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Exhibit 10.7
Translation from Russian
LEASE AGREEMENT No.2
City of Moscow December 29, 1995
The Planning-Design Bureau for the Mechanization of Electric Power Construction
Corporation (PKB Proyektenergomash), represented by General Director ▇▇▇▇▇▇▇▇,
▇▇▇▇ Mikhailovich, acting on the basis of the "Charter" and referred to
subsequently as the Lessor, on the one hand, and the firm Korbina
Telecommunications, represented by General Director ▇▇▇▇▇▇▇▇▇▇, Menakhem, acting
on the basis of the "Charter" and referred to subsequently as the Lessee, on the
other hand, have confirmed this Agreement concerning the following:
1. SUBJECT OF THE AGREEMENT
1.1 The Lessor provides the Lessee with the rental use of premises on the
7th (seventh) floor, having an area of 249.2 square meters (two hundred
forty-nine and two-tenths square meters), for use as an office in the
engineering-laboratory building of the Lessor in the city of Moscow, Ryazan
Prospekt, Building 30/15.
2. OBLIGATIONS OF EACH PARTY
The Lessor is required to:
2.1 Transfer to the Lessee the rental premises subsequent to the signing
of the Agreement, as stipulated in the terms of the Agreement.
2.2 At its own expense, make capital repairs in the rental premises.
2.3 Take necessary measures, at its own expense, to repair damages to the
heating system or electricity services which occur through no fault of the
Lessee.
2.4 Issue passes to permit entrance into the building (for the use of
their employees) to permanent and temporary employees of the Lessee, one-time
use passes and passes for packages, at the expense of the Lessee, and, also at
the expense of the Lessee, to extend the duration of temporary and permanent
passes and their replacement.
The Lessee is required to:
2.5 Utilize the rental premises in accordance with the terms of the
Agreement and in the prescribed manner (Clause 1.1 Subject of the Agreement).
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2.6 Perform ongoing maintenance and cleaning of the premises at its own
expense, removing, with its own employees and at its own expense, all disposals
connected with Lessee's activities (unneeded packaging, construction refuse,
etc.), except for fixtures.
2.7 Not make any changes in planning or equipment in the premises
necessitated by the needs of the Lessee without the permission of the Lessor,
and to conform with the latter's interior decoration of the premises.
2.8 Strictly observe the regulations concerning fire security.
3. PAYMENTS AND RATES
3.1 For the use of the premises, the Lessee pays to the Lessor in rubles
at the rate of USA$154 (one hundred fifty-four USA dollars) per year for 1
square meter of the rental premises plus a tax on additional costs, established
by the RF Government, and supplementary taxes adopted by the RF Government on
all forms of services and tasks for the duration of the Agreement.
Payment is effected at the exchange rate established by the Bank of Russia
at the moment the ▇▇▇▇ is presented.
3.2 The above-mentioned sum is comprised of two parts: Compensation for
expenditures in the upkeep and servicing of the premises in the amount of
USA$123.2, or 80% of the overall payment, and USA$30.8 dollars, or 20% of the
payment for the rental of the premises.
3.3 The rental payment, and also the compensation for expenditures in the
upkeep and servicing of the premises is transferred to the account, as specified
by the Lessor, monthly no later than the 5th (fifth) bank business day from the
moment the ▇▇▇▇ is presented.
3.4 The bills for telephone communications of all types, subscription
payments for the telephones, for telephone information services,
telegraph-teletype services are paid for within two bank business days after the
receipt of the bills.
4. RESPONSIBILITIES OF BOTH PARTIES
4.1 The parties bear responsibility for all capital property under this
Agreement in accordance with current laws of the RF.
4.2 In the event of a late payment by the Lessee, fines are imposed in the
amount of 0.5% per day for the overdue sum during the first 5 days of the
nonpayment and 1.5% per day for the overdue sum for the subsequent days.
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4.3 For the late payment of bills for telephone communications (including
intercity and local, subscription payments for the telephones, telephone
information services, telegraph-teletype services, etc.) fines are imposed in
the amount of 1% for the first overdue day, and 2% for subsequent days for the
overdue sum.
4.4 The payment of penalties, established by the Agreement, does not
release the Lessee from fulfilling its obligations under the Agreement.
4.5 In the event of nonpayment by the Lessee of compensation for
expenditures in the upkeep and services of the premises and compensation for
expenditures on the rental premises, and also the fines relating to these
payments during 10 calendar days following the payment due date, the Lessor has
the right to annul the Agreement unilaterally.
4.6 In the event of late payment of bills, and also fines for all types of
telephone communications and telephone/sic/teletype services, the Lessor has the
right to turn off telephones until the Lessee pays off the stipulated debt.
4.7 The Lessee bears full responsibility in accordance with current laws
applying to security technology, safety of workers, and anti-fire security
during the performance of any work by the Lessee during the full term of the
Agreement.
4.8 The annulment of the Agreement before its expiration may be effected
by agreement by the parties in written form or unilaterally by the Lessor in the
event the usage of the premises by the Lessee is not in accordance with the
Agreement.
4.9 In the event that the Agreement is annulled at the initiative of the
Lessee at the expiration of its term, the latter pays the Lessor the payment
sum, with taxes, on the added costs up to the end of the current year.
