**Exhibit 10.10**

 

Translation of $1.5 millionloan between GoVideo and TCL

 

Control number:

 

Agreement of Internal loansof TCL Industries Holdings (Hong Kong) Ltd.

 

Debitor (“Party A)”): GoVideo

Creditor (“Party B”): TCLIndustries Holdings (Hong Kong) Ltd.

 

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 term loan.

 

2.               Loan amount:  One million five hundred thousand US dollars.

 

3.               Purpose of the loan:  To satisfy the needs of the businessexpansion of the subsidiaries.

 

4.               Loan terms: Six months between 07/25/03 and 01/24/04. If the beginning date of theloan on any subsequent amendment(s) to renew this loan is different from thisoriginal date, the beginning date on this agreement should used for the purposeof calculation. Any subsequent extensions of this loan shall be a part to thisagreement and shall have the same binding force.

 

5.               Interest Loan interest rate, calculation ofinterest

(1) The monthly interestrate shall be 0.257%.

(2) Interest shall becalculated monthly and calculated on every 20th of the month. Dailyinterest rate 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 loan requirescollateral, all the conditions are satisfied by Party A or the third party.

(3) Party A has not breachedany 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 to accruesufficient amount to pay interest when due, and remit the interest payment toParty B’s designated bank account.

(3) Party A shall reservesufficient amount in its bank account when the loan matures in order to paybackthe principal 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.

 

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8.               Collateral

The collateral required forthis loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotusequity interest in Correlant)

(4)          Letter of credit;

(5)          Counter guarantee;

(6)          Letter of promissory notes;

(7)          Others 

 

9.               The main rights and liabilities of bothparties

(1) The rights andliabilities of Party A:

(A) The rights of Party A

(a) Party A has the right toask Party B to release the loan;

(b) Party A has the right touse the loan under the terms of the loan agreement;

(c) Party A has the right toask Party B for extension(s) of the loan with the consent of Party B;

(d) Party A has the right toask Party B to keep the confidentiality of all the information regarding itsaccounting and business operation, except otherwise governed by the laws andregulations

(B) The liabilities of PartyA

(a) Party A shall pay backthe principal and interest when the loan matures;

(b) Party A shall use theloan in accordance with the terms of the agreement, and not use the loan forother purpose without written consent from Party B;

(c) Party A shall provideParty B with all the information include but not limited accounting,statistics, business planning and KPI, etc. when requested by Party B.

(d) Without payback the loanamount, Party A shall not use the loan amount as collateral to secure anotherloan;

(e) If Party A will provideguarantee to other parties before the loan is matured, Party A must noticeParty B and receives consent from Party B;

(f) Party A shall provideParty B with additional collateral if the value of the collateral used for thisloan is less that the original stated amount as required by the agreement;

(g) Party A must notifyParty B for any changes made to its name, legal person, business registration,registered capital, etc.

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

(i) Party A shallimmediately notify Party B for any of the following: closedown of businessoperation, revoke of business license, revoked of business registration, anyinvolvement of legal person in illegal activities, becomes a party to legal action,severe deterioration of financial conditions, and resolve the payment of theloan and collateral under the conditions of Party B;

(2) Rights and liabilitiesof Party B

(A) The rights of Party B

 

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(a) Party B has the rightsto get access to the information regarding Party A’s financial and businessoperation, has the right to ask Party A to provide all the information includebut not limited to its planning, accounting and KPI data;

(b) Party B has the right toaudit Party A on the use of the loan.

(B) The liabilities of PartyB

(a) Party B shall releasethe loan amount to Party A once the agreement is effective, unless for thereasons caused by Party A;

(b) Party B agrees to keepall the information provided by Party A confidentialunless otherwise mandated by laws and regulations.

 

10.         Change and termination of the loan agreement

(1) The agreement may berevised, amended or terminated with the written agreement by both parties. Anychanges made shall become part of the whole agreement. If any provision of thisagreement is held invalid and void, the balance of the provisions will remainin full force and effect.

