THE EXPORT-IMPORT BANK OF KOREA Principal Terms and Conditions of the Medium Term Note Programme of up to RM1.0 Billion Background Information Issuer Name : The Export-Import Bank of Korea ( KEXIM ) Address : 16-1, Yoido-dong, Youngdungpo-gu, Seoul 150-996, The Republic of Korea (iii) (iv) Business registration no. Date and place of incorporation : 11235-0000158 : 1 July 1976 / The Republic of Korea (v) Date of listing : Unlisted (vi) Status : Non-resident controlled company (A special Korean governmental financial institution). (vii) Principal activities : Involved in facilitating export and import transactions, overseas investments and overseas resources development through the extension of loans and other financial facilities. (viii) Board of directors : The board of directors of KEXIM as at 31 May 2011 are as follows: Name Yong-hwan Kim Dong-soo Park Jin-kyung Kim Seung-ho Choi Woo-kyu Park Designation President/Chairman Deputy President Executive Director Non-Executive Director Non-Executive Director 1
(ix) Structure of shareholdings and names of shareholders or, in the case of a public company, names of all substantial shareholders : The structure of shareholdings and names of shareholders as at 31 May 2011 are as follows: Name of shareholders % Government of the 62.7 Republic of Korea The Bank of Korea 18.7 Korea Finance Corporation 18.6 Total 100.00 (x) Authorised and paid-up capital : Authorised and paid up capital as at 31 May 2011: Share capital Won (in billion) Authorised 8,000 Paid-up 6,209 2
Principal Terms and Conditions (a) Name of parties involved in the proposed transaction, (where applicable) Principal adviser : RHB Investment Bank Berhad ( RHB Investment Bank ) Lead arranger : RHB Investment Bank (iii) Co-arranger : Not applicable (iv) Solicitor : Messrs Zul Rafique & Partners (v) Financial adviser : Not applicable (vi) Technical adviser : Not applicable (vii) Trustee : Not applicable (viii) Guarantor : Not applicable (ix) Valuer : Not applicable (x) Facility agent : RHB Investment Bank (xi) (xii) Primary subscriber (under a bought-deal arrangement) and amount subscribed Underwriter and amount underwritten : Not applicable : Not applicable (xiii) Central depository : Bank Negara Malaysia ( BNM ) (xiv) Paying agent : BNM (xv) Reporting accountant : Not applicable (xvi) Calculation agent : Not applicable (xvii) Others (please specify) (xviii) 1) Joint Lead Manager(s)/Joint Bookrunner(s) : RHB Investment Bank or other financial institution(s) as may be appointed by KEXIM as Joint Lead Manager(s) and/or Joint Bookrunner(s) from time to time in respect of each issuance of Notes under the MTN Programme. 3
(b) Facility description : Medium Term Note Programme of up to RM1.0 billion ( MTN Programme ). The medium term notes issued under the MTN Programme shall be referred to as Notes. (c) Issue/programme size : Up to RM1,000,000,000 (Malaysia Ringgit One Billion). The aggregate outstanding nominal value of the Notes issued under the MTN Programme shall not at any point in time exceed RM1.0 billion. (d) (e) Tenure of issue/debt programme (or facility) Availability period of debt programme (or facility) : MTN Programme Up to ten (10) years from the date of the first issue under the MTN Programme. The first issuance of the Notes shall be made within two (2) years from the date of approval by the Securities Commission ( SC ). Notes The Notes may be issued with maturities of minimum of more than one (1) year and up to ten (10) years, provided always that the maturity of any of the Notes shall not exceed the tenure of the MTN Programme. : Upon completion of all documentation and compliance of the conditions precedent. (f) Interest/coupon rate : At a fixed rate or floating rate or zero coupon. The coupon for the fixed rate will be determined prior to the issuance of the Notes. The coupon for the floating rate will be determined 3 days prior to each coupon payment period. (g) (h) Interest/coupon payment frequency Interest/coupon payment basis : Payable semi-annually in arrears. : Actual / 365 Security/collateral (if any) : Unsecured 4
(j) (k) (l) Details on utilisation of proceeds by Issuer Sinking fund and designated accounts (if any) Rating The net proceeds from the issuance of the Notes will be used by KEXIM for its general corporate purposes. : None Credit rating(s) assigned Name of rating agency : : AAA Malaysian Rating Corporation Berhad ( MARC ) (m) Mode of issue : The Notes may be issued through any of the following modes to be determined by KEXIM and Lead Arranger: by direct private placement; or through book running or a book building process. The Notes shall be issued in accordance with: the Participation and Operation Rules for Payments and Securities Services issued Malaysian Electronic Clearing Corporation Sdn Bhd ( MyClear ) ( MyClear Rules ); and the Operational Procedures for Securities Services and Operational Procedures for Real Time Electronic Transfer of Funds and Securities (RENTAS) both issued by MyClear ( MyClear Procedures ), or their replacement thereof (collectively MyClear Rules and Procedures ) applicable from time to time. Issue price The Notes shall be issued at par, at a discount or at a premium over par, to be determined prior to each issuance, in accordance with the MyClear Rules and Procedures. Form and denomination The Notes will be issued in a minimum denomination of RM1,000,000 or integral multiples thereof. The Notes will be represented by a global certificate (which is exchangeable for definitive certificates only in limited circumstances) in bearer form to be deposited with BNM, and will be traded under the Scripless Securities Depository System ( SSDS ) maintained by BNM. 5
(n) Selling restriction, including tradability (i.e. tradable or non-tradable) : Selling Restriction At issuance of the Notes The Notes shall not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within Schedule 6 (or Section 229(1)(b)), Schedule 7 (or Section 230(1)(b)) and Schedule 8 (or Section 257(3)) of the Capital Markets and Services Act, 2007 of Malaysia ( CMSA ). Thereafter The Notes shall not be offered, sold or delivered, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia, other than to persons falling within Schedule 6 (or Section 229(1)(b)), Schedule 8 (or Section 257(3)) and Schedule 9 (or Section 257(3)) of the CMSA. Trading Subject to the Selling Restriction, the Notes shall be tradable in the secondary market on a willing-buyer willing-seller basis under the scripless book-entry securities settlement and funds transfer system known as the Real Time Electronic Transfer of Funds and Securities System ( RENTAS ). (o) Listing status and types of listing : The Notes will not be listed on Bursa Malaysia Securities Berhad or on any other stock exchange but will be reported on the Fully Automated System for Issuing and Tendering ( FAST ) and traded and prescribed under the SSDS. (p) Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) : KEXIM has obtained BNM s approval for the MTN Programme vide BNM s letter dated 6 December 2010. 6
(q) Conditions precedent : For the first issuance Issuance of the Notes is subject to compliance of conditions precedent including but not limited to the following: a certificate signed by a duly authorised officer of the Issuer that there is (a) no adverse change in the condition (financial, economic or otherwise) of the Issuer which is material to the issue of the Notes; (b) no event rendering untrue or incorrect to a material extent any of the representations and warranties; (c) no material breach of any of the undertakings by the Issuer; (d) no event of default or an event, which with the giving of notice or passage of time or both, would be an event of default would have occurred and is continuing in the transaction documents; and (e) no event of default under any Notes or notes which have been issued or guaranteed by the Issuer has occurred or is continuing or will occur as a result of the issuance of the Notes; the transaction documents (all in form and substance acceptable to the Lead Arranger) shall have been duly executed by the parties thereto and stamped or endorsed as exempted from stamp duty; (iii) copies of all resolutions, authorisations and consents required in connection with the issuance and sale of the Notes having been obtained or otherwise delivered to the Lead Arranger; (iv) the MTN Programme has been assigned a credit rating of AAA (or its equivalent) by a rating agency in Malaysia; (v) a written opinion from the Solicitor on, inter alia, the validity, legality and enforceability of the Notes and the transaction documents and that all conditions precedent have been fulfilled; (vi) a written opinion from the foreign solicitor in relation to laws of Korea; (vii) a written confirmation from the Issuer that the payment and maturity date(s) of the swap arrangements entered into by the Issuer with the relevant hedging counterparty(ies) in relation to the Notes is set one (1) business day prior to the 7
corresponding payment dates for all coupon payments and maturity dates of the respective Notes; (viii) a letter of confirmation from KEXIM that a report has been filed with the Korean Ministry of Strategy and Finance (pursuant to the Foreign Exchange Transactions Act and other Korean laws at the time of issuance as may be amended from time to time); and (ix) the internal approval of the Issuer must be obtained with respect to each issuance of the Notes (English translation of the internal approval if it is in Korean). : For subsequent issuance (other than the first issuance) the MTN Programme has been assigned a credit rating of AAA (or its equivalent) by a rating agency in Malaysia; copies of all resolutions, authorisations and consents required in connection with the issuance and sale of the Notes having been obtained or otherwise delivered to the Lead Arranger; (iii) a written opinion from the foreign solicitor in relation to laws of Korea; (iv) (v) a written confirmation from the Issuer that the payment and maturity date(s) of swap arrangements entered into by the Issuer with the relevant hedging counterparty(ies) in relation to the Notes is set one (1) business day prior to the corresponding payment dates for all coupon payments and maturity dates of the respective Notes; a letter of confirmation from KEXIM that a report has been filed with the Korean Ministry of Strategy and Finance (pursuant to the Foreign Exchange Transactions Act and other Korean laws at the time of issuance as may be amended from time to time); and (vi) the internal approval of the Issuer must be obtained with respect to each issuance of the Notes (English 8
