ESY Tender Offer Defense

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[Tender Offer Defense in Korea.doc]

Tender Offer Defense in Korea

I. Communication with Shareholders / Public Relations Campaign / Lobbying Campaign

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II. Litigation

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III. Acquiring Additional Line of Business

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IV. Crown Jewel

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VI. Pac Man

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VIII. Issuance of New Shares or Equity-related Securities

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[Tender Offer Defense in Korea.doc] I-1

[Attachment I]

Securities and Exchange Act Provisions regarding Restriction on the Acquisition of Listed

Company¶s Shares (Abolished in April 1997)

200 ( )

( . )

.

, u

.< 1982·3·29,

1987·11·28, 1991·12·31>

1. ( 3

) 100 10 .,

2. 1 100 10( 100

3 )

1 , 1 1 ,

1

1 1 .

.< 1987·11·28>

1 2

.< 1982·3·29>

Securities and Exchange Act Provisions regarding Mandatory Tender Offer (becoming effective inApril 1997 and abolished in February 1998)

21 ( )

100 25 (

100 25

) 1

. ,

.

- 11 2 ( ) 21 2 ³ ´ 100 50 1

. [ 1997·3·22]



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[Tender Offer Defense in Korea.doc] I-2

Securities and Exchange Act Provisions regarding the Expression of Opinion on Tender Offer

Article 25 (Presentation of Opinion on Tender Offer)An issuer of stocks, etc. for which a tender offer statement has been filed, may present his opinion on the

tender offer concerned under the conditions as prescribed by the Presidential Decree. In this case, the

issuer shall file a written statement describing the contents of such opinion without delay with the

Financial Supervisory Commission and the Exchange as the case may be. <Amended by Act No. 5254,Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 7114, Jan. 29, 2004>

25 ( )

.

. < 1997.1.13, 1998.1.8, 2004.1.29>

Presidential Decree - Article 13 (Presentation of Opinion on Tender Offer)

The issuer of stocks, etc. for which the tender offer statement is filed in accordance with Article 25 of the

Act may present his opinions on the said tender offer by means of advertisement, correspondence or other

documents. In this case, the important matters shall not be omitted and the contents shall be such that nomisunderstanding may be caused therefrom. <Amended by Presidential Decree No. 15312, Mar. 22,

1997>

- 13 ( )

25

· .

. < 1997.3.22>



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[Tender Offer Defense in Korea.doc] II-1

[Attachment II]

Laws regarding Injunction

[Commercial Code]

Article 402 (Right to Injunction)If a director commits an act in contravention of the relevant acts, subordinate statutes or the articles of incorporation and the act is likely to cause irreparable damage to the company, the auditor or ashareholder who holds no less than 1/100 of the total outstanding shares may demand on behalf of the

company that the director stop such act.

402 ()

100 1

.< 1984.4.10, 1998.12.28>

[Securities and Exchange Act]

Article 191-13 (Exercise of Minority Stockholders¶ Rights)

(2) Any person who has been holding 50/100,000 or more (in case of a corporation prescribed by thePresidential Decree, 25/100,000 or more) of the total number of outstanding stocks issued by any stock-

listed corporation or any KOSDAQ-listed corporation for 6 months under the conditions as prescribed bythe Presidential Decree may exercise his right as a stockholder prescribed in Article 402 of theCommercial Act. <Amended by Act No. 6423, Mar. 28, 2001; Act No. 7114, Jan. 29, 2004>

191 13 ( < 1999.2.1>)

6 10 50(

10 25)

402 . < 2001.3.28,2004.1.29>



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[Tender Offer Defense in Korea.doc] III-1

[Attachment III]

Commercial Code Provisions regarding Small-scale Merger, Merger, Business Transfer and

Director¶s Duties

Article 527-3 (Small-Scale Merger)

(1) In case where the total number of new shares to be issued by the surviving company due to a merger does not exceed 5/100 of the total issued shares of the surviving company, the approval of the generalshareholders' meeting of the company may be replaced by the approval of the board of directors of such

company: Provided, That where there is a fixed amount to be paid to shareholders of a company to beextinguished in consequence of the merger, if the amount exceeds 2/100 of the amount of net assetsexisting on the latest balance sheet of the surviving company, this shall not apply.

