STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made on the 28th day of
December, 1998 by and between NewState Capital Co., Ltd., a corporation duly
organized and existing under the laws of the Republic of Korea with its
principal place of business at ▇▇▇-▇▇ ▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
(hereinafter referred to as the "Transferee") and Yeongnarn Merchant Banking
Co., Ltd. having its principal place of business at ▇▇ ▇▇▇▇▇▇-▇▇▇▇ ▇-▇▇,
▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇ (hereinafter referred to as "Yeongnam") and the nine (9)
corporations named in the attached Exhibit "A" (hereinafter referred to
individually as the "Transferor" and collectively as the "Transferors").
WITNESSETH:
WHEREAS, the Transferors own total 4,000,000 shares of
registered common stock of Yeongnam Housing Finance Co., Ltd. (hereinafter
referred to as the "Company"); and
WHEREAS, the Transferors desire to transfer total 4,000,000
shares of stock of the Company which constitutes the entire issued and
outstanding stock of the Company on the terms and conditions contained in this
Agreement; and
WHEREAS, Yeongnam has been fully authorized and entrusted by
all the other shareholders of the Company to enter into this Agreement and to
take all acts necessary for implementing this Agreement; and
WHEREAS, powers of attorney in which all the other
shareholders of the Company appointed Yeongnam as their attorney-in-fact is
annexed hereto; and
WHEREAS, all the covenants of the Company as set forth in this
Agreement are guarantee by the Transferors.
NOW, THEREFORE, the parties hereto agree as follows:
Article 1 Definitions
1.1 Terms
The terms used in this Agreement shall have the following
meanings:
"Provision" shall mean the provisions contained in this
Agreement.
"Closing Date" shall mean the date as defined in Article 3.1.
"Financial Statements" shall mean the balance sheet, profit
and loss statement, etc. of the Company as of November 30, 1998 which are
prepared in accordance with generally accepted accounting principles in the
Republic of Korea.
"Laws" shall mean laws, codes, ordinances, rules, regulations
and other applicable laws of the taxing or governmental authorities.
"Purchase Price" shall have the meaning as provided in Article
2.1.
1.2 Other Terms
Other terms may be defined in other pertinent parts of this
Agreement.
Article 2 Purchase of Stock
2.1 Purchase Price
Transferors agree to sell and transfer all their rights and
interests in the entire shares of stock of the Company owned by them to the
Transferee at the purchase price of Nineteen billion (19,000,000,000) Won.
2.1.1 Each share is valued at Four Thousand Seven Hundred
Fifty (4,750) Won based on the Company's Financial Statements as of November 30,
1998.
2.2 Payment of Purchase Price
Transferee agree to pay the Purchase Price to the Transferors
in the following manner:
2.2.1 Upon execution of this Agreement, Transferee shall pay
the sum of One billion (1,000,000,000) Won as contract downpayment.
2.2.2 The balance of Eighteen billion (18,000,000,000) Won
shall be paid within 60 days from the execution of this Agreement.
2.2.3 Payments shall be made in bank checks.
2.2.4 Three (3) days prior to the due date, Transferors shall
send a written invoice to the Transferee.
2.2.5 Transferee's payment of Purchase Price shall be deemed
satisfactory performance of its obligations to pay the Purchase Price to the
Transferors.
2.3 Prohibition of Stock Transfer and Escrow of Stock
2.3.1 Until the Transferee is registered as the shareholder of
the Company pursuant to the provision of Article 3.2. 1, Transferors shall close
the Company's register of shareholders and shall not make any entries of
transfer into the register.
2.3.2 Upon execution of this Agreement and simultaneously with
receipt of contract downpayment, Transferors shall deposit the entire stock with
an escrow agent designated by both parties and shall submit proof of such a
deposit to the Transferee.
Article 3 Closing
3.1 Closing
Consummation of the transaction herein and payment of the
Purchase Price as contemplated in Article 2 (hereinafter the "Closing") shall
take place at the offices of Yeongnam Merchant Banking Co., Ltd. located at
Dongin-Dong 2-Ga, Choong-Gu, Taegu, Korea on February 26, 1999, Korean Standard
Time.
3.2 Documents To Be Delivered
On the Closing Date, Transferor shall deliver the following to
the Transferee:
3.2.1 On the Closing Date, Transferor shall deliver to the
Transferee stock certificates endorsed for transfer, proof of cancellation of
all stock pledges or other collateralization and all other documents necessary
for transfer of stocks to the Transferee.
3.2.2 On the Closing Date, the Company shall take all
necessary measures for registering the Transferee as the shareholder of the
Company including entry of the Transferee's name into appropriate Company
documents.
