Exhibit 10.38
NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by the Registrant to the Securities and Exchange Commission (the
“Commission”). Such portions have been redacted and are marked with a “[***]” in
the place of the redacted language. The redacted information has been filed
separately with the Commission.
AOS Confidential

Contract No: YZ(2018)0401

Financing Lease Contract
(Sale and Leaseback)

Lessor (Party A): Chongqing Yinhai Financing Lease Co., Ltd.

Lessee (Part B): Chongqing Alpha and Omega Semiconductor Limited
                       
Date of Signing: May 9, 2018

Place of Signing: Yubei, Chongqing

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WHEREAS:
(1) For the purpose of the Financing Lease between the Lessor and the Lessee,
the Lessor will purchase the leased items owned by the Lessee from the Lessee
and lease it back to the Lessee for use.
(2) According to relevant laws and regulations of the People's Republic of
China, both parties voluntarily enter into this Financing Lease Contract by
consensus.
Part 1 Commercial Terms
Parties
Lessor: Chongqing Yinhai Financing Lease Co., Ltd. (hereinafter referred to as
“Party A”)
Legal Representative: Pang Xianwei
Registered Address: No. 2, 3/F, Tower A, Haiwangxing Technology Building, No. 62
Xingguang Road, North New District, Chongqing
Lessee: [Chongqing Alpha and Omega Semiconductor Limited] (hereinafter referred
to as "Party B")
Legal Representative: [MIKE FUSHING CHANG]
Registered Address: [No.5-407, Yuhan Avenue, Shuitu High-tech Industrial Park,
Beibei District, Chongqing]
Leased items (see Annex I List of Leased Items for Details)
No.

Name of Leased Items
Seller Name

Specifications and Models

Invoice No.
Quantity
Unit Price
Total Price
Assessed Value
leased items use location: No.5-407, Yuhan Avenue, Shuitu High-tech Industrial
Park, Beibei District, Chongqing
Lease Conditions
Assessed Value of the Leased Items (can be Omitted If Assessment is Exempted)

In figures: ¥ [***]. In words: [***]

Lease Funds
(Purchase Price of the Leased Items)
In figures: ¥ [475,000,000.00]. In words: [RMB four hundred and seventy-five
million]

*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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Down Payment of the Rents
In figures: ¥ [75,000,000.00]. In words: [RMB seventy-five million]. Party B
shall deliver a one-off down payment of rents to Party A or a third party
designated by Party A before  May 11, 2018.
Lease Principal
In figures: ¥ [400,000,000.00]. In words: [RMB four hundred million]
Lease Rate of Interest
[5.4625]% (15% over the benchmark interest rate for the same period), floated
interest rate [√], fixed interest rate [/]
Purchase Price
In figures: ¥ [1.00]. In words: [RMB one]
Term of Lease

60 months in total, starting from the Lease Commencement Date
Purpose of Funds
Operation
Payment of Rents
Payment Method of the Rents
Pay interest on a quarterly basis and the total is 20 periods. The grace periods
of repayment of principal are from 1st period to 3rd period. The proportion of
repayment of principal of each period is 3% of the actual investment amount from
the 4th to 7th period, 6.75% of the actual investment amount from the 8th to
19th period, and 7% of the actual investment amount for the 20th period. If the
project is to be invested by stages, the rent payment method shall be determined
in accordance with this principle.

Rent Payable for Each Period
For details, please refer to Annex II Rent Payment Estimates
Accounts for Payment Collection of the Parties
Information of Party A's account for payment collection:
Bank: Chongqing Branch of China Export-Import Bank
Account Name: Chongqing Yinhai Financing Lease Co., Ltd.
Account No.: 2100000100000237876
Information of Party B 's account for payment collection:
Bank: Chongqing Branch of China Export-Import Bank
Account Name: Chongqing Alpha and Omega Semiconductor Limited
Account No.:
Security Method (All Security Methods are Listed in this Article and can be
Added)
Guarantee
/
Mortgage
/
Pledge
/
Insurance

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Insurance Type
All-Risk Property Insurance

Policyholder
Party B
Beneficiary
Party A or any third party designated by Party A
Insured Period
Cover the entire lease period
Insured Amount
Cover at least the lease principal
Insurance
Premium
Subject to the approved amount of the insurance company
Entity to Assume the Premium
Party B
Contact Information
Party A’s contact information:
Contact: Liu Ying
Tel.: 18623457667
E-mail: 2851719785@qq.com
Fax: 023-67680191
Address: No. 2, 3/F, Tower A, Haiwangxing Technology Building, No. 62 Xingguang
Road, North New District, Chongqing
Party B’s contact information:
Contact: Yang Liyan
Tel.: 13795368681
E-mail: lyla.yang@cqaos.com
Fax:
Address: No. 117, Yunhan Road, Shuitu Hi-Tech Industrial Park, Liangjiang New
District, Chongqing (Room 205, Office Building, Administrative Committee of the
Park)
Other
Number of Contract Counterparts
This Contract is made in sextuplicate with each party holding two and the rest
two of which remain.

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Part 2 General Terms
Article 1 Definition
1.1
Financing Lease: refers to the trading activities that the Lessor, according to
the choice or approval of the Lessee regarding the leased items and supplier,
leases the leased items it acquires from the supplier to the Lessee for the
Lessee to possess and use according to the contract, and collects the rents from
the Lessee.

1.2
Sale and Leaseback: refers to the type of Financing Lease that the Lessee sells
its own items to the Lessor, signs a Financing Lease contract with the Lessor at
the same time, and then rents the items back from the Lessor.

1.3
Lease Commencement Date: refers to the date on which Party A pays Party B the
first payment for the purchase price of the leased items.

1.4
Lease Funds: refers to the total price that Party A purchases the leased items
from Party B.

1.5
Down Payment of Rents: refers to the one-off payment for the first-time rent
paid by Party B to Party A on the lease commencement date.

1.6
Lease Principal: refers to the financing amount actually provided by Party A for
Party B after deduction of the Down Payment of Rents from the Lease Funds.

1.7
Lease Costs: refers to the sum of the contract price, pre-lease interest and
grace-period interest paid by Party A for purchase of the leased items, and
other expenses that both Parties agree to count into costs.

1.8
Lease Interest Rate: refers to the annual interest rate used to calculate the
rents within the lease term agreed upon by both Parties.

1.9
Interest-Bearing Method: The interest of the lease payments under this Contract
is calculated from the Lease Commencement Date (delivery day of the Lease
Funds). The calculation formula of daily accrued interest is: daily accrued
interest = balance of the Lease Principal of the day × Lease Interest Rate/360.

1.10
Lease Term: refers to the lease term agreed in Part 1 of this Contract.

1.11
The Purchase Price refers to the price of the leased items repurchased by Party
B after Party B pays off all the rents and other payables (including the
possible overdue interest penalty and economic loss compensation, etc.) in
accordance with the provisions of this Contract.

1.12
Overdue Interest: All Overdue Interest under this Contract is calculated based
on 0.0005 of the overdue amount.

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Article 2 Leased Items
2.1
The leased items as stipulated in this Contract are originally owned by Party B.
Party B transfers the leased items to Party A according to the Contract, and
Party A leases back the equipment and other assets used by Party B. The specific
content is shown in Annex I List of Leasing Items.

2.2
Party B guarantees that it has independent, complete and legal ownership of the
leased items it transfers to Party A, no mortgage, pledge and other security
rights have been set on the leased items in any way, and there is no priority or
any other defect of right.

Article 3 Purchase of the Leased Items
3.1
Party B shall transfer the leased items to Party A in the form of sale and
leaseback for the purpose of financing; Party A shall accept the leased items
transferred by Party B according to Party B's above-mentioned purpose and lease
it back to Party B for use.

3.2
Party B shall submit to Party A an assessment report of the leased items, a
capital verification report of the leased items or the purchase contract (if
any) and the original copy of the invoice (if any) within ten working days after
the signing of the Contract.

