Sample Lease Agreement

Customer (Lessee): Accounting entries, benefits with sample lease agreement:

1. Name: Your Company
2. Role: The ultimate user of leased machine (say, the Fiber Laser Cutting Machine).
3. Key Actions/Flow:Pays Upfront Finance Facilitation Fee (FFF) of approx 5%-10% of Machine Price (against delivery) to McLease.
4. Pays monthly Sub-Lease Rentals (INR 160,481 + GST) for say ~ Rs 42-45 Lac machine, to McLease for generally upto max 36 months.
5. Receives the machine / Fiber Laser Cutting Machine.
6. Receives 15-year Service Assurance, RAMC, and access to spares/consumables from McLease.
7. Lease Amount Payable: Pays INR 160,481/month (Ex-GST) to McLease. Total: INR 5,777,336.16 (Ex-GST).
8. Interest/Rate: Pays implicitly: XX% p.a. on the financed amount. No CIBIL/CMR. Purchase Order from your end customer or LOI or some security (Cheque, any collateral - land / escrow / share pledge / asset may be required if bundling with raw material finance like supply of steel on credit to you, etc)
9. Accounting Treatment (Finance Lease - Lessee): Recognizes a "Right-of-Use (ROU) Asset" on your balance sheet and a corresponding lease liability. Depreciates the ROU asset over its useful life and recognizes interest expense on the lease liability.
10. Risk-Reward-Benefits:Benefit: Gains immediate access to high-value industrial machinery without a large upfront capital expenditure from internal funds.
11. Benefit: Benefits from McLease's unique "no CIBIL check" and flexible financing options.
12. Benefit: Receives unparalleled 15-year service assurance, RAMC, and easy access to spares, significantly reducing operational risk and ensuring uptime.
13. Benefit: Transfers technology risk to McLease (who manages the ongoing service).
14. Risk: Financial obligation to make lease payments for XX months (lease period).
15. Risk: Bears the economic risks of ownership (e.g., obsolescence, maintenance responsibility).
16. Reward: Enhanced production capability and potential for business growth.

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DRAFT SUB-LEASE AGREEMENT (FINANCE LEASE)

THIS SUB-LEASE AGREEMENT ("Agreement") is made and entered into on this [Day] day of [Month], 2025

BETWEEN:

McLEASE, a brand and business division of Vula Technologies Private Limited, a company incorporated under the Companies Act, 2013, having its registered office at T-29A, Plot 88-91, Haware Mall, Sector 19A, Nerul, Navi Mumbai-400706, MH, IN; (hereinafter referred to as "the Lessor" or "the Sub-Lessor," which expression shall unless repugnant to the context or meaning thereof, include its successors and permitted assigns);

AND

ABC, a [Private Limited / Public Limited Company / Limited Liability Partnership / Proprietorship / Partnership] incorporated/registered under the laws of India, having its registered office at [ABC's Registered Address] (hereinafter referred to as "the Lessee" or "the Sub-Lessee," which expression shall unless repugnant to the context or meaning thereof, include its successors and permitted assigns).

WHEREAS:

A. The Sub-Lessor (McLease) has acquired the economic benefits and substantially all risks and rewards of ownership of a XYZ machine [E.g. Fiber Laser Cutting Machine] (hereinafter referred to as "the Equipment") under a Head Lease Agreement, with the explicit right to further sub-lease the same.

B. The Sub-Lessee desires to obtain the economic benefits and substantially all risks and rewards of ownership of the Equipment for its business operations.

C. This Agreement is intended to be classified and treated as a Finance Lease for accounting and financial purposes for the Sub-Lessee.

NOW, THIS AGREEMENT WITNESSETH AS FOLLOWS:

1. EQUIPMENT DETAILS:

a. Description: Machine [e.g. Fiber Laser Cutting Machine] [Manufactured by XYZ]

b. Model: [Insert specific model name/number]

c. Serial Number(s): [To be provided upon delivery]

d. Cost Price (MC): INR XX,00,000/- (Rupees xxxx Lakhs Only) (example)

e. Financed Portion: INR XX,XX,000/- (Rupees xxxx Lakhs xxxx Thousand Only), representing XX% of the Equipment Cost.

2. LEASE CLASSIFICATION: The parties expressly agree that this Agreement constitutes

a Finance Lease. It is the mutual intent that substantially all the risks and rewards incidental to ownership of the Equipment shall be transferred from the Sub-Lessor to the Sub-Lessee during the lease term.

3. LEASE TERM: The sub-lease term shall be for a period of XX (xxxxxx) months, commencing from the date of actual delivery and acceptance of the Equipment by the Sub-Lessee (the "Commencement Date").

4. LEASE RENTALS & STRUCTURED FINANCING:

a. The Sub-Lessee shall pay to the Sub-Lessor a monthly lease rental of INR XXXXX/- (Rupees xxxxxxxxxxxxxx Only), exclusive of Goods and Services Tax (GST).

b. Applicable GST at the prevailing rate (currently 18%) shall be added to the monthly lease rental, making the total monthly payment INR XXXXX/- (Rupees xxxxxxxxxxxxxxxxx Only).

c. Lease rentals shall be payable in advance on or before the [e.g., 5th] day of each calendar month, starting from the Commencement Date.

d. Flexible Repayment Structure: The parties acknowledge that this lease is structured based on the Sub-Lessee's repayment capacity and order book. While monthly payments are stipulated, the Sub-Lessor (McLease) may consider flexible repayment adjustments upon mutual written agreement, subject to review of the Sub-Lessee's business performance and order flow.

e. No Interest / No CIBIL Check: The Sub-Lessee acknowledges that the Sub-Lessor is not a Non-Banking Financial Company (NBFC) or a Bank and does not charge "interest" or rely on CIBIL/CMR scores for this leasing arrangement. The financial terms reflect a strategic partnership and shared long-term gains.

5. DELIVERY AND INSTALLATION:

a. The Sub-Lessor shall arrange for the delivery of the Equipment to the Sub-Lessee's designated site.

b. Installation and commissioning shall be carried out by [XXXXXXXXXXXX or specified installer].

6. OWNERSHIP AND ACCOUNTING TREATMENT:

a. Legal title to the Equipment shall ultimately remain with XXX (the Head Lessor).

b. For accounting purposes, the Sub-Lessee shall capitalize the Equipment on its balance sheet as a Right-of-Use (ROU) asset and recognize a corresponding lease liability, in accordance with applicable accounting standards (e.g., Ind AS 116 / IFRS 16).

7. MAINTENANCE, INSURANCE, AND RISK:

a. The Sub-Lessee shall be solely responsible for the proper maintenance, repair, and servicing of the Equipment at its own cost.

b. The Sub-Lessee shall, at its own cost, arrange for comprehensive insurance coverage for the Equipment against all risks, with McLease and XXX named as loss payees.

c. All risks incidental to the ownership and use of the Equipment, including but not limited to loss, damage, theft, obsolescence, and residual value risk, shall be borne by the Sub-Lessee from the Commencement Date.

d. 15-Year Service & Spares Assurance: McLease assures the Sub-Lessee of service and spare parts availability for 15 years from the Commencement Date, as per terms outlined separately (e.g., in an AMC agreement) if this product is purchased by the Sub-Lessee.

e. Remote Annual Maintenance Contract (RAMC): RAMC services, including remote troubleshooting and technical assessment, are provided by McLease as part of this arrangement.

f. Online Support: The Sub-Lessee shall have access to www.mclease.com for purchasing spares, consumables, accessories, AMC, RAMC, and availing breakdown insurance.

8. DEFAULT AND TERMINATION: [Standard clauses for events of default, remedies for default, and termination procedures, including Sub-Lessor's right to accelerate payments or repossess the Equipment].

9. END OF LEASE TERM / PURCHASE OPTION: Upon the expiration of the lease term, the Sub-Lessee shall have the option to [e.g., purchase the Equipment at a pre-determined nominal value, or return it to the Sub-Lessor, or renew the lease], as specified in a separate schedule or agreement. This purchase option reflects the finance lease classification.

10. GOVERNING LAW AND JURISDICTION: This Agreement shall be governed by and construed in accordance with the laws of India. The Courts in Mumbai shall have exclusive jurisdiction to entertain any suit or proceeding arising out of this Agreement.

11. ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, and agreements.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

FOR McLEASE

(VULA TECHNOLOGIES PRIVATE LIMITED):

(Authorized Signatory)

Name:

Designation:

FOR XYZ:

(Authorized Signatory)

Name:

Designation: