Exhibit 10.5
LEASE AGREEMENT
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CONFIRMATION OF EXECUTION
: I hereby enter into this agreement based on full understanding of its
provisions.
[] Any verbal agreement not stipulated in this lease agreement shall be
invalid.
[] Any payment in relation to this agreement must be deposited with a bank
account designated by the lessor. I may not claim the effect of any payment made
otherwise.
Lessee Xxxxxxxxx.Xxx Company
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K1 Corporate Restructuring Real Estate
Investment Trusts Company, Ltd.
LEASE AGREEMENT
This Lease Agreement on the leased property specified in the Article 1, entered
into Between K1 Corporate Restructuring Real Estate Investment Trusts
Company (hereinafter referred to as the "Lessor" or "K1"), and XxxxxXxxx.Xxx
Company (hereinafter referred to as the "Lessee"), witness as follow
Article [Property for lease] The lessor shall lease the property for lease
contemplated by this agreement to the lessee, who shall in turn pay the
consideration for such lease, pursuant to the Article 3.
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Location Chungjung-ro 3Ga 463, Seodaemun-gu, Seoul
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Name of building K1 REIT Building
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Space for lease 14th, 15th, 16th, and 17th floor of the same
building (a total of 4 floors)
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Area of leased space 5715.63 m(2)(1,728.97 xxxxx) Type Office
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Article 2 [Term of the
lease agreement] The term of this
lease agreement shall
be from October 11, 2003 through October 10, 2006. However, unless intention of
termination is notified by either party by 3 months prior to the expiration of
this agreement, the term of this agreement shall be automatically extended for
one year.
Article 3 [Deposit] (1) The lessee shall deposit a leasehold deposit with no
interest to the lessor as follow:
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Amount Date of payment
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Initial payment KRW 100,000,000 2003.10.17.
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Interim payment KRW 330,000,000 2003.10.31.
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Final payment KRW 382,610,000 2003.11.24.
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Total deposits KRW 812,610,000
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(2) In the event that the lessee fails to pay the rent, maintenance expense and
other expenses within the due date, the lessor may deduct such expenses/fees
from the leasehold deposit on his discretion to collect the rent or other
expense receivable.
(3) The lessee may not substitute the leasehold deposit for monthly rent,
maintenance fees and other expenses; the lessee may not assign his right to the
leasehold deposit to a third party, nor put a lien or pledge on the leasehold
deposit.
Article 4 [Rent] The lessee shall pay the monthly rent of KRW 81,261,000 (KRW
47,000 per xxxxx) to the lessor on the 5th day of each month (In case that the
due date falls on a bank holiday, the due date shall be the next day; the first
rent shall be paid in advance on the first day this
lease agreement becomes
effective). (Value-added tax is a separate.)
Article 5 [Maintenance expense] The lessee shall pay KRW 43,224,000(KRW 25,000
per xxxxx) as the building maintenance expense, on the 5th day of each month
(In case that the due date falls on a bank holiday, the due date shall be the
next day; the first maintenance fee shall be paid in advance on the first day
this
lease agreement becomes effective). For maintenance of special facilities,
including digital sign board, computer equipment, air conditioners/heating
system, installed independently by the lessee, and wastes (e.g. waste disposal
from furniture and fixtures, and construction materials, etc), the lessor shall
charge the relevant maintenance expense to the lessee on out-of-pocket basis,
and the lessee shall pay such maintenance expense to the lessor by the date
specified by the lessor. However, although the lessor may only charge the
quantifiable expenses, e.g. electricity xxxx, without prior discussion,
regarding the expenses not quantifiable, the lessor shall discuss with the
lessee before billing. (Value-Added tax is a separate.)
Article 6 [Method of payment] The amount due pursuant to the Article 3,4,5 and 8
of this agreement shall be paid via depositing to a bank account designated by
the lessor; in case that the lessee made payment in method other than above, he
may not claim the effectiveness of such payment. The lessor shall make notice of
the bank account to which such payment shall be deposited to the lessee before
the due date.
Article 7 [Adjustment of leasehold deposit, rent and maintenance expenses] The
leasehold deposit, rent and maintenance expenses (including the fees payable in
advance) pursuant to the Article 3,4 and 5 of this agreement shall be increased
beginning on 11th day of October each year, automatically at a rate agreed
between
the lessor and lessee at the time of executing this agreement. However, in the
event that adjustment of amount is deemed necessary in consideration of
inflation of the consumer price in the previous year, prevailing lease rates of
comparable nearby buildings, trend of urban development in the region, and
remarkable change in economic conditions, the rate of increase shall be adjusted
upon mutual discussion.