3.3
The leased items transferred by Party B to Party A shall be deemed to be owned
by Party A on the date that Party A pays Party B the first payment of the Lease
Funds in accordance with Article 4 of this Contract. Party B shall issue to
Party A the Certificate of Ownership Transfer I (Lessee to Lessor) (see Annex
VII for details) of the leased items within three working days after receiving
the first payment of the Lease Funds. Party B’s failure of issuance will not
affect Party A's ownership of the leased items.

3.4
If Party A fails to complete the second payment of the Lease Funds within 10
working days after the first payment of the Lease Funds, Party A agrees to
refund the service charges and security deposit to Party B in full (without
interest) after Party B returns Party A's actual payment of the Lease Funds
(without interest) to Party A. In addition, Party A agrees that the ownership of
the leased items shall be transferred to Party B after all the payments of Party
A and Party B are returned.

 
Article 4 Lease Funds and Payment
4.1
Both Parties agreed that the Lease Funds of the leased items shall be determined
in accordance with Part 1 Commercial Terms.

4.2
Way of payment of the Lease Funds: Party A and Party B agree to pay in
accordance with the following (3rd) way upon negotiation:

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(1)
One-off payment:

Party A shall pay Party B a lump sum of the Lease Funds within 5 working days
after all the payment conditions agreed in this Contract are satisfied.
(2)
Installments:

Party A shall pay Party B the down payment of the Lease Funds of RMB / within 5
working days after all the payment conditions agreed in this Contract are
satisfied. The remaining Lease Funds shall be paid in installments. The specific
payment time and amount shall be: / .
(3)
Other payment methods: Party A shall pay Party B the down payment of the Lease
Funds of RMB 96,000,000.00 (in words: RMB ninety-six million) within 5 working
days after the payment conditions agreed in this Contract are all satisfied; the
remaining Lease Funds is RMB 379,000,000.00 (in words: RMB three hundred and
seventy nine million), which shall be paid in full within 10 working days after
the down payment of the Lease Funds and the payment of Party B’s security
deposit are paid.

4.3
After all the following conditions of Item (1), (2), (3), (4) and (5) are met,
Party A shall pay the down payment of the Lease Funds to Party B in accordance
with the payment method stipulated in Article 4.2 of this Contract. The bank
account information designated by Party B for payment collection is as follows:

Account Name: Chongqing Alpha and Omega Semiconductor Limited
Bank: Chongqing Branch of China Export-Import Bank
Account No.:
(1)
All contracts required between Party A and Party B on the Financing Lease have
been fully signed and become effective;

(2)
If Party B or other related parties provide Party A with any guarantee in
relation to the performance of obligations of Party B under this Contract,
relevant security contract has been signed and becomes effective, related
procedures under the security contract (including but not limited to
notarization, mortgage/pledge registration of the guarantee and insurance etc.)
have been completed, and the asset lists of Party B and the guarantor and other
materials have been provided in accordance with Party A's request;

(3)
Party B has remitted the Down Payment of Rents, service charges and other
payables payable to Party A under this Contract to bank account designated by
Party A;

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(4)
Party B has provided Party A with an assessment report of the leased items, a
capital verification report of the leased items or the purchase contract (if
any) and the original copy of the invoice (if any);

(5)
Other conditions: a formal assessment report to acquire the leased items.

4.4
Party B shall use the Lease Funds paid by Party A according to the agreed
purpose of both parties, and shall bear the taxes and expenses (if any) arising
from the transfer of the leased items under this Contract.

Article 5 Delivery of the Leased Items and Handling of Quality Defects
5.1
This Contract is a sale-and-leaseback contract. The leased items originally
belong to Party B and has been occupied, used, and kept by Party B. Party A and
Party B do not need to go through the procedures for transfer and physical
handover of the leased items. After Party A pays Party B the down payment of the
Lease Funds, it is deemed that the leased items are received and accepted by
Party B (as the Lessee) in the complete state. Party B shall issue the Proof of
Receipt of the Leased Items to Party A. Party B’s failure to do so will not
affect the recognition of the fact that Party B has received and accepted the
leased items upon acceptance check. However, Party B shall not, at any time,
object to any of the accepted leased items on the ground that the Proof of
Receipt of the Leased Items has not been issued.

5.2
Any quality issues or any other problems that affect the normal use of the
leased items during the term of this Contract shall be the responsibility of
Party B. Party A shall not bear any responsibility. Party B shall not thereby
refuse to pay the rents or perform other obligations agreed in the Contract.

5.3
As Party B has purchased and used the leased items before signing of this
Contract, Party B shall bear full responsibility for its own choice and
decision. If the quality, specifications, technical performance and quantity
etc. of the goods delivered by the original supplier are not in conformity with
the contract signed by the original supplier and Party B, or any quality problem
occurs within the warranty period as stipulated in the sales contract, Party B
shall directly file a claim with the original supplier and Party A shall not
bear any responsibility for such issues. However, Party A may provide Party B
with certain assistance within a reasonable range. All costs incurred therefrom
shall be borne by Party B (including but not limited to litigation fees,
arbitration fees, property preservation fees, preservation guarantee fees,
travel expenses, implementation fees, assessment fees, auction fees, notary
fees, delivery fees, announcement fees and attorney fees, etc.) The results of
the claim are enjoyed by Party B. Regardless of whether Party B can be
compensated through the claim, and whether or not the claim is in progress,
Party B's rent payment and other obligations under this Contract will not be
affected.

Article 6 Ownership and Public Notification of the Leased Items

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6.1
After Party A pays the down payment of the Lease Funds for the leased items to
Party B according to the provisions in this Contract, the owner of the leased
items shall be changed to Party A (such ownership covers the auxiliary items,
accessory rights and Fructus etc. of the leased items). Before all payments due
under this Contract are settled, Party B shall guarantee that the proprietary
applications, software, licenses and technical documents of the leased items are
in a valid state and that performance and configuration standards (except for
normal depreciation and wear) of the leased items are not lower than the
corresponding indicators when this Contract becomes effective.

Party A shall have the right to mark in a conspicuous place on the leased items
that the owner of the leased items is Party A, by means including but not
limited to posting signs, painting marks, as well as registration and public
announcement in the Unified Registration and Public Announcement System for
Movable Property Financing of the Credit Reference Center of the People's Bank.
If any third party claims rights over the leased items and thus causes legal
disputes, Party B shall bear relevant responsibility. If Party A suffers losses
thereby, Party B shall bear the liability of compensation for Party A's
reasonable direct economic loss according to law.
6.2
Unless prior written consent from Party A is obtained, Party B shall not
transfer, mortgage and pledge the leased items, or use the leased items for
investment in shares and compensation, or establish a lawsuit guarantee over the
leased items, or in any way infringe Party A's ownership of the leased items. If
it is really necessary for the leased items to be used by a third party due to
the needs of production and operation, the third person shall be listed as a
joint lessee.

6.3
If Party B upgrades the leased items during the lease term, Party B shall bear
the cost of the upgrade. The components added to the leased items that are
inseparable from the leased items or are separable, but the separation will lead
to functional impairment of the leased items shall be owned by Party A free of
charge. Party B shall guarantee that, before all payables are paid under this
Contract, the production performance and configuration standards of the leased
items (except for normal depreciation and wear) owned by Party A shall not be
lower than the corresponding indicators when the Contract takes effect.

6.4
If Party B replaces the parts of the leased items with other replacement parts
for maintenance, repair or its use needs during the lease period, related costs
incurred from the replacement shall be borne by Party B. In addition, the
replacement parts shall be owned by Party A from the date of replacement.

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6.5
The binding of the leased items to other movable assets and real estate will not
change Party A's rights over the leased items.

6.6
Without prejudice to Party B’s possession and use of the leased items, Party A
may mortgage the leased items to a third party as required. However, Party A
shall notify Party B ten working days in advance. Party B is obligated to assist
Party A in handling the mortgage and other related procedures. When Party A
transfers the ownership of the leased items to Party B according to this
Contract, Party A shall be responsible for releasing the mortgage within ten
working days.

6.7
During the lease period, Party B shall not express or imply its ownership or
disposition right over the leased items in any form or allow any incident that
makes other people reasonably think that Party B is the owner.

