Document:

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                                                                    EXHIBIT 10.6

                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT ("AGREEMENT") dated as of August 15, 2001 by and
between AMIS Holdings, Inc., a Delaware corporation, (the "COMPANY") and
Christine King ("EXECUTIVE") (certain capitalized terms used herein being
defined in Article 7).

         WHEREAS, the Board desires to employ Executive in the positions and on
the terms and conditions set forth below, and the Executive desires to accept
such employment;

         NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

                                    ARTICLE 1
                           POSITION; TERM OF AGREEMENT

         Section 1.01    Position. (a) On September 10, 2001 (the "EFFECTIVE
DATE"), Executive shall commence service as Chief Executive Officer of the
Company and as a member of the Board.

         (b)      As Chief Executive Officer, Executive shall have such duties
and authority, consistent with such position as shall be determined from time to
time by the Board.

         (c)      During the Employment Term Executive will devote substantially
all of Executive's business time to the performance of Executive's duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict with the rendition of such
services either directly or indirectly, without the prior written consent of the
Board; provided that nothing herein shall be deemed to preclude Executive,
subject to the prior written consent of the Board, from serving on any business,
civic or charitable board, as long as such activities do not materially
interfere with the performance of Executive's duties hereunder.

         Section 1.02    Term. Executive shall be employed by the Company for a
period commencing on the Effective Date and, subject to earlier termination or
extension as provided herein, ending on December 31, 2003 (the "EMPLOYMENT
TERM").

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                                    ARTICLE 2
                            COMPENSATION AND BENEFITS

         Section 2.01    Base Salary. Starting on the Effective Date, the
Company shall pay Executive an annual base salary (the "BASE SALARY") at the
initial annual rate of $400,000, payable in equal monthly installments or
otherwise in accordance with the payroll and personnel practices of the Company
from time to time.

         Section 2.02    Bonus. Subject to Executive's continued employment as
contemplated hereby, with respect to each fiscal year all or part of which is
contained in the Employment Term, Executive shall be eligible for an annual
bonus, with a target bonus opportunity of 50% of Base Salary and a maximum bonus
opportunity of 100% of Base Salary, based on attainment of such goals as the
Board and Executive may mutually determine.

         Section 2.03    Employee Benefits. (a) Effective of August 30, 2001 and
during the Employment Term Executive shall be eligible for employee benefits
(including fringe benefits, vacation and health, accident and disability
insurance, and retirement plan participation) no less favorable in the aggregate
than those benefits made available generally to senior executives of the
Company.

         Section 2.04    Business and Travel Expenses; Office. (a) Reasonable
travel, entertainment and other business expenses incurred by Executive in the
performance of Executive's duties hereunder shall be reimbursed by the Company
in accordance with Company policies as in effect from time to time.

         (b)      Executive's principal job location shall be at the Company's
headquarters in Pocatello, Idaho.

         Section 2.05    Options. The Company shall grant to Executive (a) as of
September 10, 2001, options to purchase shares of Company common stock in an
amount that on a fully diluted basis would constitute 2.5% of the Company's
common stock as of the date hereof, at an exercise price per share equal to the
fair market value of a share of Company common stock on the date of grant and
(b) on each of the first, second and third anniversaries thereof, additional
options to purchase shares of Company common stock, each grant in an amount that
on a fully diluted basis would constitute .5% of the Company's common stock as
of the date hereof, at an exercise price, in each case, equal to the fair market
value of a share of Company common stock on the date of grant (collectively, the
"OPTIONS").

         Subject to termination as provided herein, each such annual grant shall
become 25% vested on the first anniversary of such grant, and the balance shall
vest over the 3-year period following such anniversary at a monthly rate of
2.08%. All the Options shall have a 10 year term, become 100% vested upon a

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Change in Control and shall terminate upon the Company's termination of
Executive's employment for Cause.

         Section 2.06    Relocation Expenses. The Company shall reimburse
Executive for all documented relocation expenses reasonably incurred by
Executive in relocating Executive's residence to Pocatello, Idaho or the
surrounding area.

                                    ARTICLE 3
                          CERTAIN TERMINATION BENEFITS

         Section 3.01    Certain Events. (a) A "QUALIFYING EVENT" means the
involuntary termination of Executive's employment by the Company, including any
failure by the Company to cause the Employment Term under Section 1.02 hereof to
be extended past the date set forth therein, other than (x) for Cause or (y) by
reason of Executive's death or Disability.

         (b)      Each party hereto shall give to the other party 30 days prior
written notice of such party's intent to terminate Executive's employment with
the Company.

         Section 3.02    Right to Certain Benefits. In the event of any
termination of employment during the Employment Term, Executive shall be
entitled to receive from the Company either the relevant Severance Benefits to
the extent and as described in Section 3.03 or the relevant Separation Benefits
to the extent and as described in Section 3.04, as the case may be.

         Section 3.03    Benefits upon a Qualifying Event. Executive shall be
entitled to the following benefits (the "SEVERANCE BENEFITS") upon a Qualifying
Event:

         (a)      The Company shall pay Executive as soon as practicable a lump
sum, in cash, equal to (i) Executive's earned but unpaid Base Salary and other
vested but unpaid cash entitlements for the period through and including the
date of termination of Executive's employment, including unused earned vacation
pay and unreimbursed documented business expenses (collectively, "ACCRUED
COMPENSATION"). In addition, Executive shall be entitled to any other vested
benefits earned by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "ACCRUED
BENEFITS").

         (b)      The Company shall pay Executive as soon as practicable a lump
sum cash payment in an amount equal to the Base Salary in effect immediately
prior to such Qualifying Event.

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         (c)      The Options shall become 100% vested on the date of such
termination and shall be exercisable by Executive during the 12-month period
beginning on such date. The Company shall pay to Executive promptly after such
date a lump sum cash payment equal to the amount, if any, by which $4.2 million
exceeds an amount equal to the difference, which shall not be less than zero,
between the aggregate fair market value of the shares subject to the Options on
such date and the respective exercise prices thereof; provided, however, that to
extent any portion of such Option is exercised prior to such termination, such
difference shall be the difference between the exercise price and the fair
market value of the shares subject to such exercise on the date of such
termination.

         Section 3.04    Separation Payments. (a) Upon termination of employment
other than upon a Qualifying Event, Executive shall be entitled to the benefits
set forth below (the "SEPARATION BENEFITS"):

                  (i)      The Accrued Compensation;

                  (ii)     The Accrued Benefits; and

                  (iii)    Other than upon the Company's termination of
         Executive's employment for Cause, Executive shall be entitled to
         exercise, during the 12-month period beginning on the date of any such
         termination of employment, the then vested portion of the Options;
         provided, however, that if Executive's employment terminates by reason
         of Executive's death or Disability the Company shall pay to Executive
         promptly after such date or event a lump sum cash payment equal to the
         amount, if any, by which $4.2 million exceeds an amount equal to the
         difference, which shall not be less than zero, between the aggregate
         fair market value of the shares subject to the Options on such date or
         event, and the respective exercise prices thereof; provided, however,
         that to extent any portion of such Option is exercised prior to such
         termination, such difference shall be the difference between the
         exercise price and the fair market value of the shares subject to such
         exercise on the date of such termination.

                                    ARTICLE 4
                         CERTAIN REIMBURSEMENT PAYMENTS

         Section 4.01    In the event that Executive is required to pay
Executive's previous employer any amounts in respect of certain compensation
payments paid by such employer to Executive, the Company shall promptly
reimburse Executive, in an amount not to exceed $200,000, for any such amounts
actually repaid by Executive to Executive's previous Employer.

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                                    ARTICLE 5
                           SUCCESSORS AND ASSIGNMENTS

         Section 5.01    Successors. Except in the event of a Change in Control,
this Agreement shall not be assignable by the Company without the written
consent of Executive. The Company will require any successor (whether by reason
of a Change in Control, direct or indirect, by purchase, merger, consolidation,
or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform the obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.

         Section 5.02    Assignment by Executive. This Agreement shall inure to
the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If Executive should die or become disabled while any
amount is owed but unpaid to Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid to Executive's devisee, legatee, legal
guardian or other designee, or if there is no such designee, to Executive's
estate. Executive's rights hereunder shall not otherwise be assignable.

                                    ARTICLE 6
                                  MISCELLANEOUS

         Section 6.01    Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed

         if to the Company, to:

                  AMIS Holdings, Inc.
                  2300 Buckskin Road
                  Pocatello, Idaho  83201
                  Fax:  208-234-6841
                  Attn: Chief Financial Officer

              Copies to:

                  Davis Polk & Wardwell
                  1600 El Camino Real
                  Menlo Park, CA 94025
                  Fax:  650-752-2111
                  Attn: David W. Ferguson

if to Executive, to Executive's last known address as reflected on the books and
records of the Company; or, in each case, to such other address as such party
may hereafter specify for the purpose by written notice to the other party
hereto. Any

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such notice shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
business day in the place of receipt. Otherwise, any such notice shall be deemed
not to have been received until the next succeeding business day in the place of
receipt.