(2) If Party A plans totransfer its rights and liabilities to the third party, it must get a writtenconsent from Party B, and transfer will not be valid unless the third partysign the new loan agreement with Party B;

(3) Party A must give a 30day notice to Party for any of the following actions: contract, leasing, mergeand acquisition, joint venture, joint corporation,ownership change etc. Party A shall not take any actions unless it receives awritten consent from Party B;

(4) Party A agrees tocontinue to bear the responsible for the liabilities of the loan even though ithas joint venture, joint corporation or equity merge,in which Party A has equity interest.

 

11. Breach of agreement

(1) If Party A fails topayback the principal when the loan agreement at the maturity date, Party B hasthe right accrue the interest at the daily rate of 2.1/10000.

(2) If Party A fails to payinterest, Party B has the right to accrue the interest at the daily rate of2.1/10000. If Party A pays back the principal amount but fails to the accruedthe interest, Party B has the right to continue to accrue the interest on theunpaid amount of interest at a daily compound rate of 2.1/10000.

(3) If Party A uses the loanfor the purposes other than stated in the loan agreement, Party B has the rightto charge a penalty for the breached amount at the daily rate of 5/10000.

(4) At any time before theloan agreement matures, Party B has the right to stop releasing the loan, takeback the loan and interest that were release to Party A, or deduct directlyfrom Party A’s account if Party A:

(a)fails to pay back principal or interest;

(b) usethe loan for other purpose;

(c) providefalse information to Party B;

(d) breachespart of the loan agreement;

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

 

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(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) Any actions by Party Athat affect its ability to payback the loan principal and interest.

 

12.         Settlement of dispute

Both parties shall consultwith each other for any disputes regarding the loan agreement; unresolveddisputes shall be arbitrated by the management of TCL Corporation. During theperiod of dispute, the balance of the agreement shall be in full force.

 

13. Others

(1) Any other issues thatare included the loan agreement but pertinent to the agreement, both partiesshall follow the laws, rules and regulations of the government;

(2) The loan agreement shallbe effective once it is properly signed by the legal persons of the twoparties. The agreement will be terminated once all the principal and interestare fully paid.

(3) This agreement will beexecuted in counterpart copies and each and all of which will be deemed anoriginal.

 

14. Special clause

(1) Party A acknowledgesthat Party B fully consulted with Party A for all the provisions in the loanagreement.

(2) Party A acknowledgesthat it has full comprehension of all the provisions of the loan agreement, andParty B gives all the explanations to Party A for any and all of the questionsthat Party A has.

(3) Both parties consentthat they have no disagreement over the provisions of the agreement.

 

 
|   | Party A: Legal person or  authorized signer: | /s/ Yimin Foo, CFO |   |
|--------|----------------------------------------------|--------------------|--------|
|   |                                         |               |
|   | Dated: June 28, 2003                         |               |
|   |                                         |               |
|   |                                         |               |
|   | Party B: Legal person or  authorized signer: | /s/ Yuan Bing,     |   |
|   |                                         |               |
|   | Dated: June 28, 2003                         |               |
|        |                                              |                    |        |  |

 

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Translation of $1.5 millionloan between GoVideo and TCL

 

Control number:

 

Agreement of Internal loansof TCL Industries Holdings (Hong Kong) Ltd.

 

Debitor (“Party A)”): GoVideo

Creditor (“Party B”): TCLIndustries Holdings (Hong Kong) Ltd.

 

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 term loan.

 

2.               Loan amount:  One million five hundred thousand US dollars.

 

3.               Purpose of the loan:  To satisfy the needs of the businessexpansion of the subsidiaries.

 

4.               Loan terms: Six months between 01/25/04 and 07/24/04. If the beginning date of theloan on any subsequent amendment(s) to renew this loan is different from thisoriginal date, the beginning date on this agreement should used for the purposeof calculation. Any subsequent extensions of this loan shall be a part to thisagreement and shall have the same binding force.

 

5.               Interest Loan interest rate, calculation ofinterest

(1) The monthly interestrate shall be 0.257%.