Article 4 Representations and Warranties of Transferors
Each of the Transferors and the Company represent and warrant
to the Transferee as follows:
4.1 Ownership of Stocks
Transferors have the complete authority to transfer good and
marketable title to their stocks without any mortgage, pledge, collateral,
encumbrances or assignment of voting rights to third parties. The stocks
transferred herein constitute the entire capital of the Company and there is
nothing else that constitutes the capital of the Company or conditional capital
or conditional profits.
4.2 Organization of the Company
The Company is duly organized and existing under the laws of
the Republic of Korea and has all the authority to conduct its business. All the
stocks of the Company have been duly issued and paid in and non-assessable.
4.3 Authority
Yeongnam has the full corporate authority to make this
Agreement and to take acts necessary to implement this Agreement. Yeongnam has
been duly appointed and empowered by other shareholders to enter into this
Agreement on their behalf and this Agreement has been duly signed and delivered
by the Transferors. This Agreement has the binding effect on the Transferors in
accordance with the terms and conditions provided herein.
4.4 Consent and Approval
In connection with the execution, delivery and enforcement of
this Agreement and consummation of this transaction, each Transferor does not
need to obtain any consent, approval, authorization or declaration from any
governmental authority or other individual or corporation and there is no need
to submit or record anything for same.
4.5 Legal Proceedings
To the best of its knowledge, the Company is not involved in
any legal proceedings pending with any court or administrative agency that will
bring about serious business or financial damages to the Company. To the best of
its knowledge, the Company is not violating any judgments or orders of any court
or administrative agency.
4.6 Compliance with Laws
The Company has complied with all the applicable laws,
ordinances, judgments, rules and regulations non-compliance of which will result
in serious damages to the Company's business or financial conditions. Further,
the Company is not on notice of nor is involved with any violations of such
laws, ordinances, judgments, rules, orders, regulations or other laws that will
bring about material damages to the Company's business or financial conditions.
4.7 Financial Statements
The Financial Statements of the Company fairly, accurately and
completely reflect the financial conditions of the Company in accordance with
the generally accepted accounting principles in Korea as of the date they are
prepared.
4.8 Liabilities, etc.
4.8.1 Transferors warrant that all the Company's liabilities,
debts, incidental obligations and unliquidated obligations incurred prior to the
completion of due diligence have been accurately reflected on the Financial
Statements, their attachments and other documents for transfer of ownership and
further warrant that the Company is not in default of any obligations.
4.8.2 In the event the Company incurs liabilities due to
irregular transactions by its officers or employees other than the assets or
liabilities stipulated or presented in the course of due diligence under Article
6.3, the management of the Company at the time of the execution of this
Agreement shall take full responsibility of such liabilities and shall indemnify
and hold harmless the Transferee and the Company. Transferors hereby guarantee
such indemnification to the Transferee and the Company.
4.9 Checks and Notes
Other than the checks and notes recorded in the books and
records, the Company has not issued nor endorsed any checks or notes.
4.10 Assets
The Company's Financial Statements as of November 30, 1998 are
attached hereto as Exhibit "B".
Article 5 Representations and Warranties of Transferee
Transferee represents and warrants to the Company as follows:
5.1 Organization of Transferee
Transferee is duly organized and existing under the laws of
the Republic of Korea and has all the corporate power and authority to conduct
business and own and lease assets.
5.2 Authority
Transferee has the full corporate authority to enter into this
Agreement and has taken all corporate procedures necessary to conduct the
transaction contemplated herein and to perform all obligations under this
Agreement. This Agreement was duly executed and delivered by the Transferee and
has binding effect on the Transferee in accordance with the terms and conditions
provided herein.
Article 6 Covenants Prior to Closing
Beginning from the execution of this Agreement and up and
through the Closing, the Company, Transferors and Transferee covenant and agree
as follows:
6.1 Maintenance of Business
The Company shall continue its business in a diligent manner
consistent with its p customary and normal conduct of business.
6.2 Obligations of Transferors
Beginning from the execution of this Agreement until the
Closing Date, Transferors shall not do the following without the Transferee's
written consent:
(1) Increase or decrease of the capital of the Company.
(2) Dissolution, merger or reorganization of the Company.
(3) Transfer of all or part of the Company's business, or
taking over the business or management of other
company.
(4) Transactions between the Company and its directors.
(5) Amendment of rules of Board of Directors or other
regulations of the Company.
(6) Change of employment agreement or hiring new
employees.
(7) Guaranty for third parties.
