SAMPLE OF FINANCIAL LEASE AGREEMENT

1、TABLE OF CONTENTS1.OBJECT OF THE LEASE12.LEASE TERM23.LEASE PAYMENT24.PURCHASE OF THE LEASED OBJECT45.DELIVERY OF THE LEASED OBJECT46.HANDLING OF DEFECTS IN THE LEASED OBJECT67.CUSTODY AND USE OF THE LEASED OBJECT AND EXPENSES THEREFOR68.DESTRUCTION OR LOSS OF, OR DAMAGE TO, THE LEASED OBJECT79.INSU

2、RANCE810.LEASE DEPOSIT811.HANDLING OF BREACHES OF CONTRACT912.ASSIGNMENT OF PARTY AS RIGHTS1013.AMENDMENT OF THE CONTRACT1014.DISPOSAL OF THE LEASED OBJECT AFTER EXPIRATION OF THE LEASE TERM1115.SECURITY1116.DISPUTE RESOLUTION1217.PROVISION OF NECESSARY DETAILS AND INFORMATION BY PARTY B1218.CONTRAC

3、T, SCHEDULE AND ANNEXES12ANNEX 1: SCHEDULE14ANNEX 2: ACTUAL LEASE PAYMENT FORM15ANNEX 3: CALCULATION OF ACTUAL COST OF LEASED OBJECT17ANNEX 4 EQUIPMENT PURCHASE CONTRACT (NO. _)18ANNEX 5: LETTER OF GUARANTEE19ANNEX 6: RECEIPT FOR LEASED OBJECT20FINANCE LEASE CONTRACT A finance lease contract is a co

4、ntract by which a lessor, based on a lessees selection of the seller and the leased object, after entering into a sales contract with the seller, makes the subject matter purchased under the sales contract available to the lessee for his use and benefit and for which the lessee makes a lease payment

5、 to the lessor. (Paraphrased from Article 237 of the Contract Law of the Peoples Republic of China (the “Contract Law”) adopted by the National People's Congress of the Peoples Republic of China on March 15, 1999 and implemented from October 1, 1999.) Selected from among the sample contracts iss

6、ued by the State Administration for Industry and Commerce in 2000.(EQUIPMENT LEASE CONTRACT)Lessor: _ (“Party A”)Legal address: _Legal representative: _Telephone: _ Facsimile: _Postal code: _Bank: _ Account no.: _Lessee: _ (“Party B”)Legal address: _Legal representative: _Telephone: _ Facsimile: _Po

7、stal code: _Bank: _ Account no.: _Pursuant to the Contract Law of the Peoples Republic of China and other Chinese laws and regulations, the Parties enter into this Finance Lease Contract and have agreed upon the following terms, which they shall both abide by and perform. Law Governing the Contract.

8、 For lease contracts with a foreign element, the parties may negotiate on the selection of the governing law, which may be the law of the country where one of the parties is located, the law of the place where the contract is executed, the law of the place where the Leased Object is delivered, the l

9、aw of the place where the Leased Object is to be used or international practice. According to Article 4 of the Regulations of the Supreme Peoples Court on Several Issues Concerning the Trial of Finance Lease Contract Disputes, if the parties have not selected the governing law (of the lease contract

10、), the law of the place where the lessee is located shall apply. Chinese Law has been selected as the law governing this Lease Contract and the main basis hereof shall be the Contract Law of the Peoples Republic of China (the “Contract Law”).1. OBJECT OF THE LEASEPursuant to Party Bs requirements an

11、d discretionary selection, Party A, with the aim of leasing the object specified in item (1) of the Schedule hereto (the “Leased Object”) to Party B, shall finance the purchase thereof and lease the same to Party B and Party B shall lease the same from Party A and use the same. A typical financ

12、e lease contract involves three parties and two contracts, i.e. the sales contract between the lessor and the seller and the lease contract between the lessor and the lessee. The contents of the former are largely similar to general trade or sales contracts, although the seller should perform his ob

13、ligation of supplying the goods directly to the lessee and acknowledge that the lessee has the same contractual rights as the buyer (i.e. the lessor). Accordingly, the provisions of the sales contract should be consistent with those of the lease contract and in general will only enter into effect if

14、 confirmed by the lessee. Furthermore, considered from the point of view of protecting the lessor, the sales contract should specify that if, for any reason, the lessor fails to perform the lease contract before the delivery of the goods, the lessor has the right to unconditionally terminate the sal

15、es contract.2. LEASE TERMThe lease term shall be that specified in item (5) of the Schedule and the lease commencement date shall be the date on which Party B signs the bill of lading as specified in paragraph 1 of Clause 5 hereof or, alternatively, the date on which Party A posts the bill of l

16、ading as specified in paragraph 2 of Article 5 hereof.3. LEASE PAYMENT3.1 Party A shall finance the purchase of the Leased Object for Party B and Party B must make lease payments to Party A for the lease of the Leased Object. The lease payment amount, date and place of payment, currency and num

17、ber of payments are specified in item (9) of the Schedule.3.2 The lease payment amount mentioned in the preceding paragraph shall be calculated in accordance with the budgeted cost specified in item (7) of the Schedule (the “Budgeted Cost”). However, if on the lease commencement date there is a disc

