Socialist Republic of Viet Nam

Independence – Freedom – Happiness

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FACTORY LEASING PRINCIPLE CONTRACT

No: …./HDNT

  • Pursuant to Civil Code 91/2015 / QH13 adopted by the National Assembly of the Socialist Republic of Vietnam on 24/11/2015, effective from 1/1/2017.
  • Pursuant to Commercial Law of the Socialist Republic of Vietnam adopted by the National Assembly on June 14, 2005, effective from 01/01/2006;
  • Based on the capabilities and needs of the two parties.

Today, on …/…./2018, at the office of Tan Vuong Trading and Manufacturing Co., Ltd, we include:

LESSOR: …………………………………………………………………………………………..

Enterprise Registration Certificate No. ………………………issued by ……………………………………… on 13 June 2014 (the 6th amendment)

Address: ……………………………………………………………………………………………………………..

Tax code no.: ………………………………

VND account: …………………………at Maritime Bank

USD account: …………………………at Maritime Bank

Representative: Mr/Mrs. ……………………………………….

Position: Director

Being the owner of the land lot ……………m2 and construction work for lease at land lot ………………………………

(Hereinafter referred to as “Party A”)

 

LESSEE:……………………………………………………………………………………………………………

Representative: Mr/Mrs. ……………………………                                  Position: President and CEO

Address: …………………………………………………………………………………………………………………………………..

(Hereinafter referred to as “Party B”)

WHEREAS:

  • Party A is the legitimate owner of the factory and office stipulated in this Contract. Party A has all authority and necessary licenses and permits to lease such a factory.
  • Party B is now a foreign investor, having demand for leasing the Party A’s factory and office to implement the project and set up its company in Vietnam.
  • After having discussed, the two parties agree to enter into this Factory lease principle contract (“Contract”) with the terms and conditions as follows:

 ARTICLE 1: LEASING PROPERTY AND PURPOSE:

  • Leasing property: Party A agrees to lease and Party B agrees to rent the factory belonging to Party A with the total area of:

Factory: ….. Sq. M

Office:….. Sq. M

Garage: Common use the parking lot for a motorbike (not over 40 units) and car together with Party A and other lessees.

  • Use of internal roads:
  • Party B is entitled to use internal roads in the whole area owned by Party A, used in conjunction with Party A and the lessees.
  • Party B does not use roads, spaces outside the area specified in Article 1.1 for the purpose of storing goods, materials and raw materials, etc. However, Party B may use this area to park, unload goods without affecting the general traffic and goods and materials after unloading is not allowed to be stored overnight.
  • Leasing purpose: to use as the location for implementing the ………….. Project and using as the factory for manufacturing of printing machine, the head office’s location as well as carrying out other business manufacture activities allowed of the subsidiary established in Vietnam by Party B (or any legal entity owned/contributed capital by Party B in …………) in accordance with Investment Registration Certificate and Enterprise Registration Certificate granted by a competent state agency in Vietnam.

ARTICLE 2: CONTRACT TERM:

  • The term of the contract is 05 (five) years from the date of calculating the rent of the factory, office
  • Factory handover time: After 15 days from the signing date of this Contract and Party A receives the 1st deposit for renting factory, office which is equivalent to 03-month rent. The 2nd deposit will be paid within 06 months from the signing date of this Contract.
  • Period of rent calculation: Period of renting the factory and office is calculated after 15 days from the handover date (in detail: on 21 December 2018).
  • After the expiration of the five-year contract, depending on the situation, two parties can extend the contract. The extension of the contract must be negotiated by both parties at least 03 months before the contract expires. Party B will be given the priority to continue to rent in case Party A wants to lease and Party B wants to continue to rent. The leasing price will be adjusted according to the market price at the time of negotiation and agreed between the Parties.

ARTICLE 3: LEASING PRICE AND FEES

  • Leasing price
    • Leasing price for the factory:… VND/Sq. M/month

Accordingly, the Leasing Fee of Factory is… VND x …..Sq. M =……….. VND

  • Leasing price for office: ……………. VND/month

(3) Leasing price for the parking garage, security and cleaning fees: ……………….VND/month.

 

The Leasing Fee of Factory and Leasing Fee of Office will be referred in general as the Leasing Fees. The Leasing Fees are exclusive of VAT.

