EXHIBITS 4.7
[Translation]
LG CARD CO., LTD. ACQUISITION AGREEMENT
DECEMBER 20, 2006
KOREA DEVELOPMENT BANK AND 13 OTHERS
as sellers
SHINHAN FINANCIAL GROUP
as purchaser
LG CARD CO., LTD. ACQUISITION AGREEMENT (DRAFT)
THIS LG CARD CO., LTD. ACQUISITION AGREEMENT (the "AGREEMENT") is entered into
on December 20, 2006 by and between the financial institutions listed in Exhibit
1 attached hereto (collectively the "SELLERS" and respectively a "SELLER,"
meaning the sellers who will sell the Shares defined below in a tender offer and
according to applicable laws), who are shareholders of LG Card Co., Ltd. (head
office: ▇-▇ ▇▇▇▇▇▇▇▇▇-▇▇-▇-▇▇, ▇▇▇▇▇-▇▇, ▇▇▇▇▇; representative director: Hae
▇▇▇▇▇ ▇▇▇▇) (the "COMPANY"), and Shinhan Financial Group (the "PURCHASER,"
meaning the purchaser who will purchase the Shares by tender offer and according
to applicable laws) in connection with the sale by the Sellers and purchase by
the Purchaser of the Shares in a tender offer according to legal procedure (the
"TRANSACTION")
RECITALS
1. In accordance with the "LG Card Co., Ltd. Creditor Financial Institutions
Agreement" dated February 6, 2004, the Sellers have delegated to the
steering committee of the creditor financial institutions comprised of the
Presiding Bank (defined below), National Agricultural Cooperative
Federation, Woori Bank, and the Industrial Bank of Korea, the authority to
conduct the sale of the Shares; and the Steering Committee of the Creditor
Financial Institutions, by the "17th resolution of the Steering Committee
of the Creditor Financial Institutions of LG Card Co., Ltd." held on
October 18, 2005 has conferred upon the Presiding Bank certain authority
relating to the Transaction.
2. The Purchaser has conducted preliminary due diligence on the Company (the
"PRELIMINARY DUE DILIGENCE") during the period from May 3, 2006 to June 7,
2006 in connection with the bidding relating to the sale of the Shares, and
the Purchaser has submitted an offer of purchase (the "PURCHASE OFFER") on
August 10, 2006 to the Financial Advisors (defined below) in accordance to
the bidding instructions ("BIDDING INSTRUCTIONS") provided by the M&A
Department of the Korean Development Bank and JPMorgan Chase Bank, N.A.
Hong Kong Branch (the "FINANCIAL ADVISORS").
3. The Presiding Bank selected the Purchaser as the preferred purchaser
(purchaser who will purchase the Shares from the Sellers by tender offer
and in accordance with the procedures set forth in the relevant laws and
regulations) on August 16, 2006.
4. On August 23, 2006, the Sellers and the Purchaser entered into a memorandum
of understanding (the "MOU") to set forth basic terms and conditions
between them in advance of the execution of this Agreement.
5. The Purchaser conducted a thorough, detailed due diligence ("Due
Diligence") from
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September 14, 2006 to November 6, 2006, and the Presiding Bank and the
Purchaser have negotiated and reached an agreement on the terms and
conditions of the sale of the Shares by tender offer and according to
applicable laws and regulations. The Sellers selected the Purchaser as the
final purchaser (who will purchase the Shares from the Sellers by tender
offer and according to applicable laws) according to the resolution of the
Steering Committee of the Creditor Financial Institutions and notified the
Purchaser thereof on December 14, 2006.
6. Of the registered common stocks issued by the Company and held by the
Sellers as of this date, the Purchaser desires to purchase from the Sellers
certain shares at least the number of the Bid Shares (as defined below) by
tender offer and according to applicable laws, and the Sellers desire to
sell such shares to the Purchaser.
