Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13D
Under
the
Securities Exchange Act of 1934
(Amendment
No. 10)*
Gravity
Co., Ltd.
(Name
of
Issuer)
Common
Stock, Par Value Won 500 Per Share
(Title
of
Class of Securities)
38911N107
(CUSIP
Number)
Marran
Ogilvie
666
Third
Avenue
26th
Floor
New
York,
New York 10017
(212)
845-7909 (Name, Address and Telephone
Number
of
Person
Authorized
to Receive Notices and Communications)
November
20, 2006
(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 Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box o.
NOTE:
Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties
to whom copies are to be sent.
(Page
1
of 21 Pages)
*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
2 of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Starboard
Value and Opportunity Master Fund Ltd. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
64,434
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
64,434
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY OWNED
BY
EACH REPORTING PERSON |
|
|
|
|
|
64,434 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
0.93% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
CO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 3
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Parche,
LLC
20-0870632 |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Delaware |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
83,791.75
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
83,791.75
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY OWNED
BY
EACH REPORTING PERSON |
|
|
|
|
|
83,791.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
1.20% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
OO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 4
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
RCG
Ambrose Master Fund, Ltd. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
49,126.75
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY OWNED
BY
EACH REPORTING PERSON |
|
|
|
|
|
49,126.75
|
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
0.71% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
CO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 5
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
RCG
Halifax Fund, Ltd. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE
VOTING POWER |
OF |
|
47,222.5
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
47,222.5
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
47,222.5 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
0.68% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
CO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 6
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Ramius
Master Fund, Ltd. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
182,438.25
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
182,438.25
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
182,438.25 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
2.63% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
CO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 7
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Admiral
Advisors, LLC 37-1484525 |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Delaware |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
148,225.75
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
148,225.75
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
148,225.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
2.13% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IA,
OO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 8
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Ramius
Advisors, LLC 13-3954331 |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Delaware |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
182,438.25
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
182,438.25
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
182,438.25 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
2.63% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IA,
OO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 9
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Safe
Harbor Master Fund, L.P. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
215,758.5
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
215,758.5
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
215,758.5 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
3.10% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
PN |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 10
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Safe
Harbor Investment Ltd. |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
WC |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Cayman
Islands |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
215,758.5
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
215,758.5
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
215,758.5 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
3.10% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
CO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 11
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Ramius
Capital Group, L.L.C.
13-3937658 |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER OF A
GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Delaware |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
642,771.75
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
642,771.75
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IA,
OO |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 12
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
C4S
& Co., L.L.C. 13-3946794 |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
Delaware |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
642,771.75
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
0
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
642,771.75
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
0
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75
|
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
OO |
**
SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 13
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Peter
A. Cohen |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
United
States |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
0
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
642,771.75
|
BY |
|
|
EACH |
|
(9) SOLE
DISPOSITIVE POWER |
REPORTING |
|
0
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
642,771.75
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IN |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 14
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Morgan
B. Stark |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
United
States |
|
|
|
NUMBER |
(7) SOLE VOTING
POWER |
OF |
|
0
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
642,771.75
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
0
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
642,771.75
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IN |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 15
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Thomas
W. Strauss |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
United
States |
|
|
|
NUMBER |
(7) SOLE
VOTING POWER |
OF |
|
0
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
642,771.75
|
BY |
|
|
EACH |
|
(9) SOLE
DISPOSITIVE POWER |
REPORTING |
|
0
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
642,771.75
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IN |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 16
of 21
Pages
|
|
|
|
(1)
|
|
NAME OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF
ABOVE PERSONS (ENTITIES ONLY) |
|
|
|
|
|
Jeffrey
M. Solomon |
|
|
|
(2)
|
|
CHECK THE APPROPRIATE BOX IF A
MEMBER
OF A GROUP ** |
|
|
(a)
x
|
|
|
(b)
o
|
|
|
|
(3)
|
|
SEC USE ONLY |
|
|
|
|
|
|
(4)
|
|
SOURCE OF FUNDS ** |
|
|
|
|
|
OO |
|
|
|
(5)
|
|
CHECK BOX IF DISCLOSURE OF LEGAL
PROCEEDINGS
IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) o |
|
|
|
|
|
|
(6)
|
|
CITIZENSHIP OR PLACE OF
ORGANIZATION |
|
|
|
|
|
United
States |
|
|
|
NUMBER |
(7) SOLE
VOTING POWER |
OF |
|
0
|
SHARES |
|
BENEFICIALLY |
|
(8) SHARED VOTING
POWER |
OWNED
|
|
642,771.75
|
BY |
|
|
EACH |
|
(9) SOLE DISPOSITIVE
POWER |
REPORTING |
|
0
|
PERSON |
|
|
WITH |
|
(10) SHARED
DISPOSITIVE POWER |
|
|
642,771.75
|
|
|
|
(11)
|
|
AGGREGATE AMOUNT BENEFICIALLY
OWNED BY
EACH REPORTING PERSON |
|
|
|
|
|
642,771.75 |
|
|
|
(12)
|
|
CHECK BOX IF THE AGGREGATE AMOUNT
IN
ROW (11) EXCLUDES CERTAIN SHARES
** o |
|
|
|
(13)
|
|
PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) |
|
|
9.25% |
|
|
|
(14)
|
|
TYPE OF REPORTING PERSON
** |
|
|
IN |
**
SEE
INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 38911N107 |
13D
|
Page 17
of 21
Pages
|
This
Amendment No. 10 ("Amendment No. 10") amends the statement on Schedule
13D
dated
March 28, 2006 as amended by Amendment No. 1 dated May 2, 2006, Amendment
No. 2 dated May 23, 2006, Amendment No. 3 dated June 1, 2006, Amendment
No. 4 dated July 14, 2006, Amendment No. 5 dated July 26, 2006, Amendment
No. 6 dated August 22, 2006, Amendment No. 7 dated August 25, 2006, Amendment
No. 8 dated October 31, 2006 and Amendment No. 9 dated November 8, 2006
(the
"Original Statement"). Any capitalized terms used in this Amendment No. 10
and not otherwise defined herein shall have the meanings ascribed to such
terms
in
the Original Statement.
Item
4.
Purpose of the Transaction.
Item
4 is
hereby amended and supplemented by the addition of the following:
On
November 20, 2006, the Committee issued a press release announcing that it
had
prepared a preliminary proxy statement in connection with the Extraordinary
General Meeting of the shareholders of Gravity to be held at 9:00 AM on Tuesday,
December 26, 2006. A copy of the press release is attached hereto as
Exhibit VIII and is incorporated herein by reference. A copy of the preliminary
proxy statement is attached hereto as Exhibit IX and is incorporated herein
by
reference.
Item
5.
Interest in Securities of the Issuer.
Item
5 is
hereby amended and restated as follows:
Transactions
in the Common Stock since the filing of the Original Statement (which were
all
in the open market unless otherwise noted on Schedule F-10) by the Reporting
Persons are set forth in Schedule F-10 attached hereto and incorporated by
reference herein.
1.
Starboard
(a)
As of
November 17, 2006, Starboard may be deemed the beneficial
owner of 64,434 shares of Common Stock.
Percentage:
Approximately 0.93% as of the date hereof. The
percentages used herein and in the rest of Item 5 are
calculated based upon 6,948,900 shares, which reflects
the shares of Common Stock outstanding as of December
31, 2005, as reported by the Company on its Form
20-F
filed on June 30, 2006.
(b)
1.
Sole power to vote or direct vote: 64,434
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 64,434
4.
Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by Starboard
since the filing of the Original Statement is set
forth
in Schedule F-10 and is incorporated by reference.
Starboard entered into transactions in the Common
Stock since the filing of the Original Statement which
are
set forth on Schedule F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
2.
Parche
(a)
As of
November 17, 2006, Parche may be deemed the beneficial
owner of 83,791.75 shares of Common Stock.
Percentage:
Approximately 1.20% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 83,791.75
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 83,791.75
4.
Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by Parche since
the
filing of the Original Statement is set forth in
Schedule F-10 and is incorporated by reference. Parche entered
into transactions in the Common Stock since the filing
of
the Original Statement which are set forth on Schedule
F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such shares
of the Common Stock.
(e)
Not
applicable.
3.
RCG
Ambrose
(a)
As of
November 17, 2006, RCG Ambrose may be deemed the beneficial
owner of 49,126.75 shares of Common Stock.
Percentage:
Approximately 0.71% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 49,126.75
2. Shared power to vote or direct vote: 0
3. Sole power to dispose or direct the disposition: 49,126.75
4. Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by RCG Ambrose
since the filing of the Original Statement is set
forth
in Schedule F-10 and is incorporated by reference.
RCG Ambrose
entered into transactions in the Common
Stock since the filing of the Original Statement which
are
set forth on Schedule F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
4.
RCG
Halifax
(a)
As of
November 17, 2006, RCG Halifax may be deemed the beneficial
owner of 47,222.5 shares of Common Stock.
Percentage:
Approximately 0.68% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 47,222.5
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 47,222.5
4.
Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by RCG Halifax
since the filing of the Original Statement is set
forth
in Schedule F-10 and is incorporated by reference.
RCG Halifax entered into transactions in the Common
Stock since the filing of the Original Statement which
are
set forth on Schedule F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
5.
Ramius
Master Fund
(a)
As of
November 17, 2006, Ramius Master Fund may be deemed the
beneficial owner of 182,438.25 shares of Common Stock.
Percentage:
Approximately 2.63% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 182,438.25
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 182,438.25
4.
Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by Ramius Master
Fund since the filing of the Original Statement is
set
forth in Schedule F-10 and is incorporated by reference.
