EXHIBIT 10.5
AGREEMENT ON RAGNAROK GAME SERVICES AND RELATED MATTERS
GRAVITY Co., Ltd. (hereinafter referred to as "GRAVITY") and Xx. Xxxxxx-Xxx Xxx
(000000-0000000) (hereinafter referred to as "Xxx") hereby enter into this
Agreement to establish more clearly the rights and obligations of, as well as
continued cooperation between, the parties:
ARTICLE 1. PURPOSE
The purpose of this Agreement is to clearly specify the rights and obligations
of the parties with respect to GRAVITY's control and management over the game
development process based on Xxx'x original Ragnarok cartoon (hereinafter
referred to as the "original Ragnarok work"), the online game Ragnarok and
supplementary businesses related to the Ragnarok series.
ARTICLE 2. OBLIGATION OF MUTUAL COOPERATION
Each party acknowledges that it will cooperate with the other party in good
faith and based on mutual trust for the purpose of successful operation of the
Ragnarok game services.
ARTICLE 3. DEFINITIONS
1. "Game Services Copyright" refers to the right to use the whole or part of
the original Ragnarok work and the sequels thereto, including the name,
story characters, story plot, etc., to develop, sell, distribute, transmit,
publicize, promote and advertise online games, personal computer games,
arcade games, mobile games and all other forms of games developed using
present and future technologies as well as the right to publish the
secondary authored works that are made into games by GRAVITY in all forms
of publication.
2. "Sales Amount" refers to the amount GRAVITY may legally claim from the
service use charges, net of any uncollected amount, provided that if the
service or business of GRAVITY takes the form of licensing to a third
party, the license fees payable to GRAVITY shall be the Sales Amount.
3. "Net Profit" refers to the amount after deducting Direct Expenses, Indirect
Expenses and taxes, etc. from the Sales Amount, and the Net Profit
indicated in the profit and loss statement for the current term shall be
deemed as Net Profit.
4. "Direct Expenses" refers to the expenses incurred to increase sales of the
related business. For instance, outsourcing costs, printing costs,
marketing costs, production costs, travel costs and other expenses fall
under this category.
5. "Indirect Expenses" refers to the labor costs incurred to generate sales of
the related business and all other reserves and expenses related to the
labor costs under the regulations governing taxes and dues. The expenses,
which are difficult to allocate, shall be computed using the weighted value
of sales. For instance, expenses which are difficult to allocate shall be
computed as "the weighted value = (sales by category / total sales)*100."
6. "Ragnarok Series" refers the sequels that have been developed or will be
developed by GRAVITY under the name of Ragnarok.
ARTICLE 4. COPYRIGHTS ATTRIBUTABLE TO ORIGINAL AUTHOR
1. Xxx shall have the exclusive copyrights and all other related rights to the
original Ragnarok work, except for the rights that shall be transferred or
granted to GRAVITY hereunder.
2. Copyrights shall be marked based on the agreement concluded on November 19,
2002, as follows:
First Proposal: (c) GRAVITY Corp @ LeeMyoungJin(studio DTDS) All right
reserved
Second Proposal: (c) GRAVITY & DTDS
Third Proposal: (c) GRAVITY & LeeMyoungJin(DTDS)
ARTICLE 5. GRANT AND TRANSFER OF RIGHTS TO GRAVITY
1. Xxx hereby transfers the Ragnarok Game Service Copyrights to GRAVITY, and
GRAVITY accepts them accordingly.
2. Xxx hereby grants and transfers to GRAVITY the exclusive rights to develop
and sell products using the name, storylines, characters or story plots of
Ragnarok and to engage in all secondary and related businesses using
authored products developed into games by GRAVITY, including event
businesses including theme parks, the production, distribution,
transmission, promotion, advertisement and publication of all other forms
of
related character business, animation and movies, and the publication and
distribution of comic books.
3. The businesses relating to Ragnarok games and secondary works shall be
conducted exclusively by GRAVITY, subject to continued consultation with
Xxx. In the event that Xxx intends to initiate any business using the
original Ragnarok work, including the publication of animation overseas,
other animation, character or cartoon business, Xxx must conduct such
business after prior consultation with and approval by GRAVITY.