         Section 6.02    Dispute Resolution. (a) Except as provided in Section
6.15, each of Executive and the Company shall have the right and option to elect
(in lieu of litigation) to have any dispute or controversy arising under or in
connection with this Agreement settled by arbitration, conducted before a panel
of three arbitrators sitting in a location in Delaware, in accordance with the
rules of the American Arbitration Association then in effect. Executive's
election to arbitrate, as herein provided, and the decision of the arbitrators
in that proceeding, shall be binding on the Company and Executive. Judgment may
be entered on the award of the arbitrator in any court having jurisdiction.

         (b)      Each party shall pay its own expenses of such arbitration or
litigation and all common expenses of such arbitration or litigation shall be
borne equally by Executive and the Company. Each party to an arbitration or
litigation hereunder shall be responsible for the payment of its own attorneys'
fees.

         Section 6.03    Unfunded Agreement. The obligations of the Company
under this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.

         Section 6.04    Non-Exclusivity of Benefits. Unless specifically
provided herein, neither the provisions of this Agreement nor the benefits
provided hereunder shall reduce any amounts otherwise payable, or in any way
diminish Executive's rights as an employee of the Company, whether existing now
or hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify; provided, however, that the Severance Benefits
shall be in lieu of any severance benefits under any such plans, programs,
policies or practices. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.

         Section 6.05    Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide Severance Benefits or Separation Benefits, if any. Executive shall
also have the right to terminate Executive's employment with the Company at any

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time without liability, subject only to the provisions hereof and Executive's
obligations hereunder.

         Section 6.06    Mitigation. In no event shall Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement nor
shall the amount of any payment or benefit hereunder be reduced by any
compensation earned by Executive as a result of employment by another employer.

         Section 6.07    Entire Agreement. This Agreement represents the entire
agreement between Executive and the Company and its affiliates with respect to
Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights; provided,
however, that any amounts payable to Executive hereunder shall be reduced by any
amounts paid to Executive as required by any applicable local law in connection
with any termination of Executive's employment.

         Section 6.08    Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.

         Section 6.09    Waiver of Rights. The waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.

         Section 6.10    Severability. In the event any provision of the
Agreement shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.

         Section 6.11    Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without reference
to principles of conflict of laws.

         Section 6.12    Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.

         Section 6.13    Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company
as in effect at such time or on the Effective Date, and Executive shall be
entitled to the protection of any insurance policies the Company may elect to
maintain generally for the benefit of its directors and officers (and to the
extent the Company maintains such an insurance policy or policies, Executive
shall be covered by such policy or policies, in accordance with its or their
terms, to the maximum

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extent of the coverage available for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by Executive or
Executive's legal representatives at the time such costs, charges and expenses
are incurred or sustained, in connection with any action, suit or proceeding to
which Executive (or Executive's legal representatives or other successors) may
be made a party by reason of Executive's being or having been a director,
officer or employee of the Company or any Subsidiary of the Company, or
Executive's serving or having served any other enterprise as a director,
officer, employee or fiduciary at the request of the Company.

         Section 6.14    Nondisclosure, Nonsolicitation, Noncompete, and
Nondisparagement.

         (a)      (i)      Executive shall not (except to the extent required by
an order of a court having competent jurisdiction or under subpoena from an
appropriate government agency) disclose to any third person, whether during or
subsequent to the Executive's employment with the Company, any trade secrets;
customer lists; provider lists; product development and related information;
marketing plans and related information; sales plans and related information;
premium or any other pricing information; operating policies and manuals;
research; payment rates; methodologies; contractual forms; business plans;
financial records; or other financial, commercial, business or technical
information related to the Company or any Subsidiary or Affiliate of the Company
unless such information has been previously disclosed to the public by the
Company or has become public knowledge other than by a breach of this Agreement;
provided, however, that this limitation shall not apply to any such disclosure
made while the Executive is employed by the Company, any Subsidiary or Affiliate
of the Company if such disclosure occurred in connection with the performance of
Executive's job as an employee of the Company, any Subsidiary or Affiliate of
the Company;

                  (ii)     Executive agrees that upon termination of Executive's
         employment with the Company for any reason, Executive will return to
         the Company immediately all memoranda, books, papers, plans,
         information, letters and other data, and all copies thereof or
         therefrom, in any way relating to the business of the Company or its
         Affiliates. Executive further agrees that Executive will not retain or
         use for Executive's account at any time any trade names, trademark or
         other proprietary business designation used or owned in connection with
         the business of the Company or its Affiliates.

         (b)      (i)      While employed by the Company and for one year after
the termination of the Employment Term, Executive shall not, directly or
indirectly, induce or attempt to induce any employee of the Company, or of any
Subsidiary or any Affiliate of the Company, to be employed or perform services
elsewhere;

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                  (ii)     While employed by the Company and for one year after
         the termination of the Employment Term the Executive shall not,
         directly or indirectly, solicit or attempt to solicit the trade of any
         individual or entity which, at the time of such solicitation, is a
         customer of the Company, or of any Subsidiary or Affiliate of the
         Company, or which the Company, or any such Subsidiary or Affiliate is
         undertaking reasonable steps to procure as a customer at the time of or
         immediately preceding termination of employment; provided, however,
         that this limitation shall only apply to any product or service which
         is in competition with a product or service of the Company or any such
         Subsidiary or Affiliate.

         (c)      Following the termination of the Executive's employment
hereunder with the Company, Executive shall provide assistance to and shall
cooperate with the Company and any Subsidiary or Affiliate of the Company, upon
its reasonable request and at the per diem rate of $1,100, with respect to
matters within the scope of the Executive's duties and responsibilities during
employment, provided that any reasonable out-of-pocket expenses incurred in
connection with any assistance Executive has been requested to provide under
this provision for items including, but not limited to transportation, meals,
lodging and telephone, shall be reimbursed by the Company. The Company agrees
and acknowledges that it shall, to the maximum extent possible under the then
prevailing circumstances, coordinate or cause a Subsidiary or Affiliate to
coordinate any such request with the Executive's other commitments and
responsibilities to minimize the degree to which such request interferes with
such commitments and responsibilities.

         (d)      Neither party will at any time (whether during or after
termination of Executive's employment with the Company) knowingly make any
statement, written or oral, or take any other action that would disparage or
otherwise harm the other party, its business or reputation or, in the case of
the Company, the reputation of any of its Affiliates or the officers and
directors of any of them.

         Section 6.15    Material Inducement; Specific Performance.

         (a)      If any provision of Section 6.14 is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this
Agreement, the Company and Executive agree that it is the intention of the
parties that such provision should be enforceable to the maximum extent possible
under applicable law and that such court shall reform such provision to make it
enforceable in accordance with the intent of the parties.

         (b)      Executive acknowledges that a material part of the inducement
for the Company to provide the compensation provided herein is Executive's
covenants set forth in Section 6.14 and that the covenants and obligations of
Executive with respect to nondisclosure and nonsolicitation relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company irreparable injury for
which

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adequate remedies are not available at law. Therefore, Executive agrees that, if
Executive shall materially breach any of those covenants during or following
termination of employment, the Company shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post a bond) restraining Executive from committing any violation of the
covenants and obligations contained in Section 6.14 and the Company shall have
no further obligation to pay Executive any benefits otherwise payable hereunder.
The remedies in the preceding sentence are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity as an
arbitrator (or court) shall reasonably determine.

         Section 6.16    Employee Representation. The Executive expressly
represents and warrants to the Company that the Executive is not a party to any
contract or agreement and is not otherwise obligated in any way, and is not
subject to any rules or regulations, whether governmentally imposed or
otherwise, which will or may restrict in any way the Executive's ability to
fully perform the Executive's duties and responsibilities under this Agreement.

                                    ARTICLE 7
                                   DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
meanings set forth below.

         "Accrued Benefits" has the meaning accorded such term in Section 3.03.

         "Accrued Compensation" has the meaning accorded such term in Section
3.03.

         "Affiliate" and "Associate" have the respective meanings accorded to
such terms in Rule 12b-2 under the Exchange Act.

         "Agreement" has the meaning accorded such term in the introductory
paragraph of this Agreement.

         "Base Salary" has the meaning accorded such term in Section 2.01.

         "Beneficial Ownership." A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," securities pursuant to Rule 13d-3
under the Exchange Act.

         "Board" means, the Board of Directors of the Company.

         "Cause" means the occurrence of any one or more of the following:

         (a)      Executive's willful and continued failure substantially to
perform the duties of Executive's position as then in effect (other than as a
result of

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incapacity due to physical or mental illness) which failure is not remedied
within fifteen business days of written notice from the Company;

         (b)      Executive's gross negligence or willful malfeasance in the
performance of Executive's duties hereunder as then in effect;

         (c)      Executive's breach of any of the covenants continued in
Section 6.14; or

         (d)      Executive's commission of an act constituting fraud,
embezzlement, or any other act constituting a felony.

         For purposes of this definition, no act or failure to act shall be
deemed "willful" unless effected by Executive not in good faith and without
reasonable belief that such action or failure to act was in the best interests
of the Company.

         "Change in Control" means has the meaning accorded such term in the
Company's 2000 Equity Incentive Plan.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Disability" means Long-Term Disability, as such term is defined in the
Disability Plan.

         "Disability Plan" means the long-term disability plan (or any successor
disability and/or survivorship plan adopted by the Company) in which Executive
participates, as in effect immediately prior to the relevant event (subject to
changes in coverage levels applicable to all employees generally covered by such
Plan).

         "Effective Date" has the meaning accorded such term in Section 1.01.