(2) Interest shall becalculated monthly and calculated on every 20th of the month. Dailyinterest rate 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 loan requires collateral,all the conditions are satisfied by Party A or the third party.

(3) Party A has not breachedany 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 to accruesufficient amount to pay interest when due, and remit the interest payment toParty B’s designated bank account.

(3) Party A shall reservesufficient amount in its bank account when the loan matures in order to paybackthe principal 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.

 

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8.               Collateral

The collateral required forthis loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotusequity interest in Correlant)

(4)          Letter of credit;

(5)          Counter guarantee;

(6)          Letter of promissory notes;

(7)          Others 

 

9.               The main rights and liabilities of bothparties

(1) The rights and liabilitiesof Party A:

(A) The rights of Party A

(a) Party A has the right toask Party B to release the loan;

(b) Party A has the right touse the loan under the terms of the loan agreement;

(c) Party A has the right toask Party B for extension(s) of the loan with the consent of Party B;

(d) Party A has the right toask Party B to keep the confidentiality of all the information regarding itsaccounting and business operation, except otherwise governed by the laws andregulations

(B) The liabilities of PartyA

(a) Party A shall pay backthe principal and interest when the loan matures;

(b) Party A shall use theloan in accordance with the terms of the agreement, and not use the loan forother purpose without written consent from Party B;

(c) Party A shall provideParty B with all the information include but not limited accounting,statistics, business planning and KPI, etc. when requested by Party B.

(d) Without payback the loanamount, Party A shall not use the loan amount as collateral to secure anotherloan;

(e) If Party A will provideguarantee to other parties before the loan is matured, Party A must noticeParty B and receives consent from Party B;

(f) Party A shall provideParty B with additional collateral if the value of the collateral used for thisloan is less that the original stated amount as required by the agreement;

(g) Party A must notifyParty B for any changes made to its name, legal person, business registration,registered capital, etc.

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

(i) Party A shallimmediately notify Party B for any of the following: closedown of businessoperation, revoke of business license, revoked of business registration, anyinvolvement of legal person in illegal activities, becomes a party to legalaction, severe deterioration of financial conditions, and resolve the paymentof the loan and collateral under the conditions of Party B;

(2) Rights and liabilitiesof Party B

(A) The rights of Party B

 

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(a) Party B has the rightsto get access to the information regarding Party A’s financial and businessoperation, has the right to ask Party A to provide all the information includebut not limited to its planning, accounting and KPI data;

(b) Party B has the right toaudit Party A on the use of the loan.

(B) The liabilities of PartyB

(a) Party B shall releasethe loan amount to Party A once the agreement is effective, unless for thereasons caused by Party A;

(b) Party B agrees to keepall the information provided by Party A confidentialunless otherwise mandated by laws and regulations.

 

10.         Change and termination of the loan agreement

(1) The agreement may berevised, amended or terminated with the written agreement by both parties. Anychanges made shall become part of the whole agreement. If any provision of thisagreement is held invalid and void, the balance of the provisions will remainin full force and effect.

(2) If Party A plans totransfer its rights and liabilities to the third party, it must get a writtenconsent from Party B, and transfer will not be valid unless the third partysign the new loan agreement with Party B;

(3) Party A must give a 30day notice to Party for any of the following actions: contract, leasing, mergeand acquisition, joint venture, joint corporation,ownership change etc. Party A shall not take any actions unless it receives awritten consent from Party B;

(4) Party A agrees tocontinue to bear the responsible for the liabilities of the loan even though ithas joint venture, joint corporation or equity merge,in which Party A has equity interest.

 

11. Breach of agreement

(1) If Party A fails topayback the principal when the loan agreement at the maturity date, Party B hasthe right accrue the interest at the daily rate of 2.1/10000.

(2) If Party A fails to payinterest, Party B has the right to accrue the interest at the daily rate of2.1/10000. If Party A pays back the principal amount but fails to the accruedthe interest, Party B has the right to continue to accrue the interest on theunpaid amount of interest at a daily compound rate of 2.1/10000.

