SEC Filing | Amkor Technology

View:

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1998
REGISTRATION NO. 333-37235
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

AMKOR TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 3674 23-292-5614
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)

AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

FRANK J. MARCUCCI
CHIEF FINANCIAL OFFICER
AMKOR TECHNOLOGY, INC.
1345 ENTERPRISE DRIVE
WEST CHESTER, PA 19380
(610) 431-9600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

Copies to:

LARRY W. SONSINI, ESQ. ALAN L. BELLER, ESQ.
DONNA M. PETKANICS, ESQ. YONG G. LEE, ESQ.
BRUCE M. MCNAMARA, ESQ. CLEARY, GOTTLIEB, STEEN & HAMILTON
WILSON SONSINI GOODRICH & ROSATI ONE LIBERTY PLAZA
PROFESSIONAL CORPORATION NEW YORK, NY 10006
650 PAGE MILL ROAD (212) 225-2000
PALO ALTO, CA 94304
(650) 493-9300

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE
================================================================================

PROPOSED MAXIMUM
AMOUNT TO MAXIMUM OFFERING AGGREGATE OFFERING
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER SECURITY PRICE(1)(2)
- -----------------------------------------------------------------------------------------------------------------

Common Stock, $.001 par value(3)... 40,250,000 Shares $12.00 $483,000,000
- -----------------------------------------------------------------------------------------------------------------
% Convertible Subordinated Notes due 2003 and
Common Stock, $.001 par value... $172,500,000 $172,500,000
=================================================================================================================

AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTRATION FEE
- -------------------------------------------------- -------------------

Common Stock, $.001 par value(3)... $142,485(3)
- -------------------------------------------------------------------------------------------
% Convertible Subordinated Notes due 2003 and
Common Stock, $.001 par value... $50,888(4)
- ---------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------

- ---------------

(1) Includes the aggregate value offered if the Underwriters exercise the
options to purchase shares of Common Stock and Convertible Notes to cover
over-allotments, if any.

(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) promulgated under the Securities Act of 1933, as
amended.

(3) $121,970 of the fee paid previously; $20,515 paid herewith.

(4) Fee paid previously.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
2

EXPLANATORY NOTE

This Registration Statement contains a Prospectus relating to an offering
in the United States and Canada of an aggregate of 28,000,000 shares of Common
Stock and $120,000,000 aggregate principal amount of % Subordinated
Convertible Notes due 2003 (the "Convertible Notes") of Amkor Technology, Inc.
(the "U.S. Offering"), together with separate Prospectus pages relating to a
concurrent offering outside the United States and Canada of an aggregate of
7,000,000 shares of Common Stock and $30,000,000 aggregate principal amount of
the Convertible Notes of Amkor Technology, Inc. (the "International Offering"),
in each case excluding shares issuable upon exercise of the Underwriters'
over-allotment options. The complete Prospectus for the U.S. Offering follows
immediately. Following such Prospectus are the following alternate pages from
the Prospectus for the International Offering: a front cover page, five pages
comprising the "Underwriting" section and a back cover page. All of the other
pages of the Prospectus for the U.S. Offering are to be used for both the U.S.
Offering and the International Offering.

If this Registration Statement becomes effective in accordance with Rule
430A under the Securities Act of 1933, as amended, the complete Prospectus for
each of the U.S. and International Offerings in the forms in which they are to
be used will be filed with the Securities and Exchange Commission pursuant to
Rule 424 under the Securities Act of 1933, as amended.
3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.

SUBJECT TO COMPLETION, DATED MARCH 31, 1998
PROSPECTUS
35,000,000 SHARES
COMMON STOCK
[AMKOR LOGO] $150,000,000
% CONVERTIBLE SUBORDINATED NOTES DUE 2003

AMKOR TECHNOLOGY, INC.
------------------

Amkor Technology, Inc. ("Amkor" or the "Company") hereby offers 30,000,000
shares of Common Stock, par value $.001 per share ("Common Stock"), and
$150,000,000 aggregate principal amount of % Convertible Subordinated Notes
due 2003 (the "Convertible Notes"). In addition, certain stockholders of the
Company (the "Selling Stockholders") are hereby offering 5,000,000 shares of
Common Stock. The Convertible Notes will mature on , 2003. Interest on
the Convertible Notes is payable on and of each year, commencing
, 1998. The Convertible Notes are convertible into shares of Common
Stock at any time on or before the close of business on the last trading day
prior to maturity, unless previously redeemed, at a conversion price of
$ per share, subject to adjustment in certain events as described herein.

The Convertible Notes are subordinated in right of payment to all existing
and future Senior Debt (as defined) of the Company and effectively subordinated
to all existing and future liabilities and obligations of the Company's
subsidiaries. The Convertible Notes are not redeemable by the Company prior to
, 2001. On or after , 2001, the Convertible Notes are
redeemable, in whole or from time to time in part, at the option of the Company,
at the redemption prices set forth herein plus accrued interest, if the closing
price of the Common Stock is at least 125% of the conversion price for at least
20 trading days within a period of 30 consecutive trading days ending on the
fifth trading day prior to the notice of redemption. No sinking fund is provided
for the Convertible Notes. In addition, following the occurrence of a Designated
Event (i.e., a Change of Control or Termination of Trading (each as defined)),
each holder has the right to cause the Company to purchase the Convertible Notes
at 101% of their principal amount together with accrued and unpaid interest. See
"Description of Convertible Notes."

Of the 35,000,000 shares of Common Stock (the "Shares") and $150,000,000
aggregate principal amount of Convertible Notes offered hereby, 28,000,000
Shares and $120,000,000 aggregate principal amount of Convertible Notes are
being offered by the U.S. Underwriters (as defined) in the United States and
Canada (the "U.S. Offering") and 7,000,000 Shares and $30,000,000 aggregate
principal amount of Convertible Notes are being offered by the International
Underwriters (as defined) in a concurrent offering outside the United States and
Canada (the "International Offering" and, together with the U.S. Offering, the
"Offerings"), subject to transfers between the U.S. Underwriters and the
International Underwriters (collectively, the "Underwriters"). The Price to the
Public and Underwriting Discount per Share and per Convertible Note will be
identical for the U.S. Offering and the International Offering. See
"Underwriting." The closing of the U.S. Offering and International Offering are
conditioned upon each other. Following the Offerings, certain members of
management and their family will beneficially own approximately 68.9% of the
Company's outstanding Common Stock. See "Principal and Selling Stockholders."

Prior to the Offerings, there has not been a public market for the Common
Stock or the Convertible Notes. It is currently estimated that the initial
public offering price of the Common Stock will be between $10.00 and $12.00 per
share. See "Underwriting" for information relating to the factors considered in
determining the initial public offering price. The Common Stock has been
approved for listing on the Nasdaq National Market under the symbol "AMKR,"
subject to official notice of issuance. The Company has applied for quotation of
the Convertible Notes on the Nasdaq Stock Market under the symbol "AMKRG."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES AND THE
CONVERTIBLE NOTES.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================

UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO THE SELLING
THE PUBLIC COMMISSIONS(1) THE COMPANY(2) STOCKHOLDERS(2)

- ----------------------------------------------------------------------------------------------------------------------
Per Share..................... $ $ $ $
Per Convertible Note.......... % % % --
Total Shares.................. $ $ $ $
Total Convertible Notes....... $ $ $ --
Total(3)...................... $ $ $ $
======================================================================================================================

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $5,000,000.

(3) The Company has granted the U.S. Underwriters and the International
Underwriters 30-day options to purchase up to 4,200,000 and 1,050,000
additional shares of Common Stock, respectively, and $18,000,000 and
$4,500,000 additional principal amount of Convertible Notes, respectively,
solely to cover over-allotments, if any. If such options are exercised in
full, the total Price to the Public, Underwriting Discounts and Proceeds to
the Company will be $ , $ and $ , respectively. See
"Underwriting."
------------------

The Shares and the Convertible Notes are offered subject to receipt and
acceptance by the Underwriters, to prior sale and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Shares and the Convertible
Notes will be made at the office of Smith Barney Inc., 333 West 34th Street, New
York, New York 10001 or through the facilities of The Depository Trust Company,
on or about , 1998.
------------------
SALOMON SMITH BARNEY

BANCAMERICA ROBERTSON STEPHENS
COWEN & COMPANY
, 1998
4

[ARTWORK]

[Photograph of manufacturing facilities; pictures of products; and diagram
of wafer fabrication, packaging and test operations.]

PowerQuad(R) and SuperBGA(R) are registered trademarks of the Company and
ChipArray(TM), fleXBGA(TM) and PowerSOP(TM) are trademarks of the Company.
MicroBGA(TM) is a trademark of Tessera, Inc. This Prospectus includes other
trademarks and trade names of the Company and other entities.

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY, INCLUDING PURCHASES OF SUCH SECURITIES TO STABILIZE THEIR MARKET PRICE,
PURCHASES OF SUCH SECURITIES TO COVER SOME OR ALL OF A SHORT POSITION IN SUCH
SECURITIES MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information found elsewhere in this Prospectus, including under "Risk Factors"
and the Combined Financial Statements and Notes thereto. Certain statements
contained in "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business,"
including statements regarding the anticipated growth in the market for the
Company's products, the Company's anticipated capital expenditures and financing
needs, the Company's expected capacity utilization rates, the belief of the
Company as to its future operating performance, and other statements contained
in this Prospectus that are not historical facts, are "forward-looking"
statements within the meaning of the U.S. federal securities laws. Because such
statements include risks and uncertainties, actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."
These forward-looking statements are made as of the date of this Prospectus and
the Company assumes no obligation to update such forward-looking statements or
to update the reasons why actual results could differ materially from those
anticipated in such forward-looking statements.

THE COMPANY

Amkor is the world's largest independent provider of semiconductor
packaging and test services. The Company believes that it is also one of the
leading developers of advanced semiconductor packaging and test technology in
the industry. The Company offers a complete and integrated set of packaging and
test services including integrated circuit ("IC") package design, leadframe and
substrate design, IC package assembly, final testing, burn-in, reliability
testing, and thermal and electrical characterization. As of December 31, 1997,
the Company had in excess of 150 customers, including many of the largest
semiconductor companies in the world. Such customers include, among others,
Advanced Micro Devices, Inc., International Business Machines Corp., Intel
Corporation, Lucent Technologies, Inc., Motorola, Inc., National Semiconductor
Corp., Philips Electronics N.V., SGS-THOMSON Microelectronics N.V., Siemens AG
and Texas Instruments, Inc. ("TI").

Today, nearly all of the world's major semiconductor companies outsource
some or all of their packaging and test needs. The increasing complexities,
investment requirements and time to market pressures associated with IC design
and production, combined with the growth in the number of ICs being produced and
sold, are driving increasing demand for independent packaging and test services.
According to industry estimates, independent packaging foundry revenues are
expected to grow at a compound annual rate of 16% over a period of five years
from $5.6 billion in 1997 to $11.6 billion in 2002.

The Company provides packaging and test services through its three
factories in the Philippines as well as four factories of Anam Industrial Co.,
Ltd. ("AICL") in Korea pursuant to a supply agreement between the Company and
AICL. The Company and AICL have had a long-standing relationship. In 1996 and
1997, approximately 72% and 68%, respectively, of the Company's revenues were
derived from sales of services performed for the Company by AICL. In addition,
substantially all of the revenues of AICL in 1996 and 1997 were derived from
services sold by the Company. Mr. James Kim, the Company's Chairman and Chief
Executive Officer, is a director of AICL, and he and other members of his family
beneficially own approximately 40.7% of AICL's outstanding common stock. The
Company expects that the businesses of the Company and AICL will continue to
remain highly interdependent by virtue of their supply relationship, overlaps
and family ties between their respective shareholders and management, financial
relationships, coordination of product and operation plans, joint research and
development activities and shared intellectual property rights.

The Company recently began offering wafer fabrication services through
AICL's new deep submicron CMOS foundry capable of producing 15,000 8" wafers per
month. Through a strategic relationship with TI, the Company and AICL have
qualified .25 micron CMOS process technology, and TI has agreed to provide to
AICL .18 micron CMOS process technology during 1998. AICL's foundry will
primarily manufacture DSPs, ASICs and other logic devices. By leveraging the
Company's leading position in semiconductor packaging and test services, the new
wafer fabrication services have enabled the Company to become one of the first
providers of a fully integrated, turnkey semiconductor fabrication, packaging
and test service solution.
3
6

The Company's strategy is to: (i) maintain its product technology
leadership by continuing to design and produce leading-edge packaging
technology; (ii) maintain advanced manufacturing capabilities through continuous
advancement and refinement of its process technology; (iii) leverage the scale
and scope of its packaging and test capabilities to provide Amkor with several
competitive advantages, including procurement of key materials and manufacturing
equipment, the ability to capitalize on economies of scale and the ability to
offer an industry-leading breadth of product offerings; (iv) establish industry
packaging standards to bolster sales of leading-edge, high margin and high
growth product lines; (v) enhance customer and supplier relationships; (vi)
continue to focus on customer support; and (vii) provide an integrated, turnkey
solution comprised of wafer fabrication, packaging and test services.

The Company was organized under the laws of Delaware in September 1997 to
consolidate the ownership of several affiliated entities in the same business
and under common management. See "Reorganization." The Company's principal
executive offices are located at 1345 Enterprise Drive, West Chester, PA 19380
and its telephone number at that address is (610) 431-9600.

4
7

THE COMMON STOCK OFFERINGS

Common Stock offered by the Company
U.S. Offering.................................... 24,000,000 shares
International Offering........................... 6,000,000 shares
-------------------
Total.................................... 30,000,000 shares
Common Stock offered by Selling Stockholders
U.S. Offering.................................... 4,000,000 shares
International Offering........................... 1,000,000 shares
-------------------
Total.................................... 5,000,000 shares
Common Stock to be outstanding after the
Offerings(1)..................................... 112,610,000 shares
Proposed Nasdaq National Market symbol............. "AMKR"

- ---------------

(1) Excludes 2,730,000 shares of Common Stock issuable upon exercise of options
to be granted immediately prior to the Offerings under the Company's 1998
Stock Plan and 1998 Director Option Plan. Also excludes an aggregate of
shares reserved for future issuance upon conversion of the
Convertible Notes and 3,570,000 additional shares reserved for future
issuance under the Company's 1998 Stock Plan, 1998 Director Option Plan and
1998 Employee Stock Purchase Plan. See "Management" and "Description of
Capital Stock" and Notes 1 and 16 of Notes to Combined Financial Statements.

THE CONVERTIBLE NOTES OFFERINGS

Convertible Notes offered by the Company

U.S. Offering............ $120,000,000 aggregate principal amount

International Offering... $ 30,000,000 aggregate principal amount

------------------------------------------------------------------------

Total............ $150,000,000 aggregate principal amount

Maturity................... The Convertible Notes will mature on ,
2003, unless earlier redeemed or converted.

Payment of Interest........ Interest on the Convertible Notes at the rate
of % per annum is payable semi-annually on
and of each year, commencing
, 1998.

Conversion Rights.......... The Convertible Notes are convertible into Common
Stock of the Company at the option of the holder at
any time on or before the close of business on the
last trading day prior to maturity, unless
previously redeemed, at a conversion price of
$ per share, subject to adjustment in
certain events. The initial conversion price will
be determined on the basis of the initial public
offering price per share. See "Description of
Convertible Notes -- Conversion."

Redemption at the Option of
the Company................ The Convertible Notes are not redeemable by the
Company prior to , 2001. On or after
, 2001, the Company may, upon at least
15 days' notice, redeem the Convertible Notes at
the redemption prices set forth herein, together
with accrued and unpaid interest thereon, if the
closing price of the Common Stock is at least 125%
of the conversion price for at least 20 trading
days within a period of 30 consecutive trading days
ending on the fifth trading day prior to the notice
of redemption. See "Description of Convertible
Notes -- Optional Redemption."

Repurchase Upon Designated
Event.................... The Convertible Notes are required to be
repurchased at 101% of their principal amount
together with accrued and unpaid interest thereon,
at

5
8

the option of the holder, upon the occurrence of a
Designated Event (i.e., a Change of Control or a
Termination of Trading (each as defined)). See
"Risk Factors -- Limitations on Repurchase of
Convertible Notes" and "Description of Convertible
Notes -- Repurchase at Option of Holders Upon a
Designated Event."

Subordination.............. The Convertible Notes will be unsecured obligations
of the Company and will be subordinated in right of
payment to all existing and future Senior Debt of
the Company and effectively subordinated to all
existing and future liabilities and obligations of
the Company's subsidiaries. As of December 31, 1997
(after giving effect to the Reorganization (as
defined)), the Company had approximately $32
million of outstanding indebtedness that would have
constituted Senior Debt, and the indebtedness and
other liabilities of the Company's subsidiaries
(excluding intercompany liabilities and obligations
of a type not required to be reflected on the
balance sheet of such subsidiary in accordance with
GAAP) that would effectively have been senior to
the Convertible Notes were approximately $642
million. After giving effect to planned debt
repayments by the Company prior to the Offerings
and the application of the estimated net proceeds
to the Company of the Offerings (assuming an
initial public offering price of $11.00 per share
of Common Stock), such amounts will be
approximately $32 million and $217 million,
respectively. See "Risk Factors -- Subordination of
Convertible Notes," "Use of Proceeds" and
"Description of Convertible Notes --
Subordination."

Proposed Nasdaq Stock
Market Symbol............ "AMKRG"

Securities Lending
Arrangement.............. In connection with market-making activities in the
Convertible Notes, Smith Barney Inc. may from time
to time borrow, return and reborrow up to 7,000,000
shares of Common Stock from certain stockholders of
the Company. The Underwriters are not obligated,
however, to make a market in the Convertible Notes
and any such market-making may be discontinued at
any time at the sole discretion of the
Underwriters. See "Underwriting."

USE OF PROCEEDS

The net proceeds to the Company of the Offerings, estimated to be
approximately $450 million (assuming an initial public offering price of $11.00
per share of Common Stock), will be used primarily to repay approximately $331
million of short-term and long-term debt, including $106 million of amounts due
to Anam USA, Inc., a wholly-owned subsidiary of AICL ("AUSA"), and to repurchase
AICL's minority interest in one of the Company's Philippine manufacturing
subsidiaries for approximately $34 million. The remaining $85 million of such
net proceeds will be used for capital expenditures and working capital. See "Use
of Proceeds."

RISK FACTORS

See "Risk Factors" beginning on page 9 for a discussion of certain factors
that should be considered by potential investors.

6
9

SUMMARY COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)

YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- ---------- ----------

INCOME STATEMENT DATA:
Net revenues............................. $442,101 $572,918 $932,382 $1,171,001 $1,455,761
Gross profit............................. 70,778 58,270 149,047 148,923 213,092
Operating income......................... 26,374 13,843 84,855 71,368 100,841
Net income(1)............................ 17,236 11,574 61,932 32,922 43,281
Pro forma adjustment for income
taxes(2)............................... 2,900 200 10,400 2,900 3,613
Pro forma net income(2).................. 14,336 11,374 51,532 30,022 39,668
Basic and diluted pro forma net income
per common share....................... .17 .14 .62 .36 .48
Shares used in per share calculation..... 82,610 82,610 82,610 82,610 82,610
OTHER DATA:
EBITDA(3)................................ $ 37,437 $ 34,197 $103,434 $ 123,082 $ 175,111
Ratio of earnings to fixed charges(4)
Actual................................. 3.7x 2.0x 4.6x 2.4x 2.5x
Supplemental pro forma................. 3.1x

DECEMBER 31, 1997
-----------------------------------------
DECEMBER 31, 1996 ACTUAL PRO FORMA(5) AS ADJUSTED(6)
----------------- --------- ------------ --------------

BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 49,644 $ 90,917 $ 63,217 $ 68,191
Working capital (deficit)..................... 36,785 (196,870) (224,570) 52,704
Total assets.................................. 804,864 855,592 827,892 864,197
Short-term borrowings and current portion of
long-term debt.............................. 191,813 325,968 325,968 53,668
% Convertible Subordinated Notes due 2003... -- -- -- 150,000
Due to AUSA (non-current)..................... 234,894 149,776 149,776 --
Other long-term debt.......................... 167,444 38,283 38,283 35,283
Stockholders' equity.......................... 45,812 90,875 61,075 367,838

- ---------------
(1) Net income for 1997 reflects a $17.3 million loss related primarily to the
impairment of value of the Company's equity interest in AICL. This
investment was sold in 1998. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 6 of Notes to
Combined Financial Statements.

(2) Prior to the reorganization of the Company, Amkor Electronics, Inc. ("AEI"),
a predecessor of the Company, elected to be taxed as an S Corporation under
the Internal Revenue Code of 1986 and comparable state tax laws.
Accordingly, AEI did not recognize any provision for federal income tax
expense during the periods presented herein. The pro forma adjustment for
income taxes reflects the additional U.S. federal income taxes which would
have been recorded by the Company if AEI had not been an S Corporation
during these periods. See "Reorganization" and Note 1 of Notes to Combined
Financial Statements.

(3) EBITDA is defined as earnings before interest, taxes on income, depreciation
and amortization. EBITDA is presented here to provide additional information
about the Company's ability to meet its future debt service, capital
expenditure, and working capital requirements and should not be construed as
a substitute for or a better indicator of results of operations or liquidity
than net income or cash flow from operating activities computed in
accordance with generally accepted accounting principles.

(4) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before income taxes less undistributed earnings in less
than 50%-owned subsidiaries, plus fixed charges. Fixed charges consist of
interest expense incurred and one-third of rental expense which amount is
deemed by the Company to be representative of the interest factor of rental
payments under operating leases. The supplemental pro forma ratio of
earnings to fixed charges reflects the effect on the ratio of earnings to
fixed charges if the Offerings had been completed and the estimated net
proceeds to the Company applied as described in "Use of Proceeds" at the
beginning of the period presented.

(5) Pro forma balance sheet data reflects (i) the termination of AEI's S
Corporation status which resulted in the recording of a deferred tax
liability of $2.1 million and (ii) a distribution by the Company of
undistributed earnings of AEI through December 31, 1997 of $27.7 million to
stockholders of AEI prior to the reorganization of the Company. The amount
actually distributed by the Company to such stockholders of AEI will
increase to reflect any undistributed net income earned by AEI following
December 31, 1997 and prior to such reorganization. See
"Reorganization -- Termination of S Corporation Status and Distributions"
and Notes 1, 16 and 17 of Notes to Combined Financial Statements.

(6) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $11.00 per share of Common Stock, including the purchase from AICL
of its 40% interest in Amkor/Anam Pilipinas, Inc. for approximately $34
million and the related elimination of minority interest and recording of
goodwill. The acquisition of the minority interest will result in additional
amortization of approximately $2.5 million per year. Also reflects
repayments made after December 31, 1997 and prior to the Offerings of $50.3
million of short-term borrowings and current portion of long-term debt and
$30 million of amounts due to AUSA (non-current), as well as the assumption
by an affiliate of the Company of $13.9 million of amounts due to AUSA
(non-current), in February 1998. See "Reorganization," "Use of Proceeds" and
Notes 1, 6 and 16 of Notes to Combined Financial Statements.

7
10

Capitalized terms used in this summary have the meanings ascribed to such
terms elsewhere in this Prospectus. Unless the context otherwise requires, all
references in this Prospectus to the "Company" or "Amkor" are to Amkor
Technology, Inc. and its subsidiaries. Prior to the Reorganization (as defined
under "Reorganization"), such subsidiaries were under common management and were
in the same business. As a result, the financial statements presented herein
have been prepared on a combined basis. Unless otherwise indicated, all
information in this Prospectus (i) gives effect to the Reorganization, including
the issuance of 82,610,000 shares of Common Stock in connection therewith, and
(ii) assumes that the Underwriters have not exercised the over-allotment
options. See "Reorganization," "Description of Capital Stock," "Underwriting,"
and Note 1 of Notes to Combined Financial Statements. References in this
Prospectus to "Korea" are to the Republic of Korea, and references to "won" or
"W" are to the currency of the Republic of Korea. The won has depreciated
significantly against the U.S. dollar and other foreign currencies in recent
months. On March 24, 1998, the base rate under the market average exchange rate
system, as announced by the Korea Financial Telecommunications and Clearings
Institute in Seoul, Korea (the "Market Average Exchange Rate"), was W1,415 to
$1.00. No representation is made that the won or U.S. dollar amounts referred to
herein could have been or could be converted into U.S. dollars or won, as the
case may be, at any particular rate or at all. Financial information for AICL
contained in this Prospectus has been prepared on the basis of Korean generally
accepted accounting principles ("GAAP"), which differ in certain significant
respects from U.S. GAAP.

Certain technical terms used throughout this Prospectus are defined in the
Glossary appearing immediately prior to the Combined Financial Statements at the
end of this Prospectus.

8
11

RISK FACTORS

Prospective investors should consider carefully the following risk factors,
in addition to the other information contained in this Prospectus concerning the
Company and its business, before purchasing the shares of Common Stock or the
Convertible Notes offered hereby. Certain statements contained in "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," including statements
regarding the anticipated growth in the market for the Company's products, the
Company's anticipated capital expenditures and financing needs, the Company's
expected capacity utilization rates, the belief of the Company as to its future
operating performance and other statements contained in this Prospectus that are
not historical facts, are "forward-looking" statements within the meaning of the
U.S. federal securities laws. Because such statements include risks and
uncertainties, actual results may differ materially from those anticipated in
such forward-looking statements as a result of certain factors, including those
set forth herein and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business." These forward-looking
statements are made as of the date of this Prospectus and the Company assumes no
obligation to update such forward-looking statements or to update the reasons
why actual results could differ materially from those anticipated in such
forward-looking statements.

FLUCTUATIONS IN OPERATING RESULTS; DECLINES IN AVERAGE SELLING PRICES

The Company's operating results have varied significantly from period to
period. A variety of factors could materially and adversely affect the Company's
revenues, gross profit and operating income, or lead to significant variability
of quarterly or annual operating results. These factors include, among others,
the cyclical nature of both the semiconductor industry and the markets addressed
by end-users of semiconductors, the short-term nature of its customers'
commitments, timing and volume of orders relative to the Company's production
capacity, changes in capacity utilization, evolutions in the life cycles of
customers' products, rescheduling and cancellation of large orders, rapid
erosion of packaging selling prices, availability of manufacturing capacity,
allocation of production capacity between the Company's facilities and those of
AICL, fluctuations in package and test service charges paid to AICL, changes in
costs, availability and delivery times of labor, raw materials and components,
effectiveness in managing production processes, fluctuations in manufacturing
yields, changes in product mix, product obsolescence, timing of expenditures in
anticipation of future orders, availability of financing for expansion, changes
in interest expense, the ability to develop and implement new technologies on a
timely basis, competitive factors, changes in effective tax rates, the loss of
key personnel or the shortage of available skilled workers, international
political or economic events, currency and interest rate fluctuations,
environmental events, and intellectual property transactions and disputes.
Unfavorable changes in any of the above factors may adversely affect the
Company's business, financial condition and results of operations. In addition,
the Company increases its level of operating expenses and investment in
manufacturing capacity based on anticipated future growth in revenues. If the
Company's revenues do not grow as anticipated and the Company is not able to
decrease its expenses, the Company's business, financial condition and operating
results would be materially and adversely affected. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

Beginning in the third quarter of 1996, intense competition in the
semiconductor industry worldwide resulted in decreases in the average selling
prices of many of the Company's lead frame packages. The Company expects that
average selling prices for its services will continue to decline in the future,
principally due to intense competitive conditions. A decline in average selling
prices of the Company's services, if not offset by reductions in the cost of
producing those services or by a shift to higher margin products, would decrease
the Company's gross margins and could materially and adversely affect the
Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON THE HIGHLY CYCLICAL SEMICONDUCTOR AND PERSONAL COMPUTER INDUSTRIES

The Company's business is substantially affected by market conditions in
the semiconductor industry, which is highly cyclical and, at various times, has
been subject to significant economic downturns character-
9
12

ized by reduced product demand, rapid erosion of average selling prices and
production overcapacity. In addition, the markets for semiconductors are
characterized by rapid technological change, evolving industry standards,
intense competition and fluctuations in end-user demand. Because the Company's
business will be dependent on the requirements of semiconductor companies for
independent packaging, test and wafer fabrication services for the foreseeable
future, any future downturn in the semiconductor industry could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company's operating results for 1996 and 1997 were adversely
affected by a downturn in the semiconductor market. In addition, a significant
portion of the Company's net revenues from packaging and test services depends
on the packaging and testing of semiconductors used in personal computer ("PC")
products. The PC industry is subject to intense competition, is highly volatile
and is subject to significant shifts in demand. As a result, any deterioration
of business conditions in the PC industry could have a material adverse effect
on the Company. See "Business -- Industry Background" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RISKS ASSOCIATED WITH LEVERAGE

The Company has historically operated with significant amounts of debt
relative to its equity. At December 31, 1997, the Company had outstanding $514.0
million in principal amount of indebtedness, including non-current amounts due
to Anam USA, Inc. ("AUSA"), a wholly-owned subsidiary of AICL, and the Company
intends to incur additional bank debt prior to and following the Offerings in
addition to the Convertible Notes issued as part of the Offerings. In 1996 and
1997, the Company's payments under long-term debt agreements (excluding payments
to AUSA as described in Note 11 of Notes to Combined Financial Statements) were
$3.1 million and $43.5 million, respectively. Following the expected application
of the estimated net proceeds to the Company of the Offerings and planned
repayments of debt after December 31, 1997 and prior to the Offerings, the
Company will continue to have at least $239 million in principal amount of
indebtedness outstanding, including $54 million of short-term borrowings and
current portions of long-term debt.

The Company is not in compliance with certain covenants with respect to
certain of its loans, the aggregate outstanding amount of which was $176 million
at December 31, 1997 (the "Non-Compliant Loans"). Such non-compliance in turn
triggered cross-defaults with respect to an additional $10 million of the
Company's loans. These loan covenants include restrictions on the ability of one
of the Company's subsidiaries to enter into transactions with affiliates,
requirements that the subsidiary maintain certain debt-to-equity ratios and
requirements that the subsidiary comply with certain notice requirements. The
Company's obligation to repay these loans (including the cross-defaulted loans)
may be accelerated by the lenders at any time. As a result of such
non-compliance, these loans have been classified as current liabilities in the
Company's financial statements included herein, and the report of the Company's
independent public accountants with respect to such financial statements
contains a paragraph stating that there is substantial doubt as to the ability
of the Company to continue as a going concern. The Company will eliminate such
non-compliance and cross-defaults by repaying such loans using part of the net
proceeds to the Company from the Offerings, as well as working capital. See "Use
of Proceeds."

At December 31, 1997, the Company had also guaranteed borrowing facilities
available to companies affiliated with James Kim and other stockholders of the
Company totalling $55.7 million, of which $38.2 million was outstanding at
December 31, 1997. At December 31, 1997, the Company had $90.9 million of
stockholders' equity and a working capital deficit of $196.9 million (which
amounts were $61.1 million and $224.6 million, respectively, on a pro forma
basis, after giving effect to the termination of AEI's S Corporation status and
the distribution of undistributed net income of AEI through December 31, 1997).
See "Reorganization -- Termination of S Corporation Status and Distributions."

Following the Offerings, the Company will continue to be subject to the
risks associated with leverage, which risks include (i) principal and interest
repayment obligations which require the expenditure of substantial amounts of
cash, the availability of which will be dependent on the Company's future
performance, (ii) inability to repay principal or interest when due, which could
result in a default on the debt and legal actions against the Company, (iii)
adverse effects of interest expense on the Company's financial condition and
results of operations and (iv) potential violations of loan covenants which
could lead to loans being called

10
13

by banks. In addition, a significant portion of the debt is owed to banks
located in Korea or branches of such banks located outside Korea. Due to the
deterioration of the Korean economy in recent months and the resulting liquidity
crisis in Korea, banks in Korea and their overseas branches have been
experiencing financial difficulties and are reducing their lending, in
particular to companies which have significant amounts of debt relative to their
equity. See "-- Dependence on International Operations and Sales; Concentration
of Operations in the Philippines and Korea.

DEPENDENCE ON RELATIONSHIP WITH AICL; POTENTIAL CONFLICTS OF INTEREST

AICL was founded in 1956 by Mr. H. S. Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam group of companies (the "Anam Group"), consisting principally of companies
in Korea in the electronics industries. The management of AICL and the other
companies in the Anam Group are influenced to a significant degree by the family
of H. S. Kim, which, together with the Company, collectively owned approximately
40.7% of the outstanding common stock of AICL as of December 31, 1997. A
significant portion of the shares owned by the Kim family are leveraged and as a
result of this, or for other reasons, the family's ownership could be
substantially reduced. James Kim, the founder of the Company and currently its
Chairman and Chief Executive Officer, is the eldest son of H. S. Kim. Since
January 1992, in addition to his other responsibilities, James Kim has been
serving as acting Chairman of the Anam Group and a director of AICL. Mr. In-Kil
Hwang, the President and a Representative Director of AICL, is the
brother-in-law of James Kim. In addition, four other members of Mr. Kim's family
are on the 13-member Board of Directors of AICL. After the Offerings, James Kim
and members of his family will beneficially own approximately 68.9% of the
outstanding Common Stock of the Company, and Mr. Kim and other members of his
family will continue to exercise significant control over the Company. See
"-- Benefits of the Offerings to Existing Stockholders; Continued Control by
Existing Stockholders" and "Principal and Selling Stockholders."

The businesses of the Company and AICL have been interdependent for many
years. In 1996 and 1997, approximately 72% and 68%, respectively, of the
Company's revenues were derived from sales of services performed for the Company
by AICL. In addition, substantially all of the revenues of AICL in 1996 and 1997
were derived from services sold by the Company. The Company expects the
proportion of its revenues derived from sales of services performed for the
Company by AICL and the proportion of AICL's revenues from services sold by the
Company to increase as the Company begins selling the wafer fabrication output
of AICL's new wafer foundry and with the Company's assumption from AICL in
January 1998 of substantially all of the marketing rights for the Japanese
market. In the event the ability of AICL to supply the Company were disrupted
for any reason, the Company's facilities in the Philippines would be able to
fill only a small portion of the resulting shortfall in capacity. In addition,
there are currently no significant third party suppliers of packaging and test
services from which the Company could fill its orders. As a result, the
Company's business, financial condition and operating results will continue to
be significantly dependent on the ability of AICL to effectively provide
contracted services on a cost-efficient and timely basis. The termination of the
Company's relationship with AICL for any reason, or any material adverse change
in AICL's business resulting from underutilization of its capacity, the level of
its debt and its guarantees of affiliate debt, labor disruptions, fluctuations
in foreign exchange rates, changes in governmental policies, economic or
political conditions in Korea or any other change, could have a material adverse
effect on the Company's business, financial condition and results of operations.

The Company has recently entered into new supply agreements with AICL (the
"Supply Agreements"). Under the Supply Agreements, AICL has granted to the
Company a first right to substantially all of the packaging and test services
capacity of AICL and the exclusive right to all of the wafer output of its new
wafer foundry. The Company expects to continue to purchase substantially all of
AICL's packaging and test services, and to purchase all of AICL's wafer output,
under the Supply Agreements. Under the Supply Agreements, pricing arrangements
relating to packaging and test services provided by AICL to the Company are
subject to quarterly review and adjustment, and such arrangements relating to
the wafer output provided by AICL to the Company are subject to annual review
and adjustment, in each case on the basis of factors such as changes in the
semiconductor market, forecasted demand, product mix, capacity utilization and
fluctuations in exchange rates, as well as the mutual long-term strategic
interests of the Company and AICL. There can be no assurance

11
14

that any new pricing arrangements resulting from such review and adjustment will
be favorable to the Company. Pursuant to long-standing arrangements between AICL
and the Company's operating subsidiaries, sales from AICL to the Company will
continue to be made through AUSA, a wholly-owned financing subsidiary of AICL.
Under the Supply Agreements, the Company will continue to reimburse AUSA for the
financing costs incurred by it in connection with trade financing provided to
the Company. The Supply Agreements also provide that Amkor-Anam, Inc., a
subsidiary of the Company, will continue to provide raw material procurement and
related services to AICL on a fee basis. The Supply Agreements have a five-year
term and may be terminated by any party thereto upon five years' written notice
at any time after the expiration of such initial five-year term. There can be no
assurance that AICL will not terminate either Supply Agreement upon the
expiration of such initial term or, if it does terminate a Supply Agreement,
that the Company will be able to obtain a new agreement with AICL on terms that
are favorable to the Company or at all.

The following is a summary of 1996 and 1997 consolidated financial
information pertaining to AICL prepared in accordance with Korean GAAP which
differs from U.S. GAAP in certain significant respects. See Note 6 of Notes to
Combined Financial Statements.

1996 1997
---------- --------------
(IN MILLIONS)

SUMMARY INCOME STATEMENT DATA:
Sales.................................................. W1,338,718 W1,786,457
Gross profit........................................... 242,601 279,186
Operating income....................................... 164,846 176,028
Net foreign exchange loss.............................. 29,372 216,697
Net loss............................................... (9,385) (305,414)
========== ==========
SUMMARY BALANCE SHEET DATA:
Cash and bank deposits................................. W 324,139 W 215,024
Accounts and notes receivable, net..................... 368,975 393,261
Inventory.............................................. 214,494 260,302
Other current assets................................... 145,301 490,544
---------- ----------
Total current assets................................ 1,052,909 1,359,131
---------- ----------
Property, plant and equipment, net..................... 994,931 2,159,466
Investments............................................ 83,715 122,366
Other long-term assets................................. 93,733 295,554
---------- ----------
Total long-term assets.............................. 1,172,379 2,577,386
---------- ----------
Total assets................................... W2,225,288 W3,936,517
========== ==========
Short-term borrowings.................................. 935,463 1,591,280
Current maturities of long-term debt................... 85,252 120,913
Other current liabilities.............................. 305,931 412,289
---------- ----------
Total current liabilities........................... 1,326,646 2,124,482
---------- ----------
Long-term debt, net of current maturities.............. 475,045 736,784
Long-term capital lease obligations.................... 106,068 861,813
Other long-term liabilities and minority interest...... 89,272 138,305
---------- ----------
Total long-term liabilities......................... 670,385 1,736,902
---------- ----------
Total liabilities.............................. 1,997,031 3,861,384
---------- ----------
Stockholders' equity................................... 228,257 75,133
---------- ----------
Total liabilities and stockholders' equity..... W2,225,288 W3,936,517
========== ==========

12
15

A significant amount of the current and long-term liabilities of AICL are
denominated in U.S. dollars and other foreign currencies. At December 31, 1997,
the amount of U.S. dollar and other foreign currency denominated short-term
borrowings, current maturities of long-term debt, long-term debt (net of current
maturities) and long-term capital lease obligations were W1,092 billion, W59
billion, W159 billion and W834 billion, respectively. Due in part to the
significant depreciation of the won (for example, from a Market Average Exchange
Rate of W884 to $1.00 on December 31, 1996 to W1,415 to $1.00 on December 31,
1997 and W1,415 to $1.00 on March 24, 1998) resulting from the recent economic
crisis in Korea, AICL's liabilities in won terms and its leverage calculated in
won have significantly increased in 1997. The effect of this depreciation on
AICL, however, has been mitigated by the fact that substantial amounts of AICL's
revenues are denominated in U.S. dollars. The increase in AICL's liabilities was
also attributable in part to additional financing obtained in connection with
the construction of its new wafer foundry. See "-- Risks Associated with New
Wafer Fabrication Business" and Note 6 of Notes to Combined Financial
Statements.

The recent economic crisis in Korea has also led to sharply higher interest
rates in Korea and reduced opportunities for refinancing or refunding maturing
debts as financial institutions in Korea, which are experiencing financial
difficulties, are increasingly looking to limit their lending, particularly to
highly leveraged companies, and to increase their reserves and provisions for
non-performing assets. These developments will result in higher interest rates
on loans to AICL and have otherwise made it more difficult for AICL to obtain
new financing. Therefore, there can be no assurance that AICL will be able to
refinance its existing loans or obtain new loans, or continue to make required
interest and principal payments on such loans or otherwise comply with the terms
of its loan agreements. Any inability of AICL to obtain financing or generate
cash flow from operations sufficient to fund its capital expenditure, debt
service and repayment and other working capital and liquidity requirements could
have a material adverse effect on AICL's ability to continue to provide services
and otherwise fulfill its obligations to the Company. See "-- Risks Associated
with Leverage" and "-- Dependence on International Operations and Sales;
Concentration of Operations in the Philippines and Korea."

As of December 31, 1997, AICL and its consolidated subsidiaries were
contingently liable under guarantees in respect of debt of AICL's
non-consolidated subsidiaries and affiliates in the Anam Group in the aggregate
amount of approximately W857 billion. As of such date, AICL had provided
guarantees for all of AUSA's debt of $319 million, the Non-Compliant Loans of
$176 million and the Company's obligations under a receivables sales
arrangement. The Company has met a significant portion of its financing needs
through financing arrangements obtained by AUSA for the benefit of the Company
based on guarantees provided by AICL. There can be no assurance that AUSA will
be able to obtain additional guarantees, if necessary, from AICL. Further, a
deterioration in AICL's financial condition could trigger defaults under AICL's
guarantees, causing acceleration of such loans. In addition, as an overseas
subsidiary of AICL, AUSA was formed with the approval of the Bank of Korea. If
the Bank of Korea were to withdraw such approval, or if AUSA otherwise ceased
operations for any reason, the Company and AICL would be required to meet their
financing needs through alternative arrangements. Although the Company believes
that after the Offerings alternative financing arrangements will be available,
there can be no assurance that the Company or AICL will be able to obtain
alternative financing on acceptable terms or at all. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 11 of Notes to Combined
Financial Statements. In addition, if any relevant subsidiaries or affiliates of
AICL, certain of which may have greater exposure to domestic Korean economic
conditions than AICL, were to fail to make interest or principal payments or
otherwise default under their debt obligations guaranteed by AICL, AICL could be
required under its guarantees to repay such debt, which event could have a
material adverse effect on its financial condition and results of operations.

Historically, AICL has undertaken capacity expansion programs and other
capital expenditures primarily on the basis of forecasts of the Company and
business plans prepared jointly with the Company. The Supply Agreements
generally provide for continued capital investment by AICL based on the
Company's forecasts and operational plans prepared jointly by the Company and
AICL reflecting such forecasts. However, as a result of the recent deterioration
of the Korean economy, there can be no assurance that AICL will be able to

13
16

fund future capacity expansions and other capital investments required to supply
the Company with necessary packaging and test services and wafer output on a
timely and cost-efficient basis.

The Company and AICL have historically cooperated on the development of new
package designs and packaging and testing processes and technologies. The Supply
Agreements generally provide for continued cooperation between the Company and
AICL in research and development, as well as the cross-licensing of intellectual
property rights between the Company and AICL. If the Company's relationship with
AICL were terminated for any reason, the Company's research and development
capabilities and intellectual property position could be materially and
adversely affected.

After the Offerings, the Company will continue to be controlled to a
significant degree by James Kim and members of his family, and Mr. Kim and other
members of his family will also continue to exercise significant influence over
the management of AICL and its affiliates. In addition, the Company and AICL
will continue to have certain contractual and other business relationships,
including under the Supply Agreements, and may engage in transactions from time
to time that are material to the Company. Although any such material agreements
and transactions would require approval of the Company's Board of Directors,
such transactions generally will not require approval of the disinterested
members of the Board of Directors and conflicts of interest may arise in certain
circumstances. There can be no assurance that such conflicts will not from time
to time be resolved against the interests of the Company. The Company currently
has four directors, two of whom are disinterested. Under Delaware corporate law,
each director owes a duty of loyalty and care to the Company, which if breached
can result in personal liability for the directors. In addition, the Company may
agree to certain changes in its contractual and other business relationships
with AICL, including pricing, manufacturing allocation, capacity utilization and
capacity expansion, among others, which in the judgment of the Company's
management will result in reduced short-term profitability for the Company in
favor of potential long-term benefits to the Company and AICL. There can be no
assurance that the Company's business, financial condition or results of
operations will not be adversely affected by any such decision.

DEPENDENCE ON INTERNATIONAL OPERATIONS AND SALES; CONCENTRATION OF OPERATIONS IN
THE PHILIPPINES AND KOREA

All of the production facilities currently used to fill the Company's
orders are located in the Philippines and Korea and many of the Company's
customers' operations are located in countries outside of the United States. A
substantial portion of the Company's revenues are derived from sales to
customers located outside of the United States. In 1996 and 1997, sales to such
customers accounted for 27% and 28%, respectively, of the Company's revenues.
The Company expects sales outside of the United States to continue to represent
a significant portion of its future revenues. As a result, the Company's
business will continue to be subject to certain risks generally associated with
doing business abroad, such as foreign governmental regulations, currency
fluctuations, political unrest, disruptions or delays in shipments, currency
controls and fluctuations, changes in local economic conditions and import and
export controls, as well as changes in tax laws, tariffs and freight rates. The
Company has structured its global operations to take advantage of lower tax
rates in certain countries and tax incentives extended to encourage investment.
The Company's tax returns through 1993 in the Philippines and through 1994 in
the U.S. have been examined by the Philippine and U.S. tax authorities,
respectively. The recorded provisions for subsequent open years are subject to
changes upon examination by tax authorities of tax returns for these years.
Changes in the mix of income from the Company's foreign subsidiaries, expiration
of tax holidays and changes in tax laws and regulations could result in
increased effective tax rates for the Company. See Notes 10 and 15 of Notes to
Combined Financial Statements.

Philippines

The Company's results of operations and growth will be influenced by the
political situation in the Philippines and by the general state of the
Philippine economy. Although the political and economic situation in the
Philippines has stabilized in recent years, it has historically been subject to
significant instability. Most recently, the devaluation of the Philippine peso
relative to the U.S. dollar beginning in July 1997 has led to instability in the
Philippine economy. Any future economic or political disruptions or instability
or low economic growth in the Philippines could have a material adverse effect
on the Company's business, financial condition and results of operations.
Because the functional currency of the Company's Philippine operations is
14
17

the U.S. dollar, the Company has recently benefitted from cost reductions
relating to peso denominated expenditures, primarily payroll costs. The Company
believes that such devaluation of the Philippine peso will eventually lead to
inflation in the Philippines, which could offset any savings achieved to date.

Korea

In 1996 and 1997, approximately 72% and 68%, respectively, of the Company's
revenues were derived from sales of services performed for the Company by AICL.
The operations of AICL are subject to certain risks. Relations between Korea and
the Democratic People's Republic of Korea ("North Korea") have been tense over
most of Korea's history. Incidents affecting relations between the two Koreas
continually occur. No assurance can be given that the level of tensions with
North Korea will not increase or change abruptly as a result of current or
future events, which could have a material adverse effect on AICL's, and as a
result the Company's, business, financial condition and results of operations.

Since the beginning of 1997, Korea has experienced a significant increase
in the number and size of companies filing for corporate reorganization and
protection from their creditors. Such failures were caused by, among other
factors, excessive investments, high levels of indebtedness, weak export prices
and the Korean government's greater willingness to allow troubled corporations
to fail. As a result of such corporate failures, Korea's financial institutions
have experienced a sharp increase in non-performing loans. In addition, declines
in domestic stock prices have reduced the value of Korean banks' assets. These
developments have led international credit rating agencies to downgrade the
credit ratings of Korea, as well as various companies (including AICL) and
financial institutions in Korea.

During the same period, the value of the won relative to the U.S. dollar
has depreciated significantly. The Market Average Exchange Rate as of March 24,
1998, was W1,415 to $1.00, or approximately 60% lower than on December 31, 1996,
when the Market Average Exchange Rate was W884 to $1.00. Such depreciation of
the won relative to the U.S. dollar has increased the cost of imported goods and
services, and the value in won of Korea's public and private sector debt
denominated in U.S. dollars and other foreign currencies has also increased
significantly. Korea's foreign currency reserves also have declined
significantly. Such developments have also led to sharply higher domestic
interest rates and reduced opportunities for refinancing or refunding maturing
debts as financial institutions in Korea, which are experiencing financial
difficulties, are increasingly looking to limit their lending, in particular to
highly leveraged companies, and to increase their reserves and provisions for
non-performing assets.

In order to address the liquidity crisis and the deteriorating economic
situation in Korea, the Korean government concluded an agreement with the
International Monetary Fund on December 3, 1997 pursuant to which Korea is
eligible to receive loans and other financial support reported to amount to an
aggregate of approximately $58 billion (the "IMF Financial Aid Package").
Because there are conditions on the availability of loans and other financial
support under the IMF Financial Aid Package, there can be no assurance that such
conditions will be satisfied or that such loans and other financial support will
be available. In connection with the IMF Financial Aid Package, the Korean
government announced a comprehensive policy package (the "Reform Policy")
intended to address the structural weaknesses in the Korean economy and the
financial sector. While the Reform Policy is intended to alleviate the current
economic crisis in Korea and improve the Korean economy over time, the immediate
effects could include, among others, slower economic growth, a reduction in the
availability of credit to Korean companies, an increase in interest rates, an
increase in taxes, an increased rate of inflation due to the depreciation of the
won, an increase in the number of bankruptcies of Korean companies, labor unrest
and labor strikes resulting from a possible increase in unemployment, and
political unrest. These events could have a material adverse effect on the
Korean economy. Moreover, there can be no assurance that either the IMF
Financial Aid Package or the Reform Policy will be successful. In addition,
there can be no assurance that political pressure will not force the Korean
government to retreat from some or all of its announced Reform Policy or that
the Reform Policy will be implemented as currently contemplated.

The Korean government has stated that as of December 31, 1997 the total
amount of Korea's private and governmental external liabilities was $154.4
billion under IMF standards. As of December 31, 1997, the total

15
18

amount of foreign currency reserves held by Korea was $20.4 billion, of which
the usable portion (the total less amounts on deposit with overseas branches of
Korean financial institutions and swap positions between the Korean central bank
and other central banks) was $8.9 billion. Pursuant to an exchange offer
concluded in March 1998, the Korean government received tenders from
international creditor banks to extend the maturity of up to approximately $21.8
billion of short-term foreign currency debt incurred by Korean financial
institutions. In addition, the Korean government announced in March 1998 that it
intends to raise approximately $3 billion through an international offering of
its debt securities. Korean financial institutions and the Korean corporate and
public sectors continue to carry substantial amounts of debt denominated in
currencies other than the won, including short-term debt, and there can be no
assurance that there will be sufficient foreign currency reserves to repay this
debt or that this debt can be extended or refinanced.

Such recent and potential future developments relating to Korea, including
the continued deterioration of the Korean economy, could have a material adverse
effect on AICL's and the Company's business, financial condition and results of
operations. See "-- Dependence on Relationship with AICL; Potential Conflicts of
Interest," "Business -- Marketing and Sales" and "-- Facilities and
Manufacturing" and Note 11 of Notes to Combined Financial Statements.

CUSTOMER CONCENTRATION; ABSENCE OF BACKLOG

Due to the concentration of market share in the semiconductor industry, the
Company has been largely dependent on a small group of customers for a
substantial portion of its business. In 1995, 1996 and 1997, 34.1%, 39.2% and
40.1%, respectively, of the Company's net revenues were derived from sales to
the Company's top five customers, with 13.3%, 23.5% and 23.4% of the Company's
net revenues, respectively, derived from sales to Intel Corporation ("Intel").
The ability of the Company to maintain close, satisfactory relationships with
such customers is important to the ongoing success and profitability of its
business. The Company expects that it will continue to be dependent upon a
relatively limited number of customers for a significant portion of its net
revenues in future periods. None of the Company's customers is presently
obligated to purchase any amount of packaging or test services or to provide the
Company with binding forecasts of product purchases for any period. In addition,
the Company's new wafer fabrication business will be significantly dependent
upon TI. The reduction, delay, or cancellation of orders from one of the
Company's significant customers, including Intel for packaging and test services
or TI for wafer fabrication services, could materially and adversely affect the
Company's business, financial condition and results of operations. Although the
Company has received forecasts from TI which indicate that TI will meet its
minimum purchase obligation during the second half of 1998, during the first
quarter of 1998 TI's orders were below such minimum purchase commitment due to
market conditions and issues encountered by TI in the transition of its products
to .18 micron technology. There can be no assurance that such customers will not
reduce, cancel or delay orders. See "-- Dependence on the Highly Cyclical
Semiconductor and Personal Computer Industries" and "-- Risks Associated with
New Wafer Fabrication Business."

All of the Company's customers operate in the cyclical semiconductor
business and may vary order levels significantly from period to period. In
addition, there can be no assurance that such customers or any other customers
will continue to place orders with the Company in the future at the same levels
as in prior periods. From time to time, semiconductor companies have experienced
reduced prices for some products, as well as delays or cancellations in orders.
There can be no assurance that, should these circumstances occur in the future,
they will not adversely affect the Company's business, financial condition and
results of operations. The loss of one or more of the Company's customers, or
reduced orders by any of its key customers, could adversely affect the Company's
business, financial condition and results of operations. The Company's packaging
and test business does not typically operate with any material backlog, and the
Company expects that in the future the Company's packaging and test revenues in
any quarter will continue to be substantially dependent upon orders received in
that quarter. The Company's expense levels are based in part on its expectations
of future revenues and the Company may be unable to adjust costs in a timely
manner to compensate for any revenue shortfall. See "Business -- Marketing and
Sales."

16
19

EXPANSION OF MANUFACTURING CAPACITY; PROFITABILITY AFFECTED BY CAPACITY
UTILIZATION RATES

The Company believes that its competitive position depends substantially on
its ability to expand its manufacturing capacity. Accordingly, although the
Company currently has available manufacturing capacity, the Company expects to
continue to make significant investments to expand such capacity, particularly
through the acquisition of capital equipment and the training of new personnel.
There can be no assurance that the Company will be able to utilize such capacity
or to continue to expand its manufacturing capacity in a timely manner, that the
cost of such expansion will not exceed management's current estimates or that
such capacity will not exceed the demand for the Company's services. In
addition, expansion of the Company's manufacturing capacity will continue to
significantly increase its fixed costs, and the Company expects to continue to
incur substantial additional depreciation and other expenses in connection with
the acquisition of new equipment and the construction of new facilities.
Increases or decreases in capacity utilization rates can have a significant
effect on gross margins since the unit cost of packaging and test services
generally decreases as fixed charges are allocated over a larger number of units
produced. Therefore, the Company's ability to maintain or enhance its gross
margins will continue to be dependent, in part, on its ability to maintain high
capacity utilization rates.

Capacity utilization rates may be affected by a number of factors and
circumstances, including overall industry conditions, operating efficiencies,
the level of customer orders, mechanical failure, disruption of operations due
to expansion of operations or relocation of equipment, fire or natural
disasters, employee strikes or work stoppages or other circumstances. Although
the Company has been able to maintain a high rate of capacity utilization in
recent years as a result of its close association with its customers, its
knowledge of the semiconductor market conditions, and its continued improvements
in operating efficiencies and equipment maintenance, there can be no assurance
that this high utilization rate will be sustained in the future. The Company's
inability to generate the additional orders necessary to fully utilize its
capacity would have a material adverse effect on the Company's business,
financial condition and results of operations. For example, in 1996 the
Company's capacity utilization rates were negatively affected by an unexpected
downturn in the semiconductor industry. There can be no assurance that the
Company's utilization rates will not be adversely affected by future declines in
the semiconductor industry or for any other reason. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Business -- Manufacturing and Facilities."

LIQUIDITY AND FUTURE CAPITAL REQUIREMENTS

The Company plans to continue to incur substantial costs to fund its
equipment and facilities expansion plans and its packaging technology
development. The Company believes that following the application of the net
proceeds from the sale of the Common Stock and the Convertible Notes in the
Offerings, its existing cash balances, cash flow from operations, available
equipment lease financing, bank borrowings and financing obtained through AUSA,
will be sufficient to meet its projected capital expenditures, working capital
and other cash requirements for at least the next twelve months. There can be no
assurance, however, that lower than expected revenues, increased expenses,
increased costs associated with the purchase or maintenance of capital
equipment, decisions to increase planned capacity or other events will not cause
the Company to seek more capital, or capital sooner than currently expected. The
timing and amount of the Company's actual capital requirements cannot be
precisely determined and will depend on a number of factors, including demand
for the Company's services, availability of capital equipment, fluctuations in
foreign currency exchange rates, changes in semiconductor industry conditions
and competitive factors. There can be no assurance that additional financing
will be available when needed or, if available, will be available on
satisfactory terms. Failure to obtain any such financing could have a material
adverse effect on the Company. In addition, if the Company obtains such
financing by selling equity securities of the Company, the Company's
stockholders may experience significant dilution. See "-- Risks Associated with
Leverage," "Dilution" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."

17
20

RAPID TECHNOLOGICAL CHANGE; PRODUCT DEVELOPMENT

The semiconductor packaging and test industry is characterized by rapid
increases in the diversity and complexity of semiconductor packaging products.
As a result, the Company expects that it will need to offer, on an ongoing
basis, more advanced package designs in order to respond to competitive industry
conditions and customer requirements. The requirement to develop and maintain
advanced packaging capabilities and equipment could require significant research
and development and capital expenditures in future years. In addition, advances
in technology also typically lead to rapid and significant price erosion and
decreased margins for older package types and may lead to products currently
being offered by the Company becoming less competitive or inventories held by
the Company becoming obsolete. The failure by the Company to achieve advances in
package design or to obtain access to advanced package designs developed by
others could have a material adverse effect on the Company's business, results
of operations and financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

The Company's success is also dependent upon the ability of it and AICL to
develop and implement new manufacturing process and package design technologies.
Semiconductor package design and process methodologies have become increasingly
subject to technological change, requiring large expenditures for research and
development. Converting to new package designs or process methodologies could
result in delays in producing new package types which could adversely affect the
Company's ability to meet customer orders.

MANUFACTURING RISKS; PRODUCTION YIELDS

The semiconductor packaging process is complex and involves a number of
precise steps. Defective packaging can result from a number of factors,
including the level of contaminants in the manufacturing environment, human
error, equipment malfunction, use of defective raw materials, defective plating
services and inadequate sample testing. From time to time, the Company expects
to experience lower than anticipated production yields as a result of such
factors, particularly in connection with any expansion of its capacity or change
in its processing steps. In addition, the Company's yield on new products will
be lower during the period necessary for the Company to develop the requisite
expertise and experience in producing such products and using such processes.
The failure of the Company or AICL to maintain high quality production standards
or acceptable production yields, if significant and sustained, could result in
loss of customers, delays in shipments, increased costs, cancellation of orders
and product returns for rework, any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Facilities and Manufacturing."

RISKS ASSOCIATED WITH NEW WAFER FABRICATION BUSINESS

The Company recently began providing wafer fabrication services, with
delivery of the first products from AICL's new foundry in January 1998. Neither
the Company nor AICL has significant experience in providing wafer fabrication
services, and there can be no assurance that the Company will not experience
difficulties in marketing and selling these services or that AICL will not
encounter operational difficulties such as lower than expected yields or longer
than anticipated production ramp-up, unexpected costs and other problems in
providing these services. If the Company or AICL encounters these or similar
difficulties, the Company's and AICL's businesses, financial condition and
results of operations could be materially adversely affected. In addition, TI
has transferred certain of its CMOS processes to AICL and AICL is dependent upon
TI's assistance for developing other state-of-the-art wafer manufacturing
processes. If AICL's relationship with TI is disrupted for any reason, AICL's
ability to produce wafers would be adversely affected, thus negatively impacting
the Company's ability to fulfill its customers' orders for fabrication services,
which could materially and adversely affect the Company's business, financial
condition and results of operations. In addition, AICL's technology agreements
with TI (the "TI Technology Agreements") only cover .25 micron and .18 micron
CMOS technology and TI is not under any obligation to transfer any
next-generation technology. If AICL is not able to obtain such technology on
commercially reasonable terms or at all, the Company's ability to market AICL's
wafer fabrication services could be materially and adversely affected which
could have a material adverse effect on the Company's and AICL's business,
results of operations and financial condition.

18
21

The Company's right to the supply of wafers from AICL's foundry is subject
to an agreement (the "TI Manufacturing and Purchasing Agreement") among AICL,
the Company and TI, pursuant to which TI has agreed to purchase from the Company
at least 40% of the capacity of this foundry and under certain circumstances has
the right to purchase up to 70% of this capacity. As a result, the Company's
wafer fabrication business will be significantly dependent upon TI, which may
adversely affect the Company's ability to obtain additional customers. If the
Company is unable to sell substantially all of the output of AICL's wafer
foundry, its business, results of operations and financial condition could be
materially and adversely affected. Although the Company has received forecasts
from TI which indicate that TI will meet its minimum purchase obligation during
the second half of 1998, during the first quarter of 1998 TI's orders were below
such minimum purchase commitment due to market conditions and issues encountered
by TI in the transition of its products to .18 micron technology. Accordingly,
there can be no assurance that TI will place orders representing at least 40% of
the capacity of this foundry during this period or in the future. A failure by
TI to comply with its minimum purchase obligations or the cancellation of a
significant wafer fabrication order by TI or any other customer could have a
material adverse effect on AICL's and the Company's business, financial
condition and results of operations. The TI Manufacturing and Purchasing
Agreement terminates on December 31, 2007, unless terminated sooner. The TI
Manufacturing and Purchasing Agreement may be terminated upon two years' prior
notice by either AICL or TI if AICL and TI are unable to successfully negotiate
prior to June 30, 2000 an amendment to the TI Technology Agreements or a new
agreement with respect to AICL's use of TI's next-generation CMOS technology.
During such two-year period, TI would be obligated to purchase a minimum of only
20% of the capacity of AICL's wafer fabrication facility. In addition, the TI
Manufacturing and Purchasing Agreement may be terminated sooner upon, among
other events, mutual written consent, material breach of the agreement by either
party, the inability of either party to obtain any necessary government
approvals, the failure of AICL to protect TI's intellectual property and a
change of control, bankruptcy, liquidation or dissolution of AICL. See
"Business -- Competition."

DEPENDENCE ON RAW MATERIALS SUPPLIERS AND SUBCONTRACTORS

The Company obtains the direct materials for the packaging and test
services of its factories and for the packaging and test services provided by
AICL to fill the Company's orders directly from vendors. To maintain competitive
manufacturing operations, the Company must obtain from its vendors, in a timely
manner, sufficient quantities of acceptable materials at expected prices. The
Company sources most of its raw materials, including critical materials such as
lead frames and laminate substrates, from a limited group of suppliers. The
Company purchases all of its materials on a purchase order basis and has no
long-term contracts with any of its suppliers. From time to time, vendors have
extended lead times or limited the supply of required materials to the Company
because of vendor capacity constraints and, consequently, the Company has
experienced difficulty in obtaining acceptable raw materials on a timely basis.
In addition, from time to time, the Company may reject materials that do not
meet its specifications, resulting in declines in output or yield. There can be
no assurance that the Company will be able to obtain sufficient quantities of
raw materials and other supplies of an acceptable quality. The Company's
business, financial condition and results of operations could be materially and
adversely affected if its ability to obtain sufficient quantities of raw
materials and other supplies in a timely manner were substantially diminished or
if there were significant increases in the costs of raw materials that the
Company could not pass on to its customers. See "Business -- Facilities and
Manufacturing."

INABILITY TO OBTAIN PACKAGING AND TEST EQUIPMENT IN A TIMELY FASHION

In connection with its future expansion plans, the Company and AICL expect
to purchase a significant amount of new packaging and test equipment. From time
to time, increased demand for some of this equipment causes lead times to extend
beyond those normally met by the equipment vendors. The unavailability of such
equipment or the failure of such equipment, or other equipment acquired by the
Company or AICL, to operate in accordance with the Company's or AICL's
specifications or requirements, or delays in the delivery of such equipment
could delay implementation of the Company's or AICL's expansion plans and impair
the ability of the Company to meet customer orders or otherwise have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Management's
19
22

Discussion and Analysis of Financial Condition and Results of Operations" and
"Business -- Facilities and Manufacturing."

MANAGEMENT OF GROWTH

The Company has experienced and may continue to experience growth in the
scope and complexity of its operations and in the number of its employees. For
example, the Company is expanding its scope of operations to include wafer
fabrication services and is hiring new personnel in connection with such
expansion. This growth is expected to continue to strain the Company's
managerial, financial, manufacturing and other resources. In addition, although
the Company believes its current controls are adequate, in order to manage its
growth, the Company must continue to implement additional operating and
financial controls and hire and train additional personnel. Although the Company
has been successful in hiring and properly training sufficient numbers of
qualified personnel and in effectively managing its growth in the past, there
can be no assurance that the Company will be able to do so in the future, and
its failure to do so could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, any
failure to improve the Company's operational, financial and management systems
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "-- Risks Associated with New Wafer
Fabrication Business," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business -- Employees."

COMPETITION

The independent semiconductor packaging and test industry is very
competitive, being comprised of approximately 50 companies with about 15 of
those companies having sales of $100 million per year or more. The Company faces
substantial competition from established packaging companies primarily located
in Asia, such as Advanced Semiconductor Engineering, Inc. (Taiwan), ASE Test
Limited (Taiwan and Malaysia), ASAT, Ltd. (Hong Kong), Hana Microelectronics
Public Co. Ltd. (Hong Kong and Thailand), Astra International (Indonesia),
Carsem Bhd. (Malaysia), ChipPAC Incorporated (Korea), Siliconware Precision
Industries Co., Ltd. (Taiwan), and Shinko Electric Industries Co., Ltd. (Japan).
Each of these companies has significant manufacturing capacity, financial
resources, research and development operations, marketing and other
capabilities, and have been operating for some time. Such companies have also
established relationships with many large semiconductor companies which are
current or potential customers of the Company. The principal elements of
competition in the independent semiconductor packaging market include time to
market, breadth of package offering, technical competence, design services,
quality, production yields, responsiveness and customer service and price. On a
larger scale, the Company also competes with the internal manufacturing
capabilities of many of its largest customers. There can be no assurance that
the Company will be able to compete successfully in the future against existing
or potential competitors or that the Company's operating results will not be
adversely affected by increased price competition.

The independent wafer fabrication business is also highly competitive. The
Company expects its wafer fabrication services to compete primarily with
independent wafer foundries such as Chartered Semiconductor Manufacturing Ltd.,
Taiwan Semiconductor Manufacturing Company Ltd. and United Microelectronics
Corporation, as well as with integrated device manufacturers such as LG Semicon
Co., Ltd., Hitachi, Ltd., Toshiba Corp. and Winbond Electronics Corporation,
which provide foundry services for other semiconductor companies. Each of these
companies has significant manufacturing capacity, financial resources, research
and development operations, marketing and other capabilities and have been
operating for some time. Many of these companies have also established
relationships with many large semiconductor companies which are current or
potential customers of the Company. The principal elements of competition in the
wafer foundry market include technology, delivery cycle times, price, product
performance, quality, production yield, responsiveness and flexibility,
reliability and the ability to design and incorporate product improvements.
There can be no assurance that the Company will be able to compete successfully
in the future against such companies. See "Business -- Competition."

20
23

DEPENDENCE ON KEY PERSONNEL AND AVAILABILITY OF SKILLED WORKFORCE

The Company's success depends to a significant extent upon the continued
service of its key senior management and its technical personnel, each of whom
would be difficult to replace. Competition for qualified employees is intense,
and the loss of the services of any of its existing key personnel without
adequate replacement, or the inability to attract, retain and motivate qualified
new personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, in connection with
its expansion plans, the Company and AICL will be required to increase the
number of qualified engineers and other employees at their respective facilities
in the Philippines and Korea. Competition for such employees in the Philippines
and Korea is intense and the inability to attract new qualified personnel or to
retain such personnel could have a material adverse effect on the Company's
results of operations and financial condition. See "Management."

ENVIRONMENTAL REGULATIONS

The semiconductor packaging process involves a significant amount of
chemicals and gases which are subject to extensive governmental regulations. For
example, liquid waste is produced at the stage at which silicon wafers are diced
into chips with the aid of diamond saws and cooled with running water. In
addition, excess materials on leads and moldings are removed from packaged
semiconductors in the trim and form process. The Company has installed equipment
to collect certain solvents used in connection with its manufacturing process
and has contracted with independent waste disposal companies to remove such
hazardous material.

Federal, state and local regulations in the United States, as well as
environmental regulations in Korea and the Philippines, impose various controls
on the storage, handling, discharge and disposal of chemicals used in the
Company's and AICL's manufacturing process and on the facilities occupied by the
Company and AICL. The Company believes that its activities, as well as those of
AICL, conform to present environmental and land use regulations applicable to
their respective operations and current facilities. Increasing public attention
has, however, been focused on the environmental impact of semiconductor
manufacturing operations and the risk to neighbors of chemical releases from
such operations. There can be no assurance that applicable land use and
environmental regulations will not in the future impose the need for additional
capital equipment or other process requirements upon the Company or AICL or
restrict the Company's or AICL's ability to expand their respective operations.
The adoption of new ordinances or similar measures or any failure by the Company
or AICL to comply with applicable environmental and land use regulations or to
restrict the discharge of hazardous substances could subject the Company or AICL
to future liability or cause their respective manufacturing operations to be
curtailed or suspended.

INTELLECTUAL PROPERTY

The Company currently holds 24 United States patents, five of which are
jointly held with AICL, related to various IC packaging technologies, in
addition to other pending patents. These patents will expire at various dates
from 2012 through 2016. With respect to development work undertaken jointly with
AICL, the Company and AICL share intellectual property rights under the terms of
the Supply Agreements between the Company and AICL. Such Supply Agreements also
provide for the cross-licensing of intellectual property rights between the
Company and AICL. In addition, the Company enters into agreements with other
developers of packaging technology to license or otherwise obtain certain
process or package technologies.

The Company expects to continue to file patent applications when
appropriate to protect its proprietary technologies; however, the Company
believes that its continued success depends primarily on factors such as the
technological skills and innovation of its personnel rather than on its patents.
The process of seeking patent protection can be expensive and time consuming.
There can be no assurance that patents will be issued from pending or future
applications or that, if patents are issued, they will not be challenged,
invalidated or circumvented, or that rights granted thereunder will provide
meaningful protection or other commercial advantage to the Company. Moreover,
there can be no assurance that any patent rights will be upheld in the future or
that the Company will be able to preserve any of its other intellectual property
rights.

21
24

Although the Company is not currently a party to any material litigation,
the semiconductor industry is characterized by frequent claims regarding patent
and other intellectual property rights. As is typical in the semiconductor
industry, the Company may receive communications from third parties asserting
patents on certain of the Company's technologies. In the event any third party
were to make a valid claim against the Company or AICL, the Company or AICL
could be required to discontinue the use of certain processes or cease the
manufacture, use, import and sale of infringing products, to pay substantial
damages and to develop non-infringing technologies or to acquire licenses to the
alleged infringed technology. The Company's business, financial condition and
results of operations could be materially and adversely affected by such
developments. Litigation, which could result in substantial cost to and
diversion of resources of the Company, may also be necessary to enforce patents
or other intellectual property rights of the Company or to defend the Company
against claimed infringement of the rights of others. The failure to obtain
necessary licenses or the occurrence of litigation relating to patent
infringement or other intellectual property matters could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, AICL has obtained intellectual property for wafer
manufacturing primarily from TI. The licenses granted to AICL by TI under the TI
Technology Agreements are very limited. Although TI has granted to AICL a
license under TI's trade secret rights to use TI's technology in connection with
AICL's provision of wafer fabrication services, TI has not granted AICL a
license under its patents, copyrights and mask works to manufacture
semiconductors for third parties. Although TI has agreed that TI will not assert
a claim for patent, copyright or mask work right infringement against AICL or
the Company in connection with AICL's manufacture of semiconductor products for
third parties, TI has reserved the right to bring such infringement claims
against AICL's or the Company's customers with respect to semiconductor products
purchased from AICL or the Company. As a result, AICL's and the Company's
customers could be subject to patent litigation by TI and others, and AICL and
the Company could in turn be subject to litigation by such customers and others,
in connection with the sale of wafers produced by AICL. Any such litigation
could materially and adversely affect AICL's ability to continue to manufacture
wafers and AICL's and the Company's business, financial condition and results of
operations.

SUBORDINATION OF CONVERTIBLE NOTES

The Convertible Notes will be unsecured and subordinated in right of
payment in full to all existing and future Senior Debt (as defined) of the
Company. As a result of such subordination, in the event of bankruptcy,
liquidation or reorganization of the Company, or upon the acceleration of any
Senior Debt, the assets of the Company will be available to pay obligations on
the Convertible Notes only after all Senior Debt has been paid in full, and
there may not be sufficient assets remaining to pay amounts due on any or all of
the Convertible Notes then outstanding. The Convertible Notes are also
effectively subordinated to the liabilities, including trade payables, of the
Company's subsidiaries. The Indenture relating to the Convertible Notes does not
prohibit or limit the incurrence of additional indebtedness, including Senior
Debt, by the Company or its subsidiaries. The incurrence of additional
indebtedness by the Company or its subsidiaries could adversely affect the
Company's ability to pay its obligations on the Convertible Notes. As of
December 31, 1997 (after giving effect to the Reorganization), the Company had
approximately $32 million of outstanding indebtedness that would have
constituted Senior Debt, and the indebtedness and other liabilities of the
Company's subsidiaries (excluding intercompany liabilities and obligations of a
type not required to be reflected on the balance sheet of such subsidiaries in
accordance with GAAP) that would effectively have been senior to the Convertible
Notes were approximately $642 million. The incurrence of additional indebtedness
by the Company or its subsidiaries could adversely affect the Company's ability
to pay its obligations on the Convertible Notes. The Indenture relating to the
Convertible Notes will not limit the amount of additional indebtedness,
including Senior Debt, that the Company can create, incur, assume or guarantee,
nor will the Indenture limit the amount of indebtedness and other liabilities
that any subsidiary of the Company can create, incur, assume or guarantee. The
Company anticipates that from time to time it will incur additional indebtedness
and other liabilities, including Senior Debt, and that from time to time the
Company's subsidiaries will incur additional indebtedness and other liabilities.

The Convertible Notes are obligations exclusively of the Company. However,
since the operations of the Company are primarily conducted through its
subsidiaries, the cash flow and the consequent ability of the
22
25

Company to service its debt, including the Convertible Notes, are primarily
dependent upon the earnings of its subsidiaries and the distribution of those
earnings to, or upon loans or other payments of funds by those subsidiaries to,
the Company. The payment of dividends and the making of loans and advances to
the Company by its subsidiaries may be subject to statutory or contractual
restrictions, are dependent upon the earnings of those subsidiaries and are
subject to various business considerations.

The Indenture does not contain any financial performance covenants.
Consequently, the Company is not required under the Indenture to meet any
financial tests such as those that measure the Company's working capital,
interest coverage, fixed charge coverage or net worth in order to maintain
compliance with the terms of the Indenture. See "Description of Convertible
Notes -- Subordination."

LIMITATIONS ON REPURCHASE OF CONVERTIBLE NOTES

Upon a Designated Event, which includes a Change of Control and a
Termination of Trading (each as defined), each holder of Convertible Notes will
have certain rights, at the holder's option, to require the Company to
repurchase all or a portion of such holder's Convertible Notes. If a Designated
Event were to occur, there can be no assurance that the Company would have
sufficient funds to pay the repurchase price for all Convertible Notes tendered
by the holders thereof. In addition, the terms of the Company's existing or
future credit or other agreements relating to indebtedness (including Senior
Debt) may prohibit the Company from purchasing any Convertible Notes and may
also provide that a Designated Event, as well as certain other change-of-control
events with respect to the Company, would constitute an event of default
thereunder. In the event a Designated Event occurs at a time when the Company is
prohibited from purchasing Convertible Notes, the Company could seek the consent
of its lenders to the purchase of Convertible Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company would remain
prohibited from purchasing Convertible Notes. In such case, the Company's
failure to purchase tendered Convertible Notes would constitute an Event of
Default under the Indenture, which may, in turn, constitute a further default
under the terms of other indebtedness that the Company has entered into or may
enter into from time to time. In such circumstances, the subordination
provisions in the Indenture would likely restrict payments to the holders of
Convertible Notes. See "Description of Convertible Notes -- Repurchase at Option
of Holders Upon a Designated Event."

NO PRIOR MARKET; LIQUIDITY; STOCK PRICE VOLATILITY; DILUTION

Prior to the Offerings, there has been no public market for the Common
Stock or the Convertible Notes. Consequently, the initial public offering price
will be determined by negotiations among the Company and the representatives of
the Underwriters. Although the Underwriters have advised the Company that they
currently intend to make a market in the Common Stock and Convertible Notes,
they are not obligated to do so and may discontinue such market-making at any
time without notice. There can be no assurance that an active public market for
the Common Stock or the Convertible Notes will develop or be sustained after the
Offerings or that the market price of the Common Stock or the Convertible Notes
will not decline below the initial public offering price. The trading price of
the Common Stock and Convertible Notes could be subject to wide fluctuations in
response to quarter-to-quarter variations in operating results, announcements of
technological innovations or new products by the Company or its competitors,
general conditions in the semiconductor industry, changes in earnings estimates
or recommendations by analysts, or other events or factors. In addition, the
public stock markets have experienced extreme price and trading volume
volatility in recent months. This volatility has significantly affected the
market prices of securities of many high technology companies for reasons
frequently unrelated to the operating performance of the specific companies.
These broad market fluctuations may adversely affect the market price of the
Common Stock and Convertible Notes. Moreover, purchasers of Common Stock in the
Offerings will incur immediate, substantial book value dilution. See "Dilution"
and "Underwriting."

23
26

BENEFITS OF THE OFFERINGS TO EXISTING STOCKHOLDERS; CONTINUED CONTROL BY
EXISTING STOCKHOLDERS

Immediately after the closing of the Offerings, based upon shares
outstanding as of the date hereof, James Kim and members of his family will, in
the aggregate, beneficially own 77,610,000 shares of Common Stock, which shares
represent all of the outstanding Common Stock not offered hereby and
approximately 68.9% of the total number of shares of Common Stock outstanding
following the Offerings. The Offerings will create a public market for the
resale of shares held by these existing stockholders. Such stockholders, acting
together, will be able to effectively control substantially all matters
requiring approval by the stockholders of the Company. Such matters could
include the election of a majority of the members of the Board of Directors,
proxy contests, mergers involving the Company, tender offers, open market
purchase programs or other purchases of Common Stock that could give
stockholders of the Company the opportunity to realize a premium over the then
prevailing market price for their shares of Common Stock. In addition, such
continued control could also have the effect of delaying, deferring or
preventing a change in control of the Company, may discourage bids for the
Common Stock at a premium over the market price and may adversely affect the
market price of the Common Stock. See "Principal and Selling Stockholders."

ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN CHARTER PROVISIONS

The Company's Board of Directors has the authority to issue up to
10,000,000 shares of preferred stock $.001 par value ("Preferred Stock") and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the Company's stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. While the Company has no present intention to issue shares of Preferred
Stock, such issuance, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. In addition, the Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law, which prohibits the Company from engaging in a "business combination" with
an "interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. The application of
Section 203 could have the effect of delaying or preventing a change of control
of the Company. The Company's Certificate of Incorporation (the "Certificate of
Incorporation") does not permit cumulative voting. This provision, and other
provisions of the Certificate of Incorporation, the Company's bylaws (the
"Bylaws") and Delaware corporate law, may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or management of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over then current market prices.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after the
Offerings could adversely affect the prevailing market price of the Common
Stock. In addition to the 35,000,000 shares of Common Stock offered hereby
(assuming no exercise of the Underwriters' over-allotment options), upon the
closing of the Offerings, there will be shares issuable upon
conversion of the Convertible Notes, all of which shares will be freely
tradeable. In addition, up to 7,000,000 shares of Common Stock may be borrowed
from James Kim and his wife Agnes Kim ("Mr. and Mrs. Kim") and resold in the
public market in connection with the Underwriters' market-making activities with
respect to the Convertible Notes. Excluding the shares described above, there
will be approximately 70,610,000 additional shares of Common Stock outstanding,
all of which are "restricted" shares (the "Restricted Shares") under the
Securities Act of 1933, as amended (the "Securities Act"). Beginning one year
after the Reorganization, all such Restricted Shares will first become eligible
for sale in the public market pursuant to Rule 144 promulgated under the
Securities Act, subject to certain volume and other resale restrictions pursuant
to Rule 144. See "Shares Eligible for Future Sale."

