EXHIBIT 10.56 (a)

 

LOAN AGREEMENT

 

Section 1 Parties

 

The Parties to this Agreement are as follows:

 

1.1 China Construction Bank Sichuan Branch (“Lender”) Legal address: #86 Tidu
Street, Chengdu, Sichuan Authoritative Representative: Zhao Fugao

 

1.2 Leshan-Phoenix Semiconductor Company LTD (“Borrower”) Legal Address: #27
West Renmin Street, Leshan, Sichuan Legal Representative: William Meder

 

Section 2 Definitions and Interpretation

 

Wherever used in this Agreement, unless the context otherwise requires, the
following terms have the following meanings:

 

2.1 “This Agreement” means this Loan Agreement (Reference number: (2003) (01) )

 

2.2 “Shareholders’ Loan Documents” means the loan agreement entered into by and
between Borrower and SCI (as defined below) on or about April 1, 2001, as
amended on or about August 1, 2002, and the related Promissory Note with an
original principal amount of $63,292,094.11dated August 1, 2002 with a maturity
date on December 31, 2004 executed by Borrower as borrower of funds from SCI.

 

2.3 “SCI” means Semiconductor Components Industries, LLC, a limited liability
company formed and existing under the laws of Delaware, U.S.A., being the parent
company of SCG which is a shareholder of Borrower.

 

2.4 “SCG” means SCG (China) Holding Corporation, a company incorporated and
existing under the laws of Delaware, U.S.A., being a subsidiary of SCI and a
shareholder of Borrower.

 

2.5 “Mortgaged Assets” means the fixed assets owned by Borrower and provided to
Lender, as security for purposes of assuring the repayment of the Loan
hereunder, as specifically listed in the Mortgage Agreement.

 

2.6 “Assets Evaluation Report” means the report on the evaluation of the
Mortgaged Assets having been issued by Sichuan Xinde Assets Appraisal Company on
November 24, 2003.

 

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2.7 “Loan Documents” means this Agreement and the Schedules hereto.

 

2.8 “LIBOR” means the London inter-bank offering rate provided by the Telerate
Service or any other services that display such rate and published by the
British Bankers’ Association (BBA) on 11:00 AM (London time).

 

2.9 “Draw-down Date” means the date when the Loan hereunder is deposited into a
bank account opened and maintained by Borrower at the Leshan Sub-Branch of China
Construction Bank.

 

2.10 “Insurance Company” means the insurance company which issues the insurance
policies for the Mortgaged Assets.

 

2.11 “Insurance Policy” means the insurance policy purchased by Borrower from
the Insurance Company to cover the Mortgaged Assets.

 

2.12 “Insurance Proceeds” means the compensation paid by the Insurance Company
in the event the occurrence of any insured risk regarding the Mortgaged Assets
pursuant to the Insurance Policy.

 

2.13 “Third Party” means any party other than Lender and Borrower.

 

2.14 “ICBC Loan Documents” means the loan facility entered into on November 17,
2000 between Borrower and Industrial and Commercial Bank of China, Sichuan
Branch, and related documents including the foreign exchange loan contract,
Renminbi (“RMB”) loan contract and mortgage contract between the same parties
entered into on or about November 17, 2000.

 

2.15 “Articles of Association” means the current Articles of Association of
Borrower.

 

2.1.6 “Joint Venture Contract” means the current Joint Venture Contract of
Borrower.

 

2.17 “Disbursement Notice” means a written notice sent by Lender, allowing
Borrower to immediately draw the Loan hereunder.

 

2.18 “Business Day” means a working day which is not a national holiday day in
China.

 

2.19 “Loan” means the total Forty Eight Million ($48,000,000) US Dollars loan
facility Borrower borrows from Lender hereunder, including the Tranche A, being
Twenty Four Million ($24,000,000) US Dollars and Tranche B, being Twenty Four
Million ($24,000,000) US Dollars.

