exv10w3






Exhibit 10.3




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 




	 	 	 	 	 
	 	 	Page
	Article 1. Definitions

	 	 	1	 
	 
	 	 	 	 
	Article 2. Grant of Lease and Easement

	 	 	6	 
	 
	 	 	 	 
	Article 3. Term

	 	 	7	 
	 
	 	 	 	 
	Article 4. Rent

	 	 	8	 
	 
	 	 	 	 
	Article 5. Representations, Warranties and Covenants

	 	 	9	 
	 
	 	 	 	 
	Article 6. Maintenance and Other Expenses

	 	 	12	 
	 
	 	 	 	 
	Article 7. Registration of the Lease Right and Easement Right

	 	 	13	 
	 
	 	 	 	 
	Article 8. [Intentionally Deleted]

	 	 	14	 
	 
	 	 	 	 
	Article 9. Use and Maintenance

	 	 	14	 
	 
	 	 	 	 
	Article 10. Termination

	 	 	15	 
	 
	 	 	 	 
	Article 11. Sublease and Assignment

	 	 	15	 
	 
	 	 	 	 
	Article 12. Quiet Enjoyment; Indemnification

	 	 	16	 
	 
	 	 	 	 
	Article 13. Surrender

	 	 	16	 
	 
	 	 	 	 
	Article 14. Disputes and Governing Law

	 	 	17	 
	 
	 	 	 	 
	Article 15. Change of Applicable Laws of Korea

	 	 	17	 
	 
	 	 	 	 
	Article 16. Alterations

	 	 	18	 
	 
	 	 	 	 
	Article 17. Right of First Refusal

	 	 	18	 
	 
	 	 	 	 
	Article 18. Additional Warehouse

	 	 	19	 
	 
	 	 	 	 
	Article 19. Insurance

	 	 	19	 
	 
	 	 	 	 
	Article 20. Signage

	 	 	20	 
	 
	 	 	 	 
	Article 21. Force Majeure

	 	 	20	 
	 
	 	 	 	 
	Article 22. Confidentiality

	 	 	20	 
	 
	 	 	 	 
	Article 23. Miscellaneous

	 	 	21	 
	 
	 	 	 	 
	EXHIBIT A CHEONG-JU COMPLEX
	 	 	 	 
	EXHIBIT B DESCRIPTION OF THE SITE, ACCESS AREAS AND EASEMENT AREAS
	 	 	 	 
	EXHIBIT C CONSENTS
	 	 	 	 
	EXHIBIT D DESCRIPTION OF THE PORTIONS TO BE SUB-LEASED TO VEOLIA
	 	 	 	 
	EXHIBIT E SIGNAGE
	 	 	 	 
	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”).





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





2









 









	 	 	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.






3









 









	 	 	“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.






4









 









	 	 	“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.




5









 






	 	(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




6









 






		 	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.




7









 






	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 (10th) 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 (2nd) 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
10th 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
25th 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.






	 	(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 subject to the discretion of the court before
which any proceeding therefor may be brought or the
general principle of good faith and fairness
provided for in the Korean Civil Code.
	 
	 	(d)	 	Title and Consents. Except as disclosed in Schedule
5.1(d), Lessor is the only legal and beneficial
owner of the Land and has requisite power to grant
the Lease Rights or the Easement Right hereunder to
Lessee and has the requisite power to grant the
registration of the Lease Right and the Easement
Right on the relevant portions of the Land to
Lessee.




9









 






	 	(e)	 	Use of Land. Except as disclosed in Schedule 5.1(e),
Lessor has obtained all Consent required in
connection with the ownership or use of the Land and
the granting to Lessee of the rights under this
Agreement, and shall obtain such additional Consents
necessary or appropriate for the grant of the Lease
Rights or the Easement Right, as applicable, and the
registration thereof in accordance with Section 7
(“Lessor Lease Rights Consents” or “Lessor Easement
Rights Consent”, as the case may be). Lessor has
provided Lessee with copies of all such Consents and
shall provide Lessee with the Lessor Lease Rights
Consents related to the registration of Lease Rights
on or before the Closing Date and the Lessor
Easement Rights Consents related to the registration
of the Easement Right on or before the Partition
Date, including those listed on Exhibit C. The
present condition and use of the Land by Lessor
complies with all Applicable Laws in all material
respects.
	 
	 	(f)	 	Veolia Lease Right. Lessor shall de-register the
registered lease rights in favor of Veolia Water
Korea Co., Ltd. (formerly known as Vivendi Water
Industrial Development Co., Ltd.) (“Veolia”) on the
land described in Schedule 5.1(d) (“Veolia Leased
Land”) and consent to the registration of Lease
Right I for the benefit of Lessee on the Veolia
Leased Land as soon as possible after the Closing
but in no event later than 4 weeks thereafter.
	 
	 	(g)	 	Brokerage. Lessor and its Subsidiaries (as defined
in the BTA) have not made any agreement or taken any
other action which might cause any Person to become
entitled to a broker’s or finder’s fee or commission
as a result of this Agreement.
	 
	 	(h)	 	NO OTHER REPRESENTATIONS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT OR THE BTA, NEITHER LESSOR NOR ANY OTHER
PERSON OR ENTITY ACTING ON BEHALF OF LESSOR, MAKES
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED.
TO THE EXTENT ANY REPRESENTATIONS OR WARRANTIES
HEREIN ARE INCONSISTENT WITH ANY REPRESENTATIONS OR
WARRANTIES IN THE BTA, THE APPLICABLE
REPRESENTATIONS OR WARRANTIES IN THE BTA SHALL
CONTROL.






	5.2.	 	Lessee hereby covenants, represents and warrants to Lessor that
all of the representations and warranties contained in this
Section 5.2 are true and correct in all material respects as of
the Closing Date, and the Partition Date, as the case may be.






	 	(a)	 	Organization. Lessee is a corporation duly organized
and validly existing under the laws of Korea and has
full power and authority to carry on its business as
heretofore conducted.






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	 	(b)	 	Authorization. Lessee has full corporate power and
authority to execute and deliver this Agreement. The
execution, delivery and performance by Lessee of
this Agreement have been duly authorized by all
corporate actions on the part of Lessee that are
necessary to authorize the execution, delivery and
performance by Lessee of this Agreement.
	 
	 	(c)	 	Binding Agreement. This Agreement has been duly
executed and delivered by Lessee and, assuming due
and valid authorization, execution and delivery
hereof by Lessor, is a valid and binding obligation
of Lessee, enforceable against Lessee 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 subject to the discretion of the court before
which any proceeding therefor may be brought or the
general principle of good faith and fairness
provided for in the Korean Civil Code.
	 
	 	(d)	 	Title and Consents. As of the Partition Date, Lessee
has requisite power to grant the easement rights
hereunder to Lessor and has the requisite power to
grant the registration of the Hynix Easement Right
on the relevant portions of the Land to Lessor.
	 
	 	(e)	 	Use of Land. Lessee has obtained all Consents
required in connection with the use of the Land and
the granting to Lessor of the rights under this
Agreement, and shall obtain such additional Consents
necessary or appropriate for the grant of the Hynix
Easement Right and the registration thereof in
accordance with Section 7 (“Lessee Easement Rights
Consents”). As of Partition Date, Lessee has
provided Lessor with copies of all such Consents and
shall provide Lessor with the Lessee Easement Rights
Consents on or before the Partition Date, including
those listed on Exhibit C. The condition and use of
the Access Areas as of the Partition Date by Lessee
complies with all Applicable Laws in all material
respects.
	 
	 	(f)	 	Construction of Warehouses. Lessee shall construct a
Gas Warehouse Building on the Lease Right Site II
within two (2) years from the Closing Date and a
Waste Water Facility Building on the Lease Rights
Site II within one(1) year from the Closing Date.
	 
	 	(g)	 	Brokerage. Lessee has not made any agreement or
taken any other action which might cause any Person
to become entitled to a broker’s or finder’s fee or
commission as a result of this Agreement.
	 
	 	(h)	 	NO OTHER REPRESENTATIONS. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT OR THE BTA, NEITHER LESSEE NOR ANY OTHER
PERSON OR ENTITY ACTING ON BEHALF OF LESSEE, MAKES
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED.
TO THE EXTENT ANY REPRESENTATIONS OR WARRANTIES
HEREIN ARE




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	 	 	 	INCONSISTENT WITH ANY REPRESENTATIONS OR
WARRANTIES IN THE BTA, THE APPLICABLE
REPRESENTATIONS OR WARRANTIES IN THE BTA SHALL
CONTROL.






	5.3.	 	Each Party covenants and agrees to endeavor to cooperate with
the other Party so as to minimize any interference with the
other Party’s operation of its business.






	5.4.	 	With respect to Lessee’s use of the Land, from and after the
Closing Date, Lessee shall comply in all material respects with
all Applicable Laws applicable to the ordinary operation of
Lessee’s Business, including the environmental laws, and with
the terms of all Government Authorizations relating to Lessee’s
operation of its Business at the Land or in the Buildings
arising after the Closing Date.






	5.5.	 	Lessee covenants and agrees to reimburse Lessor, in full and
promptly upon demand, if Lessor sustains any material Damages or
is reasonably required to expend any money as a result of a
default by Lessee hereunder; provided, however, Lessee shall not
reimburse Lessor for any damages resulting from (a) reasonable
wear and tear to the Land, (b) Lessor’s maintenance of the Land
as provided for herein, or (c) to the extent such Damages arises
from Lessor’s gross negligence or intentional misconduct.






	5.6.	 	Based on the Lease Right over the Site, Lessee shall grant to
Veolia a registered sublease (“deunggi cheonchawkwon”) on
certain portions of the Site, as more specifically depicted in
Exhibit D attached hereto, under the terms and conditions
substantially the same as those of the Land Use Rights Agreement
dated March 27, 2001 entered into by and between Lessor and
Veolia.






	5.7.	 	Except as disclosed in Schedule 5.1(d), Lessor will deliver
actual possession of the Site free and clear of occupancy.






