Sustainable Management

Our primary goal is to create a more inclusive, brighter tomorrow by establishing and implementing a robust environmental, safety,
and health (ESH) management system and making continuous research and development efforts for high-quality products and services.

Mutual Growth and Cooperation

Chairman: CEO of Hanwha Corporation/Explosives, Secretary: Head of Hanwha’s Support Team, Membership: 15 people(Suppliers : CEOs of 14 Suppliers, Hanwha : Chief of Hanwha’s Corporate Planning Department), For queries and requests, please call at 02-729-1787.
Chapter 1
General Provisions

Article 1 (Purpose)

The purpose of these guidelines is to set forth the matters to be complied with in the course of entering contractual agreements between Hanwha Corporation (hereinafter, the "Company") and its small- and medium-sized partner companies (hereinafter, the "Partners") by helping to fairly reflect the interest of the Partners and prevent the Company from abusing its bargaining power and undermining the principle of freedom of contract, thereby establishing a fair and reasonable basis for subcontract transactions.

Chapter 2
Council Composition

Article 2 (Composition)

For the purpose of the efficient operation of the Shared Growth Council, the Council shall be composed of the CEO, Procurement Team Manager and three directors of the Company as well as the CEOs of the Partners and shall be chaired by the CEO of the Company.

Chapter 3
Operations

Article 3 (Reciprocity)

① The Company acknowledges that the Partners are the source of its technological competitiveness, while the Partners recognize that the Company is the driving force behind their sustainable growth. Based on such mutual understanding and respect for each other, the Company and the Partners shall cooperate fully with each other.
② The Company and the Partners shall lay the foundation for shared growth by sharing ways to foster cooperative and win-win relationships.

Article 4 (Mutual Cooperation)

① The Company and the Partners shall hold Council Meetings on a regular basis, building a sense of unity and partnership.
② The Company and the Partners shall jointly develop mutually-beneficial cooperative businesses and participate in new businesses to secure new business opportunities and shall share the accomplishments of such joint efforts.
③ The Company and the Partners shall improve the technological competitiveness of the Partners' products through cooperative technology development efforts for the pursuit of shared growth.
④ The Company and the Partners shall fully exchange ideas and information on general matters regarding technology, human resources, and management based on the spirit of reciprocity to promote their mutual interests.
⑤ The Company shall provide reasonable support to the Partners to address their suggestions and complaints.

Article 5 (Suggestion System)

For the purpose of enhancing their competitiveness, the Company and the Partners shall operate a suggestion system as follows:
① They shall establish a partner relationship management (PRM) system to lay the foundation for open and mutually-beneficial relationships.
② The Company shall make reasonable efforts to create common profits by engaging the Partners to make suggestions on new business development, technological innovation, cost reduction, substitute material development, and manufacturing localization.

Article 6 (Incentive System)

The Company may provide any of the following incentives to any of the Partners according to their overall management performance.
① Financial assistance upon their request
A. Extended advance payments
B. Priority assistance for raw material supply
C. Priority assistance for facility investments and workplace improvement investments
② Opportunities to develop new products with a future purchase guarantee and opportunities to participate in new businesses
③ Management support
A. Technical training on product quality and manufacturing as well as non-technical training on cost estimation, etc.
B. Management diagnosis and consulting

ADDENDUM

Article 1(Effective Date)

These guidelines shall take effect from July 30, 2009.

The 4th

2015 Roundtable with
Hanwha Corporation/
Explosives’ Suppliers

Council Performance (The 4st 2015 Roundtable with Hanwha Corporation/Explosives’ Suppliers : DESCRIPTION(Date, Venue, Attendees, Outcomes of the Meeting))
DESCRIPTION
Date 21st July 2015
Venue The Plaza Hotel
Attendees 15 persons (7 from Hanwha Corporation and 8 from our partners)
Outcomes
of the Meeting

1.Mid- and long-term vision of Hanwha Corporation/Explosives

2.Performance Assessment of Suppliers and Awards

cash awards for Suppliers with excellent performance

earlier payments prior to national holidays

plaques of appreciation, trophies awarded


3.Consulting Program for Hanwha Suppliers announced

4.Complaints & Difficulties heard from Suppliers

The 3rd

Shared Growth
Council Meeting

Council Performance (The 3rd Shared Growth Council Meeting : DESCRIPTION(Date, Venue, Attendees, Outcomes of the Meeting))
DESCRIPTION
Date June 13, 2011 (Mon) 16:30 - 20:40
Venue The Grand Ballroom, the Plaza Hotel Seoul
Attendees 88 persons (5 from Hanwha Corporation and 83 from our partners)
Outcomes
of the Meeting

1.Council name changed from the Win-Win Cooperation Council to the Shared Growth Council

The name change represents our commitment to forward-looking, effective efforts
for shared growth with our partners.