6.8
Before Party B clears all the debts under this Contract, the ownership of the
leased items always belongs to Party A, and anyone except Party A has no right
to dispose of the leased items.

Article 7 Use, Repair and Maintenance of the Leased Items
7.1
Party B owns the right of possession and use of the leased items during the
Lease Term. Except for Party B's major breach of contract, Party A shall not
interfere with the legitimate and independent’s possession and use of the leased
items of Party B. Otherwise, Party A shall be liable for the losses caused by
Party B. If any third party claims any right to the leased items due to Party
A's reasons, Party A shall bear full responsibility and Party B's rights to use
shall not be affected.

7.2
Party B shall properly use and keep the leased items, repair, preserve and
maintain the leased items and accessories through regular repairs and irregular
inspections, and bear all expenses incurred therefrom. Any replaced, added, or
updated parts, devices and services automatically become part of the leased
items and are owned by Party A free of charge. All repairs and maintenance are
included in the lease period. If Party B is negligent in performing its
obligations of repairing and maintaining the leased items, Party A shall be
entitled to recover the leased items from Party B without prejudice to any other
claims that Party A may have against Party B under this Contract.

7.3
Party B shall, at the request of Party A, submit to Party A the maintenance
schedule and repair records of the leased items so that Party A can keep abreast
of the use conditions of the leased items. Both Parties shall jointly confirm
the submission interval and specific format of the maintenance schedule and
repair records within 30 working days after the signing of the Contract.

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7.4
Party B shall use the leased items in strict accordance with the user manual or
operation manual of the leased items, shall not assign unqualified personnel to
operate the leased items and shall keep the leased items continuously in a good
state of operation.

7.5
Party B shall bear all responsibility for the leased items and any personal
injury or property damage caused to any third party by the leased items during
the period of possession and use of the leased items by Party B. Party A shall
not bear any responsibility. If Party A suffers any reasonable and direct
economic loss, Party B shall pay full compensation.

7.6
In the event that changes in national policies result in the forced elimination
of the leased items during the lease period, Party A has the right to request
Party B to provide equivalent replacement equipment approved by Party A as the
leased items of the Contract. If the replacement equipment is not approved by
Party A, Party A has the right to request Party B to make a one-off payment with
the following amount within fifteen working days after receiving the payment
notice from Party A:

(1)
Total remaining Lease Principal and interest due (according to actual use period
of funds), unpaid service charges (if any) that have expired and overdue
interest (if any);

(2)
The Purchase Price and other payments (if any) that the Lessee shall make to the
Lessor when the lease term expires;

(3)
Other payables related to this Contract (including but not limited to litigation
fees, arbitration fees, property preservation fees, preservation guarantee fees,
travel expenses, implementation fees, assessment fees, auction fees, notary
fees, delivery fees, announcement fees and attorney fees, etc.) (if any).

7.7
During the lease period, Party A shall have the right to inspect the use and
maintenance conditions of the leased items at any time during normal working
hours without affecting the normal use of the leased items by Party B upon
written notice (including email) provided ten working days in advance. Party B
shall provide necessary conveniences for the inspections and cooperate with
Party A for the inspection of the leased items.

7.8
During the lease period, Party B shall bear related expenses and losses arising
from removal of the leased items from the bonded area.

Article 8 Loss and Damage of the Leased Items

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8.1
Party B shall bear all risks of loss or damage to the leased items. In the event
of such damage or loss, Party B’s payment obligations for rents and other
payables and other obligations under this Contract are not affected.

8.2
If any damage or loss of the leased items for a single time exceeds 5% of the
Lease Funds of the Contract for any reason during the lease term, but the damage
or loss does not constitute total loss or constructive total loss, Party B shall
promptly notify Party A and shall repair the leased items to the state of normal
operation at its own expense. The repair period is included in the lease term.
Therefore, Party B shall pay the rent as agreed in this Contract. Party B shall
bear all risks of loss or damage to the leased items, including but not limited
to risks within the insurance scope or other uninsured risks. In the event of
such damage or loss, Party B’s payment obligations for rents and other payables
and other obligations under this Contract are not affected.

8.3
If the leased items have actually been fully lost or if constructive total loss
is formed based on reasonable judgment during the lease term, Party B is
required to make a one-off payment with the following amount within five working
days after receiving the payment notice from Party A. After Party B pays Party A
all the following amounts, Party B's obligations under this Contract are
automatically discharged and all the benefits of the leased items, including
those under the insurance contract, are owned by Party B.

(1)
Total remaining Lease Principal and interest due (according to actual use period
of funds), unpaid service charges (if any) that have expired, liquidated damages
(due to Party B's fault) and overdue interest (if any);

(2)
The Purchase Price and other payments (if any) that the Lessee shall make to the
Lessor when the lease term expires;

(3)
Other payables related to this Contract (including but not limited to litigation
fees, arbitration fees, property preservation fees, preservation guarantee fees,
travel expenses, implementation fees, assessment fees, auction fees, notary
fees, delivery fees, announcement fees and attorney fees, etc.) (if any).

Article 9 Contract Term and Lease Commencement Date
9.1
Contract Term: The term of this Contract shall be valid from the effective date
of the Contract to Party A's receipt of all rents and other payables paid by
Party B under this Contract. If Party B chooses to purchase the leased items
after the lease term expires, the term of this Contract shall expire on the date
that Party B fully pays the Purchase Price of the leased items to Party A and
completes the registration of ownership change of the leased items (if any).

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9.2
Lease Commencement Date: The Lease Commencement Date of the Contract is the date
on which Party A pays Party B the down payment of the Lease Funds.

Article 10 Rent
a)

10.1
Rent and Payment

10.1.1
Party B shall deliver the one-off Down Payment of Rent to Party A or a third
party designated by Party A in accordance with the time stipulated in Part 1
Commercial Terms. Party B shall remit rents to Party A's account on or before
the date of payment on the basis of the time and amount stipulated in Annex II
Rent Payment Estimates. If the Rent Payment Estimates is inconsistent with the
Actual Rent Payment Table, the Actual Rent Payment Table shall prevail.

10.2 Rent Calculation and Reasonable Change
10.2.1
The rents consist of the Lease Costs and the lease interest. The Lessor will
charge the rents based on the total Lease Costs from the Lease Commencement
Date. The Lease Interest Rate will be determined in accordance with the
following B way:

A.
The fixed interest rate remains unchanged during the lease term and will not be
adjusted with the changes of the benchmark interest rates for loan of the
People's Bank of China for the same period.

B.
The floating interest rate will be adjusted in proportion to the benchmark
interest rates for loan of the People's Bank of China for the same period.

If a floating interest rate is adopted, Party A shall make a corresponding
adjustment to the rent in Annex III Actual Rent Payment Table within ten working
days after the People’s Bank of China announces the adjustment of the loan
interest rate for the same period. In case of interest rate adjustment, the
Lease Interest Rate shall be adjusted on the next interest adjustment date after
the date of interest rate adjustment (the dates of interest adjustment are March
21, June 21, September 21 and December 21 of each year), and the previous rents
remain unchanged. Party A informs Party B with Annex IV Rent Adjustment Notice
and Party B agrees to this change. The Rent Adjustment Notice is an integral
part of this Contract. The actual rent adjustment date shall be subject to the
Rent Adjustment Notice issued by Party B in accordance with the format of Annex
IV.
10.2.2
With respect to the rents overdue by Party B, adjustments shall be made based on
the new interest rates in case of raised interest rates or according to the
original interest rates in case of lowered interest rates, regardless of any
type of interest rate (fixed interest rate or floating interest rate) selected.

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10.2.3
Party B's obligation to pay rents under this Contract is absolute and
unconditional, and is not affected or deducted for any reason, including but not
limited to the quality defects of the leased items, unusable leased items, and
loss or damage of the leased items.

Article 11 Lease Service Charges, Security Deposit and Other Expenses

11.1
Lease service charges: After Party A collects the lease service charges from
Party B, the lease service charges will not be refunded unless the Contract is
cancelled due to Party A's fault.