(8) Other acts that may have substantial impact on the
Company's assets or business.
(9) Payment of dividends.
6.3 Due Diligence
The Company agrees that, in order to familiarize itself with
the Company's business, assets, books and records and other conditions, the
Transferee, its employees, agents or representatives may, during the normal
business hours of the Company, inspect the Company's business, assets, books and
records and other conditions; make copies of pertinent documents; and verify the
representations and warranties of the Company and Transferors. The Transferee's
due diligence herein shall be completed within 20 days after the execution of
this Agreement. Transferee shall notify the Transferors of satisfactory
completion of its due diligence within seven (7) days thereof.
6.4 Approval and Best Efforts
6.4.1 Immediately upon the execution and delivery of this
Agreement, Transferors and the Company shall provide the Transferee with all the
necessary assistance so that the Transferee may obtain the governmental approval
of the transaction herein. Transferors and the Company, with the cooperation of
the Transferee, shall make necessary application for the governmental approval
of the stock transfer herein and give notices to third parties as necessary.
Provided, however, that the Transferee shall not be required to agree to make
unreasonable amendments to this Agreement for the purpose of obtaining such
approvals. Further, the parties shall take necessary and appropriate measures,
pursuant to the terms and conditions of this Agreement and in accordance with
applicable laws and rules, in order to consummate the transaction herein and to
perform each party's obligations to the best of their abilities.
6.4.2 Upon execution of this Agreement, Transferor and the
Company shall assist the Transferee in merging the Transferee and the Company.
6.5 Notices
The parties agree to immediately notify the other of (1)
occurrence or non-occurrence of events, between the execution of this Agreement
and the Closing Date, which will make the representations and warranties of the
parties effectively false or inaccurate, or (2) substantial failure to comply
with the covenants, conditions or agreements of the Transferors, the Company or
the Transferee under this Agreement; and the parties agree to make proper
efforts to cure such defaults or failures as quickly as possible.
6.6 Prohibition of Merger and Consolidation, etc.
Transferors and the Company shall not, directly or indirectly,
inquire, offer or agree with others concerning sale of the Company, merger with
others except for the Transferee or its subsidiaries, discussion, negotiation or
agreement for disposition of substantial portion of the Company's assets or
business; nor the Transferors and the Company may provide information to others
or cooperate with others in response to such inquiry, offer or transaction. In
the event the Transferors or the Company receives such offers or information
about possible offers, Transferor or the Company shall forthwith notify the
Transferee of such information including the identity of the expected transferee
and/or offeror.
Article 7 Transfer of Management
The management of the Company shall be transferred to the
Transferee as described below:
7.1 After the due diligence as provided in Article 6.3 is completed and the
report thereof is accepted and immediately upon Closing as provided in Article
3. 1, the Transferors shall convene a special meeting of shareholders and shall
transfer the management of the Company to the Transferee.
7.2 Transferors shall fully cooperate with the Transferee with respect to all
procedures necessary for convening the meeting of shareholders including the
Board of Directors' resolution and resignation of directors and auditors.
Article 8 Conditions Precedent to Closing
The Closing shall be conditioned upon the following:
8.1 Representations and Warranties
The representations and warranties of the Transferee,
Transferors and the Company contained in Articles 4 and 5 of this Agreement
shall be true and accurate in all respects as of the Closing Date and the
Transferee, Transferors and the Company shall perform all covenants which they
are obligated to perform on or before the Closing Date.
8.2 Governmental Approval
Transferors shall obtain all consent, approval and waiver
necessary for the transfer of stocks as provided in this Agreement from the
Korean government in a form and substance acceptable to the Transferee.
8.3 Consent of Third Parties
If necessary, Transferors and the Company shall obtain the
consent of third parties as necessary for the transaction herein and shall
deliver same to the Transferee.
8.4 Resolutions of the Directors and the Shareholders
Transferors (if possible), the Company and the Transferee
shall obtain resolutions of the shareholders or the Board of Directors approving
all the acts necessary for the transaction herein including issuance of power of
attorney, signature on the register of shareholders, notice, public notice,
registration or other acts required by the law.
8.5 Due Diligence
During the period of the Transferee's due diligence as
provided in Article 6.3, Transferors and the Company shall provide the
Transferee with all the information as the Transferee may reasonably request and
the Transferee shall proceed with the Closing in its own judgment.
Article 9 Damages
9.1 Damages
Transferors shall pay the Transferee damages, liabilities,
obligations or expenses, including interests, penalties and reasonable
attorney's fees (collectively referred to as "Damages"), incurred due to the
Transferors' default of warranties, representations, covenants or agreements.