         "Employment Term" has the meaning accorded such term in Section 1.02.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Executive" has the meaning accorded such term in the introductory
paragraph of this Agreement.

         "Options" has the meaning accorded such term in Section 2.06.

         "Person" means an individual, corporation, partnership, association,
trust or any other entity or organization.

         "Qualifying Event" has the meaning accorded such term in Section 3.01.

         "Separation Benefits" has the meaning accorded such term in Section
3.04.

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         "Severance Benefits" has the meaning accorded such term in Section
3.03.

         "Subsidiary" of any Person means any other Person of which securities
or other ownership interests having voting power to elect a majority of the
board of directors or other Persons performing similar functions are at the time
directly or indirectly owned by such Person.

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         IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.

                                         AMIS HOLDINGS, INC.

                                         By: /s/ Brent D. Jensen
                                             ----------------------------------
                                             Name: Brent D. Jensen
                                             Title: Chief Financial Officer

                                         /s/ Christine King
                                         --------------------------------------
                                             Christine King

<PAGE>

                     AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

         AMENDMENT dated as of January 17, 2003 (this "AMENDMENT") to the
Employment Agreement ("AGREEMENT") by and between AMIS Holdings, Inc., a
Delaware corporation (the "COMPANY") and Christine King ("EXECUTIVE") (certain
capitalized terms used herein being defined in Article 7).

         WHEREAS, the Company and Executive entered into an Employment Agreement
dated as of August 15, 2001 (the "EMPLOYMENT AGREEMENT");

         WHEREAS, the Board and Executive desire to extend the term of
Executive's employment in the positions and on the terms and conditions set
forth in this Amendment and in the Employment Agreement;

         NOW THEREFORE the parties hereto agree as follows:

         Section 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Employment
Agreement has the meaning assigned to such term in the Employment Agreement.
Each reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Employment Agreement shall, after this Amendment
becomes effective, refer to the Employment Agreement as amended hereby

         Section 2. Amendment To Section 1.02. Section 1.02 of the Employment
Agreement is hereby amended in its entirety to read as follows:

                  Section 1.02 Term. Executive shall be employed by the Company
         for a period commencing on the Effective Date and, subject to earlier
         termination or extension as provided herein, ending on December 31,
         2005 (the "EMPLOYMENT TERM").

         Section 3. Amendment To Section 2.01. Section 2.01 of the Employment
Agreement is hereby by inserting the following sentence at the end thereof:

                  The Board shall review Executive's Base Salary annually for
         possible increases in the sole discretion of the Board.

         Section 4. Amendment To Section 3.01. Section 3.01(a) of the
Employment Agreement is hereby amended in its entirety to read as follows:

                  (a)      A "Qualifying Event" means the involuntary
         termination of Executive's employment by the Company, including any
         termination as a result of the failure by the Company to cause the
         Employment Term under

<PAGE>

         Section 1.02 hereof to be extended past the date set forth therein,
         other than (x) for Cause or (y) by reason of Executive's death or
         Disability.

         Section 5. Amendment To Section 3.03. Section 3.03(b) of the
Employment Agreement is hereby amended in its entirety to read as follows:

                  (b)      Unless such Qualifying Event is the failure by the
         Company to cause the Employment Term under Section 1.02 hereof to be
         extended past the date set forth therein (in which case no amounts
         shall be payable pursuant to this clause (b)), the Company shall pay
         Executive as soon as practicable a lump sum cash payment in an amount
         equal to the Base Salary in effect immediately prior to such Qualifying
         Event.

         Section 6. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California.

         Section 7. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be an original but all of which together
shall constitute one instrument.

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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.

                                           AMIS HOLDINGS, INC.

                                           By: /s/  Brent D. Jensen
                                               --------------------------------
                                               Name:  Brent D. Jensen
                                               Title: Chief Financial Officer

                                           /s/ Christine King
                                           ------------------------------------
                                               Christine King<PAGE>
                                                                    EXHIBIT 10.8

                               DATED 26 JUNE 2002

                              --------------------

                                SUPPLY AGREEMENT

                              --------------------

                                      - 1 -
<PAGE>
                                SUPPLY AGREEMENT

This Agreement is made and entered into the 26th day of June 2002.

BETWEEN

STMicroelectronics, N.V., a Dutch Corporation, having its registered office at
Strawinskylaan 1725, Tower B - 17th floor, 1077 XX Amsterdam, The Netherlands,
acting for the purpose of this Agreement through its Swiss branch, ICC - Bloc A,
Route de Pre-Bois 20, 1215 Geneva 15, Switzerland ("Purchaser")

AND

AMI Semiconductor Belgium BVBA, a Belgian company, having its registered office
at Westerring 15, B-9700 Oudenaarde, Belgium ("Supplier")

WHEREAS, Pursuant to the terms and conditions of a Business Purchase Agreement
(the "BPA"), dated 8 May, 2002 among Purchaser, Supplier, and AMI Semiconductor
Inc. ("AMI"), Purchaser and Alcatel Microelectronics N.V., a Belgian company
("AME"), are contemporaneously with the execution and delivery of this Agreement
selling to Supplier the Mixed Signal Business (the "MSB" as defined in the BPA)
of AME;

WHEREAS, as an enticement for Supplier and AMI to enter into the BPA, Supplier
and AMI have requested that Purchaser load the manufacturing site located in
Oudenaarde acquired by Supplier under the terms of the BPA by placing with
Supplier a certain amount, in Value (as defined below), of purchase orders for
Products (as defined herein) over the Initial Term (as defined herein) of this
Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows.

1        DEFINITIONS

         Unless the provisions of this Agreement otherwise provide, the
         following capitalised terms when used in this Agreement shall have the
         meaning set out below.

1.1      "Affiliate(s)" of a party means a Person owning or controlling a party,
         or under the same ownership or control as a party, or owned or
         controlled by a party, but only so long as such ownership or control
         exists. Ownership or control shall exist through the direct or
         indirect: (i) ownership of more than 50% of the Equity Interests and of
         the

                                     - 2 -
<PAGE>
         Equity Interests generally entitled to vote on matters submitted to
         holders of Equity Interests, or (ii) the right by any other means to
         elect or appoint a majority of directors, or Persons performing similar
         functions.

1.2      "Agreement" shall mean this Supply Agreement, together with all
         schedules attached hereto, as the same may be amended from time to
         time, as permitted herein.

1.3      "AMI" shall mean AMI Semiconductor Inc., a Delaware corporation.

1.4      "Blanket Purchase Order" shall mean a purchase order to which
         requirements for Products shall be added on a weekly basis by means of
         Weekly Forecasts in accordance with Section 5.1.

1.5      "Business Day" shall mean any day on which banks are generally open for
         business in London, Brussels, Paris and New York.

1.6      "Completion Date" shall have the meaning ascribed to it in the BPA.

1.7      "Contract Periods" shall mean the First Contract Period, the Second
         Contract Period, the Third Contract Period, the Fourth Contract Period,
         the Fifth Contract Period, the Sixth Contract Period, the Seventh
         Contract Period and the Eighth Contract Period, collectively, each of
         which being a Contract Period.

1.8      "Cycle Time" shall have the meaning set forth on Schedule 5 hereof.

1.9      "Designs" shall mean all designs, test tapes, data base tapes, data,
         information and technical and other expertise belonging to Purchaser
         and/or its Subsidiaries relating to the manufacture of Products and
         which are required by Supplier to enable Supplier to set up its
         manufacturing process and to manufacture the Products.

1.10     "Die Form" shall mean a Product in a preliminary stage of manufacturing
         which consists of a slice or slices of silicon upon which integrated
         circuits have been electrically tested and which may or may not have
         been cut into individual integrated circuits or dice.

1.11     "Effective Date" shall mean the Completion Date as defined in the BPA.

1.12     "Eighth Contract Period" shall mean the three (3) month period
         beginning on the calendar day immediately following the last day of the
         Seventh Contract Period.

                                     - 3 -
<PAGE>
1.13     "Equity Interests" shall mean capital stock, share capital, ordinary or
         preference shares, common or preferred stock, general or limited
         partnership interests, limited liability company interests or any other
         interests in any Person entitling the holder thereof to share in the
         profits or liquidation value of a Person.

1.14     "Fifth Contract Period" shall mean the three (3) month period beginning
         on the calendar day immediately following the last day of the Fourth
         Contract Period.

1.15     "Finished Form" shall mean a Product that has been wafer tested,
         packaged, final tested, and is in a form ready for shipment.

1.16     "First Contract Period" shall mean the three (3) month period beginning
         on the Effective Date.

1.17     "Foundry" shall mean the facility located at Oudenaarde, Belgium being
         acquired by Supplier pursuant to the BPA, or, as may be mutually agreed
         in writing by the parties on a case-by-case basis (i.e., for each given
         Product), any other facility operated by or for AMI or any of its
         Subsidiaries.

1.18     "Fourth Contract Period" shall mean the three (3) month period
         beginning on the calendar day immediately following the last day of the
         Third Contract Period.

1.19     "Hot Lot" shall mean Lots ordered with a Hot Lot Cycle Time, as defined
         on Schedule 5.

1.20     "Lot" shall mean a single batch of wafers.

1.21     "Initial Term" shall mean the period commencing on the Effective Date
         and ending on the second anniversary of the Effective Date, which, for
         the avoidance of doubt shall be the last day of the Eighth Contract
         Period.