5. MISCELLANEOUS CONDITIONS
5.1 The Lessor retains his rights in the future to reexamine the
compensation sum for expenditures in the upkeep and servicing of the premises,
and also the compensation for expenditures for rental of the premises in the
event of:
- Re-evaluation by the State of basic funds;
- Freeing of prices for power carriers and, in connection with this,
an increase in the cost of heat and power energy, supply of water,
etc.;
- Liberalization of prices for communal services, operational
materials,
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spare parts and similar material resources;
- Increase in the cost of real estate;
- Change in the imposition of taxes in an upward direction;
- Introduction of new taxes, ecological obligations with material
expenditures, etc.
5.2 Ten days before the Agreement is confirmed, the Lessee presents to the
Lessor copies of the "Charter" or "Status" of its organization.
5.3 The Lessee is legally and materially accountable for damages inflicted
on the Lessor because of actions of third parties involved with the activities
of the Lessee.
5.4 The Lessee pledges not to attract to its work the employees of the
Lessor from their basic tasks, and to coordinate with the Lessor's management
the possibility of attracting the latter's employees for work when they have
free time from their basic tasks.
5.5 The Lessee, in the proper manner, having fulfilled the obligations
according to the Agreement, at the end of the term of the Agreement has the
priority right before other organizations and parties to the extension of the
Agreement for subsequent terms agreed upon with the Lessor.
6. TERM OF THE AGREEMENT AND LEGAL
ADDRESSES OF THE PARTIES
6.1 Term of Agreement from January 1, 1996 to December 31, 1999.
6.2 The Lessor (The Planning-Design Bureau for the Mechanization of
Electric Power Construction Corporation "Proyektenergomash"):
Post office address: 109428, city of ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇/▇▇
Telegraph address: Moscow, Gileya
Teletype: 207030 KULMN
Telephones: ▇▇▇-▇▇-▇▇, 371-84-84, ▇▇▇-▇▇-▇▇
Account ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Correspondent account: 201791
Index of tax inspection: ▇▇▇▇▇▇▇▇▇▇
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6.3 The Lessee (the firm Korbina Telecommunications):
Post office address: 109428, city of ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇/▇▇
Telephones: (▇▇▇) ▇▇▇-▇▇-▇▇, ▇▇▇-▇▇-▇▇, ▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇
Account: 1846743, RMF 996705 (44583251), part 8
Index of tax inspection: 77229158574, Arbat Commercial Bank
Address of Bank: Russia, ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇,
(▇▇▇▇▇▇▇▇ Blvd, 3)
Telephone: (▇▇▇) ▇▇▇-▇▇-▇▇.
LESSEE LESSOR
General Director of the General Director of the
firm Korbina Telecommunications PKB "Proyektoenergomash"
/sig./ Menakhem ▇▇▇▇▇▇▇▇▇▇ /sig./ I. M. Pogozhev
December 29, 1995 December 29, 1995
/seal of/ Korbina Telecommuni- /seal of/ Southeastern
cations Corporation, Moscow Administrative Region,
Moscow, Planning-Design
Bureau for the Mechanization
of Electric Power
Construction,
Proyektoenergomash" Corp.
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SUPPLEMENTARY CONDITION
to the Agreement No. 2 of December 29, 1995, with Korbina Telecommunications
Corporation and the Proyektenergomash Corporation.
City of Moscow September 24, 1996
The Proyektenergomash Corporation, represented by General Director I. M.
Pogozhev, acting on the basis of the "Charter," on the one hand, and the Korbina
Telecommunications Corporation, represented by General Director V. A.
▇▇▇▇▇▇▇▇▇▇▇▇, acting on the basis of the "Charter" (Status), on the other hand,
confirmed this condition concerning the following:
1. In accordance with the letter from the Proyektenergomash Corporation of
September 19, 1996, the cost of the premises owned by the Lessor (the
Proyektenergomash Corporation) and rented to the Lessee (the Korbina
Telecommunications Corporation) for USA 210 dollars, in view of increased taxes
on each square meter is now established at the equivalent of USA 252 dollars In
rubles in accordance with the exchange rate set by the Bank of Russia at the
moment that the bills are presented.
2. The term of this supplementary condition is effective as of October 1,
1996.
3. This supplementary condition is an integral part of Agreement No. 2, of
December 12, 1995.
Lessee Lessor
General Director General Director
Korbina Telecommunications Corp. Proyektenergomash
/sig./ V. A. ▇▇▇▇▇▇▇▇▇▇▇▇ /sig./ I. M. Pogozhev
September 24, 1996 September 24, 1996
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THE PUBLIC CORPORATION
Planning-Design Bureau for the Mechanization
of Electric Power Construction
PROYEKTENERGOMASH
109428, city of Moscow
Southeastern Administrative Region
Ryazan Prospekt, Building 30/15
Telephone ▇▇▇-▇▇-▇▇; ▇▇▇-▇▇-▇▇
Korbina Telecommunications
Private Corporation
To the Director (President)
Mister(Madam) ▇▇▇▇▇▇▇▇▇▇▇▇, V. A.
With this letter I inform you that, from June 1, 1997, to our great
regret, because of increased expenses in the rental of real estate and changes
in standards in the adjacent territory, we are compelled to increase the rental
for 1 square meter per year by (equivalent) 6 USA dollars (according to the
NDS), in accordance with Clause 5.1 of the Agreement signed by you earlier.
Respectfully,
General Director
Proyektenergomash Corp.
/sig./ I. M. Pogozhev