 

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Section 3 Background and Purposes

 

3.1 The Shareholders’ Loan Documents reflect that as of August 1, 2002 Borrower
owed $63,292,094.11 to SCI with a maturity date on December 31, 2004.

 

3.2 From August 1, 2002 to the execution date of this Agreement, Borrower has
made partial principal payments to SCI of US$15,292,093 under the Shareholders’
Loan Documents and Borrower currently owes SCI a remaining principal balance of
approximately US$48,000,001.11. Borrower intends to borrow from Lender the Loan
to repay SCI the remaining principal balance owed under the Shareholders’ Loan
Documents less approximately US$1.00.

 

3.3 For the purpose of specifying the rights and obligations between Borrower
and Lender and promoting mutual benefits, Borrower and Lender have reached the
following agreements according to the Contract Law of China and other related
applicable laws and regulations.

 

Section 4 Currency, Amount and Usage of the Loan and Interest Payment

 

4.1 The currency of the Loan under this Agreement shall be US Dollars.

 

4.2 On the terms and subject to the conditions of this Agreement, Lender agrees
to lend to Borrower:

 

  (a) the Tranche A, being US$24,000,000 (Twenty Four Million US Dollars); and

 

  (b) the Tranche B, being US$24,000,000 (Twenty Four Million US Dollars).

 

Except for the Loan set forth above, Lender has no obligation to grant
additional loans or make any other financial support to Borrower.

 

4.3 The proceeds of the Loan shall be drawn-down in one lump sum. Borrower shall
notify Lender of the Draw-down Date immediately after its receipt of the Notice
of Disbursement from Lender after the Pre-conditions to Disbursement set forth
in Section 6 have been fulfilled.

 

4.4 The Loan under this Agreement shall only be used to repay the debt under the
Shareholders’ Loan Documents described in Section 3.2.

 

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4.5 Borrower shall pay interest on the Loan in accordance with the following
provisions:

 

  4.5.1  Interest on the Loan shall accrue from day to day, being prorated on
the basis of a 360-day year for the actual number of days in the relevant
interest period. The interest for the Loan shall be calculated and paid on a
quarterly basis, and each interest period shall include the first day within
such interest period but exclude the last day of that interest period.

 

  4.5.2  The interest rate for the Loan shall be, for each interest calculation
period, six (6) month LIBOR published on the 20th day of the last month in the
previous quarter plus 150 BPs per annum, being 6 Months LIBOR plus 1.5%.

 

  4.5.3  Subject to Section 4.5.4, the interest payment dates shall be the 20th
day of the last month within each quarter.

 

  4.5.4  The first interest payment date hereunder shall be the 20th day of the
last month within the quarter on which the Draw-down Date falls, and the last
interest payment date shall be the date when the Loan is completely paid off.

 

4.6 Disbursement of the Loan hereunder, and all payments of principal, interest,
and any other fees due to Lender under this Agreement shall be made through
China Construction Bank, Leshan Sub-branch.

 

4.7 If Borrower wishes to adjust the foregoing floating interest rate into a
fixed interest rate, Borrower shall apply to Lender for implementing such
adjustment.

 

Section 5 Representations and Warranties

 

5.1 Borrower represents and warrants that:

 

  5.1.1  It is a company duly incorporated and validly existing under the laws
of China and has the corporate power to sue or defend a case in court, and to
enter into, observe and perform its obligations under this Agreement.

 

  5.1.2  As of the date when this Agreement is executed, it is not a party to
any litigation, arbitration or administrative proceedings the outcome of which
will reasonably be expected to have a material adverse effect on performance of
its obligations under this Agreement.

 

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  5.1.3  It is not a party to or bound by any loan contract with any other
financial institution or any Third Party except for the Shareholders’ Loan
Documents and the ICBC Loan Documents.

 

  5.1.4  Its fixed assets are not subject to any security interest, including,
without limitation, mortgage, pledge, deposit, and lease, except for these
security interests arising out of the ICBC Loan Documents.