(2) In case of paragraph (1), the written agreement of the merger of the surviving company shall include

that the merger shall be effected without approval of the general meeting of shareholders.(3) In case of paragraph (1), the surviving company shall make a public notice or notification to theshareholders of the trade name and address of the principal office of the company to be extinguished, the

date of the merger, and the statement that the merger shall be effected without approval of the general

meeting of shareholders within two weeks after the written agreement of the merger has been prepared.

(4) In case where shareholders who hold no less than 20/100 of the total outstanding shares of thesurviving company which continues to exist after a merger notify, in writing, the company of their intention of dissent from the merger under paragraph (1) within two weeks after they received a publicnotice or notification under paragraph (3), the merger shall not be effected under the main sentence of

paragraph (1).

(5) Article 522-3 shall not apply in case of the main sentence of paragraph (1).

527 3 ()

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100 2

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1

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1 2

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.

100 20

3 2 1

1 .

1 522 3 .



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Article 522 (Written Agreement of Merger and Resolution of Approval)

(1) In order to effect a merger of companies, a written agreement for merger shall be prepared and beapproved by a general shareholders' meeting.

(2) The summary of the written agreement of a merger shall be stated in notices and public notices under Article 363.

(3) The resolution of approval mentioned in paragraph (1) shall be adopted in accordance with Article 434

(referring to the special resolution).

522 ( )

. <1998·12·

28>

363 .

1 434 ( ).<

1998.12.28>



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Article 374 (Resolution for Transfer, Takeover or Lease of Business)

(1) A resolution in accordance with Article 434 shall be required for a company to effect the followingacts:

1. Transfer of the whole or an important part of the business of the company;2. Conclusion, alteration or rescission of a contract for leasing the whole business for giving a mandate to

manage such business or for sharing with another person the entire profits and losses from the business or

of a similar contract; and3. Takeover of the whole business of another company.4. Takeover of parts of business of another company which significantly affect the company's business.(2) In a notice or public notice of the convocation of the general shareholders' meeting for any act under

paragraph (1), the contents and exercising method of rights under Article 374-2 (1) and (2) shall be

specified.

374 (,,)

434 . < 2001.7.24>

1.

2. ,

, 3.

4. q

1 374 2 1

2 .<

1995.12.29>



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Article 399 (Liability to Company)

(1) If directors have acted in violation of any Acts and subordinate statutes or the articles of incorporationor has neglected to perform their duties, they shall be jointly and severally liable for damages to the

company.(2) If any act mentioned in paragraph (1) has been done in accordance with the resolution of the board of

directors, the directors who have assented to such resolution shall be subject to the same liability.

(3) The directors who have participated in the resolution mentioned in paragraph (2) and whose dissentingopinion has not been entered in the minutes shall be presumed to have assented to such resolution.

399 ( )

.

.

.



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Securities and Exchange Act Provisions regarding Merger and Business Transfer of Listed

Companies

Article 190-2 (Merger, etc.)

(1)Any stock-listed corporation or any KOSDAQ-listed corporation shall, where it intends to merge with

other corporations, report to the Financial Supervisory Commission and the Exchange. In this case, the

stock-listed corporation or the KOSDAQ-listed corporation shall report the matters relating to the merger according to standards for merger conditions such as the requirements and procedures as prescribed by

the Presidential Decree. <Amended by Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Act No.

7114, Jan. 29, 2004>(2) In the event that any stock-listed corporation or any KOSDAQ-listed corporation falls under any case

of the following subparagraphs, the provisions of paragraph (1) shall apply mutatis mutandis thereto:<Amended by Act No. 7025, Dec. 31, 2003; Act No. 7114, Jan. 29, 2004>1.Where it intends to acquire by transfer or transfer any important business or assets prescribed by the

Presidential Decree;

2.Where it intends to execute a comprehensive swap or a comprehensive transfer of shares; and3.Where it intends to split itself or merge with other corporation after splitting itself.(3)The provisions of Articles 8 (2), 14 through 16, 19 and 20 shall apply mutatis mutandis in the case of

report under paragraphs (1) and (2). <Amended by Act No. 5736, Feb. 1, 1999> [This Article WhollyAmended by Act No. 5254, Jan. 13, 1997]

190 2 (< 1999.2.1>)

.

· . < 1999.2.1, 2001.3.28,

2004.1.29>

1 1

. < 2003.12.31, 2004.1.29>

1.

2. 3.