2.Full cash payments and performance guarantee exemptions for our partners ranked "good" and above

Implementation Period: July 1, 2011— June 30, 2012

Increase in the number of “good”-ranked partners: 20 → 40

Extended twice-a-month cash payments

Extended advance payments prior to the nation's New Year's and Thanksgiving holidays


3.Improved payment conditions for machinery and parts for industrial facilities and financial assistance

The maturity of electronic bonds was reduced from 90 days to 60 days.


4.Product development support with future purchase guarantees

The list of our “good”-ranked partners was distributed to our research/development organizations.

The 2nd

Shared Growth
Council Meeting

Council Performance (The 2nd Shared Growth Council Meeting : DESCRIPTION(Date, Venue, Attendees, Outcomes of the Meeting))
DESCRIPTION
Date May 17, 2010 (Mon) 17:00 - 20:00
Venue The Grand Ballroom, the Plaza Hotel Seoul
Attendees 82 persons(5 from Hanwha Corporation and 77 from our partners)
Outcomes
of the Meeting

1.Payment conditions improved

A.Cash payments extended

B.Payment conditions improved

Increase in the ratio of cash payments: Full cash payments for our partners ranked "good" and above

Twice-a-month cash payments extended

Regular advance payments prior to the nation's New Year's and Thanksgiving holidays


2.Support for technology development and quality improvement

A.Free-of-charge metal mold, jig, and fixture rental for product development and manufacturing

B.Regular consultation sessions to be held by each Hanwha plant with its partners to ensure quality


3.Human resources training and education support

A.Quality system diagnosis through quality system evaluation

B.On-site support for quality defects


4.Management support

A.Reasonable profit margin ensured by cost verification

B.Consortiums to be launched for new business development as well as for product development with future purchase guarantees

The 1st

Shared Growth
Council Meeting

Council Performance(The 1st Shared Growth Council Meeting : DESCRIPTION(Date, Venue, Attendees, Outcomes of the Meeting))
DESCRIPTION
Date July 30, 2009 (Thu) 17:00 - 20:00
Venue The Diamond Hall, The Plaza Hotel Seoul
Attendees 67 persons (5 from Hanwha Corporation and 62 from our partners)
Outcomes
of the Meeting

1.The purpose and composition of the Win-Win Cooperation Committee defined and explained


2.The general direction of the Commitee defined:
reciprocity, mutual cooperation, a suggestion system, and an incentive system


3.Our action plan for win-win management defined

A.Secure cost and technological competitiveness

B.Provide financial assistance to our partners

C.Maintain sustainable transactional relationships

D.Share information and improve systems

E.Provide technical support to our partners

  • Contract Formation Guidelines for Win-Win Cooperation between Large and Small Companies
    Article 1 (Purpose)

    The purpose of these guidelines is to set forth the matters to be complied with in the course of entering contractual agreements between Hanwha Corporation (hereinafter, the "Company") and its small- and medium-sized partner companies (hereinafter, the "Partners") by helping to fairly reflect the interest of the Partners and prevent the Company from abusing its bargaining power and undermining the principle of freedom of contract, thereby establishing a fair and reasonable basis for transactions.

