Exhibit 10.17


AMENDED AND RESTATED



LOAN AND SECURITY AGREEMENT


BY AND AMONG


CATHAY BANK


AND


SILICON STORAGE
TECHNOLOGY, INC.

a
California corporation,


SST INTERNATIONAL LTD,

a
cayman islands corporation,


SST RG LLC,

a
delaware limited liability company,


AND


SST COMMUNICATIONS CORP.,

a
delaware corporation


DATED
AS OF AUGUST 11, 2006


 
















TABLE OF CONTENTS


 


	
  

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  Accounting And Other Terms

  	
   

  	
  1

  
	
  2.

  	
  Loan And Terms Of Payment

  	
   

  	
  1

  
	
   

  	
  2.1

  	
   

  	
  Promise to Pay

  	
   

  	
  1

  
	
   

  	
  2.2

  	
   

  	
  Overadvances

  	
   

  	
  2

  
	
   

  	
  2.3

  	
   

  	
  Interest Rate, Payments

  	
   

  	
  2

  
	
   

  	
  2.4

  	
   

  	
  Fees

  	
   

  	
  2

  
	
  3.

  	
  Conditions Of Loans

  	
   

  	
  3

  
	
   

  	
  3.1

  	
   

  	
  Conditions Precedent to Initial Credit Extension

  	
   

  	
  3

  
	
   

  	
  3.2

  	
   

  	
  Conditions Precedent to all Credit Extensions

  	
   

  	
  3

  
	
  4.

  	
  Creation Of Security Interest

  	
   

  	
  3

  
	
   

  	
  4.1

  	
   

  	
  Grant of Security Interest

  	
   

  	
  3

  
	
  5.

  	
  Representations And Warranties

  	
   

  	
  4

  
	
   

  	
  5.1

  	
   

  	
  Due Organization and Authorization

  	
   

  	
  4

  
	
   

  	
  5.2

  	
   

  	
  Collateral

  	
   

  	
  4

  
	
   

  	
  5.3

  	
   

  	
  Litigation

  	
   

  	
  4

  
	
   

  	
  5.4

  	
   

  	
  No Material Adverse Change in Financial Statements

  	
   

  	
  4

  
	
   

  	
  5.5

  	
   

  	
  Solvency

  	
   

  	
  4

  
	
   

  	
  5.6

  	
   

  	
  Regulatory Compliance

  	
   

  	
  4

  
	
   

  	
  5.7

  	
   

  	
  Subsidiaries

  	
   

  	
  5

  
	
   

  	
  5.8

  	
   

  	
  Full Disclosure

  	
   

  	
  5

  
	
  6.

  	
  Affirmative Covenants

  	
   

  	
  5

  
	
   

  	
  6.1

  	
   

  	
  Government Compliance

  	
   

  	
  5

  
	
   

  	
  6.2

  	
   

  	
  Financial Statements, Reports, Certificates, Audits

  	
   

  	
  5

  
	
   

  	
  6.3

  	
   

  	
  Inventory; Returns

  	
   

  	
  6

  
	
   

  	
  6.4

  	
   

  	
  Taxes

  	
   

  	
  6

  
	
   

  	
  6.5

  	
   

  	
  Insurance

  	
   

  	
  6

  
	
   

  	
  6.6

  	
   

  	
  Primary Accounts

  	
   

  	
  6

  
	
   

  	
  6.7

  	
   

  	
  Financial Covenants

  	
   

  	
  6

  
	
   

  	
  6.8

  	
   

  	
  Further Assurances

  	
   

  	
  7

  
	
  7.

  	
  Negative Covenants

  	
   

  	
  7

  
	
   

  	
  7.1

  	
   

  	
  Dispositions

  	
   

  	
  7

  
	
   

  	
  7.2

  	
   

  	
  Changes in Business, Ownership, Management or
  Business Locations

  	
   

  	
  7

  
	
   

  	
  7.3

  	
   

  	
  Mergers or Acquisitions

  	
   

  	
  7

  
	
   

  	
  7.4

  	
   

  	
  Indebtedness

  	
   

  	
  7

  
	
   

  	
  7.5

  	
   

  	
  Encumbrance

  	
   

  	
  7

  
	
   

  	
  7.6

  	
   

  	
  Distributions; Investments

  	
   

  	
  7

  
	
   

  	
  7.7

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  7

  
	
   

  	
  7.8

  	
   

  	
  Subordinated Debt

  	
   

  	
  8

  
	
   

  	
  7.9

  	
   

  	
  Compliance

  	
   

  	
  8

  



 



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  8.

  	
  Events Of Default

  	
   

  	
  8

  
	
   

  	
  8.1

  	
   

  	
  Payment Default

  	
   

  	
  8

  
	
   

  	
  8.2

  	
   

  	
  Covenant Default

  	
   

  	
  8

  
	
   

  	
  8.3

  	
   

  	
  Material Adverse Change

  	
   

  	
  8

  
	
   

  	
  8.4

  	
   

  	
  Attachment

  	
   

  	
  8

  
	
   

  	
  8.5

  	
   

  	
  Insolvency

  	
   

  	
  9

  
	
   

  	
  8.6

  	
   

  	
  Other Agreements

  	
   

  	
  9

  
	
   

  	
  8.7

  	
   

  	
  Judgments

  	
   

  	
  9

  
	
   

  	
  8.8

  	
   

  	
  Misrepresentations

  	
   

  	
  9

  
	
  9.

  	
  Bank’s Rights And Remedies

  	
   

  	
  9

  
	
   

  	
  9.1

  	
   

  	
  Rights and Remedies

  	
   

  	
  9

  
	
   

  	
  9.2

  	
   

  	
  Power of Attorney

  	
   

  	
  10

  
	
   

  	
  9.3

  	
   

  	
  Accounts Collection

  	
   

  	
  10

  
	
   

  	
  9.4

  	
   

  	
  Bank Expenses

  	
   

  	
  10

  
	
   

  	
  9.5

  	
   

  	
  Bank’s Liability for Collateral

  	
   

  	
  10

  
	
   

  	
  9.6

  	
   

  	
  Remedies Cumulative

  	
   

  	
  11

  
	
   

  	
  9.7

  	
   

  	
  Demand Waiver

  	
   

  	
  11

  
	
  10.

  	
  Notices

  	
   

  	
  11

  
	
  11.

  	
  Choice Of Law , Venue And Jury Trial Waiver

  	
   

  	
  11

  
	
  12.