8 2, 14 16, 19 20 1 2

. < 1999.2.1>

Presidential Decree - Article 84-7 (Requirements and Procedure of Merger)(1)Where any stock-listed corporation or any KOSDAQ-listed corporation intends to merge with other

corporations, it shall do so on the basis of the price of merger calculated by the method provided in the

following subparagraphs. In such case, the price under subparagraph 2 (b) shall govern in case where thestock-listed corporation or the KOSDAQ-listed corporation is incapable of computing prices under the

provisions of subparagraph 1 or the main sentence of subparagraph 2 (a): <Amended by Presidential

Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No.16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27,

2005>

1.In case of a merger between stock-listed corporations, between KOSDAQ-listed corporations, or between stock-listed corporations and KOSDAQ-listed corporations, the price calculated in accordancewith the method prescribed by the Ordinance of the Ministry of Finance and Economy on the basis of the

latest transaction price at the securities market or the KOSDAQ market; and



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2.In case of a merger between a stock-listed corporation or a KOSDAQ-listed corporation and a

corporation which is neither a stock-listed corporation nor a KOSDAQ-listed corporation, the pricedetermined pursuant to the following items:

(a) In case of a stock-listed corporation or a KOSDAQ-listed corporation, the price of subparagraph 1:Provided, That in the case determined by the Ordinance of the Ministry of Finance and Economy, it may

be substituted by asset value; and

(b) In case of a corporation which is neither a stock-listed corporation nor a KOSDAQ-listed corporation,the price calculated in accordance with the method prescribed by the Ordinance of the Ministry of Finance and Economy on the basis of asset value, earnings value, and relative value.(2)Where a stock-listed corporation becomes a stock-listed corporation by a merger with a stock-unlisted

corporation, the requirements prescribed in the following subparagraphs shall be satisfied: Provided, That

the provisions of subparagraph 1 shall not apply where a stock-unlisted corporation is a KOSDAQ-listedcorporation and the amount of a merger is calculated pursuant to paragraph (1) 1: <Amended by

Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; PresidentialDecree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No.

18687, Jan. 27, 2005>1.The propriety of merger ratio shall be appraised by the outside appraisal organization which is

determined by the Ordinance of the Ministry of Finance and Economy;

2.and 3.Deleted; and <by Presidential Decree No. 16367, May 27, 1999>4.Where, judging by the financial statements of the business year immediately preceding the business

year to which the date on which a stock-unlisted corporation submits a merger statement belongs, two or

more from among the total amount of assets, capital, and turnover, are larger than those of a stock-listedcorporation, the stock-unlisted corporation shall meet requirements provided in the following items:

(a) Requirement which the Listing Regulations prescribe with respect to profit ratio of treasury capital,debt ratio, asset value and earnings value: Provided, That the requirements for profit ratio of treasury

capital may be substituted by the requirements for operating profit, ordinary profit, or current net incomeunder the conditions as prescribed by the Listing Regulations; and

(b) Requirement which the Listing Regulations prescribe with respect to auditing opinion, entering a

lawsuit and other matters necessary for fair merger.(3) Where any KOSDAQ-listed corporation becomes a KOSDAQ-listed corporation by a merger with a

corporation which is not a KOSDAQ-listed corporation, the following requirements shall be satisfied:Provided, That where a corporation which is not a KOSDAQ-listed corporation is a stock-listed

corporation and the merger price is calculated in accordance with paragraph (1) 1, the provisions of subparagraph 1 shall not apply: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; PresidentialDecree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>

1.The propriety of merger ratio shall be appraised by the outside appraisal organization as referred to inparagraph (2) 1; and

2.In case where any corporation that is not a KOSDAQ-listed corporation is larger than the KOSDAQ-

listed corporation in terms of not less than two from among the total amount of assets, the capital and thesales amount that are based on the financial statements in the immediately preceding business year towhich the date on which a merger report is submitted belongs, the corporation that is not a KOSDAQ-

listed corporation is required to meet the requirements stipulated by listing regulations that are laid down

otherwise with respect to matters concerning changes in capital, the audit opinions of auditors, pendinglawsuits, fair mergers, etc. concerning the KOSDAQ market.

