EXHIBIT 1.1
9,300,000 AMERICAN DEPOSITARY SHARES, EACH
REPRESENTING ONE FOURTH OF ONE COMMON SHARES
GRAVITY CO., LTD.
UNDERWRITING AGREEMENT
February __, 2005
CREDIT SUISSE FIRST BOSTON LLC,
As Representative of the Several Underwriters
named in Schedule B hereto,
Eleven Madison Avenue,
New York, N.Y.10010-3629
Dear Sirs:
1. Introductory. GRAVITY Co., Ltd., a corporation with limited liability
established under the laws of The Republic of Korea (the "COMPANY"), proposes to
issue and sell and the persons listed in Schedule A hereto (the "SELLING
SHAREHOLDERS") propose to sell to the several Underwriters (as defined below) an
aggregate of 9,300,000 American Depositary Shares (the "FIRM ADSs"), each
representing one fourth of one common shares, par value W500 per share, of the
Company (each a "COMMON SHARE"), consisting of 6,510,000 American Depositary
Shares ("ADSs") to be sold by the Company and 2,790,000 ADSs to be sold by the
Selling Shareholders. The Company also proposes to issue and sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
1,396,000 ADSs (the "OPTIONAL ADSs"). The Firm ADSs and the Optional ADSs are
hereinafter collectively referred to as the "OFFERED SECURITIES", which term,
unless otherwise specified, also includes the Common Shares underlying the Firm
ADSs and the Optional ADSs.
The Common Shares to be represented by the Offered Securities will be
evidenced by American Depositary Receipts ("ADRs") to be issued pursuant to the
Deposit Agreement dated as of February ___, 2004 (the "DEPOSIT AGREEMENT"),
among the Company, The Bank of New York, as depositary (the "DEPOSITARY"), and
the holders and beneficial holders from time to time of the ADRs.
The Company and the Selling Shareholders hereby agree with the several
Underwriters named in Schedule B hereto (the "UNDERWRITERS") as follows:
2. Representations and Warranties of the Company and the Selling
Shareholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement on Form F-1 (No. 333-122159)
relating to the Common Shares and the offering thereof in the form
of the Offered Securities, including a form of prospectus, has been
filed with the Securities and Exchange Commission (the "COMMISSION")
and either (A) has been declared effective under the Securities Act
of 1933 (the "ACT") and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If
such registration statement (the "INITIAL REGISTRATION STATEMENT")
has been declared effective, either (A) an additional registration
statement (the "ADDITIONAL REGISTRATION STATEMENT") relating to the
Common Shares may have been filed with the Commission pursuant to
Rule 462(b) ("RULE 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Common
Shares and the Offered Securities all have been duly registered
under the Act pursuant to the initial registration statement, the
ADS Registration Statement (as defined below) and, if applicable,
the additional registration statement or (B) such an additional
registration statement is proposed to be filed with the Commission
pursuant to Rule 462(b) and will become effective upon filing
pursuant to such Rule and upon such filing and the effectiveness of
the ADS Registration Statement, the Common Shares and the Offered
Securities will all have been duly registered under the Act pursuant
to the initial registration statement, the ADS Registration
Statement and such additional registration statement. If the Company
does not propose to amend the initial registration statement or if
an additional registration statement has been filed and the Company
does not propose to amend it, and if any post-effective amendment to
either such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement,
the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has
become effective upon filing pursuant to Rule 462(c) ("RULE 462(C)")
under the Act or, in the case of the additional registration
statement, Rule 462(b). For purposes of this Agreement, "EFFECTIVE
TIME" with respect to the initial registration statement or, if
filed prior to the execution and delivery of this Agreement, the
additional registration statement means (A) if the Company has
advised the Representative that it does not propose to amend such
registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto (if
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any) filed prior to the execution and delivery of this Agreement,
was declared effective by the Commission or has become effective
upon filing pursuant to Rule 462(c), or (B) if the Company has
advised the Representative that it proposes to file an amendment or
post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of
this Agreement but the Company has advised the Representative that
it proposes to file one, "EFFECTIVE TIME" with respect to such
additional registration statement means the date and time as of
which such registration statement is filed and becomes effective
pursuant to Rule 462(b). "EFFECTIVE DATE" with respect to the
initial registration statement or the additional registration
statement (if any) means the date of the Effective Time thereof. The
initial registration statement, as amended at its Effective Time,
including all information contained in the additional registration
statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the
Form on which it is filed and including all information (if any)
deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("RULE 430A(b)") under the
Act, is hereinafter referred to as the "INITIAL REGISTRATION
STATEMENT". The additional registration statement, as amended at its
Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT". The Initial Registration Statement and the Additional
Registration are hereinafter referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT". The form of prospectus relating to the Common Shares and
the Offered Securities, as first filed with the Commission pursuant
to and in accordance with Rule 424(b) ("RULE 424(b)") under the Act
or (if no such filing is required) as included in a Registration
Statement, is hereinafter referred to as the "PROSPECTUS". No
document has been or will be prepared or distributed in reliance on
Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(A) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all
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respects to the requirements of the Act and the rules and
regulations of the Commission (the "RULES AND REGULATIONS") and did
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of
the Additional Registration Statement (if any), each Registration
Statement conformed or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material
fact and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the
Prospectus will conform, in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents
includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration
Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the
Rules and Regulations, neither of such documents will include any
untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do
not apply to statements in or omissions from a Registration
Statement or the Prospectus based upon written information furnished
to the Company by any Underwriter through the Representative
specifically for use therein, it being understood and agreed that
the only such information is that described as such in Section 7(c)
hereof.
(iii) A registration statement on Form F-6 (No. 333-122160)
relating to the ADSs has been filed with the Commission (such
registration statement, including all exhibits thereto, as amended
at the time such registration statement becomes effective, being
hereinafter called the "ADS REGISTRATION
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STATEMENT"); the ADS Registration Statement, as of its effective
date, complied or will comply, and each amendment or supplement
thereto, when it is filed with the Commission or becomes effective,
as the case may be, will comply, in all respects, with the
applicable requirements of the Act and the Rules and Regulations,
and did not or will not, as of its effective date, include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(iv) A registration statement on Form 8-A (No. 000-________)
relating to the registration of the Common Shares and the Offered
Securities has been filed with the Commission, has been declared
effective under the Securities and Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and the Common Shares and the Offered
Securities have been duly registered under the Exchange Act pursuant
to such registration statement. The various parts of such
registration statement on Form 8-A for the registration of the
Common Shares and the Offered Securities, including all exhibits
thereto, each as amended at the time such part of the registration
statement became effective, are hereinafter called the "8-A
REGISTRATION STATEMENT". The 8-A Registration Statement, when it
became effective and on the date of this Agreement, conformed and
conforms in all respects to the requirements of the Exchange Act and
the Rules and Regulations thereunder and did not and does not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(v) The Company has been duly incorporated and is validly
existing under the laws of The Republic of Korea, with power and
authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing
in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually
or in the aggregate, be reasonably expected to have a material
adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT"). The
Articles of Incorporation of the Company comply with the
requirements of Korean law and are in full force and effect.