ARTICLE 1. DEFINITION AND PURPOSE
(1) For the purpose of this Agreement, capitalized terms used herein shall have
the following meanings. Capitalized terms used herein shall have the
meaning ascribed in the MOU, unless otherwise defined herein:
"CLOSING DATE" means the date when all actions set forth in Article 5(1)
hereof have been undertaken by the Sellers and the Purchaser;
"TENDER OFFER" means the tender offer undertaken by the Purchaser to
acquire the Shares in accordance with the tender offer procedure prescribed
in the Securities and Exchange Act and other applicable laws and
regulation;
"TENDER OFFER SETTLEMENT DATE" means the date designated as the settlement
date in, among others, the Tender Offer notice, the Tender Offer report and
the Tender Offer materials given by the Purchaser;
"TENDER OFFER PERIOD" means the period set forth in Article 4(5) hereof and
designated as the period of Tender Offer in the Tender Offer notice, the
Tender Offer report, the Tender Offer materials and other materials given
by the Purchaser in the Tender Offer procedure;
"SHARES TO BE PURCHASED BY TENDER OFFER" means the number of common stocks
as set forth in Article 4(2) that were issued by the Company and will be
purchased by the Purchaser by way of Tender Offer;
"COMMENCEMENT OF TENDER OFFER" means the issuance by the Purchaser of a
notice of Tender Offer in accordance with the Tender Offer procedure;
"COMMENCEMENT DATE OF TENDER OFFER" means the date on which such notice is
issued;
"TENDER OFFER AND OTHER LEGAL PROCEDURE" means the Tender Offer procedure
prescribed in the Securities and Exchange Act and other applicable laws and
all legal procedures set forth in other laws and regulations;
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"SHARES" means, of the Available Shares, the shares, including the Bid
Shares, that need to be purchased by the Purchaser from the Sellers through
the Tender Offer and Other Legal Procedure to perform this Agreement;
"BUSINESS DAY" means a day on which the banks are open for business in
Seoul, Korea;
"AVAILABLE SHARES" means the "Available Shares" specified in the Bidding
Instructions less the shares held by Shinhan Bank, as described in Exhibit
2 attached hereto;
"BID SHARES" means the "Bid Shares" specified in the Bid Shares section of
the Purchase Offer submitted by the Purchaser less the shares held by
Shinhan Bank, as described in Exhibit 2 attached hereto;
"BY-LAWS AND INTERNAL REGULATIONS" means the articles of incorporation, the
board of director regulations and other internal regulations of the
Company;
"ORDINARY SHAREHOLDERS MEETING" means the ordinary general shareholders
meeting of the Company to be held in early 2007 for the closing of the 2006
fiscal year;
"SUPERVISORY AUTHORITY" means any department of the executive branch, the
Financial Supervisory Committee, the Fair Trade Commission, and any
national administrative body, regional or local government of the Republic
of Korea or a foreign country, any agency to the foregoing bodies have
delegated their authority and other related administrative bodies.;
"PRESIDING BANK" means the Korea Development Bank (Corporate Financing 1
Department), shareholder of the Company, which has been entrusted with the
management and normalization of the Company pursuant to the "2004-01
Meeting (January 2, 2004) of LG Card Co., Ltd. Creditor Financial
Institutions" and the "LG Card Co., Ltd. Creditor Financial Institutions
Agreement" and which was entrusted with certain authorities to undertake
this Transaction;
"PURCHASE PRICE PER SHARE" means the price per share, as set forth in
Article 4(4) hereof, at which the Purchaser will purchase the shares issued
by the Company, including the Shares, by Tender Offer;
"MATERIAL BREACH" means an intentional breach or breach resulting from
gross negligence, which, if known to the other Party, would have clearly
and objectively caused the other Party not to have entered into this
Transaction;
"INITIAL SHAREHOLDERS MEETING" means the first general shareholders meeting
of the Company to be held after the Commencement Date of Tender Offer,
provided that if the Company issued a notice of general shareholders
meeting required under Article 191-10 of the Securities and Exchange Act
prior to the Commencement Date of Tender Offer, that meeting shall not be
the Initial
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Shareholders Meeting;
"RESOLUTION OF THE STEERING COMMITTEE OF THE CREDITOR FINANCIAL
INSTITUTIONS" means any and all resolutions made to date or to be the made
in the future by the Steering Committee of the Creditor Financial
Institution pursuant to the LG Card Co., Ltd. Creditor Financial
Institutions Agreement; and
"CREDITORS' COUNCIL" means the council comprised of the creditor financial
institutions listed in Exhibit 1, formed to undertake the business
normalization of the Company according to the LG Card Co., Ltd. Creditor
Financial Institutions Agreement.
(2) The purpose of this Agreement is to set forth matters necessary for the
sale of the by the Sellers to the Purchaser and the purchase by the
Purchaser from the Sellers of the Shares in accordance with the Tender
Offer and Other Legal Procedure.
ARTICLE 2. CONTRACT DEPOSIT
(1) Simultaneously with the execution hereof, the Purchaser shall remit Five
Hundred Eighteen Billion Three Hundred Million Korean Won
(KRW518,300,000,000), which is 10% of the Purchase Price per Share
multiplied by the number of shares specified in the Bid Shares section of
the Purchase Offer ("CONTRACT DEPOSIT"), into a bank account in the name of
the Presiding Bank designated by the Financial Advisor (the "CONTRACT
DEPOSIT ACCOUNT"). The EMD remitted by the Purchaser into the EMD Account
and any accrued interest thereon shall be credited to the Contract Deposit.
(2) Upon remittance of the Contract Deposit by the Purchaser according to
Article 2(1), the Sellers shall immediately cause the Presiding Bank to
establish a bank account pledge in favor of the Purchaser on the Contract
Deposit Account to secure the Purchaser's right to return of the Contract
Deposit and interest accrued thereon from the day following the date of
remittance (the "CONTRACT DEPOSIT AND INTEREST") under this Agreement.