(4) Where a stock-listed corporation or a KOSDAQ-listed corporation becomes a corporation which isneither a stock-listed corporation nor a KOSDAQ-listed corporation by a merger with another corporation,it shall undergo an appraisal by the outside appraisal organization under paragraph (2) 1: Provided, That

this shall not apply to the case where all companies subject to the merger compute a merger price under

paragraph (1) 1. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No.18687, Jan. 27, 2005>



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(5)The provisions of paragraphs (1) through (4) shall not apply to the merger pursuant to approval,

guidance, or advice, etc. which is based on the provisions of any Act or documents of the Government:Provided, That where corporations subject to a merger are in relation of affiliated companies and the

value of a merger is not calculated under paragraph (1) 1, the appropriateness of the merger ratio shall beappraised by an outside appraisal organization under paragraph (2) 1. <Amended by Presidential Decree

No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001>

(6)Matters which shall be recorded in, the time of submission of, a merger statement, and other mattersnecessary for the report of merger shall be determined by the Financial Supervisory Commission.<Amended by Presidential Decree No. 15687, Feb. 24, 1998> [This Article Newly Inserted byPresidential Decree No. 15312, Mar. 22, 1997]

- 84 7 ( ·)

. 1

2 2

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1 . < 1998.2.24, 1999.5.27, 2000.9.8,

2001.7.7, 2005.1.27>

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2.

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2 1 .,

1 1

. < 2001.7.7, 2005.1.27>

1 4 ··

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1 1

2 1 . < 2000.9.8, 2001.7.7>

·

. < 1998.2.24>

Presidential Decree - Article 84-8 (Requirements, Procedure, etc. of Transfer and Acquisition, etc. of

Business)(1) The term ³acquisition by transfer or transfer of the important business or assets prescribed by the

Presidential Decree´ in Article 190-2 (2) 1 of the Act means what falls under any of the followingsubparagraphs: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>

1.The acquisition by transfer or transfer in which the amount of assets of business part to transfer or obtain by transfer is not less than 10/ 100 of that as of the end of the latest business year;

2.The acquisition by transfer or transfer in which the turnover of business part to transfer or obtain bytransfer is not less than 10/100 of that as of the end of the latest business year;3.The acquisition by transfer in which the amount of debt to be shouldered on the ground of the

acquisition by transfer of business is not less than 10/100 of the total amount of debt as of the end of the

latest business year;

4.The acquisition by transfer of business in full; and5.The acquisition by transfer or transfer in which the amount of assets to be acquired by transfer or transferred is not less than 10/100 of the total amount of assets as of the end of the latest business year:

Provided, That the acquisition by transfer and transfer of assets, including the act of selling and buyingcommodities, manufactured goods and raw materials, etc., which are prescribed as daily business

activities by the Financial Supervisory Commission, shall be excluded.

(2) The provisions of Article 84-7 (1) shall apply mutatis mutandis to all-inclusive exchange of stocks,all-inclusive transfer of stocks or division and merger of stocks provided for in Article 190-2 (2) of the

Act: Provided, That the same shall not apply to a case where any stock-listed corporation or any

KOSDAQ-listed corporation is made a complete subsidiary on its own as a result of all-inclusive transfer

of stocks. <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No.18687, Jan. 27, 2005>

(3) In the event that the acquisition by transfer and the transfer of business or assets, all-inclusiveexchange and all-inclusive transfer of stocks (limited to a case where a corporation that is neither a stock-listed corporation nor a KOSDAQ-listed corporation is included from among corporations that become

complete subsidiaries under Articles 360-2 and 360-15 of the Commercial Act and any complete parent

company becomes a corporation that is neither a stock-listed corporation nor a KOSDAQ-listedcorporation) or the division or the merger of stocks (limited to a case where any corporation subject to thedivision or merger of stocks is neither a stock-listed corporation nor a KOSDAQ-listed corporation) is

intended under Article 190-2 (2) of the Act, the appropriateness of the value of such acquisition by



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transfer and such transfer of business or assets, the ratio of such all-inclusive exchange of stocks and the

ratio of all-inclusive transfer of stocks or the ratio of such division or merger of shares shall be appraisedby any external appraisal organization provided for in Article 84-7 (2) 1. <Newly Inserted by Presidential

Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>(4)The provisions of Article 84-7 (5) and (6) shall apply mutatis mutandis to the acquisition by transfer

and the transfer of business or assets, all-inclusive exchange of stocks, all-inclusive transfer and all-

inclusive division of stocks and the division and merger of stocks under Article 190-2 (2) of the Act.<Amended by Presidential Decree No. 18350, Apr. 1, 2004> [This Article Newly Inserted by PresidentialDecree No. 15312, Mar. 22, 1997]