    Article 2 (Contract Formation and Criteria for Contract Type Selection)
    • 1. The Company shall award procurement contracts through either limited-tender or nomination processes. Notwithstanding the foregoing, the Company may award procurement contracts through negotiation if necessary.
    • 2. Bids shall be submitted in a sealed envelope. If it is practically impossible to submit sealed bids, bids may be submitted via fax or email.
    • 3. Except for the cases described in Paragraph 4 below, the Company shall use limited tenders or nomination in awarding procurement contracts.
    • 4. The Company may use negotiated procurement in any of the following cases. In such cases, it shall clearly state the reasons for the use of such negotiated procurement method and obtain the prior approval of the head of the respective department.
      • ① A sudden rise in commodity prices or an equivalent condition which prevents the Company from pursuing a competitive bidding process;
      • ② Procurement works where it is difficult to determine which party is responsible for future defects of the facilities built under a construction projector where facilities are installed, assembled, or maintained and repaired by their manufacturer or supplier;
      • ③ Construction projects which require a patented construction method or a new technology or manufacturing processor purchase orders for products or materials which are patented and registered as an industrial property or design;
      • ④ Where the client has designated a supplier for the required procurement or only one manufacturer or supplier exists for the required procurement;
      • ⑤ Where there is a company whose technological cooperation or price-competitive bid has made significant contribution to the Company's winning of the respective contract;
      • ⑥ Where competitive bidding is difficult because the nature or purpose of the respective contract requires the technique, service, or equipment or tool of a particular person or requires work in a special region, a special structure, or a special level of quality, performance, or efficiency; or
      • ⑦ Where there is no bidder or successful bidder or the successful bidder does not sign the respective procurement contract.
    Article 3 (Establishment of Partner Relationship Management System)
    • 1. The Company shall establish a partner relationship management system and disclose information related to transactions with its Partners in an effort to ensure transparency and stability in its transactions.
    • 2. The Company shall organize regular internal and external consultation sessions with its Partners to promote win-win cooperation with them.
    Article 4 (Consultative Body for Partner Support)

    The Company shall operate the Win-Win Cooperation Council, which manages general matters regarding its partner support including technological support, financial support, education and training support, and a suggestion system.

    Article 5 (Requirements for Valid Contract Formation)

    The Company shall comply with the following prime contractor obligations and restrictions stipulated in the Fair Subcontract Transactions Act.

    • 1. Document Issuance
      • ① The Company and the Partner shall execute and sign a written agreement prior to the start of the respective manufacturing or construction work.
      • ② The Company and the Partner shall execute a master agreement in writing for recurring subcontracting transactions, and they may sign a separate agreement for individual transactions if necessary. Notwithstanding the foregoing, in the case of recurring transactions, a written order form may replace a written agreement.
      • ③ In the case where a request is made for additional work or service after the lapse of a period considerably shorter than that usually expected, the Company and the Partner shall make a prior written agreement on the major details of such request.
    • 2. Subcontractor rate determination through reasonable rate calculation
      • ① The subcontractor rate shall be determined through negotiation according to a reasonable rate calculation which considers the quantities, quality, specifications, delivery date, payment method, or cost of raw materials and labor (or trends in such costs) of the subcontracting work and adds adequate maintenance and profit margins.
      • ② In the case where a cause for a change to the original subcontracting rate occurs during the period of the respective subcontract, either the Company or the Partner may make a request for a rate change to the other, and such a request shall be decided through mutual consultation within 30 days (extendable for another 30 days) from the date of the request.
      • ③ In the case where the requested rate change is delayed due to an unavoidable reason, the Company and the Partner shall apply a tentative subcontracting rate set through negotiation. Where a final rate is determined, the Company shall pay the difference to the Partner.