 

  5.1.5  All information and materials provided by Borrower to Lender relating
to the execution and performance of this Agreement is complete, true and up-to
date in all material aspects.

 

  5.1.6  No present contract entered into by Borrower with any Third Party has a
material adverse effect on Borrower’s ability to perform its obligations under
this Agreement.

 

  5.1.7  Neither the execution nor performance of this Agreement violates any
term or provision of the Joint Venture Contract or Articles of Association or
any internal regulations of Borrower.

 

  5.1.8  It is not in violation of any law, regulation or ruling, and no
judgment or order or similar punishment has been issued which has or is likely
to have any materially adverse effect on Borrower’s business prospects or
financial condition or make it improbable for Borrower to observe or perform its
obligations under this Agreement.

 

5.2 If any of the foregoing representations and warranties is proved untrue or
misstated in a material way, Borrower shall be deemed in default and shall be
liable to Lender therefor.

 

Section 6 Pre-conditions to Disbursement

 

6.1 Within Three (3) Business Days of receiving the following documents Lender
shall issue the Disbursement Notice to Borrower to notice Borrower that Borrower
may draw down the Loan the following day, unless the documents provided by
Borrower do not comply with the applicable laws and regulations and the
provisions agreed to herein;

 

  6.1.1  a copy of Borrower’s valid business license, Joint Venture Contract and
Articles of Association;

 

  6.1.2  the Loan Documents duly signed by Borrower and Lender;

 

  6.1.3  an Assets Evaluation Report;

 

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  6.1.4  mortgage registration certificates properly evidencing the registration
of the mortgage over the Mortgaged Assets;

 

  6.1.5  a copy of the Insurance Policy (including, evidence of payment of the
premium) Borrower purchased hereunder, under which Lender is the primary
beneficiary for the Mortgaged Assets and the Commitment Letter among Lender,
Borrower and the Insurance Company to such effect.

 

  6.1.6  documents indicating that Borrower has, pursuant to this Agreement,
opened a foreign currency account and its basic Renminbi settlement account with
Lender;

 

  6.1.7  a board resolution of Borrower authorizing the execution and
performance of this Agreement;

 

  6.1.8  a letter of comfort from SCI indicating that SCI will continuously
support Borrower’s development;

 

  6.1.9  a copy of the approval from the State Administration of Foreign
Exchange, Sichuan Branch with respect to the remittance of the proceeds of the
Loan overseas for the purpose thereof as provided herein.

 

Section 7 Terms and Repayment of the Loan

 

7.1 The term of the Loan hereunder shall be:

 

  7.1.1  The term of the Tranche A loan under this Agreement shall be ten (10)
years, starting from the Draw-down Date.

 

  7.1.2  The term of the Tranche B loan under this Agreement shall be three (3)
years, starting from the Draw-down Date.

 

  7.1.3  Before the Tranche B loan hereunder becomes due, Borrower may apply for
an extension of the term thereof. If, after its examination, it is satisfied
with Borrower’s financial condition, Lender will enter into a supplementary
agreement with Borrower permitting extension of the Tranche B loan, which shall
provide that Borrower shall repay the principal of the Tranche B loan over three
(3) years in equal installments on a quarterly basis with all other terms and
conditions hereunder remaining the same.

 

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  7.1.4  Borrower shall provide to Lender a thirty (30) Business Days’ notice
for any extension of the Tranche B loan term prior to its maturity date, if
Borrower intends to apply for extension of the Tranche B loan. Lender shall
inform Borrower of its consent or denial in writing within twenty (20) Business
Days after receiving such notice for extension from Borrower.

 

7.2 Repayment of Principal

 

  7.2.1  Repayment of the principal of the Tranche A loan shall be made in
accordance with the Schedule of Principal Repayment attached hereto as Schedule
1.

 

  7.2.2  Subject to Section 7.1.3 above and Section 7.3 below, the principal of
the Tranche B loan shall become due and be paid in a lump sum payment on or
before its maturity date.