(3) If Party A uses the loanfor the purposes other than stated in the loan agreement, Party B has the rightto charge a penalty for the breached amount at the daily rate of 5/10000.

(4) At any time before theloan agreement matures, Party B has the right to stop releasing the loan, takeback the loan and interest that were release to Party A, or deduct directlyfrom Party A’s account if Party A:

(a)fails to pay back principal or interest;

(b) usethe loan for other purpose;

(c) providefalse information to Party B;

(d) breachespart of the loan agreement;

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

 

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(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) Any actions by Party Athat affect its ability to payback the loan principal and interest.

 

12.         Settlement of dispute

Both parties shall consultwith each other for any disputes regarding the loan agreement; unresolveddisputes shall be arbitrated by the management of TCL Corporation. During theperiod of dispute, the balance of the agreement shall be in full force.

 

13. Others

(1) Any other issues thatare included the loan agreement but pertinent to the agreement, both partiesshall follow the laws, rules and regulations of the government;

(2) The loan agreement shallbe effective once it is properly signed by the legal persons of the twoparties. The agreement will be terminated once all the principal and interestare fully paid.

(3) This agreement will beexecuted in counterpart copies and each and all of which will be deemed anoriginal.

 

14. Special clause

(1) Party A acknowledgesthat Party B fully consulted with Party A for all the provisions in the loanagreement.

(2) Party A acknowledgesthat it has full comprehension of all the provisions of the loan agreement, andParty B gives all the explanations to Party A for any and all of the questionsthat Party A has.

(3) Both parties consentthat they have no disagreement over the provisions of the agreement.

 

 
|   | Party A:  Legal  person or authorized signer: | /s/ Steve Davis, CFO |   |
|--------|---------------------------------------------------------|----------------------|--------|
|   |                                                    |                 |   |
|   | Dated: January 23, 2004                                 |                 |   |
|   |                                                    |                 |   |
|   |                                                    |                 |   |
|   | Party B: Legal person or  authorized signer:            | /s/ Yuan Bing,       |   |
|   |                                                    |                 |   |
|   | Dated: January 23, 2004                                 |                 |   |
|        |                                                         |                      |        |  |

 

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Translation of $1.5 millionloan between GoVideo and TCL

 

Control number:

 

Agreement of Internal loansof TCL Industries Holdings (Hong Kong) Ltd.

 

Debitor (“Party A)”): GoVideo

Creditor (“Party B”): TCLIndustries Holdings (Hong Kong) Ltd.

 

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:  One millionfive hundred thousand US dollars.

 

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

 

4.     Loan terms:  Six monthsbetween 07/25/04 and 01/24/05. If the beginning date of the loan on anysubsequent amendment(s) to renew this loan is different from this originaldate, the beginning date on this agreement should used for the purpose ofcalculation. Any subsequent extensions of this loan shall be a part to thisagreement and shall have the same binding force.

 

5.     Interest Loan interest rate, calculation of interest(1)The monthly interest rate shall be 0.257%.

(2) Interest shall becalculated monthly and calculated on every 20th of the month. 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 loan requirescollateral, all the conditions are satisfied by Party A or the third party.

(3) Party A has not breachedany 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 to accruesufficient amount to pay interest when due, and remit the interest payment toParty B’s designated bank account.

(3) Party A shall reservesufficient amount in its bank account when the loan matures in order to paybackthe principal 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.

 

1

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8.               Collateral

The collateral required forthis loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotusequity interest in Correlant)

(4)          Letter of credit;

(5)          Counter guarantee;

(6)          Letter of promissory notes;

(7)          Others

 

9.               The main rights and liabilities of bothparties

(1) The rights andliabilities of Party A:

(A) The rights of Party A

(a) Party A has the right toask Party B to release the loan;

(b) Party A has the right touse the loan under the terms of the loan agreement;

(c) Party A has the right toask Party B for extension(s) of the loan with the consent of Party B;

(d) Party A has the right toask Party B to keep the confidentiality of all the information regarding itsaccounting and business operation, except otherwise governed by the laws andregulations

(B) The liabilities of PartyA

(a) Party A shall pay backthe principal and interest when the loan matures;

(b) Party A shall use theloan in accordance with the terms of the agreement, and not use the loan forother purpose without written consent from Party B;

(c) Party A shall provideParty B with all the information include but not limited accounting,statistics, business planning and KPI, etc. when requested by Party B.