1.22     "Make Whole Amount" shall mean an amount equal to the applicable
         Shortfall Amount minus the variable costs which would have been
         incurred if Purchaser had ordered that amount of Products equal to the
         Shortfall Amount; provided that, such variable costs shall be computed
         as if Purchaser had ordered Products in the same proportion among the
         different types of Products as were actually purchased by Purchaser
         hereunder during the Contract Period in which the Shortfall Amount
         occurred and the immediately prior Contract Period (or prior to the
         commencement of the Second Contract Period since the Effective Date) or
         if no Products were purchased during such Contract Periods

                                     - 4 -
<PAGE>
         variable costs shall be calculated as if Purchaser had ordered Products
         in the proportion of the most recent Forecast. For purposes of this
         definition "variable costs" shall be the amount for each Product
         (excluding First Products, as defined below) to be agreed by the
         parties in good faith and based on a case-by-case detailed analysis of
         the actual cost structure of each given Product. With respect to the
         First Products, "variable costs" shall be replaced by an amount equal
         to twenty percent (20%) of the price for the applicable First Product.
         The parties acknowledge that this replacement amount does not
         necessarily reflect the variable costs of such First Products. "First
         Products" shall mean those Products listed in Schedule 1 as of the
         Effective Date and known as:

         MTC20164-1-TQ100A-C-TR
         MTC20164-1-TQ100A-C-TP
         MTC20174-1-TQ100A-C-TR
         MTC20174-1-TQ100A-C-TP
         MTC20454-1-TQ100A-I-TR
         J454-1-TQ100A-I-TR

1.23     "Manufacturing Window" shall mean the lesser of: (i) Cycle Time plus an
         additional two (2) weeks, and (ii) thirteen (13) weeks.

1.24     "Maximum Amount" shall mean, with respect to each of the following
         Contract Periods, the following maximum amounts that Purchaser may
         order, and which Supplier must agree to deliver within any of the
         following periods:

<TABLE>
<S>                                                       <C>
         During the First Semester Period                 Euros 16,000,000

         During the Second Semester Period                Euros 15,000,000

         During the Third Semester Period                 Euros 17,000,000

         During the Fourth Semester Period                Euros 22,000,000
</TABLE>

1.25     "Minimum Amount" shall mean the following cumulative minimum amounts
         (up to Euros 50,000,000) which Purchaser must order, and which Supplier
         shall deliver within any of the following periods:

<TABLE>
<S>                                                       <C>
         From the Effective Date through and including    Euros 3,250,000
         the last day of the First Contract Period

         From the Effective Date through and including    Euros 7,000,000
         the last day of the Second Contract Period

         From the Effective Date through and including    Euros 9,700,000
         the last day of the Third Contract Period

         From the Effective Date through and including    Euros 16,000,000
         the last day of the Fourth Contract Period

         From the Effective Date through and including    Euros 19,600,000
         the last day of the Fifth Contract Period

         From the Effective Date through and including    Euros 28,000,000
         the last day of the Sixth Contract Period
</TABLE>

                                     - 5 -
<PAGE>
<TABLE>
<S>                                                       <C>
         From the Effective Date through and including    Euros 34,600,000
         the last day of the Seventh Contract Period

         From the Effective Date through and including    Euros 50,000,000
         the last day of the Eighth Contract Period
</TABLE>

1.26     "Person" shall include individuals, corporations, companies,
         partnerships, trusts, limited liability companies and other entities.

1.27     "Products" shall mean (i) those products as listed on Schedule 1 hereto
         (including the Contract Periods and the prices set out therein), and
         (ii) any other products, either in Finished Form, Die Form or Wafer
         Form (which may include, among others, ST Telecom ASICs or AME power
         management integrated circuits for GSM chipset) as may be agreed in
         good faith by the parties hereto, such agreement to be evidenced by an
         amendment to Schedule 1 hereto signed by the parties hereto which
         identifies such new product, its price, variable costs and any
         variation in the terms hereof with respect to such new product;
         provided, however, that the aforementioned terms shall be defined for
         each specific product for the relevant Semester Periods.

         For the avoidance of doubt, the parties agree that in respect of the
         possible extension of products listed on Schedule 1 for additional
         Semester Periods, the parties undertake to negotiate in good faith to
         reach an agreement on the terms, and in particular the price. Unless
         the parties reach a mutual agreement on the price, there shall be no
         automatic extension of the terms relating to the previous Semester
         Periods.

1.28     "Requirement" shall mean the order by Purchaser of Products, which
         Supplier shall deliver prior to the expiration of the Initial Term for
         an aggregate Value to Supplier of at least Euros 50,000,000 (fifty
         million Euros) pursuant to and under the terms and conditions of this
         Agreement.

1.29     "Second Contract Period" shall mean the three (3) month period
         beginning on the calendar day immediately following the last day of the
         First Contract Period.

1.30     "Seventh Contract Period" shall mean the three (3) month period
         beginning on the calendar day immediately following the last day of the
         Sixth Contract Period.

1.31     "Semester Period" shall mean any six (6) month period made up of the
         First Contract Period plus the Second Contract Period, or the Third
         Contract Period plus the Fourth Contract Period, or the Fifth Contract
         Period plus the Sixth Contract Period, or the Seventh Contract Period
         plus the Eighth Contract Period.

                                     - 6 -
<PAGE>
1.32     "Shortfall Amount" shall mean the difference between the applicable
         Minimum Amount and the cumulative Value of Products actually ordered by
         Purchaser for delivery within the applicable Contract Period pursuant
         to and under the terms and conditions of this Agreement from the
         Effective Date to the last day of the applicable Contract Period.

1.33     "Sixth Contract Period" shall mean the three (3) month period beginning
         on the calendar day immediately following the last day of the Fifth
         Contract Period.

1.34     "ST Telecom ASICs" means telecom ASICs currently manufactured and
         supplied by Purchaser as of the date hereof.

1.35     "Subsidiary" as to any party hereto shall mean any Person in which such
         party owns directly or indirectly more than fifty percent (50%) of the
         Equity Interests and more than fifty percent (50%) of the Equity
         Interests which are generally entitled to vote on matters submitted to
         holders of Equity Interests.

1.36     "Third Contract Period" shall mean the three (3) month period beginning
         on the calendar day immediately following the last day of the Second
         Contract Period.

1.37     "Value" shall mean the price of the relevant Product as reflected on
         Schedule 1; provided that, if the parties agree to amend Schedule 1 to
         add as a new product any wafer or die which is not in Finished Form,
         Value as to such wafer or die shall be the price of such wafer or die
         as reflected on Schedule 1, as the same may be amended, plus the
         packaging costs which Supplier would have paid to an outsourced
         subcontractor to convert the wafer or die into Finished Form.

1.38     "Wafer Form" shall mean a Product in a preliminary stage of
         manufacturing, which consists of a slice or slices of silicon upon
         which integrated circuits have been manufactured but not electrically
         tested.

2        AGREEMENT TO SUPPLY AND VOLUME COMMITMENTS

2.1      During the Initial Term, Supplier agrees to sell, on an exclusive
         basis, to Purchaser, and Purchaser agrees to order and, subject to the
         terms and conditions herein, to purchase from Supplier, Products in
         Value equal to the Requirement in accordance with the applicable
         Minimum and Maximum Amounts. The Products shall be in accordance with
         Purchaser's specifications as further provided in accordance with
         Section 7 of this Agreement. Purchaser shall not place Supplier's brand
         on any of its products. The Supplier may, for a transition period equal
         to the longer of (i) four (4) weeks following

                                     - 7 -
<PAGE>
         the Effective Date or (ii) four (4) weeks following the date of the
         first purchase order delivered pursuant to this Agreement, deliver
         Products bearing its predecessor's (i.e. AME's) brand and trademarks
         which are held in inventory on the Effective Date and Purchaser shall
         be entitled to sell such Products using such brand and trademarks. In
         no event shall Purchaser acquire any rights under this Agreement to any
         patent, trademark, service mark or other intellectual property right of
         Supplier.

2.2      Purchaser will place purchase orders with Supplier for Products which
         Supplier must agree to deliver during each Contract Period for a Value
         of no less than the applicable Minimum Amount and, unless otherwise
         agreed, for no more than the applicable Maximum Amount for such
         Semester Period. Upon the parties reaching agreement to amend Schedule
         1 and to add additional products thereto, Purchaser and Supplier may
         agree to negotiate in good faith appropriate adjustments to the Maximum
         Amount for any remaining Semester Periods in light of the addition of
         such products to the definition of Products.

2.3      Wafer manufacturing of any Products purchased by Purchaser shall at all
         times be manufactured by Supplier in the Foundry. It is agreed among
         the parties that, in the event the parties agree in writing that any
         Products be manufactured for Purchaser in facilities other than the
         facility located at Oudenaarde, Belgium being acquired by Supplier
         pursuant to the BPA, any Value of such Products sold to Purchaser
         pursuant to and in accordance with the terms and conditions of this
         Agreement will be counted towards fulfilling the Requirement.