11.2
Lease Security Deposit

11.2.1
In order to ensure that the rent is paid in full and on time and other
obligations are performed under this Contract, Party B shall deposit the lease
security deposit into the bank account designated by Party A within seven
working days after signing of this Contract in accordance with Part 1 Commercial
Terms of this Contract.

11.2.2
Party A will refund the full amount of the lease security deposit to Party B
within seven working days after Party B make all the payments in accordance with
this Contract. When Party A refunds the lease security deposit, only the
principal will be refunded and no interest will accrue.

11.2.3
Within ten working days after Party A’s written notification, if Party B fails
to perform its payment obligations under this Contract, Party A is entitled to
use the lease security deposit to offset the amounts that Party B shall pay to
Party A in accordance with the order of other payables, overdue interest,
liquidated damages, rents payable, service charges and Purchase Price. After the
above offset, Party B shall promptly make up the lease security deposit
according to Party A's notice. If Party B fails to do so, Party A is entitled to
make up for the lease security deposit with the rents subsequently paid by Party
B.

11.3
Other fees that Party B shall pay to Party A: None.

 
Article 12 Insurance of the Leased Items

12.1
During the lease period, if Party A has corresponding requirements, Party B
shall insure the leased items for Party A as the insured and the beneficiary
with the full amount of property insurance and its additional insurance accepted
by Party A, and make them valid for the duration of the Contract (if the leased
items can only be insured in phases in accordance with relevant regulations of
the insurance industry, Party B shall complete the renewal of the insurance 10
working days before expiration of the insurance period). In addition, the
insurance amount shall cover the principal and

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interest of the lease, and the insurance premium shall be borne by Party B.
Party B shall provide Party A with insurance payment documents and vouchers at
the request of Party A.
12.2
If Party B fails to insure the leased items or renew the insurance on time
according to Party A's request, Party A shall have the right to insure the
leased items or renew the insurance on behalf of Party B. Party B shall bear the
costs incurred. If Party A pays for the insurance fees, Party A shall have the
right to seek repayment from Party B and collect interest at the rate of 0.0005
of the amount from the date of Party A’s advance payment to the date of
repayment by Party B. If Party B fails to promptly repay Party A's advance
payment within ten working days after Party A's written notification in
accordance with this Contract, Party A shall be entitled to deduct it from the
lease deposit. In the process of insuring the leased items, Party B shall
truthfully inform the insurance company in writing of the financing lease
relationship between Party A and Party B and the fact that Party A is the sole
owner of the leased items.

12.3
If Party B insures the leased items according to the requirements of Party A
under this Contract, the original insurance copy of the policy shall be handed
over by Party B to Party A for keeping. After the original insurance policy is
submitted to Party A, Party B and the insurance company shall not change the
insurance terms without Party A’s prior written consent.

12.4
After the occurrence of any insurance accident, Party B must immediately notify
Party A and the insurance company to handle loss assessment and damage claim.
Party B shall provide all necessary documents and take all necessary measures so
that Party A can receive insurance compensation. If Party B fails to cooperate
with Party A to handle the damage claim and causes Party A’s failure to obtain
compensation from the insurance company, Party B shall bear reasonable direct
economic losses.

12.5
After the occurrence of any insured accident, Party B shall take reasonable
measures to reduce the loss or avoid further loss. If Party B fails to promptly
notify Party A or fails to take reasonable remedial measures, Party B shall bear
corresponding responsibilities and compensate Party A for reasonable direct
economic losses suffered thereby.

12.6
(12.7)Party B shall ensure that the insurance coverage and amount are sufficient
to cause the actual amount paid by the insurance company to be not less than the
total amount of all payments payable by Party B under this Contract (including
all remaining interest of the Lease Principal and service charges) in the event
that the entire leased items suffer total loss or constructive total loss.

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12.7
(12.8)When any insured accident occurs, all insurance compensation shall be paid
to Party A and handled in the following manner:

(1)
If the accident does not constitute a total loss of the leased items and Party B
does not default on rent or other payables, the insurance compensation shall be
used to compensate Party B for the expenses incurred in repairing the leased
items under Article 8; if Party B has arrears of rent or other payables, the
insurance compensation shall be used to offset the payment that Party B shall
pay to Party A. If Party A’s insurance compensation is insufficient to pay the
aforesaid amounts, Party B still has the obligation to make up for the
insufficiency of Party A, including but not limited to the compensation that the
insurance company refuses to pay or insufficiency of compensation. In case of
any surplus after the offset, the remaining portion shall be paid to Party B.

(2)
If the accident constitutes a total loss of the leased items, the insurance
compensation shall be used to offset the payment of Party A payable by Party B
under Article 8.3. If Party A’s insurance compensation is insufficient to pay
the aforesaid amount, Party B still has the obligation to make up for the
insufficiency of Party A, including but not limited to the compensation that the
insurance company refuses to pay or insufficiency of compensation. In case of
any surplus after the offset, the remaining portion shall be paid to Party B.

12.8
(12.9)The risk of damage or loss of the leased items shall be borne by Party B.
The occurrence of an insurance accident and whether the insurance compensation
is paid will not constitute a reason for Party B to delay any payment or reduce
any payment under this Contract. Party B shall still perform the obligation of
paying rents and other payables in accordance with the provisions of this
Contract after the occurrence of any insurance accident.

Article 13 Representations and Warranties
13.1
Representations and Warranties of Party A

13.1.1
Party A is a professional financing lease company that has been established in
accordance with relevant laws and regulations of China and has been validly
subsisting, has qualifications for engaging in financing lease business, and has
the qualification and ability to sign and execute this Contract;

13.1.2
The financing lease business stipulated in this Contract does not exceed the
business scope of Party A's articles of association and business license, and
complies with relevant national policies and industry regulations;

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13.1.3
Party A has taken all necessary internal measures for the performance of this
Contract and has obtained all the necessary rights and approvals required for
the signing and performance of the Contract. The representative who has signed
this Contract has obtained legal authorization.

13.1.4
Party A carefully read all the terms of this Contract, has fully understood the
meaning of each clause, and signed this Contract is the expression of its true
meaning;

13.1.5
In terms of exempting or restricting its own responsibilities in the Contract,
Party A has taken reasonable steps to bring it to the attention of Party B and
explained the terms to Party B.

13.2
Representations and Warranties of Party B

13.2.1
Party B is a legal person/other organization legally established and validly
existing in accordance with relevant laws and regulations of China. It has the
necessary civil capacity and performance capacity to sign and perform this
Contract, and can independently bear civil liabilities;

13.2.2
Party B has taken all necessary internal measures and has obtained all the
necessary rights and approvals for signing and performance of this Contract.
Their authorized representatives who sign this Contract have obtained legal
authorization;

13.2.3
Before this transfer, Party B owns legal, complete and valid ownership of the
leased items, and has the right to transfer the leased items to Party A
according to the Contract; Party B guarantees that the leased items are not
being seized or detained by judicial or administrative authorities during the
transfer. The leased items or any part of them have not been transferred to any
third party in any way and are not bound by third-party rights (including but
not limited to ownership, security interest and usufructuary right, etc.); any
contract, rights, and obligations between Party B and other third parties do not
affect the performance effectiveness of this Contract. If any third party claims
rights to the leased items and thereby causes legal disputes, Party B shall bear
relevant responsibilities. If Party A suffers losses arising therefrom, Party B
shall bear corresponding liability;

13.2.4
Party B's signing and performance of this Contract will not violate any laws,
regulations, articles of association or any contract or agreement with any third
party;

13.2.5
Before the signing of the Contract, Party B guarantees to provide Party A with
true and accurate financial statements and asset lists, and guarantees to fully
disclose to Party A the circumstances that involve its assets or rights and may
affect the performance of the Contract including mortgage, pledge, litigation,
arbitration and administrative penalty;

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13.2.6
Within the validity period of this Contract, Party B shall submit a set of
originals of the following statements and reports to Party A within 15 working
days after completing them:    

(1)
Annual financial statements;

(2)
Half-year financial statements;

(3)
Quarterly financial statements;

(4)
The year-end audit report issued by the accounting firm.