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(vi) Each subsidiary of the Company has been duly incorporated
and is an existing corporation in good standing under the laws of
the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus; and each subsidiary of the Company
is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would
not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect; all of the issued and outstanding
capital stock or equity interest of each subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
non-assessable; and the capital stock or equity interest of each
subsidiary owned by the Company, directly or through subsidiaries,
is owned free from liens, encumbrances and defects; and none of the
outstanding shares of capital stock or equity interest of any
subsidiary are subject to preemptive or similar rights of any
securityholder of such subsidiary.
(vii) The Company has the authorized capital as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company (A) have been duly authorized, (B) are validly issued, fully
paid and non-assessable, (C) were not subject to any preemptive or
similar rights and (D) conform to the description thereof contained
in the Prospectus. Except as described in the Prospectus, there are
no outstanding securities issued by the Company convertible into or
exchangeable for, rights, warrants or options to acquire from the
Company, or obligations of the Company to issue, Common Shares or
any other capital stock of the Company.
(viii) The Common Shares underlying the Offered Securities to
be issued and sold by the Company to the Underwriters and the Common
Shares underlying the Offered Securities to be sold by the Selling
Shareholders to the Underwriters have been duly and validly
authorized, and, when issued, in the case of the Common Shares
underlying the Offered Securities to be issued and sold by the
Company, and delivered against payment therefor pursuant to this
Agreement will be duly and validly issued and delivered, fully paid
and non-assessable and will be issued free and clear of all liens,
encumbrances, equities or claims; the Common Shares, the Offered
Securities and all outstanding shares of capital stock of the
Company conform in all material respects to the descriptions thereof
contained in the
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Registration Statements and the Prospectus, including statements
under the captions "Description of Capital Stock" and "Description
of American Depositary Shares"; the holders of outstanding shares of
capital stock of the Company are not, and at the First Closing Date
(as defined below) and at each Optional Closing Date (as defined
below), if applicable, will not be, entitled to preemptive or other
similar rights to acquire the Common Shares or Offered Securities;
the Common Shares may be freely deposited by the Company and the
Selling Shareholders with the Depositary in accordance with the
Deposit Agreement against issuance of the ADRs evidencing Offered
Securities so deposited and sold hereunder by the Company and the
Selling Shareholders; the Offered Securities and the Common Shares
are freely transferable by the Company and the Selling Shareholders,
as the case may be, to or for the account of the Underwriters;
except as described in the Prospectus, there are no restrictions on
subsequent transfers of the Common Shares or the Offered Securities
under the laws of The Republic of Korea or the United States; and no
holder of the Offered Securities or Common Shares is or will be
subject to personal liability by reason of being such a holder.
(ix) The statements set forth in the Registration Statements
and the Prospectus under the caption "Taxation" are true and
accurate in all material respects.
(x) There are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with
the offering of the Offered Securities.
(xi) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned
by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statements
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(xii) The Offered Securities have been approved for listing on
the Nasdaq Stock Market's National Market ("NASDAQ"), subject to
notice of issuance.
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(xiii) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is
required to be obtained or made by the Company for the consummation
of the transactions contemplated by this Agreement or the Deposit
Agreement in connection with the issuance and sale of the Offered
Securities, except (A) such as have been obtained and made under the
Act and the Exchange Act and such as may be required under state or
foreign securities or blue sky laws; (B) the report to the Ministry
of Finance and Economy of Korea by the Company on the issue of the
Firm ADSs, which will be made and accepted prior to the First
Closing Date (as defined below); and (C) the registration of the
issuance of the Common Shares with the Registry Offices of the
competent Korean courts having jurisdiction over the Company which
is required to be made within two weeks from the issue of the Common
Shares.
(xiv) Except as disclosed in the Prospectus, under current
laws and regulations of The Republic of Korea and any political
subdivision thereof, all dividends and other distributions declared
and payable on the Offered Securities may be paid by the Company to
the holder thereof in Korean Won that may be converted into foreign
currency and freely transferred out of The Republic of Korea and all
such payments made to holders thereof who are non-residents of The
Republic of Korea will not be subject to income, withholding or
other taxes under laws and regulations of The Republic of Korea or
any political subdivision or taxing authority thereof or therein and
will otherwise be free and clear of any other tax, duty, withholding
or deduction in The Republic of Korea or any political subdivision
or taxing authority thereof or therein and without the necessity of
obtaining any governmental authorization in The Republic of Korea or
any political subdivision or taxing authority thereof or therein.
(xv) Neither the Company nor any of its subsidiaries is (A) in
violation of its respective charter or by-laws or other constituent
or organizational documents or (B) in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
it or any of them may be bound, or to which any of the properties or
assets of the Company or any subsidiary is subject (collectively,
"AGREEMENTS AND INSTRUMENTS") except in the case of clause (B) for
such defaults
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that would not individually or in the aggregate have a Material
Adverse Effect.
(xvi) The execution, delivery and performance of each of this
Agreement, the Deposit Agreement and the consummation of the
transactions contemplated therein will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under (A) any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, (B) any agreement or instrument
to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or (C)
the charter or by-laws of the Company or any such subsidiary;
except, in the case of (A) and (B) above, for any such breach,
violation or default that would not, individually or in the
aggregate, have a Material Adverse Effect.
(xvii) This Agreement has been duly authorized, executed and
delivered by the Company.
(xviii) The Deposit Agreement has been duly authorized, and
when executed and delivered by the Company, and, assuming due
authorization, execution and delivery by the Depositary, will
constitute a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, subject to (A) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles and (B)
the effect of judicial application of foreign laws or foreign
government actions affecting creditors' rights; upon due issuance by
the Depositary of the ADRs evidencing the Offered Securities against
the deposit of the underlying Common Shares in respect thereof in
accordance with the provisions of the Deposit Agreement, such ADRs
will be duly and validly issued and the persons in whose names the
ADRs are registered will be entitled to the rights specified therein
and in the Deposit Agreement; and the Deposit Agreement and the ADRs
conform in all material respects to the descriptions thereof
contained in the Prospectus.
(xix) Except as disclosed in the Prospectus, the Company and
its subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in
each case free from liens, encumbrances and defects that would
interfere with the use made or to be made thereof by them, except
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for any liens, encumbrances and defects that would not individually
or in the aggregate have a Material Adverse Effect; and except as
disclosed in the Prospectus, the Company and its subsidiaries hold
any leased real or personal property that are material to the
business or operations of the Company and its subsidiaries taken as
a whole under valid and enforceable leases with no exceptions that
would interfere with the use made or to be made thereof by them,
except for any interferences that would not individually or in the
aggregate have a Material Adverse Effect.
(xx) Except as described in the Prospectus, the Company and
its subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them (the
"GOVERNMENTAL LICENSES"); the Company and its subsidiaries are in
compliance in all material respects with the terms and conditions of
all such Governmental Licenses; all of the Governmental Licenses are
valid and in full force and effect; none of the Governmental
Licenses contains any materially burdensome restrictions or
conditions not described in the Prospectus; and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any Governmental
License that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or has any reason to believe that any such
Governmental License will be revoked, modified or suspended.
(xxi) No labor dispute with the employees of the Company or
any subsidiary exists or, to the best knowledge of the Company, is
imminent that might have a Material Adverse Effect.
