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Exhibit
10.12
Execution
Copy
LAND LEASE AND EASEMENT
AGREEMENT
between
Hynix Semiconductor
Inc.
as Lessor
and
MagnaChip Semiconductor,
Ltd.
as Lessee
with respect to
certain land located in the
Cheong-Ju Complex
in Cheong-Ju, the Republic of
Korea
October 6, 2004
/*****/ = Portions of this exhibit
are subject to a request for confidential treatment and have been
redacted and filed separately with the Securities and Exchange
Commission.
TABLE OF
CONTENTS
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Page
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Article 1.
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Definitions |
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1 |
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Article 2.
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Grant of
Lease and Easement |
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6 |
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Article 3.
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Term |
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7 |
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Article 4.
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Rent |
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8 |
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Article 5.
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Representations, Warranties and Covenants |
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9 |
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Article 6.
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Maintenance and Other Expenses |
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12 |
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Article 7.
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Registration of the Lease Right and Easement Right |
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13 |
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Article 8.
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[Intentionally Deleted] |
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14 |
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Article 9.
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Use and
Maintenance |
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14 |
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Article 10.
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Termination |
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15 |
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Article 11.
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Sublease
and Assignment |
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15 |
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Article 12.
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Quiet
Enjoyment; Indemnification |
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16 |
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Article 13.
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Surrender |
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16 |
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Article 14.
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Disputes
and Governing Law |
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17 |
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Article 15.
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Change of
Applicable Laws of Korea |
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17 |
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Article 16.
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Alterations |
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18 |
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Article 17.
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Right of
First Refusal |
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18 |
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Article 18.
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Additional Warehouse |
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19 |
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Article 19.
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Insurance |
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19 |
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Article 20.
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Signage |
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20 |
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Article 21.
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Force
Majeure |
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20 |
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Article 22.
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Confidentiality |
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20 |
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Article 23.
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Miscellaneous |
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21 |
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| EXHIBIT
A |
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CHEONG-JU
COMPLEX |
| EXHIBIT
B |
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DESCRIPTION OF THE SITE, ACCESS AREAS AND EASEMENT
AREAS |
| EXHIBIT
C |
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CONSENTS |
| EXHIBIT
D |
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DESCRIPTION OF THE PORTIONS TO BE SUB-LEASED TO
VEOLIA |
| EXHIBIT
E |
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SIGNAGE |
| SCHEDULE 5.1(d) |
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VEOLIA LEASE RIGHTS |
| SCHEDULE 5.1(e) |
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VEOLIA CONSENTS |
LAND LEASE AND EASEMENT
AGREEMENT
This LAND LEASE AND EASEMENT AGREEMENT
(this “Agreement”), dated as of October 6, 2004, is
entered into by and between:
| (1) |
Hynix Semiconductor Inc., a company organized and existing
under the laws of the Republic of Korea (“Korea”) with
its registered office at San-136-1, Ami-Ri, Bubal-Eub, Ichon-Si,
Kyoungki-Do, Korea (“Lessor”); and |
| (2) |
MagnaChip Semiconductor, Ltd., a company organized and existing
under the laws of Korea with its registered office at 1
Hyanjeong-dong, Heungduk-gu, Cheongju City, Chung Cheong Bok-do,
Korea (“Lessee”) (each a “Party”, and
collectively, the “Parties”). |
RECITALS
WHEREAS, the Parties have entered into a
certain business transfer agreement dated as of June 12, 2004 as
amended (the “BTA”) pursuant to which, among other
things, Lessee has agreed to acquire the Acquired Assets (as
defined in the BTA) from Lessor subject to the terms and conditions
set forth in the BTA;
WHEREAS, the Parties desire to enter
into an agreement as contemplated by the BTA whereby Lessor grants
lease rights and easement rights to Lessee as to certain parts of
parcels of land, which are necessary for Lessee’s ownership
of certain buildings that are now or hereafter used in the Business
(as defined below) and for its operation of facilities necessary
for its Business, in accordance with this Agreement; and
WHEREAS, the execution and delivery of
this Agreement is a condition to the Closing under the
BTA.
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements hereinafter set
forth, and intending to be legally bound hereby, each of Lessor and
Lessee agrees as follows:
Article 1.
Definitions
| 1.1. |
Unless otherwise defined herein or in the BTA, all capitalized
terms shall have the meanings set forth below: |
“Access Areas”
shall mean the access roads and areas located on the Lease Rights
Site I, as more specifically shown on Exhibit B.
“Additional
Warehouses” shall have the meaning ascribed to such term in
Section 18.1.
“Affiliate” shall
have the meaning ascribed to such term in the BTA.
“Amended Section 6.5 of
the BTA” shall mean Section 6.5 of the BTA as amended by an
First Amendment to Business Transfer Agreement made and entered
into on October 6, 2004 by and between Lessor and
Lessee.
“Applicable Laws”
shall mean all laws, constitutions, statutes, codes, ordinances,
decrees, rules, regulations, municipal by-laws, judicial or
arbitral or administrative or ministerial or departmental or
regulatory judgments, orders, decisions, rulings or awards, consent
orders and decrees, policies, guidelines or any interpretations of
any of the foregoing, including general principles of civil law and
equity, issued by any Governmental Entity having or exercising
jurisdiction over or otherwise affecting any Party, the Business or
the Land.
“BTA” shall have
the meaning ascribed to such term in the Recitals.
“Buildings” shall
mean the “R” Building, “C1” Building and
“C2” Building, as well as the to be built Gas Warehouse
Building and Waste Water Facility Building and such other
buildings, if any, and improvements affixed to such buildings now
or hereafter owned by Lessee located in the Cheong-Ju Complex, each
of which Building is owned by Lessee, as the same may be altered or
replaced.
“Business” shall
have the meaning ascribed to such term in the BTA including all
Permitted Uses.
“Cheong-Ju
Complex” shall mean Lessor’s manufacturing, testing,
packaging and research and development facilities and appurtenant
areas located in Cheong-Ju, Korea, as more specifically identified
in Exhibit A attached hereto.
“Closing Date”
shall have the meaning ascribed to such term in the BTA.
“Confidential
Information” shall mean any and all information including
technical data, trade secrets or know-how, disclosed by either
Party to the other Party in connection with this Agreement, which
is marked as “Proprietary” or
“Confidential” or is declared by the other Party,
whether in writing or orally, to be confidential, or which by its
nature would reasonably be considered confidential.
“Consents” shall
mean any consents, approvals, waivers or authorizations to be
obtained from, or notices to be given to, any persons or entities,
and includes Governmental Authorizations.
“Damages” shall
mean any and all losses, settlements, expenses, liabilities,
obligations, claims, damages (including any governmental penalty or
costs of investigation, clean-up and remediation), deficiencies,
royalties, interest, costs and expenses (including reasonable
attorneys’ fees and all other expenses reasonably incurred in
investigating, preparing or defending any litigation or proceeding,
commenced or threatened incident to the successful enforcement of
this Agreement), the extent of which are recoverable under Korean
law. Damages also shall include, if applicable, any and all
increases in insurance premiums that are reasonably demonstrably
attributable to the breach by Lessee or Lessor, as the case may be,
of its representations, warranties, agreements and covenants
expressly
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contained in this Agreement,
or negligence, gross negligence, intentional breach or willful
misconduct of Lessee or Lessor, as the case may be, for the two
following annual policy periods.
“Due Date” shall
have the meaning ascribed to such term in Section 4.3.
“Easement Right”
shall mean the right to use all necessary and appropriate roads for
ingress to, egress from and access to and from all locations at the
Cheong Ju Complex and the right to use certain land to own, use or
perform maintenance, repair and replacement of utility, pipeline,
conduit and wiring systems at the Cheong Ju Complex serving the
locations leased by Lessee or owned by Lessor, as the case may be,
each of which is on an equal and shared basis with the owner or
lessee, as the case may be, of relevant land.