 

7.3 Prepayment

 

  7.3.1  Notwithstanding Section 7.2 above, Borrower shall have the right, but
not the obligation, to prepay all or any part of the principal of the Loan upon
a thirty (30) Business Days’ notice to Lender, which shall specify the amount
and date regarding the prepayment as well as which Tranche the prepayment amount
is to be applied to. For a partial prepayment, such prepayment shall be in an
amount not less than US$1,200,000.

 

  7.3.2  Total or partial prepayment of the Loan is not subject to any
prepayment fee, penalty or additional interest to Lender. Borrower undertakes
not to prepay the Loan within One (1) year of the Draw-down Date. Any principal
amount of the Loan prepaid under this Agreement may be re-borrowed at the
discretion of Lender.

 

  7.3.3  Notwithstanding Section 7.2 above, Borrower shall have the discretion
to decide to which Tranche loan the amounts prepaid under this Section is to be
applied to. Borrower shall specify in writing to which Tranche loan the
prepayment amount is to be applied.

 

  7.3.4  Any amount prepaid to the Tranche A loan shall be applied to the
outstanding principal of the Tranche A loan in the chronological order of
maturity thereof as set forth in the Schedule of Principal Repayment.

 

  7.3.5 

If Borrower notifies Lender of its intent to prepay any amount of the principal
of the Loan, it shall make such prepayment as notified to

 

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Lender. Lender shall be entitled to a fee equal to 2% of the amount of the Loan
to be prepaid if Borrower fails to make such prepayment.

 

Section 8 Default Interest

 

8.1 Lender shall serve Borrower a notice five (5) Business Days in advance
before any payment of the principal or interest of the Loan becomes due
(including all or partial principal and interest which are declared due and
payable by Lender upon prematuring by acceleration). If Borrower fails to make
such payment on the due date, Borrower shall pay, in respect of the amount of
such payment due and unpaid, an annual interest at the rate of 150 BPs plus the
original interest rate, in effect from the due date of such payment until the
date of actual payment. Such default interest shall be payable on each interest
payment date in each quarter following such failure of payment.

 

Section 9 Particular Covenants

 

9.1 Borrower makes the following particular covenants:

 

  9.1.1  Affirmative Covenants: Borrower shall actively perform the following
obligations:

 

  (1) Borrower shall open all bank accounts necessary for its business with
Lender except that it may maintains a RMB settlement account, a foreign currency
settlement account, and for the purposes of the loan under ICBC Loan Documents,
a principal and interest payment account with the Industrial and Commercial Bank
of China, Leshan Branch;

 

  (2) Borrower shall use the Loan hereunder according to the provisions
hereunder and not for any other purpose;

 

  (3) Upon a reasonable notice from Lender, Borrower shall permit
representatives of Lender to visit any of the premises where the business of
Borrower is conducted, without interruption to the business of Borrower, so as
to obtain information about Borrower’s business and financial condition;

 

  (4) Borrower shall promptly notify Lender in writing as soon as it becomes a
party to any litigation, arbitration or administrative proceedings, with a claim
against Borrower for more than RMB 2.0 million. Such notice shall describe the
nature of such proceedings;

 

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  (5) Borrower shall provide Lender with other means of security acceptable to
Lender in the event that the Mortgaged Assets are damaged or destroyed by any
uninsured act of Borrower under the Insurance Policy;

 

  (6) Borrower shall promptly notify Lender if (i) Borrower ceases its
operation, (ii) Borrower’s registration or business license is cancelled, (iii)
its legal representative or a senior management member commits illegal
activities, or (iv) its operation confronts serious difficulties and its
financial condition becomes worsen, provided that such event or condition has or
may reasonably be expected to have a material adverse effect on Borrower’s
ability to perform its obligations hereunder.