(xxii) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to conduct
the business now operated by them, or presently employed by them,
and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(xxiii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
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properties that, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect
the ability of the Company to perform its obligations under this
Agreement or the Deposit Agreement, or which are otherwise material
in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xxiv) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries as of the dates
shown and their results of operations and cash flows for the periods
shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the
United States ("U.S. GAAP") applied on a consistent basis.
(xxv) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole,
and, except as disclosed in or contemplated by the Prospectus, there
has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(xxvi) The Company has consented to the deposit of the Common
Shares by the Selling Shareholders with the Depositary and the
issuance by the Depositary of the ADRs evidencing the ADSs to be
delivered by the Selling Shareholders, to the Underwriters at each
Closing Date (as defined below).
(xxvii) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of
the proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT").
(xxviii) The Company (A) does not expect, for the taxable year
ending December 31, 2004, to be a "passive foreign investment
company" ("PFIC") within the meaning of Section 1297 of the United
States Internal Revenue Code of 1986, as amended; and (B) does not
anticipate becoming a PFIC in 2005 and the near future taxable
years.
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(xxix) Except as disclosed in the Prospectus, no stamp or
other issuance or transfer taxes or duties and no capital gains,
income, withholding or other taxes are payable by or on behalf of
the Underwriters to The Republic of Korea or any political
subdivision or taxing authority thereof or therein (other than
Korean tax payable by reason of the fact that, for the Underwriters
incorporated in The Republic of Korea, their income generally is
subject to corporate income tax in The Republic of Korea, or for the
other Underwriters, they have a permanent establishment in The
Republic of Korea to which the relevant Korean source income is
attributable) in connection with (A) the deposit of the Common
Shares by the Company with the Depositary against the issuance of
ADRs evidencing ADSs, (B) the sale and delivery by the Company of
the Offered Securities to or for the respective accounts of the
Underwriters in the manner contemplated in this Agreement, (C) the
execution and delivery of this Agreement and the Deposit Agreement
and (D) the sale and delivery by the Underwriters of the Offered
Securities to the initial purchasers thereof in the manner
contemplated in the Prospectus.
(xxx) The choice of the laws of the State of New York as the
governing law of this Agreement will be recognized by the courts of
Korea in so far as such choice of law provision is valid under the
laws of the State of New York and the consequence of the application
of laws of the State of New York is not manifestly contrary to the
public policy of Korea; provided, however, that in the event of any
legal proceeding brought in a Korean court, the Korean court would
apply (a) the mandatory laws of Korea which should be applied by
their nature irrespective of the governing law and (b) the laws of
Korea bearing upon the capacity of the party incorporated or
established in Korea to enter into contracts. The Company has the
power to submit, and pursuant to Section 15 of this Agreement, has
legally, validly, effectively and irrevocably submitted, to the
personal jurisdiction of each United States federal court and New
York state court located in the Borough of Manhattan, in The City of
New York, New York (each, a "NEW YORK COURT") and has validly and
irrevocably waived any objection to the laying of venue of a
proceeding brought in any such court; and the Company has the power
to designate, appoint and empower, and pursuant to Section 15 of
this Agreement, has legally, validly, effectively and irrevocably
designated, appointed and empowered, the Authorized Agent (as
defined in Section 15 hereof) for service of process in any action
arising out of or relating to this Agreement or the Offered
Securities in any New York Court, and service of process effected on
such Authorized
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Agent will be effective to confer valid personal jurisdiction over
the Company as provided in Section 15 hereof.
(xxxi) Neither the Company nor, to the Company's knowledge,
any director, officer, agent, employee or other person associated
with or acting on behalf of the Company is using any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expenses; is making any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; or is in violation of any provision of the United States
Foreign Corrupt Practices Act of 1977; or is making any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment.
(xxxii) Except as disclosed in the Prospectus, no material
indebtedness (actual or contingent) and no material contract or
arrangement is outstanding between the Company or any of its
subsidiaries and any director or executive officer of the Company or
any of its subsidiaries or any person connected with such director
or executive officer (including his/her spouse, children, any
company or undertaking in which he/she holds a controlling
interest). There are no relationships or transactions between the
Company or any of its subsidiaries, on the one hand, and its
affiliates, officers and directors or their shareholders, customers
or suppliers, on the other, which, although required to be
disclosed, are not disclosed in the Prospectus.
(xxxiii) There are no material contracts or documents that are
required to be described in the Registration Statements or the
Prospectus or to be filed as exhibits thereto that have not been so
described and filed as required.
(xxxiv) The Company and its subsidiaries have filed all
material tax returns required to have been filed by them or have
duly requested extensions thereof and except as disclosed in the
Prospectus, there is no tax deficiency that has been determined
adversely to the Company and its subsidiaries, nor does the Company
and its subsidiaries have any knowledge of any tax deficiency, in
each case, except for such failure or deficiency that, individually
or in the aggregate, would be reasonably be expected to have a
Material Adverse Effect.
(xxxv) Each of the Company and its subsidiaries maintains a
system of internal and accounting controls which provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions
are recorded as necessary to permit timely
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preparation of financial statements in conformity with U.S. GAAP and
to maintain asset accountability; (iii) the recorded accountability
of assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any differences; and
(iv) access to its assets is permitted only in accordance with
management's general or specific authorizations. These reports
provide the basis for the preparation of the Company's consolidated
financial statements under U.S. GAAP and have been maintained in
compliance with applicable laws.
(xxxvi) Samil PricewaterhouseCoopers, who have audited the
financial statements of the Company and its subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and notes thereto included in the Prospectus,
are independent public accountants within the meaning of the Act and
the Exchange Act and the applicable Rules and Regulations
thereunder.
(xxxvii) The section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
Critical Accounting Policies" in the Prospectus accurately and fully
describes (A) the accounting policies that the Company believes are
the most important in the portrayal of the Company's financial
condition and results of operations and that require management's
most difficult, subjective or complex judgments ("CRITICAL
ACCOUNTING POLICIES"); (B) the judgments and uncertainties affecting
the application of critical accounting policies; and (C) the
likelihood that materially different amounts would be reported under
different conditions or using different assumptions and an
explanation thereof.
(xxxviii) The Prospectus fairly and accurately describes (A)
all material trends, demands, commitments and events known to the
Company, and uncertainties, and the potential effects thereof, that
the Company believes would materially affect liquidity and are
reasonably likely to occur; and (B) all off-balance sheet
transactions arrangements, and obligations, including relationships
with its unconsolidated entities (if any) that are contractually
limited to narrow activities that facilitate the transfer of or
access to assets by the Company or such subsidiary, including,
without limitation, structured finance entities and special purpose
entities, or otherwise engage in, or have any obligations under, any
off-balance sheet transactions or arrangements. As used herein, the
phrase "reasonably likely" refers to a disclosure threshold lower
than "more likely than not".
14
(xxxix) Neither the Company nor any of its affiliates has
taken, directly or indirectly, any action that is designed to or
that constitutes or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Offered
Securities.