13.2.7
Before completion of all the obligations of this Contract, Party B shall obtain
Party A's written consent in advance if Party B intends to carry out asset
reorganization, equity acquisition, asset transfer and other activities that may
affect realization of Party A’s rights and interests;

13.2.8
Party B guarantees that if it involves any major breach of contract, litigation,
arbitration, administrative punishment, restrictive measures such as seizure,
detention or freezing of assets, it shall notify Party A in writing within three
working days from the date of occurrence of such events, and shall take
corresponding measures to prevent such events from causing adverse effects on
Party A's rights and interests;

13.2.9
Party B shall ensure that the leased items are used only for legitimate and
rightful commercial purposes and may not be used for any illegal purpose.

Article 14 Prepayment

14.1
During the lease period, Party B may partially or fully repay the loan in
advance if Party A agrees in writing and Party B meets the following conditions:

(1)
Party B submits a written application to Party A 60 days in advance;

(2)
All service charges due have been paid;

(3)
All rents due have been paid;

(4)
The Lease Principal not yet due has been paid (applicable to all repayments in
advance);

(5)
Other payables have been paid.

14.2
Party B may, within five days after Party A agrees, pay Party A a lump sum of
all remaining Lease Principal, interest at maturity (calculated according to the
actual life of the funds), due service charges, overdue interest (if any), and
liquidated damages (if any) and other payables (including but not limited to
litigation fees, arbitration fees, property preservation fees, preservation
guarantee fees, travel expenses, implementation fees, assessment fees, auction
fees, notary fees, delivery fees,

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announcement fees and attorney fees, etc.). Party B shall pay Party A the
remaining Purchase Price and other payables. After receiving such payments,
Party A will cooperate with Party B in handling the ownership transfer
procedures for the leased items, including but not limited to issuance of the
Certificate of Ownership Transfer II (Lessor to Lessee) to Party B in accordance
with the format of Annex VIII. Taxes and fees (if any) arising from the transfer
of ownership of the leased items shall be borne by Party B.
14.3
If Party B makes part of the repayments in advance according to the provisions
of this Article, this Contract will continue to be valid. Party A shall
re-adjust the rent payment form for the outstanding principal in accordance with
the Rent Adjustment Notice attached to Annex IV of this Contract and inform
Party B in writing. Party B hereby confirms that Party A's above adjustments are
binding on it and undertakes to pay rents to Party A according to the adjusted
rent payment form. Party B confirms that its early repayments will not affect
Party A's full ownership of the leased items.

Article 15 Breach of Contract and Remedy
15.1
Party A's Liability for Breach of Contract

Party B owns the right of possession and use of the leased items during the
lease term. Except for Party B's major breach of contract, Party A shall not
interfere with the legitimate and independent’s possession and use of the leased
items of Party B. Otherwise, Party A shall be liable for the losses caused to
Party B.
15.2
Party B's Liability for Breach of Contract

15.2.1
The occurrence of any of the following circumstances during the lease period
shall be deemed as Party B's breach of contract:

(1)
Party B fails to pay rents and/or other payables in accordance with the time and
amount stipulated in this Contract;

(2)
Party B violates the representations and warranties made in this Contract;

(3)
Party B violates other terms of this Contract, including but not limited to
failure to provide guarantees in accordance with this Contract and to complete
the required registration formalities;

(4)
Party B fails to insure the leased items in accordance with this Contract and
fails to perform the obligation of proper use and maintenance of the leased
items, etc.;

(5)
Party B has overdue payment or breach of contract in other contracts signed with
Party A or other circumstances that affect Party B's performance of this
Contract;

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15.2.2
In the event of Party B’s breach of Article 15.2.1, Party A has the right to
take one or more of the following measures if Party B fails to make any
correction within 10 working days upon Party A’s written notice:

(1)
Require Party B to pay overdue interest. If Party B fails to pay rents and/or
other payables on schedule, Party A shall have the right to request Party B to
pay overdue interest from the date of payment of the rents or other payables to
the date of actual payment. Overdue interest is calculated at 0.0005 of the
amount payable per day until the full payment date. The overdue amounts shall be
paid out by Party B in the following order: other payables, overdue interest,
liquidated damages, rents payable, service charges and Purchase Price;

(2)
Take other remedies permitted by law.

15.2.3
Where Party B has any behavior indicated in Paragraph (1), (2), (3) and (5) of
Article 15.2.1, violates Article 13.2 Representations and Warranties (except for
Article 13.2.6), and makes no correction within fifteen working days after
written notice of Party A, it constitutes a major breach of contract. Party A
has the right to take one or more of the following measures:

(1)
Require Party B to pay overdue interest. If Party B fails to pay rents and/or
other payables on schedule, Party A shall have the right to request Party B to
pay overdue interest from the date of payment of the rents or other payables to
the date of actual payment. Overdue interest is calculated at 0.0005 of the
amount payable per day until the full payment date. The overdue amounts shall be
paid out by Party B in the following order: other payables, overdue interest (if
any), liquidated damages (if any), rents payable, service charges and Purchase
Price;

(2)
Require early expiry of rents and request Party B to immediately pay all
remaining rents, service charges, overdue interest, liquidated damages, Purchase
Price and other payables (including but not limited to litigation fees,
arbitration fees, property preservation fees, preservation guarantee fees,
travel expenses, implementation fees, assessment fees, auction fees, notary
fees, delivery fees, announcement fees and attorney fees, etc.);

(3)
Terminate the Contract, directly recover the leased items without judicial
procedure and require Party B to compensate Party A for all losses. Party A’s
losses include but are not limited to Party A’s costs for recovering the leased
items, costs of realizing the leased items and the insufficient part after
repayment of all rents, service charges, overdue interest (if any), Purchase
Price, liquidated damages (if any) and all other payables (including but not
limited to litigation fees, arbitration fees, property preservation fees,
preservation guarantee fees, travel expenses, implementation fees, assessment
fees, auction fees, notary fees, delivery fees, announcement fees and attorney
fees, etc.) with the proceeds of realization of the leased items;

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(4)
Take measures to prevent the leased items from malfunction;

(5)
Take other remedies permitted by law;

(6)
Party A agrees to negotiate with Party B on relevant payment amounts before
adopting the measures in Item (2) of this Article. If they reach a new
agreement, they may implement the measures according to the new agreement.

15.2.4
If Party A chooses to rescind the Contract and retrieves the leased items, Party
A may request Party B to send the leased items in good condition to Party A at
the time and place indicated by Party A, or Party A appoints personnel to
directly enter the place of the leased items to immediately occupy and transfer
them. Party B shall bear the resulting costs and reasonable direct economic
losses caused to Party B or any third party arising from the transfer or
recovery of the leased items.

15.2.5
After the leased items is retrieved, Party A can directly dispose of the leased
items, select any appraisal agency at its own discretion to appraise the leased
items, and take the appraised price as the price basis for disposal of the
leased items; or directly sell the leased items according to the state of the
leased items at the time of recovery. The sales target is any legal person or
natural person who needs the leased items. The sales income is the value of the
leased items. Party B agrees and confirms Party A's above-mentioned disposal
method for the leased items and criteria for determining the value of the leased
items.

15.2.6
For the proceeds from disposal of the leased items, Party A has the right to
make deductions with the proceeds from disposal of the leased items in the
following order:

(1)
All costs and expenses (including but not limited to litigation fees,
arbitration fees, property preservation fees, preservation guarantee fees,
travel expenses, implementation fees, assessment fees, auction fees, notary
fees, delivery fees, announcement fees and attorney fees, etc.) incurred by
Party A for repossession, transfer, safekeeping, repair or disposal of the
leased items or execution of this Contract.

(2)
Any other payables to be paid by Party B to Party A pursuant to this Contract;

(3)
Overdue interest, default penalty and service charges that Party B shall pay to
Party A in accordance with this Contract and any loss incurred by Party A;

(4)
The total remaining rents that Party B shall pay to Party A according to this
Contract;

If the proceeds are not sufficient to cover the above-mentioned payments that
Party B shall pay to Party A, Party A shall have the right to claim the
insufficient part from Party B; if the proceeds exceed the above-mentioned
payments, Party A shall return the excess amount to Party B.