 

  (7) Borrower shall actively enhance business cooperation with Lender in all
fields;

 

  (8) The ratio between the RMB and foreign currency settlements carried out by
Borrower with Lender and such settlements with all banks shall not be lower than
that of the ratio between the Loan and all loans of the Borrower with all banks.
Lender shall, however, charge Borrower fees at preferential rates based on China
Construction Bank headquarters’ standard rates which comply with regulations of
People’s Bank of China

 

  (9) Capital and debt management and use of financial derivatives by Borrower
shall be carried out through Lender, as long as Lender charges reasonable fees;

 

  (10) At the end of each month, the average period of the account receivables
arising out of sales of Borrower’s products to SCI and its affiliated companies
shall not exceed thirty (30) days;

 

  (11) Borrower shall conduct its business in accordance with laws and
regulations of China and normal business practice;

 

  (12) Borrower shall, within Fifteen (15) of the end of each month, deliver to
Lender copies of its complete financial statements for the such month and copies
of its annul audited financial statements by an internationally recognized
auditing firm within Five (5) Business Days of its receipt thereof but no later
than the last day of the month of May; and

 

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  (13) Borrower shall promptly provide to Lender such necessary information as
Lender may from time to time request from Borrower about Borrower’s business
operation and the status of the Mortgaged Assets.

 

  9.1.2  Negative Covenants. Borrower shall not take the following acts without
the prior written consent of Lender, which consent shall not be unreasonably
withheld; Lender shall provide its decision of consent or disagreement (with
proper explanation) in writing within ten (10) days of Borrower’s written notice
of its intent to take such acts:

 

  (1) change the business scope as set forth in its business license;

 

  (2) revise the Joint Venture Contract or Articles of Association in any manner
which would be inconsistent with the provisions of this Agreement;

 

  (3) change the pricing principles of its products as currently adopted by
Borrower;

 

  (4) borrow any new loan from any Third Party after the Draw-down Date which
will cause Borrower to owe an outstanding debt as a result of such loan
exceeding US$4.8 million. However, any borrowings from SCI, SCG or any of their
parent, subsidiary or other affiliates overseas and any borrowings to be used
for the purchases of equipment and development of additional facilities for the
Wafer Fab project are hereby excepted and excluded from such prior approval by
Lender. Borrower should give Lender the priority right for borrowings for such
purchases and development.

 

  (5) pay any dividends to its shareholders before all amounts owing to Lender,
for the same quarter in which the dividends will be paid, have been paid in
full;

 

  (6) create or permit to exist any security interest in favor of any Third
Party over the Mortgaged Assets;

 

  (7) enter into any agreement or similar arrangement to guarantee all or any
part of any financial or other obligation of any Third Party;

 

  (8) undertake or permit any merger, division or reorganization;

 

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  (9) sell, transfer, give away as gift or otherwise dispose of any Mortgaged
Assets; and

 

  (10) file a bankruptcy application in court.

 

Section 10 Mortgage

 

10.1 To ensure that Borrower is capable of repaying the principal and paying the
interest provided in this Agreement, Borrower agrees to grant Lender a mortgage
on the fixed assets set forth in the List of Mortgaged Assets which is an Annex
of the Mortgage Agreement attached hereto as Schedule 2.

 

10.2 The value of the Mortgaged Assets shall be determined pursuant to the
Assets Evaluation Report.

 

10.3 Within ten (10) Business Days after this Agreement becomes effective,
Borrower shall deliver to relevant authoritative agency where the Mortgaged
Assets are located documents necessary for registration of the mortgage

 

10.4 Specified provisions regarding the mortgage are set forth in the Mortgage
Agreement attached hereto as Schedule 2.

 

10.5 As Borrower duly makes payment of principal and interests, Lender will,
when requested by Borrower in writing, release such quantity of the unreleased
Mortgaged Assets, not more frequently than once every six (6) months, for a
value corresponding to the amount of the Loan having been paid by then. Upon any
prepayment by Borrower of the principal of the Loan amounting to Two Million and
Four Hundred Thousand US Dollars (US$2,400,000) or more, however, Lender shall
promptly release the Mortgaged Assets proportionate to the amount of the prepaid
Loan.

