and records (including, but not limited to, tax returns) and, during such period, shall furnish promptly to the Buyer all other information concerning the Company's business, properties and personnel as the Buyer may reasonably request, provided that the Buyer shall enter into a confidentiality agreement in advance with the Company in a form reasonably satisfactory to the Company. 4.3 Acquisition of Shares. As soon as practicable after the date hereof, Mr. Jung Ryool Kim will purchase prior to Closing all shares of the Company currently held by Rhoceo Co., Ltd. ("Rhoceo") and will, in connection therewith, disclose to Rhoceo the terms of the premium to be received by the Sellers in connection with its sale of the Shares to the Buyer. 4 4.4 Directors of Company. The Sellers shall take necessary action to cause the Company to convene an extraordinary shareholders' meeting immediately after Closing but in no event later than September 21, 2005, or any other date to be agreed upon by the parties, for the purpose of electing directors of the Company nominated by the Buyer, and the Sellers shall issue, and shall cause Rhoceo to issue, a proxy to the Buyer so that it may participate in the extraordinary shareholders' meeting. Mr. Jung Ryool Kim shall resign, and shall cause the independent directors of the Company to resign, as directors of the Company immediately prior to such extraordinary shareholders' meeting. Immediately after the Closing, the Sellers shall cause the Company to retain one or two persons designated by the Buyer as counsel who shall have the right to stay with the Company on a full-time basis, and to observe the business decisions and the daily operations of the Company. 4.5 No Interference; Nonsolicitation. (a) No Interference. After the Closing Date, the Buyer and the Sellers shall maintain cooperative relationship with each other and with the Company in order to promote the success of the Company. In this Section 4.5, the "Company" shall include its successors to its business. (b) Nonsolicitation; No Impairment. For a period of three years after the Closing Date, the Sellers shall not, directly or indirectly: (i) cause, induce or attempt to cause or induce any licensee, franchisee, employee or consultant of the Company to cease doing business with the Company; (ii) cause, induce or attempt to cause or induce licensee, franchisee, employee or consultant of the Company on the Closing Date or within the year preceding the Closing Date to cease doing business with the Company; (iii) hire, retain or attempt to hire or retain any employee of the Company, as long as six (6) months have not passed since such employee retired from the Company; (iv) directly or indirectly engage in any business of distribution or development of any products distributed or being developed by the Companies as of the Closing Date (the "Products"); or (v) directly or indirectly engage in any business to intentionally and materially impair, prevent or restrain the distribution and development of the Products. 4.6 Further Assurances. Upon the request of the Buyer at any time after 5 the Closing Date, the Sellers will forthwith execute and deliver such further instruments of assignment, transfer, conveyance, endorsement, direction or authorization and other documents as the Buyer or its counsel may reasonably request in order to perfect title of the Buyer to the Shares or otherwise to effectuate the purposes of this Agreement. 5. Conditions to Obligations of Buyers. The obligations of the Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by the Buyer in its sole discretion: 5.1 Representations and Warranties of Sellers. All representations and warranties made by the Sellers in this Agreement shall be true and correct in all material respects on and as of the Closing Date as if again made by the Sellers on and as of such date. 5.2 Performance of Sellers' Obligations. The Sellers shall have performed in all material respects all obligations required under this Agreement to be performed by it on or before the Closing Date. 5.3 Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental authority and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, including without limitation approval under the Korean Foreign Investment Promotion Law, shall have been duly obtained and shall be in full force and effect on the Closing Date. 6. Conditions to Obligations of Sellers. The obligations of the Sellers to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by the Sellers in their sole discretion: 6.1 Representations and Warranties of Buyer. All representations and warranties made by the Buyer in this Agreement shall be true and correct in all material respects on and as of the Closing Date as if again made by the Buyer on and as of such date. 6.2 Performance of Buyer's Obligations. The Buyer shall have performed in all material respects all obligations required under this Agreement to be performed by it on or before the Closing Date. 6.3 Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental authority and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, including without limitation approval under the Korean Foreign Investment Promotion Law, shall have been duly obtained and shall be in full force and effect on the Closing 6 Date. 7. Indemnification. 7.1 Coverage. Each Party ("Indemnifying Party") shall indemnify and fully defend, save and hold the other Party ("Indemnified Party") harmless if the Indemnified Party shall at any time or from time to time suffer any damage, liability, loss, cost, expense (including all reasonable attorneys' fees), claim or cause of action arising out of or resulting from, or shall pay or become obligated to pay any sum on account of, any and all Events of Breach. As used herein, "Event of Breach" shall be and mean any one or more of the following: (a) any untruth or inaccuracy in any representation of the Indemnifying Party or the breach of any warranty of the Indemnifying Party in this Agreement; or (b) any failure of the Indemnifying Party duly to perform or observe any covenant or agreement to be performed or observed by it under this Agreement. 7.2 Procedures. If an Event of Breach occurs and the Indemnified Party asserts that the Indemnifying Party has become obligated to the Indemnified Party pursuant to Section 7.1, or if any suit, action, investigation, claim or proceeding is begun, made or instituted as a result of which the Indemnifying Party may become obligated to the Indemnified Party hereunder, the Indemnified Party shall give written notice to the Indemnifying Party. The Indemnifying Party agrees to defend, contest or otherwise protect the Indemnified Party against any such suit, action, investigation, claim or proceeding at its sole cost and expense. The Indemnified Party shall have the right, but not the obligation, to participate at its own expense in the defense thereof by counsel of the Indemnified Party's choice and shall in any event cooperate with and assist the Indemnifying Party to the extent reasonably possible. 8. Miscellaneous Provisions. 8.1 Publicity. Neither the Sellers nor the Buyer shall, or shall permit any of its Affiliates to, issue or cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby or otherwise disclose this Agreement or the transactions without the consent of the other party. Notwithstanding the foregoing, in the event any such press release or announcement is required by applicable law or stock exchange regulation to be made by the party proposing to issue the same, such party shall use its best efforts to consult in good faith with the other party prior to the issuance of any such press release or announcement. Moreover, the Sellers and the Buyer shall coordinate the timing of filing the Schedule 13D with respect to the transactions contemplated in this Agreement with SEC; further, the Sellers shall not file Schedule 13D with respect to the transactions contemplated in this Agreement without prior written consent from the 7 Buyer; provided, however, that such consent shall not be unreasonably delayed or withheld by the Buyer. For the purpose of this Agreement, "Affiliate" shall mean, with respect to a specified person, any person that directly or indirectly controls, is controlled by, or is under common control with, the specified person. 8.2 Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and permitted assigns; provided, however, that neither party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other party. 8.3 Investment Bankers, Financial Advisors, Brokers and Finders. (a) The Sellers indemnify and agree to defend and hold the Buyer and the Company harmless against and in respect of all claims, losses, liabilities and expenses which may be asserted against the Buyer or the Company by any broker or other person who claims to be entitled to an investment banker's, financial advisor's, broker's, finder's or similar fee or commission in respect of the execution of this Agreement, or the consummation of the transactions contemplated hereby, by reason of his acting at the request of the Sellers. (b) The Buyer indemnifies and agrees to save and hold the Sellers and the Company harmless against and in respect of all claims, losses, liabilities, fees, costs and expenses which may be asserted against the Sellers or the Company by any broker or other person who claims to be entitled to an investment banker's, financial advisor's, broker's, finder's or similar fee or commission in respect of the execution of this Agreement or the consummation of the transactions contemplated hereby, by reason of his acting at the request of the Buyer or its Affiliate. 