EXHIBIT 4.12
[English Translation]
AGREEMENT FOR
ACQUISITION OF KOREA THRUNET CO., LTD.
This Agreement for Acquisition of Korea Thrunet Co., Ltd. (this "Agreement") is
entered into on February 4, 2005 between the following parties:
Reorganization Company: Korea Thrunet Co., Ltd.
0000-0, Xxxxxx-xxxx, Xxxxxx-xx, Xxxxx
Receiver: Seok Xxx Xxxx
Proposed Acquirer: Hanaro Telecom Inc.
43, Taepyungro 2-ga, Chung-gu, Seoul
Representative Director: Xxxxx-Bun Xxxx
RECITALS
WHEREAS, Korea Thrunet Co., Ltd. (the "Thrunet"), which is subject to
reorganization proceedings sent a bidding information sheet to the prospective
investors interested in the acquisition of the shares of the Thrunet for
purposes of mergers and acquisitions ("M&A"), and Hanaro Telecom Inc. ("Hanaro
Telecom") was designated as the preferred bidder of negotiation for the
acquisition of the Thrunet under such bidding information sheet.
WHEREAS, the Thrunet and Hanaro Telecom entered into a certain memorandum of
understanding dated December 21, 2004 (the "MOU").
NOW, THEREFORE, the parties hereto agree, as follows, for the acquisition of the
Thrunet:
ARTICLE 1 (PURPOSE)
The purpose of this Agreement is to provide for the matters related to M&A of
the Thrunet by Hanaro Telecom.
ARTICLE 2 (DEFINITION)
(1) "Amended Reorganization Plan" means the plans, as amended, regarding
Thrunet that are prepared and submitted by Thrunet to implement this
Agreement and obtain the approval of the Reorganization Court related
thereto. Such plan shall include procedures and terms regarding the
acquisition of Thrunet by Hanaro Telecom, details of the restructuring of
the debts owed by Thrunet to its creditors, and matters related to
reservation of the working capital of Thrunet.
(2) "Purchase Price" means 471,390,000,000 Won to be paid by Hanaro Telecom
for the acquisition of Thrunet, and to be invested in, or provided to,
Thrunet in the form of
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subscription for new shares and bonds issued by Thrunet, subject to the
terms contained in this Agreement.
(3) "Xxxxxxx Money" means the amount that shall be paid by Hanaro Telecom to
the account designated by Thrunet pursuant to Article 4(1) hereof in order
to guarantee the performance of the matters contained herein.
(4) "Reorganization Court" means the Seoul Central District Court that has the
jurisdiction over the corporate reorganization proceedings with respect to
Thrunet.
(5) "Bidding Documents" means the entire bidding documents submitted by Hanaro
Telecom to Thrunet on December 13, 2004 for M&A of Thrunet.
ARTICLE 3 (M&A PROCEDURES AND XXXXXXX MONEY)
(1) The acquisition hereunder shall proceed in the stages involving, among
others, (i) deposit of the Purchase Price by Hanaro Telecom, (ii) debt
restructuring for reorganization security holders and reorganization
creditors (each including the surety obligations, the same hereinafter),
(iii) payment of the Purchase Price by Hanaro Telecom, (iv) adoption of a
resolution with respect to the Amended Reorganization Plan at a meeting of
interested persons, (v) approval by the Reorganization Court, (vi)
issuance of new shares and bonds by Thrunet, and (vii) payment of the
secured loans or unsecured loans by Thrunet.
(2) Thrunet shall use its best efforts to follow the procedures for obtaining
the approval of the Reorganization Court with respect to the Amended
Reorganization Plan that reflects the M&A procedures and terms preferred
by Hanaro Telecom, and Hanaro Telecom shall fully cooperate therewith.
(3) The approval of the Amended Reorganization Plan by the Reorganization
Court shall be a condition precedent to the obligation of Hanaro Telecom
to subscribe for new shares and bonds as set forth in Articles 7 and 8
hereof.