“Easement Site”
shall mean Easement Site I and Easement Site II.
“Easement Site I”
shall mean the main access roads from public roads to the Lease
Right Site I, as more specifically shown on Exhibit B.
“Easement Site
II” shall mean the access roads, areas and the parking lots
at the Cheong Ju Complex, as more specifically shown on Exhibit
B.
“Event of Force
Majeure” shall have the meaning ascribed to such term in
Section 21.1.
“Excluded
Damages” shall mean any punitive damages.
“Execution Date”
shall mean the date of this Agreement.
“Expansion Area”
shall have the meaning ascribed to such term in Section
17.1.
“Governmental
Authorization” shall mean any approval, consent, license,
permit, waiver or other authorization issued, granted, given or
otherwise made available by or under the authority of any
Governmental Entity or otherwise pursuant to any Applicable Law,
and any registration with, or report or notice to, any Governmental
entity pursuant to any Applicable Law, including those listed on
Exhibit C.
“Governmental
Entity” shall mean a court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory
authority or agency.
“Grace Period”
shall have the meaning ascribed to such term in Section
13.1.
“Hynix Building”
shall mean any building in the Cheong-Ju Complex other than any of
the Buildings.
“Hynix Easement
Right” shall mean the Easement Right over the Access Areas on
an equally shared basis with Lessee.
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“Hynix Land”
shall mean the portions of the Cheong-Ju Complex land, excluding
the Land.
“Indemnified
Person” of a Party shall mean the Party and its Subsidiary
and any shareholder, director, officer, employee or agent of the
Party or such Subsidiary.
“Invoice” shall
have the meaning ascribed to such term in Section 4.2.
“Land” shall mean
(a) the Lease Rights Site I, (b) Lease Rights Site II, (c) Easement
Site I and (d) Easement Site II located in the Cheong-Ju Complex,
as more specifically identified in Exhibit B, all of which are
subject to the lease or easement rights under this
Agreement.
“Lease Right”
shall have the meaning ascribed to such term in Section
2.5.
“Lease Rights
Site” shall mean the Lease Rights Site I and the Lease Rights
Site II.
“Lease Rights Site
I” shall mean the Site and the Access Areas.
“Lease Rights Site
II” shall mean certain lots on which the Gas Warehouse
Building and the Waste Water Facility Building will be built by
Lessee, as more specifically identified in Exhibit B attached
hereto.
“Lease Term”
shall have the meaning ascribed to such term in Section
3.1.
“Lessee Easement Rights
Consents” shall have the meaning ascribed to such term in
Section 5.2(e).
“Lessor Easement Rights
Consents” shall have the meaning ascribed to such term in
Section 5.1(e).
“Lessor Lease Rights
Consents” shall have the meaning ascribed to such term in
Section 5.1(e).
“Lien” shall mean
any lien, charge, claim, agreement to sell, pledge, judgment,
security interest, conditional sale agreement or other title
retention agreement, lease, mortgage, deed of trust, security
agreement, right of first refusal or offer (or other similar
right), option, restriction, tenancy, license, covenant,
encroachment (whether upon any real property or by any improvement
situated on any real property onto any adjoining real property or
onto any easement area), right of way, easement, title defect or
other encumbrance or title matter or interest in real estate,
existing as of the Closing Date.
“Other Costs”
shall have the meaning ascribed to such term in Section
4.5.
“Partition Date”
shall mean the date on which the Lease Rights Site I is partitioned
as a separate parcel and the Lessor acquires the sole legal and
beneficial ownership thereto from the Lessee.
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“Permitted Uses”
shall mean the Business or any other semiconductor, information
technology or other technology related business.
“Proceeding”
shall mean any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, or
investigative) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Entity.
“Rent” shall have
the meaning ascribed to such term in Section 4.1.
