Exhibit 10.17


 


Agreement for Issuance of Overseas Letter of Credit(the
“Agreement”)


 


The
contracting party: SemiLEDs Optoelectronics Co., Ltd., represented by the
Chairman, Trung Doan (hereinafter referred to as the “Appointer”).In order to
proceed settlement of exchange at E.Sun Bank (hereinafter referred to as the
“Bank”) for purchasing the goods and materials from foreign countries, the
Appointer invites the guarantor bearing the joint and several liabilities
hereunder (hereinafter referred to as the “Guarantor”, together with the
Appointer as the contracting parties) to execute the Agreement. Based on the
percentage of the letter of credit (hereinafter referred to as “L/C”) approved
by the Bank and in accordance with the agreed deposits, the Appointer commissions
the Bank to issue overseas L/C on a oone-timeo
partial xcycle basis and to advance payment
in foreign currency (hereinafter referred to as “advance payment”) or accept or
apply for delivery for an import collection under the guarantee delivery / bill
of lading endorsed or borrowing etc., up to the amount of $5 million and is
willing to comply with the following articles:


 


Article 1:
The term of the Agreement is from March 18, 2010 to March 18, 2011.
The Bank shall accept and advance payment for the draft issued during and due
after the term of the Agreement. The contracting parties shall be jointly and
severally responsible to pay off the debts pursuant to the Agreement.


 


Article 2:
The Appointer shall fill in and submit the “Application Form for Issuance
of L/C” and other documents required by the Bank when applying for overseas L/C
from the Bank each time, and the contracting parties agree that the credit
balance shall be determined based on the amount as stated in the “Application
Form for Issuance of L/C” submitted by the Appointer or in the Bank’s
related vouchers and accounting books.


 


Article 3:
The contracting parties acknowledge that the amount of the advance payment made
by the Bank shall be the balance between the amount of the L/C as stated in the
“Application Form for Issuance of L/C” and the amount of settlement of
exchange, and agree that the “Application Form for Issuance of L/C” and
the Bank’s related documents shall be the supporting documents.


 


Article 4:
The Appointer, when applying for sight overseas L/C, shall pay off each advance
payment, interests and other related costs within 15 days upon the Bank’s
notification of the receipt of the shipping documents under respective L/C, but
the term of paying off the debts shall be as follows if any of the following
circumstances occur:


 


4.1 Where
the shipping documents are delivered before the goods, the Appointer shall
submit the supporting documents of the shipping company and pay off the balance
within 3 days after arrival of the goods. But the Appointer shall pay off the
balance if the goods have not been delivered after 60 days of the Bank’s
notification of the receipt of the shipping documents. 4.2 Where the goods are
delivered before the shipping documents and it is necessary to apply for
delivery of goods with guarantees, the Appointer shall pay off the balance
immediately and pay 7 days’ interests in advance. The payment procedure shall
be the same as above-mentioned when applying for delivery of goods by endorsed
bills of lading.


 


4.3 Where
the goods are shipped by partial shipment, the Appointer shall pay off the
advance payment made by the Bank based on portion of the amount under
respective shipping document and amount under related L/C.


 


Article 5:
When applying for overseas usance L/C, the term of a draft or advance payment
under each respective L/C shall be no more than 240 days counting from the date
of a draft is issued or the date of payment made by the foreign agency bank of
the Bank, and the settlement date of each debt shall be the due date of a draft
or the due date as informed by the Bank.


 


Article 6:
The interest of the advance payment or loan in foreign currencies shall be
calculated according to the interest rate as informed by the Bank and as
calculated from the date of payment made by the Bank or by a foreign agency
bank of the Bank till the due date of the advance payment or loan. The bank may
adjust the interest rate at any time by referring to the foreign exchange
business credit rate established by the Foreign Exchange Transaction Center or
the Bank’s increasing borrowing costs of foreign exchange rates.


 


When the
Appointer defaults on paying off the principal, the Appointer shall pay the
delay interest according to the interest rate of the due date of the general
foreign exchange credit as informed by the Bank or the base


 

















 


interest
rate of New Taiwan dollar of the Bank adding 3.95%, whichever is higher. When
the Appointer defaults on paying off the principal and its interest within six
months , ten percent delay interest is required. When the Appointer defaults on
paying off the principal and its interest beyond six months,  delay interest and the penalty of twenty
percent of the delay interest is required.