(4) Hanaro Telecom shall pay the Purchase Price for the acquisition of
Thrunet, as follows, subject to the detailed terms as set forth in
Articles 7 and 8:
A. Capital increase for value 248,100,000,000 Won
B. Subscription for bonds 223,290,000,000 Won
Total 471,390,000,000 Won
ARTICLE 4 (XXXXXXX MONEY)
(1) Hanaro Telecom shall, simultaneous with the execution of this Agreement,
pay to the following bank account designated by Thrunet a sum of
47,139,000,000 Won, equivalent to ten (10) % of the Purchase Price as set
forth in Article 3(4) hereof (which shall include the guarantee deposit
paid by Hanaro Telecom to the account designated by Thrunet upon execution
of the MOU and the interest accrued thereon), in order to guarantee its
performance of this Agreement. In such case, the 24,810,000,000 Won,
equivalent to the guarantee deposit paid by Hanaro Telecom to the account
designated by Thrunet upon execution of the MOU (including the interest
accrued thereon), shall be applied in and toward payment of part of the
Xxxxxxx Money, and the pledge created over such guarantee deposit
(including the interest
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accrued thereon) shall be automatically extinguished upon the payment of
the Xxxxxxx Money.
Accountholder:
Korea Thrunet Co., Ltd.
Receiver: Seok Xxx Xxxx
Financial Institution: Citibank Korea Inc.
Account No.: 000-00000-000
(2) Thrunet and Hanaro Telecom shall enter into a pledge agreement in the form
as attached hereto with respect to the bank deposit claims on the Xxxxxxx
Money and any accrued interest thereon, and Thrunet shall, immediately
upon the payment of the Xxxxxxx Money under Paragraph (1) above, create a
pledge in favor of Hanaro Telecom (over such bank deposit claims).
(2) The Xxxxxxx Money as set forth in this Article 4 and the interest accrued
thereon from the date of payment of the Xxxxxxx Money until the date of
depositing of the Purchase Price under Article 9(1) hereof shall be
applied in and toward payment of part of the Purchase Price to be
deposited by Hanaro Telecom.
ARTICLE 5 (PAYMENT OF REORGANIZATION SECURITY AND REORGANIZATION CREDIT)
(1) The amount and terms of payment of reorganization security and
reorganization credit shall be made in accordance with the Amended
Reorganization Plan. Thrunet shall, after payment in full of the Purchase
Price by Hanaro Telecom, repay such reorganization security and
reorganization credit in accordance with the Amended Reorganization Plan
as approved (by the Reorganization Court).
(2) Thrunet shall, for purposes of payment under Paragraph (1) above, apply
the Purchase Price as set forth in Article 3(4) hereof, less (i) the
amounts set forth in the following Subparagraphs, (ii) the reserves set
aside with respect to PowerCom Co., Ltd. ("PowerCom") in Paragraph (3)
below, and (iii) the escrow amount set forth in Paragraph (4) below
(reserves under the proviso of Paragraph (4) below, if a penalty is
imposed by the Fair Trade Commission (the "FTC") prior to the date of
deposit of the Purchase Price). The amounts deducted under the following
Subparagraphs shall be applied for the working capital needs, etc. of
Thrunet:
1. Amount equivalent to reorganization security and reorganization
credit (including the interest accrued on such loans) owed by
Thrunet that have been paid, not pursuant to the valid
reorganization plan of Thrunet, since January 1, 2005 until the date
of this Agreement; and
2. Amount equivalent to the advisory fees to be paid to Samjung KPMG
FAS, Korea Development Bank, and DeRyook International Law Firm,
whose advisory services were retained by Thrunet to proceed with the
present M&A involving Hanaro Telecom.
(3) A sum of 8,500,000,000 Won, forming part of the Purchase Price, shall be
set aside as the reserves for the working capital needs of Thrunet, which
shall be used to pay the minimum use charges to PowerCom until the
expiration of the effective term of each of (i) the "Agreement on the Use
of Cable TV Transmission Network for Provision of Additional Services"
(initially executed between Thrunet and Korea Electric Power
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Corporation on March 25, 1999 and subsequently PowerCom succeeded Korea
Electric Power Corporation as a party thereto) (ii) the "Agreement on
Provision of HFC Network between Thrunet and PowerCom" dated January 19,
2001, each existing validly between Thrunet and PowerCom.
(4) With respect to the "Agreement on the Clean Marketing for Internet
Services" dated around April 2003 among six (6) communication service
providers including Thrunet, the Korea Fair Trade Commission (the "FTC")
is investigating whether such agreement is in violation of Article 19
(Prohibition of Unfair Collaborative Acts) of the Monopoly Regulation and
Fair Trade Act ("MRFTA"). In the event that the FTC imposes a penalty on
Thrunet for an unfair collaborative act, Thrunet shall, in order to secure
the payment of such penalty, deposit, immediately upon depositing the
Purchase Price, a sum of 8,000,000,000 Won (the "Escrow Amount"), forming
part of the Purchase Price, in the name of Thrunet, with a financial
institution (the "Escrow Agent") agreed upon between Thrunet and Korea
Development Bank (representative of the creditors of Thrunet). Thrunet,
the Korea Development Bank and Hanaro Telecom shall enter into an escrow
agreement in the form attached hereto (the "Escrow Agreement") with the
Escrow Agent prior to the deposit of the Escrow Amount; provided, however,
that, if a penalty is imposed prior to deposit of the Purchase Price under
Article 9 hereof, (i) such penalty shall first be paid with the funds held
by Thrunet, then (ii) Thrunet shall set aside as reserves a portion of the
Purchase Price equal to the "amounts that would otherwise be withdrawn and
paid out from the Escrow Account" as calculated pursuant to Paragraph (5)
below, and shall use such reserves as the working capital of Thrunet,
without opening an escrow account.
(5) The Escrow Amount under Paragraph (4) above shall be used as follows, and
the specific terms, method, etc. of withdrawal of the Escrow Amount shall
be in accordance with the Escrow Agreement:
1. If no penalty is imposed by the FTC:
the Escrow Amount (including the accrued interest thereon) shall be
used to pay the reorganization security and reorganization credit
owed by Thrunet, pursuant to the Amended Reorganization Plan;
2. If the penalty imposed by the FTC is not more than 4,000,000,000
Won:
Thrunet shall withdraw the amount equal to such penalty from the
escrow account and pay such amount. The balance of the Escrow Amount
(including the accrued interest thereon) remaining after such
payment shall be used to pay the reorganization security and
reorganization creditowed by Thrunet, pursuant to the Amended
Reorganization Plan;
3. If the penalty imposed by the FTC is more than 4,000,000,000 Won,
but not more than 10,000,000,000 Won:
Thrunet shall withdraw that portion of the amount of such penalty
which is equal to 4,000,000,000 Won plus two-thirds (2/3) of the
excess of such penalty over 4,000,000,000 Won [i.e. 4,000,000,000
Won + (penalty amount - 4,000,000,000 Won) x 2/3] from the Escrow
Account and pay such portion. The rest of the amount of such penalty
shall be paid with the funds held by Thrunet. The balance of the
Escrow Amount (including the accrued interest thereon)
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remaining after such payment shall be used to pay reorganization
security and reorganization credit owed by Thrunet, pursuant to the
Amended Reorganization Plan; and
4. If the penalty imposed by the FTC is more than 10,000,000,000 Won:
Thrunet shall withdraw that portion of the amount of such penalty
which is equal to the amount of the Escrow Amount (including the
accrued interest thereon) from the Escrow Account and pay such
portion. The rest of the entire amount of such penalty shall be paid
with the funds held by Thrunet.
(6) Thrunet may object to the imposition of a penalty by the FTC through a
lawsuit, objection, etc. If a refund (including the added refund) is
received as a result of the final and conclusive determination of the
penalty, the Thrunet shall conduct the following:
1. based on the finally and conclusively determined amount of the
penalty, calculate the "penalty amount that shall be withdrawn and
paid out of the Escrow Account finally and conclusively" as
calculated pursuant to Paragraph (5) above; and
2. additionally pay to the reorganization security holders and
reorganization creditors, in accordance with the Amended
Reorganization Plan, the amount of refund (including the added
refund thereon), which is equal to (i) the "amount already withdrawn
and paid out of the Escrow Account pursuant to Paragraph (5) above
(or as the case may be, the amount equivalent to the reserves set
aside under the proviso of Paragraph (4) above)", less (ii) the
"penalty amount that shall be withdrawn and paid out from the Escrow
Account finally and conclusively" as calculated in Subparagraph 1
above.
(7) Hanaro Telecom shall bear no obligations to contribute moneys in
connection with the acquisition of Thrunet, other than the obligation to
deposit and pay the Purchase Price under Articles 3(4) and 9.
ARTICLE 6 (CAPITAL REDUCTION)
Thrunet may determine, at the time of preparation of the Amended Reorganization
Plan, specific matters regarding capital reduction, such as reduction of the
capital represented by common shares issued prior to the approval of the Amended
Reorganization Plan, and the consolidation ratio of shares.
ARTICLE 7 (ISSUANCE OF NEW SHARES)
(1) Thrunet shall issue and allocate to Hanaro Telecom, and Hanaro Telecom
shall subscribe for, 99,240,000 common shares in registered form pursuant
to this Agreement and the Amended Reorganization Plan, promptly upon
completion of the capital reduction procedures of Thrunet under Article 6
hereof (or on the issuance date of new shares, in the event that no
capital reduction is effected under Article 6 hereof).
(2) Matters regarding issuance of new shares under Paragraph (1) above shall
be as follows:
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1. Type and number of new shares to be issued: 99,240,000 common shares
in registered form;
2. Par value per share: 2,500 Won;
3. Issue price per share: 2,500 Won;
4. Capital increase: 248,100,000,000 Won;
5. Method of allocation of new shares and subscribers thereof: entire
new shares to be allocated to Hanaro Telecom;
6. Payment date for new shares: the date as set forth in the Amended
Reorganization Plan;
7. Location of payment of Subscription money: account designated by
Thrunet; and
8. Effective date of new shares: the date immediately following the
date of payment for the new shares.
(3) Hanaro Telecom shall not dispose of 49,620,000 shares, which comprise 50 %
of the new shares, that it subscribed for under this Article 7, for a
one-year period following the issuance date of such shares. To secure its
obligation not to dispose of such shares, Hanaro Telecom shall make a
safeguard deposit such shares in the Korea Securities Depository, and
shall promptly deliver the relevant documents to Thrunet. Thrunet shall
issue share certificates to Hanaro Telecom pursuant to the applicable laws
and regulations upon completion of Hanaro Telecom's payment for for the
new shares
ARTICLE 8 (SUBSCRIPTION FOR BONDS)
Hanaro Telecom shall subscribe for bonds (the "Bonds") issued by Thrunet on a
private placement basis pursuant to this Agreement and the Amended
Reorganization Plan, as follows:
1. Type of Bonds: non-guaranteed corporate bonds;
2. Total amount of the Bonds: 223,290,000,000 Won;
3. Issue price of the Bonds: 223,290,000,000 Won;
4. Maturity of the Bonds: five (5) year anniversary of the issuance
date of the Bonds (if such date is not a bank business day, the
immediately following bank business day);
5. Interest rate for the Bonds; 3.42% per annum;
6. Interest payment date: every three (3) months after the issuance
date of the Bonds (if such date is not a bank business day, the
immediately following bank business day);
7. Default interest: if the issuer fails to pay the principal of, or
the interest on, the Bonds on the maturity or the payment due dates,
default interest shall be payable in respect of the overdue amount,
calculated on daily basis at the default interest rate as set forth
in the Amended Reorganization Plan, from the date immediately
following the relevant maturity or due date until the date of actual
payment;
8. Redemption prior to maturity: the issuer may redeem the whole or any
part of the Bonds with respect to the principal or interest thereon
at any time prior to maturity, subject to a one-month written
notice;
9. Type of bond certificates: bearer form;
10. Payment due date for subscription money for the Bonds: the date
immediately following the effective date of new shares under Article
7(2) hereof; and
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11. Subscription money to be paid to: the account designated by Thrunet.
ARTICLE 9 (DEPOSIT AND PAYMENT OF PURCHASE PRICE)
(1) Hanaro Telecom shall deposit in the account designated by Thrunet the
Purchase Price, less the sum of the Xxxxxxx Money already paid by Hanaro
Telecom pursuant to Article 4 hereof and the interest accrued on the
Xxxxxxx Money, at least three (3) bank business days prior to the meeting
of interested persons for adoption of resolution of the Amended
Reorganization Plan.
(2) Thrunet and Hanaro Telecom shall enter into a pledge agreement in the form
as attached hereto with respect to the bank deposit claims on the full
amount of the Purchase Price and the accrued interest thereon, over which
the Thrunet shall create a pledge in favor of Hanaro Telecom immediately
upon the deposit of the Xxxxxxx Money under Paragraph (1) above; provided,
however, that no such pledge shall be created over the Escrow Amount as
referred to in Article 5(4) hereof.
(3) The pledge created under Paragraph (2) above shall, for the payment of the
subscription money for new shares and subscription money for the Bonds and
to the extent of the amount of money to be paid for such new shares and
the Bonds, be extinguished on the payment date of the subscription money
for new shares and the payment date of the subscription money for the
Bonds, respectively, under the Amended Reorganization Plan after the
Amended Reorganization Plan is approved by the Reorganization Court.
(4) The Purchase Price shall, after the Amended Reorganization Plan is
approved by the Reorganization Court, be converted into the subscription
money for new shares under Article 7 hereof and the subscription money for
the Bonds under Article 8 hereof. Also, the amount on deposit on the
Escrow Account under Article 5(4) hereof shall be converted into the
subscription money for the Bonds.
(5) After the Purchase Price is converted pursuant to Paragraph (4) above into
the subscription money for new shares and the subscription money for the
Bonds, Thrunet shall return to Hanaro Telecom the interest accrued on the
Purchase Price deposited pursuant to Paragraph (1) above.
ARTICLE 10 (DISPATCH OF ACQUISITION GROUP)
(1) Hanaro Telecom may, after the approval of the Amended Reorganization Plan,
dispatch a group of acquisition personnel (the "Acquisition Group") to
Thrunet in order to facilitate the acquisition of Thrunet by Hanaro
Telecom.
(2) The size of the Acquisition Group and the scope of the matters that may be
handled by the Acquisition Group shall be determined with the permission
of the Reorganization Court, subject to consultations between Thrunet and
Hanaro Telecom.
(3) Thrunet shall (i) until Hanaro Telecom acquires the management right over
Thrunet, consult the Acquisition Group prior to obtaining the permission
of the Reorganization Court if Thrunet intends to pay its debts, incur new
debts, acquire or dispose of material assets, or enter into, renew or
amend any agreements relating to the foregoing, and (ii) consult the
Acquisition Group with respect to the matters falling under the work scope
of the Acquisition Group.
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ARTICLE 11 (TERMS OF EMPLOYMENT)
(1) Hanaro Telecom shall guarantee the employment of all of the employees of
Thrunet under the Labor Standard Act as of the date of this Agreement and
procure that no disadvantage is caused to such employees by the execution
and performance of this Agreement.
(2) The period during which the guarantee of employment under Paragraph (1)
above is applicable shall be as agreed separately between Hanaro Telecom
and Thrunet.
ARTICLE 12 (EFFECTIVENESS)
This Agreement shall become effective upon the affixing by Thrunet and Hanaro
Telecom of their seal impressions on this Agreement and the approval of the
Reorganization Court with respect thereto.
ARTICLE 13 (TERMINATION)
(1) Upon the occurrence of any of the following events, Thrunet may terminate
this Agreement with a written notice to Hanaro Telecom; provided that,
this Agreement shall not be terminated for any reason after the Amended
Reorganization Plan is approved by the Reorganization Court:
1. if Hanaro Telecom fails to deposit the Xxxxxxx Money under Article
4(1) hereof;
2. if Hanaro Telecom fails to deposit the Purchase Price under Article
9(1) hereof;
3. if Hanaro Telecom fails to obtain and notify to Thrunet the
approvals, licenses, etc. under Article 15(3) hereof within the
period prescribed therein; or
4. if Hanaro Telecom commits a breach of its obligations under this
Agreement and fails to remedy such breach within 15 days following
the receipt of a notice requiring such breach to be remedied.
(2) Upon the occurrence of any of the following events, this Agreement may be
terminated with a written notice to the other party; provided, however,
that this Agreement shall not be terminated for any reason after the
Amended Reorganization Plan is approved by the Reorganization Court:
1. by Hanaro Telecom and/or Thrunet, if the Amended Reorganization Plan
is not approved by the Reorganization Court;
2. by either party, if such party becomes unable to perform this
Agreement due to a war, act of God or any other force majeure beyond
the control of such party; or
3. by Hanaro Telecom, if Thrunet commits a breach of its obligations
under this Agreement and fails to remedy such breach within 15 days
following the receipt of a notice requiring remedy of such breach.
(3) Either party may terminate this Agreement if the Amended Reorganization
Plan fails to be approved by the Reorganization Court within 6 months from
the date of this Agreement for reasons not attributable to such party.
