QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.1  




 
 

CONTRIBUTION AGREEMENT    
    


among:



SPECIALTYSEMI, INC.,

a Delaware corporation; 


CONEXANT SYSTEMS, INC.,

a Delaware corporation; 


and 


CARLYLE CAPITAL INVESTORS, L.L.C.,

a Delaware limited liability company. 






Dated as of February 23, 2002 





   

    





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 







 
TABLE OF CONTENTS



	 
	 	 
	 	 
	 	Page

	

1.	
 	

CONTRIBUTION OF ASSETS; RELATED TRANSACTIONS.	
 	

2
	

 	
 	

1.1	
 	

Contributions by Conexant.	
 	

2
	

 	
 	

1.2	
 	

Cash Contribution by Carlyle.	
 	

2
	

 	
 	

1.3	
 	

Consideration for Membership Interests and Cash.	
 	

2
	

 	
 	

1.4	
 	

Earn-Out Payments.	
 	

3
	

 	
 	

1.5	
 	

Royalties.	
 	

4
	

 	
 	

1.6	
 	

Sales Taxes.	
 	

5
	

 	
 	

1.7	
 	

Closing.	
 	

6
	

2.	
 	

REPRESENTATIONS AND WARRANTIES OF CONEXANT.	
 	

6
	

 	
 	

2.1	
 	

Due Organization; Authority; Binding Nature of Agreements.	
 	

6
	

 	
 	

2.2	
 	

Tangible Assets.	
 	

7
	

 	
 	

2.3	
 	

Inventory.	
 	

7
	

 	
 	

2.4	
 	

Contracts.	
 	

7
	

 	
 	

2.5	
 	

Intellectual Property.	
 	

8
	

 	
 	

2.6	
 	

Employee Matters.	
 	

10
	

 	
 	

2.7	
 	

Compliance with Legal Requirements.	
 	

12
	

 	
 	

2.8	
 	

Governmental Authorizations.	
 	

12
	

 	
 	

2.9	
 	

Environmental Matters.	
 	

13
	

 	
 	

2.10	
 	

Proceedings; Orders.	
 	

13
	

 	
 	

2.11	
 	

Non-Contravention; Consents.	
 	

14
	

 	
 	

2.12	
 	

Absence of Certain Changes or Events.	
 	

14
	

 	
 	

2.13	
 	

Financial Information.	
 	

15
	

 	
 	

2.14	
 	

Suppliers.	
 	

15
	

 	
 	

2.15	
 	

Taxes.	
 	

15
	

 	
 	

2.16	
 	

No Brokers.	
 	

17
	

 	
 	

2.17	
 	

Real Property.	
 	

17
	

 	
 	

2.18	
 	

Affiliated Transactions.	
 	

17
	

 	
 	

2.19	
 	

Sufficiency of Assets.	
 	

17
	

 	
 	

2.20	
 	

Newport Fab Contribution Agreement.	
 	

17
	

 	
 	

2.21	
 	

Liabilities.	
 	

17
	

 	
 	

2.22	
 	

Consummation of the Newport Fab Contribution.	
 	

17





i





 

	

 	
 	

2.23	
 	

Membership Interests.	
 	

17
	

 	
 	

2.24	
 	

Newport Fab LLC.	
 	

18
	

 	
 	

2.25	
 	

The Warrant.	
 	

18
	

3.	
 	

REPRESENTATIONS AND WARRANTIES OF CARLYLE.	
 	

18
	

 	
 	

3.1	
 	

Due Organization; Authority; Binding Nature of Agreements.	
 	

18
	

 	
 	

3.2	
 	

Non-Contravention; Consents.	
 	

18
	

4.	
 	

COVENANTS OF THE PARTIES.	
 	

19
	

 	
 	

4.1	
 	

Conduct of Business.	
 	

19
	

 	
 	

4.2	
 	

Access to Information.	
 	

21
	

 	
 	

4.3	
 	

Filings and Consents.	
 	

21
	

 	
 	

4.4	
 	

No Solicitation.	
 	

21
	

 	
 	

4.5	
 	

Notification.	
 	

22
	

 	
 	

4.6	
 	

Bulk Transfer Laws.	
 	

22
	

 	
 	

4.7	
 	

Publicity.	
 	

22
	

 	
 	

4.8	
 	

Reasonable Best Efforts.	
 	

22
	

 	
 	

4.9	
 	

[...***...]	
 	

22
	

 	
 	

4.10	
 	

Tax Matters.	
 	

22
	

 	
 	

4.11	
 	

Update of Schedules.	
 	

24
	

 	
 	

4.12	
 	

[...***...]	
 	

24
	

 	
 	

4.13	
 	

Newport Fab Contribution Agreement.	
 	

24
	

 	
 	

4.14	
 	

[...***...]	
 	

24
	

5.	
 	

CONDITIONS PRECEDENT TO CONEXANT'S OBLIGATION TO CLOSE.	
 	

24
	

 	
 	

5.1	
 	

Accuracy of Representations.	
 	

24
	

 	
 	

5.2	
 	

Performance of Obligations.	
 	

24
	

 	
 	

5.3	
 	

Governmental Approvals.	
 	

24
	

 	
 	

5.4	
 	

Governmental Proceedings.	
 	

25
	

 	
 	

5.5	
 	

Receipt of Consideration.	
 	

25
	

 	
 	

5.6	
 	

Certificates.	
 	

25
	

 	
 	

5.7	
 	

Agreements to be Delivered.	
 	

25
	

 	
 	

5.8	
 	

Warrant.	
 	

25
	

6.	
 	

CONDITIONS PRECEDENT TO CARLYLE'S OBLIGATION TO CLOSE.	
 	

25
	

 	
 	

6.1	
 	

Accuracy of Representations.	
 	

25
	

 	
 	

6.2	
 	

Performance of Obligations.	
 	

25







Confidential treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the
confidentiality request. Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange
Commission. 


ii





 


	

 	
 	

6.3	
 	

Governmental Proceedings.	
 	

25
	

 	
 	

6.4	
 	

Consents and Replacement Contracts.	
 	

25
	

 	
 	

6.5	
 	

Governmental Approvals.	
 	

26
	

 	
 	

6.6	
 	

Material Adverse Effect.	
 	

26
	

 	
 	

6.7	
 	

Inventory.	
 	

26
	

 	
 	

6.8	
 	

Employment.	
 	

26
	

 	
 	

6.9	
 	

Company Bank Account.	
 	

26
	

 	
 	

6.10	
 	

Certificates.	
 	

26
	

 	
 	

6.11	
 	

Agreements to be Delivered.	
 	

26
	

 	
 	

6.12	
 	

Conveyancing Documents.	
 	

26
	

 	
 	

6.13	
 	

Warrant.	
 	

26
	

7.	
 	

TERMINATION.	
 	

26
	

 	
 	

7.1	
 	

Termination Events.	
 	

26
	

 	
 	

7.2	
 	

Termination Procedures.	
 	

27
	

 	
 	

7.3	
 	

Effect of Termination.	
 	

27
	

 	
 	

7.4	
 	

Nonexclusivity of Termination Rights.	
 	

27
	

8.	
 	

INDEMNIFICATION, ETC.	
 	

27
	

 	
 	

8.1	
 	

Survival of Representations and Warranties.	
 	

27
	

 	
 	

8.2	
 	

Indemnification by Conexant.	
 	

28
	

 	
 	

8.3	
 	

Indemnification by the Company.	
 	

29
	

 	
 	

8.4	
 	

Indemnification by Carlyle.	
 	

29
	

 	
 	

8.5	
 	

Setoff.	
 	

30
	

 	
 	

8.6	
 	

Defense of Third Party Claims.	
 	

30
	

 	
 	

8.7	
 	

Sole and Exclusive Remedy.	
 	

31
	

 	
 	

8.8	
 	

Exercise of Remedies by Indemnitees other than Parties to this Agreement.	
 	

31
	

 	
 	

8.9	
 	

Additional Procedures Relating to Environmental Claims.	
 	

31
	

 	
 	

8.10	
 	

Additional Indemnification by Conexant	
 	

31
	

9.	
 	

COVENANTS OF THE PARTIES AFTER THE CLOSING.	
 	

32
	

 	
 	

9.1	
 	

Access to Information.	
 	

32
	

 	
 	

9.2	
 	

Election Out of Installment Method.	
 	

32
	

 	
 	

9.3	
 	

Certain Agreements Concerning the Specified Excluded Assets.	
 	

32





iii





 

	

10.	
 	

MISCELLANEOUS PROVISIONS.	
 	

32
	

 	
 	

10.1	
 	

Publicity.	
 	

32
	

 	
 	

10.2	
 	

Further Assurances.	
 	

33
	

 	
 	

10.3	
 	

Fees and Expenses.	
 	

33
	

 	
 	

10.4	
 	

Attorneys' Fees.	
 	

33
	

 	
 	

10.5	
 	

Notices.	
 	

33
	

 	
 	

10.6	
 	

Time of the Essence.	
 	

34
	

 	
 	

10.7	
 	

Headings.	
 	

34
	

 	
 	

10.8	
 	

Governing Law.	
 	

34
	

 	
 	

10.9	
 	

Successors and Assigns; Parties in Interest.	
 	

34
	

 	
 	

10.10	
 	

Remedies Cumulative; Specific Performance.	
 	

35
	

 	
 	

10.11	
 	

Waiver.	
 	

35
	

 	
 	

10.12	
 	

Amendments.	
 	

35
	

 	
 	

10.13	
 	

Severability.	
 	

35
	

 	
 	

10.14	
 	

Counterparts.	
 	

35
	

 	
 	

10.15	
 	

Entire Agreement.	
 	

35
	

 	
 	

10.16	
 	

Construction.	
 	

35
	

 	
 	

10.17	
 	

No Implied Licenses.	
 	

36
	

 	
 	

10.18	
 	

Dispute Resolution; Arbitration.	
 	

36




iv





 
CONTRIBUTION AGREEMENT  


        THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into as
of February 23, 2002, by and among: SPECIALTYSEMI, INC., a Delaware corporation (the
"Company"); CONEXANT SYSTEMS, INC., a Delaware corporation
("Conexant"); and CARLYLE CAPITAL INVESTORS, L.L.C., a Delaware limited liability company
("Carlyle"). Certain capitalized terms used in this Agreement are defined in Exhibit A. 


RECITALS  


        WHEREAS, the Conexant Group Companies currently conduct, and historically have conducted, semiconductor wafer
fabrication and manufacturing operations at Conexant's Newport Beach California facilities (the "Wafer Fabrication Operations"), which operations
include (i) the semiconductor wafer fabrication and probing operations located at the facilities surrounding, or physically housed in, either in part or in whole, Buildings 501, 503 and
505 located at 4311 Jamboree Road, Newport Beach, California (buildings 503 and 505 being referred to collectively as the "El Capitan
Buildings") and (ii) certain research and development, design support service and other support operations ("Wafer Fabrication Support
Operations"); 


        WHEREAS, (i) Conexant wishes to contribute to the Company, and the Company wishes Conexant to contribute to the Company, all of the
membership interests of Newport Fab, LLC, a Delaware limited liability company and a wholly owned Subsidiary of Conexant ("Newport Fab LLC"), and the
Warrant (as defined below) and (ii) Carlyle wishes to contribute to the Company cash in the amounts specified herein, each in exchange for shares of Common Stock of the Company as part of a
plan pursuant to Section 351 of the Code; and 


        WHEREAS, in connection with the transactions contemplated by this Agreement, (i) the Company, Conexant and Carlyle will enter into
(1) a Stockholder Agreement in the form of Exhibit B hereto (the "Stockholders Agreement")
which, among other things, sets forth the agreements relating to the operations of the Company and the rights and obligations of Conexant and Carlyle as stockholders of the Company and (2) a
Registration Rights Agreement in the form of Exhibit C hereto (the "Registration Rights
Agreement") setting forth certain rights of registration of the Company's capital stock; (ii) the Company, Newport Fab LLC and Conexant will enter into: (1) one
or more License Agreements in the form agreed to by both parties (the "License Agreements") pursuant to which, among other things, Conexant will
transfer or license certain technology and intellectual property rights to the Company; (2) a Long Term Supply Agreement in the form of  Exhibit D hereto (the "Long-Term Supply Agreement") pursuant to which, among other
things, the Company shall supply wafers to Conexant; (3) Real Property Lease Agreements in the forms agreed to by both parties (the "Real Property Lease
Agreements") pursuant to which, among other things, the Company will lease the wafer fabrication facilities located in Newport Beach, California from Conexant; (4) a
Transition Services Agreement in the form agreed to by both parties (the "Transition Services Agreement") pursuant to which Conexant and the Company
will agree to the sharing and transitioning of certain support services related to the Wafer Fabrication Operations; (5) an IT Services Agreement in the form agreed to by the parties (the  "IT Services
Agreement") pursuant to which Conexant will provide certain information technology support services to the Company, and (6) an
Employee Matters Agreement in the form of Exhibit E hereto (the "Employee Matters Agreement");
(iii) the Company will enter into Employment Agreements with certain key employees of Conexant listed on Schedule 6.8(a) to be hired by the Company in the form agreed upon by the parties
(the "Key Employees"); and (iv) the Company and Carlyle will enter into (1) a Management Services Agreement in the form of  Exhibit F hereto (the "Carlyle Management Services Agreement") pursuant to which Carlyle will
perform certain management services for the Company, and (2) agreements in the form of Exhibit G hereto (the  "Carlyle Management Rights
Agreements"), pursuant to which Carlyle will have certain rights with respect to management of the Company; and
(v) the Company and Conexant will enter into (1) a Management Services Agreement in the form of Exhibit H hereto (the  "Conexant Management Services
Agreement") pursuant to which 


1





 



Conexant
will perform certain management services for the Company and (2) agreements in the form of Exhibit I hereto (the
"Conexant Management Rights Agreements" and, together with the Carlyle Management Rights Agreements, the "Management Rights
Agreements") pursuant to which Conexant will have certain rights with respect to management of the Company. 


AGREEMENT  


        NOW, THEREFORE, the parties to this Agreement, intending to be legally bound, agree as follows: 


1.    CONTRIBUTION OF ASSETS; RELATED TRANSACTIONS.



        1.1    Contributions by Conexant.    Conexant shall contribute, assign, transfer, convey and deliver to the Company,
and the Company shall accept from Conexant, at the Closing (as defined in Section 1.7), good and valid title to the Membership Interests, which Membership Interests represent one hundred
percent (100%) of the membership and other interests in Newport Fab LLC, free and clear of any Encumbrances, on the terms and subject to the conditions set forth in this Agreement. In addition, at the
Closing, Conexant shall issue to the Company a warrant (the "Warrant") to purchase up to an aggregate of 2,900,000 shares of Conexant's Common Stock (the "Warrant Shares"). The Warrant shall
(i) be exercisable according to a schedule agreed upon by the parties, (ii) have an exercise price per share agreed upon by the parties, (iii) expire on a date agreed upon by the
parties, and (iv) be in such form, and contain such other terms and conditions (including without limitation provisions regarding registration of the shares issuable upon exercise of the
Warrant), as may be agreed to by the parties. 


        1.2    Cash Contribution by Carlyle.    Carlyle shall contribute to the Company, and the Company shall accept from
Carlyle, at the Closing, cash in the amount of fifty-two million dollars ($52,000,000). Such cash contribution shall be made by wire transfer of immediately available funds made payable to
the order of the Company. 


        1.3    Consideration for Membership Interests and Cash.    



         (a)   Subject to the satisfaction or waiver of the conditions set forth in Sections 5 and 6, as consideration for the contribution of the
Membership
Interests and the Warrant by Conexant to the Company set forth in Section 1.1 above, the Company shall: 



        (i)    at the Closing, issue 4,500,000 shares of Class B Common Stock, par value $0.001 per share, of the Company, to Conexant,
representing
45.0% of the total shares of Common Stock of the Company outstanding immediately after the Closing; 


         (ii)   at the Closing, pay to the order of Conexant, by wire transfer of immediately available funds, cash in the amount of twenty million
dollars
($20,000,000) (the "Cash Consideration"); 


        (iii)   at the Closing, guarantee the timely discharge or satisfaction by Newport Fab LLC of the Assumed Liabilities; 


         (iv)  pay to the order of Conexant, by wire transfer of immediately available funds, cash equal to the amount of the Earn-Out Payment (as
and to the extent provided by Section 1.4), if and when earned; and 



        (v)   pay to the order of Conexant, by wire transfer of immediately available funds, cash equal to the amount of the Royalties (as and to the
extent
provided by Section 1.5), if and when earned. 




         (b)   Subject to the satisfaction or waiver of the conditions set forth in Sections 5 and 6, as consideration for the cash contribution of
Carlyle to
the Company set forth in Section 1.2 above, the Company shall issue 5,500,000 shares of Class A Common Stock of the Company to Carlyle, 



2





 

representing
55.0% of the total shares of Common Stock of the Company outstanding immediately after the Closing. 




        1.4    Earn-Out Payments.    



         (a)   As partial consideration for the contribution by Conexant to the Company of the Membership Interests and the Warrant as contemplated by
Section 1.1(a), the Company shall pay to Conexant cash in the amount of [...***...] (the "Earn-Out
Payment"), as provided in Section 1.4(d), if either: 



         (i)    the Specialtysemi Group Companies' total Revenue (as defined in Section 1.4(b)) during the period commencing on the first
anniversary of
the Closing Date and ending 12 months thereafter is equal to or greater than eighty-five million dollars ($85,000,000); or 



        (ii)   the Specialtysemi Group Companies' total Revenue during the period commencing on the second anniversary of the Closing Date and ending
12 months thereafter is equal to or greater than one hundred five million dollars ($105,000,000). 




         (b)   For purposes of this Section 1.4, "Revenue" for any
period shall
mean that revenue, determined in accordance with GAAP, including nonrecurring engineering revenue ("NRE Revenue"), of the Specialtysemi Group Companies,
derived during such period from sales of products (including all revenue derived from engineering lots ("E-Lot Revenue")) and services of
the types produced by or provided through, in each case either currently or in the future, the Wafer Fabrication Operations as such operations are currently conducted by the Conexant Group Companies
and as will be conducted by the Specialtysemi Group Companies after the Closing (taking into account any
revenue resulting from the expansion of the capacity of Wafer Fabrication Operations located in the El Capitan Buildings after the Closing) as well as any revenue derived from sales to customers of
the Specialtysemi Group Companies through the Specialtysemi Group Companies' other fabrication operations as a result of the Specialtysemi Group Companies not being able to satisfy such customers from
the then manufacturing capacity of the Wafer Fabrication Operations (all such products and services being referred to herein as the "Products");  provided
however that Revenue shall exclude: (i) any revenue of the Specialtysemi Group Companies derived or earned from the sale of Products to
(1) Conexant, (2) any Person who is an Affiliate of Conexant as of the date hereof, or (3) any Affiliate of Conexant that is formed by Conexant after the date hereof from
Conexant's current assets and operations, (ii) any revenue of the Specialtysemi Group Companies derived from businesses that are acquired by the Specialtysemi Group Companies after the Closing
Date (to the extent such businesses are not used to increase the capacity of the Wafer Fabrication Operations located in the El Capitan Buildings), (iii) any revenue of the Specialtysemi Group
Companies derived from assets acquired (other than equipment acquired pursuant to ordinary course capital expenditures and other than any assets that are employed in the Wafer Fabrication Operations
located in the El Capital Building), or Subsidiaries formed (to the extent such Subsidiaries are not deriving revenue from the sale of Products), by the Specialtysemi Group Companies after the
Closing, (iv) any amounts received or realized in respect of dispositions of assets (other than sales of Products) or any other non-recurring or extraordinary items, (v) mask
revenues, and (vi) revenues derived from the sale of Products pursuant to the Long-Term Supply Agreement; provided that all revenue derived from the sale of Products to Persons
other than Conexant, Affiliates of Conexant as of the date hereof and Affiliates of Conexant formed by Conexant after the date hereof from Conexant's current assets and operations pursuant to the
Long-Term Supply Agreement at the Basic Price (as defined in the Long-Term Supply Agreement) shall be included in the definition of "Revenue." 


