While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: - PS1: Social and Environmental Assessment and Management System - PS2: Labor and Working Conditions - PS3: Pollution Prevention and Abatement; and - PS5: Land Acquisition and Involuntary Resettlement Issues associated with the following Performance Standards were not encountered during the assessment of the project: PS4: No evidence of adverse impact to Community Health Safety and Security were observed from Lattice Power's operations which are located in an industrial park. PS6: No negative impact to biodiversity or conservation from the Company’s operations (as confirmed by approved environmental impact assessment completed by the Company). PS7: No Indigenous People are known to have been in the area or affected by the project; PS8: No evidence of the presence or impact to issues associated with Cultural Heritage.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because it may create a limited number of specific environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Key environmental, health and safety, human resources and social issues that were reviewed included: environmental and social management system (scope and implementation); quality and sustainability of water resources; emissions to the environment – air, water and subsurface; solid, and hazardous waste and materials management, including transportation; life and fire safety; community and occupational health and safety; energy use and efficiency; community engagement; and land acquisition. Lattice Power has an actively engaged management program and has presented specific plans to address key issues and gaps to ensure continued compliance with local regulatory requirements as well as consistency with IFC Performance Standards and applicable environmental, health and safety guidelines.

Lattice Power has provided information on its current practices and policies that address E&S risks and impacts to ensure that the proposed project complies with or, will upon implementation of specific additional agreed measures, comply with host country laws and regulations and the IFC Performance Standards and applicable requirements of environmental, health and safety guidelines. Environmental, social and health and safety issues that require ameliorative measures will be addressed by Lattice Power as part of IFC’s investment agreements. Social and Environmental Assessment and Management Systems: As required by local regulatory requirements, Lattice Power completed an Environmental Impact Assessment (EIA) in 2008 (Government approved and authorized the construction of Lattice Power facility in 2006. The environment project and facility project were designed at the same time, constructed at the same time and final inspected and accepted at the same time) which was approved by the local government prior to commencement of any activity related to the operation of the facility in the National Hi-tech Industrial Development Zone located in Nanchang, Jiangxi Province, China. Lattice Power is ISO 9001 and 14001 certified and has a management system which has elements that provide oversight of environmental, health and safety (EHS) functions. Lattice Power’s management program includes operational policies and procedures that are implemented at the facilities level by supervisors who report to the Director of Facilities, who in turn reports to the Executive Vice President of the Company on these matters. Policies and procedures comply with applicable regulatory requirements for operation of these facilities. The management system includes effective training, documentation of monitoring results, mechanisms for correcting problems and investigating accidents or non compliance, and ensuring that appropriate adjustments to procedures are made to prevent reoccurrence. Human resources are managed at the corporate level with oversight of facilities and operations. Training of staff is done on a routine basis in compliance with local workplace regulations. The department of human resources is responsible to ensure that all employees are adequately trained to perform their work safely. Supervisors monitor that standards are met and any reportable incidents are recorded, and follow up action taken when required. Training, monitoring and reporting framework is documented and consistent with Chinese requirements, and good international industry practice. Labor and Working Conditions: Lattice Power employs about 450 people as full time staff at its LED chip manufacturing facilities in Nanchang. Sub contractors are hired on an as needed basis, with the exception of service providers for janitorial, food and security services who have longer term contracts. Labor practices and working conditions, including occupational health and safety, comply with local regulatory requirements and are largely consistent with IFC policies and applicable sector guidelines. Lattice Power has a Human Resources policy that is consistent with local and national regulatory requirements. The policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. Employment relationships recognize the principals of non-discrimination and equal opportunity. Although the work force at Lattice Power is not unionized, employees have the right to freedom of association and have the opportunity to represent to the management any issues or grievances that they may have. The minimum employment age at Lattice Power is 17 years. Lattice Power ensures that child labor or forced labor is not employed directly or by subcontractors through verification of relevant documents. Subcontractors are expected to comply with all local labor requirements specified in contractual arrangements. For its manufacturing operations, employees work on 8-hour shifts, seven days a week. Wages are paid on a monthly basis and calculated based on hours worked, inclusive of overtime. Occupational health and safety at Lattice Power facilities are managed by designated health and safety staff. Facilities are audited twice a year by regulatory agencies to monitor compliance with labor regulations. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a full training program at induction and subsequently regarding worker health and safety relevant to their job activity. Lattice Power also regularly monitors its workplace air quality against relevant standards such as those established by OSHA for exposure to industrial chemicals and vapor. Workplace air quality and noise is monitored annually and is within acceptable limits. Facilities and associated infrastructure are largely well maintained. Fire drills and emergency procedures drills are routinely held at the manufacturing facilities. As part of continual improvement, the Company will review its emergency and safety signage, handling of hazardous materials including corrosives and gases, and effectiveness of internal training and emergency response. The OHS performance of Lattice Power is in compliance with regulatory requirements, consistent with requirements of IFC PS2 on Labor and Working Conditions. Pollution Prevention and Abatement: Effluents from Lattice Power facilities include wastewater from LED chip manufacturing operations, cooling tower blow down and sanitary wastewater. Process effluents are treated on site in a pretreatment facility prior to discharge to the public sewer system; non-contact cooling water and miscellaneous blow downs are discharged directly to the public sewer system. Sanitary wastewater is also discharged to the public sewer system. Effluent collected through the public sewer/collection system is treated in municipal wastewater treatment plant (secondary treatment) before discharge to the Gan River (a source for potable water to the local water supply utility). Discharge of treated process effluent is in compliance with discharge permits issued by the regulatory agency, and within IFC EHS guidelines for the parameters monitored. Storm water discharge is not regulated by local regulatory agencies and is presently disposed to the environment without treatment. Lattice Power will review impact to surface water from its liquid emissions for compliance with applicable IFC requirements and implement remedial action if necessary. Air emissions from Lattice Power facilities primarily include emissions from process operations which may include VOCs, heavy metals and miscellaneous vapors. Air emissions are in compliance with local regulations. Lattice Power will review air emissions from its facilities for compliance with applicable IFC requirements and implement remedial action if necessary. Management of solid and hazardous materials, wastes and residuals at Lattice Power’s facilities complies with local regulatory requirements. Licensed subcontractors are used for the collection and disposal of solid and hazardous materials. Lattice Power procurement procedures contractually require that its suppliers and subcontractors comply with applicable regulatory requirements and Lattice Power's policies. As a process of continuous improvement in its performance, Lattice Power will review its solid and hazardous materials and waste management practices (training, handling, transportation and storage) at its operations for consistency with applicable IFC requirements, especially with respect to ammonia and tri-methyl gallium. Water consumption at Lattice Power is estimated to be about 110,000 cubic meters annually, which includes water used for process, non-contact cooling and sanitary usage. Lattice Power consumes about 7 MWh of electric energy annually, all of which is obtained from the public service grid. Net green house gas (GHG) emissions attributable to Lattice Power’s annual consumption of electricity, is estimated to be about 50,000 metric tons of carbon dioxide equivalents per year. Power consumption is expected to grow after planned expansion in production capacity this year. Lattice Power will review its water usage to explore potential for reduction in water usage at its facilities, with an objective to reduce, recycle and reuse to the extent feasible. Land Acquisition and Involuntary Resettlement IFC’s assessment considered the potential displacement and compensation of occupants and/or users of land acquired for the Lattice Power’s facilities which are located within the National Hi-tech Industrial Development Zone located in Nanchang, Jiangxi Province, China. The local government set up the industrial park by acquiring land from village collectives or individual villagers with compensation paid to them through village committees. Acquisition of land by the local governments was done in documented consultation with potentially affected communities and in compliance with procedures established by the Land Administration Law of the People's Republic of China (LAL), local province's implementation procedures of the LAL, relevant laws, regulations and procedures of the local municipality. The following briefly describes further details of the acquisition process relevant to this project. Lattice Power obtained land use rights for 498 mu from the local government for setting up its manufacturing operations. Prior land use was agricultural and acquired by the local government from the Yuwei village in 2002. Land acquisition for the project required physically displacement of 223 individuals, and economic displacement up to 3,423 persons. Land related compensation was made to the affected village according to prevailing market rates, which was confirmed by review of local Government directives detailing compensation arrangements and standards. Rates of compensation are considered equal or superior to the average return on the same land through cultivation. Under the terms of the land acquisition agreement, villagers had reached consensus on distribution of about 40% of the compensation funds directly to the affected villagers, while the remaining 60% would be placed in a trust administered by the Yuwei village committee for use toward provisioning of public use facilities and supporting local business activities. All compensation payments have been completed and documented, and there are no outstanding legal challenges or issues related to land acquisition. Physically dislocated persons have moved into re-housing provided by the local Government. Living conditions and access to public amenities have improved compared to pre-project housing conditions. Lattice Power has employed some of the relocated villagers, and the local government has established training and other support programs to help the displaced villagers. As such, the reported outcomes of the land acquisition undertaken by the municipal government are consistent with the objectives and requirements of IFC’s Performance Standard 5 for Land Acquisition and Involuntary Resettlement.

