COMPENSATION TRADE CONTRACT

COMPENSATIONTRADECONTRACT

ContractNo.:__________
DateofSigning:_________
PlaceofSigning:_______
ThetwoParties:
PartyA:________________________________
Address:________________________________
Tel:_________________Fax:_______________
E-mail:_________________________________
PartyB:________________________________
Address:_______________________________
Tel:_________________Fax:________________
E-mail:_________________________________
WITNESSETH
WhereasPartyBhasmachinesandequipment,whicharenowusedinPartyB’smanufacturingof_______,andiswillingtoselltoPartyAthemachinesandequipment;and
WhereasPartyBagreestobuytheproducts,_______,madebyPartyAusingthemachinesandequipmentPartyBsupplies,incompensationforthepriceofthemachinesandequipment,and
WhereasPartyAagreestopurchasefromPartyBthemachinesandequipment,and
WhereasPartyAagreestoselltoPartyBtheproducts,_______,incompensationofthepriceofPartyB’smachinesandequipment;Nowtherefore,inconsiderationofthepremisesandcovenantsdescribedhereinafter,PartyAandPartyBagreeafollows:

ARTICLE1TRANSACTIONS
A)PartyBagreestoprovidePartyAwith_________machinestobeusedinproduction,theirauxiliarymachinery,accessoriesandsparepartsandavarietyofmeasuringandtestinginstrumentsrequiredintheprocessofproduction.Thedetailsofthemodels,names,specifications,quantity,prices,packing,delivery,etc.thereofshallbespecifiedinanadditionalequipment-importagreementtobeconcludedbyandbetweenbothpartieswhichshallserveasancomponentparthereof.
B)Thetotalvalueofthemachines,auxiliaryequipment,etc.suppliedbypartBshallbepaidoffbyPartyAwithpartofthemanufacturesmadetherewithand/orothergoods,orwith(designatename)productsmadein(Nameoftheplant)ifbothpartiesagree.Thespecificname(s),quantity,price,delivery,etc.ofthegoodsgrantedasthemake-uppaymentshallbedecidedinanadditionalcompensationgoods-supplyagreementmadebythepartieswhichshallserveasacomponentparthereof.Theequipment-importagreementandcompensation-goods-supplyagreementaforesaidmaybemergedasonecalledsalesagreementoncompensationtrade(Seeappendix).

ARTICLE2PAYMENT
Bothpartiesagreetoopenlettersofcreditinfavorofeachother,i.e.PartyAwillopen,atregularintervals,longtermlettersofcreditinfavorofPartyBtopaybyinstallmentsthetotalcostofthemachinesandauxiliaryequipmentprovidedbyPartyB;whereasPartyBwillopensightlettersofcreditinfavorofPartyAtopaytheproductstobedeliveredbyPartyA.PartyAshallpayforthetotalcostofthemachinesandauxiliaryequipmentwiththemoneyremittedbyPartyBasreimbursementfortheproductstobedeliveredbyPartyA.IncasethesumtobepaidbyPartyBfailstocoverthevalueofthelong-termlettersofcreditopenedbyPartyA,thedifferenceshallbemadeupbyPartyBbypayingthatmuchtoPartyAinadvance,beforethelong-termlettersofcreditaredue,toenablePartyAtoreimburseontimethelong-termlettersofcredititopens.Thepaymentofthelong-termlettersofcreditopenedbyPartyAisbasedonPartyB’sopeningasightletterofcreditundertheprovisionsandonitspayingtheadvancerequiredherein.Thus,PartyBwarrants,guaranteesandcovenantsthatitwillopenthelettersofcreditandpaytheadvanceasprovidedherein.

ARTICLE3REIMBURSEMENT
PartyAshallreimbursePartyBforallthemachinesandauxiliaryequipmentsuppliedbyPartyBbydeliveringgoodstoPartyBonamonthlybasisandthereimbursementwilllastfor___year(s)and____months(s).Thereimbursementshallstartapproximately____month(s)afterthefirstdeliveryofthemachinesand,inprinciple,themoneytobereimbursedpermonthshallbe______percentofthetotalamountdueforthemachines.Witha______month(s)noticetoPartyB,PartyAmayreimbursePartyBinadvance.
Withinthereimbursementperiod,PartyBshall,undertheprovisionsoftheadditionalsalesagreementaforesaid,open,sight,irrevocable,divisibleandassignablelettersofcredit,coveringthefullamount,infavorofPartyA.

ARTICLE4STANDARDMONEYANDPRICESTANDARD
Thestandardmoneyforthistransactionis(Nameofcurrency).Allthemachinery,auxiliaryequipmentandmeasuringandtestinginstruments,etc.providedbyPartyBshallbevaluedwith(Nameofcurrency),whilethegoodsprovidedbyPartyAtoPartyBasreimbursementshallbevaluedwiththebasisprice(Nameofcurrency)ofthesamegoodsexportedbyPartyAatthetimewhenthisagreementisenteredinto,andthetotalprice(Nameofcurrency)shallbechangedintothatof(Nameofcurrency)inaccordancewiththeexchangeratethen.

ARTICLE5INTREREST
PartyAshallpaytheinterestonitslong-termlettersofcreditandtheinterestonthecashinadvancerenderedbyPartyB.Theannualinterestrateisagreeduponat_____%.

ARTICLE6TECHNICALSERVICE
Themachinery,afterarrivalatitsdestination,shallbeinstalledbyPartyA,PartyBshalldispatchitstechnicianstorenderspotinstructionsandothernecessarytechnicalassistanceduringtheinstallationofthemainmachines,asmayberequestedbyPartyAincaseofnecessity,PartyBshallbeliableforthelossesresultedinsuchacourseofinstallationfromtechnicaldefaultonitspart.

ARTICLE7ADDITIONALEQUIPMENT
Duringtheenforcementofthisagreement,ifitisfoundnecessarythat,inadditiontothemachineryandequipmentlistedherein,somenewaccessoriesormeasuringandtestinginstrumentsareneededforcompletionoftheproject,(an)additionalorder(s)maybemadethroughnegotiationbytheparties.Thenewitemsthusaddedshallbeincorporatedinagreement.

ARTICLE8INSURANCE
Themachineryandauxiliaryequipment,aftershipment,shallbeinsuredbyPartyB.ThetitlethereofshallbetransferredintoPartyBafterfullpaymentthereforeismadebyPartyB,thereafter,theunforeseeablelossesconcerningthemachineryandauxiliaryequipmentshallbeindemnifiedforfirstbytheInsuranceCompanytoPartyB,thenPartyBshallremitforPartyA,inproportion,thesumalreadypaidbyPartyAforthemachineryorequipmentinvolvedinthecontingency.

ARTICLE9LIABILITYFORBREACHOFAGREEMENT
PartyBshall,ifitfailstocomplywiththisagreementtomakepurchaseofthegoodsdeliveredbyPartyAasreimbursement,orPartyAshall,ifitfailstocomplywiththisagreementtodeliverthegoodsitisduetoprovide,bedeemedliableforabreachofagreementandshallcompensatethenon-breachingPartyforthelosscausedthereuponandshallpaythenon-breachingPartyafineaccountingfor%ofthetotalvalueofthegoodsinquestion.

ARTICLE10PERFORMANCEGUARANTEE
Toguaranteetheimplementationofthisagreement,eachpartyshallsubmittotheotherpartyaletterofguaranteeissuedbyitsbankrespectively.TheguaranteeingbankofPartyAis______Bank,______,whiletheguaranteeingbankofPartyBis______Bank,______.

ARTICLE11AMENDMNET
Themodificationofthisagreementinparticularcasesshallbeagreeduponbybothpartiesthroughnegotiations.

ARTICLE12ForceMajeure
Incasethatoneorbothpartiesareimpossibletoperformthedutiesprovidedhereinonaccountofforcemajeure,theparty(orparties)incontingencyshallinformtheotherparty(oreachother)ofthecaseimmediatelyandmay,providedthecaseisdulyverifiedbythecompetentauthorities,delayinperformanceofornotperformtherelevantdutieshereunderthebepartiallyorentirelyexemptedfromtheliabilityforbreachofthisagreement.

ARTICLE13ARBITRATION
AnydisputearisingfromorinconnectionwiththisContractshallbesubmittedtoChinaInternationalEconomicandTradeArbitrationCommission,ShenzhenCommissionforarbitrationwhichshallbeconductedinaccordancewiththeCommission’sarbitrationrulesineffectatthetimeofapplyingforarbitration.ThearbitralawardisfinalandbindinguponbothpartiesandtheapplicablelawisthemateriallawofP.R.C.
Notwithstandinganyreferencetoarbitration,bothPartiesshallcontinuetoperformtheirrespectiveobligationsundertheContractunlessotherwiseagreed.

ARTICLELANGUAGEANDEFFECTIVEDATE

TherearetwooriginalshereofmaderespectivelyinChineseand______,bothofwhichareofthesameeffect.
Thisagreementshallcomeintoeffectonthedatewhenbothpartiessettheirhandshereuntoandremaineffectivefor_____years.Uponitsexpiration,thepartiesmay,iftheychoose,extendthetermhereoffor_____yearsorexecuteanewcooperationagreement,providedtheyapplytoandapprovedbytheAuthorityagenciesconcerned.

PartyAPartyB

Representativeof___Representativeof____

(AuthorizedSignature)___(AuthorizedSignature)