This Real Estate Easement Agreement involves
Title: LAND LEASE AND EASEMENT AGREEMENT
Law Firm: Dechert
LAND LEASE AND EASEMENT AGREEMENT
Hynix Semiconductor Inc.
MagnaChip Semiconductor, Ltd.
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
|Grant of Lease and Easement||6|
|Representations, Warranties and Covenants||9|
|Maintenance and Other Expenses||12|
|Registration of the Lease Right and Easement Right||13|
|Use and Maintenance||14|
|Sublease and Assignment||15|
|Quiet Enjoyment; Indemnification||16|
|Disputes and Governing Law||17|
|Change of Applicable Laws of Korea||17|
|Right of First Refusal||18|
|EXHIBIT A||CHEONG-JU COMPLEX|
|EXHIBIT B||DESCRIPTION OF THE SITE, ACCESS AREAS AND EASEMENT AREAS|
|EXHIBIT D||DESCRIPTION OF THE PORTIONS TO BE SUB-LEASED TO VEOLIA|
|SCHEDULE 5.1(d)||VEOLIA LEASE RIGHTS|
|SCHEDULE 5.1(e)||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”).|
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
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.
“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.
“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.|
|(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.|
|(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.”|
|(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.|
|(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.|
|(e)||A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns.|
|(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.|
|(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.|
|(h)||Headings are for convenience only and do not affect the interpretation of the provisions of this Agreement.|
|(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|
|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.|
|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.
|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.|
|(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.|
|(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.|
|(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|