18、repancy between the actual cost and the Budgeted Cost of the Leased Object, the actual cost shall prevail and the lease payment shall be calculated accordingly on the basis of the actual cost.3.3 For the purposes of the preceding paragraph, the term “Actual Cost” means the total of all the amounts,

19、expenses and interest thereon paid in foreign exchange and Renminbi by Party A in order to purchase the Leased Object and deliver the same to Party B. Interest shall be calculated at the rate of Ä_ percent per annum for foreign currency and Ä_ percent per annum for Renminbi for the period

20、between the date of payment by Party A or the date on which Party A actually assumes the same until the lease commencement date of the Leased Object.3.4 Pursuant to paragraphs 2 and 3 of this Article, if there is a discrepancy between the Actual Cost and the Budgeted Cost, Party A shall provide a Ca

21、lculation of the Actual Cost of the Leased Object and an Actual Lease Payment Form to Party B, shall inform Party B of the amount of the Actual Cost and that the Actual Cost shall prevail and shall revise items (8), (9), (10), (11) and (12) of the Schedule. Party B shall confirm the aforementioned r

22、evisions. Such revisions shall not be construed as amendments to or revisions of the Contract. Furthermore, regardless of whether it uses the Leased Object, Party B shall make a lease payment to Party A on the date, in the amount, in the currency, etc. specified on the Actual Lease Payment Form

23、.3.5 The currency in which the lease payment hereunder is denominated shall be determined by Party B and may not be modified during the performance hereof. Any benefits or losses arising from changes in the exchange rate shall accrue to or be borne by Party B. Lease Term and Lease Payment. The finan

24、ce lease contract should expressly specify the lease term and the term during which a lease payment will be assessed (the “Base Lease Term”), usually calculated in years. The length of the Base Lease Term is determined on the basis of certain relevant factors including the number of years of use of

25、the Leased Object, cash flow, relevant expenses, etc. In the case of machinery, equipment, computers, etc., the normal term is five years.As for the starting date of the Base Lease Term, the delivery date indicated on the receipt for the Leased Object may be deemed the date on which calculation comm

26、ences, or calculation may commence from the date on which the seller seeks payment or another date agreed upon by the Parties.The lease payment is one of the key provisions of a finance lease contract. The relevant provisions should include the amount thereof or the method of calculating the same an

27、d the lease payment conditions and requirements (See Article 243 of the Contract Law). In general, the lease payment consists of the total cost of the Leased Object plus the lessors profit. The total cost includes the price, freight, insurance, the interest on the lessorss financing and the lessors

28、expenses.At the time the contract is drafted, the lease payment is usually calculated on the basis of the Budgeted Cost. In general, if at the time the Leased Object is actually delivered the total cost of the Leased Object differs from the Budgeted Cost, the Actual Cost prevails and the lease payme

29、nt is adjusted accordingly. The Parties may specify in the lease contract that, under such circumstances, the lessor will notify the lessee thereof in writing and the change will be effected after confirmation by the lessee. The lessee may not object to any reasonable adjustment made to the lease pa

30、yment as a result of the aforementioned circumstance.The lease contract should expressly specify the amount, method of and place of lease payment, the lease commencement date (i.e. the date on which calculation of the lease payment commences), the currency in which the lease payment is to be paid, t

31、he payment rate and the date on which each payment is to be made. The main conditions relating to the lease payment method are set forth below:(i)advanced payment or post-payment of the lease payment;(ii)payment in installments: equal payments may be made on a daily or quarterly basis or even on a b

32、i-annual or annual basis;(iii)equal or variable payments: in international finance leases, the lease payment is paid in equal installments is normal practice, although payment in unequal installments may also be adopted, e.g. seasonal payment, progressive increase during repayment period, progressiv

33、e decrease during repayment period, etc.4. PURCHASE OF THE LEASED OBJECT4.1 Party B shall select, at its own discretion, the Leased Object and the seller in accordance with its own requirements and after investigating the sellers creditworthiness. Party B enjoys all rights of decision over the Lease

34、d Objects description, specifications, model, performance, quality, quantity, technical standards, the contents and quality of the services connected therewith, technical warranties, price terms, delivery date, etc. and shall negotiate the same directly with the seller. Party B shall bear full liabi

35、lity for the decisions and selections which it has unilaterally made. Party A shall enter into a purchase contract with the seller on the basis of Party Bs selection and requirements. Party B agrees to and confirms all of the terms of the purchase contract specified in item (1) of the Schedule and s

36、hall sign such contract.4.2 Party B must provide to Party A all approvals and permits which Party A considers necessary.4.3 Party A shall be responsible for raising the funds required to purchase the Leased Object and carrying out, pursuant to the purchase contract, all the relevant import procedure

37、s.4.4 Customs duties, valued added tax, newly levied state taxes and other taxes, domestic freight and other domestic charges payable in connection with the purchase of the Leased Object shall be borne by Party B and shall be paid on time and directly by Party B in accordance with the regulations an