(3) With respect to the "proof of bank account balance exceeding the amount
necessary for a tender offer and proof of other funds" ("PROOF OF BANK
ACCOUNT BALANCE") of the documents to be attached to the Tender Offer
report, the Presiding Bank shall deposit the Contract Deposit and Interest
into the Presiding Bank's account in the name of the Purchaser (the
"CONTRACT DEPOSIT BALANCE ACCOUNT") on one (1) Business Day prior to the
Commencement of Tender Offer, so as to enable the Purchaser to use it as
Proof of Bank Account Balance, and, concurrently with the deposit, the
Purchaser shall establish a bank account pledge in favor of the Sellers on
the Contract Deposit Balance Account to secure the Sellers' claim against
the Purchaser for the Contract Deposit and Interest. The Sellers shall
cooperate to the best of their abilities so that the amount in the Contract
Deposit Balance Account may be used as purchase money for the tender offer
shares on the Tender Offer Settlement Date.
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ARTICLE 3 (ACTIONS ON THE EXECUTION DATE OF THIS AGREEMENT)
On the execution date of this Agreement, the Presiding Bank and the Purchaser
shall deliver the following documents to each other:
(1) The Presiding Bank shall deliver to the Purchaser a copy (certified
original) of the Resolution of the Steering Committee of the Creditor
Financial Institution approving the execution and performance of this
Agreement.
(2) The Purchaser shall deliver to the Presiding Bank (1) a copy (certified
original) of the minutes of the board of directors meeting of the
Purchaser, approving the execution and performance of this Agreement, and
(2) a certified copy of the corporate register, a certificate of corporate
seal impression, and a copy (certified original) of the articles of
incorporation of the Purchaser.
ARTICLE 4 (KEY TERMS OF TENDER OFFER)
The Sellers and Purchaser agree on the following terms in relation to the
Purchaser's Tender Offer and its procedure for this Transaction:
(1) The Sellers shall sell, and the Purchaser shall purchase, the Shares by
Tender Offer in accordance with the Tender Offer and Other Legal Procedure.
(2) The Shares to be Purchased by Tender Offer shall be 98,517,316 shares
(representing 78.58% of the total number of issued and outstanding shares).
(3) The Purchaser shall purchase all shares tendered even if the total number
of shares tendered by the shareholders of the Company is less than the
number of the Shares to be Purchased by Tender Offer. If the total number
of shares tendered exceeds the number of the Shares to be Purchased by
Tender Offer, the Purchaser shall purchase the number of Shares to be
Purchased by Tender Offer from each shareholder who tendered its shares in
proportion to the number of shares tendered, and may elect not to purchase
all or part of the shares that exceed the number of Shares to be Purchased
by Tender Offer..
(4) The Purchase Price per Share shall be Sixty Seven Thousand Seven Hundred
and Seventy Korean Won (KRW67,770).
(5) The period of the Purchaser's Tender Offer shall be twenty (20) days.
(6) The Tender Offer Settlement Date shall be a date designated by the
Purchaser that is no later than five (5) Business Days from the date on
which the Tender Offer Period ended.
(7) Unless set forth in this Agreement, the Tender Offer notice, the Tender
Offer report, the Tender Offer materials, and other terms of the Tender
Offer shall not be counter to the intent and purpose of this Agreement, and
the Purchaser shall send the draft Tender Offer notice, draft Tender Offer
report, and draft Tender
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Offer materials to the Presiding Bank and obtain its consent within three
(3) Business Days after obtaining from the Supervisory Authority the
authorizations, approvals and license required under relevant laws pursuant
to Article 7(2) hereof.
(8) The Purchaser shall publicly announce the Tender Offer and submit the
Tender Offer report to the Financial Supervisory Commission within five (5)
Business Days after obtaining the consent of the Presiding Bank to, among
others, the Tender Offer notice (draft), Tender Offer report (draft), and
the Tender Offer materials (draft) pursuant to Paragraph (7) hereof. The
Purchaser may not withdraw its Tender Offer during the Tender Offer Period
if there is a competing tender offer.
(9) Upon the Purchaser's commencement of the Tender Offer pursuant to Paragraph
(8), the Sellers shall tender all Available Shares held. After such tender,
the Sellers may not withdraw the tender for the reason set forth under
Article 24-2(3) of the Securities and Exchange Act.
(10) The Purchaser shall cause Shinhan Bank, a member of the Sellers, not to
tender the 8,960,005 shares of the Company owned by it ("SHINHAN BANK'S
AVAILABLE SHARES") in the Purchaser's Tender Offer hereunder.
(11) The Purchaser recognizes that Shinhan Bank is a member of the Creditors'
Council subject to the LG Card Co., Ltd. Creditor Financial Institutions
Agreement and the Resolution of the Steering Committee of the Creditor
Financial Institutions. The Purchaser shall consider that Shinhan Bank has
sold Shinhan Bank's Available Shares pursuant to this Agreement and
recognizes that Shinhan Bank, as a member of the Sellers and of the
Creditors' Council, is liable for the obligations under the LG Card Co.,
Ltd. Creditor Financial Institutions Agreement and the Resolution of the
Steering Committee of the Creditor Financial Institutions (including
obligations to share the fees for the Financial Advisors and all expenses
relating to this Transaction). As shareholder of Shinhan Bank, the
Purchaser shall cause Shinhan Bank to discharge its obligation thereunder.
ARTICLE 5 (ACTIONS ON THE TENDER OFFER SETTLEMENT DATE)
(1) The Sellers and the Purchaser shall perform the following actions
simultaneously on the Tender Offer Settlement Date.