Ramius Master Fund entered into transactions in
the
Common Stock since the filing of the Original Statement
which are set forth on Schedule F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
6.
Admiral
(a)
As of
November 17, 2006, Admiral may be deemed the beneficial
owner of 148,225.75 shares of Common Stock.
Percentage:
Approximately 2.13% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 148,225.75
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 148,225.75
4.
Shared power to dispose or direct the disposition: 0
(c)
Admiral did not enter into any transactions in the Common
Stock since the filing of the Original Statement. The
transactions in the Common Stock since the filing of the
Original Statement on behalf of Starboard and Parche,
which were all in the open market (except as otherwise
indicated on Schedule F-10), are set forth in Schedule
F-10, and are incorporated by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
7.
Ramius
Advisors
(a)
As of
November 17, 2006, Ramius Advisors may be deemed the
beneficial owner of 182,438.25 shares of Common Stock.
Percentage:
Approximately 2.63% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 182,438.25
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 182,438.25
4.
Shared power to dispose or direct the disposition:
0
(c)
Ramius Advisors did not enter into any transactions in the
Common Stock since the filing of the Original Statement.
The transactions in the Common Stock since the
filing of the Original Statement on behalf of Ramius Master
Fund, which were all in the open market (except as
otherwise indicated on Schedule F-10), are set forth in
Schedule F-10, and are incorporated by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
CUSIP No. 38911N107 |
13D
|
Page 18
of 21
Pages
|
8.
Safe
Harbor Master Fund
(a)
As of
November 17, 2006, Safe Harbor Master Fund may be deemed
the beneficial owner of 215,758.5 shares of Common
Stock.
Percentage:
Approximately 3.10% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 215,758.5
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 215,758.5
4.
Shared power to dispose or direct the disposition: 0
(c)
The
number of shares of Common Stock acquired by Safe Harbor
Master Fund is set forth in Schedule F-10 and is incorporated
by reference. Safe Harbor Master Fund entered
into transactions in the Common Stock since the filing
of
the Original Statement which are set forth on Schedule
F-10.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
9.
Safe
Harbor Investment
(a)
As of
November 17, 2006, Safe Harbor Investment may be deemed
the beneficial owner of 215,758.5 shares of Common
Stock.
Percentage:
Approximately 3.10% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 215,758.5
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 215,758.5
4.
Shared power to dispose or direct the disposition: 0
(c)
Safe
Harbor Investment did not enter into any transactions
in the Common Stock since the filing of the Original
Statement. The transactions in the Common Stock since
the
filing of the Original Statement on behalf of Safe
Harbor Master Fund, which were all in the open market
(except as otherwise indicated on Schedule F-10), are
set
forth in Schedule F-10, and are incorporated by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
CUSIP No. 38911N107 |
13D
|
Page 19
of 21
Pages
|
10.
Ramius Capital
(a)
As of
November 17, 2006, Ramius Capital may be deemed the beneficial
owner of 642,771.75 shares of Common Stock.
Percentage:
Approximately 9.25% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 642,771.75
2.
Shared power to vote or direct vote: 0
3.
Sole power to dispose or direct the disposition: 642,771.75
4.
Shared power to dispose or direct the disposition: 0
(c)
Ramius Capital did not enter into any transactions in the
Common Stock since the filing of the Original Statement.
The transactions in the Common Stock since the
filing of the Original Statement on behalf of Starboard,
Parche, RCG Ambrose, RCG Halifax, Ramius Master
Fund and Safe Harbor Master Fund, which were all in
the
open market (except as otherwise indicated on Schedule
F-10), are set forth in Schedule F-10, and are incorporated
by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
11.
C4S
(a)
As of
November 17, 2006, C4S may be deemed the beneficial owner
of
642,771.75 shares of Common Stock.
Percentage:
Approximately 9.25% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 642,771.75
2. Shared power to vote or direct vote: 0
3. Sole power to dispose or direct the disposition: 642,771.75
4. Shared power to dispose or direct the disposition: 0
(c)
C4S
did not enter into any transactions in the Common Stock
since the filing of the Original Statement. The transactions
in the Common Stock since the filing of the Original
Statement on behalf of Starboard, Parche, RCG Ambrose,
RCG Halifax, Ramius Master Fund and Safe Harbor Master
Fund, which were all in the open market (except as
otherwise indicated on Schedule F-10), are set forth in
Schedule F-10, and are incorporated by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
CUSIP No. 38911N107 |
13D
|
Page 20
of 21
Pages
|
12.
Mr.
Cohen, Mr. Stark, Mr. Strauss and Mr. Solomon
(a)
As of
November 17, 2006, each of Mr. Cohen, Mr. Stark, Mr.
Strauss and Mr. Solomon may be deemed the beneficial owner
of
642,771.75 shares of Common Stock. Each of Mr. Cohen,
Mr. Stark, Mr. Strauss and Mr. Solomon disclaims beneficial
ownership of the shares of Common Stock owned by
Starboard, Parche, RCG Ambrose, RCG Halifax, Ramius Master
Fund and Safe Harbor Master Fund, and the filing of
this
Schedule 13D shall not be construed as an admission
that any such person is the beneficial owner of
any
such securities.
Percentage:
Approximately 9.25% as of the date hereof.
(b)
1.
Sole power to vote or direct vote: 0
2.
Shared power to vote or direct vote: 642,771.75
3.
Sole power to dispose or direct the disposition: 0
4.
Shared power to dispose or direct the disposition: 642,771.75
(c)
Neither Mr. Cohen, Mr. Stark, Mr. Strauss nor Mr. Solomon
has entered into any transactions in the Common Stock
since the filing of the Original Statement. The transactions
in the Common Stock since the filing of the Original
Statement on behalf of Starboard, Parche, RCG Ambrose,
RCG Halifax, Ramius Master Fund, Ramius Fund III
and
Safe Harbor Master Fund, which were all in the open
market (except as otherwise indicated on Schedule F-10),
are set forth in Schedule F-10, and are incorporated
by reference.
(d)
No
person other than the Reporting Persons is known to have
the
right to receive, or the power to direct the receipt
of dividends from, or proceeds from the sale of, such
shares of the Common Stock.
(e)
Not
applicable.
As
of
November 17, 2006, the Reporting Persons may collectively be deemed to
beneficially own 642,771.75 shares of Common Stock, 105,973 of which,
representing
approximately 1.53% of its beneficial ownership are owned directly in
the
form of Common Stock and 536,798.75 of which, representing 7.72% of its
beneficial
ownership, are owned in the form of ADSs.
Upon
information and belief, as of the close of business on November 17, 2006,
Moon may be deemed to beneficially own 590,885 shares of Common Stock,
105,971
of which, representing approximately 1.53% of its beneficial ownership,
are
owned
directly in the form of Common Stock and 484,914 of which, representing
approximately 6.98% of its beneficial ownership, are owned in the form
of
ADSs.
Item
7.
Material to be Filed as Exhibits.
Item
7 is
hereby amended to add the following Exhibit:
Exhibit
VIII: Press release issued November 20, 2006 by the Gravity Committee
for
the
Fair Treatment of Minority Shareholders.
Exhibit
IX: Preliminary copy of proxy statement to be used by the Gravity Committee
for
the Fair Treatment of Minority Shareholders.
SCHEDULE
F-10
PURCHASES
OF COMMON STOCK
|
|
|
Date |
|
|
Price |
|
|
Quantity
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Starboard
Value and Opportunity Master Fund Ltd.
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
5,525
|
|
Parche,
LLC
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
1,275
|
|
Parche,
LLC
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
3,825
|
|
RCG
Ambrose Master Fund, Ltd.
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
2,550
|
|
RCG
Halifax Fund, Ltd.
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
1,700
|
|
Ramius
Master Fund, Ltd.
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
10,200
|
|
Safe
Harbor Master Fund, L.P.
|
|
|
11/17/06
|
|
$ |
5.5719 |
|
|
17,425
|
|
(1)
The
Reporting Persons acquired ADSs, each of which represents .25 shares
of
Common
Stock.
CUSIP No. 38911N107 |
13D
|
Page 21
of 21
Pages
|
SIGNATURES
After
reasonable inquiry and to the best of his knowledge and belief,
each of the undersigned certifies that the information set forth in this
statement
is true, complete and correct.
Dated:
November 20, 2006
STARBOARD VALUE AND
OPPORTUNITY |
|
RAMIUS MASTER FUND, LTD. |
MASTER FUND LTD. |
|
By: |
Ramius Advisors, LLC |
|
|
|
|
its investment manager |
PARCHE, LLC |
|
By: |
Ramius Capital Group,
L.L.C., |
By: |
Admiral Advisors, LLC, |
|
|
its managing member |
|
its managing member |
|
|
|
|
|
|
|
|
RCG AMBROSE MASTER FUND,
LTD. |
|
ADMIRAL ADVISORS,
LLC |
By: |
Ramius Capital Group, L.L.C., |
|
By: |
Ramius Capital Group, L.L.C. |
|
its investment manager |
|
|
its managing member |
|
|
|
|
|
By: |
C4S & Co., L.L.C., |
|
RAMIUS ADVISORS,
LLC |
|
its managing member |
|
By: |
Ramius Capital Group,
L.L.C., |
|
|
|
|
its managing member |
|
|
|
|
|
RCG HALIFAX FUND,
LTD. |
|
RAMIUS CAPITAL GROUP,
L.L.C. |
By: |
Ramius Capital Group,
L.L.C., |
|
By: |
C4S & Co.,
L.L.C., |
|
its investment manager |
|
|
as managing member |
By: |
C4S & Co., L.L.C., |
|
|
|
|
its managing member |
|
C4S & CO.,
L.L.C. |
|
By: |
/s/ Jeffrey M.
