**Exhibit10.11**

 

***EXECUTION COPY***

 

**OptaSystems, LLC**

 

**PROMISSORYNOTE**

 

| $4,741,230.00 |   | June  12, 2003 |
|---------------|--------|----------------|

 

**FORVALUE RECEIVED, Opta Systems, LLC,** a Delaware limited liability company (the ***“Maker”***),promises to pay to the order of **ASIA FOCUS INDUSTRIALLTD.,** a Hongkong corporation (the ***“Holder”***),at its offices at Suit 1102, 11F Chinachern Tsuen Wan Plaza, No.457, CastlePeak Road, Tsuen Wan, N.T. Hongkong, the principal sure of Four Million SevenHundred Forty-one Thousand Two Hundred Thirty Dollars ($4,741,230), togetherwith all accrued interest thereon (the ***“Principal Amount”***),upon the terms and conditions specified below.

 

**1.             Interest.**  Simpleinterest shall accrue on the unpaid balance outstanding from time to time underthis Note at the rate of four percent (4%) per annum. Accrued and unpaidinterest shall become due and payable on the due date for the payment of thePrincipal Amount of this Note.

 

**2.             Due Date.**  Subjectto acceleration in accordance with the terms hereof, the Principal Amount ofthis Note, together with all accrued and unpaid interest, shall become due andpayable on December 12, 2003.

 

**3.             Payment.**  Paymentshall be made in lawful tender of the United States and shall be applied firstto the payment of all accrued and unpaid interest and then to the payment ofprincipal. Prepayment of the Principal Amount of this Note may be made in wholeor in part at any time without penalty.

 

**4.             Events ofDefault.**  The occurrence of any of the following eventsshall constitute Events of Default hereunder.

 

(a)           Failure to Pay or Perform.  The failure by Maker to payany of the amounts due hereunder as and when due.

 

(b)           Cross-Default.  Maker’s branch of or default under the terms,covenants, or conditions of any agreement, loan, guaranty or other instrument ofMaker, including without limitation, Maker’s Operating Agreement, as amended.

 

(c)           Judgments.  Maker shall suffer any final judgment for thepayment of money.

 

(d)           Levy by Judgment Creditor.  A judgment creditor of Maker shall obtainpossession of any of the assets of Maker by any means, including but notlimited to levy, distraint, replevin or self-help.

 

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(e)           Failure to Pay Debts. Maker shall fail to pay any debt, in any material amount, due any thirdperson and such failure shall continue beyond any applicable grace period.

 

(f)            Involuntary InsolvencyProceedings.  The institution ofinvoluntary Insolvency Proceedings against Maker and the failure of any suchInsolvency Proceedings to be dismissed within thirty (30) days of theinstitution thereof.  For purposeshereof, “Insolvency Proceedings” means any case seeking the liquidation orreorganization of Maker under the United States Bankruptcy Code or any similarproceeding under applicable law or any case or proceeding seeking theappointment of a receiver, liquidator, sequestrator, custodian, trustees orother officer having similar powers of the Maker to take possession of all or asubstantial portion of the business of the Maker, or any of the followingevents occur: (i) the Maker consents to, approves or otherwise authorizes theinstitution of an Insolvency Proceeding, (ii) the petition commencing theInsolvency Proceeding is not timely controverted or (iii) the petitioncommencing the case remains undismissed and unstayed for a period of 30 days(in the case of an involuntary liquidiation proceeding).

 

(g)           Voluntary Insolvency Proceedings. The commencement by Makerof Insolvency Proceedings.

 

(h)           Dissolution.  Thedissolution of Maker

 

(i)            Injunction. If Maker is enjoined, restrained or in anyway prevented by court order from continuing to conduct all or any materialpart of its business affairs.

 

(j)            Material Adverse Change. Maker suffers a material adverse change, as determined by the Lender ingood faith, in the financial condition of Maker.

 

**5.             Waivers.**

 

(a)           A Waiver of any term of this Notemust be made in writing and signed by a duly-authorized officer of the Holderand any such waiver shall be limited to its express terms.

 

(b)           No delay by the Holder in acting withrespect to the terms of this Note shall constitute a waiver of any breach,default, or failure of a condition under this Note.

 

(c)           The Maker waives presentment, demand,notice of dishonor, notice of default or delinquency, notice of acceleration,notice of protest and nonpayment, notice of costs, expenses or losses andinterest thereon, notice of interest on interest and diligence in taking anyaction to collect any sums owing under this Note or in proceeding against anyof the rights or interests in or to properties securing payment of this Note.

 

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IN WITNESS WHEREOF, Makerhas caused this Note to be executed and delivered by its duly authorizedofficer, as of the day and year and at the place first above written.

 

 
|       | **MAKER**                          |
|------------|------------------------------------|
|       |                               |
| ** ** | **Opta Systems, LLC/DRA Go-Video** |
|       |                               |
|       |                               |
|       | By(Signature):                     |
|       |                               |
|       | Name:                              | YIMIN FOO |
|       |                               |   |
|       | Title:                             | CFO |
|       |                               |
|       |                               |
|       | Holder                             |
|       |                               |
| ** ** | **Asia Focus Industrial Ltd.**     |
|       |                               |
|       | By(Signature):                     | /s/  Yuan Bing |   |
|       |                               |
|       | Name:                              | Yuan Bing |   |
|       |                               |
|       | Title:                             |   |   |
|            |                                    |  |  |  |  |  |

 

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Translationof $4.7 million loan between GoVideo and Asia Focus

 

Controlnumber:

 

Agreementof Internal loans between

 

Debitor (“PartyA)”): Go Video

Creditor(“Party B”): Asia Focus Industrial Ltd.

 

Party A,for its business needs, intends to apply a loan from Party B, which agrees tomake such a loan. The both parties agree to reach the flowing agreements basedon mutual consents and governing laws and regulations:

 

1.     Loan type: Short term loan.

 

2.     Loan amount:  Four million seven hundred thousand USdollars.

 

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

 

4.     Loan terms: Six months between 2/12/04 and 08/11/04. 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) Themonthly interest rate shall be 0.257%.

(2)Interest shall be calculated monthly and calculated on every 20th ofthe month. Daily interest rate shall be monthly rate divided by 30.

(3) Anyadjustment of interest rate before the maturity of the loan shall be based onthe bank regulation on interest rate.

 

6.     Condition of releasing the loan to debitor

(1) PartyA properly completed the registration process and satisfied all the legaldocuments for the loan to be released;

(2) If theloan requires collateral, all the conditions are satisfied by Party A or thethird party.

(3) PartyA has not breached any clause that required by for this loan.

 

7.     Payment of interest and principal

(1) PartyA shall pay interest on the interest calculation day. First payment is the dayafter the first calculation day of the month, and last payment shall be madetogether with the principal when the loan matures.

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

(3) PartyA shall reserve sufficient amount in its bank account when the loan matures inorder to payback the principal amount of the loan.

(4) IfParty A fails to payback the loan amount when the loan matures, Party B has theright to dispose the collateral at its discretion or seek legal venue toresolve the issue.

 

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8.     Collateral

Thecollateral required for this loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotus equityinterest in Correlant Communications.)

(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)Without payback the loan amount, Party A shall not use the loan amount ascollateral to secure another loan;

(e) IfParty A will provide guarantee to other parties before the loan is matured,Party A 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 businessregistration, any involvement of legal person in illegal activities, becomes aparty to legal action, severe deterioration of financial conditions, andresolve the payment of the loan and collateral under the conditions of Party B;

(2) Rightsand liabilities of Party B

(A) Therights of Party B

 

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(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 unless otherwisemandated by laws and regulations.

 

10.      Change and termination of the loanagreement

(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,ownership change etc. Party A shall not take any actions unless it receives awritten consent 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) At anytime before the loan agreement matures, Party B has the right to stop releasingthe loan, take back the loan and interest that were release to Party A, ordeduct directly from Party A’s account if Party A:

(a) failsto pay back principal or interest;

(b) usethe loan for other purpose;

(c)provide false information to Party B;

(d)breaches part of the loan agreement;

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

 

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(f)deterioration of 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. Settlementof 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 of thegovernment;

(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/  Vincent Yan, Chairman |   |
|--------|---------------------------------------------------------|----------------------------|--------|
|   |                                                    |                       |
|   | Dated:  February 11, 2004                               |                       |
|   |                                                    |                       |
|   |                                                    |                       |
|   | Party  B: Legal person or authorized signer:            | /s/ Lu  Zhongli, Director  |   |
|   |                                                    |                       |
|   | Dated:  February 11, 2004                               |                       |
|        |                                                         |                            |        |  |

 

7

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Translationof $4.7 million loan between GoVideo and Asia Focus

 

Controlnumber:

 

Agreementof Internal loans between

 

Debitor (“PartyA)”): Go Video

Creditor(“Party B”): Asia Focus Industrial Ltd.

 

Party A,for its business needs, intends to apply a loan from Party B, which agrees tomake such a loan. The both parties agree to reach the flowing agreements basedon mutual consents and governing laws and regulations:

 

1.     Loan type: Short term loan.

 

2.     Loan amount:  Four million seven hundred thousand USdollars.

 

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

 

4.     Loan terms: Six months between 08/12/04 and 02/11/05. 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) Themonthly interest rate shall be 0.257%.

(2)Interest shall be calculated monthly and calculated on every 20th ofthe month. Daily interest rate shall be monthly rate divided by 30.

(3) Anyadjustment of interest rate before the maturity of the loan shall be based onthe bank regulation on interest rate.

 

6.     Condition of releasing the loan to debitor

(1) PartyA properly completed the registration process and satisfied all the legaldocuments for the loan to be released;

(2) If theloan requires collateral, all the conditions are satisfied by Party A or thethird party.

(3) PartyA has not breached any clause that required by for this loan.

 

7.     Payment of interest and principal

(1) PartyA shall pay interest on the interest calculation day. First payment is the dayafter the first calculation day of the month, and last payment shall be madetogether with the principal when the loan matures.

(2) PartyA agrees to accrue sufficient amount to pay interest when due, and remit theinterest payment to Party B’s designated bank account.

(3) PartyA shall reserve sufficient amount in its bank account when the loan matures inorder to payback the principal amount of the loan.

(4) IfParty A fails to payback the loan amount when the loan matures, Party B has theright to dispose the collateral at its discretion or seek legal venue toresolve the issue.

 

8

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8.     Collateral

Thecollateral required for this loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotus equityinterest in Correlant Communications.)

(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)Without payback the loan amount, Party A shall not use the loan amount ascollateral to secure another loan;

(e) IfParty A will provide guarantee to other parties before the loan is matured,Party A 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 businessregistration, any involvement of legal person in illegal activities, becomes aparty to legal action, severe deterioration of financial conditions, andresolve the payment of the loan and collateral under the conditions of Party B;

(2) Rightsand liabilities of Party B

(A) Therights of Party B

 

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(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 loanagreement

(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,ownership change etc. Party A shall not take any actions unless it receives awritten consent 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) At anytime before the loan agreement matures, Party B has the right to stop releasingthe loan, take back the loan and interest that were release to Party A, ordeduct directly from Party A’s account if Party A:

(a) failsto pay back principal or interest;

(b) usethe loan for other purpose;

(c)provide false information to Party B;

(d)breaches part of the loan agreement;

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

 

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(f)deterioration of 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. Settlementof 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 of thegovernment;

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

 

11

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Translationof $4.7 million loan between GoVideo and Asia Focus

 

Controlnumber:

 

Agreementof Internal loans between

 

Debitor (“PartyA)”): Go Video

Creditor(“Party B”): Asia Focus Industrial Ltd.

 

Party A,for its business needs, intends to apply a loan from Party B, which agrees tomake such a loan. The both parties agree to reach the flowing agreements basedon mutual consents and governing laws and regulations:

 

1.     Loan type: Short term loan.

 

2.     Loan amount:  Four million seven hundred thousand USdollars.

 

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

 

4.     Loan terms: Six months between 2/12/05 and 08/11/05. 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) Themonthly interest rate shall be 0.257%.

(2)Interest shall be calculated monthly and calculated on every 20th ofthe month. Daily interest rate shall be monthly rate divided by 30.

(3) Anyadjustment of interest rate before the maturity of the loan shall be based onthe bank regulation on interest rate.

 

6.     Condition of releasing the loan to debitor

(1) PartyA properly completed the registration process and satisfied all the legaldocuments for the loan to be released;

(2) If theloan requires collateral, all the conditions are satisfied by Party A or thethird party.

(3) PartyA has not breached any clause that required by for this loan.

 

7.     Payment of interest and principal

(1) PartyA shall pay interest on the interest calculation day. First payment is the dayafter the first calculation day of the month, and last payment shall be madetogether with the principal when the loan matures.

(2) PartyA agrees to accrue sufficient amount to pay interest when due, and remit theinterest payment to Party B’s designated bank account.

(3) PartyA shall reserve sufficient amount in its bank account when the loan matures inorder to payback the principal amount of the loan.

(4) IfParty A fails to payback the loan amount when the loan matures, Party B has theright to dispose the collateral at its discretion or seek legal venue toresolve the issue.

 

1

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8.     Collateral

Thecollateral required for this loan is the number 3 in the following list;

(1)          Guarantee;

(2)          Collateral;

(3)          Collateral with physical assets; (X) (Lotus equityinterest in Correlant Communications.)

(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 the informationregarding its accounting and business operation, except otherwise governed bythe 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)Without payback the loan amount, Party A shall not use the loan amount ascollateral to secure another loan;

(e) IfParty A will provide guarantee to other parties before the loan is matured,Party A 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 businessregistration, any involvement of legal person in illegal activities, becomes aparty to legal action, severe deterioration of financial conditions, andresolve the payment of the loan and collateral under the conditions of Party B;

(2) Rightsand liabilities of Party B

(A) Therights of Party B

 

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(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 loanagreement

(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,ownership change etc. Party A shall not take any actions unless it receives awritten consent 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) At anytime before the loan agreement matures, Party B has the right to stop releasingthe loan, take back the loan and interest that were release to Party A, ordeduct directly from Party A’s account if Party A:

(a) failsto pay back principal or interest;

(b) usethe loan for other purpose;

(c)provide false information to Party B;

(d)breaches part of the loan agreement;

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

 

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(f)deterioration of 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. Settlementof 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 of thegovernment;

(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/  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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