2.4      Purchaser will deliver a GDSII tape to Supplier for any new product
         which is agreed to be added to Schedule 1 by amendment after the
         Effective Date (unless such new product is already manufactured in the
         facility located at Oudenaarde, Belgium being acquired by Supplier
         pursuant to the BPA). Supplier will augment the database with
         Supplier's frame data and contract an appropriate mask shop (to be
         determined by both parties) to acquire reticles. Supplier will invoice
         the cost of frame generation, the reticles and probe wafer to Purchaser
         upon delivery of the purchase order to the mask shop. Supplier will
         rebate back to Purchaser 100% of the mask making cost of any Product
         taped out with Supplier upon shipment of 1000 wafers of the Product
         taped out.

                                     - 8 -
<PAGE>
3        FAILURE TO PURCHASE OR SUPPLY AGREED AMOUNTS

3.1      In the event that Purchaser believes it will be unable to purchase
         Products, in aggregate Value equal to the Requirement or, for any
         applicable Contract Period, the associated Minimum Amount, Supplier
         will commit to supply, and Purchaser will agree to purchase, in
         substitution thereof, other agreed upon products manufacturable by
         Supplier for prices and on terms and planning to be agreed upon by the
         Purchaser and Supplier. Upon reaching such agreement (as evidenced by
         an amendment to Schedule 1 in accordance with the provisions in section
         1.27), Supplier shall use all commercially reasonable efforts to
         industrialise within the agreed planning such agreed new Products and
         to provide adequate support and engineering resources for a
         qualification process which is conducted as expeditiously as is
         commercially reasonable.

3.2      In the event that Purchaser does not order and take delivery, for any
         reason other than the fault of Supplier, of a Value at least equal to
         the applicable Minimum Amount by the last day of any Contract Period,
         Purchaser will pay to Supplier the Make Whole Amount by wire transfer
         of immediately available funds by no later than thirty (30) days after
         the tenth day of the calendar month following the month in which the
         Contract Period for which there was a Shortfall Amount ended.
         Notwithstanding anything to the contrary herein, the payment of the
         Make Whole Amount by Purchaser shall be Supplier's sole remedy and
         Purchaser's sole liability in case of any such Shortfall Amount and the
         payment of such Make Whole Amount on or before the date it is due under
         this Section 3.2 shall fully relieve Purchaser from all obligations
         with regards to such Shortfall Amount.

3.3      In the event that (i) Supplier is unable to supply Purchaser with any
         Products which are ordered by Purchaser in accordance with the terms
         and conditions of this Agreement or (ii) Supplier does not accept
         purchase orders issued by Purchaser if required to so accept them in
         accordance with the terms and conditions of this Agreement, then the
         Value of undelivered Products or unaccepted orders which are within the
         applicable Maximum Amount, or, as applicable, the accepted purchase
         orders in excess of such Maximum Amount, for the relevant Semester
         Period shall be deducted from the Requirement and the amount so
         deducted will be applied over each of the remaining Contract Periods in
         proportion to the respective Minimum Amounts of each remaining Contract
         Period. An example of such apportionment is attached as Schedule 6. In
         addition, a failure under

                                     - 9 -
<PAGE>
         any part of subclause (i) or (ii) of this Section 3.3 shall be deemed
         material, and the Purchaser, acting reasonably, shall also have the
         right to terminate the Agreement in accordance with Section 10.2 below.

4        PRICING AND PAYMENT TERMS

4.1      Pricing for Products will be as set forth on Schedule 1 hereto, as may
         be amended from time to time to add additional products in accordance
         with the terms of this Agreement, for aggregate orders pursuant to this
         Agreement not exceeding Euros 50,000,000 in Products. Hot Lots for any
         products which the parties agree to add to Schedule 1 by amendment
         after the Effective Date shall be priced as follows: the first two
         requests for Hot Lots shall be priced at the agreed upon price for the
         applicable products (i.e., at no extra charge) and any subsequent Hot
         Lots shall be priced at 20% above the applicable price for such
         Product. In the event Purchaser requires Hot Lots for any of those
         Products listed on Schedule 1 as of the Effective Date, such Hot Lots
         will be priced at 20% above the applicable price for such Product.
         Reasonable prices will be negotiated in good faith with respect to
         special engineering services beyond the ordinary course of business.

4.2      All amounts payable under this Agreement will be payable in Euros,
         thirty (30) days after the tenth day of the calendar month immediately
         following the calendar month of the date of the invoice. Shipping terms
         shall be on an Incoterms 2000 Ex Works (EXW - AMI Oudenaarde plant or
         any other plant and shipping terms as may be agreed) basis. Transfer of
         ownership to Purchaser will occur at delivery Ex Works.

5        FORECASTS, PURCHASE ORDERS AND DELIVERY

5.1      Purchaser shall prepare in good faith and provide to Supplier on the
         first Business Day of each calendar month a non-binding rolling nine
         (9) month forecast (the "Forecast") by process technology of expected
         quantity requirements of Purchaser for Products. Supplier shall
         maintain capacity to satisfy Purchaser's estimated quantity
         requirements contained in the Forecasts; provided that, such estimated
         quantity requirements are within the applicable Maximum Amounts for the
         Semester Periods of such Forecast. In addition, Supplier shall use
         commercially reasonable efforts to accept orders above the Maximum
         Amounts but shall not be obligated to do so. Based on the Forecast, on
         a weekly basis Purchaser will provide a thirteen (13) week rolling
         forecast (the "Weekly Forecast") by Product. This Weekly Forecast will
         represent Purchaser's quantity requirements for Products for such
         thirteen week period which must be within the

                                     - 10 -
<PAGE>
         applicable Maximum Amounts. Purchaser shall be deemed to have made and
         Supplier shall be deemed to have accepted purchase orders for Products
         identified in the Weekly Forecast the delivery of which can be
         accomplished no earlier than a Manufacturing Window commencing on the
         date of such Weekly Forecast is provided to Supplier.

5.2      Purchaser shall order Products hereunder by means of a Blanket Purchase
         Order placed on a weekly basis in accordance with Section 5.1 above.
         The minimum order Value per Blanket Purchase Order must be at least
         Euros 25,000 (excluding engineering samples). Blanket Purchase Orders
         shall be acknowledged by Supplier within two (2) Business Days of
         receipt of the Blanket Purchase Order. Once accepted by Supplier in
         accordance with Section 5.1 above, purchase orders shall be firm and
         non-cancellable; provided that, Purchaser may cancel an accepted
         purchase order if Purchaser reimburses Supplier for those costs set
         forth in Schedule 4 and associated with the work in progress related to
         such cancelled accepted purchase order and any such amount actually
         reimbursed to Supplier shall be counted towards the fulfilment of the
         Requirement.

5.3      In the event of any conflict between the terms or provisions of any
         accepted purchase order or any document provided by Supplier (x) to
         confirm acceptance of an order or (y) with the delivery of Products,
         and this Agreement, the terms of this Agreement shall prevail.

5.4      Delivery of Products shall be in accordance with the applicable
         accepted purchase order (which must comply with the requirements of
         Section 5.2 hereof). In case of any late delivery of Products by
         Supplier, Purchaser shall be entitled to cancel, in whole or in part,
         the relevant undelivered Products with no liability of Purchaser
         towards Supplier, and the Value of such cancelled undelivered Products
         shall be deducted from the Requirement, Euro for Euro, and the amount
         so deducted will be applied over each of the remaining Contract Periods
         in proportion to the respective Minimum Amounts of such remaining
         Contract Periods in accordance with the principles set forth in
         Schedule 6 hereto. For the purposes of this Section 5.4, delivery shall
         be late if delivery has not occurred prior to ten (10) calendar days
         (provided however that, during a transition period of four (4) months
         following the Effective Date, such delivery shall be late if delivery
         has not occurred prior to sixteen (16) calendar days) after the agreed
         upon delivery date (which delivery date shall be no earlier than the
         end of the Manufacturing Window).

                                     - 11 -
<PAGE>
6        ACCEPTANCE OF ORDERS

6.1      If Supplier delivers Products which do not conform with the accepted
         purchase order, Purchaser shall be entitled to reject the
         non-conforming delivery within thirty (30) calendar days of delivery.
         If Purchaser fails to notify Supplier in accordance with this Section 6
         of any non-conforming delivery within said thirty (30) days the
         Products will be deemed accepted.

6.2      Complaints of defects shall be made to Supplier in writing providing
         sufficient detail of the nature of the non-conformance of such rejected
         delivery. Inspection of alleged defects and returns shall be conducted
         in accordance with agreed procedures attached as Schedule 2 hereto.

6.3      The Products shall be deemed to be accepted if the Products are used
         and mixed with goods supplied from other suppliers or with other
         substances or such Products have been modified.

6.4      Supplier will provide Purchaser with all applicable test programs,
         reliability data, test and reasonable assistance and information that
         it may reasonably require in performing acceptance tests.

6.5      All rejected Products will be returned to Supplier at Supplier's risk
         and expense with Purchaser's written statement of rejection which must
         describe in sufficient detail the nature of the non-conformance of such
         rejected delivery. For the avoidance of doubt, the Value of any
         rejected Products under Section 6.1 shall be applied against the
         Requirement.

7        PRODUCT SPECIFICATIONS AND QUALITY STANDARDS

7.1      During the term of this Agreement, Supplier shall manufacture and
         deliver to Purchaser Products in accordance with the applicable agreed
         specifications of Purchaser, such specifications for each Product
         listed on Schedule 1 having been provided to Supplier prior to the date
         of this Agreement and are attached to this Agreement as Schedule 3.
         Prior to the addition of any product to Schedule 1 by amendment,
         Supplier shall review the specifications for each new product prior to
         agreeing to add such new product to Schedule 1.