Article 8 [Calculation of rent/maintenance fees, penalty for delayed payment]
(1) The calculation of the rent and maintenance fees pursuant to the Article 4
and 5 shall begin on the date this agreement becomes effective, regardless of
whether the lessee actually uses the property for lease contemplated by this
agreement.
(2) In the event that the lease pursuant to this agreement commences or is
terminated in the middle of a month, the amount of rent and maintenance fee
shall be calculated on a daily basis.
(3) In the event that the lessee delays the payment of leasehold deposit, rent
or maintenance fee, he shall pay the delay penalty equivalent to an interest on
the delayed portion calculated at the annual rate of 18%.
(4) The lessor may, for the purpose of urging the lessee to pay the delayed rent
or maintenance fee, restrict the use of public facilities inside the leased
building, or restrict the use of other facilities, such as air conditioner,
electricity and water supply. In such event, the lessee may not raise any
objection to lessor's action.
(5) The order of payment by the lessee shall be: delay penalty, parking lot
fee, maintenance expense, rent, and leasehold deposit.
Article 9 [Use of parking lot] 1 The lessee may park 8 vehicles per leased floor
(a total of 32 vehicles), free of charge.
2 In case the lessee wishes to park vehicles in excess of those mentioned above,
he shall pay a monthly parking fee of KRW 150,000(exclusive of value-added tax)
per vehicle in advance.
Article 10 [Assignment or sublease] (1) The lessee may not, without lessor's
prior written consent, assign his rights under this agreement to a third party,
engage in any activities of disposition, including put a lien or pledge on a
leased property, or sublease all or part of the property for lease contemplated
by this agreement.
(2) The lessee may not, without lessor's prior written consent, have a third
party other
than the lessee use the property for lease contemplated by this agreement or
attach a third party's title to the right to the property.
Article 11 [Right of use of the property for lease] (1) In leasing the property
for lease contemplated by this agreement, the lessee shall acquire right to use
the property in question by completing the full payment of the leasehold
deposit.
(2) With respect to the property for lease, the lessee may not claim any rights
other than the right to occupy and use as the lessee.
(3) The lessee may not use the property for lease in question for any purpose
other than business office.
(4) The lessor may restrict operation of elevators, air conditioners, and supply
of water/electricity during the hours other than those of normal business
operation hours (from 8:00 AM to 7:00 PM of days other than legal holidays and
Sundays, and from 8:00 AM to 3:00 PM on Saturday). However, in case stipulated
otherwise by Maintenance Agreement, the definitions of normal operation hours
and non-operation days shall follow the provisions of such Maintenance
Agreement.
(5) In the event that the lessee requests, in written form, extension of hours
for use of facilities (lighting and air-conditioning/heating equipment etc.),
including those in customer-service space beyond normal operating hours, the
lessor shall comply with such requests, to the extent they do not obstruct the
maintenance of the building. In such case, the lessee shall pay the lessor the
extra expense related to the extension of usage hours.
Article 12 [Obligation of notification] In the event that any of the events
described below occurs, the lessee shall immediately make notice to the lessor,
with attachment of relevant documents.
1. Change of address, company name, or representative
2. Change of entity's status (e.g. from private to corporate entity or vice
versa)
3. Material changes that would have effect on the
lease agreement in the
commercial registry
Article 13 [Method of notification or direction] Any directions or notifications
by the lessor, pursuant to the provisions of this agreement, shall have effect
when delivered to the lessee or user of the lessee via written or verbal
communication.
Article 14 [Protection of property] (1) During the period of this agreement,
responsibilities of thorough safety management on the property of lessee shall
lie with the lessee; the lessor shall not bear any liabilities for damage or
loss of the property of the lessee.
(2) The lessor may hire and manage security guard(s) for the purpose of guarding
corridors and other public facilities within the building.
(3) The lessee may, at his own expense, insure the property for lease
contemplated by this agreement against potential disasters, such as fire,
electricity accident and earthquake, during the period of this agreement; the
lessee may, at his own expense, enter into a business discontinuance insurance
policy, which guarantees against any business loss resulting from the property
damage, or pay the premium of such insurance policy to the lessor. The lessor
shall not be liable for contingent loss for damage of leased property or loss of
revenue resulting from accident to the property, except those covered by the
insurance policy.
In the event that insurance premium born by the lessor described in the
paragraph 3 above increases as a result of activity of the lessee or facilities
installed by the lessee, such increased portion shall be born by the lessee.
Article 15 [Restrictions] The lessee shall not conduct following activities
within the property for lease contemplated by this agreement.
1. Installing signboard or other advertising materials which would arise
unpleasant feeling to the public or obstructing facilities for common use;
leaving its inventories in common areas
2. Bringing in or keeping in dangerous substances, such as explosives,
substances noxious to human body, materials that might provoke unpleasant
feeling or damage the property, or other materials prohibited by the lessor.
3. Breeding animals except aquarium fish, or any other activities that might
provoke unpleasant feeling or disgust other lessee(s)
4. Installing lodging facilities, or any other activities of using the leased
property for purposes other than those specified in this agreement
5. Dealing with or selling materials or products defined by relevant authorities
as unlawful, within the leased property
6. Installing vending machine or selling liquor or other beverages without
consent of the lessor
7. Any other business activities that would breach the objectives of this
lease
agreement
Article 16 [Taxes and dues] Any value-added taxes resulting from this
agreement shall be born by the lessee. However, portion of value-added tax on
the leasehold deposit, which would be deemed as part of rent, shall be borne by
the lessor.
Any taxes and dues imposed on facilities or equipment installed as necessitated
by the lessee, shall be born by the lessee.
Article 17 [Adding or modifying facilities in the leased property] If the
lessee wishes to add or modify facilities in the leased property, he shall make
request to the lessor providing layouts and specifications, and obtain the
approval in advance. Upon the approval of the lessor, the lessee may conduct the
following activities at his own expense. However, for the purpose of
universality of building facilities, the supervision of relevant work may be
conducted by the lessor or a supervisor designated by the lessor.
1. Installing or modifying interior design, partitions or advertising equipment
in the leased property
2. Installing or relocating power supplies (high or low voltage electricity)
other than those already installed, installing telephone lines, or
installing/relocating/expanding/alteration water supply facilities
3. Installing temperature/dampness controlling facilities in the leased property
for the purpose of operating IT room
Article 18 [Repair] o The cost of repair on the walls, floors and ceilings of
the leased property, resulting from damage, abrasion, or decolorization, shall
be born by the lessor. However, the cost of repairing the portion of the
property modified as necessitated by the lessee, and the cost of repair
resulting from negligence or necessity of the lessee shall be born by the
lessee.
o In the event that the lessee finds a spot in need of repair pursuant to the
paragraph 1 above, he shall notify it to the lessor immediately. In case that
the lessee wishes to repair on his own, he shall discuss with the lessor in
advance.
o In the event that a damage was resulted by the negligence of the lessee and
repair is deemed inevitable by the lessor for the purpose of maintaining the
building, the lessor may perform necessary repair after discussing with the
lessee, and charge actual cost to the lessee. In such case, the lessee shall pay
the repair cost.
Article 19 [Investigation right and access right] o If it is acknowledged
that the lessee is likely to breach the terms of the agreement in material
degree, or cause serious damage to the reputation or credit status of the
lessor, the lessor may conduct investigation on the lessee, who shall comply
with lessor's request for investigation.
o In the event that the lessor requests the lessee to authorize his access to
the leased property for the purpose of management (e.g. maintenance of the
building, operation of facilities, inspection, fire/crime prevention, rescue
activities, and/or sanitation measures), the lessee shall comply with such
request, if there is no particular reason for otherwise.
o In the event that a emergency occurs and there is no time for request for
access, the lessor may access the leased property despite the absence of the
lessee, to counter such emergency and the lessee comply with this
Article 20 [Damage compensation and indemnification of the lessee] o The
lessee shall duly manage the leased property and other property borrowed from
the lessor with faith.
o In the event that damage or loss is incurred by the lessor or a third party as
a result of negligence or deliberate misconduct of the lessee, including its
employees or visitors, the lessee shall immediately notify it to the lessor, and
compensate for the damage incurred by the lessor and/or a third party, or
recuperate the original state.
o The calculation of the amount of damage mentioned in the paragraph 2 above
shall follow the method determined by the lessor, in accordance with the market
value at the time of compensation. For any delay of such damage compensation,
provisions of Article 8.4 shall apply.
o The lessor shall not be liable for damage or loss incurred by the lessee or a
third party as a result of reasons beyond his control (e.g. earthquake, flood,
war, riot and other causes defined by the law as force majeure) or reasons not
attributable to the lessor.
Article 21 [Change of lessor] The effect of this agreement shall survive any
changes in the ownership or management right in relation to the property for
lease defined by the Article 1. However, the lessor shall notify such change to
the lessee immediately.
Article 22 [Return of the leasehold deposit] o Upon termination of this lease
agreement, and upon the return of the leased property by the lessee, the lessor
shall return the leasehold deposit to the lessee immediately. However, any rent
or maintenance fees left shall be deducted from the leasehold, and the lessor
shall return the deposit after reviewing the recovery of original state
mentioned in the Article 25.
o In regard to the paragraph 1 above, for the expenses (e.g. maintenance fees)
that usually cannot be calculated until the date of evacuation of the leased
property, the lessor shall deduct the amount twice as much as the maintenance
fee of the previous month, and make settlement afterwards.
Article 23 [Lessor's right to terminate the agreement] In the event listed
below, the lessor may terminate the agreement immediately without notice to the
lessee despite provisions of Article 24.2 and 24.3, and take necessary legal
measures to evacuate the leased property. In this case, the fact that the lessor
keeps the leasehold deposit in his custody may not constitute any reason or
excuse for lessee's refusal to evacuate the building.
1. When the lessee has failed to pay the full amount of leasehold deposit to the
lessor by the date this agreement becomes effective.
2. When the lessee has delayed the payment of rent, maintenance fees or other
expenses for more than 2 months.
3. When the lessee has assigned his right to claim for the leasehold deposit to
a third party, or placed collateral on it.
4. When a third party seize, or puts under provisional seizure or disposition,
the leasehold deposits; or when it is acknowledged that further enforcement of
this agreement is impossible due to reasons attributable to the lessee, e.g.
court ruling for incompetency, quasi-incompetence, bankruptcy, reorganization,
etc.
5. When property of the lessee is seized or put under provisional disposition,
court-ordered auction or bankruptcy application.
6. When it is acknowledged that the lessee cannot continue to comply with this
agreement due to serious changes in his assets, credit status, or business
operation.
7. When the lessee does not comply with lessor's request to discuss adjustment
of the rent and others pursuant to the Article 7.
Article 24 [Termination of the agreement] o In the event that the lessee
terminates this agreement before the agreement becomes effective, the xxxxxxx
deposit paid by the lessee shall belong to the lessor, as penalty for breach of
the contract.
o In the event that either party wishes to terminate the agreement in the middle
of the contract period, he shall notify to the other party the date of
termination by no later than 6 months prior to date of termination in written
form.
o In case such notice is made in written form within 6 months prior to the
originally scheduled date of termination, the date that 6 month has lapsed from
date of notice shall be the date of contract termination.
o In the event that the agreement is terminated before expiration of this
agreement for reasons specified in Article 23.2 through 23.8 or paragraph 2 of
this Article, a party responsible for such termination shall pay the amount
mutually agreed to the other party as compensation for damage.
o Despite paragraph 2 and 3 of this Article, the lessor may not terminate this
agreement for 2 years and 6 months after this agreement becomes effective,
unless there is reasons attributable to the lessee as described in the Article
23.
Article 25 [Recovery of original state and evacuation] o Upon expiration or
termination of this agreement, the lessee shall take his belongings out of the
leased property, and return all of the leased property to the lessor.
o Upon evacuation, the lessee shall recover, at his own expense, original state
of all internal facilities, partitions, interior/exterior wall or any other
structures that have been modified by the lessee or different from the original
state and obtain confirmation and approval of the lessor. Any expense related to
investigation to verify the recovery works shall be born by the lessee.
o If evacuation and recovery of original state are not completed within 14 days
following the expiration or termination of the lease agreement, the lessor may
recover the original state on his own and move property of the lessee to other
place, such as warehouse. In such case, all expenses related to recovery of
original state, transportation and warehousing shall be born by the lessee. The
lessor may charge 18% of interest on the leasehold deposit for the period from 3
days after the termination of the agreement until evacuation/recovery of
original state is completed, deducting it from the leasehold deposit to return
to the lessee.
o In regard to the property kept in custody pursuant to the paragraph above, the
lessor may dispose such property in appropriate manner and receive any proceed,
with lapse of certain period after making notice to the lessee.
o In the event that the lessor requests to execute 'the memorandum of compromise
prior to lawsuit' In regard to this lease agreement, the lessee shall comply
with such request. Any related expenses shall be shared equally between both
parties.