4. GRAVITY shall hold exclusive copyrights relating to game services
transferred hereunder and any other rights to authored products developed
pursuant to the rights granted hereunder.
ARTICLE 6. PAYMENT TO XXX
1. Online Game Fees for Ragnarok Series
1.1. GRAVITY shall pay to Xxx 1.5% of the monthly Sales Amount (related
taxes shall be paid by Xxx) in arrears by the 10th day of each month,
for the period starting from the commencement date and ending on the
termination date of the commercial services of the Ragnarok series.
1.2. If commercial services for the Ragnarok series are launched overseas,
GRAVITY shall pay to Xxx 1.5% of the monthly Sales Amount (related
taxes shall be paid by Xxx) payable in arrears by the 10th day of each
month, for the period starting from the commencement date and ending
on the termination date of such commercial services of such Ragnarok
series.
2. The following shall apply where GRAVITY launches commercial services for
game products other than an online game in the Ragnarok series.
2.1. In the case of personal computer games and mobile games, GRAVITY shall
pay Xxx 5% of estimated related Net Profits (related taxes shall be
paid by Xxx) from the date commercial services commence to the date
such services cease operating, provided that GRAVITY shall pay Xxx in
arrears by the 10th day of each month, and if there is any discrepancy
between the actual Net Profits and the estimated Net Profits, the
final adjustment shall be made at the end of March of the year
following the year in which GRAVITY's related settlement is completed.
2.2. In the case of arcade games and games in all formats that can be
developed using present and future technologies, the payment amount
shall be later determined by mutual consultation of the parties;
provided that, absent special circumstances, Article 2, Section (1)
shall apply mutatis mutandis.
3. The following shall apply with respect to the supplementary businesses for
the Ragnarok series:
3.1. If any domestic or overseas sale is generated from the character
business among the supplementary businesses, GRAVITY shall pay to Xxx
10% of the Net Profits derived therefrom (related taxes shall be paid
by Xxx) for the period starting from the beginning date to the end
date of such sales, provided that GRAVITY shall pay such amount to Xxx
by the 10th day of the month following the month in which the sales
are generated, and if there is a difference with the actual Net
Profits, the final adjustment shall be made at the end of March of the
year following the year in which GRAVITY's related settlement is
completed.
3.2. With respect to supplementary businesses other than the character
business, the payment amount shall be later determined by mutual
consultation of the parties; provided that, absent special
circumstances, paragraph 3 shall apply mutatis mutandis.
ARTICLE 7. OBLIGATIONS TO ACT IN GOOD FAITH
1. GRAVITY shall promote the game services business in good faith using the
original Ragnarok work and conduct related publicity campaigns. In
distributing the Ragnarok games, GRAVITY shall specify Xxx as the original
author of such games.
2. Xxx shall affirmatively cooperate with publicity campaigns for the Ragnarok
game and grant GRAVITY the preferential rights to offer as game services
Xxx'x future works other than the original Ragnarok work.
3. As for items that GRAVITY does not commercialize for a considerable period
of time or has no plan to commercialize, both parties hereby agree that
they will allow third parties to commercialize them through a written
agreement governing all terms and conditions.
4. Xxx shall cooperate with the conduct of the Ragnarok game, Ragnarok series
and the supplementary businesses as needed by Gravity.
5. GRAVITY shall be under obligation to affirmatively protect and warrant
Xxx'x copyrights and shall specify Xxx as the original author of the
Ragnarok game and supplementary businesses.
ARTICLE 8. RIGHT TO USE TRADEMARKS
1. With respect to the Ragnarok titles and characters and other names and
authored works produced or developed pursuant to the rights specified
herein, GRAVITY may register
corresponding trademarks or logos as it sees fit for business, and all
rights to trademarks so registered shall belong exclusively to GRAVITY;
provided that, if Xxx needs to use the trademarks related to the Ragnarok
name or logo for the purpose of exercising his copyrights to the original
Ragnarok work, Xxx may use the trademarks and GRAVITY hereby grants to Xxx
the right to use such trademarks without consideration.
2. With respect to trademarks relating to Ragnarok's name and logo which have
already been registered under Xxx'x name, Xxx shall transfer his rights
thereto to GRAVITY.
ARTICLE 9. XXX'X WARRANTIES
1. Xxx shall not grant to any third party, whether before or after the date of
this Agreement, any rights relating to the original Ragnarok work that may
contradict or conflict with the rights granted or exclusively transferred
to GRAVITY.
2. Xxx warrants that the original Ragnarok work does not violate the
copyrights or other rights of a third party.
ARTICLE 10. TAXES
Both parties shall pay their respective income taxes pursuant to the general
principles of tax laws. If the copyright fees payable to Xxx are subject to
withholding under the tax law, GRAVITY shall pay such fees net of the
withholding amount.
ARTICLE 11. DUTY OF CONFIDENTIALITY
Unless for a purpose expressly permitted hereunder or without the prior consent
of the other party, neither party shall, whether before and after the date of
this Agreement, make public or disclose to a third party any business
information, technical information, know-how or any other trade secrets relating
to the other party obtained in connection with this Agreement.
ARTICLE 12. TERMINATION OF AGREEMENT
11. Either party may request in writing a cure within thirty days if the other
party is in material breach of its obligations hereunder, and if the other party
does not so cure within the stated time period, may terminate this Agreement.
2. Notwithstanding the termination of this Agreement, the party in breach of
this Agreement shall be liable to indemnify the other party for any losses
arising from such breach.
3. If GRAVITY willfully or intentionally inflicts damages on Xxx, Xxx may
terminate this Agreement.
ARTICLE 13. INDEMNIFICATION
1. If this Agreement is terminated due to a breach thereof by one party, the
breaching party shall pay to the other party as liquidated damages an
amount equal to the sum of all amounts Xxx has received from Gravity
to-date and twice the amount of the damages computed as opportunity costs
based on the expected revenues.
2. If this agreement is terminated by mutual agreement of both parties, the
amounts payable to each other shall be determined by mutual agreement of
both parties, provided that as a matter of principle, GRAVITY shall be
deemed to hold all rights to the conduct of the business as of the
termination and the risk of investment shall be borne respectively by each
party.
ARTICLE 14. TERRITORIAL LIMIT
1. The rights granted by Xxx to GRAVITY hereunder shall be valid and effective
worldwide (including Korea).
ARTICLE 15. TERM OF AGREEMENT
1. This Agreement shall be effective for thirty years from the date of this
Agreement. The parties may renew the term of this Amendment in writing two
months prior to the expiration of such term, subject to mutual consultation
in good faith as to the term and conditions of the renewal.
ARTICLE 16. INTERPRETATION OF AGREEMENT
Matters not specified herein shall be interpreted in accordance with related
laws and general business customs.
ARTICLE 17. ASSIGNMENT
Neither party may assign its rights and obligations herein to third parties
without prior written consent of the other party. However, such limit on
assignment shall not limit an assignment of copyrights effected without being in
breach of the obligations hereunder, and GRAVITY
may grant to a third party a sublicense for the purposes of commercializing the
rights granted to it hereunder.
ARTICLE 18. JURISDICTION
The Seoul District Court shall be the court of jurisdiction for adjudicating any
disputes arising from this Agreement.
ARTICLE 19. COMPLETE AGREEMENT
This Agreement shall take precedence over all other agreements between the
parties hereto with respect to the subject matter hereof.
ARTICLE 20. NOTARIZATION
Both parties hereto shall have this Agreement notarized within ten (10) days
from the date of this Agreement as evidence of its effectiveness.
As evidence of the legal formation of this Agreement, both parties shall execute
two original copies of this Agreement, and each party shall keep one copy
hereof.
January 22, 2003
/seal/
GRAVITY Co., Ltd.
Xxxx 000, Xxxxxx Xxxxxxxx, 000-0, Xxxxxx-xxxx, Xxxxxxx-xx, Xxxxx
Representative Director: Jung Xxx Xxxxx
/seal/
Xxxxxx-Xxx Xxx (7404112-1052628)