  • Other fees

Infrastructure using fee in the Industrial zone; the fee for wastewater treatment, protection, cleaning (if any) of Party B. The costs related to electricity, water, telephone, internet … and other service charges shall be responsible for by Party B and to be paid directly to the supplier.

  1. From the third year onward, Leasing Fees will be adjusted up or down annually according to the average of the CPI issued by the General Statistics Office of Vietnam and the inflation index issued by the State Bank of Vietnam Male annually, but not exceed 10%.

ARTICLE 4: PAYMENT METHOD

  • Payment method: Transfer or in cash
  • Deposit: Party B shall deposit to Party A an amount equal to 6 months of the Leasing Fees, details are as below:
No Fees Unit price Quantity of months In amount
1 Leasing fee for Factory …………..vnd/month

6

 ………………… vnd
2 Leasing fee for 3rd Floor of the office building …………..vnd/month

6

 ………………. vnd
Total of deposit amount (exclusive of VAT) …………… vnd

(In word: …………………………………………………………………………………………………………………)

 

The Deposit will be paid into 02 installments:

1st installment: After signing this Contract, Party A shall pay Party B the amount of …………………………. vnd.

2nd installment: The balance of Deposit shall be paid together with the 3rd payment period of Leasing Fees (before June 21, 2019)

The deposit will be refunded upon the expiration of the Contract and after deducting any compensation (if any) from Party B.

This Deposit under this Contract may be converted into the deposit of the official factory lease contract which will be signed between the Party A and the subsidiary of the Party B (or any legal entity owned/contributed capital by Party B in Korea) established in Vietnam (“Official factory lease contract”).

This Deposit amount is interest-free and shall not be considered as Leasing fees. Party A will return to Party B this Deposit amount within 10 days when the term of lease is terminated, provided that the factory and factory structure is handed over to the original status (except for natural wear and tear and other cases where facilities and assets shall be transferred without restoration to the original status to Party B as agreed by the Parties under the Contract) based on the factory handover minutes between the Parties.

  • Within the term of this Contract: If Party A unilaterally terminates the Contract without Party B’s fault, Party A must give 3 months prior notice to Party B and Party A shall refund the deposit and the remaining amount of the lease period that Party B has not used up for Party B. At the same time, Party A must compensate Party B a sum equal to 06 months of Leasing Fee of Factory.
  • Within the term of this Contract: If Party B unilaterally terminates the Contract without Party A’s fault, Party B must give 3 months prior notice to Party A. At the same time, Party B shall pay Party A a sum equal to 06-month Leasing Fee of Factory in order to be allowed to transport the property out of the leased area. The remaining rent of the rental period that Party B has not used up and the deposit will be returned to Party B.
  • Payment period:
  • Payment method: Payment every 03 months before the 21st date of March, June, September, and December annually. Party A shall send the request for payment and VAT invoice for each installment. Details are as follows:
No Leasing Fees Unit Price Quantity of months In amount
1 Leasing fee for Factory: ……………….. vnd/month

3

 ………………vnd
2 Leasing fee for Office ……………..vnd/month

3

 ……………..vnd
3 Leasing fee for Parking and management ……………….. vnd/month

3

 …………….vnd
Total …………….vnd
VAT …………….vnd
Total Leasing Fee including VAT …………….vnd
  • The first payment period is from …./…/….. to …./…./….., Party B is responsible for payment before 21/12/2018.
  • SubsequentPayment Period: Payment is due on the 21st of March, June, September, and December annually.

