**Exhibit 10.12**

 

Translation of $724,944 (RMBYuan 6 million) loan between GoVideo DigiTech (Huizhou) Ltd. and TCL Corp.

 

Control number: JT2005001

 

Agreement of Internal loansof TCL Industries Holdings (Hong Kong)

 

Debitor (“Party A)”):GoVideo DigiTech (Huizhou) Ltd

Creditor (“Party B”): TCLCorp. .

 

Party A, for its businessneeds, intends to apply a loan from Party B, which agrees to make such a loan.The both parties agree to reach the flowing agreements based on mutual consentsand governing laws and regulations:

 

1.     Loan type:     Short termloan.

2.     Loan amount: Six million RMB Yuan ($724,944, translator’s noteper rate of $1=RMB 8.2765)

3.     Purpose of the loan:    Tosatisfy the needs of the business expansion of the subsidiaries.

4.     Loan terms:   From 4/19/2005to 6/30/2005 and may be automatically extended on six month term basis whenmatures and neither party objects to renewal of the loan. If the beginning dateof the loan on any subsequent amendment(s) to renew this loan is different fromthis original date, the beginning date on this agreement should used for thepurpose of calculation. Any subsequent extensions of this loan shall be a partto this agreement and shall have the same binding force.

5.     Interest  Loan interestrate, calculation of interest

(1) The annual interestrate shall be 5.2167%.

(2) Interest shall becalculated after the money wired to the account of Party A.. Daily interestrate shall be monthly rate divided by 30.

(3) Any adjustment ofinterest rate before the maturity of the loan shall be based on the bankregulation on interest rate.

6.     Condition of releasing the loan to debitor

(1) Party A properlycompleted the registration process and satisfied all the legal documents forthe loan to be released;

(2) If the loanrequires collateral, all the conditions are satisfied by Party A or the thirdparty.

(3) Party A has notbreached any clause that required by for this loan.

7.     Payment of interest and principal

(1) Party A shall payinterest on the interest calculation day. First payment is the day after thefirst calculation day of the month, and last payment shall be made togetherwith the principal when the loan matures.

(2) Party A agrees toaccrue sufficient amount to pay interest when due, and remit the interestpayment to Party B’s designated bank account.

(3) Party A shallreserve sufficient amount in its bank account when the loan matures

 

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in order to payback theprincipal amount of the loan.

(4) If Party A fails topayback the loan amount when the loan matures, Party B has the right to disposethe collateral at its discretion or seek legal venue to resolve the issue.

8.     Collateral

The collateral required forthis loan is the number 1 in the following list;

(1)          Guarantee without collateral;

(2)          Collateral;

(3)          Collateral with physical assets;

(4)          Letter of credit;

(5)          Counter guarantee;

(6)          Letter of promissory notes;

(7)          Others

9.     The main rights and liabilities of bothparties

(1) Therights and liabilities of Party A:

(A) Therights of Party A

(a) PartyA has the right to ask Party B to release the loan;

(b) PartyA has the right to use the loan under the terms of the loan agreement;

(c) PartyA has the right to ask Party B for extension(s) of the loan with the consent ofParty B;

(d) PartyA has the right to ask Party B to keep the confidentiality of all theinformation regarding its accounting and business operation, except otherwisegoverned by the laws and regulations

(B) Theliabilities of Party A

(a) PartyA shall pay back the principal and interest when the loan matures;

(b) PartyA shall use the loan in accordance with the terms of the agreement, and not usethe loan for other purpose without written consent from Party B;

(c) PartyA shall provide Party B with all the information include but not limitedaccounting, statistics, business planning and KPI, etc. when requested by PartyB.

(d) Withoutpayback the loan amount, Party A shall not use the loan amount as collateral tosecure another loan;

(e) IfParty A will provide guarantee to other parties before the loan is matured, PartyA must notice Party B and receives consent from Party B;

(f) PartyA shall provide Party B with additional collateral if the value of thecollateral used for this loan is less that the original stated amount asrequired by the agreement;

(g) PartyA must notify Party B for any changes made to its name, legal person, businessregistration, registered capital, etc.

(h) PartyA must notice Party B within 10 days for any of the following that may affectParty B to exercise its right as a creditor: contract, joint venture, merge,acquisition, spin-off, apply for close of business, apply for bankruptcy, etc.

(i) PartyA shall immediately notify Party B for any of the following: closedown ofbusiness operation, revoke of business license, revoked of business registration,any involvement of legal person in illegal activities, becomes a party to legalaction, severe deterioration of financial conditions, and resolve the paymentof the

 

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loanand collateral under the conditions of Party B;

(2) Rightsand liabilities of Party B

(A) Therights of Party B

(a) PartyB has the rights to get access to the information regarding Party A’s financialand business operation, has the right to ask Party A to provide all theinformation include but not limited to its planning, accounting and KPI data;

(b) PartyB has the right to audit Party A on the use of the loan.

(B) Theliabilities of Party B

(a) PartyB shall release the loan amount to Party A once the agreement is effective,unless for the reasons caused by Party A;

(b) PartyB agrees to keep all the information provided by Party A confidential unlessotherwise mandated by laws and regulations.

10.   Change and termination of the loan agreement

(1) Theagreement may be revised, amended or terminated with the written agreement byboth parties. Any changes made shall become part of the whole agreement. If anyprovision of this agreement is held invalid and void, the balance of theprovisions will remain in full force and effect.

(2) IfParty A plans to transfer its rights and liabilities to the third party, itmust get a written consent from Party B, and transfer will not be valid unlessthe third party sign the new loan agreement with Party B;

(3) PartyA must give a 30 day notice to Party for any of the following actions: contract,leasing, merge and acquisition, joint venture, joint corporation, ownershipchange etc. Party A shall not take any actions unless it receives a writtenconsent from Party B;

(4) PartyA agrees to continue to bear the responsible for the liabilities of the loaneven though it has joint venture, joint corporation or equity merge, in whichParty A has equity interest.

11.Breach of agreement

(1) IfParty A fails to payback the principal when the loan agreement at the maturitydate, Party B has the right accrue the interest at the daily rate of 2.1/10000.

(2) IfParty A fails to pay interest, Party B has the right to accrue the interest atthe daily rate of 2.1/10000. If Party A pays back the principal amount butfails to the accrued the interest, Party B has the right to continue to accruethe interest on the unpaid amount of interest at a daily compound rate of2.1/10000.

(3) IfParty A uses the loan for the purposes other than stated in the loan agreement,Party B has the right to charge a penalty for the breached amount at the dailyrate of 5/10000.

(4) Atany time before the loan agreement matures, Party B has the right to stopreleasing the loan, take back the loan and interest that were release to PartyA, or deduct directly from Party A’s account if Party A:

(a) failsto pay back principal or interest;

(b) usethe loan for other purpose;

(c) providefalse information to Party B;

 

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(d) breachespart of the loan agreement;

(e) isinvolved in law suites or litigations that substantially affect Party A’sbusiness;

(f) deteriorationof Party A’s financial situation;

(g) facesany of the following situations: depreciation, damage, loss, frozen of thecollateral and fails to provide new collateral;

(h) Anyactions by Party A that affect its ability to payback the loan principal andinterest.

12.   Settlement of dispute

Bothparties shall consult with each other for any disputes regarding the loanagreement; unresolved disputes shall be arbitrated by the management of TCLCorporation. During the period of dispute, the balance of the agreement shallbe in full force.

13.Others

(1) Anyother issues that are included the loan agreement but pertinent to theagreement, both parties shall follow the laws, rules and regulations ofthe government;

(2) Theloan agreement shall be effective once it is properly signed by the legalpersons of the two parties. The agreement will be terminated once all theprincipal and interest are fully paid.

(3) Thisagreement will be executed in counterpart copies and each and all of which willbe deemed an original.

14.Special clause

(1) PartyA acknowledges that Party B fully consulted with Party A for all the provisionsin the loan agreement.

(2) PartyA acknowledges that it has full comprehension of all the provisions of the loanagreement, and Party B gives all the explanations to Party A for any and all ofthe questions that Party A has.

(3) Bothparties consent that they have no disagreement over the provisions of theagreement.

 

 
| Party  A: Legal person or authorized signer: | /s/ Guo Xiangyang |   |
|----------------------------------------------|-------------------|--------|
|                                         |
| Dated:  April 19, 2005                  |
|                                         |
| Party  B: Legal person or authorized signer: | /s/ Lan Xuqiang   |   |
|                                         |
| Dated:  April 19, 2005                  |
|                                              |                   |        |  |

 

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