Solomon
|
|
|
Name: Jeffrey M. Solomon |
|
|
|
Title: Authorized Signatory |
|
SAFE HARBOR MASTER FUND,
L.P. |
|
SAFE HARBOR INVESTMENT
LTD. |
|
|
|
|
|
By: |
Safe Harbor Investment Ltd., |
|
By: |
/s/ Jeffrey M.
Solomon |
|
its general partner |
|
|
Name: Jeffrey M. Solomon |
|
|
|
|
Title: Authorized
Signatory |
By: |
/s/ Jeffrey M.
Solomon |
|
|
|
Name: Jeffrey M.
Solomon |
|
|
|
Title: Authorized
Signatory |
|
|
|
|
|
|
|
|
JEFFREY
M. SOLOMON |
|
|
|
|
|
|
|
|
/s/ Jeffrey M.
Solomon |
|
|
|
Individually and as
attorney-in- |
|
|
|
fact for Peter A. Cohen,
Morgan |
|
|
|
B. Stark and Thomas W.
Strauss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
VIII
GRAVITY
MINORITY SHAREHOLDERS PREPARE PROXY STATEMENT URGING ALL SHAREHOLDERS TO
REMOVE
RYU
AND BAIK AS DIRECTORS OF THE COMPANY AND TO VOTE THE GOLD PROXY
CARD
Committee
Anticipates Mailing Proxy Statement to ADS Holders Around November 24,
2006
NEW
YORK & SEOUL, Korea—November 20, 2006
- The
Gravity Committee for Fair Treatment of Minority Shareholders (the "Committee")
today announced that it has prepared a preliminary copy of its proxy statement
for the upcoming Extraordinary General Meeting (“EGM”) of shareholders of
Gravity Co., Ltd. (“Gravity” or the “Company”) (NASDAQ: GRVY). The proxy
statement, which outlines the Committee’s grievances against the Company and
presents detailed information to support the Committee’s allegations of
mismanagement and self-dealing at Gravity, is expected to be mailed to the
holders of American Depository Shares (“ADSs”) of Gravity on or shortly after
November 24, 2006. The preliminary copy of the proxy statement will also
be
filed with the United States Securities and Exchange Commission as an exhibit
to
the respective Schedule 13D filings of Moon Capital Management LP and Ramius
Capital Group, L.L.C., and certain of their affiliates.
The
purpose of the EGM, which has been scheduled for December 26, 2006, is to
vote
on the removal of Mr. Il Young Ryu, Chairman and Chief Executive Officer
of
Gravity, and Mr. Seungtaik Baik, Senior Executive Vice President and Chief
Operating Officer of Gravity, as directors of the Company and will also give
Gravity’s minority shareholders a forum to express their views on the management
and operations of the Company.
Mr.
Joo
Young Kim of Hannuri Partners, the Committee’s legal counsel in Korea, stated on
behalf of the Committee, “Since March 2006, the Committee has taken a variety of
steps to protect the rights of Gravity’s minority shareholders and communicate
our issues about the management of the Company. We have a clear opportunity
at
the EGM to reaffirm the rights of minority shareholders and send a strong
message to Gravity’s independent directors, Taizo Son, and SOFTBANK, that Mr.
Ryu and Mr. Baik should be removed as directors.”
The
Committee believes that Messrs. Ryu and Baik have consistently failed in
their
duties to manage the Company with responsibility and due care since the sale
of
a majority interest in Gravity from its founder to the Japanese firm EZER
Inc.
(“EZER”), an entity with links to Taizo Son, GungHo Online Entertainment
(“GungHo”) (JP: 3765) and SOFTBANK Corp. (“SOFTBANK”) (JP: 9984). The poor
performance and questionable conduct of Messrs. Ryu and Baik have resulted
in
share price performance and financial results that should be of great concern
to
all minority shareholders.
The
proxy
statement details allegations of a pervasive pattern of mismanagement and
personal misconduct that the Committee believes has resulted in this destruction
of shareholder value. The range of issues highlighted in the proxy statement
include the following:
|
·
|
A
series of related-party transactions which have been detrimental
to the
interests of the minority shareholders and have enriched Taizo
Son,
GungHo, SOFTBANK and Mr. Baik at the expense of the Company’s minority
shareholders;
|
|
·
|
The
Company’s poor financial performance in the first half of 2006, as
evidenced by significant declines in revenue and EBITDA margin;
|
|
·
|
Gravity’s
failure to disclose the details of the Company's secret settlement
with
ex-Chairman Jeong Ryul Kim after documented reports that he embezzled
funds from the Company;
|
|
·
|
Failure
to adequately develop and manage the Company’s existing game
portfolio;
|
|
·
|
Delays
in the release of Ragnarok Online
II;
|
|
·
|
Defection
of management and key staff members;
and
|
|
·
|
Allegations
of lavish spending and corporate waste, including use of corporate
credit
cards for personal indulgences.
|
The
Committee believes that the related-party transactions are particularly
noteworthy because EZER stated in a Schedule 13D filing on August 30, 2005
that
the primary purpose of the acquisition of the majority interest was “to secure
for the benefit of GungHo a continuing license for ‘Ragnarok’”, a license which
was due to expire in August 2006. EZER’s admission makes it clear that GungHo’s
two principal shareholders, SOFTBANK and Taizo Son’s Asian Groove, stood to
benefit directly from the EZER control purchase. Related-party transactions
that
are detailed in the proxy statement include:
|
·
|
The
re-licensing of Ragnarok to GungHo in August 2006. The directors
announced
this transaction after failing to act on the Committee’s demand that the
Company establish a special committee of the Board to maximize
the value
of the Ragnarok license. Given that the license is Gravity’s single most
valuable asset, and in light of the rampant conflicts of interest
involved
in any deal between Gravity and GungHo, the Committee feels that
this
required a heightened level of
scrutiny;
|
|
·
|
The
acquisition of Emile Chronicle Online (“ECO”) from GungHo in December
2005. This game was acquired for 700 million yen (approximately
US$6
million) from GungHo just days before the end of GungHo’s fiscal year. The
Committee believes that the price paid by Gravity for ECO was unwarranted
and excessive. ECO has yet to prove to be a material portion of
Gravity’s
game pipeline. The Committee believes that this transaction was
entered
into principally to boost GungHo’s earnings and allow GungHo to exceed
expected earnings estimates for
2005.
|
|
·
|
Acquisition
of Neo-Cyon Inc, a company held more than 40% by Mr. Ryu’s friend and
current Gravity executive and director, Mr. Baik, in November 2005.
Gravity spent approximately 7.7 billion won (approximately US$7.4
million)
on the acquisition of the 96% stake. Similarly with ECO, the Committee
believes that the price paid by Gravity was exorbitant, particularly
given
the lack of contribution that Neo-Cyon has made to the Company.
The
Committee believes that the Neo-Cyon transaction was not negotiated
at
arms’ length and is another example of self-dealing in which the Company
rescued a marginal business owned by a friend of Mr.
Ryu.
|
|
·
|
Investment
in Online Game Revolution Fund Vol. 1, in December 2005. Gravity
announced
a plan to invest up to one billion yen (approximately US$8.5 million)
of
the Company’s cash balance in this Japanese fund whose general partner is
Movida Investment Inc., which is indirectly owned and controlled
by Taizo
Son and SOFTBANK. SOFTBANK is also an investor in this fund. Scant
details
have been disclosed to the shareholders about the exact amount
that has
been invested by Gravity to date or the expected returns on this
investment.
|
The
Committee is taking this action because it believes strongly that removing
Messrs. Ryu and Baik is a necessary step towards ensuring that all shareholders
realize maximum value for their investment in the Company.
THE
COMMITTEE URGES YOU TO VOTE FOR ITS PROPOSAL TO REMOVE MESSRS. RYU AND BAIK
FROM
THE GRAVITY BOARD ON THE GOLD PROXY CARD ENCLOSED WITH THE PROXY
STATEMENT.
The
Committee has retained Innisfree M&A Incorporated to assist with the proxy
solicitation. We encourage all Gravity shareholders and ADS holders to contact
Innisfree at (888) 750-5834 to obtain a copy of the proxy statement and
additional information that the Committee will make available and for
instructions about how to vote your ADSs. In addition, the members of the
Committee will each be filing amended Schedule 13Ds filings which will attach
a
preliminary copy of the proxy statement as an exhibit.
About
The Gravity Committee for Fair Treatment of Minority Shareholders
The
Committee was formed in March 2006 by Moon Capital Management LP and Ramius
Capital Group, L.L.C. to protect the rights of minority shareholders of Gravity
and to maximize shareholder value.
About
Ramius Capital Group, L.L.C.
Ramius
Capital Group is a registered investment advisor that manages assets of
approximately $7.4 billion in a variety of alternative investment strategies.
Ramius Capital Group is headquartered in New York with offices located in
London, Tokyo, Hong Kong, Munich, and Vienna.
About
Moon Capital Management LP
Moon
Capital Management LP, on behalf of its affiliated investment funds, manages
more than $1 billion, investing primarily in equity securities in markets
around
the world. Headquartered in New York, Moon Capital also has offices in
Singapore.
CERTAIN
INFORMATION CONCERNING THE COMMITTEE
The
Gravity Committee for Fair Treatment of Minority Shareholders (the “Committee”)
intends to use a proxy statement to solicit votes from the holders of American
Depositary Shares (“ADSs”) of Gravity Co., Ltd. (the “Company”) for the purpose
of removing two current directors of the Company. The members of the Committee
expect to prepare and file a preliminary copy of the proxy statement as an
exhibit to their respective Schedule 13D filings. The members of the Committee
also expect to prepare a final proxy statement prior to mailing the final
proxy
statement to the ADS holders.
