Document:

Exhibit 10.17

 

 

Tenancy Agreement

 

This
Tenancy Agreement (the “Agreement”) is made by and between the parties below:

 

Landlord:
Manufacturing and Export Zone Administration, Ministry of Economy (“Party A”)

 

Tenant:
Philips Electronic Building Elements Industries (Taiwan) Ltd (“Party B”)

 

WHEREAS,
Party B intends to lease from Party A the “Premises” located in Nanzi
Manufacturing and Export Zone and the Landlord agrees to lease to the Tenant
the “Premises” under the terms and conditions set forth herein. NOW, THEREFORE,
the parties hereby agree as follows:

 

1.                                       The leasing premises (the “Premises”) are
located at 2/F Underground and 8/F Aboveground, 7 Jingsi Road, Nanzi
Manufacturing and Export Zone, and the total area of the Premises are 18,991.4
square meters.

 

2.                                       This Agreement shall have a term of ten
years, commencing on May 16, 2000 and expiring on May 15, 2010 (the “Term”). If
Party B desires to renew the tenancy, it shall give three months’ prior notice
to Party A and enter into another agreement with Party A.

 

3.                                       If Party B desires to terminate this
Agreement prior to the expiry hereof, it shall give three months’ prior notice
to Party A and pay the amount equal to three months’ rental as compensation,
and Party A shall refund to Party B the amount of the Deposit hereunder without
interest.

 

4.                                       Rental and Deposit

 

(1)                                  The Rental for the Term shall be NT$121 per
square meter per month. The monthly Rental shall be NT$2,298,000. Party B shall
pay the monthly Rental by issuing the bill due and payable on the sixteenth day
of each month.

 

(2)                                  The Deposit shall be NT$4,596,000 amounting
to two months’ Rental. Party B shall pay the Deposit by issuing the check due
and payable on May 25, 2000. Party A shall refund to Party B the amount of the
Deposit hereunder without interest upon Party B’s return of the Premises. If
Party B delays in payment of the Rental, or Party A finds any fault due to
Party B’s reason (except for normal wear and tear) upon Party B’s return of the
Premises, or Party B fails to perform Article 12 hereof, Party A may deduct
from the Deposit the damage incurred by it resulting therefrom and shall refund
any remaining (if any) to Party B. Party B shall pay the insufficiency (if any)
to Party A and may not have an objection.

 

1

 

5.                                       If Party B fails to pay the Rental within the
specified time herein, it shall pay the penalty according to the following
provisions:

 

(1)                                  In the case of delay for more than one month
and less than two months, the penalty shall be five percent of the monthly
Rental;

 

(2)                                  In the case of delay for more than two months
and less than three months, the penalty shall be ten percent of the monthly
Rental;

 

(3)                                  In the case of delay for more than three
months and less than four months, the penalty shall be fifteen percent of the
monthly Rental;

 

(4)                                  In the case of delay for more than four
months, Party A may collect the penalty from Party B and terminate this
Agreement.

 

In the case of the above delay, Party A shall give a
written notice to Party B.

 

6.                                       Party B may use the Premises only to the
extent of actual business needs and may not use the Premises for any illegal
activity. Party B may not sublease or sublet the Premises during the Term
hereof without the consent of Party A.

 

7.                                       Party B may, at its cost, install the
facilities of water, electricity, phone and other decorations in the Premises.
Party B may not alter the structure of the Premises without the prior consent
of Party A. Party B shall assume all the water fees, electricity fees, phone
fees and other fees due to its application for use.

 

8.                                       The land tax and housing tax of the Premises
shall be borne by Party B. If another land lease agreement is entered into, the
land rental shall be borne by Party B.

 

9.                                       Party A shall purchase the insurance for the
Premises during the Term hereof, and Party B shall, at its cost, purchase the
insurance for the properties belonging to Party B.

 

10.                                 Party B shall bear the maintenance fees of
the Premises.

 

11.                                 When the price index announced by the
government rises or falls up to five percent, or the price index is subject to
the governmental policy adjustment, or under other special circumstances, if an
application for adjustment of price index is submitted to the Ministry of Economy,
Party A may discuss the Rental with Party B.

 

12.                                 Unless as otherwise provided herein, Party A
may terminate this Agreement in the case of any of the followings:

 

(1)                                  If Party B fails to perform the provisions
hereof and fails to remedy the same within the period specified by Party A;

 

(2)                                  If Party A may terminate this Agreement
according to the provisions of the civil law or other relevant laws; or

 

2

 

(3)                                  This Agreement shall be terminated due to
Major state policies.

 

13.                                 Party B shall return the Premises to Party A
within ten days after the expiry of termination hereof. Any property left by
Party B in the Premises shall be regarded as waiver of ownership thereof and
shall be subject to disposal by Party A. Party B may not have an objection.

 

14.                                 Any dispute arising from this Agreement shall
be governed by the Kaohsiung District Court as the court of first instance.

 

15.                                 All matters not provided for herein shall be
governed by the establishment administration rules of Manufacturing and Export
Zone or other relevant laws.

 

16.                                 This Agreement is made in two counterparts,
one of which each party hereto holds.

 

 

Landlord
(“Party A”): Manufacturing and Export Zone Administration, Ministry of Economy

 

Legal
Representative: Pan Dingbai, Director

 

Address:
600 Jiachang Road, Nanzi Zone, Kaohsiung City

 

 

Tenant
(“Party B”): Philips Electronic Building Elements Industries (Taiwan) Ltd

 

Legal
Representative: Ze Wenbo, Chairman of the Board of Directors

 

Address:
10 Jingwu Road, Nanzi Manufacturing and Export Zone, Kaohsiung City

 

 

Date:
May 12, 2000

 

3Exhibit 10.18

 

 

Factory Building Lease Contract

 

Lessor:
Kaohsiung Fuguo Garment Manufacturing Co., Ltd     (“Party A”)

 

Parties
to the Contract:

 

Lessee:
Philips Electronic Building Elements Industries (Taiwan) Ltd. (“Party B”)

 

The
Parties hereby enter into this contract as follows with regard to the lease of
factory building between them:

 

Article
1 Subject Matter of the Lease

 

Location
of the factory building owned by Party A: 110 Inner Ring South Road, Nanzi
Manufacturing and Export Zone, Kaohsiung City, the factory building at the
first floor underground with an area of 953 square meters. The factory building
will be lease out to Party B as its factory building with existing equipments.
(See the equipment list for details.)

 

Article
2 Lease Term

 

The
term of this lease contract is from April 1, 2004 to March 31, 2007. Upon
expiration of the lease term, if Party A intends to continue to lease out the
subject matter of the lease, Party B shall have the priority to the lease the
same under equal conditions. The Parties shall consult with each other about
the reletting two months prior to expiration of this contract.

 

Article
3 Rent and the Method of Payment

 

3.1
The rent will be 110,000 New Taiwan dollars per month (tax included).

 

3.2
The rent shall be paid monthly. The 1st day of each month will be the payment
date. Party B shall remit the rent for the month to the bank account (Name of
the Bank: China Commercial Bank, Nanzi Branch. Account Name: Kaohsiung Fuguo
Garment Manufacturing Co., Ltd. Account Number: 003-20-000050) as designated by
Party A before the payment day of each month. If the rent is not remitted to
the bank account within three days before the payment date, the rent for the
month shall be deemed not paid. After receiving the rent for each month, Party
A shall open uniform invoices based on the fact and deliver them to Party B.

 

Article
4 Deposit

 

4.1
To ensure the observance and performance of each term of this contract, Party B
shall pay Party A the deposit of 400,000 New Taiwan dollars by a demand check
at the time of the execution of this contract. Upon expiration of this
contract, Party A

 

 

 

shall
refund the deposit without interest on a lump-sum basis after Party B retreats
from and returns the subject matter of the lease as well as performs the
provisions of Article 5, 7, 8 and hereof.

 

4.2
Except as specified in Article 9.1 and 10.1 hereof, the deposit shall not be
used for setting off the rent and shall not be transferred as a claim, and
pledge or mortgage shall not be set on the deposit, provided that Part A will
forfeit all the above deposit as the liquidated damages and Party B shall not
raise any objection if Party A is obliged to return the subject matter of the
lease pursuant to the contract but fails to return the same after the time for
returning the same.

 

Article
5 Assumption of the Expenses

 

5.1
The house tax and rent of land of the subject matter of this contract during
the lease term shall be assumed by Party A.

 

5.2
The water and electricity expenses and the tax payable on business operation of
Party B shall be assumed by Party B.

 

5.3
If Party B does not relet the subject matter or terminates the lease contract
upon expiration of the lease term, Party B shall restitute the original state
of the subject matter of the lease.

 

5.4
Anything left by Party B within the subject matter of the lease after Party
retreats from the subject matter shall be deemed as abandoned thing. Party A
shall dispose of such thing at its discretion, and Party B shall not raise any
objection and shall assume the expenses arising from such disposal.

 

5.5
Except for the sales tax on the rent, the sales tax on above various other
expenses to be assumed by Party B shall be assumed by Party B.

 

Article
6 Stipulations about the Use

 

6.1
Party B shall not sublease out, transfer or otherwise provide the whole or part
of the subject matter of the lease for use by persons other than the related
enterprises of Party B during the lease term.

 

6.2
The subject matter of this lease will only be used as legal factory building.
Party B shall not use the subject matter for other purpose, shall not illegally
use it, and shall not use it for storing dangerous goods or manufacturing or
carrying other articles which are sufficient to cause public danger.

 

Article
7 Rights and Obligations

 

7.1
Party A warrants that the ownership of the subject matter of this contract will
be clear during the lease term. In the event of any dispute about the
ownership, Party A shall be responsible for removing the same and Party B’s
interest of lease shall not be

 

 

 

affected,
otherwise, Party A shall refund any amount received by it from Party B and
compensate Party B for all its losses.

 

7.2
If the ownership of the subject matter of the lease changes on account of sale,
transfer, succession or any other cause during the period hereof, Party A shall
cause its buyer, assignee, successor or any other related party to be bound by
this contract until the expiration of this contract and shall notify Party B in
writing of the relevant change.

 

7.3
Party B shall perform its obligations as a good administrator; maintain the
subject matter of the lease and return the subject matter to Party A in its
original state upon expiration of the contract.

 

7.4
Party B shall permit Party A or its agent to enter into the subject matter of
the lease for inspection or examination and repair when necessary provided that
Party A shall notify Party B in advance.

 

7.5
Except that the damage to or natural losses of the whole or part of the subject
matter of the lease and the provided equipments caused by natural calamity or
other force majeure factors shall be repaired by Party A, the damage to the
subject matter hereof caused by reasons attributable to Party B within the
lease term shall be repaired by Party B.

 

7.6
If Party B needs changing or decorating the subject matter of the lease, the
main body structure of the building shall not be damaged. Party B shall return
the subject matter of the lease in its original state.

 

7.7
The insurance of the subject matter hereof within the lease term shall be
purchased by Party A.

 

Article
8 Liability for Damage

 

8.1
Party B shall properly manage and use the subject matter of the lease. If the
subject matter of the lease is damaged or lost for the negligence on the part
of Party B or its related party, Party B shall be liable for damages or repair.

 

8.2
If the subject matter of the lease, the properties of Party A or any third
party are damaged or lost for the negligence on the part of Party B or its
related party, Party B shall be solely liable for damages.

 

Article
9 Liability for Breach of Contract

 

9.1
During the lease term, in the event Party B is involved in such circumstances
as breaching the provisions of this contract or default of the expenses payable
or the rent for more than two periods, and still does not make performance or
correction within ten days after notified and urged in writing by Party A,
Party A may terminate the

 

 

 

contract
and set off the unpaid expenses and rents from the deposit, and Party B shall
timely return the subject matter of the lease.

 

9.2
If Party B has the liability for damages or repair according to Article 8 but
still does not pay the damages or conduct the repair within thirty days after
notified and urged in writing by Party A, Party A may engage other party to
make the repair, and Party B shall immediately pay the expenses incurred from
the repair to Party A.

 

9.3
Party B shall not cancel the lease before expiration of the lease term;
otherwise, it shall be deemed that Party B breaches this contract the undue
rent already paid by Party B and the deposit will be forfeited by Party A.

 

9.4
Party A shall not terminate the lease unless Party B breaches the above
provisions, otherwise, Party A shall compensate Party B for its loss caused by
the termination of the lease.

 

Article
10 Other Stipulations

 

10.1
Party B shall pay off the relevant expenses payable by it upon expiration of
the lease term; otherwise Party A may deduct the unpaid expenses from the
deposit as paid by Party B.

 

10.2
If Party B does not return the subject matter upon expiration of the lease term
or the termination of the lease by Party A according to Article 9, Party B
shall pay Party A the daily liquidated damages calculated in proportion to the
rent hereunder from the day following expiration of the lease term or the
termination of the contract till the day Party B returns the subject matter of
the lease, and shall compensate Party A for all its losses.

 

10.3
Party B shall not continue using the subject matter upon expiration of the
lease term and before entering into new lease contract or claim the lease
relation and continue using the subject matter on the basis of the payment by
it of the rent. Even if Party B continues using the subject matter upon
expiration of the lease term, the deemed lease without a fixed term in Article
451 of the Civil Law shall not apply.

 

10.4
If the contract is not renewed upon expiration of the lease term or Party A
terminates the contract according to Article 9, Party B shall empty out and
return the subject matter to Party A within ten days from expiration of the
lease term or the date of the termination of the contract. The articles left by
Party B shall be disposed by Party A as abandoned things at its discretion.
Party B shall promptly retreat from the subject matter, otherwise, Party B
shall not request Party A to refund the deposit.

 

Article
11 General

 

11.1
The number of days as described herein refers to working days and will be
postponed accordingly in the event of any holiday (including Saturday).

 

 

 

11.2
The mailing addresses of Party A and Party B shall be those contained herein.
In the event of any change, the changing Party must timely notify the other
Party in writing by registered mail, otherwise, if any communication to the
changing Party can not be serviced or is rejected or returned, the date of
service shall be the date of the first mailing at the post office.

 

11.3
This contract and its annexes constitute the entire agreement between Party A
and Party B and supersede all previous relevant oral or written communication,
expression of intention or agreement between the Parties. Any provision not
contained in this contract and its annexes shall not bind either Party hereto.
The annexes have equal legal effect with this contract provided that this
contract shall prevail in the event of any conflict between the annexes and
this contract.

 

11.4
The headings of each Article or item hereof are used only for the convenience
of reference and shall not interpret, restrict or affect the meaning of each
such Article or item.

 

11.5
In the event part of the provisions hereof become invalid but do not affect the
validity of other provisions, other provisions shall remain in full force.

 

11.6
If Party A grants Party B a preference or waives a right as a makeshift, it
shall not be certainly deemed that Party A subsequently will make the same
granting or waiver.

 

11.7
The Parties agree that Kaohsiung Local Court will be the court of first
instance for any dispute between the Parties arising from this contract if
litigation is necessary. The applicable law shall be laws of Taiwan Province.

 

11.8
This contract is made in duplicate, and Party A and Party B each holds one. The
stamp tax shall be borne respectively by each Party.

 

The
Parties to this Contract:

 

Party
A (Lessor): Kaohsiung Fuguo Garment Manufacturing Co., Ltd

 

Responsible
Person: Xu Xuming

 

Uniform
Number: 89004063

 

Address:
110 Inner Ring South Road, Nanzi Manufacturing and Export Zone, Kaohsiung City

 

 

 

Telephone:
(07)3611989

 

 

Party
B (Lessee): Philips Electronic Building Elements Industries (Taiwan) Ltd

 

Responsible
Person: Fan Oushi

 

Uniform
Number: 89002500

 

Address:
10 Jingwu Road, Nanzi Manufacturing and Export Zone, Kaohsiung City

 

Telephone:
(07)3612511

 

April
1, 2004

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