         (c)   In the event Conexant shall be entitled to the Earn-Out Payment under Section 1.4(a)(i), then no further Earn-Out
Payment shall be due under Section 1.4(a)(ii), and the total amount of the Earn-Out Payment due under Section 1.4(a) shall not exceed [...***...]. 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


3





 

         (d)   In the event Conexant shall be entitled to the Earn-Out Payment, the Company shall make such payment to Conexant no later than
[...***...]. In the event such payment is not to be made by the Company, then the Company shall provide to Conexant, on the dates set forth in the preceding sentence, a report
(the "Revenue Report") reflecting the amount and sources (on a product-by-product basis) of Revenue received by the
Specialtysemi Group Companies for the calendar year to which the Revenue Report relates. Conexant shall have [...***...] from the date the Revenue Report is received by
Conexant to dispute the amount of Revenue reflected thereon. If Conexant disputes the amount of Revenue reflected on the Revenue Report, Conexant and the Company shall negotiate in good faith to
reconcile their differences. If such dispute has not been resolved within [...***...] after the Company's receipt of notice of such dispute, the parties shall submit the
item(s) remaining in dispute to a mutually acceptable Independent Accounting Firm, which shall, as promptly as practical but in no event later than [...***...] after such
submission, determine the total Revenue received by the Specialtysemi Group Companies during the period in dispute. The Company shall provide the Independent Accounting Firm access to all books and
records of the Specialtysemi Group Companies necessary or reasonably requested by the Independent Accounting Firm and will assist the Independent Accounting Firm in completing their report in a timely
fashion. [...***...]. 




        1.5    Royalties.    



         (a)   As partial consideration for the contribution by Conexant to the Company of the Membership Interests as contemplated by Section 1.1
(a),
the Specialtysemi Group Companies or any Specialtysemi Group Successor shall, subject to Section 8.10 hereof, pay to Conexant a royalty equal to five percent (5%) of the Gross Revenue of the
Specialtysemi Group Companies or any Specialtysemi Group Successor, as applicable, derived or earned from the sale of SiGe Products; provided, however,
that (i) no such royalties will be due for sales that occur more than ten (10) years after the Closing Date and (ii) no royalties will be due for sales by any Specialtysemi Group
Successor other than sales (directly or indirectly through any Subsidiary) to third party customers. (As used herein, the term "sale" shall include
leases, licenses, and all other dispositions of SiGe Products but shall not include proceeds from the disposition of SiGe Products in connection with the sale of any business or the sale of all or
substantially all of the assets of any business or business unit.) 


         (b)   For the purposes of this Section 1.5, "SiGe Products" shall mean each product
that, as of
the Closing Date, is manufactured, or for which a prototype has been developed, by the Wafer Fabrication Operations, in whole or in part, with the use of silicon germanium (SiGe) specialty process
technology or Intellectual Property assigned, licensed or transferred to the Newport Fab LLC by Conexant or any improvements to or future versions of such technology or Intellectual Property developed
by or on behalf of the Specialtysemi Group Companies or any Specialtysemi Group Successor (other than such improvements or future versions purchased, acquired or obtained by license by the
Specialtysemi Group Companies for value following the Closing Date); and "Gross Revenue" shall mean all revenue of the Specialtysemi Group Companies or
any Specialtysemi Group Successor, determined in accordance with GAAP, derived or earned from sales of the SiGe Products and including E-Lot Revenue; provided
that Gross Revenue shall exclude: (i) any revenue of the Specialtysemi Group Companies derived or earned from the sale of SiGe Products to (1) Conexant,
(2) any Person who is an Affiliate of Conexant as of the date hereof, or (3) any Affiliate of Conexant that is formed by Conexant after the
date hereof from Conexant's current assets and operations, (ii) any amounts received (1) in respect of dispositions of any property or assets other than SiGe Products, or (2) from
non-recurring or extraordinary items, (iii) mask revenues, (iv) any NRE Revenue, (v) any incremental revenue that is earned from the sale of SiGe Products with
features that are the result of the implementation of Intellectual Property that was not assigned, licensed or transferred to the Newport Fab LLC by Conexant and (vi) any revenue derived from
any sales pursuant to the Long-Term Supply Agreement; provided 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


4





 

that
all revenue derived from the sale of SiGe Products to Persons other than Conexant, Affiliates of Conexant as of the date hereof and Affiliates of Conexant formed by Conexant after the date hereof
from Conexant's current assets and operations pursuant to the Long-Term Supply Agreement at the Basic Price (as defined in the Long-Term Supply Agreement) shall be included in
the definition of "Gross Revenue." "Specialtysemi Group Successor" shall mean any entity that acquires all or substantially all of the assets and
properties of the Company and its Subsidiaries, taken as a whole. 


         (c)   Within thirty (30) days after the end of each calendar quarter, the Company shall submit to Conexant a quarterly royalty report
containing
a statement of the royalties owed to Conexant under this Section 1.5 and such other information as specified by Conexant prior to preparation of such report reasonably necessary to show how the
amount of such royalties was calculated. Payment of the royalties owed to Conexant shall be due along with the report. The Company shall maintain complete and accurate books and records, prepared in
accordance with GAAP, relating to all sales of SiGe Products, including purchase orders and acknowledgments, invoices and receipts, for a period of at least five (5) years from the date of the
sale. No more than once per year, Conexant will have the right, upon reasonable advance notice to the Company and so as not to unduly interfere with the Specialtysemi Group Companies' operations, to
have a mutually acceptable Independent Accounting Firm inspect and audit the Specialtysemi Group Companies' books and records to determine whether the Specialtysemi Group Companies have accurately
reported and paid the royalties owed to Conexant in any one or more of the preceding two calendar years under this Section 1.5. Notwithstanding the foregoing, Conexant shall not be entitled to
audit any year prior to the two preceding years and shall not be entitled to audit any specific year more than once. The Company shall provide to the Independent Accounting Firm access to all of the
books and records of the Specialtysemi Group Companies
necessary or reasonably requested by the Independent Accounting Firm and will assist the Independent Accounting Firm in completing the audit in a timely fashion. In the event the audit reveals that
the Company owes any additional amounts to Conexant, then subject to the Company's right to dispute such amounts as provided below, the Company shall, within five (5) business days of the
completion of the audit, pay to Conexant, in immediately available funds, all such amounts. Conexant shall pay the fees and expenses of the Independent Accounting Firm in connection with any such
audit, unless the audit reveals that the Company has underreported or underpaid the amount of royalties owed to Conexant by five percent (5%) or more over the period of time being audited in which
case the Company shall pay the fees and expenses of the Independent Accounting Firm. Both the Company and Conexant shall have fifteen (15) days from the date the audit is received by them to
dispute the amount of the royalties reflected thereon. If either party disputes the amount of royalties reflected on the audit then the Company and Conexant shall resolve such dispute in accordance
with Section 10.18 hereto. 




        1.6    Sales Taxes.    Conexant shall be responsible for, and shall pay and reimburse the Specialtysemi Group
Companies, Carlyle, and/or their Affiliates (other than the Specialtysemi Group Companies), as applicable, for, any sales taxes, use taxes, transfer taxes, documentary charges, recording fees, stamp
taxes or similar taxes, charges, fees or expenses (collectively "Sales and Transfer Taxes") that may become payable in connection with the contributions
of Membership Interests and cash to the Company as contemplated hereby and the consummation of the transactions contemplated by the Newport Fab Contribution Agreement. The Company and Conexant shall
cooperate with each other in timely making all filings, returns, report and forms as may be required in connection with the payment of all Sales and Transfer Taxes, including but not limited to
delivering all instruments and certificates as are necessary to minimize such Sales and Transfer Taxes and enable the other to timely comply with the filing of any Tax Return that relates to Sales and
Transfer Taxes. 


5





 

        1.7    Closing.    



         (a)   The closing of the transactions contemplated by Sections 1.1, 1.2 and 1.3 and the other transactions contemplated hereby (the
"Closing") shall take place at the offices of Cooley Godward llp, located at 4401 Eastgate Mall, San Diego, California, at 9:00 a.m. (Pacific
Standard Time) no later than the second (2nd) business day after the last of the conditions set forth in Sections 5 and 6 has been satisfied or waived or such other date, time or place
as mutually agreed between the parties. For purposes of this Agreement, "Closing Date" shall mean the date as of which the Closing actually takes place. 


         (b)   At the Closing: 



        (i)    Conexant shall execute and deliver to the Company such endorsements, assignments and other documents as may (in the reasonable
judgment of
Carlyle) be necessary or appropriate to assign, convey, transfer and deliver to the Company the Membership Interests; 


         (ii)   Carlyle shall pay to the Company the sum, in cash, of $52,000,000, by wire transfer of immediately available funds to a bank account in
the
United States to be designated by the Company to Carlyle at least two business days prior to the Closing; 



        (iii)   the Company shall pay to Conexant the sum, in cash, of $20,000,000, by wire transfer of immediately available funds to a bank
account in the United States to be designated by Conexant to the Company at least two business days prior to the Closing; 


         (iv)  each of the parties to the Transactional Agreements shall execute and deliver such agreements to the other parties thereto; 


         (v)   Conexant and the Company shall execute and deliver to each other an Assignment and Assumption Guarantee Agreement in the form reasonably
acceptable to Conexant, Carlyle and the Company (the "Assignment and Assumption Agreement"); 


         (vi)    the Company shall issue to Conexant and Carlyle certificates evidencing the shares of Common Stock contemplated by
Section 1.3; and 


         (vii)   Conexant shall execute and deliver to the Company the Warrant. 





2.    REPRESENTATIONS AND WARRANTIES OF CONEXANT. 



        Conexant
represents and warrants to, and for the benefit of, the Company, Carlyle and the other Carlyle Indemnitees, as follows: 


        2.1    Due Organization; Authority; Binding Nature of Agreements.    Conexant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Conexant has the requisite corporate power and authority to own the Membership Interests, and Newport Fab LLC has the requisite
corporate power and authority to own, lease and operate the Contributed Assets. Each of the Conexant Group Companies has the requisite corporate power and authority to enter into, deliver, and perform
its obligations under each of the Transactional Agreements to which it is a party and the Newport Fab Contribution Agreement; and the execution, delivery and performance by each of the Conexant Group
Companies of the Transactional Agreements to which it is a party and the Newport Fab Contribution Agreement have been duly authorized by all necessary action on the part of each of such Conexant Group
Company and its board of directors, and no other corporate proceedings on the part of any of the Conexant Group Companies are necessary to authorize the Transactional Agreements and the Newport Fab
Contribution Agreement and the transactions contemplated thereby. This Agreement and the Newport Fab Contribution Agreement have been duly executed and delivered by Conexant, and constitute the legal,
valid and binding obligation of Conexant, and enforceable against Conexant in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or
other similar Legal Requirements affecting the enforcement of 


6





 



creditors'
rights generally and by general principles of equity relating to enforceability. Upon the execution of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements to which any of the Conexant Group Companies is a party will constitute the legal, valid and binding obligation of each of the Conexant Group Companies that is a party
thereto, enforceable against such Conexant Group Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or other similar Legal Requirements
affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability. 


        2.2    Tangible Assets.    Newport Fab LLC owns, and has good and valid title to all of the Contributed Assets (other
than the Transferred Contracts). Except as set forth in Part 2.2(a) of the Conexant Disclosure Schedule, all of the Contributed Assets owned by Newport Fab LLC are owned free and clear of any
Encumbrances, other than Permitted Encumbrances. Part 2.2(b) of the Conexant Disclosure Schedule identifies all of the Contributed Assets that are leased or licensed to the Conexant group
Companies. All material Tangible Personal Property is in good operating condition and repair in all material respects, subject to normal wear and tear. No Conexant Group Company has any agreement with
any other Person to sell or otherwise transfer any of the Contributed Assets or any line of business or material asset required for the performance of Conexant's obligations under the Transactional
Agreements, except for any sales or transfers of finished goods. The Tangible Personal Property, collectively with any tangible personal property owned by the Conexant Group Companies and used in the
provision of services to be provided to the Specialtysemi Group Companies pursuant to the Transition Services Agreement and the IT Services Agreement, constitute all of the material tangible personal
property used by the Conexant Group Companies and the Transferred Employees in the ordinary course of conduct of the Wafer Fabrication Operations. Since January 1, 2001, except as otherwise set
forth in Part 2.2(c) of the Conexant Disclosure Schedule, no Conexant Group Company has (i) sold, transferred or conveyed any material tangible personal property used in the ordinary
course of conduct of the Wafer Fabrication Operations, or (ii) removed any material items of tangible personal property from the blue shaded areas on the floor plan building schematics for
Buildings 503 and 505 located at 4311 Jamboree Road, Newport Beach, California attached hereto as Schedule 1.1(a)(i)(2), in each case, other than the sale of finished goods (and the raw
materials and inventory comprising the finished goods) in the ordinary course of business and the disposition of obsolete or worn-out equipment. 


        2.3    Inventory.    The Inventory is of such quality and quantity as to be usable and saleable by the Conexant Group
Companies in the ordinary course of business, and is free of any defect or deficiency. The levels of Inventory maintained by the Conexant Group Companies (i) are not excessive in light of the
Conexant Group Companies' normal operating requirements for the Wafer Fabrication Operations and (ii) are adequate for the conduct of the Wafer Fabrication Operations as conducted by the
Conexant Group Companies in the ordinary course of business. The Inventory to be included in the Contributed Assets shall have a book value, determined in accordance with Conexant's past practices, of
no less than [...***...]. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


7





 

        2.4    Contracts.    



         (a)   Part 2.4(a) of the Conexant Disclosure Schedule lists each Contract to which any Conexant Group Company is a party and which is used
in
connection with or relate to the conduct of the Wafer Fabrication Operations as currently conducted by the Conexant Group Companies. Part 2.4(b) of the Conexant Disclosure Schedule lists each
Contract to which any Conexant Group Company is a party that relates solely to the Wafer Fabrication Operations and which is transferable with consent of the other party thereto by Conexant to Newport
Fab LLC in connection with the transactions contemplated by the Newport Fab Contribution Agreement (the "Transferred Contracts"). Each of the
Transferred Contracts requires that Conexant obtain the Consent of the other party thereto in order to be transferred to the Newport Fab LLC. Part 2.4(c) of the Conexant Disclosure Schedule
lists each Contract to which any Conexant Group Company is a party related in part to the Wafer Fabrication Operations (the "Shared Contracts"). The
Transferred Contracts and the Shared Contracts are collectively referred to herein as the "Wafer Fabrication Operations Contracts." Conexant has made
available to Carlyle accurate and complete copies of all Wafer Fabrication Operations Contracts, including all amendments thereto. The Wafer Fabrication Operations Contracts include all of the
material Contracts (other than any Contracts related to the license of intellectual property) necessary to conduct the Wafer Fabrication Operations as such operations are being conducted by the
Conexant Group Companies as of the date hereof and include all the material Contracts reasonably necessary to enable the Specialtysemi Group Companies to conduct the Wafer Fabrication Operations in
the manner in which such business is currently being conducted by the Conexant Group Companies. Each Transferred Contract is valid and in full force and effect. Except as set forth in
Part 2.4(e) of the
Conexant Disclosure Schedule: (i) no Person has violated or breached, or declared or committed any default under, any Transferred Contract; (ii) no event has occurred that has or would
reasonably be expected to (A) result in a violation or breach of any of the provisions of any Transferred Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Transferred Contract, (C) give any Person the right to accelerate the maturity or performance of any Transferred Contract, or (D) give any Person the right to cancel,
terminate or modify any Transferred Contract; (iii) the Conexant Group Companies have not received any written notice or other communication regarding any violation or breach of, or default
under, any Transferred Contract; (iv) no Conexant Group Company has knowingly waived any right under any Transferred Contract; and (v) neither any Conexant Group Company nor any of its
Affiliates has, and to the knowledge of Conexant no other Person has, repudiated any material provision of any of the Transferred Contracts. 


         (b)   To the knowledge of the Conexant Group Companies, the performance of the Transferred Contracts will not result in any violation of or
failure to
comply with any material Legal Requirement. 


         (c)   No Person is renegotiating, or has the right to renegotiate, any amount paid or payable to the Conexant Group Companies under any
Transferred
Contract or any other term or provision of any Transferred Contract. 


        (d)   The Conexant Group Companies have no knowledge of any basis upon which any party to any Transferred Contract may object to (i) the
assignment to the Newport Fab LLC or the Specialtysemi Group Companies of any right under such Transferred Contract, or (ii) the delegation to or performance by the Specialtysemi Group
Companies of any obligation under such Transferred Contract, except for those Transferred Contracts that require the consent of such third party thereto prior to any such assignment, delegation or
performance, all of which are identified on Part 2.4(b) of the Conexant Disclosure Schedule. 



8





 





        2.5    Intellectual Property.    



         (a)   Schedule 1.1(a)(vi)(2) is a complete and accurate list of all patents and patent applications owned by the Conexant Group Companies
that
are primarily related to the Process Technology used in the Wafer Fabrication Operations. Schedule 2.5(a) is a complete and accurate list of all patent and patent applications (other than the
patents and patent applications listed on Schedule 1.1(a)(vi)(2)) owned by the Conexant Group Companies related to the Process Technology used in the Water Fabrication Operations. None of the
Excluded Patent Rights is primarily related to the Process Technology used in the Wafer Fabrication Operations. 


         (b)   The Newport Fab LLC owns, and has good and valid title to, all of the Transferred Intellectual Property, free and clear of any
Encumbrances other
than Permitted Encumbrances and other than licenses granted by Conexant or its predecessors or any previous owner of the Transferred Intellectual Property prior to the date of this Agreement. 


         (c)   Conexant has taken reasonable steps in accordance with normal industry practice to protect the Conexant Group Companies' rights in the
portions
of the Transferred Know-How that: (1) derive independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain
economic value from its disclosure or use; and (2) are the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Without limiting the foregoing, all
Intellectual Property developed by any contractor or employee of the Conexant Group Companies during the course of their employment and constituting a part of the Transferred Intellectual Property has
been fully assigned to Conexant. 


         (d)   None of the Transferred Patents is involved in any interference or opposition proceeding, and, to the Knowledge of the Conexant Group
Companies,
no such proceeding is being threatened with respect to any of the Transferred Patents. 