Article 26 [Manager] o In order to ensure proper management of the leased
property and the building, the lessor may appoint its affiliate or a qualified
third party as manager.
o The manager mentioned in the paragraph above shall have same rights and
obligations as the lessor, as representative of the lessor.
Article 27 [Maintenance rules] The lessor or manager may establish, enforce
and/or abolish the maintenance rules in order to ensure efficient maintenance of
the building. Such maintenance rules shall be regarded as a part of this
agreement. However, this agreement shall precede such maintenance rules.
Article 28 [Issues other than stipulated by this agreement] Any issues or
disputes not stipulated by this agreement shall be settled by faithful
discussion between the lessee and lessor, in accordance with rules and
regulations of Republic of Korea and general practice of lease transactions.
Article 29 [Criteria of interpretation] In case that this agreement is prepared
both in Korean and foreign language, and should any dispute or question arise in
relation to the provisions of this agreement, the Korean version shall precede
any other version prepared in foreign language.
Article 30 [Jurisdiction] The district court having jurisdiction over the
location of the building shall have jurisdiction over any legal action
instituted in relation to this agreement. (Seoul District Court).
In WITNESS WHEREOF, each of the lessor and lessee has reviewed the terms of this
agreement above, and caused this lease agreement to be executed by signing. Each
party shall retain a signed copy of this agreement.
October ----, 2003
Address: Xxxxxxx-xxxx 000-00, Xxxxxxx-xx, Xxxxx
Lessor Name: K1 Corporate Restructuring Real Estate
Investment Co.
/s/ Xxx, Ho-gil
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CEO Xxx, Xx-xxx
Corporate registration No. 110111-2616534
Address: Yuksam-dong 000-0, Xxxxxxx-xx, Xxxxx
Xxxxxx Name: XxxxxXxxx.Xxx Co.
/s/ Xxx Xxx So
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CEO Xxx Xxx So
Corporate registration number:
110111-1998701
Change of address of lessee
Address:
Contact no.:
SPECIAL AGREEMENT PROVISIONS
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Article 1 [Definitions] The definitions used in this special agreement are as
follow:
1. "Main agreement" refers to the provisions of the lease agreement,
excluding the special agreement provisions
2. "Special agreement provisions" refers to those stipulated by this
special agreement, other than the main agreement, but constitutes part of the
lease agreement.
Article 2 [Effect of the special agreement] This special agreement provision
shall precede the main agreement.
Article 3 [Change of title] In the event that the lessor assigns its title to
the leased property to a real estate investment company (including union of
promoters) as defined by Act on Real Estate Company or any other party that he
chooses without changing any conditions that have been stipulated by the main
agreement and special agreement provisions, the assignee shall automatically
succeed this lease agreement, provided that the lessor makes written notice to
the lessee. In such case, the lessee shall not raise any objection.
Article 4 [Method of securing the leasehold deposit] The lessor shall, upon the
lessee's request, put the leasehold deposit right as a guarantee on repayment of
the leasehold deposit paid by the lessee pursuant to the Article 3. However, any
cost related to put of the leasehold deposit right shall be born by the lessee,
and cost related to removal of the leasehold deposit right shall be born by the
lessor.
Article 5 [Rate of increase] The rate of increase in leasehold deposit, rent
and maintenance fees, to be separately agreed between the lessor and lessee
pursuant to the Article 7 of the main agreement, shall be finalized at 5%.
Article 6 [Damage compensation] The amount of damage compensation, which was to
be separately agreed between the lessor and less pursuant to the Article 24.4 of
the main agreement, shall be finalized at a total of 3-month rent. In the event
that a party notifies the other party of the termination of the agreement after
2-year lapse from the date this agreement has become effective, this provision
shall not apply.
Article 7 [Free Rent] The lessee may use the leased property until November
24, 2003 (45 days) free of charge, for the purpose of facility installation
and/or other interior construction (waiver of rent pursuant to the Article 4 of
the main agreement). However, the lessee shall still pay the maintenance fees
during such period.
Article 8 [Recovery of original state] The lessee shall occupy the common
corridors at 14th and 17th floor in current condition. Despite the provision
of the Article 25.2, the lessee shall not be obliged to recover the original
state upon termination of the agreement.