(i) The Sellers shall deliver the Shares to the Purchaser in accordance
with the Tender Offer and Other Legal Procedure, and the Purchaser
shall pay each Seller therefor.
(ii) The Sellers shall take actions to ensure that the Agreement for
Implementation of the Management Normalization Plan dated May 13, 2004
by and between the Presiding Bank and the Company to normalize the
Company's business under the Presiding Bank's management are
terminated
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as of the settlement of the Tender Offer.
(2) The Purchaser shall deliver to each Seller by the first Business Day after
the Tender Offer Settlement Date a statement confirming that the Purchaser
has acquired the Shares from the Sellers.
ARTICLE 6 (REPRESENTATIONS AND WARRANTIES)
(1) The Sellers represent and warrant to the Purchaser, as of the execution
date of this Agreement and the Commencement Date of Tender Offer and the
Tender Offer Settlement Date, as follows:
(i) Each Seller is a corporation duly established and validly in existence
under the laws of the Republic of Korea and no claim has been filed
against the Seller with any court in connection to a bankruptcy
proceeding such as a workout or an insolvency proceeding.
(ii) Each Seller is the legal owner of the Shares.
(iii)Each Seller has the legal and valid authority and competency to
execute this Agreement and to perform all obligations prescribed
herein.
(iv) The execution and performance of this Agreement by each Seller is not
against the By-Laws and Internal Regulation of the Seller or other
applicable laws, or any agreement to which the Seller is a party.
(2) The Purchaser represents and warrants to the Sellers, as of the execution
date of this Agreement and the Commencement Date of Tender Offer and the
Tender Offer Settlement Date, as follows:
(i) The Purchaser is a corporation duly established and validly in
existence under the laws of the Republic of Korea and no claim has
been filed against the Purchaser with any court in connection to a
bankruptcy proceeding such as a workout or an insolvency proceeding.
(ii) The Purchaser has legal and valid authority and competency to execute
this Agreement and perform all obligations prescribed herein.
(iii)The Purchaser has taken all necessary legal and actual actions and
procedures to execute this Agreement.
(iv) The execution and performance of this Agreement by the Purchaser is
not against the By-Laws and Internal Regulation of the Purchaser or
other applicable laws, or any agreement to which the Purchaser is a
party.
(v) The Purchaser is financially competent to complete the Tender Offer
and Other Legal Procedure.
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(vi) The Purchaser has carried out sufficient due diligence and analysis on
the documentation (including, but not limited to, information and
documentation on the Company's corporate organization, sales and
operations, finance, tax, and employment) necessary or adequate for
making decisions related to the purchase of the shares issued by the
Company in accordance with the Tender Offer and Other Legal Procedure.
(vii)In relation to the transaction in which the Purchaser purchases the
Shares, the Purchaser understands and acknowledges that it executes
this Agreement after due consideration of the Securities Exchange Act
and other applicable laws, and purchases the Shares in accordance with
the Tender Offer and Other Legal Procedure.
(3) The Sellers and the Purchaser make no representations and warranties except
as explicitly prescribed herein.
ARTICLE 7 (COVENANTS)
(1) From the date of the execution of this Agreement until the Closing Date,
The Sellers shall not, without prior written consent of the Purchaser,
take, or engage themselves in, (i) any actions that may result in a change
in the capital structure of the Company, such as amending the articles of
incorporation, effecting a capital decrease or capital increase with
consideration or distributing dividends, or (ii) any actions that may
result in a change in the corporate organization of the Company such as a
merger, a spin-off, a transfer of all or a material part of the business of
the Company, or a dissolution.
(2) The Purchaser acknowledges that in order to acquire the Shares it shall
comply with the Tender Offer and Other Legal Procedure and must obtain
approvals, permits and authorizations under the relevant laws. The
Purchaser shall, within five (5) Business Days from the date of this
Agreement, apply to the Financial Supervisory Commission for approval of
the Company's incorporation as Purchaser's subsidiary and apply for other
approvals and authorizations with the Supervising Authority according to
applicable laws, and agrees to deliver to the Presiding Bank, on the date
of such application, a copy of the written applications (without
attachments, such as the application form for preliminary approval for the
incorporation as subsidiary). The Purchaser shall promptly obtain all
necessary approvals, permits or authorizations under the relevant laws to
the extent reasonably required to comply with the Tender Offer and Other
Legal Procedure and shall give the Presiding Bank a notice of the result,
accompanied by a copy of the approvals, permits or authorizations obtained.
(3) The Purchaser shall not, without prior written consent of the Presiding
Bank, take any actions that may cause the funding plan submitted in the
Purchase Offer to be changed or altered before the Tender Offer Settlement
Date.
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ARTICLE 8 (SPECIAL COVENANTS)
(1) The Purchaser shall not, during two (2) years following the Closing Date,
sell all or part of the Company's shares held by the Purchaser to a third
party or otherwise cause the aggregate number of the Company shares held by
the Purchaser to be less than 51% of the total number of issued shares of
Company, unless with the prior written consent of the Sellers, in which
case the Purchaser shall procure from the third party transferee and
deliver to the Sellers the transferee's written consent stating that the
transferee will assume all obligations of the Purchaser hereunder.