8.4 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses. No fees, costs or expenses shall be borne by the Company. 8.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) or by facsimile (with appropriate confirmation of receipt) to the parties at the following addresses: (a) If to the Buyer, to: EZER Inc., 4-20-19, Minami-Aoyama 8 Minato-ku, Tokyo, Japan Attention: Mr. Nichiei Ryu with a copy to: Kim and Chang Northgate Building 66 Jeokseon-dong, Jongno-gu Seoul, Korea Attention: Mr. Chang-Hyeon Ko, Esq. (b) If to the Sellers, to: Sunkyung Apt 3-1006 506, Daichi-dong, Gangnam-gu Seoul, Korea Attention: Mr. Jung Ryool Kim with a copy to: Bae, Kim and Lee Hankook Tire Bldg. 647-15 Yoksam-dong, Gangnam-gu Seoul, Korea Attention: Ri-Bong Han or to such other persons or at such other addresses as shall be furnished by either party by like notice to the other, and such notice or communication shall be deemed to have been given or made as of the date so delivered or mailed. No change in any of such addresses shall be effective insofar as notices under this Section 8.6 are concerned unless notice of such change shall have been given to such other party hereto as provided in this Section 8.6. 8.6 Entire Agreement. This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein. 8.7 Waivers and Amendments. This Agreement may be amended, modified or supplemented only by a written instrument executed by the parties hereto. 8.8 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. 8.9 Titles and Headings. The Section headings and the Table of 9 Contents contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof. 8.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. 8.11 Governing Law; Jurisdiction. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of Korea without giving effect to the choice-of-law provisions thereof. All disputes arising out of or in connection with this Agreement and the transactions contemplated hereby shall be finally settled in Singapore under the Rules of Arbitration of the International Chamber of Commerce (the "Rules") by three (3) arbitrators appointed in accordance with the Rules. Arbitration shall be conducted in the English language. 8.12 Termination. In addition to the remedies available to either Party pursuant to Section 7.1, the obligation of the Parties to consummate the purchase and sale contemplated hereby may be terminated and abandoned at any time on or before the Closing Date by: (a) The mutual agreement of the Buyer and Mr. Jung Ryool Kim; (b) the Buyer or Mr. Jung Ryool Kim, if there has been a material breach by the other Party (Buyer, if the terminating party is Mr. Jung Ryool Kim) of any of its representations, warranties or covenants set forth in this Agreement; or (c) a Party, if the Closing has not occurred by September 30, 2005 and the reason for Closing not having occurred is due to one or more conditions, obligations, covenants or agreements of the other Party not having been fulfilled, waived or performed by such date. [no further text on this page] 10 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. /s/ Jung Ryool Kim ------------------------------------ Jung Ryool Kim /s/ Jung Ryool Kim ------------------------------------ Ji Young Kim by: attorney-in-fact /s/ Jung Ryool Kim ------------------------------------ Young Joon Kim by: legal representative /s/ Jung Ryool Kim ------------------------------------ Ji Yoon Kim by: legal representative EZER Inc. By: /s/ Nichiei Ryu ------------------------------- Name: Nichiei Ryu Title: President 11 EX-99.C 4 k00995exv99wc.txt EX-99.C TOKUMEI KUMIAI AGREEMENT, DATED AUGUST 30, 2005 BETWEEN EZER, INC. AND TECHNO GROOVE CO., LTD. EXHIBIT C TOKUMEI KUMIAI AGREEMENT This TOKUMEI KUMIAI AGREEMENT is dated August 29, 2005, and entered into BETWEEN: (1) EZER Inc., a Japanese kabushiki kaisha (the "Operator"), and (2) Techno Groove Co., Ltd., a Japanese kabushiki kaisha (the "Silent Partner") WHEREAS: (A) The Operator desires to conduct its business by way of acquiring and holding certain shares as described below, and the Silent Partner desires to contribute to such business by way of a cash contribution; (B) The Operator intends to use the moneys contributed by the Silent Partner as described above in order to acquire shares in Gravity Co., Ltd., a Korean corporation ("Gravity") (the "Shares") and to distribute profits and/or allocate losses in connection therewith pursuant to this Agreement; NOW IT IS HEREBY AGREED AS FOLLOWS: Section 1. (Definitions) The defined terms used in this Agreement shall, unless the context otherwise requires, have the meanings set forth in this Section. "Affiliate" means, with respect to a specified person, any person that directly or indirectly controls, is controlled by, or is under common control with, the specified person. "Agreement" means this Tokumei Kumiai Agreement, as supplemented, amended or restated from time to time in accordance with the terms hereof. "Assets" means all assets of the Operator in connection with the Business, including, but not limited to, the moneys contributed by the Silent Partner pursuant hereto, the Shares, dividends 1 on the Shares and all proceeds acquired through or in connection with the use of such moneys and/or the Shares. "Auditors" means such audit corporation as may be appointed by the Operator to audit the Business. "Business" means the business conducted by the Operator by way of acquiring and holding, and receiving payment in respect of, the Shares. "Commercial Code" means the Commercial Code of Japan (Law No. 48 of 1899) as now in effect and hereafter amended from time to time. "Contribution" means the aggregate amount of money contributed by the Silent Partner to the Operator, as provided in Section 4 below. "Tokumei Kumiai" means a tokumei kumiai under the Commercial Code, in which the Operator shall engage in the Business in its capacity as operator (eigyosha) and the Silent Partner as silent partner (tokumei-kumiaiin) shall make a contribution to the Business and both parties shall be entitled to distribution of profits and/or allocation of losses arising from the Business in accordance with the provisions hereof. Section 2. (Name; Location.) The name of the Tokumei Kumiai to be formed hereunder shall be Ajian Suta Fando Toushi Yugen Kumiai (in English, Asian Star Fund Investment Fund). The principal office of the Tokumei Kumiai to be formed hereunder shall be located at the office of EZER, Inc. Section 3. (Formation; Purpose etc.) (a) Subject to the terms and conditions hereof, the Operator and the Silent Partner hereby form the Tokumei Kumiai pursuant to the relevant provisions of the Commercial Code, and agree to share the profits and losses arising from the Business of the Tokumei Kumiai in accordance herewith. The Operator and the Silent Partner agree that the rights, powers and liabilities of each party shall be as provided in the Commercial Code, except as otherwise provided herein. (b) The purpose and character of the Business to be conducted by the Operator is to acquire, hold and otherwise deal with the Assets, to share profits and losses 2 therefrom, to engage in such activities as are necessary, incidental or ancillary thereto. (c) The Operator shall engage in the following activities in the Tokumei Kumiai: (i) to acquire and hold the Shares; (ii) to administer the Assets; (iii) to receive dividends on the Shares; and (iv) to distribute profits arising from the Assets. (d) The relationship between the Operator and the Silent Partner created pursuant to this Agreement shall only constitute the Tokumei Kumiai, and shall not in any manner be deemed to create any other relationship between the parties for any purposes. In addition, this Agreement shall not in any manner be interpreted to create a Tokumei Kumiai among the parties for or with respect to any activities other than those within the purposes specifically provided herein. Unless otherwise specifically agreed between the parties, the Operator shall not engage in any business other than the Business. Section 4. (Contribution) On August X, 2005 or such other date as may be agreed upon between the parties, the Silent Partner shall make contribution of 40 billion Japanese yen to the Operator. The Silent Partner shall make such payment in the manner as may be agreed upon between the parties. Section 5. (Term) The term of this Agreement shall be one (1) year; provided that this Agreement will be automatically renewed for an additional one (1) year period from the date of expiration, unless either party notifies the other to the contrary three (3) months prior to such date, and thereafter this proviso shall apply mutatis mutandis. Section 6. (Duties and Obligations of the Operator) (a) The Operator shall take all action that may be necessary or appropriate for the 3 continuation of the Tokumei Kumiai's valid existence as a tokumei kumiai under the Commercial Code (and the laws of each other jurisdiction in which such