         (e)   Part 2.5(e) of the Conexant Disclosure Schedule contains a complete and accurate list, and except as set forth in Part 2.5(e)
of
the Conexant Disclosure Schedule, Conexant has provided to Carlyle or its representatives complete and accurate copies, of all material licenses under or to the Transferred Intellectual Property
granted by the Conexant Group Companies or by Conexant's predecessors or any other previous owner of the Transferred Intellectual Property. Any licenses that are no longer valid or in effect will not
be considered material for purposes of this representation and warranty. There is no pending or, to the Knowledge of the Conexant Group Companies, threatened dispute concerning any license listed in
Part 2.5(e) of the Conexant Disclosure Schedule. 


         (f)    Part 2.5(f) of the Conexant Disclosure Schedule contains a complete and accurate list, and, except as set forth in
Part 2.5(f) of
the Conexant Disclosure Schedule, Conexant has provided to Carlyle or its representatives complete and accurate copies, of all material intellectual property licenses granted to the Conexant Group
Companies or, to the Knowledge of Conexant, any of their predecessors, that relate to the Process Technology used in the Wafer Fabrication Operations or the Design Kits and under which any of the
Conexant Group Companies has rights. Any licenses that are no longer valid or in effect will not be considered material for purposes of this representation and warranty. There is no pending or, to the
Knowledge of the Conexant Group Companies, threatened dispute concerning any license listed in Part 2.5(f) of the Conexant Disclosure Schedule. 



        (g)   Part 2.5(g) of the Conexant Disclosure Schedule contains a complete and accurate list of all software licensed to any of the Conexant
Group Companies by third parties that is used in or for and is material to the Wafer Fabrication Operations, other than (i) software used in other parts of Conexant's business operations, the
use of which by or on behalf of the Specialtysemi Group Companies is addressed in the IT Transition Services Agreement and (ii) software that is commercially available on standard terms for
less than [...***...], and the agreement or agreements pursuant to which such software is licensed to the Conexant Group Companies. True and correct copies of such license
agreements (other than any shrinkwrap or clickwrap licenses) have been provided to Carlyle. There is no pending or, to the Knowledge of Conexant, threatened dispute concerning any of the Conexant
Group Companies' licenses for such software and other copyrights. 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


9







  



         (h)   As of the Closing Date, Conexant will have full right, power and authority to grant to the Specialtysemi Group Companies the licenses to
be
granted any of the Specialtysemi Group Companies in the License Agreements. No approval, permission or consent of any third party will be needed for Conexant to grant such licenses. 



        (i)    Except as set forth in Part 2.5(i) of the Conexant Disclosure Schedule, since December 31, 1998, none of the Conexant
Group
Companies has received any written notice or claim alleging that the conduct of the Wafer Fabrication Operations, as currently conducted, infringes, misappropriates, or violates any Intellectual
Property of a third party (other than any claims relating to the design, structure, performance or functionality of specific devices or other products manufactured at the Newport Beach Fab Facility,
as opposed to the process used to fabricate the device or product). Except as set forth in Part 2.5(i) of the Conexant Disclosure Schedule, there is not now nor at any time since
December 31, 1998 have there been any pending or, to the Knowledge of Conexant, threatened Proceeding involving any such claims or allegations. To the Knowledge of the Conexant Group Companies,
no third party is infringing, misappropriating, or violating any of the Transferred Intellectual Property or Licensed Intellectual Property (other than the Intellectual Property of third parties
sublicensed by Conexant to the Specialtysemi Group Companies), and since December 31, 1998, no Conexant Group Company has asserted any claims or initiated any Proceedings against any third
party based on any such infringement, misappropriation, or violation of the Transferred Intellectual Property. To the Knowledge of the Conexant Group Companies, the conduct of the Wafer Fabrication
Operations, as currently conducted, does not infringe, misappropriate, or violate any Intellectual Property of a third party (other than Intellectual Property related to the design, structure,
performance or functionality of specific devices or other products manufactured at the Newport Beach Fab Facility, as opposed to the process used to fabricate the device or product). 


         (j)    The Transferred Intellectual Property and the Licensed Intellectual Property, along with (1) all rights granted or transferred
under
Transferred Contracts, (2) any express rights granted or transferred to the Specialtysemi Group Companies, and any implied rights the Specialtysemi Group Companies may have, under the
Long-Term Supply Agreement and other agreements relating to the supply of products by the Specialtysemi Group Companies to Conexant, Conexant Subsidiaries or Conexant Spin-Offs
(as defined in the Long-Term Supply Agreement), and (3) "have made" rights of Conexant, Conexant Subsidiaries and Conexant Spin-Offs under third party Intellectual
Property licenses, (i) collectively constitute all Intellectual Property rights owned or controlled by the Conexant Group Companies related to the Process Technology and Design Kits currently
practiced or used in the Wafer Fabrication Operations and (ii) collectively include all Intellectual Property Rights owned or controlled by the Conexant Group Companies that are sufficient to
permit the Specialtysemi Group Companies to conduct the Wafer Fabrication Operations as currently conducted. 



        (k)   [...***...] 


        (l)    [...***...] 


         (m)  [...***...] 


         (n)   [...***...] 




        2.6    Employee Matters.    



        (a)   Part 2.6(a)(i) of the Conexant Disclosure Schedule sets forth the name and position with Conexant of (i) each employee of
Conexant whose services are related to the Wafer Fabrication Operations that is covered by the Collective Bargaining Agreement (the 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


10





 

"Union Employees"), and (ii) each other employee of Conexant whose services are related to the Wafer Fabrication Operations that is not covered
by or subject to the Collective Bargaining Agreement (the "Non-Union Employees"). The Union Employees and the Non-Union
Employees are collectively referred to herein as the "Wafer Fabrication Operations Employees". Except as set forth on Part 2.6(a)(ii) of
the Conexant Disclosure Schedule, (1) Conexant is not a party to any labor, collective bargaining agreement, union, or other similar agreement covering any of the Wafer
Fabrication Operations Employees, (2) there are not occurring or, to Conexant's knowledge, threatened, and there have not been within the last [...***...], any strikes,
slowdowns, work stoppages, or other organized efforts by union or other groups of employees against Conexant and the Wafer Fabrication Operations Employees, (3) to the knowledge of Conexant, no
union or other labor organization has attempted to organize any Wafer Fabrication Operations employees except as set forth in Part 2.6(a)(ii) of the Conexant Disclosure Schedule,
(4) to Conexant's knowledge, Conexant has not committed any unfair labor practices, (5) Conexant is currently in compliance with all applicable Legal Requirements relating to the
employment of the Wafer Fabrication Operations Employees, including those related to wages, hours, collective bargaining, labor, and the payment and withholding of taxes and other sums required to be
withheld, (6) Conexant has paid in full to all Wafer Fabrication Operations Employees all amounts currently due and payable for wages, salaries, commissions, bonuses, benefits and other
compensation, and (7) to Conexant's knowledge, no Wafer Fabrication Operations Employee is in violation of any employment contract, nondisclosure agreement, noncompetition agreement, or
nonsolicitation agreement to which such employee is bound due to the activities in which such employee engages on behalf of Conexant. 



        (b)   Part 2.6(b) of the Conexant Disclosure Schedule sets forth all employee benefit plans, as such term is defined in Section 3(3)
of
ERISA (including without limitation medical, dental, health, life insurance) in which all or any of the Wafer Fabrication Operations Employees are entitled to participate and true and correct copies
of each such plan have been provided or otherwise made available by Conexant to Carlyle (each such plan, an "Employee Plan"). Conexant has provided the
Company a true and correct copy of the actuarial report related to the Retirement Plan. 



        (c)   Conexant has delivered to Carlyle complete and accurate copies of the Retirement Plan and the documents relating to the trust established
in
connection with the Retirement Plan. To Conexant's knowledge, Conexant is, and has been, in compliance with all applicable material Legal Requirements related to the Retirement Plan except the
requirement to furnish a summary plan description to participants and beneficiaries as required under ERISA Sections 102 and 104. Conexant has made all contributions or other payments that are
required to have been made under or with respect to the Retirement Plan. Conexant shall pay to the Company a portion of the contributions required to be made under or with respect to the Retirement
Plan for 2002. Such portion will be determined by dividing the number of days beginning January 1, 2002 and ending on May 1, 2002 by 365 and multiplying that fraction by the amount of
any contribution required to be made by the Company under or respect to the Retirement Plan for 2002. Conexant shall pay such prorated amount and the balance of the 2001 minimum contribution within
30 days of receipt of an invoice from the Company. No Person that is or was an administrator or fiduciary of the Retirement Plan (or that acts or has acted as an agent of any such administrator
or fiduciary): (i) has engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code; (ii) has failed to perform any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA; or (iii) has taken any action that (A) may subject such Retirement Plan or such Person to any Tax,
penalty or Liability relating to any "prohibited transaction," or (B) may directly or indirectly give rise to or serve as a basis for the assertion (by any employee or by any other Person) of
any claim under, on behalf of or with respect to such Retirement Plan. To Conexant's knowledge, the trusts forming a part of each Employee Plan of Conexant that is intended to be qualified under both
Section 401(a) and 401(k) of the Code (the "Conexant 401(k) Plans") and of the Retirement Plan are exempt from tax pursuant to Code
Section 501(a). To Conexant's knowledge, no fact or set of circumstances has 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


11





 

adversely
affected, or could adversely affect, the qualification of the Retirement Plan and the Conexant 401(k) Plans prior to May 1, 2002. To Conexant's knowledge, there are no pending or
threatened claims by, on behalf of, or against, the Retirement Plan or its related trust (other than routine requests for benefits). As of the last day of the plan year of the Retirement Plan prior to
Closing, the Projected Benefit Obligation as defined under Financial Accounting Standards Board Statement 87 ("PBO") based upon the actuarial
assumptions used for accounting purposes in the most recent actuarial report prepared by the Retirement Plan's actuary, will not exceed the market value of the assets of the Retirement Plan. In
addition, based on a reasonable projection of the PBO using generally accepted actuarial principles, the PBO will not exceed the market value of the assets of the Retirement Plan as of May 1,
2002. [...***...] 




        2.7    Compliance with Legal Requirements.    Except as set forth in Section 2.9 (and the schedules thereto)
and in Part 2.7 of the Conexant Disclosure Schedule: (a) the Conexant Group Companies and their Affiliates are, and at all times during [...***...] have been, in
material compliance with each Legal Requirement (including Environmental Laws) that is applicable to the Wafer Fabrication Operations or any of the Contributed Assets; (b) no event has occurred
that, to Conexant's knowledge, would be reasonably likely to result in a material violation by any Conexant Group Company or any of its Affiliates of, or a material failure on the part of any Conexant
Group Company or any of its Affiliates to comply with, any Legal Requirement (including Environmental Laws) related to the Wafer Fabrication Operations or the Contributed Assets; and (c) none
of the Conexant Group Companies has received any notice from any Governmental Body regarding any violation of, or failure to comply with, any material Legal Requirement. Conexant has made available to
Carlyle an accurate and complete copy of each report, study, survey, letter, or other document or communication received by any of the Conexant Group Companies within
[...***...] that addresses or otherwise relates to the compliance by any of the Conexant Group Companies with, or the applicability to any of the Conexant Group Companies of,
any Legal Requirement related to the Wafer Fabrication Operations or the Contributed Assets. To Conexant's knowledge, no Governmental Body has proposed or is considering any Legal Requirement that, if
adopted or otherwise put into effect, (i) may have an adverse effect on the current Wafer Fabrication Operations or the ownership of the Contributed Assets, or on the ability of Conexant to
comply with or perform any covenant or obligation under any of the Transactional Agreements, or (ii) may have the effect of preventing, delaying, making illegal or otherwise interfering with
any of the Transactions. Except as set forth in Part 2.7 of the Conexant Disclosure Schedule, none of the Conexant Group Companies has, during [...***...], conducted any
internal
investigation concerning any actual or alleged violation of any Legal Requirement by any of the Conexant Group Companies, any Affiliate thereof, or any officer, director, employee, or agent thereof in
connection with the conduct of the Wafer Fabrication Operations. 


        2.8    Governmental Authorizations.    Part 2.8(a) of the Conexant Disclosure Schedule lists all Governmental
Authorizations held by any of the Conexant Group Companies and related to the conduct of the Wafer Fabrication Operations and the Contributed Assets (the "Wafer Fabrication
Operations Permits"). Conexant has made available to Carlyle accurate and complete copies of all Wafer Fabrication Operations Permits, including all renewals thereof and all
amendments thereto. Each Wafer Fabrication Operations Permit is valid and in full force and effect. Except as set forth in Part 2.8(b) of the Conexant Disclosure Schedule: (i) the
Conexant Group Companies are in material compliance with all of the terms and requirements of each Wafer Fabrication Operations Permit; (ii) no event has occurred that would be reasonably
likely to (A) result in a material violation of or a material failure to comply with any term or requirement of any Wafer Fabrication Operations Permit or (B) result in the revocation,
withdrawal, suspension, cancellation, termination, modification, or failure to be renewed if applicable in the ordinary course of any Wafer Fabrication Operations Permit; (iii) none of the
Conexant Group Companies has received any written notice or other communication from any Governmental Body regarding any violation of or failure to comply with any term or requirement of any Wafer
Fabrication Operations Permit. Except as set forth on Part 2.8(c) of the Conexant Disclosure 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


12





 

Schedule,
the Wafer Fabrication Operations Permits constitute all of the Governmental Authorizations necessary (i) to enable the Conexant Group Companies to conduct the Wafer Fabrication
Operations in the manner in which such business is currently being conducted, and (ii) to permit the Conexant Group Companies to own and use the Contributed Assets in the manner in which they
are currently owned and used by the Conexant Group Companies. 



        2.9    Environmental Matters.    Except as set forth in Part 2.9 of the Conexant Disclosure Schedule: 



         (a)   Conexant has no knowledge of any violation of any Environmental Law, which violation is the result of or arises out of the conduct of the
Wafer
Fabrication Operations or any of the Contributed Assets and would be reasonably likely to result in a Conexant Material Adverse Effect, and there are no facts or circumstances that, to Conexant's
knowledge, would reasonably be expected to give rise to any such violation of any Environmental Law. 



        (b)   Conexant has obtained or caused to be obtained all environmental permits necessary for the operation of the Wafer Fabrication Operations
or any
of the Contributed Assets to comply, in all material respects, with all applicable Environmental Laws, and all such environmental permits are in full force and effect. 


         (c)   None of the Conexant Group Companies has received any written notice, report, or other communication regarding any violation, alleged
violation
of, liability, or potential liability under any Environmental Law relating to the Wafer Fabrication Operations or any of the Contributed Assets, and there are no writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, claims, proceedings or investigations pending or, to Conexant's knowledge, threatened, relating to compliance with or liability under any Environmental
Law affecting the Wafer Fabrication Operations or any of the Contributed Assets. 


         (d)   None of the Conexant Group Companies has received, during [...***...], any notice, report or other communication
regarding any alleged violation of any Environmental Law, based on the treatment, storage, disposal of, arrangement for or permission for the disposal of, transportation, handling, use, or release of
any Hazardous Material, or ownership or operation of any property or facility relating to the Wafer Fabrication Operations or any of the Contributed Assets. 



        (e)   To Conexant's knowledge, no Hazardous Material has been discharged, disposed of, dumped, injected, pumped, deposited, spilled, leaked,
emitted,
or released at, on or under any facility or property relating to the Wafer Fabrication Operations or any of the Contributed Assets. 


         (f)    Conexant has made available to Carlyle accurate and complete copies of all material environmental audits, reports and other
material
environmental documents authored within the past five years relating to the Wafer Fabrication Operations or any of the Contributed Assets, which are in its possession, custody or control, provided
that any conclusions or assessments made by Conexant in any such audits, reports and other environmental documents prepared by Conexant have been stricken or otherwise redacted from the copies of such
audits, reports and other environmental documents. 




        2.10    Proceedings; Orders.    There is no Order to which the Contributed Assets are subject; and none of the
Conexant Group Companies is subject to any Order that relates to the Wafer Fabrication Operations. To Conexant's knowledge, no Wafer Fabrication Operations Employee is subject to any Order that may
prohibit such employee from engaging in the Wafer Fabrication Operations. Except as set forth in Part 2.10 of the Conexant Disclosure Schedule, there is no proposed Order and no Proceeding
pending or, to Conexant's knowledge, threatened that (i) relates to the Wafer Fabrication Operations, the Contributed Assets, or on any of the Conexant Group Companies' ability to comply with
or perform any covenant or obligation under any of the Transactional Agreements, or (ii) if issued or already determined, would be reasonably likely to have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the Transactions. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


13





 

        2.11    Non-Contravention; Consents.    



         (a)   Except as set forth in part 2.11(a) of the Conexant Disclosure Schedule, neither the execution and delivery by any of the Conexant
Group
Companies of any of the Transactional Agreements and the Newport Fab Contribution Agreement nor the consummation or performance by any of the Conexant Group Companies of any of the Transactions or the
Newport Fab Contribution, will: 



         (i)    contravene, conflict with or result in a violation of, or give any Governmental Body the right to challenge any of the Transactions
or to
exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which any of the Conexant Group Companies, the Wafer Fabrication Operations, or any of the Contributed Assets is
subject; 


        (ii)   contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to
revoke,
withdraw, suspend, cancel, terminate, modify, or fail to renew in the ordinary course, any Transferred Permit; 


         (iii)   violate or conflict with any provision of the Certificate of Incorporation or Bylaws or other organizational documents of any of
the Conexant Group Companies or any of their Affiliates; 


        (iv)  violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the
creation of any material Encumbrance upon any of the Contributed Assets or the Membership Interests under any of the terms, conditions or provisions of, or require the consent of any party under, any
contract, indebtedness, note, bond, indenture, security or pledge agreement, commitment, license, Lease, franchise, Permit, agreement, or other instrument or obligation (i) to which any of the
Conexant Group Companies or any of their Affiliates is a party or (ii) by which the Contributed Assets or the Membership Interests are bound; or 


         (v)   otherwise result in or impose any Encumbrance on the Contributed Assets or the Membership Interests. 




         (b)   Except as otherwise set forth in Part 2.11(b) of the Conexant Disclosure Schedule, none of the Conexant Group Companies is or will
be
required to make any filing with or give any notice to, or obtain any Consent from, any Person in connection with the execution and delivery of any of the Transactional Agreements or the Newport Fab
Contribution Agreement or the consummation or performance of any of the Transactions or the Newport Fab Contribution. 




        2.12    Absence of Certain Changes or Events.    Since June 30, 2001, except as contemplated by this Agreement,
there has not been any: 



        (a)   event or occurrence resulting in or reasonably likely to result in a Conexant Material Adverse Effect; 


         (b)   material damage, destruction or loss (whether or not covered by insurance) adversely affecting the Contributed Assets or the Wafer
Fabrication
Operations; 


         (c)   increase in the rate of compensation payable or to become payable to any employee primarily engaged in the Wafer Fabrication Operations,
except
as provided in any employment agreement (including any union contract) between Conexant and any such Persons or in any Employee Plan, and any increases in the normal course of business; 



14





 




         (d)   cancellation or termination of any material contract or entry into any material contract relating to the Contributed Assets or the Wafer
Fabrication Operations that is not in the ordinary course of the business of the Conexant Group Companies; 



        (e)   agreement by any of the Conexant Group Companies or any if their Affiliates to do any of the things described in the preceding clauses
(a) through (d) other than as expressly provided for herein. 




        2.13    Financial Information.    Conexant has provided Carlyle or its representatives the historical financial and
operating information related to the Wafer Fabrication Operation and the Contributed Assets for the periods commencing October 1999 through November 2001 listed in Schedule 2.13
(collectively the "Financial Information"). The Financial Information (i) is complete, true and accurate in all material respects;
(ii) with respect to the financial information, was prepared on a basis consistent with Conexant's historical accounting policies, practices, and procedures consistently applied as those in
prior fiscal years; and (iii) fairly and accurately presents in all material respects all costs associated with the Wafer Fabrication Operations and the Contributed Assets for the period
commencing October 1999 through November 2001. 


        2.14    Suppliers.    Part 2.14 of the Conexant Disclosure Schedule sets forth a complete and accurate list of
the names and addresses of the Wafer Fabrication Operations' ten (10) largest suppliers for the most recent fiscal year showing the approximate total purchases in dollars by Conexant from each
such supplier during such fiscal year. As of the date hereof, no Conexant Group Company has received any communication from any supplier named on Part 2.14 of the Conexant Disclosure Schedule
of any intention to terminate or materially reduce purchases from or supplies to any of the Conexant Group Companies. Part 2.14 of the Conexant Disclosure Schedule sets forth a list of all
current customer contracts and current customer proposals of the Conexant Group Companies with respect to the Wafer Fabrication Operations. 



        2.15    Taxes.    



         (a)   Except as set forth in part 2.15(a) of the Conexant Disclosure Schedule, (i) all Tax Returns required to be filed with respect
to
the Wafer Fabrication Operations or the Contributed Assets have been or will be timely filed, (ii) all Taxes that accrue or are payable by any of the Conexant Group Companies in respect of the
Contributed Assets or the Wafer Fabrication Operations for Pre-Closing Tax Periods (determined on the closing of the books method of accounting) have been or will be timely paid in full,
(iii) there are no liens for Taxes on the Contributed Assets (other than liens for current Taxes not yet due and payable), (iv) there is no audit or other matter in controversy with
respect to any Taxes that relate to the Wafer Fabrication Operations or the Contributed Assets and there is no Tax deficiency or claim assessed that relates to the Wafer Fabrication Operations or the
Contributed Assets, (v) none of the Contributed Assets (A) are required to be treated as being owned by any other person pursuant to the so-called safe harbor lease
provisions of former Section 168(f)(8) of the Code, (B) secures any debt the interest of which is tax-exempt under Code Section 103(a), (C) is
tax-exempt use property within the meaning of Code Section 168(h) or (D) is subject to a 467 rental agreement as defined in Section 467 of the Code, 


         (b)   each of the Conexant Group Companies has paid in full or discharged all Taxes the nonpayment of which could result in (i) a Lien on
the
Contributed Assets in the hands of the Company or (ii) a Lien on the Contributed Assets in the hands of the Newport Fab LLC after the Closing Date, excepting in each case such Taxes as will not
be due until after the Closing Date. 


         (c)   Conexant is not a "foreign person" within the meaning of section 1445 of the Code; 



15





 




        (d)   Conexant has not entered into an agreement to dispose of the Common Stock of the Company to be received pursuant to
Section 1.3(a)(i) of this Agreement and Conexant does not have a plan or intention to dispose of such stock; 


         (e)   The aggregate adjusted tax basis of the Contributed Assets is not less than [...***...] and Part 2.15(e) of the
Conexant Disclosure Schedule sets forth the aggregate adjusted tax basis of each category of Contributed Assets that is included in the Company's regularly prepared balance sheet. 



        (f)    Conexant is not a "new loss corporation" within the meaning of Section 382 of the Code and losses or deductions with respect to
the
Contributed Assets will not be subject to any limitations under
Section 382 of the Code or the Treasury Regulations promulgated thereunder immediately prior to the contribution of the Membership Interests to the Company. 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


16







  



         (g)   Conexant is the sole member of Newport Fab LLC. The Newport Fab LLC is, and has been since its formation, classified for federal and
state income
Tax purposes as a disregarded entity, and neither Conexant nor Newport Fab LLC has made an election for the Newport Fab LLC to be treated as an association taxable as a corporation. 




        2.16    No Brokers.    No broker, finder or similar agent is entitled to any finder's fee, brokerage fees or
commission or similar payment from any of the Conexant Group Companies or any of their Affiliates in connection with the transactions contemplated hereby or by the Newport Fab Contribution Agreement. 


        2.17    Real Property.    Part 2.17 of the Conexant Disclosure Schedule lists all real property owned or leased
by Conexant or its Affiliates and primarily used in the Wafer Fabrication Operations (the "Real Property"). 



        2.18    Affiliated Transactions.    Except as set forth on Part 2.18 of the Conexant Disclosure Schedule, no
Affiliate of any of the Conexant Group Companies or any Subsidiary thereof and, to Conexant's knowledge, no officer, director, employee, stockholder, or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or individual owns a greater than 10% beneficial interest, is a party to any agreement, commitment, or transaction with any of
the Conexant Group Companies or any Subsidiary thereof or has any material interest in any material property used by the Conexant Group Companies or any Subsidiary, wherein such agreement, commitment,
transaction, or property is primarily related to the Wafer Fabrication Operations or the Contributed Assets. 



        2.19    Sufficiency of Assets.    The Membership Interests and the Contributed Assets, together with the rights and
assets to be leased, licensed, or otherwise provided to the Company pursuant to the Transactional Agreements together with the Shared Contracts, are sufficient to permit the Specialtysemi Group
Companies to operate the Wafer Fabrication Operations, following the Closing, in the manner currently conducted by the Conexant Group Companies. 


        2.20    Newport Fab Contribution Agreement.    Conexant has provided to Carlyle a true and correct copy of the Newport
Fab Contribution Agreement and all documents and instruments (the "Related Newport Fab Documents") executed in connection with the consummation of the
Newport Fab Contribution. The Newport Fab Contribution Agreement and the Related Newport Fab Documents have not been amended or modified by the parties thereto and no party thereto has waived,
released or compromised
any rights under the Newport Fab Contribution Agreement or any of the Related Newport Fab Documents. 


        2.21    Liabilities.    The Newport Fab LLC has no liabilities or obligations of any kind or nature other than the
Assumed Liabilities. 


        2.22    Consummation of the Newport Fab Contribution.    The Newport Fab Contribution has been consummated strictly in
accordance with the terms of the Newport Fab Contribution Agreement and the Related Newport Fab Documents, and Newport Fab LLC owns all of the Contributed Assets (other than the Transferred
Contracts), free and clear of all Encumbrances other than Permitted Encumbrances. 


        2.23    Membership Interests.    The Membership Interests were duly authorized and validly issued by Newport Fab LLC,
free of any preemptive or similar rights, and are held, beneficially and of record, by Conexant, free and clear of all Encumbrances. Other than the Membership Interests, there are not issued or
outstanding any membership or equity interests of Newport Fab LLC or any options, warrants or other rights exercisable for, or securities convertible or exchangeable into, any membership or equity
interests of Newport Fab LLC. 


17





 



        2.24    Newport Fab LLC.    Newport Fab LLC is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly licensed or qualified as a foreign limited liability company to conduct business in each state and other jurisdiction where the
character of the Contributed Assets and the nature of such activities make such qualification necessary, except where the failure to be so qualified would not result in a Conexant Material Adverse
Effect. Conexant has provided to Carlyle true and correct copies of the certificate of formation, limited liability company agreement, and other organizational documents of Newport Fab LLC as amended
to date (the "Newport Fab LLC Organizational Documents"). Newport Fab LLC has conducted no business, operations or activities other than the ownership
of the Contributed Assets and conduct of the Wafer Fabrication Operations. 


        2.25    The Warrant.    


        Prior
to Closing, the issuance of the Warrant will be duly authorized by all necessary corporate action on the part of Conexant. Prior to Closing, the Warrant Shares will be duly
authorized and reserved for issuance and, when issued upon exercise of the Warrant, will be validly issued, fully paid and non-assessable and will be issued free of any preemptive or
similar rights. 



3.    REPRESENTATIONS AND WARRANTIES OF CARLYLE.


        Carlyle
represents and warrants, to and for the benefit of the Company, Conexant and the other Conexant Indemnitees as follows: 


        3.1    Due Organization; Authority; Binding Nature of Agreements.    Carlyle is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware. Carlyle has the requisite corporate power and authority to enter into, deliver and to perform its obligations under each of
the Transactional Agreements to which it is a party; and the execution, delivery and performance by Carlyle of the Transactional Agreements to which it is a party have been duly authorized by all
necessary action on the part of Carlyle and its members and no other limited liability company proceedings on the part of Carlyle are necessary to authorize the Transactional Agreements and the
transactions contemplated thereby. This Agreement constitutes the legal, valid and binding obligation of Carlyle, enforceable against Carlyle in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency or other similar Legal Requirements affecting the enforcement of creditors' rights generally and by general principles of equity relating to
enforceability. Upon the execution of each of the other Transactional Agreements at the Closing, each of such other Transactional Agreements to which Carlyle is a party will constitute the legal,
valid and binding obligation of Carlyle, enforceable against Carlyle in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or other similar Legal
Requirements affecting the enforcement of creditors' rights generally and by general principles of equity relating to enforceability. 


        3.2    Non-Contravention; Consents.    Except as set forth in Part 3.2 of the Carlyle Disclosure
Schedule, neither the execution and delivery by Carlyle of any of the Transactional Agreements, nor the consummation or performance by Carlyle of any of the Transactions, will directly or indirectly
(with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of, or give any Governmental Body the right to challenge any of the Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement or any Order to which Carlyle is subject; or (ii) result in the imposition or creation of any Encumbrance (other than Permitted
Encumbrances) upon or with respect to any shares of Common Stock of the Company to be issued to Carlyle. Except as set forth in Part 3.2 of the Carlyle Disclosure Schedule, Carlyle is not and
will not be required to make any filing with or give any notice to, or to obtain any Consent from, any Person in connection with the execution and delivery of any of the Transactional Agreements or
the consummation or performance of any of the Transactions. There is no Order, or proposed Order that if issued or otherwise put into effect, would 


18






 



be
reasonably likely to have an adverse affect on Carlyle's ability to comply with or perform any covenant or obligation under any of the Transactional Agreements. 


4.    COVENANTS OF THE PARTIES.


        4.1    Conduct of Business.    



        (a)   During the period commencing on the date of this Agreement and ending on the earlier to occur of (a) the Closing or (b) the
termination of this Agreement (the "Pre-Closing Period"), Conexant shall and shall cause Newport Fab LLC to, except as expressly
contemplated by this Agreement, or as consented to in writing by Carlyle (which consent will not be unreasonably withheld or delayed) conduct the Wafer Fabrication Operations in the ordinary course of
business, and substantially in accordance with past practice and will use its reasonable efforts not to take any action that would adversely affect the Wafer Fabrication Operations or the Contributed
Assets. Without limiting the generality of the foregoing, Conexant shall not and shall cause each of its Affiliates not to, except (i) as set forth on Schedule 4.1, (ii) as
specifically contemplated by this Agreement, (iii) as consented to in writing by Carlyle (which consent will not be unreasonably withheld or delayed), or (iv) except where wholly
unrelated to the Wafer Fabrication Operations or the Contributed Assets: 



         (i)    enter into, extend, materially modify, terminate or renew any Transferred Contract except in the ordinary course of business;




        (ii)   sell, assign, transfer, convey, lease, mortgage, pledge or otherwise dispose of or encumber any material Contributed Asset, or any
interests
therein, except in the ordinary course of business; 


         (iii)   except as otherwise required by applicable Legal Requirements, take any action with respect to the grant of any bonus, severance
or termination pay, other than pursuant to written policies or agreements of any of the Conexant Group Companies or their Affiliates in effect on the date hereof, or with respect to any increase of
benefits payable under its severance or termination pay policies or agreements in effect on the date hereof or increase in any material respect the compensation or fringe benefits of any employee
(other than increases required under the Collective Bargaining Agreement) or pay any benefit not required by any existing Employee Plan, agreement or policy; 


         (iv)  make any change in the key management structure of the employees employed primarily in the Wafer Fabrication Operations, including, without
limitation, the hiring of additional officers or management employees or the termination of existing officers or management employees other than pursuant to offers of employment made by Conexant or
its Affiliates prior to the date hereof (which offers have been disclosed to Carlyle) or otherwise in the ordinary course of business; 



        (v)   except in the ordinary course of business, adopt, enter into or amend any Employee Plan, agreement (including, without limitation, any
collective
bargaining or employment agreement), trust, fund or other arrangement for the benefit or welfare of any Wafer Fabrication Operations Employee; 


         (vi)  fail to expend funds for budgeted capital expenditures or commitments set forth on Schedule 4.1(a)(vi) in accordance with
customary practices; 


         (vii)   fail to maintain the Contributed Assets in substantially their current state of repair, excepting normal wear and tear, or fail
to replace consistent with the Conexant Group Companies' past practices inoperable, worn-out or obsolete or destroyed Contributed Assets; 




19





 





         (viii)   make any material income tax election or settlement or compromise with tax authorities affecting the Contributed Assets, the
Membership Interests, or the Assumed Liabilities; 


        (ix)  intentionally do any other act that would be reasonably likely to cause any representation or warranty of Conexant in this Agreement to be or
become untrue in any material respect; 


         (x)   fail to keep available the services of and maintain good relations with its current Wafer Fabrication Operations Employees, suppliers,
customers,
licensors and other persons having business relationships with the Wafer Fabrication Operations; 



        (xi)  fail to keep in full force and effect all insurance policies in effect as of the date of this Agreement covering the Contributed Assets;



         (xii)   enter into any agreement or otherwise become obligated to do any action that would materially and adversely affect the Wafer
Fabrication Operations or the Contributed Assets; or 


         (xiii)   permit or cause Newport Fab LLC to distribute or transfer to Conexant or any of its Affiliates any assets or property (other
than cash). 




        (b)   [...***...] 


         (c)   The Company and Conexant shall, prior to the Closing and within the time periods required by all applicable Legal Requirements, file all
applications and any other documents required to be submitted or filed prior to the Closing with the appropriate Governmental Bodies, and seek to obtain all applicable consents and approvals required
to be obtained prior to the Closing by the appropriate Governmental Bodies, and take all other actions necessary to effect the transfer of, or issuance of replacement permits for, the Wafer
Fabrication Operations Permits. After the Closing, the Company and Conexant shall, within the time periods required by all applicable Legal Requirements, file all applications and any other documents
required to be submitted or filed after the Closing with the appropriate Governmental Bodies, and seek to obtain all applicable consents and approvals required to be obtained after the Closing by the
appropriate Governmental Bodies, and take all other actions necessary to effect the transfer of, or issuance of replacement permits for, the Wafer Fabrication Operations Permits. During the
Pre-Closing Period and for a period of six (6) months thereafter, the Company and Conexant shall use their commercially reasonable efforts in assisting each other with complying
with the obligations set forth in the two preceding sentences. Notwithstanding the foregoing, Conexant shall not be obligated to transfer to the Company a specific Wafer Fabrication Operations Permit
if any such transfer would violate applicable Legal Requirements. Neither party shall be liable to the other party for any costs, fees, penalties or other liabilities resulting from the failure of
such party to take any action required to be taken by the other party in order for the Company to obtain replacement permits for the Wafer Fabrication Operations Permits. Notwithstanding the
foregoing, the Company and Conexant shall each pay 50% of all costs (including application and permitting fees) associated with the Company obtaining any replacement permits for the Wafer Fabrication
Operations Permits. Neither party shall have any Liability due solely to a failure by the other party to take any action, which is required to be taken exclusively by such other party, in order for
the Company to obtain, assume or become the named party on such replacement permits for the Wafer Fabrication Operations Permits. 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


20





 

        (d)   During the Pre-Closing Period and for a period of six (6) months after the Closing, Conexant and the Company shall use their
commercially reasonable efforts to transfer or assign, or cause to be transferred or assigned, the Transferred Contracts as provided in the Newport Fab Contribution Agreement and to negotiate
replacement contracts for the Shared Contracts. The Company shall pay the first $100,000 for all costs (including attorneys fees) associated with the Specialtysemi Group Companies negotiating
replacement contracts for the Shared Contracts following Closing. Thereafter, the Company and Conexant shall each pay 50% of such costs; provided that Conexant shall not be required to pay any such
costs with respect to the platform technology contracts listed on Schedule 2.5(g) under the heading "CAD Licenses" (which costs shall be borne by the Company). Notwithstanding anything herein
to the contrary, Conexant shall not be obligated to transfer any Shared Contracts. 




        4.2    Access to Information.    From the date hereof through the Closing, Conexant shall, and shall cause their
respective officers, directors, and employees to afford Carlyle and its authorized representatives, during normal business hours and upon reasonable notice to the Conexant Group Companies and in a
manner that will not unduly interfere with the operation of the Wafer Fabrication Operations, complete access at all reasonable times to the Contributed Assets for the purpose of inspecting the same,
and to the officers and employees of Conexant, and shall, as Carlyle may reasonably request, furnish Carlyle and its authorized representatives all financial, operating, and other data and information
that is related to the Wafer Fabrication Operations or the Contributed Assets reasonably requested by Carlyle, except to the extent that such access would violate any Legal Requirement to which the
Conexant Group Companies, their employees or the Contributed Assets are subject. 


        4.3    Filings and Consents.    Conexant and Carlyle shall use commercially reasonable efforts to ensure that:
(i) all filings, notices and Consents required to be made, given and obtained in order to consummate the Transactions and the transactions contemplated by the Newport Fab Contribution Agreement
are made, given and obtained on a timely basis; (ii) during the Pre-Closing Period, Conexant and Carlyle and their respective Representatives cooperate with one another, and prepare
and make available such documents and take such other actions as the other may request in good faith, in connection with any filing, notice or Consent that the other is required to make, give or
obtain. 


        4.4    No Solicitation.    During the period (the "No-Solicitation
Period") commencing as of the date of this Agreement and ending on the earlier to occur of (a) the termination of this Agreement and (b) the Closing, Conexant
shall not and shall cause Newport Fab LLC and Conexant's and Newport Fab LLC's respective Representatives not to, directly or indirectly, (i) enter into, solicit, initiate or continue any
discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or participate in any negotiations with, or provide any information to, or otherwise cooperate in any other
way with, any Person, other than Carlyle and its Representatives, concerning any sale, lease, or license of all or any substantial portion of the Wafer Fabrication Operations or the Contributed
Assets, or (ii) provide any nonpublic information regarding the Contributed Assets or the Wafer Fabrication Operations to any Person in response to any proposal described in clause (i)
above, provided however, that Conexant shall not be prohibited from providing nonpublic information regarding the Contributed Assets or the Wafer
Fabrication Operations to any Person who is considering the acquisition of all or substantially all of the assets of Conexant or the acquisition of beneficial ownership of 50% or more of the capital
stock of Conexant, provided that such third party enters into a non-disclosure agreement with Conexant which provides that the Company is a third party beneficiary of those provisions
contained in such non-disclosure agreement that relate to the non-disclosure of nonpublic information related to the Wafer Fabrication Operations or the Contributed Assets.
Conexant shall promptly notify Carlyle of the material terms of any inquiry, proposal, or offer received by the Conexant Group Companies during the No-Solicitation Period from any Person
(other than the Company or Carlyle) solely related to the acquisition, lease, license or transfer of all or a material portion of the Contributed 


21





 



Assets
or the Wafer Fabrication Operations including, without limitation, the identity of the prospective purchaser or soliciting party, except to the extent that any such notification would violate
any existing agreement of Conexant. Notwithstanding the foregoing, Conexant shall have no obligation to disclose to any Person the existence of any inquiry, proposal or offer received by Conexant
relating to the acquisition of all or substantially all of the assets of Conexant or the acquisition of beneficial ownership of 50% or more of the capital stock of Conexant. 



        4.5    Notification.    During the Pre-Closing Period, each of Conexant and Carlyle shall promptly notify
the other parties to this Agreement in writing of: (i) the discovery by it of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and
that caused or constitutes a breach of any representation or warranty made by it in this Agreement; (ii) any event, condition, fact or circumstance that occurs, arises or exists after the date
of this Agreement and that would cause or constitute a breach of any representation or warranty made by it in this Agreement if (A) such representation or warranty had been made as of the time
of the occurrence, existence or discovery of such event, condition, fact or circumstance, or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the
date of this Agreement; (iii) any breach of any covenant or obligation of it; and (iv) any event, condition, fact or circumstance that may make the timely satisfaction of any of the
conditions set forth in Section 4 impossible or unlikely. 


        4.6    Bulk Transfer Laws.    Carlyle and the Company hereby acknowledge that the Conexant Group Companies have not
taken, and do not intend to take, any action required to comply with any applicable bulk sale or bulk transfer Legal Requirements or similar Legal Requirements, and each of Carlyle and the Company
hereby waive compliance by the Conexant Group Companies with any applicable bulk sale or bulk transfer Legal Requirements of any jurisdiction in connection with the contribution of the Contributed
Assets to Newport Fab LLC or the transactions contemplated hereby. 


        4.7    Publicity.    Each of Conexant, Carlyle and the Company shall ensure that, during the Pre-Closing
Period: (i) neither it nor any of its Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any supplier, landlord, or
creditor of Conexant, Carlyle or the Company or to any other Person other than a Representative of the party making such disclosure) regarding any of the Transactions or the existence or terms of this
Agreement, except to the extent that any of the Conexant Group Companies, Carlyle or the Company is required by any Legal Requirement to make any such disclosure (it being understood that Conexant
shall (A) issue a press release following the execution hereof which shall have been approved by Carlyle and (B) file one or more reports on Form 8-K with the
Securities Exchange Commission); and (ii) if it is required by any Legal Requirement to make any such disclosure, it shall advise the other parties to this Agreement, at least seven
(7) business days before making such disclosure, of the nature and content of the intended disclosure. 


        4.8    Reasonable Best Efforts.    During the Pre-Closing Period, each of Conexant, the Company and
Carlyle shall, and Conexant shall cause Newport Fab LLC to, use its reasonable best efforts to cause the conditions set forth in Sections 5 and 6 to be satisfied on a timely basis. Each of Conexant,
the Company and Carlyle shall also negotiate in good faith and use their reasonable best efforts to reach agreement concerning the forms of the License Agreements, Real Property Lease Agreements, IT
Services Agreement, Transition Services Agreement, the Employee Matters Agreement, and the Warrant. 


        4.9    [...***...]    





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


22





 

        4.10    Tax Matters.    



        (a)   The Company, Carlyle and Conexant each agrees (i) that the contribution of the Membership Interests to the Company will be treated
and
reported for income tax purposes as a contribution by Conexant of the Contributed Assets to the Company in exchange for the consideration specified in Section 1.3(a)(i) (the  "Section 351
Transfer"), (ii) not to take any action that would cause the Section 351 Transfer not to qualify under
Section 351 of the Code, (iii)to report the transactions contemplated under Sections 1.1, 1.2, 1.3 and 1.4 of this Agreement as one which qualifies under Section 351 of the Code in the
filing of all Tax Returns (including reporting the portion of the consideration received in exchange for the Contributed Assets other than the stock of the Company as "boot" under Section 351)
and (iv) to report to each other any communication from the Internal Revenue Service which challenges in any way such characterization of this transaction. The parties further agree that they
will continue to report the Section 351 Transaction as one that so qualifies under Section 351 of the Code notwithstanding any contrary communication from the Internal Revenue Service
and, each party will defend such qualification in an audit, tax review or tax-litigation challenging such qualification. Without limiting the generality of the foregoing (i) the
parties shall file with their respective Tax Returns for the taxable year in which the transactions described in this Agreement are consummated (which Tax Returns shall be timely filed (including
extensions)) the statement required by Treasury Regulation § 1.351-3(a), and shall deliver a copy of such statements to the other parties within thirty (30) days
thereafter and (ii) the Company shall file with its Tax Return for the taxable period which includes the Closing Date (which Tax Return shall be timely filed by the Company (including
extensions)) the statement required by Treasury Regulation § 1.351-3(b). Conexant, Carlyle and the Company shall also maintain such permanent records as are required by
Treasury Regulation § 1.351-3(c). 


         (b)   Within sixty (60) days after the Closing, Conexant shall deliver to the Company: (i) all of the cost and other basis
information
relating to the Contributed Assets and Assumed Liabilities for federal income tax purposes reasonably required for the Company to prepare the statement required by Treasury Regulation §
1.351-3(b)(2), (ii) the gain, if any, recognized by Conexant in the Section 351 Transfer with respect to each item of tangible and intangible property included in the
Contributed Assets, (iii) a complete and correct list of the income tax basis of each item of tangible and intangible property included in the Contributed Assets, (iv) the year of
acquisition of each such item of tangible or intangible property, (v) the depreciable life of each such item of tangible or intangible property and (vi) the amount and method of
depreciation with respect to each such item of tangible or intangible property. 



        (c)   The Company and Conexant agree to retain all records relating to the Taxes of the Wafer Fabrication Operations or the Contributed Assets
for all
taxable periods ending on or prior to the Closing Date or which include the Closing Date until [...***...]. Consistent with Section 9.1 of this Agreement, the Company
and Conexant agree to provide each other with such information and assistance as is reasonably necessary, including without limitation, access to records and personnel, for the preparation of any Tax
Returns or for the defense of any Tax claim or assessment that relates to the Wafer Fabrication Operations or the Contributed Assets, whether in connection with an audit or otherwise. 



        (d)   [...***...] 


         (e)   Conexant shall deliver to the Company an executed affidavit, dated not more than thirty (30) days prior to the Closing Date, in
accordance
with Code Section 1445(b)(2) and Treasury Regulation Section 1.1445-(b)(2), which statement certifies that Conexant is not a "foreign person" and sets forth Conexant's name,
identifying number and address. Conexant shall deliver to the Company all clearance certificates and similar documents that may be required by any state, local or other taxing authority in order to
relieve the Company of any obligation to withhold or escrow any of the consideration to be paid to Conexant for the benefit of such taxing authority. 


         (f)    Conexant shall file all Tax Returns with respect to Pre-Closing Tax Periods on the basis that the aggregate adjusted tax basis of
the
Contributed Assets is not less than $232,574,697.25 as of January 31, 2002. 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


23





 

         (g)   For a period of twelve (12) months after the Closing Date, unless the Company obtains the prior written consent of Conexant, the
Company
will not (i) dissolve or liquidate Newport Fab LLC, (ii) merge Newport Fab LLC with the Company or any entity that is an Affiliate of the Company prior to such merger, or
(c) cause Newport Fab LLC to distribute or otherwise transfer all or substantially all of the Contributed Assets to the Company or any entity that is an Affiliate of the Company prior to such
distribution or transfer. 




        4.11    Update of Schedules.    The parties acknowledge and agree that, no later than five (5) days prior to
the Closing Date, Conexant may update or supplement Parts 2.1 through 2.19 of the Conexant Disclosure Schedule solely for the purpose of reflecting events or occurrences occurring after the date
hereof by providing to the Company and Carlyle an updated or supplemented Conexant Disclosure Schedule (which shall be marked to show changes against the original Conexant Disclosure Schedule). Such
updated parts of the Conexant Disclosure Schedule shall, solely for the purpose of Section 6.1 hereof (and not for the purpose of Section 8 hereof), be deemed to have amended the
relevant parts of the Conexant Disclosure Schedule unless the events or occurrences reflected in such updated or
supplemented parts of the Conexant Disclosure Schedule have or would reasonably be expected to have a Conexant Material Adverse Effect. 


        4.12    [...***...]    


        4.13    Newport Fab Contribution Agreement.    Between the date hereof and the Closing Date, the Conexant Group
Companies will not amend any provision of the Newport Fab Contribution Agreement and neither of the Conexant Group Companies will waive, release or compromise any right under the Newport Fab
Contribution Agreement. 


        4.14    [...***...]    


5.    CONDITIONS PRECEDENT TO CONEXANT'S OBLIGATION TO CLOSE. 


        Conexant's
obligation to contribute the Membership Interests to the Company and to take the other actions required to be taken by Conexant at the Closing is subject to the satisfaction,
as of the Closing, of each of the following conditions (any of which may be waived by Conexant, in whole or in part, in writing): 


        5.1    Accuracy of Representations.    All of the representations and warranties made by Carlyle in this Agreement
shall be accurate in all material respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties specifically speak as of an earlier
date, in which case such representations and warranties shall be accurate in all material respects as of such earlier date). 


        5.2    Performance of Obligations.    



         (a)   Each of the Transactional Agreements shall have been executed by each of the parties thereto (other than Conexant) and delivered to
Conexant; and 


         (b)   All of the covenants and obligations that the Company and Carlyle are required to comply with or to perform at or prior to the Closing
(considered collectively), and each of said covenants and obligations (considered individually), shall have been duly complied with and performed in all material respects. 




        5.3    Governmental Approvals.    All Wafer Fabrication Operations Permits that are required to be issued in Newport
Fab LLC's name as of the Closing Date in order for Newport Fab LLC to be able to conduct the Wafer Fabrication Operations in the manner in which the Conexant Group Companies conducted such operations
as of immediately prior to the Closing Date without violating applicable Legal Requirements shall have been issued in Newport Fab LLC's name. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


24







           5.4    Governmental Proceedings.    No Governmental Body shall have commenced any
Proceeding (i) involving any
material challenge to, or seeking material damages or other material relief in connection with, any of the Transactions, or (ii) that may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions. 


        5.5    Receipt of Consideration.    Conexant shall have received the consideration and other items it is entitled to
receive pursuant to Section 1.3. 


        5.6    Certificates.    Carlyle shall have furnished Conexant with such certificates of its duly authorized officers
to evidence compliance with the conditions set forth in Section 5.1 and, to the extent applicable to Carlyle, Section 5.2(b), and the Company shall have furnished Conexant with such
certificates of its duly authorized officers to evidence compliance with the conditions set forth in Section 5.2(b) to the extent applicable to the Company. 


        5.7    Agreements to be Delivered.    The form of each of the License Agreements, the Real Property Lease Agreements,
the IT Services Agreement and the Transition Services Agreement executed and delivered by Carlyle or the Company at Closing shall be acceptable to Conexant. 


        5.8    Warrant.    



        The
form of Warrant to be delivered by Conexant at Closing shall be acceptable to Conexant, and all consents and approvals required for the issuance of the Warrant and the shares
issuable upon exercise of the Warrant shall have been obtained to the reasonable satisfaction of Conexant. 


6.    CONDITIONS PRECEDENT TO CARLYLE'S OBLIGATION TO CLOSE.


        Carlyle's
obligation to contribute to the Company the cash contribution described in Section 1.2 and to take the other actions required to be taken by Carlyle at the Closing is
subject to the satisfaction, as of the Closing, of each of the following conditions (any of which may be waived by Carlyle, in whole or in part, in writing): 



        6.1    Accuracy of Representations.    Subject to, and as modified by the update or supplement to the Conexant
Disclosure Schedule contemplated by, Section 4.11, all of the representations and warranties made by Conexant in this Agreement and the Newport Fab Contribution Agreement shall be accurate in
all material respects as of the date of this Agreement and as of the Closing Date (except to the extent such representations and warranties specifically speak as of an earlier date, in which case such
representations and warranties shall be accurate in all material respects as of such earlier date). 


        6.2    Performance of Obligations.    



         (a)   Each of the Transactional Agreements shall have been executed by each of the parties thereto (other than Carlyle or the Company) and
delivered to
Carlyle; and 


         (b)   all of the covenants and obligations that Conexant is required to comply with or to perform at or prior to the Closing, under this
Agreement and
the Newport Fab Contribution Agreement shall have been duly complied with and performed in all material respects. 




        6.3    Governmental Proceedings.    No Governmental Body shall have commenced any Proceeding (i) involving any
material challenge to, or seeking material damages or other material relief in connection with, any of the Transactions or the transactions contemplated by the Newport Fab Contribution Agreement, or
(ii) that may have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transactions. 



        6.4    Consents and Replacement Contracts.    Each of the Consents identified on Schedule 6.4(a) shall have
been obtained and each of the Contracts listed on Schedule 6.4(a) shall have been assigned to Newport Fab LLC pursuant to the Newport Fab Contribution Agreement and shall be in full force 


25





 



and
effect, and the Specialtysemi Group Companies shall have entered into Contracts replacing the Shared Contracts listed on Schedule 6.4(b) on terms acceptable to Carlyle. 



        6.5    Governmental Approvals.    All Wafer Fabrication Operations Permits that are required to be issued in one or
more of the Specialtysemi Group Companies' names as of the Closing Date in order for the Specialtysemi Group Companies to be able to conduct the Wafer Fabrication Operations in the manner in which the
Conexant Group Companies conducted such operations as of immediately prior to the Closing Date without violating applicable Legal Requirements shall have been issued in one of the Specialtysemi Group
Companies' names. 


        6.6    Material Adverse Effect.    There shall not have occurred (and be continuing) any event, condition, or
occurrence that has resulted in, or would reasonably be expected to result in, a Conexant Material Adverse Effect. 


        6.7    Inventory.    The raw material and work-in-process Inventory held by Newport Fab LLC
shall have a book value, determined in accordance with the calculation reflected on Schedule 6.7, of no less than [...***...]. Conexant shall provide to Carlyle a
detailed schedule, certified as true and correct by an officer of Conexant, reflecting the Inventory held by Newport Fab LLC as of the Closing Date, [...***...]. 



        6.8    Employment.    



         (a)   The Employment Agreements shall be in a form acceptable to Carlyle and shall have been executed by the Persons listed on
Schedule 6.8(a);
and 


         (b)   At least 75% of the Wafer Fabrication Operations Employees shall have accepted offers of employment by the Specialtysemi Group Companies.





        6.9    Company Bank Account.    A checking account shall have been established for the Company. 


        6.10    Certificates.    Conexant shall have furnished Carlyle with such certificates of its duly authorized officers
and others to evidence compliance with the conditions set forth in Sections 6.1, 6.2(b), and 6.7. 


        6.11    Agreements to be Delivered.    The form of each of the License Agreements, the Real Property Lease Agreements,
the IT Services Agreement, the Employee Matters Agreement and the Transition Services Agreement executed and delivered by Conexant at the Closing shall be acceptable to Carlyle. 


        6.12    Conveyancing Documents.    The documents and instruments executed and delivered by Conexant and Newport Fab
LLC to effect the Newport Fab Contribution shall be delivered to Carlyle and such documents shall be in a form reasonably acceptable to Carlyle. 


        6.13    Warrant.    The form of Warrant to be delivered by Conexant at the Closing shall be acceptable to Carlyle, and
all consents and approvals required for the issuance of the Warrant and the shares issuable upon exercise of the Warrant shall have been obtained to the reasonable satisfaction of Carlyle. 


7.    TERMINATION.


        7.1    Termination Events.    This Agreement may be terminated prior to the Closing: 



        (a)   by Conexant or Carlyle if the Closing has not taken place on or before April 30, 2002 (the "Termination
Date") (other than as a result of any failure on the part of the terminating party to comply with or perform its covenants and obligations under this Agreement); 


         (b)   by the mutual written consent of Conexant and Carlyle; 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


26





 

         (c)   by Conexant if there is a material breach of any representation or warranty set forth in Section 3 hereof or any covenant or
agreement to
be complied with or performed by Carlyle pursuant to the terms of this Agreement, provided that Conexant may not terminate this Agreement prior to the
Closing for such breach unless Carlyle has failed to cure such breach within [...***...] of receiving notice of such breach; or 


         (d)   by Carlyle if there is a material breach of any representation or warranty set forth in Article 2 hereof or any covenant or
agreement to
be complied with or performed by Conexant pursuant to the terms of this Agreement, provided that Carlyle may not terminate this Agreement prior to the
Closing for such breach unless Conexant has failed to cure such breach within [...***...] of receiving notice of such breach. 




        7.2    Termination Procedures.    If any party wishes to terminate this Agreement pursuant to Section 7.1, the
party shall deliver to the other parties a written notice in accordance with Section 10.5 stating that it is terminating this Agreement and setting forth a reasonably detailed description of
the basis on which it is terminating this Agreement. 


        7.3    Effect of Termination.    If this Agreement is terminated pursuant to Section 7.1, all further
obligations of the parties under this Agreement shall terminate; provided, however, that: (a) no party shall be relieved of any obligation or
other Liability arising from any breach by such party of any provision of this Agreement prior to such termination; (b) the parties shall, in all events, remain bound by and continue to be
subject to this Article 7 and the provisions set forth in Article 10; and (c) the parties shall, in all events, remain bound by and continue to be subject to Section 4.7
(Publicity). 


        7.4    Nonexclusivity of Termination Rights.    The termination rights provided in Section 7.1 shall not be
deemed to be exclusive. Accordingly, the exercise by any party of its right to terminate this Agreement pursuant to Section 7.1 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other right or remedy that such party may be entitled to exercise (whether under this Agreement, under any other Contract, under
any statute, rule or other Legal Requirement, at common law, in equity or otherwise). 


8.    INDEMNIFICATION, ETC.


        8.1    Survival of Representations and Warranties.    The representations and warranties made by Conexant in
Section 2 and by Carlyle in Section 3 shall survive the Closing until [...***...]; except that (i) the representations and warranties in Sections 2.5
(Intellectual Property) and 2.9 (Environmental Matters) and all claims and causes of action with respect thereto, shall survive the Closing until [...***...]; (ii) the
representations and warranties in Section 2.6 (Employee Matters) and in Section 2.15 (Tax Matters), and all claims and causes of action with respect thereto, shall survive until
[...***...]; and (iii) the Newport Fab LLC Representations shall survive the Closing [...***...]. If a Claim Notice (as defined below) relating
to any representation or warranty set forth in any of said Sections is given to the appropriate party on or prior to the expiration of the applicable survival period for such representation or
warranty, then, notwithstanding anything to the contrary contained in this Section 8.1, such representation or warranty shall not expire, but rather shall remain in full force and effect until
such time as any breach or alleged breach of such representation or warranty has been fully and finally resolved. For purposes of this
Agreement, a "Claim Notice" relating to a particular representation or warranty shall be deemed to have been given if any Indemnitee, acting in good
faith, delivers to the indemnifying party a written notice stating that such Indemnitee believes that there is or has been a possible breach of such representation or warranty and containing
(i) a reasonably detailed description of the circumstances supporting such Indemnitee's belief that there is or has been such a possible breach, and (ii) if reasonably determinable under
the circumstances, a non-binding, preliminary estimate of the aggregate dollar amount of the actual Damages that have arisen as a result of such possible breach. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


27





 

        8.2    Indemnification by Conexant.    



         (a)   From and after the date of this Agreement, Conexant shall hold harmless and indemnify the Company Indemnitees and the Carlyle Indemnitees
from
and against, and shall compensate and reimburse the Company Indemnitees and the Carlyle Indemnitees for, any Damages that are suffered or incurred by the Company Indemnitees or the Carlyle Indemnitees
(regardless of whether or not such Damages relate to any third-party claim) that arise from: 



         (i)    any breach of any of the representations or warranties made by Conexant in Section 2 of this Agreement or the failure of any
such
representations or warranties to be true and correct as of the Closing Date; 



        (ii)   any breach of or noncompliance with any covenant or obligation of Conexant contained in this Agreement or the Newport Fab Contribution
Agreement; 


         (iii)   any Liability of Conexant or Newport Fab LLC other than the Assumed Liabilities; 


         (iv)  any Environmental Condition (or any Environmental Claim arising out of or relating to any Environmental Condition) relating to the Wafer
Fabrication Operations or any of the Contributed Assets, or other operations, facilities, or assets of the Conexant Group Companies, which condition was in existence on, or arose, on or before the
Closing Date, or that is attributable to the Wafer Fabrication Operations or the Contributed Assets on or before the Closing Date, including but not limited to, the scheduled items under
Part 2.9 of the Conexant Disclosure Schedule; [...***...] 


         (v)   any Liability arising out of the Collective Bargaining Agreement other than any such Liability expressly included within the Assumed
Liabilities; 


         (vi)  [...***...] or 


         (vii)   any Liability arising out of (a) the failure of the Retirement Plan to be qualified under the Code (other than any failure
first arising or occurring after May 1, 2002); (b) the failure to prepare and distribute a summary plan description to participants and beneficiaries of the Retirement Plan who were
entitled to receive such summary plan description prior to May 1, 2002; and (c) the failure of Conexant to tender any contribution to the Retirement Plan required to be paid or which
accrue prior to May 1, 2002 pursuant to any applicable Legal Requirement. To the extent that, following the Closing, the Internal Revenue Service notifies the Company in writing that the
Retirement Plan is not qualified under the Code (other than a failure first arising or occurring after May 1, 2002), (i) the Company shall, as soon as may be reasonably practical
thereafter, remedy such failure or terminate the Retirement Plan and replace such Retirement Plan with one or more plans that are qualified under the Code and (ii) Conexant shall indemnify and
hold harmless the Company Indemnitees and the Carlyle Indemnitees for any and all Damages incurred by the Company Indemnitees and the Carlyle Indemnitees arising out of or relating to the remedy of
such failure of the Retirement Plan to be so qualified or the termination and replacement of the Retirement Plan contemplated by the foregoing clause (i) of this sentence. 







Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


28





 

         (b)   Conexant shall not be required to make any indemnification payment pursuant to clause (i) of Section 8.2(a) (other than for
breach
of the Newport Fab LLC Representations) until such time as the total amount of all Damages (including the Damages arising from such breach and all other Damages arising from any other breaches of any
representations or warranties) that have been suffered or incurred by the Company Indemnitees and the Carlyle Indemnitees exceeds [...***...], in which case the Company
Indemnitees and the Carlyle Indemnitees shall be entitled to be indemnified against and compensated and reimbursed only for that portion of such Damages that exceed
[...***...]. The total amount of Damages which Conexant shall be obligated to pay to the Company Indemnitees or Carlyle Indemnitees pursuant to clause (i) of
Section 8.2(a) of this Agreement (other than for any IP Representation Breach and other than for any breach of a Newport Fab LLC Representation) shall not exceed
[...***...] in the aggregate, and the total amount of Damages which Conexant shall be obligated to pay to the Company Indemnitees or Carlyle Indemnitees for
[...***...]. The total amount of Damages which Conexant shall be obligated to pay to the Company Indemnitees or Carlyle Indemnitees pursuant to clause (i) of
Section 8.2(a) [...***...] shall not exceed [...***...] in the aggregate (other than for breaches of the Newport Fab LLC Representations).
Notwithstanding the foregoing, (i) in the event that any Company Indemnitees or Carlyle Indemnitees incur any Damages as a result of or relating to any breach of or any inaccuracy of
[...***...] and (ii) such Company Indemnitees or Carlyle Indemnitees are not entitled to recover any portion of such Damages by reason of the limitations set forth in
the immediately preceding sentence, the aggregate dollar amount of all Wafer Credits (as defined in the Long-Term Supply Agreement) provided for under the Long-Term Supply
Agreement shall be reduced [...***...]. The foregoing limitations shall in no way limit the ability of any Company Indemnitee or any Carlyle Indemnitee to recover for Damages
pursuant to clauses (ii) through (vi) of Section 8.2(a) or for any breach of the Newport Fab LLC Representations. 




        8.3    Indemnification by the Company.    



         (a)   From and after the date of this Agreement, the Company shall hold harmless and indemnify the Conexant Indemnitees and the Carlyle
Indemnitees
from and against, and shall compensate and reimburse the Conexant Indemnitees and the Carlyle Indemnitees for, any Damages that are suffered or incurred, directly or indirectly, by the Conexant
Indemnitees or the Carlyle Indemnitees (regardless of whether or not such Damages relate to any third-party claim) that arise from: 



         (i)    any breach of any covenant or obligation of the Company contained in this Agreement; 


         (ii)   any failure on the part of the Specialtysemi Group Companies to guarantee, perform and discharge the Assumed Liabilities on a timely
basis; 


         (iii)   [...***...] 



        (iv)  any Liability arising out of the Collective Bargaining Agreement to the extent expressly included in the Assumed Liabilities. 





        8.4    Indemnification by Carlyle.    



         (a)   From and after the date of this Agreement, Carlyle shall hold harmless and indemnify the Company Indemnitees and the Conexant Indemnitees
from
and against, and shall compensate and reimburse the Company Indemnitees and the Conexant Indemnitees for, any Damages that are suffered or incurred, directly or indirectly, by the Company Indemnitees
or the Conexant Indemnitees (regardless of whether or not such Damages relate to any third-party claim) that arise from: 



         (i)    any breach of any of the representations or warranties made by Carlyle in Section 3 of this Agreement or the failure of any
such
representations or warranties to be true and correct as of the Closing Date; or 


        (ii)   any breach of or noncompliance with any covenant or obligation of Carlyle contained in this Agreement. 







Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


29





 

         (b)   Carlyle shall not be required to make any indemnification payment pursuant to clause (i) of Section 8.4(a) until such time as
the
total amount of all Damages (including the Damages arising from such breach and all other Damages arising from any other breaches of any representations or warranties) that have been suffered or
incurred by any one or more of the Company Indemnitees or the Conexant Indemnitees exceeds [...***...]. If the total amount of such Damages exceeds
[...***...], the Company Indemnitees shall be entitled to be indemnified against and compensated and reimbursed only for that portion of such Damages that exceed
[...***...]. The total amount of Damages which Carlyle shall be obligated to pay to the Company Indemnitees pursuant clause (i) of Section 8.4(a) of this
Agreement shall not exceed [...***...]. The foregoing limitations shall in no way limit the ability of any Conexant Indemnitee or any Company Indemnitee to recover Damages
pursuant to clause (ii) of Section 8.4(a). 




        8.5    Setoff.    The parties hereto agree that any payments required to be made by any party pursuant to this
Section 8 shall be made without any withholding, deduction or set-off, and each party hereto agrees not to assert a right of set-off at common law or otherwise. All
amounts paid with respect to indemnity claims under this Agreement, and amounts paid pursuant to Sections 1.4, 1.5, and 10.3 of this Agreement, shall be treated by the parties hereto for all Tax
purposes as purchase price adjustments other than amounts paid pursuant to Sections 1.4 and 1.5, which are required to be treated as interest payments under the Code or the Treasury Regulations
promulgated thereunder. 


        8.6    Defense of Third Party Claims.    In the event of the assertion or commencement by any Person (other than any
party hereto) of any claim or Proceeding (whether against the Company, Carlyle or Conexant, or against any other Indemnitee or against any other Person) with respect to which any party hereto may
become obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee pursuant to this Section 8, the Indemnitee shall have the right, at its election, to either
(i) assume the defense of such claim at the Indemnitee's sole expense, or (ii) designate the indemnifying party to assume the defense of such claim or Proceeding at the sole expense of
the indemnifying party. If the Indemnitee so elects to designate the indemnifying party to assume the defense of any such claim or Proceeding: 



         (a)   the indemnifying party shall proceed to defend such claim or Proceeding in a diligent manner with counsel reasonably satisfactory to the
Indemnitee; 


         (b)   the Indemnitee shall make available to the indemnifying party any non-privileged documents and materials in the possession of the
Indemnitee that may be necessary to the defense of such claim or Proceeding; 



        (c)   the indemnifying party shall keep the Indemnitee informed of all material developments and events relating to such claim or Proceeding;



         (d)   the Indemnitee (at its own expense) shall have the right to participate in the defense of such claim or Proceeding; 


         (e)   the indemnifying party shall not settle, adjust or compromise such claim or Proceeding without the prior written consent of the
Indemnitee; and 



        (f)    the Indemnitee may at any time (notwithstanding the prior designation of the indemnifying party to assume the defense of such claim
or
Proceeding) assume the defense of such claim or Proceeding at its own expense. 




        If
the Indemnitee does not elect to designate the indemnifying party to assume the defense of any such claim or Proceeding (or if, after initially designating the indemnifying party to
assume such defense, the Indemnitee elects to assume such defense), the Indemnitee may proceed with the defense of such claim or Proceeding on its own. If the Indemnitee so proceeds with the defense
of any such claim or Proceeding on its own: 




        (i)    all expenses relating to the defense of such claim or Proceeding (whether or not incurred by the Indemnitee) shall be borne and paid
exclusively
by the Indemnitee; 







Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


30





 


         (ii)   the indemnifying party shall make available to the Indemnitee any documents and materials in the possession or control of either of the
indemnifying party that may be necessary to the defense of such claim or Proceeding; 


         (iii)   the Indemnitee shall keep the indemnifying party informed of all material developments and events relating to such claim or
Proceeding; and 


        (iv)  the Indemnitee shall have the right to settle, adjust or compromise such claim or Proceeding with the prior written consent of the indemnifying
party; provided, however, that the indemnifying party shall not unreasonably withhold such consent. Such consent will not be considered to have been
unreasonably withheld if the settlement, adjustment or compromise does not provide for a full release of the indemnifying party from any further claims with respect to the matter at issue. 





        The
foregoing provisions of this Section 8.6 shall not apply to any claim or Proceeding subject to indemnification pursuant to Section 8.10. 



        8.7    Sole and Exclusive Remedy.    The indemnification rights set forth in this Section 8 shall be the sole
and exclusive remedy of any party hereto following the Closing with respect to any claim directly or indirectly (whether in tort, at law or in equity) arising out of or resulting from this Agreement,
and, except with respect to Sections 1.4 and 1.5, the dispute resolution procedures in Section 10.18 shall be the sole method by which to resolve any such claim. 


        8.8    Exercise of Remedies by Indemnitees other than Parties to this Agreement.    No Indemnitee (other than the
parties to this Agreement or any successor thereto or assign thereof) shall be permitted to assert any indemnification claim or exercise any other remedy under this Agreement unless the respective
party to this Agreement entitled to indemnification (or any successor thereto or assign thereof) shall have consented in writing to the assertion of such indemnification claim or the exercise of such
other remedy. 


        8.9    Additional Procedures Relating to Environmental Claims.    



         (a)   Section 8.6 shall govern the procedures for indemnification of any Environmental Condition or Environmental Claim brought by a third
party. With respect to any Environmental Claim for which a party seeks any indemnification pursuant to this Section 8, the Indemnitee shall be entitled to participate in the defense of such
Environmental Claim pursuant to Section 8.6, and such participation shall include: (i) receiving copies of all reports, work plans and analytical data submitted to governmental agencies,
any other non-privileged documents and correspondence materially bearing on the Environmental Claim, and notices of material meetings; (ii) the opportunity to attend and participate
in such material meetings; and (iii) the right of reasonable consultation with the indemnifying party. 


         (b)   With respect to any Environmental Condition or Environmental Claim brought by a third party for which the Indemnitee designates the
indemnifying
party to assume the defense pursuant to Section 8.6, the indemnifying party shall exercise its authority in good faith and in a responsible manner, and any activities conducted in connection
therewith shall be undertaken promptly and concluded as expeditiously and as economically as practicable using commercially reasonable efforts, subject to the schedules and approvals required by the
applicable Governmental Bodies. Any actions taken by the indemnifying party shall not unreasonably interfere with the operation of the Wafer Fabrication Operations. The parties agree to reasonably
cooperate with one another in connection with addressing any Environmental Claim brought by a third party for which a party seeks any indemnification pursuant to Section 8. Either party may
take such action as is reasonable under the circumstances to respond to an actual or threatened emergency or imminent endangerment situation arising from any Environmental Claim brought by a third
party for which a party seeks any indemnification pursuant to Section 8. 


         (c)   [...***...] 




        8.10    Additional Indemnification by Conexant    



        (a)   [...***...] 






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


31







  



         (b)   In the event of any assertion or commencement by any Person of any claim or Proceeding against the Company or any Subsidiary in respect
of or
relating to any [...***...], the Company shall (i) notify Conexant in writing, (ii) have the right to defend such claim or Proceeding and (iii) be
entitled to settle, adjust or compromise such Proceeding (without the consent of Conexant). Any settlement of any such claim or Proceeding without the consent of Conexant shall not limit or impair the
ability of the Company to recover the amounts specified in Section 8.10(a). Conexant shall reasonably cooperate with the Company in connection with the Company's defense of such claim or
Proceeding (at the cost and expense of Conexant) and shall provide to the Company such information as may be reasonably requested by the Company in connection with the defense of such claim or
Proceeding; provided that such cooperation shall not require Conexant to defend any such claim or Proceeding. 


         (c)   Any amounts which the Company Indemnitees shall be entitled to recover from Conexant pursuant to Section 8.10(a) (the "Recovered
Amounts")
shall be recovered by reducing any payments to be made by the Company pursuant to Section 1.5 by any Recovered Amounts, and such reduction in payments shall be the sole and exclusive source of
payment of the indemnification obligations of Conexant pursuant to this Section 8.10(a). 




9.    COVENANTS OF THE PARTIES AFTER THE CLOSING.


        9.1    Access to Information.    In order to facilitate the resolution of any claims made against or incurred by any
party following the Closing, for a period of seven years after the Closing, each of Conexant and the Specialtysemi Group Companies shall (i) retain all books, records, documents and other
information pertaining to the Wafer Fabrication Operations, the Contributed Assets, the Assumed Liabilities, and the Excluded Liabilities, in a manner reasonably consistent with the standard industry
practices or with GAAP, if applicable, and (ii) upon reasonable notice, afford the officers, employees, authorized agents, accountants, counsel and representatives of the other parties
reasonable access (including the right to make photocopies at such other party's expense) during normal business hours, to such books, records documents and other information. 



        9.2    Election Out of Installment Method.    Conexant may, in its sole discretion, choose to make the election
described in Section 453(d) of the Code, with respect to the transactions contemplated hereby, provided that Conexant and the Company agree on the fair market value of the Company's obligation
to make payments to Conexant pursuant to Sections 1.4 and 1.5 of this Agreement. 


        9.3    Certain Agreements Concerning the Specified Excluded Assets.    Following the Closing, Conexant shall provide
to the Specialtysemi Group Companies, at no cost to the Specialtysemi Group Companies, complete, unfettered and exclusive use of and access to the assets listed on Schedule 1.1 (b) and
the assets physically located on the floor plan attached to Schedule 1.1(b) (the "Specified Excluded Assets") which shall include the right to
repair and maintain the Specified Excluded Assets. At all times following the Closing, the Company shall maintain the Specified Excluded Assets to the extent and in the manner determined by the
Specialtysemi Group Companies. Conexant agrees that at all times prior and subsequent to the Closing, Conexant will not (i) remove any of the Specified Excluded Assets from their current
location or (ii) sell, transfer, convey or encumber any interest in any of the Specified Excluded Assets. The Specialtysemi Group Companies shall have no liability to pay any amount to Conexant
in respect of the use of and access to the Specified Excluded Assets provided pursuant to this Section 9.3. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


32





 

10.    MISCELLANEOUS PROVISIONS.


        10.1    Publicity.    Without limiting the generality of anything contained in Section 4.7, each party to this
Agreement shall ensure that, on and at all times after the Closing Date: (a) no press release or other publicity concerning any of the Transactions is issued or otherwise disseminated by or on
behalf of such party without the other party's prior written consent; (b) such party shall continue to keep the terms of this Agreement and the other Transactional Agreements strictly
confidential; and (c) such party shall keep strictly confidential, and shall not use or disclose to any other Person (other than a Representative or investor of the disclosing party), any
non-public document or other non-public information that relates directly or indirectly to the business of the Company. Notwithstanding the provisions of Section 4.7 or
this Section 10.1, any party to this Agreement shall be permitted to disclose the terms of the Agreement in order to comply with applicable laws or regulations (such as disclosure to the United
States Securities and Exchange Commission or to their foreign equivalents), or to comply with a court or administrative order, provided that the other parties hereto receives prior written notice of
such disclosure and that the disclosing party takes all reasonable
and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. 


        10.2    Further Assurances.    Each party hereto shall execute and/or cause to be delivered to each other party hereto
such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing
any of the Transactions. 


        10.3    Fees and Expenses.    



         (a)   Each party to this Agreement shall bear and pay all fees, costs and expenses (including all legal fees and expenses) that have been
incurred or
that are in the future incurred by, on behalf of or for the benefit of such party in connection with: (i) the negotiation, preparation and review of any letter of intent or similar document
relating to any of the Transactions; (ii) the investigation and review conducted by such party and its Representatives with respect to the Transactions; (iii) the negotiation,
preparation and review of this Agreement, the other Transactional Agreements and all bills of sale, assignments, certificates, opinions and other instruments and documents delivered or to be delivered
in connection with the Transactions; (iv) the preparation and submission of any filing or notice required to be made or given in connection with any of the Transactions, and the obtaining of
any Consent required to be obtained in connection with any of the Transactions; and (v) the consummation and performance of the Transactions; provided
however, that, if the Closing shall occur, then the Company shall pay (i) to Carlyle an amount equal to the total amount of all fees, costs and expenses incurred by
Carlyle (including without limitation all accounting, legal, environmental consulting, financial and investment banking fees, costs and expenses) in connection with the Transactions up to a maximum of
$4,500,000 (which amount shall include the transaction fees payable to Carlyle pursuant to Section 3(b) of the Carlyle Management Services Agreement), and (ii) to Conexant an amount
equal to the total amount of all outside legal fees, costs and expenses incurred by Conexant in connection with the Transactions. Any payments required to be made by the Company to Carlyle or Conexant
pursuant to the preceding sentence shall be made by wire transfer of immediately available funds to the relevant party within five (5) business days of the receipt by the Company from time to
time of one or more invoices from Carlyle or Conexant, as applicable, reflecting such fees, costs and expenses. 