- 84 8 (· ·< 1999.5.27>)

190 2 2 1 "

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2004.4.1, 2005.1.27>

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. < 2004.4.1, 2005.1.27>

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·, · · . <

2004.4.1>



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[Tender Offer Defense in Korea.doc] IV-1

[Attachment IV]

Commercial Code Provisions regarding Business Transfer and Director¶s Duties

Article 374 (Resolution for Transfer, Takeover or Lease of Business)(1) A resolution in accordance with Article 434 (referring to the special resolution) shall be required for a

company to effect the following acts:1. Transfer of the whole or an important part of the business of the company;2. Conclusion, alteration or rescission of a contract for leasing the whole business for giving a mandate to

manage such business or for sharing with another person the entire profits and losses from the business or of a similar contract; and3. Takeover of the whole business of another company.

4. Takeover of parts of business of another company which significantly affect the company's business.

(2) In a notice or public notice of the convocation of the general shareholders' meeting for any act under paragraph (1), the contents and exercising method of rights under Article 374-2 (1) and (2) shall bespecified.

374 (,,)

434( ) . < 2001.7.24>

1.

2. ,

,

3.

4. q

1 374 2 1

2 .<

1995.12.29>



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Article 399 (Liability to Company)

(1) If directors have acted in violation of any Acts and subordinate statutes or the articles of incorporationor has neglected to perform their duties, they shall be jointly and severally liable for damages to the

company.(2) If any act mentioned in paragraph (1) has been done in accordance with the resolution of the board of

directors, the directors who have assented to such resolution shall be subject to the same liability.

(3) The directors who have participated in the resolution mentioned in paragraph (2) and whose dissentingopinion has not been entered in the minutes shall be presumed to have assented to such resolution.

399 ( )

.

.

.



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Securities and Exchange Act Provisions regarding Business or Asset Transfer of Listed Companies

Article 190-2 (Merger, etc.)(1)Any stock-listed corporation or any KOSDAQ-listed corporation shall, where it intends to merge with

other corporations, report to the Financial Supervisory Commission and the Exchange. In this case, the

stock-listed corporation or the KOSDAQ-listed corporation shall report the matters relating to the merger

according to standards for merger conditions such as the requirements and procedures as prescribed bythe Presidential Decree. <Amended by Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Act No.

7114, Jan. 29, 2004>

(2) In the event that any stock-listed corporation or any KOSDAQ-listed corporation falls under any caseof the following subparagraphs, the provisions of paragraph (1) shall apply mutatis mutandis thereto:

<Amended by Act No. 7025, Dec. 31, 2003; Act No. 7114, Jan. 29, 2004>1.Where it intends to acquire by transfer or transfer any important business or assets prescribed by thePresidential Decree;

2.Where it intends to execute a comprehensive swap or a comprehensive transfer of shares; and

3.Where it intends to split itself or merge with other corporation after splitting itself.(3)The provisions of Articles 8 (2), 14 through 16, 19 and 20 shall apply mutatis mutandis in the case of report under paragraphs (1) and (2). <Amended by Act No. 5736, Feb. 1, 1999> [This Article Wholly

Amended by Act No. 5254, Jan. 13, 1997]

190 2 (< 1999.2.1>)

.

· . < 1999.2.1, 2001.3.28,

2004.1.29>

1 1

. < 2003.12.31, 2004.1.29>

1.

2.

3.

8 2, 14 16, 19 20 1 2

. < 1999.2.1>

Presidential Decree - Article 84-8 (Requirements, Procedure, etc. of Transfer and Acquisition, etc. of Business)(1) The term ³acquisition by transfer or transfer of the important business or assets prescribed by the

Presidential Decree´ in Article 190-2 (2) 1 of the Act means what falls under any of the following

subparagraphs: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>1.The acquisition by transfer or transfer in which the amount of assets of business part to transfer or

obtain by transfer is not less than 10/ 100 of that as of the end of the latest business year;

2.The acquisition by transfer or transfer in which the turnover of business part to transfer or obtain bytransfer is not less than 10/100 of that as of the end of the latest business year;

3.The acquisition by transfer in which the amount of debt to be shouldered on the ground of the

acquisition by transfer of business is not less than 10/100 of the total amount of debt as of the end of thelatest business year;4.The acquisition by transfer of business in full; and