existence as a tokumei kumiai is necessary to protect the limited liability of the Silent Partner). (b) Subject to the provisions hereof, the Business shall be carried out by, under the name of, and at the sole discretion of the Operator. (c) The Operator shall at all times conduct its affairs and the affairs relating to the Business in such a manner that neither any Silent Partner nor any Affiliate of any Silent Partner will have any personal liability for any indebtedness of the Operator or in connection with the Business. (d) The Operator shall not commingle any of the Assets with the funds or other assets of the Operator or its Affiliates. Section 7. (Liability of the Silent Partner) (a) The liability of the Silent Partner shall be limited in accordance with the Commercial Code. If any claim shall be asserted against the Silent Partner solely in its capacity as such, on account of or with respect to any actions or omissions of, or claims against, or debts, liabilities, contracts or other obligations of, the Business or the Operator or the Assets, the Operator shall assume the defense of the Silent Partner, with counsel designated by and at the cost and expense of the Operator. If the Operator does not so assume the defense of such claim, the Silent Partner shall be entitled to defend the claim with counsel of its choosing and shall be reimbursed and indemnified by the Operator for the expenses (including the fees and expenses of counsel) of such defense. (b) No officer, director, partner, employee, stockholder or agent of the Silent Partner shall have any personal liability under this Agreement or with respect to claims against, or debts, liabilities, contracts or other obligations of the Operator. Section 8. (Expenses) Except as otherwise expressly agreed upon between the Operator and the Silent Partner, the Operator shall be responsible for and shall use the Assets with the prior approval of the Silent Partner to pay all direct fees and expenses in connection with the Business and/or Assets, including, but not limited to, any taxes, fees or other governmental charges levied 4 against the Operator or on its income or assets in connection with its business operations, the reasonable fees and expenses of outside counsel and accountants, and all extraordinary expenses and all costs of winding up and liquidating the Tokumei Kumiai. Section 9. (Business and Assets of the Operator) Unless otherwise agreed between the Operator and the Silent Partner, the sole business and purpose of the Operator is, and at all times during the term of this Agreement shall be, to act as an operator of the Tokumei Kumiai in accordance with the terms and conditions of this Agreement and the Commercial Code. Section 10. (Management and Control of the Business and Assets) (a) Except as otherwise expressly provided herein, the Operator shall have the full and exclusive right to manage and control the Business and/or the Assets and affairs relating to the Tokumei Kumiai and to make all decisions regarding the Business and affairs of the Tokumei Kumiai and shall have all of the rights, powers and obligations of an operator (eigyosha) of a Tokumei Kumiai under the Commercial Code. the Operator shall hold title to the Assets in its own name. (b) Except as otherwise expressly provided herein, the Silent Partner shall not have any right, power and obligation to participate in the management of, or have any control over, the Business and/or the Assets nor shall the Silent Partner acquire any ownership right or interest in the Assets as a result of entering into this Agreement; provided, however, that the provisions of this Section shall not limit the right of the Silent Partner as an investor (tokumei-kumiaiin) of a tokumei kumiai under the Commercial Code. Section 11. (Representation by the Operator) The Operator hereby represents and warrants to the Silent Partner that, as of the date of this Agreement, the execution and performance of this Agreement and of any other documents or instruments related hereto have been duly authorized by all necessary corporate action by the Operator and will not violate any existing rules or regulations, legal or otherwise, to which the Operator is subject. Section 12. (Representation by the Silent Partner) 5 The Silent Partner hereby represents and warrants to the Operator that, as of the date of this Agreement, the execution and performance of this Agreement and of any other documents or instruments related hereto have been duly authorized by all necessary corporate action by the Silent Partner and will not violate any existing rules or regulations, legal or otherwise, to which the Silent Partner is subject. Section 13. (Fee and Distribution; Allocation of Profit and Loss) (a) Subject to the terms and conditions hereof, if and when the Operator receives any payment in respect of the Shares and other Assets, the proceeds of such payment shall, after deducting any amounts applied or set aside by the Operator to pay expenses for the Business in agreement with the Silent Partner and in accordance with Section 8 above, be distributed to the Silent Partner promptly, but not later than two (2) days after such receipt of the payment by the Operator. (b) Profit and loss attributable to the Business shall be determined with respect to each fiscal year of the Tokumei Kumiai as of the end of such year. All profit and loss attributable to the Business for each such fiscal year shall be allocated to the Silent Partner. (c) If any loss arises from the Business for a fiscal year, such loss shall be offset by any retained profit from the Business, if any. If accrued loss is not fully offset and carried over to a subsequent fiscal year, the Operator shall not distribute profits to the Silent Partner until such carried over loss is fully offset by the current profits from the Business arising in subsequent fiscal years. (d) Notwithstanding any other provisions contained hereunder, the Silent Partner shall neither be liable for loss in excess of the Contribution originally paid by the Silent Partner nor be required to make further contributions other than the Contribution. Section 14. (Records; Accounts) (a) Proper and complete records and books of account of the Business shall be maintained at the principal office of the Operator. The Silent Partner and its duly authorized representatives may visit and inspect any of the Assets and may examine the books of account, records, reports and other papers relating to the Business, all during regular business hours and as reasonably may be requested from time to time upon prior notice to the Operator. 6 (b) The fiscal year of the Business shall commence on April 1 of each year and end on March 31 of the immediately succeeding year; provided that the initial fiscal year shall commence on the date of this Agreement and end on March 31, 2006, and the last fiscal year shall end on the date when the Business shall be ceased as agreed between the Operator and the Silent Partner. Section 15. (Dissolution and Liquidation) (a) Upon the occurrence of any of the following events, this Agreement shall terminate, and the Tokumei Kumiai shall be dissolved and its affairs shall be wound up upon: (i) the end of the term of the Tokumei Kumiai, as provided in Section 5; (ii) the sale, disposition or distribution of all or substantially all of the Assets; (iii) redemption of the rights and interests of the Silent Partner, as may be made upon agreement between the Operator and the Silent Partner; (iv) the occurrence of an event as provided in Article 540 of the Commercial Code; or (v) the mutual determination of the Operator and the Silent Partner. (b) When the Tokumei Kumiai is dissolved, the Assets and Business of the Tokumei Kumiai shall be liquidated by the Operator in the manner set forth below or, in the event of the unavailability of the Operator, by such person or entity as shall be approved by the Silent Partner. (c) As soon as practicable after the effective date of dissolution of the Tokumei Kumiai, whether by expiration of its full term or otherwise, but in any event within 15 days of such effective date, the Assets shall be distributed to the Silent Partner in compliance with applicable law and regulations. Section 16. (Governing Law; Jurisdiction) This Agreement is governed by and shall be construed in accordance with the laws of Japan. Each of the parties hereto hereby submits to the non-exclusive jurisdiction of the courts of Japan for all purposes in connection herewith. 7 Section 17. (Language) This Agreement shall be executed both in the Japanese and English languages in duplicate respectively. Each of the duplicate copies hereof in the Japanese shall be deemed as an original. If there is any discrepancy between the Japanese version and the English version, the Japanese version shall prevail. [no further text on this page] 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date and year first above written. EZER Inc. (as the Operator) 8-4 Sudacho 1-chome Chiyoda-ku, Tokyo Nichiei Ryu, Representative Director /s/ Nichiei Ryu - --------------- Techno Groove Co., Ltd. (as the Silent Partner) 21-1 Nihombashi Hama-cho 3-chome Chuo-ku, Tokyo Masami Shimada, Representative Director /s/ Masami Shimada - ------------------ 9 -----END PRIVACY-ENHANCED MESSAGE-----