Unless specifically excluded or otherwise provided in this Agreement, such
damages shall include all the damages incurred due to the transactions executed
prior to the Closing Date. Transferee shall pay damages incurred by the
Transferors due to the Transferee's default of its warranties, representations
or covenants.
9.2 Delay of Closing by Transferee
The Closing as provided in Article 3.1 shall take place within
60 days after the execution of this Agreement. Transferee may extend the period
for an additional 30 days by a written request to the representative of the
Transferors. In such an event, the Transferee shall pay the Transferors at the
Closing per them charges at the rate of 10% p.a. In the event the Transferee
fails to close within the extended period of time, unless there is a written
agreement of the parties, the Transferors may forfeit the contract downpayment
of One billion (1,000,000,000) Won and terminate this Agreement.
9.3 Delay of Closing by Transferors
In the event the Closing is delayed due to the failure of one
or more of the Transferors, the Transferors shall reimburse the Transferee the
contract downpayment of One billion (1,000,000,000) Won. In addition, the
Transferors shall pay the Transferee per them charges at the rate of 10% p.a.
commencing from the execution of this Agreement until the date of payment and
the Transferee may unilaterally terminate this Agreement.
Article 10 Miscellaneous
10.1 Change of Corporate Name
After the Closing, the Transferee may change the name of the
Company or the trademark, etc.
10.2 Employees
Transferee agrees to take over all the employees other than
those who voluntarily resign.
10.3 Termination
In the event of default by the other party, the non-defaulting
party may terminate this Agreement by giving a written notice to the other
party. In the event the Closing does not take place on or before February 26,
1999, except as provided in Article 9.2, either party may terminate this
Agreement. However, the parties may extend the time for Closing by a prior
written agreement.
10.4 Confidentiality
The parties are prohibited to disclose this Agreement to third
parties unless disclosure is made by virtue of a judgment or order of competent
court, applicable laws or ordinances.
10.5 Choice of Law
This Agreement shall be interpreted and construed, and the
rights of respective parties shall be determined, in accordance with the laws of
the Republic of Korea.
10.6 Jurisdiction
Any disputes, demands or conflicts arising between the parties
in relation to this Agreement shall be subject to the exclusive jurisdiction of
the Seoul District Court.
10.7 Notice
Unless otherwise provided in this Agreement, all notices,
demands or instructions to the other party shall be given to the other party in
writing by telegraph, facsimile, registered mail or return receipt mail to the
following addresses and such notices shall be deemed to have been received on
the date when they are proved to have been delivered:
To Transferors and the Company:
Yeongnam Merchant Banking Co., Ltd.
11 Dongin-Dong 2-Ga
Choong-Gu, Taegu
Attention: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 053-427-0205
To the Transferee:
NewState Capital Co., Ltd.
▇▇▇-▇▇ ▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇ ▇▇▇ Huh
Telephone: ▇▇-▇▇▇-▇▇▇▇
Facsimile: 02-501-5320
The parties may designate different name, address or numbers
by giving a prior notice to the other party.
10.8 Entire Agreement; Amendment and Waiver
This Agreement, together with the Exhibits and attachments,
constitutes the entire agreement between the parties and shall supersede prior
agreements, verbal or written, understandings, negotiations and discussions
between the parties. Any additions, amendments or waivers with respect to this
Agreement shall not be binding unless made in writing and signed by both
parties. Unless otherwise provided in this Agreement, any waiver of a provision
shall not constitute waiver of other provisions in this Agreement or continuous
waiver of the same provision.
10.9 Assignment
Neither party may assign this Agreement, and any rights or
obligations under this Agreement, without the prior written consent of the other
party.
10.10 Invalidity
Any invalidity, illegality or unenforceability of a provision
in this Agreement shall not affect the validity of the other provisions. In the
event any provision is decided invalid thereby affecting the rights or
obligations of the other party, the parties may amend this Agreement in good
faith and in a mutually satisfactory manner. In the event such an amendment is
not possible under the law, either party may terminate this Agreement by giving
a written notice to the other party in accordance with the provision applicable
to termination.
10.11 Headings
The headings of this Agreement are for convenience and
information purposes only and shall not affect the interpretation of this
Agreement.
10.12 Usage
For the purpose of interpreting this Agreement, the use of
singular or plural terms shall not be limited to any particular number.
Reference to any parties shall include their successors or assigns and the laws
shall include any changes or amendments thereof
IN WITNESS WHEREOF, this Agreement was executed by duly
authorized representatives of the parties on the day and year first above
written.
