3704 Zyxel Group: Subsidiary Announces NT$4 Billion Fund Lending to Related Company

Release Date: July 7, 115 Statement Date: July 6, 115 Statement Time: 14:36:12 Company Code: 3704 Company Name: Zyxel Group Subject: Announcement by subsidiary Zyxel Technology Co., Ltd. regarding fund lending to another party, meeting Article 22, Paragraph 1, Clause 3 of the Handling Rules for Fund Lending and Guarantees by Publicly Issued Companies Applicable Clause: Clause 23 Factual Date: July 6, 115

Details: 1. Factual Date: 07/06/115

2. Recipient of Fund Lending: (1) Company Name: Zyxel Communications Corporation (2) Relationship with Lending Company: Sister Company (3) Lending Limit (in thousand NTD): 454,704 (4) Previous Outstanding Balance (in thousand NTD): 0 (5) Amount of New Lending (in thousand NTD): 400,000 (6) Is this a board-authorized revolving or multiple disbursement loan by the chairman to the same borrower: No (7) Outstanding Balance as of Factual Date (in thousand NTD): 400,000 (8) Reason for New Lending: Short-term working capital

3. Collateral Provided by Borrower: (1) Description: No collateral required (2) Value (in thousand NTD): 0

4. Latest Financial Statements of Borrowing Company: (1) Capital (in thousand NTD): 724,500 (2) Accumulated Profits/Losses (in thousand NTD): 780,565

5. Interest Calculation Method: Market annual interest rate of 2% plus interest

6. Repayment Terms: (1) Conditions: Lump-sum repayment at maturity or early repayment (2) Date: One year from actual disbursement date

7. Total Outstanding Fund Lending as of Factual Date (in thousand NTD): 4,721,641

8. Ratio of Total Outstanding Lending to Net Equity in Latest Financial Statements of Publicly Issued Company: 39.98%

9. Source of Fund Lending: Subsidiary's own funds

10. Other Matters to be Disclosed: None