(2) The Sellers and the Purchaser agree as follows with respect to the listing
maintenance of the shares of the Company after the Closing Date:
(i) For the period of two (2) years after the Closing Date (the "LISTING
MAINTENANCE PERIOD"), the Purchaser shall not cause the shares of the
Company to be de-listed or designated as supervised issues. (a) If the
Company shares are designated as supervised issues within one (1) year
after start of the Listing Maintenance Period, the Purchaser shall
clear the designation within six (6) months after the date of such
designation, and (b) if the Company shares are designated as
supervised issues one (1) year after start of the Listing Maintenance
Period but six (6) months before the expiration of the Listing
Maintenance Period, the Purchaser shall clear the designation by the
date which is six (6) months prior to the expiration date of the
Listing Maintenance Period..
(ii) If (a) the Company shares are not cleared of designation as supervised
issues until expiration of the prescribed time limit set forth in
Subparagraph (i) above, (b) the Company shares are designated as
supervised issues after one (1) year and six (6) months after start of
the Listing Maintenance Period but before the expiration of the
Listing Maintenance Period, or (c) if the shares are delisted within
the Listing Maintenance Period (or if there is a resolution at the
shareholders meeting or Board meeting causing such delisting), the
Purchaser shall, if any Seller so desires, purchase according to the
legal procedure prescribed in the Securities and Exchange Act and
other applicable laws and regulations the Remaining Shares Subject to
Purchase Obligation defined in Subparagraph (iv) within thirty (30)
days from the expiration date of the Listing Maintenance Period in the
event of (a), the date of designation as supervised issue in the event
of (b), and the date of delisting (or the date of the shareholders'
the Board's resolution causing the delisting) in the event of (c) at
Forty-Six Thousand Three Hundred Ninety-Two (KW46,392) per share,
which is an amount calculated by adding up the daily amounts obtained
by multiplying the trading price of the shares traded in the Korea
Exchange by the number of shares traded on that day and then dividing
the aggregate daily amounts for the three (3) months ending on the day
before the submission date of the Purchase Offer by the total number
of the shares traded during said three (3) month period. If the
Purchaser must purchase those shares from the Sellers according to
Tender Offer procedure,
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the Purchaser shall purchase them by Tender Offer, and the Sellers
shall make reasonable effort to enable the Purchaser to undertake the
process for Tender Offer as speedily as possible.
(iii)The Sellers shall not take any actions that would impair the
Purchaser's performance of its obligation under Subparagraph 1 of this
Article (excluding keeping the Sellers' shareholding or arbitrarily
selling the Company shares). If the Purchaser discharges its
obligation to purchase under Subparagraph 2 of this Article, the
obligation under Subparagraph 1 of this Article shall terminate.
(iv) The Parties hereto acknowledge and confirm that upon the occurrence of
any of the events set forth in Subparagraph 2 of this Article, (a) if
the number of the Company shares held by each of the Sellers
(excluding the shares of Company newly acquired by each Seller after
the Closing Date) is the same or larger than the number of shares
resulting from deducting the Shares sold to the Purchaser by Tender
Offer from the Available Shares (as listed in Exhibit 2 and
hereinafter referred to as "REMAINING AVAILABLE SHARES") the Remaining
Available Shares shall be the remaining shares subject to purchase by
the Purchaser (the "REMAINING SHARES SUBJECT TO PURCHASE OBLIGATION")
and (b) if the number of the Company shares held by each of the
Sellers (excluding the shares of Company newly acquired by each Seller
after the Closing Date) is less than the Remaining Available Shares,
the number of such shares held by each Seller at the time of
occurrence of any event specified in Subparagraph 2 of this Article
shall be the Remaining Shares Subject to Purchase Obligation.
(v) This Article shall become invalid and inapplicable if each Seller
ceases to own the Remaining Available Shares immediately after the
Closing Date or ceases to own the Remaining Shares Subject to Purchase
Obligation during the Listing Maintenance Period.
ARTICLE 9 (TERMINATION)
A party may terminate this Agreement upon the occurrence of any of the following
events upon giving an immediate written notice to the other party. However, the
party to which any of the following causes for the termination are attributable
may not terminate this Agreement.
(i) in the event the Sellers and the Purchaser have not completed the sale
of the Shares on the Tender Offer Settlement Date;
(ii) in the event a party commits a material breach of this Agreement
before the Tender Offer Settlement Date;
(iii)in the event the Purchaser fails, without any reasonable cause, to
proceed with the Tender Offer pursuant to the Tender Offer Procedure
and Other
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Legal Procedure after the execution of this Agreement or to pay the
Sellers the purchase price pursuant to the Tender Offer and Other
Legal Procedure within six (6) months from the date of this Agreement;
(iv) in the event the contemplated transaction becomes impossible or
illegal due to a natural disaster, an enactment or amendment of
applicable laws or other force majeure (the Purchaser shall be held
responsible in case the contemplated Transaction becomes impossible or
illegal because of a failure from its part to obtain the necessary
approvals, permits or authorizations from the Supervisory Authority
pursuant to relevant laws due to causes attributable to the Purchaser:
provided, however, that whether such failure is due to causes
attributable to the Purchaser or not shall be reasonably determined by
the Steering Committee for Creditor Financial Institutions); or
(v) in the event an insolvency proceeding as in reorganization or
bankruptcy are instituted against a party (provided, however, such
insolvency proceedings shall be limited to those that are pending in
the applicable court for sixty (60) or more Business Days from the
date of the filing if such proceedings are instituted by a third
party).