(b) Each Selling Shareholder represents and warrants to, and agrees
with, the several Underwriters that:
(i) Such Selling Shareholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to the
Offered Securities to be delivered by such Selling Shareholder on
such Closing Date and full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Offered
Securities to be delivered by such Selling Shareholder on such
Closing Date hereunder; and upon the delivery of and payment for the
Offered Securities on each Closing Date hereunder the several
Underwriters will acquire valid and unencumbered title to the
Offered Securities to be delivered by such Selling Shareholder on
such Closing Date.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement:
(A) on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all respects to the
requirements of the Act and the Rules and Regulations and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration
Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material
fact and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the
Initial Registration Statement and, if the Effective Time of the
Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement
each conforms, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the
Prospectus will conform, in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents
includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state any
15
material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all respects to the requirements of the
Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The two preceding
sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(c), provided that, in case of the Selling Shareholders
other than Mr. Jung Ryool Kim, the two preceding sentences apply
only to the extent that any statements in or omissions from a
Registration Statement or the Prospectus are based on written
information furnished to the Company by such Selling Shareholders
specifically for use therein.
(iii) There are no contracts, agreements or understandings
between such Selling Shareholder and any person that would give rise
to a valid claim against such Selling Shareholder or any Underwriter
for a brokerage commission, finder's fee or other like payment in
connection with the offering of the Offered Securities.
(iv) Such Selling Shareholder has not taken, and will not
take, directly or indirectly, any action that is designed to or
which has constituted or which might reasonably be expected to cause
or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Offered Securities.
(v) This Agreement has been duly authorized, executed and
delivered by such Selling Shareholder.
(vi) The execution and delivery by such Selling Shareholder
of, and the performance by such Selling Shareholder of its
obligations under this Agreement, the Custody Agreement signed by
such Selling Shareholder and the Company, as custodian, relating to
the deposit of the common shares to be sold by such Selling
Shareholder (the "CUSTODY AGREEMENT") and the Power of Attorney
appointing each Kwan Shik Seo, Sam Yong Lee and Seung Nam Oh as such
Selling Shareholder's attorneys-
16
in-fact (the "ATTORNEYS-IN-FACT") to the extent set forth therein,
relating to the transactions contemplated hereby and by the
Registration Statement (the "POWER OF ATTORNEY") and the
consummation of the transactions contemplated herein will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over such Selling Shareholder or any of
such Selling Shareholder's properties, or any agreement or
instrument to which such Selling Shareholder is a party or by which
such Selling Shareholder is bound or to which any of the properties
of such Selling Shareholder is subject.
(vii) The share certificates for the Common Shares to be
delivered by the Selling Shareholders hereunder have been placed in
custody with the Company, for delivery of the Offered Securities to
be sold by the Selling Shareholders under this Agreement, pursuant
to the Custody Agreements. The Company has the power and authority
to deliver the Common Shares to the KSD (as defined herein) for the
account and benefit of the Depositary under the Custody Agreements.
(viii) No filing with, or consent, approval, authorization,
order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary
or required for the performance by such Selling Shareholder of its
obligations hereunder, the Custody Agreement or the Power, or in
connection with the sale and delivery of the Offered Securities
hereunder or the consummation of the transactions contemplated by
this Agreement, the Custody Agreement or the Power of Attorney,
except such as may have previously been made or obtained or as may
be required under the Act or the Rules and Regulations or U.S. state
securities laws or Korean laws.
(ix) The Custody Agreement and the Power of Attorney have been
duly authorized, executed and delivered by such Selling Shareholder
and are valid and binding agreements of such Selling Shareholder.
(x) Neither such Selling Shareholder nor any of his, her or
its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning
of Article I, Section 1(dd) of the By-laws of the National
Association of Securities Dealers, Inc. ("NASD"), any member firm of
the NASD.
17
(xi) In the case of the Selling Shareholders other than Mr.
Jung Ryool Kim, (A) such Selling Shareholder has reviewed the
Registration Statement and the representations and warranties of the
Company contained in this Section 2 and has no reason to believe
that such representations and warranties are not true and correct
and (B) the sale of the Offered Securities by such Selling
Shareholder pursuant hereto is not prompted by any information
concerning the Company or any of its subsidiaries which is not set
forth in the Prospectus or any supplement thereto.
(xii) Each of the Selling Shareholders has the power to
submit, and pursuant to Section 15 of this Agreement, has legally,
validly, effectively and irrevocably submitted, to the personal
jurisdiction of each United States federal court and New York state
court located in the Borough of Manhattan, in The City of New York,
New York (each, a "NEW YORK COURT") and has validly and irrevocably
waived any objection to the laying of venue of a proceeding brought
in any such court; and such Selling Shareholder has the power to
designate, appoint and empower, and pursuant to Section 15 of this
Agreement, has legally, validly, effectively and irrevocably
designated, appointed and empowered, the Authorized Agent (as
defined in Section 15 hereof) for service of process in any action
arising out of or relating to this Agreement or the Offered
Securities in any New York Court, and service of process effected on
such Authorized Agent will be effective to confer valid personal
jurisdiction over the Company as provided in Section 15 hereof.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Shareholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Shareholder, at a purchase price of US$___ per ADS, that number of
Firm ADSs (rounded up or down, as determined by the Representative in its
discretion, in order to avoid fractions) obtained by multiplying 6,510,000 Firm
ADSs in the case of the Company and the number of Firm ADSs set forth opposite
the name of such Selling Shareholder in Schedule A hereto, in the case of a
Selling Shareholder, in each case by a fraction the numerator of which is the
number of Firm ADSs set forth opposite the name of such Underwriter in Schedule
B hereto and the denominator of which is the total number of Firm ADSs.
The Common Shares underlying the Firm ADSs to be sold by the Company shall
be issued in the name of, and delivered to, the Korea Securities Depository, as
a central securities depositary of Korea and such issuance and delivery shall be
for the account and benefit of the Depositary. The Korea Securities Depositary
is hereinafter defined as KSD, in its capacity as a central
18
securities depositary of Korea and/or a custodian for the Depositary, as the
case may be. The Company also shall register or cause to be registered such
Common Shares on the shareholders' registry of the Company in the name of the
KSD on or after 10:00 A.M. New York time, on the first Closing Date (as defined
below).
The Common Shares underlying the Firm ADSs to be sold by the Selling
Shareholders shall be delivered to, the KSD for the account and benefit of the
Depository on or before 10:00 A.M. New York time, on the First Closing Date (as
defined below) by the Company, on behalf of each Selling Shareholder, pursuant
to the Custody Agreements.
Each of the Selling Shareholders agrees that the Common Shares represented
by the share certificates held in custody with the Company for the Selling
Shareholders under the Custody Agreements are subject to the interests of the
Underwriters, that the arrangements made by the Selling Shareholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Shareholders hereunder shall not be terminated, whether by the death of any
individual Selling Shareholder or the occurrence of any other event. If any
individual Selling Shareholder should die, or if any other such event should
occur, before the delivery of the Offered Securities hereunder, share
certificates for the Common Shares underlying such Offered Securities shall be
delivered by the Company in accordance with the terms and conditions of this
Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Company shall have received notice of such
death or other event or termination.