24
27

REORGANIZATION

In March 1970, Amkor Electronics, Inc. ("AEI") was incorporated in
Pennsylvania to design semiconductor packages and provide semiconductor
packaging services through a supply relationship with AICL. Since that time, Mr.
James Kim (the founder of AEI) and members of his family have acquired a
majority interest in a number of other companies which support or engage in
various aspects of the semiconductor packaging and test business (the "Amkor
Companies"). Prior to the reorganization described below, the Amkor Companies
consisted of:

- AEI and its subsidiaries Amkor Receivables Corp., which purchases the
Company's accounts receivable under an accounts receivable financing
arrangement, and Amkor Wafer Fabrication Services SARL, which provides
various technical support for CIL's wafer fabrication services customers
in Europe and Asia;

- T.L. Limited ("TLL") and its subsidiary C.I.L. Limited ("CIL"), which
markets the Company's services to semiconductor companies in Europe and
Asia;

- Amkor/Anam EuroServices S.A.R.L. ("AAES"), which provides various
technical and support services for CIL's packaging and test customers;

- Amkor/Anam Advanced Packaging, Inc. ("AAAP"), Amkor/Anam Pilipinas, Inc.
("AAP") and AAP's subsidiary Automated MicroElectronics Inc. ("AMI"),
each of which provides manufacturing services; and

- AK Industries, Inc. ("AKI") and its subsidiary, Amkor-Anam, Inc., which
provides raw material purchasing and inventory management services.

All of the Amkor Companies are substantially wholly owned beneficially by
Mr. and Mrs. Kim or entities beneficially owned by members of Mr. James Kim's
immediate family (the "Founding Stockholders"), except for 40% of AAP owned by
AICL and one-third of AEI and all of AKI which are owned by certain trusts
established for the benefit of other members of Mr. Kim's family (the "Kim
Family Trusts"). The Company (Amkor Technology, Inc.) was formed in September
1997 to consolidate the ownership of the Amkor Companies. Prior to the
reorganization described below, Amkor Technology, Inc. will conduct no business
and hold no assets or liabilities.

Prior to the Offerings, the following transactions will be effected to
consolidate the operations of the Amkor Companies under the Company, (such
transactions are referred to collectively as the "Reorganization"):

- AEI will be merged into Amkor Technology, Inc.

- Amkor International Holdings ("AIH"), a newly formed Cayman Islands
holding company, will become a wholly-owned subsidiary of Amkor
Technology, Inc. and will hold the following entities:
- First Amkor Cayman Islands, Ltd., a newly formed Cayman Islands
holding company, and its subsidiaries AAAP, AAP and AMI;
- TLL and its subsidiary CIL; and
- AAES.

- In addition, the Company will acquire all of the stock of AKI from the
Kim Family Trusts for $3 million.

Except for the acquisition of AKI which will be accounted for as a purchase
transaction, the accounting for the Reorganization will be similar to the
accounting for a pooling of interests as it represents an exchange of equity
interests among companies under common control. Following the Reorganization,
all of the Amkor Companies will be wholly owned, directly or indirectly, by the
Company (except for AAP, which will be 40% owned by AICL). An aggregate of
82,610,000 shares of Common Stock will be issued by the Company in connection
with the Reorganization. The relative number of shares of Common Stock issued by
the Company in connection with each of the transactions comprising the
Reorganization is based upon relative amounts of stockholders' equity of each of
the Amkor Companies as of December 31, 1997. Accordingly, the Company
25
28

will issue an aggregate of 14,620,149 shares of Common Stock in connection with
the merger of AEI into Amkor Technology, Inc., 9,746,766 of which shares will be
received by Mr. and Mrs. Kim and 4,873,383 shares will be received by the Kim
Family Trusts. In addition, the Company will issue an aggregate of 67,989,851
shares of Common Stock in exchange for all of the outstanding shares of AIH and
its subsidiaries. Of such shares, 19,328,234 shares, 36,376,617 shares and
8,200,000 shares will be gifted to Mr. and Mrs. Kim, the Kim Family Trusts and
other members of Mr. Kim's immediate family, respectively. Following the
Reorganization, the Founding Stockholders and such other members of Mr. Kim's
immediate family will beneficially own a majority of the outstanding shares of
Common Stock. Following the Offerings, the Founding Stockholders, such other
members of Mr. Kim's immediate family and the Kim Family Trusts will
beneficially own 77,610,000 shares of Common Stock, representing approximately
68.9% of the outstanding shares of Common Stock. See "Certain Transactions" and
"Principal and Selling Stockholders."

The Company has entered into an agreement with AICL pursuant to which the
Company will purchase, immediately following the Offerings, AICL's 40% interest
in AAP for approximately $34 million. See "Use of Proceeds."

The Offerings are conditioned upon, among other things, the consummation of
the Reorganization.

TERMINATION OF S CORPORATION STATUS AND DISTRIBUTIONS

Prior to the consummation of the Reorganization, AEI had elected to be
treated for U.S. federal and certain state tax purposes as an S Corporation
under the Internal Revenue Code of 1986 and comparable state tax laws. As a
result, AEI did not recognize federal corporate income taxes. Instead, up until
the termination of AEI's S Corporation status (the "Termination Date"), Mr. and
Mrs. Kim and the Kim Family Trusts have been obligated to pay U.S. federal and
certain state income taxes on their allocable portion of the income of AEI. The
Company, Mr. and Mrs. Kim and the Kim Family Trusts will enter into tax
indemnification agreements providing that the Company will be indemnified by
such stockholders, with respect to their proportionate share of any U.S. federal
or state corporate income taxes attributable to the failure of AEI to qualify as
an S Corporation for any period or in any jurisdiction for which S Corporation
status was claimed through the Termination Date. The tax indemnification
agreements will also provide that the Company will indemnify Mr. and Mrs. Kim
and the Kim Family Trusts if such stockholders are required to pay additional
taxes or other amounts attributable to taxable years on or before the
Termination Date as to which AEI filed or files tax returns claiming status as
an S Corporation. AEI has made various distributions to such stockholders which
have enabled them to pay their income taxes on their allocable portions of the
income of AEI. Such distributions totaled approximately $19.8 million, $13.0
million and $5.0 million in 1995, 1996 and 1997, respectively. The Company
expects to make additional distributions to such stockholders prior to the
consummation of the Reorganization, which distributions will represent AEI's
cumulative net income in all periods prior to the Termination Date less the
aggregate amount of distributions previously made to such stockholders. These
final distributions are intended to provide such stockholders with the balance
of AEI's net income for which they have already recognized income taxes. Through
December 31, 1997, the amount of such undistributed net earnings was $27.7
million. See Notes 1, 10 and 17 of Notes to Combined Financial Statements.

26
29

RELATIONSHIP WITH ANAM INDUSTRIAL CO., LTD.

AICL is a Korean company engaged primarily in providing semiconductor
packaging and test services to the Company, which in turn sells such services to
its customers. AICL also currently markets its services directly in Korea. In
addition, AICL manufactures and sells electric wiring devices and watches. AICL
operates four semiconductor packaging and test facilities in Korea, and has
recently qualified a new deep submicron CMOS wafer foundry in Korea which is
currently capable of producing 15,000 8" wafers per month. In March 1998, AICL
changed its name to Anam Semiconductor, Inc.

AICL was founded in 1956 by Mr. H. S. Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam Group, consisting principally of companies in Korea in the electronics
industries. The businesses of AICL and the other companies in the Anam Group are
influenced to a significant degree by the family of H. S. Kim, which, together
with the Company, collectively owned approximately 40.7% of the outstanding
common stock of AICL as of December 31, 1997. A significant portion of the
shares owned by the Kim family are leveraged and as a result of this, or for
other reasons, the family's ownership could be substantially reduced. James Kim,
the founder of the Company and currently its Chairman and Chief Executive
Officer, is the eldest son of H. S. Kim. Since January 1992, in addition to his
other responsibilities, James Kim has been serving as acting Chairman of the
Anam Group and a director of AICL. Mr. In-Kil Hwang, the President and a
Representative Director of AICL, is the brother-in-law of James Kim. In
addition, four other members of Mr. Kim's family are on the 13 member Board of
Directors of AICL. After the Offerings, James Kim and members of his family will
beneficially own approximately 68.9% of the outstanding Common Stock of the
Company, and Mr. Kim and other members of his family will continue to exercise
significant control over the Company. See "Risk Factors -- Benefits of the
Offerings to Existing Stockholders; Continued Control by Existing Stockholders"
and "Principal and Selling Stockholders."

The businesses of the Company and AICL have been interdependent for many
years. In 1996 and 1997, approximately 72% and 68%, respectively, of the
Company's revenues were derived from sales of services performed for the Company
by AICL. In addition, substantially all of the revenues of AICL in 1996 and 1997
were derived from services sold by the Company. The Company expects the
proportion of its revenues derived from sales of services performed for the
Company by AICL and the proportion of AICL's revenues from services sold by the
Company to increase as the Company begins selling the wafer fabrication output
of AICL's new wafer foundry and with the Company's assumption from AICL in
January 1998 of substantially all of the marketing rights for the Japanese
market. In the event the ability of AICL to supply the Company were disrupted
for any reason, the Company's facilities in the Philippines would be able to
fill only a small portion of the resulting shortfall in capacity. In addition,
there are currently no significant third party suppliers of packaging and test
services from which the Company could fill its orders. As a result, the
Company's business, financial condition and operating results will continue to
be significantly dependent on the ability of AICL to effectively provide
contracted services on a cost-efficient and timely basis. The Company expects
that the businesses of the Company and AICL will continue to remain highly
interdependent by virtue of their supply relationship, family ties between their
respective shareholders and management, financial relationships, coordination of
product and operation plans, joint research and development activities and
shared intellectual property rights. The termination of the Company's
relationship with AICL for any reason, or any material adverse change in AICL's
business resulting from underutilization of its capacity, the level of its debt
and its guarantees of affiliate debt, labor disruptions, fluctuations in foreign
exchange rates, changes in governmental policies, economic or political
conditions in Korea or any other change, could have a material adverse effect on
the Company's business, financial condition and results of operations.

The Company has recently entered into the Supply Agreements with AICL.
Under the Supply Agreements, AICL has granted to the Company a first right to
substantially all of the packaging and test services of AICL and the exclusive
right to all of the wafer output of its new wafer foundry. The Company expects
to continue to purchase substantially all of AICL's packaging and test services,
and to purchase all of AICL's wafer output, under the Supply Agreements. Under
the Supply Agreements, pricing arrangements relating to packaging and test
services provided by AICL to the Company are subject to quarterly review and
adjustment, and such arrangements relating to the wafer output provided by AICL
to the Company are
27
30

subject to annual review and adjustment, in each case on the basis of factors
such as changes in the semiconductor market, forecasted demand, product mix and
capacity utilization and fluctuations in exchange rates, as well as the mutual
long-term strategic interests of the Company and AICL. There can be no assurance
that any new pricing arrangements resulting from such review and adjustment will
be favorable to the Company. Pursuant to long-standing arrangements between AICL
and the Company's operating subsidiaries, sales from AICL to the Company will
continue to be made through AUSA, a wholly-owned financing subsidiary of AICL.
Under the Supply Agreements, the Company will continue to reimburse AUSA for the
financing costs incurred by it in connection with trade financing provided to
the Company. The Supply Agreements also provide that Amkor-Anam, Inc., a
subsidiary of the Company, will continue to provide raw material procurement and
related services to AICL on a fee basis. The Supply Agreements have a five-year
term, and may be terminated by any party thereto upon five years' written notice
at any time after the expiration of such initial five-year term. There can be no
assurance that AICL will not terminate either Supply Agreement upon the
expiration of such initial term or that if it does terminate a Supply Agreement,
that the Company will be able to obtain a new agreement with AICL on terms that
are favorable to the Company or at all.

28
31

The following is a summary of 1996 and 1997 consolidated financial
information pertaining to AICL prepared in accordance with Korean GAAP which
differs from U.S. GAAP. See Note 6 of Notes to Combined Financial Statements.

1996 1997
----------- --------------
(IN MILLIONS)

SUMMARY INCOME STATEMENT DATA:
Sales................................................. W1,338,718 W1,786,457
Gross profit.......................................... 242,601 279,186
Operating income...................................... 164,846 176,028
Net foreign exchange loss............................. 29,372 216,697
Net loss.............................................. (9,385) (305,414)
SUMMARY BALANCE SHEET DATA:
Cash and bank deposits................................ W 324,139 W 215,024
Accounts and notes receivable, net.................... 368,975 393,261
Inventory............................................. 214,494 260,302
Other current assets.................................. 145,301 490,544
----------- -----------
Total current assets............................... 1,052,909 1,359,131
----------- -----------
Property, plant and equipment, net.................... 994,931 2,159,466
Investments........................................... 83,715 122,366
Other long-term assets................................ 93,733 295,554
----------- -----------
Total long-term assets............................. 1,172,379 2,577,386
----------- -----------
Total assets.................................. W2,225,288 W3,936,517
=========== ===========
Short-term borrowings................................. 935,463 1,591,280
Current maturities of long-term debt.................. 85,252 120,913
Other current liabilities............................. 305,931 412,289
----------- -----------
Total current liabilities.......................... 1,326,646 2,124,482
----------- -----------
Long-term debt, net of current maturities............. 475,045 736,784
Long-term capital lease obligations................... 106,068 861,813
Other long-term liabilities and minority interest..... 89,272 138,305
----------- -----------
Total long-term liabilities................... 670,385 1,736,902
----------- -----------
Total liabilities............................. 1,997,031 3,861,384
----------- -----------
Stockholders' equity.................................. 228,257 75,133
----------- -----------
Total liabilities and stockholders' equity.... W2,225,288 W3,936,517
=========== ===========

A significant amount of the current and long-term liabilities of AICL are
denominated in U.S. dollars and other foreign currencies. At December 31, 1997,
the amount of U.S. dollar and other foreign currency denominated short-term
borrowings, current maturities of long-term debt, long-term debt (net of current
maturities) and long-term capital lease obligations were W1,092 billion, W59
billion, W159 billion and W834 billion, respectively. Due in part to the
significant depreciation of the won (for example, from a Market Average Exchange
Rate of W884 to $1.00 on December 31, 1996 to W1,415 to $1.00 on December 31,
1997 and W1,415 to $1.00 on March 24, 1998) resulting from the recent economic
crisis in Korea, AICL's liabilities in won terms and its leverage calculated in
won have significantly increased in 1997. The effect of this depreciation on
AICL, however, has been mitigated by the fact that substantial amounts of AICL's
revenues are denominated in U.S. dollars. The increase in AICL's liabilities was
also attributable in part to additional financing obtained in connection with
the constitution of its new wafer foundry. See "-- Risks Associated with New
Wafer Fabrication Business" and Note 6 of Notes to Combined Financial
Statements.

29
32

The recent economic crisis in Korea has also led to sharply higher domestic
interest rates in Korea and reduced opportunities for refinancing or refunding
maturing debts as financial institutions in Korea, which are experiencing
financial difficulties, are increasingly looking to limit their lending,
particularly to highly leveraged companies, and to increase their reserves and
provisions for non-performing assets. These developments will result in higher
interest rates on loans to AICL and have otherwise made it more difficult for
AICL to obtain new financing. Therefore, there can be no assurance that AICL
will be able to refinance its existing loans or obtain new loans, or continue to
make required interest and principal payments on such loans or otherwise comply
with the terms of its loan agreements. Any inability of AICL to obtain financing
or generate cash flow from operations sufficient to fund its capital
expenditure, debt service and repayment and other working capital and liquidity
requirements could have a material adverse effect on AICL's ability to continue
to provide services and otherwise fulfill its obligations to the Company. See
"Risk Factors -- Risks Associated With Leverage" and " -- Dependence On
International Operations and Sales; Concentration of Operations in the
Philippines and Korea."

As of December 31, 1997, AICL and its consolidated subsidiaries were
contingently liable under guarantees in respect of debt of AICL's
non-consolidated subsidiaries and affiliates in the Anam Group in the aggregate
amount of approximately W857 billion. As of such date, AICL had provided
guarantees for all of AUSA's debt of $319 million, the Non-Compliant Loans of
$176 million and the Company's obligations under a receivables sales
arrangement. The Company has met a significant portion of its financing needs
through financing arrangements obtained by AUSA for the benefit of the Company,
based on guarantees provided by AICL. There can be no assurance that AUSA will
be able to obtain additional guarantees, if necessary, from AICL. Further, a
deterioration in AICL's financial condition could trigger defaults under AICL's
guarantees, causing acceleration of such loans. In addition, as an overseas
subsidiary of AICL, AUSA was formed with the approval of the Bank of Korea. If
the Bank of Korea were to withdraw such approval, or if AUSA otherwise ceased
operations for any reason, the Company and AICL would be required to meet their
financing needs through alternative arrangements. Although the Company believes
that after the Offerings alternative financing arrangements will be available,
there can be no assurance that the Company or AICL will be able to obtain
alternative financing on acceptable terms or at all. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 11 of Notes to Combined
Fianacial Statements. In addition, if any relevant subsidiaries or affiliates of
AICL, certain of which may have greater exposure to domestic Korean economic
conditions than AICL, were to fail to make interest or principal payments or
otherwise default under their debt obligations guaranteed by AICL, AICL could be
required under its guarantees to repay such debt, which event could have a
material adverse effect on its financial condition and results of operations.

After the Offerings, the Company will continue to be controlled to a
significant degree by James Kim and members of his family, and Mr. Kim and other
members of his family will continue to exercise significant

30
33

influence over the management of AICL and its affiliates. In addition, the
Company and AICL will continue to have certain contractual and other business
relationships, including under the Supply Agreements, and may engage in
transactions from time to time that are material to the Company. Although any
such material agreements and transactions would require approval of the
Company's Board of Directors, such transactions generally will not require
approval of the disinterested members of the Board of Directors and conflicts of
interest may arise in certain circumstances. There can be no assurance that such
conflicts will not from time to time be resolved against the interests of the
Company. The Company currently has four directors, two of whom are
disinterested. Under Delaware corporate law, each director owes a duty of
loyalty and care to the Company, which if breached can result in personal
liability for the directors. In addition, the Company may agree to certain
changes in its contractual and other business relationships with AICL, including
pricing, manufacturing allocation, capacity utilization and capacity expansion,
among others, which in the judgment of the Company's management will result in
reduced short-term profitability for the Company in favor of potential long-term
benefits to the Company and AICL. There can be no assurance that the Company's
business, financial condition or results of operations will not be adversely
affected by any such decision.

31
34

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 30,000,000 shares of
Common Stock and the $150,000,000 principal amount of the Convertible Notes
offered by the Company hereby are estimated to be approximately $449,950,000
(approximately $525,452,500 if the Underwriters' over-allotment options are
exercised in full), assuming an initial public offering price of $11.00 per
share of Common Stock and after deducting the estimated underwriting discounts
and estimated offering expenses. The Company will not receive any proceeds from
the sale of the shares of Common Stock offered hereby by the Selling
Stockholders.

Approximately $154 million of the net proceeds to the Company from the
Offerings will be used to repay the Non-Compliant Loans, which, following
planned repayments of portions thereof prior to the Offerings, will have
outstanding balances of $43 million, $50 million and $61 million. These loans
are due May 1998, October 2000 and April 2001, respectively, and accrue interest
annually at rates equal to 7.16%, 6.78% and 6.68%, respectively, at December 31,
1997, which rates represent LIBOR plus a spread. The $43 million loan was
incurred in August 1997 in order to redeem $40 million of Floating Rate Notes
issued by AAP and to repay certain short-term debt. The Company is not in
compliance with certain covenants under the above-described loans and, as a
result, the Company's obligation to repay these loans may be accelerated by the
lenders at any time. These loan covenants include restrictions on the ability of
one of the Company's subsidiaries to enter into transactions with affiliates,
requirements that the subsidiary maintain certain debt-to-equity ratios and
requirements that the subsidiary comply with certain notice requirements. As a
result of such non-compliance, these loans have been classified as current
liabilities in the Company's financial statements included herein, and the
report of the Company's independent public accountants with respect to such
financial statements contains a paragraph stating that there is substantial
doubt as to the ability of the Company to continue as a going concern. Repayment
of such loans from the proceeds of the Offerings will eliminate these events of
non-compliance.

Approximately $63 million of the net proceeds to the Company from the
Offerings will be used to repay numerous short-term bank loans incurred
primarily to finance capital expenditures for the Company's P1 factory in the
Philippines and for working capital. All of these loans are due within 12 months
of December 31, 1997 and bear interest at rates ranging from 8.0% to 12.2%. In
addition, approximately $8 million of the net proceeds will be used to repay two
term loans of approximately $3 million and $5 million. These loans are due
September 1999 and January 2001, respectively, and accrue interest annually at
rates equal to 9.09% and 11.88%, respectively, at December 31, 1997, which rates
represent LIBOR plus a spread.

An additional approximately $34 million of the net proceeds to the Company
will be used to purchase AICL's 40% interest in AAP. Approximately $106 million
of the net proceeds will be used to repay all of the amounts that will remain
due to AUSA following planned repayments of portions thereof prior to the
Offerings. The remaining $85 million of such net proceeds ($160 million if the
Underwriters' over-allotment options are exercised in full) will be used for
capital expenditures and working capital. Pending such uses, the net proceeds to
the Company of the Offerings will be invested in investment grade,
interest-bearing securities.

DIVIDEND POLICY

The Company currently anticipates that, following the completion of the
Offerings, all future earnings will be retained for use in the Company's
business and that the Company will not pay any cash dividends on its Common
Stock in the foreseeable future. The payment of any future dividends will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, future earnings, operations, capital requirements, the general
financial condition of the Company and general business conditions. As an S
Corporation, AEI made substantial cash distributions to its stockholders to pay
income taxes on their allocable portions of AEI's net income. The Company plans
to make additional distributions to such stockholders prior to the Termination
Date. See "Reorganization."

32
35

CAPITALIZATION

The following table sets forth as of December 31, 1997 (i) the actual
capitalization of the Company derived from the Combined Financial Statements
after giving effect to the Reorganization, (ii) the pro forma capitalization of
the Company reflecting the termination of AEI's S Corporation status which will
occur in connection with the Reorganization, and (iii) the pro forma
capitalization of the Company as adjusted principally to reflect the sale by the
Company, pursuant to the Offerings, of 30,000,000 shares of Common Stock at an
assumed initial public offering price of $11.00 per share and $150.0 million of
the Convertible Notes, and the receipt and application by the Company of the
estimated net proceeds to it therefrom (after deducting the estimated
underwriting discounts and estimated offering expenses), as well as planned debt
repayments by the Company after December 31, 1997 and prior to the Offerings.
The capitalization information set forth in the table below is qualified by the
more detailed Combined Financial Statements and Notes thereto included elsewhere
in this Prospectus and should be read in conjunction with such Combined
Financial Statements and the Notes thereto.

DECEMBER 31, 1997
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
-------- ------------ --------------
(IN THOUSANDS)

Short term borrowings and current portion of
long-term debt.............................. $325,968 $325,968 $ 53,668
Long-term debt:
% Convertible Subordinated Notes due
2003..................................... -- -- 150,000
Due to AUSA (non-current)(3)................ 149,776 149,776 --
Other long-term debt........................ 38,283 38,283 35,283
-------- -------- --------
Total long-term debt..................... 188,059 188,059 185,283
-------- -------- --------
Stockholders' equity:
Common Stock, $.001 par value; 500,000,000
shares authorized; 82,610,000 shares
issued and outstanding, actual and pro
forma; 112,610,000 shares issued and
outstanding, pro forma as adjusted(4).... 46 46 76
Additional paid-in capital.................. 20,871 20,871 327,604
Retained earnings........................... 70,621 40,821 40,821
Cumulative translation adjustment........... (663) (663) (663)
-------- -------- --------
Total stockholders' equity............... 90,875 61,075 367,838
-------- -------- --------
Total capitalization................ $278,934 $249,134 $553,121
======== ======== ========

- ---------------
(1) Pro forma balance sheet data reflects (i) the termination of AEI's S
Corporation status which resulted in the recording of a deferred tax
liability of $2.1 million and (ii) a distribution by the Company of
undistributed earnings of AEI through December 31, 1997 of $27.7 million to
stockholders of AEI prior to the Reorganization. The amount actually
distributed by the Company to such stockholders of AEI will increase to
reflect any undistributed net income earned by AEI following December 31,
1997 and prior to the Reorganization. See "Reorganization -- Termination of
S Corporation Status and Distributions" and Notes 1, 16 and 17 of Notes to
Combined Financial Statements.

(2) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $11.00 per share of Common Stock, including the purchase from AICL
of its 40% interest in AAP for approximately $34 million and the related
elimination of minority interest and recording of goodwill. The acquisition
of the minority interest will result in additional amortization of
approximately $2.5 million per year. Also reflects repayments made after
December 31, 1997 and prior to the Offerings of $50.3 million of short-term
borrowings and current portion of long-term debt and $30 million of amounts
due to AUSA (non-current), as well as the assumption by an affiliate of the
Company of $13.9 million of amounts due to AUSA (non-current) in

33
36

February 1998. See "Reorganization," "Use of Proceeds" and Notes 1, 6 and 16
of Notes to Combined Financial Statements.

(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources."

(4) Excludes 2,730,000 shares of Common Stock issuable upon exercise of options
to be granted immediately prior to the Offerings under the Company's 1998
Stock Plan and 1998 Director Option Plan. Also excludes an aggregate of
shares reserved for issuance upon conversion of the Convertible
Notes and an additional 3,570,000 shares reserved for issuance under the
Company's 1998 Stock Plan, 1998 Director Option Plan and 1998 Employee Stock
Purchase Plan. See "Management" and "Description of Capital Stock" and Notes
1 and 16 of Notes to Combined Financial Statements.

34
37

DILUTION

The pro forma net tangible book value of the Company as of December 31,
1997 was approximately $58 million or $.71 per share of Common Stock, after
giving effect to the distribution of accumulated previously taxed earnings of
$27.7 million, the recording of deferred tax liabilities of $2.1 million and the
Reorganization. Pro forma net tangible book value per share represents the
Company's total pro forma tangible assets less total liabilities as reflected in
the Combined Financial Statements, divided by the number of outstanding shares
of Common Stock. After giving effect to the sale by the Company of 30,000,000
shares of Common Stock and $150.0 million of Convertible Notes offered hereby
(assuming no exercise of the Underwriters' over-allotment options) at an assumed
initial public offering price of $11.00 per share of Common Stock and the use by
the Company of the estimated net proceeds therefrom (after deducting the
estimated underwriting discounts and offering expenses payable by the Company),
as described in "Use of Proceeds," the Company's net tangible book value at
December 31, 1997 would have been $341 million or $3.03 per share of Common
Stock. This represents an immediate increase in net tangible book value of $2.32
per share to existing stockholders and an immediate dilution in net tangible
book value of $7.97 per share to new public stockholders. The following table
illustrates this per share dilution:

Assumed initial public offering price per share........ $ 11.00
--------
Net tangible book value per share before the
Offerings....................................... $ .71
--------
Increase in net tangible book value per share
attributable to new public stockholders......... 2.32
--------
Net tangible book value per share after the
Offerings............................................ 3.03
--------
Dilution per share to new public stockholders.......... $ 7.97
========

The following table summarizes, as of December 31, 1997 (after giving
effect to the Reorganization), the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by the existing stockholders and by new public stockholders purchasing
shares in the Offerings (at an assumed initial public offering price of $11.00
per share and before deducting the estimated underwriting discounts and offering
expenses payable by the Company).

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
---------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- -------------

Existing stockholders(1)......... 82,610,000 73.4% $ 20,917,000 6.0% $ .25
New public stockholders(1)....... 30,000,000 26.6 330,000,000 94.0 $ 11.00
----------- ----- ------------ -----
Total.................. 112,610,000 100.0% $350,917,000 100.0%
=========== ===== ============ =====

- ---------------

(1) Sales by the Selling Stockholders will reduce the number of shares of Common
Stock held by existing stockholders to 77,610,000 shares or 68.9% of the
total number of shares of Common Stock outstanding after the Offerings
(65.8% assuming the Underwriters' over-allotment options are exercised in
full), and will increase the number of shares of Common Stock held by new
public stockholders to 35,000,000 shares or 31.1% of the total number of
shares of Common Stock outstanding after the Offerings (40,250,000 shares or
34.2% assuming the Underwriters' over-allotment options are exercised in
full). See "Principal and Selling Stockholders."

35
38

SELECTED COMBINED FINANCIAL DATA

The selected combined financial data presented below for, and as of the end
of, each of the years in the five-year period ended December 31, 1997 are
derived from the combined financial statements of Amkor. The combined financial
statements as of December 31, 1995, 1996 and 1997 and for each of the years in
the three-year period ended December 31, 1997 have been audited by Arthur
Andersen LLP, independent public accountants, and their report thereon, together
with such combined financial statements, are included elsewhere in this
Prospectus. Reference is made to said report which includes an explanatory
paragraph with respect to the ability of the Company to continue as a going
concern as discussed in Note 1 of the Notes to the Combined Financial
Statements. Reference is made to said reports which include an explanatory
paragraph with respect to the ability of the Company to continue as a going
concern as discussed in Note 1 of Notes to the Combined Financial Statements.
The selected combined financial data presented below as of and for the year
ended December 31, 1994 are derived from audited financial statements which are
not presented herein. The selected combined financial data presented below as of
and for the year ended December 31, 1993 are derived from unaudited combined
financial statements. In the opinion of management, the unaudited combined
financial statements have been prepared on the same basis as the audited
combined financial statements and contain all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the Company's
results of operations for such period and financial condition at such date. The
selected combined financial data set forth below is qualified in its entirety
by, and should be read in conjunction with, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Combined
Financial Statements and Notes thereto.

YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
--------- --------- --------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)

INCOME STATEMENT DATA:
Net revenues.............................................. $ 442,101 $ 572,918 $ 932,382 $ 1,171,001 $ 1,455,761
Cost of revenues.......................................... 371,323 514,648 783,335 1,022,078 1,242,669
--------- --------- --------- ----------- -----------
Gross profit....................................... 70,778 58,270 149,047 148,923 213,092
--------- --------- --------- ----------- -----------
Operating expenses:
Selling, general and administrative..................... 42,649 41,337 55,459 66,625 103,726
Research and development................................ 1,755 3,090 8,733 10,930 8,525
--------- --------- --------- ----------- -----------
Total operating expenses........................... 44,404 44,427 64,192 77,555 112,251
--------- --------- --------- ----------- -----------
Operating income.......................................... 26,374 13,843 84,855 71,368 100,841
--------- --------- --------- ----------- -----------
Other (income) expense:
Interest expense, net................................... 5,116 5,752 9,797 22,245 32,241
Foreign currency (gain) loss............................ 2,809 (4,865) 1,512 2,961 (835)
Other (income) expense, net............................. (1,725) (877) 6,523 3,150 8,429
--------- --------- --------- ----------- -----------
Total other expense................................ 6,200 10 17,832 28,356 39,835
--------- --------- --------- ----------- -----------
Income before income taxes, equity in income (loss) of
AICL and minority interest.............................. 20,174 13,833 67,023 43,012 61,006
Provision for income taxes................................ 2,445 2,977 6,384 7,876 7,078
Equity in income (loss) of AICL........................... 1,776 1,762 2,808 (1,266) (17,291)
Minority interest......................................... 2,269 1,044 1,515 948 (6,644)
--------- --------- --------- ----------- -----------
Net income................................................ $ 17,236 $ 11,574 $ 61,932 $ 32,922 $ 43,281
========= ========= ========= =========== ===========
PRO FORMA DATA (UNAUDITED):
Historical income before income taxes, equity in income
(loss) of AICL and minority interest.................... $ 20,174 $ 13,833 $ 67,023 $ 43,012 $ 61,006
Pro forma provision for income taxes(1)................... 5,345 3,177 16,784 10,776 10,691
--------- --------- --------- ----------- -----------
Pro forma income before equity in income (loss) of AICL
and minority interest(1)................................ 14,829 10,656 50,239 32,236 50,315
Historical equity in income (loss) of AICL................ 1,776 1,762 2,808 (1,266) (17,291)
Historical minority interest.............................. 2,269 1,044 1,515 948 (6,644)
--------- --------- --------- ----------- -----------
Pro forma net income (1).................................. $ 14,336 $ 11,374 $ 51,532 $ 30,022 $ 39,668
========= ========= ========= =========== ===========
Basic and diluted pro forma net income per common
share(1)................................................ $ .17 $ .14 $ .62 $ .36 $ .48
========= ========= ========= =========== ===========
Shares used in computing pro forma net income per common
share................................................... 82,610 82,610 82,610 82,610 82,610
========= ========= ========= =========== ===========
OTHER DATA:
EBITDA(2)................................................. $ 37,437 $ 34,197 $ 103,434 $ 123,082 $ 175,111
========= ========= ========= =========== ===========
Ratio of earnings to fixed charges(3):
Actual.................................................. 3.7x 2.0x 4.6x 2.4x 2.5x
Supplemental pro forma.................................. 3.1x

36
39

- ---------------
(1) Prior to the Reorganization, AEI, a predecessor of the Company, elected to
be taxed as an S Corporation under the Internal Revenue Code of 1986 and
comparable state tax laws. Accordingly, AEI did not recognize any provision
for federal income tax expense during the periods presented. The pro forma
provision for income taxes reflects the additional U.S. federal income taxes
which would have been recorded if AEI had not been an S Corporation during
these periods. See "Reorganization" and Note 1 of Notes to Combined
Financial Statements.

(2) EBITDA is defined as earnings before interest income, interest expense,
taxes on income, depreciation and amortization. EBITDA is presented here to
provide additional information about the Company's ability to meet its
future debt service, capital expenditure, and working capital requirements
and should not be construed as a substitute for or a better indicator of
results of operations or liquidity than net income or cash flow from
operating activities computed in accordance with generally accepted
accounting principles.

(3) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes less undistributed earnings in less
than 50%-owned subsidiaries, plus fixed charges. Fixed charges consist of
interest expense incurred and one-third of rental expense which amount is
deemed by the Company to be representative of the interest factor of rental
payments under operating leases. The supplemental pro forma ratio of
earnings to fixed charges reflects the effect on the ratio of earnings to
fixed charges if the Offerings had been completed and the estimated net
proceeds to the Company applied as described in "Use of Proceeds" at the
beginning of the period presented.

DECEMBER 31, DECEMBER 31, 1997
--------------------------------------- -----------------------------------------
1993 1994 1995 1996 ACTUAL PRO FORMA(1) AS ADJUSTED(2)
-------- -------- ------- ------- --------- ------------ --------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents... $ 8,929 $114,930 $91,151 $49,664 $ 90,917 $ 63,217 $ 68,191
Working capital (deficit)... (13,073) 134,798 111,192 36,785 (196,870) (224,570) 52,704
Total assets................ 191,754 426,522 626,379 804,864 855,592 827,892 864,197
Short-term borrowings and
current portion of
long-term debt............ 76,051 52,526 85,120 191,813 325,968 325,968 53,668
% Convertible
Subordinated Notes due
2003.................... -- -- -- -- -- -- 150,000
Due to AUSA (non-current)... 18,823 211,693 219,037 234,894 149,776 149,776 --
Other long-term debt........ 29,917 62,215 107,385 167,444 38,283 38,283 35,283
Stockholders' equity........ 8,070 9,617 45,289 45,812 90,875 61,075 367,838

(2) As adjusted to give effect to the application of the estimated net proceeds
to the Company of the Offerings based on an assumed initial public offering
price of $11.00 per share of common stock, including the purchase from AICL
of its 40% interest in AAP for approximately $34 million and the related
elimination of minority interest and recording of goodwill. The acquisition
of the minority interest will result in additional amortization of
approximately $2.5 million per year. Also reflects repayments made after
December 31, 1997 and prior to the Offerings of $50.3 million of short-term
borrowings and current portion of long-term debt and $30 million of amounts
due to AUSA (non-current), as well as the assumption by an affiliate of the
Company of $13.9 million of amounts due to AUSA (non-current) in February
1998. See "Reorganization," "Use of Proceeds" and Notes 1, 6 and 16 of Notes
to Combined Financial Statements.

37
40

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements within the
meaning of the federal securities laws, including statements regarding the
anticipated growth in the market for the Company's products, the Company's
anticipated capital expenditures and financing needs, the Company's expected
capacity utilization rates, the belief of the Company as to its future operating
performance and other statements that are not historical facts. Because such
statements include risks and uncertainties, actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in the following discussion as well as in
"Risk Factors" and "Business." The following discussion provides information and
analysis of the Company's results of operations from 1995 through 1997 and its
liquidity and capital resources and should be read in conjunction with the
Combined Financial Statements and Notes thereto and the selected combined
financial data included elsewhere in this Prospectus. The operating results for
interim periods are not necessarily indicative of results for any subsequent
period.

OVERVIEW

Background. The Company is the world's largest independent provider of
semiconductor packaging and test services. The Company believes that it is also
one of the leading developers of advanced semiconductor packaging and test
technology in the industry. The Company offers a complete and integrated set of
packaging and test services including IC package design, leadframe and substrate
design, IC package assembly, final testing, burn-in, reliability testing, and
thermal and electrical characterization. The Company recently began offering
wafer fabrication services. The Company provides packaging and test services
through its three factories in the Philippines (P1, P2 and P3) as well as the
four factories of AICL in Korea, and wafer fabrication services through AICL's
new wafer foundry, pursuant to the Supply Agreements between the Company and
AICL. As of December 31, 1997, the Company had in excess of 150 customers,
including many of the largest semiconductor companies in the world.

The Company was formed in September 1997 to consolidate the operations of
the Amkor Companies, including AEI which was incorporated in 1970. These
companies were under common management and in the same business prior to the
Company's formation. As a result of the Reorganization, the financial statements
included in this Prospectus are presented on a combined basis. See
"Reorganization" and "Certain Transactions" and Notes 1 and 16 of Notes to
Combined Financial Statements. Prior to the Reorganization, AEI elected to be
taxed as an S Corporation under the Internal Revenue Code of 1986 and comparable
state tax laws. Accordingly, AEI did not recognize any provision for federal
income tax expense during the periods presented in the Combined Financial
Statements. The Combined Financial Statements include a pro forma provision for
income taxes which reflects the U.S. federal income taxes which would have been
recorded by the Company if AEI had not been an S Corporation during these
periods. See Notes 1, 10 and 17 of Notes to Combined Financial Statements.

General. From 1995 to 1997, the Company's revenues increased from
approximately $932.4 million to $1.456 billion. This increase occurred primarily
as a result of increases in unit volumes, together with the shift in the
Company's product mix from traditional leadframe products to advanced leadframe
and laminate products, which were offset in part by decreasing average selling
prices. See "Business -- Products." In order to meet customer demand, the
Company has invested significant resources to expand its capacity in the
Philippines. In 1996 and the first six months of 1997, the Company incurred and
expensed $15.5 million and $16.6 million, respectively, of pre-operating and
start-up costs and initial operating losses in connection with its newest
factory, P3, in the Philippines. This facility operated at substantially less
than full capacity during these periods while customers were completing
qualification procedures for BGA packages to be produced at the facility. The
Company significantly increased utilization of P3 during the last six months of
1997 and expects to operate the facility with positive gross margins during
1998. See "Risk Factors -- Expansion of Manufacturing Capacity; Profitability
Affected by Capacity Utilization Rates" and "Business -- Facilities and
Manufacturing."

38
41

The Company's results of operations are generally affected by the
capital-intensive nature of its business. In 1995, 1996 and 1997, the Company
invested $123.6 million, $185.1 million and $179.0 million, respectively, in
property, plant and equipment. Increases or decreases in capacity utilization
rates can have a significant effect on gross margins since the unit cost of
packaging and test services generally decrease as fixed charges, such as
depreciation expense for the equipment, are allocated over a larger number of
units produced. In addition, the Company's gross margin is significantly
affected by fluctuations in service charges paid to AICL pursuant to the Supply
Agreements. Pricing arrangements relating to packaging and test services
provided by AICL to the Company are subject to quarterly review and adjustment,
and pricing arrangements relating to wafer fabrication services provided by AICL
are subject to annual review and adjustment, in each case on the basis of
factors such as changes in the semiconductor market, forecasted demand, product
mix and capacity utilization and fluctuations in exchange rates, as well as the
mutual long-term strategic interest of the Company and AICL. The Company's
results of operations are also affected by declines over time in the average
selling prices for particular products. At times in the past the Company has
been able to offset, at least in part, the effect of such decline on its margins
by successfully developing and marketing new products with higher margins, such
as advanced leadframe and laminate products, and by taking advantage of
economies of scale and higher productivity resulting from volume production.
However, there can be no assurance that the Company will be successful at
offsetting any such declines in the future. See "Risk Factors -- Expansion of
Manufacturing Capacity; Profitability Affected by Capacity Utilization Rates"
and "-- Competition."

Due to the concentration of market share in the semiconductor industry, the
Company has been largely dependent upon a small group of customers for a
substantial portion of its business. In 1995, 1996 and 1997, 34.1%, 39.2% and
40.1%, respectively, of the Company's net revenues were derived from sales to
the Company's top five customers, with 13.3%, 23.5% and 23.4%, respectively,
derived from sales to Intel. See "Risk Factors -- Customer Concentration;
Absence of Backlog."

Relationship with AICL. In 1996 and 1997, approximately 72% and 68%,
respectively, of the Company's revenues were derived from sales of services
performed for the Company by AICL. In addition, substantially all of the
revenues of AICL in 1996 and 1997 were derived from services sold by the
Company. Historically, AICL has directly sold packaging and test services in
Japan and Korea. The Company assumed substantially all of the marketing rights
for services in Japan in January 1998. Also, the Company recently began offering
wafer fabrication services through AICL's new deep submicron CMOS foundry which
is capable of producing up to 15,000 8" wafers per month. See "Risk
Factors -- Risks Associated with New Wafer Fabrication Business." The Company
expects the proportion of its net revenues derived from sales of services
performed for the Company by AICL and the percentage of AICL's revenues from
services sold by the Company to increase as the Company begins selling the wafer
fabrication output of AICL's new wafer foundry and with the Company's assumption
from AICL of substantially all of the marketing rights for Japan. The Company
has a first right to substantially all of the packaging and test service
capacity of AICL and the exclusive right to all of the wafer output of AICL's
new wafer foundry.

The Supply Agreements between the Company and AICL generally provide, among
other things, for periodic price reviews and adjustments and coordination of
research and development efforts regarding package design and packaging and
testing processes and technologies. The Supply Agreements have a five year
initial term and thereafter may be terminated upon five years' notice. There can
be no assurance that AICL will not terminate either Supply Agreement upon the
expiration of such initial term, or that if it does terminate a Supply
Agreement, that the Company will be able to enter into a new agreement with AICL
on terms favorable to the Company or at all. See "Relationship with Anam
Industrial Co., Ltd."

The Company expects that the businesses of the Company and AICL will
continue to remain highly interdependent by virtue of their supply relationship,
overlaps and family ties between their respective shareholders and management,
financial relationships, coordination of product and operation plans, joint
research and development activities and shared intellectual property rights. As
a result, the Company's business, financial condition and operating results will
continue to be significantly dependent on AICL, including without limitation
AICL's ability to effectively provide the contracted services on a
cost-efficient and timely basis as well as AICL's financial condition and
results of operations. The Company will continue to be controlled to a
significant degree by James Kim and members of his family, and Mr. Kim and other
39
42

members of his family will also continue to exercise significant influence over
the management of AICL and its affiliates. In addition, the Company and AICL
will continue to have certain contractual and other business relationships and
may engage in transactions from time to time that are material to the Company.
Although any such material agreements and transactions would require approval of
the Company's Board of Directors, such transactions will generally not require
approval of the disinterested members of the Board of Directors and conflicts of
interest may arise in certain circumstances. There can be no assurance that such
conflicts will not from time to time be resolved against the interests of the
Company. The Company currently has four directors, two of whom are
disinterested. Under Delaware corporate law, each director owes a duty of
loyalty and care to the Company, which if breached can result in personal
liability for the directors. In addition, the Company may agree to certain
changes in its contractual and other business relationships with AICL, including
pricing, manufacturing allocation, capacity utilization and capacity expansion,
among others, which in the judgment of the Company's management will result in
reduced short-term profitability for the Company in favor of potential long-term
benefits to the Company and AICL. There can be no assurance that the Company's
business, financial condition or results of operations will not be adversely
affected by any such decision. See "-- Liquidity and Capital Resources" and
"Risk Factors -- Dependence on Relationship with AICL; Potential Conflicts of
Interest."

RESULTS OF OPERATIONS

The following table sets forth certain operating data as a percentage of
net revenues for the periods indicated:

YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
----- ----- -----

Net revenues........................................ 100.0% 100.0% 100.0%
Cost of revenues.................................... 84.0 87.3 85.4
----- ----- -----
Gross profit...................................... 16.0 12.7 14.6
Operating expenses:
Selling, general and administrative .............. 6.0 5.7 7.1
Research and development.......................... 0.9 0.9 0.6
----- ----- -----
Total operating expenses....................... 6.9 6.6 7.7
----- ----- -----
Operating income.................................... 9.1 6.1 6.9
----- ----- -----
Other (income) expense:
Interest expense, net............................. 1.0 1.9 2.2
Foreign currency (gain) loss...................... 0.2 0.2 (0.1)
Other expense, net................................ 0.7 0.3 0.6
----- ----- -----
Total other expense............................ 1.9 2.4 2.7
----- ----- -----
Income before income taxes, equity in income (loss)
of AICL and minority interest..................... 7.2 3.7 4.2
Provision for income taxes.......................... 0.7 0.7 0.5
Equity in income (loss) of AICL..................... 0.3 (0.1) (1.2)
Minority interest................................... 0.2 0.1 (0.5)
----- ----- -----
Net income.......................................... 6.6 2.8 3.0
Pro forma provision for income taxes ............... 1.1 0.2 0.3
----- ----- -----
Pro forma net income................................ 5.5% 2.6% 2.7%
===== ===== =====

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net Revenues. The Company's net revenues consist of fees for the packaging
and testing of ICs which are consigned by customers to the Company's or AICL's
factories. Net revenues for 1997 increased 24.3% to $1,455.8 million from
$1,171.0 million for 1996 primarily due to an increase in unit volumes of
semiconductors packaged and tested by the Company, offset in part by declines in
average selling prices for many of the

40
43

Company's leadframe products. In addition, the opening of P3, the Company's
newest factory, and K4, AICL's newest factory, in September 1996 enabled the
Company to begin to expand sales of BGA packages in 1997.

Gross Profit. Gross profit increased 43.1% to $213.1 million in 1997 from
$148.9 million in 1996, resulting in a gross margin of 14.6% for 1997 as
compared to 12.7% for 1996. Cost of revenues consists principally of packaging
and test service charges from AICL, costs of direct material for both the
Philippine factories and AICL and labor and other costs at the Philippine
factories. Gross margin increased primarily due to improved operating results at
P1 and P2 during the second half of 1997, which more than offset initial
operating losses and start-up costs incurred in connection with P3 during the
first half of 1997. Product mix changes toward more profitable product lines and
decreased labor costs from the devaluation of the Philippine peso were the
primary factors resulting in improved margins at the P1 and P2 factories.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 55.7% to $103.7 million, or 7.1% of net
revenues, in 1997 from $66.6 million, or 5.7% of net revenues, in 1996 primarily
due to increases in personnel in marketing and support to sustain the Company's
growth. The number of employees in the Company's marketing and sales support
groups increased during 1997 by approximately 21% over 1996. Such increase
resulted in an overall increase in personnel-related costs including salaries,
benefits and payroll taxes. The Company also incurred increased costs for office
rental, depreciation and other occupancy-related expenses. The Company does not
expect this level of growth in employees to continue in 1998. In addition to the
increased costs from its marketing and sales support groups, the Company
incurred approximately $8.0 million and $3.6 million in general and
administrative expenses in connection with its P3 operations and wafer
fabrication services group, respectively, during 1997. No similar costs were
incurred in 1996 as these groups represented start-up operations in 1997.

Research and Development Expenses. Research and development expenses
decreased 22.0% to $8.5 million, or 0.6% of net revenues, in 1997, from $10.9
million, or 0.9% of net revenues, in 1996. The decrease in research and
development costs principally reflected the termination in late 1996 of the
Company's efforts to develop its own laminate substrate manufacturing
capability.

Other (Income) Expense. Other (income) expense consists of interest
expense, net, foreign currency (gain) loss and other (income) expense, net.
Other expense increased 40.5% to $39.8 million in 1997 from $28.4 million in
1996 primarily as a result of increased interest expense and increased other
expenses. Interest expense for 1997 increased to $38.6 million from $27.7
million in 1996 as the Company significantly increased its borrowing to finance
capacity expansion. See "-- Liquidity and Capital Resources." Interest expense
in each of the periods was offset in part by interest income of $6.4 million and
$5.5 million, respectively. Other expenses increased primarily due to $2.4
million in costs relating to the Company's trade receivables securitization
transactions. See "-- Liquidity and Capital Resources" and Note 2 of Notes to
Combined Financial Statements.

Income Taxes. The Company's effective tax rate (after giving effect to the
pro forma adjustment for income taxes) for 1997 was 18% as compared to 25% for
1996. The decrease in the Company's effective tax rate in 1997 compared to 1996
was primarily attributable to income not taxed due to a tax holiday and foreign
exchange effects described below. The Company's subsidiary that owns P3 operates
under a tax holiday from Philippine income taxes until the end of 2002. To the
extent P3 is profitable, the Company's effective tax rate related to its
Philippine operations during the tax holiday will be less than the Philippine
statutory rate of 35%. Additionally, the Company recognized deferred tax
benefits for unrealized foreign exchange losses in 1997 which are recognized in
the Philippines for tax reporting purposes and relate to unrecognized net
foreign exchange losses on U.S. dollar denominated monetary assets and
liabilities. See Note 10 of Notes to Combined Financial Statements. These losses
are not recognized for financial reporting purposes as the U.S. dollar is the
functional currency. These losses will be realized for Philippine tax reporting
purposes upon settlement of the related asset or liability. The benefit derived
from unrealized foreign exchange losses was partially offset by an increase in
the valuation allowance as the Company concluded that it was more likely than
not that their tax benefits could be realized in the Philippines within the
three year loss carryforward period. The Company has structured its global
operations to take advantage of lower tax rates in certain

41
44

countries and tax incentives extended to encourage investment. The recorded
provisions for income taxes are subject to changes upon examination of the
Company's tax returns by tax authorities in the United States, the Philippines
and elsewhere. Changes in the mix of income from the Company's foreign
subsidiaries, expiration of tax holidays and changes in tax laws and regulations
could result in increased effective tax rates for the Company.

Equity in Income (Loss) of AICL. Equity in income (loss) of AICL represents
the Company's ownership interest in AICL during the periods presented. In 1997,
the Company recognized a loss of $17.3 million resulting principally from the
impairment of value in its investment in AICL. In February 1998, the Company
disposed of its investment in AICL's common stock. See "Certain Transactions"
and Note 6 of Notes to Combined Financial Statements.

Minority Interest. Minority interest represents AICL's ownership interest
in the consolidated net income of AAP. During 1997, as a result of a settlement
of an intercompany loan, which otherwise had no effect on the combined pretax
income of the Company, AAP reported a net loss as a separate entity.
Accordingly, the Company recorded a minority interest benefit in its combined
financial statements relating to the minority interest in the net loss.
Following the Offerings, the Company intends to purchase AICL's 40% interest in
AAP and, as a result, the Company will own substantially all of the common stock
of AAP. See "Use of Proceeds." The acquisition of the minority interest will
result in the elimination of the minority interest liability and additional
amortization of approximately $2.5 million per year.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Revenues. Net revenues in 1996 increased 25.6% to $1.17 billion from
$932.4 million in 1995. The increase was primarily due to an increase in units
sold together with an increase in sales of newer products, such as advanced
leadframe and laminate packages. This increase in sales of newer products offset
declines in average selling prices for many of the Company's other products.

Gross Profit. Gross profit in 1996 and 1995 was approximately $149 million
representing a decrease in gross margin to 12.7% in 1996 from 16.0% in 1995. The
decrease in gross margin was primarily attributable to increases in cost of
revenues due to $15.5 million in pre-operating and start-up costs associated
with P3, as well as increased packaging and test service charges paid to AICL.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 20.1% to $66.6 million, or 5.7% of net
revenues, in 1996 from $55.5 million, or 6.0% of net revenues, in 1995 as a
result of the addition of personnel and infrastructure to service increases in
customer demand. In addition, the Company continued its investments in new
information systems in order to enhance operating efficiencies and improve
customer service and support.

Research and Development Expenses. Research and development expenses
increased 25.2% to $10.9 million, or 0.9% of net revenues, in 1996 from $8.7
million, or 0.9% of net revenues, in 1995 as a result of increased staffing and
funding for the Company's efforts to develop laminate substrate manufacturing
capabilities, prior to termination of such efforts in late 1996.

Other (Income) Expense. Other expense increased 59.0% to $28.4 million in
1996 from $17.8 million in 1995 primarily as a result of increases in interest
expense, net, offset in part by a decrease in other expense, net. Interest
expense, net in 1996 increased to $22.2 million from $9.8 million in 1995 as the
Company significantly increased its borrowing to finance capacity expansion. See
"-- Liquidity and Capital Resources." As a result of this increase in debt, the
Company's interest expense increased to $27.7 million in 1996 from $17.3 million
in 1995.

Income Taxes. The Company's effective tax rate (after giving effect to the
pro forma provision for income taxes) for 1996 and 1995 was 25%. These rates
were different from the United States statutory rate primarily due to the impact
of lower tax rates, including tax holidays, in certain of the countries in which
the Company's subsidiaries are located. See Note 10 of Notes to Combined
Financial Statements.

42
45

QUARTERLY RESULTS

The following table sets forth certain unaudited combined financial
information, including as a percentage of net revenues, for the eight fiscal
quarters ended December 31, 1997. The Company disposed of its investment in AICL
common stock in February 1998. Also, the Company has entered into an agreement
with AICL pursuant to which the Company will purchase, immediately following the
Offerings, AICL's 40% interest in AAP. After the Offerings, there will be no
equity in income (loss) of AICL and minority interest related to AAP.
Consequently, this information is not presented below. The amounts of equity in
income (loss) of AICL and minority interest have historically varied
significantly by quarter depending on the income (loss) of AICL and AAP. See
"Reorganization" and Note 6 of Notes to Combined Financial Statements. The
Company believes that all necessary adjustments, consisting only of normal
recurring adjustments, have been included in the amounts stated below to present
fairly the selected quarterly information when read in conjunction with the
Combined Financial Statements and the Notes thereto included elsewhere herein.
The Company's results of operations have varied and may continue to vary
significantly from quarter to quarter and are not necessarily indicative of the
results of any future period. In addition, in light of the Company's recent
growth, the Company believes that period-to-period comparisons should not be
relied upon as an indication of future performance.

QUARTER ENDED
---------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31,
1996 1996 1996 1996 1997 1997 1997 1997
-------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS)

Net revenues.......................... $270,327 $272,262 $285,784 $342,628 $313,019 $350,471 $380,130 $412,141
Cost of revenues...................... 230,387 231,959 250,898 308,834 287,449 299,093 314,246 341,881
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit........................ 39,940 40,303 34,886 33,794 25,570 51,378 65,884 70,260
Operating expenses:
Selling, general and
administrative.................... 13,752 15,948 16,716 20,209 20,608 26,657 26,829 29,632
Research and development............ 2,100 2,757 3,071 3,002 1,485 2,030 2,236 2,774
-------- -------- -------- -------- -------- -------- -------- --------
Total operating expenses.......... 15,852 18,705 19,787 23,211 22,093 28,687 29,065 32,406
-------- -------- -------- -------- -------- -------- -------- --------
Operating income...................... 24,088 21,598 15,099 10,583 3,477 22,691 36,819 37,854
Total other expense, net.............. 3,316 6,052 9,853 9,135 8,165 9,577 11,242 10,851
-------- -------- -------- -------- -------- -------- -------- --------
Income before income taxes, equity in
income (loss) of AICL and minority
interest............................ 20,772 15,546 5,246 1,448 (4,688) 13,114 25,577 27,003
Provision for income taxes............ 3,803 2,847 961 265 (1,497) 4,186 842 3,547
-------- -------- -------- -------- -------- -------- -------- --------
Income before equity in income (loss)
of AICL and minority interest....... $ 16,969 $ 12,699 $ 4,285 $ 1,183 $ (3,191) $ 8,928 $ 24,735 $ 23,456
======== ======== ======== ======== ======== ======== ======== ========

QUARTER ENDED
----------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1996 1996 1996 1996 1997 1997
---------- ---------- ----------- ---------- ---------- ----------

Net revenues.......................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues...................... 85.2 85.2 87.8 90.1 91.8 85.3
----- ----- ----- ----- ----- -----
Gross profit........................ 14.8 14.8 12.2 9.9 8.2 14.7
----- ----- ----- ----- ----- -----
Operating expenses:
Selling, general and
administrative.................... 5.1 5.9 5.8 5.9 6.6 7.6
Research and development............ 0.8 1.0 1.1 0.9 0.5 0.6
----- ----- ----- ----- ----- -----
Total operating expenses.......... 5.9 6.9 6.9 6.8 7.1 8.2
----- ----- ----- ----- ----- -----
Operating income...................... 8.9 7.9 5.3 3.1 1.1 6.5
Total other expense, net.............. 1.2 2.2 3.5 2.7 2.6 2.8
----- ----- ----- ----- ----- -----
Income before income taxes, equity in
income (loss) of AICL and minority
interest............................ 7.7 5.7 1.8 0.4 (1.5) 3.7
Provision for income taxes............ 1.4 1.0 0.3 0.1 (0.5) 1.2
----- ----- ----- ----- ----- -----
Income before equity in income (loss)
of AICL and minority interest....... 6.3% 4.7% 1.5% 0.3% (1.0)% 2.5%
===== ===== ===== ===== ===== =====

QUARTER ENDED
------------------------
SEPT. 30, DEC. 31,
1997 1997
----------- ----------

Net revenues.......................... 100.0% 100.0%
Cost of revenues...................... 82.7 83.0
----- -----
Gross profit........................ 17.3 17.0
----- -----
Operating expenses:
Selling, general and
administrative.................... 7.1 7.2
Research and development............ 0.5 0.6
----- -----
Total operating expenses.......... 7.6 7.8
----- -----
Operating income...................... 9.7 9.2
Total other expense, net.............. 3.0 2.6
----- -----
Income before income taxes, equity in
income (loss) of AICL and minority
interest............................ 6.7 6.6
Provision for income taxes............ 0.2 0.9
----- -----
Income before equity in income (loss)
of AICL and minority interest....... 6.5% 5.7%
===== =====

43
46

The Company's revenues, gross profit and operating profit are generally
lower in the first quarter of the year as compared to the fourth quarter of the
preceding year primarily due to the combined effect of holidays in the United
States, the Philippines and Korea. Semiconductor companies in the United States
generally reduce their production during the holidays at the end of December
which results in a significant decrease in orders for packaging and testing
services during the first two weeks of January. In addition, the Company
typically closes its factories in the Philippines for holidays in January, and
AICL closes its factories in Korea for holidays in February. As a result of
these factors, the Company's net revenues are significantly reduced during the
months of January and February. The Company currently anticipates that its
operating results for the first quarter of 1998 will follow its historical
seasonality, with revenues, gross profit and operating profit declining as
compared to the fourth quarter of 1997.

Beginning in the third quarter of 1996, intense competition in the
semiconductor industry worldwide led to decreases in the average selling prices
of many of the Company's leadframe packages. These decreases were partially
offset by increases in sales of advanced leadframe and laminate packages, which
carry higher prices and gross margins. In addition, the Company's cost of
revenues as a percentage of revenues increased significantly during the three
quarters ended March 31, 1997 primarily as a result of initial operating losses
and start-up costs associated with P3. Cost of revenues was also affected in the
two quarters ended June 30, 1997, as the Company recognized a $2.2 million
write-off for custom laminate raw materials which were purchased to meet
customer orders which were subsequently cancelled. The combined effect of these
factors was to decrease the levels of profitability in the third and fourth
quarters of 1996 and the first quarter of 1997.

Selling, general and administrative expenses increased during the second,
third and fourth quarters of 1997 primarily due to increased staffing levels at
the Company's marketing and sales support groups, as well as at its P3 factory
and wafer fabrication services group, which resulted in increased
employee-related costs. See "-- Results of Operations -- Year Ended December 31,
1997 Compared to Year Ended December 31, 1996 -- Selling, General and
Administrative Expenses."

Income tax rates in the third quarter of 1997 were lower compared to prior
periods as the Company recognized deferred tax benefits for unrealized foreign
exchange losses during the quarter, which are recognized for Philippine tax
reporting purposes but are not recognized for financial reporting purposes since
the U.S. dollar is the functional currency. Although similar circumstances
during the fourth quarter of 1997 resulted in the recognition of additional
deferred tax assets, their effect on the overall tax rates were mitigated by a
valuation allowance also recorded during the fourth quarter of approximately $22
million. See "-- Results of Operations -- Year End December 31, 1997 Compared to
Year Ended December 31, 1996 -- Income Taxes." As the majority of these tax
assets relate to fluctuations in the value of the Philippine peso, management is
unable to determine the impact to the effective tax rates which may occur as a
result of future exchange rate fluctuations.

The Company's quarterly operating results may vary significantly due to a
variety of factors including, among others, the cyclical nature of both the
semiconductor industry and the markets addressed by end-users of semiconductors,
the short-term nature of its customers' commitments, timing and volume of orders
relative to the Company's production capacity, changes in capacity utilization,
evolutions in the life cycles of customers' products, rescheduling and
cancellation of large orders, rapid erosion of packaging selling prices,
availability of manufacturing capacity, allocation of production capacity
between the Company's facilities and AICL's facilities, fluctuations in
packaging and test service charges paid to AICL, changes in costs, availability
and delivery times of labor, raw materials and components, effectiveness in
managing production processes, fluctuations in manufacturing yields, changes in
product mix, product obsolescence, timing of expenditures in anticipation of
future orders, availability of financing for expansion, changes in interest
expense, the ability to develop and implement new technologies, competitive
factors, changes in effective tax rates, the loss of key personnel or the
shortage of available skilled workers, international political or economic
events, currency and interest rate fluctuations, environmental events, and
intellectual property transactions and disputes. Unfavorable changes in any of
the above factors may adversely affect the Company's business, financial
condition and results of operations. In addition, the Company increases its
level of operating expenses and investment in manufacturing capacity in
anticipation of future growth in revenues. To the extent the Company's revenues
do not grow as anticipated, the Company's financial condition and operating
results may be materially adversely affected. See "Risk Factors -- Fluctuations
in Operating Results; Declines in Average Selling Price."
44
47

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1997, the Company had cash and cash equivalents of $90.9
million and a working capital deficit of $196.9 million ($63.2 and $224.6
million, respectively, on a pro forma basis, after giving effect to the
termination of AEI's S Corporation status and the distribution of undistributed
earnings through December 31, 1997). The Company's working capital deficit
resulted primarily from the significant amount of its short-term debt, primarily
incurred in connection with the expansion of its Philippine operations, together
with approximately $105 million of term loans which have been reclassified as
current liabilities as a result of the non-compliance by the Company with
certain covenants thereunder. The Company's non-compliance with certain
covenants with respect to the Non-Compliant Loans, the aggregate outstanding
amount of which was $176 million as of December 31, 1997, triggered
cross-defaults with respect to an additional $10 million of the Company's loans.
These loan covenants include restrictions on the ability of one of the Company's
subsidiaries to enter into transactions with affiliates, requirements that the
subsidiary maintain certain debt-to-equity ratios and requirements that the
subsidiary comply with certain notice requirements. The Company's obligation to
repay these loans (including the cross-defaulted loans) may be accelerated by
the lenders at any time. As a result of such non-compliance, the report of the
Company's independent public accountants with respect to the Company's financial
statements included herein contains a paragraph stating that there is
substantial doubt as to the ability of the Company to continue as a going
concern. The Company will eliminate such non-compliance and cross-defaults by
repaying such loans using part of the net proceeds to the Company from the
Offerings as well as working capital. See "Use of Proceeds" and "Risk
Factors -- Risks Associated with Leverage."

The Company will use the net proceeds received from the Offerings primarily
to repay an aggregate of approximately $331 million of short-term and long-term
debt, including the Non-Compliant Loans (which, following planned repayments of
portions thereof prior to the Offerings, will have an aggregate outstanding
balance of $154 million), $63 million of short-term loans, $8 million of term
loans and $106 million of amounts due to AUSA. In addition, the Company will use
approximately $34 million of such net proceeds to repurchase AICL's 40% interest
in AAP. See "Use of Proceeds." Following the expected application of the
estimated net proceeds of the Offerings to the Company together with planned
repayments of debt prior to the Offerings, the Company will have $54 million of
short-term borrowing and current portion of long-term debt, $185 million of
long-term debt and no amounts then due to AUSA. In addition, the remaining $85
million of such net proceeds will be available for capital expenditures and
working capital.

The Company has been investing significant amounts of capital to increase
its packaging and test services capacity, including the construction of P3, the
addition of capacity in the Company's other Philippine facilities and the
construction of a new manufacturing facility in the United States. Advanced
packaging processes are being developed at the U.S. facility and full scale
operations are expected to begin in 1999. In 1995, 1996, and 1997, the Company
made capital expenditures of $123.6 million, $185.1 million and $179.0 million,
respectively. Because the Company and AICL have added a significant amount of
packaging and test capacity in recent years, the Company intends to decrease its
level of capital expenditures in 1998. The Company currently intends to spend
approximately $60 million in capital expenditures in 1998, including for the new
factory in the U.S. and moderate capacity expansion at the Company's existing
facilities in the Philippines to meet expected demand. The Company believes that
expenditure levels could increase substantially in 1999 to provide the Company
with adequate capacity.

The Company believes that following the application of the net proceeds
from the Offerings, its existing cash balances, cash flow from operations,
available equipment lease financing, bank borrowings and financing obtained
through AUSA will be sufficient to meet its anticipated cash requirements
including working capital and capital expenditures, for at least the next 12
months. In addition, the Company intends to seek out strategic long-term
financing arrangements to fund part of its capital expansion plans in 1998.
There can be no assurance, however, that lower than expected revenues, increased
expenses, increased costs associated with the purchase or maintenance of capital
equipment, decisions to increase planned capacity or other events will not cause
the Company to seek more capital, or to seek capital sooner than currently
expected. The timing and amount of the Company's actual capital requirements
cannot be precisely determined and will depend on a number of factors, including
demand for the Company's services, availability of capital equipment, fluctua-
45
48

tions in foreign currency exchange rates, changes in semiconductor industry
conditions and competitive factors. There can be no assurance that such
additional financing will be available when needed or, if available, will be
available on satisfactory terms. Failure to obtain any such financing could have
a material adverse effect on the Company. In addition, if the Company obtains
such financing by selling equity securities of the Company, the Company's
stockholders may experience significant dilution.

The Company historically has met a significant portion of its cash
requirements for working capital and capital expenditures from a combination of
cash from operating activities, short-term and long-term bank loans and
financing obtained for the benefit of the Company by AUSA, a wholly-owned
financing subsidiary of AICL, as well as financing from a trade receivables
securitization agreement. Cash provided by operating activities in 1995, 1996
and 1997 was $53.3 million, $8.6 million, and $250.1 million, respectively. Cash
provided (used) by financing activities was $71.2 million, $148.0 million and
$(16.0) million for 1995, 1996 and 1997, respectively.

At December 31, 1997, the Company's debt consisted of $326.0 million of
borrowings classified as current liabilities, $38.3 million of long-term debt
and capital lease obligations and $149.8 million of amounts due to AUSA. The
Company plans to repay prior to the Offerings approximately $50.3 million of its
short-term debt and $30 million of amounts due to AUSA. In addition, $13.9
million of amounts due to AUSA was assumed by AK Investments, Inc., an affiliate
of the Company, in February 1998. As of December 31, 1997, the Company had
extended guarantees in respect of bank debt of affiliates in the amount of $31
million and in respect of vendor obligations of an affiliate in the amount of
$24.7 million, which amount may vary over time. At December 31, 1997, the
Company had $223.9 million in borrowing facilities with a number of domestic and
foreign banks, of which $36.2 million remained unused. Certain of these
agreements require compliance with certain financial covenants and restrictions,
and are collateralized by assets of the Company. These facilities are typically
revolving lines of credit and working capital facilities for one-year renewable
periods and generally bear interest at rates ranging from 7.2% to 13%. Long-term
debt and capital lease obligations outstanding at December 31, 1997 have various
expiration dates through April 2004, and accrue interest at rates ranging from
6.7% to 12.5%. See Note 11 of Notes to Combined Financial Statements.

The Company has met a significant portion of its financing needs through
financing arrangements obtained by AUSA, AICL's wholly-owned financing
subsidiary. A majority of the amount due to AUSA represents outstanding amounts
under financing obtained by AUSA for the benefit of the Company, with the
balance representing payables to AUSA for packaging and service charges paid to
AICL. Based on guarantees provided by AICL, AUSA obtains for the benefit of the
Company a continuous series of short-term financing arrangements which generally
are less than six months in duration, and typically are less than two months in
duration. Because of the short term nature of these loans, the flows of cash to
and from AUSA under this arrangement are significant. At December 31, 1997, the
Company had fully utilized $149.8 million of the credit facilities available to
the Company through AUSA. These credit facilities are with U.S. branches of a
number of banks located in Korea and have interest rates ranging from
approximately 6.9% to prime plus 8.5% (17% at December 31, 1997). Because of the
recent deterioration of the Korean economy, Korean banks have begun to raise
interest rates applicable to their lending. See "Risk Factors -- Dependence on
International Operations and Sales; Concentration of Operations in the
Philippines and Korea -- Korea." As its credit lines have been renewed, AUSA has
experienced a significant increase in interest rates, and there can be no
assurance that such increases will not continue. The Company reimburses AUSA for
certain of the interest charges incurred by AUSA under these credit facilities.
As an overseas subsidiary of AICL, AUSA was formed with the approval of the Bank
of Korea. If the Bank of Korea were to withdraw such approval, or if AUSA
otherwise ceased operations for any reason, the Company and AICL would be
required to meet their financing needs through alternative arrangements.
Although the Company believes that after the Offerings alternative financing
arrangements will be available, there can be no assurance that the Company or
AICL will be able to obtain alternative financing on acceptable terms or at all.
AUSA has received commitments from its banks indicating that they intend to
renew the facilities when they expire through at least April 1, 1999. AUSA has
extended similar terms to the Company with respect to amounts due to AUSA by the
Company. Accordingly, amounts due to AUSA are classified as non-current
liabilities on the Company's balance sheet at December 31, 1997. See Notes 2 and
6 of Notes to Combined Financial Statements.

46
49

At December 31, 1997, all of AUSA's debt of $319 million, the Non-Compliant
Loans of $176 million and the Company's obligations under the Receivables Sale
(as defined below) were guaranteed by AICL. AICL currently has a significant
amount of debt relative to its equity and is contingently liable under
guarantees in respect of debt of its subsidiaries and affiliates, including
AUSA. As of December 31, 1997, AICL and its consolidated subsidiaries had
guarantees outstanding in respect of debt of its non-consolidated subsidiaries
and affiliates in the Anam Group in the aggregate amount of approximately W857
billion, including the guarantees of the Company's loans. As a result of its
relationship with AICL, the Company's business, financial condition and
operating results are significantly dependent on AICL. There can be no assurance
that AUSA will be able to obtain additional guarantees, if necessary, from AICL.
In addition, a deterioration in AICL's financial condition could trigger
defaults under AICL's guarantees, causing acceleration of such loans. See
"-- Overview -- Relationship with AICL," "Risk Factors -- Dependence on
Relationship with AICL; Potential Conflicts of Interest" and "Relationship with
Anam Industrial Co., Ltd."

In July 1997, the Company entered into a trade receivables securitization
agreement with a commercial financial institution. Under the terms of the
agreement, the financial institution has committed to purchase, with limited
recourse, all right, title and interest in eligible receivables, as defined in
the agreement, up to $100 million (the "Receivables Sale"). Funds received
pursuant to the agreement reflect a discount of LIBOR plus 0.375% from accounts
receivable sold. The Company applied approximately $83.4 million of the initial
Receivables Sale proceeds together with approximately $17 million of working
capital to reduce the Company's indebtedness to AUSA, which amounts were
advanced by AUSA to entities controlled by members of James Kim's family. See
Note 2 of Notes to Combined Financial Statements.

Prior to the consummation of the Reorganization, AEI was treated for U.S.
federal and certain state tax purposes as an S Corporation under the Internal
Revenue Code of 1986 and comparable state tax laws. As a result, AEI did not
recognize U.S. federal corporate income taxes. Instead, up until the Termination
Date, Mr. and Mrs. Kim and the Kim Family Trusts have been obligated to pay U.S.
federal and certain state income taxes on their allocable portion of the income
of AEI. The Company, Mr. and Mrs. Kim and the Kim Family Trusts will enter into
tax indemnification agreements providing that the Company will be indemnified by
such stockholders, with respect to their proportionate share of any U.S. federal
or state corporate income taxes attributable to the failure of AEI to qualify as
an S Corporation for any period or in any jurisdiction for which S Corporation
status was claimed through the Termination Date. The tax indemnification
agreements will also provide that the Company will indemnify Mr. and Mrs. Kim
and the Kim Family Trusts if such stockholders are required to pay additional
taxes or other amounts attributable to taxable years on or before the
Termination Date as to which AEI filed or files tax returns claiming status as
an S Corporation. AEI has made various distributions to Mr. and Mrs. Kim and the
Kim Family Trusts which have enabled them to pay their income taxes on their
allocable portions of the income of AEI. Such distributions totaled
approximately $19.8 million, $13.0 million and $5.0 million in 1995, 1996 and
1997, respectively. The Company expects to make additional distributions to such
stockholders prior to the consummation of the Reorganization, which
distributions will represent AEI's cumulative net income in all periods prior to
the Termination Date less the aggregate amount of distributions previously made
to such stockholders. These final distributions are intended to provide such
stockholders with the balance of AEI's net income for which they have already
recognized income taxes. Through December 31, 1997, the amount of such
undistributed net earnings was $27.7 million. See "Reorganization" and Notes 1,
10 and 17 of Notes to Combined Financial Statements.

FOREIGN CURRENCY TRANSLATION GAINS AND LOSSES

The Company's subsidiaries in the Philippines maintain their accounting
records in U.S. dollars. This is due to the fact that all sales, the majority of
all bank debt and all significant material and fixed asset purchases of such
subsidiaries are denominated in U.S. dollars. As a result, the Philippine
subsidiaries' exposure to changes in the Philippine peso/U.S. dollar exchange
rate relates primarily to certain receivables and advances and other assets
offset by payroll, pension and local liabilities. To minimize its foreign
exchange risk, the Company selectively hedges its net foreign currency exposure
through short-term (generally not more than 30 to 60 days) forward exchange
contracts. To date, the Company's hedging activity has been immaterial.

47
50

BUSINESS

The following discussion contains forward-looking statements within the
meaning of the U.S. federal securities laws, including statements regarding the
anticipated growth in the market for the Company's products, the Company's
anticipated capital expenditures and financing needs, the Company's expected
capacity utilization rates, the belief of the Company as to its future operating
performance and other statements that are not historical facts. Because such
statements include risks and uncertainties, actual results may differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth herein, in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Amkor is the world's largest independent provider of semiconductor
packaging and test services. The Company believes that it is also one of the
leading developers of advanced semiconductor packaging and test technology in
the industry. The Company offers a complete and integrated set of packaging and
test services including IC package design, leadframe and substrate design, IC
package assembly, final testing, burn-in, reliability testing, and thermal and
electrical characterization. As of December 31, 1997, the Company had in excess
of 150 customers, including many of the largest semiconductor companies in the
world. Such customers include, among others, Advanced Micro Devices, Inc.,
International Business Machines Corp., Intel, Lucent Technologies, Inc.,
Motorola, Inc., National Semiconductor Corp., Philips Electronics N.V.,
SGS-THOMSON Microelectronics N.V., Siemens AG and TI.

The Company provides packaging and test services through its three
factories in the Philippines as well as the four factories of AICL in Korea
pursuant to a Supply Agreement between the Company and AICL, under which AICL
provides packaging and test services to the Company. In 1996 and 1997, AICL
provided packaging and test services representing approximately 72% and 68%,
respectively, of the Company's net revenues.

INDUSTRY BACKGROUND

Manufacturing Process

The production of a semiconductor is a complex process that requires
increasingly sophisticated engineering and manufacturing expertise. The
production process can be broadly divided into three primary stages: (i) wafer
fabrication, (ii) assembly of die into finished devices (referred to as
"packaging") and (iii) testing of finished devices and other back-end processes.

48
51

[ORGANIZATIONAL CHART]

The wafer fabrication process begins with the generation of a mask that
defines the circuit patterns for the transistors and interconnect layers that
will be formed on the raw silicon wafer. The transistors and other circuit
elements are formed by repeating a series of process steps wherein a
photosensitive material is first deposited on the wafer, the material is exposed
to light through the mask in a photolithography process, and finally, the
unwanted material is etched away, leaving only the desired circuit pattern on
the wafer. By stacking up the various patterns, the individual elements of the
semiconductor are defined. The final step in the wafer fabrication process is to
electrically test each individual chip in a wafer probe process in order to
identify the good chip for packaging.

The fabricated wafers are then transferred to packaging facilities.
Semiconductor packaging serves to protect the chip, facilitate integration into
electronic systems, and enable the dissipation of heat from the devices. In the
packaging process, the wafer is diced into its individual die which are then
separated from the wafer and attached to a substrate via an epoxy adhesive.
Leads on the substrate are then connected by extremely fine gold wires to the
input/output ("I/O") terminals on the chips through the use of automated
machines known as "wire bonders". Each die is then encapsulated in a plastic
molding compound, thus forming the package, which then goes through several
additional finishing steps to prepare it for testing.

Following packaging, each packaged device is then tested utilizing a
sophisticated test platform and program which tests the many different operating
specifications of the IC, including functionality, voltage, current and timing.
The completed devices are either shipped back to the customer or shipped
directly to their final destination.

Trends Toward Outsourcing

Historically, semiconductor companies manufactured semiconductors primarily
in their own factories. Independent packagers of semiconductors were used solely
to handle the overflow volume requirements of semiconductor companies.
Outsourcing of final testing and wafer fabrication was virtually non-existent in
the

49
52

early days of the industry. Over the past fifteen years, however, the need for
independent semiconductor packaging and test services has grown dramatically for
several reasons.

First, semiconductor companies are facing ever-increasing demands for
miniaturization, higher lead counts and improved thermal and electrical
performance in IC packages. As a result of this trend, semiconductor packaging
is now viewed as an enabling technology requiring sophisticated expertise and
technological innovation. Independent providers of packaging and test services
have developed substantial expertise in packaging and test technology and new
package innovation. Semiconductor companies, having found it difficult to keep
pace using their internal resources, have come to rely increasingly on the
independent packaging and test services providers as a key source for new
technology development and innovation.