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15.2.7
If Party A decides not to dispose of the leased items after retrieving them, or
needs to determine the value of the leased items in any case, the value of the
leased items shall be determined by Party A at its discretion in any of the
following ways. Party B has no objection.

(1)
The appraisal agency entrusted by Party A appraises and determines the value.
Relevant expenses thereby incurred shall be borne by Party B;

(2)
The Party A determines the value through other methods as chosen by Party A.

15.2.8
If the appraisal agency entrusted by Party A appraises and determines the value,
relevant expenses thereby incurred shall be borne by Party B; if Party B does
not approve the appraisal results of the appraisal agency entrusted by Party A,
Party B may propose to conduct an additional appraisal of the value of the
leased items or require the auction of the leased items. Relevant costs shall be
borne by Party B. In the event that the judicial organ entrusts any appraisal
agency to appraise or auction the leased items additionally according to the
request of Party B, and the value of the leased items determined by the
appraisal or auction is higher than that determined by Party A through the way
it selects according to the above-mentioned provisions in this Paragraph, Party
B shall, within 30 days from the date of determination of the value of the
leased items through additional appraisal or the auction procedure, find out a
third party to purchase the leased items from Party A at a price not lower than
the value of the leased items determined by the additional appraisal or auction
procedure and to pay for the purchase price in full. Otherwise, the value
determined by Party A shall prevail. For the avoidance of ambiguity, if the
buyer of the leased items is determined through an auction procedure or other
means, the purchase price paid by the buyer shall be owned by Party A. Party A
shall use it to deduct the amounts owed by Party B under this Contract.

15.2.9
Party A's adoption of any of the above measures shall not affect Party A's other
rights under this Contract. Before Party A takes any of the above measures and
obtains full compensation, Party B will not be released from continuing to
perform its obligations under this Contract.

15.2.10
If Party A finds that Party B’s operating conditions deteriorate seriously, or
Party B transfers assets to evade repayment of debts, surreptitiously withdraws
funds, or commits fraudulent acts in the performance of this Contract, or has
any other circumstances in which Party A believes that Party B has lost or may
lose its ability to perform the Contract, Party B may immediately notify Party B
and request Party B to provide a guarantee approved by Party A within a
reasonable period of time. Where Party B fails to do so within the time required
by Party A, Party A can adopt the measures agreed in Article 15.2.2.

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15.2.11
Party A’s adoption of the aforesaid measures does not therefore exempt Party B
from its obligations under this Contract. At the same time, Party B shall bear
the expenses incurred by Party A in taking such measures, including but not
limited to litigation fees, arbitration fees, property preservation fees,
preservation guarantee fees, travel expenses, implementation fees, assessment
fees, auction fees, notary fees, delivery fees, announcement fees and attorney
fees, etc.

15.2.12
If Party A pays the fees that Party B shall pay under this Contract on behalf of
Party B, including but not limited to the taxes and fees related to the leased
items, Party B shall reimburse Party A for the fees paid in advance by Party A
and shall pay Party A the interest of such fees at the rate of 0.0005 per day
from the date of advance payment made by Party A to the date of repayment made
by Party B.

Article 16 Transfer of Contract Rights and Obligations

16.1
Without prejudice to Party B’s possession and use of the leased items, Party A
has the right to transfer all or part of the rights and obligations under this
Contract to a third party and has the right to pledge all or part of the rights
granted to Party A under this Contract to a third party, or to mortgage the
leased items to a third party. Party A's above transfer/pledge/mortgage does not
affect Party B's performance of its obligations under this Contract. Once Party
A's above transfer/pledge/mortgage occurs, Party B shall promptly notify Party B
in writing. Party B hereby confirms that it agrees with Party A’s above
transfer/pledge/mortgage and will actively cooperate with Party A’s
implementation of the above transfer/pledge/mortgage.

16.2
Without Party A's prior written consent, Party B shall not transfer any of the
rights and obligations under this Contract.

Article 17 Handling of Significant Changes

17.1
Party B shall notify Party A immediately if any of the following circumstances
occurs. Party A is entitled to request Party B to provide a valid guarantee
approved by Party A to ensure Party B's performance of its obligations under
this Contract. If Party B fails to provide a valid guarantee approved by Party
A, Party A may adopt the remedies agreed in Article 15 of this Contract:

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(1)
Party B experiences closure, suspension of business, production suspension,
merger, division, bankruptcy and major legal disputes, etc., or deterioration of
business conditions;

(2)
Party B conducts asset reorganization, equity acquisition or transfer/pledge of
some or all assets/rights, which may affect the normal performance of this
Contract;

(3)
Party B makes major adjustments to production plans and sales plans, etc. which
are sufficient to affect normal production and may affect Party B’s ability to
perform this Contract;

(4)
Except for Party A's reasons, the leased items are frozen, detained, executed,
seized or have other conditions affecting their normal operation;

(5)
Other major events that may affect the normal performance of the contractual
debts;

(6)
Party B's failure to notify Party A in accordance with this Article does not
affect Party A's immediate adoption of the remedies agreed in Article 15 of this
Contract after it learns the circumstance on its own. However, Party B shall be
liable for all losses caused to Party A due to time delay.

17.2
Changes in Party B’s legal address and legal representative etc. shall not
affect the execution of this Contract, but Party B shall promptly notify Party A
in writing.

17.3
If any of the following circumstances occurs when Party B uses the leased items
or any project invested with the leased item has any of the following
circumstances, Party B shall immediately terminate the use of the leased items,
notify Party A of the situation in writing and correct it completely within the
reasonable period required by Party A:

(1)
Any project invested with the leased items violates the national industrial
policy;

(2)
The project invested with the leased items fails to obtain the approval
procedures and documents approved by Party A;

(3)
There are other situations in which the use of the leased items is in violation
of the mandatory or restrictive provisions of the law;

(4)
If Party B fails to completely correct the above circumstances within a
reasonable period of time agreed by both Parties, Party A shall have the right
to unilaterally terminate this Contract, recover the leased items, and request
Party B to pay all the remaining rents, service charges, overdue interest (if
any), liquidated damages (if any), Purchase Price, other payables (including but
not limited to litigation fees, arbitration fees, property preservation fees,
preservation guarantee fees, travel expenses, implementation fees, assessment
fees, auction fees, notary fees, delivery fees, announcement fees and attorney
fees, etc.) within five days after receiving Party A's written notice, and to
make full compensation for all reasonable direct economic losses.

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17.4
If the leased items are expropriated or required by a government department or
damaged or lost due to a third party, the rent payment and other obligations of
Party B under this Contract shall not be affected. When any of such
circumstances occurs, Party A is entitled to terminate this Contract in advance
and use the compensation obtained to offset all the remaining rents, service
charges, overdue interest, liquidated damages, Purchase Price and other fees
payable by Party B under this Contract. If the compensation received is not
sufficient to make up for the aforementioned amounts payable by Party B, Party B
shall be responsible for the insufficient part.

Article 18 Disposal of the Leased Items after Expiry of the Lease Term
18.1
After the lease term expires and Party B completes repayment of all the rents
and other payables that it shall pay to Party A under this Contract, both
Parties will handle the leased items in the following (1) manner:

(1)
Party B shall purchase the leased items according to the Purchase Price
stipulated in the “present status quo” and Commercial Terms and obtain the
ownership of the leased items. As Party B has always occupied and used the
leased items, Party A will make no statement or guarantee on the then-current
performance and status of the leased items.

If Party B intends to purchase the leased items, Party A shall cooperate with
Party B in processing the procedures of ownership transfer of the leased items,
including but not limited to issuing a certificate of ownership transfer of the
leased items to Party B, and releasing all the guarantee rights (if any) set up
over the leased items for the Financing Lease agreed in the Contract within 20
working days etc. Relevant taxes and fees arising from the transfer of ownership
of the leased items shall be borne by Party B (if any).
(2)
Renewal of lease: Party B may continue to rent the leased items. The parties
shall negotiate the lease renewal issue and sign a written agreement.

