Document:

Loan
        Contract

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        	
                 

              	 Agricultural Bank of
                China

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

      Loan
        Contract

       No.
        44101200700006582

      (
        / )
        Nong Yin Jie Zi ( / ) No. ( / )

      

      Borrower
        (Full Name):
        Huizhou NIVS Audio & Video technology CO.,LTD

      Lender
        (Full Name): Agricultural Bank of China, Huizhou
        Branch

      

      In
        accordance with the relevant national laws and regulations, the Parties,
        through
        mutual negotiations, conclude this contract,

      Article
        1.
        Loan

      1. Loan
        category: short-term
        current capital loan

      2. Loan
        use:
current
        capital turnover

      3. Loan
        currency and amount (capitalized):
        ten
        million whole RMB

      4. Borrowing
        term

      (1)
        Please refer to the following table for the borrowing term. 

      
        	
                Releasing
                  Date

              	
                Expiring
                  Date

              
	
                Year

              	
                Month

              	
                Day

              	
                Amount

              	
                Year

              	
                Month

              	
                Day

              	
                Amount

              
	
                2007

              	
                9

              	
                 

              	
                10,000,000RMB

              	
                2008

              	
                9

              	
                 

              	
                10,000,000RMB

              
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 

      

      (The
        added table due to the lack of the space in this table 

      will
        be
        regarded as an integral part of this contract.)

      (2)
        In
        case that there are discrepancies between the borrowing amount, releasing
        date
        and expiring date recorded in this contract and the borrowing proof, the
        borrowing proof prevails. The borrowing proof is an integral part of this
        contract and has the equal legal forces as this contract has.

      (3)
        In
        case
        that the loan in this contract is in foreign currencies, the borrower
shall
        return the borrowing amount and interests in the original
        currencies.

      5.
        Loan
        interest rate

      The
        following No. (1)
        mode
        applies for interest rate of the loan in RMB:

      (1)
        Floating interest rate

      The
        loan
        interest rate float /
        (up/down)
        /
        %
        on the
        benchmark interest rate. The annual interest rate is 7.02%.
        In
        case that the borrowing term is less than five years (including five years),
        the
        loan’s benchmark interest rate is the RMB benchmark interest rate in the same
        period published by the People’s Bank of China; In case that the borrowing term
        is more than five years, the loan’s benchmark interest rate is the RMB benchmark
        interest rate published by the People’s Bank of China plus
        /
(capitalized)
        %.

      The
        interest rate adjustment period is one
        (capitalized) month. In case that there is the adjustment of RMB loan benchmark
        interest rate in People’s Bank of China, as of the corresponding date of the
        borrowing in the first month of the following period
        since the adjustment of benchmark interest rate, the lender will reconfirm
        the
        new
        exercising loan interest rate on the basis of the benchmark interest
rate
        in
        the corresponding period and level as well as these mentioned calculation
        methods,
        of which the borrower will not be notified separately. In case that the
        adjusting date of benchmark interest rate and releasing rate of the loan
        or
        corresponding date of the loan in this period are the same dates, the new
        exercising
        loan interest rate is determined as of the adjusting date of benchmark
interest
        rate. In case that there is no corresponding date of loan, the last day of
        this
        month is regarded as the corresponding date of loan.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (2)
        Fixed
        interest rate

      The
        loan
        interest rate float /
        (up/down)
        /
%
        on the
        benchmark interest rate. The annual interest rate is
        /
%
        until
        the expiring date of loan arrives. In case that the borrowing term is less
        than
        five years (including five years), the loan’s benchmark interest rate is the RMB
        benchmark interest rate in the same period published by the People’s Bank of
        China; In case that the borrowing term is more than five years, the loan’s
        benchmark interest rate is the RMB benchmark interest rate published by the
        People’s Bank of China plus
        /
(capitalized)
        %.

      The
        following No.
        /
mode
        will
        apply for the interest rate of the loan in foreign currencies:

      (1)
        /
(capitalized) months
        /
(LIBOR/HIBOR)+
        the cost of carry
        /
%.
        The
floating
        interest rate for
        /
(capitalized) months
        applies. LIBOR/HIBOR is the London/Hong Kong Interbank Offer Rate that
        is
        published by Routers Agency two working days before the interest count
        day.

      (2)
        The
        annual interest rate
        /
%
        applies
        until the loan’s expiring date arrives.

      (3)
        Other
        modes
        /

      6.
        Interest settlement

      The
        interest for the loan hereunder is settled on the basis of month
        (month/quarter), the interest settlement day is 20th
        of each
month
        (month/last month of a quarter). The borrower shall pay the interest on the
        interest settlement day. In case that the last replacement date of the loan’s
        principle is not on the interest settlement date, then the unpaid interest
        shall
        be paid up together with the principal (the daily interest rate = monthly
        interest rate/30).

      Article
        2.
        In case
        that the following conditions are not satisfied, the lender is entitled not
        to
        provide the loan hereunder: 

      1. The
        borrower opens a general
        saving account
        at the lender premise.

      2. The
        borrower provides relevant documents, materials and goes through 

      the
        relevant procedures in accordance with the lender’s requirements.

      3. In
        case
        that the loan hereunder is in foreign currency, the borrower has

      already
        got the approval, registration and other legal procedures related to this
        loan
        in accordance with the relevant regulations.

      4. In
        case
        that there are mortgage and hypothecation securities hereunder,

      such
        relevant legal procedures as registration and/or insurance have been gone
        through and the securities and insurance remains valid. In case that the
        loan
        hereunder has guarantied, the guaranty contract has been concluded and entered
        into force.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Article
        3.
        Lender’s
        Rights and Obligations

      1. The
        lender is entitled to know about the borrower’s such situations as 

      business
        operation, financial activities, materials stock and loan use and to ask
        the
        borrower to provide such documents, materials and information as financial
        statement on a regular basis.

      2. In
        case
        that the borrower does the disadvantageous actions or situations 

      that
        may
        influence the loan’s security, which are included but not limited to the actions
        and situations in the paragraph 7, 8, 10 of Article 4 herein, the lender
        may
        stop releasing the loan or withdraw the loan in advance.

      3. In
        case
        that, in accordance with the stipulations herein, the lender withdraws or
        pre-withdraws the loan’s principle, interest, penalty interest, compound
        interest and other fees payable, the lender may deduct and collect them directly
        from the borrower’s any account.

      4. In
        case
        that the amount returned by the borrower is not enough to liquidate the amount
        payable hereunder, the lender may choose to use the returned amount as the
        returned principle, interest, penalty interest or fees.

      5. In
        case
        that the borrower does not fulfill the payment obligation, the lender
        may disclose the borrower’s breach of the contract to the outside
        publicly.

      6. The
        lender shall release the full amount of the loan on schedule in 

      accordance
        with the stipulations herein. 

      Article
        4. Borrower’s
        Rights and Obligations

      1. The
        borrower is entitled to receive and use the loan in accordance with

      the
        stipulations herein.

      2. The
        borrower shall use the account stipulated in Article 2 hereunder to

      transact
        the settlements and savings relevant to the loan hereunder.

      3. In
        case
        that the loan hereunder is in foreign currency, the borrower shall 

      go
        through such procedures as approval, registration and other legal ones well
        in
        accordance with the relevant regulations.

      4. The
        borrower shall return the loan’s principle and interest on time. In

      case
        that
        the borrower needs to renew the borrowing term, it shall submit a written
        application 15 days before the loan’s expiring date. With the lender’s consent,
        the agreement on the renewal of the borrowing term.

      5. The
        borrower shall use the loan in the way that are stipulated herein and

      shall
        not
        occupy or misappropriate the loan.

      6. The
        borrower shall provide authentic, complete and effective financial 

      statement
        or other relevant materials and information to the lender on a monthly basis
        and
        give an active cooperation for the lender’s inspection on the business
        operation, financial activities and the use of the loan hereunder.

      7. In
        case
        that the borrower contracts, leases, transforms the shareholding 

      system,
        affiliates, merges, acquires, separates, co-invests, transfers assets, applies
        for business suspension for the internal reorganization, applies for
        dissolution, applies for bankrupts or takes other actions that may change
        the
        debt relations or influence the realization of the lender’s credit, it shall
        send a written notice to the lender in advance. Besides, with the lender’s
        consent, the borrower shall clarify the liabilities for the debt’s settlements;
        otherwise, these mentioned actions should not be implemented.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8. Apart
        from these mentioned actions, in case that the borrower takes 

      such
        other actions as stopping productions, closing the business, canceling the
        registration and having the business license revoked, or its legal
        representative or main responsible persons are engaged in illegal activities,
        are involved in serious lawsuits or arbitrations, or serious difficulties
        happen
        in the business operations, or the financial situation is worsening, the
        borrow
        shall notify the lender of all the situations and take measures for the
        preservation of credit rights that the lender agrees.