 

Section 11 Insurance

 

11.1 Borrower shall insure the Mortgaged Assets and always keep them insured
with the Insurance Company recognized by Lender and name Lender as the primary
beneficiary of the Insurance Policy therefor.

 

11.2 While Lender’s security interests in the Mortgaged Assets duly exist,
Borrower shall punctually pay any premium and fulfill any obligations necessary
for effecting and maintaining in force the Insurance Policy and deliver to
Lender copies of the relevant insurance documents evidencing continuous
insurance over the Mortgaged Assets during the term of the Loan.

 

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11.3 Any Insurance Proceeds paid by the Insurance Company to Lender not
exceeding RMB 4.0 million shall be returned by Lender to Borrower upon its
receipt thereof from the Insurance Company. The use of any Insurance Proceeds
exceeding such amount shall be determined through discussion between Borrower
and Lender.

 

11.4 Borrower shall comply with the provisions of the Insurance Policy and shall
not vary or cause a material change to the Insurance Policy unless it obtains
Lender’s prior written consent, which shall not be unreasonably withheld.

 

11.5 Borrower shall notify Lender of the following events:

 

  11.5.1  occurring of any insured risk;

 

  11.5.2  changes of the Insurance Contract, including, without limitation,
changes of the coverage of risks insured, and the amounts of the coverage, the
assets insured and other terms of the Insurance Contract.

 

  11.5.3  change of the Insurance Company;

 

Section 12 Fees

 

12.1 Borrower shall bear and pay the following fees incurred related to the
execution of this Agreement:

 

  12.1.1  fees incurred for evaluation of the Mortgaged Assets;

 

  12.1.2  fees incurred for registration of the Mortgaged Assets;

 

  12.1.3  relevant legal fees;

 

  12.1.4  notarization fees, and

 

  12.1.5  stamp duty Borrower is required to pay under relevant laws.

 

In the event where Lender pays a fee on Borrower’s behalf which Borrower is
required to pay herein, Lender will provide official receipts and other
documents as Borrower may request showing such payment for reimbursement by
Borrower

 

12.2

Borrower shall be liable to Lender for a total penalty of only an amount equal
to 1% of that part of the Loan which has not been drawn down within twenty (20)
Business Days after the date of the issuance of the Disbursement Notice. Lender
shall waive such penalty, however, if Borrower draws down such part

 

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of the Loan within Forty (40) Business Days of the date of the issuance of the
Disbursement Notice, and Borrower shall, instead, only be liable for the
interest as specified in Section 4.5.1 and Section 4.5.2 for the days of such
delay. After such Forty (40) days, Lender shall be discharged of its obligation
to allow Borrower to draw down such part of the Loan not drawn down by Borrower.

 

12.3 Except otherwise provided herein, Lender shall not charge Borrower any
other fees.

 

Section 13 Events of Default

 

13.1 It shall be an event of Borrower’s default if:

 

  13.1.1  Borrower fails to pay any part of the principal of the Loan hereunder
or any interest on the Loan when due hereunder;

 

  13.1.2  Borrower fails to observe or perform any of its covenants made in
Section 9 of this Agreement, except for Section 9.1.1(7)-(13).

 

  13.1.3  any representation or warranty made in Section 5 of this Agreement is
found to be materially incorrect;

 

  13.1.4  Borrower institutes proceedings in a court seeking to be adjudicated
bankrupt or insolvent;

 

  13.1.5.  A final and enforceable judgment or arbitration award is rendered by
a court or arbitration tribunal with competent jurisdiction under which Borrower
is held liable for an amount exceeding Five Million US dollars (US$5.0 million)
and the discharge of which will have a material effect on Borrower’s ability to
perform its obligations of this Agreement; and

 

  13.1.6  Borrower fails to pay any premium or renew the Insurance Policy as
required in Section 11.2 of this Agreement.

 

Notwithstanding the above, it shall only be an event of default with respect to
any of the above listed events, if after written notice of the event from
Lender, the event continues uncured for a period of thirty (30) days from the
date of the receipt of the notice by Borrower. During this 30-day period, Lender
may cease to make disbursement of the Loan hereunder.