ARTICLE 5: RIGHTS AND RESPONSIBILITIES OF PARTY A

  • Responsibilities:
  • Party A commits that the use of land and the ownership of its factory is legal and will create favorable conditions for Party B to use the factory effectively.
  • Party A commits the right to lease the leased property to Party B as stipulated in Clause 1.1, Article 1 and in accordance with the contents of this Contract.
  • Party A ensures the using value of the leased asset in accordance with the law.
  • Party A will install an electric power of 200KVA. The wiring and electric power distribution boxes shall be transferred without restoration to Party A upon the expiration of the Contract.
  • To be responsible for paying annual land rent to competent state agencies.
  • To construct a water supply system for fire prevention and fighting activities outside the production factory area of Party B.
  • Party A must apply insurance for the factory area used by Party A (which is adjacent to Party B). Except in case of force majeure, if the occurrence of explosion or fire is due to intentional fault or violation of the regulations on fire prevention of Party A, causing damage to property, works, houses factory and other property of Party B, Party A shall be responsible for compensation for the whole of damaged value in accordance with the law.
  • Party A shall sign the Official factory lease contract with the new subsidiary established in Vietnam by Party B (or any legal entity owned/contributed capital by Party B in Korea) (“New Company”). The New Company shall inherit all rights and obligations under this Contract.
  • When the contract is terminated, Party A is responsible for refunding to Party B the deposit equal to 06 months of Leasing Fees pursuant to Article 4.2 of this Contract, provided that the leased property is in the same condition as when handed over to Party B (except natural wear and tear and other cases where facilities and assets shall be transferred without restoration to the original status to Party B as agreed by the Parties under the Contract) and Party B has fulfilled all payment agreements with Party A, infrastructure use fee in the Industrial park, wastewater treatment fee and toward service providers which Party B employed such as Internet, electricity, water, telephone, etc.
  • Rights:
  • To request Party B to pay the leasing fee in accordance with Article 4 of this Contract. In case of Party B fails to pay the leasing fee in accordance with the provisions of Article 3 of the Contract for more than 90 days from the due date without the reason approved by Party A, Party A has the right to terminate the Contract, withdraw the leased property and retain all the Deposit of Party B.
  • Have the right to terminate the Contract ahead of time without having to return the Deposit specified in Article 4.2 to Party B if Party B uses the property in contravention of law or for the purpose of rent other than those mentioned in Article 1.2 of the Contract.
  • When the Contract expires or terminates prematurely, Party A shall be entitled to receive the original status of the leased property as handed over to Party B (excluding natural wear and tear and other cases where facilities and assets shall be transferred without restoration to the original status to Party B as agreed by the Parties under the Contract). In case Party B has built and renovated the leased property (Party B must be approved in writing by Party A), Party A does not have to pay the value of the upgraded construction when the Contract is terminated. In case Party B constructs and uses improperly with the contents as agreed by both Parties under this Contract, Party B shall dismantle and hand over the original condition to party B.
  • To have the right to request Party B to compensate for all damages in the event of Party B’s fault in the use of the leased property or Party B violates the law or breaches this Contract.
  • To have the right to enter into the leased area to perform the obligations by Party A, however, provided that Party A must send a written notice to Party B at least 05 days in advance. In addition, all related parties may sign a Non-disclosure Agreement to make sure that all private and technical information of Party B shall be kept confidential and shall not be disclosed to others without permission from Party B.

ARTICLE 6. RIGHTS AND RESPONSIBILITIES OF PARTY B

  • Responsibilities:
  • Party B commits to use the leased property according to the purposes as stated in Article 1.2 of this contract.
  • To provide Party A the initial layout drawing of construction, repair, installation of overhead (max load capacity of 10 tons) crane, etc. inside the Factory.
  • When there is a need to repair or renovate the leased property according to the specific use demands, Party B must provide the layout planning drawing, notify Party A and must obtain the written consent of Party A before proceeding. Party A shall not have the right to refuse such a requirement for repair from Party B if the layout planning drawing of Party B is satisfied with the requirements as set forth by the laws of Vietnam.
  • Party B commits to pay Party A the Leasing fees in full and in time as stipulated in Article 3 of this Contract.
  • Party B commits to conduct business activities as registered in the Investment Registration Certificate, Enterprise Registration Certificate and comply with all provisions of the law of Vietnam during the operation period in the leased area. To be set responsible for all of its business activities.
  • Party B is allowed to use electricity but not exceed the capacity of 200 KVA. In case of fire or explosion of the transformer due to the fault of Party B, Party B shall be fully responsible for compensation.
  • Party B commits to sign the Electricity Purchasing Contract with the Branch of Electricity Supply Company and to sign the Water Purchasing and Waste Treatment Contract with the management authorities.
  • Party B must build its own wastewater treatment system and connect this system to the wastewater treatment system of the industrial zone (if Party B has wastewater in the production and domestic process).
  • Party B is not allowed to sub-lease, assign or transfer a part or entire leased area and asset to another individual, organization without Party A’s consent.
  • Party B ensures full implementation of regulations on fire and explosion prevention, labor safety, security order and environmental sanitation in and around the leased area. In case of fire, the occurrence of an accident in labor safety, security and environmental sanitation, Party B shall be liable for compensation for damages.
  • If Party B causes damages for any other third party during the use of the leased asset, Party B shall be responsible for compensation
  • Party B shall be responsible under the law of Vietnam if Party B causes environment pollution during the operation in the leased area.
  • Party B is fully responsible for errors due to operation causing fire of machines, damages (lack of oil, overload due to short circuit ….).
  • In a case where the damage caused by natural disasters: storms, thunder, fire, etc., the responsibility and the cost for repairing and purchasing new accessories for the transformer to return to normal operation will be divided equally to the parties including the lessee.
  • If the transformer is broken but the Parties’ fault is unidentified, the electricity authorities shall be the arbitrator for the parties, including the lessee.
  • Party B has the responsibility to work directly with the Fire Prevention and Fighting Police to have contents and plans for fire prevention and fighting. Party B is equipped with firefighting equipment inside the leased factory by itself. In case of fire, Party B shall compensate for Party A and third party (if any).
  • Party B is self-responsible for protecting its own assets and goods.
  • Party B must apply insurance for the leased factory before going into production with the additional beneficiary of Party A (if the insurance company agrees with such requirement). Except in case of force majeure, if the occurrence of explosion or fire is due to intentional fault or violation of the regulations on fire prevention of Party B, causing damage to property, works, houses factory and other property of Party A, Party B shall be responsible for compensation for the whole of damaged value in accordance with the law.
  • Party B is only allowed to use the areas listed in Article 1 of this Contract. If Party B would like to use the areas which are not stipulated in this Contract, Party B must inform Party A, then both Parties shall discuss and make an appendix to the Contract.