	5.8.	 	By the Closing Date, Lessor shall have obtained all necessary
and relevant Lessor Lease Rights Consents related to the
registration of the Lease Rights. By the Partition Date, Lessee
shall have obtained all necessary and relevant Lessee Easement
Rights Consents. Lessor shall not permit or suffer future Liens
on the Lease Rights Site I.






	5.9.	 	Lessor covenants and agrees to reimburse Lessee, in full and
promptly upon demand, if Lessee sustains any material Damages or
is reasonably required to expend any money as a result of a
default by Lessor hereunder; provided, however, Lessor shall not
reimburse Lessee for any damages resulting from (a) reasonable
wear and tear to the Land, or (b) Lessee’s maintenance of the
Land as provided for herein, or (c) to the extent such Damage
arises from Lessee’s gross negligence or intentional misconduct.





Article 6. Maintenance and Other Expenses



All costs, expenses and obligations relating to the Site which arise or are attributable to
Lessee’s occupancy or use of the Site during the Lease Term, shall be paid by Lessee. Lessee hereby
assumes all other responsibilities normally identified with the ownership of the Site, such as
responsibility for the condition of the premises, such as operation, repair, replacement,
maintenance and management of the Site, including repairs to the paved areas and driveways on




12









 







the Site. During the Lease Term, if Lessee fails to maintain the Site in good repair and condition
for Lessor to obtain the reasonable benefits of the Site, Lessor may so notify Lessee and perform
such repair and shall be reimbursed upon demand by Lessee for such costs based on invoices for work
actually performed. Without limiting the foregoing, except as otherwise provided in this Agreement,
or the other contracts executed by the Parties in connection with the BTA, the Parties agree that
Lessor shall not be required or obligated to furnish any services or facilities to the Lease Rights
Site. All costs, expenses and obligations relating to the Easement Site and taxes that Lessor
should pay, which arise or are attributable to the period of the Lease Term shall be paid by
Lessor. Lessor hereby assumes all other responsibilities normally identified with the ownership of
the Easement Site, such as a responsibility for the condition of the Easement Site, such as
operation, repair, replacement, maintenance and management of the Easement Site, including repairs
to the paved areas and driveways on the Easement Site. If Lessor fails to maintain the Easement
Site in good repair and condition for Lessee to obtain the reasonable benefit of the Easement
Right, Lessee may so notify Lessor and perform such repair and shall be reimbursed upon demand by
Lessor for such costs based on invoices for work actually performed, with a right of setoff against
next Rent due to the extent not reimbursed.




Article 7. Registration of the Lease Right and Easement Right.





	7.1.	 	On the Closing Date, Lessor shall consent to the registration of
(a) the Lease Right over the Lease Rights Site for the benefit
of Lessee, in accordance with Section 2.3 and (b) the lease
rights over the one-half of the Easement Site for the benefit of
Lessee, subject to Lessor’s rights to use the Easement Site as
the owner thereof, and shall provide to Lessee all the necessary
and appropriate documents normally required of a lessor for the
registration of such Lease Right on the Closing Date, including
Lessor Lease Rights Consents. Lessee shall be entitled to
register, on or after the Closing Date, the rights granted under
this Section 7.1 with the pertinent real property registry
offices. Such registration shall have, (i) with respect to the
Lease Rights Site I and the Easement Site I, first priority
during the Lease Term over any Lien on the Lease Rights Site I
and the Easement Site I, subject to the subsequent
de-registration of such lease rights over the one-half of the
Easement Site on the Partition Date and (ii) with respect to the
Lease Rights Site II, subordinate to the Liens held by Lessor’s
creditors. The registration shall include such material matters
provided in this Agreement as Lessor and Lessee may agree to
register and as permitted to be registered in the real property
registry under the Applicable Laws, provided that the terms of
such Lease Right shall be the same as the terms and conditions
of this Agreement. The expenses and costs of such registration
of the Lease Right shall be borne wholly by Lessee.






	7.2	 	On the Partition Date, Lessor shall consent to the registration
of the Easement Right over the Easement Site for the benefit of
Lessee, in accordance with Section 2.3 and shall provide to
Lessee all necessary and appropriate documents normally required
of a lessor for the registration of such Easement Right on the
Partition Date. Lessee shall be entitled to register, on or after
the Partition Date, the Easement Right over the Easement Site
granted under this Section 7.2 with the pertinent real property
registry offices. Such registration shall have, (a) with respect
to the Easement Site I, first priority during the Lease Term over
any Lien on the Easement Site I and (b) with respect to Easement
Site II, priority subordinated to the Liens held by Lessor’s
creditors. The registration shall




13









 






	 	 	include such material matters provided in this Agreement as Lessor and Lessee
may agree to register and as permitted to be registered in the real property
registry under the Applicable Laws, including the matter of the exercise by
Lessee of the Easement Right in a manner and to the extent that allows Lessor
to exercise a equal rights to use the Easement Site based on its ownership
rights to the Easement Site set forth in Section 2.1, provided that the terms
of such Easement Right shall be the same as the terms and conditions of this
Agreement. The expenses and cost of deregistration and re-registration of
rights other than Lease Right over Lease Rights Site and Easement Right over
Easement Site shall be borne by the Party incurring such costs and expenses.
The expenses and costs of such registration of such Easement Right shall be
borne solely by Lessee.






