Conversion and Termination Agreement



 Exhibit 10.1 
  
 CONVERSION AND TERMINATION AGREEMENT 
  
 THIS CONVERSION AND TERMINATION AGREEMENT (this “Agreement”) is
made as of the 10th day of November, 2005, by and between ON Semiconductor Corporation, a Delaware corporation (the “Company”), and TPG ON Holdings LLC, a Delaware limited liability company (“TPG” or
the “Investor”). 
  
 RECITALS

  
 WHEREAS, the Company and the Investor are parties to an
Investment Agreement, dated as of September 7, 2001 (the “Investment Agreement”), pursuant to which the Investor purchased from the Company 10,000 shares of the Company’s Series A Cumulative Convertible Preferred
Stock (the “Preferred Stock”), with a stated value of $10,000 per share (the “Stated Value”) and having the rights, preferences, privileges and restrictions set forth in the Certificate of Designations
relating to the Preferred Stock (as amended as of the date hereof, the “Certificate of Designations”); 
  
 WHEREAS, pursuant to Section VIII of the Certificate of Designations, each share of Preferred Stock may be converted, at the option of the holder, into
that number of fully paid and nonassessable shares of Common Stock equal to the quotient of (i) the sum of (A) the Stated Value plus (B) all unpaid dividends accumulated on such share of Preferred Stock to the Conversion Date whether
or not such dividends have been declared ((A) and (B) collectively, the “Accumulated Value”), divided by (ii) the Conversion Price in effect on the Conversion Date; 
  
 WHEREAS, subject to and upon the terms and conditions of this Agreement, the
Investor has agreed to convert all outstanding shares of Preferred Stock into 49,364,080 shares of Common Stock (the “Conversion Shares”) on and as of the date hereof (the “Conversion Date”) in
accordance with Section VIII of the Certificate of Designations and, simultaneously with the execution and delivery hereof, has submitted a notice of conversion of the Preferred Stock in the form of Exhibit A hereto and delivered to the
Company the certificate(s) representing all outstanding shares of Preferred Stock; 
  
 WHEREAS, as an inducement to the Investor agreeing to the conversion of the Preferred Stock, the Investor has required that the Company agree, and the Company has agreed, to issue to the Investor an additional
3,949,126 shares of Common Stock on the Conversion Date (the “Inducement Shares”), which number of shares is equal to 8% of the Conversion Shares, and to amend the Registration Rights Agreement to provide for the registration
of the Inducement Shares together with the Conversion Shares; and 
  
 WHEREAS, in connection with the conversion of the Preferred Stock, the Company and the Investor have agreed to terminate all existing agreements, whether written or oral, express or implied, relating to the Preferred Stock (other than this
Agreement and the Registration Rights Agreement). 
  
 NOW,
THEREFORE, in consideration of the foregoing, the mutual promises contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, intending to be legally bound hereby, the parties agree as follows:








 ARTICLE 1 
  

DEFINITIONS; INTERPRETATION 
  
 1.1 Certain Definitions. Capitalized terms used but not otherwise defined herein have the meanings assigned thereto in the Investment Agreement.

  
 1.2 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings: 
  
 “Common Stock” means the Company’s common stock, $0.01 par value per share. 
  
 “Conversion Date” means the date of this Agreement. 
  
 “Deferred Issuance Date” means the date that is five trading days after the earlier
of (i) the date that the Company receives written or oral confirmation from Nasdaq that stockholder approval is not required with respect to the issuance of the Inducement Shares and (ii) in the event that such approval is required, the
date that the required stockholder approval is obtained. 
  
 “Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of September 7, 2001, between the Company and the Investor. 
  
 1.3 Interpretation. When a reference is made in this Agreement to
Exhibits or Sections, such reference shall be to an Exhibit or Section of this Agreement. Unless otherwise indicated the words “include,” “includes” and “including” when used herein shall be deemed in each case to be
followed by the words “without limitation.” The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 
  
 ARTICLE 2 
  
 CONVERSION 
  
 2.1 Conversion. Simultaneously with the execution and delivery hereof, the Investor shall have delivered to the Company an irrevocable notice of
conversion of the Preferred Stock in the form of Exhibit A hereto, accompanied by stock certificate(s) representing all outstanding shares of Preferred Stock, and the Preferred Stock shall be converted in accordance with Section VIII of the
Certificate of Designations into 49,364,080 shares of Common Stock as of the Conversion Date, based on a Conversion Price of $2.82 and Accumulated Value of $139,206,707 as of the Conversion Date. The Conversion Shares shall be issued in the manner
provided in Section VIII of the Certificate of Designations. 
  
 2.2 Inducement Shares. 
  
 (a) In
consideration of the conversion of the Preferred Stock, simultaneously with the issuance of the Conversion Shares or at such later date as is provided in Section 2.2(b) hereof, the Company shall issue to the Investor 3,949,126 shares of Common
Stock, representing the Inducement Shares 
  

 2 








 (b) In the event that the Company concludes, in consultation with legal counsel, that
approval of the Company’s stockholders may be required under NASD Rules with respect to the issuance of the Inducement Shares, the Company may defer the issuance of the Inducement Shares until the Deferred Issuance Date. If the Company elects
to defer the issuance of the Inducement Shares until the Deferred Issuance Date, the Company shall (i) use its best efforts to obtain confirmation from Nasdaq that such stockholder approval is not required and (ii) if applicable, use its
best efforts to obtain such stockholder approval until such approval is duly obtained by the Company and take all action necessary to present such matter for stockholder approval at each meeting of stockholders of the Company, annual or otherwise,
held after the execution of this Agreement. Each meeting of stockholders at which such matter is considered is referred to herein as a “Stockholder Meeting”. The Company shall use it best efforts to obtain the required
approval of its stockholders of the issuance of the Inducement Shares at each Stockholder Meeting, it being understood that, except as provided in the following sentence, the Company shall have no obligation to call a special meeting for the purpose
of obtaining such stockholder approval. Upon written request of the Investor to the Company delivered at any time on or prior to December 31, 2005, the Company shall file with the Commission a Proxy Statement no later than 30 days after the
date of such request, and the Company shall use its best efforts to hold a Stockholder Meeting no later than 90 days after the date of such request. 
  
 (c) Any such Proxy Statement shall contain the recommendation of the Board of Directors that the stockholders approve the issuance of the
Inducement Shares. The Company shall notify the Investor promptly of the receipt by it of any comments from the Commission or its staff and of any request by the Commission for amendments or supplements to such Proxy Statement or for additional
information, and will supply the Investor with copies of all correspondence between the Company and its representatives, on the one hand, and the Commission or the members of its staff or of any other Governmental Entities, on the other hand, with
respect to such Proxy Statement. The Company shall give the Investor and its counsel a reasonable opportunity to review and comment on those portions of such Proxy Statement describing or referring to the proposal relating to the issuance of the
Inducement Shares or any member of the Investor Group (the “Investor Information”) prior to the filing of the Proxy Statement with the Commission and shall give the Investor and its counsel a reasonable opportunity to review
and comment on all amendments and supplements to the Investor Information and all responses to requests for additional information and replies to comments prior to their being filed with, or sent to, the Commission with respect to the Investor
Information. The Company shall give reasonable consideration to any comments the Investor or its counsel may provide with respect to the Investor Information or any amendment or supplement thereto. 
  
 (d) The Company hereby represents and warrants to the
Investor that any such Proxy Statement, as of the date it is mailed to stockholders of the Company and as of the date of the relevant Stockholder Meeting, will not include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this Section 2.2(d) shall not apply to any information
provided to the Company in writing by any member of the Investor Group with respect to such member expressly for inclusion in the Proxy Statement. 
  

 3 








 ARTICLE 3 
  

TERMINATION; AMENDMENT 
  
 3.1 Termination. Subject to and upon the terms and conditions of this Agreement, effective upon the execution and delivery hereof, the Investment
Agreement and, except for the Registration Rights Agreement, each other agreement prior to the Conversion Date relating to the Preferred Stock, whether written or oral, express or implied, between the Company and the Investor shall be terminated and
shall be of no further force or effect. 
  
 3.2 Amendment to
Registration Rights Agreement. Promptly following the execution and delivery hereof, the Company and the Investor shall enter into an amendment to the Registration Rights Agreement, pursuant to which the Company shall agree to register the
Inducement Shares in the manner provided therein. 
  
 ARTICLE 4

  
 REPRESENTATIONS AND WARRANTIES 
  
 Each of the Company and TPG represents and warrants to the other parties as
follows: 
  
 4.1 Authority Relative to this Agreement. This
Agreement and each other agreement, document or instrument required to be delivered pursuant hereto, constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms. Such party has the
requisite right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and such action has been duly authorized by all necessary action by the respective board of directors, stockholders, members and
manager of each such party, subject to the receipt of any approval of the Company’s stockholders as may be required under NASD Rules. 
  
 4.2 No Conflicts. Subject to the receipt of any approval of the Company’s stockholders as may be required under NASD Rules, to the
knowledge of such party, neither the execution and delivery of this Agreement nor the consummation or performance by such party of any of the transactions contemplated by this Agreement will: 
  
 (a) breach (i) any provision of any of the
organizational documents of such party or (ii) any resolution or ordinance adopted by the board of directors (or other governing body performing similar functions) or the stockholders, members or manager of such party; 
  
 (b) breach or give any Governmental Entity or other person
the right to challenge any of the transactions contemplated by this Agreement or to exercise any remedy or obtain any relief under any Law by which such party may be bound or affected; or 
  
 (c) breach any provision of, or give any person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument, obligation or understanding, oral or written, to which such party is a party or by which any of its assets may be bound or affected. 
  
 4.3 Consents. Such party is not required to give any notice to or obtain any consent from any person in connection with the execution and delivery
of this Agreement or the 

  

 4 








 
consummation or performance of any of the transactions contemplated hereby, except for those which have been obtained on or prior to the date hereof and
except for approval of the Company’s stockholders as may be required under NASD Rules. 
  
 4.4 Absence of Litigation. There is no pending legal proceeding that has been commenced against such party and that challenges, or may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the transactions contemplated by this Agreement. To the knowledge of such party, no such legal proceeding has been threatened. 
  
 ARTICLE 5 
  
 GENERAL PROVISIONS 
  
 5.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by overnight commercial delivery service, or sent via telecopy (receipt
confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice): 
  

	 	(a)	if to the Company, to: 

  
 ON Semiconductor Corporation 
 5005 East
McDowell Road 
 Phoenix, Arizona 85008 
 Attention: General Counsel 
 Facsimile No.: (602) 244-5601 
  

	 	(b)	if to TPG, to: 

  
 TPG ON Holdings LLC 
 301 Commerce Street

 Suite 3300 
 Fort Worth, Texas
76102 
 Attention: David Spuria 
 Facsimile No.: (817) 850-4080 
  
 5.2 Fees and
Expenses. All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses whether or not the transactions contemplated by this Agreement are
consummated. 
  
 5.3 Counterparts. This Agreement
may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart. 
  
 5.4 Entire Agreement; Third Party Beneficiaries. This Agreement, the Registration Rights Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein and
therein: (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and 

  

 5 








 
understandings, both written and oral, among the parties with respect to the subject matter hereof; and (b) are not intended to confer upon any other
person any rights or remedies hereunder. 
  
 5.5 Severability.
If any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the fullest extent possible, the economic, business and other purposes of such void or unenforceable provision. 
  

5.6 Governing Law. This Agreement will be governed by, and construed in accordance with, the laws of the State of New York applicable to
agreements made and to be performed within the State of New York, without regard to the principles of conflicts of laws. 
  
 5.7 Parties Bound. All of the terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. 
  
 5.8 Assignment. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any purported assignment in violation of this Section 5.8 shall be void. 
  
 5.9 Further Actions. The parties hereto agree to execute all
contracts, agreements and documents and to take all actions necessary to comply with the provisions of this Agreement and the intent hereof. Without limiting the foregoing, in the event that the issuance of the Inducement Shares does not occur on or
prior to March 31, 2006, the Company shall use its best efforts to obtain such consents from its lenders as may be required to permit the issuance of the Inducement Shares after such date under applicable credit agreements or other loan
facilities. 
  
 5.10 Exhibits. All exhibits attached hereto
are incorporated herein by reference and made a part hereof as if fully rewritten or reproduced herein. 
  
 [signatures on following page] 
  

 6 








 IN WITNESS WHEREOF, the parties hereto have caused this Conversion and Termination Agreement to be
executed by their duly authorized representatives as of the date first written above. 
  

					
	ON SEMICONDUCTOR CORPORATION
		
	By:	 	/s/ Donald Colvin
	 	 	 Name:
	 	 Donald Colvin

	 	 	 Title:
	 	 Senior Vice President and
 Chief Financial Officer

	
	TPG ON HOLDINGS LLC
		
	By:	 	/s/ David Spuria
	 	 	 Name:
	 	 David Spuria

	 	 	 Title:
	 	 Vice President



  

 7 








 EXHIBIT A 
  
 FORM OF NOTICE OF CONVERSION 
  
 TPG ON Holdings LLC 
 301 Commerce Street

 Suite 330 
 Fort Worth, Texas
76102 
  
 November 10, 2005 
  
 Ms. Judy A. Boyle, Esq. 
 Vice President and Assistant General Counsel 
 ON Semiconductor Corporation 
 5005 East McDowell Road 
 Law Dept. M/D-A700 
 Phoenix, AZ 85008 
  

	 	Re:	ON Semiconductor Corporation – Conversion of Series A Cumulative Convertible Preferred 

  
 Dear Ms. Boyle: 
  
 This letter is delivered pursuant to Section VIII.A. of the Certificate of Designations for the Series A Cumulative Convertible Preferred Stock, stated
value $10,000 per share (the “Preferred Stock”), of ON Semiconductor Corporation (the “Company”) and the Conversion and Termination Agreement of even date herewith by and between TPG ON Holdings LLC
(“TPG”) and the Company (the “Conversion Agreement”). 
  
 As the holder of the Preferred Stock certificate numbered A-1 evidencing 10,000 shares of the Preferred Stock (the “Old Certificate”), TPG hereby elects to convert such shares into the number of
shares of Common Stock, par value $0.01 per share, of the Company designated as the “Conversion Shares” in the Conversion Agreement and authorizes and instructs you to (i) cancel the enclosed Old Certificate, (ii) issue, countersign and
register a new stock certificate (the “New Certificate”) evidencing the Conversion Shares to TPG and (iii) deliver the New Certificate to TPG at the address set forth above. 
  
 The New Certificate should bear the restrictive legends set forth on the Old
Certificate. 
  

					
	 Very truly yours,

	
	 TPG ON Holdings LLC

		
	By:	 	/s/ David Spuria
	 	 	 Name:
	 	 David Spuria

	 	 	 Title:
	 	 Vice President



  

	cc:	Michelle Reese