7.2      If either party wishes to amend the specification of a Product,
         including, but not limited to, modifying the mask tooling, processing
         or testing, it shall issue an engineering change notice ("ECN") to the
         other party in writing detailing the amendment to the

                                     - 12 -
<PAGE>
         specification required. Where an ECN is issued by Purchaser, Supplier
         shall amend the specification in accordance with the ECN at the sole
         cost of Purchaser. The amended specification shall apply to all
         Products to which the specification apply after the date of
         implementation of the ECN by Supplier. Where an ECN issued by Supplier
         will or may affect yield, performance reliability or qualification
         status of Products, Supplier shall not implement such ECN until it has
         received Purchaser's written consent to the implementation of the ECN.
         Upon issue of any ECN by Purchaser, the parties shall negotiate in good
         faith an amendment to the price for such Product to reflect the Product
         as modified, such new price to be recorded in an amendment to Schedule
         1 hereto.

7.3      Supplier will manufacture Products in accordance with Purchaser's
         quality and reliability specifications attached hereto as Schedule 2;
         provided, however, that the parties agree that for a limited transition
         period of two (2) months following the Effective Date the quality and
         reliability specifications in effect on the Effective Date at the
         facility located at Oudenaarde acquired by Purchaser under the BPA will
         be applicable in lieu of Purchaser's quality and reliability
         specifications.

7.4      Supplier shall notify Purchaser as soon as practicable, and in any
         event not later than one (1) Business Day, after becoming aware of any
         event that will materially affect quality or delivery.

8        PRODUCT WARRANTY AND SUPPLIER OBLIGATIONS

8.1      Supplier will warrant that the Products delivered to Purchaser by
         Supplier hereunder will meet the quality and reliability specifications
         required by this Agreement, and that the Products will be free from
         defects in material and workmanship for two (2) years from the date of
         delivery. If during the warranty period the Products are defective,
         Supplier shall be responsible for and shall promptly, at Purchaser's
         election, either (x) supply replacement Products or (y) refund
         Purchaser the price paid by Purchaser for the defective Products. The
         foregoing warranty shall apply to any replacement Products. The
         Products claimed to be defective shall be returned to Supplier at
         Supplier's cost and expenses. For the avoidance of doubt, the Value
         corresponding to any refund for defective Products made under this
         Section 8.1 shall not be required to be re-ordered to fulfil the
         Requirement.

8.2      The warranties contained in this Section 8 are in lieu of any and all
         other warranties, expressed and/or implied, including but not limited
         to any implied warranties of merchantability, fitness for a particular
         purpose, and non-infringement. Without

                                     - 13 -
<PAGE>
         limiting the generality of the foregoing, Supplier does not warrant (x)
         the design of any Product or (y) that the Products will operate or
         perform in the combinations that Purchaser may select or use.

8.3      Supplier shall on a daily basis transmit information regarding work in
         progress for Purchaser to an FTP site agreed between the parties in the
         format and terminology currently existing in Supplier's information
         systems without any obligation of Supplier to adapt such information to
         Purchaser's format or terminology. For purposes of the foregoing,
         Supplier shall provide to Purchaser sufficient information in order to
         enable Purchaser to understand the file content (e.g., such information
         to include, without limitation, the file format, record lay out, and
         data definition). Further, as soon as practicable after the Effective
         Date, Supplier and Purchaser will work out in good faith the way to
         transfer such information through medium and format in line with
         applicable standards of the industry; provided that, the foregoing
         shall not be deemed to obligate the Supplier to expend any amount to
         effect or sustain such changes.

8.4      Supplier shall not, without Purchaser's prior written consent, sell
         Products to any person other than Purchaser or Purchaser's
         Subsidiaries. Supplier shall keep records of all production control
         information and summaries of production monitors for all Products for
         warranty and/or audit purposes for a period of twenty-four (24) months
         from the date of delivery of Products. At the request of Purchaser,
         Supplier shall forward a copy of such data to Purchaser. Supplier shall
         not deliver to Purchaser any Products coming from any wafer with a
         yield less than the scrap limit value as defined in Schedule 2 hereto.

8.5      Together with each delivery of Products to Purchaser, Supplier shall
         provide process control monitor data (i.e., "PCM" or control parametric
         test) as well as the relevant quality data defined in Schedule 2
         hereto.

9        INTELLECTUAL PROPERTY

9.1      Subject to Section 11 below, Supplier shall indemnify and hold
         Purchaser, its Affiliates and its/their respective directors and
         officers (hereafter referred as "Purchaser Indemnities") harmless and
         shall pay all damages, costs and reasonable attorneys' fees relating to
         its/their defence resulting from any suit, claim, demand, action by a
         third party against Purchaser Indemnities based upon an allegation that
         the process used by Supplier to manufacture the Products infringes the
         intellectual property rights of a third party ("Purchaser Infringement
         Claim"); provided that (i) Purchaser gives written notice

                                     - 14 -
<PAGE>
         to Supplier within thirty (30) calendar days of notice of such
         Purchaser Infringement Claim and (ii) Purchaser allows Supplier at its
         expense through attorneys of its own choice, to exclusively defend or
         control the defence of any Purchaser Infringement Claim; and Purchaser
         assists Supplier in all reasonable aspects in such investigation and
         defence, and is reimbursed by Supplier for all the reasonable costs
         incurred in collaborating in such investigation and defence.

9.2      Supplier shall have no obligation hereunder for any Purchaser
         Infringement Claim which results from: (a) the combination by Purchaser
         of the Product with other products if such infringement would not have
         arisen but for the combination; (b) the modification of the Product by
         parties other than Supplier; (c) the Design; (d) Purchaser's
         intellectual property rights embedded in the Product except to the
         extent the infringement is caused by the modification made by Supplier
         of Purchaser's intellectual property rights and (e) the ST Technology
         (as this term is defined in that certain Transfer and License Agreement
         executed the same date herewith between Purchaser and Supplier)
         licensed by the Supplier from the Purchaser pursuant to such Transfer
         and License Agreement.

9.3      Subject to Section 11 below, Purchaser shall indemnify and hold
         Supplier, its Affiliates and its/their respective directors and
         officers (hereafter referred as "Supplier Indemnities") harmless and
         shall pay all damages, costs and reasonable attorneys' fees relating to
         its/their defence resulting from any suit, claim, demand, action by a
         third party against Supplier Indemnities based upon an allegation that
         Purchaser's intellectual property rights embedded in a Product or the
         Designs infringes the intellectual property rights of a third party
         ("Supplier Infringement Claim"); provided that: (i) Supplier gives
         written notice to Purchaser within thirty (30) calendar days of notice
         of such Supplier Infringement Claim; and (ii) Supplier allows Purchaser
         at its expense through attorneys of its own choice, to exclusively
         defend or control the defence of any Supplier Infringement Claim; and
         Supplier assists Purchaser in all reasonable aspects in such
         investigation and defence, and is reimbursed by Purchaser for all the
         reasonable costs incurred in collaborating in such investigation and
         defence.

9.4      Sections 9.1 and 9.3 state the entire liability of Supplier and
         Purchaser and the exclusive remedy of Supplier and Purchaser with
         respect to any and all infringement claims. Except as expressly stated
         in this Section, all warranties of non-infringement of any intellectual
         property rights are hereby disclaimed by each party.

9.5      All intellectual property rights in and to the Designs belong to
         Purchaser.

                                     - 15 -
<PAGE>
9.6      All intellectual property rights in and to any masks generated by
         Supplier under this Agreement from Purchaser's databases shall belong
         to Purchaser.

9.7      All intellectual property rights in and to improvements or
         modifications made by Supplier to test tapes and Designs shall belong
         to Purchaser.

9.8      Purchaser grants to Supplier a non-exclusive, irrevocable, license to
         use the Designs and Purchaser's Confidential Information (as defined
         below) to manufacture, and sell the Products exclusively for Purchaser.

10       TERM AND TERMINATION

10.1     The term of this Agreement shall be the Initial Term unless terminated
         earlier in accordance with the provisions of this Section 10.

10.2     In the event of any material breach of a material provision (other than
         late delivery of any Product, for which the sole remedy of Purchaser is
         specified in Section 5.4 above) by any party hereto, which is not cured
         within thirty (30) days of the non-breaching party delivering notice
         thereof to the breaching party (such notice specifically identifying
         the breach), the non-breaching party shall have, without prejudice to
         its other rights or remedies, the right either to terminate this
         Agreement or to terminate any accepted purchase order. Further, unless
         otherwise specifically agreed in writing between the parties, in the
         event that Supplier is not able or not willing to manufacture Products
         (in whole or in part) out of its facility located at Oudenaarde,
         Belgium (i.e., that facility being acquired by Supplier pursuant to the
         BPA), Purchaser shall have the right, without prejudice to its other
         rights or remedies, to terminate this Agreement.

10.3     In the event this Agreement shall be terminated by Purchaser pursuant
         to Section 10.2 the purchase orders issued by Purchaser and accepted by
         Supplier before the effective date of termination will be fulfilled by
         Supplier in accordance with the relevant terms and conditions of this
         Agreement. If only an accepted purchase order is terminated, only such
         accepted purchase order shall be terminated and not the entire
         Agreement.