Payment of the purchase price of the Firm ADSs shall be made in Federal
(same day) funds by wire transfers to the account designated by the Company and
the Selling Shareholders at a bank acceptable to the Representative, at 9:00
A.M., New York time, on February 11, 2005, or at such other time not later than
seven full business days thereafter as the Representative and the Company
determine, such time being herein referred to as the "FIRST CLOSING DATE". Upon
payment of the purchase price as described above, the Firm ADSs to be purchased
by the Underwriters hereunder and the ADRs evidencing such Firm ADSs shall be
delivered in such authorized denominations and registered in such names as the
Underwriters request by or on behalf of the Company and the Selling Shareholders
to the Representative, after 10:00 A.M., New York time, on the First Closing
Date through the facilities of The Depository Trust Company ("DTC"), for the
accounts of the several Underwriters or as such Underwriters may direct.
In addition, upon written notice from the Representative given to the
Company from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
ADSs at the purchase price per ADS to be paid for the Firm ADSs. The Company
agrees to sell to the Underwriters the respective numbers of Optional ADSs
obtained by multiplying the number of Optional ADSs specified in such notice.
Such Optional ADSs shall be purchased from the Company for the account of
19
each Underwriter in the same proportion as the number of Firm ADSs set forth
opposite such Underwriter's name bears to the total number of Firm ADSs (subject
to adjustment by the Representative to eliminate fractions) and may be purchased
by the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm ADSs. No Optional ADSs shall be sold or
delivered unless the Firm ADSs previously have been, or simultaneously are, sold
and delivered. The right to purchase the Optional ADSs or any portion thereof
may be exercised from time to time and to the extent not previously exercised
may be surrendered and terminated at any time upon notice by the Representative
to the Company.
Each time for the delivery of and payment for the Optional ADSs, being
herein referred to as an "OPTIONAL CLOSING DATE", which may be the First Closing
Date (the First Closing Date and each Optional Closing Date, if any, being
sometimes referred to as a "CLOSING DATE"), shall be determined by the
Representative but shall be not later than five full business days after written
notice of election to purchase Optional ADSs is given. The Common Shares
underlying the Optional ADSs shall be issued in the name of, and delivered to,
the KSD and such issuance and delivery shall be for the account and benefit of
the Depositary. The Company also shall register or cause to be registered such
Common Shares on the shareholders' registry of the Company in the name of the
KSD on or after 10:00 A.M. New York time, on each Optional Closing Date. The
Optional ADSs to be purchased by the Underwriters hereunder and the ADRs
evidencing such Optional ADSs, in definitive form, and in such authorized
denominations and registered in such names as the Underwriters request shall be
delivered by or on behalf of the Company to the Representative on each Optional
Closing Date through the facilities of DTC, for the accounts of the several
Underwriters or as such Underwriters may direct against payment of the purchase
price therefor in Federal (same day) funds by wire transfers to the account
designated by the Company at a bank acceptable to the Representative, at 9:00
A.M., New York time on each Optional Closing Date. The ADRs representing the
Optional ADSs will be made available for checking at the office of DTC or its
designated custodian at least 24 hours prior to each Optional Closing Date.
As compensation for the Underwriters' commitments, the Company and the
Selling Shareholders, severally and not jointly, will pay on each Closing Date
to the Representative for the Underwriters' proportionate accounts the sum of
US$___ per ADS times the total number of Offered Securities purchased by the
Underwriters from the Company and the Selling Shareholders. Such payment will be
made on each Closing Date with respect to the Offered Securities purchased on
such Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
20
5. Certain Agreements of the Company and the Selling Shareholders. (a) The
Company agrees with the several Underwriters that:
(i) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement,
the Company will file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (1) (or, if applicable and if
consented to by the Representative, subparagraph (4)) of Rule 424(b)
not later than the earlier of (A) the second business day following
the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration
Statement. The Company will advise the Representative promptly of
any such filing pursuant to Rule 424(b). If the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement and an additional registration statement
is necessary to register a portion of the Offered Securities under
the Act but the Effective Time thereof has not occurred as of such
execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective
amendment thereto with the Commission pursuant to and in accordance
with Rule 462(b) on or prior to 10:00 P.M., New York time, on the
date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will
make such filing at such later date as shall have been consented to
by the Representative.
(ii) The Company will advise the Representative promptly of
any proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the
Initial Registration Statement, the Additional Registration
Statement (if any), the ADS Registration Statement, the 8-A
Registration Statement or the Prospectus and will not effect such
amendment or supplementation without the Representative's consent
(which shall not be unreasonably withheld); and the Company will
also advise the Representative promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement), of the ADS Registration
Statement (if it became effective subsequent to the execution and
delivery of this Agreement), of the 8-A Registration Statement (if
it became effective subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement, the ADS Registration Statement, the 8-A Registration
Statement or the Prospectus and of the institution by the Commission
of any stop order proceedings in respect of a
21
Registration Statement, the ADS Registration Statement or the 8-A
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(iii) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer prior to the
expiration of nine months after the date of the Prospectus, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will promptly notify
the Representative of such event and will promptly prepare and file
with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which
will effect such compliance; and in case any Underwriter is required
to deliver a Prospectus in connection with sales of any of the ADSs
at any time nine months or more after the date of the Prospectus,
upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may reasonably
request of an amended or supplemented Prospectus complying the
Section 10(a)(3) of the Act. Neither the Representative's consent
to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(iv) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make
generally available to its securityholders an earnings statement
covering a period of at least 12 months beginning after the
Effective Date of the Initial Registration Statement (or, if later,
the Effective Date of the Additional Registration Statement) which
will satisfy the provisions of Section 11(a) of the Act. For the
purpose of the preceding sentence, "AVAILABILITY DATE" means the
45th day after the end of the fourth fiscal quarter following the
fiscal quarter that includes such Effective Date, except that, if
such fourth fiscal quarter is the last quarter of the Company's
fiscal year, "AVAILABILITY DATE" means the 90th day after the end of
such fourth fiscal quarter.
(v) The Company will furnish to the Representative copies of
each Registration Statement, ADS Registration Statement and 8-A
Registration Statement (of which two of each
22
will be signed and will include all exhibits), each related
preliminary prospectus, and, so long as a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus
and all amendments and supplements to such documents, in each case
in such quantities as the Representative requests. To the extent
practicable, the Prospectus shall be so furnished on or prior to
3:00 P.M., New York time, on the business day following the later of
the execution and delivery of this Agreement or the Effective Time
of the Initial Registration Statement. All other such documents
shall be so furnished as soon as available.
(vi) The Company will use its best efforts to arrange for the
qualification of the Offered Securities for sale under the laws of
such jurisdictions as the Representative reasonably requests and
will continue such qualifications in effect so long as required for
the distribution.