(r) Representations and warranties translation of the internal approval if it is in Korean). : Representations and warranties usual and customary for an issuance of such nature, including: (iii) (iv) the Issuer is a statutory juridical entity duly established under the KEXIM Act, and is validly existing as a statutory juridical entity; all governmental and/or official authority or consent or approval have been obtained, and all action taken, for the Issuer to issue the Notes and to execute, deliver and perform the transactions contemplated in the transaction documents, and the transaction documents constitute legal, valid, binding and enforceable obligations of the Issuer, enforceable in accordance with their respective terms; the execution and delivery of the transaction documents nor the performance thereof, does or will contravene or constitute a default under or cause to be exceeded any limitation on the Issuer or the powers of its directors, imposed by or contained in any law, regulation, authority or consent, by which the Issuer or any of its assets are bound or affected, or any agreement to which the Issuer is a party or by which any of its assets are bound; there has been no change in the financial condition of the Issuer since the date of its latest financial statements which might have a material adverse effect on (a) the financial or business condition of the Issuer, or (b) the ability of the Issuer to perform any of its obligations under the transaction documents, or (c) the legality, validity, binding effect or enforceability of any of the Notes or the transaction documents; or (d) the rights of or remedies available to the holders of the Notes; (v) no litigations, arbitration or administrative proceedings or claims, which might affect the Issuer s ability to perform its obligations under the transaction documents, is presently in progress or pending or, threatened against the Issuer or any of its assets, save and except for those disclosed; and 9
(vi) no event has occurred which constitutes or which with the giving of notice and/or the lapse of time and/or a determination by the relevant third party would constitute, a contravention or default under, any agreement or instrument by which the Issuer or any of its assets are bound or affected, being a contravention or default which might have a material adverse effect on (a) the financial or business condition of the Issuer, or (b) the ability of the Issuer to perform any of its obligations under the transaction documents, or (c) the legality, validity, binding effect or enforceability of any of the Notes or the transaction documents; or (d) the rights of or remedies available to the holders of the Notes under any provision of the transaction documents. (s) Event of default (or enforcement event, where applicable) : Including: Non-Payment: the Issuer does not pay principal or interest or premium on any Notes when due and such failure to pay continues for 30 days; Breach of Other Obligations: the Issuer fails to observe or perform any of the covenants on the Notes (other than non-payment) for 60 days after written notice of the breach is delivered to the Issuer at its registered office by holders representing at least 10% of the aggregate principal amount of the Notes; (iii) Cross Default and Cross Acceleration: (a) the Issuer defaults on any of its External Indebtedness, and, as a result, becomes obligated to pay an amount equal to or greater than US$10,000,000 in aggregate principal amount prior to its due date; or (b) the Issuer fails to pay when due, including any grace period, any of its External Indebtedness in aggregate principal amount equal to or greater than US$10,000,000 or the Issuer fails to pay when requested and required by the terms thereof, any guarantee for External Indebtedness of another person equal to or greater than US$10,000,000 in aggregate principal amount, 10
except in any such case where such External Indebtedness or guarantee is being contested in good faith by appropriate proceedings. (iv) Moratorium/Default: (a) (b) (c) (d) The Issuer declares a general moratorium on the payment of its External Indebtedness, including obligations under guarantees; the Government of Korea declares a general moratorium on the payment of its External Indebtedness, including obligations under guarantees; the Government of Korea becomes liable to repay prior to maturity any amount of its External Indebtedness, including obligations under guarantees, as a result of a default under such External Indebtedness or obligations; or the international monetary reserves of the Government of Korea become subject to a security interest or segregation or other preferential arrangement for the benefit of any creditors. (v) Bankruptcy: (a) (b) (c) (d) The Issuer is declared bankrupt or insolvent by any court or administrative agency with jurisdiction over the Issuer; the Issuer passes a resolution to apply for bankruptcy or to request the appointment of a receiver or trustee or similar official in insolvency; a substantial part of the Issuer s assets are liquidated; or the Issuer ceases to conduct the banking business. (vi) Failure of Support: the Government of Korea fails to provide financial support for the Issuer as required under Article 37 of the KEXIM Act as of the date of the Notes; 11