      9. In
        case
        that the borrower provides guarantee for the others’ debt or do 

      mortgage
        and hypothecation securities with its major assets, which may have an effect
        on
        the borrower’s capacity of paying back the loan hereunder, it shall give a
        written notice to the lender in advance and get the lender’s
        consent.

      10. The
        borrower and its investors shall not withdraw capital, transfer 

      capital
        or presumptuously transfer the stock shares in avoidance of the debt to the
        lender.

      11. In
        case
        that the borrower changes the name, the legal representative, 

      the
        location and the business cope, it shall notify the lender of the changes
        with
        the written notice.

      12. In
        case
        that the guarantor hereunder stops production, closes 

      business,
        cancels registration, has the business license revoked, goes bankruptcy or
        has a
        deficit situation in the business and partially or fully lose the guarantee
        capacity corresponding to this loan or the value of the mortgaged goods and
        hypothecated property for the loan hereunder is decreased or damaged, the
        borrower shall provide other guarantee means that the lender
        approves.

      13. The
        borrower shall be liable for the fees for the lawyer’s services, 

      insurance,
        transportation, evaluation, registration, storages, appraisal and notarization
        relevant to this contract and to the guarantee under this contract.

      Article
        5. Prepayment

      The
        borrower may make the prepayment only with the lender’s consent: in case that
        the lender agrees that the borrower may make the prepayment, in the payment,
        the
        part of prepayment’s interest is calculated and collected according to the
second
        mode:

      1. The
        interest rate is calculated and collected in accordance with the 

      borrowing
        term and the exercising interest rate stipulated herein.

      2. The
        interest rate is floated up zero
        (capitalized)
        % on the basis of the borrowing term and the exercising interest rate stipulated
        herein.

      Article
        6.
        Liabilities for the breach of the contract

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      1. In
        case
        that the lender does not lease the full loan to the borrower on 

      schedule
        in accordance with the stipulations herein, which causes losses to the borrower,
        it shall pay the breach penalty to the borrower according to the amount and
        the
        overdue days. The breach penalty is calculated in the same way as the overdue
        loan’s interested loan in the same period is.

      2. In
        case
        that the borrower does not pay the principle of the loan in 

      accordance
        with the borrowing term stipulated herein, the lender will calculate and
        collect
        the penalty interest that is floated up fifty
        (capitalized)
        percent as of the overdue day on the basis of the loan’s exercising interest
        rate stipulated herein until the principle and the interest are paid off.
        During
        the overdue period, for the RMB loan, in case that People’s Bank of China adjust
        the RMB loan benchmark interest rate to a higher level in the same period,
        the
        interest rate of the penalty interest will be adjusted accordingly as of
        the
        adjustment day of the benchmark interest rate.

      3. In
        case
        that the borrower does not use the loan for what is stipulated 

      herein,
        the lender will calculate and collect the penalty interest for the part that
        breaches the contract floating up one
        hundred
        (capitalized) percent on the basis of the exercising interest rate stipulated
        herein until the principle and the interest are paid off. During the period,
        for
        the RMB loan, in case that People’s Bank of China adjust the RMB loan benchmark
        interest rate to a higher level in the same period, the interest rate of
        the
        penalty interest will be adjusted accordingly as of the adjustment day of
        the
        benchmark interest rate.

      4. In
        case
        that the interest payable is not paid, the lender will calculate and

      collect
        the compound interest in accordance with the stipulations of People’s Bank of
        China.

      5. In
        case
        that the borrower violates the obligations hereunder, the lender is

      entitled
        to ask the borrower to correct the breach actions within a time limit, to
        stop
        releasing the loan, to withdraw the released loan in advance, to declare
        the
        expiration of the loan hereunder immediately or to take other measure for
        the
        preservation of the capital.

      6. In
        case
        that any guarantor hereunder violates the obligations stipulated 

      in
        the
        guarantee contract, the lender is entitled to stop releasing the loan to
        the
        borrower, to withdraw the released loan in advance or take other actions
        for the
        preservation of the capital.

      7. In
        case
        that the lender files a lawsuit or asks for the arbitration to realize

      the
        credit due to the borrower’s breach of the contract, the borrower shall be
        liable for the lawyer fees, business trip expenses or other expenses for
        the
        realization of the credit that the lender pays.