5.The acquisition by transfer or transfer in which the amount of assets to be acquired by transfer or

transferred is not less than 10/100 of the total amount of assets as of the end of the latest business year:Provided, That the acquisition by transfer and transfer of assets, including the act of selling and buying



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commodities, manufactured goods and raw materials, etc., which are prescribed as daily business

activities by the Financial Supervisory Commission, shall be excluded.(2) The provisions of Article 84-7 (1) shall apply mutatis mutandis to all-inclusive exchange of stocks,

all-inclusive transfer of stocks or division and merger of stocks provided for in Article 190-2 (2) of theAct: Provided, That the same shall not apply to a case where any stock-listed corporation or any

KOSDAQ-listed corporation is made a complete subsidiary on its own as a result of all-inclusive transfer

of stocks. <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No.18687, Jan. 27, 2005>(3) In the event that the acquisition by transfer and the transfer of business or assets, all-inclusiveexchange and all-inclusive transfer of stocks (limited to a case where a corporation that is neither a stock-

listed corporation nor a KOSDAQ-listed corporation is included from among corporations that become

complete subsidiaries under Articles 360-2 and 360-15 of the Commercial Act and any complete parentcompany becomes a corporation that is neither a stock-listed corporation nor a KOSDAQ-listed

corporation) or the division or the merger of stocks (limited to a case where any corporation subject to thedivision or merger of stocks is neither a stock-listed corporation nor a KOSDAQ-listed corporation) is

intended under Article 190-2 (2) of the Act, the appropriateness of the value of such acquisition bytransfer and such transfer of business or assets, the ratio of such all-inclusive exchange of stocks and the

ratio of all-inclusive transfer of stocks or the ratio of such division or merger of shares shall be appraised

by any external appraisal organization provided for in Article 84-7 (2) 1. <Newly Inserted by PresidentialDecree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>

(4)The provisions of Article 84-7 (5) and (6) shall apply mutatis mutandis to the acquisition by transfer

and the transfer of business or assets, all-inclusive exchange of stocks, all-inclusive transfer and all-inclusive division of stocks and the division and merger of stocks under Article 190-2 (2) of the Act.

<Amended by Presidential Decree No. 18350, Apr. 1, 2004> [This Article Newly Inserted by PresidentialDecree No. 15312, Mar. 22, 1997]

- 84 8 (· ·< 1999.5.27>)

190 2 2 1 "

" 1 . < 2004.4.1>

1.· 100 10

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2.· 100 10

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3. 100 10

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. < 2004.4.1, 2005.1.27>

84 7 5 6 190 2 2

·, · · . < 2004.4.1>



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[Tender Offer Defense in Korea.doc] VI-1

[Attachment VI]

Commercial Code Provisions regarding Voting Rights Restriction

Article 369 (Votes)(1) A shareholder shall have one vote for each share.

(2) The company shall not be entitled to vote in respect of its own shares.(3) In case where a company, its parent company and its subsidiary company together or its subsidiarycompany alone holds more than 1/10 of the total outstanding shares of another company, the shares of the

company or of the parent company held by such another company shall not be entitled to vote.

369 ()

1 1 .

.

, 10 1

.<

1984.4.10>



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[Tender Offer Defense in Korea.doc] VIII-1

[Attachment VIII]

Deleted Articles of the Securities and Exchange Act re Tender Offers

Article 23 (Restrictions on Purchases by Tender Offerer)(4) An issuer of stocks, etc., subject to a tender offer shall not, during the period as referred to in

paragraph (2), commit an act as prescribed by Presidential Decree which may change the number of voting stocks.

23 ( )

2

.

Article 12-5 (Acts Which are Prohibited during Period of Tender Offer)The term "acts prescribed by the Presidential Decree" in Article 23 (4) of the Act means the issuance of securities which are related to the voting rights as prescribed in subparagraphs 1 through 4 of Article 10

(referring to shares, stock subscription warrants, convertible bonds and bonds with warrants) and the

resolution of the board of directors or a general meeting of stockholders concerning the issuance thereof:Provided, That in case the resolution of the board of directors or a general meeting of stockholders

concerning the issuance is made before a tender offer statement is filed, the same shall not apply.

12 5 ( )

23 4 ³ ´ 10 1 4

(, ,,

) . ,

.