6.2. Rights:

  • To use the premises of the leased factory of Party A for the using purpose of as in the commitment between the parties as specified in Article 1.2.
  • After having handed over the factory and office from Party A, Party B is entitled to do the floor foundation work for the installation of the machine, provided that the concrete smoothing work shall be finished when the lease contract expires.
  • If necessary, Party B is allowed for painting in the office/floor/exterior of factory; overhead crane installation (with the condition that this crane does not knock, connect or have any impact on the factory structural building frame of Party A in any case) ; installation of an air conditioner/outdoor fan; In the event that a permission by competent agency is needed for piping, Party A shall cooperate without any delay. All items and facilities above, except for overhead crane, the air conditioner/outdoor fan (which can be removed by Party B without restoration), shall be transferred without restoration to the original status to Party A upon expiration of the Contract.
  • Except for the contents agreed above, Party B is entitled to receive and remove the equipment and property purchased and installed in the leased factory by Party B when handed over the leased factory to Party A and Party B commits that this removal shall not affect to the value and functionality of the leased factory.
  • The company sign of the Party B’s subsidiary to be set up in Vietnam can be installed in upper front of the factory and front entrance (with the equivalent size of no more than two-thirds of the Party A’s existing signboards), and shall be removed upon expiration.
  • To receive the deposit as stipulated in Article 4.2 when the Contract expires with the condition that the leased property remains in the status as handed over to Party B (except for natural wear and tear) and Party B has fully implemented financial obligations with Party A, infrastructure using fee in industrial zone, wastewater treatment fee with functional authorities and service providers that Party B uses such as Internet, electricity, water, telephone, etc.

ARTICLE 7: SIGNING THE OFFICIAL FACTORY LEASE CONTRACT

Within ten (10) days from the date when New Company of Party B is granted the Enterprise Registration Certificate, new Company shall sign the Official factory lease contract with Party A. New Company of Party B shall inherit all rights and obligations of Party B under this Contract.

ARTICLE 8.  TERMINATION OF THE CONTRACT

  • This Factory Leasing Contract shall expire in the following cases:
  1. Lease term expires in accordance with Article 2 of this C
  2. Either Party is dissolved, declared bankruptcy, revoked Investment registration Certificate and/or Enterprise registration Certificate;
  3. Party A and New Company of Party B sign the Official factory lease contract.

In case this Contract is terminated under Article 8.1 (b), Party A is liable to return the deposit, the leasing fee which has been paid by Party B for the remaining leasing term within 10 days from the date of termination.