10.4     Notwithstanding any other provision contained in this Agreement to the
         contrary, upon the purchase by Purchaser of the Requirement and full,
         final and indefeasible payment therefore having been received by
         Supplier, this Agreement shall automatically terminate and the purchase
         obligations of Purchaser and the supply obligations of Supplier
         hereunder shall automatically terminate; provided that, such
         termination shall not affect any rights or remedies that a party may
         have prior to said termination.

                                     - 16 -
<PAGE>
10.5     Upon termination or expiration of this Agreement the provisions of
         Sections 1, 8, 9, 10, 11, 13, 14, 16, 17, 18, 20, 21 and 23 shall
         survive any such termination.

11       LIMITATION OF LIABILITY

11.1     Except with respect to Section 13, to the maximum extent permitted by
         applicable law, under no circumstances and under no legal theory
         whether in tort (including negligence) contract or otherwise shall any
         party be liable to the other party for any special, indirect,
         incidental or consequential damages (including, without limitation,
         lost profits) incurred by the other party hereto resulting from or
         arising out of or in connection with an accepted purchase order, a
         delivery hereunder or this Agreement even if the other party has been
         informed of the possibility of these damages. Notwithstanding the
         foregoing, the total liability of the Supplier hereunder shall not
         exceed Euros 50,000,000.

12       FORCE MAJEURE

12.1     Supplier and Purchaser shall not be liable for the non-performance of
         any of their obligations hereunder, if and to the extent only that such
         non-performance is caused by an event of force majeure, which means
         acts of God, war, war-like condition, embargoes, riots, strikes and
         other unforeseen events beyond their reasonable control and which
         cannot be prevented; provided that, no general change in Purchaser's
         financial condition or results of operations or in general economic
         conditions nor a reduction of Purchaser's customers' orders shall be a
         force majeure event for Purchaser. To the extent possible, in the event
         that such failure or delay occurs, the affected party shall notify in
         writing the other party of the occurrence thereof as soon as possible
         and the parties shall discuss the best way to resolve the event of
         force majeure.

12.2     Delivery of all affected Products shall be made on a revised delivery
         date (to be mutually agreed upon), that shall, at least, take into
         account the delay incurred.

12.3     By reason solely of force majeure neither Supplier nor Purchaser shall
         have any claim for relief or other damages (including, without
         limitation, by operation of Section 5.4) against the other party in
         respect of such delay in performance or non-performance and the
         obligations under this Agreement of each of Supplier and Purchaser
         shall be suspended for the duration of such force majeure.

13       CONFIDENTIALITY

13.1     During the term of this Agreement, either party may disclose
         Confidential Information to the other one. In such case, the following
         provisions shall apply. Confidential Information means the terms of
         this Agreement, the Designs, as well as any proprietary

                                     - 17 -
<PAGE>
         information and data of either party, contained in written or tangible
         form, which is marked with "Internal Use Only", "Proprietary",
         "Confidential", or with other similar words. One party's ("Disclosing
         Party") Confidential Information shall also include its confidential
         information and data orally disclosed to the other party ("Receiving
         Party") if: a reasonable summary of the same is reduced to a writing
         and marked with "Proprietary", "Confidential", or with other similar
         words and the writing is delivered to the Receiving Party within thirty
         (30) days of the first disclosure to the Receiving Party. However,
         Confidential Information shall not include any data or information
         which:

13.1.1   is or becomes publicly available through no fault of the Receiving
         Party;

13.1.2   is already in the rightful possession of the Receiving Party prior to
         its receipt of such data or information;

13.1.3   is independently developed by the Receiving Party;

13.1.4   is rightfully obtained by the Receiving Party from a third party or in
         the public domain;

13.1.5   is disclosed with the written consent of the Disclosing Party; or

13.1.6   is disclosed pursuant to a valid order or other legal compulsion of a
         court or other government body; provided, however, that Receiving Party
         shall, to the extent possible: (i) prior to such disclosure promptly
         notify Disclosing Party of the requirement and give Disclosing Party
         the opportunity to object; (ii) upon disclosure inform the body to
         which the Confidential Information is disclosed of its confidential
         status and shall seek to obtain confidential treatment of such
         Confidential Information by such body; and (iii) disclose only such
         Confidential Information as is strictly required by such order.

13.2     Each party undertakes to use the same degree of care as it uses with
         respect its own information of a similar nature to avoid disclosing the
         Confidential Information received from the other party unless the
         Disclosing Party previously consented in writing to such disclosure.
         Notwithstanding the foregoing, the Receiving Party shall, during the
         term of this Agreement, and for a period of three (3) years from the
         termination or expiration of this Agreement, hold all Confidential
         Information of the Disclosing Party received, in confidence.

13.3     The parties shall not use the Confidential Information for purposes
         other than for the purpose of this Agreement.

                                     - 18 -
<PAGE>
13.4     Either party may disclose any Confidential Information to its and its
         Affiliates' employees having the reasonable need for access to such
         Confidential Information in connection with or during the performance
         of this Agreement or their employment responsibilities and the parties
         shall ensure that such employees comply with the provisions of this
         Section.

13.5     Upon termination or expiration of this Agreement, either party shall
         return to the other party all Confidential Information, whether in
         written, documentary or other form, as well as computer programs,
         software and technical drawings other than any Confidential Information
         that is required to be retained under applicable law or which is
         necessary to defend against or prosecute any claim hereunder.

13.6     Neither party shall in any manner disclose to third parties, advertise
         or publish the fact it has entered into or the terms of this Agreement
         except by the express written consent of the other party.

13.7     Notwithstanding the foregoing, either party may disclose the fact of
         entering into this Agreement and its terms (i) to its advisors or to
         any Person providing it with finance, subject to such Person agreeing
         to keep such information confidential, or (ii) in any prospectus,
         offering memorandum or other similar document.

14       GOVERNING LAW

14.1     This Agreement shall be governed and construed in accordance with the
         laws of the Republic of France, without giving effect to the conflict
         of laws rules thereof.

14.2     Any dispute arising out of this Agreement shall be conducted in
         accordance with clauses 27.2 through 27.10, inclusive, of the BPA.

15       INDEPENDENT CONTRACTORS

15.1     The relationship of the parties is that of independent contractors, and
         no party will incur any debts or make any commitments for the other
         party. Nothing in this Agreement is intended to create or will be
         construed as creating between the parties the relationship of joint
         venturers, co-partners, employer/ employee or principal and agent.

16       ENTIRE AGREEMENT; AMENDMENT

16.1     This Agreement is the entire understanding between the parties with
         respect to the subject matter hereof and supersedes any prior
         contracts, agreements or understandings (oral or written) of the
         parties (including the term sheet attached to the Letter of Intent
         dated April 15, 2002 between Purchaser and AMI) with respect to the
         subject matter

                                     - 19 -
<PAGE>
         hereof. No part of this Agreement may be amended, altered or otherwise
         modified unless done so in a writing duly executed by all the parties
         to this Agreement.

17       NOTICES

17.1     Unless otherwise indicated differently, all legal notices, requests,
         information or demands which any party may desire or may be required to
         give to the other party under this Agreement, shall be in writing and
         in the English language and shall be personally delivered or sent via
         telecopy, internationally recognised courier service (such as Federal
         Express or DHL) or first class certified registered mail, postage
         prepaid return receipt requested, and sent to the party at its address
         appearing below or such other address as either party shall
         subsequently inform the other party by written notice given as
         described above:

17.1.1   If to Purchaser:

         STMicroelectronics

         ICC Bloc A

         Route de Pre-Bois 20

         1215 Geneva 15

         Switzerland

         Phone:

         Fax: +41 22 929 5878

         Attention: General Counsel

17.1.2   If to Supplier:

         AMI Semiconductor Belgium BVBA

         Westerring 15

         B-9700 Oudenaarde

         Belgium

         Phone: 1.208.233.4690

         Phone:

         Fax:

         Attention: Chief Financial Officer

         With copy to:

         Dechert

         2 Serjeants' Inn

                                     - 20 -
<PAGE>
         London EC4Y 1LT

         Phone: 44.207.583.5353

         Fax: 44.207.353.3683

         Attention: Brian M. McCall, Esq.

17.1.3   If to AMI:

         AMI Semiconductor Inc.

         2300 Buckskin Road

         Pocatello, Idaho 83201

         USA Phone: 1.208.233.4690

         Fax: 1.208.234.6796

         Attention: Chief Financial Officer

         With a required copy to:

         Dechert

         2 Serjeants' Inn

         London EC4Y 1LT

         Phone: 44.207.583.5353

         Fax: 44.207.353.3683

         Attention: Brian M. McCall, Esq.

17.2     For Technical Information and information relative to purchase orders
         each party agrees to nominate the following representatives to monitor
         the evolution of the Agreement and to receive information and
         communications other than legal notices:

         For Supplier:

         Name: Steve Boderck

         Title: Director of European Operations

         Address: Lilienhalster Za 853999 Hallbergmoof, Germany

         Phone: +49 811 999 3622

         Fax: +49 811 999 3655

         E-mail: steveboderck@amis.com

         For Purchaser:

         Guy Dubois / Jean-Pierre Crest

         Wafer Foundry Organization

                                     - 21 -
<PAGE>
         STMicroelectronics, 12 rue Jules Horowitz, 38000 Grenoble, France

         Phone: + 334 765 85 075

         Fax: + 334 765 85 654

         E-mail: guy.dubois@st.com

17.3     All notices, requests, information or demands so given shall be deemed
         effective upon receipt or, if mailed, upon receipt or the expiration of
         the third day following the date of mailing, whichever occurs first,
         except that any notice of change in address shall be effective only
         upon receipt by the party to whom the notice is addressed.