(vii) For the period specified below ( the "LOCK-UP PERIOD"),
the Company will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any
additional ADSs or Common Shares or securities convertible into or
exchangeable or exercisable for any ADSs or Common Shares, enter
into a transaction which would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of ADSs or
Common Shares, whether any such aforementioned transaction is to be
settled by delivery of ADSs or Common Shares or such other
securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge, disposition or filing, or
enter into any such transaction, swap, hedge or other arrangement,
without, in each case, the prior written consent of the
Representative, except grants of the employee stock options pursuant
to the terms of a plan in effect on the date hereof. The initial
Lock-Up Period will commence on the date of this Agreement and
continue for 180 days after the date of the commencement of the
public offering of the Offered Securities or such earlier date that
the Representative consents to in writing; provided, however, that
if (1) during the last 17 days of the initial Lock-Up
23
Period, the Company releases earnings results or material news or a
material event relating to the Company occurs or (2) prior to the
expiration of the initial Lock-Up period, the Company announces that
it will release earnings results during the 16-day period beginning
on the last day of the initial Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the 18-day
period beginning on the date of release of the earnings results or
the occurrence of the material news or material event, as
applicable, unless the Representative waives, in writing, such
extension. The Company will provide the Representative with notice
of any announcement described in clause (2) of the preceding
sentence that gives rise to an extension of the Lock-up Period.
(viii) The Company shall use its best efforts to maintain the
listing of the ADSs on NASDAQ.
(ix) The Company agrees to file with the NASD, NASDAQ, the
Commission and any other governmental or regulatory agency,
authority or instrumentality in the United States and The Republic
of Korea, as may be required, such reports, documents, agreements
and other information which the Company may from time to time be
required to file, including those relating to the implementation and
payment of dividends or other distributions on the Offered
Securities.
(x) The Company will take such steps as shall be necessary to
ensure that it will not be or become, within one year of the First
Closing Date, an "investment company" as defined in the Investment
Company Act.
(xi) After 10:00 A.M. New York time on each Closing Date, but
as soon as practically possible, the Company shall cause the KSD to
confirm that the KSD was registered the Common Shares underlying the
Firm or the Optional ADSs (as the case may be) in the name of the
Depositary in the registry maintained by the KSD.
(xii) The Company agrees to apply the net proceeds to be
received by the Company from the sale of the Offered Securities as
set forth under the caption "Use of Proceeds" in the Prospectus and
to file with the Commission such information on Form 20-F as may be
required by Rule 463 under the Act.
(xiii) During a period of three years from the Effective Date,
the Company agrees to furnish to the Representative as soon as they
are available, copies of all reports or other communications
(financial or other) furnished to shareholders, to the extent such
materials are not otherwise publicly available.
24
(xiv) The Company agrees to use its best efforts to comply
with all applicable laws, rules and regulations of the U.S.
Sarbanes-Oxley Act of 2002.
(xv) The Company agrees not to (and to use its best efforts to
cause its affiliates not to) take, directly or indirectly, any
action which is designed to or which constitutes or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Offered Securities.
(xvi) The Company agrees to comply in all material respects
with the Deposit Agreement so that ADRs evidencing ADSs to be
delivered to each Underwriters at each Closing Date are executed by
the Depositary (and, if applicable, counter-signed).
(xvii) The Company will pay the expenses incurred in
connection with the offering of the Offered Securities by the
Company as set forth in a side letter dated the date hereof among
the Company, the Selling Shareholders and the Underwriters (the
"EXPENSE SIDE LETTER").
(xviii) The Company will indemnify and hold harmless the
Underwriters against any documentary, stamp or similar issue tax,
including any interest and penalties, payable in the Republic of
Korea, on the creation, issue and sale by the Company of the Offered
Securities and on the execution and delivery of this Agreement and
the Deposit Agreement as set forth in the Expense Side Letter. All
payments to be made by the Company hereunder shall be made without
withholding or deduction for or on account of any present or future
taxes, duties or governmental charges whatsoever unless the Company
is compelled by law to deduct or withhold such taxes, duties or
charges. In that event, the Company shall pay such additional
amounts as may be necessary in order that the net amounts received
after such withholding or deduction shall equal the amounts that
would have been received if no withholding or deduction had been
made.
(b) Each Selling Shareholder agrees with the several Underwriters
that:
(i) For the period specified below ( the "LOCK-UP PERIOD"),
not to offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, any additional ADSs or Common Shares or
securities convertible into or exchangeable or exercisable for any
ADSs or Common Shares, enter into a
25
transaction which would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of ADSs or
Common Shares, whether any such aforementioned transaction is to be
settled by delivery of ADSs or Common Shares or such other
securities, in cash or otherwise, or publicly disclose the intention
to make any such offer, sale, pledge or disposition, or enter into
any such transaction, swap, hedge or other arrangement, without, in
each case, the prior written consent of the Representative. Each of
the Selling Shareholders agrees that, without the prior written
consent of the Representative, it will not, during the Lock-Up
Period, make any demand for or exercise any right with respect to,
the registration of any ADS or Common Share or any security
convertible into or exercisable or exchangeable for the ADSs or
Common Shares. The initial Lock-Up Period will commence on the date
of this Agreement and continue for 180 days after the date of the
commencement of the public offering of the Offered Securities or
such earlier date that the Representative consents to in writing;
provided, however, that if (1) during the last 17 days of the
initial Lock-Up Period, the Company releases earnings results or
material news or a material event relating to the Company occurs or
(2) prior to the expiration of the initial Lock-Up period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of the initial Lock-Up
Period, then in each case the Lock-Up Period will be extended until
the expiration of the 18-day period beginning on the date of release
of the earnings results or the occurrence of the material news or
material event, as applicable, unless the Representative waives, in
writing, such extension.
(ii) The Selling Shareholders will pay the expenses incurred
in connection with the offering of the Offered Securities by such
Selling Shareholders as set forth in the Expense Side Letter.
(iii) The Selling Shareholders will indemnify and hold
harmless the Underwriters against any documentary, stamp or similar
issue tax, including any interest and penalties, on the creation,
issue and sale by the Selling Shareholders of the Offered Securities
and on the execution and delivery of this Agreement as set forth in
the Expense Side Letter. All payments to be made by the Selling
Shareholders hereunder shall be made without withholding or
deduction for or on account of any present or future taxes, duties
or governmental charges whatsoever unless the Selling Shareholders
are compelled by law to deduct or
26
withhold such taxes, duties or charges. In that event, the Selling
Shareholders shall pay such additional amounts as may be necessary
in order that the net amounts received after such withholding or
deduction shall equal the amounts that would have been received if
no withholding or deduction had been made.
(iv) Mr. Jung Ryool Kim, as a Selling Shareholder, agrees to
advise the Representative promptly, and if requested by it, to
confirm such advice in writing, so long as delivery of a prospectus
relating to the Offered Securities by an underwriter or dealer may
be required under the Act, of (A) any material change in the
Company's condition (financial or otherwise), prospects, earnings,
business or properties that comes to the attention of such Selling
Shareholder, (B) any change in information in the Registration
Statements, the ADS Registration Statement, the 8-A Registration
Statement or the Prospectus relating to such Selling Shareholder or
(C) any new material information relating to the Company or relating
to any matter stated in the Prospectus that comes to the attention
of such Selling Shareholder.
(v) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder will deliver to you prior to
or at the First Closing Date a properly completed and executed
United States Treasury Department Form W-8BEN (or other applicable
form or statement specified by Treasury Department regulations in
lieu thereof).