THE
COMMITTEE STRONGLY ADVISES ALL ADS HOLDERS OF THE COMPANY TO READ THE FINAL
PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY STATEMENT WILL BE AVAILABLE AT NO CHARGE UPON REQUEST.
REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE COMMITTEE’S PROXY SOLICITOR,
INNISFREE M&A INCORPORATED AT ITS TOLL-FREE NUMBER: (888)
750-5834.
The
participants in the solicitation are Ramius Capital Group, L.L.C., Starboard
Value and Opportunity Master Fund Ltd., Parche, LLC, RCG Ambrose Master Fund,
Ltd., RCG Halifax Fund, Ltd., Ramius Master Fund, Ltd., Admiral Advisors,
LLC,
Ramius Advisors, LLC, Safe Harbor Master Fund, L.P., Safe Harbor Investment
Ltd., C4S & Co., L.L.C., Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss
and Jeffrey M. Solomon (collectively, the “Ramius Entities”) and Moon Capital
Management LP, Moon Capital Master Fund Ltd., Moon Capital Leveraged Master
Fund
Ltd., JWM Capital LLC and John W. Moon (collectively, the “Moon Entities”).
INFORMATION
REGARDING THE DIRECT OR INDIRECT INTERESTS, BY SECURITY HOLDINGS OR OTHERWISE,
OF ALL THE COMMITTEE MEMBERS IN THE COMPANY IS AVAILABLE IN THE SCHEDULES
13D
FILED BY EACH OF THE RAMIUS ENTITIES AND THE MOON ENTITIES WITH THE SEC ON
MARCH
29, 2006, AS SUBSEQUENTLY AMENDED, COPIES OF WHICH ARE AVAILABLE AT NO CHARGE
ON
THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV.
#
#
#
Contact:
Korean
Media & Shareholders
Hannuri
Law Offices
Mr.
Joo
Young Kim, Esq., (82) 2-537-9506
or
U.S.
Media & Shareholders:
Citigate
Sard Verbinnen
Dan
Gagnier or Renée Soto, 212-687-8080
Exhibit
IX
PRELIMINARY
COPY SUBJECT TO COMPLETION DATED NOVEMBER __, 2006
The
Gravity Committee for Fair Treatment of Minority
Shareholders
November
__, 2006
Dear
Fellow Gravity Investor:
The
opportunity has finally arrived for you to send a message to the Board of
Directors and management of Gravity Co., Ltd. (“Gravity” or the “Company”). We,
the members of The Gravity Committee for Fair Treatment of Minority Shareholders
(the “Committee”), together own approximately 17.6% of the Company and we
strongly believe that Gravity is not acting in your best interests. The
Committee believes that since August 30, 2005, when control of Gravity was
acquired by EZER Inc., a shell corporation with ties to GungHo Online
Entertainment and SOFTBANK Corp., the rights of the minority shareholders have
been disregarded repeatedly and consistently.
Although
we have tried to resolve these issues through a constructive dialogue with
the
Company and representatives of the majority shareholder, our efforts have been
rebuffed, as described in the attached Statement. The Committee is therefore
seeking your support at the extraordinary general meeting of shareholders,
called by the Company at the request of the Committee, scheduled to be held
at
the ___________________________, _________, ________ on December 26, 2006,
at 9
A.M. (local time) for the purpose of removing the two management directors
serving on Gravity’s Board of Directors, Mr. Il Young Ryu and Mr. Seungtaik
Baik.
Given
the
52.4% majority stake of EZER in the Company, it will not be possible to obtain
the necessary votes to legally obligate the Board to remove these two directors.
However, we believe a strong vote in favor of the proposal would send a clear
message to the independent directors that the minority shareholders believe
Gravity is being mismanaged by Messrs. Ryu and Baik and that the rights of
the
minority investors must be protected.
The
Committee urges you to carefully consider the information contained in the
attached Statement and then support our efforts by signing, dating and returning
the enclosed GOLD
proxy
card today. The attached Statement and the enclosed GOLD
proxy
card are first being furnished to the holders of American Depositary Shares
on
or about November __, 2006. If you have already voted against the proposals
described in the attached Statement, you have every right to change your vote
by
signing, dating and returning a later dated proxy.
If
you
have any questions or require any assistance with your vote, please contact
Innisfree M&A Incorporated, which is assisting us, at their address and
toll-free numbers listed on the following page.
Thank
you
for your support,
The
Gravity Committee for Fair Treatment of Minority Shareholders
If
you have any questions, require assistance in voting your
GOLD
proxy
card,
or
need additional copies of the Committee’s Statement, please call
Innisfree
M&A Incorporated at the phone numbers listed below.
501
Madison Avenue, 20th Floor
New
York, New York 10022
CALL
TOLL FREE: (888) 750-5834
BANKS
AND BROKERS CALL COLLECT: (212) 750-5833
|
EXTRAORDINARY
GENERAL MEETING OF SHAREHOLDERS
OF
GRAVITY
CO., LTD.
_________________________
STATEMENT
OF
THE
GRAVITY COMMITTEE FOR FAIR TREATMENT OF MINORITY
SHAREHOLDERS
_________________________
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
The
members of The Gravity Committee for Fair Treatment of Minority Shareholders
together own approximately 17.6% of Gravity and are by far the largest minority
shareholders of the Company. The Committee believes that Gravity is not acting
in the best interests of all shareholders. The Committee is therefore seeking
your support at the extraordinary general meeting of shareholders (the
“Meeting”), called by the Company at our request, scheduled to be held at
___________________________, _________, ________ on December 26, 2006, at 9
A.M.
(local time) for the following purpose:
To
remove Il Young Ryu and Seungtaik Baik from the Gravity Board for failing to
fulfill their fiduciary duties in accordance with applicable law.
As
of
November __, 2006, the approximate date on which this Statement is being mailed
to the holders of American Depositary Shares (“ADSs”) of Gravity, the members of
the Committee were the beneficial owners of an aggregate of 4,044,351 ADSs
and
211,944 shares of common stock of the Company (the “Shares”), which currently
represent approximately 17.6% of the issued and outstanding common stock, all
of
which are entitled to be voted at the Meeting. The Committee is composed of
Ramius Capital Group, L.L.C. and certain of its affiliates (together, “Ramius”)
and Moon Capital Management LP and certain of its affiliates (together, “Moon”).
This Statement and the GOLD
proxy
card are first being furnished to the holders of Gravity ADSs on or about
November __, 2006.
Gravity
has set the record date (the “Record Date”) for determining (i) shareholders
entitled to notice of and to vote at the Meeting as November 24, 2006 and (ii)
ADS holders entitled to notice of and to vote at the Meeting as of November
22,
2006. Shareholders, including holders of ADSs, of record at the close of
business on the Record Date will be entitled to vote at the Meeting.
THE
COMMITTEE URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF
THE
REMOVAL OF MESSRS. RYU AND BAIK FROM THE GRAVITY BOARD AS DESCRIBED IN THIS
STATEMENT.
BACKGROUND
TO SOLICITATION
The
members of the Committee initially purchased their ADSs based on their belief
that the Shares underlying the ADSs at the time of purchase were substantially
undervalued and represented an attractive investment opportunity. The Committee
was formed after becoming concerned about a number of disconcerting developments
at Gravity and the apparent failure of Gravity’s management to address these
problems. These developments and the Committee’s efforts to maximize shareholder
value are summarized in the following chronology of events leading up to this
solicitation:
|
·
|
On
August 30, 2005, EZER Inc., an entity affiliated with Taizo Son,
purchased
a 52.4% interest in Gravity from Mr. Jung Ryool Kim, Gravity’s founder,
and certain members of his family (the “EZER Control Purchase”) at a price
equivalent to approximately $24.70 per ADS. Since
then, there have been changes to the Gravity Board and management,
as well
as numerous related-party transactions and arrangements, many of
which the
Committee believes have been detrimental to the interests of the
minority
shareholders.
|
|
·
|
In
September 2005, representatives of Ramius called Mr. John C. Chung,
then
general counsel and investor relations officer of Gravity, to express
concerns about the potential conflicts of interest which arose as
a result
of the EZER Control Purchase. Mr. Chung assured Ramius that the minority
shareholders should not worry, that Gravity investors would be protected
and that Gravity would be run in an ethical manner. Three months
later, on
December 28, 2005, Mr. Chung resigned as investor relations officer
and
sometime later ceased to be general counsel of Gravity as
well.
|
|
·
|
Representatives
of Ramius attended the Tokyo Game Show on September 16, 2005 and
met with
Mr. David Woong-Jin Yoon, then CEO of Gravity. Mr. Yoon stated that
the
EZER Control Purchase would not affect the Company’s strategy and that
Gravity’s minority shareholders would be protected. In particular,
Mr. Yoon indicated that the renegotiation of the Ragnarok Online
license would be conducted on an arms’ length basis. However, according to
a Gravity press release dated December 20, 2005, Mr. Yoon resigned
as CEO
just days after the Tokyo Game Show, was “suspended from his position”
less than two months later and resigned from the Board several weeks
thereafter.
|
|
·
|
In
the wake of the EZER Control Purchase, seven of the nine members
of the
Company’s Board of Directors, including six independent directors,
resigned. They were replaced on September 21, 2005 by Mr. Ryu and
four new
directors which the Committee believes were nominated by EZER and
Mr. Ryu.