Second, semiconductor companies are increasingly seeking to shorten their
time to market for new products. Having the right packaging technology and
capacity in place is a critical factor in reducing time to market. As packaging
solutions are identified for a specific product, semiconductor companies
frequently do not have the equipment or expertise to implement such solutions in
the volumes required, nor sufficient time to develop these capabilities before
introducing a new product into the market. For this reason, semiconductor
companies are increasingly leveraging the resources and capabilities of
independent packaging and test companies to deliver their new products to market
more quickly.

Third, the packaging and testing of ICs has evolved into an increasingly
complex process that requires substantial investment in specialized equipment
and facilities. For example, the investment in facilities and equipment
necessary for a processing line capable of packaging 100 million ball grid array
("BGA") packages per year can be as much as $200 million. As a result of the
substantial cost of this manufacturing equipment, the equipment must be utilized
at a high capacity level for an extended period of time in order to be cost
effective. With semiconductor companies facing increasingly shorter product life
cycles, faster new product introductions and the need to continuously update or
replace packaging equipment to accommodate new products, it has become
increasingly difficult for semiconductor companies to sustain such high levels
of capacity utilization. Independent providers of packaging and test services,
on the other hand, can use existing equipment at high utilization levels over a
longer period of time for a broad range of customers, effectively extending the
life of the equipment.

Fourth, as the cost to build a new wafer fabrication facility has increased
to over $1 billion, semiconductor companies have been forced to concentrate
their capital resources on core wafer manufacturing activities. As a result,
semiconductor companies are increasingly seeking to use independent packaging
and test providers who have the ability to invest the capital to develop new
packaging and test capacity. The Company believes that as the cost to construct
new wafer fabrication facilities continues to increase, semiconductor
manufacturers will increasingly seek to outsource packaging and test services.

Fifth, there has been a recent growth of "fabless" semiconductor companies
whose core competency and focus is entirely on the semiconductor design process.
According to industry estimates, sales by fabless semiconductor companies have
grown from $3.2 billion in 1993 to $6.8 billion in 1996, representing 3.7% and
4.8%, respectively, of the worldwide market for semiconductors. The significant
growth in the number of fabless semiconductor companies has been driven in large
part by the ability of such companies to effectively outsource virtually every
significant step of the semiconductor manufacturing process. This development
has allowed fabless semiconductor companies to introduce new semiconductors very
quickly without committing significant amounts of capital and other resources.
The Company believes that increases in the number of fabless semiconductor
companies will continue to be a significant driver of growth in the independent
semiconductor manufacturing industry.

These trends, combined with the growth in the number of ICs being produced
and sold, are driving increasing demand for independent packaging and test
services. According to industry estimates, independent packaging revenues are
expected to grow at a compound annual rate of approximately 16% over a period of
five years from $5.6 billion in 1997 to $11.6 billion in 2002. Today, nearly all
of the world's major semiconductor companies use independent packaging and test
service providers for at least a portion, if not all, of their packaging and
test needs.

50
53

Many of the same forces that have driven the growth of independent
packaging and test have also been driving increasing demand for independent
wafer fabrication services. Moreover, because the cost of new wafer fabrication
facilities has been rising steadily, many semiconductor companies are seeking to
leverage their capital resources by outsourcing some or all of their wafer
fabrication needs. This is particularly true for newer, smaller geometry
technologies that are necessary for producing the newest, leading edge ICs,
because they cannot be produced in many semiconductor companies' existing wafer
fabrication facilities. As the demand for ICs with smaller geometries increases,
the Company believes semiconductor companies will increasingly utilize
independent wafer manufacturers.

The Need for Turnkey Solutions

The growing demand for independent wafer fabrication, packaging, and test
services has generally been served by separate wafer fabrication, packaging or
test companies. This creates inefficiencies for semiconductor companies which
must manage the delays, complex logistics and uncertainty inherent in utilizing
a different service provider for each step of the semiconductor manufacturing
process. Only a very few, if any, independent service providers have the
capability of providing a combination of wafer fabrication, packaging and test
services.

THE AMKOR SOLUTION

Amkor is the largest independent provider of semiconductor packaging and
test services in the world. With its leading edge process technology and package
design expertise, the Company is able to provide its customers with a broad
range of new packaging solutions that enable faster, smaller and more powerful
ICs. Due to its size and industry-leading position, the Company is capable of
implementing and utilizing the capital equipment necessary for both new and
mature packages, thereby affording its customers an attractive alternative in
their capital allocation decisions. In addition, with AICL's new wafer
fabrication capabilities, the Company is able to offer a fully integrated,
turnkey semiconductor manufacturing solution.

STRATEGY

Principal elements of the Company's strategy include:

Maintain Product Technology Leadership. The Company believes that it is one
of the world's leading designers and developers of new semiconductor packaging
technology. The Company has designed and developed such leading edge leadframe
and laminate products as its PowerQuad(R), SuperBGA(R), fleXBGA(TM) and
ChipArray(TM) BGA packages. The Company is focusing additional design and
development efforts on new generations of the BGA packaging format and on "flip
chip" die attach technologies where the I/O pads on the chip are attached
directly to the package's substrate rather than with wire-bonded connections.
The Company employs a staff of leading semiconductor packaging technologists and
undertakes significant research and development activities in its Chandler,
Arizona and Philippines locations, as well as through joint development
activities with AICL's development staff in Korea. The Company intends to
continue to maintain its leading packaging technology position.

Maintain Advanced Manufacturing Capabilities. The Company believes that its
tradition of manufacturing excellence has been a key factor in its success in
attracting and retaining customers, and it is committed to maintaining that high
level of excellence. Key to this effort is the Company's commitment to
continuous advancement of its process technology. The Company's development
teams work with its customers, suppliers, and others to develop new processing
technologies as well as pursue continuous improvements in the Company's existing
processing capabilities. These efforts have directly resulted in reduced time to
market, increased quality, and lower manufacturing costs.

Leverage Scale and Scope of the Company's Packaging and Test
Capabilities. The Company believes that its scale of operations and its breadth
of product offerings provide it with several competitive advantages. First, the
Company believes that its size and position in the industry allow it certain
advantages in procuring key materials and manufacturing equipment. Second, the
Company is able to capitalize on the substantial economies of scale that result
from high utilization rates of its capital equipment, thereby lowering the
51
54

Company's per unit manufacturing costs and facilitating cost-effective solutions
for its customers. The Company's scale also allows it to offer an
industry-leading breadth of product offerings and to be a single source for many
of its customers' packaging requirements. The Company offers over 450 different
package formats and sizes with a variety of processing and materials options.
The Company added 175 and 139 new packaging options, respectively, in 1996 and
1997. The Company is committed to continued expansion of both its size of
operations and its scope of product and service offerings.

Establish Industry Packaging Standards. The Company believes that by
bringing new package designs to market early, its designs are more likely to
become industry standards, which in turn will allow the Company to obtain higher
margins than its competitors for such new designs. The Company also seeks to
capture substantial market share and to spur the industry-wide adoption of its
new packages by investing aggressively in expanding its manufacturing capacity
for these packages. As a result, it is one of the leading providers of advanced
packaging solutions such as thin package formats and BGA packages. The Company
believes these package types will comprise some of the highest growth and more
profitable segments of the packaging market in coming years.

Enhance Customer and Supplier Relationships. As the world's largest
independent provider of semiconductor packaging and test services, the Company
has developed long-standing strategic relationships with leading semiconductor
and electronics companies, its suppliers, and other developers of new
semiconductor technologies. The Company believes that these relationships have
allowed it to stay ahead of the constantly advancing demand curve for
independent packaging services. The Company has repeatedly developed
leading-edge packaging technologies that have met the requirements of newer IC
devices and that have been quickly accepted in the marketplace. The Company's
alliances with certain of its key equipment and material suppliers have enabled
the Company to achieve packaging and manufacturing process innovation and cost
reduction. Developing and maintaining these relationships within the industry
will continue to be an integral part of the Company's overall strategic
direction.

Focus on Customer Service and Support. The Company believes that its focus
on customer service and support has been crucial in attracting and retaining
leading semiconductor companies as its customers. The Company has a firmly
established customer-oriented culture. To provide a dedicated customer support
infrastructure and to stay abreast of customers' expectations, the Company has
strategically established technical and sales teams near major customer
facilities and in acknowledged technology centers. In addition, the Company has
implemented direct electronic links with its customers to enhance communication
and facilitate real-time engineering data and order information flow.

Provide an Integrated, Turnkey Solution. The Company seeks to provide a
complete turnkey solution comprising wafer fabrication, packaging and test
services. The Company recently began providing wafer fabrication services
through AICL's new deep submicron CMOS foundry. With the addition of wafer
fabrication, the Company is able to provide all stages of IC production for its
customers from the fabrication of wafers through the shipment of finished ICs.
The Company believes this integration will enable customers to improve the cost
and performance of their ICs and achieve faster time to market for both new
product introductions and production lead times.

52
55

PRODUCTS

Packaging

The Company offers a broad range of package formats designed to provide
customers with a full array of packaging solutions for both commodity and
advanced products. The Company's products are divided into three product
families: traditional leadframe, advanced leadframe, and laminate products as
shown in the following tables.

- --------------------------------------------------------------------------------------------------

TRADITIONAL LEADFRAME PRODUCTS
- --------------------------------------------------------------------------------------------------
- ------------------------------------------
PACKAGE TYPE NUMBER OF LEADS APPLICATIONS
- ------------------------------------------ --------------- --------------------------------------

PDIP (Plastic Dual In-line Packages) 8-48 General purpose plastic IC package for
SPDIP (Shrink DIP) 28-64 consumer electronic products such as
games, telephones, TV, audio equipment
and computer peripherals.
- --------------------------------------------------------------------------------------------------
Hermetic Custom A line of mature, ceramic predominant
packages used especially for
high-reliability applications
(military, space and commercial
aviation).
- --------------------------------------------------------------------------------------------------
PLCC (Plastic Leaded Chip Carrier) 20-84 Used for logic, gate arrays, DAC,
processors and chip sets used in
larger form-factor items (copiers,
printers, scanners, desktop PCs,
electronic games and monitors).
- --------------------------------------------------------------------------------------------------
SOIC (Small Outline Integrated Circuit) 8-44 Designed for needs of lower lead
devices. End uses include consumer
audio/video and entertainment
products, pagers, cordless telephones,
fax machines, copiers, printers, PC
peripherals and automotive parts.
- --------------------------------------------------------------------------------------------------
MQFP (Metric Quad Flat Package) 44-304 Adapted to meet the increasing
challenges of advanced
processors/controllers, DSPs, ASICs,
video-DAC, PC chip sets, gate arrays,
logic devices, multimedia and other
technologies for consumer, commercial,
office, automotive, PC and industrial
products.
- --------------------------------------------------------------------------------------------------
PowerQuad(R) 100-304 Higher performance thermally enhanced
QFP package. Used for DSPs,
programmable logic devices,
microprocessors and micro-controllers,
high-speed and field programmable gate
array logic devices, ASIC and other
technologies requiring more thermal
performance than offered by standard
QFP packages.
- --------------------------------------------------------------------------------------------------
PowerSOP(TM) 8-36 Higher performance thermally enhanced
SOIC package. Used for wireless RF
telecom devices, automotive,
industrial, disk drive, pagers, and
other technologies requiring more
thermal performance than offered by
standard SOIC packages.

================================================================================

53
56

- ------------------------------------------
ADVANCED LEADFRAME PRODUCTS
- --------------------------------------------------------------------------------------------------
- ------------------------------------------
PACKAGE TYPE NUMBER OF LEADS APPLICATIONS
- ------------------------------------------ --------------- --------------------------------------

TQFP (Thin Quad Flat Package) 32-256 Designed for lightweight, portable
electronics requiring broad
performance characteristics, including
notebook computers, desktop PCs,
audio/video and telecommunications
products, cordless/RF devices, office
equipment, disk drives and
communication boards (e.g., Ethernet
and ISDN).
- --------------------------------------------------------------------------------------------------
TSOP (Thin Small Outline Package) 32-48 Primary application is for SRAM, DRAM,
FLASH and FSRAM memory devices. End
uses include PC cards, PCMCIA
form-factor products, cameras
(still/video) and notebook computers.
- --------------------------------------------------------------------------------------------------
TSSOP (Thin Shrink Small Outline Package) 8-80 Designed for gate drivers,
controllers, logic, analog, memory
(SRAM, DRAM, EPROM, E2PROM),
comparators and optoelectronics.
- --------------------------------------------------------------------------------------------------
SSOP (Shrink Small Outline Package) 8-64 Designed to enable end-products such
as pagers, portable audio/video
products, disk drives, and wireless
applications to be reduced in size and
weight.
- --------------------------------------------------------------------------------------------------

54
57

- ------------------------------------------
LAMINATE PRODUCTS
- --------------------------------------------------------------------------------------------------
- ------------------------------------------
PACKAGE TYPE NUMBER OF BALLS APPLICATIONS
- ------------------------------------------ --------------- --------------------------------------

PBGA (Plastic Ball Grid Array) 119-544 Semiconductors for end users which
require the enhanced performance
provided by the integrated design of
PBGA, including microprocessors/
controllers, ASICs, gate arrays,
memory, DSPs and PC chip sets.
Designed for applications where
improved portability, form-factor and
high-performance are necessary,
including wireless products, cellular,
GPS, notebook computers, video cameras
and disk drives.
- --------------------------------------------------------------------------------------------------
SuperBGA(R) 64-600 Designed for high-speed, high-power
semiconductors such as ASICs,
microprocessors, gate arrays, and
DSPs. Applications include wireless
products, notebook computers, PDAs,
video GUI and CPU/BUS boards.
- --------------------------------------------------------------------------------------------------
fleXBGA(TM) 133-412 Higher performance, lower profile
package than PBGA due to size
reduction made possible by denser
substrate. Ideal for high performance
disk drives, cellular phones, pagers,
wireless communications, DSPs and
micro-controller applications.
- --------------------------------------------------------------------------------------------------
MicroBGA(TM) 8-200 Especially suited for memory devices
such as FLASH, SRAM, DRAM and FSRAM
technologies, microprocessors/
controllers and high value ASICs
requiring a low height, weight and
size packaging. End uses include
cellular and other telecommunications
products, disk drives,
notebooks/sub-notebooks, PDAs,
wireless and consumer systems and
memory boards.
- --------------------------------------------------------------------------------------------------
ChipArray(TM) 36-128 Designed for semiconductors such as
memory, analog, ASICs and PLDs
requiring a smaller package than
conventional PBGAs. Applications
include cellular and other
telecommunications, notebooks/sub-
notebooks, PDAs, wireless systems and
GPS.
- --------------------------------------------------------------------------------------------------
FlipChip N/A An enabling interconnect technology
which can be utilized in advanced IC
packages such as PBGA, chip scale and
flex circuit solutions to support
improved electrical requirements and
very high semiconductor density in
very small systems.

================================================================================

55
58

Traditional Leadframe Products. Traditional leadframe products are the most
widely recognized package types and are characterized by a chip encapsulated in
a plastic mold compound with metal leads surrounding the perimeter. This package
type has evolved from packages designed to be plugged into the circuit board by
inserting the leads into holes on the circuit board to the more modern
surface-mount design, in which the leads are soldered to the surface of the
circuit board. Specific package customization and evolutionary improvements are
continually being engineered to enable improved electrical performance and
multi-chip capability, as well as smaller printed circuit board footprints. The
Company offers a wide range of lead counts and body sizes within this product
group to satisfy customer die size variations. In addition, the Company offers
power versions of the SOP, PLCC, and MQFP package types which are specially
designed to handle today's high power ICs that need with enhanced heat
dissipation characteristics.

Advanced Leadframe Products. The Company's customers are seeking
increasingly thinner packages, which has led the Company to develop newer, more
advanced leadframe products. The Company's advanced leadframe products are
similar in design to its traditional leadframe products. However, the advanced
leadframe products generally are thinner and smaller, have more leads, and have
advanced thermal and electrical characteristics which are necessary for many of
today's more advanced semiconductor applications. The TSOP, TSSOP and SSOP
packages are significantly smaller than the Company's traditional SOIC products,
while the TQFP package is a smaller version of the MQFP package. The Company
also offers power versions of these package types. The Company plans to continue
to develop increasingly smaller versions of these products to keep pace with
continually shrinking die sizes and increasing demands for miniaturization.

Laminate Products. The laminate product family represents the newest and
fastest growth area for the Company and consists of products employing the BGA
format which utilize a laminate (plastic or tape) substrate rather than a
leadframe substrate. BGA technology was first introduced in the industry as a
solution to problems associated with the increasingly high lead counts required
for advanced semiconductors. As the number of leads surrounding the IC
increased, packagers attempted to maintain the size of the package by increasing
the proximity of the leads to one another. As a result, however, these high lead
count packages experienced significant electrical shorting problems and required
the development of increasingly sophisticated and expensive techniques for
producing circuit boards to accommodate the density of the leads. The BGA
methodology solved this problem by effectively creating leads on the bottom of
the package in the form of small bumps or balls. These balls can be evenly
distributed across the entire bottom surface of the package, allowing greater
distance between the individual leads. The Company's first product in this
family was the plastic BGA. The Company has subsequently designed additional BGA
type packages which include features that enable low cost, high volume
manufacturing methods as well as higher performance packages. These new laminate
products include: SuperBGA(R), which includes a copper heat-sink for heat
dissipation and is designed for very low profile, high power applications;
ChipArray(TM), which allows the package to be as small as 1.5 mm larger than the
chip itself; and MicroBGA(TM), which is designed to be approximately the same
size as the chip and uses a tape substrate rather than a plastic laminate. The
Company is currently designing newer versions of BGA packages to enable further
significant reductions in package size.

Test and Related Services

The Company also provides its customers with semiconductor test services.
The Company has the capability to test digital logic, analog and mixed signal
products. The combination of the Company's test operations together with AICL's
Korean test operations comprises one of the largest independent test operations
in the world. Providing test services requires a high level of communication and
integration between the Company and its customers. In order to enable
semiconductor companies to improve their time to market and to reduce costs,
there has been an increasing trend to put packaging and test operations in the
same location. The Company has capitalized on this trend by supplying its own
testers or by supplementing customer-supplied testers with handlers and other
related equipment.

Although test services accounted for only 3.5% of the Company's total 1997
revenue and 13% of the total units shipped, the Company expects test services to
grow significantly during the next several years as customers seek to reduce the
time to market for their products by using contractors with test services at the

56
59

packaging site. In addition to final test services, the Company provides a full
range of other related services, such as burn-in test services, "dry pack"
services, "tape and reel" packing, and wafer "probing" or "sorting."

The following table sets forth, for the periods indicated, the amount of
the Company's net revenues and the percentage of total net revenues by product
type:

1994 1995 1996 1997
---------------- ---------------- ---------------- -----------------
REVENUES % REVENUES % REVENUES % REVENUES %
-------- ----- -------- ----- -------- ----- -------- -----
(DOLLARS IN MILLIONS)

Traditional Leadframe.............. $ 487 85.1% $ 699 75.0% $ 792 67.6% $ 801 55.0%
Advanced Leadframe................. 53 9.2 157 16.8 220 18.8 312 21.5
Laminate........................... 3 0.5 15 1.6 90 7.7 248 17.0
Testing and Other.................. 30 5.2 61 6.6 69 5.9 95 6.5
------- ----- ------- ----- ------- ----- ------- -----
Total.......................... $ 573 100.0% $ 932 100.0% $ 1,171 100.0% $ 1,456 100.0%
======= ===== ======= ===== ======= ===== ======= =====

Wafer Fabrication

The Company recently began offering wafer fabrication services through
AICL's new deep submicron CMOS foundry. This foundry is currently capable of
producing up to 15,000 8" wafers per month. Through a strategic relationship
with TI, the Company and AICL have qualified .25 micron CMOS process technology,
and TI has agreed to provide to AICL .18 micron CMOS process technology during
1998. The Company's right to the supply of wafers from the foundry is subject to
the TI Manufacturing and Purchasing Agreement, pursuant to which TI has agreed
to purchase at least 40% of the capacity of the foundry and under certain
circumstances has the right to purchase 70% of the capacity of the foundry.
Although the Company has received forecasts from TI which indicate that TI will
meet its minimum purchase obligation during the second half of 1998, during the
first quarter of 1998 TI's orders were below such minimum purchase commitment
due to market conditions and issues encountered by TI in the transition of its
products to .18 micron technology. There can be no assurance that TI will place
orders representing at least 40% of the capacity of this foundry during this
period or in the future. A failure by TI to comply with its minimum purchase
obligations or the cancellation of a significant wafer fabrication order by TI
or any other customer could have a material adverse effect on AICL's and the
Company's business, financial condition and results of operations. See "Risk
Factors -- Risks Associated with New Wafer Fabrication Business" and
" -- Intellectual Property."

The new foundry's capability is targeted to meet the needs of customers for
DSPs, ASICs and other logic devices. As technological capability and the needs
for CMOS designs in this area change, the Company anticipates the need to add
embedded memory and special analog functionality to its core CMOS technology.
The Company plans to continue to focus its semiconductor technology development
efforts to serve the needs of the high performance digital logic market.

With the addition of the wafer fabrication capability, the Company is able
to offer fully integrated turnkey semiconductor manufacturing services to its
customers. This complete turnkey solution will enable the Company to work with
its customers' IC designers to optimize the integration of IC design with wafer
fabrication, package design, and packaging and test processes. The Company
believes this integration will enable customers to improve the cost and
performance of their ICs and achieve faster time to market in terms of both new
product introductions and production lead times.

57
60

CUSTOMERS

The Company currently has more than 150 customers, including many of the
largest semiconductor companies in the world. Set forth below is a list of the
Company's top 50 customers in 1997:

Actel Corporation Integrated Circuit Systems, Inc. Plessey Semiconductors
Altera Corporation Integrated Device Technology, Inc. Philips Electronics N.V.
Adaptec, Inc. Intel Corporation Robert Bosch GmbH
Advanced Micro Devices, Inc. Lattice Semiconductor Rockwell Corp.
Alcatel Mietec Corporation S3 Incorporated
American Micro Systems, Inc. Level One Communications, Inc. SGS-THOMSON
Analog Devices, Inc. LSI Logic Corporation Microelectronics N.V.
Atmel Corporation Lucent Technologies Inc. Siemens AG
Cirrus Logic Macronix International Co., Ltd. SMC Corporation
Cypress Semiconductor Corp. Matra Harris Semiconductors Silicon Storage
Dallas Semiconductor Maxim Integrated Circuits Technology, Inc.
Delco Electronics Corporation Microchip Technology Inc. Symbios Logic
Digital Equipment Corp. Microlinear TEMIC Semiconductors
Harris Corporation Motorola, Inc. Texas Instruments
Hewlett-Packard Company National Semiconductor Incorporated
International Business Machines Corporation VLSI Technology, Inc.
Corporation NeoMagic Corporation VTC Inc.
IC Works Inc. Northern Telecom Waferscale Integration, Inc.
Xilinx, Inc.

The Company's five largest customers collectively accounted for approximately
34.1%, 39.2%, and 40.1% of the Company's total revenues in 1995, 1996 and 1997,
respectively. The Company anticipates that this customer concentration will
continue at least for the foreseeable future. See "Risk Factors -- Customer
Concentration; Absence of Backlog."

MARKETING AND SALES

The Company sells to and supports its customers through an international
network of offices located in close proximity to its largest customers and
concentration of customers, including offices in the United States (Austin,
Texas; Boise, Idaho; Chandler, Arizona; Dallas, Texas; Santa Clara, California
and West Chester, Pennsylvania), France, Singapore, Taiwan, and the Philippines.
A substantial majority of the Company's sales have historically been derived
from U.S.-based customers. See Note 15 of Notes to Combined Financial
Statements. The Company assigns each of its customers a sales and customer
support team consisting of an account manager, a technical program manager, and
one or more customer support representatives. The largest multinational
customers are typically supported from multiple offices. The Company's worldwide
force of account managers, customer service representatives and technical
product managers exceeds 200 personnel. In addition, an extended staff of
product management, process and reliability engineering, marketing and
advertising, information systems, and factory personnel supports the direct
account teams. Together, these direct and extended teams deliver an array of
services to the Company's customers including providing information and expert
advice on packaging solutions and trends, managing the start-up of specific
packaging and test programs, providing a continuous flow of information to the
customers regarding products and programs in process, and researching and
helping to resolve technical and logistical issues.

FACILITIES AND MANUFACTURING

Facilities

The Company provides packaging and test services through its factories in
the Philippines as well as its test facility in the U.S. A new packaging factory
is currently being equipped at the Company's Chandler, Arizona site with
expected start-up in 1999. In addition, the Company provides packaging and test
services

58
61

through AICL's four factories in Korea, which provide such services to the
Company pursuant to a Supply Agreement. In 1996 and 1997, AICL provided
packaging and test services which accounted for approximately 72% and 68%,
respectively, of the Company's revenues. In addition to providing world-class
manufacturing services, these factories provide purchasing, engineering, and
customer service support. The Company recently began offering wafer fabrication
services through AICL's new state-of-the-art .25 micron wafer foundry in Korea
pursuant to a Supply Agreement. The size, location, and manufacturing services
provided by each of the Company's and AICL's primary facilities is set forth in
the table below. See "Risk Factors -- Dependence on Relationship With AICL;
Potential Conflicts of Interest," "-- Expansion of Manufacturing Capacity;
Profitability Affected by Capacity Utilization Rates," "-- Risks Associated with
New Wafer Fabrication Business" and "-- Inability to Obtain Packaging and Test
Equipment in a Timely Fashion."

APPROXIMATE
PLANT SIZE
FACILITY LOCATION (SQUARE FEET) MANUFACTURING SERVICES
-------- -------- ------------- ----------------------

Company Facilities
P1 Muntilupa, Philippines 579,000 Packaging and test services; packaging
and process development
P2 Muntilupa, Philippines 115,000 Packaging services
P3 Province of Laguna, Philippines 249,000 Packaging and test services
AATS Santa Clara, California 3,000 Final testing services; test program
development; central shipping and
logistics
A1 (1999) Chandler, Arizona 106,000 Packaging services for laminate
products; package and process
development

AICL Facilities
K1 Seoul, Korea 646,000 Packaging services, package and
process development
K2 Buchon, Korea 264,000 Packaging services
K3 Bupyung, Korea 404,000 Packaging and test services
K4 Kwangju, Korea 597,000 Packaging services

Wafer Foundry Buchon, Korea 480,000 Wafer fabrication services

The Company's operational headquarters is located in Chandler, Arizona
while its administrative headquarters is located in West Chester, Pennsylvania.
In addition to an executive staff, the Chandler, Arizona campus houses sales and
customer service for the southwest region, product management, a technical
design center, planning, marketing and research and development. The West
Chester location houses finance and accounting, legal, personnel administration,
information systems, and serves as a satellite sales office for the Company's
eastern sales region.

Raw Materials and Equipment

The Company's packaging operations depend upon obtaining adequate supplies
of raw materials on a timely basis. The principal raw materials used in the
Company's packaging process are leadframes or laminate substrates, along with
gold wire and molding compound. The Company purchases raw materials based on the
stated demand requirements of its customers and its customers are generally
responsible for any unused materials that result from an overstatement of
demand. The Company works closely with its primary raw material suppliers to
insure the availability and timeliness of raw material supplies. In addition,
the Company negotiates worldwide pricing agreements with its major suppliers to
take advantage of the scale of its operations. The Company is not dependent on
any one supplier for a substantial portion of its raw material requirements.

The Company's packaging operations and expansion plans also depend on
obtaining adequate supplies of manufacturing equipment on a timely basis. To
that end, the Company works closely with its major equipment suppliers to insure
that equipment deliveries are on time and the equipment meets the Company's
stringent performance specifications. In addition, an affiliate of AICL
manufactures semiconductor packaging equipment exclusively for the Company and
AICL at locations in close proximity to the Company's and AICL's

59
62

packaging facilities in the Philippines and Korea, respectively. See "Risk
Factors -- Dependence on Raw Materials Suppliers and Subcontractors."

Total Quality Management

The Company believes that total quality management is a vital component of
its manufacturing strategy. To that end, the Company has established a
comprehensive Quality Operating System designed to promote continuous
improvement and maximize manufacturing yields at high volume production while
maintaining the highest quality standards. Each of the Company's and AICL's
factories is ISO9002 and QS-9000 certified. ISO9002 is a worldwide manufacturing
quality certification program administered by an independent standards
organization. QS9000 is similarly an independently administered manufacturing
quality certification used by United States automotive manufacturers. The
Company believes that many of its customers prefer to purchase from suppliers
who are ISO9002 and QS9000 certified.

COMPETITION

The independent semiconductor packaging and test industry is very
competitive, being comprised of approximately 50 companies, with about 15 of
those companies having sales of $100 million per year or more. The Company faces
substantial competition from established packaging companies primarily located
in Asia, such as Advanced Semiconductor Engineering, Inc. (Taiwan), ASE Test
Limited (Taiwan and Malaysia), ASAT Ltd. (Hong Kong), Hana Microelectronics
Public Co. Ltd. (Hong Kong and Thailand), Astra International (Indonesia),
Carsem Bhd. (Malaysia), ChipPAC Incorporated (Korea), Siliconware Precision
Industries Co., Ltd. (Taiwan), and Shinko Electric Industries Co., Ltd. (Japan).
Each of these companies has significant manufacturing capacity, financial
resources, research and development operations, marketing and other
capabilities, and have been operating for some time. Such companies have also
established relationships with many large semiconductor companies which are
current or potential customers of the Company. The principal elements of
competition in the independent semiconductor packaging market include time to
market, breadth of package offering, technical competence, design services,
quality, production yields, customer service, and price. The Company believes it
generally competes favorably with respect to these factors. On a larger scale,
the Company also competes with the internal manufacturing capabilities of many
of its largest customers.

The independent wafer fabrication business is also highly competitive. The
Company expects its wafer fabrication services to compete primarily with
independent wafer foundries such as Chartered Semiconductor Manufacturing, Ltd.,
Taiwan Semiconductor Manufacturing Company, Ltd. and United Microelectronics
Corporation, as well as with device manufacturers such as LG Semicon Co., Ltd.,
Hitachi, Ltd., Toshiba Corp. and Winbond Electronics Corporation, which provide
foundry services for other semiconductor companies. Each of these companies has
significant manufacturing capacity, financial resources, research and
development operations, marketing and other capabilities and have been operating
for some time. Many of these companies have also established relationships with
many large semiconductor companies which are current or potential customers of
the Company. The principal elements of competition in the wafer foundry market
include technology, delivery cycle times, price, product performance, quality,
production yield, responsiveness and flexibility, reliability and the ability to
design and incorporate product improvements. See "Risk Factors -- Competition."

RESEARCH AND DEVELOPMENT

The Company's research and development efforts are focused on developing
new package designs and process capabilities, and on improving the efficiency
and capabilities of its existing production processes and materials. The Company
believes that technology development is one of the key success factors in the
packaging market and believes that it has a distinct advantage in this area. In
addition to its internal development work, and its co-development work with
AICL, the Company also works closely with its packaging equipment and raw
material suppliers in developing advanced processing capabilities and materials
for use in the Company's production process. Currently, the Company is focusing
on development programs that extend the capability and applicability of the BGA
packaging format. These include high performance
60
63

BGAs for microprocessors and other high-end devices, and a chip size package for
memory. In addition, the Company is aggressively developing a flip-chip die
attach and connect process for its laminate packages that has the potential to
reduce packaging size and cost and improve package performance significantly.
The flip-chip packaging process involves attaching the die I/O terminals
directly to the lead circuits on the substrate without the use of gold wires. In
addition to providing a smaller package size, this process is expected to result
in significant improvements in packaging yields by eliminating the delicate wire
bonds from the package.

As of December 31, 1997, the Company employed approximately 95 persons in
research and development activities. In addition, other management and
operational personnel are involved in research and development activities. In
1995, 1996 and 1997, the Company's research and development expenses were
approximately $8.7 million, $10.9 million and $8.5 million, respectively. The
Company expects to continue to invest significant resources in research and
development.

INTELLECTUAL PROPERTY

The Company currently holds 24 U.S. patents, five of which are jointly held
with AICL, related to various IC packaging technologies, in addition to other
pending patents. These patents will expire at various dates from 2012 through
2016. With respect to development work undertaken jointly with AICL, the Company
and AICL share intellectual property rights under the terms of the Supply
Agreements between the Company and AICL. The Supply Agreements also provide for
the cross-licensing of intellectual property rights between the Company and
AICL. In addition, the Company enters into agreements with other developers of
packaging technology to license or otherwise obtain certain process or packaging
technologies.

Although the Company is not currently a party to any material litigation,
the semiconductor industry is characterized by frequent claims regarding patent
and other intellectual property rights. As is typical in the semiconductor
industry, the Company may receive communications from third parties asserting
patents on certain of the Company's technologies. In the event any third party
were to make a valid claim against the Company or AICL, the Company or AICL
could be required to discontinue the use of certain processes or cease the
manufacture, use, import and sale of infringing products to pay substantial
damages and to develop non-infringing technologies or to acquire licenses to the
alleged infringed technology. The Company's business, financial condition and
results of operations could be materially and adversely affected by such
developments. Litigation, which could result in substantial cost to and
diversion of resources of the Company, may also be necessary to enforce patents
or other intellectual property rights of the Company or to defend the Company
against claimed infringement of the rights of others. The failure to obtain
necessary licenses or the occurrence of litigation relating to patent
infringement or other intellectual property matters could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, AICL has obtained intellectual property for wafer
manufacturing primarily from TI. The licenses granted to AICL by TI under the TI
Technology Agreements are very limited. Although TI has granted to AICL a
license under TI's trade secret rights to use TI's technology in connection with
AICL's provision of wafer fabrication services, TI has not granted AICL a
license under its patents, copyrights and mask works to manufacture
semiconductors for third parties. Although TI has agreed that TI will not assert
a claim for patent, copyright or mask work right infringement against AICL or
the Company in connection with AICL's manufacture of semiconductor products for
third parties, TI has reserved the right to bring such infringement claims
against AICL's or the Company's customers with respect to semiconductor products
purchased from AICL or the Company. As a result, AICL's and the Company's
customers could be subject to patent litigation by TI and others, and AICL and
the Company could in turn be subject to litigation by such customers and
61
64

others, in connection with the sale of wafers produced by AICL. Any such
litigation could materially and adversely affect AICL's ability to continue to
manufacture wafers and AICL's and the Company's business, financial condition
and results of operations.

ENVIRONMENTAL MATTERS

Federal, state and local regulations in the United States, as well as
environmental regulations in Korea and the Philippines, impose various controls
on the storage, handling, discharge and disposal of chemicals used in the
Company's and AICL's manufacturing processes and on the facilities occupied by
the Company and AICL. The Company believes that its activities, as well as those
of AICL, conform to present environmental and land use regulations applicable to
their respective operations and current facilities. Increasing public attention
has, however, been focused on the environmental impact of semiconductor
manufacturing operations and the risk to neighbors of chemical releases from
such operations. There can be no assurance that applicable land use and
environmental regulations will not in the future impose the need for additional
capital equipment or other process requirements upon the Company or AICL or
restrict the Company's or AICL's ability to expand their respective operations.
The adoption of new ordinances or similar measures or any failure by the Company
or AICL to comply with applicable environment and land use regulations or to
restrict the discharge of hazardous substances could subject the Company or AICL
to future liability or cause their respective manufacturing operations to be
curtailed or suspended.

EMPLOYEES

As of December 31, 1997, the Company had approximately 9,100 full-time
employees, 7,450 of whom were engaged in manufacturing, 1,150 in manufacturing
support, 95 in research and development, 210 in marketing and sales, and 195 in
finance, business management, and administration. The Company's employees are
not represented by any collective bargaining agreement, and the Company has
never experienced a work stoppage. The Company believes that its relations with
its employees are good. See "Risk Factors -- Dependence on Key Personnel and
Availability of Skilled Workforce."

62
65

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
December 31, 1997 are as follows:

NAME AGE POSITION
---- --- --------

James J. Kim.............................. 61 Chief Executive Officer and Chairman
John N. Boruch............................ 55 President and Director
Frank J. Marcucci......................... 62 Chief Financial Officer
Eric R. Larson............................ 42 Vice President
Michael D. O'Brien........................ 65 Vice President
Thomas D. George(1)(2).................... 57 Director
Gregory K. Hinckley(1)(2)................. 51 Director

- ---------------

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

James J. Kim. James Kim has served as the Company's Chief Executive Officer
since September 1997. Mr. Kim founded AEI in 1968 and has served as its Chairman
since 1970. He has also served as the Chairman of the Anam group of companies
and a director of AICL since 1992. Mr. Kim is a director of CFM Technologies,
Inc. Mr. Kim earned B.S. and M.A. degrees in Economics from the University of
Pennsylvania. Mr. Kim is Chairman of The Electronics Boutique, Inc., an
electronics retail chain, and Forte Systems, Inc., an information technology,
consulting and outsourcing company.

John N. Boruch. John Boruch has served as President and a director of the
Company since September 1997. Mr. Boruch has served as President of AEI since
February 1992. From 1991 to 1992 he served as AEI Corporate Vice President in
charge of Sales. Mr. Boruch earned a B.A. in Economics from Cornell University.
Mr. Boruch joined the Company in 1984.

Frank J. Marcucci. Frank Marcucci has served as the Chief Financial Officer
of the Company since September 1997. Mr. Marcucci has served as the Chief
Financial Officer of AEI since joining AEI in 1980. Mr. Marcucci earned a B.S.
in Business Administration from Duquesne University and an MBA from the
University of Pittsburgh. Mr. Marcucci is a Certified Public Accountant.

Eric R. Larson. Eric Larson has served as Vice President of the Wafer
Fabrication business of the Company since September 1997. Mr. Larson has served
as President of Amkor/Anam Semiconductor, a division of AEI, since December
1996. From 1979 to 1996 he worked for the Hewlett-Packard Company ("HP") in
various management capacities, most recently as Worldwide Marketing Manager for
disk products. In addition, Mr. Larson was the worldwide Manager of Sales and
Marketing of the IC Business Division of HP from July 1985 to May 1993. Mr.
Larson earned a B.A. in Political Science from Colorado State University and an
MBA from the University of Denver.

Michael D. O'Brien. Michael O'Brien has served as the Vice President of
Packaging and Testing Operations of the Company since September 1997. Mr.
O'Brien has served as Corporate Vice President of AEI since 1990. Mr. O'Brien
earned a B.S. from Texas A&M University. Mr. O'Brien joined the Company in 1988.

Thomas D. George. Mr. George has been a director of the Company since
November 1997. Mr. George was Executive Vice President, and President and
General Manager, Semiconductor Products Sector ("SPS") of Motorola from April
1993 to May 1997. Prior to that, he held several positions with Motorola,
including Executive Vice President and Assistant General Manager, SPS from
November 1992 to April 1993 and Senior Vice President and Assistant General
Manager, SPS from July 1986 to November 1992. Mr. George is currently retired.

63
66

Gregory K. Hinckley. Mr. Hinckley has been a director of the Company since
November 1997. Mr. Hinckley serves as Executive Vice President, Chief Operating
Officer and Chief Financial Officer of Mentor Graphics Corporation since January
1997. From November 1995 until December 1996 he held the position of Senior Vice
President with VLSI, a manufacturer of complex ASICs. From August 1992 until
December 1996, Mr. Hinckley held the position of Vice President, Finance and
Chief Financial Officer with VLSI. From December 1991 until August 1992, he was
an independent consultant. Mr. Hinckley is a director of OEC Medical Systems,
Inc., a manufacturer of medical imaging equipment.

DIRECTOR COMPENSATION

Directors who are also employees or officers of the Company do not receive
compensation for their services as directors. Non-employee directors are
eligible to receive an annual retainer of $15,000 plus per meeting fees of
$1,000 per board meeting and $1,000 per committee meeting attended. Directors
are reimbursed for travel and related expenses incurred by them in attending
board and committee meetings.

1998 Director Option Plan. The Company's 1998 Director Option Plan (the
"Director Plan") was adopted by the Board of Directors in January 1998 and is
expected to be approved by the Company's stockholders immediately following the
Reorganization. The Director Plan will become effective immediately prior to the
Offerings. A total of 300,000 shares of Common Stock have been reserved for
issuance under the Director Plan. The option grants under the Director Plan are
automatic and non-discretionary. The Director Plan provides for an initial grant
of options to purchase 15,000 shares of Common Stock to each new nonemployee
director of the Company (an "Outside Director") upon the later of the effective
date of the Director Plan or the date which such individual first becomes an
Outside Director. In addition, each Outside Director will automatically be
granted subsequent options to purchase 5,000 shares of Common Stock on each date
on which such Outside Director is re-elected by the stockholders of the Company,
provided that as of such date such Outside Director has served on the Board of
Directors for at least six months. The exercise price of the options is 100% of
the fair market value of the Common Stock on the grant date, except that with
respect to initial grants to directors on the effective date of the Director
Plan the exercise price will be equal 94% of the initial public offering price
per share of Common Stock in the Offerings. The term of each option is ten
years. Each option granted to an Outside Director vests as to 33 1/3% of the
optioned stock one year after the date of grant, and as to an additional 33 1/3%
of the optioned stock on each anniversary of the date of grant, provided that
the optionee continues to serve as an Outside Director on such date so that 100%
of the optioned stock may be exercisable three years after the date of grant. In
the event of the sale of all or substantially all the Company's assets or the
merger of the company with or into another corporation, all outstanding options
under the Director Plan may either be assumed or an equivalent option may be
substituted by the surviving entity. Following such assumption or substitution,
if the director is terminated other than upon a voluntary resignation, such
assumed or substituted options will vest and become exercisable in full. If no
assumption or substitution occurs, each such option will vest and become
exercisable in full. The Director Plan will terminate in January 2008 unless
sooner terminated by the Board of Directors.

BOARD COMMITTEES

The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee is comprised of Messrs. George and Hinckley. The
functions of the Compensation Committee are to review and approve annual
salaries, bonuses, and grants of stock options pursuant to the Company's 1998
Stock Plan and to review and approve the terms and conditions of all employee
benefit plans or changes thereto. The Audit Committee is comprised of Messrs.
George and Hinckley. The functions of the Audit Committee are to recommend
annually to the Board of Directors the appointment of the independent auditors
of the Company, discuss and review in advance the scope and the fees of the
annual audit and review the results thereof with the independent auditors,
review and approve non-audit services of the independent auditors, review
compliance with existing major accounting and financial reporting policies of
the Company, review the adequacy of the financial organization of the Company,
and review management's procedures and policies relating to the adequacy of the
Company's internal accounting controls and compliance with applicable laws
relating to accounting practices.

64
67

EXECUTIVE COMPENSATION

Summary Compensation. The following table sets forth compensation earned
during the fiscal year ended December 31, 1997, by the Company's Chief Executive
Officer and the four other most highly compensated executive officers whose
total salary and bonus during such year exceeded $100,000 (collectively, the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION(1)
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION
---------------------------- --------- --------- ------------

James J. Kim, Chief Executive Officer and
Chairman(2).......................................... $500,000 $ -- $ 6,000
John N. Boruch, President(3)........................... 415,000 375,000 6,000
Frank J. Marcucci, Chief Financial Officer(4).......... 254,000 100,000 245,000
Eric R. Larson, Vice President......................... 220,000 -- --
Michael D. O'Brien, Vice President..................... 249,000 100,000 --

- ---------------

(1) At the time of the Offerings, Messrs. Boruch, Marcucci, Larson and O'Brien
will receive option grants of 300,000 shares, 100,000 shares, 85,000 shares
and 85,000 shares, respectively, of Common Stock under the Company's 1998
Stock Plan, in each case with an exercise price per share equal to the
initial public offering price per share.

(2) All other compensation for Mr. Kim represents the amount of insurance
premium paid by the Company on Mr. Kim's behalf for a life insurance
policy. Effective January 1, 1998, Mr. Kim is compensated at an annual
salary of $750,000 and he may earn an annual bonus of up to $500,000 if the
Company achieves its annual operating plan, as approved by the Company's
Board of Directors.

(3) All other compensation for Mr. Boruch represents the amount of insurance
premium paid by the Company on Mr. Boruch's behalf for a life insurance
policy.

(4) All other compensation for Mr. Marcucci represents the amount of insurance
premium paid by the Company on Mr. Marcucci's behalf for a life insurance
policy together with a bonus paid to Mr. Marcucci to cover the income taxes
owed by Mr. Marcucci as a result of the payment of such insurance premium.

STOCK PLANS

1998 Stock Plan. The Company's 1998 Stock Plan (the "1998 Plan") provides
for the grant to employees of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"), and for the grant
to employees, directors and consultants of nonstatutory stock options and stock
purchase rights. The 1998 Plan was adopted by the Board of Directors in January
1998 and is expected to be approved by the Company's stockholders immediately
following the Reorganization. Unless terminated sooner, the 1998 Plan will
terminate automatically in January 2008. The maximum aggregate number of shares
which may be optioned and sold under the 1998 Plan is 5,000,000, plus an annual
increase to be added on each anniversary date of the adoption of the 1998 Plan
equal to the lesser of (i) the number of shares of Common Stock needed to
restore the maximum aggregate number of shares of Common Stock which may be
optioned and sold under the 1998 to 5,000,000, or (ii) a lesser amount
determined by the Board of Directors.

The 1998 Plan may be administered by the Board of Directors or a committee
appointed by the Board of Directors (the "Committee"), which Committee shall, in
the case of options intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code, consist of two or more
"outside directors" within the meaning of Section 162(m) of the Code. The Board
of Directors or the Committee, as applicable, has the power to determine the
terms of options granted, including the exercise price and the fair market
value, to reduce the exercise price of any option to the then current fair
market price if the fair market value of the Common Stock covered by such option
shall have declined since the date the option was granted, the number of shares
subject to the option or stock purchase right, and the exercisability thereof
and the form of consideration payable upon such exercise. In addition, the Board
of Directors has the

65
68

authority to amend, suspend or terminate the 1998 Plan, provided that no such
action may affect any share of Common Stock previously issued and sold or any
option previously granted under the 1998 Plan.

Unless determined otherwise by the administrators, options and stock
purchase rights granted under the 1998 Plan are not transferable by the
optionee, and each option and stock purchase right is generally exercisable
during the lifetime of the optionee only by such optionee. Options granted under
the 1998 Plan must generally be exercised within three months following
termination of an optionee's status as an employee, director or consultant of
the Company, within twelve months after an optionee's termination by disability,
and within twelve months after an optionee's termination by death, but in no
event later than the expiration of the option. In the case of stock purchase
rights, unless the administrator determines otherwise, a restricted stock
purchase agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or disability). The purchase price for
shares repurchased pursuant to a restricted stock purchase agreement shall be
the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at a rate determined by the administrator. The exercise price of all incentive
stock options granted under the 1998 Plan must be at least equal to the fair
market value of the shares on the date of grant. The exercise price of
nonstatutory stock options granted under the 1998 Plan is determined by the
Committee, but with respect to nonstatutory stock options intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the exercise price must be at least equal to the fair market value of the
Common Stock on the date of grant. With respect to any employee who owns stock
possessing more than ten percent of the voting power of all classes of the
Company's, or any parent or subsidiary of the Company's outstanding capital
stock, the exercise price of any incentive stock option granted to such person
must equal at least 110% of the fair market value of the Common Stock on the
date of grant and the term of such incentive stock option must not exceed five
years. The term of all other options granted under the 1998 Plan may not exceed
ten years.

The 1998 Plan provides that in the event of a merger of the Company with or
into another corporation, or a sale of substantially all of the Company's
assets, each outstanding option and stock purchase right will be assumed or
substituted for by the successor corporation. In the event the successor
corporation refuses to assume or substitute for the option or stock purchase
right, the optionee shall have the right to exercise all of the optioned stock,
including shares as to which it would not otherwise be exercisable.

1998 Employee Stock Purchase Plan. The Company's 1998 Employee Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors in
January 1998 and is expected to be approved by the stockholders immediately
following the Reorganization. The Company does not intend to implement the
Purchase Plan until after the Offerings. A total of 1,000,000 shares of Common
Stock have been made available for sale under the Purchase Plan and an annual
increase is to be added on each anniversary date of the adoption of the Purchase
Plan equal to the lesser of (i) the number of shares needed to restore the
maximum aggregate number of shares available for sale under the Purchase Plan to
1,000,000, or (ii) a lesser amount determined by the Board of Directors. The
Purchase Plan, which is intended to qualify under Section 423 of the Code is
administered by the Board of Directors or by a committee appointed by the Board.
Employees (including officers and employee directors of the Company but
excluding 5% or greater stockholders) are eligible to participate if they are
customarily employed for at least 20 hours per week and for more than five
months in any calendar year. The Purchase Plan permits eligible employees to
purchase Common Stock through payroll deductions, which may not exceed 15% of
the compensation an employee receives on each pay day. The Purchase Plan will be
implemented by consecutive six-month offering periods. The initial offering
period and the date of subsequent offering periods under the Purchase Plan will
be determined by the Board of Directors after the effective date of the
Offerings. Each participant will be granted an option on the first day of an
offering period, and shares of Common Stock will be automatically purchased on
the last date of each purchase period within the offering period. If the fair
market value of the Common Stock on any purchase date (other than the final
purchase date of the offering period) is lower than such fair market value on
the start date of that offering period, then all participants in that offering
period will be automatically withdrawn from such offering period and re-enrolled
in the immediately following offering period. The purchase price of the Common
Stock under the Purchase Plan will be equal to 85% of the lesser of

66
69

the fair market value per share of Common Stock on the start date of the
offering period or on the purchase date. Employees may end their participation
in an offering period at any time, and participation ends automatically on
termination of employment with the Company. In the event of a proposed
dissolution or liquidation of the Company, the offering periods then in progress
will be shortened by setting a new exercise date that is before the dissolution
or liquidation, and will terminate immediately prior to the consummation of the
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the Company's assets or the merger
of the Company with or into another corporation, each outstanding option will be
assumed or substituted for by the successor corporation. In the event the
successor corporation refuses to assume or substitute for the options, the
offering periods then in progress will be shortened by setting a new exercise
date that is before the sale or merger and the offering periods then in progress
will end on the new exercise date. Each participant will be notified at least
ten business days prior to the new exercise date, and unless such participant
ends his or her participation, the option will be exercised automatically on the
new exercise date. The Purchase Plan will terminate in January 2008, unless
sooner terminated by the Board of Directors.

401(k) PLAN

The Company participates in a tax-qualified employee savings and retirement
plan (the "401(k) Plan") which covers certain of the Company's employees who are
at least 21 years of age. Pursuant to the 401(k) Plan, employees may elect to
reduce their current eligible compensation by up to 13% of eligible compensation
or the statutorily prescribed annual limit, whichever is lower, and have the
amount of such reduction contributed to the 401(k) Plan. After an eligible
employee completes one year of service and has attained age 21, he or she will
become eligible for the Company matching contributions effective as of the
quarterly entry date after meeting these service and age requirements. The
matching contribution amount is a discretionary amount as determined from time
to time by the Company. The 401(k) Plan is intended to qualify under Section 401
of the Internal Revenue Code of 1986, as amended, so that contributions by
employees or by the Company to the 401(k) Plan, and income earned on plan
contributions, are not taxable to employees until withdrawn from the 401(k)
Plan, and so that contributions by the Company, if any, will be deductible by
the Company when made. The trustee under the 401(k) Plan, at the direction of
each participant, invests the assets of the 401(k) Plan in any of a number of
designated investment options.

PHILIPPINE PENSION PLANS

The Company adopted a retirement plan for its eligible Philippine employees
and those eligible employees of designated affiliated companies and subsidiaries
of the Company, the Amkor/Anam Pilipinas, Incorporated Employees' Retirement
Benefit Plan (the "Phillipine Plan"), originally effective January 1, 1988, and
most recently amended on January 1, 1997. Eligible employees are employees with
regular and permanent status that have been employed continuously for one (1)
year by a participating company. Currently, the companies participating in the
Phillipine Plan are AMI, AAAP, and Anam Amkor Precision Machine Company
(Phils.), Incorporated. At normal retirement age (age 60), death, or upon total
and permanent disability, a participant will receive a lump sum benefit payment
based on a percentage of his or her final base monthly salary, as determined by
his or her years of credited service. A participant who retires at age 50 with
at least ten (10) years of service will receive a reduced payment based on the
same formula. Company contributions to the Phillipine Plan are held in trust.
The Phillipine Plan is presently underfunded by $3.8 million. The amount by
which the Phillipine Plan is underfunded decreased from $7.2 million at
September 30, 1997 primarily as a result of payments made by the Company as
required under the plan and the effect of the recent devaluation of the
Phillipine peso to the U.S. dollar. See Note 9 of Notes to Combined Financial
Statements.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Certificate of Incorporation that
eliminate to the fullest extent permissible under Delaware law the liability of
its directors to the Company for monetary damages. Such limitation of liability
does not affect the availability of equitable remedies such as injunctive relief
or

67
70

rescission. The Bylaws provide that the Company shall indemnify its directors
and officers, and may indemnify its other employees and agents, to the fullest
extent permitted by Delaware law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. The Company has
entered into indemnification agreements with its officers and directors
containing provisions which may require the Company, among other things, to
indemnify the officers and directors against certain liabilities that may arise
by reason of their status or service as directors or officers (other than
liabilities arising from willful misconduct of a culpable nature), and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.

There is no currently pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification would be required or permitted.

68
71

CERTAIN TRANSACTIONS

AICL was founded in 1956 by Mr. H. S. Kim, who currently serves as the
honorary Chairman and a Representative Director of AICL. AICL is a member of the
Anam Group of companies, consisting principally of companies in Korea in the
electronics industries. The management of AICL and the other companies in the
Anam Group are influenced to a significant degree by the family of H. S. Kim,
which, together with the Company, collectively owned approximately 40.7% of the
outstanding common stock of AICL as of December 31, 1997. A significant portion
of the shares owned by the Kim family are leveraged and as a result of this, or
for other reasons, the family's ownership could be substantially reduced. James
Kim, the founder of the Company and currently its Chairman and Chief Executive
Officer, is the eldest son of H. S. Kim. Since January 1992, in addition to his
other responsibilities, James Kim has been serving as acting Chairman of the
Anam Group and a director of AICL. Mr. In-Kil Hwang, the President and a
Representative Director of AICL, is the brother-in-law of James Kim. In
addition, four other members of Mr. Kim's family are on the 13-member Board of
Directors of AICL. In connection with the Reorganization, Mr. James Kim and
members of his family will exchange their interests in the Amkor Companies in
return for shares of Common Stock. After the Offerings, James Kim and members of
his family will beneficially own approximately 68.9% of the outstanding Common
Stock, and Mr. Kim and other members of his family will continue to exercise
significant control over the Company. The Company and AICL have had a
long-standing relationship. In 1996 and 1997, approximately 72% and 68%,
respectively, of the Company's revenues were derived from sales of services
performed for the Company by AICL. In addition, substantially all of the
revenues of AICL in 1996 and 1997 were derived from services sold by the
Company. The Company expects that the businesses of the Company and AICL will
continue to remain highly interdependent by virtue of their supply relationship,
overlaps and family ties between their respective shareholders and management,
financial relationships, coordination of product and operation plans, joint
research and development activities and shared intellectual property rights. See
"Relationship with Anam Industrial Co., Ltd." and "Reorganization."

The Company has entered into indemnification agreements with its officers
and directors containing provisions which may require the Company, among other
things, to indemnify the officers and directors against certain liabilities that
may arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature), and to
advance to them expenses incurred as a result of any proceeding against them as
to which they could be indemnified.

In connection with the Reorganization, the Company proposes to enter into
tax indemnification agreements with Mr. and Mrs. Kim and the Kim Family Trusts
pursuant to which the Company will be indemnified by such stockholders with
respect to their proportionate share of any U.S. federal or state corporate
income taxes attributable to the failure of AEI to qualify as an S Corporation
for any period or in any jurisdiction for which S Corporation status was claimed
through the Termination Date. The tax indemnification agreements will also
provide that the Company will indemnify Mr. and Mrs. Kim and the Kim Family
Trusts if such stockholders are required to pay additional taxes or other
amounts attributable to taxable years on or before the Termination Date as to
which AEI filed or files tax returns claiming status as an S Corporation. AEI
has made various distributions to such stockholders which have enabled them to
pay their income taxes on their allocable portions of the income of AEI. Such
distributions totaled approximately $13.0 million and $5.0 million in 1996 and
1997, respectively. The Company expects to make additional distributions to such
stockholders prior to the consummation of the Reorganization, which
distributions will represent AEI's cumulative net income in all periods prior to
the Termination Date less the aggregate amount of distributions previously made
to such stockholders. These final distributions are intended to provide such
stockholders with the balance of AEI's net income for which they have already
recognized income taxes. Through December 31, 1997, the amount of such
undistributed net earnings was $27.7 million. See "Reorganization" and Notes 1,
10 and 17 of Notes to Combined Financial Statements.

In February 1998 the Company sold its investment in AICL common stock to AK
Investments, Inc. ("AK Investments"), a company owned by Mr. Kim, for $13.9
million, the market value determined by the closing price of AICL shares on the
Korea Stock Exchange on the date of the sale. In exchange for such

69
72

shares, AK Investments assumed $13.9 million of the Company's long-term
borrowing from AUSA. See Note 6 of Notes to Combined Financial Statements.

Mr. Kim has executed certain guarantees to lenders in connection with
certain debt instruments of the Amkor Companies that remain outstanding. The
total contingent liability under such guarantees equalled approximately $87.0
million as of December 31, 1997. See Note 11 of Notes to Combined Financial
Statements.

The Company and Mr. Kim currently are parties to a loan agreement under
which Mr. Kim may borrow funds from the Company, subject to the Company's
consent. Mr. Kim has recognized compensation in 1996 and 1997 in the amount of
$101,716 and $3,000, respectively of imputed interest for loans under this
agreement. Since the beginning of the 1996 fiscal year, the maximum amount
outstanding under such agreement has been $6.5 million. All amounts due from Mr.
Kim have been repaid in full subsequent to December 31, 1997.

In 1996, Mr. Kim sold his interest in Amkor Anam Test Services, Inc.,
representing half of its outstanding capital stock, to AEI for $910,350. See
Note 14 of Notes to Combined Financial Statements.

AK Investments purchased certain securities held by AEI for $49.7 million,
which consideration was paid by assuming from AEI certain non-current payables
from AUSA. Subsequent to the sale of investments to AK Investments, AEI loaned
AK Investments an additional $12.8 million. The amount outstanding on this loan
as of December 31, 1997 was $4.4 million. See Notes 6 and 11 of Notes to
Combined Financial Statements. AK Investments repaid such amount in full during
March 1998.

In 1996, the Kim Family Trusts borrowed $5.3 million at market interest
rates from AEI to purchase the real estate and develop the facilities that
comprise the Company's Chandler, Arizona plant and offices. In 1997, the Kim
Family Trusts, after making improvements, sold the real estate and facilities
back to AEI for $5.7 million which was used to repay the original loan from AEI.
See Note 11 of Notes to Combined Financial Statements.

Members of the Kim family own all the outstanding shares of Forte Systems,
Inc. ("Forte"). The Company and Forte currently are parties to a loan agreement
under which Forte may borrow funds at market interest rates from the Company,
subject to the Company's consent. Since the beginning of the 1996 fiscal year,
the maximum amount outstanding under such agreement has been $3.8 million. See
Note 11 of Notes to Combined Financial Statements.

Members of the Kim family own all the outstanding shares of The Electronics
Boutique, Inc. (the "Electronics Boutique"). The Company and the Electronics
Boutique currently are parties to a loan agreement under which the Electronics
Boutique may borrow funds at market rates from the Company, subject to the
Company's consent. Since the beginning of the 1996 fiscal year, the maximum
amount outstanding under such agreement in the ordinary course of business of
the Electronics Boutique's business has been $3.0 million. In addition, in 1996,
the Electronics Boutique borrowed $50 million from AEI in connection with a
contemplated acquisition. However, this acquisition was abandoned by the
Electronics Boutique and the $50 million was repaid to AEI within eleven working
days of the date it was borrowed. Finally, the Company has guaranteed certain
vendor obligations and a line of credit of the Electronics Boutique, which total
approximately $24.7 million and $14.3 million, respectively as of December 31,
1997. See Note 11 of Notes to Combined Financial Statements.

In addition, in each of the last three years, various Electronics Boutique
expenses were paid by the Company on behalf of Electronics Boutique and various
Company expenses were paid by Electronics Boutique on behalf of the Company.
These expenses include insurance premiums, employee medical claims, interest,
rent and other miscellaneous expenses. In 1995, 1996 and 1997, the Company made
net advancements on behalf of Electronics Boutique of $604,000, $128,000 and
$147,000. In 1997, Electronics Boutique repaid to the Company $2.4 million of
current and prior year advancements.

The Company has executed a surety and guarantee agreement on behalf of
Electronics Boutique. The Company has unconditionally guaranteed Electronics
Boutique's obligation under a $17 million line of credit

70
73

and a $9 million term loan note. As of December 31, 1997, there was $750,000
outstanding under the line of credit and $9 million outstanding under the term
loan note. The Company has also unconditionally guaranteed obligations of EB
Canada, a subsidiary of Electronics Boutique, under a $4 million term loan
agreement and a $1 million line of credit. As of December 31, 1997, there was
$3.8 million outstanding under the term loan and no amounts outstanding under
the line of credit.

The Company leases office space in West Chester, Pennsylvania from the Kim
Family Trusts. The lease expires in 2006. The Company has the option to extend
the lease for an additional 10 years. The monthly rent pursuant to such lease is
$92,000. The Company sub-leases a portion of this office space to Forte for
which the monthly rent is $43,000. See Note 11 of Notes to Combined Financial
Statements.

At December 31, 1996 and 1997, the Company had advances and notes
receivable from affiliates other than AICL and AUSA of $23.0 million and $36.5
million, respectively. See Note 11 of Notes to Combined Financial Statements.

71
74

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock outstanding as of the date of this Prospectus, and
as adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) each person or entity who is known by the Company to own beneficially 5% or
more of the outstanding Common Stock; (ii) each director of the Company; (iii)
each of the Named Executive Officers; and (iv) all directors and executive
officers of the Company as a group.

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING NUMBER OF AFTER OFFERING(1)
-------------------- SHARES --------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT
---------------- ---------- ------- --------- ---------- -------

James J. and Agnes C. Kim(2)(3).............. 29,075,000 35.2% 3,500,000 25,575,000 22.7%
1345 Enterprise Drive
West Chester, PA 19380
David D. Kim Trust of December 31,
1987(3)(4)................................. 13,750,000 16.6 500,000 13,250,000 11.8
1500 E. Lancaster Avenue
Paoli, PA 19301
John T. Kim Trust of December 31,
1987(3)(4)................................. 13,750,000 16.6 500,000 13,250,000 11.8
1500 E. Lancaster Avenue
Paoli, PA 19301
Susan Y. Kim Trust of December 31,
1987(3)(4)(5).............................. 13,750,000 16.6 500,000 13,250,000 11.8
1500 E. Lancaster Avenue
Paoli, PA 19301
Thomas D. George............................. -- -- -- -- --
Gregory K. Hinckley.......................... -- -- -- -- --
John N. Boruch............................... -- -- -- -- --
Eric R. Larson............................... -- -- -- -- --
Frank J. Marcucci............................ -- -- -- -- --
Michael D. O'Brien........................... -- -- -- -- --
All directors and executive officers as a
group (7 persons).......................... 29,075,000 35.2 3,500,000 25,575,000 22.7

- ---------------
(1) Assumes no exercise of the Underwriters' over-allotment options. The number
and percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule, beneficial
ownership includes any share as to which the individual or entity has voting
power or investment power. Unless otherwise indicated, each person or entity
has sole voting and investment power with respect to shares shown as
beneficially owned.

(2) James J. and Agnes C. Kim are husband and wife. Accordingly, each may be
deemed to beneficially own shares of Common Stock held in the name of the
other.

(3) David D. Kim, John T. Kim and Susan Y. Kim are children of James J. and
Agnes C. Kim. Each of the David D. Kim Trust of December 31, 1987, John T.
Kim Trust of December 31, 1987 and Susan Y. Kim Trust of December 31, 1987
has in common Susan Y. Kim and John F.A. Earley as co-trustees, in addition
to a third trustee (John T. Kim in the case of the Susan Y. Kim Trust and
the John T. Kim Trust and David D. Kim in the case of the David D. Kim
Trust) (the trustees of each trust may be deemed to be the beneficial owners
of the shares held by such trust). In addition, the trust agreement for each
of these trusts encourages the trustees of the trusts to vote the shares of
Common Stock held by them, in their discretion, in concert with James Kim's
family. Accordingly, the trusts, together with their respective trustees and
James J. and Agnes C. Kim, may be considered a "group" under Section 13(d)
of the Exchange Act. This group may be deemed to have beneficial ownership
of 65,325,000 shares or 58.0% of the outstanding shares of Common Stock
after the Offerings.

(4) These three trusts together with the trusts described in note (5) below
comprise the Kim Family Trusts.

(5) Includes 8,200,000 shares held by a trust established for the benefit of
Susan Y. Kim's children.

72
75

DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the closing of the Offerings, the Company will be authorized to issue
500,000,000 shares of Common Stock, $.001 par value, and 10,000,000 shares of
Preferred Stock, $.001 par value. Immediately after the closing of the Offerings
and assuming no exercise of the Underwriters' over-allotment options, the
Company estimates there will be an aggregate of 112,610,000 shares of Common
Stock outstanding, 2,730,000 shares of Common Stock will be issuable upon
exercise of outstanding options, 3,570,000 shares of Common Stock will be
reserved for issuance under the Company's 1998 Stock Plan, 1998 Director Option
Plan and 1998 Employee Stock Purchase Plan and shares of Common Stock
will be reserved for issuance upon conversion of the Convertible Notes.

The following description of the Company's capital stock does not purport
to be complete and is subject to and qualified in its entirety by the
Certificate of Incorporation and the Bylaws, which are included as exhibits to
the Registration Statement of which this Prospectus forms a part, and by the
provisions of applicable Delaware law.

The Certificate of Incorporation and the Bylaws contain certain provisions
that are intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and which may have the effect of delaying,
deferring, or preventing a future takeover or change in control of the Company
unless such takeover or change in control is approved by the Board of Directors.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Holders of Common Stock do not have
cumulative voting rights, and, therefore, holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors. See "Risk Factors -- Benefits of the Offerings to Existing
Stockholders; Continued Control by Existing Stockholders."

Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between the Company and its debtholders. The Company has never declared or paid
cash dividends on its capital stock, expects to retain future earnings, if any,
for use in the operation and expansion of its business, and does not anticipate
paying any cash dividends in the foreseeable future. See "Dividend Policy." In
the event of the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets legally
available for distribution after payment of all debts and other liabilities and
subject to the prior rights of any holders of Preferred Stock then outstanding.

PREFERRED STOCK

The Company's Board of Directors is authorized to issue 10,000,000 shares
of Preferred Stock in one or more series and to fix the price, rights,
preferences, privileges and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences and the number of shares constituting
a series or the designation of such series, without any further vote or action
by the Company's stockholders. The issuance of Preferred Stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of delaying, deferring or making more
difficult a change in control of the Company and may adversely affect the market
price of, and the voting and other rights of, the holders of Common Stock. The
issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others. The Company has no current plans to issue any
additional shares of Preferred Stock. See "Risk Factors -- Anti-Takeover Effects
of Delaware Law and Certain Charter Provisions."

73
76

EFFECT OF DELAWARE ANTI-TAKEOVER STATUTE

The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Anti-Takeover Law"), which regulates corporate acquisitions. The
Anti-Takeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Anti-Takeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested shareholder and the sale of more than 10% of the
Company's assets. In general, the Anti-Takeover Law defines an "interested
stockholder" as any entity or person beneficially owning 15% or more the
outstanding voting stock of the Company and any entity or person affiliated with
or controlling or controlled by such entity or person. A Delaware corporation
may "opt out" of the Anti-Takeover Law with an express provision in its original
certificate of incorporation or an express provision in its certificate of
incorporation or bylaws resulting from amendments approved by the holders of at
least a majority of the Company's outstanding voting shares. The Company has not
"opted out" of the provisions of the Anti-Takeover Law. See "Risk
Factors -- Anti-Takeover Effects of Delaware Law and Certain Charter
Provisions."

TRANSFER AGENT

The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York Shareholder Services, 525 Washington Boulevard, Jersey
City, NJ 07310; telephone (201) 324-0014.

74
77

DESCRIPTION OF CONVERTIBLE NOTES

The Convertible Notes will be issued under an indenture to be dated as of
, 1998 (the "Indenture") between the Company and State Street Bank
and Trust Company, as trustee (the "Trustee"), a copy of which has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The terms of the Convertible Notes will include those stated in the Indenture
and those made a part of the Indenture by reference to the Trust Indenture Act
of 1939, as amended (the "TIA"), as in effect on the date of the Indenture. The
Convertible Notes will be subject to all such terms, and holders of the
Convertible Notes are referred to the Indenture and the TIA for a statement of
such terms. The following is a summary of important terms of the Convertible
Notes and does not purport to be complete. Reference should be made to all
provisions of the Indenture, including the definitions therein of certain terms
and all terms made a part of the Indenture by reference to the TIA. Certain
definitions of terms used in the following summary are set forth under
"-- Certain Definitions" below. As used in this section, the "Company" means
Amkor Technology, Inc., but not any of its Subsidiaries, unless the context
requires otherwise.

GENERAL

The Convertible Notes will be general unsecured subordinated obligations of
the Company, will mature on , 2003 (the "Maturity Date"), and will
be limited to an aggregate principal amount of $150,000,000 ($172,500,000 if the
Underwriters' over-allotment option is exercised). The Convertible Notes will be
issued in denominations of $1,000 and integral multiples of $1,000 in fully
registered form. The Convertible Notes are exchangeable and transfers thereof
will be registrable without charge therefor, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge in connection
therewith.

The Convertible Notes will accrue interest at a rate of % per annum
from , 1998, or from the most recent interest payment date to which
interest has been paid or duly provided for, and accrued and unpaid interest
will be payable semi-annually in arrears on and of each year
beginning , 1998. Interest will be paid to the person in whose name
a Convertible Note is registered at the close of business on the or
immediately preceding the relevant interest payment date (other than
with respect to a Convertible Note or portion thereof called for redemption on a
redemption date, or repurchased in connection with a Designated Event on a
repurchase date, during the period from a record date to (but excluding) the
next succeeding interest payment date (in which case accrued interest shall be
payable (unless such Convertible Note of portion thereof is converted) to the
holder of the Convertible Note or portion thereof redeemed or repurchased)).
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.

Principal of, premium, if any, and interest on the Convertible Notes will
be payable at the office or agency of the Company maintained for such purpose
or, at the option of the Company, payment of interest may be made by check
mailed to the holders of the Convertible Notes at their respective addresses set
forth in the register of holders of Convertible Notes. Until otherwise
designated by the Company, the Company's office or agency maintained for such
purpose will be the principal corporate trust office of the Trustee.

CONVERSION

The holders of Convertible Notes will be entitled at any time on or before
the close of business on the last trading day prior to the Maturity Date of the
Convertible Notes, subject to prior redemption or repurchase, to convert any
Convertible Notes or portions thereof (in denominations of $1,000 or multiples
thereof) into Common Stock of the Company, at the conversion price of
$ per share of Common Stock, subject to adjustment as described below
(the "Conversion Price"). Except as described below, no adjustment will be made
on conversion of any Convertible Notes for interest accrued thereon or for
dividends on any Common Stock issued. If Convertible Notes not called for
redemption are converted after a record date for the payment of interest and
prior to the next succeeding interest payment date, such Convertible Notes must
be accompanied by funds equal to the interest payable on such succeeding
interest payment date on the principal amount so converted. The Company is not
required to issue fractional shares of Common Stock upon

75
78

conversion of Convertible Notes and, in lieu thereof, will pay a cash adjustment
based upon the market price of the Common Stock on the last trading day prior to
the date of conversion. In the case of Convertible Notes called for redemption,
conversion rights will expire at the close of business on the trading day
preceding the date fixed for redemption, unless the Company defaults in payment
of the redemption price, in which case the conversion right will terminate at
the close of business on the date such default is cured. In the event any holder
exercises its right to require the Company to repurchase Notes upon a Designated
Event, such holder's conversion right will terminate on the close of business on
the Designated Event Offer Termination Date (as defined) unless the Company
defaults in the payment due upon repurchase or the holder elects to withdraw the
submission of election to repurchase. See "-- Repurchase at Option of Holders
Upon a Designated Event."

The right of conversion attaching to any Convertible Note may be exercised
by the holder by delivering the Convertible Note at the specified office of a
conversion agent, accompanied by a duly signed and completed notice of
conversion, together with any funds that may be required as described in the
preceding paragraph. Such notice of conversion can be obtained from the Trustee.
Beneficial owners of interests in a Global Note (as defined) may exercise their
right of conversion by delivering to The Depository Trust Company ("DTC") the
appropriate instruction form for conversion pursuant to DTC's conversion
program. The conversion date shall be the date on which the Convertible Note,
the duly signed and completed notice of conversion, and any funds that may be
required as described in the preceding paragraph shall have been so delivered. A
holder delivering a Convertible Note for conversion will not be required to pay
any taxes or duties payable in respect of the issue or delivery of Common Stock
on conversion, but will be required to pay any tax or duty which may be payable
in respect of any transfer involved in the issue or delivery of the Common Stock
in a name other than the holder of the Convertible Note. Certificates
representing shares of Common Stock will not be issued or delivered unless all
taxes and duties, if any, payable by the holder have been paid.

The Conversion Price is subject to adjustment (under formulae set forth in
the Indenture) in certain events, including: (i) the issuance of Common Stock as
a dividend or distribution on Common Stock; (ii) certain subdivisions and
combinations of the Common Stock; (iii) the issuance to all or substantially all
holders of Common Stock of certain rights or warrants to purchase Common Stock
at a price per share less than the Current Market Price (as defined); (iv) the
dividend or other distribution to all holders of Common Stock of shares of
capital stock of the Company (other than Common Stock) or evidences of
indebtedness of the Company or assets (including securities, but excluding those
rights, warrants, dividends and distributions referred to above or paid
exclusively in cash); (v) dividends or other distributions consisting
exclusively of cash (excluding any cash portion of distributions referred to in
clause (iv)) to all holders of Common Stock to the extent such distributions,
combined together with (A) all such all-cash distributions made within the
preceding 12 months in respect of which no adjustment has been made plus (B) any
cash and the fair market value of other consideration payable in respect of any
tender offers by the Company or any of its Subsidiaries for Common Stock
concluded within the preceding 12 months in respect of which no adjustment has
been made, exceeds 15% of the Company's market capitalization (being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date for such distribution; and
(vi) the purchase of Common Stock pursuant to a tender offer made by the Company
or any of its subsidiaries to the extent that the aggregate consideration,
together with (X) any cash and the fair market value of any other consideration
payable in any other tender offer expiring within 12 months preceding such
tender offer in respect of which no adjustment has been made plus (Y) the
aggregate amount of any such all-cash distributions referred to in clause (v)
above to all holders of Common Stock within the 12 months preceding the
expiration of such tender offer in respect of which no adjustments have been
made, exceeds 15% of the Company's market capitalization on the expiration of
such tender offer.

In the case of (i) any reclassification or change of the Common Stock or
(ii) a consolidation, merger or combination involving the Company or a sale or
conveyance to another corporation of the property and assets of the Company as
an entirety or substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, other securities,
other property or assets (including cash) with respect to or in exchange for
such Common Stock, the holders of the Convertible Notes then outstanding will be
entitled thereafter to convert such Convertible Notes into the kind and amount
of shares of stock, other

76
79

securities or other property or assets, which they would have owned or been
entitled to receive upon such reclassification, change, consolidation, merger,
combination, sale or conveyance had such Convertible Notes been converted into
Common Stock immediately prior to such reclassification, change, consolidation,
merger, combination, sale or conveyance (assuming, in a case in which the
Company's stockholders may exercise rights of election, that a holder of
Convertible Notes would not have exercised any rights of election as to the
stock, other securities or other property or assets receivable in connection
therewith and received per share the kind and amount received per share by a
plurality of non-electing shares). Certain of the foregoing events may also
constitute or result in a Designated Event requiring the Company to offer to
repurchase the Convertible Notes. See "-- Repurchase at Option of Holders Upon a
Designated Event."

In the event of a taxable distribution to holders of Common Stock (or other
transaction) that results in any adjustment of the Conversion Price, the holders
of Convertible Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States income tax as a dividend; in certain other
circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain Federal Income Tax
Consequences to Holders of Common Stock and Convertible Notes."

The Company from time to time may, to the extent permitted by law, reduce
the Conversion Price of the Convertible Notes by any amount for any period of at
least 20 days, in which case the Company shall give at least 15 days' notice of
such decrease, if the Board of Directors has made a determination that such
decrease would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in the
Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes. See
"Certain Federal Income Tax Consequences to Holders of Common Stock and
Convertible Notes."

No adjustment in the Conversion Price will be required unless such
adjustment would require a change of at least 1% of the Conversion Price then in
effect; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the Conversion Price will not be adjusted for the
issuance of Common Stock or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing.

SUBORDINATION

The payment of principal of, premium, if any, and interest on the
Convertible Notes will be subordinated in right of payment, as set forth in the
Indenture, to the prior payment in full in cash or other payment satisfactory to
the Senior Debt of all Senior Debt, whether outstanding on the date of the
Indenture or thereafter incurred. Upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshaling of the Company's assets and liabilities, the holders of Senior Debt
will be entitled to receive payment in full in cash or other payment
satisfactory to the Senior Debt of all Senior Debt of all obligations in respect
of such Senior Debt before the holders of Convertible Notes will be entitled to
receive any payment with respect to the Convertible Notes.

In the event of any acceleration of the Convertible Notes because of an
Event of Default, the holders of any Senior Debt then outstanding will be
entitled to payment in full in cash or other payment satisfactory to the holders
of such Senior Debt of all obligations in respect of such Senior Debt before the
holders of the Convertible Notes are entitled to receive any payment or
distribution in respect thereof. If payment of the Convertible Notes is
accelerated because of an Event of Default, the Company or the Trustee shall
promptly notify the holders of Senior Debt or the trustee(s) for such Senior
Debt of the acceleration. The Company may not pay the Convertible Notes until
five business days after such holders or trustee(s) of Senior Debt receive
notice of such acceleration and, thereafter, may pay the Convertible Notes only
if the subordination provisions of the Indenture otherwise permit payment at
that time.

77
80

The Company also may not make any payment upon or in respect of the
Convertible Notes if (i) a default in the payment of the principal of, premium,
if any, interest, rent or other obligations in respect of Senior Debt occurs and
is continuing beyond any applicable period of grace or (ii) a default, other
than a payment default, occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt as to which such
default relates to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or other person
permitted to give such notice under the Indenture. Payments on the Convertible
Notes may and shall be resumed (a) in the case of a payment default, upon the
date on which such default is cured or waived or ceases to exist and (b) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or ceases to exist or 179 days after the date on
which the applicable Payment Blockage Notice is received if the maturity of the
Senior Debt has not been accelerated. No new period of payment blockage may be
commenced unless and until 365 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.

By reason of the subordination provisions described above, in the event of
the Company's liquidation or insolvency, holders of Senior Debt may receive
more, ratably, and holders of the Convertible Notes may receive less, ratably,
than the other creditors of the Company. Such subordination will not prevent the
occurrences of any Event of Default under the Indenture.

The Convertible Notes are obligations exclusively of the Company. However,
since the operations of the Company are primarily conducted through
Subsidiaries, the cash flow and the consequent ability of the Company to service
its debt, including the Convertible Notes, are primarily dependent upon the
earnings of its Subsidiaries and the distribution of those earnings to, or upon
loans or other payments of funds by those Subsidiaries to, the Company. The
payment of dividends and the making of loans and advances to the Company by its
Subsidiaries may be subject to statutory or contractual restrictions, are
dependent upon the earnings of those Subsidiaries and are subject to various
business considerations.

