EXHIBIT B
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 30, 2005 (this "Agreement"),
between:
(1) Xx. Xxxx Ryool Xxx, Ms. Ji Xxxxx Xxx, Xx. Xxxxx Xxxx Xxx and Ms. Ji Xxxx
Xxx, 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
Xx. Xxxx Ryool Xxx 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: 0000-000-000000, account name: Jung Ryool Xxx).
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
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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
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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,
Xx. Xxxx Ryool Xxx 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.
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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. Xx. Xxxx Ryool Xxx 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
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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
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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
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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.,
0-00-00, Xxxxxx-Xxxxxx
0
Xxxxxx-xx, Xxxxx, Xxxxx
Attention: Mr. Nichiei Ryu
with a copy to:
Xxx and Xxxxx
Northgate Xxxxxxxx
00 Xxxxxxxx-xxxx, Xxxxxx-xx
Xxxxx, Xxxxx
Attention: Xx. Xxxxx-Hyeon Ko, Esq.
(b) If to the Sellers, to:
Sunkyung Apt 3-1006
000, Xxxxxx-xxxx, Xxxxxxx-xx
Xxxxx, Xxxxx
Attention: Xx. Xxxx Ryool Xxx
with a copy to:
Xxx, Xxx and Xxx
Hankook Tire Xxxx.
000-00 Xxxxxx-xxxx, Xxxxxxx-xx
Xxxxx, Xxxxx
Attention: Ri-Xxxx Xxx
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
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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 Xx. Xxxx Ryool Xxx;
(b) the Buyer or Xx. Xxxx Ryool Xxx, if there has been a material breach
by the other Party (Buyer, if the terminating party is Xx. Xxxx Ryool
Xxx) 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
/s/ Jung Ryool Xxx
------------------------------------
Jung Ryool Xxx
/s/ Jung Ryool Xxx
------------------------------------
Ji Xxxxx Xxx
by: attorney-in-fact
/s/ Jung Ryool Xxx
------------------------------------
Young Xxxx Xxx
by: legal representative
/s/ Jung Ryool Xxx
------------------------------------
Ji Xxxx Xxx
by: legal representative
EZER Inc.
By: /s/ Nichiei Ryu
-------------------------------
Name: Nichiei Ryu
Title: President
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