38、d requirements of the relevant authority. Party A shall not bear any liability in respect thereof. Subject Matter of the Lease. One of the main differences between a finance lease and a general operational lease is that the decision on the subject matter of the lease, supplier, the quality requireme

39、nts and technical specifications in respect of the subject matter, etc. rests with the lessee rather than the lessor. Accordingly, the following provisions on the requirements in respect of the subject matter of the lease should be specified in the finance lease contract: (i)the fact that the Leased

40、 Object is purchased by the lessor in accordance with the requirements of the lessee and is provided to the lessee for its use should be specified;(ii)the requirements of the lessee in respect of the Leased Objects description, specifications, model, technical requirements; and(iii)the special requi

41、rements of the lessee in respect of the supplier of the Leased Object, e.g. the designation of a certain supplier in a certain place. (See Article 239 of the Contract Law)5. DELIVERY OF THE LEASED OBJECT5.1 The Leased Object shall be delivered to Party B by the seller or Party A (including its agent

42、) at the point of delivery specified in item (3) of the Schedule. After receipt of the bill of lading, Party A shall promptly notify Party B by telegram to collect the bill of lading from Party A on the strength of a power of attorney. At such time, Party B shall issue Party A a receipt for the Leas

43、ed Object. Upon Party B signing the bill of lading, Party A shall be deemed to have completed delivery of the Leased Object to Party B. The date on which Party B signs the bill of lading shall be deemed the date of commencement of the lease hereunder. Party B shall take delivery of the Leased Object

44、 at the point of delivery on the strength of the bill of lading, and may not refuse to take delivery of the same for any reason.5.2 If Party B fails to collect the bill of lading on the date communicated to it by Party A or refuses to accept the bill of lading, Party A shall send the bill of lading

45、to Party B by registered mail whereupon Party A shall be deemed to have completed delivery of the Leased Object to Party B and Party B to have delivered the receipt for the Leased Object to Party A. In such circumstances, the date on which Party A mails the bill of lading shall be deemed the date of

46、 commencement of the lease hereunder.5.3 Once the Leased Object has been delivered to the point of delivery, Party As forwarding agent (outward shipment company) or Party B itself shall carry out the customs declaration procedures and the procedures for taking delivery of the Leased Object. Regardle

47、ss of whether Party B takes delivery of the Leased Object in a timely manner or not, Party B shall be liable for custody of the Leased Object once it is delivered to the point of delivery.5.4 Party A shall not bear any liability for the delayed receipt by Party B of the Leased Object or Party B bein

48、g unable to receive the Leased Object due to delayed shipment, unloading or customs procedures if such delay is due to force majeure, a government decree or other such reason not attributable to Party A.5.5 After taking delivery of the Leased Object at the point of delivery, Party B shall, in accord

49、ance with relevant state laws and regulations, carry out commodities inspection procedures at the place and time designated in the purchase contract and provide a duplicate of the commodities inspection report to Party A in a timely manner. Time Limit for, and Method of, Delivery of the Leased Objec

50、t. A finance lease contract should specify the specific time for, and the method of, the delivery of the Leased Object. In general, the lessee will take delivery of the goods from the lessor or the seller will deliver the goods directly to the lessee. The lessor is not under obligation to collect th

51、e goods. Notwithstanding the foregoing, the lessor, as the owner of the goods, has the right to require the lessee to act as its agent in issuing a proof of receipt of the goods to the seller and to issue to itself a receipt for the delivery of the goods as proof of the delivery of the Leased Object

52、.If an international finance lease arrangement is involved, specific provisions in respect of such related matters as shipment, customs declaration, customs duties, value added tax, commodities inspection, etc. need to be made.6. HANDLING OF DEFECTS IN THE LEASED OBJECT6.1 As Party B enjoys the righ

53、ts specified in paragraph 1 of Article 4 hereof, if the seller delivers the Leased Object late, or if there is a discrepancy between the Leased Object provided and the provisions regarding the same specified in the purchase contract, or if a defect is discovered during the installation, adjustments,

54、 operation or the warranty period, or other such circumstance, the seller under the purchase contract shall, pursuant to the provisions of such contract, be held liable. Party A shall not be liable for damages and Party B shall not have any recourse against Party A.6.2 The right of recourse in respe

55、ct of the late delivery of, and quality defects in, the Leased Object shall vest in the Lessor and the Lessor may assign part or all of its right of recourse to the Lessee. The assignment of the right of recourse shall be expressly specified in the purchase contract.6.3 Expenses incurred in the purs

56、uit of claims and the results of such claims shall be borne by the Lessee.7. CUSTODY AND USE OF THE LEASED OBJECT AND EXPENSES THEREFOR7.1 During the lease term, Party B may make full use of the Leased Object.7.2 Party B may not remove the Leased Object from the place of installation specified in it

57、em (4) of the Schedule, assign it to a third party or permit a third party to use it without the written consent of Party A.7.3 Party B shall properly maintain the Leased Object at all times so that it is kept in normal condition and functions normally. Party B shall be responsible for handling the repair and maintenance of the Leased Object and shall bear all costs therefor. Without the written consent of Party A, parts thereof requirin