Any right of the Company to receive assets of any of its Subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the Convertible Notes to participate in those assets) will be effectively
subordinated to the claims of that Subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such Subsidiary, in which case the claims of the Company would still
be subordinate to any security interests in the assets of such Subsidiary and
any indebtedness of such Subsidiary senior to that held by the Company.

As of December 31, 1997 (after giving effect to the Reorganization), the
Company had approximately $32 million of outstanding indebtedness that would
have constituted Senior Debt, and the indebtedness and other liabilities of the
Company's subsidiaries (excluding intercompany liabilities and obligations of a
type not required to be reflected on the balance sheet of such subsidiary in
accordance with GAAP) that would effectively have been senior to the Convertible
Notes were approximately $642 million. After giving effect to planned debt
repayments by the Company prior to the Offerings and the application of the
estimated net proceeds to the Company of the Offerings (assuming an initial
public offering price of $11.00 per share of Common Stock), such amounts will be
approximately $32 million and $217 million, respectively. The Indenture will not
limit the amount of additional indebtedness, including Senior Debt, that the
Company can create, incur, assume or guarantee, nor will the Indenture limit the
amount of indebtedness and other liabilities that any Subsidiary can create,
incur, assume or guarantee.

In the event that, notwithstanding the foregoing, the Trustee or any holder
of Convertible Notes receives any payment or distribution of assets of the
Company of any kind in contravention of any of the terms of the Indenture,
whether in cash, property or securities, including, without limitation by way of
set-off or otherwise, in respect of the Convertible Notes before all Senior Debt
is paid in full in cash or other payment satisfactory to the holders of Senior
Debt, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Debt, and will be immediately paid over or
delivered to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full in cash or other

78
81

payment satisfactory to such holders of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to or for the holders of Senior Debt.

OPTIONAL REDEMPTION

The Convertible Notes may not be redeemed by the Company prior to
, 2001. The Convertible Notes may be redeemed at the option of the
Company, in whole or from time to time in part, on not less than 15 nor more
than 60 days' prior written notice to the holders thereof by first class mail,
at the following redemption prices (expressed as percentages of principal
amount) if redeemed during the 12-month period beginning of each year
indicated ( with respect to 2001), plus accrued and unpaid interest to
the date fixed for redemption, if the closing price of the Common Stock on the
principal stock exchange or market on which the Common Stock is then quoted or
admitted to trading equals or exceeds 125% of the Conversion Price for at least
20 trading days within a period of 30 consecutive trading days ending on the
fifth trading day prior to the date the notice of redemption is first mailed to
the holders of the Convertible Notes:

REDEMPTION
YEAR PRICE
---- ----------

2001............................................
2002............................................

If less than all the Convertible Notes are to be redeemed at any time,
selection of Convertible Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Convertible Notes are listed or, if the Convertible Notes
are not so listed, on a pro rata basis by lot or by any other method that the
Trustee considers fair and appropriate. The Trustee may select for redemption a
portion of the principal of any Convertible Note that has a denomination larger
than $1,000. Convertible Notes and portions thereof will be redeemed in the
amount of $1,000 or integral multiples of $1,000. The Trustee will make the
selection from Convertible Notes outstanding and not previously called for
redemption; provided that if a portion of a holder's Convertible Notes are
selected for partial redemption and such holder converts a portion of such
Convertible Notes, such converted portion shall be deemed to be taken from the
portion selected for redemption.

Provisions of the Indenture that apply to the Convertible Notes called for
redemption also apply to portions of the Convertible Notes called for
redemption. If any Convertible Note is to be redeemed in part, the notice of
redemption will state the portion of the principal amount to be redeemed. Upon
surrender of a Convertible Note that is redeemed in part only, the Company will
execute and the Trustee will authenticate and deliver to the holder a new
Convertible Note equal in principal amount to the unredeemed portion of the
Convertible Note surrendered.

On and after the redemption date, unless the Company shall default in the
payment of the redemption price, interest will cease to accrue on the principal
amount of the Convertible Notes or portions thereof called for redemption and
for which funds have been set apart for payment. In the case of Convertible
Notes or portions thereof redeemed on a redemption date which is also a
regularly scheduled interest payment date, the interest payment due on such date
shall be paid to the person in whose name the Note is registered at the close of
business on the relevant record date.

The Convertible Notes are not entitled to any sinking fund.

REPURCHASE AT OPTION OF HOLDERS UPON A DESIGNATED EVENT

Upon the occurrence of a Designated Event, each holder of Convertible Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such holder's Convertible Notes
pursuant to the offer described below (the "Designated Event Offer") at an offer
price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon to the date of purchase (the "Designated
Event Payment"). Within 20 days following any Designated Event, the Company will
mail a notice to each holder describing the transaction or transactions that
constitute the

79
82

Designated Event and offering to repurchase Convertible Notes pursuant to the
procedures required by the Indenture and described in such notice.

The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Convertible Notes as a result of a Designated Event. Rule
13e-4 under the Exchange Act requires, among other things, the dissemination of
certain information to security holders in the event of an issuer tender offer
and may apply in the event that the repurchase option becomes available to
holders of the Convertible Notes. The Company will comply with this rule to the
extent applicable at that time.

On the date specified for termination of the Designated Event Offer, the
Company will, to the extent lawful, (1) accept for payment all Convertible Notes
or portions thereof properly tendered pursuant to the Designated Event Offer,
(2) deposit with the paying agent an amount equal to the Designated Event
Payment in respect of all Convertible Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Convertible Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Convertible Notes or portions thereof being purchased by the Company.
On the date specified for payment of the Designated Event Payment (the
"Designated Event Payment Date"), the paying agent will promptly mail to each
holder of Convertible Notes so accepted the Designated Event Payment for such
Convertible Notes, and the Trustee will promptly authenticate and mail (or cause
to be transferred by book entry) to each holder a new Convertible Note equal in
principal amount to any unpurchased portion of the Convertible Notes
surrendered, if any; provided that each such new Convertible Note will be in a
principal amount of $1,000 or an integral multiple thereof.

The foregoing provisions would not necessarily afford holders of the
Convertible Notes protection in the event of highly leveraged or other
transactions involving the Company that may adversely affect holders.

The right to require the Company to repurchase Convertible Notes as a
result of a Designated Event could have the effect of delaying, deferring or
preventing a Change of Control or other attempts to acquire control of the
Company unless arrangements have been made to enable the Company to repurchase
all the Convertible Notes at the Designated Event Payment Date. Consequently,
this right may render more difficult or discourage a merger, consolidation or
tender offer (even if such transaction is supported by the Company's Board of
Directors or is favorable to the stockholders), the assumption of control by a
holder of a large block of the Company's shares and the removal of incumbent
management.

Except as described above with respect to a Designated Event, the Indenture
does not contain provisions that permit the holders of the Convertible Notes to
require that the Company repurchase or redeem the Convertible Notes in the event
of a takeover, recapitalization or similar restructuring. Subject to the
limitation on mergers and consolidations described below, the Company, its
management or its Subsidiaries could in the future enter into certain
transactions, including refinancings, certain recapitalizations, acquisitions,
the sale of all or substantially all of its assets, the liquidation of the
Company or similar transactions, that would not constitute a Designated Event
under the Indenture, but that would increase the amount of Senior Debt (or any
other indebtedness) outstanding at such time or substantially reduce or
eliminate the Company's assets.

The terms of the Company's existing or future credit or other agreements
relating to indebtedness (including Senior Debt) may prohibit the Company from
purchasing any Convertible Notes and may also provide that a Designated Event,
as well as certain other change-of-control events with respect to the Company,
would constitute an event of default thereunder. In the event a Designated Event
occurs at a time when the Company is prohibited from purchasing Convertible
Notes, the Company could seek the consent of its then-existing lenders to the
purchase of Convertible Notes or could attempt to refinance the borrowings that
contain such prohibition. If the Company does not obtain such a consent or repay
such borrowings, the Company would remain prohibited from purchasing Convertible
Notes. In such case, the Company's failure to purchase tendered Convertible
Notes would constitute an Event of Default under the Indenture, which may, in
turn, constitute a further default under the terms of other indebtedness that
the Company has entered into or may enter into from time to time. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the holders of Convertible Notes.
80
83

A "Designated Event" will be deemed to have occurred upon a Change of
Control or a Termination of Trading.

A "Change of Control" will be deemed to have occurred when: (i) any person
has become an Acquiring Person, (ii) the Company consolidates with or merges
into any other corporation, or conveys, transfers, or leases all or
substantially all of its assets to any person, or any other corporation merges
into the Company, and, in the case of any such transaction, the outstanding
Common Stock of the Company is changed or exchanged as a result, unless the
stockholders of the Company immediately before such transaction own, directly or
indirectly immediately following such transaction, at least a majority of the
combined voting power of the outstanding voting securities of the corporation
resulting from such transaction in substantially the same proportion as their
ownership of the Voting Stock immediately before such transaction, or (iii) any
time the Continuing Directors do not constitute a majority of the Board of
Directors of the Company (or, if applicable, a successor corporation to the
Company); provided that a Change of Control shall not be deemed to have occurred
if either (x) the last sale price of the Common Stock for any five trading days
during the ten trading days immediately preceding the Change of Control is at
least equal to 105% of the Conversion Price in effect on the date of such Change
of Control or (y) at least 90% of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions constituting the Change of
Control consists of shares of common stock that are, or upon issuance will be,
traded on a United States national securities exchange or approved for trading
on an established automated over-the-counter trading market in the United
States.

The definition of Change of Control includes a phrase relating to the
lease, transfer or conveyance of "all or substantially all" of the assets of the
Company. Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a holder of Convertible Notes
to require the Company to repurchase such Convertible Notes as a result of a
lease, transfer or conveyance of less than all of the assets of the Company to
another person or group may be uncertain.

"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

A "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Notes are then
convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on an established automated
over-the-counter trading market in the United States.

MERGER AND CONSOLIDATION

The Indenture will provide that the Company may not, in a single
transaction or a series of related transactions, consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another
corporation, person or entity as an entirety or substantially as an entirety
unless either (a)(i) the Company shall be the surviving or continuing
corporation or (ii) the entity or person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or person
which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company substantially as an
entirety (x) is a corporation organized and validly existing under the laws of
the United States, any State thereof or the District of Columbia and (y) assumes
the due and punctual payment of the principal of, and premium, if any, and
interest on all the Convertible Notes and the performance of every covenant of
the Company under the Convertible Notes and the Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (b)
immediately after such transaction no Default or Event of Default exists; and
(c) the Company or such person shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such transaction and
the supplemental indenture comply with the Indenture and that all conditions
precedent in the Indenture relating to such transaction have been satisfied.

81
84

For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company, the capital stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.

Upon any such consolidation, merger, sale, assignment, conveyance, lease,
transfer or other disposition in accordance with the foregoing, the successor
person formed by such consolidation or into which the Company is merged or to
which such sale, assignment, conveyance, lease, transfer or other disposition is
made will succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture with the same effect as if such
successor had been named as the Company therein, and thereafter (except in the
case of a sale, assignment, transfer, lease, conveyance or other disposition)
the predecessor corporation will be relieved of all further obligations and
covenants under the Indenture and the Convertible Notes.

EVENTS OF DEFAULT AND REMEDIES

An Event of Default is defined in the Indenture as being (i) default in
payment of the principal of, or premium, if any, on the Convertible Notes,
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (ii) default for 30 days in payment of any installment of interest on
the Convertible Notes, whether or not such payment is prohibited by the
subordination provisions of the Indenture; (iii) default by the Company for 60
days after notice in the observance or performance of any other covenants in the
Indenture; (iv) default in the payment of the Designated Event Payment in
respect of the Convertible Notes on the date therefor, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (v)
failure to provide timely notice of a Designated Event; (vi) failure of the
Company or any Material Subsidiary to make any payment at maturity, including
any applicable grace period, in respect of indebtedness for borrowed money of,
or guaranteed or assumed by, the Company or any Material Subsidiary, which
payment is in an amount in excess of $20,000,000, and continuance of such
failure for 30 days after notice; (vii) default by the Company or any Material
Subsidiary with respect to any such indebtedness, which default results in the
acceleration of any such indebtedness of an amount in excess of $20,000,000
without such indebtedness having been paid or discharged or such acceleration
having been cured, waived, rescinded or annulled for 30 days after notice; or
(viii) certain events involving bankruptcy, insolvency or reorganization of the
Company or any Material Subsidiary.

If an Event of Default (other than an Event of Default specified in clause
(viii) above with respect to the Company) occurs and is continuing, then and in
every such case the Trustee, by written notice to the Company, or the holders of
not less than 25% in aggregate principal amount of the then outstanding
Convertible Notes, by written notice to the Company and the Trustee, may declare
the unpaid principal of, premium, if any, and accrued and unpaid interest on all
the Convertible Notes then outstanding to be due and payable. Upon such
declaration, such principal amount, premium, if any, and accrued and unpaid
interest will become immediately due and payable, notwithstanding anything
contained in the Indenture or the Convertible Notes to the contrary, but subject
to the provisions limiting payment described in "-- Subordination." If any Event
of Default specified in clause (viii) above occurs with respect to the Company,
all unpaid principal of, and premium, if any, and accrued and unpaid interest on
the Convertible Notes then outstanding will automatically become due and
payable, subject to the provisions described in "-- Subordination," without any
declaration or other act on the part of the Trustee or any holder of Convertible
Notes.

Holders of the Convertible Notes may not enforce the Indenture or the
Convertible Notes except as provided in the Indenture. Subject to the provisions
of the Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders, unless such holders have
offered to the Trustee a security or an indemnity satisfactory to it against any
cost, expense or liability. Subject to all provisions of the Indenture and
applicable law, the holders of a majority in aggregate principal amount of the
then outstanding Convertible Notes have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. If a Default or Event of
Default occurs and
82
85

is continuing and is known to the Trustee, the Indenture requires the Trustee to
mail a notice of Default or Event of Default to each holder within 60 days of
the occurrence of such Default or Event of Default, provided, however, that the
Trustee may withhold from the holders notice of any continuing Default or Event
of Default (except a Default or Event of Default in the payment of principal of,
premium, if any or interest on the Convertible Notes) if it determines in good
faith that withholding notice is in their interest. The holders of a majority in
aggregate principal amount of the Convertible Notes then outstanding by notice
to the Trustee may rescind any acceleration of the Convertible Notes and its
consequences if all existing Events of Default (other than the nonpayment of
principal of, premium, if any, and interest on the Convertible Notes that has
become due solely by virtue of such acceleration) have been cured or waived and
if the rescission would not conflict with any judgment or decree of any court of
competent jurisdiction. No such rescission shall affect any subsequent Default
or Event of Default or impair any right consequent thereto.

In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Convertible Notes pursuant
to the optional redemption provisions of the Indenture, an equivalent premium
shall also become and be immediately due and payable to the extent permitted by
law upon the acceleration of the Convertible Notes. If an Event of Default
occurs prior to any date on which the Company is prohibited from redeeming the
Convertible Notes by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Convertible Notes prior to such date, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Convertible Notes.

The holders of a majority in aggregate principal amount of the Convertible
Notes then outstanding may, on behalf of the holders of all the Convertible
Notes, waive any past Default or Event of Default under the Indenture and its
consequences, except Default in the payment of principal of, premium, if any, or
interest on the Convertible Notes (other than the non-payment of principal of,
premium, if any, and interest on the Convertible Notes that has become due
solely by virtue of an acceleration that has been duly rescinded as provided
above) or in respect of a covenant or provision of the Indenture that cannot be
modified or amended without the consent of all holders of Convertible Notes.

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

BOOK-ENTRY; DELIVERY AND FORM

The Convertible Notes will be issued in the form of one or more global
notes (the "Global Note") deposited with, or on behalf of, DTC and registered in
the name of Cede & Co. as DTC's nominees, or will remain in the custody of the
Trustee pursuant to a FAST Balance Certificate Agreement between DTC and the
Trustee. Owners of beneficial interests in the Convertible Notes represented by
the Global Note will hold such interests pursuant to the procedures and
practices of DTC and must exercise any rights in respect of their interests
(including any right to convert or require repurchase of their interests) in
accordance with those procedures and practices. Such beneficial owners will not
be holders for purposes of the Indenture, and will not be entitled to any rights
under the Global Note or the Indenture, with respect to the Global Note, and the
Company and the Trustee, and any of their respective agents, may treat DTC as
the sole holder and owner of the Global Note for all purposes under the
Indenture.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC holds securities for its participants
and facilitates the clearance and settlement of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in participants' accounts, thereby eliminating the need for
physical movement of securities

83
86

certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its direct participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the Commission.

Unless and until they are exchanged in whole or in part for certificated
Convertible Notes in definitive form as set forth below, the Global Note may not
be transferred except as a whole by DTC to a nominee of DTC, or by a nominee of
DTC to DTC or another nominee of DTC.

The Convertible Notes represented by the Global Note will not be
exchangeable for certificated Convertible Notes, provided that if DTC is at any
time unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Convertible Notes in definitive form in exchange for the Global
Note. In addition, the Company may at any time in its sole discretion determine
not to have a Global Note, and, in such event, will issue individual Convertible
Notes in definitive form in exchange for the Global Note previously representing
all such Convertible Notes. In either instance, an owner of a beneficial
interest in a Global Note will be entitled to physical delivery of Convertible
Notes in definitive form equal in principal amount to such beneficial interest
and to have such Convertible Notes registered in its name. Individual
Convertible Notes so issued in definitive form will be issued in denominations
of $1,000 and any larger amount that is an integral multiple of $1,000 and will
be issued in registered form only, without coupons.

The laws of some states require that certain persons take physical delivery
in definite form of securities that they own and that security interests in
negotiable instruments can only be perfected by delivery of certificates
representing the instruments. Consequently, the ability to transfer Convertible
Notes evidenced by the Global Note will be limited to such extent.

Payments of principal of and interest on the Convertible Notes will be made
by the Company through the Trustee to DTC or its nominee, as the case may be, as
the registered owner of the Global Note. Neither the Company nor the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the Global
Note or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that DTC, upon receipt of
any payment of principal or interest in respect of the Global Note, will credit
the accounts of the related participants with payment in amounts proportionate
to their respective holdings in principal amount of beneficial interest in the
Global Note as shown on the records of DTC. The Company also expects that
payments by participants to owners of beneficial interests in the Global Note
will be covered by standing customer instructions and customary practices, as is
now the case with securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of such
participants.

So long as the Convertible Notes are represented by a Global Note, DTC or
its nominee will be the only entity that can exercise a right to repayment
pursuant to the holder's option to elect repayment of its Convertible Notes or
the right of conversion of the Convertible Notes. Notice by participants or by
owners of beneficial interests in a Global Note held through such participants
of the exercise of the option to elect repayment, or the right of conversion, of
beneficial interests in Convertible Notes represented by the Global Note must be
transmitted to DTC in accordance with its procedures on a form required by DTC
and provided to participants. In order to ensure that DTC's nominee will timely
exercise a right to repayment, or the right of conversion, with respect to a
particular Convertible Note, the beneficial owner of such Convertible Notes must
instruct the broker or other participant through which it holds an interest in
such Convertible Notes to notify DTC of its desire to exercise a right to
repayment, or the right of conversion. Different firms have different cut-off
times for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other participant through which it
holds an interest in a Convertible Note in order to ascertain the cut-off time
by which such an instruction must be given in order for timely notice to be
delivered to DTC. The Company will not be liable for any delay in delivery of
such notice to DTC.

84
87

The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable. The
Company will have no responsibility for the performance by DTC or its
participants of their respective obligations as described hereunder or under the
rules and procedures governing their respective operations.

Neither the Company nor the Trustee shall be liable for any delay by DTC or
any participant or indirect participant in DTC in identifying the beneficial
owners of the Convertible Notes, and the Company and the Trustee may
conclusively rely on, and shall be protected in relying on, instructions from
DTC for all purposes (including with respect to the registration and delivery,
and the respective principal amounts, of the Convertible Notes to be issued).

AMENDMENT, SUPPLEMENT AND WAIVER

Except as provided in the next two succeeding paragraphs, the Indenture or
the Convertible Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the Convertible Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Convertible Notes), and any existing default or compliance
with any provision of the Indenture or the Convertible Notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding Convertible Notes (including consents obtained in connection with a
tender offer or exchange offer for Convertible Notes).

Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Convertible Notes held by a non-consenting holder): (a)
reduce the principal amount of Convertible Notes whose holders must consent to
an amendment, supplement or waiver, (b) reduce the principal of or change the
fixed maturity of any Convertible Note or, other than as set forth in the next
paragraph, alter the provisions with respect to the redemption of the
Convertible Notes, (c) reduce the rate of or change the time for payment of
interest on any Convertible Notes, (d) waive a Default or Event of Default in
the payment of principal of or premium, if any, or interest on the Convertible
Notes (except a rescission of acceleration of the Convertible Notes by the
holders of at least a majority in aggregate principal amount of the Convertible
Notes and a waiver of the payment default that resulted from such acceleration),
(e) make any Convertible Note payable in money other than that stated in the
Indenture and the Convertible Notes, (f) make any change in the provisions of
the Indenture relating to waivers of past Defaults or the rights of holders of
Convertible Notes to receive payments of principal of, premium, if any, or
interest on the Convertible Notes, (g) waive a redemption payment with respect
to any Convertible Note, (h) except as permitted by the Indenture, increase the
Conversion Price or, other than as set forth in the next paragraph, modify the
provisions of the Indenture relating to conversion of the Convertible Notes in a
manner adverse to the holders thereof or (i) make any change to the abilities of
holders of Convertible Notes to enforce their rights under the Indenture or the
provisions of clause (a) through (i) hereof. In addition, any amendment to the
provisions of Article 11 of the Indenture (which relate to subordination) will
require the consent of the holders of at least 75% in aggregate principal amount
of the Convertible Notes then outstanding if such amendment would adversely
affect the rights of holders of Convertible Notes.

Notwithstanding the foregoing, without the consent of any holder of
Convertible Notes, the Company and the Trustee may amend or supplement the
Indenture or the Convertible Notes to (a) cure any ambiguity, defect or
inconsistency or make any other changes in the provisions of the Indenture which
the Company and the Trustee may deem necessary or desirable, provided such
amendment does not materially and adversely affect the Convertible Notes, (b)
provide for uncertificated Convertible Notes in addition to or in place of
certificated Convertible Notes, (c) provide for the assumption of the Company's
obligations to holders of Convertible Notes in the circumstances required under
the Indenture as described under "-- Merger and Consolidation," (d) provide for
conversion rights of holders of Convertible Notes in certain events such as a
consolidation, merger or sale of all or substantially all of the assets of the
Company, (e) reduce the Conversion Price, (f) make any change that would provide
any additional rights or benefits to the holders of Convertible Notes or that
does not adversely affect the legal rights under the Indenture of any such
holder, or (g) comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA.
85
88

SATISFACTION AND DISCHARGE

The Company may discharge its obligations under the Indenture while
Convertible Notes remain outstanding if (i) all outstanding Convertible Notes
will become due and payable at their scheduled maturity within one year or (ii)
all outstanding Convertible Notes are scheduled for redemption within one year,
and, in either case, the Company has (a) deposited with the Trustee an amount
sufficient to pay and discharge all outstanding Convertible Notes on the date of
their scheduled maturity or the scheduled date of redemption and (b) paid all
other sums then payable by the Company under the Indenture.

GOVERNING LAW

The Indenture will provide that the Convertible Notes will be governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law.

TRANSFER AND EXCHANGE

A holder may transfer or exchange Convertible Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Convertible Note selected for redemption or repurchase. Also, the Company is
not required to transfer or exchange any Convertible Note for a period of 15
days before a selection of Convertible Notes to be redeemed.

The registered holder of a Convertible Note will be treated as the owner of
it for all purposes.

THE TRUSTEE

The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. In case an Event of Default shall occur (and shall not
be cured) and holders of the Convertible Notes have notified the Trustee, the
Trustee will be required to exercise its powers with the degree of care and
skill of a prudent person in the conduct of such person's own affairs. Subject
to such provisions, the Trustee is under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of
Convertible Notes, unless they shall have offered to the Trustee security and
indemnity satisfactory to it.

The Indenture and the TIA will contain certain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received in respect of
any such claim as security or otherwise. Subject to the TIA, the Trustee will be
permitted to engage in other transactions, provided, however, that if it
acquires any conflicting interest (as described in the TIA), it must eliminate
such conflict or resign.

CERTAIN DEFINITIONS

"Acquiring Person" means any person (as defined in Section 13(d)(3) of the
Exchange Act) who or which, together with all affiliates and associates (each as
defined in Rule 12b-2 under the Exchange Act), becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act and as further defined
below) of shares of Common Stock or other voting securities of the Company
having more than 50% of the total voting power of the Voting Stock of the
Company; provided, however, that an Acquiring Person shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any Permitted Holder, (iv) an
underwriter engaged in a firm commitment underwriting in connection with a
public offering of the Voting Stock of the Company or (v) any current or future
employee or director benefit plan of the Company or any Subsidiary of the
Company or any entity holding Common Stock of the Company for or pursuant to the
terms of any such plan. For purposes hereof, a person shall not be deemed to be
the beneficial owner of (A) any securities tendered pursuant to a tender or
exchange offer made by or on behalf of such person or any of such person's
affiliates until such tendered securities are accepted for purchase or exchange
thereunder, or (B) any securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to the applicable rules and regulations under the
Exchange Act, and (2) is not also then reportable on Schedule 13D (or any
successor schedule) under the Exchange Act.

86
89

"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.

"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.

"Designated Senior Debt" means any particular Senior Debt if the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Indebtedness shall be "Designated Senior Debt" for purposes
of the Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Debt to exercise
the rights of Designated Senior Debt).

"Event of Default" has the meaning set forth under "-- Events of Default
and Remedies" herein.

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

"Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of the Company that is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor of such
property or to another, or (2) existing on property at the time of acquisition
thereof), (b) evidenced by a note, debenture, bond or other written instrument,
(c) under a lease required to be capitalized on the balance sheet of the lessee
under GAAP or under any lease or related document (including a purchase
agreement) that provides that the Company is contractually obligated to purchase
or cause a third party to purchase and thereby guarantee a minimum residual
value of the lease property to the lessor and the obligations of the Company
under such lease or related document to purchase or to cause a third party to
purchase such leased property, (d) in respect of letters of credit, bank
guarantees or bankers' acceptances (including reimbursement obligations with
respect to any of the foregoing), (e) with respect to Indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
by or shall otherwise be such person's legal liability, (f) in respect of the
balance of deferred and unpaid purchase price of any property or assets, (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) or under clause (iii) below assumed by or guaranteed in any
manner by such person or in effect guaranteed by such person through an
agreement to purchase (including, without limitation, "take or pay" and similar
arrangements), contingent or otherwise (and the obligations of such person under
any such assumptions, guarantees or other such arrangements); and (iii) any and
all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any of the foregoing.

"Issue Date" means the date on which the Convertible Notes are first issued
and authenticated under the Indenture.

"Material Subsidiary" means any Subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act.

"Maturity Date" means , 2003.

"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

"Permitted Holders" means James Kim and his estates, spouses, ancestors and
lineal descendants (and spouses thereof), the legal representatives of any of
the foregoing, and the trustee of any bona fide trust of which one or more of
the foregoing are the sole beneficiaries or the grantors, or any person of which
any of the

87
90

foregoing, individually or collectively, beneficially own (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) voting securities representing at least
a majority of the total voting power of all classes of Capital Stock of such
person (exclusive of any matters as to which class voting rights exist).

"Person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization, limited liability company or
government or any agency or political subdivision thereof.

"Senior Debt" means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in or in respect of any
Indebtedness of the Company (including, without limitation, any Obligations in
respect of such Indebtedness and, in the case of Designated Senior Debt, any
interest accruing after the filing of a petition by or against the Company under
any bankruptcy law, whether or not allowed as a claim after such filing in any
proceeding under such bankruptcy law), whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company (including all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to the foregoing);
provided, however, that Senior Debt does not include (v) Indebtedness evidenced
by the Convertible Notes, (w) any liability for federal, state, local or other
taxes owed or owing by the Company, (x) Indebtedness of the Company to any
Subsidiary of the Company except to the extent such Indebtedness is of a type
described in clause (ii) of the definition of Indebtedness, (y) trade payables
of the Company for goods, services or materials purchased in the ordinary course
of business (other than, to the extent they may otherwise constitute such trade
payables, any obligations of the type described in clause (ii) of the definition
of Indebtedness), and (z) any particular Indebtedness in which the instrument
creating or evidencing the same expressly provides that such Indebtedness shall
not be senior in right of payment to, or is pari passu with, or is subordinated
or junior to, the Convertible Notes.

"Subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such person or a Subsidiary of such person or (b)
the only general partners of which are such person or of one or more
Subsidiaries of such person (or any combination thereof).

"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.

88
91

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings, there has been no market for the Common Stock and
there is no assurance that a significant public market for the Common Stock will
develop or be sustained after the Offerings. Sales of substantial amounts of
Common Stock in the public market could adversely affect the market price of the
Common Stock and could impair the Company's future ability to raise capital
through the sale of its equity securities.

Upon the closing of the Offerings, the Company will have outstanding
112,610,000 shares of Common Stock. In addition to the 35,000,000 shares of
Common Stock offered hereby (40,250,000 if the Underwriters' over-allotment
options are exercised in full), upon the closing of the Offerings, there will be
approximately shares of Common Stock issuable upon conversion of the
Convertible Notes, all of which will be freely tradeable. In addition, in
connection with market-making activities in the Convertible Notes, Smith Barney
Inc. may from time to time until the maturity date or redemption date of the
Convertible Notes borrow, return and reborrow up to 7,000,000 shares of Common
Stock from Mr. and Mrs. Kim pursuant to a securities loan agreement (the
"Securities Loan Agreement"), which shares may from time to time be sold in the
market in connection with such market-making activities pursuant to a Form S-1
registration statement (No. 333- ) (the "Securities Loan Registration
Statement") filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"). At the end of such period, the shares of Common Stock
borrowed and returned to Mr. and Mrs. Kim (the "Control Shares") may be resold
from time to time by Mr. and Mrs. Kim subject to certain volume, manner of sale
and other restrictions described below under Rule 144 under the Securities Act.
Excluding all such freely tradeable shares and Control Shares, approximately
70,610,000 additional shares of Common Stock will be outstanding upon the
closing of the Offerings (excluding 2,730,000 shares issuable upon the exercise
of outstanding options), all of which are "restricted" shares (the "Restricted
Shares") under the Securities Act. Such Restricted Shares may be sold only if
registered under the Securities Act or sold in accordance with an available
exemption from such registration.

Under Rule 144, a person (or persons whose shares are aggregated in
accordance with the Rule) who has beneficially owned his or her Restricted
Shares for at least one year, including persons who are affiliates of the
Company, will be entitled to sell, within any three month period a number of
Restricted Shares that does not exceed the greater of (i) one percent of the
then outstanding number of shares of Common Stock (1,126,100 shares of Common
Stock immediately after the consummation of the Offerings) or (ii) the average
weekly trading volume of the shares of Common Stock during the four calendar
weeks preceding each such sale. In addition, sales under Rule 144 are also
subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. After Restricted
Shares are held for two years, a person who is not an affiliate of the Company
is entitled to sell such shares under Rule 144 without regard to such volume
limitations, or manner of sale, notice or public information requirements under
Rule 144. Sales of Restricted Shares by affiliates will continue to be subject
to such volume limitations, and manner of sale, notice and public information
requirements.

The Company has agreed with the Underwriters not to offer, pledge, sell,
contract to sell, or otherwise dispose of (or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, or announce the offering of, any other shares of Common Stock or any
securities or options convertible into, or exchangeable or exercisable for,
shares of Common Stock (other than the Convertible Notes) for a period of 180
days following the date hereof without the prior written consent of Smith Barney
Inc., subject to certain limited exceptions. In addition, each of the Company's
officers, directors and stockholders has agreed with the Underwriters not to
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Exchange Act
with respect to, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for shares of Common Stock, or publicly announce
an intention to effect any such transaction, for a period of 180 days after the
date hereof other than pursuant to
89
92

the Securities Loan Agreement or with the prior written consent of Smith Barney
Inc., subject to certain limited exceptions. See "Underwriting."

Beginning one year from the date of the Reorganization, approximately
70,610,000 Restricted Shares subject to the lock-up agreements will become
eligible for sale in the public market pursuant to Rule 144.

The Company plans to grant options to purchase 2,730,000 shares of Common
Stock immediately prior to the Offerings under the 1998 Stock Plan and the 1998
Director Option Plan. See "Management -- Stock Plans." The Company intends to
file, within 30 days after the date of this Prospectus, a Form S-8 registration
statement under the Securities Act to register shares of Common Stock reserved
for issuance under the 1998 Stock Plan, 1998 Director Option Plan and 1998
Employee Stock Purchase Plan, and shares of Common Stock issuable upon exercise
of outstanding options. Shares of Common Stock issued upon exercise of options
after the effective date of the Form S-8 will be available for sale in the
public market, subject to Rule 144 volume limitations applicable to affiliates
and to lock-up agreements.

90
93

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO HOLDERS OF COMMON STOCK AND CONVERTIBLE NOTES

GENERAL

The following is a general discussion of certain United States federal
income and estate tax considerations relating to the ownership and disposition
of Common Stock and Convertible Notes by a holder who acquires and owns such
Common Stock or a Convertible Note as a capital asset within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). This
discussion does not consider specific facts and circumstances that may be
relevant to a particular holder's tax position, does not address all aspects of
United States federal income and estate taxes and does not deal with foreign,
state, and local consequences and United States federal gift taxes that may be
relevant to such holders in light of their personal circumstances. Further, it
does not discuss the rules applicable to holders subject to special tax
treatment under the federal income tax laws (including but not limited to,
banks, insurance companies, dealers in securities, holders of securities held as
part of a "straddle," "hedge," or "conversion transaction," and persons who
undertake a constructive sale of Common Stock or a Convertible Note). In
addition, this discussion is limited to original purchasers of Convertible
Notes, who acquire their Convertible Notes at their original issue price within
the meaning of Section 1273 of the Code, and Common Stock. Furthermore, this
discussion is based on current provisions of the Code, existing and proposed
regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly on a
retroactive basis. Accordingly, each prospective purchaser of Common Stock or
Convertible Notes is advised to consult a tax advisor with respect to current
and possible future tax consequences of acquiring, holding, and disposing of
Common Stock or Convertible Notes.

U.S. HOLDERS

The following discussion is limited to a holder of Common Stock or a
Convertible Note that for United States federal income tax purposes is (i) a
citizen or resident (within the meaning of Section 7701(b) of the Code) of the
United States, (ii) a corporation, partnership or other entity created or
organized in the United States or under the laws of the United States or of any
state, (iii) an estate whose income is includible in gross income for United
States federal income tax purposes, regardless of its source, or (iv) in
general, a trust subject to the primary supervision of a court within the United
States and the control of a United States person as described in Section
7701(a)(30) of the Code (a "U.S. Holder").

Interest

Stated interest on the Convertible Notes will generally be includable in a
U.S. Holder's gross income and taxable as ordinary income for U.S. federal
income tax purposes at the time it is paid or accrued in accordance with the
U.S. Holder's regular method of accounting.

Conversion of Convertible Notes Into Common Stock

A U.S. Holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock except to the extent the Common Stock is
considered attributable to accrued interest not previously included in income
(which is taxable as ordinary income) or with respect to cash received in lieu
of a fractional share of Common Stock. The adjusted basis of shares of Common
Stock received on conversion will equal the adjusted basis of the Convertible
Note converted (reduced by the portion of adjusted basis allocated to any
fractional share of Common Stock exchanged for cash), and the holding period of
the Common Stock received on conversion will generally include the period during
which the converted Convertible Notes were held. However, a U.S. Holder's tax
basis in shares of Common Stock considered attributable to accrued interest as
described above generally will equal the amount of such accrued interest
included in income, and the holding period for such shares shall begin as of the
date of conversion.

The conversion price of the Convertible Notes is subject to adjustment
under certain circumstances. Section 305 of the Code and the Treasury
Regulations issued thereunder may treat the holders of the

91
94

Convertible Notes as having received a constructive distribution, resulting in
ordinary income (subject to a possible dividends received deduction in the case
of corporate holders) to the extent of the Company's current or accumulated
earnings and profits, if, and to the extent that, certain adjustments in the
conversion price that may occur in limited circumstances (particularly an
adjustment to reflect a taxable dividend to holders of Common Stock) increase
the proportionate interest of a holder of Convertible Notes in the fully diluted
Common Stock, whether or not such holder ever exercises its conversion
privilege. Moreover, if there is not a full adjustment to the conversion ratio
of the Convertible Notes to reflect a stock dividend or other event increasing
the proportionate interest of the holders of outstanding Common Stock in the
assets or earnings and profits of the Company, then such increase in the
proportionate interest of the holders of the Common Stock generally will be
treated as a distribution to such holders, taxable as ordinary income (subject
to a possible dividends received deduction in the case of corporate holders) to
the extent of the Company's current or accumulated earnings and profits..

Sale, Exchange or Retirement of a Convertible Note

Each U.S. Holder generally will recognize gain or loss upon the sale,
exchange, redemption, retirement or other disposition of a Convertible Note
measured by the difference (if any) between (i) the amount of cash and the fair
market value of any property received (except to the extent that such cash or
other property is attributable to the payment of accrued interest not previously
included in income, which amount will be taxable as ordinary income) and (ii)
such holder's adjusted tax basis in the Convertible Note. Any such gain or loss
recognized on the sale, exchange, redemption, retirement or other disposition of
a Convertible Note will be capital gain or loss. Gain on most capital assets
held or deemed held by an individual for more than 18 months is subject to a
maximum rate of tax of 20%, and gain on most capital assets held or deemed held
by an individual more than one year and up to 18 months is subject to tax at a
maximum rate of 28%. A U.S. Holder's initial basis in a Convertible Note will be
the amount paid therefor.

The Common Stock

In general, dividends paid from current or accumulated earnings and profits
of the Company, as determined for U.S. federal income tax purposes, will be
included in a U.S. Holder's income as ordinary income (subject to a possible
dividends received deduction in the case of corporate holders) as they are paid.
Gain or loss realized on the sale or exchange of Common Stock will equal the
difference between the amount realized on such sale or exchange and the U.S.
Holder's adjusted tax basis in such Common Stock. Gain on most capital assets
held by an individual for more than 18 months is subject to tax at a maximum
rate of 20% and gain on most capital assets held by an individual for more than
one year and up to 18 months is subject to tax at a maximum rate of 28%.

Information Reporting and Backup Withholding

A U.S. Holder of Common Stock or a Convertible Note may be subject to
"backup withholding" at a rate of 31% with respect to certain "reportable
payments," including dividend payments, interest payments, and, under certain
circumstances, principal payments on the Convertible Notes. These backup
withholding rules apply if the holder, among other things, (i) fails to furnish
a social security number or other taxpayer identification number ("TIN")
certified under penalties of perjury within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividends, or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN furnished
is the correct number and that such holder is not subject to backup withholding.
A holder who does not provide the Company with its correct TIN also may be
subject to penalties imposed by the IRS. Any amount withheld from a payment to a
U.S. Holder under the backup withholding rules is creditable against the
holder's federal income tax liability, provided that the required information is
furnished to the IRS. Backup withholding will not apply, however, with respect
to payments made to certain U.S. Holders, including corporations and tax-exempt
organizations, provided their exemptions from backup withholding are properly
established.

92
95

The Company will report to the U.S. Holders of Convertible Notes and Common
Stock and to the IRS the amount of any "reportable payments" for each calendar
year and the amount of tax withheld, if any, with respect to such payments.

NON U.S. HOLDERS

The following discussion is limited to the U.S. federal income tax
consequences relevant to a Non-U.S. Holder. As used herein, the term "Non-U.S.
Holder" means any holder other than a U.S. Holder. For purposes of withholding
tax on interest and dividends discussed below, a Non-U.S. Holder includes a non-
resident fiduciary of an estate or trust. For purposes of the following
discussion, interest, dividends and gain on the sale, exchange or other
disposition of a Convertible Note or Common Stock will generally be considered
to be "U.S. trade or business income" if such income or gain is (i) effectively
connected with the conduct of a U.S. trade or business or (ii) in the case of
most treaty residents, attributable to a permanent establishment (or, in the
case of an individual, a fixed base) in the United States.

Interest

Generally, any interest paid to a Non-U.S. Holder of a Convertible Note
that is not U.S. trade or business income will not be subject to U.S. tax if the
interest qualifies as "portfolio interest." Interest on the Convertible Notes
will generally qualify as portfolio interest if (i) the Non-U.S. Holder does not
actually or constructively own 10% or more of the total voting power of all
voting stock of the Company and is not a "controlled foreign corporation" with
respect to which the Company is a "related person" within the meaning of the
Code, and (ii) the beneficial owner, under penalty of perjury, certifies that
the beneficial owner is not a U.S. person and such certificate provides the
beneficial owner's name and address.

The gross amount of payments of interest to a Non-U.S. Holder that do not
qualify for the portfolio interest exemption and that are not U.S. trade or
business income will be subject to withholding of U.S. federal income tax at a
30% rate, unless a U.S. income tax treaty applies to reduce or eliminate the
rate of withholding. Interest that is U.S. trade or business income will be
subject to United States federal income tax on a net income basis at applicable
graduated individual or corporate rates and would be exempt from the 30%
withholding tax described above. In the case of a Non-U.S. Holder that is a
corporation, interest that is U.S. trade or business income may, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty. To claim
the benefit of a tax treaty or to claim an exemption from withholding for
interest that is U.S. trade or business income, the Non-U.S. Holder must provide
a properly executed Form 1001 or Form 4224 (or such successor form as the IRS
designates), as applicable, prior to the payment of interest. Under recently
adopted Treasury Regulations that will generally be effective after December 31,
1998 (the "New Regulations"), a Non-U.S. Holder, subject to certain transition
rules, will instead be required to provide a properly executed Form W-8,
certifying to such U.S. Holder's entitlement to treaty benefits or exemption
from withholding for U.S. trade or business income. Special procedures are
provided in the New Regulations for payments through qualified intermediaries.
Other recently adopted Treasury Regulations that will be effective with respect
to payments made after December 31, 1997 (the "Treaty Regulations") provide
special rules applicable to certain entities that are treated as partnerships
for U.S. purposes but as corporations for foreign tax purposes, for purposes of
determining the applicability of a tax treaty. Prospective investors should
consult their tax advisors regarding the effect, if any, of the New Regulations
and the Treaty Regulations on an investment in a Convertible Note or Common
Stock. Prospective investors should consult their tax advisors regarding the
effect, if any, of the New Regulations and the Treaty Regulations on an
investment in the Common Stock or a Convertible Note.

Conversion of Convertible Notes into Common Stock

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
on the conversion of Convertible Notes into Common Stock, except with respect to
cash (if any) received in lieu of a fractional share or interest not previously
included in income. Cash received in lieu of a fractional share may give rise to
gain that would be subject to the rules described below for the sale of
Convertible Notes. Cash or Common Stock treated as issued for accrued interest
would be treated as interest under the rules described above.
93
96

Dividends

In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of United States federal income tax at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty, unless the
dividends are U.S. trade or business income. If the dividend is U.S. trade or
business income, the dividend would be subject to United States federal income
tax on a net income basis at applicable graduated individual or corporate rates
and would be exempt from the 30% withholding tax described above. Any such
dividends that are U.S. trade or business income received by a foreign
corporation may, under certain circumstances, be subject to the additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Certain certification and disclosure requirements
must be complied with in order to be exempt from withholding under the U.S.
trade or business income exemption discussed above (which requirements have been
modified by the New Regulations).

Under current United States Treasury regulations, dividends paid to a
stockholder at an address in a foreign country are presumed to be paid to a
resident of such country for purposes of the withholding discussed above (unless
the payor has knowledge to the contrary), including for purposes of determining
the applicability of a tax treaty rate. Under the New Regulations, to obtain a
reduced rate of withholding under a treaty, a Non-U.S. Holder would generally be
required to provide an Internal Revenue Service Form W-8 (or suitable substitute
form) certifying such Non-U.S. Holder's entitlement to benefits under a treaty.
These certification requirements may be relaxed somewhat in the case of a
Non-U.S. Holder who holds Common Stock through an account maintained at a
non-U.S. office of a financial institution. Certain other special rules may be
applicable to a Non-U.S. Holder under the New Regulation or the Treaty
Regulations. See "-- Non-U.S. Holders -- Interest".

A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
United States withholding tax pursuant to a tax treaty or whose dividends have
otherwise been subjected to withholding in an amount that exceeds such holder's
United States federal income tax liability, may obtain a refund or credit of any
excess amounts withheld by filing an appropriate claim for refund with the
United States Internal Revenue Service (the "Service").

Gain on Disposition of Common Stock or a Convertible Note

A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain realized on a sale or other disposition of
Common Stock or a Convertible Note unless (i) the gain is U.S. trade or business
income, (ii) in the case of a Non-U.S. Holder who is a nonresident alien
individual and holds Common Stock or a Convertible Note as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
of the sale or other disposition and certain other conditions are met, (iii) the
Non-U.S. Holder is subject to tax pursuant to provisions of United States tax
law that apply to certain expatriates, or (iv) under certain circumstances, in
the case of disposition of Common Stock if the Company is or has been during
certain time periods a "U.S. real property holding corporation" for United
States federal income tax purposes. The Company is not and does not anticipate
becoming a "U.S. real property holding corporation" for United States federal
income tax purposes.

Federal Estate Taxes

Common Stock that is owned, or treated as owned, by a non-resident alien
individual (as specifically determined under residence rules for United States
federal estate tax purposes) at the time of death or that has been the subject
of certain lifetime transfers will be included in such holder's gross estate for
United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise. A Convertible Note that is owned, or treated as
owned, by a non-resident alien individual (as specifically determined under
residence rules for United States federal estate tax purposes) at the time of
death will not be subject to U.S. federal estate tax provided that the interest
thereon qualifies as portfolio interest and was not U.S. trade or business
income.

94
97

United States Information Reporting and Backup Withholding Tax

The Company must report annually to the Service and to each Non-U.S. Holder
the amount of dividends or interest paid to such holder and any tax withheld
with respect to such dividends or interest. These information reporting
requirements apply regardless of whether withholding is required. Copies of the
information returns reporting such dividends and interest and withholding with
respect thereof may also be made available under the provisions of an applicable
treaty or agreement, to the tax authorities in the country in which such
Non-U.S. Holder resides.

Treasury Regulations provide that backup withholding and additional
information reporting will not apply to payments of principal on the Convertible
Notes by the Company to a Non-U.S. Holder if the holder certifies as to its
Non-U.S. status under penalties of perjury or otherwise establishes an exemption
(provided that neither the Company nor its paying agent has actual knowledge
that the holder is a U.S. person or that the conditions of any other exemption
are not, in fact, satisfied). United States backup withholding tax (which
generally is a withholding tax imposed at the rate of thirty-one percent (31%)
on certain payments to persons that fail to furnish certain information under
the United States information reporting requirements) generally will not apply
to dividends paid on Common Stock to a Non-U.S. Holder at an address outside the
United States, except that with regard to payments made after December 31, 1998,
a Non-U.S. Holder will be entitled to such an exemption only if it provides a
Form W-8 (or satisfies certain documentary evidence requirements for
establishing that it is a non-United States person) or otherwise establishes an
exemption. Except as provided below, Non-U.S. Holders will not be subject to
backup withholding with respect to the payment of proceeds from the disposition
of Common Stock or Convertible Notes effected by the foreign office of a broker;
except that if the broker is a United States person or a "U.S. related person,"
information reporting (but not backup withholding) is required with respect to
the payment, unless the broker has documentary evidence in its files that the
owner is a Non-U.S. Holder (and the broker has no actual knowledge to the
contrary) and certain other requirements are met or the holder otherwise
establishes an exemption. For this purpose, a "U.S. related person" is (i) a
"controlled foreign corporation" for United States federal income tax purposes,
(ii) a foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
collection or payment of such proceeds (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a United States trade or business, or (iii) with
respect to payments made after December 31, 1998, a foreign partnership that, at
any time during its taxable year is 50% or more (by income or capital interest)
owned by U.S. persons or is engaged in the conduct of a U.S. trade or business.
The payment of the proceeds of a sale of shares of Common Stock or of a
Convertible Note to or through a United States office of a broker is subject to
information reporting and possible backup withholding unless the owner certifies
its non-United States status under penalties of perjury or otherwise establishes
an exemption. Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules from a payment to a Non-U.S. Holder will be
allowed as a refund or a credit against such Non-U.S. Holder's United States
federal income tax liability, provided that the required information is
furnished to the Service.

THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT WITH HIS TAX ADVISOR
WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX AND FEDERAL ESTATE TAX
CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF COMMON STOCK AND CONVERTIBLE
NOTES, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, LOCAL,
FOREIGN, OR OTHER TAXING JURISDICTION.

95
98

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
(the "U.S. Underwriting Agreement") among the Company, the Selling Stockholders
and each of the underwriters named below (the "U.S. Underwriters"), for whom
Smith Barney Inc., BancAmerica Robertson Stephens and Cowen & Company are acting
as representatives (the "U.S. Representatives"), (i) the Company and the Selling
Stockholders have agreed to sell to each of the U.S. Underwriters and each of
the U.S. Underwriters has severally agreed to purchase from the Company and the
Selling Stockholders the aggregate number of Shares set forth opposite its name
in the table below and (ii) the Company has agreed to sell to certain of the
U.S. Underwriters and each such U.S. Underwriter has severally agreed to
purchase from the Company the principal amount of the Convertible Notes set
forth opposite its name below.

PRINCIPAL
AMOUNT
NUMBER OF OF CONVERTIBLE
U.S. UNDERWRITERS SHARES NOTES
----------------- ---------- --------------

Smith Barney Inc. ..........................
BancAmerica Robertson Stephens..............
Cowen & Company.............................
---------- ------------
Total............................. 28,000,000 $120,000,000
========== ============

The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters to purchase the Shares and Convertible Notes listed above are
subject to certain conditions set forth therein. The U.S. Underwriters are
committed to purchase all of the Shares and Convertible Notes agreed to be
purchased by the U.S. Underwriters pursuant to the U.S. Underwriting Agreement
(other than those covered by the over-allotment options described below), if any
Shares or Convertible Notes are purchased. In the event of default by any U.S.
Underwriter, the U.S. Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting U.S. Underwriters
may be increased or the U.S. Underwriting Agreement may be terminated.

The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer such Shares
to the public at the initial public offering price thereof set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
discount not in excess of $ per share. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per share
on sales to certain other dealers. After the initial public offering of the
Shares, the public offering price and such discounts may be changed.

The U.S. Representatives have also advised the Company that the relevant
U.S. Underwriters propose initially to offer such Convertible Notes to the
public at the initial public offering price thereof set forth on the cover page
of this Prospectus, and to certain dealers at such price less a concession not
in excess of % of the principal amount of such Convertible Notes. The relevant
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of % of the principal amount of the Convertible Notes on sales to
certain other dealers. After the initial public offering of the Convertible
Notes, the public offering price and such concessions may be changed.

The Company and the Selling Stockholders also have entered into an
underwriting agreement (the "International Underwriting Agreement") with the
International Underwriters named therein, for whom Smith Barney Inc.,
BancAmerica Robertson Stephens International Limited and Cowen International
L.P. are acting as representatives (the "International Representatives" and,
together with the U.S. Representatives, the "Representatives"), providing for
the concurrent offer and sale of 7,000,000 of the Shares and $30,000,000
principal amount of the Convertible Notes outside the United States and Canada.

The closing with respect to the sale of the Shares and the Convertible
Notes pursuant to the U.S. Underwriting Agreement is a condition to the closing
with respect to the sale of the Shares and the Convertible Notes pursuant to the
International Underwriting Agreement, and the closing with respect to the sale
of the Shares and the Convertible Notes pursuant to the International
Underwriting Agreement is a

96
99

condition to the closing with respect to the sale of the Shares and the
Convertible Notes pursuant to the U.S. Underwriting Agreement. The initial
public offering price and underwriting discounts per Share and per Convertible
Note for the U.S. Offering and the International Offering will be identical.

Each U.S. Underwriter has severally agreed that, as part of the
distribution of the 28,000,000 Shares and $120,000,000 principal amount of the
Convertible Notes by the U.S. Underwriters, (i) it is not purchasing any Shares
or Convertible Notes for the account of anyone other than a United States or
Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any Shares or Convertible Notes or distribute any
Prospectus relating to the U.S. Offering to any person outside of the United
States or Canada, or to anyone other than a United States or Canadian Person and
(iii) any dealer to whom it may sell any Shares or Convertible Notes will
represent that it is not purchasing for the account of anyone other than a
United States or Canadian Person and agree that it will not offer or resell,
directly or indirectly, any Shares or Convertible Notes outside of the United
States or Canada, or to anyone other than a United States or Canadian Person or
to any other dealer who does not so represent and agree.

Each International Underwriter has severally agreed that, as part of the
distribution of the 7,000,000 Shares and $30,000,000 principal amount of the
Convertible Notes by the International Underwriters, (i) it is not purchasing
any Shares or Convertible Notes for the account of any United States or Canadian
Person, (ii) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Shares or Convertible Notes or distribute any Prospectus to any
person in the United States or Canada, or to any United States or Canadian
Person and (iii) any dealer to whom it may sell any Shares or Convertible Notes
will represent that it is not purchasing for the account of any United States or
Canadian Person and agree that it will not offer or resell, directly or
indirectly, any Shares or Convertible Notes in the United States or Canada, or
to any United States or Canadian Person or to any other dealer who does not so
represent and agree.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S. Underwriters
and International Underwriters. "United States or Canadian Persons" means any
person who is a national or resident of the United States or Canada, any
corporation, partnership or other entity created or organized in or under the
laws of the United States or Canada or of any political subdivision thereof, and
any estate or trust the income of which is subject to United States or Canadian
federal income taxation, regardless of its source (other than a foreign branch
of such entity) and includes any United States or Canadian branch of a person
other than a United States or Canadian Person.

Each U.S. Underwriter that will offer or sell Shares or Convertible Notes
in Canada as part of the distribution has severally agreed that such offers and
sales will be made only pursuant to an exemption from the prospectus
requirements in each jurisdiction in Canada in which such offers and sales are
made.

Pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of Shares and such principal amount of
the Convertible Notes as may be mutually agreed. The price of any Shares or
Convertible Notes so sold shall be the initial public offering price thereof set
forth on the cover page of this Prospectus, less an amount not greater than the
concession to securities dealers set forth above. To the extent that there are
sales between the International Underwriters and the U.S. Underwriters pursuant
to the Agreement Between U.S. Underwriters and International Underwriters, the
number of Shares and the principal amount of the Convertible Notes initially
available for sale by the U.S. Underwriters or by the International Underwriters
may be more or less than the amount specified on the cover page of this
Prospectus.

Each International Underwriter has severally represented and agreed that
(i) it has not offered or sold and, prior to the expiration of six months from
the closing of the International Offering, will not offer or sell any Shares or
Convertible Notes in the United Kingdom other than to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (whether as principal or agent) for the purposes of their businesses
or otherwise in circumstances which have not resulted in and will not result in
an offer to the public within the meaning of the Public Offers of Securities
Regulations 1995; (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done by
it in relation to the Shares or the Convertible Notes in, from or otherwise
involving the
97
100

United Kingdom; and (iii) it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it in connection with the
issue of the Shares or the Convertible Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.

The Company has granted to the U.S. Underwriters and the International
Underwriters options to purchase up to an additional 4,200,000 and 1,050,000
Shares, respectively, and an additional $18,000,000 and $4,500,000 principal
amount of the Convertible Notes, respectively, in each case at the applicable
price to the public less the applicable underwriting discount set forth on the
cover page of this Prospectus, solely to cover over-allotments, if any. Such
options may be exercised at any time up to 30 days after the date of this
Prospectus. To the extent such options are exercised, each of the U.S.
Underwriters and the International Underwriters will become obligated, subject
to certain conditions, to purchase approximately the same percentage of such
additional shares of Common Stock or such additional principal amount of
Convertible Notes as the percentage it was obligated to purchase pursuant to the
U.S. Underwriting Agreement or the International Underwriting Agreement, as
applicable.

The Company has agreed with the Underwriters not to offer, pledge, sell,
contract to sell, or otherwise dispose of (or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, or announce the offering of, any other shares of Common Stock or any
securities or options convertible into, or exchangeable or exercisable for,
shares of Common Stock (other than the Convertible Notes) for a period of 180
days following the date hereof without the prior written consent of Smith Barney
Inc., subject to certain limited exceptions. In addition, each of the Company's
officers, directors and stockholders has agreed with the Underwriters not to
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Exchange Act
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date hereof unless pursuant to the Securities Loan Agreement (as described
below) or with the prior written consent of Smith Barney Inc., subject to
certain limited exceptions. Smith Barney Inc. currently does not intend to
release any securities subject to such lock-up agreements, but may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements.

The U.S. Underwriting Agreement and the International Underwriting
Agreement provide that the Company and certain Selling Stockholders will
indemnify the several U.S. Underwriters and International Underwriters against
certain liabilities under the Securities Act, or contribute to payments the U.S.
Underwriters and the International Underwriters may be required to make in
respect thereof.

BancAmerica Robertson Stephens is an affiliate of Bank of America, which
will be repaid approximately $43 million of short-term loans to the Company from
the net proceeds of the Offerings. See "Use of Proceeds." Because more than 10%
of the net proceeds of the Offerings may be paid to Bank of America, the
Offerings are being conducted in accordance with Rule 2710(c)(8) and Rule 2720
("Rule 2720") of the Conduct Rules of the National Association of Securities
Dealers, Inc., Smith Barney Inc. will serve as a "qualified independent
underwriter" in the Offerings and, in such capacity, will recommend a price in
compliance with Rule 2720 and has performed due diligence investigations in
accordance with Rule 2720.

Affiliates of Smith Barney Inc., Mr. James Kim and AICL are among the
principal shareholders of a securities and investment banking firm in Korea. In
addition, certain of the Underwriters and their affiliates have been engaged
from time to time, and may in the future be engaged, to perform investment
banking and other advisory-related services to the Company and its affiliates,
including certain of the Selling Stockholders, in the ordinary course of
business. In connection with rendering such services in the past, such
Underwriters and affiliates have received customary compensation, including
reimbursement of related expenses.

98
101

In connection with the Offerings, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock or
the Convertible Notes. Such transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M, pursuant to which such
persons may bid for or purchase Common Stock or Convertible Notes for the
purpose of stabilizing their market price. The Underwriters also may create a
short position for the account of the Underwriters by selling more Common Stock
or Convertible Notes in connection with the Offerings than they are committed to
purchase from the Company and the Selling Stockholders, and in such case may
purchase Common Stock or Convertible Notes in the open market following
completion of the Offerings to cover all or a portion of such short position.
The Underwriters may also cover all or a portion of such short position, up to
5,250,000 shares of Common Stock and $22,500,000 principal amount of the
Convertible Notes, by exercising the Underwriters' over-allotment options
referred to above. In addition, the Representatives, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the Offerings), for the account of the other Underwriters, the selling
concession with respect to Common Stock or Convertible Notes that are
distributed in the Offerings but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock and the
Convertible Notes at a level above that which might otherwise prevail in the
open market. None of the transactions described in this paragraph is required,
and, if they are undertaken, they may be discontinued at any time.

In connection with the Offerings, Mr. and Mrs. Kim (referred to herein as
the "Lenders") and Smith Barney Inc. intend to enter into a Securities Loan
Agreement (the "Securities Loan Agreement") which provides that, subject to
certain restrictions and with the agreement of the Lenders, Smith Barney Inc.
may from time to time until the maturity date or redemption date of the
Convertible Notes borrow, return and reborrow shares of Common Stock from the
Lenders (the "Borrowed Securities"): provided, however, that the number of
Borrowed Securities at any time may not exceed 7,000,000 shares of Common Stock,
subject to adjustment for certain dilutive events. The Securities Loan Agreement
is intended to facilitate market-making activity in the Convertible Notes by
Smith Barney Inc. Smith Barney Inc. may from time to time borrow shares of
Common Stock under the Securities Loan Agreement to settle short sales of Common
Stock entered into by Smith Barney Inc. to hedge any long position in the
Convertible Notes resulting from its market-making activities. Such sales will
be made on the Nasdaq National Market or in the over-the-counter market at
market prices prevailing at the time of sale or at prices related to such market
prices. Market conditions will dictate the extent and timing of Smith Barney
Inc.'s market-making transactions in the Convertible Notes and the consequent
need to borrow and sell shares of Common Stock. The availability of shares of
Common Stock under the Securities Loan Agreement at any time is not assured and
any such availability does not assure market-making activity with respect to the
Convertible Notes. Any market-making engaged in by Smith Barney Inc. or any
other Underwriter may cease at any time. The foregoing description of the
Securities Loan Agreement does not purport to be complete and is qualified in
its entirety by reference to such agreement, which is an exhibit to the
Securities Loan Registration Statement.

The Underwriters do not intend to confirm sales in the Offerings to any
accounts over which they exercise discretionary authority.

Prior to the Offerings, there has been no public market for the Common
Stock. Accordingly, the initial public offering price for the Shares will be
determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors considered in determining the initial public
offering price will be the Company's record of operations, its current financial
condition, its future prospects, the market for its services, the experience of
management, the economic conditions of the Company's industry in general, the
general condition of the equity securities market and the demand for similar
securities of companies considered comparable to the Company and other relevant
factors. There can be no assurance, however, that the prices at which the Common
Stock will sell in the public market after the Offerings will not be lower than
the price at which the Shares are sold by the Underwriters.

99
102

LEGAL MATTERS

The validity of the Shares and the Convertible Notes offered hereby will be
passed upon for the Company by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. Cleary, Gottlieb, Steen & Hamilton, New
York, New York, is acting as counsel for the Underwriters in connection with
certain legal matters relating to the Shares and the Convertible Notes offered
hereby.

EXPERTS

The combined financial statements and schedule of the Company as of
December 31, 1995, 1996 and 1997, and for each of the years in the three-year
period ended December 31, 1997, included in this Registration Statement (as
defined below) have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports dated February 3, 1998 (except with
respect to the sale of the investment in AICL's common stock discussed in Note 6
to the Combined Financial Statements, as to which the date is February 16, 1998)
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.

Reference is made to said reports which include an explanatory paragraph
with respect to the ability of the Company to continue as a going concern as
discussed in Note 1 of Notes to the Combined Financial Statements.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company, the Common Stock and the Convertible
Notes, reference is made to the Registration Statement and the exhibits and
schedules filed as a part thereof. Statements contained in this Prospectus as to
the contents of any contract or any other document referred to are not
necessarily complete. In each instance, reference is made to the copy of such
contract or document filed as an exhibit to the Registration Statement, and each
such statement is qualified in all respects by such reference. The Registration
Statement, including exhibits and schedules thereto, may be inspected without
charge at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Northwestern Atrium Center, 500 Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates and through the National Association of Securities
Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C. 20006. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov.

100
103

GLOSSARY

ASIC....................... Application Specific Integrated Circuit. A
custom-designed integrated circuit that performs
specific functions which would otherwise require a
number of off-the-shelf integrated circuits to
perform. The use of an ASIC in place of a
conventional integrated circuit reduces product
size and cost and also improves reliability.

BGA........................ Ball grid array.

Bus........................ A common pathway, or channel, between multiple
devices.

CMOS....................... Complementary Metal Oxide Silicon. Currently the
most common integrated circuit fabrication process
technology, CMOS is one of the latest fabrication
techniques to use metal oxide semiconductor
transistors.

DAC........................ Digital Analog Converter. A device that converts
digital pulses into analog signals.

Die........................ A piece of a semiconductor wafer containing the
circuitry of a single chip.

DRAM....................... Dynamic Random Access Memory. A type of volatile
memory product that is used in electronic systems
to store data and program instructions. It is the
most common type of RAM and must be refreshed with
electricity thousands of times per second or else
it will fade away.

DSP........................ Digital Signal Processor. A type of integrated
circuit that processes and manipulates digital
information after it has been converted from an
analog source.

EEPROM..................... Electrically Erasable and Programmable Read-Only
Memory. A form of non-volatile memory that can be
erased electronically before being reprogrammed.

EPROM...................... Erasable Programmable Read-Only Memory. A
programmable and reusable chip that holds its
content until erased under ultraviolet light.

Ethernet................... A type of local area network (LAN). Most widely
used LAN access method.

Flash Memory............... A type of non-volatile memory, similar to an EEPROM
in that it is erasable and reprogrammable.

FlipChip................... Package type where silicon die is attached to the
packaging substrate using solder balls instead of
wires. See "Business -- Products."

GPS........................ Global Positioning System. A system for identifying
earth locations.

GUI........................ Graphical User Interface. A graphics-based user
interface that incorporates icons, pull-down menus
and a mouse.

IC......................... Integrated Circuit. A combination of two or more
transistors on a base material, usually silicon.
All semiconductor chips, including memory chips and
logic chips, are just very complicated ICs with
thousands of transistors.

Input/Output............... A connector which interconnects the chip to the
package or one package level to the next level in
the hierarchy. Also referred to as pin out
connections or terminals.

ISDN....................... Integrated Services Digital Network. An
international telecommunications standard for
transmitting voice, video and data over digital
lines running at 64 Kbps.

Logic Device............... A device that contains digital integrated circuits
that process, rather than store, information.

101
104

Mask....................... A piece of glass on which an IC's circuitry design
is laid out. Integrated circuits may require up to
20 different layers of design, each with its own
mask. In the IC production process, a light shines
through the mask leaving an image of the design on
the wafer. Also known as a reticle.

MBGA....................... Micro Ball Grid Array. See "Business -- Products."

Micron..................... 1/25,000 of an inch. Circuitry on an IC typically
follows lines that are less than one micron wide.

MOS........................ A device which consists of three layers (metal,
oxide and semiconductors) and operates as a
transistor.

MQFP....................... Metric Quad Flat Package. See
"Business -- Products."

PBGA....................... Plastic Ball Grid Array. See
"Business -- Products."

PC......................... Personal Computer.

PCMCIA..................... Standard for connecting peripherals to computers.

PDA........................ Personal Digital Assistant.

PDIP....................... Plastic Dual In-Line Packages. See
"Business -- Products."

Photolithography........... A lithographic technique used to transfer the
design of the circuit paths and electronic elements
on a chip onto a wafer's surface.

PLCC....................... Plastic Leaded Chip Carrier. See
"Business -- Products."

PLD........................ A logic chip that is programmed at the customer's
site.

PQFP....................... Plastic Quad Flat Packages. See
"Business -- Products."

RF......................... Radio Frequency. The range of electromagnetic
frequencies above the audio range and below visible
light.

SIP........................ Single In-Line Package. See "Business -- Products."

SOIC....................... Small Outline IC Packages. See
"Business -- Products."

SRAM....................... Static Random Access Memory. A type of volatile
memory product that is used in electronic systems
to store data and program instructions. Unlike the
more common DRAM, it does not need to be refreshed.

SSOP....................... Shrink Small Outline Packages. See
"Business -- Products."

Surface Mount Technology... A circuit board packaging technique in which the
leads (pins) on the chips and components are
soldered on top of the board.

TQFP....................... Thin Quad Flat Packages. See
"Business -- Products."

TSOP....................... Thin Small Outline Packages. See
"Business -- Products."

TSSOP...................... Thin Shrink Small Outline Packages. See
"Business -- Products."

Wafer...................... Thin, round, flat piece of silicon that is the base
of most integrated circuits.

Wire Bonding............... The method used to attach very fine wire to
semiconductor components in order to provide
electrical continuity between the semiconductor die
and a terminal.

102
105

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

INDEX TO COMBINED FINANCIAL STATEMENTS

PAGE
----

Report of Independent Public Accountants.................... F-2
Combined Statements of Income -- Years ended December 31,
1995, 1996 and 1997....................................... F-3
Combined Balance Sheets -- December 31, 1996 and 1997....... F-4
Combined Statements of Stockholders' Equity -- Years ended
December 31, 1995, 1996 and 1997.......................... F-5
Combined Statements of Cash Flows -- Years ended December
31, 1995, 1996 and 1997................................... F-6
Notes to Combined Financial Statements...................... F-7

F-1
106

After the Reorganization transaction discussed in Note 1 to the Amkor
Technology, Inc. and AK Industries, Inc. Combined Financial Statements is
effected, we expect to be in position to render the following report.

ARTHUR ANDERSEN LLP

February 3, 1998 (except with respect to the sale of the investment in Anam
Industrial Co., Ltd. common stock discussed in Note 6, as to which the date is
February 16, 1998)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Amkor Technology, Inc. and AK Industries, Inc.:

We have audited the accompanying combined balance sheets of Amkor
Technology, Inc. and AK Industries, Inc. and subsidiaries (see Note 1) as of
December 31, 1996 and 1997, and the related combined statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Amkor Technology,
Inc. and AK Industries, Inc. and subsidiaries as of December 31, 1996 and 1997,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the combined
financial statements, the Company is not in compliance with certain debt
agreements and has a net working capital deficiency at December 31, 1997. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to this matter are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Philadelphia, Pa.

F-2
107

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

COMBINED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

FOR THE YEAR ENDED
DECEMBER 31,
----------------------------------
1995 1996 1997
-------- ---------- ----------

NET REVENUES................................................ $932,382 $1,171,001 $1,455,761
COST OF REVENUES -- including purchases from AICL (Note
11)....................................................... 783,335 1,022,078 1,242,669
-------- ---------- ----------
GROSS PROFIT................................................ 149,047 148,923 213,092
-------- ---------- ----------
OPERATING EXPENSES:
Selling, general and administrative....................... 55,459 66,625 103,726
Research and development.................................. 8,733 10,930 8,525
-------- ---------- ----------
Total operating expenses............................... 64,192 77,555 112,251
-------- ---------- ----------
OPERATING INCOME............................................ 84,855 71,368 100,841
-------- ---------- ----------
OTHER (INCOME) EXPENSE:
Interest expense, net..................................... 9,797 22,245 32,241
Foreign currency (gain) loss.............................. 1,512 2,961 (835)
Other expense, net........................................ 6,523 3,150 8,429
-------- ---------- ----------
Total other expense.................................... 17,832 28,356 39,835
-------- ---------- ----------
INCOME BEFORE INCOME TAXES, EQUITY IN INCOME (LOSS) OF AICL
AND MINORITY INTEREST..................................... 67,023 43,012 61,006
PROVISION FOR INCOME TAXES.................................. 6,384 7,876 7,078
EQUITY IN INCOME (LOSS) OF AICL............................. 2,808 (1,266) (17,291)
MINORITY INTEREST........................................... 1,515 948 (6,644)
-------- ---------- ----------
NET INCOME.................................................. $ 61,932 $ 32,922 $ 43,281
======== ========== ==========
PRO FORMA DATA (UNAUDITED):
Historical income before income taxes, equity in income
(loss) of AICL and minority interest................... $ 67,023 $ 43,012 $ 61,006
Pro forma provision for income taxes...................... 16,784 10,776 10,691
-------- ---------- ----------
Pro forma income before equity in income (loss) of AICL
and minority interest.................................. 50,239 32,236 50,315
Historical equity in income (loss) of AICL................ 2,808 (1,266) (17,291)
Historical minority interest.............................. 1,515 948 (6,644)
-------- ---------- ----------
Pro forma net income...................................... $ 51,532 $ 30,022 $ 39,668
======== ========== ==========
Basic and diluted pro forma net income per common share... $ .62 $ .36 $ .48
======== ========== ==========
Shares used in computing pro forma net income per common
share..................................................... 82,610 82,610 82,610
======== ========== ==========

The accompanying notes are an integral part of these statements.

F-3
108

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

COMBINED BALANCE SHEETS
(IN THOUSANDS)

DECEMBER 31,
-----------------------------------
1997 1997
1996 ACTUAL PRO FORMA
-------- -------- -----------
(UNAUDITED)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 49,664 $ 90,917 $ 63,217
Short-term investments.................................. 881 2,524 2,524
Accounts receivable --
Trade, net of allowance for doubtful accounts of
$1,179, $4,234 and $4,234.......................... 170,892 102,804 102,804
Due from affiliates.................................. 26,886 14,431 14,431
Other................................................ 6,426 4,879 4,879
Inventories............................................. 101,920 115,870 115,870
Other current assets.................................... 8,618 26,997 26,997
-------- -------- --------
Total current assets............................ 365,287 358,422 330,722
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, net........................ 324,895 427,061 427,061
-------- -------- --------
INVESTMENTS:
AICL at equity.......................................... 31,154 13,863 13,863
Other................................................... 38,090 5,958 5,958
-------- -------- --------
Total investments............................... 69,244 19,821 19,821
-------- -------- --------
OTHER ASSETS:
Due from affiliates..................................... 20,699 29,186 29,186
Other................................................... 24,739 21,102 21,102
-------- -------- --------
45,438 50,288 50,288
-------- -------- --------
Total assets.................................... $804,864 $855,592 $827,892
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term
debt................................................. $191,813 $325,968 $325,968
Trade accounts payable.................................. 45,798 113,037 113,037
Due to affiliates....................................... 33,379 15,581 15,581
Bank overdraft.......................................... 14,518 29,765 29,765
Accrued expenses........................................ 30,156 43,973 43,973
Accrued income taxes.................................... 12,838 26,968 26,968
-------- -------- --------
Total current liabilities....................... 328,502 555,292 555,292
-------- -------- --------
LONG-TERM DEBT............................................ 167,444 38,283 38,283
-------- -------- --------
DUE TO ANAM USA, INC. (Note 11)........................... 234,894 149,776 149,776
-------- -------- --------
OTHER NONCURRENT LIABILITIES.............................. 12,286 12,084 14,184
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 13)
MINORITY INTEREST......................................... 15,926 9,282 9,282
-------- -------- --------
STOCKHOLDERS' EQUITY:
Amkor Technology, Inc. -- common stock.................. 45 45 45
AK Industries, Inc. -- common stock..................... 1 1 1
Additional paid-in capital.............................. 16,770 20,871 20,871
Retained earnings....................................... 32,340 70,621 40,821
Unrealized losses on investments........................ (1,586) -- --
Cumulative translation adjustment....................... (1,758) (663) (663)
-------- -------- --------
Total stockholders' equity...................... 45,812 90,875 61,075
-------- -------- --------
Total liabilities and stockholders' equity...... $804,864 $855,592 $827,892
======== ======== ========

The accompanying notes are an integral part of these statements.

F-4
109

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996, AND 1997
(IN THOUSANDS)

AMKOR AK UNREALIZED
TECHNOLOY, INDUSTRIES, GAINS
INC. INC. ADDITIONAL (LOSSES) CUMULATIVE
COMMON COMMON PAID-IN RETAINED ON TRANSLATION
STOCK STOCK CAPITAL EARNINGS INVESTMENTS ADJUSTMENT TOTAL
---------- ----------- ---------- --------- ----------- ------------ --------

BALANCE AT JANUARY 1, 1995..... $45 $ 1 $16,494 $ (6,359) $ (35) $ (529) $ 9,617
Net income................... -- -- -- 61,932 -- -- 61,932
Distributions................ -- -- -- (19,922) -- -- (19,922)
Change in division equity
account.................... -- -- -- (4,505) -- -- (4,505)
Unrealized gains (losses) on
investments................ -- -- -- -- (2,015) -- (2,015)
Currency translation
adjustments................ -- -- -- -- -- 182 182
--- --- ------- -------- ------- ------- --------
BALANCE AT DECEMBER 31, 1995... 45 1 16,494 31,146 (2,050) (347) 45,289
Net income................... -- -- -- 32,922 -- -- 32,922
Distributions................ -- -- -- (15,123) -- -- (15,123)
Change in division equity
account.................... -- -- -- (16,605) -- -- (16,605)
Unrealized gains (losses) on
investments................ -- -- -- -- 464 -- 464
Currency translation
adjustments................ -- -- -- -- -- (1,411) (1,411)
Acquisition of AATS (Note
14)........................ -- -- 276 -- -- -- 276
--- --- ------- -------- ------- ------- --------
BALANCE AT DECEMBER 31, 1996... 45 1 16,770 32,340 (1,586) (1,758) 45,812
Net income................... -- -- -- 43,281 -- -- 43,281
Distributions................ -- -- -- (5,000) -- -- (5,000)
Change in division equity
account.................... -- -- 4,101 -- -- -- 4,101
Unrealized gains (losses) on
investments................ -- -- -- -- 1,586 -- 1,586
Currency translation
adjustments................ -- -- -- -- -- 1,095 1,095
--- --- ------- -------- ------- ------- --------
BALANCE AT DECEMBER 31, 1997... $45 $ 1 $20,871 $ 70,621 $ 0 $ (663) $ 90,875
=== === ======= ======== ======= ======= ========

The accompanying notes are an integral part of these statements.

F-5
110

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

FOR THE YEAR ENDED
DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 61,932 $ 32,922 $ 43,281
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation and amortization........................... 26,614 57,825 81,864
Provision for accounts receivable....................... 444 1,271 3,490
Provision for excess and obsolete inventory............. 1,000 500 12,659
Deferred income taxes................................... (1,147) (324) (11,715)
Equity (gain) loss of investees......................... (2,713) 605 16,779
(Gain) loss on sale of investments...................... 126 (139) (239)
Minority interest....................................... 1,515 948 (6,644)
Changes in assets and liabilities excluding effects of
acquisitions --
Accounts receivable..................................... (53,264) (36,695) (19,802)
Proceeds from accounts receivable sale.................. -- -- 90,700
Other receivables....................................... (2,565) (925) 1,547
Inventories............................................. (32,668) (16,380) (26,609)
Due to/from affiliates, net............................. (3,001) (8,203) (19,138)
Other current assets.................................... (4,764) 1,694 (7,239)
Other non-current assets................................ (326) (6,108) 3,322
Accounts payable........................................ 35,017 (16,852) 60,939
Accrued expenses........................................ 17,687 (12,658) 13,817
Accrued taxes........................................... 404 7,433 14,130
Other long-term liabilities............................. 9,034 (108) (1,089)
Other, net.............................................. -- 3,750 --
----------- ----------- -----------
Net cash provided by operating activities.......... 53,325 8,556 250,053
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, including
purchase of AATS........................................ (123,645) (185,112) (178,990)
Sale of property, plant and equipment..................... 110 2,228 1,413
Purchases of investments and issuances of notes
receivable.............................................. (25,123) (15,633) (15,187)
Proceeds from sale of investments......................... 351 520 --
----------- ----------- -----------
Net cash used in investing activities.............. (148,307) (197,997) (192,764)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in bank overdrafts and short-term borrowings... 41,308 64,852 52,393
Proceeds from issuance of Anam USA, Inc. debt............. 1,059,759 1,205,174 1,408,086
Payments of Anam USA, Inc. debt........................... (1,052,415) (1,189,317) (1,443,464)
Proceeds from issuance of long-term debt.................. 50,080 102,193 11,389
Payments of long-term debt................................ (3,021) (3,138) (43,541)
Distributions to stockholders............................. (20,003) (15,205) (5,000)
Change in division equity account......................... (4,505) (16,605) 4,101
----------- ----------- -----------
Net cash provided by (used in) financing
activities....................................... 71,203 147,954 (16,036)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (23,779) (41,487) 41,253
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 114,930 91,151 49,664
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 91,151 $ 49,664 $ 90,917
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest................................................ $ 12,594 $ 24,125 $ 37,070
Income taxes............................................ 495 2,256 3,022

The accompanying notes are an integral part of these statements.

