AUTHORIZATION TO USE AND DISTRIBUTE SOFTWARE AGREEMENT

1.1

“ Agreement ” shall mean this Authorization to Use and Distribute Software Agreement , and all annexes, amendments and supplements hereto.

1.2

“ Confidential Information ” shall mean all materials, know-how, software or other information including, but not limited to, proprietary information and materials regarding a Party’s technology, products, business information or objectives, including the software for the Game and Technical Information under this Agreement, which is designated as confidential in writing by the providing Party or which is the type that is customarily considered to be confidential information by persons engaged in similar activities.

1.3

“ End Users ” shall mean the users of the Game through a network game service system established and operated by Level Up! with individually assigned ID Numbers for each End User.

1.4

“ Game ” shall have the meaning stipulated in the recitals above, including any modified or advanced version of the Game distributed by Gravity for error correcting, updating or debugging purpose, under the same title. Any subtitled version, series or sequel to the Game which may be developed or distributed by Gravity after the execution of this Agreement shall be clearly excluded from the scope of this Agreement.

1.5

“ ID Number ” shall mean an identification number assigned to each End User, with which such End User can access and use the network game service system established and operated by Level Up!.

1.6

“ English Version ” shall mean the Game provided in the English language.

1.7

“ Intellectual Property ” shall mean all patents, designs, utility models, copyrights, know-how, trade secrets, trademarks, service mark, trade dress and any other intellectual property rights in or related to the Game or Technical Information.

1.8

“ Local Language ” shall mean the Portuguese language as used in the Territory.

1.9

“ Local Version ” shall mean the Game provided in the Local Language.

1.10

“ Parties ” and “ Party ” shall mean Gravity and Level Up!, collectively and individually, respectively.

1.11

“ Servers ” shall mean the servers established, installed and operated by Level Up! within the Territory only for the service of Game to End Users in the Territory.

1.12

“ Service-Sales Amount ” shall mean the total service-sales amount that has been paid by End Users for the Game, including the amounts paid by way of prepaid card, and calculated by the billing system.

1.13

“ Technical Information ” shall mean the software, know-how, data, test result, layouts, artwork, processes, scripts, concepts and other technical information on or in relation to the Game and the installation, operation, maintenance, service and use thereof.

1.14

“ Territory ” shall mean Brazil.

2.1

Gravity hereby grants to Level Up!, subject to the terms and conditions contained in this Agreement, the exclusive, copyright-bearing and non-transferable Authorization (the “Authorization”) to service, use, promote, distribute and market the Game to End Users and to use the Technical Information for such purpose within the Territory, and to grant an authorization subject, however, to the prior written approval of Gravity of the identity of the Gravity’s approval shall not be required for the terms of the authorized agreement between Level Up! and Sub-Authorized.

2.1.2

The service, use, promotion, distribution and marketing of the Game by Level Up! under this Agreement shall be made in the Local Language using the Local Version in the Territory. Gravity shall provide Level Up! with the game script and any service, use, promotion, distribution and marketing of the Game outside the Territory and any use of the Technical Information for any purpose other than performance under this Agreement are strictly prohibited.

2.3

Level Up! shall provide services of the Game only by the IBM PC on-line method (excluding mobile access) using the Servers. However, in consideration of the current level of development of information technology in the Territory, which primarily operates on a narrow-band basis, Level Up! shall be allowed to manufacture, distribute and sell the Game in a compact disk (“ CD ”) format.

2.4

The Game shall be serviced, promoted, distributed and marketed under the titles, trademark, character names and other names of the Game (“ Title ”) as originally created and used by Gravity, provided, however, that if a change in any of such Titles is required due to any special lingual or social circumstance of the Territory, the Parties shall decide and use new Title (“ New Title ”) for the Game. All of the rights in or to the Title and New Title shall be exclusively owned by Gravity and Level Up! shall not use any such Title or New Title in a manner that falls outside the scope of this Agreement without the prior written approval of Gravity.

2.5

All of the rights in or to the Game, except as granted under this Agreement, including but not limited to the rights to the character business of the Game, shall remain exclusively with Gravity. However, Gravity will grant to Level Up! the right of first negotiation for sixty (60) days to produce and/or sell and distribute in the Territory merchandise relating to the Game, including, but not limited to, character dolls, reproductions of the characters in collaterals, and such other merchandising accessories, under a separate merchandising agreement. Such right of first negotiation shall include the right of Level Up! to match any written offer received by Gravity from any third party. Level Up! shall also have the right of first negotiation for thirty (30) days to acquire the rights to all new game titles of Gravity from the date when such new game is available in the Territory or the date that Gravity gives Level Up! written notice, whichever date is later. Also included is the right of Level Up! to match any offer received by Gravity from any party. If Level Up! fails to exercise such right, Gravity may grant the Authorization for a new game title to the offering party, provided the terms of such authorization shall not be more favourable than those offered and rejected by the Level Up!, and provided further that Gravity shall grant such authorization to the offering party no later than thirty (30) days from expiration of Level Up!’s right of first negotiation. If the offering party renews its offer beyond this thirty (30) day period, then Level Up! shall again be immediately notified by Gravity and the Level Up!’s right of first negotiation shall again come into effect.

