Exhibit M-4
[Cleary, Gottlieb, Steen & Hamilton London Office Letterhead]
November 13, 2002
To: The Korea Development Bank
16-3, Yoido-dong
Youngdungpo-gu
Seoul, Korea
Ladies and Gentlemen:
We have acted as English counsel to The Korea Development Bank (the
"Issuer"), a statutory juridical entity established in the Republic of Korea
under The Korea Development Bank Act of 1953, in connection with the preparation
and filing with the U.S. Securities and Exchange Commission (the "Commission")
under the U.S. Securities Act of 1933 (the "Securities Act") of the Issuer's
registration statement under Schedule B (No. 333-97299) (the "Registration
Statement") relating to the offering from time to time, as set forth in the
Registration Statement, the form of prospectus contained therein (the
"Prospectus") and one or more supplements to the Prospectus, of the Issuer's
unsecured debt securities (the "Debt Securities") and guarantees (the
"Guarantees"). The Registration Statement relates to Debt Securities and
Guarantees having an aggregate initial public offering price or purchase price
of up to approximately U.S.$6,621,000,000 or the equivalent thereof. Certain of
the Guarantees are to be issued in the form of deed poll guarantees (the "Deed
Poll Guarantees") or securities guarantees pursuant to a guarantee agreement
dated November 13, 2002 between the Issuer and Korea Electric Power Corporation.
In arriving at the opinions expressed below we have reviewed the specimen
form of the Deed Poll Guarantees attached to this letter.
In rendering the opinions expressed below we have assumed and not verified:
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(a) that each Deed Poll Guarantee will be or has been executed in the
specimen attached to this letter;
(b) that each Deed Poll Guarantee has been or will be duly authorised by
the Issuer and that the Issuer has the power, capacity and authority to
execute and deliver and to perform its obligations contained in such
Deed Poll Guarantee;
(c) the accuracy as to factual matters of each Deed Poll Guarantee
(including, without limitation, the accuracy of the representations and
warranties of the Issuer) and the compliance by the Issuer with its
obligations under each Deed Poll Guarantee.
Based on the foregoing, and subject to the further qualifications and
limitations set forth below, it is our opinion that each Deed Poll Guarantee,
when duly executed and delivered by the Issuer, will constitute a valid, binding
and enforceable obligation of the Issuer.
The expression "enforceable" as used above means that the obligations
referred to are of the type which English courts enforce. It does not mean that
those obligations will necessarily be enforced in all circumstances in
accordance with their terms. In particular, but without limitation:
(a) The opinion set forth above as regards the binding effect and validity
of the obligations and their enforceability against the contracting
parties is subject to all limitations resulting from the laws of
bankruptcy, insolvency, liquidation, administration, reorganisation,
suretyship or similar laws of general application affecting creditors'
rights.
(b) Enforcement may be limited by general principles of equity. For
example, equitable remedies may not be available where damages are
considered to be an adequate remedy.
(c) Where any obligations of any person are to be performed or observed in
jurisdictions outside England, or by a person subject to the laws of a
jurisdiction outside England, such obligations may not be enforceable
under English law to the extent that performance or observance thereof
would be illegal or contrary to public policy under the laws of any
such jurisdiction.
(d) The choice of English law as the governing law of the Deed Poll
Guarantees may be limited by the Contracts (Applicable Law) Act 1991 in
certain circumstances, including, for example, in respect of laws which
cannot be derogated from by contract or which are, irrespective of the
governing law of the contract, mandatory in the relevant forum.
(e) Where any person is vested with a discretion, or may determine any
matter in its opinion, English law may require that such discretion is
exercised reasonably or that such opinion is based on reasonable
grounds.
(f) Enforcement of rights may be or become limited by prescription or by
the lapse of time or may be or become subject to defences of set-off or
counterclaim.
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(g) An English court is able, where the amount of a claim is denominated in
a currency other than sterling, to give judgment in that other
currency, as a matter of current procedural practice and at its own
discretion.