“Rules and
Regulations” shall have the meaning ascribed to such term in
Section 2.2.
“Site” shall mean
certain lots which are occupied by Building “R”,
Building “C1”, Building “C2”, as more
specifically identified in Exhibit B, all of which are subject to
the lease under this Agreement.
“Subsidiary”
shall have the meaning ascribed to such term in the BTA.
“Successor” shall
have the meaning ascribed to such term in Section 11.2.
“Turnover
Condition” shall have meaning set forth in Section 17.1(d) of
this Lease.
“VAT” shall mean
the value added tax required to be paid to the relevant
Governmental Entity in respect of the lease or grant of easement
rights of the Land to Lessee.
“Warrant Issuer”
shall have the meaning ascribed to such term in the BTA.
| 1.2. |
Rules of Interpretation. |
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(a) |
When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the
contrary. |
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(b) |
Whenever the words “include”,
“includes” or “including” are used in this
Agreement they shall be deemed to be followed by the words
“without limitation.” |
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(c) |
The words “hereof”, “hereto”,
“herein” and “herewith” and words of
similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph and
exhibit references are to the articles, sections, paragraphs and
exhibits of this Agreement unless otherwise specified. |
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(d) |
The meaning assigned to each term defined herein shall be
equally applicable to both the singular and the plural forms of
such term, and words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning. |
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(e) |
A reference to any party to this Agreement or any other
agreement or document shall include such party’s successors
and permitted assigns. |
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(f) |
A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or
re-enactment thereof, any legislative provision substituted
therefor and all regulations and statutory instruments issued
thereunder or pursuant thereto. |
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(g) |
The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties, and no presumption
or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any provisions of this
Agreement. |
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(h) |
Headings are for convenience only and do not affect the
interpretation of the provisions of this Agreement. |
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(i) |
Any Exhibits attached hereto are incorporated herein by
reference and shall be considered as part of this
Agreement. |
Article 2. Grant of Lease
and Easement
| 2.1. |
Subject to Article 3, in consideration of the Rent hereby
agreed to be paid to Lessor by Lessee and the agreements and
covenants herein made by Lessee and subject to other terms and
conditions herein, Lessor hereby (a) leases to Lessee the Lease
Rights Site and the one-half of the Easement Site (until the date
of registration of the Easement Right on the Easement Site) and (b)
grants Lessee the Easement Right to use the Easement Site from the
date of the registration of the Easement Right; provided that the
Easement Right and the Lease Right on the one-half of the Easement
Site granted to Lessee shall be exercisable by Lessee in a manner
and to the extent that it is in common with equivalent rights
exercisable by Lessor, as owner. |
| 2.2. |
In consideration of the lease rights and easement rights hereby
granted to Lessee by Lessor and the agreements and covenants herein
made by Lessor and subject to other terms and conditions herein,
for the Lease Term Lessee shall grant to Lessor the Hynix Easement
Right over the Access Areas for free; provided that the Hynix
Easement Right granted to Lessor shall be exercised by Lessor in a
manner and to the extent that allows Lessee to exercise equal right
to use the Access Areas based upon Lessee’s Lease Rights over
the Access Areas. |
| 2.3. |
In consideration of the Rent hereby agreed to be paid to Lessor
by Lessee and the agreements and covenants herein made by Lessee
and subject to other terms and conditions herein, Lessor hereby