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Commercial Code Provisions regarding the Issuance of Shares or Equity-related Securities to the

Third Parties

Article 418 (Contents of Preemptive Rights, Designation and Public Notice of Record Date for

Allotment)

(1) Each shareholder shall be entitled to the allotment of new shares in proportion to the number of shares

which he holds.(2) The company may make an allotment of new shares to other per sons than the shareholders under the

provisions of articles of incorporation, notwithstanding the provisons of paragraph (1): Provided, That in

such case, it shall be limited to the case necessary for the achieve-ment of the company's operationalobjectives, such as an introduction of new technology, improvement of financial structures, etc.

(3) The company shall fix a certain record date and shall, at least two weeks before such record date, givepublic notice to the effect that shareholders entered on the register of shareholders as of such record dateshall be entitled to the rights under paragraph (1) and to the effect that such preemptive rights are

transferable: Provided, That if the above record date is within the period set forth in Article 354 (1), the

public notice shall be given at least two weeks before the first day of such period.

418 ( ·)

. < 2001.7.24> 1

., ,

. < 2001.7.24>

1

, 2 .,

354 1 2 .<

1984.4.10>

Article 513 (Issuance of Convertible Bonds)

(1) A company may issue convertible bonds.

(2) In case of paragraph (1), any of the following matters not provided for in the articles of incorporationshall be determined by the board of directors, unless the articles of incorporation provides that it shall be

determined by a general meeting of shareholders' meeting:

1. Total amount of convertible bonds;2. Conditions of conversion;3. Contents of the shares to be issued upon conversion;

4. Period during which a claim for conversion may be demanded;5. Effect that the preemptive rights to subscribe for convertible bonds is granted to shareholders, and the

amount of convertible bonds subject to such rights; and

6. Particulars as to the issuance of convertible bonds to the persons other than shareholders, and theamount of such convertible bonds to be issued.(3) If, in case where convertible bonds are issued to those who are not shareholders of the company, the

articles of incorporation do not provide for the amount of convertible bonds to be issued, conditions of conversion, contents of the shares to be issued upon conversion and the period during which theconversion may be demanded, such matters shall be determined by resolution pursuant to Article 434(referring to special shareholders¶ resolution). In such case, the proviso of Article 418 (2) shall apply

mutatis mutandis.(4) In case of resolution in accordance with paragraph (3), the summary of agenda relating to the issuance

of convertible bonds shall be stated in the notice and public notice under Article 363.



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513 ( )

.

1 .,

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1.

2. 3.

4.

5.

6.

,

,

434 ( ) . 418

2 . < 2001.7.24>

3 363

.

Article 516-2 (Issuance of Bonds with Warrants)(1) A company may issue bonds with warrants to subscribe for new shares.

(2) In case of paragraph (1), any of the following matters which are not provided for in the articles of

incorporation shall be determined by the board of directors, unless the articles of incorporation provide

that it shall be determined by a general of shareholders meeting:1. Total amount of bonds with warrants;2. Details of the warrants vested in such bonds;

3. Period within which the warrants are to be exercised;4. A statement on the transferability of only the warrants;

5. A statement to the effect that upon request of the person who intends to exercise his warrant rights, the

issue price of the bonds with warrants shall be deemed as payment under Article 516-8 (1), in lieu of theredemption of such bonds;

6. Deleted; <By Act No. 5053, Dec. 29, 1995>

7. A statement to the effect that the pre-emptive right to subscribe for the bonds with warrants is granted

to shareholders and the amount of bonds subject to such rights; and8. Details on issuance of bonds with warrants to persons other than shareholders and the amount of suchbonds with warrants to be issued.

(3) The total amount of issue price of the shares to be issued upon the exercise of warrant rights vested toeach bonds shall not exceed the total amount of such bonds with warrant.

(4) If, in case where the bonds with warrants are issued to those who are not shareholders, the articles of

incorporation do not provide for the amount of such bonds, contents of the warrant rights and the periodwithin which the warrant rights are to be exercised, such matters shall be determined by a resolution in

accordance with Article 434 (referring to special shareholders¶ resolution). In such case, the proviso of Article 418 (2) shall apply mutatis mutandis.

(5) Article 513 (4) shall apply mutatis mutandis to the case of paragraph (4).

516 2 ( )

.

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1.

2.

3.

4.

5.

516 8 1 6. <1995.12.29>

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8.

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434 ( ) . 418 2

. <

2001.7.24> 513 4 4 .



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Commercial Code Provisions regarding Director¶s Liabilities

Article 399 (Liability to Company)(1) If directors have acted in violation of any Acts and subordinate statutes or the articles of incorporation

or has neglected to perform their duties, they shall be jointly and severally liable for damages to the

company.

(2) If any act mentioned in paragraph (1) has been done in accordance with the resolution of the board of directors, the directors who have assented to such resolution shall be subject to the same liability.

(3) The directors who have participated in the resolution mentioned in paragraph (2) and whose dissenting

opinion has not been entered in the minutes shall be presumed to have assented to such resolution.

399 ( )

.

.

.

Article 400 (Release of Liability to Company)The liability of directors under Article 399 may be released by the consent of all shareholders.

400 ( )

.

Article 401 (Liability to Third Persons)(1) If directors have neglected to perform their duties willfully or by gross negligence, they shall be

jointly and severally liable for damages to third persons.

(2) Article 399 (2) and (3) shall apply mutatis mutandis in case of paragraph (1).

401 ( 3 ) 3

.

399 2, 3 .



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Financial Supervisory Service¶s Regulation regarding Convertible Bonds and Bonds with Warrants

Article 60 (Restrictions on Issuance of Convertible Bonds)A stock-listed corporation, etc. shall not issue convertible bonds by any other methods than conferring

subscription right to shareholders pursuant to the provisions of Article 513-2 paragraph (1) of the

Commercial Code or offering by channels and methods (hereinafter, "public offering method") provided

under Article 84-5 paragraph (1) of the Decree during each period specified under the followingsubparagraphs;

1.When a minority shareholder under Article 191-13 of the Act (hereinafter, "minority shareholder")

requests convening of general shareholders' meeting, or requests a court for its permission of suchconvening, for dismissal of executive officers of the corporation: the period from the date of request to the

date of decision on dismissal;2.The period during which a litigation is pending over managerial disputes of a listed corporation, as incases where a minority shareholder requests a court to suspend from office certain executive officers of

the corporation, or files an action of nullity or abrogation of resolution of general shareholders meeting;

and3.The period during which procedures concerning disputes over the management right of the listedcorporation, of equivalent nature and significance to cases under paragraph (1) or (2), are being

undertaken after notification or disclosure thereof.

60 ( )

513 2 1

84 5 1

( "") . <

2002.4.4>

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2.

3. 1 2

Article 61 (Determination of Conversion Price)

(1) When a stock-listed corporation, etc. issues convertible bonds, the conversion price shall be thehighest price among the following: (i) the arithmetic average of the closing price for the past one month

and for the past one week, each of which is counted from the date one day prior to the resolution of boardof directors for issuance of convertible bonds, and of the closing price of the most recent day; (ii) theclosing price of the most recent day; and (iii) the closing price of the date three trading days prior to the

subscription date (if there is no subscription date, the payment date). However, in the event an issuer of convertible bonds, who has not issued any non-voting preferred stocks, intends to issue non-voting

preferred stocks after conversion, Article 57 paragraph (4) mp shall apply mutatis mutandis thereto.<Added August 1, 2001>

61 ( )

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Article 62 (Restricted Conversion Period)A stock-listed corporation, etc. shall issue convertible bonds under the condition that the bonds may beconverted after one year from when they are issued.

62 ()

1

.

Article 63 (Issuance of Bonds with Warrant)

(1) Article 60, Article 61 paragraph (1), Article 61-2 and Article 62 shall apply mutatis mutandis to

issuance of bonds with warrant.(2) In the case of issuing bonds with warrant by a stock-listed corporation etc., the total issuing value of

the shares to be issued through exercise of preemptive rights endowed thereupon shall not exceed the totalissuing value of convertible bonds issued.(3) Where a stock-listed corporation, etc. issues divisible bonds with warrant under approach other than

public offering, it shall do so to the extent that bonds, whose certificates of preemptive right to bonds withwarrant are separated, are not solely purchased until the term commensurate with 1/3 of maturity of thebonds expires (one year if such term is less than one year) from the date of bond issuance.

63 ( )

60, 61 1, 61 2 62

. < 2001.8.1, 2002.4.4>

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ESY Tender Offer Defense

Documents

Transcript of ESY Tender Offer Defense