(h) Except in those cases where jurisdiction is determined in accordance
with the provisions of the Council Regulation (EC) 44/2001 on
jurisdiction and the recognition and enforcement of judgements in civil
and commercial matters, the Brussels Convention on Jurisdiction in
Civil and Commercial Matters of 1968 or the Lugano Convention on
Jurisdiction in Civil and Commercial Matters, an English court has
power to stay an action where it is shown that it can, without
injustice to the plaintiff, be tried in a more convenient forum.
(i) Any provision providing that any calculation, certification,
determination, notification, minute or opinion will be conclusive and
binding will not be effective if such calculation, certification,
determination, notification, minute or opinion is fraudulent or made on
an unreasonable or arbitrary basis or in the event of manifest error
despite any provision to the contrary and it will not necessarily
prevent judicial enquiry into the merits of any claim by any party
thereto.
(j) Any provision providing for the payment of liquidated damages,
compensation, additional interest or similar amounts might be held to
be unenforceable on the ground that it is a penalty.
(k) Any undertaking or indemnity may be void insofar as it relates to stamp
duty payable in the United Kingdom.
(l) An English court may refuse to give effect to any provision of an
agreement which amounts to an indemnity in respect of the costs of
enforcement or of unsuccessful litigation brought before an English
court or where the court has itself made an order for costs.
(m) Any question as to whether or not any provision of any agreement or
instrument which is illegal, invalid, not binding, unenforceable or
void may be severed from the other provisions thereof in order to save
those other provisions would be determined by an English court in its
discretion.
(n) There is some possibility that an English court would hold that a
judgment on a particular agreement or instrument, whether given in an
English court or elsewhere, would supersede such agreement or
instrument to all intents and purposes, so that any obligation
thereunder which by its terms would survive such judgment might not be
held to do so.
(o) In the case of agreements which are not required by law to be in
writing or evidenced in writing any provision of an agreement under
hand may be amended by oral agreement or waived between the parties or
by the conduct of the parties, notwithstanding any provision to the
contrary. The most common example of a financing agreement which is
required to be evidenced in writing is a guarantee.
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(p) The effectiveness of terms exculpating a party from a liability or duty
otherwise owed is limited by law.
(q) The Deed Poll Guarantees may not be enforceable to the extent that the
English law doctrines of frustration or mistake apply to them.
(r) A power of attorney may be revoked in certain circumstances, even if it
is stated to be irrevocable, unless the power of attorney is expressed
to be irrevocable and is given to secure a proprietary interest of the
donee of the power or the performance of an obligation owed to the
donee.
We express no opinion as to any agreement, instrument, or other document
other than the Deed Poll Guarantees, or as to any liability to tax which may
arise or be incurred as a result of or in connection with any Deed Poll
Guarantee.
The opinions set out in this opinion letter are limited to the laws of
England as currently applied by the courts in England, and is given on the basis
that this opinion letter will be governed by and construed in accordance with
English law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the incorporation by reference of this opinion in any
registration statement relating thereto filed by the Issuer with the Commission
pursuant to Rule 462(b) under the Securities Act and to the references to us
under the heading "Legal Matters" in the Prospectus and any prospectus relating
to any such other registration statement, without thereby admitting that we are
"experts" under the Securities Act or the rules and regulations of the
Commission thereunder for purposes of any part of the Registration Statement or
any such other registration statement, including the exhibit as which this
opinion is filed.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Andrew Shutter
--------------------------
Andrew Shutter, a Partner
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FORM OF DEED POLL GUARANTEE
THIS GUARANTEE is made by way of DEED POLL on o 2003 by THE KOREA DEVELOPMENT
BANK (the "Guarantor"), a statutory juridical entity established under The Korea
Development Bank Act of 1954, as amended, in the Republic of Korea, and wholly
owned by the government of the Republic of Korea, in favour of the holders of
the Notes from time to time (the "Noteholders").