ARTICLE 10 (EFFECT OF TERMINATION)
(1) In case this Agreement is terminated before the Tender Offer Settlement
Date due to causes not attributable to either of the parties or to causes
attributable to the Sellers, the Sellers shall return the sum of the
Contract Deposit and Interest to the Purchaser within five (5) Business
Days from the date of the Purchaser's request for such return (provided,
however, that in case a pledge is established on the Contract Deposit
Balance Account pursuant to Paragraph 3 of Article 2 (Contract Deposit)
hereof, the pledge shall be extinguished).
(2) In case this Agreement is terminated before the Tender Offer Settlement
Date due to causes attributable to the Purchaser, the sum of the Contract
Deposit and Interest shall be retained by the Sellers as liquidated damages
(provided, however, that in case a pledge is established on the Contract
Deposit Balance Account under Paragraph 3 of Article 2 (Contract Deposit)
hereof, the Sellers may immediately enforce such pledge and receive the
Contract Deposit and Interest as liquidated damages).
(3) The parties confirm and acknowledge that the remedies stipulated in this
Article are only available remedies in the event this Agreement is
terminated. The parties may not, in any way, terminate or cancel this
Agreement after the Tender Offer Settlement Date.
(4) This Article, Article 11 (Compensation for Damage), Article 12
(Indemnification), Article 13 (Confidentiality), Article 17 (Notices),
Paragraph 6 of Article 18 (Jurisdiction) and Paragraph 8 of Article 18
(Governing Law) shall survive
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the termination of this Agreement.
ARTICLE 11 (COMPENSATION FOR DAMAGE)
(1) In case a party breaches a representation or warranty, or a covenant or
other obligations under this Agreement, and the other party incurs damages
as a result of such breach, the breaching party shall compensate the other
party for such damages.
(2) Notwithstanding Paragraph 1 of this Article, the Sellers shall be liable
for the amount of damages subject to the following conditions:
(i) The damages the Sellers shall pay to the Purchaser shall be the amount
calculated by multiplying the total amount of damages to the Purchaser
by the ratio of the Bid Shares over the total number of the issued
shares of the Company: provided, however, that in cases of a defect in
the Shares or in its transfer, or in a breach of the Sellers'
obligations to sell the Shares pursuant to Paragraph (9) of Article 4
hereof, the Seller, to which such defect or breach is attributable,
shall be held responsible for the total amount of damages to the
Purchaser.
(ii) The Sellers shall not be liable for damages until the aggregate amount
of damages calculated pursuant to Subparagraph 1 above reaches Ten
Billion Korean Won (KRW10,000,000,000) (the "BASE AMOUNT"), but if the
amount of the damages exceeds the Base Amount, the Sellers shall
compensate the entire amount of the damages to the Purchaser:
provided, however, that such amount shall not exceed three percent
(3%) of the amount calculated by multiplying the number of Bid Shares
by the Purchase Price per S share.
(iii)The Sellers' liability for damages shall lapse in case the Purchaser
fails to provide a written notice to the Sellers specifying the
reasons for the damages and the reasonable amount of the damages,
together with objective supporting documents on or before the Tender
Offer Settlement Date.
ARTICLE 12 (INDEMNIFICATION)
(1) A party shall not claim for any damages, losses or costs related to the
transaction contemplated hereby against the other party (including its
employees, officers and counsels), except to enforce its rights under this
Agreement.
(2) After the Closing Date, the Purchaser may not pursue, directly or
indirectly any civil or criminal sanctions against the Sellers in
connection with the Company.
ARTICLE 13 (CONFIDENTIALITY)
(1) No party shall disclose or cause to be disclosed the content of this
Agreement except in any of the following events:
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(i) in case it is required to respond, disclose or announce under a
provision of applicable laws or pursuant to a request by any
governmental agencies; or
(ii) in case it obtains a prior written consent of the other party for the
disclosure.
(2) The Purchaser shall use the information obtained in connection with the
execution and performance of this Agreement (including, but not limited to,
the information obtained through preliminary due diligence and due
diligence) only for the purpose of the Transaction contemplated in this
Agreement and shall not use such information for any other purpose
whatsoever: provided, however, that after the Closing Date, the Purchaser
may use such information to carry out the business operation of the
Company.
(3) In case this Agreement is terminated by any cause (whether or not
attributable to either party), the Purchaser, upon the occurrence of such
cause, (a) shall promptly discard any and all information and materials
obtained with respect to the Transaction contemplated in this Agreement,
and (b) shall cause any third party who obtained such information through
the Purchaser to promptly discard such information and materials.