F-6
111

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Combination

The combined financial statements of Amkor Technology, Inc. ("ATI") and its
subsidiaries and AK Industries, Inc. and its subsidiary ("Amkor" or the
"Company") include the accounts of the following (these companies are referred
to as the "Amkor Companies"):

- Amkor Electronics, Inc. ("AEI"), a U.S. S Corporation and its wholly
owned subsidiaries Amkor Receivables Corp and Amkor Wafer Fabrication
Services SARL (a French Limited Company).

- T.L. Limited ("TLL") (a British Cayman Island Corporation) and its
Philippine subsidiaries, Amkor Anam Advanced Packaging, Inc. ("AAAP")
(wholly owned) and Amkor/Anam Pilipinas, Inc. ("AAP") (which is currently
owned 60% by TLL and 40% by Anam Industrial Co., Ltd. ("AICL"-- see Notes
11 and 16) and its wholly-owned subsidiary Automated MicroElectronics,
Inc. ("AMI");

- C.I.L., Limited ("CIL") (a British Cayman Islands Corporation) and its
wholly-owned subsidiary Amkor/Anam Euroservices S.A.R.L. ("AAES") (a
French Corporation);

- Amkor Anam Test Services, Inc. (a U.S. Corporation) (see Note 14); and

- The semiconductor packaging and test business unit of Chamterry
Enterprises, Ltd. ("Chamterry"). During the third quarter of 1997
Chamterry transferred its customers to AEI and CIL and ceased operations
of its semiconductor and test business unit.

- AK Industries, Inc. ("AKI") (a U.S. Corporation) and its wholly-owned
subsidiary, Amkor-Anam, Inc. (a U.S. Corporation);

All of the Amkor Companies are substantially wholly owned by Mr. and Mrs.
James Kim or entities controlled by members of Mr. James Kim's immediate family
(the "Founding Stockholders"), except for AAP which is 40% owned by AICL and one
third of AEI and all of AKI which are owned by trusts established for the
benefit of other members of Mr. James Kim's family ("Kim Family Trusts"). The
Amkor Companies are an interdependent group of companies involved in the same
business under the direction of common management. ATI was formed in September
1997 to facilitate the Reorganization and consolidate the ownership of the Amkor
Companies. In connection with the Reorganization, AEI will be merged into ATI.
Amkor International Holdings ("AIH") a newly formed Cayman Islands holding
company will become a wholly owned subsidiary of ATI. AIH will hold the
following entities: First Amkor Caymans, Inc. ("FACI"), a newly formed holding
company, and its subsidiaries AAAP and AAP and AAP's subsidiary AMI, TLL and its
subsidiary CIL and CIL's subsidiary AAES. The relative number of shares of
common stock issued by the Company in connection with each of the transactions
comprising the Reorganization is based upon the relative amounts of
stockholders' equity at December 31, 1997. In exchange for their interests in
AEI, Mr. and Mrs. James Kim and the Kim Family Trusts will receive 9,746,766
shares and 4,873,383 shares of ATI common stock, respectively. ATI will issue
67,989,851 shares of common stock in exchange for all of the outstanding shares
of AIH and its subsidiaries. Of such shares, 19,328,234 shares, 36,376,617
shares and 8,200,000 shares will be gifted to Mr. and Mrs. James Kim, the Kim
Family Trusts and other members of Mr. Kim's immediate family, respectively.
Following such transactions the Founding Stockholders and such other members of
Mr. Kim's immediate family will beneficially own a majority of the outstanding
shares of ATI common stock. In addition, ATI will acquire all of the stock of
AKI from the Kim Family Trusts for $3,000. The merger of AEI and ATI, the
creation of AIH and FACI, the issuance of ATI common stock for AIH and the
acquisition of AKI are collectively referred to as the Reorganization.

F-7
112
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

Included within the Amkor Companies following the Reorganization are ATI,
AIH and its subsidiaries and AKI and its subsidiary. All of the subsidiaries
will be wholly owned except for 40% of the common stock of AAP which is owned by
AICL (see Note 16), and a small number of shares of each of AAP, AAAP and AMI
which are required to be owned by directors of these companies pursuant to
Philippine law.

Except for the acquisition of the shares of AKI which will be accounted for
as a purchase transaction, the Reorganization described above will be treated
similar to a pooling of interests as it represents an exchange of equity
interests among companies under common control. The purchase price for the AKI
stock, which represents the fair value of these shares, approximates the book
value of AKI. The financial statements are presented on a combined basis as a
result of the common ownership and business operations of all of the Amkor
Companies, including AKI. As a result of the acquisition of AKI, AKI will become
a wholly owned subsidiary of ATI; accordingly, future financial statements will
be presented for ATI and its subsidiaries on a consolidated basis.

The financial statements reflect the elimination of all significant
intercompany accounts and transactions.

The investments in and the operating results of 20%- to 50%-owned companies
are included in the combined financial statements using the equity method of
accounting.

Basis of Presentation

The accompanying financial statements have been prepared on a going concern
basis which contemplates realization of assets and liquidation of liabilities in
the ordinary course of business. At December 31, 1997 the Company was not in
compliance with certain restrictive covenants of its principal long-term debt
agreements and, as a result, amounts due under these agreements are required to
be classified as current liabilities in the combined balance sheet.
Consequently, at December 31, 1997, current liabilities exceeded current assets
by $196,870. To date, the Company has not received any notification that the
Company's repayment obligations with respect to these loans have been
accelerated as a result of such covenant violations. However, there is no
assurance that the Company could generate sufficient cash flow from operations
or other sources to satisfy these liabilities should they become due before
maturity. If the planned public offering of common stock and convertible debt is
successful (see Note 16), the Company will use part of the net proceeds to the
Company to repay these bank loans. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

Nature of Operations

The Company provides semiconductor packaging and test services to
semiconductor and computer manufacturers located in strategic markets throughout
the world. Such services are provided by the Company and by AICL under a
long-standing arrangement. Approximately 79%, 72% and 68% of the Company's
packaging and test revenues in 1995, 1996 and 1997, respectively, relate to the
packaging and test services provided by AICL.

Concentrations of Credit Risk

Financial instruments, for which the Company is subject to credit risk,
consist principally of trade receivables. The Company has mitigated this risk by
selling primarily to well established companies, performing ongoing credit
evaluations and making frequent contact with customers.

At December 31, 1996 and 1997, the Company maintained $34,330 and $53,071,
respectively, in deposits at one U.S. financial institution and $1,861 and
$2,548, respectively, in deposits at U.S. banks which exceeded federally insured
limits.

F-8
113
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

Additionally, at December 31, 1996 and 1997, the Company maintained
deposits and certificates of deposits totaling approximately $14,649 and
$34,622, respectively, at foreign owned banks.

Significant Customers

The Company has a number of major customers in North America, Asia and
Europe. The Company's largest customer, Intel Corporation, accounted for
approximately 13.3%, 23.5% and 23.4% of net revenues in 1995, 1996 and 1997,
respectively. The Company's five largest customers collectively accounted for
34.1%, 39.2% and 40.1% of net revenues in 1995, 1996 and 1997, respectively. The
Company anticipates that significant customer concentration will continue for
the foreseeable future, although the companies which constitute the Company's
largest customers may change.

Risks and Uncertainties

The Company's future results of operations involve a number of risks and
uncertainties. Factors that could affect the Company's future operating results
and cause actual results to vary materially from expectations include, but are
not limited to, dependence on the highly cyclical nature of both the
semiconductor and the personal computer industries, competitive pricing and
declines in average selling prices, risks associated with leverage, dependence
on the Company's relationship with and the financial support provided by AICL
(see Note 11), reliance on a small group of principal customers, timing and
volume of orders relative to the Company's production capacity, availability of
manufacturing capacity and fluctuations in manufacturing yields, availability of
financing, competition, dependence on international operations and sales,
dependence on raw material and equipment suppliers, exchange rate fluctuations,
dependence on key personnel, difficulties in managing growth, enforcement of
intellectual property rights, environmental regulations and fluctuations in
quarterly operating results.

Foreign Currency Translation

Substantially all of the Company's foreign subsidiaries use the U.S. dollar
as their functional currency. Accordingly, monetary assets and liabilities which
were originally denominated in a foreign currency are translated into U.S.
dollars at month-end exchange rates. Non-monetary items which were originally
denominated in foreign currencies are translated at historical rates. Gains and
losses from such transactions and from transactions denominated in foreign
currencies are included in other (income) expense, net. The cumulative
translation adjustment reflected in stockholders' equity in the combined balance
sheets relates primarily to investments in unconsolidated companies which use
the local currency as the functional currency (see Note 6).

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

Accounts Receivable

At December 31, 1997, trade accounts receivable represent the Company's
interest in receivables sold in excess of amounts purchased by banks under an
accounts receivable sale agreement (see Note 2). Of the total net trade accounts
receivable amount at December 31, 1997, $19,905 relates to the trade accounts
receivable of CIL which were not sold under the Agreement.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
principally by using a moving average method.

F-9
114
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is
calculated by the straight-line method over the estimated useful lives of
depreciable assets. Accelerated methods are used for tax purposes. Depreciable
lives follow:

Building and improvements............................. 10 to 30 years
Machinery and equipment............................... 3 to 5 years
Furniture, fixtures, and other equipment.............. 3 to 10 years

Cost and accumulated depreciation for property retired or disposed of are
removed from the accounts and any resulting gain or loss is included in
earnings. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation expense was $27,381, $58,497 and $81,159 for 1995, 1996
and 1997, respectively.

Other Noncurrent Assets

Other noncurrent assets consist principally of security deposits, deferred
income taxes and the cash surrender value of life insurance policies.

Other Noncurrent Liabilities

Other noncurrent liabilities consist primarily of pension obligations and
noncurrent income taxes payable.

Income Taxes

The Company accounts for income taxes following the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires the use of the liability method. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is provided.

The Company reports certain income and expense items for income tax
purposes on a basis different from that reflected in the accompanying combined
financial statements. The principal differences relate to the timing of the
recognition of accrued expenses which are not deductible for federal income tax
purposes until paid, the use of accelerated methods of depreciation for income
tax purposes and unrecognized foreign exchange gains and losses.

AEI elected to be taxed as an S Corporation under the provisions of the
Internal Revenue Code of 1986 and comparable state tax provisions. As a result,
AEI does not recognize U.S. federal corporate income taxes. Instead, the
stockholders of AEI are taxed on their proportionate share of AEI's taxable
income. Accordingly, no provision for U.S. federal income taxes was recorded for
AEI. Given the pending Offerings (see Note 16), for informational purposes, the
accompanying combined statements of income include an unaudited pro forma
adjustment to reflect income taxes which would have been recorded if AEI had not
been an S Corporation, based on the tax laws in effect during the respective
periods (see Note 17).

Earnings Per Share

The pro forma net income per common share was calculated by dividing the
pro forma net income by the weighted average number of shares outstanding for
the respective periods, adjusted for the effect of the Reorganization (see Note
16).

In the fourth quarter of 1997, the Company adopted SFAS No. 128, "Earnings
Per Share," which requires dual presentation of basic and diluted earnings per
share on the face of the income statement. Basic

F-10
115
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

EPS is computed using only the weighted average number of common shares
outstanding for the period while diluted EPS is computed assuming conversion of
all dilutive securities, such as options. In accordance with the statement, all
prior period per share amounts have been revised to reflect the new
presentation. The Company's basic and diluted per share amounts are the same for
all periods presented. There have been no changes to historical per share
amounts.

Revenue Recognition and Risk of Loss

The Company records revenues upon shipment of packaged semiconductors to
its customers. The Company does not take ownership of customer-supplied
semiconductors. Title and risk of loss remains with the customer for these
materials at all times. Risk of loss for Amkor packaging costs passes upon
completion of the packaging process and shipment to the customer. Accordingly,
the cost of the customer-supplied materials is not included in the combined
statements of income.

Research and Development Costs

Research and development costs are charged to expense as incurred.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income." This statement establishes standards
for reporting and display of income and its components in financial statements.
The Company will be required to adopt this statement in 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." Under this statement, reporting
standards were established for the way that public business enterprises report
information about operating segments in annual financial statements and selected
information about operating segments in interim financial reports issued to
shareholders. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments. This statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial year of
application, comparative information for earlier years presented is to be
restated. This statement need not be applied to interim financial statements in
the initial year of its application, but comparative information for interim
periods in the initial year of application is to be reported in financial
statements for interim periods in the second year of application. The Company
will adopt this statement prospectively for the year ended December 31, 1998.

Reclassifications

Certain previously reported amounts have been reclassified to conform with
the current presentation.

2. ACCOUNTS RECEIVABLE SALE AGREEMENT

Effective July 7, 1997, the Company entered into an agreement to sell
receivables (the "Agreement") with certain banks (the "Purchasers"). The
transaction qualifies as a sale under the provisions of SFAS

F-11
116
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

No. 125 "Accounting For Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." Under the Agreement, the Purchasers have
committed to purchase, with limited recourse, all right, title and interest in
selected accounts receivable of the Company, up to a maximum of $100,000. In
connection with the Agreement, the Company established a wholly owned,
bankruptcy remote subsidiary, Amkor Receivables Corp., to purchase accounts
receivable at a discount from the Company on a continuous basis, subject to
certain limitations as described in the Agreement. Amkor Receivables Corp.
simultaneously sells the accounts receivable at the same discount to the
Purchasers. AICL has guaranteed AEI's obligations under the Agreement (see Note
11). The Agreement is structured as a three year facility subject to annual
renewals based upon the mutual consent of the Company and purchasers. The first
such renewal date is June 18, 1998. The Company and AICL did not comply with
certain financial covenants under the Agreement as of December 31, 1997. The
Purchasers have agreed to waive compliance with these covenants through January
2, 1999. The Company applied approximately $83.4 million of the Receivables Sale
proceeds together with approximately $17 million of working capital to reduce
the Company's indebtedness to AUSA which amounts were advanced by AUSA to
entities controlled by members of James Kim's family.

Proceeds from the sale of receivables were $84,400 in 1997. Losses on
receivables sold under the Agreement were approximately $2,414 in 1997 and are
included in other expense, net. As of December 31, 1997, approximately $6,300 is
included in current liabilities for amounts to be refunded to the Purchasers as
a result of a reduction in selected accounts receivable.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

DECEMBER 31,
--------------------
1996 1997
-------- --------

Land........................................... $ -- $ 2,346
Building and improvements...................... 81,602 109,528
Machinery and equipment........................ 333,188 448,032
Furniture, fixtures and other equipment........ 31,330 33,050
Construction in progress....................... 5,240 31,964
-------- --------
451,360 624,920
Less -- Accumulated depreciation and
amortization................................. 126,465 197,859
-------- --------
$324,895 $427,061
======== ========

4. COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL

The common stock and additional paid-in-capital of the Company are
reflected at the original cost of the Amkor Companies. In connection with the
Reorganization, the Company authorized 500,000,000 shares of $.001 par value
common stock, of which 82,610,000 shares will be issued and outstanding to the
stockholders of the Amkor Companies in exchange for their interests in these
Companies.

In addition, the Company authorized 10,000,000 shares of $.001 par value
preferred stock, designated as Series A.

Changes in the division equity account reflected in the combined statement
of stockholders' equity represent the net cash flows resulting from the
operations of the Chamterry semiconductor packaging and test business for the
periods indicated. Such cash flows have been presented as distributions or
capital contributions since these amounts were retained in Chamterry
Enterprises, Ltd. for the benefit of the owners.

F-12
117
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

5. INVENTORIES

Inventories consist of raw materials and purchased components which are
used in the semiconductor packaging process. The Company's inventories are
located at its facilities in the Philippines or at AICL on a consignment basis.
Components of inventories follow:

DECEMBER 31,
--------------------
1996 1997
-------- --------

Raw materials and purchased components......... $ 93,112 $105,748
Work-in-process................................ 8,808 10,122
-------- --------
$101,920 $115,870
======== ========

6. INVESTMENTS

The Company's investments include investments in affiliated companies which
provide services to the Company (see Note 11) and certain other technology based
companies. Investments are summarized as follows:

DECEMBER 31,
------------------
1996 1997
------- -------

Equity Investment in AICL (10.2% and 8.1% at
December 31, 1996 and 1997, respectively)...... $31,154 $13,863
------- -------
Other Equity Investments (20%-50% owned)
Anam Semiconductor & Technology Co., Ltd....... 10,700 --
Datacom International, Inc..................... 1,335 --
Sunrise Capital Fund........................... 1,328 --
Other.......................................... 1,373 738
------- -------
Total other equity investments......... 14,736 738
------- -------
Available for Sale (cost based investments)...... 23,354 5,220
------- -------
$69,244 $19,821
======= =======

The Company had net unamortized investment costs in excess of the
proportionate share of the investee companies' net assets of approximately
$1,284 and $0 at December 31, 1996 and 1997, respectively.

On August 1, 1997, the Company sold its equity investment in Anam
Semiconductor & Technology Co., Ltd. ("Anam S&T") and certain investments and
notes receivable from companies unrelated to the semiconductor packaging and
test business to AK Investments, Inc., an entity owned by James J. Kim, at cost
($49,740) and AK Investments, Inc. assumed $49,740 of the Company's long-term
borrowings from Anam USA, Inc. Management estimates that the fair value of these
investments and notes receivable approximated the carrying value at August 1,
1997. Subsequent to the sale on August 1, 1997 the Company loaned AK
Investments, Inc. $12,800 for the purchase of additional investments. The amount
outstanding on this loan at December 31, 1997 was $4,350.

The Company's investment in AICL is accounted for using the equity method
of accounting. Although the Company does not own in excess of 20% of the
outstanding common stock of AICL, the Company through its common ownership with
the Kim family and entities controlled by the Kim family owns 40.7% of the
outstanding common stock of AICL and may exercise a significant influence over
AICL. Accordingly the Company applies the equity method based on its ownership
interest. A significant portion of the shares owned by the Kim family are
leveraged and as a result of this, or for other reasons, the family's ownership
could be substantially reduced.

F-13
118
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

In 1997, the Company recognized a loss of $17,291, resulting principally
from the impairment of value of its investment in AICL as well as the current
year equity in income (loss) of AICL. The amount of the loss was determined
based upon the market value of the AICL shares on the Korean Stock Exchange on
February 16, 1998, the date that the Company sold its investment in AICL common
stock to AK Investments, Inc. In exchange for the shares, AK Investments, Inc.
assumed $13,863 of the Company's long-term borrowings from Anam USA, Inc.

The Company is advised that AICL, as a public company in Korea, has
published its most recent consolidated financial statements as of December 31,
1996, and that AICL has prepared preliminary consolidated financial statements
as of December 31, 1997. The Company's auditors do not audit AICL.

The Korean economy is undergoing changes as evidenced by the agreement
between the Korean government and the International Monetary Fund. Among other
things, this agreement includes a restructuring plan of the banking industry as
a whole which will most likely have a material effect on AICL's operations. The
overall impact of these economic changes on AICL is uncertain at this time.

AICL's financial statements are prepared on the basis of Korean GAAP, which
differs from U.S. GAAP in certain significant respects. The Company's equity in
income (loss) of AICL is based upon the Korean GAAP information noted above and
AICL's estimate of significant U.S. GAAP adjustments. These adjustments were not
significant in 1995 and 1996. In 1997, AICL recognized a W305 billion loss
principally as a result of foreign exchange losses on U.S. dollar denominated
liabilities due to the significant depreciation of the won relative to the U.S.
dollar. For purposes of determining the Company's equity in income (loss) of
AICL under U.S. GAAP, losses on remeasuring U.S. dollar denominated liabilities
are not recognized as the U.S. dollar is the functional currency for AICL. Such
U.S. dollar denominated liabilities were W2,144 billion at December 31, 1997.
Also, at December 31, 1997, the carrying value of the investment in AICL,
adjusted for the loss on the 1998 disposition discussed above, is less than the
Company's portion of AICL's net assets after consideration of the estimated U.S.
GAAP adjustments. The most significant such adjustment affecting net assets is
the remeasurement of property, plant and equipment to historical costs as
required as the U.S. dollar is the functional currency.

The following summary of consolidated financial information pertaining to
AICL was derived from the consolidated financial statements referred to above.
All amounts are in millions of Korean Won:

1995 1996 1997
---------- ---------- ----------

SUMMARY INCOME STATEMENT INFORMATION:
Sales........................................ W1,105,273 W1,338,718 W1,786,457
Net income (loss)............................ 18,333 (9,385) (305,414)
SUMMARY BALANCE SHEET INFORMATION:
Total assets................................. 2,225,288 3,936,517
Total liabilities............................ 1,975,431 3,861,384

7. SHORT-TERM CREDIT FACILITIES

At December 31, 1996 and 1997, short-term borrowings consisted of various
operating lines of credit and working capital facilities maintained by the
Company. These borrowings are secured by receivables, inventories or property.
These facilities, which are typically for one-year renewable terms, generally
bear interest at current market rates appropriate for the country in which the
borrowing is made (ranging from 7.2% to 13.0% at December 31, 1997). For 1996
and 1997, the weighted average interest rate on these borrowings was 7.8% and
8.6%, respectively. Included in cash and cash equivalents is $1,200 of
certificates of

F-14
119
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

deposit pledged as collateral for certain of these lines. The unused portion of
lines of credit total $36,169 at December 31, 1997.

8. DEBT

Following is a summary of the Company's short-term borrowings and long-term
debt:

DECEMBER 31,
----------------------
1996 1997
--------- ---------

Short-term borrowings (see Note 7).......................... $ 150,513 $ 187,659
Bank loan, interest at LIBOR plus annual spread (6.78% at
December 31, 1997), due October, 2000..................... 50,000 50,000
Bank loan, interest at LIBOR plus annual spread (6.68% at
December 31, 1997), due in installments beginning March,
1998 through April, 2001.................................. 71,250 71,250
Floating rate notes (FRNs), interest at LIBOR plus annual
spread (7.38% at August 20, 1997, date of redemption)..... 40,000 --
Bank debt, interest at LIBOR plus annual spread (9.37% at
December 31, 1997), due December, 2001.................... 20,000 20,000
Bank debt, interest at LIBOR plus annual spread (12.22% at
December 31, 1997,) due October, 1998..................... 5,000 5,000
Bank debt, interest at LIBOR plus annual spread (9.09% at
December 31, 1997), due in installments with balance due
September, 1999........................................... 4,000 3,500
Bank debt, interest at LIBOR plus annual spread (11.88% at
December 31, 1997), due in equal installments through
January, 2001............................................. 5,926 5,502
Note payable, interest at prime (8.50% at December 31,
1997), due in semiannual installments beginning November
1999 through April, 2004.................................. -- 9,530
Note payable, interest at LIBOR plus annual spread (12.48%
at December 31, 1997), due in installments with balance
due November, 1999........................................ 11,000 9,000
Other, primarily capital lease obligations and other debt... 1,568 2,810
--------- ---------
359,257 364,251
Less -- Short-term borrowings and current portion of
long-term debt............................................ (191,813) (325,968)
--------- ---------
$ 167,444 $ 38,283
========= =========

The Bank loans were obtained to finance the expansion of the Company's
factories in the Philippines. The Company has the option to prepay all or part
of the loans on any interest payment date. These Bank loans are unconditionally
and irrevocably guaranteed by AICL. The Bank loans contain provisions pertaining
to the maintenance of specified debt-to-equity ratios, restrictions with respect
to corporate reorganization, acquisition of capital stock or substantially all
of the assets of any other corporations and advances and dispositions of all or
a substantial portion of the borrower's assets, except in the ordinary course of
business. AAP has not been in compliance with covenants regarding the
maintenance of certain debt-to-equity ratios and advances to affiliates.
Consequently, amounts due under these agreements and certain other agreements
with cross-default clauses have been classified as current liabilities in the
accompanying combined balance sheet.

Other bank debt instruments have interest rates based on Singapore
interbank rates and LIBOR plus an annual spread. The loans are secured by assets
of the Company and assets acquired through proceeds from the loans.

F-15
120
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

Principal payments required under long-term debt borrowings at December 31,
1997 are as follows:

AMOUNT
--------

1998.............................................. $138,309
1999.............................................. 9,153
2000.............................................. 2,360
2001.............................................. 22,003
2002.............................................. 1,905
Thereafter........................................ 2,862
--------
Total............................................. $176,592
========

9. EMPLOYEE BENEFIT PLANS

U.S. Pension Plans

AEI has a defined contribution benefit plan covering substantially all U.S.
employees under which AEI matches 75% of the employee's contributions of between
6% and 10% of salary, up to a defined maximum on an annual basis. The pension
expense for this plan was $483, $776 and $959 in 1995, 1996 and 1997,
respectively. The pension plan assets are invested primarily in equity and fixed
income securities.

Philippine Pension Plans

AAAP, AAP and AMI sponsor several defined benefit plans that cover
substantially all employees who are not covered by statutory plans. Charges to
expense are based upon costs computed by independent actuaries.

The components of net periodic pension cost for the defined benefit plans
are as follows:

YEAR ENDED DECEMBER 31,
--------------------------
1995 1996 1997
------ ------ ------

Service cost of current period................... $ 974 $1,542 $1,274
Interest cost on projected benefit obligation.... 811 1,228 957
Actual return on plan assets..................... (609) (677) (585)
Net amortization and deferrals................... 100 98 132
------ ------ ------
Total pension expense.................. $1,276 $2,191 $1,778
====== ====== ======

It is the Company's policy to make contributions sufficient to meet the
minimum contributions required by law and regulation.

F-16
121
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The following table sets forth the funded status and the amounts recognized
in the combined balance sheets for the defined benefit pension plans:

1996 1997
------- -------

Actuarial present value of:
Vested benefit obligation.............................. $ 1,696 $ 1,546
======= =======
Accumulated benefit obligation......................... $ 2,848 $ 2,669
======= =======
Actuarial present value of projected benefit
obligation............................................. $12,699 10,428
Plan assets at fair value................................ 6,077 6,614
------- -------
Plan assets less than projected benefit obligation....... (6,622) (3,814)
Prior service cost....................................... 1,125 967
Unrecognized net loss.................................... 1,800 953
------- -------
Accrued pension cost..................................... $(3,697) $(1,894)
======= =======

The weighted average interest rate used in determining the projected
benefit obligation was 12% as of December 31, 1996 and 1997. The rates of
increase in future compensation levels was 11% as of December 31, 1996 and 1997.
The expected long-term rate of return on plan assets was 12% as of December 31,
1996 and 1997.

10. INCOME TAXES

The provision for income taxes includes federal, state and foreign taxes
currently payable and those deferred because of temporary differences between
the financial statement and the tax bases of assets and liabilities. The
components of the provision for income taxes follow:

FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
-------- -------- ---------

Current:
Federal....................................... $6,125 $5,880 $16,126
State......................................... 908 60 2,639
Foreign....................................... 498 2,260 28
------ ------ -------
7,531 8,200 18,793
------ ------ -------
Deferred:
Federal....................................... (173) (226) (4,991)
Foreign....................................... (974) (98) (6,724)
------ ------ -------
(1,147) (324) (11,715)
------ ------ -------
Total provision....................... $6,384 $7,876 $ 7,078
====== ====== =======

F-17
122
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The reconciliation between the tax payable based upon the U.S. federal
statutory income tax rate and the recorded provision follow:

FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
-------- ------- --------

Federal statutory rate...................... $ 23,458 $15,054 $ 21,352
State taxes, net of federal benefit......... 908 60 1,285
S Corp. status of AEI....................... (10,400) (2,900) (3,613)
(Income) losses of foreign subsidiaries
subject to tax holiday.................... -- 4,957 (5,106)
Foreign exchange losses recognized for
income taxes.............................. (1,649) -- (21,147)
Valuation allowance......................... 22,000
Difference in rates on foreign
subsidiaries.............................. (5,933) (9,295) (7,693)
-------- ------- --------
Total............................. $ 6,384 $ 7,876 $ 7,078
======== ======= ========

The Company has structured its global operations to take advantage of lower
tax rates in certain countries and tax incentives extended to encourage
investment. AAP had a tax holiday in the Philippines which expired in 1995. AAAP
has a tax holiday in the Philippines which expires at the end of 2002. Foreign
exchange losses recognized for income taxes relate to unrecognized net foreign
exchange losses on U.S. dollar denominated monetary assets and liabilities.
These losses, which are not recognized for financial reporting purposes as the
U.S. dollar is the functional currency (see Note 1), result in deferred tax
assets that will be realized, for Philippine tax reporting purposes, upon
settlement of the related asset or liability. The deferred tax asset related to
these losses increased in 1997 as a result of the dramatic devaluation of the
Philippine peso relative to the U.S. dollar. The Company's ability to utilize
these assets depends on the timing of the settlement of the related assets or
liabilities and the amount of taxable income recognized within the Philippine
statutory carryforward limit of three years. Accordingly, a valuation allowance
has been established in 1997 for a portion of the related deferred tax assets.

The following is a summary of the significant components of the Company's
deferred tax assets and liabilities:

DECEMBER 31,
------------------
1996 1997
------ --------

Deferred tax assets (liabilities):
Retirement benefits.................................... $ 888 $ 816
Receivables............................................ 344 227
Inventories............................................ 1,057 6,509
Unrealized foreign exchange losses..................... 398 37,447
Unrealized foreign exchange gains...................... (614) (9,084)
Other.................................................. 225 98
------ --------
Net deferred tax asset................................. 2,298 36,013
Valuation allowance.................................... -- (22,000)
------ --------
Net deferred tax asset................................. $2,298 $ 14,013
====== ========

Non-U.S. income before taxes and minority interest of the Company was
$23,800, $20,420 and $32,920 in 1995, 1996 and 1997, respectively.

F-18
123
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

At December 31, 1996 and 1997 current deferred tax assets of $1,919 and
$13,439, respectively, are included in other current assets and noncurrent
deferred tax assets of $379 and $574, respectively, are included in other assets
in the combined balance sheet. The Company's net deferred tax assets include
amounts which management believes are realizable through future taxable income.

The Company's tax returns have been examined through 1993 in the
Philippines and through 1994 in the U.S. The recorded provision for open years
is subject to changes upon final examination of these tax returns. Changes in
the mix of income from the Company's foreign subsidiaries, expiration of tax
holidays and changes in tax laws or regulations could result in increased
effective tax rates for the Company.

At December 31, 1997, the financial reporting basis of AEI's net assets
were greater than the tax basis of the net assets by approximately $5,200. In
connection with the Offerings, the Company and the stockholders of AEI will
enter into a Tax Indemnification Agreement providing that the Company and AEI
will be indemnified by such stockholders, with respect to their proportionate
share of any federal or state corporate income taxes attributable to the failure
of AEI to qualify as an S Corporation for any period or in any jurisdiction for
which S Corporation status was claimed through the date AEI terminates its S
Corporation status. The Tax Indemnification Agreement will also provide that the
Company and AEI will indemnify the stockholders if such stockholders are
required to include in income additional amounts attributable to taxable years
on or before the date AEI terminates its S Corporation status as to which AEI
filed or files tax returns claiming status as an S Corporation.

11. RELATED-PARTY TRANSACTIONS

At December 31, 1997, the Company owned 8.1% of the outstanding stock of
AICL (see Note 6), and AICL owned 40% of AAP. After the Offerings (see Note 16)
the Company intends to purchase AICL's interest in AAP for approximately
$34,000. In 1996 and 1997, approximately 72% and 68%, respectively, of the
Company's net revenues (see Note 1) were derived from services performed for the
Company by AICL, a Korean public company in which the Company and certain of the
Company's principal stockholders hold a minority interest. By the terms of a
long-standing agreement, the Company has been responsible for marketing and
selling AICL's semiconductor packaging and test services, except to customers in
Korea and certain customers in Japan to whom AICL has historically sold such
services directly. The Company has worked closely with AICL in developing new
technologies and products. The Company has recently entered into five-year
supply agreements with AICL giving the Company the first right to market and
sell substantially all of AICL's packaging and test services and the exclusive
right to market and sell all of the wafer output of AICL's new wafer foundry.
The Company's business, financial condition and operating results have been and
will continue to be significantly dependent on the ability of AICL to
effectively provide the contracted services on a cost-efficient and timely
basis. The termination of the Company's relationship with AICL for any reason,
or any material adverse change in AICL's business resulting from
underutilization of its capacity, the level of its debt and its guarantees of
affiliate debt, labor disruptions, fluctuations in foreign exchange rates,
changes in governmental policies, economic or political conditions in Korea or
any other change could have a material adverse effect on the Company's business,
financial condition and results of operations.

The Company has obtained a significant portion of its financing from
financing arrangements provided by Anam USA, Inc. ("AUSA"), AICL's wholly-owned
financing subsidiary. A majority of the amount due to AUSA represents
outstanding amounts under financing obtained by AUSA for the benefit of the
Company with the balance representing payables to AUSA for packaging and service
charges paid to AICL. Based on guarantees provided by AICL, AUSA obtains for the
benefit of the Company a continuous series of short-term financing arrangements
which generally are less than six months in duration, and typically are less
than two months in duration. Because of the short-term nature of these loans,
the flows of cash to and from AUSA under this arrangement are significant.
Purchases from AICL through AUSA were $354,062, $460,282 and

F-19
124
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

$527,858 for 1995, 1996 and 1997, respectively. Charges from AUSA for interest
and bank charges were $4,484, $7,074 and $6,002 for 1995, 1996 and 1997,
respectively. Amounts payable to AICL and AUSA were $252,221, and $156,350 at
December 31, 1996 and 1997, respectively.

AICL's ability to continue to provide services to the Company will depend
on AICL's financial condition and performance. AICL currently has a significant
amount of debt relative to its equity, which debt the Company expects will
continue to increase in the foreseeable future. The Company is advised that
AICL, as a public company in Korea, has published its most recent annual
consolidated financial statements as of December 31, 1996, and that AICL has
prepared preliminary consolidated financial statements as of December 31, 1997.
These consolidated financial statements are prepared on the basis of Korean
GAAP, which differs from U.S. GAAP. U.S. GAAP financial statements are not
available (See Note 6). As of December 31, 1997, AICL, on a consolidated basis,
had current liabilities of approximately W2,124 billion, including approximately
W1,591 billion of short-term borrowings and approximately W121 billion of
current maturities of long-term debt, and had long-term liabilities of
approximately W1,737 billion, including approximately W737 billion of long-term
debt and approximately W862 billion of long-term capital lease obligations. As
of such date, the total shareholders' equity of AICL amounted to approximately
W75 billion. The deterioration of the Korean economy in recent months and the
resulting liquidity crisis in Korea have led to sharply higher domestic interest
rates and reduced opportunities for refinancing or refunding maturing debts as
financial institutions in Korea, which are experiencing financial difficulties,
are increasingly looking to limit their lending, particularly to highly
leveraged companies, and to increase their reserves and provisions for non-
performing assets. Therefore, there can be no assurance that AICL will be able
to refinance its existing loans or obtain new loans, or continue to make
required interest and principal payments on such loans or otherwise comply with
the terms of its loan agreements. Any inability of AICL to obtain financing or
generate cash flow from operations sufficient to fund its capital expenditure,
debt service and repayment and other working capital and liquidity requirements
could have a material adverse effect on AICL's ability to continue to provide
services and otherwise fulfill its obligations to the Company.

As of December 31, 1997, AICL and its consolidated subsidiaries were
contingently liable under guarantees in respect of debt of its non-consolidated
subsidiaries and affiliates in the aggregate amount of approximately W857
billion. As of December 31, 1997, such guarantees included those in respect of
all of AUSA's debt totaling $319,200, $176,250 of the Company's debt to banks
and the Company's obligations under a receivables sales arrangement (see Note
2). The Company has met a significant portion of its financing needs through
financing arrangements obtained by AUSA for the benefit of the Company based on
guarantees provided by AICL. There can be no assurance that AUSA will be able to
obtain additional guarantees, if necessary, from AICL. Further, a deterioration
in AICL's financial condition could trigger defaults under AICL's guarantees,
causing acceleration of such loans. In addition, as an overseas subsidiary of
AICL, AUSA was formed with the approval of the Bank of Korea. If the Bank of
Korea were to withdraw such approval, or if AUSA otherwise ceased operations for
any reason, the Company and AICL would be required to meet their financing needs
through alternative arrangements. There can be no assurance that the Company or
AICL will be able to obtain alternative financing on acceptable terms or at all.
In addition, if any relevant subsidiaries or affiliates of AICL were to fail to
make interest or principal payments or otherwise default under their debt
obligations guaranteed by AICL, AICL could be required under its guarantees to
repay such debt, which event could have a material adverse effect on its
financial condition and results of operations.

Anam Engineering and Construction, an affiliate of AICL, built the
packaging facility for AAAP in the Philippines. Payments to Anam Engineering and
Construction were $22,167 and $3,844 in 1996 and 1997, respectively. Anam
Precision Equipment and Anam Instruments manufacture certain equipment used by
the Philippine operations. Payments to Anam Precision Equipment and Anam
Instruments were $6,652 and

F-20
125
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

$4,211 in 1996 and 1997, respectively. The Company purchases direct materials
from Anam S&T. Payments to Anam S&T were approximately $16,400, $27,300 and
$26,000 during 1995, 1996 and 1997, respectively.

During 1996, the Company extended guarantees on behalf of an affiliate to
vendors used by this affiliate. Outstanding guarantees as of December 31, 1996
and 1997 were $25,100 and $24,655 respectively. Amounts guaranteed under this
agreement fluctuate due to the cyclical nature of the affiliate's retail
business. Balances guaranteed at December 31 are generally the largest.

The Company has executed a surety and guarantee agreement on behalf of an
affiliate. The Company has unconditionally guaranteed the affiliate's obligation
under a $17,000 line of credit and a $9,000 term loan note. As of December 31,
1997, there was $750 outstanding under the line of credit and $9,000 outstanding
under the term loan note. The Company has also unconditionally guaranteed
another affiliate's obligation under a $4,000 term loan agreement and a $1,000
line of credit. As of December 31, 1997, there was $3,800 outstanding under the
term loan and no amounts outstanding under the line of credit.

A principal stockholder of the Company has extended guarantees on behalf of
the Company in the amount of $87,000 at December 31, 1997. Also in 1997, a
company controlled by this stockholder purchased investments in the amount of
$49,740 (see Note 6).

The Company leases office space in West Chester, PA from certain
stockholders of the Company. The lease expires in 2006. The Company has the
option to extend the lease for an additional 10 years through 2016. On September
11, 1997, the office previously being leased in Chandler, Arizona was purchased
from certain stockholders of the Company. The total purchase price of the
building ($5,710) represents the carrying value to the stockholders. Amounts
paid for these leases in 1996 and 1997 were $1,343 and $1,458, respectively.

At December 31, 1996 and 1997, the Company had advances and notes
receivable from affiliates other than AICL and AUSA of $22,988 and $36,501,
respectively. Realization of these notes is dependent upon the ability of the
affiliates to repay the notes. In management's opinion, these receivables are
recorded at the net realizable value.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate methodologies;
however, considerable judgment is required in interpreting market data to
develop the estimates for fair value. Accordingly, these estimates are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. Certain of these financial instruments are with major
financial institutions and expose the Company to market and credit risks and may
at times be concentrated with certain counterparties or groups of
counterparties. The creditworthiness of counterparties is continually reviewed,
and full performance is anticipated.

The methods and assumptions used to estimate the fair value of significant
classes of financial instruments is set forth below:

Available for sale investments. The fair value of these financial
instruments was estimated based on market quotes, recent offerings of similar
securities, current and projected financial performance of the company and net
asset positions.

Short-term borrowings. Short-term borrowings have variable rates that
reflect currently available terms and conditions for similar borrowings. The
carrying amount of this debt is a reasonable estimate of fair value.

Long-term debt and due to affiliates. Long-term debt and due to affiliates
have variable rates that reflect currently available terms and conditions for
similar debt. The carrying amount of this debt is a reasonable estimate of fair
value.

F-21
126
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

13. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims incidental to the conduct of its
business. Based on consultation with legal counsel, management does not believe
that any claims to which the Company is a party will have a material adverse
effect on the Company's financial condition or results of operations.

Future minimum lease payments under operating leases that have initial or
remaining noncancelable lease terms in excess of one year at December 31, 1997,
are:

1998............................................... $ 7,805
1999............................................... 7,230
2000............................................... 6,463
2001............................................... 5,689
2002............................................... 2,338
Thereafter......................................... 36,404
-------
Total.................................... $65,929
=======

Rent expense amounted to $3,692, $5,520 and $6,709 for 1995, 1996 and 1997,
respectively.

The Company has various purchase commitments for materials, supplies and
capital equipment incidental to the ordinary conduct of business. As of December
31, 1997 the Company had commitments for capital equipment of approximately
$27,000. In the aggregate, such commitments are not at prices in excess of
current market.

14. ACQUISITION OF AMKOR ANAM TEST SERVICES, INC.

On September 30, 1996, AEI and a principal stockholder each acquired 50% of
the outstanding common stock of Amkor Anam Test Services, Inc. (AATS), formerly
Navell Test Consultants, Inc., a provider of test engineering services for the
semiconductor industry located in San Jose, California, for approximately
$2,860. Subsequent to September 30, 1996, AEI purchased the 50% interest owned
by a principal stockholder at the stockholder's original cost. The acquisition
was accounted for using the purchase method of accounting and the results of
AATS' operations are included in the Company's combined statements of income
effective October 1, 1996. Accordingly, the total purchase price has been
allocated to the combined assets and liabilities based upon their estimated
respective fair values. This acquisition resulted in goodwill of approximately
$2,356, which is being amortized over 20 years.

F-22
127
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

15. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

The Company is primarily engaged in one industry segment, namely, the
packaging and testing of integrated circuits. Financial information, summarized
by geographic area, is as follows:

UNITED
STATES EUROPE PHILIPPINES ELIMINATIONS COMBINED
---------- -------- ----------- ------------ ----------

Year ended December 31, 1997:
Net revenues from unaffiliated
customers.................. $1,258,110 $197,651 $ -- $ -- $1,455,761
Net revenues from
affiliates................. -- -- 256,895 (256,895) --
---------- -------- -------- --------- ----------
Total net revenues............ 1,258,110 197,651 256,895 (256,895) 1,455,761
Income before income taxes and
minority interest.......... 28,086 23,522 9,398 -- 61,006
Identifiable assets........... 352,503 21,873 506,397 (176,134) 704,639
Corporate assets.............. 146,299
----------
Total assets.......... $ 850,938
==========
Year ended December 31, 1996:
Net revenues from unaffiliated
customers.................. $1,013,182 $157,819 $ -- $ -- $1,171,001
Net revenues from
affiliates................. -- -- 198,637 (198,637) --
---------- -------- -------- --------- ----------
Total net revenues............ 1,013,182 157,819 198,637 (198,637) 1,171,001
Income before income taxes and
minority interest.......... 22,592 12,473 7,947 -- 43,012
Identifiable assets........... 245,781 19,422 424,653 (91,552) 598,304
Corporate assets.............. 199,309
----------
Total assets.......... $ 797,613
==========
Year ended December 31, 1995:
Net revenues from unaffiliated
customers.................. $ 792,285 $140,097 $ -- $ -- $ 932,382
Net revenues from
affiliates................. -- -- 128,164 (128,164) --
---------- -------- -------- --------- ----------
Total net revenues............ 792,285 140,097 128,164 (128,164) 932,382
Income before income taxes and
minority interest.......... 43,223 13,019 10,781 -- 67,023
Identifiable assets........... 235,707 18,699 270,185 (100,385) 424,206
Corporate assets.............. 211,662
----------
Total assets.......... $ 635,868
==========

Sales between affiliates are priced at customer selling price less material
costs provided by the segment, less a sales commission. Net revenues from
unaffiliated customers for the United States include $109,532, $160,507 and
$208,062 of revenues from unaffiliated foreign customers for 1995, 1996 and
1997, respectively. Identifiable assets are those assets that can be directly
associated with a particular geographic area. Corporate assets are those assets
which are not directly associated with a particular geographic area and consist
primarily of cash and cash equivalents, investments and advances or loans to
another geographic segment.

F-23
128
AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(U.S. DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

16. SUBSEQUENT EVENTS

On , 1998, Mr. and Mrs. James Kim and the Kim Family Trusts
exchanged their interests in AEI for 9,746,766 shares and 4,873,383 shares of
ATI common stock, respectively. ATI issued 67,989,851 shares of common stock in
exchange for all of the outstanding shares of AIH and its subsidiaries. Of such
shares, 19,328,234 shares, 36,376,617 shares and 8,200,000 shares were gifted to
Mr. and Mrs. James Kim, the Kim Family Trusts and other members of Mr. Kim's
immediate family, respectively. In addition, ATI acquired all of the stock of
AKI from the Kim Family Trusts for $3,000.

Except for the acquisition of the shares of AKI which will be accounted for
as a purchase transaction, the Reorganization described above was treated
similar to a pooling of interests as it represents an exchange of equity
interests among companies under common control. The purchase price for the AKI
stock, which represents the fair value of these shares, approximates the book
value of AKI. ATI filed an amended registration statement on , 1998
with the Securities and Exchange Commission as part of a proposed plan to reduce
outstanding borrowings and to increase the stockholders' equity. ATI intends to
raise approximately $449,950 (after deducting the underwriting discount and
estimated offering expenses) from the sale of shares of common stock and
convertible notes (the "Offerings"). The convertible notes will be 1)
convertible into ATI common stock at a premium over the initial public offering
price; 2) callable in certain circumstances after three years; 3) unsecured and
subordinate to senior debt; 4) carry a coupon rate of approximately %; and
5) have a maturity of five years. Approximately $225,000 of the proceeds will be
used to reduce short-term and long-term borrowings. Approximately $105,000 of
the proceeds will be used to reduce amounts due to AUSA. In connection with the
Offerings, certain existing stockholders intend to sell approximately 5,000,000
of their shares.

The Company established stock option plans in 1998 pursuant to which
6,300,000 shares of common stock were reserved for future issuance upon the
exercise of stock options granted to employees, consultants and directors. The
options will be issued at fair value and generally will vest over five years.

After the Offerings, the Company intends to purchase AICL's 40% interest in
AAP for approximately $34,000. The Company will account for this transaction as
a purchase which will result in the elimination of the minority interest
liability reflected on the combined balance sheet and result in additional
amortization of approximately $2,500 per year.

17. PRO FORMA ADJUSTMENTS

Statement of Income

Pro forma adjustments are presented to reflect a provision for income taxes
as if AEI had not been an S Corporation for all of the periods presented. Pro
forma net income per common share is based on the weighted average number of
shares outstanding as if the Exchange had occurred at the beginning of the
period presented.

Balance Sheet

As discussed in Note 1, the Company intends to reorganize prior to the
effective date of the contemplated offering. AEI will terminate its S
Corporation status at which time additional deferred tax liabilities of $2,100
will be recorded for existing temporary differences between the book and tax
bases of assets and liabilities. If the termination of AEI's S Corporation
status would have occurred on December 31, 1997, AEI would have declared a
distribution of $27,700 of previously taxed income. The pro forma balance sheet
is presented to reflect these changes as if they occurred on December 31, 1997.

F-24
129

======================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH THE INFORMATION IS GIVEN IN
THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.
------------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary..................... 3
Risk Factors........................... 9
Reorganization......................... 25
Relationship with Anam Industrial Co.,
Ltd.................................. 27
Use of Proceeds........................ 32
Dividend Policy........................ 32
Capitalization......................... 33
Dilution............................... 35
Selected Combined Financial Data....... 36
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 38
Business............................... 48
Management............................. 63
Certain Transactions................... 69
Principal and Selling Stockholders..... 72
Description of Capital Stock........... 73
Description of Convertible Notes....... 75
Shares Eligible for Future Sale........ 89
Certain United States Federal Tax
Consequences to Holders of Common
Stock and Convertible Notes.......... 91
Underwriting........................... 96
Legal Matters.......................... 100
Experts................................ 100
Additional Information................. 100
Glossary............................... 101
Index to Combined Financial
Statements........................... F-1

------------------

Until , 1998 (25 days after the commencement of the Offerings), all
dealers effecting transactions in the Common Stock and Convertible Notes,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as Underwriters and with respect to their unsold
allotments or subscriptions.
======================================================
======================================================

35,000,000 SHARES
COMMON STOCK

$150,000,000
% CONVERTIBLE
SUBORDINATED NOTES
DUE 2003

AMKOR
TECHNOLOGY, INC.

[AMKOR LOGO]
------------

PROSPECTUS

, 1998

------------
SALOMON SMITH BARNEY

BANCAMERICA
ROBERTSON STEPHENS

COWEN & COMPANY
======================================================
130

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER,SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED MARCH 31, 1998
PROSPECTUS
35,000,000 SHARES

COMMON STOCK
[AMKOR LOGO] $150,000,000
% CONVERTIBLE SUBORDINATED NOTES DUE 2003

AMKOR TECHNOLOGY, INC.
------------------

Of the 35,000,000 shares of Common Stock (the "Shares") and $150,000,000
aggregate principal amount of Convertible Notes offered hereby, 7,000,000 Shares
and $30,000,000 principal amount of Convertible Notes are being offered by the
International Underwriters (as defined) outside the United States and Canada
(the "International Offering") and 28,000,000 Shares and $120,000,000 principal
amount of Convertible Notes are being offered by the U.S. Underwriters (as
defined) in a concurrent offering in the United States and Canada (the "U.S.
Offering" and, together with the International Offering, the "Offerings"),
subject to transfers between the International Underwriters and the U.S.
Underwriters (collectively, the "Underwriters"). The Price to the Public and
Underwriting Discount per Share and per Convertible Note will be identical for
the International Offering and the U.S. Offering. See "Underwriting." The
closing of the International Offering and U.S. Offering are conditioned upon
each other. Following the Offerings, certain members of management and their
family will beneficially own approximately 68.9% of the Company's outstanding
Common Stock. See "Principal and Selling Stockholders."

Prior to the Offerings, there has not been a public market for the Common
Stock or the Convertible Notes. It is currently estimated that the initial
public offering price per share of the Common Stock will be between $10.00 and
$12.00 per share. See "Underwriting" for a discussion of factors to be
considered in determining the initial public offering price. The Common Stock
has been approved for listing on the Nasdaq National Market under the symbol
"AMKR," subject to official notice of issuance. The Company has applied for
quotation of the Convertible Notes on the Nasdaq Stock Market under the symbol
"AMKRG."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES AND THE
CONVERTIBLE NOTES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================

UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
THE PUBLIC COMMISSIONS(1) THE COMPANY(2) STOCKHOLDERS(2)

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $5,000,000.

(3) The Company has granted the International Underwriters and the U.S.
Underwriters 30-day options to purchase up to 1,050,000 and 4,200,000
additional shares of Common Stock, respectively, and $4,500,000 and
$18,000,000 additional principal amount of Convertible Notes, respectively,
solely to cover over-allotments, if any. If such options are exercised in
full, the total Price to the Public, Underwriting Discounts and Proceeds to
the Company will be $ , $ and $ , respectively. See
"Underwriting."
------------------

SALOMON SMITH BARNEY INTERNATIONAL
BA ROBERTSON STEPHENS INTERNATIONAL LIMITED
COWEN INTERNATIONAL L.P.
, 1998
131
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting agreement
(the "International Underwriting Agreement") among the Company, the Selling
Stockholders and each of the underwriters named below (the "International
Underwriters"), for whom Smith Barney Inc., BancAmerica Robertson Stephens
International Limited and Cowen International L.P. are acting as representatives
(the "International Representatives"), (i) the Company and the Selling
Stockholders have agreed to sell to each of the International Underwriters and
each of the International Underwriters has severally agreed to purchase from the
Company and the Selling Stockholders the aggregate number of Shares set forth
opposite its name in the table below and (ii) the Company has agreed to sell to
certain of the International Underwriters and each such International
Underwriter has severally agreed to purchase from the Company the principal
amount of the Convertible Notes set forth opposite its name below.

PRINCIPAL
AMOUNT OF
NUMBER OF CONVERTIBLE
INTERNATIONAL UNDERWRITERS SHARES NOTES
-------------------------- --------- ------------

Smith Barney Inc. ...........................
BancAmerica Robertson Stephens International
Limited....................................
Cowen International L.P......................
--------- ----------
Total.............................. 7,000,000 30,000,000
========= ==========

The International Underwriting Agreement provides that the obligations of
the International Underwriters to purchase the Shares and Convertible Notes
listed above are subject to certain conditions set forth therein. The
International Underwriters are committed to purchase all of the Shares and
Convertible Notes agreed to be purchased by the International Underwriters
pursuant to the International Underwriting Agreement (other than those covered
by the over-allotment options described below), if any Shares or Convertible
Notes are purchased. In the event of default by any International Underwriter,
the International Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the non-defaulting International
Underwriters may be increased or the International Underwriting Agreement may be
terminated.

The International Representatives have advised the Company and the Selling
Stockholders that the International Underwriters propose initially to offer such
Shares to the public at the initial public offering price thereof set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
discount not in excess of $ per share. The International Underwriters
may allow, and such dealers may reallow, a discount not in excess of $
per share on sales to certain other dealers. After the initial public offering
of the Shares, the public offering price and such discounts may be changed.

The International Representatives have also advised the Company that the
relevant International Underwriters propose initially to offer such Convertible
Notes to the public at the initial public offering price thereof set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of such Convertible
Notes. The relevant International Underwriters may allow, and such dealers may
reallow, a discount not in excess of % of the principal amount of the
Convertible Notes on sales to certain other dealers. After the initial public
offering of the Convertible Notes, the public offering price and such
concessions may be changed.

Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the initial public offering price set forth on the cover
page hereof.

The Company and the Selling Stockholders also have entered into an
underwriting agreement (the "U.S. Underwriting Agreement") with the U.S.
Underwriters named therein, for whom Smith Barney Inc., BancAmerica Robertson
Stephens and Cowen & Company are acting as representatives (the

96
132
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

"U.S. Representatives" and, together with the International Representatives, the
"Representatives"), providing for the concurrent offer and sale of 28,000,000 of
the Shares and $120,000,000 principal amount of the Convertible Notes in the
United States and Canada.

The closing with respect to the sale of the Shares and the Convertible
Notes pursuant to the International Underwriting Agreement is a condition to the
closing with respect to the sale of the Shares and the Convertible Notes
pursuant to the U.S. Underwriting Agreement, and the closing with respect to the
sale of the Shares and the Convertible Notes pursuant to the U.S. Underwriting
Agreement is a condition to the closing with respect to the sale of the Shares
and the Convertible Notes pursuant to the International Underwriting Agreement.
The initial public offering price and underwriting discount per Share and per
Convertible Note for the International Offering and the U.S. Offering will be
identical.

Pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, sales may be made between the International Underwriters and the
U.S. Underwriters of such number of Shares and such principal amount of the
Convertible Notes as may be mutually agreed. The price of any Shares or
Convertible Notes so sold shall be the initial public offering price thereof set
forth on the cover page of this Prospectus, less an amount not greater than the
concession to securities dealers set forth above. To the extent that there are
sales between the International Underwriters and the U.S. Underwriters pursuant
to the Agreement Between U.S. Underwriters and International Underwriters, the
number of Shares and the principal amount of the Convertible Notes initially
available for sale by the International Underwriters or by the U.S. Underwriters
may be more or less than the amount specified on the cover page of this
Prospectus.

97
133
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

any Shares or Convertible Notes in the United Kingdom other than to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (whether as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted in and
will not result in an offer to the public within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares or the Convertible Notes in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Shares or the Convertible
Notes to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom such document may otherwise lawfully be issued or passed on.

The Company has granted to the International Underwriters and the U.S.
Underwriters options to purchase up to an additional 1,050,000 and 4,200,000
Shares, respectively, and an additional $4,500,000 and $18,000,000 principal
amount of the Convertible Notes, respectively, in each case at the applicable
price to the public less the applicable underwriting discount set forth on the
cover page of this Prospectus, solely to cover over-allotments, if any. Such
options may be exercised at any time up to 30 days after the date of this
Prospectus. To the extent such options are exercised, each of the International
Underwriters and the U.S. Underwriters will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares of Common Stock or such additional principal amount of Convertible Notes
as the percentage it was obligated to purchase pursuant to the International
Underwriting Agreement or the U.S. Underwriting Agreement, as applicable.

The Company has agreed with the Underwriters not to offer, pledge, sell,
contract to sell, or otherwise dispose of (or enter into any transaction which
is designed to, or could be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, or announce the offering of, any other shares of Common Stock (other
than the Convertible Notes) or any securities or options convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 180 days
following the date hereof without the prior written consent of Smith Barney
Inc., subject to certain limited exceptions. In addition, each of the Company's
officers, directors and stockholders has agreed with the Underwriters not to
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Exchange Act
with respect to any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock, or publicly announce an
intention to effect any such transaction, for a period of 180 days after the
date hereof unless pursuant to the Securities Loan Agreement (as described
below) or with the prior written consent of Smith Barney Inc., subject to
certain limited exceptions. Smith Barney Inc. currently does not intend to
release any securities subject to such lock-up agreements, but may, in its sole
discretion and at any time without notice, release all or any portion of the
securities subject to such lock-up agreements.

The International Underwriting Agreement and the U.S. Underwriting
Agreement provide that the Company and certain Selling Stockholders will
indemnify the several International Underwriters and U.S. Underwriters against
certain liabilities under the Securities Act, or contribute to payments the
International Underwriters and the U.S. Underwriters may be required to make in
respect thereof.

BancAmerica Robertson Stephens International Limited is an affiliate of
Bank of America, which will be repaid approximately $43 million of short-term
loans to the Company from the net proceeds of the Offerings. See "Use of
Proceeds." Because more than 10% of the net proceeds of the Offerings may be
paid to Bank of America, the Offerings are being conducted in accordance with
Rule 2710(c)(8) and Rule 2720 ("Rule 2720") of the Conduct Rules of the National
Association of Securities Dealers, Inc. Smith Barney Inc. will serve as a
"qualified independent underwriter" in the Offerings and, in such capacity, will
recommend

98
134
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

a price in compliance with Rule 2720 and has performed due diligence
investigations in accordance with Rule 2720.

In connection with the Offerings, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock or
the Convertible Notes. Such transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M, pursuant to which such
persons may bid for or purchase Common Stock or Convertible Notes for the
purpose of stabilizing their market price. The Underwriters also may create a
short position for the account of the Underwriters by selling more Common Stock
or Convertible Notes in connection with the Offerings than they are committed to
purchase from the Company and the Selling Stockholders, and in such case may
purchase Common Stock or Convertible Notes in the open market following
completion of the Offerings to cover all or a portion of such short position.
The Underwriters may also cover all or a portion of such short position, up to
5,250,000 shares of Common Stock and $22,500,000 principal amount of the
Convertible Notes, by exercising the Underwriters' over-allotment options
referred to above. In addition, the Representatives, on behalf of the
Underwriters, may impose "penalty bids" under contractual arrangements with the
Underwriters whereby it may reclaim from an Underwriter (or dealer participating
in the Offerings), for the account of the other Underwriters, the selling
concession with respect to Common Stock or Convertible Notes that is distributed
in the Offerings but subsequently purchased for the account of the Underwriters
in the open market. Any of the transactions described in this paragraph may
result in the maintenance of the price of the Common Stock and the Convertible
Notes at a level above that which might otherwise prevail in the open market.
None of the transactions described in this paragraph is required, and, if they
are undertaken, they may be discontinued at any time.

In connection with the Offerings, Mr. and Mrs. Kim (referred to herein as
the "Lenders") and Smith Barney Inc. intend to enter into a securities loan
agreement (the "Securities Loan Agreement") which provides that, subject to
certain restrictions and with the agreement of the Lenders, Smith Barney Inc.
may from time to time until the maturity date or redemption date of the
Convertible Notes borrow, return and reborrow shares of Common Stock from the
Lenders (the "Borrowed Securities"); provided, however, that the number of
Borrowed Securities at any time may not exceed 7,000,000 shares of Common Stock,
subject to adjustment for certain dilutive events. The Securities Loan Agreement
is intended to facilitate market-making activity in the Convertible Notes by
Smith Barney Inc. Smith Barney Inc. may from time to time borrow shares of
Common Stock under the Securities Loan Agreement to settle short sales of Common
Stock entered into by Smith Barney Inc. to hedge any long position in the
Convertible Notes resulting from its market-making activities. Such sales will
be made on the Nasdaq National Market or in the over-the-counter market at
market prices prevailing at the time of sale or at prices related to such market
prices. Market conditions will dictate the extent and timing of Smith Barney
Inc.'s market-making transactions in the Convertible Notes and the consequent
need to borrow and sell shares of Common Stock. The availability of shares of
Common Stock under the Securities Loan Agreement at any time is not assured and
any such availability does not assure market-making activity with respect to the
Convertible Notes. Any market-making engaged in by Smith Barney Inc. or any
other Underwriter may cease at any time. The foregoing description of the
Securities Loan Agreement does not purport to be complete and is qualified in
its entirety by reference to such agreement, which is an exhibit to the
Securities Loan Registration Statement.

The Underwriters do not intend to confirm sales in the Offerings to any
accounts over which they exercise discretionary authority.

99
135
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

LEGAL MATTERS

EXPERTS

The combined financial statements and schedule of the Company as of
December 31, 1995, 1996 and 1997, and for each of the years in the three-year
period ended December 31, 1997, included in this Registration Statement (as
defined below) have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports dated February 3, 1998 (except with
respect to the sale of the investment in AICL's common stock discussed in Note 6
to the Combined Financial Statements as to which the date is February 16, 1998)
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.

ADDITIONAL INFORMATION

100
136

[ALTERNATE PAGES FOR INTERNATIONAL PROSPECTUS]

======================================================

------------------

TABLE OF CONTENTS

PAGE
----

------------------

35,000,000 SHARES
COMMON STOCK

$150,000,000
% CONVERTIBLE
SUBORDINATED NOTES
DUE 2003

AMKOR
TECHNOLOGY, INC.

[AMKOR LOGO]
------------

PROSPECTUS

, 1998

------------

SALOMON SMITH BARNEY
INTERNATIONAL

BA ROBERTSON STEPHENS
INTERNATIONAL LIMITED

COWEN INTERNATIONAL L.P.

======================================================
137

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts, commissions and certain accountable expenses, payable by
the Company in connection with the sale of Common Stock and Convertible Notes
being registered. All amounts are estimates except the SEC registration fee and
the NASD filing fee.

SEC Registration Fee........................................ $ 193,373
NASD Filing Fee............................................. 30,500
Nasdaq National Market System Listing Fee................... 95,000
Printing Fees and Expenses.................................. 350,000
Legal Fees and Expenses..................................... 1,750,000
Accounting Fees and Expenses................................ 2,200,000
Blue Sky Fees and Expenses.................................. 5,000
Transfer Agent and Registrar Fees........................... 50,000
Miscellaneous............................................... 326,127
----------
Total............................................. $5,000,000
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

The Company's Certificate of Incorporation provides for the indemnification
of directors to the fullest extent permissible under Delaware law.

The Company's Bylaws provide for the indemnification of officers, directors
and third parties acting on behalf of the Registrant if such person acted in
good faith and in a manner reasonably believed to be in and not opposed to the
best interest of the Company, and, with respect to any criminal action or
proceeding, the indemnified party had no reason to believe his conduct was
unlawful.

The Company has entered into indemnification agreements with its directors
and executive officers, in addition to indemnification provided for in the
Company's Bylaws, and intends to enter into indemnification agreements with any
new directors and executive officers in the future.

The form of U.S. Underwriting Agreement filed as Exhibit 1.1 hereto and the
form of International Underwriting Agreement filed as Exhibit 1.2 hereto provide
for the indemnification of the Company's directors and officers in certain
circumstances as provided therein.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Prior to the Offerings, in 1998, 82,610,000 shares of Common Stock were
issued to Mr. James Kim and members of his family in exchange for their
outstanding interests in the Amkor Companies. Such issuances were made pursuant
to an exemption from registration under Section 4(2) of the Securities Act of
1933, as amended. See "Reorganization" in Part I hereof. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information about the Company.

II-1
138

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) Exhibits

1.1 Form of U.S. Underwriting Agreement.
1.2 Form of International Underwriting Agreement.
2.1 Agreement and Plan of Reorganization dated , 1998
between Amkor Technology, Inc. and Amkor Electronics, Inc.*
2.2 Stock Purchase Agreement dated , 1998 between Amkor
Electronics, Inc. and the shareholders of AK Industries,
Inc. *
3.1 Certificate of Incorporation.**
3.2 Bylaws.**
4.1 Specimen Common Stock Certificate.
4.2 Form of Indenture dated , 1998.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to the legality of the securities being
registered.*
10.1 Form of Indemnification Agreement for directors and
officers.
10.2 1998 Stock Plan and form of agreement thereunder.
10.3 Receivables Purchase Agreement between Amkor Electronics,
Inc. and Amkor Receivables Corp., dated June 20, 1997.**
10.4 Tax Indemnification Agreement dated , 1998
between Amkor Technology, Inc., Amkor Electronics, Inc. and
certain stockholders of Amkor Technology, Inc.
10.5 Bridge Loan Agreement between Amkor/Anam Pilipinas, Inc.,
Anam Industrial Co., Ltd. and the Korea Development Bank for
$55,000,000, dated July 1997.**
10.6 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the
Korea Development Bank for $71,000,000, dated March 28,
1996.**
10.7 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the
Korea Development Bank for $50,000,000, dated September 7,
1995.**
10.8 Commercial Office Lease between Chandler Corporate Center
Phase II, G.P. and Amkor Electronics, Inc., dated September
6, 1993.**
10.9 Commercial Office Lease between the 12/31/87 Trusts of Susan
Y., David D. and John T. Kim and Amkor Electronics, Inc.,
dated October 1, 1996.**
10.10 Commercial Office Lease between the 12/31/87 Trusts of Susan
Y., David D., and John T. Kim and Amkor Electronics, Inc.,
dated June 14, 1996.**
10.11 Contract of Lease between Corinthian Commercial Corporation
and Amkor/Anam Pilipinas Inc., dated October 1, 1990.**
10.12 Contract of Lease between Salcedo Sunvar Realty Corporation
and Automated Microelectronics, Inc., dated May 6, 1994.**
10.13 Lease Contract between AAP Realty Corporation and Amkor/Anam
Advanced Packaging, Inc., dated November 6, 1996.**
10.14 Immunity Agreement between Amkor Electronics, Inc. and
Motorola, Inc., dated June 30, 1993.+**
10.15 Assembly Agreement between Amkor Electronics, Inc. and Intel
Corporation, dated July 17, 1991.+**
10.16 1998 Director Option Plan and form of agreement thereunder.
10.17 1998 Employee Stock Purchase Plan.

II-2
139

10.18 Performance Undertaking between Amkor Receivables Corp. and Anam Industrial Co., Ltd., dated June 20,
1997.**
10.19 Packaging and Test Services Agreement by and among Amkor Technology, Inc., Amkor Electronics, Inc.,
C.I.L. Limited, Anam USA, Inc. and Anam Industrial Co., Ltd. dated January 1, 1998.+
10.20 Foundry Services Agreement by and among Amkor Electronics, Inc., C.I.L. Limited, Anam Industries Co.,
Ltd. and Anam USA dated as of January 1, 1998.+
10.21 Amendment to Technical Assistance Agreement dated as of September 29, 1997 between Texas Instruments
Incorporated and Anam Industrial Co., Ltd. and related portions of Technical Assistance Agreement
dated as of January 28, 1997.+**
10.22 Registration Rights Agreement between Amkor Technology, Inc. and Smith Barney Inc. in consideration
of the Master Securities Loan Agreement dated , 1998.
10.23 Manufacturing and Purchase Agreement between Texas Instruments Incorporated, Anam Industrial Co., Ltd
and Amkor Electronics, Inc., dated as of January 1, 1998.+
10.24 Stock Purchase Agreement dated , 1998 between Amkor Technology, Inc. and Anam Industrial Co.,
Ltd. (with respect to the purchase of stock of AAPI).*
12.1 Ratio of Earnings to Fixed Charges.*
21.1 List of Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney.**
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.

- ---------------

* To be filed by amendment.

** Previously Filed.

+ Confidential Treatment requested as to certain portions of this exhibit.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933, and will be governed by the final adjudication of such
issue.

II-3
140

The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus as filed as part of the registration statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective, and (2) for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-4
141

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of West
Chester, State of Pennsylvania, on the 30th day of March 1998.

AMKOR TECHNOLOGY, INC.

By: /s/ JAMES J. KIM

------------------------------------
James J. Kim
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT ON FORM S-1 HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ JAMES J. KIM Chief Executive Officer and March 30, 1998
- --------------------------------------------------- Chairman
James J. Kim

/s/ FRANK J. MARCUCCI Chief Financial Officer and March 30, 1998
- --------------------------------------------------- Secretary (Principal Financial
Frank J. Marcucci and Accounting Officer)

/s/ JOHN N. BORUCH President and Director March 30, 1998
- ---------------------------------------------------
John N. Boruch

/s/ THOMAS D. GEORGE Director March 30, 1998
- ---------------------------------------------------
Thomas D. George

/s/ GREGORY K. HINCKLEY Director March 30, 1998
- ---------------------------------------------------
Gregory K. Hinckley

II-5
142

INDEX TO FINANCIAL STATEMENT SCHEDULES*

SEQUENTIALLY
SCHEDULE NUMBERED
NUMBER DESCRIPTION OF SCHEDULES PAGE
- -------- ------------------------ ------------

Report of Independent Public Accountants.................... S-2
II Valuation and Qualifying Accounts........................... S-3

- ---------------

* All other schedules are omitted as the required information is inapplicable
or the information is presented in the financial statements or related
notes.

S-1
143

ARTHUR ANDERSEN LLP

February 3, 1998 (except with respect to the sale of the investment in Anam
Industrial Co., Ltd. common stock discussed in Note 6 to the Combined Financial
Statements as to which the date is February 16, 1998)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Amkor Technology, Inc.:

We have audited in accordance with generally accepted auditing standards,
the Combined Financial Statements of Amkor Technology, Inc. and AK Investments,
Inc. and subsidiaries (See Note 1 to the Combined Financial Statements) included
in this registration statement and have issued our report thereon dated
, 1997. Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. Our report on the
financial statements includes an explanatory paragraph with respect to the
ability of the Company to continue as a going concern as discussed in Note 1 to
the Combined Financial Statements. The schedule listed in the index above is
presented for the purpose of complying with the Securities and Exchange
Commissions rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

S-2
144

SCHEDULE II

AMKOR TECHNOLOGY, INC. AND AK INDUSTRIES, INC.

VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)

ADDITIONS
BALANCE AT CHARGED BALANCE AT
BEGINNING TO END
OF PERIOD EXPENSE WRITE-OFFS OTHER OF PERIOD
---------- --------- ---------- ----- ----------

Year ended December 31, 1995:
Allowance for doubtful accounts................. $ 487 $ 500 $ -- $56 $1,043
Year ended December 31, 1996:
Allowance for doubtful accounts................. $1,043 $ 660 $(564) $40 $1,179
Year ended December 31, 1997:
Allowance for doubtful accounts................. $1,179 $3,490 $(435) -- $4,234

S-3
145

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------- -----------

1.1 Form of U.S. Underwriting Agreement.
1.2 Form of International Underwriting Agreement.
2.1 Agreement and Plan of Reorganization dated , 1998
between Amkor Technology, Inc. and Amkor Electronics, Inc.*
2.2 Stock Purchase Agreement dated , 1998 between Amkor
Electronics, Inc. and the shareholders of AK Industries,
Inc. *
3.1 Certificate of Incorporation.**
3.2 Bylaws.**
4.1 Specimen Common Stock Certificate.
4.2 Form of Indenture dated , 1998.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to the legality of the securities being
registered.*
10.1 Form of Indemnification Agreement for directors and
officers.
10.2 1998 Stock Plan and form of agreement thereunder.
10.3 Receivables Purchase Agreement between Amkor Electronics,
Inc. and Amkor Receivables Corp., dated June 20, 1997.**
10.4 Tax Indemnification Agreement dated , 1997
between Amkor Technology, Inc., Amkor Electronics, Inc. and
certain stockholders of Amkor Technology, Inc.
10.5 Bridge Loan Agreement between Amkor/Anam Pilipinas, Inc.,
Anam Industrial Co., Ltd. and the Korea Development Bank for
$55,000,000, dated July 1997.**
10.6 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the
Korea Development Bank for $71,000,000, dated March 28,
1996.**
10.7 Loan Agreement between Amkor/Anam Pilipinas, Inc. and the
Korea Development Bank for $50,000,000, dated September 7,
1995.**
10.8 Commercial Office Lease between Chandler Corporate Center
Phase II, G.P. and Amkor Electronics, Inc., dated September
6, 1993.**
10.9 Commercial Office Lease between the 12/31/87 Trusts of Susan
Y., David D. and John T. Kim and Amkor Electronics, Inc.,
dated October 1, 1996.**
10.10 Commercial Office Lease between the 12/31/87 Trusts of Susan
Y., David D., and John T. Kim and Amkor Electronics, Inc.,
dated June 14, 1996.**
10.11 Contract of Lease between Corinthian Commercial Corporation
and Amkor/Anam Pilipinas Inc., dated October 1, 1990.**
10.12 Contract of Lease between Salcedo Sunvar Realty Corporation
and Automated Microelectronics, Inc., dated May 6, 1994.**
10.13 Lease Contract between AAP Realty Corporation and Amkor/Anam
Advanced Packaging, Inc., dated November 6, 1996.**
10.14 Immunity Agreement between Amkor Electronics, Inc. and
Motorola, Inc., dated June 30, 1993.+**
10.15 Assembly Agreement between Amkor Electronics, Inc. and Intel
Corporation, dated July 17, 1991.+**
10.16 1998 Director Option Plan and form of agreement thereunder.
10.17 1998 Employee Stock Purchase Plan.
10.18 Performance Undertaking between Amkor Receivables Corp. and
Anam Industrial Co., Ltd., dated June 20, 1997.**
10.19 Packaging and Test Services Agreement by and among Amkor
Technology, Inc., Amkor Electronics, Inc., C.I.L. Limited,
Anam USA, Inc. and Anam Industrial Co., Ltd. dated January
1, 1998.+
10.20 Foundry Services Agreement by and among Amkor Electronics,
Inc., C.I.L. Limited, Anam Industries Co., Ltd. and Anam USA
dated as of January 1, 1998.+

146

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.21 Amendment to Technical Assistance Agreement dated as of
September 30, 1997 between Texas Instruments Incorporated
and Anam Industrial Co., Ltd.+**
10.22 Registration Rights Agreement between Amkor Technology, Inc.
and Smith Barney Inc. in consideration of the Master
Securities Loan Agreement dated , 1998.
10.23 Manufacturing and Purchase Agreement between Texas
Instruments Incorporated, Anam Industrial Co., Ltd and Amkor
Electronics, Inc., dated as of January 1, 1998.+
10.24 Stock Purchase Agreement dated , 1998 between Amkor
Technology, Inc. and Anam Industrial Co., Ltd. (with respect
to the purchase of stock of AAPI).*
12.1 Ratio of Earnings to Fixed Charges.*
21.1 List of Subsidiaries of the Registrant.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney (see page II-4).**
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.

- ---------------

* To be filed by amendment.

** Previously Filed.

+ Confidential Treatment requested as to certain portions of this exhibit.

   1
                                                                     EXHIBIT 1.1


                                                       CGS&H DRAFT/ U.S. Version
                                                                         3/24/98

                             AMKOR TECHNOLOGY, INC.

                               28,000,000 Shares*
                                  Common Stock
                                ($.001 par value)

                                 $120,000,000**
                  ___ % Convertible Subordinated Notes Due 2003

                           U.S. Underwriting Agreement


                                                              New York, New York
                                                                 April ___, 1998

Smith Barney Inc.
BancAmerica Robertson Stephens
Cowen & Company
  As U.S. Representatives of the several U.S. Underwriters,
c/o Smith Barney Inc.
333 West 34th Street
New York, New York  10001


Ladies and Gentlemen:

            Amkor Technology, Inc., a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the "U.S.
Underwriters"), for whom you (the "U.S. Representatives") are acting as
representatives, 24,000,000 shares of common stock, $.001 par value ("Common
Stock"), of the Company, and the persons named in Schedule II hereto (the
"Selling Stockholders") propose to sell to the U.S. Underwriters 4,000,000
shares of Common Stock (said shares to be issued and sold by the Company and
shares to be sold by the Selling Stockholders collectively being hereinafter
called the "U.S. Underwritten Shares"). The Company also proposes to grant to
the U.S. Underwriters an option to purchase up to 4,200,000 additional shares of
Common Stock (the "U.S. Option Shares"; the U.S. Option Shares, together with
the U.S. Underwritten Shares, being hereinafter called the "U.S. Shares"). The
Company


- --------
*     Plus an option to purchase from Amkor Technology, Inc. up to 4,200,000
      additional shares to cover over-allotments.

**    Plus an option to purchase from Amkor Technology, Inc. up to $18,000,000
      additional principal amount of its ___% Convertible Subordinated Notes due
      2003 to cover over-allotments.
   2
also proposes to sell to certain of the U.S. Underwriters $120,000,000
principal amount of its ___% Convertible Subordinated Notes due 2003 (the "U.S.
Underwritten Notes"), to be issued under an indenture (the "Indenture") to be
dated as of April __, 1998, between the Company and State Street Bank and Trust
Company, as trustee (the "Trustee"). The Company also proposes to grant to such
U.S. Underwriters an option to purchase up to $18,000,000 additional principal
amount of its ___% Convertible Subordinated Notes due 2003 (the "U.S. Option
Notes"; the U.S. Option Notes, together with the U.S. Underwritten Notes, being
hereinafter called the "U.S. Notes"; and the U.S. Notes, together with the U.S.
Shares, being hereinafter called the "U.S. Securities"). The U.S. Notes are
convertible into shares of Common Stock.

            It is understood that the Company and the Selling Stockholders are
concurrently entering into an International Underwriting Agreement dated the
date hereof (the "International Underwriting Agreement") providing for (i) the
sale by the Company and the Selling Stockholders of an aggregate of 7,000,000
shares of Common Stock (said shares to be sold by the Company and the Selling
Stockholders pursuant to the International Underwriting Agreement being
hereinafter called the "International Underwritten Shares"), and providing for
the grant to the underwriters named in Schedule I thereto (the "International
Underwriters") of an option to purchase from the Company up to 1,050,000
additional shares of Common Stock (the "International Option Shares"; the
International Option Shares, together with the International Underwritten
Shares, being hereinafter called the "International Shares"; and the U.S.
Shares, together with the International Shares, being hereinafter called the
"Shares") and (ii) the sale by the Company of $30,000,000 principal amount of
its ___% Convertible Subordinated Notes due 2003 (the "International
Underwritten Notes"), and providing for the grant to certain International
Underwriters of an option to purchase from the Company up to $4,500,000
additional principal amount of its ____% Convertible Subordinated Notes due 2003
(the "International Option Notes"; the International Option Notes, together with
the International Underwritten Notes, being hereinafter called the
"International Notes"; and the International Notes, together with the
International Shares, being hereinafter called the "International Securities";
and the International Notes, together with the U.S. Notes, being hereinafter
called the "Notes"; and the Notes, together with the Shares, being hereinafter
called the "Securities").

            It is further understood and agreed that the International
Underwriters and the U.S. Underwriters have entered into an Agreement Between
U.S. Underwriters and International Underwriters dated the date hereof (the
"Agreement Between U.S. Underwriters and International Underwriters"), pursuant
to which, among other things, the International Underwriters may purchase from
the U.S. Underwriters a portion of the U.S. Securities to be sold pursuant to
the U.S. Underwriting Agreement and the U.S. Underwriters may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to the International Underwriting Agreement. To the extent there are no
additional U.S. Underwriters listed on Schedule I other than you, the term U.S.
Representatives as used herein shall mean you, as U.S. Underwriters, and the
terms U.S. Representatives and U.S. Underwriters shall mean either the singular
or plural as the context requires.