WHEREAS:
(A) Pursuant to a fiscal agency agreement dated [insert applicable date],
as amended, supplemented or restated as at the date hereof, between
Korea Electric Power Corporation, a statutory juridical corporation
established under The Korea Electric Power Corporation Act of 1980, as
amended, in the Republic of Korea (the "Issuer" or "KEPCO") and [name
of Fiscal Agent ] (the "Fiscal Agent") and the other agent named
therein (the "Fiscal Agency Agreement"), the Issuer has issued [name of
applicable Eurobond security] (the "Notes"). A reference to a numbered
condition in this Guarantee shall be a reference to the conditions of
the Notes (the "Conditions").
(B) At a meeting of the Noteholders, the Noteholders passed an
Extraordinary Resolution, inter alia, sanctioning and approving certain
modifications to the terms and conditions of the Notes (the "Proposed
Amendments") and a proposal to eliminate the joint and several
liability with respect to the Notes arising under the Korean Commercial
Code of KEPCO's generation company subsidiaries (the "Proposal"), as
set out in the Notice of Meeting dated [insert applicable date]. In
connection with such Proposed Amendments and the Proposal, the
Guarantor has agreed, subject to the satisfaction of certain conditions
precedent, for the benefit of all the Noteholders, on the terms set
forth herein, to fully, unconditionally and irrevocably guarantee, on
an unsecured and unsubordinated basis, KEPCO's payment obligations
under the Notes.
(C) The aforementioned conditions precedent have been satisfied in respect
of the Notes;
(D) The Notes are represented by a permanent global note (the "Global
Note");
(E) The Global Note is deposited with a common depositary for Clearstream
Banking, societe anonyme and Euroclear Bank S.A./N.V. as operator of
the Euroclear System (each a "Clearing System"). The Notes represented
by the Global Note are credited to a securities account or securities
accounts with the Clearing Systems. Any Accountholder (as defined in
the Fiscal Agency Agreement) with the relevant Clearing System which
has any of the Notes credited to its securities account from time to
time will, subject to and in accordance with the terms and conditions
and operating procedures or management regulations of the relevant
Clearing System, be entitled to transfer such Notes and (subject to and
upon payment being made by the Issuer to the bearer in accordance with
the terms of the Global Note) will be entitled to receive payments from
the relevant Clearing System calculated by reference to the Notes
credited to its securities account; and
(F) Capitalised terms not defined herein shall bear the meanings ascribed
to them in the Fiscal Agency Agreement.
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NOW THIS GUARANTEE WITNESSES AS FOLLOWS:
1. The Guarantor as primary obligor fully, unconditionally and irrevocably:
(a) guarantees on an unsecured (subject to the provisions of clause 3
below) and unsubordinated basis to the Noteholders by way of
continuing guarantee, the due and punctual payment of the principal
of, premium, if any, and interest thereon and all other amounts
payable by the Issuer on or in respect of the Notes (including any
additional amounts which may become payable under Condition [insert
applicable condition number] (Taxation) of the Notes) and all
amounts under the Fiscal Agency Agreement as and when the same shall
become due and payable in accordance with the terms of the Fiscal
Agency Agreement and the Notes;
(b) agrees that, if and each time that the Issuer shall fail to make any
payments as and when the same shall become due and payable, the
Guarantor will on demand (without requiring the relevant Noteholder
first to take steps against the Issuer or any other person) pay to
the Noteholder such amounts (as to which the certificate of the
relevant Noteholder shall in the absence of manifest error be final
and conclusive) in the currency in which the amounts are payable by
the Issuer (as if the same were paid by the Issuer).