(4) In case a party breaches the provisions set forth in Paragraphs (1) through
(3) of this Article, such party shall be held liable for any consequences
of the breach.
(5) With respect to the Transaction contemplated in this Agreement, the parties
acknowledge and confirm that the Confidentiality Agreement submitted by the
Purchaser on April 19, 2006 and the provisions set forth in Paragraphs (1)
through (4) of this Article shall apply severally or collectively.
ARTICLE 14 (EMPLOYMENT GUARANTEE)
The Purchaser shall, in principle, use its best efforts to guarantee continued
employment of the Company's workers (except for registered officers), who desire
to continue their employment with the Company, pursuant to the Labor Standards
Act.
ARTICLE 15 (BRAND AND SYMBOL)
The Purchaser has understood and acknowledged the Agreement dated January 18,
2005 entered into by and between the Presiding Bank and LG Corporation whereby
LG's corporate brand and symbol ([LOGO]) used by the Company may be used only
for three (3) months from the Closing Date. The Purchaser shall solely bear any
and all damages, losses, expenses or other civil or criminal liabilities to the
Presiding Bank arising out of, or in relation to, the Company's use of LG's
brand and symbol ([LOGO]) following the three (3) months from the Closing Date.
ARTICLE 16 (PURCHASER'S PARTICIPATION IN THE MANAGEMENT SUPPORT TEAM)
(1) Upon the execution of this Agreement, the Purchaser may dispatch an
appropriate number of its representatives nominated by the Purchaser
(determined upon
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consultation with the Presiding Bank) to the management support team for
the Company (the "MANAGEMENT SUPPORT TEAM") that operates under the
Agreement for Implementation of the Management Normalization Plan dated May
13, 2004, entered into by and between the Presiding Bank and the Company.
(2) The Presiding Bank shall ensure that the Management Support Team works in
coordination and by mutual agreement with the representatives dispatched by
the Purchaser.
(3) The Sellers shall ensure that, unless there are other justifiable reasons,
the persons nominated by the Purchaser be appointed as directors of the
Company at the Initial Shareholders Meeting. If the Initial Shareholders
Meeting is convened after the Ordinary Shareholders Meeting, the Sellers
shall not appoint any new directors of the Company at the Ordinary
Shareholders Meeting.
(4) The Sellers shall deliver to the Purchaser a power of attorney authorizing
the Purchaser to exercise the voting rights of the Sellers as shareholders
at the Initial Shareholders Meeting, not later than the first Business Day
immediately following the Tender Offer Settlement Date.
ARTICLE 17 (NOTICES)
Except as otherwise provided herein, all notices, invoices and advice (the
"NOTICES") required or permitted to be given hereunder shall be in writing, and
shall be deemed to be duly given (a) when actually received, if sent by
registered mail or certified mail, with return receipt requested, (b) when
delivered, if sent by personal delivery or a recognized commercial courier
service, or (c) when transmitted with a simultaneous confirmation of
transmission, if sent by fax; and in each case, when sent to the appropriate
recipients at the following addresses (or such other addresses as designated by
the Notices):
SELLERS:
Process Agent
Person-in-charge, Corporate Finance Office I
The Korea Development Bank
▇▇-▇, ▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Tel No.: ▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇-▇▇▇-▇▇▇▇
PURCHASER:
Process Agent
Person-in-charge, Strategic Planning Team
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Shinhan Financial Group Co., Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇-▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Tel No: ▇▇-▇▇▇▇-▇▇▇▇
Fax No.: ▇▇-▇▇▇▇-▇▇▇▇
ARTICLE 18 (MISCELLANEOUS)
(1) In case of a conflict between the terms and conditions of this Agreement
and those of any agreements or negotiations (whether oral or written) made
between the Sellers and the Purchaser in connection with the Transaction
prior to the execution of this Agreement, the terms and conditions of this
Agreement shall prevail. Except as otherwise provided herein, the MOU shall
become null and void upon the execution of this Agreement.
(2) Neither the Sellers nor the Purchaser may assign all or any part of the
rights or obligations hereunder to a third party without the prior written
consent of the other party.
(3) Each provision of this Agreement shall be severable. Even if any covenant,
term or provision of this Agreement is found to be illegal, invalid or
unenforceable for any reason, the remaining provisions of this Agreement
shall remain valid, enforceable and in full force and effect, unless there
are special reasons to the contrary.
(4) Any amendment to this Agreement shall be made only by a prior written
agreement between the Sellers and the Purchaser.
(5) Each party shall bear its own taxes and other expenses incurred in relation
to the execution and performance of this Agreement.
(6) In case of a dispute arising in relation to this Agreement, the parties
shall use their best efforts to settle the dispute amicably and under the
principle of trust and good faith. If, despite such efforts, the dispute
cannot be settled amicably, the parties may file a lawsuit with the Seoul
Central District Court in Korea, in which case the Seoul Central District
Court shall have sole and exclusive jurisdiction over the dispute.
(7) Except as otherwise provided herein, references to the "Recitals" or any
"Article", "Paragraph" or "Exhibit" shall refer to the Preamble, Article,
Paragraph of and Exhibit to this Agreement. Headings are included for
reference only and shall not affect the construction or interpretation of
this Agreement.