            It is understood by the parties hereto that Mr. James J. Kim and
Mrs. Agnes C. Kim ("Mr. and Mrs. James J. Kim"), Selling Stockholders, are
concurrently entering into a


                                       2
   3
securities loan agreement dated the date hereof (the "Securities Loan
Agreement") with Smith Barney Inc. ("SBI") which provides that, subject to
certain restrictions and with the agreement of Mr. and Mrs. James J. Kim, SBI
may from time to time borrow, return and reborrow from Mr. and Mrs. James J. Kim
certain shares of Common Stock (the "Borrowed Shares") for the purpose of
facilitating market-making activity in the Notes by SBI.

            Certain terms used in this Agreement are defined in Section 17
hereof.

                  1. Representations and Warranties.

                  A. The Company and Mr. James J. Kim, a Selling Stockholder,
      jointly and severally represent and warrant to, and agree with, each U.S.
      Underwriter as set forth below in this Section 1A.

                  (a) The Company has filed with the Securities and Exchange
      Commission (the "Commission") a registration statement (file number
      333-37235) on Form S-1, including the related Offering Preliminary
      Prospectuses, for the registration under the Act of the offering and sale
      of the Securities. The Company may have filed one or more amendments
      thereto, including the related Offering Preliminary Prospectuses, each of
      which has previously been furnished to you. The Company will next file
      with the Commission either (i) prior to effectiveness of the Offering
      Registration Statement, a further amendment to the Offering Registration
      Statement (including the form of Offering Prospectuses) or (ii) after
      effectiveness of the Offering Registration Statement, the Offering
      Prospectuses in accordance with Rules 430A and 424(b)(1) or (4). In the
      case of clause (ii), the Company has included in the Offering Registration
      Statement all information (other than Rule 430A Information) required by
      the Act and the rules thereunder to be included in the Offering
      Registration Statement and the Offering Prospectuses. As filed, such
      amendment and form of Offering Prospectuses, or such Offering
      Prospectuses, shall contain all Rule 430A Information, together with all
      other such required information, and, except to the extent the U.S.
      Representatives shall agree in writing to a modification, shall be in all
      substantive respects in the form furnished to you prior to the Execution
      Time or, to the extent not completed at the Execution Time, shall contain
      only such specific additional information and other changes (beyond that
      contained in the latest Offering U.S. Preliminary Prospectus) as the
      Company has advised you, prior to the Execution Time, will be included or
      made therein.

                  It is understood that two forms of prospectus are to be used
      in connection with the offering and sale of the Securities: one form of
      prospectus relating to the U.S. Securities, which are to be offered and
      sold to United States and Canadian Persons, and one form of prospectus
      relating to the International Securities, which are to be offered and sold
      to persons other than United States and Canadian Persons. The two forms of
      prospectus are identical except for the outside front cover page, the
      inside front cover page, the discussion under the heading "Underwriting"
      and the outside back cover page. Such form of prospectus relating to the
      U.S. Securities as first filed pursuant to Rule 424(b) after the Execution
      Time or, if no filing pursuant to Rule 424(b) is made,


                                       3
   4
      such form of prospectus included in the Offering Registration Statement at
      the Effective Date, is hereinafter called the "Offering U.S. Prospectus";
      such form of prospectus relating to the International Securities as first
      filed pursuant to Rule 424(b) after the Execution Time or, if no filing
      pursuant to Rule 424(b) is made, such form of prospectus included in the
      Offering Registration Statement at the Effective Date, in either case,
      exclusive of any supplement thereto, is hereinafter called the "Offering
      International Prospectus"; and the Offering U.S. Prospectus and the
      Offering International Prospectus are hereinafter collectively called the
      "Offering Prospectuses".

                (b) On the Effective Date, the Offering Registration Statement
      did or will, and when the Offering Prospectuses are first filed (if
      required) in accordance with Rule 424(b) and on the Closing Date (as
      defined herein) and on any date on which the U.S. Option Shares or U.S.
      Option Notes are purchased, if such date is not the Closing Date (a
      "settlement date"), each Offering Prospectus (and any supplement thereto)
      will, comply in all material respects with the applicable requirements of
      the Act and the rules thereunder; on the Effective Date and at the
      Execution Time, the Offering Registration Statement did not or will not
      contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary in order to make
      the statements therein not misleading; and, on the Effective Date, each
      Offering Prospectus, if not filed pursuant to Rule 424(b), did not or will
      not, and on the date of any filing pursuant to Rule 424(b) and on the
      Closing Date and any settlement date, each Offering Prospectus (together
      with any supplement thereto) will not, include any untrue statement of a
      material fact or omit to state a material fact necessary in order to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading; provided, however, that the Company and Mr.
      James J. Kim make no representations or warranties as to the information
      contained in or omitted from the Offering Registration Statement or the
      Offering Prospectuses (or any supplement thereto) in reliance upon and in
      conformity with information furnished herein or in writing to the Company
      by or on behalf of any U.S. Underwriter through the U.S. Representatives
      specifically for inclusion in the Offering Registration Statement or the
      Offering Prospectuses (or any supplement thereto).

                (c) The Company has filed with the Commission a registration
      statement (file number 333-_________) on Form S-1, including the related
      Borrowing Preliminary Prospectus, for the registration under the Act of
      the offering and sale of the Borrowed Shares. The Company may have filed
      one or more amendments thereto, including the related Borrowing
      Preliminary Prospectus, each of which has previously been furnished to
      you. The Company will next file with the Commission either (i) prior to
      the effectiveness of the Borrowing Registration Statement, a further
      amendment to the Borrowing Registration Statement (including the form of
      Borrowing Prospectus) or (ii) after the effectiveness of the Borrowing
      Registration Statement , the Borrowing Prospectus in accordance with Rules
      430A and 424(b)(1) or (4). In the case of clause (ii), the Company has
      included in the Borrowing Registration Statement all information (other
      than Rule 430A Information) required by the Act and the rules thereunder
      to be included in the Borrowing Registration Statement and the Borrowing
      Prospectus. As filed, such


                                       4
   5
      amendment and form of Borrowing Prospectus, or such Borrowing Prospectus,
      shall contain all Rule 430A Information, together with all other such
      required information, and, except to the extent the U.S. Representatives
      shall agree in writing to a modification, shall be in all substantive
      respects in the form furnished to you prior to the Execution Time or, to
      the extent not completed at the Execution Time, shall contain only such
      specific additional information and other changes (beyond that contained
      in the latest Borrowing Preliminary Prospectus) as the Company has advised
      you, prior to the Execution Time, will be included or made therein.

                (d) On the Effective Date, the Borrowing Registration Statement
      did or will, and when the Borrowing Prospectus is first filed (if
      required) in accordance with Rule 424(b) and on the Closing Date, the
      Borrowing Prospectus (and any supplements thereto) will, comply in all
      material respects with the applicable requirements of the Act and the
      rules thereunder; on the Borrowing Effective Date and at the Execution
      Time, the Borrowing Registration Statement did not or will not contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary in order to make the statements
      therein not misleading; and, on the Borrowing Effective Date, the
      Borrowing Prospectus, if not filed pursuant to Rule 424(b), will not, and
      on the date of any filing pursuant to Rule 424(b) and on the Closing Date,
      the Borrowing Prospectus (together with any supplemental thereto) will
      not, include any untrue statement of a material fact or omit to state a
      material fact necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading;
      provided, however, that the Company and Mr. James J. Kim make no
      representations or warranties as to the information contained in or
      omitted from the Borrowing Registration Statement, or the Borrowing
      Prospectus (or any supplemental thereto) in reliance upon and in
      conformity with information furnished herein or in writing to the Company
      by or on behalf of any U.S. Underwriter through the U.S. Representatives
      specifically for inclusion in the Borrowing Registration Statement or the
      Borrowing Prospectus (or any supplement thereto).

                (e) The combined financial statements and schedules of the
      Company and A.K. Industries, Inc., Amkor Electronics, Inc., Amkor Anam
      Test Services, Inc., T.L. Limited, Amkor Anam Advanced Packaging, Inc.
      ("AAAP"), Amkor/Anam Pilipinas, Inc. ("AAP"), C.I.L. Limited, Amkor/Anam
      Euroservices S.A.R.L., and Automated MicroElectronics, Inc. ("AMI") (each
      a "Subsidiary" and collectively the "Subsidiaries") included in the
      Prospectuses and the Registration Statements present fairly in all
      material respects the financial condition, results of operations and cash
      flows of the Company and the Subsidiaries, on a combined basis, as of the
      dates and for the periods indicated, comply as to form with the applicable
      accounting requirements of the Act and the rules and regulations
      thereunder and have been prepared in conformity with generally accepted
      accounting principles applied on a consistent basis throughout the periods
      involved (except as otherwise noted therein).

                (f) Each of the Company, the Subsidiaries and , to the knowledge
      of the Company and Mr. James J. Kim, Anam Industrial Co., Ltd. ("AICL")
      has been duly


                                       5
   6
      incorporated and is validly existing as a corporation in good standing
      under the laws of the jurisdiction in which it is chartered or organized
      with full corporate power and authority to own, lease and operate its
      properties and conduct its business as described in the Prospectuses; each
      of the Company and the Subsidiaries is duly qualified to do business as a
      foreign corporation and is in good standing under the laws of each
      jurisdiction which requires such qualification, except where the failure
      to be so qualified would not have a Material Adverse Effect; and no
      proceeding has been instituted in any such jurisdiction, revoking,
      limiting or curtailing, or seeking to revoke, limit or curtail, such power
      and authority or qualification except such proceedings which, if
      successful, would not individually or in the aggregate have a Material
      Adverse Effect.

                (g) All the outstanding shares of capital stock of each
      Subsidiary have been duly and validly authorized and issued and are fully
      paid and nonassessable, and, except (i) such shares of AAP owned by AICL,
      which shares do not exceed 40.1% of the outstanding voting shares of AAP,
      (ii) such shares of AAP, AMI and AAAP owned by directors thereof, which
      shares in each case do not exceed 0.1% of the outstanding shares of such
      Subsidiary, (iii) 3,446,476 shares of preferred stock of AAP, which shares
      are owned by Integrated Microelectronics, Inc., and (iv) as otherwise set
      forth in the Prospectuses, all outstanding shares of capital stock of the
      Subsidiaries are owned by the Company either directly or through wholly
      owned subsidiaries free and clear of any perfected security interest and
      any other security interests, claims, liens or encumbrances.

                (h) The Company's authorized equity capitalization is as set
      forth in the Prospectuses; the capital stock of the Company conforms in
      all material respects to the description thereof contained in the
      Prospectuses; the outstanding shares of Common Stock have been duly and
      validly authorized and issued and are fully paid and nonassessable; the
      U.S. Shares being sold hereunder have been duly and validly authorized,
      and, when issued and delivered to and paid for by the U.S. Underwriters
      pursuant to this Agreement, will be fully paid and nonassessable; the U.S.
      Shares have been duly authorized for listing, subject to official notice
      of issuance, on the Nasdaq National Market; the certificates for the U.S.
      Shares are in valid and sufficient form; the holders of outstanding shares
      of capital stock of the Company are not entitled to preemptive or other
      rights to subscribe for the U.S. Shares; and, except as set forth in the
      Prospectuses, no options, warrants or other rights to purchase, agreements
      or other obligations to issue, or rights to convert any obligations into
      or exchange any securities for, shares of capital stock of or ownership
      interests in the Company are outstanding.

                 (i) The Indenture will be, as of the Closing Date, duly
      authorized, executed and delivered; the Indenture has been duly qualified
      under the Trust Indenture Act and as of the Closing Date will constitute a
      valid, binding and enforceable obligation of the Company; the U.S. Notes
      have been duly authorized by the Company and, when authenticated by the
      Trustee in accordance with the terms of the Indenture and delivered to and
      paid for by the U.S. Underwriters pursuant to this Agreement, will have
      been duly executed, authenticated, issued and delivered and will
      constitute valid, binding and enforceable obligations of the Company
      entitled to the benefits provided by the


                                       6
   7
      Indenture; the shares of Common Stock issuable upon conversion of the U.S.
      Notes have been duly authorized for listing, subject to official notice of
      issuance, on the Nasdaq National Market; the holders of the outstanding
      shares of capital stock of the Company are not entitled to any preemptive
      or other rights to subscribe for the U.S. Notes or the shares of Common
      Stock issuable upon the conversion thereof; the shares of Common Stock
      initially issuable upon conversion of the U.S. Notes have been duly and
      validly authorized and reserved for issuance upon such conversion and,
      when issued upon conversion, will be validly issued, fully paid and
      nonassessable; and the U.S. Notes and the Indenture will conform in all
      material respects to the descriptions thereof contained in the Offering
      Prospectuses.

                (j) There is no franchise, contract or other document of a
      character required to be described in the Registration Statements or
      Prospectuses, or to be filed as an exhibit thereto, which is not described
      or filed as required.

                (k) This Agreement has been duly authorized, executed and
      delivered by the Company and is a valid, binding and enforceable agreement
      of the Company.

                (l) The Company is not and, after giving effect to the offering
      and sale of the U.S. Securities and the application of the proceeds
      thereof as described in the Prospectuses, will not be an "investment
      company" as defined in the Investment Company Act of 1940, as amended (the
      "1940 Act").

                (m) No consent, approval, authorization, filing with or order of
      any court or governmental agency or body is required in connection with
      the transactions contemplated herein, except such as have been obtained
      under the Act and such as may be required under the blue sky laws of any
      jurisdiction in connection with the purchase and distribution of the U.S.
      Securities by the U.S. Underwriters in the manner contemplated herein and
      in the Prospectuses.

                (n) Neither the issue and sale of the U.S. Securities nor the
      consummation of any other of the transactions herein contemplated nor the
      fulfillment of the terms hereof will conflict with, or result in a breach
      or violation of or imposition of any lien, charge or encumbrance upon any
      property or assets of the Company or any of the Subsidiaries pursuant to,
      (i) the charter or bylaws of the Company or any of the Subsidiaries or
      (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
      note agreement, loan agreement or other agreement to which the Company or
      any of the Subsidiaries is a party or bound or to which its or their
      property is subject or (iii) any statute, law, rule, regulation, judgment,
      order or decree applicable to the Company or any of the Subsidiaries of
      any court, governmental body, arbitrator or other authority having
      jurisdiction over the Company or any of the Subsidiaries or any of its or
      their properties.

                (o) No holders of securities of the Company have rights to the
      registration of such securities under the Registration Statements.


                                       7
   8
                (p) No action, suit or proceeding by or before any court or
      governmental agency, authority or body or any arbitrator involving the
      Company or any of the Subsidiaries or its or their property is pending or,
      to the knowledge of the Company and Mr. James J. Kim, threatened that (i)
      could reasonably be expected to have a material adverse effect on the
      performance of this Agreement or the consummation of any of the
      transactions contemplated hereby or (ii) could reasonably be expected to
      have a Material Adverse Effect, except as set forth in or contemplated in
      the Prospectuses.

                (q)  The Reorganization (as defined in the Prospectuses) has
      been completed as described in the Prospectuses.

                (r) Each of the Packaging and Test Services Agreement dated as
      of November 1, 1997 and the Foundry Services Agreement dated as of January
      1, 1998 (collectively, the "AICL Agreements") has been duly authorized,
      executed and delivered by the Company, the Subsidiaries that are parties
      thereto (the "Subsidiary Parties") and AICL and is a valid, binding and
      enforceable agreement of the Company, the Subsidiary Parties and, to the
      knowledge of the Company and Mr. James J. Kim, AICL; neither the
      consummation of the transactions contemplated in any of the AICL
      Agreements nor the fulfillment of the terms thereof will conflict with, or
      result in a breach or violation of or imposition of any lien, charge or
      encumbrance upon any property or assets of the Company, any of the
      Subsidiary Parties or AICL pursuant to, (i) the charter or bylaws of the
      Company, any Subsidiary Party or, to the knowledge of the Company and Mr.
      James J. Kim, AICL or (ii) the terms of any indenture, contract, lease,
      mortgage, deed of trust, note agreement, loan agreement or other agreement
      to which the Company, any Subsidiary Party or, to the knowledge of the
      Company and Mr. James J. Kim, AICL is a party or bound or to which their
      respective property is subject (except for such breaches or violations
      which would not, individually or in the aggregate, have a Material Adverse
      Effect or a material adverse effect on the ability of AICL to perform any
      of the AICL Agreements) or (iii) any statute, law, rule, regulation,
      judgment, order or decree applicable to the Company, any Subsidiary Party
      or, to the knowledge of the Company and Mr. James J. Kim, AICL of any
      court, governmental body, arbitrator or other authority having
      jurisdiction over the Company, such Subsidiary Party or AICL or any of
      their respective properties; no consent, approval, authorization, filing
      with or order of any court or governmental agency or body is currently
      required in connection with the transactions contemplated in any of the
      AICL Agreements, except those of which have been obtained or which, if not
      obtained, would not individually or in the aggregate have a material
      adverse effect on the performance of any of the AICL Agreements or the
      consummation of the transactions contemplated thereby; and no action, suit
      or proceeding by or before any court or governmental body or any
      arbitrator involving the Company, any Subsidiary Party or, to the
      knowledge of the Company and Mr. James J. Kim, AICL or their respective
      properties is pending or, to the knowledge of the Company and Mr. James J.
      Kim, threatened that could reasonably be expected to have a material
      adverse effect on the performance of any of the AICL Agreements or the
      consummation of the transactions contemplated thereby.


                                        8
   9
                (s) Each of the Company, the Subsidiaries and, to the knowledge
      of the Company and Mr. James J. Kim, AICL owns or leases all such
      properties as are necessary to the conduct of its operations as presently
      conducted; neither the Company nor any Subsidiary nor, to the knowledge of
      the Company and Mr. James J. Kim, AICL is in violation of any law, rule or
      regulation of any Federal, state, local or other governmental or
      regulatory authority applicable to it or is in non-compliance with any
      term or condition of, or has failed to obtain and maintain in effect, any
      license, certificate, permit or other governmental authorization required
      for the ownership or lease of its property or the conduct of its business,
      which violation, non-compliance or failure would individually or in the
      aggregate have a Material Adverse Effect or a material adverse effect on
      the ability of AICL to perform any of the AICL Agreements, except as set
      forth in or contemplated in the Prospectuses; and the Company has not
      received notice of any proceedings relating to the revocation or material
      modification of any such license, certificate, permit or other
      authorization (other than such proceedings which, if the subject of an
      unfavorable decision, would not individually or in the aggregate have a
      Material Adverse Effect), except as set forth in or contemplated in the
      Prospectuses.

                (t) Neither the Company nor any Subsidiary nor, to the knowledge
      of the Company and Mr. James J. Kim, AICL is in violation or default of
      (i) any provision of its charter or bylaws, (ii) the terms of any
      indenture, contract, lease, mortgage, deed of trust, note agreement, loan
      agreement or other agreement to which it is a party or bound or to which
      its property is subject, or (iii) any statute, law, rule, regulation,
      judgment, order or decree of any court, governmental body, arbitrator or
      other authority having jurisdiction over the Company, or such Subsidiary
      or AICL or any of their respective properties, as applicable, in each case
      (x) other than such violations or defaults which would not, individually
      or in the aggregate, have a Material Adverse Effect or a material adverse
      effect on the ability of AICL to perform its obligations under the AICL
      Agreements and (y) except as set forth in or contemplated in the
      Prospectuses.

                (u) Arthur Andersen LLP, who have certified certain financial
      statements of the Company and the Subsidiaries and delivered their report
      with respect to the audited combined financial statements and schedules
      included in the Prospectuses, are independent public accountants with
      respect to the Company within the meaning of the Act and the applicable
      published rules and regulations thereunder.

                (v) There are no transfer taxes or other similar fees or charges
      under Federal law or the laws of any state, or any political subdivision
      thereof, required to be paid in connection with the execution and delivery
      of this Agreement or the issuance by the Company or sale by the Company of
      the U.S. Securities.

                (w) The Company has filed all foreign, federal, state and local
      tax returns that are required to be filed or has requested extensions
      thereof (except in any case in which the failure so to file would not have
      a Material Adverse Effect), except as set forth in or contemplated in the
      Prospectuses and has paid all taxes shown as payable on such tax returns
      and any other assessment, fine or penalty levied against it, to the extent
      that


                                        9
   10
      any of the foregoing is due and payable, except for any such assessment,
      fine or penalty that is currently being contested in good faith or as
      would not have a Material Adverse Effect, except as set forth in or
      contemplated in the Prospectuses.

                (x) No labor dispute with the employees of the Company or any of
      the Subsidiaries exists or, to the knowledge of the Company and Mr. James
      J. Kim, is threatened that could reasonably be expected to have a Material
      Adverse Effect, except as set forth in or contemplated in the
      Prospectuses.

                (y) The Company and each of the Subsidiaries are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as are prudent for the businesses in which they
      are engaged; neither the Company nor any such Subsidiary has been refused
      any insurance coverage sought or applied for; and neither the Company nor
      any such Subsidiary has any reason to believe that it will not be able to
      renew its existing insurance coverage as and when such coverage expires or
      to obtain similar coverage from similar insurers as may be necessary to
      continue its business at a cost that would not have a Material Adverse
      Effect, except as set forth in or contemplated in the Prospectuses.

                (z) No Subsidiary is currently prohibited, directly or
      indirectly, from paying any dividends to the Company, from making any
      other distribution on such Subsidiary's capital stock, from repaying to
      the Company any loans or advances to such Subsidiary from the Company or
      from transferring any of such Subsidiary's property or assets to the
      Company or any other Subsidiary of the Company, except as described in or
      contemplated in the Prospectuses.

               (aa) The Company and the Subsidiaries possess all certificates,
      authorizations and permits issued by the appropriate federal, state or
      foreign regulatory authorities necessary to conduct their respective
      businesses (except in any case in which the failure so to possess any such
      certificate, authorization or permit would not, individually or in the
      aggregate, have a Material Adverse Effect), and neither the Company nor
      any such Subsidiary has received any notice of proceedings relating to the
      revocation or modification of any such certificate, authorization or
      permit which, singly or in the aggregate, if the subject of an unfavorable
      decision, ruling or finding, could reasonably be expected to have a
      Material Adverse Effect, except as set forth in or contemplated in the
      Prospectuses.

               (bb) Neither the Company nor any of the Subsidiaries is in
      violation of any federal or state law or regulation relating to
      occupational safety and health or to the storage, handling or
      transportation of hazardous or toxic materials and the Company and the
      Subsidiaries have received all permits, licenses or other approvals
      required of them under applicable federal and state occupational safety
      and health and environmental laws and regulations to conduct their
      respective businesses, and the Company and each such Subsidiary is in
      compliance with all terms and conditions of any such permit, license or
      approval, except any such violation of law or regulation, failure to
      receive required


                                       10
   11
      permits, licenses or other approvals or failure to comply with the terms
      and conditions of such permits, licenses or approvals which would not,
      singly or in the aggregate, have a Material Adverse Effect, except as set
      forth in or contemplated in the Prospectuses.

               (cc) The Company and each of the Subsidiaries maintain a system
      of internal accounting controls sufficient to provide reasonable assurance
      that (i) transactions are executed in accordance with management's general
      or specific authorizations; (ii) transactions are recorded as necessary to
      permit preparation of financial statements in conformity with generally
      accepted accounting principles and to maintain asset accountability; (iii)
      access to assets is permitted only in accordance with management's general
      or specific authorization; and (iv) the recorded accountability for assets
      is compared with the existing assets at reasonable intervals and
      appropriate action is taken with respect to any differences.

               (dd) Each of the Company, the Subsidiaries and, to the knowledge
      of the Company and Mr. James J. Kim, AICL owns or has obtained licenses
      for the patents, patent applications, trade and service marks, trade
      secrets and other intellectual properties referenced or described in the
      Prospectuses as being owned by or licensed to it (collectively, the
      "Intellectual Property"). Except as set forth in the Prospectuses under
      the caption "Business --Intellectual Property," (a) to the knowledge of
      the Company and Mr. James J. Kim, there are no rights of third parties to
      any such Intellectual Property owned by the Company or any of the
      Subsidiaries; (b) to the knowledge of the Company and Mr. James J. Kim,
      there is no material infringement by third parties of any such
      Intellectual Property (other than with respect to the "Gold Gate" patent
      of the Company); (c) there is no pending or, to the knowledge of the
      Company and Mr. James J. Kim, threatened action, suit, proceeding or claim
      by others challenging the rights of the Company, any Subsidiary or AICL in
      or to any such Intellectual Property, and the Company is unaware of any
      facts which would form a reasonable basis for any such claim; (d) there is
      no pending or, to the knowledge of the Company and Mr. James J. Kim,
      threatened action, suit, proceeding or claim by others challenging the
      validity or scope of any such Intellectual Property; (e) there is no
      pending or, to the knowledge of the Company and Mr. James J. Kim,
      threatened action, suit, proceeding or claim by others that the Company,
      any Subsidiary or AICL infringes or otherwise violates any patent,
      trademark, copyright, trade secret or other proprietary rights of others;
      (f) to the knowledge of the Company and Mr. James J. Kim, there is no U.S.
      patent or published U.S. patent application which contains claims that
      dominate or may dominate any Intellectual Property described in the
      Prospectuses as being owned by or licensed to the Company, any Subsidiary
      or AICL or that interferes with the issued or pending claims of any such
      Intellectual Property; and (g) there is no prior art of which the Company
      is aware that may render any U.S. patent held by the Company, any
      Subsidiary or AICL invalid or any U.S. patent application held by the
      Company, any Subsidiary or AICL unpatentable which has not been disclosed
      to the U.S. Patent and Trademark Office. Each of the Company, the
      Subsidiaries and, to the knowledge of the Company and Mr. James J. Kim,
      AICL owns the Intellectual Property or has the rights to the Intellectual
      Property that is necessary, in the case of the Company and the
      Subsidiaries, to conduct


                                       11
   12
      the Company's business as described in the Prospectuses or, in the case of
      AICL, to perform its obligations under the AICL Agreements.

               (ee) Neither the Company nor any of the Subsidiaries has
      distributed nor will it distribute prior to the later of (i) the Closing
      Date, or any date on which U.S. Option Shares or U.S. Option Notes are to
      be purchased, as the case may be, and (ii) completion of the distribution
      of the U.S. Securities, any offering material in connection with the
      offering and sale of the U.S. Securities other than any Offering
      Preliminary Prospectuses, the Offering Prospectuses, the Offering
      Registration Statement and other materials, if any, permitted by the Act.

               (ff) Neither the Company nor its affiliated purchasers, as
      defined in Rule 100 of Regulation M ("Regulation M") under the Exchange
      Act, either alone or with one or more other persons, (i) has taken, either
      directly or indirectly, any action which was designed to cause or result
      in, or which has constituted, or which might reasonably be expected to
      cause or result in, stabilization or manipulation of the price of any
      security of the Company ("Subject Securities") in connection with the
      offering of the Securities or (ii) will bid for or purchase any Subject
      Securities of the Company or any other covered securities (within the
      meaning of Regulation M) relating to the Subject Securities (together with
      Subject Securities, "Covered Securities"), or attempt to induce any person
      to bid for or purchase any Covered Securities, in either case, for the
      purpose of creating actual or apparent active trading in, or raising the
      price of the Securities.

               (gg) There are no outstanding loans, advances (except normal
      advances for business expenses in the ordinary course of business) or
      guarantees of indebtedness by the Company or any of the Subsidiaries to or
      for the benefit of any of the officers or directors of the Company or any
      Subsidiary or any of the members of the families of any of them, which
      loans, advances or guarantees are required to be, and are not, disclosed
      in the Registration Statements and Prospectuses.

               (hh) There have not been, and there are not proposed, any
      transactions or agreements between the Company or any of the Subsidiaries
      on the one hand and the officers, directors or stockholders of the Company
      or any of the Subsidiaries on the other, which transactions or agreements
      are required to be, and are not, disclosed in the Registration Statements
      and Prospectuses.

               (ii) No officer or director of the Company is in breach or
      violation of any employment agreement, non-competition agreement,
      confidentiality agreement, or other agreement restricting the nature or
      scope of employment to which such officer or director is a party, other
      than such breaches or violations which would not, individually or in the
      aggregate, have a Material Adverse Effect; neither the current conduct nor
      the proposed conduct of the Company's business, as described in the
      Registration Statements and Prospectuses, will result in a breach or
      violation of any such agreement.


                                       12
   13
               (jj) There are no outstanding options to acquire shares of
      capital stock of the Company that are vested and exercisable, and there
      are no outstanding options to acquire shares of capital stock of the
      Company that can, by their terms, become exercisable within 180 days of
      the date hereof.

            Any certificate signed by any officer of the Company and delivered
to the U.S. Representatives or counsel for the U.S. Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each U.S.
Underwriter.

            B. Each Selling Stockholder represents and warrants to, and agrees
with, each U.S. Underwriter that:

                 (a) Such Selling Stockholder has full legal right, capacity,
      power and authority to enter into and perform this Agreement and the
      Custody Agreement (as defined below) and to sell, transfer, assign and
      deliver in the manner provided in this Agreement and the Custody Agreement
      the U.S. Shares to be sold by such Selling Stockholder hereunder.

                 (b) Such Selling Stockholder is the lawful owner of the U.S.
      Shares to be sold by such Selling Stockholder hereunder and upon sale and
      delivery of, and payment for, such U.S. Shares, as provided herein, such
      Selling Stockholder will convey good and valid title to such U.S. Shares,
      free and clear of all liens, encumbrances, equities and claims whatsoever.

                 (c) Such Selling Stockholder has not taken and will not take,
      directly or indirectly, any action designed to or which has constituted or
      which might reasonably be expected to cause or result, under the Exchange
      Act or otherwise, in stabilization or manipulation of the price of any
      security of the Company to facilitate the sale or resale of the U.S.
      Shares and has not effected any sales of shares of Common Stock which, if
      effected by the issuer, would be required to be disclosed in response to
      Item 701 of Regulation S-K under the Act.

                 (d) Certificates in negotiable form for such Selling
      Stockholder's U.S. Shares have been placed in custody, for delivery
      pursuant to the terms of this Agreement, under a Custody Agreement duly
      executed and delivered by such Selling Stockholder, in the form heretofore
      furnished to you (the "Custody Agreement") with ___________ of
      ___________, as Custodian (the "Custodian"); the U.S. Shares represented
      by the certificates so held in custody for each Selling Stockholder are
      subject to the interests hereunder of the U.S. Underwriters, the Company
      and the other Selling Stockholders; the arrangements for custody and
      delivery of such certificates, made by such Selling Stockholder hereunder
      and under the Custody Agreement, are not subject to termination by any
      acts of such Selling Stockholder, or by operation of law, whether by the
      death or incapacity of such Selling Stockholder or the occurrence of any
      other event; and if any such death, incapacity or any other such event
      shall occur before the delivery of such U.S.


                                       13
   14
      Shares hereunder, certificates for the U.S. Shares will be delivered by
      the Custodian in accordance with the terms and conditions of this
      Agreement and the Custody Agreement as if such death, incapacity or other
      event had not occurred, regardless of whether or not the Custodian shall
      have received notice of such death, incapacity or other event.

                 (e) No consent, approval, authorization or order of any court
      or governmental agency or body is required for the consummation by such
      Selling Stockholder of the transactions contemplated herein, except such
      as may have been obtained under the Act and such as may be required under
      the blue sky laws of any jurisdiction in connection with the purchase and
      distribution of the U.S. Shares by the U.S. Underwriters and such other
      approvals as have been obtained.

                 (f) Neither the sale of the U.S. Shares being sold by such
      Selling Stockholder nor the consummation of any other of the transactions
      herein contemplated by such Selling Stockholder or the fulfillment of the
      terms hereof by such Selling Stockholder will conflict with, result in a
      breach or violation of, or constitute a default under any law or the terms
      of any indenture or other agreement or instrument to which such Selling
      Stockholder is a party or bound, or any judgment, order or decree
      applicable to such Selling Stockholder of any court, regulatory body,
      administrative agency, governmental body or arbitrator having jurisdiction
      over such Selling Stockholder.

            2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
and the Selling Stockholders agree to sell to each U.S. Underwriter, and each
U.S. Underwriter agrees, severally and not jointly, to purchase from the Company
and the Selling Stockholders, at a purchase price of $________ per share, the
amount of the U.S. Underwritten Shares set forth opposite such U.S.
Underwriter's name in Schedule I hereto.

            (b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several U.S. Underwriters to purchase, severally and not jointly,
up to 4,200,000 shares of the U.S. Option Shares at the same purchase price per
share as the U.S. Underwriters shall pay for the U.S. Underwritten Shares. Said
option may be exercised only to cover over-allotments in the sale of the U.S.
Underwritten Shares by the U.S. Underwriters. Said option may be exercised in
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Offering U.S. Prospectus upon written or telegraphic
notice by the U.S. Representatives to the Company setting forth the number of
shares of the U.S. Option Shares as to which the several U.S. Underwriters are
exercising the option and the settlement date; provided, however, that to the
extent that both the option provided for in this Section 2(b) and the option
provided for in Section 2(b) of the International Underwriting Agreement are
exercised, (i) such exercises shall occur on the same date and (ii) the
settlement dates in respect thereof shall be the same date. Delivery of the U.S.
Option Shares, and payment therefor, shall be made as provided in Section 3
hereof. The number of shares of the U.S. Option Shares to be purchased by each
U.S. Underwriter shall be the same percentage of the total number of shares of
the U.S. Option Shares to be purchased by the several U.S. Underwriters as such
U.S. Underwriter is purchasing of the


                                       14
   15
U.S. Underwritten Shares, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional shares.

            (c) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to
each U.S. Underwriter, and each U.S. Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of ___% of the
principal amount thereof, plus accrued interest, if any, on the U.S.
Underwritten Notes from April __, 1998, to the Closing Date, the principal
amount of the U.S. Underwritten Notes set forth opposite such U.S.
Underwriter's name in Schedule I hereto.

            (d) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several U.S. Underwriters to purchase, severally and not jointly,
the U.S. Option Notes at a purchase price of _____% of the principal amount
thereof, plus accrued interest, if any, from April __, 1998, to the settlement
date for the U.S. Option Notes. Said option may be exercised only to cover
over-allotments in the sale of the U.S. Underwritten Notes by the U.S.
Underwriters. Said option may be exercised in whole or in part at any time (but
not more than once) on or before the 30th day after the date of the Offering
U.S. Prospectus upon written or telegraphic notice by the U.S. Representatives
to the Company setting forth the principal amount of U.S. Option Notes as to
which the several U.S. Underwriters are exercising the option and the settlement
date; provided, however, that to the extent that both the option provided for in
this Section 2(d) and the option provided for in Section 2(d) of the
International Underwriting Agreement are exercised, (i) such exercises shall
occur on the same date and (ii) the settlement dates in respect thereof shall be
the same date. Delivery of certificates for the U.S. Option Notes, and payment
therefor, shall be made as provided in Section 3 hereof. The principal amount of
U.S. Option Notes to be purchased by each U.S. Underwriter shall be the same
percentage of the total principal amount of U.S. Option Notes to be purchased by
the U.S. Underwriters as such U.S. Underwriter is purchasing of the U.S.
Underwritten Notes, subject to such adjustments as you in your absolute
discretion shall make to eliminate any fractional principal amounts.

            3. Delivery and Payment. Delivery of and payment for the U.S.
Underwritten Shares, the U.S. Underwritten Notes, and the U.S. Option Shares (if
the option provided for in Section 2(b) hereof shall have been exercised on or
before the third Business Day prior to the Closing Date) and the U.S. Option
Notes (if the option provided for in Section 2(d) hereof shall have been
exercised on or before the third Business Day prior to the Closing Date) shall
be made at 10:00 AM, New York City time, on ___________, 1998, or at such time
on such later date not more than three Business Days after the foregoing date as
the U.S. Representatives shall designate, which date and time may be postponed
by agreement among the U.S. Representatives, the Company and the Selling
Stockholders or as provided in Section 9 hereof (such date and time of delivery
and payment for the U.S. Securities being herein called the "Closing Date").
Delivery of the U.S. Securities shall be made to the U.S. Representatives for
the respective accounts of the several U.S. Underwriters against payment by the
several U.S. Underwriters through the U.S. Representatives of (i) $_____ by wire
transfer payable in same-day funds to an account of the Korea Development Bank
specified by the Company and (ii) the balance of the respective aggregate
purchase prices of the U.S. Securities being sold by the Company and each


                                       15
   16
of the Selling Stockholders to or upon the order of the Company and each of the
Selling Stockholders by wire transfer payable in same-day funds to the accounts
specified by the Company and each of the Selling Stockholders or by such other
method as shall be agreed upon by the U.S. Representatives and the Company and
such Selling Stockholders. Delivery of the U.S. Securities shall be made through
the facilities of the Depository Trust Company unless the U.S. Representatives
shall otherwise instruct.

            It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement.

            Each Selling Stockholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several U.S. Underwriters of the
U.S. Shares to be purchased by them from such Selling Stockholders and the
respective U.S. Underwriters will pay any additional stock transfer taxes
involved in further transfers.

            If the option provided for in Section 2(b) and/or Section 2(d)
hereof is exercised on or after the second Business Day prior to the Closing
Date, the Company will deliver (at the expense of the Company) to the U.S.
Representatives, on the date(s) specified by the U.S. Representatives (which
shall be within three Business Days after exercise of said option(s)), the U.S.
Option Shares and/or U.S. Option Notes against payment by the several U.S.
Underwriters through the U.S. Representatives of the purchase price thereof to
or upon the order of the Company by wire transfer payable in same-day funds to
an account specified by the Company or by such other method as shall be agreed
upon by the U.S. Representatives and the Company. Delivery of the U.S. Option
Shares and/or U.S. Option Notes shall be made through the facilities of the
Depository Trust Company unless the U.S. Representatives shall otherwise
instruct. If settlement for the U.S. Option Shares and/or U.S. Option Notes
occurs after the Closing Date, the Company will deliver to the U.S.
Representatives on the settlement date(s), and the obligation of the U.S.
Underwriters to purchase the U.S. Option Shares and/or U.S. Option Notes, as the
case may be, shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date(s) the opinions,
certificates and letters delivered on the Closing Date pursuant to Section 6
hereof.

            4. Offering by Underwriters. It is understood that the several U.S.
Underwriters propose to offer the U.S. Securities for sale to the public as set
forth in the Offering Prospectuses.

            5. Other Agreements.

            A. The Company agrees with the several U.S. Underwriters that:

                (a) The Company will use its best efforts to cause the Offering
      Registration Statement, if not effective at the Execution Time, and any
      amendment thereof to become effective. Prior to the termination of the
      offering of the Securities, the Company will not file any amendment of the
      Offering Registration Statement or supplement to the Offering Prospectuses
      or any Rule 462(b) Registration Statement unless the Company has furnished
      you a copy for your review prior to filing and will not


                                       16
   17
      file any such proposed amendment or supplement to which you reasonably
      object. Subject to the foregoing sentence, if the Offering Registration
      Statement has become or becomes effective pursuant to Rule 430A, or filing
      of the Offering Prospectuses is otherwise required under Rule 424(b), the
      Company will cause the Offering Prospectuses, properly completed, and any
      supplement thereto to be filed with the Commission pursuant to the
      applicable paragraph of Rule 424(b) within the time period prescribed and
      will provide evidence satisfactory to the U.S. Representatives of such
      timely filing. The Company will promptly advise the U.S. Representatives
      (i) when the Offering Registration Statement, if not effective at the
      Execution Time, shall have become effective, (ii) when the Offering
      Prospectuses, and any supplement thereto, shall have been filed (if
      required) with the Commission pursuant to Rule 424(b) or when any Rule
      462(b) Registration Statement shall have been filed with the Commission,
      (iii) when, prior to termination of the offering of the Securities, any
      amendment to the Offering Registration Statement shall have been filed or
      become effective, (iv) of any request by the Commission for any amendment
      of the Offering Registration Statement or any Rule 462(b) Registration
      Statement, or for any supplement to the Offering Prospectuses or for any
      additional information, (v) of the issuance by the Commission of any stop
      order suspending the effectiveness of the Offering Registration Statement
      or the institution or threatening of any proceeding for that purpose and
      (vi) of the receipt by the Company of any notification in writing with
      respect to the suspension of the qualification of the Securities for sale
      in any jurisdiction or with respect to the initiation or threatening of
      any proceeding for such purpose. The Company will use its best efforts to
      prevent the issuance of any such stop order or the suspension of any such
      qualification and, if issued, to obtain as soon as possible the withdrawal
      thereof.

                (b) If, at any time when a prospectus relating to the Securities
      is required to be delivered under the Act, any event occurs as a result of
      which either of the Offering Prospectuses as then supplemented would
      include any untrue statement of a material fact or omit to state any
      material fact necessary to make the statements therein in the light of the
      circumstances under which they were made not misleading, or if it shall be
      necessary to amend the Offering Registration Statement or supplement
      either of the Offering Prospectuses to comply with the Act or the rules
      thereunder, the Company promptly will (i) prepare and file with the
      Commission, subject to the second sentence of paragraph (a) of this
      Section 5, an amendment or supplement which will correct such statement or
      omission or effect such compliance and (ii) supply any supplemented
      Offering Prospectuses to you in such quantities as you may reasonably
      request.

                (c) As soon as practicable, the Company will make generally
      available to its security holders and to the U.S. Representatives an
      earnings statement or statements of the Company and the Subsidiaries which
      will satisfy the provisions of Section 11(a) of the Act and Rule 158 under
      the Act.

                (d) The Company will furnish to the U.S. Representatives and
      counsel for the U.S. Underwriters, without charge, signed copies of the
      Offering Registration Statement (including exhibits thereto) and to each
      other U.S. Underwriter a copy of the


                                       17
   18
      Offering Registration Statement (without exhibits thereto) and, so long as
      delivery of a prospectus by a U.S. Underwriter or dealer may be required
      by the Act, as many copies of each U.S. Offering Preliminary Prospectus
      and the Offering U.S. Prospectus and any supplement thereto as the U.S.
      Representatives may reasonably request; provided, that, without limiting
      the foregoing, the Company will furnish to each U.S. Underwriter such
      number of copies of the Offering U.S. Prospectus as the U.S.
      Representatives shall request for purposes of confirming orders for the
      U.S. Securities, which copies shall be delivered to the U.S. Underwriters
      by (i) if the public offering price is determined after 12:00 noon, New
      York City time, on the date of determination of the public offering price,
      5:00 PM, New York City time, on the Business Day immediately following
      such date and (ii) if the public offering price is determined at or prior
      to 12:00 noon, New York City time, on the date of determination of the
      public offering price, 9:00 AM, New York City time, on the Business Day
      immediately following such date. The Company will pay the expenses of
      printing or other production of all documents relating to the offering.

                (e) The Company will arrange, if necessary, for the
      qualification of the Securities for sale under the laws of such
      jurisdictions as the U.S. Representatives may designate, will maintain
      such qualifications in effect so long as required for the distribution of
      the U.S. Securities and will pay any fee of the NASD, in connection with
      its review of the offering; provided, however, that the Company shall not
      be required in connection therewith, as a condition thereof, to qualify as
      a foreign corporation or to execute a general consent to service of
      process in any jurisdiction or subject itself to taxation as doing
      business in any jurisdiction.

                (f) The Company will not, for a period of 180 days following the
      Execution Time, without the prior written consent of SBI, offer, pledge,
      sell or contract to sell, or otherwise dispose of (or enter into any
      transaction which is designed to, or could be expected to, result in the
      disposition (whether by actual disposition or effective economic
      disposition due to cash settlement or otherwise) by the Company or any
      affiliate of the Company or any person in privity with the Company or any
      affiliate of the Company), directly or indirectly, or announce the
      offering of, any other shares of Common Stock or any securities or options
      convertible into, or exchangeable or exercisable for, shares of Common
      Stock (other than the Notes); provided, however, that the Company may
      grant options and may issue and sell shares of Common Stock pursuant to
      any employee stock option plan, stock ownership plan or dividend
      reinvestment plan of the Company that was approved by the Board of
      Directors of the Company prior to the Execution Time and the Company may
      issue shares of Common Stock issuable upon the conversion of securities or
      the exercise of warrants outstanding at the Execution Time.

                (g) The Company will use the net proceeds to the Company of the
      offering of the Securities as described under the heading "Use of
      Proceeds" in the Offering Prospectuses.


                                       18
   19
                (h) The Company will use its best efforts to have the Notes
      approved for quotation on the Nasdaq Stock Market.

                (i) The Company will use its best efforts to have Arthur
      Andersen LLP issue, on or prior to May 15, 1998 (or, to the extent such
      date is prior to the Closing Date, within _____ Business Days after the
      Closing Date), a revised audit report with respect to the combined
      financial statements of the Company contained in the Offering
      Prospectuses, which audit report shall not contain any qualification as to
      the Company's ability to continue as a going concern.

                (j) The Company confirms as of the date hereof that it is in
      compliance with all provisions of Section 1 of Laws of Florida, Chapter
      92-198, An Act Relating to Disclosure of Doing Business with Cuba, and the
      Company further agrees that if it commences engaging in business with the
      government of Cuba or with any person or affiliate located in Cuba after
      the date the Offering Registration Statement becomes or has become
      effective with the Commission or with the Florida Department of Banking
      and Finance (the "Department"), whichever date is later, or if the
      information reported in the Offering Prospectuses, if any, concerning the
      Company's business with Cuba or with any person or affiliate located in
      Cuba changes in any material way, the Company will provide the Department
      notice of such business or change, as appropriate, in a form acceptable to
      the Department.

            B. Each Selling Stockholder agrees with the several U.S.
Underwriters that it will not during the period of 180 days following the
Execution Time, without the prior written consent of SBI or unless pursuant to
the Securities Loan Agreement, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any other
shares of Common Stock beneficially owned by such person, or any securities
convertible into, or exchangeable for, shares of Common Stock other than shares
of Common Stock disposed of as bona fide gifts.

            C. Each U.S. Underwriter agrees that (i) it is not purchasing any of
the U.S. Securities for the account of anyone other than a United States or
Canadian Person, (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any of the U.S. Securities or distribute any Offering
U.S. Prospectus to any person outside the United States or Canada, or to anyone
other than a United States or Canadian Person, and (iii) any dealer to whom it
may sell any of the U.S. Securities will represent that it is not purchasing for
the account of anyone other than a United States or Canadian Person and agree
that it will not offer or resell, directly or indirectly, any of the U.S.
Securities outside the United States or Canada, or to anyone other than a United
States or Canadian Person or to any other dealer who does not so represent and
agree; provided, however, that the foregoing shall not restrict (i) purchases
and sales between the International Underwriters on the one hand and the U.S.
Underwriters on the other hand pursuant to the Agreement Between U.S.
Underwriters and International Underwriters, (ii) stabilization transactions
contemplated under the Agreement Between U.S. Underwriters and International
Underwriters, conducted through SBI (or through the U.S. Representatives and
International Representatives) as part of the distribution of the Securities,
and (iii) sales to or through (or


                                       19
   20
distributions of Offering U.S. Prospectuses or Offering U.S. Preliminary
Prospectuses to) United States or Canadian Persons who are investment advisors,
or who otherwise exercise investment discretion, and who are purchasing for the
account of anyone other than a United States or Canadian Person.

            The agreement of the U.S. Underwriters set forth in the above
paragraph shall terminate upon the earlier of the following events:

            (i)  a mutual agreement of the U.S. Representatives and the
International Representatives to terminate the selling restrictions set forth
in such paragraph and in Section 5C(a) of the International Underwriting
Agreement; or

            (ii) the expiration of a period of 30 days after the Closing Date,
unless (A) the International Representatives shall have given notice to the
Company and the U.S. Representatives that the distribution of the International
Securities by the International Underwriters has not yet been completed, or (B)
the U.S. Representatives shall have given notice to the Company and the
International Underwriters that the distribution of the U.S. Securities by the
U.S. Underwriters has not yet been completed. If such notice by the U.S.
Representatives or the International Representatives is given, the agreements
set forth in such paragraph shall survive until the earlier of (1) the event
referred to in clause (i) above or (2) the expiration of an additional period of
30 days from the date of any such notice.

            6. Conditions to the Obligations of the U.S. Underwriters. The
obligations of the U.S. Underwriters to purchase (i) the U.S. Underwritten
Shares and the U.S. Underwritten Notes and (ii) the U.S. Option Shares and the
U.S. Option Notes, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholders made in any certificates pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations under this Agreement and to the
following additional conditions:

                 (a) If any Registration Statement has not become effective
      prior to the Execution Time, unless the U.S. Representatives agree in
      writing to a later time, such Registration Statement will become effective
      not later than (i) 6:00 PM, New York City time, on the date of
      determination of the public offering price of the Securities, if such
      determination occurred at or prior to 3:00 PM, New York City time, on such
      date or (ii) 9:30 AM, New York City time, on the Business Day following
      the day on which the public offering price of the Securities was
      determined, if such determination occurred after 3:00 PM, New York City
      time, on such date; if filing of any of the Prospectuses, or any
      supplement thereto, is required pursuant to Rule 424(b), the Prospectuses,
      and any such supplement, will be filed in the manner and within the time
      period required by Rule 424(b); and no stop order suspending the
      effectiveness of any Registration Statement


                                       20
   21
      shall have been issued and no proceedings for that purpose shall have been
      instituted or threatened.

                 (b) The Company shall have furnished to the U.S.
      Representatives the opinion of Wilson Sonsini Goodrich & Rosati, counsel
      for the Company, dated the Closing Date, to the effect that:

                     (i) each of the Company and the Subsidiaries chartered or
            organized under the laws of any state of the United States (the
            "U.S. Subsidiaries") has been duly incorporated and is validly
            existing as a corporation in good standing under the laws of the
            jurisdiction in which it is chartered or organized, with full
            corporate power and authority to own its properties and conduct its
            business as described in the Prospectuses;

                    (ii) all the outstanding shares of capital stock of each
            U.S. Subsidiary have been duly and validly authorized and issued and
            are fully paid and nonassessable, and, except as otherwise set forth
            in the Prospectuses, all outstanding shares of capital stock of the
            U.S. Subsidiaries are owned by the Company, either directly or
            through wholly owned Subsidiaries, free and clear of any perfected
            security interest and, to the knowledge of such counsel, any other
            security interests, claims, liens or encumbrances;

                   (iii) the capital stock of the Company conforms as to legal
            matters in all material respects to the description thereof
            contained in the Prospectuses; the outstanding shares of Common
            Stock (including the Shares being sold hereunder by the Selling
            Stockholders) have been duly and validly authorized and issued and
            are fully paid and nonassessable; the Shares have been duly and
            validly authorized and, when issued and delivered to and paid for by
            the U.S. Underwriters pursuant to this Agreement and by the
            International Underwriters pursuant to the International
            Underwriting Agreement, will be fully paid and nonassessable; the
            Shares have been duly authorized for listing, subject to official
            notice of issuance, on the Nasdaq National Market; the certificates
            for the Shares are in valid and sufficient form; the holders of
            outstanding shares of capital stock of the Company are not entitled
            to preemptive or other rights to subscribe for the Shares under the
            Articles of Incorporation or bylaws of the Company or under the laws
            of the State of Delaware; and, to the knowledge of such counsel,
            except as set forth in the Prospectuses, no options, warrants or
            other rights to purchase, agreements or other obligations to issue,
            or rights to convert any obligations into or exchange any securities
            for, shares of capital stock of or ownership interests in the
            Company are outstanding;

                    (iv) The Indenture has been duly authorized, executed and
            delivered; the Indenture has been duly qualified under the Trust
            Indenture Act and constitutes a valid and binding obligation of the
            Company; the Notes have been duly authorized and, when executed by
            the Company and authenticated in


                                       21
   22
            accordance with the terms of the Indenture and paid for by the
            holders thereof, will constitute valid, binding and enforceable
            obligations of the Company entitled to the benefits provided by the
            Indenture, subject to applicable bankruptcy, insolvency and similar
            laws affecting creditors' rights generally and to general principles
            of equity; the shares of Common Stock issuable upon conversion of
            the Notes have been duly authorized for listing, subject to official
            notice of issuance, on the Nasdaq National Market; the holders of
            the outstanding shares of capital stock of the Company are not
            entitled, under the Articles of Incorporation or bylaws of the
            Company or under the laws of the State of Delaware, to any
            preemptive or other rights to subscribe for the Notes or the shares
            of Common Stock issuable upon the conversion thereof; the shares of
            Common Stock initially issuable upon conversion of the Notes have
            been duly and validly authorized and reserved for issuance upon such
            conversion and, when issued upon conversion, will be validly issued,
            fully paid and nonassessable; and the Notes and the Indenture
            conform in all material respects to the descriptions thereof
            contained in the Offering Prospectuses.

                     (v) to the knowledge of such counsel, there is no pending
            action, suit or proceeding, or any written threat thereof, by or
            before any court or governmental agency, authority or body or any
            arbitrator involving the Company or any of the Subsidiaries of a
            character required to be disclosed in any Registration Statement
            which is not adequately disclosed in the Prospectuses, and there is
            no franchise, contract or other document of a character required to
            be described in any Registration Statement or Prospectus, or to be
            filed as an exhibit, which is not described or filed as required;
            and the statements in the Prospectuses under the headings
            "Reorganization," "Description of Capital Stock," "Description of
            the Convertible Notes," "Shares Eligible for Future Sale" and
            "Certain United States Federal Tax Consequences to Non-United States
            Holders of Common Stock and Convertible Notes," insofar as such
            statements constitute a summary of legal matters referred to
            therein, fairly summarize the information called for with respect to
            such legal matters;

                    (vi) the Registration Statements have become effective under
            the Act; any required filing of the Prospectuses, and of any
            supplements thereto, pursuant to Rule 424(b) has been made in the
            manner and within the time period required by Rule 424(b); to the
            knowledge of such counsel, no stop order suspending the
            effectiveness of any Registration Statement has been issued, no
            proceedings for that purpose have been instituted or threatened and
            the Registration Statements and the Prospectuses (other than the
            financial statements and other financial and statistical information
            contained therein, as to which such counsel need express no opinion)
            comply as to form in all material respects with the applicable
            requirements of the Act and the rules thereunder; and such counsel
            has no reason to believe that on the Effective Date or at the
            Execution Time the Registration Statements contained any untrue
            statement of a material fact or omitted to state a material fact
            required to be stated therein or necessary to make


                                       22
   23
            the statements therein not misleading or that the Prospectuses as of
            its date and on the Closing Date included or includes any untrue
            statement of a material fact or omitted or omits to state a material
            fact necessary to make the statements therein, in the light of the
            circumstances under which they were made, not misleading (in each
            case, other than the financial statements and other financial
            information contained therein, as to which such counsel need express
            no opinion);

                  (vii) each of this Agreement and the International
            Underwriting Agreement has been duly authorized, executed and
            delivered by the Company;

                  (viii) no consent, approval, authorization, filing with or
            order of any court or governmental agency or body is required in
            connection with the transactions contemplated herein or in the
            International Underwriting Agreement, except such as have been
            obtained under the Act and such as may be required under the blue
            sky laws of any jurisdiction in connection with the purchase and
            distribution of the Securities by the U.S. Underwriters and the
            International Underwriters in the manner contemplated in this
            Agreement and the International Underwriting Agreement and in the
            Offering Prospectuses and such other approvals (specified in such
            opinion) as have been obtained;

                    (ix) neither the issue and sale of the Securities nor the
            performance of the Company's obligations hereunder or under the
            International Underwriting Agreement nor the fulfillment of the
            terms hereof or thereof will conflict with, or result in a breach or
            violation of or imposition of any lien, charge or encumbrance upon
            any property or assets of the Company or any of the U.S.
            Subsidiaries pursuant to, (i) the charter or bylaws of the Company
            or any U.S. Subsidiary or (ii) any U.S., California or Delaware
            statute, law, rule, regulation, judgment, order or decree known to
            such counsel applicable to the Company or any U.S. Subsidiary of any
            U.S., California or Delaware court, governmental body, arbitrator or
            other authority having jurisdiction over the Company or any U.S.
            Subsidiary or any of their respective properties;

                  (x) no holders of securities of the Company have rights to the
            registration of such securities under the Registration Statements;

                  (xi) each of the AICL Agreements has been duly authorized,
            executed and delivered by the Company and the U.S. Subsidiaries that
            are parties thereto (the "U.S. Subsidiary Parties") and is a valid,
            binding and enforceable agreement of the Company and the U.S.
            Subsidiary Parties, subject to applicable bankruptcy, insolvency and
            similar laws affecting creditors' rights generally and to general
            principles of equity; neither the consummation of the transactions
            contemplated in any of the AICL Agreements nor the fulfillment of
            the terms thereof will conflict with, or result in a breach or
            violation of or imposition of any lien, charge or encumbrance upon
            any property or assets of the Company or any


                                       23
   24
            of the U.S. Subsidiary Parties pursuant to, the charter or bylaws of
            the Company or any U.S. Subsidiary Party; and

                   (xii) the Company is not and, after giving effect to the
            offering and sale of the Securities and application of the proceeds
            thereof as described in the Prospectuses under the caption "Use of
            Proceeds," will not be an "investment company" within the meaning of
            the 1940 Act.

                 In rendering such opinion, such counsel may rely (A) as to
      matters involving the application of laws of any jurisdiction other than
      the State of California, the United States or the corporate laws of the
      State of Delaware or, with respect to the opinion referred to in
      sub-paragraph (iv) above, the laws of the State of New York (to the extent
      such opinion relates to the validity and binding effect of the Indenture),
      to the extent they deem proper and specify in such opinion, upon the
      opinion of other counsel of good standing whom they believe to be reliable
      and who are satisfactory to counsel for the U.S. Underwriters and (B) as
      to matters of fact, to the extent they deem proper, on certificates of
      responsible officers of the Company and public officials. Such opinion may
      also contain customary qualifications and limitations. References to the
      Prospectuses in this paragraph (b) include any supplements thereto at the
      Closing Date.

                 (c) The Company shall have furnished to the U.S.
      Representatives the opinion of Kevin Herron, Esq., the General Counsel of
      the Company, dated the Closing Date, to the effect that:

                     (i) neither the issue and sale of the Securities nor the
            consummation of any other of the transactions contemplated herein or
            in the International Underwriting Agreement nor the fulfillment of
            the terms hereof or thereof will conflict with, or result in a
            breach or violation of or imposition of any lien, charge or
            encumbrance upon any property or assets of the Company or any of the
            U.S. Subsidiaries pursuant to, (i) the charter or bylaws of the
            Company or any U.S. Subsidiary or (ii) the terms of any indenture,
            contract, lease, mortgage, deed of trust, note agreement, loan
            agreement or other agreement known to such counsel to which the
            Company or any U.S. Subsidiary is a party or bound or to which its
            property is subject (except for such breaches or violations which
            would not, individually or in the aggregate, have a Material Adverse
            Effect) or (iii) any Pennsylvania statute, law, rule, regulation,
            judgment, order or decree applicable to the Company or any U.S.
            Subsidiary of any Pennsylvania court, governmental body, arbitrator
            or other authority having jurisdiction over the Company or any U.S.
            Subsidiary or any of their respective properties; and

                    (ii) neither the consummation of the transactions
            contemplated in any of the AICL Agreements nor the fulfillment of
            the terms thereof will conflict with, or result in a breach or
            violation of or imposition of any lien, charge or encumbrance upon
            any property or assets of the Company or any of the U.S. Subsidiary
            Parties pursuant to, (i) the charter or bylaws of the Company or any


                                       24
   25
            U.S. Subsidiary Party or (ii) the terms of any indenture, contract,
            lease, mortgage, deed of trust, note agreement, loan agreement or
            other agreement known to such counsel to which the Company or any
            U.S. Subsidiary Party is a party or bound or to which their
            respective property is subject (except for such breaches or
            violations which would not, individually or in the aggregate, have a
            Material Adverse Effect) or (iii) any Pennsylvania statute, law,
            rule, regulation, judgment, order or decree applicable to the
            Company or any U.S. Subsidiary Party of any Pennsylvania court,
            governmental body, arbitrator or other authority having jurisdiction
            over the Company or any U.S. Subsidiary Party or any of their
            respective properties; no consent, approval, authorization, filing
            with or order of any U.S. court or governmental agency or body is
            required in connection with the transactions contemplated in any of
            the AICL Agreements, except ______________ [LIST APPROVALS (IF ANY)
            REQUIRED], each of which has been obtained.

                 In rendering such opinion, such counsel may rely as to matters
      involving the application of laws of any jurisdiction other than the State
      of Pennsylvania, the United States or the corporate laws of the State of
      Delaware, to the extent he deems proper and specifies in such opinion,
      upon the opinion of other counsel of good standing whom he believes to be
      reliable and who are satisfactory to counsel for the U.S. Underwriters.
      Such opinion may also contain customary qualifications and limitations.

                 (d) The Company shall have furnished to the U.S.
      Representatives the opinion of Orloge, Del Costello, Bacorro, Odulco,
      Calma & Carobonell, Philippine counsel for the Company, dated the
      Closing Date, to the effect that:

                     (i) each of AAP, AAAP and AMI (the "Philippine
            Subsidiaries") has been duly incorporated and is validly existing as
            a corporation in good standing under the laws of the jurisdiction in
            which it is chartered or organized, with full corporate power and
            authority to own its properties and conduct its business, and is
            duly qualified to do business as a foreign corporation and is in
            good standing under the laws of each jurisdiction which requires
            such qualification; and

                    (ii) all the outstanding shares of capital stock of each
            Philippine Subsidiary have been duly and validly authorized and
            issued and are fully paid and nonassessable, and, except (i) such
            shares of AAP owed by AICL, which shares do not exceed 40.1% of the
            outstanding shares of AAP, (ii) such shares of each Phillipine
            Subsidiary owned by directors thereof, which shares in each case do
            not exceed 0.1 % of the outstanding shares of such Philippine
            Subsidiary, (iii) 3,446,476 shares of preferred stock of AAP, which
            shares are owned by Integrated Microelectronics, Inc., and (iv) as
            otherwise set forth in the Prospectuses, all outstanding shares of
            capital stock of the Philippine Subsidiaries are owned by the
            Company, either directly or through wholly owned Subsidiaries, free
            and clear of


                                       25
   26
            any perfected security interest and, to the knowledge of such
            counsel, after due inquiry, any other security interests, claims,
            liens or encumbrances.

                 In rendering such opinion, such counsel may rely as to matters
      of fact, to the extent they deem proper, on certificates of responsible
      officers of the Company and public officials. Such opinion may also
      contain customary qualifications and limitations. References to the
      Prospectuses in this paragraph (d) include any supplements thereto at the
      Closing Date.

                 (e) The Company shall have furnished to the U.S.
      Representatives the opinion of Kim & Chang, Korean counsel for the
      Company, dated the Closing Date, to the effect that:

                     (i) AICL has been duly incorporated and is validly existing
            as a corporation in good standing under the laws of the Republic of
            Korea, with full corporate power and authority to own its properties
            and conduct its business as described in the Prospectuses;

                    (ii) each of the AICL Agreements has been duly executed and
            delivered by AICL and is a valid, binding and enforceable agreement
            of AICL, subject to applicable bankruptcy, insolvency and similar
            laws affecting creditors' rights generally and to general principles
            of equity;

                   (iii) no consent, approval, authorization, filing with or
            order of any court or governmental agency or body in the Republic of
            Korea is required in connection with the transactions contemplated
            in the AICL Agreements, except _________________, each of which has
            been obtained; and

                    (iv) neither the consummation of any of the transactions
            contemplated in the AICL Agreements nor the fulfillment of the terms
            thereof will conflict with or result in a breach or violation of the
            Articles of Incorporation of AICL or any statute, law, rule or
            regulation of any regulatory body, administrative agency,
            governmental body or other authority in the Republic of Korea having
            jurisdiction over AICL or any of its properties.

                 In rendering such opinion, such counsel may rely as to matters
      of fact, to the extent they deem proper, on certificates of responsible
      officers of AICL and public officials. Such opinion may also contain
      customary qualifications and limitations. References to the Prospectuses
      in this paragraph (e) include any supplements thereto at the Closing Date.

                 (f) The Selling Stockholders shall have furnished to the U.S.
      Representatives the opinion of Wilson, Sonsini, Goodrich & Rosati, counsel
      for the Selling Stockholders, dated the Closing Date, to the effect that:


                                       26
   27
                  (i) this Agreement, the International Underwriting Agreement
            and the Custody Agreement have been duly executed and delivered by
            the Selling Stockholders and each Selling Stockholder has full legal
            right, capacity, power and authority to enter into and perform this
            Agreement, the International Underwriting Agreement and the Custody
            Agreement and to sell, transfer, assign and deliver in the manner
            provided in this Agreement, the International Underwriting Agreement
            and the Custody Agreement the Shares being sold by such Selling
            Stockholder hereunder and thereunder;

                  (ii) upon the delivery by each Selling Stockholder to the
            several U.S. Underwriters and the several International Underwriters
            of certificates for the Shares being sold hereunder and under the
            International Underwriting Agreement by such Selling Stockholder
            against payment therefor as provided herein, the U.S. Underwriters
            and the International Underwriters will have good and valid title to
            such Shares, free and clear to the knowledge of such counsel of any
            adverse claims;

                  (iii) no consent, approval, authorization or order of any
            court or governmental agency or body is required for the
            consummation by any Selling Stockholder of the transactions
            contemplated herein or in the International Underwriting Agreement,
            except such as may have been obtained under the Act and such as may
            be required under the blue sky laws of any jurisdiction in
            connection with the purchase and distribution of the Shares by the
            U.S. Underwriters and the International Underwriters and such other
            approvals (specified in such opinion) as have been obtained;

                  (iv) neither the sale of the Shares being sold by any Selling
            Stockholder nor the consummation of any other of the transactions
            contemplated herein or in the International Underwriting Agreement
            by any Selling Stockholder or the fulfillment of the terms hereof or
            thereof by any Selling Stockholder will conflict with, result in a
            breach or violation of, or constitute a default under any law or the
            charter or bylaws of such Selling Stockholder, or any judgment,
            order or decree known to such counsel to be applicable to such
            Selling Stockholder of any court, governmental body or arbitrator
            having jurisdiction over such Selling Stockholder; and

                  (v)   the Securities Loan Agreement has been duly executed
            and delivered by Mr. and Mrs. James J. Kim; Mr. and Mrs. James J.
            Kim have full legal right, capacity, power and authority to enter
            into and perform the Securities Loan Agreement and to lend,
            assign and deliver in the manner provided in the Securities Loan
            Agreement the Borrowed Shares being lent by Mr. and Mrs. James J.
            Kim thereunder; Mr. and Mrs. James J. Kim have good and valid
            title to the Borrowed Shares, free and clear to the knowledge of
            such counsel of any adverse claims; no consent, approval,
            authorization or order of any court or governmental agency or
            body is required for the consummation by Mr. and Mrs.


                                       27
   28
            James J. Kim of the transactions contemplated in the Securities Loan
            Agreement, except such as may have been obtained under the Act and
            such as may be required under the blue sky laws of any jurisdiction
            in connection with the borrowing and distribution of the Borrowed
            Shares by SBI and such other approvals (specified in such opinion)
            as have been obtained; and neither the lending of the Borrowed
            Shares by Mr. and Mrs. James J. Kim nor the consummation of any
            other of the transactions contemplated in the Securities Loan
            Agreement by Mr. and Mrs. James J. Kim or the fulfillment of the
            terms thereof by Mr. and Mrs. James J. Kim will conflict with,
            result in a breach or violation of, or constitute a default under
            any law or the terms of any indenture or other agreement or
            instrument known to such counsel and to which Mr. and Mrs. James J.
            Kim (or either of them) are a party or bound, or any judgment, order
            or decree known to such counsel to be applicable to Mr. and Mrs.
            James J. Kim (or either of them) of any court, governmental body or
            arbitrator having jurisdiction over either of them.

                  In rendering such opinion, such counsel may (A) rely as to
      matters involving the application of laws of any jurisdiction other than
      the State of California or Delaware or the United States, to the extent
      they deem proper and specified in such opinion, upon the opinion of other
      counsel of good standing whom they believe to be reliable and who are
      satisfactory to counsel for the U.S. Underwriters, (B) rely as to matters
      of fact, to the extent they deem proper, on certificates of the Selling
      Stockholders (including Mr. and Mrs. James J. Kim) and public officials
      and (C) with respect to the opinion in clause (ii) above, may assume each
      U.S. Underwriter and each International Underwriter takes delivery of the
      Shares without notice of any adverse claim. Such opinion may also contain
      customary qualifications and limitations.

                 (g) The U.S. Representatives shall have received from Cleary,
      Gottlieb, Steen & Hamilton, counsel for the U.S. Underwriters, such
      opinion or opinions, dated the Closing Date, with respect to the issuance
      and sale of the U.S. Securities, the Registration Statements, the
      Prospectuses (together with any supplement thereto) and other related
      matters as the U.S. Representatives may reasonably require, and the
      Company and each Selling Shareholder shall have furnished to such counsel
      such documents as they request for the purpose of enabling them to pass
      upon such matters.

                 (h) The Company shall have furnished to the U.S.
      Representatives a certificate of the Company, signed by the Chairman of
      the Board or the President and the principal financial or accounting
      officer of the Company, dated the Closing Date, to the effect that the
      signers of such certificate have carefully examined the Registration
      Statements, the Prospectuses, any supplements to the Prospectuses, this
      Agreement and the International Underwriting Agreement and that:

                     (i) the representations and warranties of the Company in
            this Agreement and the International Underwriting Agreement are true
            and correct in all material respects on and as of the Closing Date
            with the same effect as if made on the Closing Date and the Company
            has complied with all the agreements and


                                       28
   29
            satisfied all the conditions on its part to be performed or
            satisfied at or prior to the Closing Date;

                    (ii) no stop order suspending the effectiveness of any
            Registration Statement has been issued and no proceedings for that
            purpose have been instituted or, to the Company's knowledge,
            threatened; and

                   (iii) since the date of the most recent financial statements
            included in the Prospectuses, there has been no material adverse
            change in the condition (financial or other), prospects, earnings,
            business or properties of the Company and the Subsidiaries, taken as
            a whole, whether or not arising from transactions in the ordinary
            course of business, except as set forth in or contemplated in the
            Prospectuses.

                 (i) Each Selling Stockholder shall have furnished to the U.S.
      Representatives a certificate, signed by or on behalf of such Selling
      Stockholder, dated the Closing Date, to the effect that the signer of such
      certificate has carefully examined the Offering Registration Statement,
      the Offering Prospectuses, any supplement to the Offering Prospectuses,
      this Agreement and the International Underwriting Agreement and that the
      representations and warranties of such Selling Stockholder in this
      Agreement and the International Underwriting Agreement are true and
      correct in all material respects on and as of the Closing Date to the same
      effect as if made on the Closing Date.

                 (j) At the Execution Time and at the Closing Date, Arthur
      Andersen LLP shall have furnished to the U.S. Representatives letters,
      dated respectively as of the Execution Time and as of the Closing Date, in
      form and substance satisfactory to the U.S. Representatives, confirming
      that they are independent accountants within the meaning of the Act and
      the applicable published rules and regulations thereunder and stating in
      effect that:

                     (i) in their opinion the audited financial statements and
            financial statement schedules included in the Registration
            Statements and the Prospectuses and reported on by them comply in
            form in all material respects with the applicable accounting
            requirements of the Act and the related published rules and
            regulations;

                    (ii) on the basis of a reading of the latest unaudited
            financial statements made available by the Company and the
            Subsidiaries; carrying out certain specified procedures (but not an
            examination in accordance with generally accepted auditing
            standards) which would not necessarily reveal matters of
            significance with respect to the comments set forth in such letter;
            a reading of the minutes of the meetings of the stockholders,
            directors and the audit and compensation committees of the Company
            and the Subsidiaries; and inquiries of certain officials of the
            Company who have responsibility for financial and accounting matters
            of the Company and the Subsidiaries as to transactions and


                                       29
   30
            events subsequent to December 31, 1997, nothing came to their
            attention which caused them to believe that:

                              (1) with respect to the period subsequent to
                  December 31, 1997, there were any changes, at a specified date
                  not more than five business days prior to the date of the
                  letter, in the long-term debt of the Company and the
                  Subsidiaries or capital stock of the Company or decreases in
                  the total stockholders' equity of the Company or decreases in
                  working capital of the Company and the Subsidiaries as
                  compared with the amounts shown on the December 31, 1997
                  combined balance sheet included in the Registration Statements
                  and the Prospectuses, or for the period from December 31, 1997
                  to such specified date there were any decreases, as compared
                  with the corresponding period in the preceding quarter, in
                  revenues, net operating income or interest expense or in total
                  or per share amounts of net income of the Company and the
                  Subsidiaries, except in all instances for changes or decreases
                  set forth in such letter, in which case the letter shall be
                  accompanied by an explanation by the Company as to the
                  significance thereof unless said explanation is not deemed
                  necessary by the U.S.
                  Representatives;

                              (2) the information included in the Registration
                  Statements and Prospectuses in response to Item 301 (Selected
                  Financial Data), Item 302 (Supplementary Financial
                  Information) and Item 402 (Executive Compensation) of
                  Regulation S-K under the Act is not in conformity with the
                  applicable disclosure requirements of Regulation S-K; and

                   (iii) they have performed certain other specified procedures
            as a result of which they determined that certain information of an
            accounting, financial or statistical nature (which is limited to
            accounting, financial or statistical information derived from the
            general accounting records of the Company and the Subsidiaries) set
            forth in the Registration Statements and the Prospectuses, including
            the information set forth under the captions "Summary Financial
            Data" and "Selected Financial Data" in the Prospectuses, agrees with
            the accounting records of the Company and the Subsidiaries,
            excluding any questions of legal interpretation.

      References to the Prospectuses in this paragraph (j) include any
      supplement thereto at the date of the letter.

                 (k) At the Execution Time and at the Closing Date, Samil
      Accounting Corporation shall have furnished to the U.S. Representatives
      and the Company a letter or letters, dated respectively as of the
      Execution Time and as of the Closing Date, in form and substance
      satisfactory to the U.S. Representatives and the Company, confirming that
      they are independent accountants within the meaning of the standards
      established for independent certified public accountants in the Republic
      of Korea and stating in effect


                                       30
   31
      that they have performed certain specified procedures as a result of which
      they determined that certain information of an accounting, financial or
      statistical nature (which is limited to accounting, financial or
      statistical information derived from the general accounting records of
      AICL) set forth in the Registration Statements and the Prospectuses,
      including the information set forth under the captions "Risk Factors --
      Dependence on Relationship with AICL; Potential Conflicts of Interest" and
      "Relationship with Anam Industrial Co., Ltd." in the Prospectuses, agrees
      with the accounting records of AICL, excluding any questions of legal
      interpretation. References to the Prospectuses in this paragraph (k)
      include any supplement thereto at the date of the letter.

                 (l) Subsequent to the Execution Time or, if earlier, the dates
      as of which information is given in the Registration Statements (exclusive
      of any amendment thereof) and the Prospectuses, there shall not have been
      (i) any change or decrease specified in the letter or letters referred to
      in paragraph (j) of this Section 6 or (ii) any change, or any development
      involving a prospective change, in or affecting the business or properties
      of the Company and the Subsidiaries, taken as a whole, whether or not
      arising from transactions in the ordinary course of business, except as
      set forth in or contemplated in the Prospectuses the effect of which, in
      any case referred to in clause (i) or (ii) above, is, in the sole judgment
      of the U.S. Representatives, so material and adverse as to make it
      impractical or inadvisable to proceed with the offering or delivery of the
      U.S. Securities as contemplated by the Registration Statements (exclusive
      of any amendment thereof) and the Prospectuses.

                 (m) At the Execution Time, the Company shall have furnished to
      the U.S. Representatives and the International Representatives a letter
      substantially in the form of Exhibit A hereto from each officer, director
      and shareholder (other than the Selling Stockholders) of the Company,
      which persons are listed in Schedule III hereto, addressed to the U.S.
      Representatives and the International Representatives.

                 (n) Prior to the Closing Date, the Company shall have furnished
      to the U.S. Representatives such further information, certificates and
      documents as the U.S. Representatives may reasonably request.

                 (o) The closing of the purchase of the International Securities
      to be issued and sold by the Company pursuant to the International
      Underwriting Agreement shall occur concurrently with the closing described
      herein.

            If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the U.S. Representatives and counsel for the U.S. Underwriters,
this Agreement and all obligations of the U.S. Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by the U.S.
Representatives. Notice of


                                       31
   32
such cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or telegraph confirmed in writing.

            The documents required to be delivered by this Section 6 shall be
delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the
U.S. Underwriters, at 1 Liberty Plaza, New York, New York, on the Closing Date.

            7. Reimbursement of U.S. Underwriters' Expenses. If the sale of the
U.S. Securities provided for herein is not consummated because any condition to
the obligations of the U.S. Underwriters set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure on the part of the
Company or any Selling Stockholder to perform any agreement herein or comply
with any provision hereof other than by reason of a default by any of the U.S.
Underwriters, the Company will reimburse the U.S. Underwriters severally through
SBI on demand for all reasonable out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the U.S. Securities. If the
Company is required to make any payments to the U.S. Underwriters under this
Section 7 because of any Selling Stockholder's refusal, inability or failure to
satisfy any condition to the obligations of the U.S. Underwriters set forth in
Section 6, the Selling Stockholders pro rata in proportion to the percentage of
U.S. Shares to be sold by each shall reimburse the Company on demand for all
amounts so paid.

            8. Indemnification and Contribution. (a) The Company and Mr. James
J. Kim jointly and severally agree to indemnify and hold harmless each U.S.
Underwriter (including, without limitation, SBI (the "Market Maker") in its
capacity as a market maker for the Securities and SBI (the "Independent
Underwriter") in its capacity as "qualified independent underwriter" (within the
meaning of NASD Conduct Rule 2720)), the directors, officers, employees and
agents of each U.S. Underwriter, and each person who controls any U.S.
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Offering Registration Statement or
in any amendment thereof, or in any Offering Preliminary Prospectus or in either
of the Offering Prospectuses, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company and Mr. James J. Kim
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any U.S. Underwriter through the U.S. Representatives
specifically for inclusion therein. This indemnity


                                       32
   33
agreement will be in addition to any liability which the Company or Mr. James J.
Kim may otherwise have.

            (b) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Offering Registration Statement, and each person who controls the Company within
the meaning of either the Act or the Exchange Act and Mr. James J. Kim, to the
same extent as the foregoing indemnity from the Company and Mr. James J. Kim to
each U.S. Underwriter, but only with reference to written information relating
to such U.S. Underwriter furnished to the Company by or on behalf of such U.S.
Underwriter through the U.S. Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any U.S. Underwriter may otherwise have.
The Company and Mr. James J. Kim acknowledge that the statements set forth in
the last paragraph of the front cover page, the last paragraph of the inside
front cover page and, under the heading "Underwriting", the paragraphs in the
Offering Registration Statement, any Offering Preliminary Prospectus and the
Offering Prospectuses and any amendment or supplement thereto constitute the
only information furnished in writing by or on behalf of the several U.S.
Underwriters for inclusion in any Offering Preliminary Prospectus or the
Offering Prospectuses and any amendment or supplement thereto.

            (c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party shall
be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ one separate counsel (and one local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate (and local) counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall


                                       33
   34
authorize the indemnified party in writing to employ separate (and local)
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.