        10.4    Attorneys' Fees.    If any legal action or other legal proceeding relating to any of the Transactional
Agreements or the enforcement of any provision of any of the Transactional Agreements is brought against any party to this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled). 


33





 

        10.5    Notices.    Any notice or other communication required or permitted to be delivered to any party under this
Agreement shall be in writing and shall be deemed properly delivered, given and received
when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to
such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto): 



	if to Conexant:	 	 
	 	 	Conexant Systems, Inc.

4311 Jamboree Road

Newport Beach, CA 92660

Attn: General Counsel

Facsimile: (949) 483-9576
	with a copy to:	 	 
	 	 	Cooley Godward LLP

4401 Eastgate Mall

San Diego, CA 92121

Attn: Carl R. Sanchez, Esq.

Facsimile: (858) 550-6420
	if to the Company or Carlyle:	 	 
	 	 	Carlyle Capital Investors, L.L.C.

c/o The Carlyle Group

101 S. Tryon Street, 25th Floor

Charlotte, N.C., 28280

Attn: Claudius E. Watts, IV

Facsimile: (704) 632-0299
	with a copy to:	 	 
	 	 	Latham & Watkins

555 11th Street N.W., Ste 1000

Washington, D.C., 20004-1304

Attn: Raymond B. Grochowski, Esq.

Facsimile: (202) 637-2201






        10.6    Time of the Essence.    Time is of the essence of this Agreement. 


        10.7    Headings.    The headings contained in this Agreement are for convenience of reference only, shall not be
deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement. 



        10.8    Governing Law.    This Agreement shall be construed in accordance with, and governed in all respects by, the
internal laws of the State of Delaware (without giving effect to principles of conflicts of laws). 


        10.9    Successors and Assigns; Parties in Interest.    



        (a)   This Agreement shall be binding upon and inure to the benefit of the Company; Conexant; and Carlyle, and the respective successors and
assigns
(if any) of the foregoing. 


         (b)   No party to this Agreement shall be permitted to assign any of his or its rights or delegate any of his or its obligations under this
Agreement
without the prior written consent of the other parties; except that (i) Carlyle may, without such consent, assign all such rights to any Affiliate controlling Carlyle or to any Person providing
financing to the Company as collateral security for such financing provided that no such assignment shall relieve the Company or Carlyle from any of their respective obligations hereunder,
(ii) Conexant may, without such consent, assign 



34





 




all
such rights to any Affiliate controlling Conexant, and (iii) following the Closing, any party may, without such consent, assign all such rights to any Person who acquires, directly or
indirectly, all or any substantial portion of the assets or securities of such Person. 



        (c)   None of the provisions of this Agreement is intended to provide any rights or remedies to any Person other than the parties to this
Agreement and
their respective successors and assigns (if any). Without limiting the generality of the foregoing, (i) no employee of Conexant shall have any rights under this Agreement or under any of the
other Transactional Agreements (other than the Employment Agreements), and (ii) no creditor of Conexant, Carlyle or the Company shall have any rights under this Agreement or any of the other
Transactional Agreements. 




        10.10    Remedies Cumulative; Specific Performance.    The rights and remedies of the parties hereto shall be
cumulative (and not alternative). The parties hereto agree that: (a) in the event of any breach or threatened breach by any party of any covenant, obligation, or other provision of this
Agreement applicable to such party, the other parties shall be entitled (in addition to any other remedy that may
be available) to (i) a decree or order of specific performance or mandamus to enforce the observance and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such breach or threatened breach; and (b) neither such other parties nor any other Indemnitee shall be required to provide any bond or other security in connection with
any such decree, order or injunction or in connection with any related action or Proceeding. 


        10.11    Waiver.    



         (a)   No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of
any
Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. 



        (b)   No Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this
Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Person; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is given. 




        10.12    Amendments.    This Agreement may not be amended, modified, altered or supplemented other than by means of a
written instrument duly executed and delivered on behalf of Conexant and Carlyle. The Company expressly agrees, by the signature of its authorized representative on the signature page hereof, that no
amendment shall require the consent or signature of the Company. 


        10.13    Severability.    In the event that any provision of this Agreement, or the application of any such provision
to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to
Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and
enforceable to the fullest extent permitted by law. 


        10.14    Counterparts.    This Agreement may be executed in several counterparts, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement. 


        10.15    Entire Agreement.    This Agreement and the Transactional Agreements, together with all exhibits and
schedules hereto and thereto, and that certain Non-Disclosure Agreement dated October 12, 2001 by and between Conexant and TC Group, LLC set forth the entire understanding of the
parties relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or between any of the parties relating to the subject matter hereof and thereof. 


35





 



        10.16    Construction.    



        (a)   For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine
gender
shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders. 


         (b)   The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall
not be
applied in the construction or interpretation of this Agreement. 


        (c)   All monetary amounts referenced herein are denominated in United States Dollars. 


         (d)   As used in this Agreement, the words "include" and "including," and variations thereof, shall not be deemed to be terms of limitation,
but rather
shall be deemed to be followed by the words "without limitation." 


         (e)   Except as otherwise indicated, all references in this Agreement to "Sections" and
"Exhibits" are intended to refer to Sections of this Agreement and Exhibits to this Agreement. 




        10.17    No Implied Licenses.    Nothing in this Agreement is intended or shall be construed to grant to the Company,
Carlyle or any other Person, by implication, estoppel or otherwise, any license under any Intellectual Property (other than the licenses granted pursuant to the License Agreements) owned by Conexant
that is not included within the Contributed Assets. 


        10.18    Dispute Resolution; Arbitration.    



         (a)   The parties hereto will act in good faith and use commercially reasonable efforts to promptly resolve any claim, dispute, controversy or
disagreement arising out of or relating to or in connection with this Agreement or the breach, termination or validity hereof (each a "Dispute") between
the parties or any of their respective Subsidiaries or affiliates under or related to this Agreement or any of the transactions contemplated hereby. 



        (b)   Upon the written request (a "Request") of any party, the relevant parties shall
commence good
faith negotiations with the goal of resolving the Dispute on a mutually satisfactory basis. If the Dispute has not been resolved to the satisfaction of all relevant parties within fifteen
(15) calendar days after the date on which the Request is delivered, the Dispute shall immediately be referred to senior officers of each relevant party. The senior officers of each party
(e.g., chief executive officer and/or chief financial officer or senior or executive vice president) shall meet immediately, and in no case later than
30 calendar days after the date on which the Request is delivered, for a minimum of two business days with a mutually selected mediator and attempt in good faith to negotiate a resolution of the
Dispute. If the parties are unable to resolve the Dispute within 35 calendar days after the date on which the Request is delivered, then any relevant party may submit the Dispute to arbitration as the
exclusive means of resolving it in accordance with the procedures set forth in this Section. 


         (c)   Except as otherwise specified in this Section, any Dispute not resolved through the procedure set forth above shall be finally settled by
arbitration in accordance with the Rules and Procedures of the American Arbitration Association (the "Arbitration Rules"), which are deemed to be
incorporated by reference herein except as otherwise modified herein. 


         (d)   The arbitration situs shall be Wilmington, Delaware, and the laws of the State of Delaware shall be applied. 


         (e)   In the event of an arbitration involving two parties, there shall be one arbitrator who shall be jointly nominated by such parties. In
the event
of an arbitration involving more than two parties, there shall be three arbitrators who shall be jointly nominated by the parties. If the parties 



36





 




fail
to so nominate the arbitrators within 30 days from the date when the Dispute is submitted to arbitration pursuant to this Section, at the request of any party, the arbitrator(s) shall be
appointed in accordance with the Arbitration Rules. 


         (f)    The arbitration hearing shall commence no later than 30 days following the appointment of the sole arbitrator or after the
appointment of
the last of the three arbitrators, as the case may be, and the final award shall be rendered no later than 30 calendar days following the close of the hearing. 


         (g)   Consistent with the expedited nature of arbitration, each party will, upon the written request of the other party, provide the other with
copies
of documents relevant to the issue raised by any claim or counterclaim. Other discovery may be ordered by the panel to the extent the panel deems additional discovery relevant and appropriate, and any
dispute regarding discovery, relevance or scope thereof, shall be determined by the panel, which determination shall be conclusive. 



        (h)   By agreeing to arbitration, the parties do not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction,
pre-arbitral attachment, injunctive or other equitable relief or an order in aid of arbitration proceedings and the enforcement of any award. Without prejudice to such provisional remedies
in aid of arbitration as may be available under the jurisdiction of a national court, the arbitral tribunal shall have full authority to grant provisional remedies and to award damages for the failure
of any party to respect the arbitral tribunal's orders to that effect. 


         (i)    The award shall be final and binding upon the parties, and shall be the sole and exclusive remedy between the parties regarding any
claims,
counterclaims, issues, or accounting presented to the arbitral tribunal in connection with the Dispute. Judgment upon any award may be entered in any court having competent jurisdiction thereof. 


         (j)    The costs of the arbitration shall be borne as determined in accordance with the Arbitration Rules; provided,

however, that to the extent a party is non-prevailing or unsuccessful on a claim in an arbitration proceeding under this Section, as determined by the
arbitrator(s), that party shall pay the prevailing or successful party's costs and expenses incurred in connection with the arbitration of
that Dispute, including attorneys' fees and arbitration expenses, whether or not such Dispute is prosecuted to award or judgment. 



        (k)   Subject to the receipt of any applicable governmental approval, any monetary award shall be made and promptly payable in U.S. dollars if
due in
U.S. dollars, free of any deduction or offset, and the arbitral tribunal shall be authorized in its discretion to grant pre-award and post-award interest at commercial rates.
The arbitral tribunal shall have the authority to award any remedy or relief proposed by the claimants or respondents pursuant to this Agreement, including without limitation, a declaratory judgment,
specific performance of any obligation created under this Agreement or the issuance of an injunction. 



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


37






        The
parties to this Agreement have caused this Agreement to be executed and delivered as of the date first above written. 



	 	 	SPECIALTYSEMI, INC.,

a Delaware corporation
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/  CLAUDIUS E. WATTS IV      
 Name:  Claudius E. Watts IV

Title:    President
	 	 	 	 
	 	 	CONEXANT SYSTEMS, INC.,

a Delaware corporation
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/  DWIGHT DECKER      
 Name:  Dwight Decker

Title: Chief Executive Officer
	 	 	 	 
	 	 	CARLYLE CAPITAL INVESTORS, L.L.C.

a Delaware limited liability company
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/  CLAUDIUS E. WATTS IV      
 Name:  Claudius E. Watts IV

Title:    President




[SIGNATURE
PAGE TO ASSET CONTRIBUTION AGREEMENT] 






   EXHIBIT A  


 CERTAIN DEFINITIONS  


        For purposes of the Agreement (including this Exhibit A): 



        "Affiliate" shall mean, with respect to any Entity, any other Entity controlled by, controlling, or under common control with such first
Entity. 


        "Agreement" shall mean the Asset Contribution Agreement to which this Exhibit A is
attached (including the Conexant Disclosure Schedule and the Carlyle Disclosure Schedule), as it may be amended from time to time. 


        "Assumed Liabilities" shall mean only the following Liabilities: 



        (i)    all Liabilities arising under or out of the Transferred Contracts (other than Liabilities arising out of breaches or violations by
the Conexant
Group Companies occurring prior to the Closing Date) for performance of or payments to be made under the Transferred Contracts that accrue in respect of events following the Closing Date;  provided however, that any payment obligations arising under the Transferred Contracts for products or services received by the Conexant Group Companies
prior to the Closing Date shall not be deemed an Assumed Liability, and Conexant shall remain liable for any such payments; 



        (ii)   all Liabilities arising, accruing or occurring under or out of that certain Labor Agreement, effective May 1, 1998 between Conexant
and
Local Union No. 2295 of the International Brotherhood of Electrical Workers (the "Collective Bargaining Agreement") on or after June 1,
2002 to the extent provided in the Employee Matters Agreement; 


         (iii)   all Liabilities other than Excluded Liabilities arising on or after the Closing Date out of the ownership or use of the
Contributed Assets or the conduct of the Wafer Fabrication Operations by the Specialtysemi Group Companies on or after the Closing Date; 



        (iv)  all Liabilities related to the capital expenditures and other acquisition commitments identified on Schedule 1.2(b)(v); and 


         (v)   all employment related liabilities set forth on Schedule 1.2(b)(ii). 




        "Carlyle Disclosure Schedule" shall mean the schedule of exceptions (dated as of the date of the Agreement), delivered by Carlyle, if any
that is attached to the Agreement and incorporated in the Agreement by reference. 



        "Carlyle Indemnitees" shall mean the following Persons: (a) Carlyle; (b) Carlyle's current and future Affiliates (other than
the Company); (c) the respective Representatives of the Persons referred to in clauses (a) and (b) above; and (d) the respective successors and assigns of the Persons
referred to in clauses (a) through (c) above. 


        "Carlyle Material Adverse Effect" shall mean any change in, or circumstances relating to, Carlyle that adversely affects Carlyle's ability
to contribute the cash to the Company pursuant to Section 1.2 of this Agreement. 



        "Class A Common Stock" shall mean the class of Common Stock of the Company that at all times, in the aggregate, carries at least
51% of the total equity voting power of the Company, regardless of the Percentage Interest represented thereby, and for which all other terms are identical to Class B Common Stock. 


        "Class B Common Stock" shall mean the class of Common Stock of the Company consisting of all Common Stock that is not
Class A Common Stock, and that is subject to terms that are identical to Class A Common Stock except for aggregate voting percentage. 


A-1





 



        "Code" shall mean the Internal Revenue Code of 1986, as amended. 


        "Common Stock" shall mean the common stock of the Company, par value $.001 per share, including all of the Class A Common Stock and
the Class B Common Stock. 


        "Company Indemnitees" shall mean the following Persons: (a) the Company and Newport Fab LLC; (b) the Company's current and
future Affiliates (other than Carlyle or Conexant); (c) the respective Representatives of the Persons referred to in clauses (a) and (b) above; and (d) the respective
successors and assigns of the Persons referred to in clauses (a) through (c) above. 


        "Conexant Disclosure Schedule" shall mean the schedule of exceptions (dated as of the date of the Agreement), delivered by Conexant, if
any, a copy of which is attached to the Agreement and incorporated in the Agreement by reference. 



        "Conexant Group Companies" shall mean, collectively: (i) Conexant and (ii) at all times prior to the Closing, Newport Fab
LLC. 


        "Conexant Indemnitees" shall mean the following Persons: (a) Conexant; (b) Conexant's current and future Affiliates (other
than the Company); (c) the respective Representatives of the Persons referred to in clauses (a) and (b) above; and (d) the respective successors and assigns of the Persons
referred to in clauses (a) through (c) above. 


        "Conexant Material Adverse Effect" means any change, event, or circumstance that results in a material adverse effect or change in the
Contributed Assets, Assumed Liabilities, or the results of operations, condition (financial or otherwise) or business of the Wafer Fabrication Operations; provided
however, in no event shall any of the following, either individually or in combination, constitute a Conexant Material Adverse Effect: (i) changes in general business or
economic conditions, (ii) any circumstance, change, or effect solely resulting from or arising out of, directly or indirectly, the fact that the Company or Carlyle (rather than another party)
is a party to the transactions contemplated by any of the Transactional Agreements; (iii) any circumstance, change in or effect resulting solely from or arising out of, directly or indirectly,
actions taken by Conexant that are specifically required by any of the Transactional Agreements to be taken (including any actions taken by Conexant to reduce fixed costs associated with the Wafer
Fabrication Operations as contemplated by Section 4.1(b) of this Agreement); (iv) any failure by Conexant or the Wafer Fabrication Operations to meet internal projections of forecasts,
or published revenue or earnings predictions for any period; and (v) any adverse change, occurrence, effect, state of facts or development solely attributable to the announcement or pendency of
the Transactions (including cancellations or delays in customer orders, termination of employment by employees of the Wafer Fabrication Operations, disruption in supplier, distributor or partner
relationships or any nongovernmental litigation). 


        "Consent" shall mean any approval, consent, ratification, permission, waiver or authorization of any Person (including any Governmental
Authorization). 


        "Contract" shall mean any written agreement, contract, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment,
power of attorney, certificate, purchase order, work order, insurance policy, benefit plan or commitment of any nature. 



        "Contributed Assets" shall mean all right, title, and interest of the Conexant Group Companies in and to only the following assets and
properties: 



         (i)    except as set forth on Schedule 1.1(a)(i)(1), all equipment, machinery, computers, tools, trade fixtures, improvements
(including waste
treatment and pollution control systems, raised floors, walls, HEPA filters, exhaust ductwork, gas and liquid lines, etc.) supplies, materials, furniture, and other tangible personal property used or
held for use in the conduct of the Wafer Fabrication Operations and that are physically located within the blue shaded areas on the floor plan building schematics for Buildings 503 and 505 located at
4311 Jamboree Road, Newport 



A-2





 

Beach,
California attached hereto as Schedule 1.1(a)(i)(2) (the "Identified WFO Property"), and all furniture, personal computers, calculators
and other personal property used by or held for use by the Transferred Employees (the "Transferred Employees' Property"); 



        (ii)   all equipment, machinery, computers, tools, fixtures, supplies, materials, furniture, and other tangible property related to the Wafer
Fabrication Support Operations that are specifically listed on Schedule 1.1.(a)(ii) (together with the Identified WFO Property and the Transferred Employees' Property, the
"Tangible Personal Property"); 


         (iii)   the Inventory owned by the Conexant Group Companies as of the Closing Date (as defined in Section 1.7); 



        (iv)  the spare parts used in the Wafer Fabrication Operations and owned by the Conexant Group Companies as of the Closing Date; 


         (v)   all contracts listed on Schedule 1.1(a)(v), including any purchase orders related to such contracts (the  "Transferred Contracts"); 


         (vi)  except as set forth on Schedule 1.1(a)(vi)(1) and except for any patent and patent applications not listed on
Schedule 1.1(a)(vi)(1) that are primarily related to the Product Technology (collectively, the "Excluded Patent Rights"), the patent and patent
applications set forth on Schedule 1.1(a)(vi)(2) and all other all patents, patent applications and worldwide patent rights to all invention disclosures (which invention disclosures have been
submitted to Conexant in writing as of the date of the Closing) primarily related to the Process Technology (collectively, the "Transferred Patents").
Notwithstanding the foregoing, the Excluded Patent Rights shall not include any patents, patent applications or disclosures set forth on Schedule 1.1(a)(vi)(2); 



        (vii)   the know-how, trade secrets and other intellectual property primarily related to the Process Technology, including,
without limitation, the know how, trade secrets, and other intellectual property rights described on Schedule 1.1(a)(vii) (collectively, the "Transferred
Know-How"); 


         (viii)   all Governmental Authorizations primarily relating to the operation of the Wafer Fabrication Operations, to the extent such
Governmental Authorizations were transferred or are transferable by Conexant to Newport Fab LLC pursuant to the Newport Fab Contribution Agreement (the "Transferred
Permits"); 


         (ix)  All claims, causes of action and rights of set-off relating to any of the Contributed Assets other than claims, causes of action and
rights of set-off for infringement, misappropriation or violation of the Transferred Intellectual Property that occurred prior to the Closing Date; 


         (x)   (a) all records and lists of Conexant Group Companies primarily relating to Wafer Fabrication Operations and the assets described in
clauses
(i) through (ix) of this definition of "Contributed Assets", including without limitation all records and lists pertaining to all external customers and suppliers of and to the Wafer
Fabrication Operations, (b) all product, business, and marketing plans of Conexant Group Companies primarily pertaining to the Wafer Fabricating Operations, (c) all books, ledgers,
files, reports, plans, drawings, and operating records related primarily to the Wafer Fabrication Operations or the assets described in clauses (i) through (ix) of this definition of
"Contributed Assets", and (d) to the extent permitted by applicable Legal Requirements, personnel records for all Transferred Employees (collectively, the "Books and
Records"); and 


        (xi)  all trusts, trust assets, trust accounts, reserves, insurance policies or other assets of the Conexant Systems, Inc. Retirement Plan for
Hourly Employees (the "Retirement Plan"). 