2. All payments of principal and interest in respect of the Notes that are
paid or otherwise satisfied by the Guarantor pursuant to this Guarantee
will be made without deduction or withholding for or on account of any
present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of the Republic of Korea
or any political subdivision or any authority thereof or therein having
power to tax, unless the deduction or withholding of such taxes, duties,
assessments or governmental charges is required by law. If the Guarantor
is required by law to make any such deduction or withholding, the
Guarantor will pay such additional amounts by way of principal or interest
as will result in the receipt by the Noteholders or Couponholders of the
amounts which would otherwise have been receivable in respect of principal
and interest had no such deduction or withholding been made, except that
no such additional amounts shall be payable in respect of any Note or
Coupon presented for payment:
(a) by or on behalf of a holder who is subject to such taxes, duties,
assessments or governmental charges in respect of such Note or
Coupon by reason of his being connected with the Republic of Korea
otherwise than merely by holding such Note or Coupon or receiving
principal or interest in respect thereof;
(b) by or on behalf of a holder who would not be liable for or subject
to such deduction or withholding by making a declaration of
non-residence or other similar claim for exemption to the relevant
tax authority if, after having been requested to make such a
declaration or claim, such holder fails to do so; or
(c) more than thirty days after the Relevant Date (as defined below)
except to the extent that the holder thereof would have been
entitled to such additional payment on presenting the same for
payment on the last day of such thirty-day period.
For the purposes of this clause 2:
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(x) the "Relevant Date" in relation to any Note or Coupon means the date
on which such payment first becomes due, except that if the amount
of the moneys payable has not been received in [insert applicable
time zone] by the Fiscal Agent on or prior to such due date it means
that date on which, the full amount of such moneys having been so
received, notice to that effect shall have been duly given to the
Noteholders or Couponholders in accordance with Condition [insert
applicable condition number]of the Notes (Notices); and
(y) references to principal or interest in respect of the Notes shall be
deemed also to refer to any additional amounts which may be payable
under this clause 2.
3. For so long as this Guarantee remains in effect, the Guarantor will not
create or permit to subsist any mortgage, charge, pledge or other security
interest upon the whole or any part of its assets, present or future, to
secure any indebtedness, or to secure any guarantee of indebtedness,
unless the Guarantee shall be secured equally and ratably therewith,
except that the Guarantor may create or permit to arise or subsist:
(a) any encumbrance over promissory notes or other commercial paper
discounted or otherwise provided as security to or issued by the
Guarantor where such encumbrance is created in favour of The Bank of
Korea in the normal operation of its discount facilities or its
facilities for the funding of loans by the Guarantor to customers of
the Guarantor; or
(b) any encumbrance over any immovable property owned by the Guarantor
as security for the repayment by the Guarantor to a tenant of that
property of any key money paid by such tenant to the Guarantor upon
taking a tenancy or lease of that property; or
(c) any statutory lien arising in the ordinary course of the Guarantor's
business and not in connection with the borrowing or raising of
money; or
(d) any encumbrance arising or preference given under Korean law,
applicable generally to corporations established under Korean law,
by virtue of a failure by the Guarantor to meet an obligation,
provided that such encumbrance shall not be permitted to subsist for
more than 30 days; or
(e) any encumbrance over any asset purchased by the Guarantor (or
documents of title thereto) or arising in connection with
improvements to any asset of the Guarantor as security for the
unpaid balance of the purchase price thereof or costs of improvement
thereto.
4. The obligations of the Guarantor under this Guarantee shall not be
affected by any matter or thing which but for this provision might operate
to affect the Guarantor's obligations, including, without limitation:
(a) any time or indulgence granted to or composition with the Issuer or
any other person;
(b) the taking, variation, renewal or release of remedies or securities
against the Issuer or any other person;
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(c) any unenforceability, invalidity or irregularity of the Notes, the
Fiscal Agency Agreement or the Guarantee Agreement entered into
between the Guarantor and KEPCO dated November 13, 2002 (the
"Guarantee Agreement"); or
(d) any term or other provision of the Guarantee Agreement.