18       SEVERABILITY

18.1     In the event any provision of this Agreement conflicts with the law
         under which this Agreement is to be construed, such provision shall be
         deleted from the Agreement, and the Agreement shall be construed to
         give effect to the remaining provisions thereof.

19       ASSIGNMENT

19.1     No party may assign this Agreement without the prior written consent of
         the other party hereto; provided that, Supplier may (x) assign the
         right to any payment obligation ("cession de creance") under this
         Agreement to any Person providing Supplier or any of its Affiliates
         with financing in connection with the transaction contemplated by the
         BPA or (y) assign this Agreement to any Person who acquires
         substantially all of the assets and business of Supplier. This
         Agreement is binding upon and will inure to the benefit of the
         respective parties hereto and their respective successors and permitted
         assigns.

20       WAIVER

20.1     A waiver of any term, provision or condition of, or consent granted
         under, this Agreement shall be effective only if given in writing and
         signed by the waiving or consenting party and then only in the instance
         and for the purpose for which it is given.

21       GUARANTY

21.1     In consideration for and to induce Purchaser to enter into this
         Agreement, AMI hereby guarantees to Purchaser the payment of all
         amounts due from Supplier to Purchaser, if any, and the performance of
         all other obligations of Supplier, whether now existing or hereafter
         arising, pursuant to this Agreement.

                                     - 22 -
<PAGE>
22       COUNTERPARTS

22.1     This Agreement may be executed in counterparts, each of which shall be
         deemed to be an original, but all of which shall constitute one and the
         same agreement.

23       SUBSIDIARIES

23.1     Supplier acknowledges that Purchaser conducts its business in whole or
         in part through its Subsidiaries. Accordingly, Supplier agrees that the
         rights and benefit granted by Supplier through this Agreement shall
         inure to Purchaser and Purchaser's Subsidiaries and that Purchaser's
         Subsidiaries shall be entitled to order Products and Supplier shall be
         permitted to sell Products to Purchaser's Subsidiaries to the same
         extent as Purchaser and such orders shall be counted towards the
         fulfilment of the Requirement.

                                     - 23 -
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
above written.

STMicroelectronics, N.V.

By:
Name:
Title:

AMI Semiconductor Belgium BVBA

By:
Name:
Title:

AMI Semiconductor Inc. (to acknowledge and accept the terms of Section 21 of
this Agreement)

By:
Name:
Title:

                                     - 24 -
<PAGE>
                                   SCHEDULE 1

                                     PART A
            PRICE PER FINISHED, PACKAGED, TESTED AND PACKED PRODUCTS

During the First and the Second Contract Period

<TABLE>
<CAPTION>
       AFE PART NUMBER                           PRICE PER AFE PRODUCTS
       ---------------                           ----------------------
<S>                                              <C>
MTC20164-1-TQ100A-C-TR                                 2.42 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR                                 2.42 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR                                 3.40 EURO
J454-1-TQ100A-I-TR
PBMB-1-MB100C-U-TP                                     1.65 EURO
MTC20154-1-TQ64A-C-TP                                  1.40 EURO
</TABLE>

During the Third and Fourth Contract Period

<TABLE>
<CAPTION>
       AFE PART NUMBER                           PRICE PER AFE PRODUCTS
       ---------------                           ----------------------
<S>                                              <C>
MTC20164-1-TQ100A-C-TR                                 2.15 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR                                 2.15 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR                                 3.30 EURO
J454-1-TQ100A-I-TR
</TABLE>

During the Fifth and Sixth Contract Period

<TABLE>
<CAPTION>
       AFE PART NUMBER                           PRICE PER AFE PRODUCTS
       ---------------                           ----------------------
<S>                                              <C>
MTC20164-1-TQ100A-C-TR                                 2.10 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR                                 2.10 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR                                 3.20 EURO
J454-1-TQ100A-I-TR
</TABLE>

During the Seventh and Eighth Contract Period

<TABLE>
<CAPTION>
       AFE PART NUMBER                           PRICE PER AFE PRODUCTS
       ---------------                           ----------------------
<S>                                              <C>
MTC20164-1-TQ100A-C-TR                                 2.05 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR                                 2.05 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR                                 3.10 EURO
J454-1-TQ100A-I-TR
</TABLE>

The above Schedule 1 is effective as of the Effective Date. It may be amended
and/or supplemented from time to time by mutual agreement between the parties
and in accordance with the provisions set forth in this Agreement.

                                     - 25 -
<PAGE>
                                     PART B
                            PRODUCTS IN DIE FORM ONLY

During the Third and Fourth Contract Period

<TABLE>
<CAPTION>
PRODUCT                                      MAXIMUM PRICE
-------                                      -------------
<S>                                          <C>
PBMB-1                                       1.20 EURO
MTC20154-1                                   1.25 EURO
</TABLE>

The above Schedule 1 is effective as of the Effective Date. It may be amended
and/or supplemented from time to time by mutual agreement between the parties
and in accordance with the provisions set forth in this Agreement.

                                     - 26 -
<PAGE>
                                   SCHEDULE 2

               PURCHASER'S QUALITY AND RELIABILITY SPECIFICATIONS

         (TO BE PROVIDED IN DUE COURSE TOGETHER WITH AGREED VARIATIONS)

<TABLE>
<CAPTION>
     SPECIFICATION                                    DESCRIPTIVE TITLE
     -------------                                    -----------------
<S>                         <C>
        7178219             silicon foundry general requirements
     0076604 (262)          process qualification and release to production
     0080526 (313)          definition and management of non conforming lots in front-end
                            operations
        7177610             visual inspection at wafer fab and EWS outgoing
        0115373             acceptance rules at parametric test
        7326076             customer action request and return of defective material for silicon
                            foundries
        0018694             site code definition and product marking
        0072304             Laser marking of flatted or notched silicon wafers
        7183955             collective wafer packing
      7377224(*)            wafer scrap limit and defectivity for silicon foundries
     0076719 (213)          subcon qualification and audit
     0073560 (261)          mixing prevention
     0076600 (255)          Calibration
     0076616 (243)          Traceability
    0091650 (2510)          E.S.D
    0107363 (2616)          definition and management of non conforming lots in back-end
                            operations
     0076595 (242)          electrical testing of finished products
        0063181             electrical testing transfer
        0019155             QC gate acceptance criteria
        0046953             QFP IPC & final product V&M criteria
        0018968             packing acceptance
        0031932             Tape & reel
        0033575             damp-proof packing for smd
        0103700             TPA testing low yield limits
        0044316             Non standard packing
</TABLE>

                                     - 27 -
<PAGE>
                                   SCHEDULE 3

                             PRODUCT SPECIFICATIONS

                                     - 28 -
<PAGE>
                                   SCHEDULE 4

                        CANCELLATION COSTS (SECTION 5.2)

Cancellation costs - calculation formula:

Cancellation costs referred to in section 5.2 of this Agreement, shall be
calculated as follows:

                     CF = ([CS divided by TS] x [P - R]) + R

And, for the purposes of the foregoing:

"CF" means the cancellation costs payable by Purchaser

"CS" means the number of completed manufacturing steps as the date of
cancellation

"TS" means the total number of manufacturing steps required to produce the wafer
had not been any cancellation

"P" means the agreed purchase price of the wafer

"R" means the raw wafer cost incurred by Supplier

                                     - 29 -
<PAGE>
                                   SCHEDULE 5

                                   CYCLE TIME

(1). As of the Effective Date, the Cycle Time shall be as follows:

         For Products in Wafer Form:

         2 day per mask layer standard lots

         1.3 day per mask layer for hot lots

         For Products in Finished Form: 12 weeks.

(2). Supplier agrees to work in good faith to improve the Cycle Time described
in paragraph 1 above.

(3). The parties shall meet on a quarterly basis, or more often as may be
mutually agreed, to evaluate the performances and to develop mutually acceptable
objectives for the continuous improvement of the Cycle Time.

                                     - 30 -
<PAGE>
                                   SCHEDULE 6

     EXAMPLE OF APPORTIONMENT OF REDUCTION OF REQUIREMENT UNDER SECTION 3.3

If, during the Sixth Contract Period, Supplier is unable to supply or did not
accept purchase orders issued by Purchaser for Euros 10,000,000 (in Value) of
Products which were ordered by Purchaser in accordance with the terms and
conditions of this Agreement, such amount will be deducted over the Seventh
Contract Period and the Eighth Contract Period Minimum Amount as follows:

1.       Minimum Amount for the Seventh Contract Period is reduced by Euros
         3,000,000

              Computed as follows: 10,000,000 x [34.6 - 28]/[50-28]

2.       Minimum Amount for the Eighth Contract Period is reduced by Euros
         7,000,000

               Computed as follows: 10,000,000 x [50-34.6]/[50-28]

                                     - 31 -

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