	7.3	 	On the Partition Date, Lessee shall consent to the registration
of the Hynix Easement Right over the Access Areas in accordance
with Section 2.1 for the benefit of Lessor and shall provide to
Lessor all necessary and appropriate documents normally required
of a lessor for the registration of such easement rights on the
Partition Date. Lessor shall be entitled to register, on or after
the Partition Date, such Easement Right over the Access Areas
granted under this Section 7.3 with the pertinent real property
registry offices. Such registration shall have, with respect to
the Access Areas, first priority during the Lease Term over any
Lien on the Access Areas. The registration shall include such
material matters provided in this Agreement as Lessor and Lessee
may agree to register and as permitted to be registered in the
real property registry under the Applicable Laws, including the
matter of the exercise by Lessee of the Easement Right in a
manner and to the extent that allows Lessee to exercise a equal
rights to use the Access Areas based on its Lease Rights over the
Access Areas set forth in Section 2.2, provided that the terms of
such easement rights shall be the same as the terms and
conditions of this Agreement. The expenses and costs of such
registration of Hynix Easement Right shall be borne solely by
Lessor.





Article 8. [Intentionally Deleted]




Article 9. Use and Maintenance




	9.1.	 	Subject to Section 2.7, Lessee shall not occupy or use the Lease
Rights Site and the Easement Site for any purpose whatsoever,
other than in connection with the operation of the Business,
including all Permitted Uses and in compliance with all
Applicable Laws and Rules and Regulations.






	9.2.	 	Lessee shall, at its sole cost and expense, maintain, or cause
to be maintained, during the Lease Term, the Site in equivalent
condition to the condition as of the Closing Date, wear and
tear, insured casualty and condemnation excepted.






14









 








Article 10. Termination




	10.1.	 	Termination. This Agreement may be terminated at any time
during the Lease Term of this Agreement upon the occurrence of
any of the following events:







	 	(a)	 	by a Party serving a written notice of termination
to the other Party in the event of a material breach
or default by such other Party of its obligations
hereunder, which default shall not have been cured
within sixty (60) days after written notice is
provided by the non-breaching Party to the breaching
Party; or
	 
	 	(b)	 	by Lessee with ninety (90) days prior written notice to Lessor for any reason whatsoever.






	10.2.	 	Upon termination of this Agreement, each Party shall
discontinue the use of all Confidential Information provided by
the other Party in connection with this Agreement, and shall
promptly return to the other Party any and all Confidential
Information, including documents originally conveyed to it by
the other Party and any copies thereof made thereafter.






	10.3.	 	Termination of this Agreement shall be without prejudice to the
accrued rights and liabilities of the Parties prior to the
termination of this Agreement.






	10.4.	 	The respective rights and obligations of the Parties under any
Sections which by their nature are intended to extend beyond
termination, shall survive the termination or expiry of this
Agreement.






	10.5.	 	In the event of the termination of this Agreement pursuant to
Section 10.1 hereof, a written notice thereof shall forthwith
be given to the other Party specifying the provision hereof
pursuant to which such termination is made, and Lessee or
Lessor (as the case may be) shall only be liable thereafter for
(i) Damages suffered as a result of its fraud or willful breach
of this Agreement that occurred prior to the termination of
this Agreement, or (ii) the obligations and liabilities of the
Parties pursuant to this Agreement that accrued prior to the
termination of this Agreement.





Article 11. Sublease and Assignment





	11.1.	 	This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective successors and
permitted assigns; provided, however, that no Party hereto will
assign its rights or delegate its obligations under this
Agreement without the express prior written consent of the
other Party hereto, except that (i) Lessee may assign its
rights hereunder (other than the lease right over the one-half
of the Easement Site allowed from the Closing Date until the
Partition Date) as collateral security to any bona fide
financial institution engaged in financing in the ordinary
course providing financing to the Warrant Issuer or its
Subsidiaries and any of the foregoing financial institutions
may assign such rights in connection with the sale of Lessee’s
business in the form then being conducted by Lessee
substantially as an entirety; (ii) Lessor and Lessee each may,
upon written notice to the other Party (but without the
obligation to obtain the consent of such other Party), assign
this Agreement or any of its rights and obligations under this
Agreement to




15









 






	 	 	any person, entity or organization that succeeds (by purchase, merger,
operation of law or otherwise) to all or substantially all of the capital
stock, assets or business of such party, all or substantially all of its assets
and liabilities or to all or substantially all of the assets and liabilities of
the portion of the Party’s business to which the subject of this Agreement
relates or of a division of Lessee, if such person or entity agrees in writing
to assume and be bound by all of the relevant obligations of such Party under
this Agreement; and (iii) Lessee may, upon written notice to Lessor (but
without the obligation to obtain the consent of Lessor), assign this Agreement
or any of its rights and obligations under this Agreement to one or more direct
or indirect Subsidiaries of the Warrant Issuer if such Subsidiaries agree in
writing to assume and be bound by all of the relevant obligations of Lessee
under this Agreement.






	11.2.	 	Intentionally Deleted.






	11.3.	 	Notwithstanding anything to the contrary, Lessee shall not
sublease the Lease Rights Site, in whole or in part, to a third
party, except Veolia in accordance with Section 5.6 and the
Hynix Easement Right.





Article 12. Quiet Enjoyment; Indemnification.





	12.1.	 	Without prejudice to Lessor’s rights under this Agreement or
under the Applicable Laws, so long as Lessee pays the Rent and
materially observes all other terms, conditions and covenants
hereof, Lessor shall ensure that Lessee has the right to
quietly enjoy the Land without hindrance, molestation or
interruption during the Lease Term, subject to the terms and
conditions of this Agreement.






	12.2.	 	Lessor shall indemnify Lessee and its Indemnified Persons (the
“Lessee Indemnified Parties”), and hold the Lessee Indemnified
Parties harmless from and against, any and all Damages arising
out of, resulting from or relating to claims by third parties
arising from the negligent acts of Lessor, except to the extent
such Damage is caused by the negligence or willful misconduct
of any such Lessee Indemnified Party.






	12.3.	 	Lessee shall indemnify Lessor and its Indemnified Persons (the
“Lessor Indemnified Parties”) and hold the Lessor Indemnified
Parties harmless from and against, any and all Damages arising
out of, resulting from or relating to claims by third parties
arising from the negligent acts of Lessee, except to the extent
such Damage is caused by the negligence or willful misconduct
of any such Lessor Indemnified Party.






	12.4.	 	In no event shall a Party be liable for Excluded Damages.





Article 13. Surrender.





	13.1.	 	Upon the expiration or termination of this Agreement, Lessor
and Lessee shall consult in good faith to determine a
reasonable grace period (which shall not be more than 6 months)
(the “Grace Period”) for Lessee to peaceably and quietly vacate
and surrender the Land to Lessor. For the avoidance of doubt,
Lessee shall be obligated to pay the Rent for the period until
the date of surrender of the Land to Lessor.






16









 









	13.2.	 	During the Grace Period, Lessee shall, among other things, restore
the Land to its condition and shape equivalent to that of the
Closing Date, wear and tear, insured casualty and condemnation
excepted, and as otherwise reasonably acceptable to Lessor by
removing at its own expense any additional fixtures, partitions and
structural alterations made by Lessee not consented to by Lessor. In
the event Lessee fails to vacate, surrender and restore the Land to
its condition equivalent to that of the Closing Date, including the
presence of any buildings and improvements, reasonable wear and tear
and insured casualty excepted, by the end of the Grace Period,
Lessor may move, remove or dispose of any fixtures, partitions,
structural alterations or other property or belongings remaining on
the Land, and all reasonable expenses incurred therefrom shall be
borne by Lessee.





Article 14. Disputes and Governing Law.





	14.1.	 	This Agreement shall be governed by and construed in accordance
with the laws of Korea without reference to the choice of law
principles thereof.






	14.2.	 	The Parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction to prevent any breach of
this Agreement and to enforce specifically the terms and
provisions of this Agreement by bringing a relevant action in
the Seoul Central District Court in Seoul, Korea, in addition
to any other remedy to which any Party may be entitled at law
or in equity. In addition, the Parties agree that any disputes,
claims or controversies between the Parties arising out of or
relating to this Agreement, whether in contract, tort, equity
or otherwise and whether relating to the meaning,
interpretation, effect, validity, performance or enforcement of
this Agreement shall be submitted to the exclusive jurisdiction
of the Seoul Central District Court in Seoul, Korea. Each of
the Parties irrevocably waives, to the fullest extent permitted
by law, any objection which it may now, or hereafter, have with
respect to the jurisdiction of, or the venue in, the Seoul
Central District Court.





Article 15. Change of Applicable Laws of Korea



Lessor shall process, and Lessee shall pay for, every zoning requirement or the requirements
imposed by the Applicable Laws, which arise from change of conditions caused by Lessee subsequent
to the Closing Date from the operation of the Business, as they come into effect during the Lease
Term.





17









 








Article 16. Alterations


Each of the Buildings is now or hereafter shall be owned by Lessee, Lessee has the unfettered
right to alter, replace, construct and/or reconstruct the Buildings, and Lessor acknowledges such
alteration, replacement, construction or reconstruction shall not be deemed to be a termination of
the Business or this Agreement. Lessor shall, upon request by Lessee, either (a) give evidence of
this prior consent to such demolition and construction during the Lease Term as long as the
applicable Building is to be used for a Permitted Use, and/or (b) issue the requisite consent
letter for submission to competent authorities.