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(4) If this Agreement is terminated due to any event set forth in Paragraph
(1) above, the guarantee deposit (including the accrued interest thereon
in the case of Article 13 (1), Subparagraph 1) or the Xxxxxxx Money
(including the accrued interest thereon in the case of Article 13 (1),
Subparagraphs 2 to 4) shall belong to Thrunet as a penalty. In such case,
the pledge created over the bank deposit claims shall be automatically
extinguished and Hanaro Telecom shall give the relevant financial
institution a notice of closing of the account concerned. Hanaro Telecom
shall bear no obligations to compensate for damages in connection with
this Agreement, other than the guarantee deposit (including the accrued
interest) or the Xxxxxxx Money (including the accrued interest thereon)
belonging to Thrunet pursuant to this Paragraph (4).
(5) If this Agreement is terminated under Paragraph (2) or (3) above for
reasons not attributable to Hanaro Telecom prior to the approval of the
Amended Reorganization Plan by the Reorganization Court, Thrunet shall,
immediately upon such approval by the Reorganization Court being obtained,
return to Hanaro Telecom the Xxxxxxx Money (including the accrued interest
thereon) or the Purchase Price (including the accrued interest thereon).
(6) If this Agreement is terminated, Thrunet and Hanaro Telecom shall
immediately return to the other party, or destroy, all the materials, etc.
obtained from the other party.
ARTICLE 14 (INDEMNITY)
If this Agreement is terminated, Hanaro Telecom shall not claim any damages from
Thrunet, the Reorganization Court, the lead manager for the present M&A, etc.,
other than the return or repayment of the Xxxxxxx Money and the Purchase Price
pursuant to Articles 4 (1), 9 (1), or 13 (4) or (5) hereof.
ARTICLE 15 (COVENANTS BY HANARO TELECOM)
(1) Hanaro Telecom fully understands that it shall obtain the consent of the
REORGANIZATION SECURITY HOLDERS AND REORGANIZATION creditors or the
shareholders of the Thrunet in a meeting of interested persons if the
interest of such REORGANIZATION SECURITY HOLDERS AND REORGANIZATION
creditors or the shareholders is unfavorably affected in connection with
the Amended Reorganization Plan.
(2) Hanaro Telecom fully understands that (i) the reorganization procedures of
the Thrunet shall not automatically be terminated by the execution of this
Agreement, debt restructuring under the Amended Reorganization Plan,
payment of the Purchase Price, and payment of the REORGANIZATION SECURITY
AND REORGANIZATION credits owed by the Thrunet, and (ii) the termination
of the reorganization procedures of the Thrunet shall be determined by the
final and conclusive judgment of the Reorganization Court pursuant to the
applicable laws, based on the financial soundness of the Thrunet,
including procurement of funds necessary to perform the Amended
Reorganization Plan or generation of ordinary profit, after the
acquisition of the issued shares of the Thrunet by Hanaro Telecom pursuant
to the approved Amended Reorganization Plan.
(3) Hanaro Telecom acknowledges that it is entering into this Agreement based
on its confirmation of the availability of the approvals, licenses, etc.
under the MRFTA and other relevant laws and regulations necessary for the
acquisition of the Thrunet by Hanaro Telecom. If such approvals, licenses,
etc. necessary for the acquisition of
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the Thrunet by Hanaro Telecom are not obtained and notified to the Thrunet
not later than the earlier of (i) 60 days following the date of this
Agreement (or the extended date by which such approvals, licenses, etc.
are to be obtained, if such extended date has been granted by the
Reorganization Court as a result of a delay in the period for obtaining
such approvals, licenses, etc. pursuant to the relevant laws and
regulations) and (ii) three (3) business days prior to the meeting of
interested persons, such failure shall be deemed to be attributable to
Hanaro Telecom.
ARTICLE 16 (COVENANTS BY THRUNET)
(1) Thrunet shall promptly take all the steps necessary for acquisition of
Thrunet by Hanaro Telecom to be completed as quickly as possible pursuant
to this Agreement, for as long as this Agreement remains effective.
(2) Thrunet shall conduct its purchases, sales, administration and other
business and management matters in good faith and in the ordinary course
of business, for as long as this Agreement remains effective.
(3) Thrunet shall comply with the applicable laws and regulations in
performing the matters set forth herein, for as long as this Agreement
remains effective.
(4) Thrunet shall not, for as long as this Agreement remains effective, commit
any act that, except for the change in the capital of Thrunet as set forth
in this Agreement, may cause a change in the capital of Thrunet,
including, without limitation, a grant of the pre-emptive rights to
subscribe for new shares to any persons other than Hanaro Telecom,
issuance of convertible bonds, bonds with warrants or exchangeable bonds,
or a grant of stock options.
(5) Thrunet shall not, for as long as this Agreement remains effective,
proceed with or commence any transactions the same as or similar to the
transactions contemplated by this Agreement, with third parties other than
Hanaro Telecom or the persons acknowledged by Hanaro Telecom.
(6) Thrunet shall not, for as long as this Agreement remains effective, commit
any act that may substantially deteriorate the financial status of the
Thrunet, without the permission of the Reorganization Court.
(7) With respect to the damages and reimbursable expenses payable to SK
Networks Co., Ltd. (then known as SK Global Co., Ltd.) ("SK Networks")
under a certain Asset Transfer Agreement dated July 5, 2002 between
Thrunet and SK Networks and certain agreements ancillary thereto
(collectively, the "Asset Transfer Agreement"), Thrunet shall, by prior
consultation with Hanaro Telecom, use best efforts to enter into an
agreement with SK Networks under which (i) the amount equivalent to 6% of
the reserve amount (which shall be the balance of the reserve amount as of
the date of this Agreement as confirmed by Thrunet and SK Networks and
notified to Hanaro Telecom) held by SK Networks under the Asset Transfer
Agreement as of the date of this Agreement shall be paid to Thrunet by
December 31, 2007, and (ii) SK Networks waives, in return for the waiver
by Thrunet of the right to claim the payment of the balance of the reserve
amount on or after December 31, 2007, its rights to claim the damages and
reimbursable expenses under the Asset Transfer Agreement as well as its
all other rights.
(8) Thrunet shall use best efforts to ensure that the "Master Agreement on
Cooperation
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for Additional Communication Business" and the agreements ancillary
thereto entered into with general cable broadcasting business operators,
relayed broadcasting business operators or transmission network business
operators under the Broadcasting Act will remain effective after the
execution of this Agreement.
(9) Thrunet shall, by referring to the opinion of Hanaro Telecom, prepare the
Amended Reorganization Plan to contain the details of the acquisition of
Thrunet by Hanaro Telecom.
ARTICLE 17 (APPLICATION FOR TERMINATION OF REORGANIZATION PROCEDURES)
Thrunet shall use best efforts to make an application to the Reorganization
Court for termination of the reorganization procedures pursuant to the Corporate
Reorganization Act, as quickly as possible after the completion of payment under
Article 5 hereof of the reorganization security and reorganization credits owed
by Thrunet.
ARTICLE 18 (CONFIDENTIALITY OBLIGATION)
(1) Neither Thrunet nor Hanaro Telecom shall disclose to a third party, or
allow a third party to gain knowledge , trade secrets of the other party,
the terms of this Agreement or any other information related to the
present M&A obtained in connection with the execution and performance of
this Agreement (including the information obtained in the process leading
to the execution of this Agreement) without prior written consent of the
other party.
(2) The confidentiality obligation under Paragraph (1) above shall not be
applicable to (i) the provision by Thrunet to its creditors or the
Reorganization Court of materials related to the present M&A and other
information regarding the progress thereof for purposes of, among others,
making reports to the Reorganization Court or conducting consultations
with such creditors in order to proceed with the present M&A or (ii) the
provision of information as required by the applicable laws and
regulations, regulatory agencies or the court.
(3) The confidentiality obligation under this Article 18 shall not be
applicable to (i) the provision for unavoidable reasons by Hanaro Telecom
of the materials related to the present M&A and other information
regarding the progress thereof to financial advisors, legal advisors,
accounting firms or the shareholders or creditors of Hanaro Telecom
(restricted to the shareholders or creditors of Hanaro Telecom to whom
materials related to the present M&A and other information regarding the
progress thereof have been provided pursuant to the relevant agreement
with Hanaro Telecom) for purposes of proceeding with the present M&A or
(ii) the provision of information relating to the present M&A as required
by the Securities and Exchange Act and other applicable laws and
regulations.
(4) Thrunet and Hanaro Telecom shall not use the information obtained in
connection with the execution and performance of this Agreement for any
purposes other than the purpose of performing this Agreement and
proceeding with the present M&A. Hanaro Telecom shall procure that the
financial advisors, legal advisors, accounting firms or creditors of
Hanaro Telecom under Paragraph (3) above shall comply with the
confidentiality obligation under this Article 18, and Hanaro Telecom shall
directly bear the liability for any breach of such confidentiality
obligation by such the financial advisors, legal advisors, accounting
firms or creditors of Hanaro Telecom.
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(5) Thrunet and Hanaro Telecom shall continue to bear the confidentiality
obligation under this Article 18 even after this Agreement ceases to be in
effect or is terminated; provided, however, that Hanaro Telecom may (i) if
the Amended Reorganization Plan has been approved by the Reorganization
Court, disclose to the public or a third party under its responsibility
the details and terms of this Agreement and other information relating to
the present M&A (including the information obtained in the process leading
to the execution of this Agreement) as the largest shareholder of Thrunet,
in accordance with the applicable laws and regulations, subject to the
prior consultation with Thrunet, and (ii) if the reorganization procedures
for Thrunet has been completed, disclose to the public or a third party
under its responsibility the trade secrets of Thrunet.
ARTICLE 19 (NO ASSIGNMENT)
The rights and obligations of Hanaro Telecom under this Agreement shall not be
assigned to a third party without permission of the Reorganization Court and
Thrunet.
ARTICLE 20 (OTHER PROVISIONS)
(1) Thrunet and Hanaro Telecom shall cooperate fully in good faith for the
performance of this Agreement and the management normalization of Thrunet.
(2) The reference to Thrunet in this Agreement shall be the reference to the
receiver of Thrunet or Thrunet itself, as the context requires.
(3) Matters not specified herein shall be in accordance with the Corporate
Reorganization Act, Corporate Reorganization Proceedings Working Rule No.
5 of the Bankruptcy Department of the Seoul Central District Court as
amended on October 9, 2001 (the "Working Rule"), and general trade
practices regarding M&A.
(4) Terms of this Agreement may be amended by agreement between Thrunet and
Hanaro Telecom, subject to the approval of the Reorganization Court with
respect to such amendment.
(5) The effectiveness and interpretation of this Agreement shall be governed
by the laws of the Republic of Korea, and any dispute arising in
connection with this Agreement shall be under the jurisdiction of the
Seoul Central District Court with respect to the first-instance trial.
(6) If the Reorganization Court presents any opinion with respect to the
execution of this Agreement or in the process of the deliberation,
resolution, etc. of the Amended Reorganization Plan, each of Thrunet and
Hanaro Telecom shall accommodate such opinion to the fullest extent as
long as its rights and/or obligations are not substantially changed
thereby.
(7) If Thrunet intends to do any act deviating from its customary business
such as paying reorganization creditors owed by Thrunet or executing
(including executing an amendment agreement) or terminating any material
agreement from the date of this Agreement until the approval of the
Amended Reorganization Plan, Thrunet shall consult with Hanaro Telecom in
advance; provided that the term "material agreement" shall include,
without limitation, the general terms and conditions for the subscribers
of Thrunet, any agreement executed with respect to the solicitation and
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charging of subscribers, any entrustment agreement executed with respect
to the provision of internet services to subscribers, and any agreement
executed with respect to the use of various communication lines in
connection with the provision of internet services to subscribers.
(8) This Agreement shall prevail over any prior oral or written agreements
(including Bidding Documents of Hanaro Telecom and the MOU) exchanged
between the parties in connection with the acquisition of Thrunet by
Hanaro Telecom.
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In Witness Whereof, Thrunet and Hanaro Telecom have duly executed this Agreement
by signing or affixing their seals on this Agreement in duplicate and each party
shall keep one copy.
February 4, 2005
Thrunet: Korea Thrunet Co., Ltd.
0000-0, Xxxxxx-xxxx, Xxxxxx-xx, Xxxxx
Receiver: Seok Xxx Xxxx
Proposed Acquirer: Hanaro Telecom Inc.
43, Taepyungro 2-ga, Chung-gu, Seoul
Representative Director: Xxxxx-Bun Xxxx
Attachments: Pledge Agreement
Escrow Agreement
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