5. Where any discharge (whether in respect of the obligations of the Issuer
or any security for the obligations of the Issuer or otherwise) is made in
whole or in part or any arrangement is made on the faith of any payment,
security or other disposition which is avoided or must be repaid on
bankruptcy, liquidation or otherwise without limitation, the liability of
the Guarantor under this Guarantee shall continue as if there had been no
discharge or arrangement except by payment in full of the principal,
premium, if any, and interest thereon and all other amounts payable on or
in respect of the Notes and the Fiscal Agency Agreement. The Guarantor
covenants that this Guarantee will not be discharged with respect to any
Note except by payment in full of the principal thereof, interest and any
other amounts due thereon. The Guarantor waives notice of any default
under the Fiscal Agency Agreement or the Notes. Notwithstanding anything
in this Guarantee, the Fiscal Agency Agreement or the Guarantee Agreement,
the Guarantor hereby agrees that its obligations hereunder shall not be
affected by any defence, right of set-off or similar right (with respect
to KEPCO or any other person), counterclaim, recoupment or termination.
Each Noteholder, acting bona fide and in good faith, shall be entitled to
concede or compromise any claim that any payment, security or other
disposition is liable to avoidance or repayment.
6. The Guarantor represents, warrants and covenants with each Noteholder
that:
(a) it is a statutory banking institution duly organised under the laws
of the Republic of Korea and has and will have the necessary power
to enable it to execute, deliver and perform its obligations under
this Guarantee;
(b) subject to the provisions of clause 3 hereof, this Guarantee
constitutes a full unconditional and irrevocable, on an unsecured
and unsubordinated basis, obligation of the Guarantor and will rank
pari passu with all other outstanding and future unsecured and
unsubordinated obligations of the Guarantor (subject to certain
statutory exceptions under the laws of the Republic of Korea);
(c) this Guarantee constitutes its legal, valid and binding obligations,
enforceable against it;
(d) all necessary consents and authorisations (if any) to enable it to
enter into this Guarantee have been obtained and are and will remain
in full force and effect;
(e) the execution, delivery and performance of this Guarantee will not
conflict with (i) any agreement binding on it or any of its assets;
(ii) its constitutive documents, or (iii) any applicable law; and
(f) that, for the avoidance of doubt, this Guarantee constitutes a
guarantee of payment (and not a guarantee of collection) and waives
any right to require that any resort be had by any holder or the
Fiscal Agent or the Paying Agent under the Fiscal Agency Agreement
to any security held for payment of the obligations guaranteed
thereunder.
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7. The Guarantor shall be subrogated to all rights of the Noteholders against
the Issuer in respect of any amounts paid to the Noteholders by the
Guarantor pursuant to this Guarantee, provided, however, that the
Guarantor shall not be entitled to enforce or to receive any payments
arising out of or based upon its rights of subrogation if, at the time of
any such payments, any amounts are due and unpaid by the Guarantor under
this Guarantee.
8. The obligations of the Guarantor hereunder shall not be affected by (i)
the failure of any Noteholder or the Fiscal Agent or Paying Agent to
assert any claim or demand or to enforce any right to remedy against the
Issuer or any other person under the Fiscal Agency Agreement, the Notes or
any other agreement or otherwise; (ii) any rescission, waiver, amendment
or modification of any of the terms or provisions of the Fiscal Agency
Agreement, the Notes or any other agreement, (iii) the release of any
security held by any Noteholder or the Fiscal Agent or Paying Agent for
the guaranteed obligations hereunder or any of them; (iv) the failure of
any Noteholder or Fiscal Agent or Paying Agent to exercise any right or
remedy against any other guarantor of the guaranteed obligations
hereunder; or (v) any change in the ownership of the Guarantor.