(vii) Control of Assets: the Government of Korea ceases to control the Issuer (directly or indirectly); or (viii) IMF Membership/World Bank Membership: the Government of Korea ceases to be a member of the IMF or the International Bank for Reconstruction and Development (World Bank). For purposes of the foregoing, External Indebtedness means any obligation for the payment or repayment of money borrowed that is denominated in a currency other than the currency of Korea. Upon the occurrence of an Event of Default, the Noteholders may declare that the Notes are immediately due and repayable and thereafter, the Noteholders may take proceedings as they think fit to enforce repayment of the Notes. (t) Covenants : The Issuer shall comply with all such applicable covenants as may be agreed upon, including: (iii) (iv) (v) (vi) at all times, comply with its obligations under the transaction documents; redeem in full all outstanding Notes in accordance with the terms and conditions of the transaction documents; at all times, provide information which the Lead Arranger or the Facility Agent may reasonably require in order to discharge its/their duties and obligations to the extent permitted by law; at all times maintain its statutory juridical entity status and carry on, conduct and operate its business, affairs and operations with diligence and in accordance and in compliance with all applicable laws and regulations and all directives of governmental authorities having the force of law and applicable to it; at all times maintain a paying agent in Malaysia; and at all times keep and maintain proper books, accounts and adequate records, in accordance with the relevant laws and regulations. 12
The Issuer agrees to comply with all such applicable negative covenants / undertakings as may be agreed upon, including on Negative Pledge. Negative Pledge If any of the Notes are outstanding, the Issuer will not create or permit any security interests on its assets as security for any of its Long-Term External Indebtedness or guarantees issued by it, unless the security interest also secures the Issuer s obligation under the Notes. Long-Term External Indebtedness means any obligation for the payment or repayment of money borrowed that is denominated in a currency other than the currency of Korea and which has a final maturity of one year or more from its date of issuance. The Issuer may, however, create or permit a security interest: In favour of the Government of Korea or The Bank of Korea or any other agency or instrumentality of or controlled by the Government of Korea; (u) (v) Provisions on buy-back and early redemption of bonds Other principal terms and conditions for the issue Arising from, any deposit or other arrangement made or entered into in connection with, the sale, assignment or other disposition or the discounting of any notes or receivables, or any other transaction in the ordinary course of business; or (iii) On any asset (or documents of title to such asset) incurred when the asset was purchased or improved to secure payment of the cost of the activity. : Repurchase and cancellation The Issuer may at any time purchase the Notes in the open market at any price and these repurchased Notes will be cancelled. Yield to maturity : To be determined closer to the issuance date of the Notes. Ranking : The Notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer 13
ranking pari passu, without any preference among themselves, and with all other unsecured and unsubordinated obligations (whether present or future) of the Issuer except those obligations preferred by law. (iii) Taxation : All payments by the Issuer of principal of, and premium and interest, if any, on the Notes shall be made without withholding or deductions for or on account of any present or future taxes, duties or charges of whatsoever nature imposed or levied by or on behalf of the Government of Korea or any of its political subdivisions or the Government of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. If withholding or deduction of taxes, duties or charges of whatsoever nature is required by law, including laws of Korea, the Issuer shall pay such additional amounts as are necessary to ensure that the Noteholders receive the same amount as the Noteholders would have received without such withholding or deduction. The Issuer will not pay, however, any additional amounts if the Noteholders are liable for the tax of in Korea because: the Noteholders are connected with Korea other than by merely owning the Notes or receiving income or payments on the Notes; or the Noteholders failed to complete and submit a declaration of the status of the Noteholders as a non-resident of Korea after the Issuer or the relevant tax authority requested the Noteholders to do so. (iv) Governing law : Laws of Malaysia. (v) Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the non-exclusive jurisdiction of the courts of Malaysia. 14
(vi) Transaction documents : The documents to be entered into for the purposes of the Notes under the MTN Programme will include: (iii) Programme Agreement; Deed of Covenant; and Any other relevant document to complete the MTN Programme as advised by the Lead Arranger and/or Solicitor and agreed by the Issuer. 15