(d) Without payback the loanamount, Party A shall not use the loan amount as collateral to secure anotherloan;

(e) If Party A will provideguarantee to other parties before the loan is matured, Party A must noticeParty B and receives consent from Party B;

(f) Party A shall provideParty B with additional collateral if the value of the collateral used for thisloan is less that the original stated amount as required by the agreement;

(g) Party A must notifyParty B for any changes made to its name, legal person, business registration,registered capital, etc.

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

(i) Party A shallimmediately notify Party B for any of the following: closedown of businessoperation, revoke of business license, revoked of business registration, anyinvolvement of legal person in illegal activities, becomes a party to legalaction, severe deterioration of financial conditions, and resolve the paymentof the loan and collateral under the conditions of Party B;

(2) Rights and liabilitiesof Party B

(A) The rights of Party B

 

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(a) Party B has the rightsto get access to the information regarding Party A’s financial and businessoperation, has the right to ask Party A to provide all the information includebut not limited to its planning, accounting and KPI data;

(b) Party B has the right toaudit Party A on the use of the loan.

(B) The liabilities of PartyB

(a) Party B shall releasethe loan amount to Party A once the agreement is effective, unless for thereasons caused by Party A;

(b) Party B agrees to keepall the information provided by Party A confidentialunless otherwise mandated by laws and regulations.

 

10.         Change and termination of the loan agreement

(1) The agreement may berevised, amended or terminated with the written agreement by both parties. Anychanges made shall become part of the whole agreement. If any provision of thisagreement is held invalid and void, the balance of the provisions will remainin full force and effect.

(2) If Party A plans totransfer its rights and liabilities to the third party, it must get a writtenconsent from Party B, and transfer will not be valid unless the third partysign the new loan agreement with Party B;

(3) Party A must give a 30day notice to Party for any of the following actions: contract, leasing, mergeand acquisition, joint venture, joint corporation,ownership change etc. Party A shall not take any actions unless it receives awritten consent from Party B;

(4) Party A agrees tocontinue to bear the responsible for the liabilities of the loan even though ithas joint venture, joint corporation or equity merge,in which Party A has equity interest.

 

11. Breach of agreement

(1) If Party A fails topayback the principal when the loan agreement at the maturity date, Party B hasthe right accrue the interest at the daily rate of 2.1/10000.

(2) If Party A fails to payinterest, Party B has the right to accrue the interest at the daily rate of2.1/10000. If Party A pays back the principal amount but fails to the accruedthe interest, Party B has the right to continue to accrue the interest on theunpaid amount of interest at a daily compound rate of 2.1/10000.

(3) If Party A uses the loanfor the purposes other than stated in the loan agreement, Party B has the rightto charge a penalty for the breached amount at the daily rate of 5/10000.

(4) At any time before theloan agreement matures, Party B has the right to stop releasing the loan, takeback the loan and interest that were release to Party A, or deduct directlyfrom Party A’s account if Party A:

(a)fails to pay back principal or interest;

(b) usethe loan for other purpose;

(c) providefalse information to Party B;

(d) breachespart of the loan agreement;

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

 

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(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) Any actions by Party Athat affect its ability to payback the loan principal and interest.

 

12.         Settlement of dispute

Both parties shall consultwith each other for any disputes regarding the loan agreement; unresolveddisputes shall be arbitrated by the management of TCL Corporation. During theperiod of dispute, the balance of the agreement shall be in full force.

 

13. Others

(1) Any other issues thatare included the loan agreement but pertinent to the agreement, both partiesshall follow the laws, rules and regulations of the government;

(2) The loan agreement shallbe effective once it is properly signed by the legal persons of the twoparties. The agreement will be terminated once all the principal and interestare fully paid.