No local communities have been significantly affected by Lattice Power’s ongoing operations which are in an industrial park and away from any residential communities. The Company has not been the subject of any public complaints or litigation related to its environmental or social performance. In China, dialogue and communication with affected communities including public consultation and disclosure of environmental and social impact assessment occurs through procedures established by PRC regulations. As a result, no formal information dissemination activities have been undertaken by the Company so far. Notwithstanding, as part of its environmental and social management program, Lattice Power will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. Specific procedures will be developed to incorporate community engagement, including clear procedure on disclosure and consultation with potentially affected communities. For more information see the company’s website at http://www.latticepower.com/ or contact: Bo Lu Executive Vice President Lattice Power (Jiangxi) Corporation 699, North Aixihu Road, National Hi-tech Industrial Development Zone Nanchang, Jiangxi Province, P.R.China, 330029 Telephone: +86 791-8158518 Fax: +86-791-8190011 E-Mail: blu@latticepower.com

A Chinese-language copy of the Environmental and Social Review Summary (ESRS) and associated Environmental and Social Action Plan (ESAP) will be posted on the Company’s web site (http://www.latticepower.com/) and made available at the main entrance of the facility listed below. An announcement informing the public of its availability for review and comment will also be placed in a local newspaper. Lattice Power (Jiangxi) Corporation 699, North Aixihu Road, National Hi-tech Industrial Development Zone Nanchang, Jiangxi Province, P.R.China, 330029