A-3





 





        "Damages" shall mean any loss, damage, cost injury, liability, claim, demand, settlement, judgment, award, fine, penalty, Tax or expense
of any nature, including without limitation, reasonable fees and disbursements of counsel. 


        "Design Kits" shall mean the semiconductor design kits described on Exhibit J. 


        "Employment Agreements" shall mean those employment agreements to be entered into between the Company and the Key Employees. 



        "Encumbrance" shall mean any lien, pledge, hypothecation, mortgage, security interest, encumbrance, claim, lease, license, Order,
imperfection of title, condition or restriction (including any restriction on the transfer of any asset, any restriction on the receipt of any income derived from any asset, any restriction on the use
of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset). 


        "Entity" shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity. 


        "Environmental Claim" means any and all administrative, regulatory or judicial Proceeding, demands, claims, claims, liens, Encumbrance,
notices of non-compliance or violation, investigations, consents, Orders or consent agreements relating in any way to any Environmental Law or any permit, approval or license under any
Environmental Law (hereinafter "Claims"), including without limitation, (a) any and all Claims by Governmental Bodies for enforcement, cleanup, remediation or other actions or Damages pursuant
to any Environmental Law, and (b) any and all Claims by any Person seeking Damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety or the environment. 


        "Environmental Condition" shall mean (a) a condition relating to or arising or resulting from a failure to comply with any
applicable Environmental Law or any permit, approval or license under any Environmental Law or (b) any and all conditions, including soil, surface water and groundwater contamination, resulting
from the handling or use of any Hazardous Material or the disposal, release or discharge of a Hazardous Material into the environment. 



        "Environmental Law" means any Legal Requirement, now or hereafter in effect and as amended, and any judicial, legislative or
administrative interpretation thereof, including any judicial, legislative or administrative Order relating to the environment; the effect of Hazardous Materials on the environment or human safety or
health; emissions, discharges or releases of Hazardous Materials into the environment, including without limitation into ambient air, surface water, groundwater or land; or otherwise relating to the
handling of Hazardous Materials or the clean-up or other remediation of Hazardous Materials. 


        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. 



        "Excluded Liabilities" shall mean any Liabilities of the Conexant Group Companies, whether arising out of the Wafer Fabrication Operations
or otherwise, including without limitation any liabilities related to or arising from employment, employee benefits and employee benefit plans, the ownership of the Contributed Assets, Taxes,
compliance with Legal Requirements, or any breaches or violations under the Transferred Contracts, in each case, accruing, arising out of, or relating to events and occurrences prior to the Closing. 


        "Governmental Authorization" shall mean any permit, license, certificate, franchise, approval, consent, certification, designation,
registration, qualification or authorization issued or granted by any Governmental Body. 


A-4





 



        "Governmental Body" shall mean any: (a) nation, principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction; (b) federal, state, local, municipal or foreign government (including any agency, department, bureau, division, court, or other administrative or judicial body
thereof); or (c) governmental or quasi-governmental authority of any nature. 


        "Hazardous Material" shall mean: (a) any petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is explosive or radioactive; (c) any "hazardous substance," "pollutant," "contaminant," "hazardous waste," "regulated substance,"
"hazardous chemical," "toxic chemical" or "toxic substance" as designated, listed or defined (whether expressly or by reference) in any statute, regulation or other Legal Requirement (including the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq. and any other so-called "superfund" or "superlien" law, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., and the respective regulations
promulgated thereunder, or any analogous federal, state or local laws and regulations); (d) any other substance or material (regardless of physical form) or form of energy that is subject to
any Legal Requirement which regulates or establishes standards of conduct in connection with, or which otherwise relates to, the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property from the presence in the environment of any solid, liquid, gas, odor, noise or form of energy; and (e) any compound, mixture, solution, product or
other substance or material that contains any substance or material referred to in clause "(a)," "(b)," "(c)," or "(d)" above. 


        "Indemnitee" shall mean any of the Conexant Indemnitees, the Carlyle Indemnitees or the Company Indemnitees. 



        "Independent Accounting Firm" shall mean a nationally recognized public accounting firm that is not then engaged by Conexant, Carlyle or
the Company. 


        "Intellectual Property" shall mean any and all worldwide (a) rights associated with works of authorship, including copyrights,
moral rights, and mask works; (b) trademark and trade name rights and similar rights; (c) trade secret rights; (d) patents and patent rights; (e) other proprietary rights
in know-how, inventions, ideas, algorithms, formula, methods, processes, techniques, proprietary information, software, semiconductor devices, and other types of technology; and
(f) all registrations, applications, renewals, extensions, combinations, divisions, or reissues of the foregoing. 


        "Inventory" shall mean those items of raw materials and work-in-process used to manufacture semiconductor wafers
at the Newport Beach Fab Facility or otherwise related to the Wafer Fabrication Operations. 


        "IP Representation Breach" shall mean a breach of the representation and warranties set forth in Section 2.5 hereof or the failure
of the representations and warranties set forth in Section 2.5 to be true and correct as of the Closing Date. 


        "Specialtysemi Group Companies" shall mean, collectively: (i) the Company and (ii) at all times subsequent to the Closing,
Newport Fab LLC. 


        "Knowledge" shall mean the actual knowledge of Daniel Yannuzzi, Dennis O'Reilly, Sam Talpalatsky, Paul Kempf, Jean Hu, Shu Li, Mark
Becker, Steve Lin, Scott Silcock, Theodore Chu, or Rick Bluth. 


        "Legal Requirement" shall mean any federal, state, foreign, local or municipal law, statute, legislation, constitution, ordinance, code,
edict, rule, regulation, ruling, directive, pronouncement, or interpretation issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Body. 


A-5





 

        "Liability" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued,
unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability). 


        "Licensed Intellectual Property" shall mean all Intellectual Property and all rights to any Intellectual Property licensed to the Company
pursuant to the License Agreements. 


        "Long Term Supply Agreement" shall mean that certain Long Term Supply Agreement by and between the Company and Conexant in the form
attached hereto as Exhibit D. 


        "Membership Interests" shall mean all membership and any other ownership interests in Newport Fab LLC 


        "Newport Beach Fab Facility" shall mean Conexant's semiconductor wafer manufacturing facility located in buildings 501, 503 and 505 at
4311 Jamboree Road, Newport Beach, California, together with any other real property used in the Wafer Fabrication Operations. 



        "Newport Fab Contribution" shall mean the consummation of the contribution of the Contributed Assets to, and assumption of the Assumed
Liabilities by, Newport Fab LLC, as contemplated by the Newport Fab Contribution Agreement. 


        "Newport Fab Contribution Agreement" shall mean the Newport Fab LLC Contribution Agreement dated as of the date hereof by and between
Conexant and Newport Fab LLC. 


        "Newport Fab LLC Representations" shall mean the representations and warranties set forth in Sections 2.20 through 2.25 hereof. 



        "Order" shall mean any order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise put into effect by or under the authority of any Governmental Body or any arbitrator or arbitration panel. 


        "Permitted Encumbrance" shall mean (i) any Encumbrance for Taxes not yet due and payable or which are being contested in good faith
through appropriate proceedings for which adequate reserves have been established in accordance with GAAP on the financial statements, (ii) any Encumbrance with respect to leased equipment that
exists under the express terms of any equipment lease included in the Contributed Assets, and (iii) liens of landlords and liens of carriers, warehousemen, mechanics and materialmen and other
like liens arising in the ordinary course of business for sums not yet due and payable or which are being contested in good faith through appropriate proceedings for which adequate reserves have been
established in accordance with GAAP on the financial statements. 


        "Person" shall mean any individual, Entity or Governmental Body. 



        "Pre-Closing Tax Period" shall mean all taxable periods ending prior to the Closing Date and the portion ending on the Closing
Date of any taxable period that includes but does not end on the Closing Date. 


        "Proceeding" shall mean any action, suit, litigation, arbitration, or investigation (including any civil, criminal or administrative)
commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or any arbitrator or arbitration panel. 


        "Process Technology" shall mean: [...***...] 


        "Product Technology" shall mean [...***...] 


        "Representatives" shall mean officers, directors, employees, shareholders, agents, attorneys, accountants, advisors and representatives. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions
are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


A-6





 

        "Subsidiary" shall mean, in respect of any Person, any Entity of which the majority of each class of Voting Stock (as defined in the
Stockholders Agreement) or other voting equity and the majority of each other class of Capital Stock (as defined in the Stockholders Agreement) is owned by either (a) such Person or
(b) another Subsidiary of such Person. 


        [...***...] 


        "Tax" shall mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value-added tax,
surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll tax), levy,
assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), that is, has been or may
in the future be (a) imposed, assessed or collected by or under the authority of any Governmental Body, or (b) payable pursuant to any tax-sharing agreement or similar
Contract. 


        "Tax Return" shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof. 


        "Transactional Agreements" shall mean: (a) the Agreement; (b) the Stockholder Agreement; (c) the License Agreements;
(d) the Employee Matters Agreement; (e) the Long Term Supply Agreement; (f) the Real Property Lease Agreements; (g) the Assignment and Assumption Agreement; (h) the
Registration Rights Agreement; (i) the Transition Services Agreement; (j) the IT Services Agreement, (k) the Conexant and Carlyle Management Services Agreements, (l) the
Management Rights Agreements, and (m) the Warrant. 


        "Transactions" shall mean (a) the execution and delivery of the respective Transactional Agreements, and (b) all of the
transactions contemplated by the respective Transactional Agreements, including: (i) the contribution of the Membership Interests by Conexant and the contribution of cash by Carlyle to the
Company in accordance with the Agreement; (ii) the guarantee of the Assumed Liabilities by the Company pursuant to the Assignment and Assumption Agreement; (iii) the performance by the
Company, Conexant and Carlyle of their respective obligations under the Transactional Agreements;
and (iv) the exercise by the Company, Conexant and Carlyle of their respective rights under the Transactional Agreements. 


        "Transferred Employees" shall mean those employees of the Conexant Group Companies who become employees of the Specialtysemi Group
Companies after the Closing. 


        "Transferred Intellectual Property" shall mean collectively the Transferred Patents and the Transferred Know-How. 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 


A-7







 
 

DISCLOSURE SCHEDULE
  to
  CONTRIBUTION AGREEMENT
  Dated as of February 23, 2002
  by and among
  SPECIALTYSEMI, INC., CONEXANT SYSTEMS, INC., and CARLYLE CAPITAL INVESTORS, L.L.C.    




        This disclosure schedule ("Disclosure Schedule") is being furnished by Conexant Systems, Inc.
("Conexant") to Specialtysemi, Inc. (the "Company") and Carlyle Capital Investors L.L.C.
("Carlyle") in connection with the execution and delivery of that certain Contribution Agreement dated as of February 23, 2002 by and among
Conexant, the Company and Carlyle (the "Agreement"). Unless the context otherwise requires, all capitalized terms used in this Disclosure Schedule shall
have the respective meanings assigned to them in the Agreement. 


        No
reference to or disclosure of any item or other matter in this Disclosure Schedule shall be construed as an admission or indication that such item or other matter is material or that
such item or other matter is required to be referred to or disclosed in this Disclosure Schedule. No disclosure in this Disclosure Schedule relating to any possible breach or violation of any
agreement, law or regulation shall be construed as an admission or indication that any such breach or violation exists or has actually occurred. 



        This
Disclosure Schedule and the information and disclosures contained in this Disclosure Schedule are intended only to qualify and limit the representations, warranties and covenants of
Conexant contained in the Agreement and shall not be deemed to expand in any way the scope or effect of any such representation, warranties or covenants. 


        The
bold-faced headings contained in this Disclosure Schedule are included for convenience only, and are not intended to limit the effect of the disclosures contained in this
Disclosure Schedule or to expand the scope of the information required to be disclosed in this Disclosure Schedule. 





 
 

Schedule 1.1(a)(i)(1)
  
    Excluded Assets    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(i)(2)
  
    MAP    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(ii)
  
    Tangible Personal Property    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(v)    
    


[...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(vi)(1)


[...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(vi)(2)


        [...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(a)(vii)
  
    Know-How    
    


[...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.1(b)
  
    Excluded Assets    
    


[...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.2(b)(i)
  
    Employment Related Liabilities to be Assumed by the Joint Venture    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 1.2(b)(v)
  
    Assumed Liabilities Related to Capital Expenditures and
  
    Other Acquisition Commitments    
    


[...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  Part 2.2(a)
  
    Encumbrances on Assets Being Transferred    
    


[...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.2(b)
  
    Leased or Licensed Assets Being Transferred    
    


[...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Disclosure Schedule
  
    Part 2.2(c)
  
    Assets Disposed of Since January 1, 2001    
    


[...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.4(a)
  
    All Contracts Relating to WFO    
    


[...***...]






Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.4(b)
  
    Contracts Solely for Company Requiring Consent for Transfer    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.4(c)
  
    Shared Contracts    
    


        
[...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.4(e)
  
    Breaches    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions
are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.5(a)
  
    Patents, Applications and Disclosures Licensed to Company    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.5(g)
  
    Software Licenses    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.5(i)
  
    Notices of Infringement    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.6(a)(i)
  
    Collective Bargaining Unit Employees    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.6(a)(ii)
  
    Labor Matters    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.5(e)
  
    IP Out-Licenses    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.5(f)
  
    IP In-Licenses    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.6(b)
  
    Employee Benefit Plans    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.7
  
    Compliance with Legal Requirements    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.8(a)
  
    Permits Held    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.8(b)
  
    Permit Violations    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.8(c)
  
    Permits Necessary    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.9
  
    Environmental Issues    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.10
  
    Government Orders of Proceedings Affecting Operations    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.11(a)
  
    Conflicts and Terminations, Acceleration or Encumbrance of Rights    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.11(b)
  
    Notice and Consent Requirements    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.13
  
    Financial Information    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.14
  
    Suppliers and Customers    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.15(a)
  
    Tax Information    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 2.15(e)
  
    Aggregate Tax Basis    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.17
  
    Real Property    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Conexant Disclosure Schedule
  
    Part 2.18
  
    Affiliated Transactions    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 4.1
  
    Fundamental Changes    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions
are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 4.1(a)(vi)
  
    Budgeted Capital Commitments    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 6.4(a)
  
    The Consents to Assign the Contracts
  on Schedule 6.4(a) to Newport Fab, LLC    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 6.4(b)    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 6.7    
    


        [...***...] 





Confidential
treatment has been requested for portions of this document. This copy of the document filed as an Exhibit omits the confidential information subject to the confidentiality request.
Omissions are designated by the symbol [...***...]. A complete version of this document has been filed separately with the Securities and Exchange Commission. 





 
 

Schedule 6.8(a)
  
    Employee Agreements
  
    That Must Be In Place to Close    
    


Scott
Silcock 


Paul
Kempf 


Theodore
Zhu 


Mark
Becker 


Daniel
Lynch 



Shu
Li 


Jeff
McHenry 


Marco
Racanelli 









QuickLinks


CONTRIBUTION AGREEMENT


DISCLOSURE SCHEDULE to CONTRIBUTION AGREEMENT Dated as of February 23, 2002 by and among SPECIALTYSEMI, INC., CONEXANT SYSTEMS, INC., and CARLYLE CAPITAL INVESTORS, L.L.C.

Schedule 1.1(a)(i)(1) Excluded Assets

Schedule 1.1(a)(i)(2) MAP

Schedule 1.1(a)(ii) Tangible Personal Property

Schedule 1.1(a)(v)

Schedule 1.1(a)(vi)(1)

Schedule 1.1(a)(vi)(2)

Schedule 1.1(a)(vii) Know-How

Schedule 1.1(b) Excluded Assets

Schedule 1.2(b)(i) Employment Related Liabilities to be Assumed by the Joint Venture

Schedule 1.2(b)(v) Assumed Liabilities Related to Capital Expenditures and Other Acquisition Commitments

Conexant Disclosure Schedule Part 2.2(a) Encumbrances on Assets Being Transferred

Conexant Disclosure Schedule Part 2.2(b) Leased or Licensed Assets Being Transferred

Disclosure Schedule Part 2.2(c) Assets Disposed of Since January 1, 2001

Conexant Disclosure Schedule Part 2.4(a) All Contracts Relating to WFO

Conexant Disclosure Schedule Part 2.4(b) Contracts Solely for Company Requiring Consent for Transfer

Conexant Disclosure Schedule Part 2.4(c) Shared Contracts

Conexant Disclosure Schedule Part 2.4(e) Breaches

Schedule 2.5(a) Patents, Applications and Disclosures Licensed to Company

Conexant Disclosure Schedule Part 2.5(g) Software Licenses

Conexant Disclosure Schedule Part 2.5(i) Notices of Infringement

Schedule 2.6(a)(i) Collective Bargaining Unit Employees

Conexant Disclosure Schedule Part 2.6(a)(ii) Labor Matters

Schedule 2.5(e) IP Out-Licenses

Schedule 2.5(f) IP In-Licenses

Conexant Disclosure Schedule Part 2.6(b) Employee Benefit Plans

Conexant Disclosure Schedule Part 2.7 Compliance with Legal Requirements

Conexant Disclosure Schedule Part 2.8(a) Permits Held

Conexant Disclosure Schedule Part 2.8(b) Permit Violations

Conexant Disclosure Schedule Part 2.8(c) Permits Necessary

Conexant Disclosure Schedule Part 2.9 Environmental Issues

Conexant Disclosure Schedule Part 2.10 Government Orders of Proceedings Affecting Operations

Conexant Disclosure Schedule Part 2.11(a) Conflicts and Terminations, Acceleration or Encumbrance of Rights

Conexant Disclosure Schedule Part 2.11(b) Notice and Consent Requirements

Schedule 2.13 Financial Information

Conexant Disclosure Schedule Part 2.14 Suppliers and Customers

Conexant Disclosure Schedule Part 2.15(a) Tax Information

Schedule 2.15(e) Aggregate Tax Basis

Conexant Disclosure Schedule Part 2.17 Real Property

Conexant Disclosure Schedule Part 2.18 Affiliated Transactions

Schedule 4.1 Fundamental Changes

Schedule 4.1(a)(vi) Budgeted Capital Commitments

Schedule 6.4(a) The Consents to Assign the Contracts on Schedule 6.4(a) to Newport Fab, LLC

Schedule 6.4(b)

Schedule 6.7

Schedule 6.8(a) Employee Agreements That Must Be In Place to Close