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm ADSs on the First
Closing Date and the Optional ADSs to be purchased on each Optional Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company and the Selling Shareholders herein, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company and the Selling Shareholders of their obligations
hereunder and to the following additional conditions precedent:
(a) The Representative shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of Samil
PricewaterhouseCoopers confirming that they are independent public
27
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect set forth in
Exhibit A hereto.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by the Representative. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and delivery
of this Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or, if earlier,
the time the Prospectus is printed and distributed to any Underwriter, or
shall have occurred at such later date as shall have been consented to by
the Representative. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with
the Rules and Regulations and Section 5(a) of this Agreement. Prior to
such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of any Selling
Shareholder, the Company or the Representative, shall be contemplated by
the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as one enterprise which, in the judgment of a majority
in interest of the Underwriters including the Representative, is material
and adverse and makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Offered Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance
or review its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any change
in the United States, The Republic of Korea or international financial,
political or economic conditions or currency exchange rates or exchange
controls as would, in the judgment of a majority in interest of the
Underwriters including the Representative, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
Offered Securities, whether in the primary market or in respect of
dealings in the secondary market; (iv) any material suspension
28
or material limitation of trading in securities generally on the New York
Stock Exchange, NASDAQ or the Korea Stock Exchange, or any setting of
minimum prices for trading on such exchange (other than as a result of the
maximum and minimum trading price system of the Korea Stock Exchange,
existing as of the date hereof); (v) or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (vi) any banking moratorium declared by U.S. Federal, New York or
Korean authorities; (vii) any major disruption of settlements of
securities or clearance services in the United States or (viii) any attack
on, outbreak or escalation of hostilities or act of terrorism involving
the United States or The Republic of Korea, any declaration of war by the
Congress of the United States or any other national or international
calamity or emergency if, in the judgment of a majority in interest of the
Underwriters including the Representative, the effect of any such attack,
outbreak, escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities.
(d) The Representative shall have received an opinion, dated such
Closing Date, of Simpson Thacher & Bartlett LLP, United States counsel for
the Company, to the effect set forth in Exhibit B.
(e) The Representative shall have received an opinion, dated such
Closing Date, of Kim & Chang, Korean counsel for the Company, to the
effect set forth in Exhibit C.
(f) The Representative shall have received an opinion, dated such
Closing Date, of counsel to each of the Selling Shareholders, in form and
substance satisfactory to the Representative.
(g) The Representative shall have received from Davis Polk &
Wardwell, United States counsel for the Underwriters, an opinion, dated
such Closing Date, in form and substance satisfactory to the
Representative.
(h) The Representative shall have received from Shin & Kim, Korean
counsel for the Underwriters, an opinion, dated such Closing Date, in form
and substance satisfactory to the Representative.
(i) The Representative shall have received an opinion, dated such
Closing Date, of Emmet, Marvin & Martin, counsel for the Depositary, to
the effect set forth in Exhibit D.
(j) The Representative shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that:
29
the representations and warranties of the Company in this Agreement are
true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date; no stop order suspending the
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in the
Prospectus or as described in such certificate.
(k) The Representative shall have received a letter, dated such
Closing Date, of Samil PricewaterhouseCoopers which meets the requirements
of subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three business days
prior to such Closing Date for the purposes of this subsection.
(l) On or prior to the date of this Agreement, the Representative
shall have received lockup letters from each of the executive officers and
directors of the Company who are not the Selling Shareholders.
(m) The Company and the Depositary shall have executed and delivered
the Deposit Agreement and the Deposit Agreement shall be in full force and
effect.
(n) The Depositary shall have delivered to the Company at each
Closing Date, certificates satisfactory to the Underwriters evidencing the
deposit with the Depositary of the Common Shares being so deposited
against issuance of ADRs evidencing the Offered Securities to be delivered
by the Company at such Closing Date, and the execution, countersignature
(if applicable), issuance and delivery of ADRs evidencing such Offered
Securities pursuant to the Deposit Agreement.
(o) The ADSs to be delivered on the Closing Date shall have been
approved for listing for quotation on NASDAQ, subject to official notice
of issuance.
30
(p) The Representative shall have received a certificate, dated such
Closing Date, of the Selling Shareholders in which such Selling
Shareholder, to the best of his knowledge after reasonable investigation,
shall state that: the representations and warranties of the Selling
Shareholders in Section 2(b) of this Agreement are true and correct; and
such Selling Shareholder has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to such Closing Date.
(q) Each of the Custody Agreement and the Power of Attorney has been
duly authorized, executed and delivered by each of the Selling
Shareholders and is a valid and binding agreement of such Selling
Shareholder.
The Selling Shareholders and the Company will furnish the Representative with
such conformed copies of such opinions, certificates, letters and documents as
the Representative reasonably requests. The Representative may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter,
its partners, members, directors, officers and its affiliates and each
person, if any who controls such Underwriter within the meaning of Section
15 of the Act, against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any Registration Statement, the ADS Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative specifically for use
therein, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information
31
described as such in subsection (c) below; and provided, further, that
with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the indemnity
agreement contained in this subsection (a) shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased the Offered Securities concerned, to the
extent that a prospectus relating to such Offered Securities was required
to be delivered by such Underwriter under the Act in connection with such
purchase and any such loss, claim, damage or liability of such Underwriter
results from the fact that there was not sent or given to such person, at
or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus if the Company had
previously furnished copies thereof in sufficient quantities to such
Underwriter.
(b) The Selling Shareholders, severally but not jointly, will
indemnify and hold harmless each Underwriter, its partners, members,
directors, officers and its affiliates and each person who controls such
Underwriter within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement, the ADS Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
the Selling Shareholders will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by an
Underwriter through the Representative specifically for use therein, it
being understood and agreed that the only such information furnished by
any Underwriter consists of the information described as such in
subsection (c) below and; provided, further, that the Selling Shareholders
other than Mr. Jung Ryool Kim shall only be subject to such liability to
the extent that the untrue statement or alleged untrue statement or
omission or alleged omission is based upon information provided by such
Selling Shareholder or contained in a representation or warranty given by
such Selling Shareholder in this Agreement; provided, further, that the
liability under this subsection of each Selling Shareholder shall be
limited to an amount
32
equal to the aggregate gross proceeds to such Selling Shareholder from the
sale of Offered Securities sold by such Selling Shareholder hereunder; and
provided, further, that with respect to any untrue statement or alleged
untrue statement in or omission or alleged omission from any preliminary
prospectus the indemnity agreement contained in this subsection (b) shall
not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Offered
Securities concerned, to the extent that a prospectus relating to such
Offered Securities was required to be delivered by such Underwriter under
the Act in connection with such purchase and any such loss, claim, damage
or liability of such Underwriter results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of
the sale of such Offered Securities to such person, a copy of the
Prospectus if the Company had previously furnished copies thereof in
sufficient quantities to such Underwriter.
(c) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the Act,
and each Selling Shareholder against any losses, claims, damages or
liabilities to which the Company or such Selling Shareholder may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the ADS
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Underwriter
through the Representative specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company
and each Selling Shareholder in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the concession and
reallowance figures appearing in the fifith paragraph under the caption
"Underwriting".
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under subsection (a), (b) or (c) above, notify the
33
indemnifying party of the commencement thereof; but the failure to notify
the indemnifying party shall not relieve it from any liability that it may
have under subsection (a), (b) or (c) above except to the extent that it
has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided further that the failure
to notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party otherwise than under subsection
(a), (b) or (c) above. In case any such action is brought against any
indemnified party and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party unless such (i) settlement
includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and
(ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of an indemnified party.
(e) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a), (b) or (c) above (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other
shall be deemed to be in the same
34
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence
of this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of
this subsection (e). Notwithstanding the provisions of this subsection
(e), no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders
under this Section shall be in addition to any liability which the Company
and the Selling Shareholders may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to
each officer of the Company who has signed a Registration Statement and to
each person, if any, who controls the Company within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, the
35
Representative may make arrangements satisfactory to the Company and the Selling
Shareholders for the purchase of such Offered Securities by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date, the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Underwriters agreed but failed to purchase on
such Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to the Representative, the Company and the Selling
Shareholders for the purchase of such Offered Securities by other persons are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders, except as provided in Section 9 (provided that if such
default occurs with respect to Optional ADSs after the First Closing Date, this
Agreement will not terminate as to the Firm ADSs or any Optional ADSs purchased
prior to such termination). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Shareholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Shareholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Shareholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
Shareholders, and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder, the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv), (vi), (vii) or (viii) of Section 6(c), the Company will
reimburse the Underwriters for all out-of-pocket expenses as set forth in the
Expense Side Letter.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed
36
to the Representative at Eleven Madison Avenue, New York, N.Y. 10010-3629,
Attention: Transactions Advisory Group, or, if sent to the Company or the
Selling Shareholders or any of them, will be mailed, delivered or telegraphed
and confirmed to it at Shingu Building, 620-2 Shinsa-dong, Gangnam-gu, Seoul
135-894, Korea, Attention: Sam-Yong, Lee ; provided, however, that any notice to
an Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed
and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
12. Representation. The Representative will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representative will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
15. Consent to Jurisdiction. Each of the Company and the Selling
Shareholders hereby submits to the non-exclusive jurisdiction of the Federal and
state courts in the Borough of Manhattan in The City of New York in any suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. Each of the Company and the Selling Shareholders
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of venue of any such suit or
proceeding brought in such a court and any claim that any such suit or
proceeding brought in such a court has been brought in an inconvenient forum.
Each of the Company and the Selling Shareholders irrevocably appoints CT
Corporation System, 111 Eighth Avenue, New York, New York 10011 (the "AUTHORIZED
AGENT"), as its authorized agent in the Borough of Manhattan in The City of New
York upon which process may be served in any such suit or proceeding, and agrees
that service of process upon such agent, and written notice of said service to
the Company or such Selling Shareholder by the person serving the same to the
address provided in Section 10, shall be deemed in every respect effective
service of process upon the Company or any Selling Shareholder, respectively, in
any such suit or proceeding. Each of the Company and the Selling Shareholders
further agrees to take any and all action as may be necessary to maintain such
designation and appointment of such agent in full force and effect for a period
of seven years from the date of this Agreement.
37
16. Judgment Currency. The obligation of the Company or any Selling
Shareholder in respect of any sum due to any Underwriter shall, notwithstanding
any judgment in a currency other than United States dollars, not be discharged
until the first business day, following receipt by such Underwriter of any sum
adjudged to be so due in such other currency, on which (and only to the extent
that) such Underwriter may in accordance with normal banking procedures purchase
United States dollars with such other currency; if the United States dollars so
purchased are less than the sum originally due to such Underwriter hereunder,
the Company and such Selling Shareholder agree, as a separate obligation and
notwithstanding any such judgment, to indemnify such Underwriter against such
loss. If the United States dollars so purchased are greater than the sum
originally due to such Underwriter hereunder, such Underwriter agrees to pay to
the Company or such Selling Shareholder an amount equal to the excess of the
dollars so purchased over the sum originally due to such Underwriter hereunder.
38
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Shareholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
GRAVITY CO., LTD.
By: ________________________________
Name:
Title:
SELLING SHAREHOLDER
____________________________________
Name: Jung Ryool Kim
OTHER SELLING SHAREHOLDERS
By: ________________________________
Name: Kwan Shik Seo
Title: Attorney-in-fact, acting on
behalf of the other Selling
Shareholders
S-1
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON LLC
By: _________________________________
Name:
Title:
Acting on behalf of itself and as the
Representative of the Several
Underwriters
DAEWOO SECURITIES CO., LTD
By: _________________________________
Name:
Title:
Acting on behalf of itself and Daewoo
Securities (America) Inc.
S-2
SCHEDULE A
Number of
Common Shares to be sold in the form
Selling Shareholders of ADS
- ------------------------------------------------- ------------------------------------
Jung Ryool Kim................................... 531,754
Rhoceo Co., Ltd.................................. 38,190
KGIF Limited Partnership......................... 20,696
LG CEO Fund...................................... 10,624
NPC 02-2 KTB Venture Fund........................ 10,034
KTB Network Co., Ltd............................. 10,034
IONE Venture Capital Co., Ltd.................... 7,768
Dam Lee......................................... 7,588
Doo-Young Shin................................... 7,588
Yong-Hee Park.................................... 7,450
03-14 Hanmi Venture Fund......................... 6,899
C&L Venture Fund 1............................... 5,381
LG Mercury Fund.................................. 5,312
Hanmi Millennium Fund............................ 4,068
Yang-Ran Lee..................................... 2,759
Ki-Hong Jang..................................... 2,483
Namjong Ki....................................... 2,346
Hanmi Venture Fund............................... 2,290
Kiyeon Kwon...................................... 2,070
Duk-Kyoo Choi.................................... 1,794
Su-Beum Park..................................... 1,725
JEI-HOSEO INNO-BIZ Fund NO.1..................... 1,449
Yong-Chul Kim.................................... 1,449
Seoug-Young Lee.................................. 807
Myeong-Seon Kang................................. 552
Ji-Hyeon Yoon.................................... 483
Ok-Soon Kim...................................... 373
Won Gyoo Park.................................... 373
Kyung-Soon Jang.................................. 276
Joon-Ho Lee...................................... 276
Kwan-Hoo Ra...................................... 276
Myeong-Hee Lee................................... 276
Jae-Bong Kim..................................... 276
In-Chul Shin..................................... 207
Jang-Hee Lee..................................... 207
Sang-Woo Park.................................... 207
Young-Bok Park................................... 138
Sang-Pill Kwak................................... 138
Yun-Chang Lee.................................... 138
Sch-A-1
Number of
Common Shares to be sold in the form
Selling Shareholders of ADS
- ------------------------------------------------- ------------------------------------
Mi-Kyung Jun..................................... 138
Sung-Ju Na....................................... 69
-------
Total.......................................... 697,500
=======
Sch-A-2
SCHEDULE B
Number of
Firm ADSs to
U.S. Underwriters be Purchased
- -------------------------------------------------------------------------- ------------
Credit Suisse First Boston LLC............................................
Daewoo Securities (America) Inc...........................................
CIBC World Markets Corp...................................................
CLSA Limited..............................................................
------------
Total.....................................................................
============
Number of
Firm ADSs to
International Underwriters be Purchased
- -------------------------------------------------------------------------- ------------
Credit Suisse First Boston (Europe) Limited...............................
Daewoo Securities Co., Ltd................................................
CLSA Limited..............................................................
------------
Total.....................................................................
============
Sch-B-1