We believe certain of these new directors had prior ties to Mr. Ryu
or
Taizo Son. This newly-comprised Board of Directors (the “Ryu Board”), now
with only seven members, proceeded to approve a number of related-party
transactions and take other questionable actions which the Committee
believes were not in the best interest of all shareholders. Importantly,
none of Gravity’s three current independent directors were on the Ryu
Board.
|
|
·
|
On
October 18, 2005, Gravity announced that it was conducting an
investigation into Ragnarok Online royalty payments from licensees
which
were not accounted for in Gravity’s financial statements (the
“Embezzlement”).
|
|
·
|
On
November 11, 2005, the Ryu Board authorized Gravity to purchase shares
of
Neo-Cyon, Inc., (“Neo-Cyon”) from certain of its shareholders which
resulted in Gravity holding an approximately 96% stake in Neo-Cyon.
One of
the shareholders was Neo-Cyon’s then CEO, Mr. Baik, who coincidentally
became an officer of Gravity around the time of this transaction
and who
then joined the Board on March 31, 2006. As described in more detail
below, the Committee believes that this acquisition was unjustified,
extremely expensive and not in the best interests of Gravity’s
shareholders.
|
|
·
|
On
November 25, 2005, representatives of Ramius visited Gravity’s offices for
a scheduled meeting with Mr. Ryu, as well as other Gravity management.
However, the meeting with Mr. Ryu was abruptly canceled with no clear
explanation.
|
|
·
|
On
December 20, 2005, Gravity announced that the Ryu Board had effectuated
a
number of changes in the management team, including the resignation
of Mr.
Yoon as president and member of the Ryu Board and the appointment
of a new
chief technical officer, among others. Shortly thereafter, on December
27,
2005, William Song, the Chief Financial Officer also
resigned.
|
|
·
|
On
December 21, 2005, under direction from the Ryu Board, Gravity announced
a
plan to invest up to one billion yen (approximately US$8.5 million)
of the
Company’s cash balance in “Online Game Revolution Fund Vol. 1”, an
investment fund organized in Japan. The general partner of this fund
is
Movida Investment Inc., which is indirectly owned and controlled
by Taizo
Son and SOFTBANK Corp. (“SOFTBANK”). SOFTBANK is also an investor in this
fund. Scant details have been disclosed to the shareholders about
the
exact amount which has been invested by Gravity to date or the expected
returns on this investment.
|
|
·
|
On
December 22, 2005, as directed by the Ryu Board, Gravity entered
into a
related-party transaction with GungHo Online Entertainment (“GungHo”): the
purchase of “Emile Chronicle Online.” Although this game was acquired for
a price of 700 million yen (approximately US$6 million) from GungHo
just
days before the end of GungHo’s fiscal year, there has been no mention of
any financial contribution to Gravity from this game in any disclosure
since then. As described below, the Committee believes the price
paid for
Emile was excessive and that this transaction was not in the best
interest
of Gravity’s shareholders.
|
|
·
|
On
January 8, 2006, Kwan Shik Seo, the former Chief Financial Officer
of
Gravity resigned from the Ryu Board. Following this resignation,
the Ryu
Board shrunk to five members: Mr. Ryu, and the four directors appointed
shortly after the EZER Control
Purchase.
|
|
·
|
On
February 6, 2006, representatives of Ramius held a meeting with Taizo
Son
in Tokyo. Ramius discussed its strong concerns about the
related-party transactions. In addition, representatives of Ramius
proposed a strategy whereby Gravity’s share price could be maximized for
all shareholders by listing Gravity’s shares in Japan. Mr. Son expressed a
need to restructure Gravity prior to such a listing, which restructuring
he said would be difficult to do with minority investors in
Gravity.
|
|
·
|
On
March 16, 2006, representatives of Ramius met again with Taizo Son
to
reiterate Ramius’ concerns regarding the related-party transactions,
discuss its opinion on Gravity’s valuation and state that if Taizo Son or
his affiliates wanted to engage in related-party transactions with
Gravity, he should take Gravity private at a fair
price.
|
|
·
|
On
March 17, 2006, Gravity disclosed that its net income for 2005 had
been
impacted negatively by a decline in revenues due to increased competition
and delays in releasing new games, as well as increased operating
expenses. In addition, Gravity disclosed that the beta service of
Ragnarok
Online II had been delayed until “sometime during the fourth quarter of
2006.” This was Gravity’s first public announcement of the deterioration
of its business under the management of Messrs. Ryu and
Baik.
|
|
·
|
Ramius
and Moon formed the Committee on March 29, 2006 in order to protect
the
rights of the minority shareholders of Gravity and to maximize the
value
of Gravity shares.
|
|
·
|
At
Gravity’s annual shareholder’s meeting on March 31, 2006, the Ryu Board
was completely restructured. The four directors who joined the Ryu
Board
shortly after the EZER Control Purchase resigned. These four were
replaced
with Mr. Baik and three new independent directors. This reconstituted
Board of Directors (the “Ryu/Baik Board”) remains seated as of the mailing
date of this Statement.
|
|
·
|
On
April 21, 2006, Gravity announced its “business vision for 2006” to become
the “Hollywood of the online game industry.” In addition, the Company
stated that it had no present intention to delist its shares from
NASDAQ
and denied that it was manipulating its results to devalue its stock
price
in preparation for a merger with
GungHo.
|
|
·
|
On
May 18, 2006, Gravity disclosed a settlement with ex-Chairman Jung
Ryool
Kim pertaining to the Embezzlement. The settlement called for the
cessation of civil and criminal actions between the parties and the
payment of certain amounts by Mr. Kim to Gravity. In addition, the
two
parties agreed to assist one another in seeking settlements of various
lawsuits filed by minority shareholders unrelated to the Committee
and
other parties against Gravity.
|
|
·
|
Since
that time, Gravity has provided no evidence to the shareholders that
the
terms of this settlement were in the best interests of Gravity’s
shareholders. In fact, to this day the Committee has more questions
than
answers about the Embezzlement and the settlement. These questions
multiplied following ex-Chairman Kim’s public statements about the
Embezzlement made in late August 2006 and the identification of certain
missing or omitted invoices from GungHo during the course of the
Committee’s document inspection, both of which are described
below.
|
|
·
|
On
May 23, 2006, the Committee urged Gravity to form a special committee
comprised of the independent directors and a shareholder representative
of
the Committee’s choice to examine alternatives for maximizing the value of
the Japan Ragnarok Online license, including offering the license
to third
parties through an auction or the creation and share listing of a
Japanese
subsidiary. The Committee received no
response.
|
|
·
|
On
June 1, 2006, the Committee filed a petition with the Seoul Central
District Court (the “Court”) to exercise its members’ rights as Gravity
shareholders to inspect the financial documents of the Company. This
petition was granted in part by the Court on July 12, 2006. Subsequently,
after Gravity failed to turn over certain of its financial records,
the
Committee sought and obtained an order from the Court enforcing its
earlier ruling, as described below.
|
|
·
|
In
August 2006, the members of the Committee concluded that, in order
to
protect the minority shareholders’ interests, it would be necessary for
Gravity to convene an extraordinary general meeting of shareholders.
The
purpose of the meeting is to remove Messrs. Ryu and Baik from the
Gravity
Board.
|
|
·
|
On
August 22, 2006, the Committee delivered to Gravity a demand for
the
convocation of an extraordinary general meeting of shareholders.
Despite
this demand, Gravity did not set the meeting date until months later,
after the Committee filed a petition with the Court to compel Gravity
to
hold the meeting.
|
|
·
|
Also
on August 22, 2006, Gravity issued a press release announcing that
it had
entered numerous memorandums of understanding (“MOUs”) with various
parties, including GungHo, to publish Ragnarok Online II in five
overseas
markets. More importantly, the renewal of the Ragnarok Online license
to
GungHo in Japan, Gravity’s
single most valuable asset,
was casually mentioned at the end of the press release. Other than
mentioning a new expiration date of August 2009, no details were
provided
about the terms of the renewal.
|
|
·
|
On
August 25, 2006, the Committee sent a letter to Mr. Ryu, demanding
that
the Company initiate, on behalf of the shareholders derivatively,
a civil
lawsuit against any directors and former directors of the Company
responsible for approving related-party transactions and alleged
misconduct.
|
|
·
|
On
August 29, 2006, public statements made at a press conference held
by
ex-Chairman Kim were widely reported in Korean media outlets. These
statements suggested that the Embezzlement may have been made possible
with the assistance of GungHo. In addition, Mr. Kim indicated that
he
possesses additional information regarding potential wrongdoing at
Gravity
- in his words “the last hidden card” - which he threatened to disclose.
|
|
·
|
In
mid-September 2006, the Committee sent a letter to Masayoshi Son
and Taizo
Son asking them to set the record straight regarding ex-Chairman
Kim’s
allegations. The Committee again received no response. Gravity has
never
publicly discussed the details about the Embezzlement and the subsequent
confidential settlement of the matter with Mr.
Kim.
|
|
·
|
On
September 8, 2006, the Committee’s Korean legal advisor met with one of
Gravity’s independent directors, Professor James Jinho Chang, to discuss
the Committee’s concerns about Gravity. The discussion included matters
such as the Committee’s lack of confidence in management, the terms of the
Ragnarok Online license and other related-party transactions, the
recent
public disclosures by ex-Chairman Kim, the confidential settlement
terms
with Gravity and excessive entertainment expenses which were uncovered
by
the Committee during its inspection of financial
documents.
|
|
·
|
From
mid-September to early-November 2006, the financial advisors and
legal
advisors to the Committee met with Mr. James O. Kwon and certain
other
agents of the Company on various occasions to discuss possible solutions
to the Committee’s concerns. These potential solutions included a
potential acquisition of all of the outstanding minority shares of
Gravity. In addition, several emails and letters were sent to Taizo
Son
seeking his participation to resolve the
situation.
|
|
·
|
Also
during this time period, the Committee prepared and presented a slide
presentation to these individuals and others which laid out a valuation
case for Gravity. In this presentation, the Committee provided analysis
which the Committee believes supports its view that Gravity is worth
substantially more than the current market price per ADS in a transaction
with EZER and/or its related
parties.
|
|
·
|
The
Committee remains open to having a constructive dialogue with Gravity
and/or representatives of the majority shareholder to discuss potential
solutions to our concerns about the Company. To date, the discussions
have
not been substantive or fruitful.
|
|
·
|
During
this same time period, advisors to the Committee conducted follow
up
meetings and teleconferences with the independent members of the
Gravity
Board. The Committee is confident that if Messrs. Ryu and Baik were
removed from the Board, the three remaining independent directors
would be
set free to install new management to set Gravity back on course
and to
insure that the Company is run for the benefit of all the shareholders,
rather than for the benefit of the majority shareholder, EZER, and
its
related parties: Taizo Son, GungHo and
SOFTBANK.
|
|
·
|
On
October 13, 2006, Gravity released first and second quarter 2006
financial
results, which showed a further deterioration in Gravity’s operating
fundamentals, which the Committee believes is due to Gravity’s poor
management, as described below.
|
|
·
|
On
November 6, 2006, the Court found that Gravity did not comply with
the
terms of the Court’s July 12, 2006 injunction, which ordered Gravity to
provide the Committee access to the Company’s financial documents. The
Court reaffirmed the Committee’s right to inspect all of Gravity’s
financial documents and ordered the Company to produce documents
which it
had previously attempted to withhold from the Committee. The Court
took
the extraordinary measure of imposing potential significant daily
monetary
sanctions on the Company if it fails to
comply.
|
REMOVAL
OF
IL
YOUNG RYU AND SEUNGTAIK BAIK
FROM
THE GRAVITY BOARD
There
are
currently five directors serving on the Gravity Board. The Committee is seeking
your support to remove the following two directors:
Name
|
|
Current
Position
|
Il
Young Ryu
|
|
Chairman,
President, Representative Director and CEO
|
Seungtaik
Baik
|
|
Senior
Executive Director, Chief Operating Officer and
Chief
Marketing Officer
|
The
remaining three directors are independent directors who, to the Committee’s
knowledge, have no affiliations with Taizo Son, SOFTBANK, GungHo or EZER.
The
Committee is not seeking the removal of the independent
directors.
We
believe that if the influences of Messrs. Ryu and Baik were removed from the
Board, the independent directors would be set free to install new management
to
set Gravity back on course and to insure that henceforth the Company is run
for
the benefit of all the shareholders, rather than for the benefit of the majority
shareholder, EZER, and its related parties: Taizo Son, GungHo and SOFTBANK.
In
addition, the independent directors will be able to review and potentially
revise or reverse the related-party transactions without interference from
Messrs. Ryu and Baik.
REASONS
FOR REMOVING DIRECTORS
The
Committee believes that Messrs. Ryu and Baik have mismanaged Gravity and are
responsible for recommending to the Gravity Board a host of improper
related-party transactions since the sale of a majority interest in Gravity
from
its founder to the Japanese firm EZER. In particular:
|
·
|
EZER
stated in a Schedule 13D filing on August 30, 2005 (the “EZER 13D”) that
the
primary purpose of the acquisition of the majority interest was “to secure
for the benefit of GungHo a continuing license for
‘Ragnarok’”,
a
license which was due to expire in August 2006. This disclosure foretold
a
future of numerous related-party transactions, described below, which
the
Committee believes have been detrimental to the interests of the
minority
shareholders and have enriched Taizo Son, GungHo, SOFTBANK and Mr.
Baik.
|
|
·
|
Since
Messrs. Ryu and Baik were installed as Directors and officers of
the
Company, the operating performance of Gravity has deteriorated
dramatically, as evidenced by substantial revenue declines, increases
in
costs and compensation expenses and delays in new product
development.
|
|
·
|
Gravity’s
conduct in response to the Embezzlement by ex-Chairman Kim of licensing
fees paid by GungHo has, in our opinion, been unacceptable and poorly
disclosed. The Committee believes serious unanswered questions remain
about whether Gravity has been adequately compensated for the wrongdoings
of the former Chairman and possibly
GungHo.
|
|
·
|
The
Committee has uncovered numerous suspicious charges, such as thousands
of
dollars in seemingly unnecessary entertainment expenses, which were
charged to corporate credit cards of Mr. Ryu, which the Committee
believes
reflect a gross waste of corporate
assets.
|
Related-Party
Transactions
Relicensing
of Ragnarok Online in Japan to GungHo
On
August
30, 2005, according to the EZER 13D, EZER purchased a 52.4% interest (the
“Majority Interest”) in Gravity from Mr. Jung Ryool Kim, Gravity’s founder, and
certain members of his family. The following summarizes the relationship of
the
related parties as disclosed in the EZER 13D:
|
· |
Mr.
Ryu owns all of the issued share capital of
EZER.
|
|
· |
EZER
entered into a contractual relationship known as a “tokumei kumiai” (a
“TK”) with Techno Groove Co., Ltd. Pursuant to this TK arrangement, EZER
technically owns the Majority Interest but Techno Groove is attributed
the
financial performance of the shares. Techno Groove is wholly owned
by
Asian Groove Co., Ltd., which is controlled and approximately 82%
owned by
Taizo Son.
|
|
· |
Asian
Groove owned directly and indirectly 39.6% of GungHo as of August
30,
2005. An additional 44.6% of GungHo is owned by a subsidiary of SOFTBANK.
Taizo Son’s brother, Masayoshi Son, is the President and 32.7% shareholder
of SOFTBANK.
|
|
· |
Masayoshi
Son facilitated the EZER Control Purchase by causing Son Assets Management
Inc., an entity he controls, to lend 40 billion yen to Techno
Groove.
|
With
the
help of the loan facilitated by Masayoshi Son, EZER paid the equivalent of
approximately $24.70 per ADS for the controlling interest in Gravity. This
represented a premium of over three times the then market price of $7.10 per
ADS. As stated above, EZER surprisingly admitted in the EZER 13D that the
primary purpose of the acquisition of the majority interest was “to secure for
the benefit of GungHo a continuing license for ‘Ragnarok.’” EZER’s
admission makes it clear that GungHo’s two principal shareholders, SOFTBANK and
Taizo Son’s Asian Groove, stood to benefit directly from the EZER Control
Purchase.
The
Committee believes that the extremely high price paid in the EZER Control
Purchase indicates just how important the Ragnarok Online license was for
GungHo’s business. According to GungHo’s 2005 financial statements,
substantially all of GungHo’s revenue was derived from products licensed from or
sold and licensed to Gravity, with greater than 80% of the revenue generated
by
the Ragnarok Online license.
Faced
with EZER’s brazen statement in the EZER 13D, the Committee demanded in May 2006
that the Ryu Board establish a special committee to be comprised of independent
directors and a designee of the Committee to examine alternatives to this
“insider deal” and instead seek to maximize the value of Gravity’s online game
Ragnarok Online. GungHo’s license to distribute Ragnarok Online in the Japanese
market was due to expire in August 2006.
The
Committee publicly asked the Ryu Board to examine two scenarios that the
Committee believed would maximize the value of the license: (1) offer the
license to multiple third parties, including GungHo, through a formal auction
process or (2) allow the license to expire, create a Japanese subsidiary to
directly distribute Ragnarok Online in Japan, and list the subsidiary on a
Japanese stock exchange. The Committee believed that either scenario would
maximize the value of the license which, in the Committee’s opinion, is even
more valuable now than when GungHo was granted the license in 2002.
The
Committee is appalled by the lack of disclosure made regarding the terms of
the
extension of the Ragnarok Online license with GungHo to 2009. Given that the
license is Gravity’s
single most valuable asset,
and in
light of the rampant conflicts of interest involved in any deal between Gravity
and GungHo, the Committee was dismayed to have to find out about this deal
in a
brief mention at the end of a press release regarding licensing for Ragnarok
Online II. No financial terms of the renewal were disclosed nor were any details
provided regarding what processes, if any, were undertaken by the Ryu/Baik
Board
to ensure that the interests of the minority shareholders were protected.
Furthermore, representatives of the Committee contacted a number of alternative
potential licensees who were interested in licensing Ragnarok
Online.
Particularly
given the conflicts of interest involved, the Committee feels that this deal
required a heightened level of scrutiny. The nature of the disclosure regarding
the license renewal leads the Committee to believe that the interests of the
minority shareholders were ignored. We believe Messrs. Ryu and Baik saved
GungHo, for the benefit of Taizo Son and SOFTBANK, by allowing EZER and its
related entities to follow through with their plan to force Gravity into the
license renewal with GungHo.
Acquisition
of Emile Chronicle Online from GungHo
On
December 22, 2005, as directed by the Ryu Board, Gravity entered into another
related-party transaction with GungHo: the purchase of Emile Chronicle Online
(“ECO”). This game was acquired for 700 million yen (approximately US$6 million)
from GungHo just days before the end of GungHo’s fiscal year.
The
Committee believes that the transaction may have been timed to boost GungHo’s
2005 revenues to enable GungHo to exceed the Toyo Keizai estimates for the
year.
In addition, the Committee believes the revenues from the sale of ECO to Gravity
enabled GungHo to tout its reduced exposure to Ragnarok Online. Because EZER
owns Gravity shares in a “tokumei kumiai”, under Japanese law GungHo is not
required to report the sale of ECO as a related-party transaction. These types
of TK structures have become highly controversial in Japan due to the recent
Livedoor scandal.
The
Committee believes that the price paid by Gravity for ECO was unwarranted and
excessive. We believe it is a lower quality game than South Korean online games
generally, and aspects of ECO appear to be copied from Gravity’s own Ragnarok
Online game. In addition, in a document written by Gravity’s own internal staff
which was revealed through yet another lawsuit against Gravity by a minority
shareholder unrelated to the Committee, the following observations were
noted:
ECO’s
“competitive factors are weak”, “the user interface is complicated and difficult
to use”, “camera angles are limited”, “the animation and special effects in
battle scenes are monotonous”, ECO is “lacking creativity”, “the interface looks
messy and clumsy, compared to that of Ragnarok”, “ECO has less competitive power
than other online games that have been recently published, since it benchmarked
an outdated system” and ECO’s “major contents must be revised, including its
user interface, characters and balancing.”
Furthermore,
there was no mention of any financial contribution from ECO to Gravity in the
Company’s first half 2006 financial report, or in any other disclosure from
Gravity.
Despite
the questionable nature of this related-party transaction with GungHo, Gravity
has denied the Committee’s request to review pertinent contracts and other
materials relating to this transaction or otherwise set the record straight
so
that the Company’s shareholders can evaluate related-party dealing for
themselves.
Acquisition
of Neo-Cyon from Mr. Baik
On
November 11, 2005, the Ryu Board authorized the purchase of Neo-Cyon Inc.,
a
company more than 40% owned by Mr. Ryu’s friend and current Gravity executive
and director, Mr. Baik. In addition, Neo-Cyon had a business alliance with
another company, G-mode Co. Ltd, that itself was and remains partially owned
by
GungHo. Gravity spent approximately 7.7 billion won (approximately US$7.4
million) on the acquisition of the 96% stake.
The
Committee believes that this price was unjustified and exorbitant, particularly
in light of the fact that Neo-Cyon had an accumulated deficit and net profits
of
only 20 million won (US$20,000 dollars) in 2005. According to Gravity’s
management, Neo-Cyon contributed 1.4 billion won (approximately US$1.5 million)
in revenues in the first half of 2006. Based upon these figures, the Company
paid an estimated 2.8x annualized 2006 revenues for this business. The Company
has refused to provide details on whether or not Neo-Cyon has been profitable
this year. This valuation is significantly higher than the estimated 1.9x 2006
revenue multiple that RealNetworks paid to acquire WiderThan, Inc. - a
well-known SK Telecom affiliated company that is significantly more developed
with over US$101 million in revenues reported in 2005.
The
Committee believes the Neo-Cyon transaction was not negotiated at arms’ length
and is another example of self-dealing in which the Company rescued a marginal
business owned by a friend of Mr. Ryu. Despite our questions surrounding this
transaction, Gravity has denied the Committee’s request to disclose more
detailed 2006 performance data and review pertinent contracts, valuation reports
and financial documents of Neo-Cyon in order to determine the magnitude of
the
possible harm suffered by the Company as a result of this
acquisition.
Other
Questionable Transactions
On
December 21, 2005, under direction from the Ryu Board, Gravity announced a
plan
to invest up to one billion yen (approximately US$8.5 million) of the Company’s
cash balance in “Online Game Revolution Fund Vol. 1”, an investment fund
organized in Japan. This fund, which also has SOFTBANK as an investor, is
managed by Movida Investment Inc., which is indirectly owned and controlled
by
Taizo Son and SOFTBANK. No details have been disclosed to the shareholders
about
the exact amount which has been invested by Gravity to date or the expected
returns on this investment.
Furthermore,
in May 2006, Gravity announced that it had entered into a contract to invest
approximately 8.5 billion won (approximately US$9 million) in Perpetual
Entertainment, Inc., an online game developer in which SOFTBANK’s private equity
investment unit also has an ownership stake.
We
do not
yet know enough about these other arrangements to determine whether or not
they
were in the best interests of Gravity’s shareholders.
Deteriorating
Operating Performance
Poor
First Half 2006 Results
Gravity
recently released its first half results for 2006, more than three months after
the close of the second quarter. In addition to the tardiness of the report,
the
results were poor. Consistent with the Committee’s concerns regarding Gravity’s
management, Gravity reported significant revenue declines and an operating
loss.
Key
concerns include the following:
|
·
|
Gravity
showed a significant revenue decline of 26.8% in the first half of
2006 as
compared to the first half of 2005, a figure that is particularly
distressing in comparison to a number of other publicly traded Korean
online gaming companies.
|
|
·
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Gravity’s
EBITDA margin has decreased from an estimated 45% in the first half
of
2005 before the EZER Control Purchase, to an estimate of zero or
negative
in the first half of 2006. In addition, the Company’s EBITDA and operating
margin have significantly underperformed most of its
peers.
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Gravity
reported an operating loss of 3.4 billion won (approximately US$3.6
million) or negative 16% of revenues, excluding non-operating items
such
as interest income and one-time proceeds from the sale of real estate
and
the reimbursement from ex-Chairman
Kim.
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In
the earnings press release, there is no mention of any contributions
from
Emile Chronicle Online, for which Gravity paid GungHo 700 million
yen
(approximately US$6 million) less than one year
ago.
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In
addition, Gravity highlighted the potential of Neo-Cyon despite a
modest
revenue contribution of 1.4 billion won (approximately US$1.5 million).
The quality of these revenues and the associated margins were not
discussed, although the Company disclosed the commencement of sales
of
mobile phones by Neo-Cyon. The Committee believes the resale of cellular
phones represents an unexplained deviation from Gravity’s core
business.
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Concerns
about Existing Game Portfolio
In
the
Committee’s view, Gravity is doing a poor job of developing and managing its
existing game portfolio. Revenues for Ragnarok Online have declined dramatically
in the first half of 2006 in Korea and certain overseas markets, due in the
Committee’s view to a lack of new features and updates. Time
& Tales and
Stylia
have
not
been successful. Paper
Man,
a
potentially promising title, was not published by Gravity and the publishing
rights were returned to the developer, Rhoceo, an entity related to ex-Chairman
Kim.
Furthermore,
at the recently completed GSTAR Game Show - the most important annual game
show
held in Korea - Gravity missed a valuable marketing opportunity and did not
publicly demonstrate any of its games. This absence raises the Committee’s
concerns about the readiness of the Company’s game pipeline.
Delays
in Release of Ragnarok Online II
The
next
phase of Gravity’s growth relies on the launch and success of Ragnarok Online
II. It is unclear when this game will be released, and it has already been
significantly delayed. In addition, the Committee believes that the Ragnarok
Online II development team has suffered a talent defection and has received
insufficient leadership from senior management. In the Committee’s view, these
delays and other mismanagement relating to Gravity’s most promising asset have
resulted in the deterioration of Gravity’s share value over the past
year.
Defection
of Management and Key Staff
The
Committee believes that turnover and serial restructuring of management and
staff have led to the loss of business momentum and may have seriously damaged
morale.
The
following senior management changes, among others, have occurred since the
EZER
Control Purchase:
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Resignation
of a CEO (David Yoon)
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Resignation
of multiple CFO’s (William Song / James
Kwon)
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Resignation
of General Counsel / IR officer (John
Chung)
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Replacement
of COO (Lee Kyu Hyeong)
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The
Committee also believes that there have been many resignations of key gaming
developers, designers and operators.
Lack
of Disclosure and Secretive Settlement with ex-Chairman
Kim
The
dispute surrounding the Embezzlement continues to be a source of continued
negative publicity and unanswered questions. Despite the Committee’s efforts to
seek clarification, Messrs. Ryu and Baik and their affiliates have failed to
properly address ongoing questions and concerns raised by Mr. Kim’s public
statements, including the following:
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Was
Taizo Son involved in establishing Mr. Kim’s reported “slush fund” used to
divert funds intended for Gravity, as alleged by Mr.
Kim?
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What
is the nature of the 150 billion won additional payment which Mr.
Kim
publicly indicated was withheld by Taizo Son? What did Mr. Kim or
Gravity
give up in exchange for foregoing this alleged
payment?
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What
is the “last hidden card” that Mr. Kim indicated that he can reveal about
potential wrongdoing at Gravity?
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In
addition, during the Committee’s court mandated inspection of Gravity’s
financial documents, the Committee’s advisors looked for certain invoices
related to GungHo. These invoices were either not turned over by Gravity or
are
missing. The total amount of missing invoices is similar to the publicly
reported amount of diverted funds in the Embezzlement. Could these documents
be
the basis to support ex-Chairman Kim’s allegations that the Embezzlement was
made possible with the assistance of GungHo? In mid-September, the Committee
sent a letter to Masayoshi Son and Taizo Son asking them to set the record
straight regarding ex-Chairman Kim’s allegations. The Committee again received
no response.
These
matters raise serious questions about whether Gravity has been adequately
compensated for possible wrongdoings by the former and current majority
shareholder and their related parties.
Lavish
Spending and Corporate Waste
The
Committee is outraged about lavish spending and corporate waste that it believes
is occurring at Gravity. For example, the Committee believes that certain
members of the Ryu Board, particularly Mr. Ryu, used Company issued credit
cards
in an excessive and questionable manner, resulting in an unjustified waste
of
corporate assets.
The
Committee obtained certain Gravity corporate card statements during its
inspection which indicate that the Company has been paying for expenses from
a
well-known Korean “room salon.” In particular, Company records show that only
two days after Mr. Ryu was informally nominated as Chairman of Gravity on
September 12, 2005, expenses from a room salon of 5.1 million won (approximately
US$5,000) were charged on Mr. Ryu’s corporate card. From September 2005 to
December 2005, this company credit card was used at the same establishment
on
seven occasions for a grand total of 17.5 million won (approximately US$17,000)
in expenses.
Adding
insult to injury, Gravity pays for Mr. Ryu’s housing at the luxurious Seoul
Tower Palace, as well as luxury cars for each of Mr. Ryu and Mr. Baik (one
Mercedes S-class and one BMW 7-series).
As
discussed above, on November 6, 2006, the Seoul Central District Court ordered
Gravity to turn over certain financial documents, including additional
management credit card statements, which Gravity previously attempted to
withhold from the Committee.
Considering
the nature of Gravity’s business and the Company’s poor financial performance
since the EZER Control Purchase, the Committee believes that there is no
legitimate business justification for these indulgences.
*
* *
As
members of the Gravity Board, Messrs. Ryu and Baik have fiduciary duties to
perform their duties as directors with due care and loyalty and to act in a
manner that is in or at least not opposed to the best interests of the Company.
The Committee believes that Messrs. Ryu and Baik failed to fulfill their duties
and in fact have acted in a manner which flouts them.
Messrs.
Ryu and Baik must be held accountable for their actions. The Committee believes
that they should be removed from the Gravity Board as, in our opinion, the
value
of the Shares diminishes on a daily basis under their stewardship.
The
Committee urges you to vote FOR its proposal to remove Messrs. Ryu and Baik
from
the Gravity Board on the enclosed GOLD proxy card.
VOTING
AND PROXY PROCEDURES
Only
holders of Shares and ADSs of record on the Record Date will be entitled to
notice of and to vote at the Meeting. Each ADS represents 0.25 Shares. Each
Share is entitled to one vote. ADS holders who sell ADSs before the Record
Date
(or acquire them without voting rights after the Record Date) may not vote
such
ADSs. Holders of ADSs of record on the Record Date will retain their voting
rights in connection with the Meeting even if they sell such ADSs after the
Record Date.
ADSs
represented by properly executed GOLD
proxy
cards will be voted at the Meeting as marked and, in the absence of specific
instructions, will be voted FOR
the
proposal to remove Il Young Ryu and Seungtaik Baik from the Gravity
Board.
HOW
TO VOTE YOUR ADSs
If
you
are an ADS holder of record, please sign, date and return the enclosed
GOLD
proxy
card in the postage-paid envelope provided.
If
you
hold your ADSs in street name through a bank, broker, trustee, or other nominee,
only that nominee can vote on your behalf. Instruct your nominee to vote your
ADSs by signing, dating and returning the enclosed voting form marked
“GOLD
PROXY” in
the
postage paid envelope provided. You may also be able to instruct your nominee
to
vote through the Internet or by a toll-free telephone call. Please follow the
instructions on the enclosed GOLD
PROXY.
If you
decide to return the GOLD
PROXY
by mail,
please act promptly, to ensure that your instructions are received in time
to be
voted at the Meeting.
The
Bank
of New York (the “Depositary”) serves as the Depositary of the ADSs. Holders of
ADSs are cautioned that the Depositary is contractually obligated to only
endeavor to cause your ADSs to be voted based on your instructions. To help
ensure that your ADSs are actually voted at the Meeting, please request
confirmation from your bank, broker or nominee that your voting instructions
were received.
QUORUM
Based
on
Gravity’s Articles of Incorporation, the Meeting will be duly convened with a
quorum of not less than one-third of the total number of issued and outstanding
Shares with voting rights present; provided that votes of shareholders who
have
special interests in the agenda of the Meeting and therefore cannot exercise
their voting rights shall not be counted in the total number of issued and
outstanding Shares with voting rights.
VOTES
REQUIRED FOR APPROVAL
Under
applicable Korean law, approval of the proposal to remove Messrs. Ryu and Baik
from the Gravity Board requires the vote of at least two-thirds of the votes
of
shareholders present at the Meeting; provided that such votes shall represent
at
least one-third of the total number of issued and outstanding Shares.
ABSTENTIONS
You
have
the option of voting “FOR”, “AGAINST” or “ABSTAIN” on the Committee’s proposal
on the enclosed proxy card. The Committee is giving you the option of abstaining
on the proposal although it has been informed by the Depositary that
abstentions may not be counted as valid votes.
DISCRETIONARY
VOTING
ADSs
held
in “street name” and held of record by banks, brokers or nominees may not be
voted by such banks, brokers or nominees unless the beneficial owners of such
ADSs provide them with instructions on how to vote.
REVOCATION
OF PROXIES
The
delivery of a subsequently dated proxy which is properly completed will
constitute a revocation of any earlier proxy. If
you
have previously returned a management proxy card voting against the removal
of
Messrs. Ryu and Baik, you have every right to change your vote by returning
a
later dated proxy card. Simply sign, date and return the enclosed GOLD
proxy
card today.
PARTICIPANT
INFORMATION
About
Ramius Capital Group, L.L.C.
Ramius
Capital Group, L.L.C. is a registered investment advisor that manages assets
of
approximately $7.4 billion in a variety of alternative investment strategies.
Ramius Capital Group, L.L.C. is headquartered in New York with offices located
in London, Tokyo, Hong Kong, Munich and Vienna. The affiliates of Ramius Capital
Group, L.L.C. who are also members of the Committee are Starboard Value and
Opportunity Master Fund Ltd., Parche, LLC, RCG Ambrose Master Fund, Ltd., RCG
Halifax Fund, Ltd., Ramius Master Fund, Ltd., Admiral Advisors, LLC, Ramius
Advisors, LLC, Safe Harbor Master Fund, L.P., Safe Harbor Investment Ltd.,
C4S
& Co., L.L.C., Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss and
Jeffrey M. Solomon (collectively, the “Ramius Entities”). As of the date of this
Statement, the Ramius Entities own an aggregate of 2,104,695 ADSs and 105,973
Shares which currently represent approximately 9.1% of the issued and
outstanding Shares.
About
Moon Capital Management LP
Moon
Capital Management LP, on behalf of its affiliated investment funds, manages
more than $1 billion, investing primarily in equity securities in markets around
the world. Headquartered in New York, Moon Capital also has offices in
Singapore. The affiliates of Moon Capital Management LP who are also members
of
the Committee are Moon Capital Master Fund Ltd., Moon Capital Leveraged Master
Fund Ltd., JWM Capital LLC and John W. Moon (collectively, the “Moon
Entities”). As of the date of this Statement, the Moon Entities own an aggregate
of 1,939,656 ADSs and 105,971 Shares which currently represent approximately
8.5% of the issued and outstanding Shares.
Sharing
Agreement
The
Ramius Entities and the Moon Entities entered into a Sharing Agreement pursuant
to which they agreed, among other things, to (i) make individual filings on
Schedule 13D with respect to the ADSs or the Shares they own to the extent
required under applicable securities laws, (ii) provide written notice within
one business day to each other of purchases or sales of ADSs or Shares or the
acquisition or disposition of beneficial ownership of ADSs or Shares and (iii)
to share equally the costs of legal counsel in Korea in connection with pursuing
the matters discussed in this Statement and to share any other agreed upon
expenses. By virtue of the communications among the Ramius Entities and the
Moon
Entities as to the matters discussed in this Statement and the Sharing
Agreement, the Ramius Entities and the Moon Entities may be deemed to be a
“group” for purposes of the Securities Exchange Act of 1934, as amended. Neither
the Ramius Entities nor the Moon Entities affirm that such a group has been
formed.
Additional
Information Concerning the Participants
For
additional information regarding the Ramius Entities and the Moon Entities
and
their investment in securities of Gravity, reference is made to the Schedules
13D filed by each of the Ramius Entities and the Moon Entities with the
Securities and Exchange Commission on March 29, 2006, as subsequently amended.
OTHER
MATTERS AND ADDITIONAL INFORMATION
Although
the Committee does not have any knowledge indicating that any statement made
herein is untrue, the Committee does not take any responsibility for the
accuracy or completeness of statements taken from public documents and records
that were not prepared by the Committee or on the Committee’s behalf, or for any
failure by Gravity to disclose events that may affect the significance or
accuracy of such information. Unless otherwise indicated, all statements made
herein are made as of the date hereof, and the Committee is not responsible
for
updating the information contained herein after such date.
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THE
GRAVITY COMMITTEE FOR FAIR TREATMENT OF MINORITY
SHAREHOLDERS
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November
__, 2006
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IMPORTANT
Tell
your
Board what you think! Your vote is important. No matter how many ADSs you own,
please give the Committee your proxy FOR
the
proposal to remove Il Young Ryu and Seungtaik Baik from the Gravity
Board.
If
you
are an ADS holder of record, please sign, date and return the enclosed
GOLD
proxy
card in the postage-paid envelope provided.
If
you
hold your ADSs in street name through a bank, broker, trustee, or other nominee,
only that nominee can vote on your behalf. Instruct your nominee to vote your
ADSs by signing, dating and returning the enclosed voting form marked
“GOLD
PROXY”
in the
postage paid envelope provided. You may also be able to instruct your nominee
to
vote through the Internet or by a toll-free telephone call. Please follow the
instructions on the enclosed GOLD
PROXY.
If you
decide to return the GOLD
PROXY
by mail,
please act promptly, to ensure that your instructions are received in time
to be
voted at the Meeting.
If
you have any questions, require assistance in voting your
GOLD
proxy
card,
or
need additional copies of the Committee’s Statement, please call
Innisfree
M&A Incorporated at the phone numbers listed below.
501
Madison Avenue, 20th Floor
New
York, New York 10022
CALL
TOLL FREE: (888) 750-5834
BANKS
AND BROKERS CALL COLLECT: (212) 750-5833
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