  	
  General Provisions

  	
   

  	
  11

  
	
   

  	
  12.1

  	
   

  	
  Successors and Assigns

  	
   

  	
  11

  
	
   

  	
  12.2

  	
   

  	
  Indemnification

  	
   

  	
  11

  
	
   

  	
  12.3

  	
   

  	
  Time of Essence

  	
   

  	
  12

  
	
   

  	
  12.4

  	
   

  	
  Severability of Provision

  	
   

  	
  12

  
	
   

  	
  12.5

  	
   

  	
  Amendments in Writing, Integration

  	
   

  	
  12

  
	
   

  	
  12.6

  	
   

  	
  Counterparts

  	
   

  	
  12

  
	
   

  	
  12.7

  	
   

  	
  Survival

  	
   

  	
  12

  
	
   

  	
  12.8

  	
   

  	
  Confidentiality

  	
   

  	
  12

  
	
   

  	
  12.9

  	
   

  	
  Attorneys’ Fees, Costs and Expenses

  	
   

  	
  12

  
	
  13.

  	
  Definitions

  	
   

  	
  12

  



 



 ii














 


AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT


This Amended and Restated Loan and Security Agreement
(this “Agreement”) is made and entered into as of August 11, 2006, by and
between CATHAY BANK (“Bank”), and SILICON STORAGE TECHNOLOGY, INC., a California
corporation, SST INTERNATIONAL LTD, SST RG, LLC, and SST COMMUNICATIONS
CORP.  (Collectively “Borrower”).


RECITALS


A.            Borrower
wishes to obtain credit from Bank in the amount of up to Forty Million Dollars
($40,000,000), with a sublimit of a maximum of $8,000,000 of such $40,000,000
to be extended to SST China Ltd.


B.            Subject
to the representations and warranties of Borrower herein and upon the terms and
conditions set forth in this Agreement, Bank is willing to extend credit to
Borrower.


AGREEMENT


NOW THEREFORE, in consideration of the foregoing
recitals and the terms and conditions and agreements contained herein, the
parties hereby agree as follows:


1.             Accounting And Other Terms.


Accounting terms not defined in this Agreement will be
construed following GAAP. Calculations and determinations must be made
following GAAP.  The term “financial
statements” includes the notes and schedules. 
The terms “including” and “includes” always mean “including (or
includes) without limitation,” in this or any Loan Document.


2.             Loan And Terms Of Payment


2.1           Promise to Pay.  Borrower promises to pay Bank the unpaid
principal amount of all Credit Extensions and interest on the unpaid principal
amount of the Credit Extensions.


2.1.1        Revolving Advances.


(a)           Bank will make Advances not exceeding
(i) the lesser of (A) the amount of the Revolving Line; (B) the Borrowing Base
(however, no Borrowing Base is needed if borrowing is less than $20,000,000).
Amounts borrowed under this Section may be repaid and reborrowed during the term
of this Agreement.


(b)           To obtain an Advance, Borrower must
notify Bank by facsimile or telephone by 11:00 a.m. Pacific time on the
Business Day the Advance is to be made if the advance is to be wired out of the
Bank and by 3:00 p.m. Pacific time for disbursement to an account within Cathay
Bank.  Borrower must promptly confirm the
notification by delivering to



 1
 






 



 


Bank the Payment/Advance Form attached as Exhibit
B.  Bank will credit Advances to Borrower’s
deposit account.  Bank may make Advances
under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank
may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank
suffers due to such reliance.


(c)           The Revolving Line terminates on the
Revolving Maturity Date, when all Advances and interest accrued are immediately
payable.


(d)           Bank’s obligation to lend the
undisbursed portion of the Obligations will terminate if, in Bank’s sole
discretion, there has been a material adverse change in the general affairs,
management, results of operation, condition (financial or otherwise) or the
prospect of repayment of the Obligations, or there has been any material
adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank prior to the execution of this Agreement.


2.2           Overadvances.  If Borrower’s Obligations under Section
2.1.1, exceed the lesser of either (i) the Revolving Line or (ii) the Borrowing
Base, Borrower must immediately pay Bank the excess.


2.3           Interest Rate, Payments.


(a)           Interest Rate.  Advances accrue interest on the outstanding
principal balance at a per annum rate of 1 percentage point below the Prime
Rate as published in the Wall Street Journal’s West Coast Edition (and if the
Wall Street Journal is not published, as published in any other reputable
financial publication), floating daily. 
After an Event of Default, as defined in Section 8, Obligations accrue
interest at 5 percent above the Prime Rate effective immediately before the
Event of Default. The interest rate increases or decreases when the Prime Rate
changes.  Interest is computed on a 360
day year for the actual number of days elapsed.


(b)           Payments.  Interest due on the Revolving Line is payable
on the 25th of each month.  Bank may
debit any of Borrower’s deposit accounts including Account Number 12016209 for
principal and interest payments owing or any amounts Borrower owes Bank.  Bank will promptly notify Borrower when it
debits Borrower’s accounts.  These debits
are not a set-off.  Payments received
after 11:00 a.m. Pacific time are considered received at the opening of business
on the next Business Day.  When a payment
is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest accrue.


2.4           Fees.


Borrower
will pay:


(a)           Loan Fee.  A loan fee of $40,000.


(b)           Maintenance Fee.  A maintenance fee of $20,000 to be paid at
the end of each calendar quarter during the term of this Agreement, such
maintenance fee to be waived if Borrower meets any one of the following
conditions:



 2
 






 



 


(i)            Borrower’s average borrowing during
the quarter equals or exceeds twenty percent (20%) of the total commitment of
$40,000,000 during the relevant calendar quarter, of which including Letter of
Credit outstanding.


(ii)           Borrower’s deposits at Bank exceed
$40,000,000 [on average during the relevant calendar quarter], or


(iii)          Or Borrower’s total deposits at Bank
exceed $20,000,000 [on average during the relevant calendar quarter] and fee
income generated by Bank from offering foreign exchange services and
international letter of credit services to Borrower exceed $10,000 during the
relevant calendar quarter.


(iv)          Total maintenance fee will be waived
when total Fee income generated by Bank from offering international letter of
credit services to Borrower equal or exceed $72,000 a year.


(c)           Bank Expenses.  All Bank Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.


(d)           Late Fee.  A late fee of five percent (5%) of any
Obligation due if such Obligation is not paid within the time frame set forth
in Section 8.1 hereof.


3.             Conditions Of Loans.


3.1           Conditions Precedent to Initial
Credit Extension.  Bank’s obligation
to make the initial Credit Extension is subject to the condition precedent that
it receive the agreements, documents and fees it requires.


3.2           Conditions Precedent to all Credit
Extensions.  Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:


(a)           timely receipt of any Payment/Advance
Form; and


(b)           the representations and warranties in
Section 5 must be materially true on the date of the Payment/Advance Form and
on the effective date of each Credit Extension and no Event of Default may have
occurred and be continuing, or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties of Section 5 remain true.


4.             Creation Of Security Interest.


4.1           Grant of Security Interest.  Borrower and each Borrower Subsidiary grants
Bank a continuing security interest in all presently existing and later
acquired Collateral to secure all Obligations and performance of each of
Borrower’s duties under the Loan Documents and each of them hereby authorizes
Bank to execute and file any and all documents necessary to perfect such
security interest granted hereunder. 
Except for Permitted Liens, any security interest will be a first
priority security interest in the Collateral. 
Bank may place a “hold” on any



 3
 






 



 


deposit account pledged as Collateral. If this
Agreement is terminated, Bank’s lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.


5.             Representations And Warranties.  Borrower represents and warrants as follows:


5.1           Due Organization and Authorization.  Borrower is duly existing and in good
standing in its state of formation and qualified and licensed to do business
in, and in good standing in, any state in which the conduct of its business or
its ownership of property requires that it be qualified, except where the
failure to do so could not reasonably be expected to cause a Material Adverse
Change.


The execution, delivery and performance of the Loan
Documents have been duly authorized, and do not conflict with Borrower’s formation
documents, nor constitute an event of default under any material agreement by
which Borrower is bound.  Borrower is not
in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.


5.2           Collateral.  Borrower has good title to the Collateral,
free of Liens except Permitted Liens. 
The Accounts are bona fide, existing obligations, and the service or
property has been performed or delivered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor.  Borrower has no notice of any actual or
imminent Insolvency Proceeding of any account debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  All Inventory is in all material respects of
good and marketable quality, free from material defects.


5.3           Litigation.  Except as shown in the Schedule, there are no
actions or proceedings pending or, to the knowledge of Borrower’s Responsible
Officers, threatened by or against Borrower or any Subsidiary  in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.


5.4           No Material Adverse Change in
Financial Statements.  All
consolidated financial statements for Borrower, and any Subsidiary, delivered
to Bank fairly present in all material respects Borrower’s consolidated
financial condition and Borrower’s consolidated results of operations.  There has not been any material deterioration
in Borrower’s consolidated financial condition since the date of the most
recent financial statements submitted to Bank.


5.5           Solvency.  The fair salable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities and Borrower is able to pay its debts (including trade debts) as
they mature.


5.6           Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company
Act.  Borrower is not engaged as one of
its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws, ordinances
or rules, the violation of which could reasonably be expected to cause a
Material Adverse Change.  None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower
or any Subsidiary or, to the best of Borrower’s knowledge, by



 4
 






 



 


previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally.  Borrower and each Subsidiary has timely filed
all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP.  Borrower and each
Subsidiary has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government authorities
that are necessary to continue its business as currently conducted, except
where the failure to do so could not reasonably be expected to cause a Material
Adverse Change.


5.7           Subsidiaries.  Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.


5.8           Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
(taken together with all such written certificates and written statements to
Bank) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading.  It being recognized
by Bank that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.


6.             Affirmative Covenants.  Borrower will do all of the following for so
long as Bank has an obligation to lend, or there are outstanding Obligations:


6.1           Government Compliance.  Borrower will maintain its and all
Subsidiaries’ legal existence and good standing in its jurisdiction of
formation and maintain qualification in each jurisdiction in which the failure
to so qualify would reasonably be expected to cause a material adverse effect
on Borrower’s business or operations. 
Borrower will comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could have a material adverse effect on Borrower’s business or operations or
would reasonably be expected to cause a Material Adverse Change.


6.2           Financial Statements, Reports,
Certificates, Audits.


(a)           Borrower will deliver to Bank:  (i) as soon as filed with the Securities
and Exchange Commission, but no later than 5 days after the date on which they
are due to be filed with the Securities and Exchange Commission, any and all
quarterly and annual reports filed on Forms 10Q and 10K; (ii) a prompt report
of any legal actions pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any Subsidiary of $100,000
or more; and (iii) budgets, sales projections, operating plans or other
financial information Bank reasonably requests.


(b)           Whenever the balance of the Revolving
Line exceeds $20,000,000 or the Borrower’s liquidity ratio falls below 1.0:1.0,
within 20 days after the last day of each month thereafter, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C, with aged listings of accounts receivable and accounts
payable.



 5
 






 



 


(c)           Within 45 days after the last day of
each quarter, Borrower will deliver to Bank a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit D.


(d)           Borrower will allow Bank’s internal
auditor to audit Borrower’s Collateral and Borrower’s books and records at
Borrower’s expense (not to exceed $2,000) within 60 days of the Closing
Date.  Such audit will be conducted no
more often than once every 12 months unless an Event of Default has occurred
and is continuing.


6.3           Inventory; Returns.  Borrower will keep all Inventory in good and
marketable condition, free from material defects.  Returns and allowances between Borrower and
its account debtors will follow Borrower’s customary practices as they exist at
execution of this Agreement.  Borrower
must promptly notify Bank of all credit only returns, recoveries, disputes and
claims, that involve more than $1,000,000.


6.4           Taxes.  Borrower will make, and cause each Subsidiary
to make, timely payment of all material federal, state, and local taxes or
assessments (other than taxes and assessments which Borrower is contesting in
good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to the payment.


6.5           Insurance.  Borrower will keep its business and the
Collateral insured for risks and in amounts standard for Borrower’s industry,
and as Bank may reasonably request. 
Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank’s reasonable discretion.  All property policies will have a lender’s
loss payable endorsement showing Bank as an additional loss payee and all
liability policies will show the Bank as an additional insured and provide that
the insurer must give Bank at least 20 days notice before canceling its
policy.  At Bank’s request, Borrower will
deliver certified copies of policies and evidence of all premium payments.
Proceeds payable under any policy will, at Bank’s option, be payable to Bank on
account of the Obligations.


6.6           Primary Accounts.  Borrower and SST International, Ltd. will
maintain their primary depository and operating accounts, other than their
primary accounts receivable account, with Bank with the understanding that they
will maintain such arrangement with Bank.


6.7           Financial Covenants.  Borrower will maintain as of the last day of
each month:


(a)           Current Ratio.  A ratio of Current Assets to Current
Liabilities of at least 1.75 to 1.00.


(b)           Maximum Leverage Ratio.  A ratio of Total Liabilities excluding
deferred revenues divided by Tangible Net Worth of no more than 1.50:1.0.


(c)           Minimum Liquidity Ratio.  A ratio of 100% of unrestricted cash (and
equivalents) plus 95% of any government securities held by Borrower and 85% of
investment grade corporate bonds held by Borrower all divided by Indebtedness
of not less than 1.00 to 1.00.



 6
 






 



 


6.8           Further Assurances.  Borrower will execute any further instruments
and take further action as Bank reasonably requests to perfect or continue Bank’s
security interest in the Collateral or to effect the purposes of this
Agreement.


7.             Negative Covenants.  Borrower will not do any of the following
without Bank’s prior written consent, which will not be unreasonably withheld,
for so long as Bank has an obligation to lend or there are any outstanding
Obligations:


7.1           Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property if the value of transfer
exceeds $1,000,000, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; (iii) of worn out or obsolete Equipment.


7.2           Changes in Business, Ownership,
Management or Business Locations. 
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably
related thereto or have a material change in its ownership or management of
greater than 25% (other than by the sale of Borrower’s equity securities in a
public offering or to venture capital investors so long as Borrower identifies
the venture capital investors prior to the closing of the investment).  Borrower will not, without at least 30 days
prior written notice, relocate its chief executive office.


7.3           Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person, except where (i) no Event of
Default has occurred and is continuing or would result from such action during
the term of this Agreement and (ii) such transaction would not result in a
decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.


7.4           Indebtedness.       Create,
incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to
do so, other than Permitted Indebtedness.


7.5           Encumbrance.  Create, incur, or allow any Lien on any of
its Intellectual Property or the Intellectual Property of any Borrower
Subsidiary, except for Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest granted here, subject to
Permitted Liens.


7.6           Distributions; Investments.  Directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so for amount exceed $5,000,000.  Pay any dividends or make any distribution or
payment or redeem, retire or purchase any capital stock for aggregate amount
exceed $5,000,000.


7.7           Transactions with Affiliates.  Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less



 7
 






 



 


favorable to Borrower than would be obtained in an arm’s
length transaction with a nonaffiliated Person.


7.8           Subordinated Debt.  Make or permit any payment on any
Subordinated Debt, without Bank’s prior written consent.


7.9           Compliance.  Become an “investment company” or a company
controlled by an “investment company,” under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business or operations or would reasonably be
expected to cause a Material Adverse Change, or permit any of its Subsidiaries
to do so.


8.             Events Of Default.  Any one of the following is an Event of
Default:


8.1           Payment Default.  If Borrower fails to pay any of the
Obligations within 3 days after their due date (10 days in the case of payment
of interest). Borrower has an additional period of 27 days (an additional 20
days in the case of payment of interest) to attempt to cure the default.  During the additional period the failure to
cure the default is not an Event of Default (but no Credit Extension will be
made during the cure period);


8.2           Covenant Default.  If Borrower does not perform any obligation
in Section 6 or violates any covenant in Section 7; or


If Borrower does not
perform or observe any other material term, condition or covenant in this
Agreement, any Loan Documents, or in any agreement between Borrower and Bank
and as to any default under a term, condition or covenant that can be cured,
has not cured the default within 10 days after it occurs, or if the default
cannot be cured within 10 days or cannot be cured after Borrower’s attempts
within 10 day period, and the default may be cured within a reasonable time,
then Borrower has an additional period (of not more than 30 days) to attempt to
cure the default.  During the additional
time, the failure to cure the default is not an Event of Default (but no Credit
Extensions will be made during the cure period);


8.3           Material Adverse Change.  If there (i) occurs a material adverse change
in the business, operations, or condition (financial or otherwise) of the
Borrower, or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations or (iii) is a material impairment of the value or
priority of Bank’s security interests in the Collateral.


8.4           Attachment.  If any material portion of Borrower’s assets
is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in 10 days, or if
Borrower is enjoined, restrained, or prevented by court order from conducting a
material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower’s assets, or if a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency
and not paid within 10 days after Borrower



 8
 






 



 


receives notice. 
These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions will be made during the cure
period);


8.5           Insolvency.  If Borrower becomes insolvent or if Borrower
begins an Insolvency Proceeding or an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within 30 days (but no Credit Extensions
will be made before any Insolvency Proceeding is dismissed);


8.6           Other Agreements.  If there is a default in any agreement
between Borrower and a third party that gives the third party the right to
accelerate any Indebtedness exceeding $100,000 or that could cause a Material
Adverse Change;


8.7           Judgments.  Except in connection with litigation
identified on the Litigation Schedule, if a money judgement(s) in the aggregate
of at least $500,000 is rendered against Borrower and is unsatisfied and
unstayed for 10 days (but no Credit Extensions will be made before the judgment
is stayed or satisfied);


8.8           Misrepresentations.  If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document; or


9.             Bank’s Rights And Remedies.


9.1           Rights and Remedies.  When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:


(a)           Declare all Obligations immediately
due and payable (but if an Event of Default described in Section 8.5 occurs all
Obligations are immediately due and payable without any action by Bank);


(b)           Stop advancing money or extending
credit for Borrower’s benefit under this Agreement or under any other agreement
between Borrower and Bank;


(c)           Settle or adjust disputes and claims
directly with account debtors for amounts, on terms and in any order that Bank
considers advisable;


(d)           Make any payments and do any acts it
considers necessary or reasonable to protect its security interest in the
Collateral.  Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates.  Bank may enter premises where the Collateral
is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise
any of Bank’s rights or remedies;


(e)           Apply to the Obligations any (i)
balances and deposits of Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower;


 



 9














 


(f)            Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell the
Collateral.  Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower’s
labels, Patents, Copyrights, Mask Works, rights of use of any name, trade
secrets, trade names, Trademarks, service marks, and advertising matter, or any
similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, Borrower’s rights under all licenses
and all franchise agreements inure to Bank’s benefit; and


(g)           Dispose of the Collateral according
to the Code and, as to any Cayman Islands Borrower Subsidiary, any other
applicable Cayman Islands laws.


9.2           Power of Attorney.  Effective only when an Event of Default
occurs and continues, Borrower and each Borrower Subsidiary irrevocably
appoints Bank as its lawful attorney to: 
(i) endorse Borrower’s or any Borrower Subsidiary’s name on any checks
or other forms of payment or security; (ii) sign Borrower’s or any Subsidiary’s
name on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower’s or any
Borrower Subsidiary’s insurance policies; (iv) settle and adjust disputes and
claims about the Accounts directly with account debtors, for amounts and on
terms Bank determines reasonable; and (v) transfer the Collateral into the name
of Bank or a third party as the Code or, as to any Cayman Islands Borrower
Subsidiary, any applicable Cayman Islands laws permit.  Bank may exercise the power of attorney to
sign Borrower’s or any Borrower Subsidiary’s name on any documents necessary to
perfect or continue the perfection of any security interest regardless of
whether an Event of Default has occurred. 
Bank’s appointment as Borrower’s and each Borrower Subsidiary’s attorney
in fact, and all of Bank’s rights and powers, coupled with an interest, are
irrevocable until all Obligations have been fully repaid and performed and Bank’s
obligation to provide Credit Extensions terminates.


9.3           Accounts Collection.  When an Event of Default occurs and
continues, Bank may notify any Person owing Borrower or any Borrower Subsidiary
money of Bank’s security interest in the funds and verify the amount of the
Account.  Borrower and each Borrower
Subsidiary must collect all payments in trust for Bank and, if requested by
Bank, immediately deliver the payments to Bank in the form received from the
account debtor, with proper endorsements for deposit.


9.4           Bank Expenses.  If Borrower fails to pay any amount or
furnish any required proof of payment to third persons, Bank may make all or
part of the payment or obtain insurance policies required in Section 6.5, and
take any action under the policies Bank deems prudent.  Any amounts paid by Bank are Bank Expenses
and immediately due and payable, bearing interest at the then applicable rate
and secured by the Collateral.  No
payments by Bank are deemed an agreement to make similar payments in the future
or Bank’s waiver of any Event of Default.


9.5           Bank’s Liability for Collateral.  If Bank complies with reasonable banking
practices and the Code, it is not liable for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the
value of the Collateral; or (d) any act or



 10
 






 



default of any
carrier, warehouseman, bailee, or other person. 
Borrower and the Borrower Subsidiaries bear all risk of loss, damage or
destruction of the Collateral.


9.6           Remedies Cumulative.  Bank’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative.  Bank has all rights and remedies provided
under the Code, and, as to any Cayman Islands Borrower Subsidiary, by any
applicable Cayman Islands law, by any other law, or in equity. Bank’s exercise
of one right or remedy is not an election, and Bank’s waiver of any Event of
Default is not a continuing waiver. Bank’s delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.


9.7           Demand Waiver.  Borrower and each Borrower Subsidiary waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which Borrower or any Borrower Subsidiary is liable.


10.           Notices.  All notices or demands by any party about
this Agreement or any other related agreement must be in writing and be
personally delivered or sent by an overnight delivery service, by certified
mail, postage prepaid, return receipt requested, or by telefacsimile to the
addresses set forth at the beginning of this Agreement.  A party may change its notice address by
giving the other party written notice.


11.           Choice Of Law , Venue And Jury
Trial Waiver.  California law governs
the Loan Documents without regard to principles of conflicts of law.  Borrower, Bank and each Borrower Subsidiary
each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California.


TO THE EXTENT PERMITTED BY LAW, BORROWER, BANK AND
EACH BORROWER SUBSIDIARY EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS.
THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT.  EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.


12.           General Provisions.


12.1         Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower and each Subsidiary may not assign
this Agreement or any rights under it without Bank’s prior written consent
which may be granted or withheld in Bank’s discretion.  Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement.


12.2         Indemnification.  Borrower will indemnify, defend and hold
harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the



 11
 






 



Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following,
or consequential to transactions between Bank and Borrower (including
reasonable attorneys fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct.


12.3         Time of Essence.  Time is of the essence for the performance of
all obligations in this Agreement.


12.4         Severability of Provision.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.


12.5         Amendments in Writing, Integration.  All amendments to this Agreement must be in
writing and signed by Borrower, each Borrower Subsidiary and Bank.  This Agreement represents the entire
agreement about this subject matter, and supersedes prior negotiations or
agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement
and the Loan Documents.


12.6         Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.


12.7         Survival.  All covenants, representations and warranties
made in this Agreement continue in full force while any Obligations remain
outstanding.  The obligations of Borrower
in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.


12.8         Confidentiality.  In handling any confidential information,
Bank will exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made (i) to Bank’s
subsidiaries or affiliates in connection with their business with Borrower,
(ii) to prospective transferees or purchasers of any interest in the loans
(provided, however, Bank shall use commercially reasonable efforts in obtaining
such prospective transferee or purchasers agreement of the terms of this
provision), (iii) as required by law, regulation, subpoena, or other order,
(iv) as required in connection with Bank’s examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement.  Confidential information does not include
information that either: (a) is in the public domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know
that the third party is prohibited from disclosing the information.


12.9         Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between Borrower
and Bank arising out of the Loan Documents, the prevailing party will be
entitled to recover its reasonable attorneys’ fees and other reasonable costs
and expenses incurred, in addition to any other relief to which it may be
entitled.


13.           Definitions.  In this Agreement:


“Accounts” are all
existing and later arising accounts, contract rights, and other obligations
owed Borrower in connection with its sale or lease of goods (including
licensing



 12
 






 



software and other
technology) or provision of services, all credit insurance, guaranties, other
security and  all merchandise returned or
reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.


“Advance” or “Advances”
is a loan advance (or advances) under the Committed Revolving Line.


“Affiliate” of a Person
is a Person that owns or controls directly or indirectly the Person, any Person
that controls or is controlled by or is under common control with the Person,
and each of that Person’s senior executive officers, directors, partners and,
for any Person that is a limited liability company, that Person’s managers and
members.


“Bank Expenses” are all
UCC search and filing expenses, audit and maintenance fees and expenses and
reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) for preparing, negotiating, administering, defending and enforcing
the Loan Documents (including appeals or Insolvency Proceedings).


“Borrower’s Books” are
all Borrower’s books and records including ledgers, records regarding Borrower’s
assets or liabilities, the Collateral, business operations or financial
condition and all computer programs or discs or any equipment containing the
information.


“Borrowing Base” is 80%
of Eligible Accounts as determined by Bank from Borrower’s most recent
Borrowing Base Certificate plus 25% of Inventory (finished goods only and up to
$10,000,000 of inventory financing); provided, however, that Bank
may lower the percentage of the Borrowing Base after performing an audit of
Borrower’s Collateral.


“Borrower Subsidiary”
shall mean SST International Ltd, SST RG LLC, SST Communications Corp. and SST
China Ltd.


“Business Day” is any day
that is not a Saturday, Sunday or a day on which the Bank is closed.


“Closing Date” is the
date of this Agreement.


“Code” is the Uniform
Commercial Code, as applicable.


“Collateral” is the
property described on Exhibit A.


“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (ii) any obligations
for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices;  but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the



 13
 






 



Contingent Obligation is
made or, if not determinable, the maximum reasonably anticipated liability for
it determined by the Person in good faith; but the amount may not exceed the
maximum of the obligations under the guarantee or other support arrangement.


“Copyrights” are all
copyright rights, applications or registrations and like protections in each
work or authorship or derivative work, whether published or not (whether or not
it is a trade secret) now or later existing, created, acquired or held.


“Credit Extension” is
each Advance or any other extension of credit by Bank for Borrower’s benefit.


“Current Assets” are
amounts that under GAAP should be included on that date as current assets on
Borrower’s consolidated balance sheet.


“Current Liabilities” are
the aggregate amount of Borrower’s Total Liabilities which mature within one
(1) year.


“Eligible Accounts” are
Accounts in the ordinary course of Borrower’s business that meet all Borrower’s
representations and warranties in Section 5; but Bank may change
eligibility standards by giving Borrower notice.  Unless Bank agrees otherwise in writing,
Eligible Accounts will not include:


(a)           Accounts
that the account debtor has not paid within 61 days of invoice date;


(b)           Accounts
for an account debtor, 50% or more of whose Accounts have not been paid within
61 days of invoice date;


(c)           Credit
memos over 61 days from invoice date;


(d)           Accounts
for an account debtor, including Affiliates, whose total obligations to
Borrower exceed 15% of all Accounts (net of inter company, Affiliates accounts,
and returned bad debt reserves and adjustments), for the amounts that exceed
that percentage, unless the Bank approves in writing except for those certain
Accounts from Silicon Professional Technology, for which the percentage may be
up to 50% ;


(e)           Accounts
for which the account debtor is a federal, state or local government entity or
any department, agency, or instrumentality;


(f)            Accounts
for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or
credit accounts);


(g)           Accounts
for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other
terms if account debtor’s payment may be conditional;



 14
 






 



(h)           Accounts
for which the account debtor is Borrower’s Affiliate, officer, employee, or
agent;


(i)            Accounts
in which the account debtor disputes liability or makes any claim and Bank
believes there may be a basis for dispute (but only up to the disputed or
claimed amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business;


(j)            Intercompany
accounts; and


(k)           Accounts
for which Bank reasonably determines collection to be doubtful.


“Equipment” is all
present and future machinery, equipment, tenant improvements, furniture,
fixtures, vehicles, tools, parts and attachments in which Borrower has any
interest.


“ERISA” is the Employment
Retirement Income Security Act of 1974, and its regulations.


“GAAP” is generally
accepted accounting principles.


“Indebtedness” is
(a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures or
similar instruments, (c) capital lease obligations and (d) Contingent
Obligations.


“Insolvency Proceeding”
are proceedings by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.


“Intellectual
Property” is:


(a)           Copyrights,
Trademarks, Patents, and Mask Works including amendments, renewals, extensions,
and all licenses or other rights to use and all license fees and royalties from
the use;


(b)           Any
trade secrets and any intellectual property rights in computer software and
computer software products now or later existing, created, acquired or held;


(c)           All
design rights which may be available to Borrower now or later created, acquired
or held;


(d)           Any
claims for damages (past, present or future) for infringement of any of the
rights above, with the right, but not the obligation, to sue and collect damages
for use or infringement of the intellectual property rights above;



 15
 






 



All proceeds and products of the foregoing, including
all insurance, indemnity or warranty payments.


“Inventory” is present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or later owned by or in the custody or
possession, actual or constructive, of Borrower, including inventory
temporarily out of its custody or possession or in transit and including
returns on any accounts or other proceeds (including insurance proceeds) from
the sale or disposition of any of the foregoing and any documents of title.


“Investment” is any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.


“Lien” is a mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.


“Loan Documents” are, collectively, this Agreement,
any note, or notes or guaranties executed by Borrower or Guarantor, and any
other present or future agreement between Borrower and/or for the benefit of
Bank in connection with this Agreement, all as amended, extended or restated.


“Mask Works” are all mask works or similar rights
available for the protection of semiconductor chips, now owned or later
acquired.


“Material Adverse Change” is described in Section 8.3.


“Obligations” are debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, including cash
management services, letters of credit and foreign exchange contracts, if any
and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank.


“Patents” are patents, patent applications and like
protections, including improvements, divisions, continuations, renewals,
reissues, extensions and continuations in part of the same.


“Permitted Indebtedness” is:


(e)           Borrower’s
indebtedness to Bank under this Agreement or any other Loan Document;


(f)            Indebtedness
existing on the Closing Date and shown on the Schedule;


(g)           Subordinated
Debt;


(h)           Indebtedness
to trade creditors incurred in the ordinary course of business; and



 16
 






 



(i)            Indebtedness
secured by Permitted Liens.


(j)            Other Indebtedness,
excluding listed above, not exceeding an aggregate of US$1,000,000


“Permitted Investments” are:


(k)            Investments shown on the Investment
Schedule and existing on the Closing Date; and


(l)             marketable
direct obligations issued or unconditionally guaranteed by the United States or
its agency or any State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 1 year after its creation and having the highest
rating from either Standard & Poor’s Corporation or Moody’s Investors
Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more
than 1 year after issue.


“Permitted Liens” are:


(j)            Liens
existing on the Closing Date and shown on the Schedule or arising under this
Agreement or other Loan Documents;


(k)           Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank’s
security interests;


(l)            Purchase
money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries
incurred for financing the acquisition of the Equipment, or (ii) existing on
equipment when acquired, if the Lien is confined to the property and
improvements and the proceeds of the equipment;


(m)          Licenses
or sublicenses granted in the ordinary course of Borrower’s business and any
interest or title of a licensor or under any license or sublicense, if the
licenses and sublicenses permit granting Bank a security interest;


(n)           Leases
or subleases granted in the ordinary course of Borrower’s business, including
in connection with Borrower’s leased premises or leased property;


(o)           Liens
incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness may not increase.


“Person” is any individual, sole proprietorship,
partnership, limited liability company, joint venture, company association,
trust, unincorporated organization, association, corporation, institution,
public benefit corporation, firm, joint stock company, estate, entity or
government agency.



 17
 






 



“Prime Rate” is the variable rate of interest, per
annum, that is reported by the Wall Street Journal, Western Edition, from time
to time as the “Prime Rate.”


“Responsible Officer” is each of the Chief Executive
Officer, the President, and the Chief Financial Officer of Borrower.


“Revolving Line” is a Credit Extension of up to
$40,000,000 (subject to an $8,000,000 sublimit maximum for SST China Ltd.)
subject to participation of $20,000,000.


“Revolving Maturity Date” is August 11, 2007.


“Schedule” is any attached schedule of exceptions.


“Subordinated Debt” is debt incurred by Borrower
subordinated to Borrower’s indebtedness owed to Bank and which is reflected in
a written agreement in a manner and form acceptable to Bank and approved by
Bank in writing.


“Subsidiary” is for any Person, or any other business
entity of which more than 50% of the voting stock or other equity interests is
owned or controlled, directly or indirectly, by the Person or one or more
Affiliates of the Person.


“Tangible Net Worth” is, on any date, the consolidated
total assets of Borrower and its Subsidiaries minus, (i) any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, Patents, trade and service marks and names, Copyrights
and research and development expenses except prepaid expenses, and (c) reserves
not already deducted from assets, and (ii) Total Liabilities.


“Total Liabilities” is on any day, obligations that
should, under GAAP, be classified as liabilities on Borrower’s consolidated
balance sheet, including all Indebtedness.



 18
 






 



“Trademarks” are trademark and servicemark rights,
registered or not, applications to register and registrations and like
protections, and the entire goodwill of the business of Assignor connected with
the trademarks.


	
  

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON STORAGE TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  Vice President Finance & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  SST INTERNATIONAL LTD

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SST RG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  CFO & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SST COMMUNICATIONS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  CFO & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
  CATHAY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 



 19














 


EXHIBIT A


The Collateral consists
of all of the right, title and interest of Borrower and each Borrower
Subsidiary in and to the following:


All goods and equipment
now owned or hereafter acquired, including, without limitation, all machinery,
fixtures, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located;


All inventory, now owned
or hereafter acquired, including, without limitation, all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrower’s
custody or possession or in transit and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above;


All contract rights and general
intangibles now owned or hereafter acquired, including, without limitation,
goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent
applications, leases, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights
to payment of any kind;


All now existing and
hereafter arising accounts, contract rights, royalties, license rights and all
other forms of obligations owing to Borrower or any Borrower Subsidiary,
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower  or any
Borrower Subsidiary, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower or by any Borrower Subsidiary;


All documents, cash,
deposit accounts, securities, securities entitlements, securities accounts,
investment property, financial assets, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower’s or any Borrower Subsidiary’s Books relating to the foregoing;


All Borrower’s or any
Borrower Subsidiary’s Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.


Notwithstanding the
foregoing, the Collateral shall not be deemed to include any copyrights,
copyright applications, copyright registration and like protection in each work
of authorship and derivative work thereof, whether published or unpublished,
now owned or hereafter acquired; any patents, patent applications and like
protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same, trademarks, servicemarks and applications therefor, whether registered or
not, and the goodwill of the business of Borrower or of any Borrower
Subsidiary,



 1
 






 



connected with and
symbolized by such trademarks, any trade secret rights, including any rights to
unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; or
any claims for damage by way of any past, present and future infringement of
any of the foregoing (collectively, the “Intellectual Property”), except that
the Collateral shall include the proceeds of all the Intellectual Property that
are accounts, (i.e. accounts receivable) of Borrower or of any Borrower
Subsidiary or general intangibles consisting of rights to payment, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest
in such accounts and general intangibles of Borrower or of any Borrower
Subsidiary that are proceeds of the Intellectual Property, then the Collateral
shall automatically, and effective as of the Closing Date, include the
Intellectual Property to the extent necessary to permit perfection of Bank’s
security interest in such accounts and general intangibles of Borrower or of
any Borrower Subsidiary that are proceeds of the Intellectual Property.



 2














 


Loan
Payment/Advance Request Form


DEADLINE FOR SAME DAY PROCESSING IS 11:00 A.M.
P.S.T.


	
  FAX TO:

  	
   

  	
  DATE:

  	
   

  	
   

  



 


○ Loan Payment:


 


Sample documents  Silicon Storage Technology, Inc. (Borrower)


 


	
  From Account # 

  	
   

  	
   

  	
  To Account # 

  	
   

  
	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
  Loan Account #)

  



 


Principal
$                                
and/or Interest
$                                



 


All Borrower’s
representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone
transfer request for and advance, but those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of the date:


 


	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  



 


 


○  LOAN ADVANCE:


 


Complete Outgoing Wire Request
section below if all or a portion of the funds from this loan advance are for
an outgoing wire.


 


	
  From Account #

  	
   

  	
   

  	
  To Account # 

  	
   

  
	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
  (Loan Account #)

  



 


Principal
$                                
and/or Interest
$                                



 


All Borrower’s
representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone
transfer request for and advance, but those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of the date:


 


	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  



 


 


OUTGOING WIRE REQUEST


 


Complete only if all or a portion
of funds from the loan advance above are to be
wired.


 


Deadline for same day processing is 11:00 am, P.S.T.


 


	
  Beneficiary Name:

  	
   

  	
   

  	
  Amount of Wire: 

  	
  $

  	
   

  
	
  Beneficiary Bank:

  	
   

  	
   

  	
  Account Number:

  	
   

  	
   

  
	
  City and Sate:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Beneficiary Bank Transit (ABA) #:

  	
   

  	
   

  	
   

  	
  Beneficiary Bank Code (Swift, Sort, Chip, etc.):

  	
   

  



 


(For
International Wire Only)


 


	
  Intermediary
  Bank:

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  



 


	
  For Further Credit to:

  	
   

  
	
  Special Instruction:

  	
   

  



 


By signing below, I (we) acknowledge and agree that
my (our) funds transfer request shall be processed in accordance with and subject
to the terms and conditions set forth in the agreements(s) covering funds
transfer service(s), which agreements(s) were previously received and executed
by me (us).


 


	
  Authorized Signature:

  	
   

  	
   

  	
  2nd Signature (If
  Required):

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
  Print Name/Title:

  	
   

  
	
  Telephone #

  	
   

  	
   

  	
  Telephone #

  	
   

  



 















 


	
  Telephone #

  	
   

  	
   

  	
  Facsimile #

  	
   

  



 


EXHIBIT C

BORROWING BASE CERTIFICATE


	
  

  
	
   

  
	
  Borrower: Silicon Storage Technology, Inc.

  	
   

  	
  Bank:

  	
   

  	
  Cathay Bank

  20195 Stevens Creek Boulevard

  Suite 100

  Cupertino, California 95014

  
	
  Commitment Amount:       $40,000,000
  (Subject to reduction and sublimits)

  	
   

  	
   

  	
   

  	
   

  
	
   

  



 


	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable
  Book Value as of          

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Additions (please
  explain on reverse)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE
  DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 61 days
  due

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Balance of 50% over 61
  day accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Credit balances over 61
  days

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Concentration Limits*

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Contra Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Promotion or Demo
  Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Consignment Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Government Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Other (please explain
  on reverse)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
  15.

  	
   

  	
  Total Eligible Accounts
  Receivable (Line 3 minus Line 14)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Total Inventory as of:           

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Ineligible Inventory

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Total Eligible
  Inventory (Line 16 minus Line 17)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Account Receivable
  Availability at 80% of Line 15

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Inventory Availability
  at 25% of Line 18 and up to $10,000,000

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Maximum Loan Amount

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Total Funds Available
  (Lesser of Line 19 + Line 20 or Line 21)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
  23.

  	
   

  	
  Present balance owing
  on Line of Credit

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Outstanding under
  Sublimits (LC or FX)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  RESERVE POSITION (Line 22 minus Line 230 and Line 0)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  



 


The
undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Cathay Bank.


	
  

  	
  BANK
  USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
  Rec'd By:

  	
   

  
	
   

  	
   

  	
  Auth. Signer

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
  Auth. Signer

  
	
   

  	
  Date:

  	
   

  



 















 


COMMENTS:


 


Silicon Storage Technology, Inc.


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer

  	
   

  



 


*The amounts of accounts of any customer in excess
of 15% of net accounts receivable (net of inter-company, affiliates’ accounts,
return of bad debt reserve and adjustments), with an exception allowed up to
50% for Silicon Professional Technology.


 



 2














 


EXHIBIT D

COMPLIANCE CERTIFICATE


	
  TO:

  	
   

  	
  Cathay Bank

  
	
   

  	
   

  	
  20195 Stevens Creek Boulevard, Suite 100

  
	
   

  	
   

  	
  Cupertino, California 95014

  
	
  FROM:

  	
   

  	
  Silicon Storage Technology, Inc.

  



 


The undersigned
authorized officer of Silicon Storage Technology, Inc. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                                 
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date.  Attached
are the required documents supporting the certification.  The Officer certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes.  The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.


Please indicate compliance status by circling
Yes/No under “Complies” column.




	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly financial statements + CC

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes     No

  
	
  10-K (Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes     No

  
	
  A/R & A/P
  Agings

  	
   

  	
  Monthly within 20 days*

  	
   

  	
  Yes     No

  
	
  A/R Audit

  	
   

  	
  Annual

  	
   

  	
  Yes     No

  
	
  Borrowing Base Certificate

  	
   

  	
  Monthly within 20 days*

  	
   

  	
  Yes     No

  






 




	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Current
  Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  
	
  Minimum
  Liquidity Ratio

  	
   

  	
  1.00:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  
	
  Maximum Leverage
  Ratio

  	
   

  	
  1.50:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  






 


	
  Have there been updates to
  Borrower’s intellectual property, if appropriate?

  	
   

  	
  Yes  /  No

  	
   

  



 









 



 


	
  

  	
   

  	
  BANK
  USE ONLY

  
	
  Comments Regarding Exceptions:  See Attached.

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Silicon Storage Technology, Inc.

  	
   

  	
  Verified: 

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  BY:

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:

  	
  Yes    No

  
	
  TITLE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								



 















 


Litigation Schedule


In
January and February 2005, multiple putative shareholder class action
complaints were filed against SST and certain directors and officers, in the
United States District Court for the Northern District of California, following
our announcement of anticipated financial results for the fourth quarter of
2004.  On March 24, 2005, the putative
class actions were consolidated under the caption In re Silicon Storage
Technology, Inc., Securities Litigation, Case No. C 05 00295 PJH (N.D. Cal.).  On May 3, 2005, the Honorable Phyllis J.
Hamilton appointed the “Louisiana Funds Group,” consisting of the Louisiana
School Employees’ Retirement System and the Louisiana District Attorneys’
Retirement System, to serve as lead plaintiff and the law firms of Pomeranz
Haudek Block Grossman & Gross LLP and Berman DeValerio Pease Tabacco Burt
& Pucillo to serve as lead counsel and liason counsel, respectively, for
the class.  The lead plaintiff filed a
Consolidated Amended Class Action Complaint on July 15, 2005.  The complaint seeks unspecified damages on
alleged violations of federal securities laws during the period from April 21,
2004 to December 20, 2004.  Responses to
the Consolidated Amended Class Action Complaint are presently scheduled to be
due on September 16, 2005.  We intend to
take all appropriate action in response to these lawsuits.  The impact related to the outcome of these
matters is undeterminable at this time.


In
January and February 2005, following the filing of the putative class actions,
multiple shareholder derivative complaints were filed in California Superior
Court for the County of Santa Clara, purportedly on behalf of SST against
certain directors and officers.  The
factual allegations of these complaints are substantially identical to those
contained in the putative shareholder class actions filed in federal
court.  The derivative complaints assert
claims for, among other things, breach of fiduciary duty and violations of the
California Corporations Code.  These
derivative actions have been consolidated under the caption In Re Silicon
Storage Technology, Inc. Derivative Litigation, Lead Case No. 1:05CV034387
(Cal. Super. Ct., Santa Clara Co.).  We
intend to take all appropriate action in response to these lawsuits.  The impact related to the outcome of these
matters is undeterminable at this time.


On July
13, 2006, a shareholder derivative complaint was filed in the United States
district Court for the Northern district of California by Mike Brien under the
caption Brien v. Yeh, et al., Case No. C06-04310 JF (N.D. Cal.).  On July 18, 2006, a shareholder derivative
complaint was filed in the United States District court for the northern
District of California by Behrad Bazargani under the caption Bazargani v. Yeh,
et al., Case No. C06-04388 HRL (N.D. Cal.). 
Both complaints were brought purportedly on behalf of us against certain
of our current and former officers and directors and allege among other things,
that the named officers and directors: (a) breached their fiduciary duties as they
colluded with each other to backdate stock options, (b) violated Rule 10b-5 of
the Securities Exchange Act of 1934 through their alleged actions, and (c) were
unjustly enriched by their receipt and retention of such stock options.  We intend to take all appropriate action in
responding to the complaints.















 


Investment Schedule


Silicon
Storage Technology, Inc.


Investment
at June 30, 2006


	
   

  	
   

  	
  # shares

  	
   

  	
  Carried

  	
   

  	
  Carried

  	
   

  	
  Closing Price

  	
   

  
	
   

  	
   

  	
  SST owned

  	
   

  	
  Investment

  	
   

  	
  Investment

  	
   

  	
  in NT$ @

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  in Total $

  	
   

  	
  Per Share in US$

  	
   

  	
  6/30/2006

  	
   

  
	
  Common Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KYE (King Yuan
  Electronics Corp.)

  	
   

  	
  3,937,828

  	
   

  	
  $

  	
  1,299,460

  	
   

  	
  $

  	
  0.3300

  	
   

  	
  NTD 27.20

  	
   

  
	
  PTI (Powertech
  Technology, Inc.)

  	
   

  	
  5,482,580

  	
   

  	
  $

  	
  1,759,986

  	
   

  	
  $

  	
  0.3210

  	
   

  	
  NTD 96.10

  	
   

  
	
  PCT Limited
  (Professional Computer Technology, Limited)

  	
   

  	
  7,346,226

  	
   

  	
  $

  	
  2,330,262

  	
   

  	
  $

  	
  0.3172

  	
   

  	
  NTD 33.80

  	
   

  
	
  Insyde Software Corp.

  	
   

  	
  1,533,401

  	
   

  	
  $

  	
  455,513

  	
   

  	
  $

  	
  0.2971

  	
   

  	
  NTD 31.20

  	
   

  
	
  Silicon Technology Co.,
  Ltd.

  	
   

  	
  250,000

  	
   

  	
  $

  	
  938,967

  	
   

  	
  $

  	
  3.7559

  	
   

  	
   

  	
   

  
	
  APACER (Apacer
  Technology Inc.)

  	
   

  	
  9,927,280

  	
   

  	
  $

  	
  4,357,240

  	
   

  	
  $

  	
  0.4389

  	
   

  	
   

  	
   

  
	
  GSMC (Grace
  Semiconductor Manufacturing Corporation)

  	
   

  	
  113,000,000

  	
   

  	
  $

  	
  83,150,000

  	
   

  	
  $

  	
  0.7358

  	
   

  	
   

  	
   

  
	
  Acorn Campus Asia Fund
  I, L.P.

  	
   

  	
  666,666

  	
   

  	
  $

  	
  866,872

  	
   

  	
  $

  	
  1.3003

  	
   

  	
   

  	
   

  
	
  ACET (Advanced Chip
  Engineering Technology, Inc.)

  	
   

  	
  6,056,391

  	
   

  	
  $

  	
  1,772,036

  	
   

  	
  $

  	
  0.2926

  	
   

  	
   

  	
   

  
	
  EoNex (EoNex
  Technologies, Inc.)

  	
   

  	
  19,950

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  $

  	
  150.3759

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Convertible Bonds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PCT Limited
  (Professional Computer Technology, Limited)

  	
   

  	
  1,485,493

  	
   

  	
  $

  	
  1,721,376

  	
   

  	
  $

  	
  1.16

  	
   

  	
  NTD 33.80

  	
   

  
	
  Insyde Software Corp.

  	
   

  	
   

  	
   

  	
  $

  	
  132,705

  	
   

  	
   

  	
   

  	
  NTD 31.20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Note:
SST has a pending investment project of NT $520M for ACET in Q3, 2006