Article 17. Right of First Refusal





	17.1.	 	Lessor is the current occupant of portions of the Hynix Land
(“Expansion Area”), Lessee shall have both a Right of First
Refusal on the Expansion Area as set forth below:






	 	(a)	 	Right of First Refusal. If Lessor shall receive an
offer to lease any portion of the Expansion Area,
from time to time, which offer Lessor shall desire
to accept, Lessor shall transmit a memorandum of
said offer to Lessee. The memorandum shall set forth
in detail the terms of the offer, including a
description of the area, the rent (including any
abatement and escalations), and any other material
terms of the offer, to the extent available. Within
fifteen (15) days of receiving Lessor’s memorandum,
Lessee shall, by written notice to Lessor exercise
the right (each, a “Right of First Refusal”), (i) to
accept such Expansion Area upon the terms and
conditions stated in the offer or (ii) to accept
such Expansion Area on the terms and conditions set
forth in Section 17.1(c) and 17.1(d). Lessee’s
failure to make the election shall be deemed a
rejection of the Expansion Area. Upon Lessee’s
acceptance of the Expansion Area, the parties shall
execute an amendment incorporating the Expansion
Area into the Site subject to all of the terms,
covenants, and conditions of the Lease, except as
modified by the terms of the offer (if Lessee has
elected option (i) above). Notwithstanding anything
to the contrary in the offer, the terms of the Lease
for the Expansion Area shall be as provided in
Section 17.1(c) immediately below. Notwithstanding
that Lessee should fail or refuse to exercise its
Right of First Refusal in the manner herein
provided, if the Expansion Area, or any part
thereof, is not leased to the prospective tenant
contemplated by Lessor’s memorandum within the
time-period and on terms no more favorable to such
tenant than originally offered to Lessee, the
Expansion Area shall thereafter continue to be
subject to the terms and conditions imposed by this
Section 17.1(a) upon third party offers to lease and
the first refusal procedure established by this
Section 17.1(a) shall be reinstated.
	 
	 	(b)	 	Should Lessee elect to exercise its Right of First
Refusal, the terms and conditions of this Lease
shall apply to the Expansion Area except as modified
by the terms of the offer if Lessee has accepted in
Section 17.1(a) option (i) above. Rent for the
Expansion Area shall be at the then current square
meter rental rate except as modified by the terms of
the offer if Lessee has accepted in Section 17.1(a)
option (i) above.




18









 






	 	(c)	 	Should Lessee exercise its Right of First Refusal,
Lessor shall deliver such Expansion Area to Lessee,
in Turnover Condition (defined below) whereupon said
Expansion Area shall be added to and become a part
of the Site and shall be governed in all respects by
the terms of this Lease except that (i) as to the
Right of First Refusal, the terms of the offer upon
which Lessee exercised such right shall govern to
the extent inconsistent with the terms of this
Agreement and (ii) notwithstanding anything herein
to the contrary, the term applicable to such space
shall end at the same time, and under the same
conditions, as applicable to the Lease Term. As used
herein, “Turnover Condition” shall mean broom clean,
free of occupants, debris, and movable property.





Article 18. Additional Warehouse





	18.1	 	In accordance with Applicable Laws and if any land in the Cheong
Ju Complex is available for the construction of one additional
warehouse (“First Additional Warehouse”), Lessee may elect to
construct a First Additional Warehouse by hiring its own
contractors and performing such construction. In such event,
Lessor shall provide or engage in the following:






	 	(a)	 	the use or lease of the additional land necessary
for the construction of the First Additional
Warehouse, which would become part of the Lease
Rights Site II; and
	 
	 	(b)	 	the use of access to such additional land and to the
completed First Additional Warehouse, which would
become part of the Easement Site II.
	 
	 	(c)	 	to undertake the performance for Lessee to obtain
second priority Lease Rights for the site of the
First Additional Warehouse and second priority
Easement Rights for access from a public road along
the main road to the site of the First Additional
Warehouse consistent with Article 7 of this
Agreement.






	18.2	 	In accordance with Applicable Laws and if any land in the Cheong
Ju Complex is available for the construction of one other
additional warehouse (“Second Additional Warehouse”, together
with the First Additional Warehouse, the “Additional
Warehouses”), upon Lessee’s request, the Parties shall discuss
in good faith (i) to accommodate such request and (ii) the
selection of the site for the Second Additional Warehouse and
other required acts. If both Parties agree, Lessor shall provide
the undertakings as set forth in Sections 18.1(a), (b) and (c)
above.






	18.3	 	This Section shall be deemed as advance consent by Lessor to the
site of the Additional Warehouses becoming part of the Lease
Rights Site II and having the right of Easement Right II for
access from a public road along the main road to the site of the
Additional Warehouses.





Article 19. Insurance.





	19.1.	 	Lessor and Lessee shall each obtain from, keep in force during
the Lease Term with, and pay all premiums due to, an insurer(s)
holding a Best Rating of B+ or higher, Standard




19









 






	 	 	Commercial General Liability Insurance. The limits of liability of such
insurances shall be in an amount not less than One Million Dollars
($1,000,000.00) per occurrence, Personal Injury including death and One Million
Dollars ($1,000,000.00) per occurrence, Property Damage Liability or One
Million Dollars ($1,000,000.00) combined single limit for Personal Injury and
property Damage Liability.






	19.2.	 	Lessee shall pay to Lessor the incremental amount of insurance
premiums which will be additionally charged to Lessor due to
Lessor’s grant to Lessee of lease of the Lease Rights Site I
and easement right to the Easement Site in accordance with this
Agreement.





Article 20. Signage.



Upon surrender or vacation of the Leased Premises, Lessee shall have removed all signs it has
installed. Lessee shall obtain all applicable Governmental Authorizations for sign and exterior
treatments at its sole cost and expense. Lessor consents to the signage as depicted on Exhibit E.
If Lessee desires to install signs, decorations, or advertising media, the Parties shall discuss in
good faith the installation of such signage.




Article 21. Force Majeure.





	21.1.	 	Neither Party shall be liable to the other Party for failure of
or delay in the performance of any obligations under this
Agreement due to causes reasonably beyond its control including
(i) war, insurrections, riots, explosions, inability to obtain
raw materials due to then current market situation; (ii)
natural disasters and acts of God, such as violent storms,
earthquakes, floods, and destruction by lightning; (iii) the
intervention of any Governmental Entity or changes in relevant
laws or regulations which restrict or prohibit either Party’s
performance of its obligations under this Agreement or
implementation of this Agreement; or (iv) strikes, lock-outs
and work-stoppages, which are beyond the reasonable control of
the Party claiming the benefit (each, an “Event of Force
Majeure”). Upon the occurrence of an Event of Force Majeure,
the affected Party shall notify the other Party as soon as
possible of such occurrence, describing the nature of the Event
of Force Majeure and the expected duration thereof.
Notwithstanding the foregoing, Lessee shall be under continuing
obligation to make the payments required hereunder for any
Rent, Other Costs and the corresponding VAT payable by Lessee,
which was payable by Lessee prior to the occurrence of an Event
of Force Majeure.






	21.2.	 	If a Party is unable, by reason of an Event of Force Majeure,
to perform any of its obligations under this Agreement, then
such obligation shall be suspended to the extent and for the
period that the affected Party is unable to perform. If this
Agreement requires an obligation to be performed by a specified
date, such date shall be extended for the period during which
the relevant obligation is suspended due to such an Event of
Force Majeure under this Agreement.





Article 22. Confidentiality.





	22.1.	 	Confidentiality. Neither Party shall, except as expressly
permitted by the terms of this Agreement, disclose to any third
party the terms and conditions of this Agreement, the




20









 






	 	 	existence of this Agreement and any Confidential Information which either Party
obtains from the other Party in connection with this Agreement and/or use such
Confidential Information for any purposes whatsoever other than those
contemplated hereunder provided, however, that this Agreement (and its terms
and conditions) may be disclosed and filed publicly in connection with a public
offering of securities by Lessee or its Affiliates. “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.






	22.2.	 	The obligation of confidentiality in Section 22.1 shall not
apply to any information that: (a) was known to the other Party
without an obligation of confidentiality prior to its receipt
thereof from the disclosing Party; (b) is or becomes generally
available to the public without breach of this Agreement, other
than as a result of a disclosure by the recipient Party, its
representatives, its Affiliates or the representatives of its
Affiliates in violation of this Agreement; (c) is rightfully
received from a third party with the authority to disclose
without obligation of confidentiality and without breach of
this Agreement; or (d) is required by law or regulation to be
disclosed by a recipient Party or its representatives
(including by oral question, interrogatory, subpoena, civil
investigative demand or similar process), provided that written
notice of any such disclosure shall be provided to the
disclosing Party in advance. If a Party determines that it is
required to disclose any information pursuant to applicable law
(including the requirements of any law, rule or regulation in
connection with a public offering of securities by Lessor or
its Affiliates) or receives any demand under lawful process to
disclose or provide information of the other Party that is
subject to the confidentiality provisions hereof, such Party
shall notify the other Party prior to disclosing and providing
such information and shall cooperate at the expense of the
requesting Party in seeking any reasonable protective
arrangements requested by such other Party. Subject to the
foregoing, the Party that receives such request may thereafter
disclose or provide information to the extent required by such
law or by lawful process.





Article 23. Miscellaneous.





	23.1.	 	Exercise of Right. A Party may exercise a right, power or
remedy at its discretion, and separately or concurrently with
another right, power or remedy. A single or partial exercise of
a right, power or remedy by a Party does not prevent a further
exercise of that or of any other right, power or remedy. A
failure to exercise a right, power or remedy or a delay in
exercising a right, power or remedy by a Party does not prevent
such Party from exercising the same right thereafter.






	23.2.	 	Extension; Waiver. At any time during the Lease Term, each of
Lessor and Lessee may (a) extend the time for the performance
of any of the obligations or other acts of the other or (b)
waive any inaccuracies in the representations and warranties of
the other contained in this Agreement or in any document
delivered pursuant to this Agreement. Any agreement on the part
of a Party to any such extension or waiver shall be valid only
if set




21









 






	 	 	forth in an instrument in writing signed on behalf of such Party. The failure
of any Party to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights. Any rights under this Agreement
may not be waived except in writing signed by the Party granting the waiver or
varied except in writing signed by the Parties.






	23.3.	 	Notices. Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted to be
given to any Party shall be in writing and shall be deemed duly
given only upon delivery to the Party personally (including by
reputable overnight courier service), when telecopied (with
confirmation of transmission having been received) during
normal business hours or three days after being mailed by
registered or certified mail (return receipt requested), with
postage and registration or certification fees thereon prepaid,
addressed to the Party at its address set forth below (or at
such other address for a party as shall be specified by such
Party by like notice):




If to Lessor, to:



Hynix Semiconductor Inc.