(3)
Return of the leased items: Party B returns the leased items to Party A within
10 days after the expiry of the Contract and guarantees that the leased items
are intact (except for normal wear and tear).

Article 19 Security

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19.1
Party B shall implement the security contract entered into by and between
relevant guarantee obligor and Party A in accordance with the Security Methods
stipulated in this Contract, which at the same time shall be taken as the
entry-into-force condition for this Contract.

19.2
Where the financial status of the guarantee obligor significantly deteriorates,
or the value of the guarantee/pledge may be derogated or lost, Party B shall
provide other guarantee measures approved by Party A separately.

Article 20 Force Majeure
20.1
“Force majeure” refers to the incidents which are beyond the control scope of
the Parties to this Contract, unforeseeable, unavoidable or insurmountable, or
render either party hereunder partially or wholly unable to perform this
Contract. Such incidents include but are not limited to earthquakes, typhoons,
floods, fires, wars, strikes, riots, government actions, legal provisions or
their applicable changes.

20.2
When force majeure occurs, the party affected by force majeure shall promptly
notify the other party in writing and take remedial measures to reduce losses.

20.3
The party affected by force majeure shall provide the other party with details
of the force majeure, the report of losses and relevant supporting documents
within seven days from the occurrence of force majeure.

20.4
If a party affected by force majeure fails to perform or delay performance of
its obligations under this Contract due to force majeure, it may be exempted
from liability in part or in whole within the influence scope of force majeure.
However, force majeure shall not relieve the affected party of its obligations
in accordance with this Contract prior to the occurrence of such events.

20.5
After the force majeure is over or the influence is eliminated, the party
affected by force majeure shall notify the other party immediately. The parties
shall continue to perform their contractual obligations after the force majeure
is over or the influence is eliminated. At the same time, the duration of the
Contract shall be extended accordingly.

20.6
If the influence of force majeure persists for more than 30 days, resulting in
failure of either party to continue to perform the contractual obligations,
either party has the right to notify the other party in writing to terminate the
Contract.

Article 21 Information Disclosure
21.1
Party B agrees that Party A has the right to exercise the following actions:

(1)
Party A announces Party B's performance of this Contract on Party A's own
website;

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(2)
Party B authorizes Party A to obtain the credit information of Party B and its
legal representatives, actual controllers, shareholders, financial controllers
and other credit information of the company or individuals from the Basic
Database of Financial Credit Information of the People's Bank of China and other
credit investigation agencies or databases, to report the Party B’s credit
condition of the performance of this Contract to the above-mentioned
organizations, and to complete public announcement and registration of the
leased items on the financing lease system of the People's Bank;

(3)
In the event that Party B has overdue payments under the Contract and fails to
make any correction within 15 days after Party A’s written reminder, Party A has
the right to disclose Party B’s breaches in the Basic Database of Financial
Credit Information of the People's Bank of China and other credit investigation
agencies.

21.2
Party A agrees that Party B has the right to exercise the following actions:

Party B and its shareholders are entitled to publicly disclose the contents of
this Contract, its supplementary agreements and related materials in accordance
with relevant applicable laws, regulations as well as rules and management
requirements of stock exchanges.

Article 22 Governing Law and Dispute Resolution
22.1
This Contract and its performance are governed by the laws of the People's
Republic of China and interpreted in accordance with the laws of the People's
Republic of China.

22.2
Any dispute arising from this Contract or related to this Contract shall be
settled by the Parties through friendly negotiation. If the negotiation fails,
the Parties agree to adopt the following (2) way for resolution:

(1)
Apply to the / Arbitration Committee for arbitration;

(2)
File a lawsuit with the local people's court of Party A.

Article 23 Change, Termination and Rescission of the Contract
23.1
Any amendment, addition or change to this Contract shall be made in writing
separately and shall take effect after the legal representatives of Party A and
Party B or their authorized agents sign/sign and seal it. The aforementioned
amendment, addition or change shall be deemed as an integral part of this
Contract.

23.2
Except as otherwise provided in this Contract, neither party shall rescind or
early terminate this Contract without the consent of both Parties.

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Article 24 Annexes to the Contract
The annexes to this Contract is an integral part of this Contract and have the
same legal effect as this Contract.
Annex I: List of Leasing Items
Annex II: Rent Payment Estimates
Annex III: Actual Rent Payment Table
Annex IV: Rent Adjustment Notice
Annex V: Rent Payment Notice
Annex VI: Notice of Top-Up of the Lease Security Deposit
Annex VII: Certificate of Ownership Transfer I (Lessee to Lessor)
Annex VIII: Certificate of Ownership Transfer II (Lessor to Lessee)
Annex IX: Proof of Receipt of the Leased Items
Annex X: Other Annexes Approved by the Parties

Article 25 Effectiveness of the Contract
25.1
This Contract shall take effect on the date on which the legal representatives
of both Parties or their authorized representatives sign/sign and seal it or
affix the official seal to it.

Article 26 Notice and Delivery
26.1
Any notice given by either party to the other party in relation to this Contract
must be in writing. If the notice is delivered by hand, it will be deemed to be
served after the addressee signs for receipt. If it is sent by e-mail or fax, it
will be deemed to be served at the time of sending; if it is served by post, it
will be deemed to be served after the other party signs for receipt or refuses
to sign for receipt. If the address or name is incorrect or the other party is
not notified in writing for any change, the date of indicating the cause for
failure to deliver the mail shall be deemed that the notice has been served.
Unless otherwise notified in writing, the Parties shall confirm the addresses
for communication services (see Part 1 Commercial Terms);

26.2
Both Parties confirm that the above-mentioned domiciles of both Parties
contained in this Contract is their addresses for delivery of their legal
documents. A written document sent by one party to the other party to the
address of the Contract (regardless of whether or not the mail is rejected or
returned for any reason) will be deemed served on the third day after mailing.
In case of any change in the address of either party, the party shall notify the
other party in writing of the address change issue and the new address of
service on the day of the change of the address. Before either party delivers

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the notice of change of service address to the other party, the written notice
sent by the other party to the original address of service of such party shall
be still deemed to be validly served.

Article 27 Special Terms
If the contents agreed in the special terms of this Article conflict with the
contents of other terms of this Contract, the special terms shall prevail:
(1)
Party A shall notify Party B immediately in writing if it confronts any
difficulty in raising funds which cannot be predicted. Both Parties shall, based
on changes in specific circumstances, jointly confirm the adjustment plan of the
mode and timing of the funds release, or confirm the suspension and termination
of release of the Lease Funds, and guarantee that Parties will not raise any
right claim in this condition.

(2)
If Party B fails to provide Party A with a written proof of receipt of the
increased capital of US$25 million from Alpha and Omega Semiconductor Limited,
Party B’s shareholder, within three months from the date of full payment of
Party A's Lease Funds, Party A has the right to request early termination of the
Contract and require Party B to make an one-off payment to Party A for the
remaining Lease Principal, Interest Due, due service charges, Overdue Interest
(if any), liquidated damages (the amount of liquidated damage is 5% of the
Purchase Price of the leased items paid by Party A), other payables (if any,
including but not limited to litigation fees, arbitration fees, property
preservation fees, preservation guarantee fees, travel expenses, implementation
fees, assessment fees, auction fees, notary fees, delivery fees, announcement
fees and attorney fees, etc.). The security deposits and service charges already
paid by Party B will not be refunded. In case of any other loss caused by Party
A, Party B shall also bear corresponding liability for compensation.

The Parties confirm hereby that they carefully read all the terms of this
Contract, fully understand the meaning of each term, and signing of this
Contract and the annexes is presentation of their true meaning. The Parties
accept the terms of exemption or limitation of the other party’s liabilities in
this Contract. The Parties have taken reasonable steps to draw the other party’s
attention and explain such terms.