      Article
        7. Loan
        guarantee

      The
        guarantee mode for the loan hereunder is mortgage
        plus guaranty.
        The
        guarantee contract is concluded separately. In case that the mode of highest
        amount of guarantee is used, the guarantee contract’s number is No.
        44906200700002184 and No. 44905200700001249.

      Article
        8. Disputes
        settlement

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      In
        case
        that any dispute rises during the implementation of the contract, it
can
        be
        settled through the mutual negotiations. Or it can be settled in the
        first
        way:

      1. Lawsuit:
        it is within the jurisdiction of the local People’s Court.

      2. Arbitration:
        the dispute may be submitted to
        /

      (the
        full
        name of the arbitration organization) for the arbitration in accordance with
        their arbitration rules.

      3. During
        the period of lawsuits or arbitrations, the clauses herein that are

      not
        involved shall be still implemented.

      Article
        9. Miscellaneous

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

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

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      Article
        10.
        Contract’s Validity

      This
        contract will become valid as of the signing or sealing date of the
        Parties.

      Article
        11.
        Contract’s Copies

      This
        contract has four
        original
        copies. The lender, the borrower, the Land and Resource Bureau and the Real
        Estate Bureau hold one copy respectively with the equal legal
        forces.

      Article
        12. Remark

      The
        lender has reminded that the borrower shall have a complete and accurate
        understanding
        on the various clauses herein. Besides, the lender has, according to
        the
        borrower’s demand, made the appropriate explanations on the clauses. The signing
        Parties have the consensus on the meanings of this contract. 

      

      

        
          	
                  Lender
                    (Signature and Seal)

                	
                  Borrower
                    (Signature and Seal)

                
	 	 
	
                  /s/
                    Tianfu Li 

                	 
	
                  Legal
                    Representative

                	
                  Responsible
                    Person 

                
	
                  or
                    Authorized Agent: Signature

                	
                  or
                    Authorized Agent: Signature

                

        

         

         

          
            

          

        

      

      

        
          	
                	
                  Date:
                    September
                    3rd,
                    2007

                  
                    Location:
                      Guangdong
                      HuizhouChina
        Construction Bank

      Guangdong
        Province Branch 

      (Credit
        Approval Department)

      

      Jian
        Yue
        Zhi Pi Shen [2007] No. 1294

      
        
          

        

      

      Notice
        of Credit Approval Decision

      

      Huizhou
        Branch:

       

      It
        is
        confirmed that we have received the general credit line granted project of
        90,000,000 RMB for Huizhou NIVS Audio & Video Technology CO., LTD that your
        branch submitted. Through the examination and approval in the No. 272 (No.
        166
        in credit approval direct center) credit approval meeting of the provincial
        branch held on September 11th,
        2007,
        in principle, your proposal is hereby approved. The Huizhou NIVS Audio &
Video Technology CO., LTD is given a general credit line of 90,000,000 RMB
        with
        a loan term of one year. Furthermore, the following conditions are
        supplemented:

       

      1.
        The
        precondition for the continuous use of credit line: the condition 2 for the
        continuous use in the proposal is amended as follows: the credit granted
        customer’s current ratio shall be not less than 1.2 and asset to liability ratio
        shall be at a maximum of 55%. Once its actual financial situation exceeds
        beyond
        these mentioned levels, our bank will frozen its unused credit line until
        the
        customer’s mentioned levels return to be normal. 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      2.
        Monitoring requirements for credit granting: strengthen post-loan management,
        closely monitor the credit granted customer’s capital use and capital flow, pay
        close attention to the customer’s business positioning and financial operation
        conditions and take precautions against the credit granted customer’s capital
        operations and risks.

       

      The
        meeting proposes for your branch’s attention that: the credit granting customer
        is developing rapidly in recent years. Your branch should strive for
        shareholders’ support and strengthen the support
        force as well as pay attentions to the credit granted customer’s
        stocks
        and the quality of the account receivable.

       

      Hereby
        notify 

      

      

      September
        12th, 2007

       

      
        
          

        

      Distributed
        in the bank to: Risk Management Department, Corporate Business Department,
        Risk
        Evaluation Department

      
        
          

        

      

      Editor:
        Credit Approval Department Wu Xiao, Shi Lan

      China
        Construction Bank Guangdong Province Branch Office

      Printed
        and distributed on September 12th, 2007

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