grants to Lessee a right (i) to access to the Cheong-Ju Complex for
the purpose of using the Land in accordance with this Agreement,
and to pass and repass to and from the Land or any part thereof
over and along certain roads, accessways, paths, highways and other
thoroughfares within the Cheong-Ju Complex, provided that Lessee
shall fully comply in all material respects with all Applicable
Laws and the rules and regulations as currently adopted and
enforced in the ordinary operation |
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of the Cheong-Ju Complex and such additional rules and
regulations adopted by Lessor and enforced uniformly as to all
occupants of the Cheong-Ju Complex which do not materially change
the economic structure or effect of the Business (together
“Rules and Regulations”) and (ii) to use, operate,
maintain, repair and replace all of Lessee’s utility,
pipeline, conduit and wiring systems on the Cheong Ju Complex or
any part thereof that serve the Site. In case where it is
necessary, (i) Lessee may install utility, pipeline, conduit or
wiring systems for the purpose of using the Buildings on Easement
Site and Access Areas with Lessor’s prior written consent
which may not be unreasonably withheld and (ii) Lessor may install
such facilities for the purpose of using Hynix Buildings on Access
Areas with Lessee’s prior written consent which may not be
unreasonably withheld. |
| 2.4 |
In consideration of the Lease Right and the Easement Right
hereby granted to Lessee by Lessor and the agreements and covenants
herein made by Lessor and subject to other terms and conditions
herein, Lessee hereby grants to Lessor a right (i) to access to the
Cheong-Ju Complex for the purpose of using the Hynix Land as the
owner thereof, and to pass and repass to and from the Land or other
part of the Cheong Ju Complex on which Lessee has a lease right or
any part thereof over and along certain roads, accessways, paths,
highways and other thoroughfares within the Cheong-Ju Complex,
provided that Lessor shall fully comply in all material respects
with all Applicable Laws and reasonable rules and regulations
adopted by Lessee and enforced uniformly as to all occupants of the
Cheong-Ju Complex which do not materially change the economic
structure of, or have an effect on, Lessor’s business and
(ii) to use, operate, maintain, repair and replace all of
Lessor’s utility, pipeline, conduit and wiring systems on the
Cheong Ju Complex or any part thereof that serve the Hynix
Land. |
| 2.5 |
Subject to Article 7, Lessor hereby grants to Lessee a right to
register the lease under this Agreement (“Lease Right”,
“ deunggi imchakwon ”) over the Lease Rights
Site and the one-half of the Easement Site and the Easement Right
(“ jiyokkown ”) over the Easement Site with the
relevant real property registry offices. The Lease Right and the
Easement Right shall be effective during the Lease Term, as long as
the Buildings remain on the Lease Rights Site and the Lease Rights
Site is used for the Permitted Uses in accordance with the terms of
this Agreement. |
| 2.6 |
Subject to Article 7, Lessee hereby grants to Lessor a right to
register the Hynix Easement Right over the Access Areas with the
relevant real property registry offices. |
| 2.7 |
Lessee acknowledges and agrees that Lessee has the right to
occupy and use the Land only for the Permitted Uses, and upon the
terms and conditions set forth in this Agreement. |
Article 3.
Term
| 3.1. |
This Agreement shall be effective from the Closing
Date. |
| 3.2. |
Subject to Section 3.4, the lease term for the Lease Right
(“Lease Term”) shall be indefinite (i) unless otherwise
agreed between the Parties, and (ii) as long as the Buildings
remain on the Lease Rights Site and are owned by Lessee and Lessee
uses the Lease Rights Site for the purpose of the Permitted
Uses. |
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| 3.3 |
The Lease Term for the Lease Right on the one-half of the
Easement Site shall continue until the Easement Right is registered
on the Easement Site. |
| 3.4 |
Term for the Easement Right on the Easement Site shall continue
from the Partition Date to the expiration date of the Lease
Term. |
| 3.5 |
Hynix Easement Right on Access Areas shall be effective from
the Partition Date to the expiration date of the Lease
Term. |
Article 4.
Rent
| 4.1. |
The monthly rent for the Land, exclusive of VAT, (the
“Rent”) shall be [*****] per year
for ten (10) years, which is [*****] payable
monthly in accordance with Article 4. Commencing on the tenth
(10 th ) anniversary of the Closing Date, or the first
day of the immediately succeeding calendar month if the Closing
Date is not the first day of a calendar month, and every second
(2 nd ) anniversary of such date (each, a
“Calculation Date”), Rent shall be recalculated for the
next succeeding two years to increase or decrease by the same
percentage as the change in the consumer price index published by
the Korean National Statistical Office of the Ministry of Finance
and Economy (each, an “Index”) or any of its equivalent
if an Index is not available, between the Index published most
recently prior to the Calculation Date compared to the Index
published most recently prior to two years before such Calculation
Date. In any event prior to the commencement date on which such
recalculated Rent shall be applicable, the Parties, upon the
request of either Party, agree to submit a joint application to
modify the amount of the Rent registered as of such time into such
recalculated amount of the Rent. |
| 4.2. |
Lessor shall provide an invoice (the “Invoice”) to
Lessee by the 10 th day of each calendar month which shall
include the amount of Rent, Other Costs and the corresponding VAT
amount payable by Lessee for such month. |
| 4.3. |
Lessee shall pay in aggregate the Rent, Other Costs and the
corresponding VAT amount stated on each Invoice to the
Lessor’s designated account, or as otherwise designated by
Lessor, by means of wire transfer in immediately available funds by
25 th day of each calendar month (the “Due
Date”). |
| 4.4. |
For any month of the Lease Term which is less than a full
calendar month, the amount of Rent (and the corresponding VAT
amount) payable by Lessee shall be equal to a pro rata portion of
the Rent, based on a ratio of the number of days during such month
that the Lease Term is in effect to the total number of days in
such month. |
| 4.5. |
If (a) the Rent is not paid on or before the Due Date or (b)
any other amounts payable herein including payments due by either
Party with respect to Damages (collectively, the “Other
Costs”) are not paid when due, after the passage of any
applicable grace and/or cure period, Lessee or Lessor, as
applicable, shall be liable for and pay interest on the outstanding
amounts of the Rent and/or Other Costs at a rate of eight percent
(8%) per annum calculated from and including the sixth day after
the Due Date until the date Rent and/or Other Costs are received in
full by the Party to whom they are due. |
/*****/ = Portions of this exhibit
are subject to a request for confidential treatment and have been
redacted and filed separately with the Securities and Exchange
Commission.
8
| 4.6. |
Lessee shall be responsible for payment of any VAT levied on
the Rent under this Agreement. |
| 4.7 |
Notwithstanding anything herein to the contrary, in the event
of a bankruptcy filing with respect to Lessee, Lessee shall deposit
with Lessee an amount equal to the fees paid by Lessee during the
immediately preceding full calendar month under the terms of this
Agreement, against which will be credited fees payable by Lessee
over the thirty day period following such deposit. Lessee shall
renew such deposit each thirty days in each case by reference to
the fees paid by Lessee during the full calendar month immediately
preceding any such renewal until such bankruptcy protection filing
has been accepted by the bankruptcy court. For the avoidance of
doubt, Lessee shall not be relieved of responsibility for, and
shall pay when due, any fees for services hereunder during any such
thirty day period to the extent in excess of the then actual
deposit. |
Article 5.
Representations, Warranties and Covenants
| 5.1. |
Lessor hereby covenants, represents and warrants to Lessee that
all of the representations and warranties contained in this Section
5.1 are true and correct in all material respects as of the Closing
Date, and the Partition Date, as the case may be. |
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(a) |
Organization . Lessor is a corporation duly organized
and validly existing under the laws of Korea and has full power and
authority to own and lease the Land. |
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(b) |
Authorization . Lessor has full corporate power and
authority to execute and deliver this Agreement. The execution,
delivery and performance by Lessor of this Agreement have been duly
authorized by all corporate actions on the part of Lessor that are
necessary to authorize the execution, delivery and performance by
Lessor of this Agreement. |
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(c) |
Binding Agreement . This Agreement has been duly
executed and delivered by Lessor and, assuming due and valid
authorization, execution and delivery hereof by Lessee, is a valid
and binding obligation of Lessor, enforceable against Lessor in
accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting
enforcement of creditors’ rights generally and (ii) the
availability of the remedy of injunctive relief may be
s |
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