    • 3. Clear delivery date
      • ① The Company shall set a reasonable delivery date according to the usual industry standard after sufficient consultation with the Partner.
      • ② In the case of any change to the delivery date originally set in the contract, such a change shall be clarified in writing. In the case where a subcontract project requires a shorter delivery date than usual due to a rush order or etc., the Company shall reach an agreement through consultation with the Partner.
      • ③ In the case of the Company's unreasonable delay in, or refusal of, receiving orders not attributable to the Partner, the Company shall compensate the Partner for losses incurred due to such delay or refusal.
    • 4. Objective inspection standards and criteria
      • ① The Company shall establish objective, fair, and reasonable standards and criteria for the inspection of goods manufactured or supplied by its partner companies (including facilities or structures constructed by partner companies) through consultation with the Partner.
      • ② The Company shall issue a certificate of receipt upon receiving goods or services from the Partner and promptly carry out inspection on such goods or services according to the standards, criteria, and procedures pre-determined through consultation with the Partner.
      • ③ The Company shall give notice of inspection results within 10 days after delivery unless there is a justifiable reason not to do so.
      • ④ The Company shall take good care of the goods delivered by the Partner in good faith until or during inspection.
    • 5. Reasonable payment schedule
      • ① The Company shall make a payment on the earliest possible date set within the time frame of 60 days from the date of invoice.
      • ② In the case where the Company has been entrusted with manufacturing work from a project owner and has received an initiation fee or a completion fee from the project owner, the Company shall make a payment for any portion of such work performed by the Partner within 15 days from the receipt of such a fee (or the pre-determined payment date if the date comes earlier than the 15th date after receipt of such a fee).
      • ③ In the case where the Company has received a payment in cash from a project owner in relation to manufacturing or other work entrusted by the project owner, the Company shall pay no less than the amount of cash for any portion of such work performed by the Partner.
      • ④ In the case where a project owner makes a payment in electronic bonds in relation to manufacturing or other work entrusted by the project owner, the Company shall make a payment in the electronic bonds issued by the project owner within the valid period of such bonds.
      • ⑤ In the case where the Company fails to make a payment for subcontract work within 60 days from the date of invoice issued by the Partner or the electronic bonds mentioned in the preceding paragraph reach maturity after 60 days from the date of such an invoice, the Company shall pay the late payment interest stipulated in the relevant laws, regulations, or guidelines as well as an electronic bond clearing commission.
    • 6. Reasonable return of products found defective after delivery
      • ① For products found to be defective after delivery, the Company and the Partner shall decide which of them is responsible to identify the cause of such defects, the type of the cause of such defects, and their respective proportion of liability and have the defective products returned through mutual consent.
    • 7. Contract termination and cancellation
      • ① The Company may terminate or cancel a subcontract without any further notice in the following cases:
        A. Where the Partner has its bank account blocked by a financial institution or has its business suspended or canceled by the relevant authority; or
        B. Where both the Company and the Partner deem it practically impossible to perform the subcontract work due to a resolution made for the dissolution, business transfer, or merger of either of them or a disaster.
      • ② In the following cases, the Company may terminate or cancel a subcontract within, at most, one month unless the Partner performs its subcontractual obligations within the one-month period.
        A. Where the Partner makes a material breach of such subcontract;
        B. Where the Partner refuses to perform, or delays performing, its subcontractual obligations without a justifiable reason and such a refusal or delay makes it difficult or impossible for the Company to meet its delivery deadline; or
        C. Where it is deemed that the Partner is not capable of fulfilling its subcontractual obligations for significant reasons, such as the Partner's lack of technology or production and quality management capacity.
    Article 6 (Prohibitions Concerning Contract Formation)