(8) This Agreement shall be interpreted and applied in accordance with the laws
of the Republic of Korea.
(9) This Agreement shall come into effect upon signing and sealing by the
Sellers and
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the Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives as of the date first written
above.
[Signature page to follow; The following space intentionally left blank]
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"Sellers" (On Behalf of and/or in the capacity of the Sellers)
Name: The Korea Development Bank
Address: ▇▇-▇, ▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Governor: ▇▇▇▇▇ ▇▇▇ ▇▇▇ (seal)
"Purchaser"
Name: Shinhan Financial Group Co., Ltd.
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇-▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Representative Director: In ▇▇ ▇▇▇ (seal)
Exhibit 1. List of Creditor Financial Institution Shareholders
Exhibit 2. Available Shares - Bid Shares
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EXHIBIT 1.
LIST OF CREDITOR FINANCIAL INSTITUTION SHAREHOLDERS
---------------------------------------------------
Name Address Representative
---- ------- --------------
1 The Korea Development Bank ▇▇-▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
▇ National Agricultural 75 Choongjeongro 1-ga, Jung-gu, Credit Representative Director
Cooperative Federation Seoul Yong ▇▇▇▇ ▇▇▇▇▇
3 Kookmin Bank Co., Ltd. 9-1 Namdaemoonro 2-ga, Jung-gu, Representative Director
Seoul Jung Won Kang
4 Woori Bank Co., Ltd. 203 Hoihyundong 1-ga, Jung-gu, Representative Director
Seoul Young Ki Hwang
5 Shinhan Bank Co., Ltd. 120 Taepyungro 2-ga, Jung-gu, Representative Director
Seoul ▇▇▇▇ ▇▇▇▇ Shin
6 Industrial Bank of Korea 50 Eulgiro 2-ga, Jung-gu, Seoul Chairman & Ceo
Kwon ▇▇▇▇ ▇▇▇▇
7 Hana Bank Co., Ltd. 101-1 Eulgiro 1-ga, Jung-gu, Representative Director
Seoul Jong ▇▇▇▇ ▇▇▇
8 Citibank Korea, Inc. 39 ▇▇-▇▇▇▇, ▇▇▇▇-gu, Seoul Representative Director
Young Goo Ha
9 Samsung Life Insurance Co., 150 Taepyungro 2-ga, Jung-gu, Representative Director
Ltd. Seoul Soo ▇▇▇▇▇ ▇▇▇
10 Korea Life Insurance Co., Ltd. ▇▇ ▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ Eun ▇▇▇▇ ▇▇▇▇
11 Kyobo Life Insurance Co., Ltd. 1 Jongro 1-ga, Jongro-gu, Seoul Representative Director
▇▇▇▇▇ ▇▇▇ Shin
12 Samsung Fire & Marine 87 Eulgiro 1-ga, Jung-gu, Seoul Representative Director
Insurance Co., Ltd. Tae Sun Hwang
13 LIG Insurance Co., Ltd. 649-11 Yoksam-dong, Gangnam-gu, Representative Director
Seoul Ki ▇▇▇▇▇ ▇▇▇
14 Dongbu Insurance Co., Ltd. 891-10 Daechi-dong, Gangnam-gu, Representative Director
Seou. Soon ▇▇▇▇ ▇▇▇
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EXHIBIT 2.
AVAILABLE SHARES - BID SHARES
-----------------------------
AUCTIONED SHARES BIDED SHARES
------------------------------- --------------------------------
No. of Shares Shareholding No. of Shares Shareholding
(shares) Ratio (shares) Ratio
(%) (%)
------------- ------------ ------------- ------------
The Korea Development 23,936,869 19.09 20,257,781 16.16
Bank
National Agricultural 15,313,429 12.22 12,959,760 10.34
Cooperative Federation
Kookmin Bank Co., Ltd. 13,019,159 10.39 11,018,119 8.79
Woori Bank Co., Ltd. 9,454,464 7.54 8,001,316 6.38
Industrial Bank of Korea 6,470,011 5.16 5,475,573 4.37
Hana Bank Co., Ltd. 4,978,012 3.97 4,212,893 3.36
Citibank Korea, Inc. 1,093,894 0.87 925,763 0.74
Samsung Life Insurance 1,970,149 1.57 1,667,338 1.33
Co., Ltd.
Korea Life Insurance 1,530,597 1.22 1,295,345 1.03
Co., Ltd.
Kyobo Life Insurance 1,364,629 1.09 1,154,886 0.92
Co., Ltd.
Samsung Fire & Marine 1,168,901 0.93 989,241 0.79
Insurance Co., Ltd.
LIG Insurance Co., Ltd. 985,075 0.79 833,669 0.66
Dongbu Insurance Co., 766,867 0.61 649,000 0.52
Ltd.
---------- ----- ---------- -----
Total 82,052,056 65.45 69,440,684 55.39
========== ===== ========== =====
--------------
* Total number of issued shares of the Company: 125,369,403 common shares
* Shareholding Ratio (%): rounded to 2 decimal places
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