(No text below)

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Party A (Seal): Chongqing Yinhai Financing Lease Co., Ltd.
Legal Representative or Authorized Representative (Signature/Signature and
Seal):
 
By: /s/ Xianwei Pang

Party B (Seal): Chongqing Alpha and Omega Semiconductor Limited
Legal Representative or Authorized Representative (Signature/Signature and
Seal):

By: Mike F. Chang

Date: May 9, 2018

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Annex I: List of Leased Items

[***]

*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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Annex 2 : Schedule of Estimated Rent Payments

1. Lease Term
Tenancy Term is 60 months, for total 20 payment periods, effective from April
10, 2018.
Currency: RMB Unit:Yuan
Period #
Due Date
Principal to be Paid
Interests to be Paid
Total Payment
Note
0
2018/4/10
75,000,000.00
0.00
75,000,000.00
 
1
2018/6/21
0.00
4,560,000.00
4,560,000.00
 
2
2018/9/21
0.00
5,826,666.67
5,826,666.67
 
3
2018/12/21
0.00
5,763,333.33
5,763,333.33
 
4
2019/3/21
12,000,000.00
5,700,000.00
17,700,000.00
 
5
2019/6/21
12,000,000.00
5,651,866.67
17,651,866.67
 
6
2019/9/21
12,000,000.00
5,477,066.67
17,477,066.67
 
7
2019/12/21
12,000,000.00
5,244,633.33
17,244,633.33
 
8
2020/3/21
27,000,000.00
5,071,733.33
32,071,733.33
 
9
2020/6/21
27,000,000.00
4,734,166.67
31,734,166.67
 
10
2020/9/21
27,000,000.00
4,340,866.67
31,340,866.67
 
11
2020/12/21
27,000,000.00
3,904,658.33
30,904,658.33
 
12
2021/3/21
27,000,000.00
3,477,000.00
30,477,000.00
 
13
2021/6/21
27,000,000.00
3,160,966.67
30,160,966.67
 
14
2021/9/21
27,000,000.00
2,767,666.67
29,767,666.67
 
15
2021/12/21
27,000,000.00
2,348,558.33
29,348,558.33
 
16
2022/3/21
27,000,000.00
1,938,000.00
28,938,000.00
 
17
2022/6/21
27,000,000.00
1,587,766.67
28,587,766.67
 
18
2022/9/21
27,000,000.00
1,194,466.67
28,194,466.67
 
19
2022/12/21
27,000,000.00
792,458.33
27,792,458.33
 
20
2023/3/21
28,000,000.00
399,000.00
28,399,000.00
 
Total
 
475,000,000.00
73,940,875.00
548,940,875.00
 

Note : Actual rent shall be based on the Schedule of Actual Rent Payments and
the Notice of Rent Payment. If Party A fails to deliver the Statement and the
Notice to Party B, this Schedule shall prevail.

Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc.(Seal)
Authorized Representative (Signature/Seal)
[2018/5/ ]

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Annex 3: Schedule of Actual Rent Payments (Sample Form)

1. Lease Term
Tenancy term is [ ] months, total for [ ] payment periods; rented from and
including [Date]
  
Currency: RMB Unit:Yuan
Period#
Due Date
Principal
Interests
Total
Note
1
 
 
 
 
 
2
 
 
 
 
 
3
 
 
 
 
 
Total
 
 
 
 
 

Note : If there is any inconsistency between the Schedule of Estimated Rent
Payments and this Schedule, this Schedule shall prevail.

Payment by Wire Transfer
Account Name : Chongqing Yinhai Leasing Co. Ltd.
Bank : The Export-Import Bank of China, Chongqing Branch
Account : 2100000100000237876

Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc. (Seal)
Authorized Representative (Signature/Seal)

Date:

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Annex 4: Notice of Rent Adjustment (Sample Form)
To: Chongqing Alpha and Omega Semiconductor, Inc.
    
Pursuant to the Finance Lease (Series Number [ ]), executed by both parties, and
given one of the following situations has occurred:

(1) The Central Bank of China adjusted the benchmark interest rate of [ ]-year
loan on the date of [ ]; the current benchmark interest rate is now at [ ].

(2) Other: [ ]

Our Company does hereby adjust the rent as follows: starting from
[year/month/day], the lease rate is adjusted to ___. Please make payment to our
company according to the “amount due after adjustment” in the chart below.
Currency: RMB Unit: Yuan
Period
Due Date
Amount Due before Adjustment
Amount Due after Adjustment
 
 
 
 
…
 
 
 
…
 
 
 
…
 
 
 
Total
 
 
 

Account Name : Chongqing Yinhai Leasing Co. Ltd.
Bank : The Export-Import Bank of China, Chongqing Branch
Account : 2100000100000237876

Party A : Chongqing Yinhai Leasing Co., Ltd.(Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc.(Seal)
Authorized Representative (Signature/Seal)
Date

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Annex 5: Notice of Rent Payment (Sample Form)

To: Chongqing Alpha and Omega Semiconductor, Inc.

Pursuant to the Finance Lease (Series Number [ ]), executed by both parties, as
well as the Annexes herein attached, this notice is to inform you that the rent
for period [ ] is due soon. Please see the chart below for more details.

Currency: RMB Unit: Yuan
Period #
Amount to be Paid (RMB）
Due Date
…
 
 

Please make your payment to the following account by the due date
Account Name : Chongqing Yinhai Leasing Co. Ltd.
Bank : The Export-Import Bank of China, Chongqing Branch
Account : 2100000100000237876

Please note: In the event your Company delays the payment or does not pay the
full amount of the rent, we have the right to impose penalties, pursuant to the
amount specified in the Finance Lease, and request your Company to bear other
liabilities due to the breach.

Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Date:

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Annex 6: Notice to Pay Additional Deposits (Sample Form)
To: Chongqing Alpha and Omega Semiconductor, Inc.
    
Pursuant to the Finance Lease (Series Number [ ]), executed by both parties, as
well as the herein attached Annexes, the total amount of deposits which shall be
paid to our Company are insufficient. Please see more details in the chart
below.

Currency: RMB Unit: Yuan
Minimum Deposits
Current Available Deposits
Amount to be Paid
 
 
 

Note : the deposits were deducted for the purpose of …

Payment must be made on the next day after the receipt of this notice. Please
make your deposit payment to the account below.
Account Name : Chongqing Yinhai Leasing Co. Ltd.
Bank : The Export-Import Bank of China, Chongqing Branch
Account : 2100000100000237876

Please note: In the event your Company delays the payment or does not pay the
full amount of the deposits, we have the right to use your subsequent rent
payments to make up for the minimum deposits required by the Lease, to impose
penalties pursuant to the amount specified in the Lease, and to request your
Company to bear other liabilities due to the breach.
                  
Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc. (Seal)
Authorized Representative (Signature/Seal)
Date:

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Annex 7 : Proof if Ownership Transfer 1

To: Chongqing Yinhai Leasing Co., Ltd.

We hereby certify that, on [year/month/day], our Company received the initial
payment of [ ]RMB made by your company via wire transfer from [ ] bank for the
purchase of leased items. Pursuant to the Finance Lease (Series Number xx),
executed by both parties, the ownership of the leased item listed under this
lease will be transferred to your Company starting from [Date].

              
Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc.༈Seal)
Authorized Representative (Signature/Seal)
[Date]

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Annex 8: Proof of Ownership Transfer 2 (Sample Form)

To: Chongqing Alpha and Omega Semiconductor, Inc.

As of [year/month/day], our Company has received all the rent payments,
deposits, and other payments required by the terms of the Finance Lease. We
hereby certify that, effective from [year/month/day], the ownership of leased
items specified in the Finance Lease will be transferred to your company.

Party A: Chongqing Yinhai Leasing Co., Ltd. (Seal)
Authorized Representative (Signature/Seal):

Party B: Chongqing Alpha and Omega Semiconductor, Inc.(Seal)
Authorized Representative (Signature/Seal)
Date

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Annex 9: Receipt of Transferred Items (Sample Form)

To: Chongqing Yinhai Leasing Co., Ltd. (Party A)

Pursuant to the Finance Lease (Series Number [ ]), executed by both parties on
[year/month/day], we have received all the leased items, which your company has
complete ownership of, in good and normal operating condition without any
quality defect upon delivery of the items.

Hereby Certify.

Party B: Chongqing Alpha and Omega Semiconductor, Inc. (Seal)
Authorized Representative (Signature/Seal)
Date

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