(3) This agreement will beexecuted in counterpart copies and each and all of which will be deemed anoriginal.

 

14. Special clause

(1) Party A acknowledgesthat Party B fully consulted with Party A for all the provisions in the loanagreement.

(2) Party A acknowledgesthat it has full comprehension of all the provisions of the loan agreement, andParty B gives all the explanations to Party A for any and all of the questionsthat Party A has.

(3) Both parties consentthat they have no disagreement over the provisions of the agreement.

 

 
|   | Party A:  Legal person or authorized signer: | /s/ Steve Davis, CFO     |   |
|--------|--------------------------------------------------------|--------------------------|--------|
|   |                                                   |                     |
|   | Dated: July 23, 2004                                   |                     |
|   |                                                   |                     |
|   |                                                   |                     |
|   | Party B: Legal person or authorized signer:            | /s/ Lu Zhongli, Director |   |
|   |                                                   |                     |
|   | Dated: July 23, 2004                                   |                     |
|        |                                                        |                          |        |  |

 

4

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Translation of $1.5 millionloan between GoVideo and TCL

 

Control number:

 

Agreement of Internal loansof TCL Industries Holdings (Hong Kong) Ltd.

 

Debitor (“Party A)”): Go Video

Creditor (“Party B”): TCLIndustries Holdings (Hong Kong) Ltd.

 

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 term loan.

 

2.               Loan amount:  One million five hundred thousand US dollars.

 

3.               Purpose of the loan:  To satisfy the needs of the businessexpansion of the subsidiaries.

 

4.               Loan terms: Six months between 01/25/05 and 07/24/05. If the beginning date of theloan on any subsequent amendment(s) to renew this loan is different from thisoriginal date, the beginning date on this agreement should used for the purposeof calculation. Any subsequent extensions of this loan shall be a part to thisagreement and shall have the same binding force.

 

5.               Interest Loan interest rate, calculation ofinterest

(1) The monthly interestrate shall be 0.257%.

(2) Interest shall becalculated monthly and calculated on every 20th of the month. Dailyinterest rate 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 loan requirescollateral, all the conditions are satisfied by Party A or the third party.

(3) Party A has not breachedany 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 to accruesufficient amount to pay interest when due, and remit the interest payment toParty B’s designated bank account.

(3) Party A shall reservesufficient amount in its bank account when the loan matures in order to paybackthe principal 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.

 

1

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8.               Collateral

The collateral required forthis loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotusequity interest in Correlant)

(4)          Letter of credit;

(5)          Counter guarantee;

(6)          Letter of promissory notes;

(7)          Others 

 

9.               The main rights and liabilities of bothparties

(1) The rights andliabilities of Party A:

(A) The rights of Party A

(a) Party A has the right toask Party B to release the loan;

(b) Party A has the right touse the loan under the terms of the loan agreement;

(c) Party A has the right toask Party B for extension(s) of the loan with the consent of Party B;

(d) Party A has the right toask Party B to keep the confidentiality of all the information regarding itsaccounting and business operation, except otherwise governed by the laws andregulations

(B) The liabilities of PartyA

(a) Party A shall pay backthe principal and interest when the loan matures;

(b) Party A shall use theloan in accordance with the terms of the agreement, and not use the loan forother purpose without written consent from Party B;

(c) Party A shall provideParty B with all the information include but not limited accounting,statistics, business planning and KPI, etc. when requested by Party B.

(d) Without payback the loanamount, Party A shall not use the loan amount as collateral to secure anotherloan;

(e) If Party A will provideguarantee to other parties before the loan is matured, Party A must noticeParty B and receives consent from Party B;

(f) Party A shall provideParty B with additional collateral if the value of the collateral used for thisloan is less that the original stated amount as required by the agreement;

(g) Party A must notifyParty B for any changes made to its name, legal person, business registration,registered capital, etc.