Dated: December 28, 1998
Transferor: Yeongnam Merchant Banking Co., Ltd.
For itself and as attorney-in-fact for the Transferors named
in Exhibit "A"
By: (Corporate seal affixed)
▇▇▇▇▇ ▇▇▇ ▇▇▇▇
President
Transferee: NewState Capital Co., Ltd.
By: (Signed)
--------
▇▇▇ ▇▇▇ Huh
President
Exhibit "A"
POWER OF ATTORNEY
FOR SALE OF YEONGNAM HOUSING FINANCE CO., LTD.
The shareholders of Yeongnam Housing Finance Co., Ltd. hereby
appoint Yeongnam Merchant Banking Co., Ltd. as their attorney-in-fact and hereby
authorize the attorney-in-fact all the authority of sell the entire shares of
stock (100%) of Yeongnam Housing Finance Co., Ltd. to NewState Capital
Corporation.
In confirmation thereof, this Power of Attorney is signed and
sealed by representatives of all the shareholders as below.
Dated: , 1998
Name of Shareholder Number of Shares Percentage of Holding Signature Seal
------------------- ---------------- --------------------- --------- ----
Yeongnam Merchant Banking 1,460,000 36.50%
Dong Bang, Ltd. 698,000 17.45%
▇▇▇ ▇▇▇ Development, Ltd. 466,000 11.65%
Samjoo Development Co., Ltd. 466,000 11.65%
Hwanggeum Housing, Ltd. 300,000 7.50%
Namyeong Development Ltd. 200,000 5.00%
▇▇▇ ▇▇▇▇, Ltd. 200,000 5.00%
Mido Construction, Ltd. 100,000 2.50%
Taegu Merchant Banking Co., 100,000 2.50%
Ltd.
Eden, Ltd. 10,000 0.25%
Total 4,000,000 100.00%
Exhibit "B"
BALANCE SHEET
(PROVISIONAL)
as of November 30, 1998
Yeongnam Housing Finance Co., Ltd.
286 Shinchun-▇▇▇▇
▇▇▇▇-Gu, Taegu
Unit: Won
Assets Liabilities
I. Liquid Assets I. Liquid Liabilities
(1) Current Assets 1. Current Debts
1. Cash 2. Short Term Borrowing
2. Deposits 3. Accounts Payable
(Savings Account) 4. Unpaid Expenses
(Checking Account) 5. Unpaid Dividends
(Other Deposits) 6. Suspense Receipt
3. Short Term Lending 7. Advance Earnings
4. Negotiable Instruments 8. Taxes Collected
5. Advance Payments 9. Reserve for Evaluation of Negotiable
Instruments
6. Advance Expenses
10. Unpaid Corporate Taxes
7. Uncollected Earnings
8. Immature Interest
9. Deposit for Stock Subscription
(2) Financial Assets
1. Installment Financing
2. Other Loans
II. Fixed Assets
(1) Investment Assets
1. Long term Deposits
2. Negotiable Instruments for Investment
3. Capital Contribution
4. Security Deposit
5. Security Deposit for Company House
6. Deposit for Others
7. Deposit for Group Retirement Insurance
8. Deposit for Telephone
II. Fixed Liabilities
1. Bonds
(Discount Issuance of Bonds)
2. Long Term Borrowing
3. Reserve for Depreciation of Leased Facilities
4. Reserve for Depreciation of Real Estate of Business Use
5. Reserve for Depreciation of Real Estate of Non-Business Use
6. Reserve for Bad Debts
(Installment Financing)
(Other Loans)
7. Reserve for Severance Pay
(Transfer to National Pension)
8. Reserve for Group Severance Pay
CERTIFICATE OF CORPORATE SEAL
Name: Yeongnam Merchant Banking Co., Ltd.
Address: Dongin-Dong 2-Ga, Choong-Gu, Taegu
President: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
To: Registrar, Taegu District Court
You are requested to certify that the above corporate seal is
the same as the specimen registered with the Court.
Dated: , 199
Applicant: Yeongnam Merchant Banking Co., Ltd.
By: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, President (Corporate seal affixed)
================================================================================
I hereby certify that the above seal is the same as the
specimen registered with this Court.
Dated: December 1, 1998
By: Ki Taek Oh
Registrar
Taegu District Court
UNDERTAKING
The undersigned hereby agrees to undertake that the entire
shares of stock (4,000,000 shres) of Yeongnam Housing Finance Co., Ltd. will be
deposited with us no later than January 10, 1999.
Dated: December 28, 1998
Yeongnam Merchant Banking Co., Ltd.
By: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
President