 8.2 Unilaterally terminate to perform the contract before the expiration by Party A:

  • Party A is allowed to unilaterally terminate the Contract in the following cases:
  1. Party B violates the provisions on payment stipulated in Article 3 and Article 4 of the Contract and fails to make full payment to Party A within 20 days from the date that Party B is obliged to pay without any reason accepted by Party A.
  2. Party B has actions without the prior approval of Party A which may affect the safety and structure of the factory causing the risks in safety, security order, fire and explosion, and environment;
  3. Party B seriously violates the regulations on the use of the leased areas for the purposes contrary to the agreed purpose, contrary to the Vietnamese law and has been notified by Party A to stop the violation for the second time but Party B still violated.
    • When unilaterally terminating to perform the Contract under this Article2.1, Party A shall not be fined and hahas no obligation to compensate for any amount of money to Party B. Party B shall not be refunded the deposit paid to Party A.
    • If Party A unilaterally terminates the Contract which is inconsistent with this Article2.1 and/or other agreements as stipulated under this Contract, Party A shall return to Party B the Deposit, the Leasing Fees which has been paid in advance for the unused period of time as well as compensate for Party B an amount equivalent to 03 months of Leasing Fees.

 Unilaterally terminate to perform the contract before the expiration by Party B:

8.3.1. Party B is allowed to unilaterally terminate the Contract in the following cases:

The factory is damaged or in a state of deterioration that endangers life and property, seriously affecting the purpose of use of Party B which is not caused by the production activities of Party B. Party A has no remedial measures and timely repairs after Party B has sent a second notification requesting remedial action.

8.3.2.  When unilaterally terminating to perform the Contract under this Article 8.3.1, Party B shall not be fined and has no obligation to compensate for any amount of money to Party A. Party A shall return to Party B the Deposit, the Leasing Fees which has been paid in advance for the unused period of time as well as compensate for Party B an amount equivalent to 03 months of Leasing Fees.

8.3.3.   If Party B unilaterally terminates the Contract which is inconsistent with this Article 8.3.1 and/or other agreements as stipulated under this Contract, Party B is not entitled to receive the Leasing Fees which was paid in advance for the unused period, the amount of deposit equivalent to 03 months  of Leasing Fees and expenses for renovation and repair after depreciating the assets as regulated (if any).

 8.4      Termination of the Contact in cases of Force majeure:

8.4.1. Force majeure events are events that are objectively unavoidable and beyond the control of parties such as natural disasters, earthquakes, floods, wars, epidemics, terrorism, changes of the government, state policies and planning, one of the party is bankrupt or revoked operation license, etc.

When the contract is terminated under this clause, the Parties will be exempted from the obligations set out in this Contract from the time of the occurrence of the force majeure. However, the Parties still have to fulfill all the obligations stipulated in this Contract that has not been implemented until the time of the occurrence of the force majeure event, and at the same time compensate for the damages incurred by the infringed party if the termination of this Contract is due to the fault of a party.

  • If either Party unilaterally terminates the Contract prior to the expiry date, the Party wishing to terminate the Contract must notify the other party in writing 03 months in advance with the reasons accepted by both parties. The obligation to notify the unilateral termination of the contract prior to the expiry date shall not be construed as a basis for exemption from penalties and compensation for damages under the Contract but as a condition for the Parties to negotiate the fine and compensation.

ARTICLE 9: DISPUTE SETTLEMENT

  • In the course of the performance of the contract, if the dispute arises, the two parties shall jointly negotiate in the spirit of cooperation and respect the legitimate interests of each other.
  • In case of failure to negotiate, the Parties will bring the case to a competent court for settlement under Vietnamese law. The decision of the court is the final decision that the parties must comply with. All expenses will be paid by the losing party.

ARTICLE 10: GENERAL COMMITMENTS

  • Party A and Party B commit to comply with the contents and terms of this Contract. Neither party is free to change, modify the terms of the Contract. If it is necessary to amend the Contract, the parties can negotiate and officially sign the contract appendix in order to take effect.
  • This Contract is made into 04 originals in Vietnamese and English with the same content and validity. Each Party keeps 02 Vietnamese and English originals. In case there is a disparity between the versions, the Vietnamese version shall prevail.
  • All contents, terms in this Contract have been clearly understood by both Parties before signing the Contract.
  • This contract takes effect from the signing date.

 

REPRESENTATIVE OF PARTY A                 REPRESENTATIVE OF PARTY B