2.5.1

Gravity shall notify Level Up! in writing within seven (7) days upon receipt of an offer from any party relating to merchandise or new games as described above.

3.1

Subject to the terms and conditions of this Agreement, Gravity shall provide Level Up! with its full assistance and cooperation, including preparation of the Local Language Version and providing technical assistance, in order to enable a launch of the beta service and commercial service of the Game in the Territory.

3.2

Gravity shall deliver the Local Language Version of the Game to the Level Up! at its servers in Brazil for testing, not later than ninety (90) days from the date of execution of this Agreement. The beta test of the Game shall commence not later than fifteen (15) days from initial acceptance of the Local Language Version by the Level Up!. Level Up! shall launch the commercial service of the Game in the Territory within one hundred twenty (120) days from the date of launch of the beta service of the Game, provided, however, that all defects and bugs detected in the Game during the beta service are corrected or rectified by Gravity. The Parties agree to cooperate with each other and exert their best efforts to launch the services of the Game in accordance with the above schedule in this Section 3.2. The above target dates for launching the services of the Game may be changed by mutual agreement between the Parties.

3.3

Once Level Up! receives the English Version and technical documents on the Game (collectively “ Delivery Materials ”) from Gravity, Level Up! shall perform its review and test promptly and inform Gravity of any defect in or modifications that have to be made to the Delivery Materials within forty five (45) days after receipt thereof.

3.3.1

Level Up!’s failure to so inform within the designated period shall be regarded as acceptance by Level Up! of the Delivery Materials, and any revision or modification of any of the Delivery Materials which may be made by Gravity thereafter upon the request by Level Up! shall be at Level Up!’s sole expense. Upon the request of Level Up! and Gravity’s approval thereon, Level Up! shall provide the translated transcript of the Game into the Local Language and Gravity shall prepare Local Version by incorporating such translation into the Game. Level Up! shall guarantee the accuracy of such translation in the Local Version and all of the rights in or related to Local Version shall be exclusively owned by Gravity. Level Up! hereby assigns all of its right on the translation and promises not to claim any right or reimbursement on the translation or Local Version in any case. It is understood however that any defects in the game that appear after said forty five (45) day period shall continue to be rectified by Gravity.

3.4

The Game shall be serviced in the Territory only in the manners permitted by Gravity under this Agreement. Level Up! shall be strictly prohibited from any modification, amendment or revision of any part of the Game including the title of the Game and the name of the characters in the Game, without the prior written approval of Gravity.

4.1

During the term of this Agreement, Gravity shall provide Level Up! free of charge with the technical assistance, and technical support and maintenance needed and requested by Level Up! to enable the latter to provide and maintain high-quality service for the Game, including, but not limited to software installation and set-up, maintenance support, patch updates in connection with the Game and the localization of the Game into the English Version, training Level Up!’s technical personnel in respect of the maintenance and operation of the Game provided that, any and all expenses actually incurred by any engineers dispatched by Gravity to perform the above technical assistance in this Section 4.1, including, without limitation, economy or business class airfare, lodging, food and other general living expenses incurred during their stay at Level Up!’s premises, shall be borne by Level Up!. The Parties shall agree in writing on the budget for the aforesaid expenses prior to Gravity’s incurring the same.

4.2

Gravity shall, upon the request of Level Up!, dispatch its engineers to Level Up! for the installation of Servers and training of Level Up!’s personnel. The total period for such technical assistance excluding the travelling time shall not exceed ten (10) man days [based on eight (8) hours of work per engineer per day], and any further assistance through dispatch of Gravity’s engineers shall be determined by the mutual agreement of the Parties. After the initial dispatch by Gravity of its engineers for the said 10 man-day period, the salaries of Gravity’s engineers for the dispatched period shall be reimbursed by Level Up! to Gravity. All the expenses incurred by the engineers of Gravity for economy or business class airfare, lodging and food and other general living expenses during their stay for the period of technical assistance shall be borne by Level Up! provided that, the same are within the budget as agreed upon by the Parties under Section 4.1.