 


The
contracting parties shall be jointly and severally responsible for the
necessary expenses arising from respective claim of enforcement of debts under
the Agreement by the Bank.


 


Article 7:
The handling charges shall be based on the rate as stipulated by the Bank if
the Bank agrees to issue respective L/C under the Agreement.


 


Article 8:
The Appointer shall pay off the principle and its interest for each loan or
advance payment on the due date in New Taiwan dollars calculated by the
exchange rate as designated by the Bank, or by the agreed exchange rate as set
forth in the Pre Purchased Forward Foreign Exchange Contract signed by and
between the Appointer and the Bank, or by the original foreign currency.  If the Appointer does not perform its
obligation on the due date, the Appointer shall bear the risks of there being
exchange rate variation between foreign currency of the loan or advance payment
and New Taiwan dollar.


 


When the
Appointer does not pay off the advance payment or loan according to the agreed
term and the method, the Bank may convert the principal and the relevant fees
into New Taiwan dollar based on the selling foreign exchange rate published by
the Bank on the conversion date, and the Appointer shall have no objection on
the said conversion date, the amount of exchange rate etc., but the Bank shall
bear no obligation of conversion.


 


Article 9:
If the Appointer makes the payment for the imported goods by payment methods
other than L/C, including D/A, D/P, O/A, T/T or other methods, after the
approval of the Bank, the Appointer may submit an appropriation application and
the relevant transaction documents to get the loan in the credit line according
to the percentage of the amount of the transaction document as agreed by the
Bank. The longest term of each loan shall not
exceed          day.


 


Article 10:
For advance payment made by the Bank under respective L/C, the Appointer may
submit appropriation applications , drafts or other supporting documents for
the claims to apply for short term loan in New Taiwan dollar and commission the
Bank to set off the debts with such loan. The Agreement can be used as the
proof for the loan and there is no need to sign additional contracts.  The Appointer is willing to comply with the
following terms:


 


(1) The
longest term of each loan is 240 days.


 


(2) The
loan shall be made even though the date of loan is after the term when the Bank
may appropriate loan under the Agreement and/or after the expiration date of
L/C.


 


(3) The
interest shall be calculated based on the interest rate recorded on an
appropriation application or the annual fixed deposit rate index adding annual
rate of 1.09% (at present, the annual interest rate being 2.00%), which may be
adjusted simultaneously according to the variation of the annual fixed deposit
interest rate index.


 


(4) If
the Appointer does not perform its obligation on the due date,  the Bank may convert the loan into other
currency at the then exchange rate as designated by the Bank.


 


(5) The
Appointer hereby authorizes the Bank to automatically transfer the deposit from
the account opened by the Appointer at the Bank with the account number
1126-940-001286 for the purpose of paying off the loan and its related expenses
(including principal, interest, liquidated damages, fees, insurance premiums,
the fees of the enforcement of the claims and attorney fees, etc.), using
automatic bank transfer or by the Bank from any of the persons entitled to sign
the deposit withdrawal certificate, without the Appointer’s bank book,
withdrawal slip or check. Such procedure shall be processed in accordance with
the regulations of the Bank. Before all the debts are paid off, the Appointer
shall not cancel such authorization the said deposit account or otherwise
prevent the Bank from withdrawing funds from the said deposit account for the
said purposes without the Bank’s approval and the Agreement shall serve as a
proof of the authorization.


 

















 


Article 11:
The illustration of pricing of the base interest rate and the fixed interest
rate index:


 


I. Base
Interest Rate


 


1. Pricing
Basis: base interest rate = the arithmetic average of the overnight call rate
of the financial industry in the recent three months + a certain percentage, “
the arithmetic average of the overnight rate of the financial industry in the
recent three months”  should be
calculated based on the arithmetic average of the overnight call rate announced
by the “Inter-bank Call Center”,  “a
certain percentage” should be set by reference to capital costs, operating
costs, and interest rate risks and other factors of the Bank, which the Bank
may review and adjust as the market changes.