Hynix Youngdong Building

891 Daechi-dong, Gangnam-gu

Seoul 135-738, Korea

Attention: O.C. Kwon

Telephone: 82-2-3459-3006

Facsimile: 82-2-3459-5955



If to Lessee, to:



MagnaChip Semiconductor, Ltd.

1 Hyangjeong-dong

Heungduk-gu

Cheongju City

Chung Cheong Bok-do

Korea

Telephone:



Attention: Dr. Youm Huh

Facsimile: +82-43-270-2134



with a copy to:



Dechert LLP

30 Rockefeller Plaza

New York, New York 10112

Telephone: (212) 698-3500

Facsimile: (212) 698-3599

Attention: Geraldine A. Sinatra, Esq.

Sang H. Park, Esq.





22









 









	23.4.	 	Fees and Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the Party incurring such
expenses, except as specifically provided to the contrary in this
Agreement.






	23.5.	 	Entire Lease; No Third Party Beneficiaries. This Agreement (a)
constitutes the entire agreement between the Parties and
supersedes all prior agreements and understandings, both
written or oral, between the Parties with respect to the
subject matter hereof and (b) is not intended to confer upon
any person other than the Parties hereto any rights or remedies
hereunder.






	23.6.	 	Severability of Provisions. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or
other authority to be unlawful, invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any
other jurisdiction. If the final judgment of a court of
competent jurisdiction or other authority declares that any
term or provision hereof is unlawful, invalid, void or
unenforceable, the Parties agree that the court making such
determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to
delete specific words or phrases, or to replace any unlawful,
invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest
to expressing the intention of the unlawful, invalid or
unenforceable term or provision.






	23.7.	 	Amendment and Modification. This Agreement (for the avoidance
of doubt, including Exhibits attached hereto) may be amended,
modified and supplemented in any and all respects, but only by
a written instrument signed by the Parties expressly stating
that such instrument is intended to amend, modify or supplement
this Agreement.






	23.8.	 	Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement.






	23.9.	 	Election of Remedies. Neither the exercise of nor the failure
to exercise a right or to give notice of a claim under this
Agreement shall constitute an election of remedies or limit any
Party in any manner in the enforcement of any other remedies
that may be available to such Party, whether at law or in
equity.






	23.10.	 	Language. This Agreement is being originally executed in the
English language only. In the event that the Parties agree to
have a Korean version of this Agreement following signing,
this Agreement may be translated into Korean. The Parties
acknowledge that the Korean version of this Agreement shall be
for reference purposes only, and in the event of any
inconsistency between the two texts, the English version shall
control.






	23.11.	 	No Merger. It is the intention of the Lessor to lease the Land
to the Lessee free of any merger of the fee estate and
leasehold estate or any other interests that may be held
contemporaneously by Lessor, or any of them, and Lessee. No
such merger will occur until such time as the Lessee executes
a written instrument specifically effecting such merger and
duly records the same.






23









 








     IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly
authorized representatives as of the date first above written.



	 	 	 	 	 
	Hynix  Semiconductor Inc.	 	 
	By:
	 	/s/ [ILLEGIBLE] 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	MagnaChip
 Semiconductor, Ltd.
	 	 
	By:
	 	/s/ [ILLEGIBLE] 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 







24











 







Exhibit A




CHEONG-JU COMPLEX


(STAMP)

 









 










 









 





Exhibit B




DESCRIPTION OF THE SITE,

ACCESS AREAS AND EASEMENT AREAS


(STAMP)

 









 










 









 





Exhibit C




CONSENTS



None


(STAMP)

 









 





Exhibit D




DESCRIPTION OF PORTIONS TO BE SUB-

LEASED TO VEOLIA


(STAMP)

 









 










 









 





Exhibit E




SIGNAGE


(STAMP)


 









 












	Cheong-ju Plant Diagram





 









 





SCHEDULE 5.1(d)




VEOLIA LEASE RIGHTS


Portions of the Lands on which Veolia Water Industrial Development Co., Ltd.’s lease rights are
registered:




	 	 	 	 	 
	Description of the part of parcel	 	Address	 	Area
	Site
corresponding to
the areas occupied
by DI facility in C1 Building

	 	1 Hyangjung-dong

Heungduk-gu Cheongju
	 	131 m2
	 

	 	105-27 Oibuk-dong,

Heungduk-gu, Cheongju
	 	262 m2
	 
	 	 	 	 
	Site
corresponding to
the areas occupied
by storage tank in
C1 Building

	 	105-27 Oibuk-dong,

Heungduk-gu, Cheongju
	 	50 m2
	 
	 	 	 	 
	Site
corresponding to the areas occupied
by DI facility in
C2 Building

	 	105-27 Oibuk-dong,

Heungduk-gu, Cheongju
	 	813 m2
	 
	 	 	 	 
	Site
corresponding to
the areas occupied
by storage tank in
C2 Building

	 	105-27 Oibuk-dong,

Heungduk-gu, Cheongju
	 	149.40 m2





(STAMP)

 









 






SCHEDULE 5.1(e)


VEOLIA CONSENTS


Consents from the creditors of Veolia Water Industrial Development Co., Ltd.




(STAMP)