 

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13.2 If any event of default mentioned above occurs, Lender may:

 

  13.2.1  declare all outstanding principal of the Loan due and payable
immediately and require Borrower to repay such amount of the Loan hereunder and
all interest having accrued thereon.

 

  13.2.2  if an event of default provided for in 13.1.1 and 13.1.4 occur and
Borrower fails to pay off the outstanding amount of the Loan due and payable
pursuant to Section 13.2.1 within ninety (90) days of the declaration under
Section 13.2.1, Lender is entitled to sell the Mortgaged Assets to repay the
Loan hereunder, withholding an equal amount deposited in accounts maintained by
Borrower at Lender through proper action in court.

 

  13.2.3  If, after this Agreement becomes effective and all the Pre-conditions
specified in Section 6 hereunder have been fulfilled including the receipt of
the Disbursement Notice, Borrower does not borrow the Loan, Borrower shall pay
to Lender liquidated damages in an amount equal to 1% of the total principal of
the Loan hereunder.

 

13.3 It shall be a Lender’s default:

 

  13.3.1  If, after this Agreement becomes effective and all the pre-conditions
specified in Section 6 hereunder have been fulfilled including the delivery of
the Disbursement Notice, Lender fails to make disbursement of the Loan hereunder
to Borrower, Lender shall pay to Borrower liquidated damages in an amount equal
to 1% of the total principal of the Loan hereunder.

 

Section 14 Miscellaneous

 

14.1 Borrower and Lender agree to maintain the confidentiality of the
Information (as defined below), except that such may be disclosed (a) to its and
its affiliates, directors, officers, employees and agents, including
accountants, legal counsel and other advisors who need to know the same, (b) to
the extent requested and/or required by any regulatory authority, applicable
laws or regulations or by any subpoena, suit or similar legal process, (c) with
the prior consent of the other party or (d) to the extent the Information
becomes publicly available or non-confidential. For the purposes of this
Section, the term “Information” means the contents of the Loan Documents, and
all information received from Borrower relating to Borrower or its businesses
(other than any such information that is available to Lender on a
non-confidential basis).

 

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14.2 This Agreement shall remain effective from the date when it becomes
effective until the date when Borrower has repaid in full the Loan hereunder and
interest accrued on it.

 

14.3 Any Schedule to this Agreement is an integral part of this Agreement and
shall have the same force as this Agreement does. However, any termination,
rescinding or change of any Loan Documents other than this Agreement shall not
affect the validity or force of this Agreement.

 

14.4 The Schedules of this Agreement include: (1) the Schedule of Principal
Repayment; (2) the Mortgage Agreement;

 

14.5 Any amendment to any provision of this Agreement and/or other Loan
Documents shall not be effective or valid unless Borrower and Lender agree in
writing.

 

14.6 Without prior written consent of Lender, Borrower shall not assign any of
its rights or obligations hereunder, in whole or in part, to any Third Party.

 

14.7 This Agreement shall become effective when duly signed by the legal or duly
authorized representatives of both Lender and Borrower and sealed by the parties
hereto

 

14.8 Any dispute arising out of or relating to the execution or performance of
this Agreement shall first be resolved through negotiations between Borrower and
Lender. If the negotiations fail to reach a resolution, either party may bring a
legal action in the court with proper jurisdiction in the venue where Lender is
located.

 

14.9 This Agreement constitutes the whole agreement between Borrower and Lender
concerning the Loan transaction hereunder and shall replace any other oral or
written agreements or understandings reached between the parties through
discussions before this Agreement is executed.

 

14.10  All communications to be given or made under this Agreement shall be in
writing. Such communications shall be made to the party’s address specified
below.