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

(i) Party A shallimmediately notify Party B for any of the following: closedown of businessoperation, revoke of business license, revoked of business registration, anyinvolvement of legal person in illegal activities, becomes a party to legalaction, severe deterioration of financial conditions, and resolve the paymentof the loan and collateral under the conditions of Party B;

(2) Rights and liabilitiesof Party B

(A) The rights of Party B

 

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(a) Party B has the rightsto get access to the information regarding Party A’s financial and businessoperation, has the right to ask Party A to provide all the information includebut not limited to its planning, accounting and KPI data;

(b) Party B has the right toaudit Party A on the use of the loan.

(B) The liabilities of PartyB

(a) Party B shall releasethe loan amount to Party A once the agreement is effective, unless for thereasons caused by Party A;

(b) Party B agrees to keepall the information provided by Party A confidentialunless otherwise mandated by laws and regulations.

 

10.         Change and termination of the loan agreement

(1) The agreement may berevised, amended or terminated with the written agreement by both parties. Anychanges made shall become part of the whole agreement. If any provision of thisagreement is held invalid and void, the balance of the provisions will remainin full force and effect.

(2) If Party A plans to transferits rights and liabilities to the third party, it must get a written consentfrom Party B, and transfer will not be valid unless the third party sign thenew loan agreement with Party B;

(3) Party A must give a 30day notice to Party for any of the following actions: contract, leasing, mergeand acquisition, joint venture, joint corporation,ownership change etc. Party A shall not take any actions unless it receives awritten consent from Party B;

(4) Party A agrees tocontinue to bear the responsible for the liabilities of the loan even though ithas joint venture, joint corporation or equity merge,in which Party A has equity interest.

 

11. Breach of agreement

(1) If Party A fails topayback the principal when the loan agreement at the maturity date, Party B hasthe right accrue the interest at the daily rate of 2.1/10000.

(2) If Party A fails to payinterest, Party B has the right to accrue the interest at the daily rate of2.1/10000. If Party A pays back the principal amount but fails to the accrued theinterest, Party B has the right to continue to accrue the interest on theunpaid amount of interest at a daily compound rate of 2.1/10000.

(3) If Party A uses the loanfor the purposes other than stated in the loan agreement, Party B has the rightto charge a penalty for the breached amount at the daily rate of 5/10000.

(4) At any time before theloan agreement matures, Party B has the right to stop releasing the loan, takeback the loan and interest that were release to Party A, or deduct directlyfrom Party A’s account if Party A:

(a)fails to pay back principal or interest;

(b) usethe loan for other purpose;

(c) providefalse information to Party B;

(d) breachespart of the loan agreement;

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

 

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(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) Any actions by Party Athat affect its ability to payback the loan principal and interest.

 

12.         Settlement of dispute

Both parties shall consultwith each other for any disputes regarding the loan agreement; unresolveddisputes shall be arbitrated by the management of TCL Corporation. During theperiod of dispute, the balance of the agreement shall be in full force.

 

13. Others

(1) Any other issues thatare included the loan agreement but pertinent to the agreement, both partiesshall follow the laws, rules and regulations of the government;

(2) The loan agreement shallbe effective once it is properly signed by the legal persons of the twoparties. The agreement will be terminated once all the principal and interestare fully paid.

(3) This agreement will beexecuted in counterpart copies and each and all of which will be deemed anoriginal.

 

14. Special clause

(1) Party A acknowledgesthat Party B fully consulted with Party A for all the provisions in the loanagreement.

(2) Party A acknowledgesthat it has full comprehension of all the provisions of the loan agreement, andParty B gives all the explanations to Party A for any and all of the questionsthat Party A has.

(3) Both parties consentthat they have no disagreement over the provisions of the agreement.

 

 
|   | Party A:  Legal person or authorized signer: | /s/ Steve Davis, CFO |   |
|--------|--------------------------------------------------------|----------------------|--------|
|   |                                                   |                 |
|   | Dated: January 23, 2005                                |                 |
|   |                                                   |                 |
|   | Party B: Legal person or authorized signer:            | /s/ Yuan Bing,       |   |
|   |                                                   |                 |
|   | Dated: January 31, 2005                                |                 |
|        |                                                        |                      |        |  |

 

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