            (d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and Mr. James J. Kim, jointly and
severally, and the U.S. Underwriters agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, Mr. James J. Kim and one or more
of the U.S. Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Company and Mr. James J. Kim on
the one hand and by the U.S. Underwriters on the other from the offering of the
U.S. Securities; provided, however, that in no case shall any U.S. Underwriter
(except as may be provided in any agreement among underwriters relating to the
offering of the U.S. Securities) be responsible for any amount in excess of the
underwriting discount or commission applicable to the U.S. Securities purchased
by such U.S. Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
Mr. James J. Kim, jointly and severally, and the U.S. Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and Mr. James J.
Kim on the one hand and of the U.S. Underwriters on the other in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company and Mr.
James J. Kim shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by them, and benefits received by
the U.S. Underwriters shall be deemed to be equal to the total underwriting
discounts and commissions, in each case as set forth on the cover page of the
Offering U.S. Prospectus. Benefits received by the Independent Underwriter in
its capacity as "qualified independent underwriter" shall be deemed to be equal
to the compensation received by the Independent Underwriter for acting in such
capacity. Relative fault shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
provided by the Company or Mr. James J. Kim on the one hand or by the U.S.
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, Mr. James J. Kim and the U.S.
Underwriters agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls a U.S. Underwriter within the meaning of either the Act or the Exchange
Act and each


                                       34
   35
director, officer, employee and agent of a U.S. Underwriter shall have the same
rights to contribution as such U.S. Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Offering Registration Statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of this
paragraph (d).

            (e) The liability of each Selling Stockholder under such Selling
Stockholder's representations and warranties contained in Section 1 hereof and
under the indemnity and contribution agreements contained in this Section 8
shall be limited to an amount equal to the initial public offering price of the
U.S. Shares sold by such Selling Stockholder to the U.S. Underwriters, less the
underwriting discounts and commissions paid thereon to the U.S. Underwriters.
The Company and the Selling Stockholders may agree, as among themselves and
without limiting the rights of the U.S. Underwriters under this Agreement, as to
the respective amounts of such liability for which they each shall be
responsible.

            (f) The Company and Mr. James J. Kim shall not have any liability
under this Section 8 with respect to any losses, claims, damages or liabilities
of a U.S. Underwriter if copies of the Offering U.S. Prospectus, as then amended
or supplemented, were furnished by the Company to the U.S. Underwriters as
required by this Agreement, and such copies of the Offering U.S. Prospectus were
not sent or given by or on behalf of such U.S. Underwriter, as required by law,
to the purchasers of the U.S. Securities and if the Offering U.S. Prospectus, as
so amended or supplemented, would have cured the defect giving rise to such
losses, claims, damages or liabilities.

            9. Default by a U.S. Underwriter. If any one or more U.S.
Underwriters shall fail to purchase and pay for any of the U.S. Shares or U.S.
Notes agreed to be purchased by such U.S. Underwriter or U.S. Underwriters
hereunder and such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement, the remaining U.S.
Underwriters shall be obligated severally to take up and pay for (in the
respective proportions which the amount of U.S. Shares or U.S. Notes, as the
case may be, set forth opposite their names in Schedule I hereto bears to the
aggregate amount of U.S. Shares or U.S. Notes, as the case may be, set forth
opposite the names of all the remaining U.S. Underwriters) the U.S. Shares or
U.S. Notes which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase; provided, however, that in the event that (x) the aggregate
amount of U.S. Shares which the defaulting U.S. Underwriter or U.S. Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of U.S.
Shares set forth in Schedule I hereto or (y) the aggregate principal amount of
U.S. Notes which the defaulting U.S. Underwriter or U.S. Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate principal amount of U.S.
Notes set forth in Schedule I hereto, then the remaining U.S. Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the U.S. Shares or U.S. Notes, as the case may be, and if such
nondefaulting U.S. Underwriters do not purchase all the U.S. Shares or U.S.
Notes, as the case may be, this Agreement will terminate without liability to
any nondefaulting U.S. Underwriter, the Selling Stockholders or the Company. In
the event of a default by any U.S. Underwriter as set forth in this Section 9,
the Closing Date shall be


                                       35
   36
postponed for such period, not exceeding five Business Days, as the U.S.
Representatives shall determine in order that the required changes in the
Registration Statements and the Prospectuses or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting U.S. Underwriter of its liability, if any, to the Company, the
Selling Stockholders and any nondefaulting U.S. Underwriter for damages
occasioned by its default hereunder.

            10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the U.S. Representatives, by notice given to the
Company prior to delivery of and payment for the U.S. Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities generally
on the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or National Market, (ii) a banking moratorium shall have been declared
by either Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war, or other calamity or crisis, the effect
of which on financial markets is such as to make it, in the sole judgment of the
U.S. Representatives, impracticable or inadvisable to proceed with the offering
or delivery of the U.S. Securities as contemplated in the Offering U.S.
Prospectus.

            11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the U.S.
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
U.S. Underwriter, any Selling Stockholder or the Company or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the U.S. Securities. The provisions of
Sections 7 and 8 and the last sentence of Section 9 hereof shall survive the
termination or cancellation of this Agreement.

            12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the U.S. Representatives, will be
mailed, delivered or telefaxed to the SBI General Counsel (fax no.: (212)
________) and confirmed to the General Counsel, care of Smith Barney Inc., at
333 West 34th Street, New York, New York 10001, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telefaxed to James J. Kim
(fax no.: (610) 431-9600) and confirmed to it at 1345 Enterprise Drive, West
Chester, Pennsylvania 19380, attention of the Legal Department, with a copy to
Larry W. Sonsini (fax no.: (650) 493-6811) at Wilson Sonsini Goodrich & Rosati,
650 Page Mill Road, Palo Alto, California 94304; or, if sent to the Selling
Stockholders, will be mailed, delivered, or telefaxed to James J. Kim (fax no.:
(610) 431-9600) and confirmed to it at the address set forth in Schedule II
hereto.

            13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.


                                       36
   37
            14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

            15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

            16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.

            17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.

            "Act" shall mean the Securities Act of 1933, as amended.

            "Borrowing Effective Date" shall mean each date and time that the
      Borrowing Registration Statement, any post-effective amendment or
      amendments thereto and any Rule 462(b) Registration Statement relating
      thereto became or shall become effective.

            "Borrowing Preliminary Prospectus" shall mean any preliminary
      prospectus with respect to the offering of the Borrowed Shares referred to
      in paragraph 1A(c) above and any preliminary prospectus included in the
      Borrowing Registration Statement at the Borrowing Effective Date
      that omits Rule 430A Information.

            "Borrowing Prospectus" shall mean the prospectus relating to the
      Borrowed Shares that is first filed pursuant to Rule 424(b) after the
      Execution Time or, if not filing pursuant to Rule 424(b) is required,
      shall mean the form of final prospectus relating to the Borrowed Shares
      included in the Borrowing Registration Statement at the Borrowing
      Effective Date.

            "Borrowing Registration Statement" shall mean the registration
      statement referred to in paragraph 1A(c) above, including exhibits and
      financial statements, as amended at the Execution Time (or, if not
      effective at the Execution Time, in the form in which it shall become
      effective) and, in the event any post-effective amendment thereto or any
      Rule 462(b) Registration Statement becomes effective at any time or from
      time to time, shall also mean such registration statement as so amended or
      such Rule 462(b) Registration Statement, as the case may be. Such term
      shall include any Rule 430A Information deemed to be included therein at
      the Borrowing Effective Date as provided by Rule 430A.

            "Business Day" shall mean any day other than a Saturday, a Sunday or
      a legal holiday or a day on which banking institutions or trust companies
      are authorized or obligated by law to close in New York City or London.


                                       37
   38
            "Effective Date" shall mean each date and time that the Offering
      Registration Statement, any post-effective amendment or amendments thereto
      and any Rule 462(b) Registration Statement relating thereto became or
      shall become effective.

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
      amended.

            "Execution Time" shall mean the date and time that this Agreement is
      executed and delivered by the parties hereto.

            "Material Adverse Effect" shall mean a material adverse effect on
      the condition (financial or otherwise), prospects, earnings, business or
      properties of the Company and the Subsidiaries, taken as a whole, whether
      or not arising in the ordinary course of business.

            "Offering International Preliminary Prospectus" shall have the
      meaning set forth under Offering U.S. Preliminary Prospectus".

            " Offering Preliminary Prospectus"  shall have the meaning set
      forth under "Offering U.S. Preliminary Prospectus".

            "Offering Registration Statement" shall mean the registration
      statement referred to in paragraph 1A(a) above, including the exhibits
      thereto and the financial statements included therein, as amended at the
      Execution Time (or, if not effective at the Execution Time, in the form in
      which it shall become effective) and, in the event any post-effective
      amendment thereto or any Rule 462(b) Registration Statement becomes
      effective prior to the Closing Date (as hereinafter defined), shall also
      mean such registration statement as so amended or such Rule 462(b)
      Registration Statement, as the case may be. Such term shall include any
      Rule 430A Information deemed to be included therein at the Effective Date
      as provided by Rule 430A.

            "Offering U.S. Preliminary Prospectus" and the "Offering
      International Preliminary Prospectus", respectively, shall mean any
      preliminary prospectus with respect to the offering of the U.S. Securities
      and the International Securities, as the case may be, referred to in
      paragraph 1A(a) above and any preliminary prospectus with respect to the
      offering of the U.S. Securities and the International Securities, as the
      case may be, included in the Offering Registration Statement at the
      Effective Date that omits Rule 430A Information; and the Offering U.S.
      Preliminary Prospectus and the Offering International Preliminary
      Prospectus are hereinafter collectively called the "Offering Preliminary
      Prospectuses".

            "Preliminary Prospectuses" shall mean, collectively, the Offering
      Preliminary Prospectuses and the Borrowing Preliminary Prospectus.

            "Prospectuses" shall mean, collectively, the Offering
      Prospectuses and the Borrowing Prospectus.


                                       38
   39
            "Registration Statements" shall mean, collectively, the Offering
      Registration Statement and the Borrowing Registration Statement.

            "Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
      Act.

            "Rule 430A Information" shall mean information with respect to the
      Securities or the Borrowed Shares, as the case may be, and the offering
      thereof permitted to be omitted from the Offering Registration Statement
      or the Borrowing Registration Statement, as the case may be, when it
      becomes effective pursuant to Rule 430A.

            "Rule 462(b) Registration Statement" shall mean a registration
      statement and any amendments thereto filed pursuant to Rule 462(b)
      relating to the offering covered by the initial Registration Statement or
      the initial Borrowing Registration Statement, as the case may be.

            "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
      amended.

            "United States or Canadian Person" shall mean any person who is a
      national or resident of the United States or Canada, any corporation,
      partnership or other entity created or organized in or under the laws of
      the United States or Canada or of any political subdivision thereof, or
      any estate or trust the income of which is subject to United States or
      Canadian Federal income taxation, regardless of its source (other than any
      non-United States or non-Canadian branch of any United States or Canadian
      Person), and shall include any United States or Canadian branch of a
      person other than a United States or Canadian Person. "U.S." or "United
      States" shall mean the United States of America (including the states
      thereof and the District of Columbia), its territories, its possessions
      and other areas subject to its jurisdiction.


                                       39
   40
             If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Selling Stockholders and the several U.S. Underwriters.

                                    Very truly yours,

                                    Amkor Technology, Inc.


                                    By: ____________________________
                                        Name:
                                        Title:



                                    James J. Kim


                                    ____________________________


                                    [Selling Stockholder]


                                    By: ____________________________
                                        Name:
                                        Title:

The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

Smith Barney Inc.
BancAmerica Robertson Stephens
Cowen & Company

By: Smith Barney Inc.


By:___________________________
   Name:
   Title:

For themselves and the other several U.S. Underwriters
named in Schedule I to the foregoing Agreement.


                                       40
   41
                                                                      SCHEDULE I




                                        Number of Shares
                                            of U.S.           Principal Amount
                                          Underwritten           of U.S.
                                         Shares to Be        Underwritten Notes
U.S. Underwriter                           Purchased          to Be Purchased
- ----------------                        ----------------     ------------------
                                                       
Smith Barney Inc. ..................                         $
BancAmerica Robertson Stephens .....                         $
Cowen & Company.....................                         $
[Other U.S. Underwriters]...........                         $
                                        ----------------     ------------------

     Total..........................                         $
                                        ================     ==================



                                       I-1
   42
                                                                     SCHEDULE II



Selling Stockholders                    Number of Shares
- --------------------                    ----------------




Address
[Address for notice]


                                      II-1
   43
                                                                    SCHEDULE III


                  List of Officers, Directors and Shareholders
                        (other than Selling Stockholders)


                                      III-1
   44
                                                                       EXHIBIT A



         [LETTERHEAD OF OFFICER, DIRECTOR, STOCKHOLDER OR SHAREHOLDER OF
                             AMKOR TECHNOLOGY, INC.]


                             Amkor Technology, Inc.
              Public Offering of Common Stock and Convertible Notes


                                                           _______________, 1998

Smith Barney Inc.
BancAmerica Robertson Stephens
Cowen & Company
 as U.S. Representatives of the several U.S. Underwriters
c/o Smith Barney Inc.
333 West 34th Street
New York, New York  10001


Smith Barney Inc.
BancAmerica Robertson Stephens International Limited
Cowen International L.P.
 as International Representatives of the several International Underwriters
c/o Smith Barney Inc.
333 West 34th Street
New York, New York 10001


Ladies and Gentlemen:

            This letter is being delivered to you in connection with (i) the
proposed U.S. Underwriting Agreement (the "U.S. Underwriting Agreement") among
Amkor Technology, Inc., a Delaware corporation (the "Company"), certain selling
stockholders of the Company and a group of U.S. Underwriters named therein and
(ii) the proposed International Underwriting Agreement (the "International
Underwriting Agreement") among the Company, certain selling stockholders of the
Company and a group of International Underwriters named therein, relating to an
underwritten public offering of Common Stock, $.001 par value (the "Common
Stock"), of the Company, and the Company's ____% Convertible Subordinated Notes
due 2003.

            In order to induce you and the other U.S. Underwriters and
International Underwriters to enter into the U.S. Underwriting Agreement and the
International Underwriting Agreement, the undersigned will not, without the
prior written consent of Smith Barney Inc.,


                                       A-1
   45
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, with respect to, any shares of Common Stock of
the Company or any securities convertible into or exercisable or exchangeable
for shares of Common Stock, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of the U.S. Underwriting
Agreement and the International Underwriting Agreement, other than (i) upon the
exercise of any option or warrant, or the conversion of a security, outstanding
on the date of the U.S. Underwriting Agreement and the International
Underwriting Agreement and referred to in the Offering Prospectuses (as defined
in the U.S. Underwriting Agreement and the International Underwriting Agreement)
and (ii) shares of Common Stock disposed of as bona fide gifts approved by Smith
Barney Inc.

            If for any reason the U.S. Underwriting Agreement and the
International Underwriting Agreement shall be terminated prior to the Closing
Date (as defined in the U.S. Underwriting Agreement and the International
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.

                                    Very truly yours,



                                    _______________________________________
                                    Signature


                                    _______________________________________
                                    Print Name


                                    _______________________________________
                                    Address

                                    _______________________________________


                                       A-2

   1
                                                                     Exhibit 1.2


                                              CGS&H DRAFT/ International Version
                                                                         3/24/98
                             AMKOR TECHNOLOGY, INC.

                                7,000,000 Shares*
                                  Common Stock
                                ($.001 par value)
                                  $30,000,000**
                  ___% Convertible Subordinated Notes due 2003

                      International Underwriting Agreement


                                                                 London, England
                                                                  April __, 1998

Smith Barney Inc.
BancAmerica Robertson Stephens International Limited
Cowen International L.P.
  As International Representatives of the several International Underwriters,
c/o Smith Barney Inc.
333 West 34th Street
New York, New York  10001


Ladies and Gentlemen:

                  Amkor Technology, Inc., a Delaware corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto (the
"International Underwriters"), for whom you (the "International
Representatives") are acting as representatives, 6,000,000 shares of common
stock, $.001 par value ("Common Stock"), of the Company, and the persons named
in Schedule II hereto (the "Selling Stockholders") propose to sell to the
International Underwriters 1,000,000 shares of Common Stock (said shares to be
issued and sold by the Company and shares to be sold by the Selling Stockholders
collectively being hereinafter called the "International Underwritten Shares").
The Company also proposes to grant to the International Underwriters an option
to purchase up to 1,050,000 additional shares of Common Stock (the
"International Option Shares"; the International Option Shares, together with
the International Underwritten Shares, being hereinafter called the
"International Shares"). The Company also

- --------
*        Plus an option to purchase from Amkor Technology, Inc. up to 1,050,000
         additional shares to cover over-allotments.

**       Plus an option to purchase from Amkor Technology, Inc. up to $4,500,000
         additional principal amount of its ___% Convertible Subordinated Notes
         due 2003 to cover over-allotments.
   2
proposes to sell to certain of the International Underwriters $30,000,000
principal amount of its ___% Convertible Subordinated Notes due 2003 (the
"International Underwritten Notes"), to be issued under an indenture (the
"Indenture") to be dated as of April __, 1998, between the Company and State
Street Bank and Trust Company, as trustee (the "Trustee"). The Company also
proposes to grant to such International Underwriters an option to purchase up to
$4,500,000 additional principal amount of its ___% Convertible Subordinated
Notes due 2003 (the "International Option Notes"; the International Option
Notes, together with the International Underwritten Notes, being hereinafter
called the "International Notes"; and the International Notes, together with the
International Shares, being hereinafter called the "International Securities").
The International Notes are convertible into shares of Common Stock.

                  It is understood that the Company and the Selling Stockholders
are concurrently entering into a U.S. Underwriting Agreement dated the date
hereof (the "U.S. Underwriting Agreement") providing for (i) the sale by the
Company and the Selling Stockholders of an aggregate of 28,000,000 shares of
Common Stock (said shares to be sold by the Company and the Selling Stockholders
pursuant to the U.S. Underwriting Agreement being hereinafter called the "U.S.
Underwritten Shares"), and providing for the grant to the underwriters named in
Schedule I thereto (the "U.S. Underwriters") of an option to purchase from the
Company up to 4,200,000 additional shares of Common Stock (the "U.S. Option
Shares"; the U.S. Option Shares, together with the U.S. Underwritten Shares,
being hereinafter called the "U.S. Shares"; and the U.S. Shares, together with
the International Shares, being hereinafter called the "Shares") and (ii) the
sale by the Company of $120,000,000 principal amount of its ___% Convertible
Subordinated Notes due 2003 (the "U.S. Underwritten Notes"), and providing for
the grant to certain U.S. Underwriters of an option to purchase from the Company
up to $18,000,000 additional principal amount of its ____% Convertible
Subordinated Notes due 2003 (the "U.S. Option Notes"; the U.S. Option Notes,
together with the U.S. Underwritten Notes, being hereinafter called the "U.S.
Notes"; and the U.S. Notes, together with the U.S. Shares, being hereinafter
called the "U.S. Securities"; and the U.S. Notes, together with the
International Notes, being hereinafter called the "Notes"; and the Notes,
together with the Shares, being hereinafter called the "Securities").

                  It is further understood and agreed that the International
Underwriters and the U.S. Underwriters have entered into an Agreement Between
U.S. Underwriters and International Underwriters dated the date hereof (the
"Agreement Between U.S. Underwriters and International Underwriters"), pursuant
to which, among other things, the International Underwriters may purchase from
the U.S. Underwriters a portion of the U.S. Securities to be sold pursuant to
the U.S. Underwriting Agreement and the U.S. Underwriters may purchase from the
International Underwriters a portion of the International Securities to be sold
pursuant to the International Underwriting Agreement. To the extent there are no
additional International Underwriters listed on Schedule I other than you, the
term International Representatives as used herein shall mean you, as
International Underwriters, and the terms International Representatives and
International Underwriters shall mean either the singular or plural as the
context requires.

                  It is understood by the parties hereto that Mr. James J. Kim
and Mrs. Agnes C. Kim ("Mr. and Mrs. James J. Kim"), Selling Stockholders, are
concurrently entering into a 


                                       2
   3
securities loan agreement dated the date hereof (the "Securities Loan
Agreement") with Smith Barney Inc. ("SBI") which provides that, subject to
certain restrictions and with the agreement of Mr. and Mrs. James J. Kim, SBI
may from time to time borrow, return and reborrow from Mr. and Mrs. James J. Kim
certain shares of Common Stock (the "Borrowed Shares") for the purpose of
facilitating market-making activity in the Notes by SBI.

                  Certain terms used in this Agreement are defined in Section 17
hereof.

                  1.     Representations and Warranties.

                           A. The Company and Mr. James J. Kim, a Selling
         Stockholder, jointly and severally represent and warrant to, and agree
         with, each International Underwriter as set forth below in this Section
         1A.

                           (a) The Company has filed with the Securities and
         Exchange Commission (the "Commission") a registration statement (file
         number 333-37235) on Form S-1, including the related Offering
         Preliminary Prospectuses, for the registration under the Act of the
         offering and sale of the Securities. The Company may have filed one or
         more amendments thereto, including the related Offering Preliminary
         Prospectuses, each of which has previously been furnished to you. The
         Company will next file with the Commission either (i) prior to
         effectiveness of the Offering Registration Statement, a further
         amendment to the Offering Registration Statement (including the form of
         Offering Prospectuses) or (ii) after effectiveness of the Offering
         Registration Statement, the Offering Prospectuses in accordance with
         Rules 430A and 424(b)(1) or (4). In the case of clause (ii), the
         Company has included in the Offering Registration Statement all
         information (other than Rule 430A Information) required by the Act and
         the rules thereunder to be included in the Offering Registration
         Statement and the Offering Prospectuses. As filed, such amendment and
         form of Offering Prospectuses, or such Offering Prospectuses, shall
         contain all Rule 430A Information, together with all other such
         required information, and, except to the extent the International
         Representatives shall agree in writing to a modification, shall be in
         all substantive respects in the form furnished to you prior to the
         Execution Time or, to the extent not completed at the Execution Time,
         shall contain only such specific additional information and other
         changes (beyond that contained in the latest Offering International
         Preliminary Prospectus) as the Company has advised you, prior to the
         Execution Time, will be included or made therein.

                           It is understood that two forms of prospectus are to
         be used in connection with the offering and sale of the Securities: one
         form of prospectus relating to the International Securities, which are
         to be offered and sold to persons other than United States and Canadian
         Persons, and one form of prospectus relating to the U.S. Securities,
         which are to be offered and sold to United States and Canadian Persons.
         The two forms of prospectus are identical except for the outside front
         cover page, the inside front cover page, the discussion under the
         headings "Underwriting" and the outside back cover page. Such form of
         prospectus relating to the U.S. Securities as first filed pursuant to


                                       3
   4
         Rule 424(b) after the Execution Time or, if no filing pursuant to Rule
         424(b) is made, such form of prospectus included in the Offering
         Registration Statement at the Effective Date, is hereinafter called the
         "Offering U.S. Prospectus"; such form of prospectus relating to the
         International Securities as first filed pursuant to Rule 424(b) after
         the Execution Time or, if no filing pursuant to Rule 424(b) is made,
         such form of prospectus included in the Offering Registration Statement
         at the Effective Date, in either case, exclusive of any supplement
         thereto, is hereinafter called the "Offering International Prospectus";
         and the Offering U.S. Prospectus and the Offering International
         Prospectus are hereinafter collectively called the "Offering
         Prospectuses".

                         (b) On the Effective Date, the Offering Registration
         Statement did or will, and when the Offering Prospectuses are first
         filed (if required) in accordance with Rule 424(b) and on the Closing
         Date (as defined herein) and on any date on which the International
         Option Shares or the International Option Notes are purchased, if such
         date is not the Closing Date (a "settlement date"), each Offering
         Prospectus (and any supplement thereto) will, comply in all material
         respects with the applicable requirements of the Act and the rules
         thereunder; on the Effective Date and at the Execution Time, the
         Offering Registration Statement did not or will not contain any untrue
         statement of a material fact or omit to state any material fact
         required to be stated therein or necessary in order to make the
         statements therein not misleading; and, on the Effective Date, each
         Offering Prospectus, if not filed pursuant to Rule 424(b), did not or
         will not, and on the date of any filing pursuant to Rule 424(b) and on
         the Closing Date and any settlement date, each Offering Prospectus
         (together with any supplement thereto) will not, include any untrue
         statement of a material fact or omit to state a material fact necessary
         in order to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided,
         however, that the Company and Mr. James J. Kim make no representations
         or warranties as to the information contained in or omitted from the
         Offering Registration Statement or the Offering Prospectuses (or any
         supplement thereto) in reliance upon and in conformity with information
         furnished herein or in writing to the Company by or on behalf of any
         International Underwriter through the International Representatives
         specifically for inclusion in the Offering Registration Statement or
         the Offering Prospectuses (or any supplement thereto).

                         (c) The Company has filed with the Commission a
         registration statement (file number 333-_________) on Form S-1,
         including the related Borrowing Preliminary Prospectus, for the
         registration under the Act of the offering and sale of the Borrowed
         Shares. The Company may have filed one or more amendments thereto,
         including the related Borrowing Preliminary Prospectus, each of which
         has previously been furnished to you. The Company will next file with
         the Commission either (i) prior to the effectiveness of the Borrowing
         Registration Statement, a further amendment to the Borrowing
         Registration Statement (including the form of Borrowing Prospectus) or
         (ii) after the effectiveness of the Borrowing Registration Statement ,
         the Borrowing Prospectus in accordance with Rules 430A and 424(b)(1) or
         (4). In the case of clause (ii), the Company has included in the
         Borrowing Registration Statement all information (other than Rule 430A
         Information) required by the Act and the rules thereunder to be
         included 


                                       4
   5
         in the Borrowing Registration Statement and the Borrowing Prospectus.
         As filed, such amendment and form of Borrowing Prospectus, or such
         Borrowing Prospectus, shall contain all Rule 430A Information, together
         with all other such required information, and, except to the extent the
         International Representatives shall agree in writing to a modification,
         shall be in all substantive respects in the form furnished to you prior
         to the Execution Time or, to the extent not completed at the Execution
         Time, shall contain only such specific additional information and other
         changes (beyond that contained in the latest Borrowing Preliminary
         Prospectus) as the Company has advised you, prior to the Execution
         Time, will be included or made therein.

                         (d) On the Effective Date, the Borrowing Registration
         Statement did or will, and when the Borrowing Prospectus is first filed
         (if required) in accordance with Rule 424(b) and on the Closing Date,
         the Borrowing Prospectus (and any supplements thereto) will, comply in
         all material respects with the applicable requirements of the Act and
         the rules thereunder; on the Borrowing Effective Date and at the
         Execution Time, the Borrowing Registration Statement did not or will
         not contain any untrue statement of a material fact or omit to state
         any material fact required to be stated therein or necessary in order
         to make the statements therein not misleading; and, on the Borrowing
         Effective Date, the Borrowing Prospectus, if not filed pursuant to Rule
         424(b), will not, and on the date of any filing pursuant to Rule 424(b)
         and on the Closing Date, the Borrowing Prospectus (together with any
         supplemental thereto) will not, include any untrue statement of a
         material fact or omit to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading; provided, however, that the
         Company and Mr. James J. Kim make no representations or warranties as
         to the information contained in or omitted from the Borrowing
         Registration Statement, or the Borrowing Prospectus (or any
         supplemental thereto) in reliance upon and in conformity with
         information furnished herein or in writing to the Company by or on
         behalf of any International Underwriter through the International
         Representatives specifically for inclusion in the Borrowing
         Registration Statement or the Borrowing Prospectus (or any supplement
         thereto).

                         (e) The combined financial statements and schedules of
         the Company and A.K. Industries, Inc., Amkor Electronics, Inc., Amkor
         Anam Test Services, Inc., T.L. Limited, Amkor Anam Advanced Packaging,
         Inc. ("AAAP"), Amkor/Anam Pilipinas, Inc. ("AAP"), C.I.L. Limited,
         Amkor/Anam Euroservices S.A.R.L., and Automated MicroElectronics, Inc.
         ("AMI") (each a "Subsidiary" and collectively the "Subsidiaries")
         included in the Prospectuses and the Registration Statements present
         fairly in all material respects the financial condition, results of
         operations and cash flows of the Company and the Subsidiaries, on a
         combined basis, as of the dates and for the periods indicated, comply
         as to form with the applicable accounting requirements of the Act and
         the rules and regulations thereunder and have been prepared in
         conformity with generally accepted accounting principles applied on a
         consistent basis throughout the periods involved (except as otherwise
         noted therein).


                                       5
   6
                         (f) Each of the Company, the Subsidiaries and, to the
         knowledge of the Company and Mr. James J. Kim, Anam Industrial Co.,
         Ltd. ("AICL") has been duly incorporated and is validly existing as a
         corporation in good standing under the laws of the jurisdiction in
         which it is chartered or organized with full corporate power and
         authority to own, lease and operate its properties and conduct its
         business as described in the Prospectuses; each of the Company and the
         Subsidiaries is duly qualified to do business as a foreign corporation
         and is in good standing under the laws of each jurisdiction which
         requires such qualification, except where the failure to be so
         qualified would not have a Material Adverse Effect; and no proceeding
         has been instituted in any such jurisdiction, revoking, limiting or
         curtailing, or seeking to revoke, limit or curtail, such power and
         authority or qualification except such proceedings which, if
         successful, would not individually or in the aggregate have a Material
         Adverse Effect.

                         (g) All the outstanding shares of capital stock of each
         Subsidiary have been duly and validly authorized and issued and are
         fully paid and nonassessable, and, except (i) such shares of AAP owned
         by AICL, which shares do not exceed 40.1% of the outstanding voting
         shares of AAP, (ii) such shares of AAP, AMI and AAAP owned by directors
         thereof, which shares in each case do not exceed 0.1% of the
         outstanding shares of such Subsidiary, (iii) 3,446,476 shares of
         preferred stock of AAP, which shares are owned by Integrated
         Microelectronics, Inc., and (iv) as otherwise set forth in the
         Prospectuses, all outstanding shares of capital stock of the
         Subsidiaries are owned by the Company either directly or through wholly
         owned subsidiaries free and clear of any perfected security interest
         and any other security interests, claims, liens or encumbrances.

                         (h) The Company's authorized equity capitalization is
         as set forth in the Prospectuses; the capital stock of the Company
         conforms in all material respects to the description thereof contained
         in the Prospectuses; the outstanding shares of Common Stock have been
         duly and validly authorized and issued and are fully paid and
         nonassessable; the International Shares being sold hereunder have been
         duly and validly authorized, and, when issued and delivered to and paid
         for by the International Underwriters pursuant to this Agreement, will
         be fully paid and nonassessable; the International Shares have been
         duly authorized for listing, subject to official notice of issuance, on
         the Nasdaq National Market; the certificates for the International
         Shares are in valid and sufficient form; the holders of outstanding
         shares of capital stock of the Company are not entitled to preemptive
         or other rights to subscribe for the International Shares; and, except
         as set forth in the Prospectuses, no options, warrants or other rights
         to purchase, agreements or other obligations to issue, or rights to
         convert any obligations into or exchange any securities for, shares of
         capital stock of or ownership interests in the Company are outstanding.

                         (i) The Indenture will be, as of the Closing Date, duly
         authorized, executed and delivered; the Indenture has been duly
         qualified under the Trust Indenture Act and as of the Closing Date will
         constitute a valid, binding and enforceable obligation of the Company;
         the International Notes have been duly authorized by the Company and,
         when authenticated by the Trustee in accordance with the terms of the
         Indenture and 


                                       6
   7
         delivered to and paid for by the International Underwriters pursuant to
         this Agreement, will have been duly executed, authenticated, issued and
         delivered and will constitute valid, binding and enforceable
         obligations of the Company entitled to the benefits provided by the
         Indenture; the shares of Common Stock issuable upon conversion of the
         International Notes have been duly authorized for listing, subject to
         official notice of issuance, on the Nasdaq National Market; the holders
         of the outstanding shares of capital stock of the Company are not
         entitled to any preemptive or other rights to subscribe for the
         International Notes or the shares of Common Stock issuable upon the
         conversion thereof; the shares of Common Stock initially issuable upon
         conversion of the International Notes have been duly and validly
         authorized and reserved for issuance upon such conversion and, when
         issued upon conversion, will be validly issued, fully paid and
         nonassessable; and the International Notes and the Indenture will
         conform in all material respects to the descriptions thereof contained
         in the Offering Prospectuses.

                         (j) There is no franchise, contract or other document
         of a character required to be described in the Registration Statements
         or Prospectuses, or to be filed as an exhibit thereto, which is not
         described or filed as required.

                         (k) This Agreement has been duly authorized, executed
         and delivered by the Company and is a valid, binding and enforceable
         agreement of the Company.

                         (l) The Company is not and, after giving effect to the
         offering and sale of the International Securities and the application
         of the proceeds thereof as described in the Prospectuses, will not be
         an "investment company" as defined in the Investment Company Act of
         1940, as amended (the "1940 Act").

                         (m) No consent, approval, authorization, filing with or
         order of any court or governmental agency or body is required in
         connection with the transactions contemplated herein, except such as
         have been obtained under the Act and such as may be required under the
         blue sky laws of any jurisdiction in connection with the purchase and
         distribution of the International Securities by the International
         Underwriters in the manner contemplated herein and in the Prospectuses.

                         (n) Neither the issue and sale of the International
         Securities nor the consummation of any other of the transactions herein
         contemplated nor the fulfillment of the terms hereof will conflict
         with, or result in a breach or violation of or imposition of any lien,
         charge or encumbrance upon any property or assets of the Company or any
         of the Subsidiaries pursuant to, (i) the charter or bylaws of the
         Company or any of the Subsidiaries or (ii) the terms of any indenture,
         contract, lease, mortgage, deed of trust, note agreement, loan
         agreement or other agreement to which the Company or any of the
         Subsidiaries is a party or bound or to which its or their property is
         subject or (iii) any statute, law, rule, regulation, judgment, order or
         decree applicable to the Company or any of the Subsidiaries of any
         court, governmental body, arbitrator or other authority having
         jurisdiction over the Company or any of the Subsidiaries or any of its
         or their properties.


                                       7
   8
                         (o) No holders of securities of the Company have rights
         to the registration of such securities under the Registration
         Statements.

                         (p) No action, suit or proceeding by or before any
         court or governmental agency, authority or body or any arbitrator
         involving the Company or any of the Subsidiaries or its or their
         property is pending or, to the knowledge of the Company and Mr. James
         J. Kim, threatened that (i) could reasonably be expected to have a
         material adverse effect on the performance of this Agreement or the
         consummation of any of the transactions contemplated hereby or (ii)
         could reasonably be expected to have a Material Adverse Effect, except
         as set forth in or contemplated in the Prospectuses.

                         (q) The Reorganization (as defined in the Prospectuses)
         has been completed as described in the Prospectuses.

                         (r) Each of the Packaging and Test Services Agreement
         dated November 1, 1997 and the Foundry Services Agreement dated January
         1, 1998 (collectively, the "AICL Agreements") has been duly authorized,
         executed and delivered by the Company, the Subsidiaries that are
         parties thereto (the "Subsidiary Parties") and AICL and is a valid,
         binding and enforceable agreement of the Company, the Subsidiary
         Parties and, to the knowledge of the Company and Mr. James J. Kim,
         AICL; neither the consummation of the transactions contemplated in any
         of the AICL Agreements nor the fulfillment of the terms thereof will
         conflict with, or result in a breach or violation of or imposition of
         any lien, charge or encumbrance upon any property or assets of the
         Company, any of the Subsidiary Parties or AICL pursuant to, (i) the
         charter or bylaws of the Company, any Subsidiary Party or, to the
         knowledge of the Company and Mr. James J. Kim, AICL or (ii) the terms
         of any indenture, contract, lease, mortgage, deed of trust, note
         agreement, loan agreement or other agreement to which the Company, any
         Subsidiary Party or, to the knowledge of the Company and Mr. James J.
         Kim, AICL is a party or bound or to which their respective property is
         subject (except for such breaches or violations which would not,
         individually or in the aggregate, have a Material Adverse Effect or a
         material adverse effect on the ability of AICL to perform any of the
         AICL Agreements) or (iii) any statute, law, rule, regulation, judgment,
         order or decree applicable to the Company, any Subsidiary Party or, to
         the knowledge of the Company and Mr. James J. Kim, AICL of any court,
         governmental body, arbitrator or other authority having jurisdiction
         over the Company, such Subsidiary Party or AICL or any of their
         respective properties; no consent, approval, authorization, filing with
         or order of any court or governmental agency or body is currently
         required in connection with the transactions contemplated in any of the
         AICL Agreements, except those which have been obtained or which, if not
         obtained, would not individually or in the aggregate have a material
         adverse effect on the performance of any of the AICL Agreements or the
         consummation of the transactions contemplated thereby; and no action,
         suit or proceeding by or before any court or governmental body or any
         arbitrator involving the Company, any Subsidiary Party or, to the
         knowledge of the Company and Mr. James J. Kim, AICL or their respective
         properties is pending or, to the knowledge of the Company and Mr. James
         J. Kim, threatened that could reasonably be expected to have a material
         adverse effect on the


                                       8
   9
         performance of any of the AICL Agreements or the consummation of the
         transactions contemplated thereby.

                         (s) Each of the Company, the Subsidiaries and, to the
         knowledge of the Company and Mr. James J. Kim, AICL owns or leases all
         such properties as are necessary to the conduct of its operations as
         presently conducted; neither the Company nor any Subsidiary nor, to the
         knowledge of the Company and Mr. James J. Kim, AICL is in violation of
         any law, rule or regulation of any Federal, state, local or other
         governmental or regulatory authority applicable to it or is in
         non-compliance with any term or condition of, or has failed to obtain
         and maintain in effect, any license, certificate, permit or other
         governmental authorization required for the ownership or lease of its
         property or the conduct of its business, which violation,
         non-compliance or failure would individually or in the aggregate have a
         Material Adverse Effect or a material adverse effect on the ability of
         AICL to perform any of the AICL Agreements, except as set forth in or
         contemplated in the Prospectuses; and the Company has not received
         notice of any proceedings relating to the revocation or material
         modification of any such license, certificate, permit or other
         authorization (other than such proceedings which, if the subject of an
         unfavorable decision, would not individually or in the aggregate have a
         Material Adverse Effect), except as set forth in or contemplated in the
         Prospectuses.

                         (t) Neither the Company nor any Subsidiary nor, to the
         knowledge of the Company and Mr. James J. Kim, AICL is in violation or
         default of (i) any provision of its charter or bylaws, (ii) the terms
         of any indenture, contract, lease, mortgage, deed of trust, note
         agreement, loan agreement or other agreement to which it is a party or
         bound or to which its property is subject, or (iii) any statute, law,
         rule, regulation, judgment, order or decree of any court, governmental
         body, arbitrator or other authority having jurisdiction over the
         Company, or such Subsidiary or AICL or any of their respective
         properties, as applicable, in each case (x) other than such violations
         or defaults which would not, individually or in the aggregate, have a
         Material Adverse Effect or a material adverse effect on the ability of
         AICL to perform its obligations under the AICL Agreements and (y)
         except as set forth in or contemplated in the Prospectuses.

                         (u) Arthur Andersen LLP, who have certified certain
         financial statements of the Company and the Subsidiaries and delivered
         their report with respect to the audited combined financial statements
         and schedules included in the Prospectuses, are independent public
         accountants with respect to the Company within the meaning of the Act
         and the applicable published rules and regulations thereunder.

                         (v) There are no transfer taxes or other similar fees
         or charges under Federal law or the laws of any state, or any political
         subdivision thereof, required to be paid in connection with the
         execution and delivery of this Agreement or the issuance by the Company
         or sale by the Company of the International Securities.

                         (w) The Company has filed all foreign, federal, state
         and local tax returns that are required to be filed or has requested
         extensions thereof (except in any case in 


                                       9
   10
         which the failure so to file would not have a Material Adverse Effect),
         except as set forth in or contemplated in the Prospectuses and has paid
         all taxes shown as payable on such tax returns and any other
         assessment, fine or penalty levied against it, to the extent that any
         of the foregoing is due and payable, except for any such assessment,
         fine or penalty that is currently being contested in good faith or as
         would not have a Material Adverse Effect, except as set forth in or
         contemplated in the Prospectuses.

                         (x) No labor dispute with the employees of the Company
         or any of the Subsidiaries exists or, to the knowledge of the Company
         and Mr. James J. Kim, is threatened that could reasonably be expected
         to have a Material Adverse Effect, except as set forth in or
         contemplated in the Prospectuses.

                         (y) The Company and each of the Subsidiaries are
         insured by insurers of recognized financial responsibility against such
         losses and risks and in such amounts as are prudent for the businesses
         in which they are engaged; neither the Company nor any such Subsidiary
         has been refused any insurance coverage sought or applied for; and
         neither the Company nor any such Subsidiary has any reason to believe
         that it will not be able to renew its existing insurance coverage as
         and when such coverage expires or to obtain similar coverage from
         similar insurers as may be necessary to continue its business at a cost
         that would not have a Material Adverse Effect, except as set forth in
         or contemplated in the Prospectuses.

                         (z) No Subsidiary is currently prohibited, directly or
         indirectly, from paying any dividends to the Company, from making any
         other distribution on such Subsidiary's capital stock, from repaying to
         the Company any loans or advances to such Subsidiary from the Company
         or from transferring any of such Subsidiary's property or assets to the
         Company or any other Subsidiary of the Company, except as described in
         or contemplated in the Prospectuses.

                        (aa) The Company and the Subsidiaries possess all
         certificates, authorizations and permits issued by the appropriate
         federal, state or foreign regulatory authorities necessary to conduct
         their respective businesses (except in any case in which the failure so
         to possess any such certificate, authorization or permit would not,
         individually or in the aggregate, have a Material Adverse Effect), and
         neither the Company nor any such Subsidiary has received any notice of
         proceedings relating to the revocation or modification of any such
         certificate, authorization or permit which, singly or in the aggregate,
         if the subject of an unfavorable decision, ruling or finding, could
         reasonably be expected to have a Material Adverse Effect, except as set
         forth in or contemplated in the Prospectuses.

                        (bb) Neither the Company nor any of the Subsidiaries is
         in violation of any federal or state law or regulation relating to
         occupational safety and health or to the storage, handling or
         transportation of hazardous or toxic materials and the Company and the
         Subsidiaries have received all permits, licenses or other approvals
         required of them under applicable federal and state occupational safety
         and health and environmental laws 


                                       10
   11
         and regulations to conduct their respective businesses, and the Company
         and each such Subsidiary is in compliance with all terms and conditions
         of any such permit, license or approval, except any such violation of
         law or regulation, failure to receive required permits, licenses or
         other approvals or failure to comply with the terms and conditions of
         such permits, licenses or approvals which would not, singly or in the
         aggregate, have a Material Adverse Effect, except as set forth in or
         contemplated in the Prospectuses.

                        (cc) The Company and each of the Subsidiaries maintain a
         system of internal accounting controls sufficient to provide reasonable
         assurance that (i) transactions are executed in accordance with
         management's general or specific authorizations; (ii) transactions are
         recorded as necessary to permit preparation of financial statements in
         conformity with generally accepted accounting principles and to
         maintain asset accountability; (iii) access to assets is permitted only
         in accordance with management's general or specific authorization; and
         (iv) the recorded accountability for assets is compared with the
         existing assets at reasonable intervals and appropriate action is taken
         with respect to any differences.

                        (dd) Each of the Company, the Subsidiaries and, to the
         knowledge of the Company and Mr. James J. Kim, AICL owns or has
         obtained licenses for the patents, patent applications, trade and
         service marks, trade secrets and other intellectual properties
         referenced or described in the Prospectuses as being owned by or
         licensed to it (collectively, the "Intellectual Property"). Except as
         set forth in the Prospectuses under the caption "Business --
         Intellectual Property," (a) to the knowledge of the Company and Mr.
         James J. Kim, there are no rights of third parties to any such
         Intellectual Property owned by the Company or any of the Subsidiaries;
         (b) to the knowledge of the Company and Mr. James J. Kim, there is no
         material infringement by third parties of any such Intellectual
         Property (other than with respect to the "Gold Gate" patent of the
         Company); (c) there is no pending or, to the knowledge of the Company
         and Mr. James J. Kim, threatened action, suit, proceeding or claim by
         others challenging the rights of the Company, any Subsidiary or AICL in
         or to any such Intellectual Property, and the Company is unaware of any
         facts which would form a reasonable basis for any such claim; (d) there
         is no pending or, to the knowledge of the Company and Mr. James J. Kim,
         threatened action, suit, proceeding or claim by others challenging the
         validity or scope of any such Intellectual Property; (e) there is no
         pending or, to the knowledge of the Company and Mr. James J. Kim,
         threatened action, suit, proceeding or claim by others that the
         Company, any Subsidiary or AICL infringes or otherwise violates any
         patent, trademark, copyright, trade secret or other proprietary rights
         of others; (f) to the knowledge of the Company and Mr. James J. Kim,
         there is no U.S. patent or published U.S. patent application which
         contains claims that dominate or may dominate any Intellectual Property
         described in the Prospectuses as being owned by or licensed to the
         Company, any Subsidiary or AICL or that interferes with the issued or
         pending claims of any such Intellectual Property; and (g) there is no
         prior art of which the Company is aware that may render any U.S. patent
         held by the Company, any Subsidiary or AICL invalid or any U.S. patent
         application held by the Company, any Subsidiary or AICL unpatentable
         which has not been disclosed to the U.S. Patent and Trademark Office.


                                       11
   12
         Each of the Company, the Subsidiaries and, to the knowledge of the
         Company and Mr. James J. Kim, AICL owns the Intellectual Property or
         has the rights to the Intellectual Property that is necessary, in the
         case of the Company and the Subsidiaries, to conduct the Company's
         business as described in the Prospectuses or, in the case of AICL, to
         perform its obligations under the AICL Agreements.

                        (ee) Neither the Company nor any of the Subsidiaries has
         distributed nor will it distribute prior to the later of (i) the
         Closing Date, or any date on which International Option Shares or
         International Option Notes are to be purchased, as the case may be, and
         (ii) completion of the distribution of the International Securities,
         any offering material in connection with the offering and sale of the
         International Securities other than any Offering Preliminary
         Prospectuses, the Offering Prospectuses, the Offering Registration
         Statement and other materials, if any, permitted by the Act.

                        (ff) Neither the Company nor its affiliated purchasers,
         as defined in Rule 100 of Regulation M ("Regulation M") under the
         Exchange Act, either alone or with one or more other persons, (i) has
         taken, either directly or indirectly, any action which was designed to
         cause or result in, or which has constituted, or which might reasonably
         be expected to cause or result in, stabilization or manipulation of the
         price of any security of the Company ("Subject Securities") in
         connection with the offering of the Securities or (ii) will bid for or
         purchase any Subject Securities of the Company or any other covered
         securities (within the meaning of Regulation M) relating to the Subject
         Securities (together with Subject Securities, "Covered Securities"), or
         attempt to induce any person to bid for or purchase any Covered
         Securities, in either case, for the purpose of creating actual or
         apparent active trading in, or raising the price of the Securities.

                        (gg) There are no outstanding loans, advances (except
         normal advances for business expenses in the ordinary course of
         business) or guarantees of indebtedness by the Company or any of the
         Subsidiaries to or for the benefit of any of the officers or directors
         of the Company or any Subsidiary or any of the members of the families
         of any of them, which loans, advances or guarantees are required to be,
         and are not, disclosed in the Registration Statements and Prospectuses.

                        (hh) There have not been, and there are not proposed,
         any transactions or agreements between the Company or any of the
         Subsidiaries on the one hand and the officers, directors or
         stockholders of the Company or any of the Subsidiaries on the other,
         which transactions or agreements are required to be, and are not,
         disclosed in the Registration Statements and Prospectuses.

                        (ii) No officer or director of the Company is in breach
         or violation of any employment agreement, non-competition agreement,
         confidentiality agreement, or other agreement restricting the nature or
         scope of employment to which such officer or director is a party, other
         than such breaches or violations which would not, individually or in
         the aggregate, have a Material Adverse Effect; neither the current
         conduct nor the proposed 


                                       12
   13
         conduct of the Company's business, as described in the Registration
         Statements and Prospectuses, will result in a breach or violation of
         any such agreement.

                        (jj) There are no outstanding options to acquire shares
         of capital stock of the Company that are vested and exercisable, and
         there are no outstanding options to acquire shares of capital stock of
         the Company that can, by their terms, become exercisable within 180
         days of the date hereof.

                  Any certificate signed by any officer of the Company and
delivered to the International Representatives or counsel for the International
Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each International Underwriter.

                  B. Each Selling Stockholder represents and warrants to, and
agrees with, each International Underwriter that:

                         (a) Such Selling Stockholder has full legal right,
         capacity, power and authority to enter into and perform this Agreement
         and the Custody Agreement (as defined below) and to sell, transfer,
         assign and deliver in the manner provided in this Agreement and the
         Custody Agreement the International Shares to be sold by such Selling
         Stockholder hereunder.

                         (b) Such Selling Stockholder is the lawful owner of the
         International Shares to be sold by such Selling Stockholder hereunder
         and upon sale and delivery of, and payment for, such International
         Shares, as provided herein, such Selling Stockholder will convey good
         and valid title to such International Shares, free and clear of all
         liens, encumbrances, equities and claims whatsoever.

                         (c) Such Selling Stockholder has not taken and will not
         take, directly or indirectly, any action designed to or which has
         constituted or which might reasonably be expected to cause or result,
         under the Exchange Act or otherwise, in stabilization or manipulation
         of the price of any security of the Company to facilitate the sale or
         resale of the International Shares and has not effected any sales of
         shares of Common Stock which, if effected by the issuer, would be
         required to be disclosed in response to Item 701 of Regulation S-K
         under the Act.

                         (d) Certificates in negotiable form for such Selling
         Stockholder's International Shares have been placed in custody, for
         delivery pursuant to the terms of this Agreement, under a Custody
         Agreement duly executed and delivered by such Selling Stockholder, in
         the form heretofore furnished to you (the "Custody Agreement") with
         ___________ of ___________, as Custodian (the "Custodian"); the
         International Shares represented by the certificates so held in custody
         for each Selling Stockholder are subject to the interests hereunder of
         the International Underwriters, the Company and the other Selling
         Stockholders; the arrangements for custody and delivery of such
         certificates, made by such Selling Stockholder hereunder and under the
         Custody Agreement, are not subject to termination by any acts of such
         Selling Stockholder, or by operation of law, 


                                       13
   14
         whether by the death or incapacity of such Selling Stockholder or the
         occurrence of any other event; and if any such death, incapacity or any
         other such event shall occur before the delivery of such International
         Shares hereunder, certificates for the International Shares will be
         delivered by the Custodian in accordance with the terms and conditions
         of this Agreement and the Custody Agreement as if such death,
         incapacity or other event had not occurred, regardless of whether or
         not the Custodian shall have received notice of such death, incapacity
         or other event.

                         (e) No consent, approval, authorization or order of any
         court or governmental agency or body is required for the consummation
         by such Selling Stockholder of the transactions contemplated herein,
         except such as may have been obtained under the Act and such as may be
         required under the blue sky laws of any jurisdiction in connection with
         the purchase and distribution of the International Shares by the
         International Underwriters and such other approvals as have been
         obtained.

                         (f) Neither the sale of the International Shares being
         sold by such Selling Stockholder nor the consummation of any other of
         the transactions herein contemplated by such Selling Stockholder or the
         fulfillment of the terms hereof by such Selling Stockholder will
         conflict with, result in a breach or violation of, or constitute a
         default under any law or the terms of any indenture or other agreement
         or instrument to which such Selling Stockholder is a party or bound, or
         any judgment, order or decree applicable to such Selling Stockholder of
         any court, regulatory body, administrative agency, governmental body or
         arbitrator having jurisdiction over such Selling Stockholder.

                  2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company and the Selling Stockholders agree to sell to each International
Underwriter, and each International Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholders, at a
purchase price of $________ per share, the amount of the International
Underwritten Shares set forth opposite such International Underwriter's name in
Schedule I hereto.

                  (b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several International Underwriters to purchase, severally and
not jointly, up to 1,050,000 shares of the International Option Shares at the
same purchase price per share as the International Underwriters shall pay for
the International Underwritten Shares. Said option may be exercised only to
cover over-allotments in the sale of the International Underwritten Shares by
the International Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Offering International Prospectus upon written or telegraphic notice by the
International Representatives to the Company setting forth the number of shares
of the International Option Shares as to which the several International
Underwriters are exercising the option and the settlement date; provided,
however, that to the extent that both the option provided for in this Section
2(b) and the option provided for in Section 2(b) of the U.S. Underwriting
Agreement are exercised, (i) such exercises shall occur on the same date and
(ii) the settlement dates in respect thereof shall be the same date. Delivery of


                                       14
   15
the International Option Shares, and payment therefor, shall be made as provided
in Section 3 hereof. The number of shares of the International Option Shares to
be purchased by each International Underwriter shall be the same percentage of
the total number of shares of the International Option Shares to be purchased by
the several International Underwriters as such International Underwriter is
purchasing of the International Underwritten Shares, subject to such adjustments
as you in your absolute discretion shall make to eliminate any fractional
shares.

                  (c) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company agrees to sell
to each International Underwriter, and each International Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
___% of the principal amount thereof, plus accrued interest, if any, on the
International Underwritten Notes from April ___, 1998, to the Closing Date, the
principal amount of the International Underwritten Notes set forth opposite such
International Underwriter's name in Schedule I hereto.

                  (d) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several International Underwriters to purchase, severally and
not jointly, the International Option Notes at a purchase price of _____% of the
principal amount thereof, plus accrued interest, if any, from April __, 1998, to
the settlement date for the International Option Notes. Said option may be
exercised only to cover over-allotments in the sale of the International
Underwritten Notes by the International Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the Offering International Prospectus upon
written or telegraphic notice by the International Representatives to the
Company setting forth the principal amount of International Option Notes as to
which the several International Underwriters are exercising the option and the
settlement date; provided, however, that to the extent that both the option
provided for in this Section 2(d) hereof and the option provided for in Section
2(d) of the U.S. Underwriting Agreement are exercised, (i) such exercises shall
occur on the same date and (ii) the settlement dates in respect thereof shall be
the same date. Delivery of certificates for the International Option Notes, and
payment therefor, shall be made as provided in Section 3 hereof. The principal
amount of International Option Notes to be purchased by each International
Underwriter shall be the same percentage of the total principal amount of
International Option Notes to be purchased by the International Underwriters as
such International Underwriter is purchasing of the International Underwritten
Notes, subject to such adjustments as you in your absolute discretion shall make
to eliminate any fractional principal amounts.

                  3. Delivery and Payment. Delivery of and payment for the
International Underwritten Shares, the International Underwritten Notes, the
International Option Shares (if the option provided for in Section 2(b) hereof
shall have been exercised on or before the third Business Day prior to the
Closing Date) and the International Option Notes (if the option provided for in
Section 2(d) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
________  ___, 1998, or at such time on such later date not more than three
Business Days after the foregoing date as the International Representatives
shall designate, which date and time may be postponed 


                                       15
   16
by agreement among the International Representatives, the Company and the
Selling Stockholders or as provided in Section 9 hereof (such date and time of
delivery and payment for the International Securities being herein called the
"Closing Date"). Delivery of the International Securities shall be made to the
International Representatives for the respective accounts of the several
International Underwriters against payment by the several International
Underwriters through the International Representatives of (i) $___________ by
wire transfer payable in same-day funds to an account of the Korea Development
Bank specified by the Company and (ii) the balance of the respective aggregate
purchase prices of the International Securities being sold by the Company and
each of the Selling Stockholders to or upon the order of the Company and each of
the Selling Stockholders by wire transfer payable in same-day funds to the
accounts specified by the Company and each of the Selling Stockholders or by
such other method as shall be agreed upon by the International Representatives
and the Company and such Selling Stockholders. Delivery of the International
Securities shall be made through the facilities of the Depository Trust Company
unless the International Representatives shall otherwise instruct.

                  It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the U.S. Underwriting Agreement.

                  Each Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the several International
Underwriters of the International Shares to be purchased by them from such
Selling Stockholders and the respective International Underwriters will pay any
additional stock transfer taxes involved in further transfers.

                  If the option provided for in Section 2(b) and/or Section 2(d)
hereof is exercised on or after the second Business Day prior to the Closing
Date, the Company will deliver (at the expense of the Company) to the
International Representatives, on the date(s) specified by the International
Representatives (which shall be within three Business Days after exercise of
said option(s)), the International Option Shares and/or International Option
Notes against payment by the several International Underwriters through the
International Representatives of the purchase price thereof to or upon the order
of the Company by wire transfer payable in same-day funds to an account
specified by the Company or by such other method as shall be agreed upon by the
International Representatives and the Company. Delivery of the International
Option Shares and/or International Option Notes shall be made through the
facilities of the Depositary Trust Company unless the International
Representatives shall otherwise instruct. If settlement for the International
Option Shares and/or International Option Notes occurs after the Closing Date,
the Company will deliver to the International Representatives on the settlement
date(s), and the obligation of the International Underwriters to purchase the
International Option Shares and/or International Option Notes, as the case may
be, shall be conditioned upon receipt of, supplemental opinions, certificates
and letters confirming as of such date(s) the opinions, certificates and letters
delivered on the Closing Date pursuant to Section 6 hereof.

                  4. Offering by Underwriters. It is understood that the several
International Underwriters propose to offer the International Securities for
sale to the public as set forth in the Offering Prospectuses.


                                       16
   17
                  5.     Other Agreements.

                  A. The Company agrees with the several International
Underwriters that:

                         (a) The Company will use its best efforts to cause the
         Offering Registration Statement, if not effective at the Execution
         Time, and any amendment thereof to become effective. Prior to the
         termination of the offering of the Securities, the Company will not
         file any amendment of the Offering Registration Statement or supplement
         to the Offering Prospectuses or any Rule 462(b) Registration Statement
         unless the Company has furnished you a copy for your review prior to
         filing and will not file any such proposed amendment or supplement to
         which you reasonably object. Subject to the foregoing sentence, if the
         Offering Registration Statement has become or becomes effective
         pursuant to Rule 430A, or filing of the Offering Prospectuses is
         otherwise required under Rule 424(b), the Company will cause the
         Offering Prospectuses, properly completed, and any supplement thereto
         to be filed with the Commission pursuant to the applicable paragraph of
         Rule 424(b) within the time period prescribed and will provide evidence
         satisfactory to the International Representatives of such timely
         filing. The Company will promptly advise the International
         Representatives (i) when the Offering Registration Statement, if not
         effective at the Execution Time, shall have become effective, (ii) when
         the Offering Prospectuses, and any supplement thereto, shall have been
         filed (if required) with the Commission pursuant to Rule 424(b) or when
         any Rule 462(b) Registration Statement shall have been filed with the
         Commission, (iii) when, prior to termination of the offering of the
         Securities, any amendment to the Offering Registration Statement shall
         have been filed or become effective, (iv) of any request by the
         Commission for any amendment of the Offering Registration Statement or
         any Rule 462(b) Registration Statement, or for any supplement to the
         Offering Prospectuses or for any additional information, (v) of the
         issuance by the Commission of any stop order suspending the
         effectiveness of the Offering Registration Statement or the institution
         or threatening of any proceeding for that purpose and (vi) of the
         receipt by the Company of any notification in writing with respect to
         the suspension of the qualification of the Securities for sale in any
         jurisdiction or with respect to the initiation or threatening of any
         proceeding for such purpose. The Company will use its best efforts to
         prevent the issuance of any such stop order or the suspension of any
         such qualification and, if issued, to obtain as soon as possible the
         withdrawal thereof.

                         (b) If, at any time when a prospectus relating to the
         Securities is required to be delivered under the Act, any event occurs
         as a result of which either of the Offering Prospectuses as then
         supplemented would include any untrue statement of a material fact or
         omit to state any material fact necessary to make the statements
         therein in the light of the circumstances under which they were made
         not misleading, or if it shall be necessary to amend the Offering
         Registration Statement or supplement either of the Offering
         Prospectuses to comply with the Act or the rules thereunder, the
         Company promptly will (i) prepare and file with the Commission, subject
         to the second sentence of paragraph (a) of this Section 5, an amendment
         or supplement which will correct such statement or 


                                       17
   18
         omission or effect such compliance and (ii) supply any supplemented
         Offering Prospectuses to you in such quantities as you may reasonably
         request.

                         (c) As soon as practicable, the Company will make
         generally available to its security holders and to the International
         Representatives an earnings statement or statements of the Company and
         the Subsidiaries which will satisfy the provisions of Section 11(a) of
         the Act and Rule 158 under the Act.

                         (d) The Company will furnish to the International
         Representatives and counsel for the International Underwriters, without
         charge, signed copies of the Registration Statement (including exhibits
         thereto) and to each other International Underwriter a copy of the
         Offering Registration Statement (without exhibits thereto) and, so long
         as delivery of a prospectus by an International Underwriter or dealer
         may be required by the Act, as many copies of each Offering
         International Preliminary Prospectus and the Offering International
         Prospectus and any supplement thereto as the International
         Representatives may reasonably request. The Company will pay the
         expenses of printing or other production of all documents relating to
         the offering.

                         (e) The Company will arrange, if necessary, for the
         qualification of the Securities for sale under the laws of such
         jurisdictions as the International Representatives may designate, will
         maintain such qualifications in effect so long as required for the
         distribution of the International Securities and will pay any fee of
         the NASD, in connection with its review of the offering; provided,
         however, that the Company shall not be required in connection
         therewith, as a condition thereof, to qualify as a foreign corporation
         or to execute a general consent to service of process in any
         jurisdiction or subject itself to taxation as doing business in any
         jurisdiction.

                         (f) The Company will not, for a period of 180 days
         following the Execution Time, without the prior written consent of SBI,
         offer, pledge, sell or contract to sell, or otherwise dispose of (or
         enter into any transaction which is designed to, or could be expected
         to, result in the disposition (whether by actual disposition or
         effective economic disposition due to cash settlement or otherwise) by
         the Company or any affiliate of the Company or any person in privity
         with the Company or any affiliate of the Company), directly or
         indirectly, or announce the offering of, any other shares of Common
         Stock or any securities or options convertible into, or exchangeable or
         exercisable for, shares of Common Stock (other than the Notes);
         provided, however, that the Company may grant options and may issue and
         sell shares of Common Stock pursuant to any employee stock option plan,
         stock ownership plan or dividend reinvestment plan of the Company that
         was approved by the Board of Directors of the Company prior to the
         Execution Time and the Company may issue shares of Common Stock
         issuable upon the conversion of securities or the exercise of warrants
         outstanding at the Execution Time.


                                       18
   19
                         (g) The Company will use the net proceeds to the
         Company of the offering of the Securities as described under the
         heading "Use of Proceeds" in the Offering Prospectuses.

                         (h) The Company will use its best efforts to have the
         Notes approved for quotation on the Nasdaq Stock Market.

                         (i) The Company will use its best efforts to have
         Arthur Andersen LLP issue, on or prior to May 15, 1998 (or, to the
         extent such date is prior to the Closing Date, within _____ Business
         Days after the Closing Date), a revised audit report with respect to
         the combined financial statements of the Company contained in the
         Offering Prospectuses, which audit report shall not contain any
         qualification as to the Company's ability to continue as a going
         concern.

                         (j) The Company confirms as of the date hereof that it
         is in compliance with all provisions of Section 1 of Laws of Florida,
         Chapter 92-198, An Act Relating to Disclosure of Doing Business with
         Cuba, and the Company further agrees that if it commences engaging in
         business with the government of Cuba or with any person or affiliate
         located in Cuba after the date the Offering Registration Statement
         becomes or has become effective with the Commission or with the Florida
         Department of Banking and Finance (the "Department"), whichever date is
         later, or if the information reported in the Offering Prospectuses, if
         any, concerning the Company's business with Cuba or with any person or
         affiliate located in Cuba changes in any material way, the Company will
         provide the Department notice of such business or change, as
         appropriate, in a form acceptable to the Department.

                  B. Each Selling Stockholder agrees with the several
International Underwriters that it will not during the period of 180 days
following the Execution Time, without the prior written consent of SBI or unless
pursuant to the Securities Loan Agreement, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering of, any
other shares of Common Stock beneficially owned by such person, or any
securities convertible into, or exchangeable for, shares of Common Stock other
than shares of Common Stock disposed of as bona fide gifts.

                  C.(a) Each International Underwriter agrees that (i) it is not
         purchasing any of the International Securities for the account of any
         United States or Canadian Person, (ii) it has not offered or sold, and
         will not offer or sell, directly or indirectly, any of the
         International Securities or distribute any Offering International
         Prospectus to any person in the United States or Canada, or to a United
         States or Canadian Person, and (iii) any dealer to whom it may sell any
         of the International Securities will represent that it is not
         purchasing for the account of any United States or Canadian Person and
         agree that it will not offer or resell, directly or indirectly, any of
         the International Securities in the United States or Canada, or to a
         United States or Canadian Person or to any other dealer who does not so
         represent and agree; provided, however, that the foregoing shall not
         restrict (i) purchases and sales between the International Underwriters
         on the one hand and the 


                                       19
   20
         U.S. Underwriters on the other hand pursuant to the Agreement Between
         U.S. Underwriters and International Underwriters, (ii) stabilization
         transactions contemplated under the Agreement Between International
         Underwriters and U.S. Underwriters, conducted through SBI (or through
         the International Representatives and U.S. Representatives) as part of
         the distribution of the Securities, and (iii) sales to or through (or
         distributions of Offering International Prospectuses or Offering
         International Preliminary Prospectuses to) persons not United States or
         Canadian Persons who are investment advisors, or who otherwise exercise
         investment discretion, and who are purchasing for the account of any
         United States or Canadian Person.

                  The agreement of the International Underwriters set forth in
         the above paragraph shall terminate upon the earlier of the following
         events:

                           (i) a mutual agreement of the International
                  Representatives and the U.S. Representatives to terminate the
                  selling restrictions set forth in such paragraph and in
                  Section 5C of the International Underwriting Agreement; or

                           (ii) the expiration of a period of 30 days after the
                  Closing Date, unless (A) the International Representatives
                  shall have given notice to the Company and the U.S.
                  Representatives that the distribution of the International
                  Securities by the International Underwriters has not yet been
                  completed, or (B) the U.S. Representatives shall have given
                  notice to the Company and the International Underwriters that
                  the distribution of the U.S. Securities by the U.S.
                  Underwriters has not yet been completed. If such notice by the
                  International Representatives or the U.S. Representatives is
                  given, the agreements set forth in such paragraph shall
                  survive until the earlier of (1) the event referred to in
                  clause (i) above or (2) the expiration of an additional period
                  of 30 days from the date of any such notice.

                         (b) Each International Underwriter severally represents
and agrees that:

                           (i) it has not offered or sold and, prior to the
                  expiration of six months from the closing of the offering of
                  the International Securities, will not offer or sell any
                  International Securities in the United Kingdom other than to
                  persons whose ordinary activities involve them in acquiring,
                  holding, managing or disposing of investments (whether as
                  principal or agent) for the purposes of their businesses or
                  otherwise in circumstances which have not resulted and will
                  not result in an offer to the public within the meaning of the
                  U.K. Public Offers of Securities Regulations 1995;

                           (ii) it has complied and will comply with all
                  applicable provisions of the U.K. Financial Services Act 1986
                  with respect to anything done by it in relation to the
                  International Securities in, from or otherwise involving the
                  United Kingdom; and

                           (iii) it has only issued or passed on and will only
                  issue or pass on in the United Kingdom any document received
                  by it in connection with the issue of the 


                                       20
   21
                  International Securities to a person who is of a kind
                  described in Article 11(3) of the U.K. Financial Services Act
                  1986 (Investment Advertisements) (Exemptions) Order 1996 or is
                  a person to whom such document may otherwise lawfully be
                  issued or passed on.

                  6. Conditions to the Obligations of the International
Underwriters. The obligations of the International Underwriters to purchase (i)
the International Underwritten Shares and the International Underwritten Notes
and (ii) the International Option Shares and the International Option Notes, as
the case may be, shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the Company
and the Selling Stockholders made in any certificates pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholders of their
respective obligations under this Agreement and to the following additional
conditions:

                         (a) If any Registration Statement has not become
         effective prior to the Execution Time, unless the International
         Representatives agree in writing to a later time, such Registration
         Statement will become effective not later than (i) 6:00 PM, New York
         City time, on the date of determination of the public offering price of
         the Securities, if such determination occurred at or prior to 3:00 PM,
         New York City time, on such date or (ii) 9:30 AM, New York City time,
         on the Business Day following the day on which the public offering
         price of the Securities was determined, if such determination occurred
         after 3:00 PM, New York City time, on such date; if filing of any of
         the Prospectuses, or any supplement thereto, is required pursuant to
         Rule 424(b), the Prospectuses, and any such supplement, will be filed
         in the manner and within the time period required by Rule 424(b); and
         no stop order suspending the effectiveness of any Registration
         Statement shall have been issued and no proceedings for that purpose
         shall have been instituted or threatened.

                         (b) The Company shall have furnished to the
         International Representatives the opinion of Wilson Sonsini Goodrich &
         Rosati, counsel for the Company, dated the Closing Date, to the effect
         that:

                                 (i) each of the Company and the Subsidiaries
                  chartered or organized under the laws of any state of the
                  United States (the "U.S. Subsidiaries") has been duly
                  incorporated and is validly existing as a corporation in good
                  standing under the laws of the jurisdiction in which it is
                  chartered or organized, with full corporate power and
                  authority to own its properties and conduct its business as
                  described in the Prospectuses;

                                (ii) all the outstanding shares of capital stock
                  of each U.S. Subsidiary have been duly and validly authorized
                  and issued and are fully paid and nonassessable, and, except
                  as otherwise set forth in the Prospectuses, all outstanding
                  shares of capital stock of the U.S. Subsidiaries are owned by
                  the 



                                       21
   22
                  Company, either directly or through wholly owned Subsidiaries,
                  free and clear of any perfected security interest and, to the
                  knowledge of such counsel, any other security interests,
                  claims, liens or encumbrances;

                               (iii) the capital stock of the Company conforms
                  as to legal matters in all material respects to the
                  description thereof contained in the Prospectuses; the
                  outstanding shares of Common Stock (including the Shares being
                  sold hereunder by the Selling Stockholders) have been duly and
                  validly authorized and issued and are fully paid and
                  nonassessable; the Shares have been duly and validly
                  authorized and, when issued and delivered to and paid for by
                  the International Underwriters pursuant to this Agreement and
                  by the U.S. Underwriters pursuant to the U.S. Underwriting
                  Agreement, will be fully paid and nonassessable; the Shares
                  have been duly authorized for listing, subject to official
                  notice of issuance, on the Nasdaq National Market; the
                  certificates for the Shares are in valid and sufficient form;
                  the holders of outstanding shares of capital stock of the
                  Company are not entitled to preemptive or other rights to
                  subscribe for the Shares under the Articles of Incorporation
                  or bylaws of the Company or under the laws of the State of
                  Delaware; and, to the knowledge of such counsel, except as set
                  forth in the Prospectuses, no options, warrants or other
                  rights to purchase, agreements or other obligations to issue,
                  or rights to convert any obligations into or exchange any
                  securities for, shares of capital stock of or ownership
                  interests in the Company are outstanding;

                                (iv) The Indenture has been duly authorized,
                  executed and delivered; the Indenture has been duly qualified
                  under the Trust Indenture Act and constitutes a valid and
                  binding obligation of the Company; the Notes have been duly
                  authorized and, when executed by the Company and authenticated
                  in accordance with the terms of the Indenture and paid for by
                  the holders thereof, will constitute valid, binding and
                  enforceable obligations of the Company entitled, to the
                  benefits provided by the Indenture, subject to applicable
                  bankruptcy, insolvency and similar laws affecting creditors'
                  rights generally and to general principles of equity; the
                  shares of Common Stock issuable upon conversion of the Notes
                  have been duly authorized for listing, subject to official
                  notice of issuance, on the Nasdaq National Market; the holders
                  of the outstanding shares of capital stock of the Company are
                  not entitled, under the Articles of Incorporation or bylaws of
                  the Company or under the laws of the State of Delaware, to any
                  preemptive or other rights to subscribe for the Notes or the
                  shares of Common Stock issuable upon the conversion thereof;
                  the shares of Common Stock initially issuable upon conversion
                  of the Notes have been duly and validly authorized and
                  reserved for issuance upon such conversion and, when issued
                  upon conversion, will be validly issued, fully paid and
                  nonassessable; and the Notes and the Indenture conform in all
                  material respects to the descriptions thereof contained in the
                  Offering Prospectuses.


                                       22
   23
                                 (v) to the knowledge of such counsel, there is
                  no pending action, suit or proceeding, or any written threat
                  thereof, by or before any court or governmental agency,
                  authority or body or any arbitrator involving the Company or
                  any of the Subsidiaries of a character required to be
                  disclosed in any Registration Statement which is not
                  adequately disclosed in the Prospectuses, and there is no
                  franchise, contract or other document of a character required
                  to be described in any Registration Statement or Prospectus,
                  or to be filed as an exhibit, which is not described or filed
                  as required; and the statements in the Prospectuses under the
                  headings "Reorganization," "Description of Capital Stock,"
                  "Description of the Convertible Notes," "Shares Eligible for
                  Future Sale" and "Certain United States Federal Tax
                  Consequences to Non-United States Holders of Common Stock and
                  Convertible Notes," insofar as such statements constitute a
                  summary of legal matters referred to therein, fairly summarize
                  the information called for with respect to such legal matters;

                                (vi) the Registration Statements have become
                  effective under the Act; any required filing of the
                  Prospectuses, and of any supplements thereto, pursuant to Rule
                  424(b) has been made in the manner and within the time period
                  required by Rule 424(b); to the knowledge of such counsel, no
                  stop order suspending the effectiveness of any Registration
                  Statement has been issued, no proceedings for that purpose
                  have been instituted or threatened and the Registration
                  Statements and the Prospectuses (other than the financial
                  statements and other financial and statistical information
                  contained therein, as to which such counsel need express no
                  opinion) comply as to form in all material respects with the
                  applicable requirements of the Act and the rules thereunder;
                  and such counsel has no reason to believe that on the
                  Effective Date or at the Execution Time the Registration
                  Statements contained any untrue statement of a material fact
                  or omitted to state a material fact required to be stated
                  therein or necessary to make the statements therein not
                  misleading or that the Prospectuses as of its date and on the
                  Closing Date included or includes any untrue statement of a
                  material fact or omitted or omits to state a material fact
                  necessary to make the statements therein, in the light of the
                  circumstances under which they were made, not misleading (in
                  each case, other than the financial statements and other
                  financial information contained therein, as to which such
                  counsel need express no opinion);

                               (vii) each of this Agreement and the U.S.
                  Underwriting Agreement has been duly authorized, executed and
                  delivered by the Company;

                              (viii) no consent, approval, authorization, filing
                  with or order of any court or governmental agency or body is
                  required in connection with the transactions contemplated
                  herein or in the U.S. Underwriting Agreement, except such as
                  have been obtained under the Act and such as may be required
                  under the blue sky laws of any jurisdiction in connection with
                  the purchase and distribution of the Securities by the
                  International Underwriters and the U.S. Underwriters in the
                  manner contemplated in this Agreement and the U.S.
                  Underwriting Agreement 


                                       23
   24
                  and in the Offering Prospectuses and such other approvals
                  (specified in such opinion) as have been obtained;

                                (ix) neither the issue and sale of the
                  Securities nor the performance of the Company's obligations
                  hereunder or under the U.S. Underwriting Agreement nor the
                  fulfillment of the terms hereof or thereof will conflict with,
                  or result in a breach or violation of or imposition of any
                  lien, charge or encumbrance upon any property or assets of the
                  Company or any of the U.S. Subsidiaries pursuant to, (i) the
                  charter or bylaws of the Company or any U.S. Subsidiary or
                  (ii) any U.S., California or Delaware statute, law, rule,
                  regulation, judgment, order or decree known to such counsel
                  applicable to the Company or any U.S. Subsidiary of any U.S.,
                  California or Delaware court, governmental body, arbitrator or
                  other authority having jurisdiction over the Company or any
                  U.S. Subsidiary or any of their respective properties;

                                 (x) no holders of securities of the Company
                  have rights to the registration of such securities under the
                  Registration Statements;

                                (xi) each of the AICL Agreements has been duly
                  authorized, executed and delivered by the Company and the U.S.
                  Subsidiaries that are parties thereto (the "U.S. Subsidiary
                  Parties") and is a valid, binding and enforceable agreement of
                  the Company and the U.S. Subsidiary Parties, subject to
                  applicable bankruptcy, insolvency and similar laws affecting
                  creditors' rights generally and to general principles of
                  equity; neither the consummation of the transactions
                  contemplated in any of the AICL Agreements nor the fulfillment
                  of the terms thereof will conflict with, or result in a breach
                  or violation of or imposition of any lien, charge or
                  encumbrance upon any property or assets of the Company or any
                  of the U.S. Subsidiary Parties pursuant to, the charter or
                  bylaws of the Company or any U.S. Subsidiary Party; and

                               (xii) the Company is not and, after giving effect
                  to the offering and sale of the Securities and application of
                  the proceeds thereof as described in the Prospectuses under
                  the caption "Use of Proceeds," will not be an "investment
                  company" within the meaning of the 1940 Act.

                         In rendering such opinion, such counsel may rely (A) as
         to matters involving the application of laws of any jurisdiction other
         than the State of California, the United States or the corporate laws
         of the State of Delaware or, with respect to the opinion referred to in
         sub-paragraph (iv) above, the laws of the State of New York (to the
         extent such opinion relates to the validity and binding effect of the
         Indenture), to the extent they deem proper and specify in such opinion,
         upon the opinion of other counsel of good standing whom they believe to
         be reliable and who are satisfactory to counsel for the International
         Underwriters and (B) as to matters of fact, to the extent they deem
         proper, on certificates of responsible officers of the Company and
         public officials. Such opinion 


                                       24
   25
         may also contain customary qualifications and limitations. References
         to the Prospectuses in this paragraph (b) include any supplements
         thereto at the Closing Date.

                         (c) The Company shall have furnished to the
         International Representatives the opinion of Kevin Herron, Esq., the
         General Counsel of the Company, dated the Closing Date, to the effect
         that:

                                 (i) neither the issue and sale of the
                  Securities nor the consummation of any other of the
                  transactions contemplated herein or in the U.S. Underwriting
                  Agreement nor the fulfillment of the terms hereof or thereof
                  will conflict with, or result in a breach or violation of or
                  imposition of any lien, charge or encumbrance upon any
                  property or assets of the Company or any of the U.S.
                  Subsidiaries pursuant to, (i) the charter or bylaws of the
                  Company or any U.S. Subsidiary or (ii) the terms of any
                  indenture, contract, lease, mortgage, deed of trust, note
                  agreement, loan agreement or other agreement known to such
                  counsel to which the Company or any U.S. Subsidiary is a party
                  or bound or to which its property is subject (except for such
                  breaches or violations which would not, individually or in the
                  aggregate, have a Material Adverse Effect) or (iii) any
                  Pennsylvania statute, law, rule, regulation, judgment, order
                  or decree applicable to the Company or any U.S. Subsidiary of
                  any Pennsylvania court, governmental body, arbitrator or other
                  authority having jurisdiction over the Company or any U.S.
                  Subsidiary or any of their respective properties; and

                                (ii) neither the consummation of the
                  transactions contemplated in any of the AICL Agreements nor
                  the fulfillment of the terms thereof will conflict with, or
                  result in a breach or violation of or imposition of any lien,
                  charge or encumbrance upon any property or assets of the
                  Company or any of the U.S. Subsidiary Parties pursuant to, (i)
                  the charter or bylaws of the Company or any U.S. Subsidiary
                  Party or (ii) the terms of any indenture, contract, lease,
                  mortgage, deed of trust, note agreement, loan agreement or
                  other agreement known to such counsel to which the Company or
                  any U.S. Subsidiary Party is a party or bound or to which
                  their respective property is subject (except for such breaches
                  or violations which would not, individually or in the
                  aggregate, have a Material Adverse Effect) or (iii) any
                  Pennsylvania statute, law, rule, regulation, judgment, order
                  or decree applicable to the Company or any U.S. Subsidiary
                  Party of any Pennsylvania court, governmental body, arbitrator
                  or other authority having jurisdiction over the Company or any
                  U.S. Subsidiary Party or any of their respective properties;
                  no consent, approval, authorization, filing with or order of
                  any U.S. court or governmental agency or body is required in
                  connection with the transactions contemplated in any of the
                  AICL Agreements, except __________ [LIST APPROVALS (IF ANY) 
                  REQUIRED], each of which has been obtained.

                         In rendering such opinion, such counsel may rely as to
         matters involving the application of laws of any jurisdiction other
         than the State of Pennsylvania, the United States or the corporate laws
         of the State of Delaware, to the extent he deems proper and 


                                       25
   26
         specifies in such opinion, upon the opinion of other counsel of good
         standing whom he believes to be reliable and who are satisfactory to
         counsel for the International Underwriters. Such opinion may also
         contain customary qualifications and limitations.

                         (d) The Company shall have furnished to the
         International Representatives the opinion of Orloge, Del Costello,
         Bacorro, Odulco, Calma & Carobonell, Philippine counsel for the
         Company, dated the Closing Date, to the effect that:

                                 (i) each of AAP, AAAP and AMI (the "Philippine
                  Subsidiaries") has been duly incorporated and is validly
                  existing as a corporation in good standing under the laws of
                  the jurisdiction in which it is chartered or organized, with
                  full corporate power and authority to own its properties and
                  conduct its business, and is duly qualified to do business as
                  a foreign corporation and is in good standing under the laws
                  of each jurisdiction which requires such qualification; and

                                (ii) all the outstanding shares of capital stock
                  of each Philippine Subsidiary have been duly and validly
                  authorized and issued and are fully paid and nonassessable,
                  and, except (i) such shares of AAP owned by AICL, which shares
                  do not exceed 40.1% of the outstanding shares of AAP, (ii)
                  such shares of each Phillipine Subsidiary owned by directors
                  thereof, which shares in each case do not exceed 0.1 % of the
                  outstanding shares of such Philippine Subsidiary, (iii)
                  3,446,476 shares of preferred stock of AAP, which shares are
                  owned by Integrated Microelectronics, Inc., and (iv) as
                  otherwise set forth in the Prospectuses, all outstanding
                  shares of capital stock of the Philippine Subsidiaries are
                  owned by the Company, either directly or through wholly owned
                  Subsidiaries, free and clear of any perfected security
                  interest and, to the knowledge of such counsel, after due
                  inquiry, any other security interests, claims, liens or
                  encumbrances.

                         In rendering such opinion, such counsel may rely as to
         matters of fact, to the extent they deem proper, on certificates of
         responsible officers of the Company and public officials. Such opinion
         may also contain customary qualifications and limitations. References
         to the Prospectuses in this paragraph (d) include any supplements
         thereto at the Closing Date.

                         (e) The Company shall have furnished to the
         International Representatives the opinion of Kim & Chang, Korean
         counsel for the Company, dated the Closing Date, to the effect that:

                                 (i) AICL has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the Republic of Korea, with full corporate power and
                  authority to own its properties and conduct its business as
                  described in the Prospectuses;

                                (ii) each of the AICL Agreements has been duly
                  executed and delivered by AICL and is a valid, binding and
                  enforceable agreement of AICL, 


                                       26
   27
                  subject to applicable bankruptcy, insolvency and similar laws
                  affecting creditors' rights generally and to general
                  principles of equity;

                               (iii) no consent, approval, authorization, filing
                  with or order of any court or governmental agency or body in
                  the Republic of Korea is required in connection with the
                  transactions contemplated in the AICL Agreements, except
                  _________________, each of which has been obtained; and

                                (iv) neither the consummation of any of the
                  transactions contemplated in the AICL Agreements nor the
                  fulfillment of the terms thereof will conflict with or result
                  in a breach or violation of the Articles of Incorporation of
                  AICL or any statute, law, rule or regulation of any regulatory
                  body, administrative agency, governmental body or other
                  authority in the Republic of Korea having jurisdiction over
                  AICL or any of its properties.

                         In rendering such opinion, such counsel may rely as to
         matters of fact, to the extent they deem proper, on certificates of
         responsible officers of AICL and public officials. Such opinion may
         also contain customary qualifications and limitations. References to
         the Prospectuses in this paragraph (e) include any supplements thereto
         at the Closing Date.

                         (f) The Selling Stockholders shall have furnished to
         the International Representatives the opinion of Wilson, Sonsini,
         Goodrich & Rosati, counsel for the Selling Stockholders, dated the
         Closing Date, to the effect that:

                           (i) this Agreement, the U.S. Underwriting Agreement
                  and the Custody Agreement have been duly executed and
                  delivered by the Selling Stockholders and each Selling
                  Stockholder has full legal right, capacity, power and
                  authority to enter into and perform this Agreement, the U.S.
                  Underwriting Agreement and the Custody Agreement and to sell,
                  transfer, assign and deliver in the manner provided in this
                  Agreement, the U.S. Underwriting Agreement and the Custody
                  Agreement the Shares being sold by such Selling Stockholder
                  hereunder and thereunder;

                           (ii) upon the delivery by each Selling Stockholder to
                  the several International Underwriters and the several U.S.
                  Underwriters of certificates for the Shares being sold
                  hereunder and under the U.S. Underwriting Agreement by such
                  Selling Stockholder against payment therefor as provided
                  herein, the International Underwriters and the U.S.
                  Underwriters will have good and valid title to such Shares,
                  free and clear to the knowledge of such counsel of any adverse
                  claims;

                           (iii) no consent, approval, authorization or order of
                  any court or governmental agency or body is required for the
                  consummation by any Selling Stockholder of the transactions
                  contemplated herein or in the U.S. Underwriting Agreement,
                  except such as may have been obtained under the Act and such
                  as may be required under the blue sky laws of any jurisdiction
                  in connection with the 


                                       27
   28
                  purchase and distribution of the Shares by the International
                  Underwriters and the U.S. Underwriters and such other
                  approvals (specified in such opinion) as have been obtained;

                           (iv) neither the sale of the Shares being sold by any
                  Selling Stockholder nor the consummation of any other of the
                  transactions contemplated herein or in the U.S. Underwriting
                  Agreement by any Selling Stockholder or the fulfillment of the
                  terms hereof or thereof by any Selling Stockholder will
                  conflict with, result in a breach or violation of, or
                  constitute a default under any law or the charter or bylaws of
                  such Selling Stockholder, or any judgment, order or decree
                  known to such counsel to be applicable to such Selling
                  Stockholder of any court, governmental body or arbitrator
                  having jurisdiction over such Selling Stockholder; and

                           (v) the Securities Loan Agreement has been duly
                  executed and delivered by Mr. and Mrs. James J. Kim; Mr. and
                  Mrs. James J. Kim have full legal right, capacity, power and
                  authority to enter into and perform the Securities Loan
                  Agreement and to lend, assign and deliver in the manner
                  provided in the Securities Loan Agreement the Borrowed Shares
                  being lent by Mr. and Mrs. James J. Kim thereunder; Mr. and
                  Mrs. James J. Kim have good and valid title to the Borrowed
                  Shares, free and clear to the knowledge of such counsel of any
                  adverse claims; no consent, approval, authorization or order
                  of any court or governmental agency or body is required for
                  the consummation by Mr. and Mrs. James J. Kim of the
                  transactions contemplated in the Securities Loan Agreement,
                  except such as may have been obtained under the Act and such
                  as may be required under the blue sky laws of any jurisdiction
                  in connection with the borrowing and distribution of the
                  Borrowed Shares by SBI and such other approvals (specified in
                  such opinion) as have been obtained; and neither the lending
                  of the Borrowed Shares by Mr. and Mrs. James J. Kim nor the
                  consummation of any other of the transactions contemplated in
                  the Securities Loan Agreement by Mr. and Mrs. James J. Kim or
                  the fulfillment of the terms thereof by Mr. and Mrs. James J.
                  Kim will conflict with, result in a breach or violation of, or
                  constitute a default under any law or the terms of any
                  indenture or other agreement or instrument known to such
                  counsel and to which Mr. and Mrs. James J. Kim (or either of
                  them) are a party or bound, or any judgment, order or decree
                  known to such counsel to be applicable to Mr. and Mrs. James
                  J. Kim (or either of them) of any court, governmental body or
                  arbitrator having jurisdiction over either of them.

                           In rendering such opinion, such counsel may (A) rely
         as to matters involving the application of laws of any jurisdiction
         other than the State of California or Delaware or the United States, to
         the extent they deem proper and specified in such opinion, upon the
         opinion of other counsel of good standing whom they believe to be
         reliable and who are satisfactory to counsel for the International
         Underwriters, (B) rely as to matters of fact, to the extent they deem
         proper, on certificates of the Selling Stockholders (including Mr. and
         Mrs. James J. Kim) and public officials and (C) with 


                                       28
   29
         respect to the opinion in clause (ii) above, may assume each
         International Underwriter and each U.S. Underwriter takes delivery of
         the Shares without notice of any adverse claim. Such opinion may also
         contain customary qualifications and limitations.

                         (g) The International Representatives shall have
         received from Cleary, Gottlieb, Steen & Hamilton, counsel for the
         International Underwriters, such opinion or opinions, dated the Closing
         Date, with respect to the issuance and sale of the International
         Securities, the Registration Statements, the Prospectuses (together
         with any supplement thereto) and other related matters as the
         International Representatives may reasonably require, and the Company
         and each Selling Shareholder shall have furnished to such counsel such
         documents as they request for the purpose of enabling them to pass upon
         such matters.

                         (h) The Company shall have furnished to the
         International Representatives a certificate of the Company, signed by
         the Chairman of the Board or the President and the principal financial
         or accounting officer of the Company, dated the Closing Date, to the
         effect that the signers of such certificate have carefully examined the
         Registration Statements, the Prospectuses, any supplements to the
         Prospectuses, this Agreement and the U.S. Underwriting Agreement and
         that:

                           (i) the representations and warranties of the Company
                  in this Agreement and the U.S. Underwriting Agreement are true
                  and correct in all material respects on and as of the Closing
                  Date with the same effect as if made on the Closing Date and
                  the Company has complied with all the agreements and satisfied
                  all the conditions on its part to be performed or satisfied at
                  or prior to the Closing Date;

                           (ii) no stop order suspending the effectiveness of
                  any Registration Statement has been issued and no proceedings
                  for that purpose have been instituted or, to the Company's
                  knowledge, threatened; and

                           (iii) since the date of the most recent financial
                  statements included in the Prospectuses, there has been no
                  material adverse change in the condition (financial or other),
                  prospects, earnings, business or properties of the Company and
                  the Subsidiaries, taken as a whole, whether or not arising
                  from transactions in the ordinary course of business, except
                  as set forth in or contemplated in the Prospectuses.

                         (i) Each Selling Stockholder shall have furnished to
         the International Representatives a certificate, signed by or on behalf
         of such Selling Stockholder, dated the Closing Date, to the effect that
         the signer of such certificate has carefully examined the Offering
         Registration Statement, the Offering Prospectuses, any supplement to
         the Offering Prospectuses, this Agreement and the U.S. Underwriting
         Agreement and that the representations and warranties of such Selling
         Stockholder in this Agreement and the 


                                       29
   30
         U.S. Underwriting Agreement are true and correct in all material
         respects on and as of the Closing Date to the same effect as if made on
         the Closing Date.

                         (j) At the Execution Time and at the Closing Date,
         Arthur Andersen LLP shall have furnished to the International
         Representatives letters, dated respectively as of the Execution Time
         and as of the Closing Date, in form and substance satisfactory to the
         International Representatives, confirming that they are independent
         accountants within the meaning of the Act and the applicable published
         rules and regulations thereunder and stating in effect that:

                           (i) in their opinion the audited financial statements
                  and financial statement schedules included in the Registration
                  Statements and the Prospectuses and reported on by them comply
                  in form in all material respects with the applicable
                  accounting requirements of the Act and the related published
                  rules and regulations;

                           (ii) on the basis of a reading of the latest
                  unaudited financial statements made available by the Company
                  and the Subsidiaries; carrying out certain specified
                  procedures (but not an examination in accordance with
                  generally accepted auditing standards) which would not
                  necessarily reveal matters of significance with respect to the
                  comments set forth in such letter; a reading of the minutes of
                  the meetings of the stockholders, directors and the audit and
                  compensation committees of the Company and the Subsidiaries;
                  and inquiries of certain officials of the Company who have
                  responsibility for financial and accounting matters of the
                  Company and the Subsidiaries as to transactions and events
                  subsequent to December 31, 1997, nothing came to their
                  attention which caused them to believe that:

                                           (1) with respect to the period
                           subsequent to December 31, 1997, there were any
                           changes, at a specified date not more than five
                           business days prior to the date of the letter, in the
                           long-term debt of the Company and the Subsidiaries or
                           capital stock of the Company or decreases in the
                           total stockholders' equity of the Company or
                           decreases in working capital of the Company and the
                           Subsidiaries as compared with the amounts shown on
                           the December 31, 1997 combined balance sheet included
                           in the Registration Statements and the Prospectuses,
                           or for the period from December 31, 1997 to such
                           specified date there were any decreases, as compared
                           with the corresponding period in the preceding
                           quarter, in revenues, net operating income or
                           interest expense or in total or per share amounts of
                           net income of the Company and the Subsidiaries,
                           except in all instances for changes or decreases set
                           forth in such letter, in which case the letter shall
                           be accompanied by an explanation by the Company as to
                           the significance thereof unless said explanation is
                           not deemed necessary by the International
                           Representatives;


                                       30
   31
                                           (2) the information included in the
                           Registration Statements and Prospectuses in response
                           to Item 301 (Selected Financial Data), Item 302
                           (Supplementary Financial Information) and Item 402
                           (Executive Compensation) of Regulation S-K under the
                           Act is not in conformity with the applicable
                           disclosure requirements of Regulation S-K; and

                           (iii) they have performed certain other specified
                  procedures as a result of which they determined that certain
                  information of an accounting, financial or statistical nature
                  (which is limited to accounting, financial or statistical
                  information derived from the general accounting records of the
                  Company and the Subsidiaries) set forth in the Registration
                  Statements and the Prospectuses, including the information set
                  forth under the captions "Summary Financial Data" and
                  "Selected Financial Data" in the Prospectuses, agrees with the
                  accounting records of the Company and the Subsidiaries,
                  excluding any questions of legal interpretation.

         References to the Prospectuses in this paragraph (j) include any
         supplement thereto at the date of the letter.

                         (k) At the Execution Time and at the Closing Date,
         Samil Accounting Corporation shall have furnished to the International
         Representatives and the Company a letter or letters, dated respectively
         as of the Execution Time and as of the Closing Date, in form and
         substance satisfactory to the International Representatives and the
         Company, confirming that they are independent accountants within the
         meaning of the standards established for independent certified public
         accountants in the Republic of Korea and stating in effect that they
         have performed certain specified procedures as a result of which they
         determined that certain information of an accounting, financial or
         statistical nature (which is limited to accounting, financial or
         statistical information derived from the general accounting records of
         AICL) set forth in the Registration Statements and the Prospectuses,
         including the information set forth under the captions "Risk Factors --
         Dependence on Relationship with AICL; Potential Conflicts of Interest"
         and "Relationship with Anam Industrial Co., Ltd." in the Prospectuses,
         agrees with the accounting records of AICL, excluding any questions of
         legal interpretation. References to the Prospectuses in this paragraph
         (k) include any supplement thereto at the date of the letter.

                         (l) Subsequent to the Execution Time or, if earlier,
         the dates as of which information is given in the Registration
         Statements (exclusive of any amendment thereof) and the Prospectuses,
         there shall not have been (i) any change or decrease specified in the
         letter or letters referred to in paragraph (j) of this Section 6 or
         (ii) any change, or any development involving a prospective change, in
         or affecting the business or properties of the Company and the
         Subsidiaries, taken as a whole, whether or not arising from
         transactions in the ordinary course of business, except as set forth in
         or contemplated in the Prospectuses the effect of which, in any case
         referred to in clause (i) or (ii) above, is, in the sole judgment of
         the International Representatives, so material and adverse as to 


                                       31
   32
         make it impractical or inadvisable to proceed with the offering or
         delivery of the International Securities as contemplated by the
         Registration Statements (exclusive of any amendment thereof) and the
         Prospectuses.

                         (m) At the Execution Time, the Company shall have
         furnished to the International Representatives and the U.S.
         Representatives a letter substantially in the form of Exhibit A hereto
         from each officer, director and shareholder (other than the Selling
         Stockholders) of the Company, which persons are listed in Schedule III
         hereto, addressed to the International Representatives and the U.S.
         Representatives.

                         (n) Prior to the Closing Date, the Company shall have
         furnished to the International Representatives such further
         information, certificates and documents as the International
         Representatives may reasonably request.

                         (o) The closing of the purchase of the U.S. Securities
         to be issued and sold by the Company pursuant to the U.S. Underwriting
         Agreement shall occur concurrently with the closing described herein.

                  If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the International Representatives and
counsel for the International Underwriters, this Agreement and all obligations
of the International Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the International Representatives. Notice of such
cancellation shall be given to the Company and each Selling Stockholder in
writing or by telephone or telegraph confirmed in writing.

                  The documents required to be delivered by this Section 6 shall
be delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for
the International Underwriters, at 1 Liberty Plaza, New York, New York, on the
Closing Date.

                  7. Reimbursement of International Underwriters' Expenses. If
the sale of the International Securities provided for herein is not consummated
because any condition to the obligations of the International Underwriters set
forth in Section 6 hereof is not satisfied or because of any refusal, inability
or failure on the part of the Company or any Selling Stockholder to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the International Underwriters, the Company will reimburse the
International Underwriters severally through SBI on demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the International Securities. If the Company is required to make any
payments to the International Underwriters under this Section 7 because of any
Selling Stockholder's refusal, inability or failure to satisfy any condition to
the obligations of the International Underwriters set forth in Section 6, the
Selling Stockholders pro rata in proportion to the percentage of International
Shares to be sold by each shall reimburse the Company on demand for all amounts
so paid.


                                       32
   33
                  8. Indemnification and Contribution. (a) The Company and Mr.
James J. Kim jointly and severally agree to indemnify and hold harmless each
International Underwriter (including without limitation SBI (the "Market Maker")
in its capacity as a market maker for the Securities and SBI (the "Independent
Underwriter") in its capacity as "qualified independent underwriter" (within the
meaning of NASD Conduct Rule 2720)), the directors, officers, employees and
agents of each International Underwriter, and each person who controls any
International Underwriter within the meaning of either the Act or the Exchange
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Offering
Registration Statement or in any amendment thereof, or in any Offering
Preliminary Prospectus or in either of the Offering Prospectuses, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and Mr. James J. Kim will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any International
Underwriter through the International Representatives specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which the
Company or Mr. James J. Kim may otherwise have.

                  (b) Each International Underwriter severally agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Offering Registration Statement, and each person who
controls the Company within the meaning of either the Act or the Exchange Act
and Mr. James J. Kim, to the same extent as the foregoing indemnity from the
Company and Mr. James J. Kim to each International Underwriter, but only with
reference to written information relating to such International Underwriter
furnished to the Company by or on behalf of such International Underwriter
through the International Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any International Underwriter may
otherwise have. The Company and Mr. James J. Kim acknowledge that the statements
set forth in the last paragraph of the front cover page, the last paragraph of
the inside front cover page and, under the heading "Underwriting", the _______
paragraphs in the Offering Registration Statement, any Offering Preliminary
Prospectus and the Offering Prospectuses and any amendment or supplement thereto
constitute the only information furnished in writing by or on behalf of the
several International Underwriters for inclusion in any Offering Preliminary
Prospectus or the Offering Prospectuses and any amendment or supplement thereto.

                  (c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is 


                                       33
   34
to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the failure so to
notify the indemnifying party (i) will not relieve it from any liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ one separate counsel (and one
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate (and local) counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv)
the indemnifying party shall authorize the indemnified party in writing to
employ separate (and local) counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

                  (d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and Mr. James J. Kim, jointly and
severally, and the International Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company, Mr. James J. Kim and one or more
of the International Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company and Mr.
James J. Kim on the one hand and by the International Underwriters on the other
from the offering of the International Securities; provided, however, that in no
case shall any International Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the International
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the International Securities purchased by such
International Underwriter hereunder. 


                                       34
   35
If the allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and Mr. James J. Kim, jointly and severally, and the
International Underwriters shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company and Mr. James J. Kim on the one hand and of the International
Underwriters on the other in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company and Mr. James J. Kim shall be deemed to be
equal to the total net proceeds from the offering (before deducting expenses)
received by them, and benefits received by the International Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions, in
each case as set forth on the cover page of the Offering International
Prospectus. Benefits received by the Independent Underwriter in its capacity as
"qualified independent underwriter" shall be deemed to be equal to the
compensation received by the Independent Underwriter for acting in such
capacity. Relative fault shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
provided by the Company or Mr. James J. Kim on the one hand or by the
International Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, Mr. James J. Kim and the
International Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls an International Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of an
International Underwriter shall have the same rights to contribution as such
International Underwriter, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Offering Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).

                  (e) The liability of each Selling Stockholder under such
Selling Stockholder's representations and warranties contained in Section 1
hereof and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the initial public offering
price of the International Shares sold by such Selling Stockholder to the
International Underwriters, less the underwriting discounts and commissions paid
thereon to the International Underwriters. The Company and the Selling
Stockholders may agree, as among themselves and without limiting the rights of
the International Underwriters under this Agreement, as to the respective
amounts of such liability for which they each shall be responsible.

                  (f) The Company and Mr. James J. Kim shall not have any
liability under this Section 8 with respect to any losses, claims, damages or
liabilities of an International Underwriter if copies of the Offering
International Prospectus, as then amended or supplemented, 


                                       35
   36
were furnished by the Company to the International Underwriters as required by
this Agreement, and such copies of the Offering International Prospectus were
not sent or given by or on behalf of such International Underwriter, as required
by law, to the purchasers of the International Securities and if the Offering
International Prospectus, as so amended or supplemented, would have cured the
defect giving rise to such losses, claims, damages or liabilities.

                  9. Default by an International Underwriter. If any one or more
International Underwriters shall fail to purchase and pay for any of the
International Shares or International Notes agreed to be purchased by such
International Underwriter or International Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining International Underwriters
shall be obligated severally to take up and pay for (in the respective
proportions which the amount of International Shares or International Notes, as
the case may be, set forth opposite their names in Schedule I hereto bears to
the aggregate amount of International Shares or International Notes, as the case
may be, set forth opposite the names of all the remaining International
Underwriters) the International Shares or International Notes which the
defaulting International Underwriter or International Underwriters agreed but
failed to purchase; provided, however, that in the event that (x) the aggregate
amount of International Shares which the defaulting International Underwriter or
International Underwriters agreed but failed to purchase shall exceed 10% of the
aggregate amount of International Shares set forth in Schedule I hereto or (y)
the aggregate principal amount of International Notes which the defaulting
International Underwriter or International Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate principal amount of International
Notes set forth in Schedule I hereto, then the remaining International
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the International Shares or International Notes,
as the case may be, and if such nondefaulting International Underwriters do not
purchase all the International Shares or International Notes, as the case may
be, this Agreement will terminate without liability to any nondefaulting
International Underwriter, the Selling Stockholders or the Company. In the event
of a default by any International Underwriter as set forth in this Section 9,
the Closing Date shall be postponed for such period, not exceeding five Business
Days, as the International Representatives shall determine in order that the
required changes in the Registration Statements and the Prospectuses or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting International Underwriter of its
liability, if any, to the Company, the Selling Stockholders and any
nondefaulting International Underwriter for damages occasioned by its default
hereunder.

                  10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the International Representatives, by
notice given to the Company prior to delivery of and payment for the
International Securities, if prior to such time (i) trading in the Company's
Common Stock shall have been suspended by the Commission or the Nasdaq National
Market or trading in securities generally on the New York Stock Exchange or the
Nasdaq National Market shall have been suspended or limited or minimum prices
shall have been established on such Exchange or National Market, (ii) a banking
moratorium shall have been declared by either Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other 


                                       36
   37
calamity or crisis, the effect of which on financial markets is such as to
make it, in the sole judgment of the International Representatives,
impracticable or inadvisable to proceed with the offering or delivery of the
International Securities as contemplated in the Offering International
Prospectus.

                  11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of each Selling Stockholder and of the International
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
International Underwriter, any Selling Stockholder or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the International Securities. The
provisions of Sections 7 and 8 and the last sentence of Section 9 hereof shall
survive the termination or cancellation of this Agreement.

                  12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the International
Representatives, will be mailed, delivered or telefaxed to the SBI General
Counsel (fax no.: (212) ______________) and confirmed to the General Counsel,
care of Smith Barney Inc., 333 West 34th Street, New York, New York 10001,
Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to James J. Kim (fax no.: (610) 431-9600) and confirmed
to it at 1345 Enterprise Drive, West Chester, Pennsylvania 19380, attention of
the Legal Department, with a copy to Larry W. Sonsini (fax no.: (650) 493-6811)
at Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California
94304; or, if sent to the Selling Stockholders, will be mailed, delivered, or
telefaxed to James J. Kim (fax no.: (610) 431-9600) and confirmed to it at the
address set forth in Schedule II hereto.

                  13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.

                  14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

                  16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.

                  17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.


                                       37
   38
                  "Act" shall mean the Securities Act of 1933, as amended.

                  "Borrowing Effective Date" shall mean each date and time that
the Borrowing Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement relating thereto became or
shall become effective.

                  "Borrowing Preliminary Prospectus" shall mean any preliminary
prospectus with respect to the offering of the Borrowed Shares referred to in
paragraph 1A(c) above and any preliminary prospectus included in the Borrowing
Registration Statement at the Borrowing Effective Date that omits Rule 430A
Information.

                  "Borrowing Prospectus" shall mean the prospectus relating to
the Borrowed Shares that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the Borrowed Shares included in the
Borrowing Registration Statement at the Borrowing Effective Date.

                  "Borrowing Registration Statement" shall mean the registration
statement referred to in paragraph 1A(c) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective at any time or from time to time, shall also mean
such registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A Information
deemed to be included therein at the Borrowing Effective Date as provided by
Rule 430A.

                  "Business Day" shall mean any day other than a Saturday, a
         Sunday or a legal holiday or a day on which banking institutions or
         trust companies are authorized or obligated by law to close in New York
         City or London.

                  "Effective Date" shall mean each date and time that the
         Offering Registration Statement, any post-effective amendment or
         amendments thereto and any Rule 462(b) Registration Statement relating
         thereto became or shall become effective.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         as amended.

                  "Execution Time" shall mean the date and time that this
         Agreement is executed and delivered by the parties hereto.

                  "Material Adverse Effect" shall mean a material adverse effect
         on the condition (financial or otherwise), prospects, earnings,
         business or properties of the Company and the Subsidiaries, taken as a
         whole, whether or not arising in the ordinary course of business.

                  "Offering International Preliminary Prospectus" shall have the
         meaning set forth under "Offering U.S. Preliminary Prospectus".


                                       38
   39
                  "Offering Preliminary Prospectuses" shall have the meaning set
         forth under "Offering U.S. Preliminary Prospectus".

                  "Offering Registration Statement" shall mean the registration
         statement referred to in paragraph 1A(a) above, including the exhibits
         thereto and the financial statements included therein, as amended at
         the Execution Time (or, if not effective at the Execution Time, in the
         form in which it shall become effective) and, in the event any
         post-effective amendment thereto or any Rule 462(b) Registration
         Statement becomes effective prior to the Closing Date, shall also mean
         such registration statement as so amended or such Rule 462(b)
         Registration Statement, as the case may be. Such term shall include any
         Rule 430A Information deemed to be included therein at the Effective
         Date as provided by Rule 430A.

                  "Offering U.S. Preliminary Prospectus" and the "Offering
         International Preliminary Prospectus", respectively, shall mean any
         preliminary prospectus with respect to the offering of the U.S.
         Securities and the International Securities, as the case may be,
         referred to in paragraph 1A(a) above and any preliminary prospectus
         with respect to the offering of the U.S. Securities and the
         International Securities, as the case may be, included in the Offering
         Registration Statement at the Effective Date that omits Rule 430A
         Information; and the Offering U.S. Preliminary Prospectus and the
         Offering International Preliminary Prospectus are hereinafter
         collectively called the "Offering Preliminary Prospectuses".

                  "Preliminary Prospectuses" shall mean, collectively, the
         Offering Preliminary Prospectuses and the Borrowing Preliminary
         Prospectus.

                  "Prospectuses" shall mean, collectively, the Offering
         Prospectuses and the Borrowing Prospectus.

                  "Registration Statements" shall mean, collectively, the
         Offering Registration Statement and the Borrowing Registration
         Statement.

                  "Rule 424", "Rule 430A" and "Rule 462" refer to such rules
         under the Act.

                  "Rule 430A Information" shall mean information with respect to
         the Securities or the Borrowed Shares, as the case may be, and the
         offering thereof permitted to be omitted from the Offering Registration
         Statement or the Borrowing Registration Statement, as the case may be,
         when it becomes effective pursuant to Rule 430A.

                  "Rule 462(b) Registration Statement" shall mean a registration
         statement and any amendments thereto filed pursuant to Rule 462(b)
         relating to the offering covered by the initial Offering Registration
         Statement or the initial Borrowing Registration Statement, as the case
         may be.

                  "Trust Indenture Act" shall mean the Trust Indenture Act of
         1939, as amended.


                                       39
   40
                  "United States or Canadian Person" shall mean any person who
         is a national or resident of the United States or Canada, any
         corporation, partnership or other entity created or organized in or
         under the laws of the United States or Canada or of any political
         subdivision thereof, or any estate or trust the income of which is
         subject to United States or Canadian Federal income taxation,
         regardless of its source (other than any non-United States or
         non-Canadian branch of any United States or Canadian Person), and shall
         include any United States or Canadian branch of a person other than a
         United States or Canadian Person. "U.S." or "United States" shall mean
         the United States of America (including the states thereof and the
         District of Columbia), its territories, its possessions and other areas
         subject to its jurisdiction.


                                       40
   41
                   If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Selling Stockholders and the several International
Underwriters.

                                       Very truly yours,

                                       Amkor Technology, Inc.


                                       By:    ____________________________
                                              Name:
                                              Title:



                                       James J. Kim


                                       ____________________________


                                       [Selling Stockholder]


                                       By:    ____________________________
                                              Name:
                                              Title:

The foregoing Agreement is hereby 
confirmed and accepted as of the 
date first above written.

Smith Barney Inc.
BancAmerica Robertson Stephens International Limited
Cowen International L.P.

By:  Smith Barney Inc.


By:___________________________
   Name:
   Title:

For themselves and the other several International Underwriters named in
Schedule I to the foregoing Agreement.


                                       41
   42
                                                                      SCHEDULE I





                                                                             Number of Shares of            Principal Amount of
                                                                          International Underwritten    International Underwritten
International Underwriter                                                   Shares to Be Purchased         Notes to Be Purchased
- -------------------------                                                 --------------------------    --------------------------
                                                                                                   
Smith Barney Inc.......................................................                                    $
BancAmerica Robertson Stephens International Limited...................                                    $
Cowen International L.P................................................                                    $
[Other International Underwriters].....................................                                    $
                                                                         ------------------------          -----------------------
     Total.............................................................                                    $
                                                                         ========================          =======================



                                      1-1
   43
                                                                     SCHEDULE II



Selling Stockholders                                        Number of Shares
- --------------------                                        ----------------

Address
[Address for notice]


                                      A-1
   44

                                                                    SCHEDULE III

                  List of Officers, Directors and Shareholders
                        (other than Selling Stockholders)


                                     III-1
   45
                                                                       EXHIBIT A



         [LETTERHEAD OF OFFICER, DIRECTOR, STOCKHOLDER OR SHAREHOLDER OF
                             AMKOR TECHNOLOGY, INC.]


                             Amkor Technology, Inc.
              Public Offering of Common Stock and Convertible Notes


                                                           _______________, 1998

Smith Barney Inc.
BancAmerica Robertson Stephens
Cowen & Company
  as U.S. Representatives of the several U.S. Underwriters
c/o Smith Barney Inc.
333 West 34th Street
New York, New York  10001


Smith Barney Inc.
BancAmerica Robertson Stephens International Limited
Cowen International L.P.
  as International Representatives of the several International Underwriters
c/o Smith Barney Inc.
333 West 34th Street
New York, New York 10001


Ladies and Gentlemen:

                  This letter is being delivered to you in connection with (i)
the proposed U.S. Underwriting Agreement (the "U.S. Underwriting Agreement")
among Amkor Technology, Inc., a Delaware corporation (the "Company"), certain
selling stockholders of the Company and a group of U.S. Underwriters named
therein and (ii) the proposed International Underwriting Agreement (the
"International Underwriting Agreement") among the Company, certain selling
stockholders of the Company and a group of International Underwriters named
therein, relating to an underwritten public offering of Common Stock, $.001 par
value (the "Common Stock"), of the Company, and the Company's __% Convertible
Subordinated Notes due 2003.

                  In order to induce you and the other U.S. Underwriters and
International Underwriters to enter into the U.S. Underwriting Agreement and the
International Underwriting Agreement, the undersigned will not, without the
prior written consent of Smith Barney Inc., 


                                       A-1
   46
offer, sell, contract to sell, pledge or otherwise dispose of, or file a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, with respect to, any shares of Common Stock of
the Company or any securities convertible into or exercisable or exchangeable
for shares of Common Stock, or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of the U.S. Underwriting
Agreement and the International Underwriting Agreement, other than (i) upon the
exercise of any option or warrant, or the conversion of a security, outstanding
on the date of the U.S. Underwriting Agreement and the International
Underwriting Agreement and referred to in the Offering Prospectuses (as defined
in the U.S. Underwriting Agreement and the International Underwriting Agreement)
and (ii) shares of Common Stock disposed of as bona fide gifts approved by Smith
Barney Inc.

                  If for any reason the U.S. Underwriting Agreement and the
International Underwriting Agreement shall be terminated prior to the Closing
Date (as defined in the U.S. Underwriting Agreement and the International
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.

                                    Very truly yours,



                                    _______________________________________
                                    Signature


                                    _______________________________________
                                    Print Name


                                    _______________________________________
                                    Address


                                    _______________________________________


                                       A-2

   1
   
                                                                     EXHIBIT 4.1

                            [AMKOR TECHNOLOGY LOGO]

                             AMKOR TECHNOLOGY, INC.
              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

  [GRAPHIC]                                           [GRAPHIC]
COMMON STOCK                                        CUSIP 031652 10 0
                                             SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES that




is the owner of



                     FULLY PAID AND NON-ASSESSABLE SHARES,
             OF THE PAR VALUE OF $.001 EACH, OF THE COMMON STOCK OF

AMKOR TECHNOLOGY, INC. transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed. This certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.

     IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed in facsimile by its duly authorized officers and has caused its facsimile
seal to be affixed hereto.

Dated:

 /s/ F. J. Marcucci    [AMKOR TECHNOLOGY CORPORATE SEAL]     /s/ James J. Kim
CHIEF FINANCIAL OFFICER                                  CHIEF EXECUTIVE OFFICER
                                                               AND CHAIRMAN


COUNTERSIGNED AND REGISTERED:
    FIRST CHICAGO TRUST COMPANY OF NEW YORK
                                                       TRANSFER AGENT
                                                       AND REGISTRAR

BY

                                                 AUTHORIZED OFFICER

    
   2
                             AMKOR TECHNOLOGY, INC.


     THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS A FULL OR SUMMARY STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF
STOCK OR SERIES THEREOF AUTHORIZED TO BE ISSUED BY THE CORPORATION AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
SUCH REQUEST MAY BE MADE TO THE CORPORATION OR THE TRANSFER AGENT.

     The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM   - as tenants in common
TEN ENT   - as tenants by the entities
JT TEN    - as joint tenants with right of survivorship and not as tenants
            in common


UNIF GIFT MIN ACT-                Custodian
                  ----------------         -------------------
                      (Cust)                     (Minor)

                 under Uniform Gifts to Minors

                 Act
                    -------------------------
                             (State)


    Additional abbreviations may also be used though not in the above list.


For value received,                    hereby sell, assign and transfer unto
                   --------------------


PLEASE INSERT SOCIAL SECURITY OR OTHER
    IDENTIFYING NUMBER OF ASSIGNEE

- --------------------------------------


- --------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip code of assignee


- --------------------------------------------------------------------------------



- --------------------------------------------------------------------------------


                                                                          Shares
- --------------------------------------------------------------------------
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
                                   ---------------------------------------------

- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.


Dated
      ----------------------------------------


NOTICE:   THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
          WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, 
          WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.


   
                       SIGNATURE(S) GUARANTEED:
                       --------------------------------------------------------
                       THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
                       GUARANTOR INSTITUTION (BANKS, STOCK BROKERS, SAVINGS AND
                       LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
                       APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT
                       TO SEC RULE 17Ad-15.
    

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO 
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

   1
                                                                     EXHIBIT 4.2

                             AMKOR TECHNOLOGY, INC.

                                       AND



                       STATE STREET BANK AND TRUST COMPANY

                                   AS TRUSTEE



                                  $150,000,000

                _____% Convertible Subordinated Notes due 2003*


                               ------------------

                                    INDENTURE

                               Dated as of , 1998











- ----------
*Plus an over-allotment option to purchase up to $22,500,000 principal amount of
 ____% Convertible Subordinated Notes due 2003.



   2

     THIS INDENTURE, dated as of ______ __, 1998, is between Amkor Technology,
Inc., a Delaware corporation (the "Company"), and State Street Bank and Trust
Company, a trust company duly organized and existing under laws of the
Commonwealth of Massachusetts (the "Trustee"). The Company has duly authorized
the creation of its % Convertible Subordinated Notes due 2003 (the "Convertible
Subordinated Notes") and to provide therefor the Company and the Trustee have
duly authorized the execution and delivery of this Indenture. Each party agrees
as follows for the benefit of the other party and for the equal and ratable
benefit of the holders from time to time of the Convertible Subordinated Notes:


                                    ARTICLE 1

                                   DEFINITIONS

SECTION 1.01 Definitions.

     "Acquiring Person" means any person (as defined in Section 13(d)(3) of the
Exchange Act) who or which, together with all affiliates and associates (each as
defined in Rule 12b-2 under the Exchange Act), becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act and as further defined
below) of shares of Common Stock or other voting securities of the Company
having more than 50% of the total voting power of the Voting Stock of the
Company; provided, however, that an Acquiring Person shall not include (i) the
Company, (ii) any subsidiary of the Company, (iii) any Permitted Holder, (iv) an
underwriter engaged in a firm commitment underwriting in connection with a
public offering of the Voting Stock of the Company or (v) any current or future
employee or director benefit plan of the Company or any subsidiary of the
Company or any entity holding Common Stock of the Company for or pursuant to the
terms of any such plan. For purposes hereof, a person shall not be deemed to be
the beneficial owner of (A) any securities tendered pursuant to a tender or
exchange offer made by or on behalf of such person or any of such person's
affiliates until such tendered securities are accepted for purchase or exchange
thereunder, or (B) any securities if such beneficial ownership (1) arises solely
as a result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to the applicable rules and regulations under the
Exchange Act, and (2) is not also then reportable on Schedule 13D (or any
successor schedule) under the Exchange Act.

     "Affiliate" means, when used with reference to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control of, the referent person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct or cause the direction of management or policies of the referent person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. The terms "controlling" and "controlled" have meanings
correlative of the foregoing.

     "Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.



                                       1
   3

     "Agent Member" means any member of, or participant in, the Depositary.

     "Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Note or beneficial interest therein, the rules and procedures
of the Depositary for such Global Note to the extent applicable to such
transaction and as in effect from time to time.

     "Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.

     "Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, but excluding any debt
securities convertible into such equity.

     "Change of Control" means the occurrence of one or more of the following
events: (a) any person has become an Acquiring Person, (b) the Company
consolidates with or merges into any other corporation, or conveys, transfers or
leases all or substantially all of its assets to any person, or any other
corporation merges into the Company, and, in the case of any such transaction,
the outstanding Common Stock of the Company is changed or exchanged as a result,
unless the stockholders of the Company immediately before such transaction own,
directly or indirectly immediately following such transaction, at least a
majority of the combined voting power of the outstanding voting securities of
the corporation resulting from such transaction in substantially the same
proportion as their ownership of the Voting Stock of the Company immediately
before such transaction, or (c) any time the Continuing Directors do not
constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company); provided, that a Change of
Control shall not be deemed to have occurred if either (y) the last sale price
of the Common Stock for any five trading days during the ten trading days
immediately preceding the Change of Control is at least equal to 105% of the
Conversion Price in effect on the date of such Change of Control or (z) at least
90% of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change of Control consists of
shares of common stock that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States.

     "Commission" means the Securities and Exchange Commission.

     "Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the provisions
of Section 12.06, however, shares issuable on conversion of Convertible
Subordinated Notes shall include only shares of the class designated as Common
Stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation,



                                       2
   4

dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.

     "Company" means the party named as such above until a successor replaces it
in accordance with Article 5 and thereafter means the successor.

     A "consolidated subsidiary" of any person means a subsidiary which for
financial reporting purposes is or, in accordance with GAAP, should be,
accounted for by such person as a consolidated subsidiary.

     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on the
date of this Indenture or (ii) was nominated for election or elected to such
Board of Directors with the approval of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.

     "Convertible Subordinated Notes" means the ____% Convertible Subordinated
Notes due 2003 issued, authenticated and delivered under this Indenture.

     "Conversion Price" means the initial conversion price specified in the form
of Convertible Subordinated Note in Paragraph 16 of such form, as adjusted in
accordance with the provisions of Article 12.

     "Corporate Trust Office" means the corporate trust office of the Trustee at
which at any particular time the trust created by this Indenture shall
principally be administered; as of the date hereof, the Corporate Trust Office
is located at Two International Place, 4th Floor, Boston, MA 02110.

     "Default" means any event that is, or after notice or passage of time, or
both, would be, an Event of Default.

     "Depositary" means, with respect to any Global Notes, a clearing agency
that is registered as such under the Exchange Act and is designated by the
Company to act as Depositary for such Global Notes (or any successor securities
clearing agency so registered), which shall initially be DTC.

     "Designated Event" means the occurrence of a Change of Control or a
Termination of Trading.



                                       3
   5

     "Designated Senior Debt" means any particular Senior Debt if the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Indebtedness shall be "Designated Senior Debt" for purposes
of the Indenture (provided that such instrument, agreement or other document may
place limitations and conditions on the right of such Senior Debt to exercise
the rights of Designated Senior Debt.)

     "DTC" means The Depository Trust Company, a New York corporation.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect from time to time.

     "Global Note" means a Convertible Subordinated Note that is registered in
the Register.

     "Indebtedness" means, with respect to any person, all obligations, whether
or not contingent, of such person (i) (a) for borrowed money (including, but not
limited to, any indebtedness secured by a security interest, mortgage or other
lien on the assets of the Company that is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the vendor of such
property or to another, or (2) existing on property at the time of acquisition
thereof), (b) evidenced by a note, debenture, bond or other written instrument,
(c) under a lease required to be capitalized on the balance sheet of the lessee
under GAAP or under any lease or related document (including a purchase
agreement) that provides that the Company is contractually obligated to purchase
or cause a third party to purchase and thereby guarantee a minimum residual
value of the lease property to the lessor and the obligations of the Company
under such lease or related document to purchase or to cause a third party to
purchase such leased property, (d) in respect of letters of credit, bank
guarantees or bankers' acceptances (including reimbursement obligations with
respect to any of the foregoing), (e) with respect to Indebtedness secured by a
mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such person are
subject, whether or not the obligation secured thereby shall have been assumed
by or shall otherwise be such person's legal liability, (f) in respect of the
balance of deferred and unpaid purchase price of any property or assets, (g)
under interest rate or currency swap agreements, cap, floor and collar
agreements, spot and forward contracts and similar agreements and arrangements;
(ii) with respect to any obligation of others of the type described in the
preceding clause (i) or under clause (iii) below assumed by or guaranteed in any
manner by such person through an agreement to purchase (including, without
limitation, "take or pay" and similar arrangements), contingent or otherwise
(and the obligations of such person under any such assumptions, guarantees or
other



                                       4
   6

such arrangements); and (iii) any and all deferrals, renewals, extensions,
refinancings and refundings of, or amendments, modifications or supplements to,
any of the foregoing.

     "Indenture" means this Indenture as amended or supplemented from time to
time.

     "Interest Payment Date" means _____ and _____ of each year.

     "Issue Date" means the date on which Convertible Subordinated Notes are
first issued and authenticated under this Indenture.

     "Material Subsidiary" means any subsidiary of the Company which at the date
of determination is a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act.

     "Maturity Date" means __________ , 2003.

     "Note Custodian" means State Street Bank and Trust Company, as custodian
with respect to any Global Note, or any successor entity thereto.

     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

     "Officer" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, the Chief Accounting Officer, any
Executive Vice President, Senior Vice President or Vice President (whether or
not designated by a number or numbers or word or words before or after the title
"Vice President"), the Treasurer, any other executive officer, the Secretary and
any Assistant Treasurer or any Assistant Secretary of the Company.

     "Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the principal executive officer, principal financial officer or
principal accounting officer of the Company.

     "Opinion of Counsel" means a written opinion from legal counsel who may be
an employee of or counsel to the Company or the Trustee except to the extent
otherwise indicated in this Indenture.

     A "person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization, limited liability company or
government or any agency or political subdivision thereof.

     "Permitted Holders" means James J. Kim and his estates, spouses, ancestors
and lineal descendants (and spouses thereof), the legal representatives of any
of the foregoing, and the



                                       5
   7

trustee of any bona fide trust of which one or more of the foregoing are the
sole beneficiaries or the grantors, or any person of which any of the foregoing,
individually or collectively, beneficially own (as defined in Rules 13d-3 and
13d-5 under the Exchange Act) voting securities representing at least a majority
of the total voting power of all classes of Capital Stock of such person
(exclusive of any matters as to which class voting rights exist).

     "redemption date" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the date fixed by the Company for such
redemption pursuant to Article 3 of this Indenture and the Convertible
Subordinated Notes.

     "redemption price" when used with respect to any of the Convertible
Subordinated Notes to be redeemed, means the price fixed for such redemption
pursuant to Article 3 of this Indenture and the Convertible Subordinated Notes.

     "Regular Record Date" means the _____ or _____ immediately preceding each
Interest Payment Date.

     "Representative" means (a) the indenture trustee or other trustee, agent or
representative for any Senior Debt or (b) with respect to any Senior Debt that
does not have any such trustee, agent or other representative, (i) in the case
of such Senior Debt issued pursuant to an agreement providing for voting
arrangements as among the holders or owners of such Senior Debt, any holder or
owner of such Senior Debt acting with the consent of the required persons
necessary to bind such holders or owners of such Senior Debt and (ii) in the
case of all other such Senior Debt, the holder or owner of such Senior Debt.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     "Senior Debt" means the principal of, premium, if any, and interest on,
rent under, and any other amounts payable on or in respect of any Indebtedness
of the Company (including, without limitation, any Obligations in respect of
such Indebtedness and, in the case of Designated Senior Debt, any interest
accruing after the filing of a petition by or against the Company under any
bankruptcy law, whether or not allowed as a claim after such filing in any
proceeding under such bankruptcy law), whether outstanding on the date of this
Indenture or thereafter created, incurred, assumed, guaranteed or in effect
guaranteed by the Company (including all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to the foregoing);
provided, however, that Senior Debt does not include (v) Indebtedness evidenced
by the Convertible Subordinated Notes, (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) Indebtedness of the
Company to any Subsidiary of the Company except to the extent such Indebtedness
is of a type described in clause (ii) of the definition of Indebtedness, (y)
trade payables of the Company for goods, services or materials purchased in the
ordinary course of business (other than, to the extent they may otherwise
constitute trade payables, any obligations of the type described in clause (ii)
of the definition of Indebtedness), and



                                       6
   8

(z) any particular Indebtedness in which the instrument creating or evidencing
the same expressly provides that such Indebtedness shall not be senior in right
of payment to, or is pari passu with, or is subordinated or junior to, the
Convertible Subordinated Notes.

     A "subsidiary" means, with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other subsidiaries of that person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a Subsidiary of such person or (b)
the only general partners of which are such person or of one or more
Subsidiaries of such person (or any combination thereof).

     "Termination of Trading" will be deemed to have occurred if the Common
Stock (or other common stock into which the Convertible Subordinated Notes are
then convertible) is neither listed for trading on a United States national
securities exchange nor approved for trading on an established automated
over-the-counter trading market in the United States.

     "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-
77bbbb) as in effect on the date of execution of this Indenture, except as
provided in Sections 9.03 and 12.06.

     "Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
manes the successor.

     "Trust Officer" means an officer in the Corporate Trust Office of the
Trustee.

     "U.S. Government Obligations" means direct obligation of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged. In order to have money available on a payment date
to pay principal or interest on the Convertible Subordinated Notes, the U.S.
Government Obligations shall be payable as to principal or interest on or before
such payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.

     "Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.


SECTION 1.02 Other Definitions 


                                                                      Defined in
                                                                         Section
                                                                   
"Bankruptcy Law"..........................................................  6.01
"business day"............................................................ 10.07




                                       7
   9



                                                                      Defined in
                                                                         Section
                                                                   
"Current Market Price"....................................................  2.05
"closing price"........................................................... 12.05
"Conversion Agent"........................................................  2.03
"Custodian"...............................................................  6.01
"Designated Event Date"...................................................  4.06
"Designated Event Offer"..................................................  4.06
"Designated Event Offer Termination Date".................................  4.06
"Designated Event Payment"................................................  4.06
"Designated Event Payment Date"...........................................  4.06
"Event of Default"........................................................  6.01
"Expiration Time"......................................................... 12.05
"fair market value"....................................................... 12.05
"Legal Holiday"........................................................... 10.07
"New Rights Plan.......................................................... 12.05
"non-electing share"...................................................... 12.06
"Paying Agent"............................................................ .2.03
"Payment Blockage Notice"................................................. 10.04
"Purchased Shares"........................................................ 12.05
"Record Date"............................................................. 12.05
"Registrar"............................................................... .2.03
"Securities".............................................................. 12.05
"trading day"............................................................. 12.05
"Trigger Event"........................................................... 12.05



SECTION 1.03 Incorporation by Reference of Trust Indenture Act.

     Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

     The following TIA terms used in this Indenture have the following meanings:

          "Commission" means the Commission;

          "indenture securities" means the Convertible Subordinated Notes;

          "indenture security holder" means a holder of a Convertible
          Subordinated Note;

          "indenture to be qualified" means this Indenture;

          "indenture trustee" or "institutional trustee" means the Trustee; and

          "obligor" on the Convertible Subordinated Notes means the Company or
          any other obligor on the Convertible Subordinated Notes.



                                       8
   10

     All other terms in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.


SECTION 1.04 Rules of Construction.

     Unless the context otherwise requires:

          (1) a term has the meaning assigned to it;

               (2) an accounting term not otherwise defined has the meaning
          assigned to it in accordance with GAAP;

               (3) "or" is not exclusive;

               (4) words in the singular include the plural, and in the plural
          include the singular; and

               (5) the male, female and neuter genders include one another.


                                    ARTICLE 2

                       THE CONVERTIBLE SUBORDINATED NOTES

SECTION 2.01 Form and Dating.

     The Convertible Subordinated Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the form set forth in
Exhibit A, which is part of this Indenture, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture. The Convertible Subordinated Notes may have notations, legends
or endorsements required by law, stock exchange rule or the Depositary or usage.
The Company shall approve the form of the Convertible Subordinated Notes and any
notation, legend or endorsement on them. Each Convertible Subordinated Note
shall be dated the date of its authentication.

     The terms and provisions contained in the Convertible Subordinated Notes
shall constitute, and are hereby expressly made, a part of this Indenture and,
to the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.



                                       9
   11

SECTION 2.02 Execution and Authentication.

     Two Officers shall sign the Convertible Subordinated Notes for the Company
by manual or facsimile signature. The Company's seal shall be reproduced on the
Convertible Subordinated Notes.

     If an Officer whose signature is on a Convertible Subordinated Note no
longer holds that office at the time the Convertible Subordinated Note is
authenticated, the Convertible Subordinated Note shall nevertheless be valid.

     A Convertible Subordinated Note shall not be valid until authenticated by
the manual signature of the Trustee. The signature shall be conclusive evidence
that the Convertible Subordinated Note has been authenticated under this
Indenture.

     Upon a written order of the Company signed by an Officer of the Company,
the Trustee shall authenticate Convertible Subordinated Notes for original issue
up to an aggregate principal amount of $150,000,000 (plus up to $22,500,000
aggregate principal amount of Convertible Subordinated Notes that may be sold by
the Company pursuant to the over-allotment option granted pursuant to (i) the
U.S. Underwriting Agreement, dated as of __________ , 1998, among the Company
and Smith Barney Inc., BancAmerica Robertson Stephens and Cowen & Company and
(ii) the International Underwriting Agreement, dated as of __________ , 1998,
among the Company and Smith Barney Inc., BancAmerica Robertson Stephens
International Limited and Cowen International L.P.). The aggregate principal
amount of Convertible Subordinated Notes outstanding at any time may not exceed
that amount except as provided in Section 2.07.

     The Convertible Subordinated Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 or any integral
multiple thereof.

     The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Convertible Subordinated Notes. An authenticating agent may
authenticate Convertible Subordinated Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same right as an
Agent to deal with the Company or an Affiliate of the Company.


SECTION 2.03 Registrar, Paying Agent and Conversion Agent.

     The Company shall maintain or cause to be maintained in such locations as
it shall determine, which may be the Corporate Trust Office, an office or
agency: (i) where securities may be presented for registration of transfer or
for exchange ("Registrar"); (ii) where Convertible Subordinated Notes may be
presented for payment ("Paying Agent"); (iii) an office or agency where
Convertible Subordinated Notes may be presented for conversion (the "Conversion
Agent"); and (iv) where notices and demands to or upon the Company in respect of
Convertible



                                       10
   12

Subordinated Notes and this Indenture may be served by the holders of the
Convertible Subordinated Notes. The Registrar shall keep a Register ("Register")
of the Convertible Subordinated Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars, one or more additional paying
agents and one or more additional conversion agents. The term "Paying Agent"
includes any additional paying agent and the term "Conversion Agent" includes
any additional Conversion Agent. The Company may change any Paying Agent,
Registrar, Conversion Agent or co-registrar without prior notice. The Company
shall notify the Trustee of the name and address of any Agent not a party to
this Indenture and shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar not a party to this
Indenture. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company or any of its subsidiaries may act as Paying
Agent, Registrar, Conversion Agent or co-registrar, except that for purposes of
Articles 3 and 8 and Section 4.06, neither the Company nor any of its
subsidiaries shall act as Paying Agent. If the Company fails to appoint or
maintain another entity as Registrar, or Paying Agent or Conversion Agent, the
Trustee shall act as such, and the Trustee shall initially act as such.


SECTION 2.04 Paying Agent To Hold Money in Trust.

     The Company shall require each Paying Agent (other than the Trustee, who
hereby so agrees), to agree in writing that the Paying Agent will hold in trust
for the benefit of holders of the Convertible Subordinated Notes or the Trustee
all money held by the Paying Agent for the payment of principal or interest on
the Convertible Subordinated Notes, and will notify the Trustee of any default
by the Company in respect of making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a subsidiary of the Company) shall have no further
liability for the money. If the Company or a subsidiary of the Company acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the holders of the Convertible Subordinated Notes all money held by
it as Paying Agent.


SECTION 2.05 Holder Lists.

     The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
holders of Convertible Subordinated Notes and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least seven business days before each Interest Payment Date,
and as the Trustee may request in writing within fifteen (15) days after receipt
by the Company of any such request (or such lesser time as the Trustee may
reasonably request in order to enable it to timely provide any notice to be
provided by it hereunder), a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of holders of
Convertible Subordinated Notes.



                                       11
   13

SECTION 2.06 Transfer and Exchange.

     When Convertible Subordinated Notes are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal principal amount of Convertible Subordinated Notes for other
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Convertible Subordinated Notes at the Registrar's request, bearing
registration numbers not contemporaneously outstanding. No service charge shall
be made to a holder for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company may require payment of a
sum sufficient to cover any transfer tax or other governmental charge payable
upon exchanges pursuant to Sections 2.10, 3.07, 9.05 or 12.02.

     The Company or the Registrar shall not be required (i) to issue, register
the transfer of or exchange Convertible Subordinated Notes during a period
beginning at the opening of business fifteen (15) days before the day of any
selection of Convertible Subordinated Notes for redemption under Section 3.03
and ending at the close of business on the day of selection, (ii) to register
the transfer or exchange of any Convertible Subordinated Note so selected for
redemption in whole or in part, except the unredeemed portion of any Convertible
Subordinated Note being redeemed in part or (iii) to register the transfer of
any Convertible Subordinated Notes surrendered for repurchase pursuant to
Section 4.06.

     All Convertible Subordinated Notes issued upon any transfer or exchange of
Convertible Subordinated Notes in accordance with this Indenture shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture as the Convertible Subordinated Notes
surrendered upon such registration of transfer or exchange.

     The provisions of Clauses (1), (2), (3), (4) and (5) below shall apply only
to Global Notes:

     (1) Each Global Note authenticated under this Indenture shall be registered
in the name of the Depositary designated for such Global Note or a nominee
thereof and delivered to such Depositary or a nominee thereof or Note Custodian
therefor, and each such Global Note shall constitute a single Convertible
Subordinated Note for all purposes of this Indenture.

     (2) Notwithstanding any other provision in this Indenture, in the event
that (i) the Depositary is unwilling, unable or ineligible to continue as
Depositary and a successor Depositary is not appointed by the Company within 90
days, or (ii) if, at any time in the Company's sole discretion, the Company
determines not to have a Global Note, the Company will issue Convertible
Subordinated Notes in definitive form in exchange for the Global Notes.

     (3) Subject to Clause (2) above, any exchange of a Global Note for other
Securities may be made in whole or in part, and all Securities issued in
exchange for a Global Note or any portion thereof shall be registered in such
names as the Depositary for such Global Note shall direct.



                                       12
   14

     (4) Every Convertible Subordinated Note authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Note or
any portion thereof, whether pursuant to this Article 2 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Note, unless
such Convertible Subordinated Note is registered in the name of a person other
than the Depositary for such Global Note or a nominee thereof.

     (5) The Depositary or its nominee, as registered owner of a Global Note,
shall be the Holder of such Global Note for all purposes under the Indenture and
the Convertible Subordinated Notes, and owners of beneficial interests in a
Global Note shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Note will be shown
only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Note will not be considered the
owners or holders thereof.


SECTION 2.07 Replacement Convertible Subordinated Notes.

     If the holder of a Convertible Subordinated Note claims that the
Convertible Subordinated Note has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Convertible
Subordinated Note if the Trustee's requirements are met. If required by the
Trustee or the Company as a condition of receiving a replacement Convertible
Subordinated Note, the holder of a Convertible Subordinated Note must provide a
certificate of loss and an indemnity and/or an indemnity bond sufficient, in the
judgment of both the Company and the Trustee, to fully protect the Company, the
Trustee, any Agent and any authenticating agent from any loss, liability, cost
or expense which any of them may suffer or incur if the Convertible Subordinated
Note is replaced. The Company and the Trustee may charge the relevant holder for
their expenses in replacing any Convertible Subordinated Note.

     The Trustee or any authenticating agent may authenticate any such
substituted Convertible Subordinated Note, and deliver the same upon the receipt
of such security or indemnity as the Trustee, the Company and, if applicable,
such authenticating agent may require. Upon the issuance of any substituted
Convertible Subordinated Note, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses connected therewith. In case any
Convertible Subordinated Note which has matured or is about to mature, or has
been called for redemption pursuant to Article 3, submitted for repurchase
pursuant to Section 4.06 or is about to be converted into Common Stock pursuant
to Article 12, shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Convertible Subordinated Note, pay
or authorize the payment of or convert or authorize the conversion of the same
(without surrender thereof except in the case of a mutilated Convertible
Subordinated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
the authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by



                                       13
   15

or connected with such substitution, and, in case of destruction, loss or theft,
evidence satisfactory to the Company, the Trustee and, if applicable, any paying
agent or conversion agent of the destruction, loss or theft of such Convertible
Subordinated Note and of the ownership thereof.

     Every replacement Convertible Subordinated Note is an additional obligation
of the Company and shall be entitled to all the benefits provided under this
Indenture equally and proportionately with all other Convertible Subordinated
Notes duly issued, authenticated and delivered hereunder.


SECTION 2.08 Outstanding Convertible Subordinated Notes.

     The Convertible Subordinated Notes outstanding at any time are all the
Convertible Subordinated Notes properly authenticated by the Trustee except for
those canceled by the Trustee, those delivered to it for cancellation, and those
described in this Section as not outstanding.

     If a Convertible Subordinated Note is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Convertible Subordinated Note is held by a bona fide
purchaser.

     If Convertible Subordinated Notes are considered paid under Section 4.01 or
converted under Article 12, they cease to be outstanding and interest on them
ceases to accrue.

     Subject to Section 2.09 hereof, a Convertible Subordinated Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Convertible Subordinated Note.


SECTION 2.09 When Treasury Convertible Subordinated Notes Disregarded.

     In determining whether the holders of the required principal amount of
Convertible Subordinated Notes have concurred in any direction, waiver or
consent, Convertible Subordinated Notes owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Convertible Subordinated
Notes which the Trustee knows are so owned shall be so disregarded.


SECTION 2.10 Temporary Convertible Subordinated Notes.

     Until definitive Convertible Subordinated Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Convertible
Subordinated Notes. Temporary Convertible Subordinated Notes shall be
substantially in the form of definitive Convertible Subordinated Notes but may
have variations that the Company considers appropriate



                                       14
   16

for temporary Convertible Subordinated Notes. If temporary Convertible
Subordinated Notes are issued, the Company will cause definitive Convertible
Subordinated Notes to be prepared without unreasonable delay. After the
preparation of definitive Convertible Subordinated Notes, the temporary
Convertible Subordinated Notes shall be exchangeable for definitive Convertible
Subordinated Notes upon surrender of the temporary Convertible Subordinated
Notes at any office or agency of the Company designated pursuant to Section 2.03
without charge to the holder of the Convertible Subordinated Note, except as
specified in Section 2.06. Upon surrender for cancellation of any one or more
temporary Convertible Subordinated Notes the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Convertible Subordinated Notes of authorized denominations.
Until so exchanged, the temporary Convertible Subordinated Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Convertible Subordinated Notes.


SECTION 2.11 Cancellation.

     The Company at any time may deliver Convertible Subordinated Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Convertible Subordinated Notes surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else may cancel
Convertible Subordinated Notes surrendered for registration of transfer,
exchange, payment, replacement, conversion, redemption, repurchase or
cancellation. Upon written instructions of the Company, the Trustee shall
destroy and dispose of canceled Convertible Subordinated Notes as the Company
directs and, after such destruction, shall deliver a certificate of destruction
to the Company. The Company may not issue new Convertible Subordinated Notes to
replace Convertible Subordinated Notes that it has paid, redeemed or repurchased
or that have been delivered to the Trustee for cancellation or that any holder
has (i) converted pursuant to Article 12 hereof, (ii) submitted for redemption
pursuant to Article 3 hereof or (iii) submitted for repurchase pursuant to
Section 4.06 hereof (unless revoked).


SECTION 2.12 Defaulted Interest.

     If the Company fails to make a payment of interest on the Convertible
Subordinated Notes, it shall pay such defaulted interest plus, to the extent
lawful, any interest payable on the defaulted interest. It may pay such
defaulted interest, plus any such interest payable on it, to the persons who are
holders of Convertible Subordinated Notes on a subsequent special record date.
The Company shall fix any such record date and payment date. At least 15 days
before any such record date, the Company shall mail to holders of the
Convertible Subordinated Notes a notice that states the record date, payment
date and amount of such interest to be paid.


SECTION 2.13 CUSIP Number.

     The Company in issuing the Convertible Subordinated Notes may use a "CUSIP"
number, and if so, such CUSIP number shall be included in notices of redemption,
repurchase or exchange as a convenience to holders of Convertible Subordinated
Notes; provided, however, that any such



                                       15
   17

notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Convertible
Subordinated Notes and that reliance may be placed only on the other
identification numbers printed on the Convertible Subordinated Notes. The
Company will promptly notify the Trustee of any change in the CUSIP number.


                                    ARTICLE 3

                                   REDEMPTION

SECTION 3.01 Optional Redemption.

     The Company may redeem all or any portion of the Convertible Subordinated
Notes upon the terms and at the redemption prices set forth in each of the
Convertible Subordinated Notes. Any redemption shall be made pursuant to
Paragraph 5 of the Convertible Subordinated Notes and this Article 3.


SECTION 3.02 Notices to Trustee.

     If the Company elects to redeem Convertible Subordinated Notes pursuant to
the optional redemption provisions of paragraph 5 of the Convertible
Subordinated Notes, it shall furnish to the Trustee, at least 15 (20 if less
than all of the then outstanding Convertible Subordinated Notes are to be
redeemed or if the Company requests the Trustee to give notice of redemption
pursuant to Section 3.04) days but not more than 60 days before a redemption
date (unless a shorter period shall be satisfactory to the Trustee), an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Convertible Subordinated Notes (if less than all) to be
redeemed, (iv) the redemption price and (v) the CUSIP number of the Convertible
Subordinated Notes being redeemed.


SECTION 3.03 Selection of Convertible Subordinated Notes To Be Redeemed.

     If less than all the Convertible Subordinated Notes are to be redeemed, the
Trustee shall select the Convertible Subordinated Notes to be redeemed by a
method that complies with the requirements of the principal national securities
exchange, if any, on which the Convertible Subordinated Notes are listed or
quoted or, if the Convertible Subordinated Notes are not so listed, on a pro
rata basis by lot or by any other method that the Trustee considers fair and
appropriate. The Trustee shall make the selection not more than 60 days and not
less than 15 days before the redemption date from Convertible Subordinated Notes
outstanding and not previously called for redemption. The Trustee may select for
redemption a portion of the principal of any Convertible Subordinated Notes that
has a denomination larger than $1,000. Convertible Subordinated Notes and
portions thereof will be redeemed in the amount of $1,000 or integral multiples
of $1,000.



                                       16
   18

     Provisions of this Indenture that apply to Convertible Subordinated Notes
called for redemption also apply to portions of Convertible Subordinated Notes
called for redemption. The Trustee shall notify the Company promptly of the
Convertible Subordinated Notes or portions of Convertible Subordinated Notes to
be called for redemption.

     If any Convertible Subordinated Note selected for partial redemption is
converted in part after such selection, the converted portion of such
Convertible Subordinated Note shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Convertible Subordinated Notes (or
portion thereof) so selected shall be deemed duly selected for redemption for
all purposes hereof, notwithstanding that any such Convertible Subordinated Note
is converted in whole or in part before the mailing of the notice of redemption.
Upon any redemption of less than all the Convertible Subordinated Notes, the
Company and the Trustee may treat as outstanding any Convertible Subordinated
Notes surrendered for conversion during the period of 15 days next preceding the
mailing of a notice of redemption and need not treat as outstanding any
Convertible Subordinated Note authenticated and delivered during such period in
exchange for the unconverted portion of any Convertible Subordinated Note
converted in part during such period.


SECTION 3.04 Notice of Redemption.

     At least 15 days but not more than 60 days before a redemption date, the
Company shall mail by first class mail a notice of redemption to each holder
whose Convertible Subordinated Notes are to be redeemed.

     The notice shall identify the Convertible Subordinated Notes to be redeemed
and shall state:

          (1) the redemption date;

          (2) the redemption price;

          (3) if any Convertible Subordinated Note is being redeemed in part,
     the portion of the principal amount of such Convertible Subordinated Note
     to be redeemed and that, after the redemption date, upon surrender of such
     Convertible Subordinated Note, a new Convertible Subordinated Note or
     Convertible Subordinated Notes in principal amount equal to the unredeemed
     portion will be issued in the name of the holder thereof;

          (4) that Convertible Subordinated Notes called for redemption must be
     surrendered to the Paying Agent to collect the redemption price;

          (5) that interest on Convertible Subordinated Notes called for
     redemption and for which funds have been set apart for payment, ceases to
     accrue on and after the redemption date (unless the Company defaults in the
     payment of the redemption price or



                                       17
   19

     the Paying Agent is prohibited from making such payment pursuant to the
     terms of this Indenture);

          (6) the paragraph of the Convertible Subordinated Notes pursuant to
     which the Convertible Subordinated Notes called for redemption are being
     redeemed;

          (7) the aggregate principal amount of Convertible Subordinated Notes
     (if less than all) that are being redeemed;

          (8) the CUSIP number of the Convertible Subordinated Notes (provided
     that the disclaimer permitted by Section 2.13 may be made);

          (9) the name and address of the Paying Agent;

          (10) that Convertible Subordinated Notes called for redemption may be
     converted at any time prior to the close of business on the last trading
     day immediately preceding the redemption date and if not converted prior to
     the close of business on such date, the right of conversion will be lost;
     and

          (11) that in the case of Convertible Subordinated Notes or portions
     thereof called for redemption on a date that is also an Interest Payment
     Date, the interest payment due on such date shall be paid to the person in
     whose name the Convertible Subordinated Note is registered at the close of
     business on the relevant Regular Record Date.

     The notice if mailed in the manner herein provided shall be conclusively
presumed to have been given, whether or not the holder receives such notice. In
any case, failure to give such notice my mail or any defect in the notice to the
holder of any Convertible Subordinated Note designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption
of any Convertible Subordinated Note.

     At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense.


SECTION 3.05 Effect of Notice of Redemption.

     Once notice of redemption is mailed, Convertible Subordinated Notes called
for redemption become due and payable on the redemption date at the redemption
price set forth in the Convertible Subordinated Note.


SECTION 3.06 Deposit of Redemption Price.

     On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money in immediately available funds sufficient
to pay the redemption price of and



                                       18
   20

accrued interest on all Convertible Subordinated Notes to be redeemed on that
date. The Trustee or the Paying Agent shall return to the Company any money not
required for that purpose.

     On and after the redemption date, unless the Company shall default in the
payment of the redemption price, interest will cease to accrue on the principal
amount of the Convertible Subordinated Notes or portions thereof called for
redemption and for which funds have been set apart for payment and such
Convertible Subordinated Notes shall cease after the close of business on the
business day immediately preceding the Redemption Date to be convertible into
Common Stock and, except as provided in this Section 3.06 and 8.04, to be
entitled to any benefit or security under this Indenture, and the holders
thereof shall have no right in respect of such Convertible Subordinated Notes
except the right to receive the Redemption Price thereof and unpaid interest to
(but excluding) the Redemption Date. In the case of Convertible Subordinated
Notes or portions thereof redeemed on a redemption date which is also an
Interest Payment Date, the interest payment due on such date shall be paid to
the person in whose name the Convertible Subordinated Note is registered at the
close of business on the relevant Regular Record Date.

SECTION 3.07 Convertible Subordinated Notes Redeemed in Part.

     Upon surrender of a Convertible Subordinated Note that is redeemed in part
only, the Company shall issue and the Trustee shall authenticate and deliver to
the holder of a Convertible Subordinated Note a new Convertible Subordinated
Note equal in principal amount to the unredeemed portion of the Convertible
Subordinated Note surrendered, at the expense of the Company, except as
specified in Section 2.06.

SECTION 3.08 Conversion Arrangement on Call for Redemption.

     In connection with any redemption of Convertible Subordinated Notes, the
Company may arrange for the purchase and conversion of any Convertible
Subordinated Notes by an arrangement with one or more investment bankers or
other purchasers to purchase such Convertible Subordinated Notes by paying to
the Trustee in trust for the holders, on or before the date fixed for
redemption, an amount not less than the applicable redemption price, together
with interest accrued to the date fixed for redemption, of such Convertible
Subordinated Notes. Notwithstanding anything to the contrary contained in this
Article 3, the obligation of the Company to pay the redemption price of such
Convertible Subordinated Notes, together with interest accrued to the date fixed
for redemption, shall be deemed to be satisfied and discharged to the extent
such amount is so paid by the purchasers. If such an agreement is entered into,
a copy of which will be filed with the Trustee prior to the date fixed for
redemption, any Convertible Subordinated Notes not duly surrendered for
conversion by the holders thereof may, at the option of the Company, be deemed,
to the fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article 12)
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the date fixed for redemption (and the right to convert
any such Convertible Subordinated Notes shall be deemed to have been extended
through such time), subject to payment of the above



                                       19
   21

amount as aforesaid. At the direction of the Company, the Trustee shall hold and
dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Convertible Subordinated
Notes. Without the Trustee's prior written consent, no arrangement between the
Company and such purchasers for the purchase and conversion of any Convertible
Subordinated Notes shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Trustee from, and hold it harmless
against, any loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Convertible Subordinated
Notes between the Company and such purchasers to which the Trustee has not
consented in writing, including the costs and expenses incurred by the Trustee
in the defense of any claim or liability arising out of or in connection with
the exercise or performance of any of its powers, duties, responsibilities or
obligations under this Indenture.


                                    ARTICLE 4

                                    COVENANTS

SECTION 4.01 Payment of Convertible Subordinated Notes.

     The Company shall pay the principal of and interest on the Convertible
Subordinated Notes on the dates and in the manner provided in the Convertible
Subordinated Notes. Principal, interest, the redemption price and the Designated
Event Payment shall be considered paid on the date due if the Trustee or Paying
Agent (other than the Company or a subsidiary of the Company) holds as of 10:00
a.m. New York City time on that date immediately available funds designated for
and sufficient to pay all principal, interest, the redemption price and the
Designated Event Payment then due, provided, however, that money held by the
Agent for the benefit of holders of Senior Debt pursuant to the provisions of
Article 11 hereof or the payment of which to the holders of the Convertible
Subordinated Notes is prohibited by Article 11 shall not be considered to be
designated for the payment of any principal of or interest on the Convertible
Subordinated Notes within the meaning of this Section 4.01.

     To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by Convertible Subordinated Notes,
compounded semiannually; and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semiannually.


SECTION 4.02 Commission Reports.

     The Company shall comply with Section 314(a) of the TIA.


SECTION 4.03 Compliance Certificate.



                                       20
   22

     The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has fully performed its obligations
under this Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge, the Company is not in
default in the performance or observance of any of the terms and conditions
hereof (or, if any Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge)
and, that to the best of his or her knowledge, no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest on the Convertible Subordinated Notes are prohibited.

     The Company shall, so long as any of the Convertible Subordinated Notes are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default.


SECTION 4.04 Maintenance of Office or Agency.

     The Company shall maintain or cause to be maintained the office or agency
required under Section 2.03. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency not maintained by the Trustee. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, presentations, surrenders, notices and demands with
respect to the Convertible Subordinated Notes may be made or served at the
Corporate Trust Office of the Trustee.

     The Company may also from time to time designate one or more other offices
or agencies where the Convertible Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designation.


SECTION 4.05 Continued Existence.

     Subject to Article 5, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.


SECTION 4.06 Repurchase Upon Designated Event.

     Following a Designated Event (the date of each such occurrence being the
"Designated Event Date"), the Company shall notify the holders of Convertible
Subordinated Notes in writing of such occurrence and shall make an offer (the
"Designated Event Offer") to repurchase all Convertible Subordinated Notes then
outstanding at a repurchase price in cash (the "Designated Event Payment") equal
to 101% of the principal amount thereof, plus accrued and unpaid interest, if
any, to, but excluding, the Designated Event Payment Date (as defined below).



                                       21
   23

     Notice of a Designated Event shall be mailed by or at the direction of the
Company to the holders of Convertible Subordinated Notes as shown on the
Register of such holders maintained by the Registrar not more than 20 days after
the applicable Designated Event Date at the addresses as shown on the Register
of holders maintained by the Registrar, with a copy to the Trustee and the
Paying Agent. The Designated Event Offer shall remain open until a specified
date (the "Designated Event Offer Termination Date") which is at least 20
business days from the date such notice is mailed. During the period specified
in such notice, holders of Convertible Subordinated Notes may elect to tender
their Convertible Subordinated Notes in whole or in part in integral multiples
of $1,000 in exchange for cash. Payment shall be made by the Company in respect
of Convertible Subordinated Notes properly tendered pursuant to this Section on
a specified business day (the "Designated Event Payment Date") which shall be no
earlier than five business days after the applicable Designated Event Offer
Termination Date and no later than 60 days after the applicable Designated
Event.

     The notice, which shall govern the terms of the Designated Event Offer,
shall include such disclosures as are required by law and shall state:

          (a) that a Designated Event Offer is being made pursuant to this
     Section 4.06 and that all Convertible Subordinated Notes will be accepted
     for payment;

          (b) the transaction or transactions that constitute the Designated
     Event;

          (c) the Designated Event Payment for each Convertible Subordinated
     Note, the Designated Event Offer Termination Date and the Designated Event
     Payment Date;

          (d) that any Convertible Subordinated Note not accepted for payment
     will continue to accrue interest in accordance with the terms thereof;

          (e) that, unless the Company defaults on making the Designated Event
     Payment, any Convertible Subordinated Note accepted for payment pursuant to
     the Designated Event Offer shall cease to accrue interest on the Designated
     Event Payment Date and no further interest shall accrue on or after such
     date;

          (f) that holders electing to have Convertible Subordinated Notes
     repurchased pursuant to a Designated Event Offer will be required to
     surrender their Convertible Subordinated Notes to the Paying Agent at the
     address specified in the notice prior to 5:00 p.m., New York City time, on
     the Designated Event Offer Termination Date and must complete any form
     letter of transmittal proposed by the Company and acceptable to the Trustee
     and the Paying Agent;

          (g) that holders of Convertible Subordinated Notes will be entitled to
     withdraw their election if the Paying Agent receives, not later than 5:00
     p.m., New York City time, on the Designated Event Offer Termination Date, a
     facsimile transmission or letter setting



                                       22
   24

     forth the name of the holder, the principal amount of Convertible
     Subordinated Notes the holder delivered for purchase, the Convertible
     Subordinated Note certificate number (if any) and a statement that such
     holder is withdrawing his election to have such Convertible Subordinated
     Notes purchased;

          (h) that holders whose Convertible Subordinated Notes are repurchased
     only in part will be issued Convertible Subordinated Notes equal in
     principal amount to the unpurchased portion of the Convertible Subordinated
     Notes surrendered;

          (i) the instructions that holders must follow in order to tender their
     Convertible Subordinated Notes; and

          (j) that in the case of a Designated Event Offer Termination Date that
     is also an interest payment date, the interest payment due on such date
     shall be paid to the person in whose name the Convertible Subordinated Note
     is registered at the close of business on the relevant Designated Event
     Offer Termination Date.

     On the Designated Event Offer Termination Date the Company shall (i) accept
for payment all Convertible Subordinated Notes or portions thereof properly
tendered pursuant to the Designated Event Offer, (ii) deposit with the Paying
Agent money sufficient to pay the Designated Event Payment with respect to all
Convertible Subordinated Notes or portions thereof so tendered and accepted and
(iii) deliver or cause to be delivered to the Trustee the Convertible
Subordinated Notes so accepted together with an Officers' Certificate setting
forth the aggregate principal amount of Convertible Subordinated Notes or
portions thereof tendered to and accepted for payment by the Company. On the
Designated Event Payment Date, the Paying Agent shall mail or deliver to the
holders of Convertible Subordinated