 

14.10.1   If to Lender:     Attention: Mr. Dai Hulin     Address: #86 Tidu
Street, Chengdu, Sichuan     Post code:     Telephone:     Fax:

 

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14.10.2   If to Borrower:     Attention: Zhang Jing     Address: #27 West Renmin
Street, Leshan, Sichuan     Post code:     Telephone:     Fax:

 

14.11  This Agreement shall be executed in both English and Chinese; both
versions shall be equally authentic and shall have the same legal effect. If
there is any discrepancy between the two (2) versions, the Chinese version shall
control.

 

14.12  This Agreement is executed in ten (10) originals in the English language
and ten (10) originals in the Chinese language, and each party shall retain two
(2) originals of each language.

 

14.13  This Agreement, the rights and obligations of Lender and Borrower
hereunder and any claim or dispute relating thereto, shall be governed by and
construed in accordance with the laws of the People’s Republic of China.

 

14.14  This Agreement is executed on December 12, 2003 in Chengdu, Sichuan
Province.

 

Lender: China Construction Bank, Sichuan Branch (Seal)

Authorized Representative: /S/ WU MINHAO

Wu Minhao                           

 

Borrower: Leshan-Phoenix Semiconductor Company LTD (Seal)

Legal (or duly authorized) Representative: /S/ H. F. LEE

H. F. Lee                       

 

16

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Schedule of Principle Repayment (Tranche A)

 

Currency: USD

 

Scheduled time

--------------------------------------------------------------------------------

 

Date

--------------------------------------------------------------------------------

 

Reimbursed principle

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Principle balance

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1

  3/20/2004   1,200,000.00   22,800,000.00

2

  6/20/2004   1,200,000.00   21,600,000.00

3

  9/20/2004   1,200,000.00   20,400,000.00

4

  12/20/2004   1,200,000.00   19,200,000.00

5

  3/20/2005   1,200,000.00   18,000,000.00

6

  6/20/2005   1,200,000.00   16,800,000.00

7

  9/20/2005   1,200,000.00   15,600,000.00

8

  12/20/2005   1,200,000.00   14,400,000.00

9

  3/20/2006   1,200,000.00   13,200,000.00

10

  6/20/2006   1,200,000.00   12,000,000.00

11

  9/20/2006   1,200,000.00   10,800,000.00

12

  12/20/2006   1,200,000.00   9,600,000.00

13

  3/20/2007   342,857.00   9,257,143.00

14

  6/20/2007   342,857.00   8,914,286.00

15

  9/20/2007   342,857.00   8,571,429.00

16

  12/20/2007   342,857.00   8,228,572.00

17

  3/20/2008   342,857.00   7,885,715.00

18

  6/20/2008   342,857.00   7,542,858.00

19

  9/20/2008   342,857.00   7,200,001.00

20

  12/20/2008   342,857.00   6,857,144.00

21

  3/20/2009   342,857.00   6,514,287.00

22

  6/20/2009   342,857.00   6,171,430.00

23

  9/20/2009   342,857.00   5,828,573.00

24

  12/20/2009   342,857.00   5,485,716.00

25

  3/20/2010   342,857.00   5,142,859.00

26

  6/20/2010   342,857.00   4,800,002.00

27

  9/20/2010   342,857.00   4,457,145.00

28

  12/20/2010   342,857.00   4,114,288.00

29

  3/20/2011   342,857.00   3,771,431.00

30

  6/20/2011   342,857.00   3,428,574.00

31

  9/20/2011   342,857.00   3,085,717.00

32

  12/20/2011   342,857.00   2,742,860.00

33

  3/20/2012   342,857.00   2,400,003.00

34

  6/20/2012   342,857.00   2,057,146.00

35

  9/20/2012   342,857.00   1,714,289.00

36

  12/20/2012   342,857.00   1,371,432.00

37

  3/20/2013   342,857.00   1,028,575.00

38

  6/20/2013   342,857.00   685,718.00

39

  9/20/2013   342,857.00   342,861.00

40

  12/20/2013   342,861.00   0.00