Exhibit 10.16

May 11, 2005

Isao Nojima
475 Knoll Drive
Los Altos, CA 94024

Dear Isao:

This letter sets forth the substance of the separation and consulting agreement
(the "Agreement") between Silicon Storage Technology, Inc. ("SST") and you,
following your resignation from SST on April 14, 2005 (the "Resignation Date").
SST has valued your contribution as an executive officer and seeks to continue
to benefit from your experience and knowledge.

1. Consulting Agreement.

We agree that you will serve as a consultant to SST, commencing on the
Resignation Date and continuing for three (3) months thereafter (the "Consulting
Period"). As a consultant you will provide consulting services to SST in any
area of your expertise upon request by the Chief Executive Officer ("CEO") of
SST, subject to your reasonable availability during normal business hours. You
will not be required to provide more than forty (40) hours per week of
consulting services to SST during the Consulting Period. During the Consulting
Period, you will receive as consulting fees $20,833.33 per month ("Consulting
Fees").

2. Health Insurance.

As provided by the federal COBRA law, state insurance laws, and by SST's current
group health insurance policies, you will be eligible to continue your health
insurance benefits at your own expense following the Retirement Date and, later,
to convert to an individual policy if you wish. You will be provided with a
separate notice of your COBRA rights. If you elect continued coverage under
COBRA, as part of this Agreement SST will pay your COBRA premiums for coverage
through the end of the Consulting Period ("COBRA Premiums").

3. Confidentiality.

We agree that this Agreement will be held in strictest confidence by you and SST
and will not be publicized or disclosed in any manner whatsoever; provided,
however, that: (a) you may disclose this Agreement to your immediate family; (b)
the parties may disclose this Agreement in confidence to their respective
attorneys, accountants, auditors, tax preparers, and financial advisors; (c) SST
will disclose this Agreement as necessary to fulfill legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law.

4. Nondisparagement.

Both you and SST agree not to defame, libel, or slander the other party, or the
other party's officers and directors, or to tortiously interfere with the
contracts, relationships and prospective economic advantage of the other party
or the other party's officers and directors; provided that both you and SST will
respond accurately and fully to any question, inquiry or request for information
when required by legal process.

5. Indemnification.

As a former executive officer of SST you were provided certain indemnifications
rights, and these rights and obligations are unchanged by this Agreement,
including, without limitation, those rights and obligations under applicable
law, and those rights and obligations set forth in your March, 2000 Indemnity
Agreement with SST and SST's Bylaws and Articles of Incorporation.

6. General Release.

In exchange for the consideration provided to you by this Agreement, you hereby
generally and completely release SST and its current and former directors,
officers, employees, shareholders, partners, agents, attorneys, predecessors,
successors, parent and subsidiary entities, insurers, affiliates, and assigns
from any and all claims, liabilities and obligations, both known and unknown,
that arise out of events, acts, conduct, or omissions occurring prior to your
signing this Agreement. This general release includes, but is not limited to:
all claims arising out of or in any way related to your employment with SST; all
claims related to your compensation or benefits from SST, including salary,
bonuses, commissions, vacation pay, expense reimbursements, severance pay,
fringe benefits, stock, stock options, or any other ownership interests in SST;
all claims for breach of contract, wrongful termination, and breach of the
implied covenant of good faith and fair dealing; all tort claims, including
claims for fraud, defamation, emotional distress, and discharge in violation of
public policy; and all federal, state, and local statutory claims, including
claims for discrimination, harassment, retaliation, attorneys' fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) ("ADEA"), and the California Fair
Employment and Housing Act (as amended). Notwithstanding the foregoing, nothing
in this Agreement shall prevent you from filing, cooperating with, or
participating in any proceeding before the Equal Employment Opportunity
Commission or the California Department of Fair Employment and Housing, except
that you acknowledge and agree that you shall not recover any monetary benefits
in connection with any such claim, charge or proceeding with regard to any claim
released herein. Further, nothing in this Agreement shall (a) prevent either
party from filing any claim arising from any breach of the terms of this
Agreement, or (b) release SST from any of its indemnification obligations to you
pursuant to your March 2000 Indemnity Agreement with SST, SST's Bylaws or
Articles of Incorporation, or statutory or common law.

7. ADEA Waiver

. You acknowledge that you are knowingly and voluntarily waiving and releasing
any rights you may have under the ADEA ("ADEA Waiver"). You also acknowledge
that the consideration given for the ADEA Waiver is in addition to anything of
value to which you were already entitled. You further acknowledge that you have
been advised by this writing, as required by the ADEA, that: your ADEA Waiver
does not apply to any rights or claims that arise after the date you sign this
Agreement; you should consult with an attorney prior to signing this Agreement;
you have twenty-one (21) days to consider this Agreement (although you may
choose to voluntarily sign it sooner); you have seven (7) days following the
date you sign this Agreement to revoke the ADEA Waiver; and the ADEA Waiver and
this Agreement will not be effective until the date upon which the revocation
period has expired unexercised, which will be the eighth day after you sign this
Agreement ("Effective Date").

8. Waiver.

In giving the release herein, which includes claims which may be unknown to you
at present, you acknowledge that you have read and understand Section 1542 of
the California Civil Code, which reads as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

(California Civil Code section 1542)

You hereby expressly waive and relinquish all rights and benefits under that
section and any law or legal principle of similar effect in any jurisdiction
with respect to the release of unknown and unsuspected claims granted in this
Agreement.

9. Entire Agreement

. This Agreement constitutes the complete, final and exclusive embodiment of the
entire agreement between you and SST with regard to the subject matter hereof.
It supersedes any and all other agreements entered into by and between you and
SST. It is entered into without reliance on any promise or representation,
written or oral, other than those expressly contained herein. It may not be
modified except in a writing signed by you and a duly authorized officer of SST.

10. Authority

. SST represents and warrants that the undersigned has the authority to act on
behalf of SST and to bind SST and all who may claim through it to the terms and
conditions of this Agreement. You represent and warrant that you have the
capacity to act on your own behalf and on behalf of all who might claim through
you to bind them to the terms and conditions of this Agreement.

11. Severability

. In the event that any provision of this Agreement, or any portion thereof,
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision or portion of said provision.

12. Governing Law.

This Agreement shall be construed, interpreted, governed, and enforced in
accordance with the laws of the State of California, without regard to
choice-of-law provisions.

13. Counterparts.

This Agreement may be executed in counterparts and by facsimile, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

14. Binding Effect.

This Agreement will be binding upon, and will inure to the benefit of,
Employee's heirs, executors, and administrators, if any, and will be binding
upon and will inure to the benefit of the individual or collective successors
and assigns of SST , and all of its present and former directors, officers,
employees, shareholders, agents, and all persons acting by, through, or in
concert with any of them.

If this Agreement is acceptable to you, please sign below and return it to me.

We wish you much success in your future endeavors, and appreciate all that you
have done for SST.

Sincerely,

Silicon Storage Technology, Inc.

By: /s/ Bing Yeh
Bing Yeh
President and CEO

 

 

Understood and Agreed:

/s/ Isao Nojima

Isao Nojima

Date: May 16, 2005

527094 v1/HN

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