4.3

During the term of this Agreement, Gravity shall receive Level Up!’s personnel in its office in Korea for training with respect to the installation and service of the Game and the installation, maintenance and operation of the Servers. The number of the trainees from Level Up! shall not exceed three (3) persons at one time and the total period of training shall not exceed seven (7) man-days [based on eight (8) hours of training per trainee per day], unless otherwise agreed in writing by Gravity. All of the expenses for travel, lodging, food and other general living expenses incurred by such dispatched personnel of Level Up! shall be borne by Level Up!.

4.4

Any further assistance may be rendered by Gravity upon mutual agreement of the Parties.

4.5

Each Party shall be fully responsible and fully indemnify the other Party for the behaviour of and activities performed by its employees and personnel during their stay at the other Party’s facilities.

4.5.1

Both parties agree to cooperate fully and in good faith in all technical matters relating to the operation of the Game, in order to maintain good service to the Users.

4.6

Both parties agree to have the separate Service Providing Amendment to be attached to the agreement for dispatching the Gravity’s staff within forty five (45) days from the execution date of this Agreement, and the minimum amount of dispatching the two (2) Gravity’s staffs shall be fifty thousand US dollars (USD 50.000,00) annualy.

4.6.1

The Parties shall enter into a separate agreement regarding the amount that shall be paid for the dispatching of the two (2) Gravity’s staffs.

4.6.2

The following expenses shall be covered by the amount referred to in the Section 4.6 above:

4.6.2.1

Daily Allowance to be paid to the personnel in the Local Office, which shall be no less than thirty US dollars (30) US Dollars per day.

4.6.2.2

Accommodation for two (2) of Gravity’s staffs.

4.6.2.3

Basic Salaries of the Gravity’s staffs according to the separate agreement foresee in Section 4.6 above.

4.7

The terms and conditions of staying for the staffs shall be lasted until until “Ragnarok’s” commercial service is over and reviewed at each six (6) months.

5.1

In consideration of the Authorization and technical assistance granted under this Agreement, Level Up! shall pay the following amounts to Gravity:

5.2.

Initial Payment:

5.2.1

Level Up! shall pay to Gravity a sum of Two Hundred Forty Thousand United States Dollars (USD 240,000.00) (“ Initial Payment ”) upon the below schedule.

5.2.1.1.

within seven (7) days from the execution date of this agreement and once Level Up! receives any and all necessary approval from any governmental body, including but not limited to the Brazilian Central Bank: Eighty Thousand US Dollars (USD80,000.00).

5.2.1.2

within seven (7) days after starting the open beta test Game and once Level Up! receives any and all necessary approval from any governmental body, including but not limited to the Brazilian Central Bank:: Eighty Thousand US Dollars (USD80,000.00).

5.2.1.3

within seven (7) days after starting the released Game and once Level Up! receives any and all necessary approval from any governmental body, including but not limited to the Brazilian Central Bank:: Eighty Thousand US Dollars (USD80,000.00).

5.2.2

The Initial Payment, whether in part or in whole, shall not be refunded to or recouped by Level Up!, except for cases where the Game does not function properly due to inherent defects or bugs therein, which are not remedied by Gravity within eighty (80) days from the date when the Game is installed in the Level Up!’s hardware. Such refund accorded to Level Up! shall be fifty (50) percent of the Initial Payment less the cost incurred by Gravity in localizing the Game in the Territory.

5.2.3

Gravity hereby expressly agrees that Level Up! Inc. , a corporation duly organized and existing under the laws of the Republic of the Philippines, and having its offices at 8th floor Pacific Star Building, Makati City, Philippines (“ Controller of L evel Up! ”), has also made a payment on behalf of the Level Up! in the amount of Ten Thousand US Dollars (USD10,000.00), which is also part of the Initial Payment.

5.2.3.1

Controller of Level Up! and Level Up! shall take the proper measures under Brazilian law regarding the payment made by the Controller of Level Up! on behalf of the Level Up!, as per Section 5.2.3, above.

5.3

Copyright Fee and Report:

5.3.1

In addition to the Initial Payment, Level Up! shall pay to Gravity as continuing copyrights fee, twenty five percent (25%) of the Service-Sales Amount paid by End Users (“ Copyright ”). Subject to Section 5.4 below, the Copyright shall be paid on a monthly basis within twenty (20) days after the end of the applicable month. Payment shall be deemed made upon presentation of Level Up! whether in fax or any other means the remittance confirmation or notice to Gravity. In any case, unless Gravity actuall