    At the time of the formation of a contract with the Partner, the Company shall not violate the following prohibitions:

    • 1. Failure to issue a written contract letter
      • ① Where the Company fails to issue a separate contract letter and separate work instructions for an additional task even if the scope of such a task has been defined and its amount is considerable; or
      • ② Where the Company fails to issue a revised contract letter or an adjusted contract pricing statement for an additional work added to, or a change made to, the original volume of a construction work.
    • 2. Unfair subcontract pricing
      • ① Where the Company sets a subcontract price by indiscriminately reducing the unit price without any justifiable reasons;
      • ② Where the Company sets a subcontract price by unilaterally deducting a certain amount from the Partner's remuneration;
      • ③ Where the Company sets a subcontract price by discriminating against the Partner without any justifiable reasons or unilaterally setting such a lower price without its prior consent;
      • ④ Where the Company sets a subcontract price by causing the Partner to misunderstand the terms and conditions of the transaction, such as order quantity, etc., or by deceiving the Partner in such a way as to show it the quotation of another partner company or a false quotation;
      • ⑤ Where the Company sets a subcontract price lower than the combined amount of direct construction work without any justifiable reasons when the Company forms a private subcontract with the Partner through a one-way bid;
      • ⑥ Where the Company sets a subcontract price lower than the lowest tender price without any justifiable reasons when it forms a subcontract with the Partner through competitive bidding;
      • ⑦ Where the Company sets a subcontract price by indiscriminately reducing the unit price without any objective and justifiable reasons such as a drop in raw material prices or labor cost;
      • ⑧ Where the Company sets a lower subcontract price by discriminating against the Partner even if the Partner has the same qualifications as other partner companies in terms of payment conditions, production volume, and work difficulty;
      • ⑨ Where the Company sets a lower subcontract price based on the Partner's quotation offered upon the Company's quotation request for an order volume considerably larger than its actual volume;
      • ⑩ Where the Company entrusts the Partner to perform manufacturing or other works without setting a subcontract price and sets the price lower than usual prices without its prior consent;
      • ⑪ Where the Company receives technical materials related to the requested deliverable from the Partner, shares it with another partner company, and sets the subcontract price lower citing the quotation of such other partner company;
      • ⑫ Where the Company sets a lower subcontract price to satisfy its subcontract budget which has been set remarkably lower than the amount of the prime contract;
      • ⑬ Where the Company sets a subcontract price remarkably lower than usual prices under the pretext of its export, special markdown events, promotional gifts, or samples.
    • 3. Oral request for proposals or product development
      • ① Where the Company cancels its request for product development after the Partner completes installing related facilities and equipment or completes its preparation for manufacturing or demands the Partner to lower the unit price offered by the Partner upon its oral quotation request.
    • 4. Unreasonable intervention in the management of the Partner
      • ① Where the Company intervenes in the personnel management of the Partner by requiring the Partner to obtain its instruction or approval for the Partner's appointment and dismissal of its directors, officers, and employees or by compelling the Partner to hire a certain person against its will;
      • ② Where the Company intervenes in the Partner's re-subcontract formation and limits its autonomy in selecting its re-subcontractor and setting terms and conditions regardless of the purpose of its subcontract under the pretext of maintaining quality of deliverables and meeting the delivery deadline;
      • ③ Where the Company coerces the Partner to mobilize all its on-site personnel against its will even if the Partner is performing its construction work as normally:
      • ④ Where the Company puts a limit on the list of items that the Partner can manufacture or prevents it from engaging in transactions with its competitors or the competitors of its affiliated companies; or
      • ⑤ Where the Company demands that the Partner share its technical materials related to a deliverable
    • 5. Fee for an additional construction project not reflected
      • ① Where the Company does not allow the Partner to make a request for the fee for an additional work assigned after the completion of the construction work;
      • ② Where the Company passes the burden of building a supervisor's office and funding the operation of such an office on to the Partner or does not allow it to make a due change to the original contract after an increase in labor cost or fluctuations in prices; or
      • ③ Where the Company does not include a construction suspension period due to specific construction circumstances, weather conditions, or rainy seasons to the construction period and thus does not allow the formation of an additional contract for such reasons.
    • 6. Exclusive dealing
      • ① Where the Company does not allow the Partner to work for a specific client (unless the Company and the Partner reach an agreement to exclusive dealing as they engage in a joint technology development project).
    • 7. Unilateral passing of civil complaints to the Partner
      • ① Where the Partner is held responsible for any financial cost and administrative burden incurred from civil complaints filed in relation to the subcontract construction work; and where the project owner resolves civil complaints which remain pending and therefore can trigger future disputes and deducts all costs incurred from such a process from the subcontract price.
    Article 7 (Fulfillment of Subcontractual Obligations Pursuant to the Subcontract Terms and Related Laws)

    For the fulfillment of their subcontractual obligations, the Company and the Partner shall comply with the following:

    • 1. Compliance with Civil Law and other related laws
      • ① The Company shall comply with the principle of good faith, the Fair Subcontract Transactions Act, the Monopoly Regulation and Fair Trade Act, and other related laws and regulations. In the case of disputes with the Partner, the Company shall resolve such disputes in writing.
    • 2. Sufficient consultation and supporting documentation for price cuts
      • ① In the case where the Company demands price cuts in exchange for a drop in commodity prices or an increased volume of orders, the Company shall provide the Partner with reasonable documentation that supports such price cuts.
    • 3. Adjustment of the subcontract price as a result of a change in the subcontract
      • ① In the case where the Partner has incurred additional costs due to a change to the subcontract terms including an addition of more specification requirements by the Company, the Company shall pay such costs to the Partner
    Article 8 (Prohibitions Concerning the Performance of Subcontractual Obligations)

    During the performance of their subcontractual obligations, the Company and the Partner shall not violate the following
    prohibitions:

    • 1. Unfair refusal to accept deliverables
      • ① Where the Company refuses to accept deliverables, even in the case in which its terms are ambiguous to determine whether such deliverables are supplied or produced in a manner originally requested;
      • ② Where the Company blames a claim by the project owner, a foreign importer, or a customer or sluggish sales on the Partner and refuses to accept requested deliverables;
      • ③ Where the Company refuses to accept deliverables for their delayed delivery even if the Partner was not in a position to deliver deliverables or complete a construction work on time due to the project owner's delay in the supply of raw materials or construction materials to the Partner;
      • ④ Where the Company has not established any inspection standards for deliverables and applies inspection standards stricter than usual;
      • ⑤ Where the Company refuses to accept deliverables by citing its ambiguous inspection standards or applying inspection standards stricter than those already agreed upon between the Company and the Partner;
      • ⑥ Where the Company refuses to accept ordered deliverables due to its own decision that a stable supply of deliverables is not possible due to the bankruptcy, etc., of the Partner; or
      • ⑦ Where the Company has ordered several types of deliverables and refuses to accept certain types of deliverables due to defects found on other types of deliverables, or where the Company refuses to accept deliverables because of the project owner's cancellation or suspension of the order.
    • 2. Unfair return of deliverables
      • ① Where the Company returns deliverables on the pretext of the project owner's cancellation of order or changes in economic conditions;
      • ② Where the Company unfairly determines that deliverables are not in compliance with its ambiguous inspection standards and procedures and returns them;
      • ③ Where the Company returns deliverables when they are found to be defective during its inspection because of defective raw materials supplied by the project owner;
      • ④ Where the Company returns deliverables due to a delay in their delivery, even if such delay was caused by a delayed supply of raw materials to the Partner;
      • ⑤ Where the Company returns already received deliverables by reason of the project owner's cancellation of order or changes in economic conditions;
      • ⑥ Where the Company returns deliverables which have passed the inspection of a third party designated by the Company; or
      • ⑦ Where the Company returns already received deliverables on the grounds of their delayed supply or construction even if there is objective evidence that the Company had accepted such a delay.
    • 3. Unfair price reduction
      • ① Where the Company reduces the subcontract price on unreasonable grounds, such as a request for cooperation, cancellation of order by another party to the transaction, a change in economic circumstances, etc., after having given entrustment to the Partner without specifying conditions for a possible reduction in the subcontract price;
      • ② Where the Company has reached an agreement for a price reduction with the Partner and reduces the subcontract price by applying the terms of the agreement unilaterally and retroactively to a portion that was entrusted before the agreement was reached;
      • ③ Where the Company reduces the subcontract price excessively on the grounds that the subcontract price is paid in cash or paid in advance;
      • ④ Where the Company reduces the subcontract price unilaterally due to an insignificant fault of the Partner that does not cause any substantial loss to the Company;
      • ⑤ Where the Company has had the Partner purchase from it the goods or other materials which are necessary for the manufacturing, repair, construction, or service performance or use its equipment and reduces the subcontract price by deducting an amount greater than the proper purchase or lease amount from the subcontract price;
      • ⑥ Where the Company reduces the subcontract price on the grounds that the prices of commodities or raw materials have fallen at the time of payment;
      • ⑦ Where the Company reduces the subcontract price for unreasonable reasons such as its operating loss or its markdown;
      • ⑧ Where the Company deducts indirect labor costs, general administrative expenses, profit margins, and value added taxes from the subcontract price although such a deduction has not been included in the subcontract terms and conditions;
      • ⑨ Where the Company imposes on the Partner a subcontractor employment insurance premium, industrial safety and health management expenses, and other expenses which should be borne by the Company as a prime contractor under the Act on the Collection of Insurance Premiums, etc., for Employment Insurance and Industrial Accident Compensation Insurance, the Occupational Safety and Health Act, and other related laws;
      • ⑩ Where the Company reduces the subcontract price for a delay in the Partner's delivery of deliverables due to the Company's delay in the supply of raw materials and equipment or its limited timeframe for delivery;
      • ⑪ Where the Company reduces the already fixed subcontract price by reason of future orders, or where it has entered into the subcontract for the total price and reduces the price on the grounds of the elements of the subcontract work;
      • ⑫ Where the Company reduces the already fixed subcontract price for its purchase of raw materials at a lower price than expected;
      • ⑬ Where the Company reduces the subcontract price by way of making changes to the subcontract, not the work entrusted and the terms and conditions of such entrustment; or
      • ⑭ Where the Company reduces the subcontract price by passing foreign exchange losses and other losses on to the Partner and such passing on of losses is not included in the subcontract terms and conditions.
    • 4. Unfair requests for economic profits
      • ① Where the Company demands the Partner to pay a certain amount of sponsorship, assistance, support, or other economic profits in consideration of the initiation of the contract or a large volume order;
      • ② Where the Company demands the Partner to pay a certain amount of sponsorship, assistance, support, or other economic profits on the pretext of its profit or management deterioration; or
      • ③ Where the Company demands the Partner to pay a certain amount of sponsorship, assistance, support, or other economic profits although the Partner has no legal obligation to pay.
    • 5. Unfair passing on of costs attributable to the Company to the Partner
      • ① Where the Company passes on to the Partner costs incurred as a result of its wage increase or a delay in its internal approval process.
    • 6. Unreasonable payment in kind
      • ① Where the Company demands that it pay the subcontract price with goods contrary to the intention of the Partner.
    • 7. Retaliatory measures
      • ① Where the Company limits opportunities for the Partner to win an order, suspends a transaction with the Partner, or gives the Partner other disadvantages for the Partner's reporting to the Fair Trade Commission regarding the Company's violation of the Fair Subcontract Transactions Act.
    • 8. Law evasion
      • ① Where the Company performs any act to evade the actual application of the Fair Subcontract Transactions Act in relation with a subcontract transaction;
      • ② Where the Company has made a payment to the Partner according to a corrective measure imposed by the Fair Trade Commission and thereafter collects the amount from the Partner or deducts the amount from the subcontract price; or
      • ③ Where the Company has paid discount charges on notes or late payment interest to the Partner and thereafter deducts the paid amount from a unit price.
    • 9. Compelling purchase of goods
      • ① Where the Company compels the Partner to purchase or use certain goods, equipment, or services except for justifiable reasons such as the maintenance and improvement of the quality of deliverables.
    • 10. Unfair requests for the settlement of purchase prices
      • ① Where the Company has had the Partner purchase goods and other materials or use equipment necessary for the delivery of deliverables and has the Partner pay all or part of the purchase price or rent prior to the date of payment of the subcontract price; or
      • ② Where the Company has had the Partner purchase goods and other materials or use equipment necessary for the delivery of deliverables and has the Partner pay the purchase price or rent on conditions that are remarkably unfavorable compared with those on which the Company purchases or uses the goods, materials, or equipment or it supplies such goods, materials, or equipment to a third party.
    ADDENDUM

    These guidelines shall take effect from October 1, 2009.

  • Guidelines for the Selection (Registration) and Management of Partner Companies
    Article 1 (Purpose)

    The purpose of these guidelines is to set forth the matters concerning Hanwha Corporation's selection and management of its partner companies, thereby enhancing transparency and fairness in the selection and management process and contributing to establishing a fair and reasonable basis for subcontracting transactions.

    Article 2 (Definitions)
    • 1. “Partner Companies” refers to businesses selected to perform, or currently performing, manufacturing or construction works or other services entrusted by Hanwha Corporation. This term includes subcontractors stipulated in the Fair Subcontract Transactions Act as well as general contractors.
    • 2. “Partner Company Selection”refers to the process of having a partner company registered on Hanwha Corporation's Partner Company Register.
    • 3. “Partner Company Management”refers to the management of businesses selected and registered as a partner company of Hanwha Corporation according to certain criteria, such as offering an opportunity to initiate a transaction with Hanwha Corporation or cancel their registration.
    Article 3 (Criteria for and Procedures and Disclosure of Partner Company Selection)
    • 1. Businesses which are capable of manufacturing or supplying requested components or services that meet Hanwha Corporation's quality standards;
    • 2. Businesses which are highly qualified with rich experience and expertise in manufacturing or processing the respective item;
    • 3. Businesses which are qualified for volume production, timely delivery, and reasonable prices given their production capacity and speed and are making ongoing efforts to reduce costs;
    • 4. Businesses which have sufficient working space and workforce, quality manufacturing facilities and testing equipment, and a quality assurance system;
    • 5. Businesses which are able to continue as a ongoing entity and have a strong financial position;
    • 6. Businesses which are suitably located for the requested manufacturing or supplying work and have good access to transportation; or
    • 7. Calibration agencies which are accredited by the Korea Laboratory Accreditation Scheme (KOLAS) or possess equivalent qualifications.
    Article 4 (Equal Transaction Opportunities)

    Businesses selected and registered as a partner company of Hanwha Corporation shall not be limited or discriminated against in tenders offered by Hanwha Corporation without any justifiable reason.

    Article 5 (Criteria and Procedures for Partner Company Dismissal and Disclosure Thereof)
    • 1. A registered Partner Company may be dismissed by Hanwha Corporation only for objective and justifiable reasons as follows:
      • ① Where it fails to meet the minimum threshold during Hanwha Corporation's registration assessment;
      • ② Where it is responsible for a clear, substantial reason for the cancellation in the course of performing the task entrusted by Hanwha Corporation;
      • ③ Where it has ceased normal business operations due to bankruptcy or suspension or cessation of business;
      • ④ Where its business license has been revoked pursuant to the relevant laws and regulations (including the Fair Subcontract Transactions Act, the Framework Act on the Construction Industry, and the Basic Act on Small and Medium Enterprises in South Korea);
      • ⑤ Where it damages the public reputation of Hanwha Corporation or incurs financial losses to it;
      • ⑥ Where it creates serious safety, environmental, and quality issues;
      • ⑦ Where it has caused significant defects or fails to correct such defects;
      • ⑧ Where it undermines Hanwha Corporation's fair subcontract transaction culture by bribing or coercing its directors, officers, and employees;
    • 2. A registered Partner Company shall not be disadvantaged by unjustifiable dismissal as follows:
      • ① Where it is dismissed for not complying with Hanwha Corporation's unilateral instructions; or
      • ② Where it is dismissed for also being registered as a partner company of Hanwha Corporation's competitors.
    • 3. In the case of dismissal of Partner Companies, Hanwha Corporation shall give individual notice that specifies its reason for dismissal in writing (or in an electronic document) within 15 days from selection.
    • 4. Such dismissed businesses shall have an opportunity to appeal within 15 days from the aforementioned notice of dismissal. In the case where registration has been revoked due to a cause attributable to Hanwha Corporation, such businesses shall be promptly re-registered.
    Article 6 (Penalties)

    In the case where any one of Hanwha Corporation's directors, officers, and employees fails to comply with these guidelines due to his or her willful misconduct or gross negligence, the person shall become subject to disciplinary action pursuant to Hanwha Corporation's human resources management policies and merit and disciplinary policies.

    ADDENDUM

    These guidelines shall take effect from October 1, 2009.

  • Guidelines for the Establishment and Operation of the Internal Deliberative Council on Subcontract Transactions
    Article 1 (Purpose)

    The purpose of these guidelines is to conduct voluntary preliminary deliberation on the fairness and lawfulness of Hanwha Corporation's subcontract transactions of a certain amount or higher, thereby contributing to establishing a fair and reasonable basis for subcontracting transactions.

    Article 2(Composition)
    • 1. The Internal Deliberative Council on Subcontract Transactions is composed of three or more Hanwha Corporation directors, officers, and employees, including a director in charge of subcontract transactions. The Council may appoint outside experts if necessary.
    • 2. The Council shall be composed of one chairperson and three or more members.
      – Chairperson: the Management Support Officer of Hanwha Corporation
      – Members: Business Planning Team Managers of two business divisions of Hanwha Corporation, the Management Planning Team Manager and Procurement Team Manager of Hanwha Corporation
      – Secretary: Win-Win Cooperation Officer of Procurement Team
    Article 3 (Operations)
    • 1. The Council shall hold regular meetings at least once a year and may hold additional meetings as deemed necessary. In the case of no agenda items to deliberate on, the Council shall replace a regular meeting with a written resolution and keep a written record of the resolution as "no agenda items."
    • 2. The Council shall carry out preliminary deliberations on the following matters: (written deliberation available for the matters set forth under Subparagraph ④)
      • ① The appropriateness of partner company registration and dismissal criteria and procedures;
      • ② Appeals made against decisions on the selection or dismissal of partner companies;
      • ③ Corrective and disciplinary actions to be taken for violations against the Fair Subcontract Transactions Act and other related laws and regulations
      • ④ The fairness of contract formation and pricing for subcontract transactions with a value of KRW 1 billion or more and annual unit price contracts and their compliance with the Fair Subcontract Transactions Act and other related laws and regulations using the ‘Compliance Check Sheet’on the following matters:
        A. Whether to issue a written contract letter;
        B. Whether to open a local letter of credit;
        C. Whether to make a payment guarantee for subcontractors
        D. Whether to determine fair and reasonable pricing;
        E. Whether to coerce subcontractors to purchase certain goods; and
        F. Whether to make an unfair request for economic profits.
      • ⑤ The Council may listen to the opinion of subcontractors if necessary. In such cases, it shall keep maintain anonymity.
    Article 4 (Resolution)

    The Council shall adopt a resolution by a majority of the votes cast by more than half of the members (including the chairperson) present. The chairperson holds the deciding vote in case of a tie.

    Article 5 (Document Retention)

    All documentation regarding deliberations made and other actions taken thereafter by the Council shall be retained for three years from the conclusion of deliberation.

    ADDENDUM

    These guidelines shall take effect from October 1, 2009.

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