 


2. Rate
sampling: based on the arithmetic average of the overnight call rate of the
financial industry announced by the “Inter-bank Call Center’ for the three full
months before the date of adjustment (rounded to take to the second decimal).


 


3.
Adjustment Frequency and Method:


 


o(1) Base interest rate is
regularly adjusted once every three months and the adjustment dates are 3 / 23,
6 / 23, 9 / 23, 12/23 every year (as adjusted on a holiday, a next business day
serving as an adjustment date).


 


Adjustment
Frequency Compiled Table


 


	
   

  	
  Adjustment
  Date

  	
   

  	
  3/23

  	
   

  	
  6/23

  	
   

  	
  9/23

  	
   

  	
  12/23

  	
   

  
	
   

  	
  ApplicablePeriod

  	
   

  	
  3/23-6/22

  	
   

  	
  6/23-9/22

  	
   

  	
  9/23-12/22

  	
   

  	
  12/23-3/22

  	
   

  
	
   

  	
  Sampling
  Date

  	
   

  	
  12/1-2/29

  	
   

  	
  3/1-5/31

  	
   

  	
  6/1-8/31

  	
   

  	
  9/1-11/30

  	
   

  



 


o(2) Base interest rate is
regularly adjusted once each month, and the adjustment date is 23th every month
(as adjusted on a holiday, a next business day serving as an adjustment date).


 


4. In case
of significant force majeure factors (for example sampling organization being
merged, eliminated or unable to provide overnight call rate of the financial
industry etc.), the Bank has the right to change the pricing basis of the base
interest rate.


 


II Fixed
Deposit Interest Rate Index


 


1. Pricing
Basis: fixed deposit interest rate index is set based on the average of the
“  fixed deposit rate of one-year regular
savings” of the sample reference banks ( which shall be based on the Bank
website announcement when appropriating the fund ) selected from the Bank of
Taiwan, Zhanghua Bank, Hua Nan Bank, First Commercial Bank,  Taiwan Cooperative Bank, Land Bank, Mega
International Commercial Bank, Cathay United Bank, Taiwan Small and
Medium-sized Enterprise Bank and Chinese Trust Commercial Bank and other
well-known banks


 


2.
Adjustment Frequency and Method:


 


o (1) Fixed deposit rate index
is adjusted once every three months.The adjustment dates are 2 / 21, 5 / 21, 8
/ 21 and 11/21 every year(as adjusted on a holiday, a next business day serving
as an adjustment date) and sampling dates for the adjustment from the 11th date to 17th date of the same month for average interest
rate as a basis, the time is based on the announcement made by the Central Bank
on that day. Index is subject to the second decimal point, rounding the third
decimal point.


 


Adjustment
Frequency Compiled Table


 


	
   

  	
  Adjustment
  Date

  	
   

  	
  2/21

  	
   

  	
  5/21

  	
   

  	
  8/21

  	
   

  	
  11/21

  
	
   

  	
  Applicable
  Period

  	
   

  	
  2/21-5/20

  	
   

  	
  5/21-8/20

  	
   

  	
  8/21-11/20

  	
   

  	
  11/21-2/20

  
	
   

  	
  Sampling
  Date

  	
   

  	
  2/11-2/17

  	
   

  	
  5/11-5/17

  	
   

  	
  8/11-8/17

  	
   

  	
  11/11-11/17

  



 


x (2) Fixed deposit rate index
is adjusted once every month. The adjustment dates are 21st every month (as
adjusted on a holiday, a next business day serving as an adjustment
date)sampling date for adjustment from the twenty first date of a month to the
twentieth date of a next month for average interest rate as a basis, and the
time is based on the announcement made by the Central Bank on that day. Index
is subject to the second decimal point, rounding the third decimal point.


 

















 


3. In case
of one of the following circumstances, the contracting parties agree that the
Bank may change the full set of sample reference banks of the fixed deposit
rate index, and replace them with other domestic banks.