9. This Guarantee shall enure for the benefit of the Noteholders.
10. The records of the relevant Clearing System shall be conclusive evidence
of the identity of the Accountholder and the number of Notes credited to
the securities account of such Accountholder. For the purposes hereof a
statement issued by the relevant Clearing System stating:-
(a) the name of the Accountholder to which such statement is issued; and
(b) the aggregate nominal amount of Notes credited to the securities
account of such Accountholder as at the opening of business on the
day on which any payment is due under this Guarantee,
shall be conclusive evidence of the records of the Clearing System as
at the day on which any payment is due under this Guarantee.
11. In the event of a dispute, the determination by the Agent (as defined in
the Fiscal Agency Agreement) of the identity of the Accountholder and the
number of Notes credited to the securities account of such Accountholder
shall (in the absence of manifest error) be final and conclusive for all
purposes in connection with this Guarantee.
12. This Guarantee shall take effect as a Deed Poll for the benefit of the
Noteholders from time to time and for the time being. This Guarantee shall
be deposited with and held by the Fiscal Agent until all the obligations
of the Guarantor hereunder have been discharged in full.
13. The Guarantor hereby acknowledges the right of every Accountholder to the
production of, and the right of every Accountholder to obtain (upon
payment of a reasonable charge) a copy of, this Guarantee, and further
acknowledges and covenants that the obligations binding upon it contained
herein are owed to, and shall be for the account of, the Noteholders, and
that
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each Accountholder shall be entitled severally to
enforce the said obligations against the Guarantor.
14. (a) This Guarantee may not be modified, varied or amended without (i)
the approval of the Noteholders by way of an Extraordinary
Resolution and (ii) the prior written consent of the Guarantor.
(b) Notwithstanding any other provision of this Guarantee, if the Notes
are amended or modified to: (i) increase the principal amount or
interest rate of the Notes, (ii) change the currency of payment with
respect to the Notes, (iii) change the stated maturity of the Notes,
(iv) provide for any new Events of Default under the Notes or (v)
otherwise change the Conditions of the Notes or any provision of the
Fiscal Agency Agreement which has the effect of increasing the
obligations or liability of the Guarantor under this Guarantee, the
terms of this Guarantee shall remain in full force and effect only
as to the amounts agreed to be guaranteed hereunder and on the same
terms as if no such amendment or modification as aforementioned had
occurred.
15. This Guarantee is governed by, and shall be construed in accordance with,
the laws of England.
16. The Guarantor hereby irrevocably agrees, for the exclusive benefit of the
Noteholders and the Accountholders, that the courts of England are to have
non-exclusive jurisdiction to settle any disputes which may arise out of
or in connection with this Guarantee and that accordingly any suit, action
or proceedings (together referred to as "Proceedings") arising out of or
in connection with this Guarantee may be brought in such courts.
17. The Guarantor hereby irrevocably waives any objection which it may have
now or hereafter to the laying of the venue of any such Proceedings in any
such court and any claim that any such Proceedings have been brought in an
inconvenient forum and hereby further irrevocably agrees that a judgment
in any such Proceedings brought in the English courts shall be conclusive
and binding upon it and may be enforced in the courts of any other
jurisdiction. Nothing contained in this clause shall limit any right to
take Proceedings against the Guarantor in any other court of competent
jurisdiction, nor shall the taking of Proceedings in one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
18. The Guarantor agrees that the process by which any Proceedings are begun
may be served on it by being delivered to The Korea Development Bank,
London branch at its principal place of business for the time being in
England (currently 16th Floor, 99 Bishopsgate, London, EC2H 3XD). If the
Guarantor ceases to maintain a branch in England, the Guarantor shall
appoint a further person in England to accept service of process on its
behalf.
19. Nothing herein shall affect the right to serve process in any manner
permitted by law.
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IN WITNESS whereof the Guarantor has caused this Guarantee to be duly executed
as a deed the day and year first above mentioned.
Executed as a deed )
by THE KOREA DEVELOPMENT )
BANK acting )
by ) ------------------------
in the presence of:- )
Witness:
Name:
Address:
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