 


(1) When
the sample reference banks have merged, are merged, eliminated, closure,
bankruptcy, reorganization or has one of the circumstances of having been
ordered to suspend business, being regulatory, and being taken over, according
to Article 62 of the Banking Act. There are banks among the sample reference
banks which merge or are merged, eliminated, closed, bankrupted or are ordered
to closed, regulated or taken over under Article 62 o the Banking Act.


 


(2) 
There are banks among the sample reference banks which stop selling products of
one-year regular savings with fixed deposit rates.


 


III.                              Method
of Announcement: the adjusted base rate and fixed deposit rate index will be
published on the boards of “ deposit/loan rate table “ of various branches of
the Bank and the Bank website (www.esunbank.com.tw).


 


Article 12:
When the Bank accepts and effects payment after examining the drafts and other
supporting documents issued under the L/C and concluding they are consistent
with L/C on the surface, the Appointer should pay off the advance payment on
the due date.  Even if the said draft
documents were proved to be incorrect, 
forged, altered or have other defects (including the quality or quantity
of goods not matching with the documents), the Appointer shall not, for any
reason, refuse to pay it off.


 


Article 13:
If the Bank suffers any loss from the
Appointer’s failure to timely make customs declaration and clearance after the
respective L/C shipping documents have been delivered, after the Bank notifies
the Appointer within reasonable time, all the advance payment by the Bank is
deemed mature. And the Bank may claim the amount in New Taiwan dollar
calculated in accordance with the exchange rate as of the maturity date, or for
the purpose of securing the claim, apply for the customs declaration and
clearance with the Customs and then auction or at will dispose of (including
the dispose method, the price and the time etc.) the goods imported to satisfy
all debts, expenses and losses incurred due to the disposition of the goods
(including the duties and transportation fees incurred from the customs
declaration and clearance) owing to the bank. The contracting parties to the
Agreement shall be jointly and severally liable for any shortfall. (This clause
is individually negotiated).


 


Article 14:
If the Appointer imports goods by collection, the Appointer may apply for
delivery against letter of guarantee or endorsement on the countersigned bill
of lading with the consent of the Bank and within the agreed specified amount.
Affidavits (exclusive for delivery against letter of guarantee or endorsement
on the countersigned bill of lading under collection arrangements) and any
relevant deeds or documents requested by the Bank shall be submitted for each
withdrawal. The contracting parties to the Agreement shall, pursuant to the terms
and conditions of each affidavit, deed or document, be liable to the Bank for
its damages incurred until the Appointer makes payment for the fees specified
in the overseas documents sent to the Bank.


 


Article 15:
In the event that there is any inconsistency between the shipping documents and
the L/C in the Appointer’s application or the letter of guarantee or
endorsement on the countersigned bill of lading under the collection
arrangement issued by the Bank regarding the goods, specifications, individual
prices, total amount or the clearance conditions, the Appointer agrees to be
responsible for any outstanding balance, to accept the negotiable instrument,
to make payment and comply with other procedures according to the terms and
conditions set forth in the shipping documents sent to the Bank. The
contracting parties to the Agreement shall be responsible for any loss born by
the Bank arising from the inconsistency in the documents signed by the Bank and
the documents sent to the Bank. The affidavit for delivery against letter of
guarantee or endorsement on the countersigned bill of lading is incorporated
into the Agreement as an attachment, and the contracting parties to the
Agreement shall comply with such Affidavit accordingly.


 


Article 16:
The Appointer agrees to provide the shipping documents, goods procured and
other collaterals for the creation of pledge in favor of the Bank to secure advance
payment owing to the Bank under the respective L/C, and the Agreement is the
evidence for such creation of pledge. The Appointer agrees that from the date
of opening the L/C until the arrival of the goods procured, the Bank has the
pledge over all relevant shipping documents for the goods procured (e.g. import
permits and the relevant bills of lading). The Bank also has the pledge over
the goods procured from the arrival of such goods.


 

















 


Article 17:
Upon the Bank’s request, the Appointer agrees to obtain prior consent from the
Bank regarding the categories and conditions of the insurance for the goods
listed in the respective L/C. In the event that the goods are imported under
FOB, FAS or C&F, the Bank shall be the priority beneficiary insured in
full. The original copy of the insurance documents and the duplicate copy of
the receipts of the insurance premium shall be retained by the Bank. The Bank
may notify the Appointer to procure additional insurance when it deems
necessary and the expenses incurred by such additional insurance shall be borne
by the Appointer. The Bank is without obligation but has the right to manage
the insurance on behalf of the Appointer should the Appointer delay in doing so
or fail to renew the insurance upon its expiration. The Appointer shall duly
repay the Bank immediately for any insurance premium advance by the Bank.
Should there be any delay of repayment, the contracting parties to the
Agreement shall pay the interests accrued according to clause 6 of the
Agreement.


 


Article 18:
The Bank is not responsible for any unsuccessful negotiation with the foreign
negotiating bank, where the negotiation is requested by the Appointer when the
Appointer refuses to accept the flaw indicated on the arrival notice of the
shipping document for the respective L/C. The Appointer shall still pay off the
principal and interests of the advance payment by the Bank and any other
expenses so incurred in accordance with the Agreement. The contracting parties
to the Agreement shall be jointly and severally liable for any damage of the
Bank.


 


Article 19:
The Bank shall not be held liable and the Appointer shall make full payment
according to the L/C, should there be any loss or damage arising from any of
the following: (i) the delivery error, delay or error in interpretation of
the L/C; (ii) loss of the whole or part of the goods listed on the bill, delay
or failure of arrival at the agreed venue of the bill; (iii) losses caused
by failure to insure or under-insured of the goods during the transportation or
after the delivery of the goods; (iv) the detainment or hinder of the
goods by any third party during the transportation or after the delivery of the
goods; or (v) any other factors and situations.


 


Article 20:
The contracting parties to the Agreement shall bear liabilities relating to the
following matters concerning the goods procured under the respective L/C:
(i) the L/C beneficiary’s or the seller’s non-performance of the contract,
delay or defective delivery, (ii) any other force majeure incident that
leads to damage; and (iii) the insurance company refuses to honor the
claim,  makes insufficient claim payment
or delay the payment of the claim of the goods procured under respective L/C.
When the L/C is overdue for three weeks, the Bank may directly write-off the
L/C and use the amount of returned remittance to set off the advance payment
under the Agreement.


 


Article 21:
The relevant terms and conditions of the Agreement are applicable to the L/C
financing where the Bank opens for triangular trade at the request of the
Appointer.


 


Article 22:
If the terms of the Agreement relating to operations, responsibilities and
duties are inadequate in any way, the contracting parties to the Agreement
shall, in addition to fully comply with the terms of the Agreement and any
other special arrangements under contracts separately entered into, be bound by
the latest enacted and promulgated “Uniform Customs and Practice for
Documentary Credits (the ‘UCP’)” of the International Chamber of Commerce and
other relevant clauses based on the interpretation on terms of trade of the
international trade regulations (the “Regulations”). The UCP and Regulations
are deemed a part of the Agreement.


 


In the event
of any change or amendment of the UCP or Regulations, the Bank may make
corresponding changes or amendment to or termination of the Agreement regarding
the actual situation and in line with the changed or otherwise amended UCP and
Regulations, and the contracting parties to the Agreement shall not raise any
objection.


 


Article 23:
The Guarantor shall be jointly and severally liable for the principal,
interest, delay interest, penalty, damages and other secondary claims to
matters for which the Appointer is liable under the Agreement. The Guarantor
shall not withdraw from its obligations as a guarantor. Failure of the
Guarantor to sign on the Appointer’s L/C application or the disbursement
application by the Guarantor may not be used as an excuse by the Guarantor to
refuse to perform its responsibilities.


 


Article 24:
The Appointer hereby authorizes the Bank to automatically transfer deposit from
the account opened by the Appointer at the Bank with account number
1126-940-001286 for the purpose of pay off the 


 

















 


loan and its
related expenses (including principal, interest, liquidated damages, fees,
insurance premiums, the fees for enforcement of the claims and attorney
fees, etc.), using automatic bank transfer or by the Bank from any of the
persons entitled to sign the deposit withdrawal certificates, without the
Appointer’s bank book, withdrawal slip or check. Such procedures shall be
processed in accordance with the regulations of the Bank. Before all the debts
are paid off, the Appointer shall not cancel such authorization, settle the
said deposit account or otherwise prevent the Bank from withdrawing funds from
the said deposit account for the said purposes without the Bank’s approval and
the Agreement shall serve as a proof of the authorization.


 


Article 25:
The venue of execution of the Agreement is the Hsinchu branch of E. Sun Bank.
Except where otherwise agreed, the Agreement is governed by the laws of the
Republic of China.


 


Article 26:
Both parties agree that any litigation involving the Agreement should refer to
the Financing Agreement stipulated by Taiwan Taipei District Court or Taiwan
Hsinchu District Court. The terms and conditions of the said Financing
Agreement shall be deemed as a part of the Agreement.


 

















 


To: E. Sun
Bank


 


The
contracting parties to the Agreement hereby agree and sign the Agreement and
declare their thorough understanding of the contents of the Agreement after
reviewing within a reasonable time period.


 


The
Appointer: SemiLEDs Optoelectronics Co. Ltd.


(Original
stamp)


Representative:
Trung Doan


Address:
3-4F, No. 11 Ke Jumg Rd., Chu-Nan Site, Hsinchu Science Park, Chu-Nan 350
Miao-Li County, Taiwan, R.O.C.


 


Guarantor:


(Original
stamp)


Address:


 


Guarantor:


(Original
stamp)


Address:


 


Guarantor:


(Original
stamp)


Address:


 


Guarantor:


(Original
stamp)


Address:


 


Guarantor:


(Original
stamp)


Address:


 


Date:


 

















 


Credit
Facility No.


 


Stamp
:                      
Handled
by:                              
Cross Reference:                          


 

















 


Power of Attorney


 


The
Appointers jointly issue and deliver to the Bank a promissory note in the
amount of 5 million US dollars, as collateral of its debts, as deemed necessary
in accordance with a fact, authorize the Bank or an agent, an employee of the
Bank to fill in the due date, the rate, the payment of place, and other items
to effectively enforce the right of a promissory note, the Appointer may not
withdraw or limit this authorization without a written consent of the Bank.


 


To: E Sun
Bank


 


Appointer:
SemiLEDs Optoelectronics Co., Ltd.


 


Address: 3F,
No. 11 Ke Jung Rd., Chu-Nan Site, Hsinchu Science Park, Chu-Nan 350, Miao
Li County, Taiwan, R.O.C.


 


Representative:
Trung Doan


 


Appointer:


 


Appointer:


 


Appointer:


 


Date                         Month                     Year
of R.O.C


 


Credit Facility No.:


 


Approval Code:


 


 


	
   

  	
  Stamp:

  
	
   

  	
  Handled by:

  
	
   

  	
  Cross Reference:

  



 

















 


Promissory Note


 


Pay to the
order of E.Sun Bank or its designator $5,000,000 without conditions


 


1. The interest
is paid monthly from the date of the promissory note, calculated by
    %o fixedo
variable (current annual rate being     %). If the interest
rate is variable, the above-mentioned interest rate shall be adjusted in
accordance with          interest rate.
Where it is overdue to pay interest within six months, the delay interest is
ten percent, beyond six months, the penalty being twenty percent.


 


2. This
promissory note is exempted from making a refusal certificate, and is exempted
from the obligation of notice under Article 89 of Negotiable Instrument
Act.


 


3. Place of
payment: No 34, Minzu Road, Xinzhu City


 


Issuer:
SemiLEDs Optoelectronics Co., Ltd.


 

















 


Representative
: Trung Doan


 


Address: 3F,
No. 11 Ke Jung Rd., Chu-Nan Site, Hsinchu Science Park, Chu-Nan 350, Miao
Li County, Taiwan, R.O.C.


 


Issuer:


 


Address:


 


Issuer:


 


Address:


 


Issuer:


 


Address:


 


Date                         Month                     Year
of R.O.C


 


Credit Facility No.:


 


Approval Code:


 


 


	
   

  	
  Stamp:

  
	
   

  	
  Handled by:

  
	
   

  	
  Cross Reference: