Document:

<PAGE>   1

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                                CREDIT AGREEMENT

                                   dated as of

                                 August 4, 1999,

                  as Amended and Restated as of April 3, 2000,

                                      among

                            SCG HOLDING CORPORATION,

                    SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC,
                                  as Borrower,

                            The Lenders Party Hereto,

                            THE CHASE MANHATTAN BANK,
                            as Administrative Agent,

                        CREDIT LYONNAIS NEW YORK BRANCH,
                           as Co-Documentation Agent,

                           DLJ CAPITAL FUNDING, INC.,
                           as Co-Documentation Agent,

                                       and

                          LEHMAN COMMERCIAL PAPER INC.,
                            as Co-Documentation Agent

                             CHASE SECURITIES INC.,
                                   as Arranger

<PAGE>   2
                               TABLE OF CONTENTS

                                                                          Page
                                                                          ----
                                   ARTICLE I

                                  Definitions

SECTION 1.01.  Defined Terms ..............................................  1
SECTION 1.02.  Classification of Loans and Borrowings ..................... 27
SECTION 1.03.  Terms Generally ............................................ 27
SECTION 1.04.  Accounting Terms:GAAP ...................................... 27
SECTION 1.05.  Interim Financial Calculations ............................. 28

                                   ARTICLE II

                                  The Credits

SECTION 2.01.  Commitments ................................................ 28
SECTION 2.02.  Loans and Borrowings ....................................... 29
SECTION 2.03.  Requests for Borrowings .................................... 29
SECTION 2.04.  Swingline Loans ............................................ 30
SECTION 2.05.  Letters of Credit .......................................... 31
SECTION 2.06.  Funding of Borrowings ...................................... 35
SECTION 2.07.  Interest Elections ......................................... 36
SECTION 2.08.  Termination and Reduction of Commitments ................... 37
SECTION 2.09.  Repayment of Loans; Evidence of Debt ....................... 38
SECTION 2.10.  Amortization of Term Loans ................................. 39
SECTION 2.11.  Prepayment of Loans ........................................ 42
SECTION 2.12.  Fees ....................................................... 44
SECTION 2.13.  Interest ................................................... 45
SECTION 2.14.  Alternate Rate of Interest ................................. 46
SECTION 2.15.  Increased Costs ............................................ 46
SECTION 2.16.  Break Funding Payments ..................................... 47
SECTION 2.17.  Taxes ...................................................... 48
SECTION 2.18.  Payments Generally; Pro Rata Treatment;
                  Sharing of Set-offs ..................................... 49
SECTION 2.19.  Mitigation Obligations; Replacement of Lenders ............. 51

                                  ARTICLE III

                         Representations and Warranties

SECTION 3.01.  Organization; Powers ....................................... 51
SECTION 3.02.  Authorization; Enforceablility ............................. 52
SECTION 3.03.  Governmental Approvals; No Conflicts ....................... 52
SECTION 3.04.  Financial Condition; No Material Adverse Change ............ 52
SECTION 3.05.  Properties ................................................. 53
SECTION 3.06.  Litigation and Environmental Matters ....................... 54
<PAGE>   3

                                                                  Contents, p. 2

SECTION 3.07.  Compliance with Laws and Agreements........................... 54
SECTION 3.08.  Investment and Holding Company Status......................... 54
SECTION 3.09.  Taxes......................................................... 54
SECTION 3.10.  ERISA......................................................... 54
SECTION 3.11.  Disclosure.................................................... 55
SECTION 3.12.  Subsidiaries.................................................. 55
SECTION 3.13.  Insurance..................................................... 55
SECTION 3.14.  Labor Matters................................................. 55
SECTION 3.15.  Solvency...................................................... 56
SECTION 3.16.  Senior Indebtedness........................................... 56
SECTION 3.17.  Year 2000..................................................... 56
SECTION 3.18.  Acquisition................................................... 56

                                   ARTICLE IV

                                   Conditions

SECTION 4.01.  Restatement Effective Date.................................... 56
SECTION 4.02.  Each Credit Event............................................. 59

                                   ARTICLE V

                             Affirmative Covenants

SECTION 5.01.  Financial Statements and Other Information.................... 60
SECTION 5.02.  Notices of Material Events.................................... 61
SECTION 5.03.  Information Regarding Collateral.............................. 61
SECTION 5.04.  Existence: Conduct of Business................................ 62
SECTION 5.05.  Payment of Obligations........................................ 62
SECTION 5.06.  Maintenance of Properties..................................... 62
SECTION 5.07.  Insurance..................................................... 62
SECTION 5.08.  Casualty and Condemnation..................................... 63
SECTION 5.09.  Books and Records: Inspection and Audit Rights................ 63
SECTION 5.10.  Compliance with Laws.......................................... 63
SECTION 5.11.  Use of Proceeds and Letters of Credit......................... 63
SECTION 5.12.  Additional Subsidiaries....................................... 63
SECTION 5.13.  Further Assurances............................................ 64
SECTION 5.14.  Interest Rate Protection...................................... 64

                                   ARTICLE VI

                               Negative Covenants

SECTION 6.01.  Indebtedness: Certain Equity Services......................... 64
SECTION 6.02.  Liens......................................................... 66
SECTION 6.03.  Fundamental Changes........................................... 67
SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions..... 68
SECTION 6.05.  Asset Sales................................................... 70

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                                                                  Contents, p. 3

SECTION 6.06. Sale and Leaseback Transactions ............................... 71
SECTION 6.07. Hedging Agreements ............................................ 71
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness ......... 71
SECTION 6.09. Transactions with Affiliates .................................. 72
SECTION 6.10. Restrictive Agreements ........................................ 73
SECTION 6.11. Amendment of Material Documents ............................... 73
SECTION 6.12. Interest Expense Coverage Ratio ............................... 74
SECTION 6.13. Leverage Ratio ................................................ 74
SECTION 6.14. Capital Expenditures .......................................... 74

                                  ARTICLE VII

                               Events of Default

SECTION 7.01. Events of Default ............................................. 75
SECTION 7.02. Exclusive of Immaterial Subsidiaries .......................... 77

                                  ARTICLE VIII

                            The Administrative Agent

                                   ARTICLE IX

                                 Miscellaneous

SECTION 9.01. Notices ....................................................... 79
SECTION 9.02. Waivers; Amendments ........................................... 80
SECTION 9.03. Expenses; Indemnity; Damage Waiver ............................ 81
SECTION 9.04. Successors and Assigns ........................................ 83
SECTION 9.05. Survival ...................................................... 85
SECTION 9.06. Counterparts; Integration; Effectiveness ...................... 86
SECTION 9.07. Severability .................................................. 86
SECTION 9.08. Right of Setoff ............................................... 86
SECTION 9.09. GOVERNING LAW: JURISDICTION: CONSENT TO SERVICE OF PROCESS..... 86
SECTION 9.10. WAIVER OF JURY TRIAL .......................................... 87
SECTION 9.11. Headings ...................................................... 87
SECTION 9.12. Confidentiality ............................................... 87
SECTION 9.13. Interest Rate Limitation ...................................... 88
SECTION 9.14. Original Credit Agreement; Effectiveness of Amendment
                and Restatement.............................................. 89
SECTION 9.15. Additional Provisions for Tranche D Lenders ................... 89

<PAGE>   5
                                                                          Page

SCHEDULES:

Schedule 1.01     --    Mortgaged Properties
Schedule 1.01(b)  --    Restatement Mortgaged Properties
Schedule 2.01     --    Commitments
Schedule 3.05     --    Real Property
Schedule 3.06     --    Disclosed Matters
Schedule 3.12     --    Subsidiaries
Schedule 3.13     --    Insurance
Schedule 6.01     --    Existing Indebtedness
Schedule 6.02     --    Existing Liens
Schedule 6.04     --    Existing Investments
Schedule 6.10     --    Existing Restrictions

EXHIBITS:

Exhibit A         --    Form of Assignment and Acceptance
Exhibit B-1       --    Form of Opinion of Borrower's Counsel
Exhibit B-2       --    Form of Opinion of Local Counsel
Exhibit C         --    Guarantee Agreement
Exhibit D         --    Indemnity, Subrogation and Contribution Agreement
Exhibit E         --    Pledge Agreement
Exhibit F         --    Security Agreement
Exhibit G         --    Collateral Assignment
Exhibit H         --    Form of Reaffirmation Agreement

<PAGE>   6

                             CREDIT AGREEMENT dated as of August 4, 1999,
                    as amended and restated as of April 3, 2000 (this
                    "Agreement"), among SCG HOLDING CORPORATION,
                    SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, the LENDERS
                    party hereto, and THE CHASE MANHATTAN BANK, as
                    administrative agent, collateral agent and
                    syndication agent hereunder, and CREDIT LYONNAIS NEW
                    YORK BRANCH, DLJ CAPITAL FUNDING, INC. and LEHMAN
                    COMMERCIAL PAPER INC., as co-documentation agents
                    hereunder.

         The parties hereto agree as follows:

                                       2

<PAGE>   7
- As used in this Agreement, the following terms have the meanings specified
below:

         "ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Acquisition" means the acquisition pursuant to the Acquisition
Agreement by the Borrower of all the outstanding capital stock of Cherry
Semiconductor for a purchase price not to exceed $250,000,000 and the other
transactions contemplated by the Acquisition Agreement and the documents related
thereto.

         "Acquisition Agreement" means the Stock Purchase Agreement dated as of
March 8, 2000, between the Borrower, Holdings and the Seller.

         "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.

         "Administrative Agent" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Lenders hereunder.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
Notwithstanding the foregoing, no individual shall be deemed to be an Affiliate
of a Person solely by reason of his or her being an officer or director of such
Person.

         "Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

         "Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.

         "Applicable Rate" means, for any day (a) with respect to any Tranche B
Term Loan, (i) 2.50% per annum, in the case of an ABR Loan, or (ii) 3.50% per
annum, in the case of a Eurodollar Loan, (b) with respect to any Tranche C Term
Loan, (i) 2.75% per annum, in the case

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of an ABR Loan, or (ii) 3.75% in the case of a Eurodollar Loan, (c) with respect
to any Tranche D Term Loan, (i) 2.00%, in the case of an ABR Loan or (ii) 3.00%,
in the case of a Eurodollar Loan and (d) with respect to any ABR Loan or
Eurodollar Loan that is a Revolving Loan or a Tranche A Term Loan, or with
respect to the commitment fees payable hereunder, as the case may be, the
applicable rate per annum set forth below under the caption "ABR Spread",
"Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based upon the
Leverage Ratio as of the most recent determination date, provided that until the
delivery to the Administrative Agent, pursuant to Section 5.01(a), of Holdings's
consolidated financial statements for Holdings's fiscal year ending on December
31, 1999, the "Applicable Rate" for purposes of clause (d) above shall be the
applicable rate per annum set forth below in Category 1:

<TABLE>
<CAPTION>
===========================================================================================================
                                       ABR                Eurodollar                Commitment Fee
        Leverage Ratio:              Spread                 Spread                       Rate
===========================================================================================================
<S>                                  <C>                  <C>                       <C>
          Category 1                  2.00%                 3.00%                       0.50%
 Greater than or equal to 3.00
            to 1.00
===========================================================================================================
          Category 2                  1.75%                 2.75%                       0.50%
 Greater than or equal to 2.50
 to 1.00 and less than 3.00 to
             1.00
===========================================================================================================
          Category 3                  1.50%                 2.50%                       0.50%
 Greater than or equal to 2.00
 to 1.00 and less than 2.50 to
             1.00
===========================================================================================================
          Category 4                  1.25%                 2.25%                       0.50%
    Less than 2.00 to 1.00
===========================================================================================================
</TABLE>

         For purposes of the foregoing, (a) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of Holdings's fiscal year based
upon Holdings's consolidated financial statements delivered pursuant to Section
5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the first Business Day after the date of delivery to the
Administrative Agent of such consolidated financial statements indicating such
change and ending on the date immediately preceding the effective date of the
next such change, provided that the Leverage Ratio shall be deemed to be in
Category 1 (i) at any time that an Event of Default has occurred and is
continuing or (ii) at the option of the Administrative Agent or at the request
of the Required Lenders if Holdings fails to deliver the consolidated financial
statements required to be delivered by it pursuant to Section 5.01(a) or (b),
during the period from the expiration of the time for delivery thereof until
such consolidated financial statements are delivered.

         "Approved Fund" means, with respect to any Lender that is a fund that
invests in bank loans and similar commercial extensions of credit, any other
fund that invests in bank loans and similar commercial extensions of credit and
is managed by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.

         "Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States, provided that if, as a result of
any change in any law, rule or

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<PAGE>   9

regulation, it is no longer possible to determine the Assessment Rate as
aforesaid, then the Assessment Rate shall be such annual rate as shall be
determined by the Administrative Agent to be representative of the cost of such
insurance to the Lenders.

         "Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

         "Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

         "Board" means the Board of Governors of the Federal Reserve System of
the United States of America.

         "Borrower" means Semiconductor Components Industries, LLC, a Delaware
limited liability company.

         "Borrowing" means (a) Loans of the same Class and Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect, or (b) a Swingline Loan.

         "Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.

         "Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed, provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

         "Capital Expenditures" means, for any period, without duplication, (a)
the additions to property, plant and equipment and other capital expenditures of
the Borrower and its consolidated Subsidiaries that are (or would be) set forth
in a consolidated statement of cash flows of the Borrower for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by
the Borrower and its consolidated Subsidiaries during such period, provided that
the term "Capital Expenditures" (i) shall be net of landlord construction
allowances, (ii) shall not include expenditures made in connection with the
repair or restoration of assets with insurance or condemnation proceeds and
(iii) shall not include the purchase price of equipment to the extent
consideration therefor consists of used or surplus equipment being traded in at
such time or the proceeds of a concurrent sale of such used or surplus
equipment, in each case in the ordinary course of business.

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and

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<PAGE>   10

accounted for as capital lease obligations on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.

         "Certificate of Designation" means the certificate of designations of
Holdings with respect to the Cumulative Preferred Stock.

         "Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person other than Holdings of any
Equity Interest in Borrower; (b) prior to an IPO, the failure by TPG to own (and
retain the right to vote), directly or indirectly, beneficially and of record,
Equity Interests in Holdings representing greater than 40% of each of the
aggregate ordinary voting power and aggregate equity value represented by the
issued and outstanding Equity Interests in Holdings; (c) after an IPO, the
failure by TPG to own (and retain the right to vote), directly or indirectly,
beneficially and of record, Equity Interests in Holdings representing at least
15% of each of the aggregate ordinary voting power and the aggregate equity
value represented by the issued and outstanding Equity Interests in Holdings;
(d) after an IPO, the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the Effective Date), of Equity Interests
representing a greater percentage of either the aggregate ordinary voting power
or the aggregate equity value of Holdings than owned, directly or indirectly,
beneficially and of record, by TPG; (e) occupation of a majority of the seats
(other than vacant seats) on the board of directors of Holdings by Persons who
were neither (i) nominated by the board of directors of Holdings nor (ii)
appointed by directors so nominated; or (f) the occurrence of a "Change of
Control", as defined in the Subordinated Debt Documents.

         "Change in Law" means (a) the adoption of any law, rule or regulation
after the Effective Date, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the Effective Date or (c) compliance by any Lender or the Issuing Bank (or, for
purposes of Section 2.15(b), by any lending office of such Lender or by such
Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority first made or issued after the Effective Date.

         "Cherry Semiconductor" means Cherry Semiconductor Corporation, a Rhode
Island corporation.

         "Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Tranche D Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment, Tranche A Commitment,
Tranche B Commitment, Tranche C Commitment or Tranche D Commitment.

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

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<PAGE>   11

         "Collateral" means any and all "Collateral", as defined in any
applicable Security Document.

         "Collateral Agent" means the "Collateral Agent", as defined in any
applicable Security Document.

         "Collateral and Guarantee Requirement" means the requirement that:

                  (a) the Administrative Agent shall have received from each
         Loan Party either (i) a counterpart of each of the Guarantee Agreement,
         the Indemnity, Subrogation and Contribution Agreement, the Pledge
         Agreement, the Collateral Assignment and the Security Agreement duly
         executed and delivered on behalf of such Loan Party or (ii) in the case
         of any Person that becomes a Loan Party after the Effective Date
         (including, as of the Restatement Effective Date, pursuant to the
         Acquisition and the other Restatement Transactions), a supplement to
         each of the Guarantee Agreement, the Indemnity, Subrogation and
         Contribution Agreement, the Pledge Agreement and the Security
         Agreement, in each case in the form specified therein, duly executed
         and delivered on behalf of such Loan Party;

                  (b) all outstanding Equity Interests of the Borrower and each
         Subsidiary owned directly by or directly on behalf of any Loan Party
         (including, as of the Restatement Effective Date, after giving effect
         to the Restatement Transactions), shall have been pledged pursuant to
         the Pledge Agreement (except that the Loan Parties shall not be
         required to pledge more than 65% of the outstanding voting stock of any
         Foreign Subsidiary and shall not be required to pledge any Equity
         Interests in any Foreign Joint Venture Company to the extent that such
         a pledge is prohibited by the constitutive documents of such Foreign
         Joint Venture Company or applicable law) and the Administrative Agent
         shall have received certificates or other instruments representing all
         such Equity Interests, together with stock powers or other instruments
         of transfer with respect thereto endorsed in blank;

                  (c) all Indebtedness of Holdings, the Borrower and each
         Subsidiary that is owing to any Loan Party shall be evidenced by a
         promissory note and shall have been pledged pursuant to the Pledge
         Agreement and the Administrative Agent shall have received all such
         promissory notes, together with instruments of transfer with respect
         thereto endorsed in blank; provided that the requirements of this
         paragraph (c) shall not apply to the extent the Administrative Agent
         has waived compliance with Section 2(b) of the Pledge Agreement and the
         Required Lenders have consented to such waiver;

                  (d) all documents and instruments, including Uniform
         Commercial Code financing statements, required by law or reasonably
         requested by the Administrative Agent to be filed, registered or
         recorded to create the Liens intended to be created by the Security
         Agreement and the Pledge Agreement (including any supplements thereto),
         after giving effect to the Restatement Transactions and perfect such
         Liens to the extent required by, and with the priority required by, the
         Security Agreement and the Pledge

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<PAGE>   12

         Agreement, shall have been filed, registered or recorded or delivered
         to the Administrative Agent for filing, registration or recording;

                  (e) the Administrative Agent shall have received (i)
         counterparts of a Mortgage with respect to each Mortgage Property and
         amendments to each such Mortgage providing that the Tranche D Term
         Loans (in addition to the other Obligations) shall be secured by a Lien
         on such Mortgaged Property, signed on behalf of the record owner of
         such Mortgaged Property, (ii) counterparts of a Mortgage with respect
         to each Restatement Mortgaged Property signed on behalf of the record
         owner of such real property, (iii) a policy or policies of title
         insurance issued by a nationally recognized title insurance company,
         insuring the Lien of each such Mortgage as a valid first Lien on the
         Mortgaged Property or Restatement Mortgaged Property, as the case may
         be, described therein, free of any other Liens except as expressly
         permitted by Section 6.02, together with such endorsements, coinsurance
         and reinsurance as the Administrative Agent or the Required Lenders may
         reasonably request, and (iv) such surveys, abstracts, appraisals, legal
         opinions and other documents as the Administrative Agent or the
         Required Lenders may reasonably request with respect to any such
         Mortgage or Mortgaged Property or Restatement Mortgaged Property, as
         the case may be; and

                  (f) each Loan Party shall have obtained all material consents
         and approvals required to be obtained by it in connection with the
         execution and delivery of all Security Documents (or supplements
         thereto) to which it is a party, the performance of its obligations
         thereunder and the granting by it of the Liens thereunder.

         "Collateral Assignment" means the Collateral Assignment, entered into
in connection with the Original Credit Agreement, attached hereto as Exhibit G,
between the Borrower and the Collateral Agent.

         "Commitment" means a Revolving Commitment, Tranche A Commitment,
Tranche B Commitment, Tranche C Commitment or Tranche D Commitment or any
combination thereof (as the context requires).

         "Consolidated Cash Interest Expense" means, for any period (subject to
Section 1.05), the excess of (a) the sum of (i) the interest expense (including
(i) the aggregate amount of accrued letter of credit fees and (ii) imputed
interest expense in respect of Capital Lease Obligations) of the Borrower and
the Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, (ii) any interest accrued during such period in respect of
Indebtedness of the Borrower or any Subsidiary that is required to be
capitalized rather than included in consolidated interest expense for such
period in accordance with GAAP, (iii) the amount of cash dividends paid on any
preferred stock by Holdings during such period and (iv) any cash payments made
during such period in respect of obligations referred to in clause (b)(ii) below
that were amortized or accrued in a previous period, minus (b) the sum of (i) to
the extent included in such consolidated interest expense for such period,
non-cash amounts attributable to amortization of financing costs paid in a
previous period, plus (ii) to the extent included in such consolidated interest
expense for such period, non-cash amounts attributable to amortization of

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<PAGE>   13

debt discounts or accrued interest or dividends payable in kind for such period
(including with respect to the Junior Subordinated Note or the Cumulative
Preferred Stock).

         "Consolidated EBITDA" means, for any period (subject to Section 1.05),
Consolidated Net Income for such period plus (a) without duplication and to the
extent deducted in determining such Consolidated Net Income, the sum of (i)
consolidated interest expense for such period, (ii) consolidated income tax
expense for such period, (iii) all amounts attributable to depreciation and
amortization for such period, (iv) the aggregate amount of letter of credit fees
accrued during such period, (v) all extraordinary charges during such period,
(vi) noncash expenses during such period resulting from the grant of stock
options to management and employees of Holdings, the Borrower or any of the
Subsidiaries, (vii) the aggregate amount of deferred financing expenses for such
period, (viii) all other noncash expenses or losses of Holdings, the Borrower or
any of the Subsidiaries for such period (excluding any such charge that
constitutes an accrual of or a reserve for cash charges for any future period),
(ix) any non-recurring fees, expenses or charges realized by Holdings, the
Borrower or any of the Subsidiaries for such period related to any offering of
capital stock or incurrence of Indebtedness and (x) noncash dividends on the
Cumulative Preferred Stock and minus (b) without duplication and to the extent
included in determining such Consolidated Net Income, (i) any extraordinary
gains for such period and (ii) all noncash items increasing Consolidated Net
Income for such period (excluding any items that represent the reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period),
all determined on a consolidated basis in accordance with GAAP. For purposes of
calculating the Leverage Ratio as of any date, if the Borrower or any
consolidated Subsidiary has made any Permitted Acquisition or sale, transfer,
lease or other disposition of assets outside of the ordinary course of business
permitted by Section 6.05 during the period of four consecutive fiscal quarters
ending on the date on which the most recent fiscal quarter ended, Consolidated
EBITDA for the relevant period for testing compliance shall be calculated after
giving pro forma effect thereto, as if such Permitted Acquisition or sale,
transfer, lease or other disposition of assets outside of the ordinary course of
business (and any related incurrence, repayment or assumption of Indebtedness
with any new Indebtedness being deemed to be amortized over the applicable
testing period in accordance with its terms) had occurred on the first day of
the relevant period for testing compliance.

         "Consolidated Net Income" means, for any period, the net income or loss
of Holdings, the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, provided that there shall be
excluded from such net income or loss (a) the income of any Person (other than a
consolidated Subsidiary) in which any other Person (other than Holdings, the
Borrower or any consolidated Subsidiary or any director holding qualifying
shares in compliance with applicable law) owns an Equity Interest, except to the
extent of the amount of dividends or other distributions actually paid to the
Borrower or any of the consolidated Subsidiaries by such Person during such
period, and (b) the income or loss of any Person accrued prior to the date on
which it becomes a Subsidiary or is merged into or consolidated with the
Borrower or any consolidated Subsidiary or the date on which such Person's
assets are acquired by the Borrower or any consolidated Subsidiary.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise

                                       9
<PAGE>   14

voting power, by contract or otherwise. The terms "Controlling" and "Controlled"
have meanings correlative thereto.

         "Cumulative Preferred Stock" means the 12% Cumulative Preferred Stock
of Holdings with an aggregate liquidation preference on the Effective Date of
$209,000,000.

         "Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

         "Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.

         "Documentation Agents" means Credit Lyonnais New York Branch, DLJ
Capital Funding, Inc. and Lehman Commercial Paper Inc., in their capacity as
co-documentation agents hereunder.

         "dollars" or "$" refers to lawful money of the United States of
America.

         "Effective Date" means August 4, 1999, the date on which the conditions
specified in Section 4.01 of the Original Credit Agreement were satisfied.

         "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or restoration
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.

         "Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
administrative oversight costs, fines, penalties or indemnities), of Holdings,
the Borrower or any Subsidiary directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the Release or threatened Release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

         "Equity Contribution" means the contribution by TPG of not less than
$337,500,000 to the Investor.

         "Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

                                       10
<PAGE>   15

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

         "ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan under Section 4042 of
ERISA; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

         "Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

         "Event of Default" has the meaning assigned to such term in Article
VII.

         "Excess Cash Flow" means, for any fiscal year, the sum (without
duplication) of:

                  (a) Consolidated Net Income for such fiscal year, adjusted to
         exclude any gains or losses attributable to Prepayment Events; plus

                  (b) depreciation, amortization and other non-cash charges or
         losses deducted in determining such Consolidated Net Income for such
         fiscal year; plus

                  (c) the sum of (i) the amount, if any, by which Net Working
         Capital decreased during such fiscal year plus (ii) the net amount, if
         any, by which the consolidated deferred revenues of Holdings, the
         Borrower and the consolidated Subsidiaries increased during such fiscal
         year; minus

                  (d) the sum of (i) any non-cash gains included in determining
         such Consolidated Net Income for such fiscal year plus (ii) the amount,
         if any, by which Net Working Capital increased during such fiscal year
         plus (iii) the net amount, if any, by which the consolidated deferred
         revenues of Holdings, the Borrower and the consolidated Subsidiaries
         decreased during such fiscal year; minus

                                       11
<PAGE>   16

                  (e) Capital Expenditures for such fiscal year (except (i) to
         the extent attributable to the incurrence of Capital Lease Obligations
         or otherwise financed by incurring Long-Term Indebtedness or (ii)
         Capital Expenditures made pursuant to the first proviso to Section
         2.11(c) or the proviso to the first paragraph of Section 6.14); minus

                  (f) the aggregate principal amount of Long-Term Indebtedness
         repaid or prepaid by the Borrower and the consolidated Subsidiaries
         during such fiscal year, excluding (i) Indebtedness in respect of
         Revolving Loans and Letters of Credit, (ii) Term Loans prepaid pursuant
         to Section 2.11(a), 2.11(c) or (d), and (iii) repayments or prepayments
         of Long-Term Indebtedness financed by incurring other Long-Term
         Indebtedness; minus

                  (g) the aggregate amount of all prepayments of Revolving Loans
         made during such period to the extent accompanying reductions of the
         total Revolving Commitments.

         "Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) doing business,
income or franchise taxes imposed on (or measured by) its net income, capital or
any similar alternate basis by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.19(b)), any withholding tax that (i) is in effect and would apply to
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.17(e).

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

         "Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of Holdings.

         "Financing Transactions" means the transactions undertaken by Holdings,
the Borrower and the Subsidiary Loan Parties in connection with the execution
and delivery of the Original Credit Agreement and the Subordinated Debt
Documents, the issuance of the Subordinated Debt,

                                       12
<PAGE>   17

the issuance by the Borrower of the Junior Subordinated Note and the borrowing
of the initial Loans.

         "Foreign Joint Venture Companies" (i) Leshan-Phoenix Semiconductor Co.,
Ltd., an entity existing under the laws of the People's Republic of China, (ii)
SMP, (iii) Tesla Sezam, a.s., a corporation existing under the laws of the Czech
Republic, and (iv) Terosil, a.s., a corporation existing under the laws of the
Czech Republic.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

         "Foreign Subsidiary" means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.

         "Funded Indebtedness" means, as of any date, (a) the aggregate
principal amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date (other than any Indebtedness with respect to which
the Borrower is not obligated to pay or accrue any cash interest expense as of
such date), in the amount that would be reflected on a balance sheet prepared as
of such date on a consolidated basis in accordance with GAAP, and (b) the
aggregate amount of any Guarantee by Holdings, the Borrower or any Subsidiary of
any such Indebtedness of any other Person.

         "GAAP" means generally accepted accounting principles in the United
States of America.

         "Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

         "Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty

                                       13
<PAGE>   18

issued to support such Indebtedness or obligation, provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.

         "Guarantee Agreement" means the Guarantee Agreement, entered into in
connection with the Original Credit Agreement, attached hereto as Exhibit C,
among Holdings, the Subsidiary Loan Parties and the Collateral Agent for the
benefit of the Secured Parties.

         "Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
and all substances or wastes of any nature regulated pursuant to any
Environmental Law.

         "Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

         "Holdings" means SCG Holding Corporation, a Delaware corporation.

         "Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
Notwithstanding anything to the contrary in this paragraph, the term
"Indebtedness" shall not include (a) obligations under Hedging Agreements or (b)
agreements providing for indemnification, purchase price adjustments or similar
obligations incurred or assumed in connection with the acquisition or
disposition of assets or stock.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, entered into in connection
with the Original Credit

                                       14
<PAGE>   19

Agreement, attached hereto as Exhibit D, among the Borrower, the Subsidiary Loan
Parties and the Collateral Agent.

         "Information Memorandum" means the Confidential Information Memorandum
dated March 2000, as modified or supplemented prior to the Restatement Effective
Date, relating to the Borrower and the Restatement Transactions.

         "Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.

         "Interest Payment Date" means (a) with respect to any ABR Loan (other
than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.

         "Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect, provided that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.

         "Investor" means TPG Semiconductor Holdings LLC, a Delaware limited
liability company that is wholly owned by TPG.

         "IPO" means a bona fide underwritten initial public offering of voting
common stock of Holdings as a direct result of which at least 10% of the
aggregate voting common stock of Holdings (calculated on a fully diluted basis
after giving effect to all options to acquire voting common stock of Holdings
then outstanding, regardless of whether such options are then currently
exercisable) is beneficially owned by Persons other than TPG, the Investor,
Holdings and their respective Affiliates (including, in the case of Holdings,
all directors, officers and employees of Holdings, the Borrower and any
Subsidiary).

         "Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.

                                       15
<PAGE>   20

         "Joint Venture Holding Companies" means SCG (Malaysia SMP) Holding
Corporation, SCG (Czech) Holding Corporation and SCG (China) Holding
Corporation, each a Delaware corporation.

         "Junior Subordinated Note" means the 10% Junior Subordinated Note due
2011 of the Borrower.

         "LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.

         "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

         "Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.

         "Leshan JV Agreement" means the Joint Venture Contract dated as of
March 1, 1995, by and between Leshan Radio Company, Ltd. and Motorola
International Development Corporation.

         "Letter of Credit" means any letter of credit issued pursuant to this
Agreement.

         "Leverage Ratio" means, on any date, the ratio of (a) Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters of Holdings ended on such date (or, if such date is
not the last day of a fiscal quarter, ended on the last day of the fiscal
quarter of Holdings most recently ended prior to such date).

         "LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the LIBO Rate with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

                                       16
<PAGE>   21

         "Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

         "Loan Documents" means this Agreement, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement and the Security Documents.

         "Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.

         "Loan Transactions" means the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

         "Loans" means the loans made and the loans continued by the Lenders to
the Borrower pursuant to this Agreement.

         "Long-Term Indebtedness" means any Indebtedness that, in accordance
with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, properties, financial condition or prospects of
Holdings, the Borrower and the Subsidiaries, taken as a whole, (b) the ability
of the Loan Parties to perform their obligations under the Loan Documents or (c)
any material rights of or benefits available to the Lenders under the Loan
Documents.

         "Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $10,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that Holdings, the Borrower or such Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.

         "Moody's" means Moody's Investors Service, Inc.

         "Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property or Restatement Mortgaged Property to secure the Obligations.
Each Mortgage shall be reasonably satisfactory in form and substance to the
Collateral Agent.

         "Mortgaged Property" means, initially, each parcel of real property and
the improvements thereto owned by a Loan Party and identified on Schedule 1.01,
and includes each other parcel of

                                       17
<PAGE>   22

real property and improvements thereto with respect to which a Mortgage is
granted pursuant to Section 5.12 or 5.13.

         "Motorola" means Motorola, Inc., a Delaware corporation.

         "Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

         "Net Proceeds" means, with respect to any event (a) the cash proceeds
received in respect of such event, including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty or other insured damage, insurance proceeds in excess of $1,000,000,
and (iii) in the case of a condemnation or similar event, condemnation awards
and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses (including underwriting discounts and commissions and
collection expenses) paid or payable by Holdings, the Borrower and the
Subsidiaries to third parties in connection with such event, (ii) in the case of
a sale, transfer or other disposition of an asset (including pursuant to a sale
and leaseback transaction or a casualty or a condemnation or similar
proceeding), the amount of all payments required to be made by Holdings, the
Borrower and the Subsidiaries as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event, and (iii) the amount of all taxes paid (or
reasonably estimated to be payable) by Holdings, the Borrower and the
Subsidiaries, and the amount of any reserves established by Holdings, the
Borrower and the Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
determined reasonably and in good faith by the chief financial officer of the
Borrower). Notwithstanding anything to the contrary set forth above, the
proceeds of any sale, transfer or other disposition of Receivables or Related
Property (or any interest therein) pursuant to any Permitted Receivables
Financing shall not be deemed to constitute Net Proceeds except to the extent
that such sale, transfer or other disposition (a) is the initial sale, transfer
or other disposition of Receivables or Related Property (or any interest
therein) in connection with the establishment of such Permitted Receivables
Financing or (b) occurs in connection with an increase in the aggregate
outstanding amount of such Permitted Receivables Financing over the aggregate
outstanding amount of such Permitted Receivables Financing at the time of such
initial sale, transfer or other disposition.

         "Net Working Capital" means, at any date, (a) the consolidated current
assets and non-current deferred income tax assets of Holdings, the Borrower and
the consolidated Subsidiaries as of such date (excluding cash and Permitted
Investments) minus (b) the consolidated current liabilities and non-current
deferred income tax liabilities of Holdings, the Borrower and the consolidated
Subsidiaries as of such date (excluding current liabilities that constitute
Indebtedness). Net Working Capital at any date may be a positive or negative
number. Net Working Capital increases when it becomes more positive or less
negative and decreases when it becomes less positive or more negative.

         "Obligations" has the meaning assigned to such term in the Security
Agreement.

                                       18
<PAGE>   23

         "Original Credit Agreement" means the Credit Agreement dated as of
August 4, 1999, among Holdings, the Borrower, the Lenders party thereto, The
Chase Manhattan Bank, a New York banking corporation, as Administrative Agent,
Collateral Agent and syndication agent and Credit Lyonnais New York Branch, DLJ
Capital Funding, Inc. and Lehman Commercial Paper, as co-documentation agents
thereunder.

         "Other Taxes" means any and all current or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

         "Perfection Certificate" means a certificate in the form of Annex 2 to
the Security Agreement or any other form approved by the Borrower and the
Administrative Agent.

         "Permitted Acquisition" means any acquisition (whether by purchase,
merger, consolidation or otherwise) by the Borrower or any consolidated
Subsidiary of all or substantially all the assets of, or all the Equity
Interests in, a Person or division or line of business of a Person if, at the
time of and immediately after giving effect thereto, (a) no Default has occurred
and is continuing or would result therefrom, (b) the principal business of such
Person shall be reasonably related to a business in which the Borrower and the
Subsidiaries were engaged on the Effective Date, (c) each Subsidiary formed for
the purpose of or resulting from such acquisition shall be a Subsidiary Loan
Party and all of the Equity Interests of such Subsidiary Loan Party shall be
owned directly by the Borrower or a consolidated Subsidiary Loan Party and all
actions required to be taken with respect to such acquired or newly formed
Subsidiary Loan Party under Sections 5.12 and 5.13 shall have been taken, (d)
Holdings, the Borrower and the Subsidiaries are in compliance, on a pro forma
basis after giving effect to such acquisition (without giving effect to any cost
savings other than those actually realized as of the date of such acquisition),
with the covenants contained in Sections 6.12 and 6.13 recomputed as at the last
day of the most recently ended fiscal quarter of Holdings for which financial
statements are available, as if such acquisition (and any related incurrence or
repayment of Indebtedness, with any new Indebtedness being deemed to be
amortized over the applicable testing period in accordance with its terms) had
occurred on the first day of each relevant period for testing such compliance
and (e) Holdings has delivered to the Administrative Agent an officers'
certificate to the effect set forth in clauses (a), (b), (c) and (d) above,
together with all relevant financial information for the Person or assets to be
acquired and reasonably detailed calculations demonstrating satisfaction of the
requirement set forth in clause (d) above.

         "Permitted Encumbrances" means:

                  (a) Liens imposed by law for taxes or other governmental
         charges that are not yet due or are being contested in compliance with
         Section 5.05;

                                       19
<PAGE>   24

                  (b) carriers', warehousemen's, mechanics', materialmen's,
         repairmen's and other like Liens imposed by law, arising in the
         ordinary course of business and securing obligations that are not
         overdue by more than 30 days or are being contested in compliance with
         Section 5.05;

                  (c) pledges and deposits made in the ordinary course of
         business in compliance with workers' compensation, unemployment
         insurance and other social security laws or regulations;

                  (d) Liens (other than Liens on Collateral) to secure the
         performance of bids, trade contracts, leases, statutory obligations,
         surety and appeal bonds, performance bonds and other obligations of a
         like nature, in each case in the ordinary course of business;

                  (e) judgment liens in respect of judgments that do not
         constitute an Event of Default under clause (k) of Article VII;

                  (f) easements, zoning restrictions, rights-of-way and similar
         encumbrances on real property imposed by law or arising in the ordinary
         course of business and minor defects or irregularities in title that do
         not secure any monetary obligations and do not materially detract from
         the value of the affected property or interfere with the ordinary
         conduct of business of the Borrower or any Subsidiary;

                  (g) ground leases in respect of real property on which
         facilities owned or leased by the Borrower or any of the Subsidiaries
         are located;

                  (h) any interest or title of a lessor under any lease
         permitted by this Agreement;

                  (i) Liens in favor of customs and revenue authorities arising
         as a matter of law to secure payment of customs duties in connection
         with the importation of goods; and

                  (j) leases or subleases granted to other Persons and not
         interfering in any material respect with the business of the Borrower
         and the Subsidiaries, taken as a whole,

provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.

         "Permitted Investments" means:

                  (a) direct obligations of, or obligations the principal of and
         interest on which are unconditionally guaranteed by, the United States
         of America (or by any agency thereof to the extent such obligations are
         backed by the full faith and credit of the United States of America);

                  (b) investments in commercial paper maturing not more than one
         year after the date of acquisition thereof and having, at such date of
         acquisition, one of the two highest credit ratings obtainable from S&P
         or from Moody's;

                                       20
<PAGE>   25

                  (c) investments in certificates of deposit, banker's
         acceptances and time deposits maturing not more than one year after the
         date of acquisition thereof issued or guaranteed by or placed with, and
         money market deposit accounts and overnight bank deposits issued or
         offered by, any commercial bank organized under the laws of the United
         States of America or any State thereof or any foreign country
         recognized by the United States of America that has a combined capital
         and surplus and undivided profits of not less than $250,000,000 (or the
         foreign-currency equivalent thereof);

                  (d) fully collateralized repurchase agreements with a term of
         not more than 30 days for securities described in clause (a) above or
         clause (e) or (f) below and entered into with a financial institution
         satisfying the criteria described in clause (c) above;

                  (e) securities issued by any state of the United States of
         America or any political subdivision of any such state or any public
         instrumentality thereof having maturities of not more than six months
         from the date of acquisition thereof and, at the time of acquisition,
         having one of the two highest credit ratings obtainable from S&P or
         from Moody's;

                  (f) securities issued by any foreign government or any
         political subdivision of any foreign government or any public
         instrumentality thereof having maturities of not more than six months
         from the date of acquisition thereof and, at the time of acquisition,
         having one of the two highest credit ratings obtainable from S&P or
         from Moody's; and

                  (g) investments in funds that invest solely in one or more
         types of securities described in clauses (a), (e) and (f) above.

         "Permitted Receivables Financing" means any financing pursuant to which
(a) the Borrower or any Subsidiary sells, conveys or otherwise transfers to a
Receivables Subsidiary, in "true sale" transactions, and (b) such Receivables
Subsidiary sells, conveys or otherwise transfers to any other Person or grants a
security interest to any other Person in, any Receivables (whether now existing
or hereafter acquired) of the Borrower or any Subsidiary or any undivided
interest therein, and any assets related thereto (including all collateral
securing such Receivables), all contracts and all Guarantees or other
obligations in respect of such Receivables, proceeds of such Receivables and
other assets that are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving Receivables, provided that the board of directors of
Holdings shall have determined in good faith that such Permitted Receivables
Financing is economically fair and reasonable to Holdings, the Borrower and the
Subsidiaries, taken as a whole.

         "Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

         "Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA.

                                       21
<PAGE>   26

         "Pledge Agreement" means the Pledge Agreement, entered into in
connection with the Original Credit Agreement, attached hereto as Exhibit E,
among the Loan Parties and the Collateral Agent for the benefit of the Secured
Parties.

         "Prepayment Event" means:

                  (a) any sale, transfer or other disposition (including
         pursuant to a Permitted Receivables Financing or a sale and leaseback
         transaction) of any property or asset of the Borrower or any
         Subsidiary, including any Equity Interest owned by it, other than (i)
         dispositions described in clauses (a) and (b) of Section 6.05 and (ii)
         other dispositions resulting in aggregate Net Proceeds not exceeding
         $1,000,000 during any fiscal year of the Borrower; or

                  (b) any casualty or other insured damage to, or any taking
         under power of eminent domain or by condemnation or similar proceeding
         of, any property or asset of the Borrower or any Subsidiary, but only
         to the extent that the Net Proceeds therefrom have not been applied to
         repair, restore or replace such property or asset within 365 days after
         such event; or

                  (c) the incurrence by Holdings, the Borrower or any Subsidiary
         of any Indebtedness, other than Indebtedness permitted by Section 6.01.

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

         "Reaffirmation Agreement" means the Reaffirmation Agreement,
substantially in the form of Exhibit H, among the Loan Parties under the
Original Credit Agreement and The Chase Manhattan Bank, in its capacity as
Administrative Agent or Collateral Agent, as applicable, under the Collateral
Assignment, the Pledge Agreement, the Security Agreement, the Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement.

         "Recapitalization" means (a) the recapitalization of Holdings in
accordance with the Recapitalization Agreement pursuant to which the Investor
will acquire approximately 91% of the common stock of Holdings and (b) the
related transactions contemplated by the Recapitalization Agreement.

         "Recapitalization Agreement" means the Agreement and Plan of
Recapitalization and Merger dated as of May 11, 1999, among Motorola, Holdings,
the Borrower, the Investor and TPG Semiconductor Acquisition Corp., as amended.

         "Recapitalization Documents" means the Recapitalization Agreement, the
Reorganization Agreement and the Transition Agreements.

                                       22
<PAGE>   27

         "Receivable" means the Indebtedness and payment obligations of any
Person to the Borrower or any of the Subsidiaries or acquired by the Borrower or
any of the Subsidiaries (including obligations constituting an account or
general intangible or evidenced by a note, instrument, contract, security
agreement, chattel paper or other evidence of indebtedness or security) arising
from a sale of merchandise or the provision of services by the Borrower or any
Subsidiary or the Person from which such Indebtedness and payment obligation
were acquired by the Borrower or any of the Subsidiaries, including (a) any
right to payment for goods sold or for services rendered and (b) the right to
payment of any interest, sales taxes, finance charges, returned check or late
charges and other obligations of such Person with respect thereto.

         "Receivables Subsidiary" means a corporation or other entity that is a
newly formed, wholly owned, bankruptcy-remote, special purpose subsidiary of
Holdings, the Borrower or any wholly owned Subsidiary (a) that engages in no
activities other than in connection with the financing of Receivables, all
proceeds thereof and all rights (contractual or other), collateral and other
assets relating thereto, and any business or activities incidental or related to
such business (including servicing of Receivables), (b) that is designated by
the board of directors of the Borrower (as provided below) as a Receivables
Subsidiary, (c) of which no portion of its Indebtedness or any other obligations
(contingent or otherwise) (i) is Guaranteed by Holdings, the Borrower or any
Subsidiary (other than pursuant to Standard Securitization Undertakings), (ii)
is recourse to or obligates Holdings, the Borrower or any Subsidiary in any way
other than pursuant to Standard Securitization Undertakings and other than any
obligation to sell or transfer Receivables or (iii) subjects any property or
asset of Holdings, the Borrower or any Subsidiary, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, (d) with which none of
Holdings, the Borrower or any Subsidiary has any material contract, agreement,
arrangement or understanding (except in connection with a Permitted Receivables
Financing) other than on terms no less favorable to Holdings, the Borrower or
such Subsidiary than those that might be obtained at the time from Persons that
are not Affiliates of Holdings, other than fees payable in the ordinary course
of business in connection with servicing Receivables, and (e) to which none of
Holdings, the Borrower or any Subsidiary has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Upon any such designation, a Financial
Officer of the Borrower shall deliver a certificate to the Administrative Agent
certifying (a) the resolution of the board of directors of the Borrower giving
effect to such designation, (b) that, to the best of such officer's knowledge
and belief after consulting with counsel, such designation complied with the
foregoing conditions, (c) that after giving effect to such designation
(including any Indebtedness permitted to exist in connection with such
designation), Holdings and the Borrower shall be in compliance, on a pro forma
basis, with the covenants set forth in Section 6.12 and 6.13 and (d) immediately
after giving effect to such designation, no Default shall have occurred and be
continuing.

         "Register" has the meaning set forth in Section 9.04(c).

         "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.

         "Related Property" shall mean, with respect to each Receivable:

                                       23
<PAGE>   28

                  (a) all the interest of the Borrower or any Subsidiary in the
         goods, if any, sold and delivered to an obligor relating to the sale
         that gave rise to such Receivable,

                  (b) all other security interests or Liens, and the interest of
         the Borrower or any Subsidiary in the property subject thereto, from
         time to time purporting to secure payment of such Receivable, together
         with all financing statements signed by an obligor describing any
         collateral securing such Receivable and

                  (c) all guarantees, insurance, letters of credit and other
         agreements or arrangements of whatever character from time to time
         supporting or securing payment of such Receivable,

in the case of clauses (b) and (c), whether pursuant to the contract related to
such Receivable or otherwise or pursuant to any obligations evidenced by a note,
instrument, contract, security agreement, chattel paper or other evidence of
Indebtedness or security and the proceeds thereof.

         "Release" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.

         "Reorganization Agreement" means the Reorganization Agreement dated as
of May 11, 1999, by and among Motorola, Holdings and the Borrower, as amended.

         "Required Lenders" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.

         "Restatement Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).

         "Restatement Mortgaged Property" means each parcel of real property and
the improvements thereto owned by a Loan Party as a result of the Acquisition
and identified on Schedule 1.01(b).

         "Restatement Transactions" means the Acquisition and the Loan
Transactions entered into in connection with the Tranche D Facility.

         "Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interests in
Holdings, the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancelation or
termination of any Equity Interests in Holdings, the Borrower or any Subsidiary
or any option, warrant or other right to acquire any such Equity Interests in
Holdings, the Borrower or any Subsidiary.

                                       24
<PAGE>   29

         "Revolving Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.

         "Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01 (as of the
Restatement Effective Date), or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Revolving Commitment, as applicable.
The initial aggregate amount of the Lenders' Revolving Commitments is
$150,000,000.

         "Revolving Exposure" means, with respect to any Lender at any time, the
sum of (a) the outstanding principal amount of such Lender's Revolving Loans and
(b) such Lender's LC Exposure and Swingline Exposure at such time.

         "Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

         "Revolving Loan" means a Loan made pursuant to clause (b) of Section
2.01 (or, if made prior to the Restatement Effective Date, pursuant to clause
(d) of Section 2.01 of the Original Credit Agreement).

         "Revolving Maturity Date" means the earlier of (a) August 4, 2005, or,
if such day is not a Business Day, the next preceding Business Day and (b) the
date of the repayment in full of the Tranche A Term Loans.

         "SCG Restructuring" means the restructuring of the business of the
Borrower and the Subsidiaries described in Section 3 of the Information
Memorandum.

         "S&P" means Standard & Poor's Rating Service.

         "SMP" means Surface Mount Products Malaysia Sendirian Berhad, a
Malaysian private limited liability company.

         "SMP JV Agreement" means the Joint Venture Agreement dated as of July
31, 1992, and August 17, 1992, by and between Motorola and Philips
Semiconductors International B.V.

         "Secured Parties" has the meaning assigned to such term in the Security
Agreement.

                                       25
<PAGE>   30

         "Security Agreement" means the Security Agreement, entered into in
connection with the Original Credit Agreement, attached hereto as Exhibit F,
among the Borrower, Holdings, the Subsidiary Loan Parties and the Collateral
Agent for the benefit of the Secured Parties.

         "Seller" means The Cherry Corporation, a Delaware corporation.

         "Security Documents" means the Security Agreement, the Collateral
Assignment, the Pledge Agreement, the Mortgages and each other security
agreement or other instrument or document executed and delivered pursuant to
Section 5.12 or 5.13 to secure any of the Obligations.

         "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into at any time by Holdings, the
Borrower or any Subsidiary that are reasonably customary in an accounts
receivable transaction.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

         "Subordinated Debt" means the Senior Subordinated Notes due 2009 issued
by Holdings and the Borrower as co-issuers on the Effective Date in the
aggregate principal amount of $400,000,000 and the Indebtedness represented
thereby (including the Note Guarantees, Exchange Notes (each as defined in
Subordinated Debt Documents), guarantees of Exchange Notes and any replacement
Notes).

         "Subordinated Debt Documents" means the indenture under which the
Subordinated Debt was issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for any
Guarantee or other right in respect thereof.

         "subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than

                                       26
<PAGE>   31

50% of the general partnership interests are, as of such date, owned, controlled
or held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

         "Subsidiary" means any subsidiary of Holdings other than the Borrower.
Without limiting the generality of the definition of the term "subsidiary", it
is understood and agreed that each of (a) Tesla Sezam, a.s., a corporation
existing under the laws of the Czech Republic, (b) Terosil, a.s., a corporation
existing under the laws of the Czech Republic, (c) Slovakia Electronic
Industries, a.s., a corporation existing under the laws of Slovakia, and (d)
Leshan-Phoenix Semiconductor Co., Ltd., an entity existing under the laws of the
People's Republic of China, is a subsidiary of Holdings as of the Effective
Date.

         "Subsidiary Loan Party" means any Subsidiary that is not a Foreign
Subsidiary or a Receivables Subsidiary.

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans outstanding at such time. The Swingline Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.

         "Swingline Lender" means The Chase Manhattan Bank, in its capacity as
lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.04.

         "Taxes" means any and all current or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.

         "Term Loans" means Tranche A Term Loans, Tranche B Term Loans, Tranche
C Term Loans and Tranche D Term Loans.

         "Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.

         "TPG" means TPG Partners II, L.P. and its Affiliates, provided that no
such Affiliate shall be deemed a member of TPG to the extent it ceases to be
Controlled by, or under common Control with, TPG Partners II, L.P.

                                       27
<PAGE>   32

         "Tranche", when used in reference to any Borrowings, refers to whether
such Borrowings consist of Revolving Loans, Tranche A Term Loans, Tranche B Term
Loans or Tranche C Term Loans.

         "Tranche A Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Tranche A Term Loans pursuant to
clause (a) of Section 2.01 of the Original Credit Agreement. The initial
aggregate amount of the Lenders' Tranche A Commitments was $200,000,000.

         "Tranche A Lender" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.

         "Tranche A Maturity Date" means August 4, 2005, or, if such day is not
a Business Day, the next preceding Business Day.

         "Tranche A Term Loan" means a Loan made on or after the Effective Date
pursuant to clause (a) of Section 2.01 of the Original Credit Agreement. The
aggregate principal amount of Tranche A Term Loans outstanding on the
Restatement Effective Date is $125,500,000.

         "Tranche B Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche B Term Loan pursuant to
clause (b) of Section 2.01 of the Original Credit Agreement. The initial
aggregate amount of the Lenders' Tranche B Commitments was $325,000,000.

         "Tranche B Lender" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.

         "Tranche B Maturity Date" means August 4, 2006, or, if such day is not
a Business Day, the next preceding Business Day.

         "Tranche B Term Loan" means a Loan made on the Effective Date pursuant
to clause (b) of Section 2.01 of the Original Credit Agreement. The aggregate
principal amount of Tranche B Term Loans outstanding on the Restatement
Effective Date is $325,000,000.

         "Tranche C Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche C Term Loan pursuant to
clause (c) of the Original Credit Agreement. The initial aggregate amount of the
Lenders' Tranche C Commitments was $350,000,000.

         "Tranche C Lender" means a Lender with a Tranche C Commitment or an
outstanding Tranche C Term Loan.

         "Tranche C Maturity Date" means August 4, 2007, or, if such day is not
a Business Day, the next preceding Business Day.

                                       28
<PAGE>   33

         "Tranche C Term Loan" means a Loan made on the Effective Date pursuant
to clause (c) of Section 2.01 of the Original Credit Agreement. The aggregate
principal amount of Tranche C Term Loans outstanding on the Restatement
Effective Date is $350,000,000.

         "Tranche D Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Tranche D Term Loan hereunder on
the Restatement Effective Date, expressed as an amount representing the maximum
principal amount of the Tranche D Term Loan to be made by such Lender hereunder,
as such commitment may be (a) reduced from time to time pursuant to Section 2.08
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04. The initial amount of each Lender's
Tranche D Commitment is set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Tranche D
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
D Commitments is $200,000,000.

         "Tranche D Lender" means a Lender with a Tranche D Commitment or an
outstanding Tranche D Term Loan.

         "Tranche D Maturity Date" means August 4, 2007, or, if such day is not
a Business Day, the next preceding Business Day.

         "Tranche D Term Loan" means a Loan made pursuant to clause (a) of
Section 2.01.

         "Transactions" means the Restatement Transactions and the Financing
Transactions.

         "Transition Agreements" means agreements to be entered into with
Motorola or its Affiliates as contemplated by the Recapitalization Agreement and
as in effect on the Effective Date and as amended from time to time in
accordance with Section 6.11(b).

         "Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.

         "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

  Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar
Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

  Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise

                                       29
<PAGE>   34

(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (c) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time, provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the Effective Date in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

SECTION 1.05. Interim Financial Calculations. For purposes of determining the
Leverage Ratio and for purposes of determining compliance with Sections 6.12 and
6.13:

                  (a) for any period of four consecutive fiscal quarters ended
         on or prior to September 30, 2000, Consolidated EBITDA shall be deemed
         to be the Consolidated EBITDA of Holdings, the Borrower and the
         Subsidiaries (or their respective predecessor entities) for such period
         determined on a consolidated basis in accordance with GAAP (it being
         understood that Consolidated EBITDA for the fiscal quarter ended (i)
         December 31, 1998, was $86,500,000, (ii) March 31, 1999, was
         $76,300,000 and (iii) June 30, 1999, was $94,100,000); and

                  (b) (i) Consolidated Cash Interest Expense for the period of
         four consecutive fiscal quarters ending on September 30, 1999, shall be
         equal to the product of (A) Consolidated Cash Interest Expense for the
         period of two fiscal months ending on September 30, 1999, and (B) a
         fraction the numerator of which is 12 and the denominator of which is
         two, (ii) Consolidated Cash Interest Expense for the period of four
         consecutive fiscal quarters ending on December 31, 1999, shall be equal
         to the product of (A) Consolidated Cash Interest Expense for the period
         of five fiscal months ending on December 31, 1999, and (B) a fraction
         the numerator of which is 12 and the denominator of which is five,
         (iii) Consolidated Cash Interest Expense for the period of four
         consecutive fiscal quarters ending on March 31, 2000, shall be equal to
         the product of (A) Consolidated Cash Interest Expense for the period of
         eight fiscal months ending on March 31, 2000, and (B) a fraction the

                                       30
<PAGE>   35
         numerator of which is 12 and the denominator of which is eight and (iv)
         Consolidated Cash Interest Expense for the period of four consecutive
         fiscal quarters ending on June 30, 2000, shall be equal to the product
         of (A) Consolidated Cash Interest Expense for the period of 11 fiscal
         months ending on June 30, 2000, and (B) a fraction the numerator of
         which is 12 and the denominator of which is 11.

                                   ARTICLE II
                                  The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender agrees (a) to make a Tranche D Term Loan on the Restatement
Effective Date in a principal amount not exceeding its Tranche D Commitment and
(b) to make Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Exposure exceeding such Lender's Revolving
Commitment. Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid or prepaid in respect of Term Loans may not be reborrowed. All
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Revolving
Loans and Letters of Credit outstanding under the Original Credit Agreement on
the Restatement Effective Date shall remain outstanding hereunder on the terms
set forth herein.

SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan)
shall be made as part of a Borrowing consisting of Loans of the same Class and
Type made by the Lenders ratably in accordance with their respective Commitments
of the applicable Class. The failure of any Lender to make any Loan required to
be made by it shall not relieve any other Lender of its obligations hereunder,
provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.

         (b) Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith, provided that all Borrowings made
on the Effective Date shall be ABR Borrowings. Each Swingline Loan shall be an
ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan,
provided that (i) any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of this Agreement
and (ii) the Borrower shall not be required to make any greater payment under
Section 2.17 to the applicable Lender than such Lender would have been entitled
to receive if such Lender had not exercised such option.

         (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $10,000,000, provided that
an ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to

                                       31
<PAGE>   36

finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple
of $100,000 and not less than $500,000. Borrowings of more than one Type and
Class may be outstanding at the same time, provided that there shall not at any
time be more than a total of six Eurodollar Borrowings outstanding with respect
to any Tranche of Borrowings.

         (d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Revolving Loan, Tranche A Term Loan, Tranche B Term Loan, Tranche C Term Loan or
Tranche D Term Loan if the Interest Period requested with respect thereto would
end after the Revolving Maturity Date, Tranche A Maturity Date, Tranche B
Maturity Date, Tranche C Maturity Date or Tranche D Maturity Date, respectively.

SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing or Term
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than 10:00 a.m., New
York City time, on the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by the Borrower. Each
such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

                  (i) whether the requested Borrowing is to be a Revolving
         Borrowing or Tranche D Term Borrowing;

                  (ii) the aggregate amount of such Borrowing;

                  (iii) the date of such Borrowing, which shall be a Business
         Day;

                  (iv) subject to the proviso to the first sentence of Section
         2.02(b), whether such Borrowing is to be an ABR Borrowing or a
         Eurodollar Borrowing;

                  (v) in the case of a Eurodollar Borrowing, the initial
         Interest Period to be applicable thereto, which shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the location and number of the Borrower's account to
         which funds are to be disbursed, which shall comply with the
         requirements of Section 2.06.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

                                       32
<PAGE>   37
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from
time to time during the Revolving Availability Period, in an aggregate principal
amount at any time outstanding that will not result in (i) the aggregate
principal amount of outstanding Swingline Loans exceeding $25,000,000 or (ii)
the sum of the total Revolving Exposures exceeding the total Revolving
Commitments, provided that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Swingline Loans.

         (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan.

         (c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Swingline Loans.
Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt
of notice as provided above, to pay to the Administrative Agent, for the account
of the Swingline Lender, such Lender's Applicable Percentage of such Swingline
Loan or Swingline Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Revolving Lenders. The Administrative Agent
shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by

                                       33
<PAGE>   38
 the Administrative Agent shall be promptly remitted by the Administrative Agent
to the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.

SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period and prior to the date that is five
Business Days prior to the Revolving Maturity Date. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.

         (b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the LC Exposure shall not exceed $50,000,000
and (ii) the total Revolving Exposures shall not exceed the total Revolving
Commitments.

         (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.

         (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative

                                       34
<PAGE>   39

Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason.
Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

         (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 2:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt, provided that
the Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 or 2.04 that such payment be financed
with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and,
to the extent so financed, the Borrower's obligation to make such payment shall
be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

         (f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any

                                       35
<PAGE>   40

Letter of Credit, any application for the issuance of a Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. None of
the Administrative Agent, the Lenders, the Issuing Bank or any of their Related
Parties shall have any liability or responsibility by reason of or in connection
with the issuance or transfer of any Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the Issuing
Bank, provided that the foregoing shall not be construed to excuse the Issuing
Bank from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower that are caused by (i) the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof or (ii) the Issuing Bank's failure to issue
a Letter of Credit in accordance with the terms of this Agreement when requested
by the Borrower pursuant to Section 2.05(b). The parties hereto expressly agree
that, in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination
and each issuance (or failure to issue) a Letter of Credit. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

         (g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder, provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

         (h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC

                                       36
<PAGE>   41

Disbursement, at the rate per annum then applicable to ABR Revolving Loans,
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.

         (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

         (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon, provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. The Borrower also shall
deposit cash collateral pursuant to this paragraph as and to the extent required
by Section 2.11(b). Each such deposit pursuant to this paragraph or Section
2.11(b) shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total

                                       37
<PAGE>   42

LC Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within
three Business Days after all Events of Default have been cured or waived. If
the Borrower is required to provide an amount of cash collateral hereunder
pursuant to Section 2.11(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower as and to the extent that, after
giving effect to such return, the Borrower would remain in compliance with
Section 2.11(b) and no Event of Default shall have occurred and be continuing.

  Section 2.06. Funding of Borrowings. (a) Each Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 1:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders, provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request,
provided that ABR Revolving Loans and Swingline Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the Issuing Bank.

         (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.

         (c) Nothing in this Section 2.06 shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that the Borrower may have against any Lender as a result of any default
by any such Lender hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to fulfill its Commitments
hereunder).

  Section 2.07. Interest Elections. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Type or to continue such

                                       38
<PAGE>   43

Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. This Section shall not apply to
Swingline Borrowings, which may not be converted or continued.

         (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02:

                  (i) the Borrowing to which such Interest Election Request
         applies and, if different options are being elected with respect to
         different portions thereof, the portions thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses (iii) and (iv) below shall be specified for each
         resulting Borrowing);

                  (ii) the effective date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;

                  (iii) whether the resulting Borrowing is to be an ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest Period to be applicable thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

         (d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

         (e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event

                                       39
<PAGE>   44

of Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

SECTION 2.08. Termination and Reduction of Commitments. (a) Unless previously
terminated, (i) the Tranche D Commitments shall terminate at 5:00 p.m., New York
City time, on the Restatement Effective Date and (ii) the Revolving Commitments
shall terminate on the Revolving Maturity Date.

         (b) The Borrower may at any time, without premium or penalty,
terminate, or from time to time reduce, the Commitments of any Class, provided
that (i) each reduction of the Commitments of any Class shall be in an amount
that is an integral multiple of $1,000,000 and not less than $10,000,000 and
(ii) the Borrower shall not terminate or reduce the Revolving Commitments if,
after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.11, the sum of the Revolving Exposures would exceed
the total Revolving Commitments.

         (c) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable, provided that a notice of termination of
the Revolving Commitments delivered by the Borrower may state that such notice
is conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments of any Class shall be
permanent. Each reduction of the Commitments of any Class shall be made ratably
among the Lenders in accordance with their respective Commitments of such Class.

         (d) The parties hereto acknowledge that the Tranche A Commitments, the
Tranche B Commitments and the Tranche C Commitments have terminated.

SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Revolving Loan of such
Lender on the Revolving Maturity Date, (ii) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Term Loan of
such Lender as provided in Section 2.10 and (iii) to the Swingline Lender the
then unpaid principal amount of each Swingline Loan on the earlier of the
Revolving Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least five Business
Days after such Swingline Loan is made, provided that on each date that a
Revolving Borrowing is made, the Borrower shall repay all Swingline Loans that
were outstanding on the date such Borrowing was requested.

                                       40
<PAGE>   45

         (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.

         (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof,
which accounts the Administrative Agent will make available to the Borrower upon
its reasonable request.

         (d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein, provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.

         (e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Borrower and the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).

  Section 2.10. Amortization of Term Loans. (a) Subject to adjustment pursuant
to paragraph (f) of this Section, the Borrower shall repay Tranche A Term
Borrowings on each date set forth below in the aggregate principal amount set
forth opposite such date:

<TABLE>
<CAPTION>
                                 Date                 Amount
                                 ----                 ------
<S>                                                 <C>
                  September 30, 2001                $4,706,250
                  December 31, 2001                  4,706,250
                  March 31, 2002                     4,706,250
                  June 30, 2002                      4,706,250

                  September 30, 2002                 6,275,000
                  December 31, 2002                  6,275,000
                  March 31, 2003                     6,275,000
                  June 30, 2003                      6,275,000
</TABLE>

                                       41
<PAGE>   46

<TABLE>
<S>                                                 <C>
                  September 30, 2003                 7,843,750
                  December 31, 2003                  7,843,750
                  March 31, 2004                     7,843,750
                  June 30, 2004                      7,843,750
                  September 30, 2004                12,550,000
                  December 31, 2004                  12,550,000
                  March 31, 2005                     12,550,000
                  August 4, 2005                     12,550,000
</TABLE>

         The foregoing amortization schedule reflects all prepayments of Tranche
A Term Borrowings made prior to the Restatement Effective Date.

         (b) Subject to adjustment pursuant to paragraph (f) of this Section,
the Borrower shall repay Tranche B Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:

<TABLE>
<CAPTION>
                                   Date                 Amount
                                   ----                 ------
<S>                                                   <C>
                    September 30, 2001                $ 812,500
                    December 31, 2001                   812,500
                    March 31, 2002                      812,500
                    June 30, 2002                       812,500
                    September 30, 2002                  812,500
                    December 31, 2002                   812,500
                    March 31, 2003                      812,500
                    June 30, 2003                       812,500
                    September 30, 2003                  812,500
                    December 31, 2003                   812,500
                    March 31, 2004                      812,500
                    June 30, 2004                       812,500
                     September 30, 2004                 812,500
                    December 31, 2004                   812,500
                    March 31, 2005                      812,500
                    June 30, 2005                       812,500
</TABLE>

                                       42
<PAGE>   47

<TABLE>
<S>                                                 <C>
                    September 30, 2005               78,000,000
                    December 31, 2005                78,000,000
                    March 31, 2006                   78,000,000
                    August 4, 2006                   78,000,000
</TABLE>

         The foregoing amortization schedule reflects all prepayments of Tranche
B Term Borrowings made prior to the Restatement Effective Date.

         (c) Subject to adjustment pursuant to paragraph (f) of this Section,
the Borrower shall repay Tranche C Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:

<TABLE>
<CAPTION>
                                  Date                     Amount
                                  ----                     ------
<S>                                                      <C>
                  September 30, 2001                     $  875,000
                  December 31, 2001                         875,000
                  March 31, 2002                            875,000
                  June 30, 2002                             875,000
                  September 30, 2002                        875,000
                  December 31, 2002                         875,000
                  March 31, 2003                            875,000
                  June 30, 2003                             875,000
                  September 30, 2003                        875,000
                  December 31, 2003                         875,000
                  March 31, 2004                            875,000
                  June 30, 2004                             875,000
                  September 30, 2004                        875,000
                  December 31, 2004                         875,000
                  March 31, 2005                            875,000
                  June 30, 2005                             875,000
                  September 30, 2005                        875,000
                  December 31, 2005                         875,000
                  March 31, 2006                            875,000
                  June 30, 2006                             875,000
                  September 30, 2006                     83,125,000
                  December 31, 2006                      83,125,000
                  March 31, 2007                         83,125,000
                  August 4, 2007                         83,125,000
</TABLE>

                                       43
<PAGE>   48

         The foregoing amortization schedule reflects all prepayments of Tranche
C Term Borrowings made prior to the Restatement Effective Date.

         (d) Subject to adjustment pursuant to paragraph (f) of this Section,
the Borrower shall repay Tranche D Term Borrowings on each date set forth below
in the aggregate principal amount set forth opposite such date:

<TABLE>
<CAPTION>
                                  Date                    Amount
                                  ----                    ------
<S>                                                    <C>
                  September 30, 2001                   $     500,000
                  December 31, 2001                          500,000
                  March 31, 2002                             500,000
                  June 30, 2002                              500,000
                  September 30, 2002                         500,000
                  December 31, 2002                          500,000
                  March 31, 2003                             500,000
                  June 30, 2003                              500,000
                  September 30, 2003                         500,000
                  December 31, 2003                          500,000
                  March 31, 2004                             500,000
                  June 30, 2004                              500,000
                  September 30, 2004                         500,000
                  December 31, 2004                          500,000
                  March 31, 2005                             500,000
                  June 30, 2005                              500,000
                  September 30, 2005                         500,000
                  December 31, 2005                          500,000
                  March 31, 2006                             500,000
                  June 30, 2006                               500,000
                  September 30, 2006                     47,500,000
                  December 31, 2006                      47,500,000
                  March 31, 2007                         47,500,000
                  August 4, 2007                         47,500,000
</TABLE>

         (e) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date, (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date, (iii) all Tranche
C Term Loans shall be due and payable on the Tranche C Maturity Date and (iv)
all Tranche D Term Loans shall be due and payable on the Tranche D Maturity
Date.

         (f) Any prepayment of a Term Borrowing of any Class shall be applied to
reduce the subsequent scheduled repayments of the Term Borrowings of such Class
to be made pursuant to this Section ratably, provided that any prepayment made
pursuant to Section 2.11(c) shall be applied to reduce the scheduled repayments
of the Term Borrowings of such Class to be made pursuant to this Section in
reverse chronological order. If the initial aggregate amount of the Lenders'
Tranche D Term Commitments exceeds the aggregate principal amount of Tranche D

                                       44
<PAGE>   49

Term Loans that are made, then the scheduled repayments of Tranche D Term
Borrowings to be made pursuant to this Section shall be reduced ratably by an
aggregate amount equal to such excess.

         (g) Prior to any repayment of any Term Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment. Each repayment of a Borrowing shall be applied ratably to the Loans
included in the repaid Borrowing. Repayments of Term Borrowings shall be
accompanied by accrued interest on the amount repaid.

  Section 2.11 Prepayment of Loans. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, without
premium or penalty (but subject to Section 2.16), subject to the requirements of
this Section.

         (b) In the event and on each occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in an account with the Administrative Agent
pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.

         (c) In the event and on each occasion that any Net Proceeds are
received by or on behalf of Holdings, the Borrower or any Subsidiary in respect
of any Prepayment Event, the Borrower shall, within ten Business Days after such
Net Proceeds are received, prepay Term Borrowings in an aggregate amount equal
to such Net Proceeds, provided that, in the case of any event described in
clause (a) of the definition of the term "Prepayment Event" (other than the
sale, transfer or other disposition of Receivables in connection with a
Permitted Receivables Financing), if the Borrower shall deliver to the
Administrative Agent a certificate of a Financial Officer to the effect that
Holdings, the Borrower and the Subsidiaries intend to apply the Net Proceeds
from such event (or a portion thereof specified in such certificate), within 180
days after receipt of such Net Proceeds, to acquire real property, equipment or
other assets to be used in the business of the Borrower and the Subsidiaries,
and certifying that no Default has occurred and is continuing, then no
prepayment shall be required pursuant to this paragraph in respect of the Net
Proceeds in respect of such event (or the portion of such Net Proceeds specified
in such certificate, if applicable) except to the extent of any such Net
Proceeds therefrom that have not been so applied by the end of such 180-day
period, at which time a prepayment shall be required in an amount equal to such
Net Proceeds that have not been so applied.

         (d) Following the end of each fiscal year of the Borrower, commencing
with the fiscal year ending December 31, 2000, the Borrower shall prepay Term
Borrowings in an aggregate amount equal to 50% of Excess Cash Flow for such
fiscal year. Each prepayment pursuant to this paragraph shall be made on or
before the date on which financial statements are delivered pursuant to Section
5.01 with respect to the fiscal year for which Excess Cash Flow is being
calculated (and in any event within 90 days after the end of such fiscal year).

                                       45
<PAGE>   50

         (e) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (f) of this Section. In the event of any optional or mandatory
prepayment of Term Borrowings made at a time when Term Borrowings of more than
one Class remain outstanding, the Borrower shall select Term Borrowings to be
prepaid so that the aggregate amount of such prepayment is allocated between the
Tranche A Term Borrowings, Tranche B Term Borrowings, Tranche C Term Borrowings
and Tranche D Term Borrowings pro rata based on the aggregate principal amount
of outstanding Borrowings of each such Class, provided that, so long as and to
the extent that any Tranche A Term Borrowing remains outstanding, any Tranche B
Lender, Tranche C Lender or Tranche D Lender may elect, by notice to the
Administrative Agent by telephone (confirmed by telecopy) at least one Business
Day prior to the prepayment date, to decline all or any portion of any
prepayment of its Tranche B Term Loans, Tranche C Term Loans or Tranche D Term
Loans, as applicable, pursuant to this Section (other than an optional
prepayment pursuant to paragraph (a) of this Section, which may not be
declined), in which case the aggregate amount of the prepayment that would have
been applied to prepay Tranche B Term Loans, Tranche C Term Loans or Tranche D
Term Loans, as applicable, but was so declined shall be applied to prepay
Tranche A Term Borrowings.

         (f) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 10:00 a.m., New York City time,
on the date of prepayment or (iii) in the case of prepayment of a Swingline
Loan, not later than 12:00 noon, New York City time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date, the
principal amount of each Borrowing or portion thereof to be prepaid and, in the
case of a mandatory prepayment, a reasonably detailed calculation of the amount
of such prepayment, provided that, if a notice of optional prepayment of any
Loans is given in connection with a conditional notice of termination of the
Revolving Commitments as contemplated by Section 2.08, then such notice of
prepayment may be revoked if such notice of termination is revoked in accordance
with Section 2.08. Promptly following receipt of any such notice (other than a
notice relating solely to Swingline Loans), the Administrative Agent shall
advise the Lenders of the contents thereof. Each partial prepayment of any
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment or to
prepay such Borrowing in full. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.

         (g) In the event of and on each occasion of any prepayment of any
Tranche B Term Borrowing, Tranche C Term Borrowing or Tranche D Term Borrowing
pursuant to Section 2.11(a) or (c), the Borrower shall pay to the Tranche B
Lenders, Tranche C Lenders and Tranche D Lenders whose Tranche B Term Loans,
Tranche C Term Loans or Tranche D Term Loans, as applicable, are being prepaid a
prepayment premium equal to (A) if such prepayment

                                       46
<PAGE>   51

(or the date on which such prepayment is required to be made) occurs on or prior
to the date that is one year after the Effective Date, 2.0% of the principal
amount of the Tranche B Term Loans, Tranche C Term Loans or Tranche D Term
Loans, as applicable, being prepaid or (B) if such prepayment (or the date on
which such prepayment is required to be made) occurs more than one year after
the Effective Date but on or prior to the date that is two years after the
Effective Date, 1.0% of the principal amount of the Tranche B Term Loans, or
Tranche C Term Loans or Tranche D Term Loans, as applicable, being prepaid.

  Section 2.12. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee, which shall accrue at the rate
set forth in the definition of the term "Applicable Rate" on the average daily
unused amount of the Commitments of such Lender during the period from and
including the Effective Date to but excluding the date on which such Commitment
terminates (it being understood that no commitment fee shall be payable in
respect of the portion of any Commitment funded on the Effective Date). Accrued
commitment fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the dates on which the Commitments
terminate, commencing on the first such date to occur after the Effective Date.
All commitment fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day). For purposes of computing commitment fees, a
Revolving Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).

         (b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of 0.25% per annum on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Revolving Commitments and the date on
which there ceases to be any LC Exposure, as well as the Issuing Bank's standard
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date,
provided that all such fees shall be payable on the date on which the Revolving
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).

                                       47
<PAGE>   52

         (c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.

         (d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.

  Section 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including
each Swingline Loan) shall bear interest at the Alternate Base Rate plus the
Applicable Rate.

         (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.

         (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, to the
fullest extent permitted by applicable law, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, 2% plus the rate otherwise applicable
to such Loan as provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans
as provided in paragraph (a) of this Section.

         (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments, provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.

         (e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be prima facie evidence thereof.

  Section 2.14. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

                  (a) the Administrative Agent determines (which determination
         shall be prima facie evidence thereof) that adequate and reasonable
         means do not exist for ascertaining the Adjusted LIBO Rate for such
         Interest Period; or

                                       48
<PAGE>   53

                  (b) the Administrative Agent is advised by the Required
         Lenders that the Adjusted LIBO Rate for such Interest Period will not
         adequately and fairly reflect the cost to such Lenders of making or
         maintaining their Loans included in such Borrowing for such Interest
         Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist (it being understood
that the Administrative Agent will use commercially reasonable efforts to give
such notice as soon as practicable after such circumstances no longer exist),
(i) any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing,
such Borrowing shall be made as an ABR Borrowing.

  Section 2.15. Increased Costs. (a) If any Change in Law (except with respect
to Taxes, which shall be governed by Section 2.17) shall:

                  (i) impose, modify or deem applicable any reserve, special
         deposit or similar requirement against assets of, deposits with or for
         the account of, or credit extended by, any Lender (except any such
         reserve requirement reflected in the Adjusted LIBO Rate or Base CD
         Rate) or the Issuing Bank; or

                  (ii) impose on any Lender or the Issuing Bank or the London
         interbank market any other condition affecting this Agreement or
         Eurodollar Loans made by such Lender or any Letter of Credit or
         participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.

         (b) If any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on a Lender's or the Issuing
Bank's capital or on the capital of such Lender's or the Issuing Bank's holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy), then from time
to time the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the

                                       49
<PAGE>   54

Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.

         (c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be prima facie
evidence thereof. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

         (d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor, and provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.11(f) and is revoked in accordance therewith) or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to any Lender shall be deemed to include an amount
reasonably determined by such Lender to be the excess, if any, of (i) the amount
of interest that would have accrued on the principal amount of such Loan had
such event not occurred, at the Adjusted LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate that such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be prima facie evidence thereof. The Borrower shall
pay such Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any

                                       50
<PAGE>   55

Indemnified Taxes or Other Taxes, provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Bank (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

         (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

         (c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its
own behalf or on behalf of a Lender or the Issuing Bank, shall be prima facie
evidence thereof.

         (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

         (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, provided that such Foreign Lender
has received written notice from the Borrower advising it of the availability of
such exemption or reduction and supplying all applicable documentation.

         (f) If the Administrative Agent or a Lender or the Issuing Bank has
received a refund of any Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.17, which the Administrative Agent or such Lender or
the Issuing Bank is able to identify as such, it shall pay such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes
giving rise to such refund), net of

                                       51
<PAGE>   56
all reasonable out-of-pocket expenses of the Administrative Agent or such Lender
or the Issuing Bank and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, however,
that the Borrower agrees to pay, upon the request of the Administrative Agent or
such Lender or the Issuing Bank, the amount paid to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender or the Issuing Bank in the
event the Administrative Agent or such Lender or the Issuing Bank is required to
repay such refund to such Governmental Authority. Nothing contained in this
Section 2.17(f) shall require the Administrative Agent or any Lender or the
Issuing Bank to make available its tax returns (or any other information
relating to its Taxes that it deems confidential) to the Borrower or any other
Person.

Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-Offs. (a)
The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., New York City time), on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.

         (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.

         (c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon

                                       52
<PAGE>   57

than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Revolving Loans, Term Loans and participations in LC Disbursements and Swingline
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Revolving Loans,
Term Loans and participations in LC Disbursements and Swingline Loans, provided
that (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or participations in LC Disbursements to any assignee or participant,
other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

         (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing Bank,
as the case may be, the amount due. In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the Issuing Bank, as the
case may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or Issuing Bank with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender
requests compensation under Section 2.15, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the reasonable judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be

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<PAGE>   58

disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

         (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
Nothing in this Section 2.19 shall be deemed to prejudice any rights that the
Borrower may have against any Lender as a result of any default by any such
Lender in its obligation to fund Loans hereunder.

                                  ARTICLE III
                         Representations and Warranties

         Each of Holdings and the Borrower represents and warrants to the
Lenders that:

SECTION 3.01. Organization; Powers. Each of Holdings, the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

SECTION 3.02. Amortization; Enforceability. The Transactions entered into and to
be entered into by each Loan Party are within such Loan Party's powers and have
been duly authorized by all necessary action. This Agreement has been duly
executed and delivered by each of Holdings and the Borrower and constitutes, and
each other Loan Document to which any Loan Party is to be a party, when executed
and delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of Holdings, the Borrower or such Loan Party (as the case may be),
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'

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<PAGE>   59

rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by or before, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents and except where the failure
to obtain such consent or approval or make such registration or filing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, (b) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of Holdings, the
Borrower or any of the Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any material indenture,
agreement or other instrument binding upon Holdings, the Borrower or any of the
Subsidiaries or any of their assets, or give rise to a right thereunder to
require any payment to be made by Holdings, the Borrower or any of the
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of Holdings, the Borrower or any of the Subsidiaries, except Liens
created under the Loan Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) Holdings has
heretofore furnished to the Lenders its consolidated balance sheet as of
December 31, 1999, and consolidated statement of operations and comprehensive
income for the period from August 4, 1999, to December 31, 1999, reported on by
PricewaterhouseCoopers LLP, independent public accountants. Such financial
statements present fairly, in all material respects, the consolidated financial
position and results of operations of Holdings, the Borrower and its
consolidated Subsidiaries as of such date and for such period in accordance with
GAAP.

         (b) Holdings has heretofore furnished to the Lenders a pro forma
combined balance sheet and pro forma combined income statement as of and for the
pro forma fiscal year ended December 31, 1999, after giving effect to the
Restatement Transactions. Such pro forma consolidated financial statements (i)
have been prepared in good faith based on the same assumptions used to prepare
the pro forma financial summary included in the Information Memorandum (which
assumptions are believed by Holdings and the Borrower to be reasonable), (ii)
are based on the best information available to Holdings and the Borrower after
due inquiry, (iii) accurately reflect in all material respects all adjustments
necessary to give effect to the Restatement Transactions and (iv) present
fairly, in all material respects, the pro forma consolidated financial position
and results of operations and cash flows of Holdings, the Borrower and the
Subsidiaries as of such date and for such period, as if the Restatement
Transactions had occurred on such date or at the beginning of such period, as
applicable.

         (c) The Borrower has heretofore furnished to the Administrative Agent
the consolidated financial statements of Cherry Semiconductor and its
subsidiaries as of and for the fiscal year ended February 28, 1999, reported on
by Arthur Anderson LLP, independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of Cherry Semiconductor and its
subsidiaries as of such date and for such period in accordance with GAAP.

         (d) Except as disclosed in the financial statements referred to in
paragraphs (a), (b) and (c) above or the notes thereto or in the Information
Memorandum and except for the Disclosed

                                       55
<PAGE>   60

Matters, after giving effect to the Restatement Transactions, none of Holdings,
the Borrower or the Subsidiaries has, as of the Restatement Effective Date, any
material contingent liabilities, unusual long-term commitments or unrealized
losses.

         (e) Since December 31, 1999, there has been no material adverse change
in the business, assets, operations, properties, financial condition or
prospects of Holdings, the Borrower and its Subsidiaries, taken as a whole.

         (f) Since February 28, 1999, there has been no material adverse change
in the business, assets, operations, properties, financial condition or
prospects of Cherry Semiconductor and its subsidiaries, taken as a whole.

SECTION 3.05. Properties. (a) Holdings, the Borrower and each of the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties and Restatement Mortgaged Properties), except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes
and subject to Permitted Encumbrances.

         (b) Holdings, the Borrower and each of the Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by Holdings,
the Borrower and the Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

         (c) Schedule 3.05 sets forth the address of each real property that is
owned or leased by the Borrower or any of the Subsidiaries as of the Restatement
Effective Date after giving effect to the Restatement Transactions.

         (d) As of the Restatement Effective Date, none of Holdings, the
Borrower or any of the Subsidiaries has received notice of, or has knowledge of,
any material pending or contemplated condemnation proceeding affecting any
Mortgaged Property or Restatement Mortgaged Property or any sale or disposition
thereof in lieu of condemnation. None of the Mortgaged Property, Restatement
Mortgaged Property or any interest therein is subject to any right of first
refusal, option or other contractual right to purchase any such Mortgaged
Property, Restatement Mortgaged Property or interest therein.

SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority
pending against or, to the knowledge of Holdings or the Borrower, threatened
against or affecting Holdings, the Borrower or any of the Subsidiaries (i) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve any of the Loan Documents or the Transactions.

         (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse

                                       56
<PAGE>   61

Effect, none of Holdings, the Borrower or any of the Subsidiaries (i) has failed
to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.

         (c) Since the Effective Date, there has been no change in the status of
the Disclosed Matters that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.07. Compliance with Laws and Agreements.  Each of Holdings, the
Borrower and the Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.

SECTION 3.08. Investment and Holding Company Status. None of Holdings, the
Borrower or any of the Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

SECTION 3.09. Taxes. Holdings, the Borrower and each of the Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which Holdings, the Borrower or such Subsidiary,
as applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of all such underfunded Plans by an amount
that, if it were required to be fully paid, would reasonably be expected to
result in a Material Adverse Effect. Neither the Borrower nor any ERISA
Affiliate has engaged in a transaction with respect to any employee benefit plan
that would reasonably be expected to result in any material liability to the
Borrower or any ERISA Affiliate pursuant to Section 4069 of ERISA.

SECTION 3.11. Disclosure. Holdings and the Borrower have disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
Holdings, the Borrower or any of the Subsidiaries is subject, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. The Information
Memorandum and the other reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the

                                       57
<PAGE>   62

negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished),
taken as a whole, do not contain any material misstatement of fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, provided that
(a) with respect to projected financial information, Holdings and the Borrower
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time and (b) with respect to
information regarding the semiconductor market and other industry data, Holdings
and the Borrower represent only that such information was prepared by
third-party industry research firms, and although Holdings and the Borrower
believe such information is reliable, Holdings and the Borrower cannot guarantee
the accuracy and completeness of the information and have not independently
verified such information.

SECTION 3.12. Subsidiaries. Holdings does not have any subsidiaries other than
the Borrower and the Subsidiaries. Schedule 3.12 sets forth the name of, and the
ownership interest of Holdings in, each Subsidiary and identifies each
Subsidiary that is a Subsidiary Loan Party, in each case as of the Restatement
Effective Date.

SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all insurance
maintained by or on behalf of Holdings, the Borrower and the Subsidiaries as of
the Restatement Effective Date. As of the Restatement Effective Date, all
premiums in respect of such insurance that are required to have been paid have
been paid. Holdings and the Borrower believe that the insurance maintained by or
on behalf of Holdings, the Borrower and the Subsidiaries is adequate in all
material respects.

SECTION 3.14. Labor Matters. As of the Restatement Effective Date, there are no
material strikes, lockouts or slowdowns against Holdings, the Borrower or any
Subsidiary pending or, to the knowledge of Holdings or the Borrower, threatened.
Except as could not reasonably be expected to result in a Material Adverse
Effect, (a) the hours worked by and payments made to employees of Holdings, the
Borrower and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters and (b) the consummation of the Restatement
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which Holdings, the Borrower or any Subsidiary is bound.

SECTION 3.15. Solvency. Immediately after the consummation of the Restatement
Transactions to occur on the Restatement Effective Date and immediately
following the making of each Loan made on the Restatement Effective Date and
after giving effect to the application of the proceeds of such Loans, (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed
its debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of each Loan Party will be greater
than the amount that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) each Loan Party will
not have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be conducted
following the Restatement Effective Date.

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SECTION 3.16. Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" under and as defined in the Subordinated Debt Documents.

SECTION 3.17. Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the computer systems of
Holdings, the Borrower and the Subsidiaries and (b) equipment containing
embedded microchips (including systems and equipment supplied by others,
including Motorola and its Affiliates, or with which Holdings's, the Borrower's
or any Subsidiary's systems interface, including the systems and equipment of
Motorola and its Affiliates) and the testing of all such systems and equipment,
as so reprogrammed, has been completed. The cost to Holdings, the Borrower and
the Subsidiaries of such reprogramming and testing and of the reasonably
foreseeable consequences of year 2000 to Holdings, the Borrower and the
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in a Material Adverse Effect.

SECTION 3.18. Acquisition. As of the Restatement Effective Date, the Acquisition
Agreement has been duly authorized, executed and delivered by each of the
parties thereto and constitutes a legal, valid and binding obligation of each
such party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law. A true,
correct and complete copy of the Acquisition Agreement has been furnished to the
Administrative Agent.

                                   ARTICLE IV

                                   Conditions

SECTION 4.01. Restatement Effective Date. The amendments to the Original Credit
Agreement effected hereby and the obligations of the Tranche D Lenders to make
Tranche D Term Loans hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):

                  (a) The Administrative Agent (or its counsel) shall have
         received from Holdings, the Borrower, the Required Lenders (as defined
         in the Original Credit Agreement) and each Lender with a Tranche D Term
         Loan Commitment either (i) a counterpart of this Agreement signed on
         behalf of such party or (ii) written evidence satisfactory to the
         Administrative Agent (which may include telecopy transmission of a
         signed signature page of this Agreement) that such party has signed a
         counterpart of this Agreement.

                  (b) The Administrative Agent shall have received a favorable
         written opinion (addressed to the Administrative Agent and the Lenders
         and dated the Restatement Effective Date) of each of (i) Cleary,
         Gottlieb, Steen & Hamilton, counsel for the Borrower, substantially in
         the form of Exhibit B-1, and (ii) local counsel in each jurisdiction
         where a Mortgaged Property or a Restatement Mortgaged Property is
         located, substantially in the form of Exhibit B-2, and, in the case of
         each such opinion required by this paragraph, covering such other
         matters relating to the Loan Parties, the Loan Documents or the
         Restatement Transactions as the Required Lenders shall reasonably

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<PAGE>   64

         request. Each of Holdings and the Borrower hereby requests such counsel
         to deliver such opinions.

                  (c) The Administrative Agent shall have received such
         documents and certificates as the Administrative Agent or its counsel
         may reasonably request relating to the organization, existence and good
         standing of each Loan Party, the authorization of the Restatement
         Transactions and any other legal matters relating to the Loan Parties,
         the Loan Documents or the Restatement Transactions, all in form and
         substance satisfactory to the Administrative Agent and its counsel.

                  (d) The Administrative Agent shall have received a
         certificate, dated the Restatement Effective Date and signed by the
         President, a Vice President or a Financial Officer of the Borrower,
         confirming compliance with the conditions set forth in paragraphs (a)
         and (b) of Section 4.02.

                  (e) The Administrative Agent shall have received all fees and
         other amounts due and payable on or prior to the Restatement Effective
         Date, including, to the extent invoiced, reimbursement or payment of
         all out-of-pocket expenses (including fees, charges and disbursements
         of counsel) required to be reimbursed or paid by any Loan Party
         hereunder or under any other Loan Document.

                  (f) The Administrative Agent shall have received from each
         party to the Reaffirmation Agreement a counterpart of the Reaffirmation
         Agreement signed on behalf of such party.

                  (g) The Collateral and Guarantee Requirement (including with
         respect to any Subsidiary Loan Parties formed in connection with or
         resulting from the Acquisition) shall have been satisfied and the
         Administrative Agent shall have received a completed Perfection
         Certificate dated the Restatement Effective Date and signed by an
         executive officer or Financial Officer of Holdings, together with all
         attachments contemplated thereby, including the results of a search of
         the Uniform Commercial Code (or equivalent) filings made with respect
         to the Loan Parties (including any Subsidiary Loan Parties formed in
         connection with or resulting from the Acquisition) in the jurisdictions
         contemplated by the Perfection Certificate and copies of the financing
         statements (or similar documents) disclosed by such search and evidence
         reasonably satisfactory to the Administrative Agent that the Liens
         indicated by such financing statements (or similar documents) are
         permitted by Section 6.02 or have been released.

                  (h) The Administrative Agent shall have received evidence that
         the insurance required by Section 5.07 and the Security Documents is in
         effect.

                  (i) The Administrative Agent shall have received audited
         consolidated balance sheets and related statements of income,
         stockholders' equity and cash flows of Cherry Semiconductor and its
         subsidiaries, prepared in accordance with GAAP, for the most recent
         fiscal year for which such financial statements are available, which
         audited financial statements shall not be less favorable in any
         material respect than the

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<PAGE>   65

         information relating to Cherry Semiconductor and its subsidiaries for
         such fiscal year previously provided to the Administrative Agent and
         the Lenders.

                  (j) All consents and approvals required to be obtained from
         any Governmental Authority or other Person in connection with the
         Acquisition shall have been obtained, and all applicable waiting
         periods and appeal periods shall have expired, in each case without the
         imposition of any burdensome conditions. The Acquisition shall have
         been, or substantially simultaneously with the initial funding of the
         Tranche D Term Loans on the Restatement Effective Date shall be,
         consummated in accordance with the Acquisition Agreement, all related
         documentation and applicable law, without any amendment to or waiver of
         the Acquisition Agreement or the related documentation not approved by
         the Administrative Agent. The Administrative Agent shall have received
         copies of the Acquisition Agreement and all certificates, opinions and
         other documents delivered thereunder, certified by a Financial Officer
         as complete and correct.

                  (k) The Lenders shall have received a pro forma consolidated
         balance sheet of Holdings as of December 31, 1999, reflecting all pro
         forma adjustments as if the Restatement Transactions had been
         consummated on such date, and there shall be no material change in such
         pro forma consolidated balance sheet from the pro-forma consolidated
         balance sheet of Holdings as of December 31, 1999, previously provided
         to the Administrative Agent.

                  (l) After giving effect to the Restatement Transactions,
         Cherry Semiconductor and its subsidiaries shall have no outstanding
         Indebtedness at the time of the Acquisition other than (i) ordinary
         course accounts payable with respect to its trade creditors and (ii)
         other Indebtedness, the terms and conditions of which (including, but
         not limited to, terms and conditions relating to the interest rate,
         fees, amortization, maturity, subordination, covenants, events of
         default and remedies) shall be satisfactory in all respects to the
         Required Lenders.

                  (m) The Administrative Agent shall have been afforded the
         timely opportunity to review all other documentation relating to the
         Restatement Transactions and the other transactions contemplated
         hereby and shall be reasonably satisfied in all respects with such
         documentation.

                  (n) There shall not have occurred any material adverse change
         in the business, assets, operations, properties, financial condition,
         or prospects of (i) Holdings, the Borrower and its subsidiaries, taken
         as a whole since December 31, 1999, or (ii) Cherry Semiconductor and
         its subsidiaries, taken as a whole since February 28, 1999.

The Administrative Agent shall notify the Borrower and the Lenders of the
Restatement Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Tranche D
Term Loans hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00
p.m., New York City time, on May 31, 2000, (and, in the event such conditions
are not so satisfied or waived, the Tranche D Commitments shall terminate at
such time).

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<PAGE>   66
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to receipt of the request therefor in
accordance herewith and to the satisfaction of the following conditions:

                  (a) The representations and warranties of each Loan Party set
         forth in the Loan Documents shall be true and correct in all material
         respects on and as of the date of such Borrowing or the date of
         issuance, amendment, renewal or extension of such Letter of Credit, as
         applicable, except to the extent such representations and warranties
         expressly relate to an earlier date (in which case such representations
         and warranties shall be true and correct in all material respects as to
         such earlier date).

                  (b) At the time of and immediately after giving effect to such
         Borrowing or the issuance, amendment, renewal or extension of such
         Letter of Credit, as applicable, no Default shall have occurred and be
         continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Holdings
and the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section. For purposes of the foregoing, the term "Borrowing"
shall not include the continuation or conversion of Loans in which the aggregate
amount of such Loans is not being increased.

                                   ARTICLE V

                             Affirmative Covenants

         Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. Holdings will furnish
to the Administrative Agent and each Lender:

                  (a) within 90 days after the end of each fiscal year of
         Holdings, its audited consolidated balance sheet and related statements
         of operations, stockholders' equity and cash flows as of the end of and
         for such year, setting forth in each case in comparative form the
         figures for the previous fiscal year, all reported on by
         PricewaterhouseCoopers LLP or other independent public accountants of
         recognized national standing (without a "going concern" or like
         qualification or exception and without any qualification or exception
         as to the scope of such audit) to the effect that such consolidated
         financial statements present fairly in all material respects the
         consolidated financial condition and results of operations of Holdings,
         the Borrower and the Subsidiaries on a consolidated basis in accordance
         with GAAP consistently applied;

                  (b) within 45 days after the end of each of the first three
         fiscal quarters of each fiscal year of Holdings, its unaudited
         consolidated balance sheet and related statements of operations,
         stockholders' equity and cash flows as of the end of and for such
         fiscal quarter

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<PAGE>   67

         and the then elapsed portion of the fiscal year, setting forth in each
         case in comparative form the figures for the corresponding period or
         periods of (or, in the case of the balance sheet, as of the end of) the
         previous fiscal year, all certified by one of its Financial Officers as
         presenting fairly in all material respects the consolidated financial
         condition and results of operations of Holdings, the Borrower and the
         Subsidiaries on a consolidated basis in accordance with GAAP
         consistently applied, subject to normal year-end audit adjustments and
         the absence of footnotes;

                  (c) concurrently with any delivery of financial statements
         under paragraph (a) or (b) above, a certificate of a Financial Officer
         of Holdings (i) certifying as to whether a Default has occurred and, if
         a Default has occurred, specifying the details thereof and any action
         taken or proposed to be taken with respect thereto, (ii) setting forth
         reasonably detailed calculations demonstrating compliance with Sections
         6.12 and 6.13 and (iii) stating whether any change in GAAP or in the
         application thereof has occurred since the date of Holdings' audited
         financial statements referred to in Section 3.04 and, if any such
         change has occurred, specifying the effect of such change on the
         financial statements accompanying such certificate;

                  (d) concurrently with any delivery of financial statements
         under paragraph (a) above, a certificate of the accounting firm that
         reported on such financial statements stating whether they obtained
         knowledge during the course of their examination of such financial
         statements of any Default (which certificate may be limited to the
         extent required by accounting rules or guidelines);

                  (e) prior to the commencement of each fiscal year of Holdings,
         a detailed consolidated budget for such fiscal year (including a
         projected consolidated balance sheet and related statements of
         projected operations and cash flow as of the end of and for such fiscal
         year and setting forth any material assumptions used for purposes of
         preparing such budget) and, promptly when available, any significant
         revisions of such budget;

                  (f) promptly after the same become publicly available, copies
         of all periodic and other reports, proxy statements and other materials
         filed by Holdings, the Borrower or any Subsidiary with the Securities
         and Exchange Commission, or any Governmental Authority succeeding to
         any or all of the functions of said Commission, or with any national
         securities exchange, or, in the event the Holdings becomes a publicly
         traded company, distributed by Holdings to its public stockholders
         generally, as the case may be; and

                  (g) promptly following any request therefor, such other
         information regarding the operations, business affairs and financial
         condition of Holdings, the Borrower or any Subsidiary, or compliance
         with the terms of any Loan Document, as the Administrative Agent or any
         Lender may reasonably request.

SECTION 5.02. Notices of Material Events. Holdings and the Borrower will furnish
to the Administrative Agent and each Lender written notice of the following
promptly upon Holdings's or the Borrower's obtaining knowledge thereof:

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<PAGE>   68

                  (a) the occurrence of any Default;

                  (b) the filing or commencement of any action, suit or
         proceeding by or before any arbitrator or Governmental Authority
         against or affecting Holdings, the Borrower or any Affiliate thereof
         that, if adversely determined, could reasonably be expected to result
         in a Material Adverse Effect;

                  (c) the occurrence of any ERISA Event that, alone or together
         with any other ERISA Events that have occurred, could reasonably be
         expected to result in liability of Holdings, the Borrower and the
         Subsidiaries in an aggregate amount exceeding $10,000,000; and

                  (d) any other development that results in, or could reasonably
         be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of Holdings setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.

SECTION 5.03. Information Regarding Collateral. (a) Holdings will furnish to the
Administrative Agent prompt written notice of any change (i) in any Loan Party's
corporate name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties, (ii) in the location of any Loan
Party's chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in any Loan Party's
identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer
Identification Number. Holdings agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made, or will
have been made within any statutory period, under the Uniform Commercial Code or
otherwise that are required in order for the Administrative Agent to continue at
all times following such change to have a valid, legal and perfected security
interest in all the Collateral for the benefit of the Secured Parties. Holdings
also agrees promptly to notify the Administrative Agent if any material portion
of the Collateral is damaged or destroyed.

         (b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to paragraph (a) of Section
5.01, Holdings shall deliver to the Administrative Agent a certificate of a
Financial Officer of Holdings (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified

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<PAGE>   69

pursuant to clause (i) above to the extent necessary to protect and perfect the
security interests under the Security Agreement for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period).

SECTION 5.04. Existence; Conduct of Business. Each of Holdings and the Borrower
will, and will cause each of the Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, contracts, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of the
business of the Borrower and its Subsidiaries, taken as a whole, provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.03 or any sale of assets permitted under
Section 6.05.

SECTION 5.05. Payment of Obligations. Each of Holdings and the Borrower will,
and will cause each of the Subsidiaries to, pay its Indebtedness and other
obligations, including Tax liabilities, before the same shall become delinquent
or in default, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) Holdings, the Borrower
or such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.06. Maintenance of Properties. Each of Holdings and the Borrower will,
and will cause each of the Subsidiaries to, keep and maintain all property
material to the conduct of the business of Holdings, the Borrower and the
Subsidiaries, taken as a whole, in good working order and condition, ordinary
wear and tear excepted.

SECTION 5.07. Insurance. Each of Holdings and the Borrower will, and will cause
each of the Subsidiaries to, maintain, with financially sound and reputable
insurance companies (a) insurance in such amounts (with no greater risk
retention) and against such risks as are customarily maintained by companies of
established repute engaged in the same or similar businesses operating in the
same or similar locations and (b) all insurance required to be maintained
pursuant to the Security Documents. Holdings will furnish to the Lenders, upon
request of the Administrative Agent, information in reasonable detail as to the
insurance so maintained.

SECTION 5.08. Casualty and Condemnation. Holdings (a) will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or
other insured damage to any material portion of any Collateral or the
commencement of any action or proceeding for the taking of any Collateral or any
part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will cause the Net Proceeds of any
such event (whether in the form of insurance proceeds, condemnation awards or
otherwise) to be applied in accordance with the applicable provisions of the
Security Documents.

SECTION 5.09. Books and Records; Inspection and Audit Rights. Each of Holdings
and the Borrower will, and will cause each of the Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made of
all material dealings and transactions in relation to its business and
activities. Each of Holdings and the

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Borrower will, and will cause each of the Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and at such reasonable intervals as may be reasonably
requested.

SECTION 5.10. Compliance with Laws. Each of Holdings and the Borrower will, and
will cause each of the Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the Tranche
D Term Loans made on the Restatement Effective Date will be used solely for (i)
the payment of amounts payable as consideration for the Acquisition and (ii) the
payment of fees and expenses payable in connection with the Restatement
Transactions. The proceeds of the Revolving Loans and Swingline Loans will be
used only for general corporate purposes. No part of the proceeds of any Loan
will be used, whether directly or indirectly, for any purpose that entails a
violation of any of the Regulations of the Board, including Regulations T, U and
X. Letters of Credit will be issued only to support obligations of the Borrower
or any Subsidiary incurred in the ordinary course of business.

SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is formed or
acquired after the Effective Date, Holdings will, within ten Business Days after
such Subsidiary is formed or acquired, notify the Administrative Agent and the
Lenders thereof and cause the Collateral and Guarantee Requirement to be
satisfied with respect to such Subsidiary (if it is a Subsidiary Loan Party) and
with respect to any Equity Interest in or Indebtedness of such Subsidiary owned
by or on behalf of any Loan Party.

SECTION 5.13. Further Assurances. (a) Each of Holdings and the Borrower will,
and will cause each Subsidiary Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), that may be
required under any applicable law, or which the Administrative Agent or the
Required Lenders may reasonably request, to cause the Collateral and Guarantee
Requirement to be and remain satisfied, all at the expense of the Loan Parties.
Holdings and the Borrower also agree to provide to the Administrative Agent,
from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.

         (b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by the Borrower or any Subsidiary
Loan Party after the Effective Date (other than assets constituting Collateral
under the Security Agreement or the Pledge Agreement that become subject to the
Lien of the Security Agreement or the Pledge Agreement upon acquisition
thereof), the Borrower will notify the Administrative Agent and the Lenders
thereof, and, if requested by the Administrative Agent or the Required Lenders,
the Borrower will cause such assets to be subjected to a Lien securing the
Obligations and will take, and cause the Subsidiary Loan Parties to take, such
actions as shall be necessary or reasonably requested by

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<PAGE>   71

the Administrative Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the Loan
Parties.

SECTION 5.14. Interest Rate Protection. As promptly as practicable, and in any
event within 90 days after the Effective Date, the Borrower will enter into, and
thereafter for a period of not less than three years after the Effective Date
will maintain in effect, one or more interest rate protection agreements on such
terms and with such parties as shall be reasonably satisfactory to the
Administrative Agent, the effect of which shall be to ensure that at least 50%
of the outstanding Long-Term Indebtedness of Holdings, the Borrower and the
consolidated Subsidiaries is effectively subject to a fixed rate of interest.

                                   ARTICLE VI
                               Negative Covenants

         Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each of Holdings and the Borrower covenants and
agrees with the Lenders that:

SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Borrower will
not, and Holdings and the Borrower will not permit any Subsidiary to, create,
incur, assume or permit to exist any Indebtedness, except:

                  (i) Indebtedness created under the Loan Documents;

                  (ii) the Subordinated Debt;

                  (iii) the Junior Subordinated Note;

                  (iv) Indebtedness existing on the Effective Date and set forth
         in Schedule 6.01 and extensions, renewals, refinancings and
         replacements of any such Indebtedness that do not increase the
         outstanding principal amount thereof or result in an earlier maturity
         date or decreased weighted average life thereof;

                  (v) Indebtedness of the Borrower to Holdings or any Subsidiary
         and of any Subsidiary to the Borrower, Holdings or any other
         Subsidiary;

                  (vi) Guarantees by the Borrower and by any Subsidiary of
         Indebtedness of the Borrower or any other Subsidiary, provided that
         Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness
         of any Subsidiary that is not a Loan Party shall be subject to Section
         6.04;

                  (vii) Indebtedness of the Borrower or any Subsidiary incurred
         to finance the acquisition, construction or improvement of any fixed or
         capital assets, including Capital Lease Obligations (provided that such
         Indebtedness is incurred prior to or within 180 days after such
         acquisition or the completion of such construction or improvement) and
         any Indebtedness assumed in connection with the acquisition of any such
         assets or

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<PAGE>   72

         secured by a Lien on any such assets prior to the acquisition thereof,
         and extensions, renewals, refinancings and replacements of any such
         Indebtedness that do not increase the outstanding principal amount
         thereof, provided that the aggregate principal amount of Indebtedness
         permitted by this clause (vii) shall not exceed $25,000,000 at any time
         outstanding;

                  (viii) Indebtedness of the Borrower or any Subsidiary in
         respect of workers' compensation claims, self-insurance obligations,
         performance bonds, surety, appeal or similar bonds and completion
         guarantees provided by the Borrower and the Subsidiaries in the
         ordinary course of their business, provided that upon the incurrence of
         Indebtedness with respect to reimbursement type obligations regarding
         workers' compensation claims, such obligations are reimbursed within 30
         days following such drawing or incurrence;

                  (ix) Indebtedness in respect of a Permitted Receivables
         Financing in an aggregate principal amount not to exceed $100,000,000,
         provided that the Net Proceeds resulting from the sale, transfer or
         other disposition of Receivables in connection with such Permitted
         Receivables Financing are applied in accordance with Section 2.11(c);

                  (x) Indebtedness of the Borrower or any Subsidiary that was
         (A) Indebtedness of any other Person existing at the time such other
         Person was merged with or became a Subsidiary, including Indebtedness
         incurred in connection with, or in contemplation of, such other
         Person's merging with or becoming a Subsidiary, and extensions,
         renewals, refinancings and replacements of any such Indebtedness that
         do not increase the outstanding principal amount thereof or result in
         an earlier maturity date or decreased weighted average life thereof,
         provided that the aggregate principal amount of Indebtedness permitted
         under this clause (x) shall not exceed $25,000,000 at any time
         outstanding;

                  (xi) other unsecured Indebtedness in an aggregate principal
         amount not exceeding $50,000,000 at any time outstanding, provided that
         the aggregate principal amount of Indebtedness of the Subsidiaries that
         are not Subsidiary Loan Parties permitted by this clause (xi) shall not
         exceed $25,000,000 at any time outstanding.

         (b) Holdings will not create, incur, assume or permit to exist any
Indebtedness except (i) Indebtedness created under the Loan Documents, (ii) the
Subordinated Debt and (iii) Indebtedness permitted under clause (a)(v) of this
Section 6.01.

         (c) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, issue any preferred stock or other preferred Equity Interests,
except that (i) Holdings may issue the Cumulative Preferred Stock, (ii) Holdings
may issue preferred stock or other preferred Equity Interests of Holdings that
do not require mandatory cash dividends or redemptions and do not provide for
any right on the part of the holder to require redemption, repurchase or
repayment thereof, in each case prior to the date that is 91 days after August
4, 2007, and (iii) Holdings, the Borrower or any Subsidiary may issue directors'
qualifying shares or shares required by applicable law to be held by a Person
other than Holdings, the Borrower or any Subsidiary.

                                       68
<PAGE>   73
6.02 Liens.  (a) The Borrower will not, and Holdings and the Borrower will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:

                  (i) Liens created under the Loan Documents;

                  (ii) Permitted Encumbrances;

                  (iii) any Lien on any property or asset of the Borrower or any
         Subsidiary existing on the Effective Date and set forth in Schedule
         6.02, provided that (i) such Lien shall not apply to any other property
         or asset of the Borrower or any Subsidiary and (ii) such Lien shall
         secure only those obligations that it secures on the Effective Date and
         extensions, renewals and replacements thereof that do not increase the
         outstanding principal amount thereof;

                  (iv) any Lien existing on any property or asset prior to the
         acquisition thereof by the Borrower or any Subsidiary or existing on
         any property or asset of any Person that becomes a Subsidiary after the
         Effective Date prior to the time such Person becomes a Subsidiary,
         provided that (A) such Lien is not created in contemplation of or in
         connection with such acquisition or such Person becoming a Subsidiary,
         as the case may be, (B) such Lien shall not apply to any other property
         or assets of the Borrower or any Subsidiary and (C) such Lien shall
         secure only those obligations that it secures on the date of such
         acquisition or the date such Person becomes a Subsidiary, as the case
         may be and extensions, renewals and replacements thereof that do not
         increase the outstanding principal amount thereof;

                  (v) Liens on fixed or capital assets acquired, constructed or
         improved by the Borrower or any Subsidiary, provided that (A) such
         Liens secure Indebtedness permitted by clause (vii) of Section 6.01(a),
         (B) such security interests and the Indebtedness secured thereby are
         incurred prior to or within 180 days after such acquisition or the
         completion of such construction or improvement, (C) the Indebtedness
         secured thereby does not exceed 100% of the cost of acquiring,
         constructing or improving such fixed or capital assets and (D) such
         security interests shall not apply to any other property or assets of
         the Borrower or any Subsidiary;

                  (vi) sales of Receivables and Related Property (or undivided
         interests therein) permitted under Section 6.05(d) and Liens on
         Receivables of a Receivables Subsidiary granted in connection with any
         Permitted Receivables Financing;

                  (vii) Liens arising solely by virtue of any statutory or
         common law provision relating to banker's liens, rights of setoff or
         similar rights; and

                  (viii) Liens in favor of a landlord on leasehold improvements
         in leased premises.

                                       69
<PAGE>   74

         (b) Holdings will not create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
thereof, except Liens created under the Pledge Agreement and Permitted
Encumbrances.

  SECTION 6.03. Fundamental Changes. (a) Neither Holdings nor the Borrower will,
nor will they permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Person may merge with Holdings or the Borrower in a transaction in which the
surviving entity is a Person organized or existing under the laws of the United
States of America, any State thereof or the District of Columbia and, if such
surviving entity is not Holdings or the Borrower, as the case may be, such
Person expressly assumes, in writing, all the obligations of Holdings or the
Borrower, as the case may be, under the Loan Documents, (ii) any Person may
merge with any Subsidiary in a transaction in which the surviving entity is a
Subsidiary and, if any party to such merger is a Subsidiary Loan Party, is a
Subsidiary Loan Party and (iii) any Subsidiary (other than a Subsidiary Loan
Party) may liquidate or dissolve if the Borrower determines in good faith that
such liquidation or dissolution is in the best interests of the Borrower and is
not materially disadvantageous to the Lenders, provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Sections 6.04 and
6.08.

         (b) The Borrower will not, and Holdings and the Borrower will not
permit any of the Subsidiaries (other than a Receivables Subsidiary) to, engage
to any material extent in any business other than businesses of the type
conducted by the Borrower and the Subsidiaries on the Effective Date and
businesses reasonably related thereto.

         (c) Holdings will not engage in any business or activity other than the
ownership of all the outstanding shares of capital stock of the Borrower and the
Joint Venture Holding Companies and activities incidental thereto. Holdings will
not own or acquire any assets (other than shares of capital stock of the
Borrower, shares of capital stock of the Joint Venture Holding Companies, cash
and Permitted Investments) or incur any liabilities (other than liabilities
under the Loan Documents, Guarantees by Holdings of obligations of the Borrower
and the Subsidiaries under leases of real property, obligations under any stock
option plans or other benefit plans for management or employees of Holdings, the
Borrower and the Subsidiaries, liabilities imposed by law, including tax
liabilities, and other liabilities incidental to its existence and permitted
business and activities).

         (d) No Receivables Subsidiary will engage in any business other than
the purchase and sale or other transfer of Receivables (or participation
interests therein) in connection with any Permitted Receivables Financing,
together with activities directly related thereto.

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not, and Holdings and the Borrower will not permit any of the
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
Equity Interests in or evidences of indebtedness or other securities (including
any option, warrant or other right to acquire any of the

                                       70
<PAGE>   75

foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:

                  (a) to the extent provided for by the terms of the
         Recapitalization;

                  (b) Permitted Investments;

                  (c) investments existing on the Effective Date hereof and set
         forth on Schedule 6.04;

                  (d) investments by the Borrower and the Subsidiaries that are
         Loan Parties in Equity Interests in their respective Subsidiaries that
         are Loan Parties and investments by Subsidiaries that are not Loan
         Parties in Equity Interests in their respective Subsidiaries, provided
         that any such Equity Interests held by a Loan Party shall be pledged
         pursuant to the Pledge Agreement (subject to the limitations applicable
         to voting stock of a Foreign Subsidiary and Equity Interests in the
         Foreign Joint Venture Companies referred to in the definition of the
         term "Collateral and Guarantee Requirement");

                  (e) loans or advances made by the Borrower to Holdings or any
         Subsidiary and made by Holdings or any Subsidiary to the Borrower or
         any other Subsidiary, provided that any such loans and advances made by
         a Loan Party shall be evidenced by a promissory note pledged pursuant
         to the Pledge Agreement;

                  (f) Guarantees constituting Indebtedness permitted by Section
         6.01 (other than with respect to the Junior Subordinated Note) of
         Indebtedness of the Borrower or any Subsidiary Loan Party, provided
         that a Subsidiary shall not Guarantee the Subordinated Debt unless (i)
         such Subsidiary also has Guaranteed the Obligations pursuant to the
         Guarantee Agreement, (ii) such Guarantee of the Subordinated Debt is
         subordinated to such Guarantee of the Obligations on terms no less
         favorable to the Lenders than the subordination provisions of the
         Subordinated Debt and (iii) such Guarantee of the Subordinated Debt
         provides for the release and termination thereof, without action by any
         party, upon any release or termination of such Guarantee of the
         Obligations;

                  (g) investments received in connection with the bankruptcy or
         reorganization of, or settlement of delinquent accounts and disputes
         with, customers and suppliers, in each case in the ordinary course of
         business;

                  (h) Permitted Acquisitions, provided that the sum of all
         consideration paid or otherwise delivered in connection with Permitted
         Acquisitions (including the principal amount of any Indebtedness issued
         as deferred purchase price and the fair market value of any other
         non-cash consideration) plus the aggregate principal amount of all
         Indebtedness otherwise incurred or assumed in connection with, or
         resulting from, Permitted Acquisitions (including Indebtedness of any
         acquired Persons outstanding at

                                       71
<PAGE>   76

         the time of the applicable Permitted Acquisition) shall not exceed, on
         a cumulative basis subsequent to the Effective Date, $50,000,000;

                  (i) any investments in or loans to any other Person received
         as noncash consideration for sales, transfers, leases and other
         dispositions permitted by Section 6.05;

                  (j) Guarantees by the Borrower and the Subsidiaries of leases
         entered into by any Subsidiary as lessee;

                  (k) extensions of credit in the nature of accounts receivable
         or notes receivable in the ordinary course of business;

                  (l) investments in payroll, travel and similar advances to
         cover matters that are expected at the time of such advances ultimately
         to be treated as expenses for accounting purposes and that are made in
         the ordinary course of business;

                  (m) loans or advances to employees made in the ordinary course
         of business consistent with prudent business practice and not exceeding
         $5,000,000 in the aggregate outstanding at any one time;

                  (n) investments in or acquisitions of stock, obligations or
         securities received in settlement of debts created in the ordinary
         course of business and owing to the Borrower or any Subsidiary or in
         satisfaction of judgments;

                  (o) investments in the form of Hedging Agreements permitted
         under Section 6.07;

                  (p) investments by the Borrower or any Subsidiary in (i) the
         capital stock of a Receivables Subsidiary and (ii) other interests in a
         Receivables Subsidiary, in each case to the extent determined by the
         Borrower in its judgment to be reasonably necessary in connection with
         or required by the terms of the Permitted Receivables Financing;

                  (q) investments, loans, advances, guarantees and acquisitions
         resulting from a foreclosure by Holdings, the Borrower or any
         Subsidiary with respect to any secured investment or other transfer of
         title with respect to any secured investment in default;

                  (r) investments, loans, advances, guarantees and acquisitions
         the consideration for which consists solely of shares of common stock
         of Holdings;

                  (s) the Acquisition; and

                  (t) other investments in an aggregate amount not to exceed
         $100,000,000 at any time outstanding.

SECTION 6.05. Asset Sales. The Borrower will not, and Holdings and the Borrower
will not permit any of the Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any Equity Interest owned by

                                       72
<PAGE>   77

it, nor will the Borrower permit any of the Subsidiaries to issue any additional
Equity Interest in such Subsidiary, except:

                  (a) sales of inventory, used or surplus equipment and
         Permitted Investments in the ordinary course of business and the
         periodic clearance of aged inventory;

                  (b) sales, transfers and dispositions to the Borrower or a
         Subsidiary, provided that any such sales, transfers or dispositions
         involving a Subsidiary that is not a Loan Party shall be made in
         compliance with Section 6.09;

                  (c) transfers and dispositions in connection with the SCG
         Restructuring, provided that the aggregate fair market value of all
         assets sold, transferred or otherwise disposed of in reliance on this
         clause (c) shall not exceed $10,000,000;

                  (d) the Borrower and the Subsidiaries may sell, without
         recourse (other than Standard Securitization Undertakings and retained
         interests), Receivables to a Receivables Subsidiary, and any
         Receivables Subsidiary may sell Receivables and Related Property or an
         undivided interest therein to any other Person, pursuant to any
         Permitted Receivables Financing, and convert or exchange Receivables
         and Related Property into or for notes receivable in connection with
         the compromise or collection thereof; and

                  (e) sales, transfers and other dispositions of assets (other
         than Equity Interests in a Subsidiary) that are not permitted by any
         other clause of this Section, provided that the aggregate fair market
         value of all assets sold, transferred or otherwise disposed of in
         reliance upon this clause (e) shall not exceed $50,000,000 during any
         fiscal year of the Borrower;

provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and for consideration of at least 80% cash or cash equivalents.

SECTION 6.06. Sale and Leaseback Transaction. The Borrower will not, and
Holdings and the Borrower will not permit any of the Subsidiaries to, enter into
any arrangement, directly or indirectly, whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
that it intends to use for substantially the same purpose or purposes as the
property sold or transferred, except for any such sale of any fixed or capital
assets that is made for cash consideration in an amount not less than the cost
of such fixed or capital asset and is consummated within 180 days after the
Borrower or such Subsidiary acquires or completes the construction of such fixed
or capital asset.

SECTION 6.07. Hedging Agreements. The Borrower will not, and Holdings and the
Borrower will not permit any of the Subsidiaries to, enter into any Hedging
Agreement, other than (a) Hedging Agreements required by Section 5.14 and (b)
Hedging Agreements entered into in the ordinary course of business to

                                       73
<PAGE>   78

hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities.

SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a) Other
than as specified in the first sentence of Section 5.11, neither Holdings nor
the Borrower will, nor will they permit any Subsidiary to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, except
that (i) Holdings may declare and pay dividends with respect to its capital
stock payable solely in additional shares of its capital stock, (ii)
Subsidiaries may declare and pay dividends ratably with respect to their capital
stock, (iii) Holdings may make Restricted Payments, not exceeding $2,000,000
during any fiscal year, pursuant to and in accordance with stock option plans or
other benefit plans for directors, management or employees of Holdings, the
Borrower and the Subsidiaries, including the redemption or purchase of capital
stock of Holdings held by former directors, management or employees of Holdings,
the Borrower or any Subsidiary following termination of their employment, (iv)
the Borrower may pay dividends to Holdings at such times and in such amounts,
not exceeding $2,000,000 during any fiscal year, as shall be necessary to permit
Holdings to discharge its permitted liabilities and (v) the Borrower and the
Joint Venture Holding Companies may make Restricted Payments to Holdings at such
times and in such amounts (but not prior to the fifth anniversary of the date of
issuance of the Cumulative Preferred Stock) as shall be necessary to enable
Holdings, after such fifth anniversary, to pay dividends in cash on such
Cumulative Preferred Stock as and when declared and payable, provided that, at
the time of each Restricted Payment made in reliance upon this clause (v) and
after giving pro forma effect to such payment, the Leverage Ratio shall not
exceed 1.50 to 1.00, (vi) Holdings, the Borrower and the Subsidiaries may make
Restricted Payments as and to the extent contemplated by the Recapitalization
Agreement and (vii) Holdings may make Restricted Payments on account of the
purchase, redemption or repurchase of the Cumulative Preferred Stock with the
net proceeds of a substantially concurrent IPO, provided that, after giving
effect to such purchase, redemption or repurchase, no Default or Event of
Default shall have occurred and be continuing.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any payment
or other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:

                  (i) payment of Indebtedness created under the Loan Documents;

                  (ii) payment of regularly scheduled interest and principal
         payments as and when due in respect of any Indebtedness, other than (A)
         payments in respect of the Subordinated Debt and the Junior
         Subordinated Note prohibited by the subordination provisions thereof,
         (B) principal payments in respect of the Junior Subordinated Note and
         (C) cash interest payments in respect of the Junior Subordinated Note
         unless, in the case of any such payment specified in this clause (C),
         at the time of such payment and after giving pro forma effect thereto
         the Leverage Ratio shall not exceed 1.50 to 1.00 and such payment is
         due and payable on or after the fifth anniversary of the date of
         issuance of the Junior Subordinated Note;

                                       74
<PAGE>   79

                  (iii) refinancings of Indebtedness to the extent permitted by
         Section 6.01;

                  (iv) payment of secured Indebtedness that becomes due as a
         result of the voluntary sale or transfer of the property or assets
         securing such Indebtedness;

                  (v) payments on account of the purchase, redemption or
         repurchase of the Subordinated Debt with the net proceeds of a
         substantially concurrent IPO, provided that (i) after giving effect to
         such purchase, redemption or repurchase, no Default or Event of Default
         shall have occurred and be continuing, (ii) no more than 35% of the
         aggregate principal amount of the Subordinated Debt issued on or prior
         to the Effective Date is purchased, redeemed or repurchased and (iii)
         at the time of any such payment, the net proceeds of such IPO remaining
         after such payment and any Restricted Payment made pursuant to clause
         (a)(vii) of this Section 6.08 are applied to prepay Term Borrowings
         pursuant to Section 2.11(a) (or, if no such Borrowings are outstanding
         or the outstanding amount of such Borrowings is less than the amount of
         the required prepayments, then to reduce Revolving Commitments pursuant
         to Section 2.08(b) by an aggregate amount equal to the amount of the
         required prepayment, or the excess of such amount over the outstanding
         Term Borrowings, as the case may be);

                  (vi) payments in respect of any Permitted Receivables
         Facility; and

                  (vii) repayment of certain Indebtedness of certain Foreign
         Subsidiaries on the Effective Date as specified in the first sentence
         of Section 5.11.

     SECTION 6.09. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions that are at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among Holdings, the Borrower and the Subsidiary Loan Parties not
involving any other Affiliate, (c) to pay management, consulting and advisory
fees to TPG or its Affiliates pursuant to any financial advisory, financing,
underwriting or placement agreement or in respect of other investment banking
activities, including in connection with acquisitions or divestitures, in an
aggregate amount not to exceed $2,000,000 in any fiscal year, (d) payments of
fees and expenses to TPG and its Affiliates in connection with the Transactions,
(e) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the board of directors of
Holdings, (f) the grant of stock options or similar rights to officers,
employees, consultants and directors of Holdings pursuant to plans approved by
the board of directors of Holdings and the payment of amounts or the issuance of
securities pursuant thereto, (g) loans or advances to employees in the ordinary
course of business consistent with prudent business practice, but in any event
not to exceed $5,000,000 in the aggregate outstanding at any one time, (h) the
Transition Agreements and (i) any Restricted Payment permitted by Section 6.08.

                                       75
<PAGE>   80
SECTION 6.10. Restrictive Agreements. Neither Holdings nor the Borrower will,
nor will they permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of Holdings, the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary, provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document or Subordinated Debt Document, (ii) the foregoing shall
not apply to restrictions and conditions existing on the Effective Date
identified on Schedule 6.10 (but shall apply to any extension or renewal of, or
any amendment or modification if it expands the scope of, any such restriction
or condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness, (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof and (vi) the foregoing
shall not apply to restrictions or conditions imposed on a Receivables
Subsidiary in connection with a Permitted Receivables Financing.

SECTION 6.11. Amendment of Material Documents. (a) Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, amend, modify or waive
any of its rights under (i) any Subordinated Debt Document, (ii) its certificate
of incorporation, by-laws or other organizational documents (including the SMP
JV Agreement and the Leshan JV Agreement), (iii) the Junior Subordinated Note or
(iv) the Certificate of Designations.

         (b) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, amend, modify or waive any of its rights under any
Recapitalization Document or terminate any Transition Agreement, in each case to
the extent that such amendment, modification, waiver or termination would be
adverse to the Lenders.

         (c) Holdings and the Borrower will not, and will not permit any
Subsidiary to, amend, modify or waive any of its rights under any Permitted
Receivables Financing to the extent that such amendment, modification or waiver
would be materially adverse to the Lenders.

SECTION 6.12. Interest Expense Coverage Ratio. The Borrower will not permit the
ratio of (a) Consolidated EBITDA to (b) Consolidated Cash Interest Expense, in
each case for any period of four consecutive fiscal quarters ending on any date
during any period set forth below, to be less than the ratio set forth below
opposite such period:

<TABLE>
<CAPTION>
                      Period                                      Ratio
                     ------                                       -----
<S>                                                           <C>
         August 4, 1999 to December 30, 2000                  2.00 to 1.00
         December 31, 2000 to June 29, 2001                   2.25 to 1.00
</TABLE>

                                       76
<PAGE>   81
<TABLE>
<S>                                                           <C>
         June 30, 2001 to June 29, 2002                       2.50 to 1.00
         June 30, 2002 to June 29, 2003                       2.75 to 1.00
         June 30, 2003 and thereafter                         3.00 to 1.00
</TABLE>

SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage Ratio as
of the end of any fiscal quarter during any period set forth below to exceed the
ratio set forth opposite such period:

<TABLE>
<CAPTION>
                      Period                                      Ratio
                      ------                                      -----

<S>                                                           <C>
         August 4, 1999 to December 30, 2000                  4.75 to 1.00
         December 31, 2000 to June 29, 2001                   4.50 to 1.00
         June 30, 2001 to December 30, 2001                   4.25 to 1.00
         December 31, 2001 to June 29, 2002                   3.75 to 1.00
         June 30, 2002 to December 30, 2002                   3.50 to 1.00
         December 31, 2002 to June 29, 2003                   3.25 to 1.00
         June 30, 2003 to December 30, 2003                   3.25 to 1.00
         December 31, 2003 and thereafter                     3.00 to 1.00
</TABLE>

SECTION 6.14. Capital Expenditures. The Borrower and Subsidiaries shall not
incur or make Capital Expenditures during any fiscal year (commencing with
fiscal year 1999) in an amount exceeding $200,000,000, provided that such
$200,000,000 permitted amount shall be increased with respect to any fiscal year
by an amount equal to the portion of Excess Cash Flow for the immediately
preceding fiscal year that is not required to be applied to make prepayments of
Loans pursuant to Section 2.11(d).

     The amount of Capital Expenditures permitted to be made by the immediately
preceding paragraph in respect of any fiscal year shall be increased by (a) the
unused amount of Capital Expenditures that were permitted to be made during the
immediately preceding fiscal year pursuant to the immediately preceding
paragraph (without giving effect to the proviso to such paragraph) minus (b) an
amount equal to the unused permitted Capital Expenditures carried forward to
such preceding fiscal year.

                                  ARTICLE III
                               Events of Default

SECTION 7.01. Events of Default. If any of the following events ("Events of
Default") shall occur:

                  (a) the Borrower shall fail to pay any principal of any Loan
         or any reimbursement obligation in respect of any LC Disbursement when
         and as the same shall become due and payable, whether at the due date
         thereof or at a date fixed for prepayment thereof or otherwise;

                  (b) the Borrower shall fail to pay any interest on any Loan or
         any fee or any other amount (other than an amount referred to in clause
         (a) of this Article) payable under this Agreement or any other Loan
         Document, when and as the same shall become due and payable, and such
         failure shall continue unremedied for a period of five days;

                                       77
<PAGE>   82
                  (c) any representation or warranty made or deemed made by or
         on behalf of Holdings, the Borrower or any Subsidiary in or in
         connection with any Loan Document or any amendment or modification
         thereof or waiver thereunder, or in any certificate or other document
         furnished pursuant to or in connection with any Loan Document or any
         amendment or modification thereof or waiver thereunder, shall prove to
         have been incorrect in any material respect when made or deemed made;

                  (d) Holdings or the Borrower shall fail to observe or perform
         any covenant, condition or agreement contained in Section 5.02, 5.04
         (with respect to the existence of Holdings or the Borrower) or 5.11 or
         in Article VI;

                  (e) any Loan Party shall fail to observe or perform any
         covenant, condition or agreement contained in any Loan Document (other
         than those specified in clause (a), (b) or (d) of this Article), and
         such failure shall continue unremedied for a period of 30 days after
         notice thereof from the Administrative Agent to the Borrower (which
         notice will be given at the request of any Lender);

                  (f) Holdings, the Borrower or any Subsidiary shall fail to
         make any payment (whether of principal or interest and regardless of
         amount) in respect of any Material Indebtedness, when and as the same
         shall become due and payable after giving effect to any applicable
         grace period with respect thereto;

                  (g) any event or condition occurs that results in any Material
         Indebtedness becoming due prior to its scheduled maturity or that
         enables or permits the holder or holders of any Material Indebtedness
         or any trustee or agent on its or their behalf to cause any Material
         Indebtedness to become due, or to require the prepayment, repurchase,
         redemption or defeasance thereof, prior to its scheduled maturity,
         provided that this clause (g) shall not apply to secured Indebtedness
         that becomes due as a result of the voluntary sale or transfer of the
         property or assets securing such Indebtedness;

                  (h) an involuntary proceeding shall be commenced or an
         involuntary petition shall be filed seeking (i) liquidation,
         reorganization or other relief in respect of Holdings, the Borrower or,
         subject to Section 7.02, any Subsidiary or its debts, or of a
         substantial part of its assets, under any Federal, state or foreign
         bankruptcy, insolvency, receivership or similar law now or hereafter in
         effect or (ii) the appointment of a receiver, trustee, custodian,
         sequestrator, conservator or similar official for Holdings, the
         Borrower or, subject to Section 7.02, any Subsidiary or for a
         substantial part of its assets, and, in any such case, such proceeding
         or petition shall continue undismissed for 60 days or an order or
         decree approving or ordering any of the foregoing shall be entered;

                  (i) Holdings, the Borrower or, subject to Section 7.02, any
         Subsidiary shall (i) voluntarily commence any proceeding or file any
         petition seeking liquidation, reorganization or other relief under any
         Federal, state or foreign bankruptcy, insolvency, receivership or
         similar law now or hereafter in effect, (ii) consent to the institution
         of, or fail to contest in a timely and appropriate manner, any
         proceeding or petition described in clause (h) of this Article, (iii)
         apply for or consent to the appointment of a receiver,

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<PAGE>   83
         trustee, custodian, sequestrator, conservator or similar official for
         Holdings, the Borrower or, subject to Section 7.02, any Subsidiary or
         for a substantial part of its assets, (iv) file an answer admitting the
         material allegations of a petition filed against it in any such
         proceeding, (v) make a general assignment for the benefit of creditors
         or (vi) take any action for the purpose of effecting any of the
         foregoing;

                  (j) Holdings, the Borrower or, subject to Section 7.02, any
         Subsidiary shall become unable, admit in writing its inability or fail
         generally to pay its debts as they become due;

                  (k) one or more judgments for the payment of money in an
         aggregate amount in excess of $10,000,000 (net of amounts covered by
         insurance as to which the insurer has admitted liability in writing)
         shall be rendered against Holdings, the Borrower, any Subsidiary or any
         combination thereof and the same shall remain undischarged for a period
         of 30 consecutive days during which execution shall not be effectively
         stayed, or any action shall be legally taken by a judgment creditor to
         attach or levy upon any assets of Holdings, the Borrower or any
         Subsidiary to enforce any such judgment;

                  (l) an ERISA Event shall have occurred that, in the opinion of
         the Required Lenders, when taken together with all other ERISA Events
         that have occurred, could reasonably be expected to result in a
         Material Adverse Effect;

                  (m) any Lien purported to be created under any Security
         Document shall cease to be, or shall be asserted by any Loan Party not
         to be, a valid and perfected Lien on Collateral having, in the
         aggregate, a value in excess of $5,000,000, with the priority required
         by the applicable Security Document, except (i) as a result of the sale
         or other disposition of the applicable Collateral in a transaction
         permitted under the Loan Documents, (ii) any action taken by the
         Collateral Agent to release any such Lien in compliance with the
         provisions of this Agreement or any other Loan Document or (iii) as a
         result of the Collateral Agent's failure to maintain possession of any
         stock certificates, promissory notes or other instruments delivered to
         it under the Pledge Agreement;

                  (n) any default or other event shall have occurred under any
         document governing any Permitted Receivables Financing if the effect of
         such default or other event is to cause the termination of such
         Permitted Receivables Financing; or

                  (o) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due

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and payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.

SECTION 7.02. Exclusion of Immaterial Subsidiaries. Solely for the purposes of
determining whether a Default has occurred under clause (h), (i) or (j) of
Section 7.01, any reference in any such clause to any "Subsidiary" shall be
deemed not to include any Subsidiary affected by any event or circumstance
referred to in any such clause that did not, as of the last day of the fiscal
quarter of the Borrower most recently ended, have assets with a value in excess
of 5.0% of the total consolidated assets of the Borrower and the Subsidiaries as
of such date, provided that if it is necessary to exclude more than one
Subsidiary from clause (h), (i) or (j) of Section 7.01 pursuant to this Section
in order to avoid a Default thereunder, all excluded Subsidiaries shall be
considered to be a single consolidated Subsidiary for purposes of determining
whether the condition specified above is satisfied.

                                  ARTICLE VIII
                            The Administrative Agent

     Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto.

     The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with Holdings, the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

     The Administrative Agent shall not have any duties or obligations except
those expressly set forth in the Loan Documents. Without limiting the generality
of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage

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of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to Holdings, the
Borrower or any of the Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken
by it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until written notice thereof is given
to the Administrative Agent by Holdings, the Borrower or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with any Loan Document, (ii) the contents of any certificate, report
or other document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.

         The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         The Administrative Agent may perform any of and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

         Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent that shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the

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Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

         Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.

                                   ARTICLE IX
                                 Miscellaneous

SECTION 9.01. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

                  (a) if to Holdings or the Borrower, to it at 5005 East
         McDowell Road, Phoenix, Arizona 85018, Attention of President (Telecopy
         No. 602-244-4830);

                  (b) if to the Administrative Agent, to The Chase Manhattan
         Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th
         Floor, New York, New York 10081, Attention of Janet Belden (Telecopy
         No. (212) 552-5658), with a copy to The Chase Manhattan Bank, 270 Park
         Avenue, New York, New York 10017, Attention of Edmond DeForest
         (Telecopy No. (212) 270-4584);

                  (c) if to the Issuing Bank, to The Chase Manhattan Bank, Loan
         and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New
         York, New York 10081, Attention of Janet Belden (Telecopy No.
         (212) 552-5658);

                  (d) if to the Swingline Lender, to The Chase Manhattan Bank,
         Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor,
         New York, New York 10081, Attention of Janet Belden (Telecopy No. (212)
         552-5658); and

                  (e) if to any other Lender, to it at its address (or telecopy
         number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

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  SECTION 5.02.  Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.

         (b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders,
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the maturity of any Loan, or the date of any scheduled
payment of the principal amount of any Term Loan under Section 2.10, or the
required date of reimbursement of any LC Disbursement, or any date for the
payment of any interest or fees payable hereunder, or reduce the amount of,
waive or excuse any such scheduled payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) change any of the provisions of this Section or the
percentage set forth in the definition of the term "Required Lenders" or any
other provision of any Loan Document specifying the number or percentage of
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release Holdings or any Subsidiary Loan Party from its Guarantee
under the Guarantee Agreement (except as expressly provided in the Guarantee
Agreement), or limit its liability in respect of such Guarantee, without the
written consent of each Lender, (vii) except in strict accordance with the
express provisions of the Security Documents, release all or any substantial
part of the Collateral from the Liens of the Security Documents, without the
written consent of each Lender, (viii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class, without the written consent of Lenders holding
a majority in interest of the outstanding Loans and unused Commitments of each
affected Class, (ix) change the definition of "Interest Period" to include
periods longer than six months or

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<PAGE>   88
(x) change the rights of the Tranche B Lenders or the Tranche C Lenders to
decline mandatory prepayments as provided in Section 2.11, without the written
consent of Tranche B Lenders or the Tranche C Lenders, as applicable, holding a
majority of the outstanding Tranche B Loans or Tranche C Loans, as applicable,
and provided further that (A) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Issuing Bank or the
Swingline Lender without the prior written consent of the Administrative Agent,
the Issuing Bank or the Swingline Lender, as the case may be, and (B) any
waiver, amendment or modification of this Agreement that by its terms affects
the rights or duties under this Agreement of the Revolving Lenders (but not the
Tranche A Lenders, Tranche B Lenders and Tranche C Lenders), the Tranche A
Lenders (but not the Revolving Lenders, Tranche B Lenders and Tranche C
Lenders), the Tranche B Lenders (but not the Revolving Lenders, Tranche A
Lenders and Tranche C Lenders) or the Tranche C Lenders (but not the Revolving
Lenders, the Tranche A Lenders and the Tranche B Lenders) may be effected by an
agreement or agreements in writing entered into by Holdings, the Borrower and
requisite percentage in interest of the affected Class of Lenders that would be
required to consent thereto under this Section if such Class of Lenders were the
only Class of Lenders hereunder at the time. Notwithstanding the foregoing, any
provision of this Agreement may be amended by an agreement in writing entered
into by Holdings, the Borrower, the Required Lenders and the Administrative
Agent (and, if their rights or obligations are affected thereby, the Issuing
Bank and the Swingline Lender) if (i) by the terms of such agreement the
Commitment of each Lender not consenting to the amendment provided for therein
shall terminate upon the effectiveness of such amendment and (ii) at the time
such amendment becomes effective, each Lender not consenting thereto receives
payment in full of the principal of and interest accrued on each Loan made by it
and all other amounts owing to it or accrued for its account under this
Agreement.

SECTION 9.03.  Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay
(i) all reasonable out-of-pocket expenses incurred by the Administrative Agent
and its Affiliates and the Documentation Agents and their respective Affiliates,
including the reasonable fees, charges and disbursements of one counsel in each
applicable jurisdiction for the Administrative Agent and the Documentation
Agents, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, either Documentation Agent, the
Issuing Bank or any Lender, including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agent, either Documentation
Agent, the Issuing Bank or any Lender, in connection with the enforcement or
protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or
Letters of Credit.

         (b) The Borrower shall indemnify the Administrative Agent, the
Documentation Agents, the Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,

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charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Loan Document or any other
agreement or instrument contemplated hereby, the performance by the parties to
the Loan Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence, Release or threatened Release of Hazardous Materials on or
from any Mortgaged Property or Restatement Mortgaged Property or any other
property currently or formerly owned or operated by Holdings, the Borrower or
any of the Subsidiaries, or any Environmental Liability related in any way to
Holdings, the Borrower or any of the Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any Related Person of such
Indemnitee. It is acknowledged and agreed by the parties hereto that, solely in
their capacities as Documentation Agents and not in their capacities as Lenders,
the Documentation Agents have no duties hereunder.

         (c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, either Documentation Agent, the
Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Administrative Agent, such
Documentation Agent, the Issuing Bank or the Swingline Lender, as the case may
be, such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, such Documentation Agent, the Issuing Bank or
the Swingline Lender in its capacity as such. For purposes hereof, a Lender's
"pro rata share" shall be determined based upon its share of the sum of the
total Revolving Exposures, outstanding Term Loans and unused Commitments at the
time.

         (d) To the extent permitted by applicable law, neither Holdings nor the
Borrower shall assert, and each hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of Credit or the use
of the proceeds thereof.

         (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

         (f) Neither Motorola nor any director, officer, employee, stockholder
or member, as such, of any Loan Party or Motorola shall have any liability for
the Obligations or for any claim based on, in respect of or by reason of the
Obligations or their creation; provided that the

                                       85
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foregoing shall not be construed to relieve any Loan Party of its Obligations
under any Loan Document.

9.04 Successors and Assigns.  (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent, the Issuing Bank and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

         (b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitments and the Loans at the time owing to it), provided that (i) except
in the case of an assignment to a Lender or an Affiliate or Approved Fund of a
Lender, each of the Borrower and the Administrative Agent (and, in the case of
an assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure or Swingline Exposure, the Issuing
Bank and the Swingline Lender) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld), (ii) except in
the case of an assignment to a Lender or an Affiliate or Approved Fund of a
Lender or an assignment of the entire remaining amount of the assigning Lender's
Commitments or Loans, the amount of the Commitments or Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, and provided further that
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (a), (b), (g), (h), (i), (j), (n)
or (o) of Article VII has occurred and is continuing. Subject to acceptance and
recording thereof pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement (provided that any liability of the Borrower to such
assignee under Section 2.15, 2.16 or 2.17 shall be limited to the amount, if
any, that would have been payable thereunder by the Borrower in the absence of
such assignment), and the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an

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Assignment and Acceptance covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17
and 9.03). Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (e) of this Section.

         (c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Holdings, the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

         (d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

         (e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it),
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents,
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08

                                       87
<PAGE>   92
as though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.

         (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.17(e) as though it were a
Lender.

         (g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest, provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof that, when
taken together, bear the signatures of the other parties hereto required by
paragraph (a) of Section 4.01, and thereafter shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

                                       88
<PAGE>   93
SECTION 9.07. Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower then existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement. The rights of each Lender under this
Section are in addition to other rights and remedies (including any other rights
of setoff) that such Lender may have.

SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (A)
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.

         (b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against Holdings, the Borrower or its
properties in the courts of any jurisdiction.

         (c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

         (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan

                                       89
<PAGE>   94
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

SECTION 9.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, or to any direct or indirect contractual counterparties in swap
agreements or such contractual counterparties' professional advisors, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent, the Issuing Bank or any Lender on
a nonconfidential basis from a source other than Holdings or the Borrower. For
the purposes of this Section, the term "Information" means all information
received from Holdings or the Borrower relating to Holdings or the Borrower or
its business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by Holdings or the Borrower. Any Person required to maintain
the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

                                       90
<PAGE>   95
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts that are treated as interest on such Loan
under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") that may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.14. Original Credit Agreement; Effectiveness of Amendment and
Restatement. Until this Agreement becomes effective upon the satisfaction, or
waiver by the Required Lenders (as defined in the Original Credit Agreement) and
each Lender with a Tranche D Commitment, of the conditions set forth in Section
4.01, the Original Credit Agreement shall remain in full force and effect and
shall not be affected hereby. After the Restatement Effective Date, all
obligations of the Borrower under the Original Credit Agreement shall become
obligations of the Borrower hereunder, secured by the Security Documents, and
the provisions of the Original Credit Agreement shall be superseded by the
provisions hereof.

SECTION 9.15. Additional Provisions for Tranche D Lenders. No agreement
effecting an amendment or modification of this Agreement or of any other Loan
Document or of any provision hereof or thereof may (i) change the rights of the
Tranche D Lenders to decline mandatory prepayments as provided in Section 2.11,
without the written consent of Tranche D Lenders holding a majority of the
outstanding Tranche D Loans or (ii) by its terms affect the rights or duties
under this Agreement of the Tranche D Lenders (but not the Revolving Lenders,
the Tranche A Lenders, the Tranche B Lenders and the Tranche C Lenders), without
an agreement or agreements in writing entered into by Holdings, the Borrower and
the requisite percentage in interest of the Tranche D Lenders that would be
required to consent thereto under Section 9.02 if the Tranche D Lenders were the
only Class of Lenders hereunder at the time; provided, however, that any
provision of this Agreement may be amended by an agreement in writing entered
into by Holdings, the Borrower, the Required Lenders and the Administrative
Agent (and, if their rights or obligations are affected thereby, the Issuing
Bank and the Swingline Lender) if (i) such amendment is permitted under Section
9.02, (ii) by the terms of such agreement, the Commitment of each Tranche D
Lender not consenting to the amendment provided for therein shall terminate upon
the effectiveness of such amendment and (iii) at the time such amendment becomes
effective, each Tranche D Lender not consenting thereto receives payment in full
of the principal of and interest accrued on each Tranche D Term Loan made by it
and all other amounts owing to it or accrued for its account under this
Agreement.

                                       91
<PAGE>   96
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                        SCG HOLDING CORPORATION,

                                        by  /s/ Dario Sacomani
                                           -------------------------------------
                                            Name:  Dario Sacomani
                                            Title:  Senior Vice President, Chief
                                            Financial Officer and Treasurer

                                        SEMICONDUCTOR COMPONENTS
                                        INDUSTRIES, LLC,

                                        by  /s/ Dario Sacomani
                                           -------------------------------------
                                            Name:  Dario Sacomani
                                            Title:  Senior Vice President, Chief
                                            Financial Officer and Treasurer

                                        THE CHASE MANHATTAN BANK,
                                        individually and as Administrative Agent

                                        by /s/ Edmond DeForest
                                           -------------------------------------
                                            Name: Edmond DeForest
                                            Title: Vice President

                                        CREDIT LYONNAIS NEW YORK
                                        BRANCH, individually and as Co-
                                        Documentation Agent,

                                        by _______________________
                                            Name:
                                            Title:

                                        DLJ CAPITAL FUNDING, INC.,
                                        individually and as Co-
                                        Documentation Agent,

                                        by  _______________________
                                            Name:
                                            Title:

                                       92
<PAGE>   97
                                        LEHMAN COMMERCIAL PAPER INC.,
                                        individually and as Co-
                                        Documentation Agent,

                                        by _________________________
                                            Name:
                                            Title:

                                       93

<PAGE>   98
                    LEHMAN COMMERCIAL PAPER INC.,

                    by  /s/  Michele Swanson
                        -------------------------
                        Name:  Michele Swanson
                        Title: Authorized Signatory

                    SYNDICATED LOAN FUNDING TRUST

                    BY: LEHMAN COMMERCIAL PAPER INC.,
                    Not in its individual capacity but
                    solely as Asset Manager,

                    by  /s/  Michele Swanson
                        -------------------------
                        Name:  Michele Swanson
                        Title: Authorized Signatory

                    CREDIT LYONNAIS NEW YORK BRANCH,

                    by  /s/  Mark Koneval
                        -------------------------
                        Name:  Mark Koneval
                        Title: Vice President

                    ABN AMRO BANK N.V.,

                                       94

<PAGE>   99

                    by  /s/  Nanci M. Fastre
                        -------------------------
                        Name:  Nanci M. Fastre
                        Title: Vice President

                    IBM CREDIT CORPORATION,

                    by  /s/  Ronald J. Bachner
                        -------------------------
                        Name:  Ronald J. Bachner
                        Title: Director, Commercial Financing
                        Solutions Americas

                    COMERICA WEST INCORPORATED,

                    by  /s/  Eoin Collins
                        -------------------------
                        Name:  Eoin Collins
                        Title: Account Officer

                                       95

<PAGE>   100
                     THE INDUSTRIAL BANK OF JAPAN, LIMITED

                     by /s/ Ken Iwata
                        -------------------------
                        Name: Ken Iwata
                        Title: Senior Vice President & Manager

                     AG CAPITAL FUNDING PARTNERS, L.P.

                     By:     Angelo Corion & Co., L.P.,
                             as Collateral Manager

                     by /s/ Jeffrey H. Aronson
                        -------------------------
                        Name: Jeffrey H. Aronson
                        Title: Managing Director

                     VAN KAMPEN PRIME RATE INCOME TRUST

                     By: Van Kampen Investment Advisory
                     Corp.

                     by /s/ Darwin D. Pierce
                        -------------------------
                        Name: Darwin D. Pierce
                        Title: Vice President

                     VAN KAMPEN CLO I, LIMITED

                     By: Van Kampen Management, Inc.

                     by /s/ Darwin D. Pierce
                        -------------------------
                        Name: Darwin D. Pierce
                        Title: Vice President

                     VAN KAMPEN CLO II, LIMITED

                     By: Van Kampen Management, Inc.

                     by /s/ Darwin D. Pierce
                        -------------------------
                        Name: Darwin D. Pierce
                        Title: Vice President

                     NEW YORK LIFE INSURANCE COMPANY

                     by /s/ David Melka
                        -------------------------
                        Name: David Melka
                        Title: Investment Manager

                     NORTHWOODS CAPITAL, LIMITED

                     By:     Angelo Corion & Co., L.P.,
                             as Collateral Manager

                     by /s/ Jeffrey H. Aronson
                        -------------------------
                        Name: Jeffrey H. Aronson
                        Title: Managing Director

                     NORTHWOODS CAPITAL II, LIMITED

                     By:     Angelo Corion & Co., L.P.,
                             as Collateral Manager

                     by /s/ Jeffrey H. Aronson
                        -------------------------
                        Name: Jeffrey H. Aronson
                        Title: Managing Director

                                       96
<PAGE>   101
                          ARCHIMEDES FUNDING II, LTD.

                          By: ING Capital Advisors, LLC
                              As Collateral Manager,

                          by /s/ Michael J. Campbell
                             -----------------------------
                             Name: Michael J. Campbell
                             Title: Senior Vice President
                             & Portfolio Manager

                          KZH ING-2 LLC,

                          by /s/ Peter Chin
                             -----------------------------
                             Name: Peter Chin
                             Title: Authorized Agent

                          DEBT STRATEGIES FUND II, INC.

                          by /s/ Joseph Moroney
                             -----------------------------
                             Name: Joseph Moroney
                             Title: Authorized Signatory

                          PACIFIC PARTNERS I, L.P.

                          By: Imperial Credit Asset Management,
                              as its Investment Manager

                          by /s/ Tom Colwell
                             -----------------------------
                             Name: Tom Colwell
                             Title: Vice President

                                       97
<PAGE>   102
                           PPM SPYGLASS FUNDING TRUST

                             by /s/ Kelly C. Walker
                                ---------------------

                                Name: Kelly C. Walker
                                Title: Authorized Agent

                           PRINCIPAL LIFE INSURANCE COMPANY

                     By:    Principal Capital Management, LLC,
                            a Delaware limited liability company,
                            its authorized signatory

                              by /s/ John C. Henry
                                 -------------------
                                 Name: John C. Henry
                                 Title: Counsel

                           SRF TRADING, INC.

                             by /s/ Kelly C. Walker
                                ---------------------
                                Name: Kelly C. Walker
                                Title: Vice President

                                       98
<PAGE>   103
                        FOOTHILL CAPITAL CORPORATION

                            by /s/ Dennis R. Ascher
                               ----------------------
                               Name: Dennis R. Ascher
                               Title: Managing Member

                        STEIN ROE FLOATING RATE LIMITED
                        LIABILITY COMPANY,

                              by /s/ Brian W. Good
                                 ---------------------
                                 Name: Brian W. Good
                                 Title: Vice President

                        STEIN ROE & FARNHAM CLOI LTD.

                        By Stein Roe & Farnham Incorporated,
                        as Portfolio Manager

                              by /s/ Brian W. Good
                                 ------------------------
                                 Name: Brian W. Good
                                 Title: Vice President &
                                        Portfolio Manager

                        LIBERTY-STEIN ROE ADVISOR FLOATING
                        RATE ADVANTAGE FUND,

                        By Stein Roe & Farnham Incorporated,
                        as Portfolio Manager

                              by /s/ Brian W. Good
                                 ------------------------
                                 Name: Brian W. Good
                                 Title: Vice President &
                                        Portfolio Manager

                                       99
<PAGE>   104
     BALANCED HIGH YIELD FUND I LTD.

     By: BHF (USA) CAPITAL
     CORPORATION
     acting as Attorney-in-Fact,

     by /s/ Michael De Thertte
        -------------------------------
        Name: Michael De Thertte
        Title: Assistant Vice President

        /s/ Christopher Dugger
        -------------------------------
        Name: Christopher Dugger
        Title: Associate

                                      100
<PAGE>   105
     KZH CRESCENT-2 LLC
     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH CRESCENT-3 LLC,
     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH CRESCENT LLC
     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH CYPRESSTREE-1 LLC
     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     UNITED OF OMAHA LIFE INSURANCE COMPANY

     By: TCW Asset Management Company, its
     Investment Advisor,

     by /s/ Mark L. Gold
        -----------------------------------
        Name: Mark L. Gold
        Title: Managing Director

        /s/ Justin L. Driscoll
        -----------------------------------
        Name: Justin L. Driscoll
        Title: Senior Vice President

                                      101
<PAGE>   106
     CONTINENTAL ASSURANCE COMPANY SEPARATE ACCOUNT(E)

     By: TWC Asset Management Company, its
     Attorney-in-Fact

     by /s/ Mark L. Gold
        -----------------------------------
        Name: Mark L. Gold
        Title: Managing Director

        /s/ Justin L. Driscoll
        -----------------------------------
        Name: Justin L. Driscoll
        Title: Senior Vice President

     KZH III LLC

     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH ING-1 LLC

     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH ING-3 LLC

     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH SOLEIL-2 LLC

     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     KZH SOLEIL LLC

     by /s/ Peter Chin
        -----------------------------------
        Name: Peter Chin
        Title: Authorized Agent

     SEQUILS I, LTD.

     By: TCW Advisors, Inc. as its Collateral
     Manager,

     by /s/ Mark L. Gold
        ----------------------------------------
            Name: Mark L. Gold
            Title: Managing Director

     /s/ Justin L. Driscoll
            Name: Justin L. Driscoll
            Title: Senior Vice President

     SEQUILS-ING I (HBDGM), LTD.

     By: ING Capital Advisors LLC,
     as Collateral Manager

     by: /s/ Michael J. Campbell
         ---------------------------------------
             Name: Michael J. Campbell
             Director: Managing Director

     SEQUILS IV, LTD

     By: TCW Advisors, Inc. as its Collateral
     Manager

     by /s/ Mark L. Gold
        ----------------------------------------
            Name: Mark L. Gold
            Title: Managing Director

     /s/ Justin L. Driscoll
            Name: Justin L. Driscoll
            Title: Senior Vice President

     MORGAN STANLEY DEAN WITTER
     PRIME INCOME TRUST,

     by /s/ Peter Gewirtz
        ----------------------------------------
            Name: Peter Gewirtz
            Title: Authorized Signatory

     CYPRESSTREE INVESTMENT
     MANAGEMENT COMPANY, INC.

     As: Attorney-in-Fact and on behalf of
     FIRST ALLMERICA FINANCIAL LIFE
     INSURANCE COMPANY as Portfolio Manager,

     by /s/ Jeffrey W. Heuer
        ----------------------------------------
            Name: Jeffrey W. Heuer
            Title: Principal

                                      102
<PAGE>   107

               CYPRESSTREE SENIOR FLOATING
               RATE FUND

               By: CypressTree Investment
               Management Company, Inc. as Portfolio
               Manager,

               by /s/ Jeffrey W. Heuer
                  --------------------------------------
                      Name: Jeffrey W. Heuer
                      Title: Principal

               CYPRESSTREE Investment Fund LLC,

               By: CypressTree Investment Management
               Company, Inc., its Managing Member

               by /s/ Jeffrey W. Heuer
                  --------------------------------------
                      Name: Jeffrey W. Heuer
                      Title: Principal

               NORTH AMERICAN SENIOR
               FLOATING RATE FUND

               By: CypressTree Investment
               Management Company, Inc. as Portfolio
               Manager,

               by /s/ Jeffrey W. Heuer
                  --------------------------------------
                      Name: Jeffrey W. Heuer
                      Title: Principal

               TCW LEVERAGED INCOME TRUST, L.P.

               by: TCW Advisers (Bermuda), Ltd.,
               as General Partner

               by /s/ Mark L. Gold
                  --------------------------------------
                      Name: Mark L. Gold
                      Title: Managing Director

               By: TCW Investment Management Company,
               as Investment Adviser

               by /s/ Justin L. Driscoll
                  --------------------------------------
                      Name: Justin L. Driscoll
                      Title: Senior Vice President

               TCW LEVERAGED INCOME TRUST II, L.P.

               by: TCW Advisers (Bermuda), Ltd.,
               as General Partner

               by /s/ Mark L. Gold
                  --------------------------------------
                      Name: Mark L. Gold
                      Title: Managing Director

               By: TCW Investment Management Company,
               as Investment Adviser

               by /s/ Justin L. Driscoll
                  --------------------------------------
                      Name: Justin L. Driscoll
                      Title: Senior Vice President

                                      103
<PAGE>   108

               FIRST UNION NATIONAL BANK

               by /s/ Charles B. Edmondson
                  --------------------------------------
                      Name: Charles B. Edmondson
                      Title: Assistant Vice President

               FRANKLIN FLOATING RATE TRUST

               by /s/ Chauncey Lufkin
                  --------------------------------------
                      Name: Chauncey Lufkin
                      Title: Vice President

               FRANKLIN FLOATING RATE MASTER SERIES

               by /s/ Chauncey Lufkin
                  --------------------------------------
                      Name: Chauncey Lufkin
                      Title: Vice President

               FREMONT INVESTMENT & LOAN

               by /s/ Randolph M. Ross
                  --------------------------------------
                      Name: Randolph M. Ross
                      Title: Vice President -- Senior
                             Portfolio Manager

               NATEXIS BANQUE POPULAIRES

               by /s/ G. Kevin Dooley
                  --------------------------------------
                      Name: G. Kevin Dooley
                      Title: Vice President & Group
                             Manager

               by /s/ Jordan Sadler
                  --------------------------------------
                      Name: Jordan Sadler
                      Title: Assistant Vice President

                                      104
<PAGE>   109

                                  SCHEDULE 1.01

                               MORTGAGED PROPERTY

<TABLE>
<CAPTION>
Loan Party (Record Owner)                   Property
-------------------------                   --------
<S>                                         <C>
Semiconductor Components                    52nd Street facility located at 5005 East McDowell
Industries, LLC                             Road, Phoenix, AZ, 85018
</TABLE>
<PAGE>   110
                                SCHEDULE 1.01(b)

                        RESTATEMENT MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
Loan Party (Record Owner)                   Property
-------------------------                   --------
<S>                                         <C>
Semiconductor Components Industries
Rhode Island, Inc.                          2000 South County Trail
                                            East Greenwich, RI  02818
                                            Assessors Plat 11, Log 586
                                            150,847 sq. ft. semiconductor manufacturing facility on 30
                                            acres of land that includes a 30,000 sq. ft. cleanroom

Semiconductor Components Industries
Rhode Island, Inc.                          1900 South County Trail
                                            East Greenwich, RI  02818
                                            Assessors Plat 11, Log 500 (Parcel I)
                                            Assessors Plat 11, Log 499 (Parcel II)
                                            57,000 sq. ft. warehouse and office facility on 20 acres of
                                            land
</TABLE>
<PAGE>   111
                                  SCHEDULE 2.01

                                   COMMITMENTS

                                 Schedule 2.01

<TABLE>
<CAPTION>
Institution                                                 R/C       Term Loan A    Term Loan B    Term Loan C    Term Loan D
-----------                                             ----------    -----------    -----------    -----------    -----------
<S>                                                    <C>           <C>            <C>            <C>            <C>
ABN AMRO Bank N.V. ..................................  15,000,000     12,550,000      4,814,815      5,185,185
Aeries-II Finance Ltd. ..............................                                 2,407,407      2,592,593
Alliance Capital Funding LLC ........................                                 3,407,407      2,592,593
Amara I Finance Ltd. ................................                                 1,114,041      1,173,459
AMMC CDO I, Limited .................................                                 2,407,407      2,592,593
Archimedes Funding II, LLC ..........................                                 2,407,407      2,592,593
Archimedes Funding III, LLC .........................                                 4,813,751      5,186,249
Archimedes  Funding, LLC ............................                                 2,407,407      2,592,593
Avalon Capital Ltd. .................................                                 2,407,407      2,592,593
Bank of China (New York) ............................   4,285,714      3,585,714
Bank of Montreal ....................................   6,428,571      5,378,571
The Bank of Nova Scotia .............................  17,142,857     14,342,857
Balanced High Yield Fund (USA) Capital Corporation...                                 2,407,407      2,592,593
Captiva II Finance Ltd. .............................                                 1,203,704      1,296,296
Carlyle High Yield Partners .........................                                 3,370,370      3,629,630
Ceres Finance, Ltd. .................................                                 2,648,148      2,851,852
The Chase Manhattan Bank ............................  34,157,143     19,165,643                                   108,200,000
Comerica West Incorporated ..........................   6,428,571      5,378,571
Continental Assurance Company .......................                                                                1,000,000
Credit Lyonnais (New York) ..........................  17,142,857     14,342,857
Cypress Tree Investment Fund, LLC ...................                                                                1,000,000
Cypress Tree Senior Floating Rate Fund ..............                                   361,111        388,889
DLJ Capital Funding, Inc. ...........................  18,278,571      9,018,071
Eaton Vance Institutional Senior Loan Fund ..........                                   361,111        388,889
Eaton Vance Senior Income Trust .....................                                   722,222        777,778
ELT Ltd. ............................................                                 3,851,907      4,148,093
First Allmerica Financial Life Insurance ............                                   481,481        518,519
First Dominion Funding I ............................                                 2,407,500      2,592,500
First Union National Bank N.C. ......................                                26,000,000     28,000,000
Floating Rate Portfolio .............................                                 2,407,407      2,592,593
Foothill Capital Corporation ........................                                 7,222,222      7,777,778
Foothill Income Trust ...............................                                                                7,500,000
Franklin Floating Rate Trust ........................                                 9,629,630     10,370,370       9,500,000
Franklin Floating Rate Master Series ................                                                                  500,000
Fremont Investment & Loan ...........................                                 2,407,407      2,592,593
Galaxy CLO 1999-1, Ltd. .............................                                 9,629,929     10,370,071
Heller Financial Inc. ...............................                                 7,222,222      7,777,778
</TABLE>

                                 SCHEDULE 2.01

<TABLE>
<CAPTION>
INSTITUTION                                              R/C    TERM LOAN A     TERM LOAN B     TERM LOAN C     TERM LOAN D
-----------                                      -----------    -----------     -----------     -----------     -----------
<S>                                               <C>            <C>             <C>             <C>             <C>
IBM Credit Corporation                            10,714,286      8,964,286                                       5,000,000
Indosuez Capital Funding IIA, Ltd.                                                2,407,407       2,592,593
Indosuez Capital Funding III, Ltd.                                                4,814,815       5,185,185
Indosuez Capital Funding IV, Ltd.                                                 4,814,815       5,185,185
Industrial Bank of Japan                                          9,412,500
JHW Cash Flow I, LP                                                               3,851,761       4,148,239
Kemper Floating Rate Fund                                                           962,963       1,037,037
Keyport Life Insurance                                                                                            5,500,000
KZH Crescent 2 LLC                                                                1,444,444       1,555,556       1,500,000
KZH Crescent 3 LLC                                                                                                3,500,000
KZH Crescent LLC                                                                    962,963       1,037,037       1,500,000
KZH Cypress Tree LLC                                                              3,250,000       3,500,000       3,000,000
KZH III LLC                                                                       2,648,148       2,851,852       1,300,000
KZH ING 1 LLC                                                                                                     2,000,000
KZH ING 2 LLC                                                                     4,814,815       5,185,185
KZH ING 3 LLC                                                                                                     1,000,000
KZH Riverside LLC                                                                 4,814,815       5,185,185
KZH Showshone LLC                                                                 4,814,815       5,185,185
KZH Soleil 2 LLC                                                                                                  6,500,000
KZH Soleil LLC                                                                                                    6,000,000
KZH Sterling LLC                                                                  4,814,815       5,185,185
Lehman Commercial Paper Inc.                      18,278,571     15,293,071
Longhorn CDO (Cayman) Ltd.                                                        2,407,407       2,592,593
Merrill Lynch Prime Rate Portfolio                                                8,185,185       8,814,815
Merrill Lynch Senior Floating Rate Fund                                          14,444,444      15,555,556       6,000,000
Merrill Lynch Senior Floating Rate Fund II                                                                        2,000,000
Merrill Lynch Debt Strategies Fund II, Inc.                                                                       2,000,000
ML CLO XX Pilgrim America (Cayman)                                                2,407,407       2,592,593
ML Senior Floating Rate Fund II, Inc                                              1,444,444       1,555,556
Monument Capital Ltd.                                                             2,407,407       2,592,593
MSDW Prime Income Trust                                                           7,222,222       7,777,778      10,000,000
Natexis Banque BFCE (New York)                    2,142,857       1,792,857       2,407,407       2,592,593       5,000,000
New York Life Insurance Company                                                   4,814,815       5,185,185
North American Senior Floating Rate Fund                                            722,222         777,778       1,000,000
Northwoods Capital, Limited                                                       6,018,519       6,481,481
Nuveen Senior Income Fund                                                         4,814,815       5,185,185
Oasis Collateralized High Income Portfolios 1                                     1,168,830       1,231,170
Octagon Credit Investors                                                          5,868,056       6,319,444
Octagon Investment Partners II, LLC                                               3,611,111       3,888,889
Olympic Funding Trust, Series 1999-1                                              4,814,815       5,185,185
Oppenheimer Senior Floating Rate Fund                                             2,407,407       2,592,593
</TABLE>

                                 Schedule 2.01

<TABLE>
<CAPTION>
Institution                                     R/C        Term Loan A     Term Loan B     Term Loan C     Term Loan D
-----------                                  -----------   -----------     -----------     -----------     -----------
<S>                                          <C>           <C>             <C>          <C>             <C>
Perseus CDO I, Limited                                                       3,595,200      3,894,800
Pilgrim CLO 1999 1 Ltd.                                                      2,407,407      2,592,593
Pilgrim Prima Rate Trust                                                     2,888,796      3,111,204
PPM America Inc.                                                             4,814,815      5,185,185
PPM Spyglass Funding Trust                                                   4,814,815      5,185,185
Principal Life Insurance Company                                             4,814,815      5,185,185
Senior Debt Portfolio                                                       18,175,926     19,574,074
SEQUILS - Pilgrim I, Ltd.                                                    1,925,926      2,074,074
SEQUILS I, Ltd.                                                              3,370,370      3,629,630
SEQUILS ING I (HBDGM), Ltd.                                                  2,407,407      2,592,593
SEQUILS IV, Ltd.                                                                                             5,000,000
Simsbury CLO, Limited                                                        2,402,400      2,602,600
Somers CDO, Limited                                                          2,402,400      2,602,600
SRF Trading, Inc.                                                            2,166,667      2,333,333
Stanfield CLO, Ltd.                                                          2,407,407      2,592,593
Stein Roe & Farnham CLO I Ltd.                                               2,166,667      2,333,333
Stein Roe Floating Rate Ltd.                                                   481,481        518,519        4,000,000
Liberty Stein Roe Advisor Floating Rate                                                                        500,000
Strata Funding Limited                                                       1,203,704      1,296,296
Strategic Managed Loan Portfolio                                               963,000      1,037,000
Syndicated Loan Funding Trust                                                4,153,540      4,471,460
TCW Leveraged Income Trust II, L.P.                                          1,685,185      1,814,815
TCW Leveraged Income Trust, L.P.                                             1,685,185      1,814,815
Triton CBO III, Limited                                                      2,407,407      2,592,593
United of Omaha Life Insurance Co.                                             481,481        518,519
Van Kampen CLO I, Limited                                    3,137,500
Van Kampen CLO II, Limited                                   3,137,500
Van Kampen Prime Rate Income Trust                                          24,074,074     25,925,926
-----------                                  -----------   -----------     -----------    -----------      -----------
Totals                                       150,000,000   125,500,000     325,000,000    350,000,000      200,000,000

</TABLE>
<PAGE>   112
                                  SCHEDULE 3.05

                                  REAL PROPERTY

A.       Owned Real Property

<TABLE>
<CAPTION>
Entity                                                       Property
------                                                       --------
<S>                                                          <C>
Semiconductor Components Industries, LLC                     52nd Street facility located at 5005 East McDowell
                                                             Road, Phoenix, AZ, 85018

SCG Industries Malaysia Sdn. Bhd.                            Manufacturing facilities located at Lot 122 and Lot 55,
                                                             Senawang Industrial Estate, 20050 Seremban, Nederi,
                                                             Sembilan, Malaysia

Slovakia Electronics Industries, a.s.                        Manufacturing facility located at Vrbovska cesta
                                                             2617/102, Piestany, Slovak Republic (Ownership
                                                             certificate number 8226)

SCG Japan Ltd.                                               Manufacturing facility located at 1, Ooyaji, Kofune,
                                                             Shiokawa-machi, Yama-gun, Fukushima 969-3594, Japan

SCG Philippines, Inc.                                        Manufacturing facility at Governor's Drive, Carmona
                                                             Cavite, Philippines

Terosil a.s.                                                 Manufacturing facility located at 1 maje 1000, 75661
                                                             Roznovpod Radhostem, Czech Republic ICO 451 93 533

Tesla Sezam a.s.                                             Manufacturing facility located at 1 maje 1000, 75661
                                                             Roznovpod Radhostem, Czech Republic ICO 451 93 533

Semiconductor Components Industries of                       2000 South County Trail
Rhode Island, Inc.                                           East Greenwich, RI  02818
                                                             Assessors Plat 11, Log 586
                                                             150,847 sq. ft. semiconductor manufacturing facility on
                                                             30 acres of land that includes a 30,000 sq. ft.
                                                             cleanroom

Semiconductor Components Industries of                       1900 South County Trail
Rhode Island, Inc.                                           East Greenwich, RI  02818
                                                             Assessors Plat 11, Log 500 (Parcel I)
                                                             Assessors Plat 11, Log 499 (Parcel II)
                                                             57,000 sq. ft. warehouse and office facility on 20
                                                             acres of land
</TABLE>
<PAGE>   113
B.       Leased Property

      1)   U.S. Office Sharing Agreement (includes China and Korea) dated July
           31, 1999 between Motorola, Inc. and Semiconductor Components
           Industries, LLC regarding: (a) 101 Pacifica, Irvine, CA; (b) 330
           Research Court, Norcross, GA; (c) 300 Unicorn Pk, Woburn, MA; (d)
           1501 Woodfield, Shaumburg, Illinois; (e) 20405 State Highway,
           Houston, Texas; (f) 500 N. Central Expressway, Plano, Texas; (g)
           10200 E. Girard Avenue, Denver, Colorado; (h) 41700 Six Mile Road,
           Northville, MI; (i) 2717 South Albright, Kokomo, IN; (j) 700 Veterans
           Memorial, Hauppauge, NY; (k) 201 Electronics Blvd, Huntsville, AL;
           (l) 26635 W. Agoura Road, Calabasas, CA; (m) 12254 Hancock St.,
           Carmel, IN; (n) 325 N. Corporate Drive, Brookfield, WI; (o) 5620
           Smetana Drive, Minnetonka, MN; (p) 1155 Business Center Drive,
           Horsham, PA; (q) 4900 S.W. Griffith, Beaverton, OR; (r) 8601 Six
           Forks Road, Raleigh, NC; (s) 700 Crosskeys, Fairport, NY; (t) 100
           Passaic Avenue, Fairfield, NJ; (u) 9665 Chesapeake Drive, San Diego,
           CA; (v) 1150 Kifer Road, Sunnyvale, CA; (w) 13575 58th Street, N.,
           Clearwater, FL; (x) 8945 Guilford Road, Columbia, MD; (x) 41-2,
           Chungdam-dong, Kangnam-gu, Seoul 135-766, Korea; (y) No. 2, Dong-San
           Huan Nan Lu, Chao Yang District, Beijing 100022, People's Republic of
           China; (z) 5th Floor, Central Place, No. 16 Henan Road, Shanghai,
           200002, People's Republic of China; and (aa) No. 271, Huang Pu Da Dao
           West Tian He District, Guangzhou 510620, People's Republic of China

      2)   U.S. Sublease of sublease dated July 31, 1999 between Motorola, Inc.
           and Semiconductor Components Industries, LLC regarding: Watkins
           Warehouse

      3)   U.S. Sublease dated July 31, 1999 between Motorola, Inc. and
           Semiconductor Components Industries, LLC regarding: Scrap Reclamation
           Site in Tempe

      4)   U.S. Lease dated July 31, 1999 between Motorola, Inc. and
           Semiconductor Components Industries, LLC regarding: U.S. Locations
           (Mesa, Chandler, 56th Street & Tempe)

      5)   U.S. Lease dated July 31, 1999 between Motorola, Inc. and
           Semiconductor Components Industries, LLC regarding: U.S. Locations
           (52nd Street, Phoenix, Arizona)

      6)   Brazil Office Sharing Agreement dated July 31, 1999 between Motorola
           do Brasil Ltda. and SCG do Brasil Ltda. regarding: Suites 51, 52, 53,
           54, 55 & 56 and their respective parking spaces at the Edifice
           Passarelli located at Rua Paes Leme, 524-5 Andar, 05424-904, Sao
           Paulo, Brazil

      7)   Canada Sublease dated July 31, 1999 between Motorola Canada Limited
           and SCG Canada Limited regarding: 145, 846 sq. ft. at 400 Matheson
           Blvd. West, Mississauga, Ontario, L5R3MI

      8)   Great Britain Underlease dated July 31, 1999 between Motorola Limited
           and Semiconductor Components Industries UK Limited regarding: Part of
           ground floor, Fairfax House, 69 Bucking St., Aylesbury,
           Buckinghamshire, England HP202NF
<PAGE>   114
      9)   Sweden Office Sharing Agreement dated July 31, 1999 between Motorola
           AB and SCGS AB regarding: 4,851 sq. meters of office space and 182
           sq. meters of storage in Dalvagen 2, Solna, Sweden (P.O. Box 516,
           SE16529 Stockholm, Sweden)

      10)  Sweden (Finland) Office Sharing Agreement dated July 31, 1999 between
           Motorola AB and SCGS AB regarding: 250 sq. meters of office space and
           6 parking lots at Hopeatie 2, 00440 Helsinki, Finland

      11)  France Lease dated July 31, 1999 between Motorola Semiconducteurs SA
           and SCG France SAS regarding: 1,250 sq. meters on 3rd fl. at Avenue
           du General Eisenhower, ZI du Mirail, 31100 Toulouse

      12)  France Sublease dated July 31, 1999 between Motorola Semiconducteurs
           SA and SCG France SAS regarding: 354 sq. meters at 18 Rue Grange Dame
           Rose, 78140 Velizy, Villacoublay, France

      13)  France Lease dated July 31, 1999 between Motorola Semiconducteurs SA
           and SCG France SAS regarding: 510 sq. meters at Avenue du General
           Eisenhower, ZI du Mirail, 31100 Toulouse

      14)  France Lease dated July 31, 1999 between Motorola Semiconducteurs SA
           and SCG France SAS regarding: 880 sq. meters on 3rd fl. at Avenue du
           General Eisenhower, ZI du Mirail, 31100 Toulouse

      15)  Germany Office Sharing Agreement dated July 31, 1999 between Motorola
           GmbH and Semiconductors Components Industries Germany GmbH regarding:
           Husumer Street 251, D-24941 Flensburg

      16)  Hong Kong Lease dated July 31, 1999 between Motorola Semiconductors
           Hong Kong Limited and SCG Hong Kong SAR Limited regarding: Unit Nos.
           2307, 2308, 2309, 2310, 2311 and 2312 on Level 23, Metroplaza, Tower
           II, 223 Hing Fong Road, Kwai Chung, New Territories, Hong Kong

      17)  India Office Sharing Agreement dated July 31, 1999 between Motorola
           India Limited and SCG Hong Kong SAR Limited regarding: 108, Gavipuram
           Guttahalli, Off Bull Temple Road, Bangalore, India

      18)  Ireland Office Sharing Agreement dated July 31, 1999 between Motorola
           Ireland Limited and SCG Holding (Netherlands) B.V., Ireland Branch
           regarding: Mahon Industrial Estate, Blackrock, Cork, Ireland

      19)  Isreal Office Sharing Agreement dated July 31, 1999 between Motorola
           Isreal Semiconductor Products (SPS) Ltd. and SCG Holding
           (Netherlands) B.V., Isreal Branch regarding: 1st Shenka, Herzelia
<PAGE>   115
      20)  Italy Sublease Agreement dated July 31, 1999 between Motorola S.p.A.
           and SCG Italy S.r.l. regarding: Pal. C2, Centro Milanofiori, Assago,
           Milano regarding:100 sq. meters of floor space on the 5th floor

      21)  Japan Office Sharing Agreement dated July 31, 1999 between Motorola
           Japan Ltd. and SCG Japan Ltd. regarding: 20-1, 3 cho-me,
           Minami-Azabu, Minato-ku, Tokyo, Japan

      22)  Japan (Sendai) Lease dated July 31, 1999 between Motorola Japan Ltd.
           and SCG Japan Ltd. regarding: Motorola Sendai Design and Research &
           Development Center, Akedori 2-9-1, Izumiku, Sendai-shi, Miyagiken
           981-3206, Japan

      23)  Malaysia Office Sharing Agreement dated July 31, 1999 between
           Motorola Malaysia Sdn. Bhd. and Motorola Semiconductor Sdn. Bhd.
           regarding: Sixth floor of Choo Plaza, Lot 6.02, 41 Lorong Abu Siti,
           10400 Penang, Malaysia

      24)  Mexico Office Sharing Agreement dated July 31, 1999 between Motorola
           de Mexico, S.A. and SCG Mexico, S.A. de C.V. regarding: 252 sq.
           meters on 2nd fl. of building "Torre Provenza" located in
           Chimalhuacan No. 3569, Cuidad del Sol, Zapopan, Jalisco, Mexico

      25)  Netherlands Office Sharing Agreement dated July 31, 1999 between
           Motorola, B.V. and SCG Holding (Netherlands) B.V. regarding: 470 sq.
           meters at De Waal 26, 5684 PH Best, The Netherlands

      26)  Puerto Rico Office Sharing Agreement dated July 31, 1999 between
           Motorola de Puerto Rico, Inc. and Semiconductor Components Industries
           Puerto Rico, Inc. regarding: 12,928 sq. ft. at El Mundo Building No.
           2, 383 Chardon Street, Hato Rey, Puerto Rico 00917

      27)  Singapore Sublease dated July 31, 1999 between Motorola Electronics
           Pte. Ltd. and Semiconductor Components Industries Singapore Pte. Ltd.
           regarding: #01-06, 132, Tanjong Rhu Road, Pebble Bay, Singapore

      28)  Singapore Office Sharing Agreement dated July 31, 1999 between
           Motorola Electronics Pte. Ltd. and Semiconductor Components
           Industries Singapore, Pte. Ltd. regarding: 10, 944 sq. ft. at 12 Ang
           Mo Kio Street 64, Mic Level 5, Singapore

      29)  Spain Office Sharing Agreement dated July 31, 1999 between Motorola
           Espana S.A. and SCG Holding (Netherlands) B.V. Spain Branch
           regarding: Offices labeled "B" and "A" on the 9th floor in the
           Alberto Alcocer 46 Building

      30)  Switzerland Sublease dated July 31, 1999 between Motorola, Inc.,
           Geneva Branch and SCG Holding (Netherlands) B.V., Geneva Branch
           regarding: 207, Route de Ferney, 1218 Le Grand Saconnex, Switzerland
<PAGE>   116
      31)  Taiwan Office Sharing Agreement dated July 31, 1999 between Motorola
           Electronics Taiwan, Limited and SCG Hong Kong SAR Limited, Taiwan
           Branch regarding: #296 Jen-ai Road, Section 4, Taipei, Taiwan

      32)  Thailand Office Sharing Agreement dated July 31, 1999 between
           Motorola (Thailand) Limited and Semiconductor Components Industries
           (Thailand) Limited regarding: 916 sq. meters on 22nd fl. of the Two
           Pacific Place Building, 142 Sukhumvit Road, Klongtoey, Bangkok 10110

      33)  Czechoslovakia Sublease Agreement dated July 30, 1999 between SCG
           Czech Design Center, s.r.o. (formerly Rydan, s.r.o.) and Motorola,
           spol. s.r.o. regarding: B. Nemcove Street, 75661 Roznov pod
           Radhostim, land registry No. 1720

      34)  Lease between Telecom Co., Ltd. and Cherry Semiconductor Corporation
           dated April 20, 1999

      35)  Lease between Cherry Semiconductor Corporation, as Lessor, and the
           United States of America dated January 21, 1997 and recorded in Book
           221 at Page 749 of the Land Evidence Records of the Town of East
           Greenwich

      36)  Lease Agreement of Cherry Semiconductor Corporation for the Arizona
           Design Center, 7402 West Detroit Street, Suite 140, Chandler, AZ,
           85226

      37)  Lease Agreement of Cherry Semiconductor Corporation for the
           California Design Center, 2512 Chambers Road, Tustin, CA 92780

      38)  Lease Agreement of Cherry Semiconductor Corporation for the Santa
           Clara Sales Office, 2700 Augustine Drive & 3295 Scott Blvd., Santa
           Clara, CA 95054

      39)  Lease Agreement between Cherry Semiconductor Corporation and McKenzie
           & Associates for Kokomo Sales Office, 1307 E. Markland Ave., Kokomo,
           IN 48901

      40)  Lease Agreement of Cherry Semiconductor Corporation for Michigan
           Sales Office, 755 W. Big Beaver, Suite 102, Troy, MI 48084

      41)  Tenancy Agreement between Cherry Semiconductor Corporation and JIT
           Services for Huntsville Sales Office, 125 Electronics Blvd., Suite M3
           & M4, Huntsville 35824

      42)  Service Agreement between Cherry Semiconductor Corporation and Psi
           Technologies, Inc., Electronics Avenue, FTI Comples, Taguig, Metro
           Manila, Philippines

      43)  Lease Agreement between Cherry Semiconductor Corporation and Telecom
           Co., Ltd., Room 604, 6th Floor, Dongkyung Bldg., 824-19, Yuksam-dong,
           Kangnam-ku, Seoul, Korea

      44)  Lease Agreement of Cherry Semiconductor Corporation and Aengevelt
           Asia-Pacific for Taiwan Office, 6th Floor - 2 No. 380, Fu Hsin S.
           Rd., Sec. 1, Taipei, Taiwan
<PAGE>   117
                                  SCHEDULE 3.06

                                DISCLOSED MATTERS

                                   Litigation

                                      None

                                  Environmental

                                      None
<PAGE>   118
                                  SCHEDULE 3.12

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
Subsidiary                                                                    Equity Interest        Status
----------                                                                    ---------------        ------
<S>                                                                           <C>                    <C>
Subsidiaries of SCG Holding Corporation
-        Semiconductor Components Industries, LLC                             100%                   Loan Party
-        SCG (China) Holding Corporation                                      100%                   Loan Party
-        SCG (Czech) Holding Corporation                                      100%                   Loan Party
-        SCG (Malaysia SMP) Holding Corporation                               100%                   Loan Party

Subsidiaries of Semiconductor Components Industries, LLC
-        SCG Canada Limited                                                   100%
-        SCG Mexico, S.A. de C.V.                                             100%
-        SCG Japan Ltd.                                                       100%
-        SCG Philippines Inc.                                                 100%(1)
-        SCG Korea Limited                                                    100%(2)
-        Semiconductor Components Industries Singapore Pte Ltd                100%
-        SCG Hong Kong SAR Limited                                            100%
-        SCG (Thailand) Limited                                               100%(3)
-        SCG Malaysia Holdings Snd. Bhd.                                      100%
-        SCG Holding (Netherlands) B.V.                                       100%
-        Slovakia Electronics Industries, a.s.                                100%
-        SCG Czech Design Center s.r.o.                                       100%
-        SCG do Brasil Ltda.                                                  100%
-        Semiconductor Components Industries Puerto Rico, Inc.                100%                   Loan Party
-        SCG International Development LLC                                    100%                   Loan Party
-        SCG Asia Capital Pte Ltd                                             100%
-        Redbird Acquisition Corp.                                            100%                   Loan Party

Subsidiary of SCG (China) Holding Corporation
-        Leshan Phoenix Semiconductor Company Ltd.                            51% of record

Subsidiary of SCG (Malaysia SMP) Holding Corporation
-        Semiconductor Miniature Products (M) Sdn. Bhd.                       50%

Subsidiary of SCG Malaysia Holdings Snd. Bhd.
-        SCG Industries Malaysia Sdn. Bhd.                                    100%
</TABLE>

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

(1)  Five shares are issued to directors as director's qualifying shares.
2,250,000 shares are issued and outstanding.

(2)  Two shares are to be issued to directors as director's qualifying shares.
5,000 shares are issued and outstanding.

(3)  Seven shares are issued to directors as director's qualifying shares. 1,000
shares are issued and outstanding.
<PAGE>   119
<TABLE>
<CAPTION>
Subsidiary                                                                   Equity Interest          Status
<S>                                                                           <C>                    <C>
Subsidiaries of SCG (Czech) Holding Corporation
-        Terosil a.s.                                                         49.9%
-        Tesla Sezam a.s.                                                     49.9%

Subsidiaries of SCG Holding (Netherlands) B.V.
-        Semiconductor Components Industries Germany GmbH                     100%
-        SCG Investments EURL                                                 100%
-        SCG France SAS                                                       100%
-        SCG Italy S.r.l.                                                     99%(4)
-        Semiconductor Components Industries UK Limited                       100%

Subsidiaries of Redbird Acquisition Corp.
-        Semiconductor Components Industries                                  100%                   Loan Party
         of Rhode Island, Inc.

Subsidiaries of Semiconductor Components Industries of Rhode Island, Inc.
-        Semiconductor Components Industries International of Rhode Island,   100%                   Loan Party
         Inc.
</TABLE>

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

(4)  SCG International Development LLC owns the remaining 1% interest.
<PAGE>   120
                                  SCHEDULE 3.13

                                    INSURANCE

                                ON SEMICONDUCTOR
                             Schedule of Insurance

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
  LINE OF COVERAGE        PREMIUM     EXPOSURE                     LIMITS                                RETENTIONS
----------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>                       <C>                              <C>
PROPERTY - DOMESTIC                   - 2,019,111,260 PD        All Risk Incl. DI/EE             US LOCATIONS
AND FOREIGN                           -   291,100,000 BI        - 2,310,211,260 Blanket Limit    - 50,000
(8/1/99-7/31/00)                        -------------
                                        2,310,211,260 TIV                                        FOREIGN LOCATIONS
                                                                Major Sublimits                  - 25,000
- Premium                2,300,000                              - 250,000,000
                                                                  Floor Ann/Agg                  WAFER FABS
                                                                - 250,000,000                    - 250,000 PD
                                                                  EQ Ann/Agg                     - 3X Average Daily Values TE
                                                                - 100,000,000
                                                                  EQ Japan Ann/Agg
                                                                - 100,000,000                    EQ - MEXICO
                                                                  EQ Mexico Ann/Agg              - 2% of Location Value
                                                                - 250,000 Contamination              100,000 Minimum
                                                                             Cleanup               2,000,000 Maximum

                                                                 Boiler & Machinery              EQ - JAPAN
                                                                - 100,000,000 Per Occ            - 5% of Location Value
                                                                                                     100,000 Minimum
                                                                Sublimits                          3,000,000 Maximum
                                                                - 5,000,000 Water Damage
                                                                - 5,000,000 Haz Sub              WINDSTORMS
                                                                - 5,000,000 Ammonia ConL         - 2% of values at any one loc.
                                                                                                     100,000 Minimum
                                                                                                   1,000,000 Maximum

                                                                                                 - 12 Hour waiting period
                         ---------                                                                 for Off Premises Power/
                         2,300,000                                                                 Service Interruption
----------------------------------------------------------------------------------------------------------------------------------
UMBRELLA LIABILITY                    Gross Sales
(8/1/99 - 7/31/00)                    -  645,000,000 US         -  50,000,000 occ/agg            - 25,000 Self Insured
- Premium                             -   37,000,000 Canada     -  50,000,000 x/s                  Retention
                           172,500    -   25,000,000 PR            50,000,000
                                      -  811,000,000 Foreign
                                       -------------
                                      -1,518,000,000 Total      - 100,000,000 Total occ/agg
                         ---------
                           172,500    - Flat rate, no audit
----------------------------------------------------------------------------------------------------------------------------------
DIRECTORS &                           Corporate Assets          Directors & Officers             D&O
OFFICERS LIABILITY                    - 776,500,000             -  25,000,000 Total Ea/Agg       Coverage A
INCL. EMPLOYMENT                                                   ($10/$10/$5 by carrier)       - 0 Ind. D&O
PRACTICES LIABILITY                   No. of Employees                                           - 0 Agg All D&O's
(8/1/99-7/31/00)                      -  2,677 US, Canada        EPL
- Premium                  400,000           & Puerto Rico      -  25,000,000 Ea/Agg             Coverage B
                                      -  7,925 Foreign                                           - 125,000 Corp. Indem
                                      - Includes Employment
                                        Practices Liability                                      EPL
                         ---------                                                               - 175,000 Ea Wrongful Act
                           400,000
----------------------------------------------------------------------------------------------------------------------------------
WORKERS'                              Payroll                   Part I - Workers' Compensation   - None
COMPENSATION                          - 134,427,500 Est.        - Statutory
(8/1/99-7/31/00)                      - Auditable policy,
- Premium (Estimated)      835,000      final premium subject   Part II - Employers' Liability
- Taxes & Assessments          521      to actual payroll       - 1,000,000 per accident
- Claims Handling           60,000                              - 1,000,000 policy limit
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
                    COMMENTS                              CARRIER
-----------------------------------------------------------------------
<S>                                                    <C>
                                                            Alliance/
                                                            Various

-----------------------------------------------------------------------
- Coverage Excess of Primary limits [EL, GL, Auto Liab.,    National
  Foreign GL, EL & AL]                                       Union
- Named Peril and Time Element. Pollution endorsement       Fire Ins.
  coverage included in Primary $50 million only                of
                                                            Pittsburgh
                                                              (AIG)
                                                            (Various)
-----------------------------------------------------------------------
- Includes full EPL1 entity coverage                        National
- Claims Made Form                                           Union
                                                            Fire Ins.
                                                               of
                                                           Pittsburgh
                                                              (AIG)
- Aggregate limit of D&O applies, EPL1 not a separate         Also:
  limit.                                                     Zurich
- Claims Made Form                                            Royal
-----------------------------------------------------------------------
- Guaranteed Cost Program                                    American
- Estimated loss pick: $750,000                                Home
- Swing Plan chosen                                          Assurance
  Additional premium due if losses exceed $707,000 -           (AIG)
  see binders for formula
-----------------------------------------------------------------------
</TABLE>

                                ON SEMICONDUCTOR
                             SCHEDULE OF INSURANCE

<TABLE>
<CAPTION>
LINE OF COVERAGE    PREMIUM  EXPOSURE               LIMITS                    RETENTIONS        COMMENTS                CARRIER
------------------------------------------------------------------------------------------------------------------------------------
<S>                 <C>      <C>                    <C>                       <C>               <C>                     <C>
                                                                disease
                                                    - 1,000,000 ea. employee
                                                                disease
                                                    -   100,000 repatriation
                    -------                                       expense
                    895,521                         - 1,000,000 Stop Gap
------------------------------------------------------------------------------------------------------------------------------------
GENERAL/PRODUCTS             GROSS DOMESTIC SALES                             - None            - Guaranteed Cost         National
LIABILITY                    --------------------                                                 Program                   Union
(8/1/99 - 7/31/00)           - 645,000,000 US       - 2,000,000 Gen Agg                         - Named peril and time    Fire Ins.
                             -  37,000,000 Canada   - 2,000,000 Prod/Ops Agg                      element pollution          of
- Premium           125,000  -  25,000,000 PR       - 2,000,000 Ea. Occ.                          endorsement             Pittsburg
                                                    - 2,000,000 Pl/Adv                          - Adjustable at rate of     (AIG)
                               -----------                                                        .177 per $1,000 sales
                             - 707,000,000 Total    - 1,000,000 Fire Dam.                       - Includes Canada and
                                                                Legal                             Puerto Rico
                                                    -    10,000 Med Pay
                             - Auditable policy,    - 1,000,000 EBL (Claims
                               final premium                    Made)
                               subject to actual
                               dom. sales                                     - 1,000 EBL

                                                              ALE in
                                                              addition to
                                                              policy limit.
                    -------
                    125,000
------------------------------------------------------------------------------------------------------------------------------------
FOREIGN GENERAL &            GROSS FOREIGN SALES    - 2,000,000 Gen Agg       - None            - Includes Sudden &      Insurance
AUTO LIABILITY               -------------------    - 2,000,000 Prod/Ops                          Accidental Pollution    Company
(8/1/99 - 7/31/00)           - 811,000,000                      Agg                               coverage                 of the
- Premium            56,900                         - 2,000,000 Ea. Occ.                        - Adjustable at rate      State of
                                                    - 2,000,000 Pl/Adv                            of .06 per $1,000     Pennsylvania
                             FOREIGN AUTOS          - 2,000,000 EBL           - 1,000 EBL         sales                     (AIG)
                             -------------          -   100,000 Fire Legal    - Statutory       - Premium contemplates
                             -         178          -    10,000 Med Pay         Auto or         - issuance of 14 local
                                                    - 1,000,000 Auto            $25,000           GL policies. There
                                                      No aggregate applies      whichever is      is a $2,000 cost per
                                                      to the auto               greater           each additional
                                                                              - Auto coverage     local policy
                                                                                responds on       required.
                                                                                an excess
                                                                                basis.
                    -------
                     56,900
------------------------------------------------------------------------------------------------------------------------------------
FOREIGN VOLUNTARY                                   WORKERS' COMPENSATION     - None            - Local Social           Insurance
WORKERS' COMP.               FOREIGN PAYROLL        ---------------------                         Security provides WC    Company
(8/1/99 - 7/31/00)           ---------------        - 3rd Country Nationals:                      benefits in the          of the
- Premium             3,200  -     400,000            Country of Hire                             the following           State of
                                                    - Local Nationals:                            countries: Mexico,    Pennsylvania
                                                      E.L. Only                                   Philippines, Japan,       (AIG)
                                                                                                  China, and Malaysia.
                                                    EMPLOYERS' LIABILITY                        - Czech Republic
                                                    --------------------                          requires local WC
                                                    - 1,000,000 Bl by                             coverage. Local AON
                                                                Accident                          office to provide.
                                                    - 1,000,000 Bl by                           - Supplemental WC
                                                                Disease                           benefits can be
                                                                Ea Emp                            purchased in
                                                    - 1,000,000 Bl by                             Malaysia and Japan
                                                                Disease
                                                                Policy
                                                                Limit
                                                    -    25,000 Excess                          - Adjustable at rate
                                                                repatriation                      of .80 per $100
                                                                                                  payroll
                    -------
                      3,200
------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE                   POWER UNITS                                      LIABILITY         - Adjustable at rate      American
LIABILITY/PHYSICAL           -----------                                      ---------           of $800 per vehicle       Home
DAMAGE                       -       139 Autos/     - 1,000,000 Combined      - None                                      Assurance
(8/1/99 - 7/31/00)                       Trks                   Single                                                      (AIG)
                             -        17 Tractors               Limit
                                       5 Canada     - 1,000,000 Uninsured     PHYSICAL DAMAGE
                               ---------                        Motorist      ---------------
</TABLE>

                                                   ON Semiconductor Confidential

                                ON SEMICONDUCTOR

                             SCHEDULE OF INSURANCE

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------
LINE OF COVERAGE          PREMIUM          EXPOSURE         LIMITS
---------------------------------------------------------------------------------------------------
<S>                     <C>            <C>              <C>

* Premium                  128,800          161 Total      * 10,000 Med Pay

                           -------
                           128,800
---------------------------------------------------------------------------------------------------
POLITICAL RISK/TRADE
DISRUPTION
(8/1/99-7/31/00)
* Premium                1,750,000      * 254,105,263       *  250,000,000 CEND Aggregate
                                          Malaysia Values   *  250,000,000 War Aggregate
                                                            *   38,000,000 Bl Aggregate
                                                            *   10,000,000 Cl Aggregate

                         ---------
                         1,750,000
---------------------------------------------------------------------------------------------------
CRIME                                     No. of Employees     Per Claim:
(8/1/99-7/31/00)                        * 2,677 US, Canada  *    5,000,000 Employee Dishonesty
* Premium                   42,000           & Puerto Rico  *    5,000,000 Loss Inside Prem.
                                        * 7,925 Foreign     *    5,000,000 Loss Outside Prem.
                                                            *    5,000,000 Money Orders/
                                                                           Counterfeit Currency
                                                            *    5,000,000 Depositors Forgery
                                                            *    5,000,000 Computer Fraud
                                                            *    5,000,000 Credit Card

                         ---------
                            42,000
---------------------------------------------------------------------------------------------------
FIDUCIARY LIABILITY                        Plan Assets      *    5,000,000 Ann/Agg
(8/1/99-7/31/00)                         * TBD
* Premium                   25,000

                         ---------
                            25,000
---------------------------------------------------------------------------------------------------
NON-OWNED                                  No. of Charters  *   10,000,000 Per Occurrence
AVIATION LIABILITY                       * 25
(8/1/99-7/31/00)
* Premium                    5,000

                         ---------
                             5,000
---------------------------------------------------------------------------------------------------
MARINE CARGO                               Sales
(8/1/99-7/31/00)                         *  1,518,000,000   *   10,000,000 Per conveyance
* Premium                  335,000                          *    5,000,000 Outside Processors
                                                            *    1,000,000 Barge/Tow
                                                            *       50,000 UPS/Mail

                         ---------
                           335,000
---------------------------------------------------------------------------------------------------
SPECIAL CRIME                              No. of Employees
(8/1/99-7/31/00)                         * 2,677 US, Canada *    5,000,000 Max. benefit is $250K
* Premium                   12,500              Puerto Rico       for any one person &
                                         * 7,925 Foreign          $1.25 Mil per accident
                         ---------
                            12,500
                         ---------
GRAND TOTAL              6,251,421

</TABLE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------
      RETENTIONS                COMMENTS        CARRIER
----------------------------------------------------------------------------
<S>                           <C>            <C>
----------------------------------------------------------------------------
*     500 Comprehensive
*     500 Collision

   TRACTOR PHYSICAL DAMAGE
*   1,500 Comprehensive
*   1,500 Collision

---------------------------------------------------------------------------------------------------
                                                         National
*   20,000,000 CEND, WAR & Bl     * CEND stands for        Union
                                    Confiscation,        Fire Ins.
                                    Expropriation,          of
                                    Nationalization      Pittsburg
                                    Declarations           (AIG)

                                  * Policy identifies
                                    sub-limits by
                                    Country

---------------------------------------------------------------------------------------------------
                                                    National
*   100,000 Per Claim                                Union
                                                    Fire Ins.
                                                       of
                                                    Pittsburg
                                                      (AIG)

---------------------------------------------------------------------------------------------------
*   25,000 Per Claim         * Claims Made Form      National
                                                      Union

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

*   None                                            American
                                                      Home

---------------------------------------------------------------------------------------------------
*  10,000 Per conveyance    * Adjusted if sales      CNA
*  25,000 Outside Process     exceed $1,633 Bil
*       0 3rd party shpmnts   by more than 15%
        0 UPS/Mail          * Land transportation
                              security warranty

---------------------------------------------------------------------------------------------------
*  None                     * Provides coverage      Reliance
                              for kidnap, ransom
                              and extortion for
                              employees, relatives
                              or guests (ADD/Life)
---------------------------------------------------------------------------------------------------

</TABLE>
<PAGE>   121
                                  SCHEDULE 6.01

                              EXISTING INDEBTEDNESS

1)       SCG INDUSTRIES MALAYSIA SDN. BHD.

      a)   Letter of Credit in favor of Tenaga Nasional Berhad for electricity
           service in the amount of RM2,226,000 (approximately $585,800) under
           the RM8,000,000 Letter of Credit facility, dated September 16, 1998,
           between Hongkong Bank Malaysia Bhd. and Motorola Semiconductor Sdn.
           Bhd. (presently, SCG Industries Malaysia Sdn. Bhd.), as renewed on
           July 5, 1999

      b)   (i) Letter of Credit in favor of Tenaga Nasional Berhad for
           electricity service in the amount of RM1,035,000 (approximately
           $272,400) and (ii) Letter of Credit in favor of Custom Department to
           guarantee custom duties in the amount of RM150,000 (approximately
           $39,500) under the RM12,000,000 Letter of Credit facility, dated
           September 16, 1998, between Hongkong Bank Malaysia Bhd. and Motorola
           Electronics Sdn. Bhd., as renewed on July 5, 1999 with a reduction in
           facility limit to RM1,200,000

      c)   Letter of Credit in favor of Custom Department to guarantee custom
           duties in the amount of RM2,500,000 (approximately $657,900) under
           the RM10,000,000 Letter of Credit facility, dated October 6, 1998,
           between Citibank Bhd. and Motorola Semiconductor Sdn. Bhd.
           (presently, SCG Industries Malaysia Sdn. Bhd.)
<PAGE>   122
                                  SCHEDULE 6.02

                                 EXISTING LIENS

1)       (A) Joint Venture Agreement dated July 27, 1992, between Motorola, Inc.
         Semiconductor Products Sector and Philips Semiconductors International
         B.V., as amended through the date hereof, and (B) Technology
         Cooperation Agreement between Motorola, Inc. and Phillips
         Semiconductors International B.V. dated July 9, 1992, in each case as
         amended from time to time, and as amended further by the Assignment and
         Amendment Agreement by and among Motorola, Inc., Philips Semiconductors
         International B.V., SCG Holding Corporation and Semiconductor Miniature
         Products (Malaysia) Sdn. Bhd. Dated August 4, 1999.

2)       Joint Venture Contract, dated March 1, 1995, between Leshan Radio
         Company, Ltd. and Motorola International Development Corp. ("MIDC");

         a)       Amendment No. 1 to Joint Venture Contract, dated March 1,
                  1995, between Leshan Radio Company, Ltd. and MIDC;

         b)       Amendment No. 2 to Joint Venture Contract, dated December 11,
                  1995, between Leshan Radio Company, Ltd. and MIDC;

         c)       Amendment No. 3 to Joint Venture Contract, dated April 12,
                  1996, between Leshan Radio Company, Ltd. and Motorola (China)
                  Investment Limited;

         d)       Amendment No. 4 to Joint Venture Contract, dated January 6,
                  1998, between Leshan Radio Company, Ltd. and Motorola (China)
                  Investment Limited;

         e)       Amendment No. 5 to Joint Venture Contract, dated June 29,
                  1998, between Leshan Radio Company, Ltd. and Motorola (China)
                  Investment Limited;

         f)       Memorandum of Understanding, dated July 28, 1999, between
                  Leshan Radio Company, Ltd., SCG Holding Corporation and
                  Motorola (China) Investment Limited; and

         g)       Amended and Restated Joint Venture Contract, dated September
                  6, 1999, between Leshan Radio Company, Ltd., MIDC and SCG
                  (China) Holding Corporation;

3)       The By-laws of Amicus Realty Corporation provide that a stockholder
         wishing to sell all or a part of his/its shares of common stock must
         give a right of first refusal to the non-selling stockholders for a
         period of thirty (30) days before he/it can sell any of such shares.

4)       The manufacturing facility owned by SCG Industries Malaysia Sdn. Bhd.
         is located on Lots 122 and 123 in Seremban. These lots are separate
         legal parcels that are physically continuous. On June 18, 1998, the
         Seremban Land Office approved a request by Motorola Semiconductor Sdn.
         Bhd. (a predecessor to SCG Industries Malaysia Sdn. Bhd.) to combine
         the two parcels of land into a single lot. The land title provides that
         any future transfer of the land by SCG Industries Malaysia Sdn. Bhd.
         must be approved first by the State Authority, and the land may only be
         used for the manufacture of electronic components.
<PAGE>   123
5)       Property No. 26574 owned by SCG Industries Malaysia Sdn. Bhd. may only
         be used in the electronic products industry.

6)       Lot No. P.T. 12463 owned by SCG Industries Malaysia Sdn. Bhd. may not
         be transferred, leased or changed without the approval of the State
         Authority, and may only be used for an electrical substation.

7)       Declaration of Covenants, Easements, Restrictions and Grant of
         Exclusive Options to Purchase and Lease dated as of July 31, 1999
         between Motorola, Inc. and Semiconductor Components Industries, LLC

8)       Lease of 52nd Street Property between Motorola, Inc. and Semiconductor
         Components Industries, LLC

9)       The following encumbrances on 2000 South County Trail East Greenwich,
         RI 02818, Assessors Plat 11, Log 586 150,847 sq. ft. semiconductor
         manufacturing facility on 30 acres of land that includes a 30,000 sq.
         ft. cleanroom:

         a)       Easement from John T. Hannah and Marjorie R. Hannah to the
                  Narragansett Electric Company recorded with the Land Evidence
                  Records of the Town of East Greenwich in Book 34 at Page 579.

         b)       Easement from Gulton Industries, Inc. to the Town of East
                  Greenwich recorded with the Land Evidence Records of the Town
                  of East Greenwich in Book 63 at Page 192.

         c)       Sublease by and between Cherry Semiconductor Corporation and
                  the United States of America recorded with the Land Evidence
                  Records of the Town of East Greenwich in Book 137 at Page 233.

10)      The following encumbrances on 1900 South County Trail East Greenwich,
         RI 02818 Assessors Plat 11, Log 500 (Parcel I) Assessors Plat 11, Log
         499 (Parcel II) 57,000 sq. ft. warehouse and office facility on 20
         acres of land

         a)       Subject to rights of others in and to the easement described
                  in Book 44 at Page 81 of the Land Evidence Records of the Town
                  of East Greenwich; as affected by Easement recorded in Book 54
                  at Page 152 of the Land Evidence Records of the Town of East
                  Greenwich. (as to Parcel I)

         b)       Subject to the reservations, easements, terms and conditions
                  contained in deed from Joyce M. Ingraham, as Successor Trustee
                  to Gulton Industries, Inc. dated December 31, 1997 and
                  recorded in Book 61 at Page 81 of the Land Evidence Records of
                  the Town of East Greenwich. (as to Parcel I)

         c)       Easement from Gulton Industries, Inc. to the Town of East
                  Greenwich recorded with the Land Evidence Records of the Town
                  of East Greenwich in Book 63 at Page 192 of the Land Evidence
                  Records of the Town of East Greenwich. (as to Parcel I)
<PAGE>   124
         d)       Easements contained in Deed recorded in Book 63 at Page 221,
                  provided, however, no exception is taken as to the rights of
                  the United States of America with respect to any reference
                  therein.

         e)       Terms and conditions contained in Easement from Kenneth W.
                  Washburn, et als., as The Trustees of the Industrial Building
                  Authority to the Town of East Greenwich, dated 1/15/82 and
                  recorded 3/5/82 at 8:38 a.m. in Book 78 at Page 152. (as to
                  both Parcels)

         f)       Rights and easements of others to drain through or otherwise
                  to use the stream located on the premises. (as to both
                  Parcels)

         g)       Lease by and between the Subsidiary, as Lessor and the United
                  States of America dated 1/21/97 and recorded in Book 221 at
                  Page 749 of the Land Evidence Records of the Town of East
                  Greenwich.

11)      The U.S. government has required that an FAA tower be installed on the
         owned real estate of Cherry Semiconductor Corporation.

12)      Cherry Semiconductor Corporation has entered into a Settlement
         Agreement and Covenant Not To Sue in connection to the property at 1900
         South Country Trail. Case #97-058 (Brownfield Agreement).
<PAGE>   125
                                  SCHEDULE 6.04

                              EXISTING INVESTMENTS

<TABLE>
<CAPTION>
                     Entity                                          Ownership Interest
                     ------                                          ------------------
<S>                                                <C>
Semiconductor Components Industries, LLC           -    1 share in SCG Canada Limited
                                                   -    49,999 shares in SCG Mexico, S.A. de C.V.
                                                   -    999 shares in SCG do Brasil Ltda.
                                                   -    200 shares in SCG Japan Ltd.
                                                   -    2,249,995 shares in SCG Philippines Inc.
                                                   -    5,000 shares in SCG Korea Limited(5)
                                                   -    999 shares in Semiconductor Components Industries
                                                        Singapore Pte Ltd
                                                   -    999 shares in SCG Hong Kong SAR Limited
                                                   -    19,993 shares in SCG (Thailand) Limited
                                                   -    999 shares in SCG Malaysia Holdings Sdn. Bhd.
                                                   -    2,000 shares in SCG Holding (Netherlands) B.V.
                                                   -    1,700 shares in Slovakia Electronics Industries, a.s.
                                                   -    2 shares in SCG Czech Design Center s.r.o.

SCG International Development LLC                  -    1 share in SCG do Brasil Ltda.
                                                   -    1 share in SCG Mexico, S.A. de C.V.
                                                   -    1 share in SCG Hong Kong SAR Limited
                                                   -    1 share in Semiconductor Components Industries Singapore
                                                        Pte Ltd
                                                   -    1 share in SCG Malaysia Holdings Sdn. Bhd.
                                                   -    1 quota with value of 100 Euros in SCG Italy S.r.l.

SCG (China) Holding Corporation                    -    51% interest in Leshan Phoenix Semiconductor Company,
                                                        Ltd.

SCG (Malaysia SMP) Holding Corporation             -    30,064,354 shares in Semiconductor Miniature Products
                                                        (M) Sdn. Bhd.

SCG (Czech) Holding Corporation                    -    54,627 shares in Terosil a.s.
                                                   -    298,382 shares in Tesla Sezam a.s.
</TABLE>

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

(5)  Two shares are to be issued to directors as director's qualifying shares.
<PAGE>   126
<TABLE>
<S>                                                <C>
SCG Philippines Inc.                               -    400,000 shares in Amicus Realty Corporation
                                                   -    4,900 shares in the Philippine Long Distance Telephone
                                                        Company
                                                   -    1 share in Alabang Country Club Valley Vista Sports
                                                        Club, Inc.
                                                   -    31,692 shares Manila Electric Company

SCG Mexico, S.A. de C.V.                           -    1 share in the Santa Anita Golf Club

Semiconductor Components Industries                -    161.0656 shares of common stock of Communications
of Rhode Island, Inc.                                   Circuits Modules Incorporated
</TABLE>
<PAGE>   127
                                  SCHEDULE 6.10

                              EXISTING RESTRICTIONS

1)   (A) Joint Venture Agreement dated July 27, 1992, between Motorola, Inc.
     Semiconductor Products Sector and Philips Semiconductors International
     B.V., as amended through the date hereof, and (B) Technology Cooperation
     Agreement between Motorola, Inc. and Phillips Semiconductors International
     B.V. dated July 9, 1992, in each case as amended from time to time, and as
     amended further by the Assignment and Amendment Agreement by and among
     Motorola, Inc., Philips Semiconductors International B.V., SCG Holding
     Corporation and Semiconductor Miniature Products (Malaysia) Sdn. Bhd. Dated
     August 4, 1999.

2)   Joint Venture Contract, dated March 1, 1995, between Leshan Radio Company,
     Ltd. and Motorola International Development Corp. ("MIDC");

      a)   Amendment No. 1 to Joint Venture Contract, dated March 1, 1995,
           between Leshan Radio Company, Ltd. and MIDC;

      b)   Amendment No. 2 to Joint Venture Contract, dated December 11, 1995,
           between Leshan Radio Company, Ltd. and MIDC;

      c)   Amendment No. 3 to Joint Venture Contract, dated April 12, 1996,
           between Leshan Radio Company, Ltd. and Motorola (China) Investment
           Limited;

      d)   Amendment No. 4 to Joint Venture Contract, dated January 6, 1998,
           between Leshan Radio Company, Ltd. and Motorola (China) Investment
           Limited;

      e)   Amendment No. 5 to Joint Venture Contract, dated June 29, 1998,
           between Leshan Radio Company, Ltd. and Motorola (China) Investment
           Limited;

      f)   Memorandum of Understanding, dated July 28, 1999, between Leshan
           Radio Company, Ltd., SCG Holding Corporation and Motorola (China)
           Investment Limited; and

      g)   Amended and Restated Joint Venture Contract, dated September 6, 1999,
           between Leshan Radio Company, Ltd., MIDC and SCG (China) Holding
           Corporation;

3)   The By-laws of Amicus Realty Corporation provide that a stockholder wishing
     to sell all or a part of his/its shares of common stock must give a right
     of first refusal to the non-selling stockholders for a period of thirty
     (30) days before he/it can sell any of such shares.

4)   The manufacturing facility owned by SCG Industries Malaysia Sdn. Bhd. is
     located on Lots 122 and 123 in Seremban. These lots are separate legal
     parcels that are physically continuous. On June 18, 1998, the Seremban Land
     Office approved a request by Motorola Semiconductor Sdn. Bhd. (a
     predecessor to SCG Industries Malaysia Sdn. Bhd.) to combine the two
     parcels of land into a single lot. The land title provides that any future
     transfer of the land by SCG Industries Malaysia Sdn. Bhd. must be approved
     first by the State Authority, and the land may only be used for the
     manufacture of electronic components.
<PAGE>   128
5)   Property No. 26574 owned by SCG Industries Malaysia Sdn. Bhd. may only be
     used in the electronic products industry.

6)   Lot No. P.T. 12463 owned by SCG Industries Malaysia Sdn. Bhd. may not be
     transferred, leased or changed without the approval of the State Authority,
     and may only be used for an electrical substation.
<PAGE>   129

                                                                       EXHIBIT A

                                    [FORM OF]

                            ASSIGNMENT AND ACCEPTANCE

                  Reference is made to the Credit Agreement dated as of August
4, 1999, as amended and restated as of ________, 2000 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among SCG Holding Corporation, Semiconductor Components Industries,
LLC, the Lenders party thereto and The Chase Manhattan Bank, as Administrative
Agent, Collateral Agent and Syndication Agent, and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper, Inc., as
Co-Documentation Agents. Terms defined in the Credit Agreement are used herein
with the same meanings.

                  The Assignor named below hereby sells and assigns, without
recourse, to the Assignee named on the reverse hereof, and the Assignee hereby
purchases and assumes, without recourse, from the Assignor, effective as of the
Assignment Date set forth on the reverse hereof, the interests set forth on the
reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement and other Loan Documents, including,
without limitation, the amounts and percentages set forth below of (i) the
Commitments of the Assignor on the Assignment Date, (ii) the Loans owing to the
Assignor which are outstanding on the Assignment Date and (iii) participations
in Letters of Credit, LC Disbursements and Swingline Loans held by the Assignor
on the Assignment Date, but excluding accrued interest and fees to and excluding
the Assignment Date. The Assignee hereby acknowledges receipt of a copy of the
Credit Agreement. Each of the Assignee and the Assignor represents and warrants
that it is legally authorized to enter into and deliver this agreement and that
this agreement constitutes its legal, valid and binding obligation and the
Assignor confirms that (a) the Loans being assigned as part of this Assigned
Interest have been fully funded by it and (b) it is the legal and beneficial
owner of the Assigned Interest, which Assigned Interest is being assigned free
and clear of any Lien or adverse claim. From and after the Assignment Date (i)
the Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of
the Assigned Interest, relinquish its rights and be released from its
obligations under the Credit Agreement.

                  This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) any documentation required to be
delivered by the Assignee pursuant to Section 2.17(e) of the Credit Agreement,
duly completed and executed by the Assignee, and (ii) if the Assignee is not
already a Lender under the Credit Agreement, an Administrative Questionnaire in
the form supplied by the Administrative Agent, duly completed by the Assignee.
The Assignee shall pay the fee payable to the Administrative Agent pursuant to
Section 9.04(b) of the Credit Agreement.

                  This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.

Date of Assignment:
<PAGE>   130
Legal Name of Assignor:
Legal Name of Assignee:

Assignee's Address for Notices:

Effective Date of Assignment
("Assignment Date"):

<TABLE>
<CAPTION>

                                                                         Percentage Assigned of Facility and
                                                                        Commitment thereunder (set forth, to
                                                                        at least 8 decimals, as a percentage
                                                                          of the Facility and the aggregate
Commitment                            Principal Amount Assigned         Commitments of all Lenders thereunder)
----------                            -------------------------         --------------------------------------
<S>                                   <C>                               <C>
Tranche A Term Commitment/Loan
                                      $                                                   %

Tranche B Term Commitment/Loan
                                      $                                                   %

Tranche C Term Commitment/Loan
                                      $                                                   %

Tranche D Term Commitment/Loan        $                                                   %

Revolving Credit Commitment/Loans
                                      $                                                   %
</TABLE>

The terms set forth above and on the reverse side hereof are hereby agreed to:

                                           [Name of Assignor]   , as Assignor

                                           By: _____________________________
                              Name:
                              Title:

                                           [Name of Assignee]   , as Assignee

                                           By: ______________________________
                              Name:
                              Title:

The undersigned hereby consent to the within assignment: 1/

--------
     1/ Consents to be included to the extent required by Section 9.04(b) of the
Credit Agreement.
<PAGE>   131
<TABLE>
<S>                                                    <C>
Semiconductor Components Industries, LLC               The Chase Manhattan Bank, as
                                                       Administrative Agent,
By: ___________________________
Name:                                                  By: ___________________________
Title:                                                 Name:
                                                       Title:

The Chase Manhattan Bank,                              The Chase Manhattan Bank,
as Issuing Bank,                                       as Swingline Lender,

By: ___________________________                        By: ___________________________
Name:                                                  Name:
Title:                                                 Title:

</TABLE>
<PAGE>   132
                                   EXHIBIT B-1

             [Form of Opinion of Cleary, Gottlieb, Steen & Hamilton]

                                                April 3, 2000

The Agents and Lenders party on
the date hereof to the Amended and Restated
Credit Agreement referred to below

Ladies and Gentlemen:

                  We have acted as special counsel to SCG Holding Corporation, a
Delaware corporation ("Holdings"), Semiconductor Components Industries, LLC, a
Delaware limited liability company and a wholly-owned subsidiary of Holdings
(the "Company"), and each of the subsidiaries of Holdings listed on Schedule I
hereto (each such subsidiary individually a "Subsidiary" and collectively, the
"Subsidiaries"), in connection with that certain Credit Agreement dated as of
August 4, 1999, as amended and restated as of April 3, 2000 (the "Amended and
Restated Credit Agreement") among Holdings, the Company, the financial
institutions listed therein as Lenders ("Lenders"), The Chase Manhattan Bank, as
administrative agent (in such capacity, "Administrative Agent"), and Credit
Lyonnais New York Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper
Inc., as co-documentation agents. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Amended and Restated Credit
Agreement. This opinion letter is furnished pursuant to Section 4.01(b) of the
Amended and Restated Credit Agreement.

                  In arriving at the opinions expressed below, we have reviewed
the following documents:

                  (a)      an executed copy of the Amended and Restated Credit
                           Agreement;

                  (b)      an executed copy of the Amendment, Consent and Waiver
                           Agreement (the "Amendment, Consent and Waiver
                           Agreement") dated as of the date hereof;

                  (c)      an executed copy of the Security Agreement and an
                           executed copy of Supplement No. 1 thereto (the
                           "Security Agreement Supplement No. 1") dated as of
                           the date hereof;

                  (d)      an executed copy of the Pledge Agreement and an
                           executed copy of Supplement No. 1 thereto (the
                           "Pledge Agreement Supplement No. 1") dated as of the
                           date hereof;

                  (e)      an executed copy of the Guarantee Agreement and an
                           executed copy of Supplement No. 1 thereto (the
                           "Guarantee Agreement Supplement No. 1") dated as of
                           the date hereof;
<PAGE>   133
                  (f)      an executed copy of the Indemnity, Contribution and
                           Subrogation Agreement and an executed copy of
                           Supplement No. 1 thereto (the "Indemnity,
                           Contribution and Subrogation Agreement Supplement No.
                           1") dated as of the date hereof;

                  (g)      an executed copy of the Reaffirmation Agreement dated
                           as of the date hereof among Holdings, the Company,
                           the Subsidiaries and the Administrative Agent
                           (together with the Amended and Restated Credit
                           Agreement, the Amendment, Consent and Waiver
                           Agreement, the Security Agreement Supplement No. 1,
                           the Pledge Agreement Supplement No. 1, the Guarantee
                           Agreement Supplement No. 1 and the Indemnity,
                           Contribution and Subrogation Agreement Supplement No.
                           1, the "Loan Documents");

                  (h)      a copy of the Perfection Certificate dated as of the
                           date hereof executed by the Company and Holdings;

                  (i)      copies of UCC financing statements executed by the
                           Company and naming the Company as Debtor and the
                           Collateral Agent as Secured Party, which we assume
                           have been filed prior to the date hereof with the
                           office of the Secretary of State of the State of New
                           York and the county clerks for Dutchess, Suffolk and
                           Monroe counties in the State of New, and remain of
                           record in the foregoing filing offices in the form we
                           have examined (the "New York UCC Filings");

                  (j)      executed copies of each of the documents listed in
                           Exhibit A; and

                  (k)      the other documents delivered by Holdings, the
                           Company, the Subsidiaries, Semiconductor Components
                           Industries of Rhode Island, Inc. ("SCI RI"),
                           Semiconductor Components Industries International of
                           Rhode Island, Inc. ("SCI RI International") and
                           Redbird Acquisition Corp. ("Redbird Acquisition")
                           (each, a "Loan Party," and collectively, the "Loan
                           Parties") at the closing on the date hereof,
                           including copies of (i) the Company's Certificate of
                           Limited Liability Company, certified by the Secretary
                           of State of the State of Delaware, (ii) Holdings'
                           Amended and Restated Certificate of Incorporation,
                           certified by the Secretary of State of the State of
                           Delaware; (iii) the Certificate of Incorporation or
                           the Certificate of Limited Liability Company, as the
                           case may be, of each Subsidiary, certified by the
                           Secretary of State of the State of Delaware; and (iv)
                           the By-Laws or Limited Liability Company Agreement,
                           as the case may be, of each of the Company, Holdings
                           and each Subsidiary, certified by the corporate
                           secretary or an authorized officer, as the case may
                           be, of each of the Company, Holdings or such
                           Subsidiary.

                  In addition, we have reviewed the originals or copies
certified or otherwise identified to our satisfaction of all such corporate and
limited liability company records of each of Holdings, the Company and the
Subsidiaries and such other instruments and other certificates

                                       2
<PAGE>   134
of public officials, officers and representatives of each of Holdings, the
Company and the Subsidiaries and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below.

                  In arriving at the opinions expressed below, we have assumed
the authenticity of all documents submitted to us as originals and the
conformity to the originals of all documents submitted to us as copies. In
addition, we have assumed and have not verified the accuracy as to factual
matters of each document we have reviewed (including, without limitation, the
accuracy of the representations and warranties of each Loan Party in the Loan
Documents).

                  Based on the foregoing, and subject to the further assumptions
and qualifications set forth below, it is our opinion that:

                  1. The Company is validly existing as a limited liability
company in good standing under the laws of the State of Delaware.

                  2. Each of Holdings and each Subsidiary is validly existing as
a corporation or a limited liability company, as the case may be, in good
standing under the laws of the State of Delaware.

                  3. Each of the Company, Holdings and each Subsidiary has
corporate power or limited liability company power, as the case may be, to own
its properties and conduct its business as now conducted, and to enter into each
Loan Document to which it is a party and to perform its obligations thereunder.

                  4. The execution and delivery of each of the Loan Documents to
which the Company is a party have been duly authorized by all necessary limited
liability company action of the Company, and each of the Loan Documents to which
the Company is a party has been duly executed and delivered by the Company. Each
of the Loan Documents to which the Company is a party is a valid, binding and
enforceable agreement of the Company.

                  5. The execution and delivery of each of the Loan Documents to
which Holdings is a party have been duly authorized by all necessary corporate
action of Holdings, and each of the Loan Documents to which Holdings is a party
has been duly executed and delivered by Holdings. Each of the Loan Documents to
which Holdings is a party is a valid, binding and enforceable agreement of
Holdings.

                  6. The execution and delivery of each of the Loan Documents to
which each Subsidiary is a party have been duly authorized by all necessary
corporate action or limited liability company action, as the case may be, of
each such Subsidiary, and each of the Loan Documents to which such Subsidiary is
a party has been duly executed and delivered by such Subsidiary. Each of the
Loan Documents to which each Subsidiary is a party is a valid, binding and
enforceable agreement of such Subsidiary.

                  7. Assuming that (i) the execution and delivery of each of the
Loan Documents to which SCI RI is a party have been duly authorized by all
necessary corporate action of SCI RI and (ii) each of the Loan Documents to
which SCI RI is a party has been duly

                                       3
<PAGE>   135
executed and delivered by SCI RI, each of the Loan Documents to which SCI RI is
a party is a valid, binding and enforceable agreement of SCI RI.

                  8. Assuming that (i) the execution and delivery of each of the
Loan Documents to which SCI RI International is a party have been duly
authorized by all necessary corporate action of SCI RI International and (ii)
each of the Loan Documents to which SCI RI International is a party has been
duly executed and delivered by SCI RI International, each of the Loan Documents
to which SCI RI International is a party is a valid, binding and enforceable
agreement of SCI RI International.

                  9. Assuming that (i) the execution and delivery of each of the
Loan Documents to which Redbird Acquisition is a party have been duly authorized
by all necessary corporate action of Redbird Acquisition and (ii) each of the
Loan Documents to which Redbird Acquisition is a party has been duly executed
and delivered by Redbird Acquisition, each of the Loan Documents to which
Redbird Acquisition is a party is a valid, binding and enforceable agreement of
Redbird Acquisition.

                  10. Except for (i) such filings and other actions as may be
required to perfect Liens in favor of the Collateral Agent which the Loan
Documents purport to create, (ii) such other consents, approvals,
authorizations, registrations and filings as have heretofore been obtained or
made by the Loan Parties and (iii) with respect to any securities pledged under
the Pledge Agreement, any actions as may be required under federal or state
securities laws in connection with a disposition of such securities, no
authorization, consent, approval or other action by, and no notice to or filing
with, any governmental authority of the United States or the State of New York
is required by any Loan Party for (a) the execution and delivery of any of the
Loan Documents to which such Loan Party is a party or (b) the performance by
such Loan Party of its obligations under any Loan Document to which it is a
party.

                  11. The execution, delivery and performance of each of the
Loan Documents to which the Company is a party do not contravene or conflict
with the Certificate of Limited Liability Company or Limited Liability Company
Agreement of the Company. The execution, delivery and performance of each of the
Loan Documents to which Holdings is a party do not contravene or conflict with
the Amended and Restated Certificate of Incorporation or Amended and Restated
By-Laws of Holdings. The execution, delivery and performance of each of the Loan
Documents to which each Subsidiary is a party do not contravene or conflict with
the Certificate of Incorporation or Certificate of Limited Liability Company, as
the case may be, or By-Laws or Limited Liability Company Agreement, as the case
may be, of such Subsidiary.

                  12. Neither the execution nor the delivery by any Loan Party
of any of the Loan Documents to which it is a party will (i) result in the
violation by such Loan Party of any federal or New York State statute, rule or
regulation of general applicability that is binding on such Loan Party or (ii)
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any of the agreements of the Loan Parties listed in
Exhibit A hereto.

                  13. None of the Company, Holdings or any Subsidiary is a
"holding company" or a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

                                       4
<PAGE>   136
                  14. None of the Company, Holdings or any Subsidiary is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

                  15. The Pledge Agreement and the Pledge Agreement Supplement
No. 1, together with the Reaffirmation Agreement, create in favor of the
Collateral Agent for the benefit of the Secured Parties valid security interests
in the certificates representing the shares of stock and the promissory notes
described in Schedule I to the Pledge Agreement Supplement No. 1 (the "Pledged
Securities") as security for the payment of the Obligations (as defined in the
Pledge Agreement after giving effect to the Reaffirmation Agreement).

                  16. The Security Agreement and the Security Agreement
Supplement No. 1, together with the Reaffirmation Agreement, create in favor of
the Collateral Agent for the benefit of the Secured Parties as security for the
payment of the Obligations (as defined in the Security Agreement after giving
effect to the Reaffirmation Agreement) valid security interests in the
Collateral (as defined in the Security Agreement) described in Schedule I to
Security Agreement Supplement No. 1 to the extent security interests in such
Collateral can be created under Article 9 of the Uniform Commercial Code as in
effect in the State of New York (the "NYUCC") (the "Security Agreement
Collateral").

                  17. Upon delivery of the Pledged Securities duly endorsed or,
in the case of shares of stock, accompanied by stock powers duly executed in
blank, to the Collateral Agent in the State of New York, the Collateral Agent
will have a perfected security interest in the Pledged Securities having
priority over the claims of other creditors to the extent such priority is
determined pursuant to the NYUCC, which security interest will remain a
perfected security interest for as long as possession thereof is continuously
maintained in the State of New York by the Collateral Agent in accordance with
the Pledge Agreement.

                  18. The New York UCC Filings are effective to perfect the
security interest referred to in paragraph 16 (including without limitation with
respect to Obligations of the Company in respect of the Tranche D Term Loans) in
the Company's rights in that portion of the Security Agreement Collateral a
security interest in which is perfected by filing a financing statement in the
State of New York under the NYUCC.

                  In addition, we confirm to you that, based solely on inquiry
of the Chief Financial Officer of the Company and of lawyers currently with this
firm who have been actively involved in the preparation of the registration
statement on Form S-1 originally filed by Holdings on February 18, 2000 with the
U.S. Securities and Exchange Commission relating to an offering of shares of
Common Stock of Holdings, we know of no legal or governmental proceedings to
which the Company or the Subsidiaries is a party that are currently pending
before any adjudicative tribunal or that have been threatened by a written
communication manifesting an intention to initiate such proceedings received by
the management of the Company or by us that are required to be disclosed in such
registration statement (as amended to date) that are not so disclosed.

                  In arriving at the opinions expressed in numbered paragraphs
15 and 16 above, we have assumed that each of the Loan Parties has rights in the
subject Collateral, and we note that, with respect to Collateral in which any
Loan Party has no present rights, the Pledge Agreement,

                                       5
<PAGE>   137
the Pledge Agreement Supplement No. 1, the Security Agreement and the Security
Agreement Supplement No. 1, as the case may be, will create the security
interest referred to in numbered paragraph 15 or 16 only when such Loan Party
acquires such rights. We also note that Section 9-103 of the NYUCC provides that
perfection and the effect of perfection or non-perfection of a security interest
in (a) collateral consisting of goods (other than mobile goods) and chattel
paper a security interest in which is perfected by possession, is governed by
the law of the jurisdiction in which the goods or the chattel paper are located
when the last event on which is based the assertion that the security interest
is perfected or unperfected occurs and (b) collateral consisting of accounts,
general intangibles, mobile goods and chattel paper a security interest in which
is perfected by filing under the Uniform Commercial Code, is governed by the law
of the jurisdiction in which the debtor is located.

                  In arriving at the opinions expressed in numbered paragraph 17
above, we have assumed that (i) the Collateral Agent takes delivery of the
Pledged Securities for the benefit of the Secured Parties, without notice of any
adverse claim, within the meaning of the NYUCC and (ii) each signature on any
endorsement or stock power is genuine and duly authorized. We have also assumed
that the Pledged Securities of any Person organized in a jurisdiction other than
a State of the United States constitute "securities" within the meaning of the
NYUCC.

                  We express no opinion with respect to the priority of the
Collateral Agent's security interests as against (x) any lien or claim arising
by operation of law that is given priority over perfected security interests or
(y) any lien or claim in favor of the United States or any agency or
instrumentality thereof, including without limitation any federal tax liens or
liens arising under ERISA, or claims given priority pursuant to 31 U.S.C.
Section 3713. In addition, insofar as the security interest secures "future
advances" within the meaning of the NYUCC, the priority of such security
interest will be subject to the limitations set forth in Sections 9-301(4) and
9-312(7) of the NYUCC.

                  We express no opinion with respect to Article 9 Collateral of
a type described in Section 9-401(1)(a) or (b) of the NYUCC or represented by a
certificate of title.

                  Insofar as the foregoing opinions relate to the valid
existence and good standing of the Company, Holdings or any Subsidiary, they are
based solely on the certificates of good standing received from the Secretary of
State of the State of Delaware. Insofar as the foregoing opinions relate to the
validity, binding effect or enforceability of any agreement or obligation of any
Loan Party or the creation or perfection of any security interests, we have
assumed that each party to such agreement or obligation has satisfied those
legal requirements that are applicable to it to the extent necessary to make
such agreement or obligation enforceable against it (except that no such
assumption is made as to the Company, Holdings or any Subsidiary regarding
matters of the federal law of the United States of America, the law of the State
of New York, the General Corporation Law of the State of Delaware or the Limited
Liability Company Act of the State of Delaware). The foregoing opinions are also
subject to applicable bankruptcy, insolvency, fraudulent conveyance and similar
laws affecting creditors' rights generally and to general principles of equity.
In addition, certain of the remedial provisions of the Loan Documents may be
further limited or rendered unenforceable by other applicable laws or judicially
adopted principles which, however, in our judgment do not make the remedies
provided for therein (taken

                                       6
<PAGE>   138
as a whole) inadequate for the practical realization of the principal benefits
purported to be afforded thereby (except for the economic consequences of
procedural or other delay).

                  We note that the designations in (i) Section 9.09(b) of the
Amended and Restated Credit Agreement, (ii) Section 7.13(a) of the Security
Agreement, (iii) Section 18(a) of the Guarantee Agreement and (iv) Section 22(a)
of the Pledge Agreement, of the United States District Court of the Southern
District of New York, and any appellate court from any thereof as the venue for
actions or proceedings relating to the Amended and Restated Credit Agreement,
the Security Agreement, the Guarantee Agreement and the Pledge Agreement,
respectively are (notwithstanding the waiver in Section 9.09(c) of the Amended
and Restated Credit Agreement, Section 7.13(b) of the Security Agreement,
Section 18(b) of the Guarantee Agreement and Section 22(b) of the Pledge
Agreement) subject to the power of such courts to transfer actions pursuant to
28 U.S.C. Section 1404(a) or to dismiss such actions or proceedings on the
grounds that such a federal court is an inconvenient forum for such action or
proceeding.

                  With respect to (i) the first sentence of Section 9.09(b) of
the Amended and Restated Credit Agreement, (ii) the first sentence of Section
7.13(a) of the Security Agreement, (iii) the first sentence of Section 18(a) of
the Guarantee Agreement and (iv) the first sentence of Section 22(a) of the
Pledge Agreement, we express no opinion as to the subject matter jurisdiction of
any United States federal court to adjudicate any action relating to the Loan
Documents where jurisdiction based on diversity of citizenship under 28 U.S.C.
Section 1332 does not exist.

                  The foregoing opinions are limited to the federal law of the
United States of America, the law of the State of New York, the General
Corporation Law of the State of Delaware and the Limited Liability Company Act
of the State of Delaware.

                  We are furnishing this opinion letter to you solely for your
benefit in connection with the Loan Documents. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Notwithstanding the foregoing, a copy of this opinion letter may be furnished
to, and relied upon by, a permitted transferee who becomes a party to the
Amended and Restated Credit Agreement as a Lender thereunder, and you or any
such transferee may show this opinion to any governmental authority pursuant to
requirements of applicable law or regulations. The opinions expressed herein
are, however, rendered on and as of the date hereof, and we assume no obligation
to advise you or any such transferee or governmental authority or any other
person, or to make any investigations, as to any legal developments or factual
matters arising subsequent to the date hereof that might affect the opinions
expressed herein.

                                       7
<PAGE>   139
                                      Very truly yours,

                                      CLEARY, GOTTLIEB, STEEN & HAMILTON

                                      By______________________________________
                                           Stephen H. Shalen, a partner

                                       8
<PAGE>   140
                                  EXHIBIT B-1

            [Form of Opinion of Cleary, Gottlieb, Steen & Hamilton]

                                   SCHEDULE I

SCG International Development LLC

SCG (Malaysia SMP) Holding Corporation

SCG (Czech) Holding Corporation

SCG (China) Holding Corporation

Semiconductor Components Industries Puerto Rico, Inc.

                                      S-1
<PAGE>   141
                                    EXHIBIT A

1.   Reorganization Agreement by and among Motorola, Inc., Holdings and the
     Company dated as of May 11, 1999

2.   Transition Services Agreement between Motorola, Inc. and the Company dated
     as of July 31, 1999.

3.   Equipment Lease and Repurchase Agreement between Motorola, Inc. and the
     Company dated as of July 31, 1999.

4.   Equipment Passdown Agreement between Motorola, Inc. and the Company dated
     as of July 31, 1999.

5.   SCG Assembly Agreement between Motorola, Inc. and the Company dated as of
     July 31, 1999.

6.   SCG Foundry Agreement between Motorola, Inc. and the Company dated as of
     July 31, 1999.

7.   Motorola Assembly Agreement between Motorola, Inc. and the Company dated as
     of July 31, 1999.

8.   Motorola Foundry Agreement between Motorola, Inc. and the Company dated as
     of July 31, 1999.

9.   Employee Matters Agreement among Motorola, Inc., the Company and Holdings
     dated as of May 11, 1999.

10.  Amended and Restated Intellectual Property Agreement dated as of August 4,
     1999 among the Company and Motorola Inc.

11.  Indenture dated as of August 4, 1999 among the Company, Holdings and State
     Street Bank and Trust Company, as trustee.

                                      A-1
<PAGE>   142
                                  EXHIBIT B-2

                   [Form of McDermott, Will & Emery opinion]

                                                                 April 3, 2000

SCG Holding Corporation
5005 E. McDowell Road
M/D: C302
Phoenix, AZ 85008

     Re: Sale of Cherry Semiconductor Corporation

Ladies and Gentlemen:

     We have acted as counsel to the Cherry Corporation ("Company"), a Delaware
corporation, in connection with the preparation, execution and delivery of the
Stock Purchase Agreement, dated as of March 8, 2000, as amended by Letter
Agreement dated March 31, 2000 (the "Agreement") among the Company, SCG Holding
Corporation and Semiconductor Components Industries, LLC, a Delaware limited
liability company ("Buyer"), and certain other instruments and documents related
to the Agreement. This opinion is being delivered pursuant to Section 3.3(b) of
the Agreement. Capitalized terms used herein and not otherwise defined herein
shall have the same meanings herein as ascribed thereto in the Agreement.

     In our examination we have assumed the genuineness of all signatures
including endorsements, the legal capacity of natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such copies. As to any facts material
to this opinion which we did not independently establish or verify, we have
relied upon statements and representations of the Company, Cherry Semiconductor
Corporation, a Rhode Island corporation (the "Subsidiary"), and their respective
officers and other representatives and of public officials, including the facts
set forth in the Company Officer's Certificate and the Subsidiary Officer's
Certificate described below.

     In rendering opinions set forth herein, we have examined and relied on
originals or copies of the following:

     (a)  the Agreement;
<PAGE>   143
     (b)  certificate of the Company executed by the Chief Executive Officer of
the Company dated the date hereof a copy of which is attached as Exhibit A
hereto (the "Company Officer's Certificate");

     (c)  certificate of the Subsidiary executed by the President of the
Subsidiary dated the date hereof a copy of which is attached as Exhibit B hereto
(the "Subsidiary Officer's Certificate");

     (d)  copies of the Certificate of Incorporation and By-laws of the Company;

     (e)  copies of the Articles of Incorporation and By-laws of the Subsidiary;

     (f)  certified copies of certain resolutions of the Boards of Directors of
the Company and the Subsidiary regarding the Agreement and related matters; and

     (g)  certificates from public officials in the states of Delaware, Illinois
and Rhode Island as to the good standing of the Company in Delaware and Illinois
and the Subsidiary in Rhode Island.

     We have also examined such other corporate documents and records, and other
certificates, opinions and instruments and have conducted such investigation as
we have deemed necessary as a basis for the opinions expressed below. As to
factual matters relevant to our opinions, we have, without independent
verification, relied upon all of the foregoing.

     We are admitted to the Bar in the state of Illinois. We express no opinion
as to the laws of any jurisdiction other than (i) the laws of the State of
Illinois, (ii) the General Corporation Law of the State of Delaware, (iii) the
laws of the state of Rhode Island, (iv) the federal laws of the United States of
America to the extent specifically referred to herein, and (v) based solely on
the certificates of public officials previously identified with respect to our
opinion with respect to the Company's qualifications to do business and good
standing.

     Our opinions are subject to the following assumptions and qualifications:

     (a)  the Agreement constitutes the legal, valid and binding obligation of
each party to the Agreement (other than the Company) enforceable against such
parties (other than the Company) in accordance with its terms;

     (b)  we express no opinion as to the effect on the opinions herein stated
of (i) the compliance or non-compliance of any party (other than the Company) to
the Agreement with any state, federal or other laws or regulations applicable to
them or (ii) the legal or regulatory status or the nature of the business of
such other parties.

     (c)  In rendering our opinions expressed below, we express no opinion as to
the applicability or effect of any preference or similar law on the Agreement or
any transaction contemplated thereby;
<PAGE>   144
     (d)  In rendering our opinions expressed below, we express no opinion as
to the ordinances, statutes, administrative decisions, orders, rules and
regulations of any municipality, county or other political subdivision of any
state (as opposed to the laws of the state itself).

     (e)  For purposes of this opinion, we have assumed that the
representations and warranties of each of the parties to the Agreement are true
and correct (other than with respect to legal conclusions opined to herein).

     (f)  For purposes of this opinion, our knowledge is limited to the
knowledge of attorneys at McDermott, Will & Emery that have performed
significant services for the Company.

     Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:

          1.   The Company is validly existing and in good standing under the
   laws of the State of Delaware. Subsidiary is a corporation duly organized,
   validly existing and in good standing under the laws of the State of Rhode
   Island and has the requisite corporate power and authority to own, lease and
   operate its assets and properties and to carry on its business as it is now
   being conducted. Subsidiary is qualified to do business and is in good
   standing in each jurisdiction in which the properties owned, leased or
   operated by it or the nature of the business conducted by it makes such
   qualification necessary, except where the failure to be so qualified and in
   good standing will not have a Material Adverse Effect.

          2.   The Company has the corporate power and corporate authority to
   execute, deliver and perform all of its obligations under the Agreement. The
   execution and delivery of the Agreement and the consummation by the Company
   of the transactions contemplated thereby have been duly authorized by
   requisite corporate action on the part of the Company. The Agreement has been
   duly executed and delivered by the Company.

          3.   The Agreement constitutes the valid and binding obligation of the
   Company enforceable against the Company in accordance with its terms subject
   to the following qualifications;

               (i)  enforcement may be limited by applicable bankruptcy,
   insolvency, reorganization, moratorium or other similar laws affecting
   creditors' rights generally and by general principles of equity (regardless
   of whether enforcement is sought in equity or at law);

               (ii) we express no opinion as to: the enforceability of any
   rights to contribution or indemnification provided for in the Agreement which
   are violative of the public policy underlying any law, rule or regulation
   (including any federal or state securities law, rule or regulation);
<PAGE>   145
                (iii)     we express no opinion with respect to the
     enforceability of (a) Section 14.1 of the Agreement to the extent that it
     provides that provisions of the Agreement may only be waived in writing,
     (b) Section 12.2 of the Agreement to the extent that any recovery of
     attorneys' fees is limited to reasonable attorneys' fees, or (c) Section
     14.8 of the Agreement to the extent it states that the provisions of the
     Agreements are severable.

          4.   The execution and delivery by the Company of the Agreement and
     performance by the Company of its obligations under the Agreement in
     accordance with its terms, do not conflict with (i) the Certificate of
     Incorporation or By-laws of the Company or the Articles of Incorporation or
     By-laws of the Subsidiary, or (ii) any statute, law, rule, regulation,
     judgement, decree, order, or injunction of any governmental authority
     applicable to the Company or Subsidiary, or their respective properties or
     assets, except for such violations, conflicts, breaches, defaults,
     terminations, accelerations or creations of liens, security interests,
     charges or encumbrances that would not have a Material Adverse Effect.

          5.   No approval, authorization, order or consent of any court or
     regulatory body, or other governmental body, which has not been obtained or
     taken and is not in full force and effect, is required to authorize or is
     required in connection with the execution, delivery or performance of the
     Agreement by the Company except filings required by the Hart-Scott-Rodino
     Antitrust Improvements Act and, except for such violations, conflicts,
     breaches, defaults, terminations, accelerations or creations of liens,
     security interests, charges or encumbrances that would not have a Material
     Adverse Effect.

          6.   The authorized capital stock of the Subsidiary consists of
     250,000 shares of Subsidiary Common Stock. As of the date hereof, 160,190
     shares of Subsidiary Common Stock were issued and outstanding, all of which
     were validly issued and are fully paid, nonassessable and free of
     preemptive rights, and are owned of record by the Company. To our
     knowledge, the Company has good title to the Subsidiary Common Stock, free
     and clear of all liens, claims and encumbrances.

          7.   Except as set forth in the Agreement, there are no outstanding
     subscriptions, options, calls, contracts, commitments, understandings,
     restrictions, arrangements, rights of any kind or warrants, including any
     right of conversion or exchange under any outstanding security, instrument
     or other agreement, obligating the Subsidiary or the Company to issue,
     deliver or sell, or cause to be issued, delivered or sold, additional
     shares of the capital of the Subsidiary. There are no voting trusts,
     proxies or other agreements or understandings of any kind to which
     Subsidiary or the Company is a party or is bound with respect to the voting
     of any shares of capital stock of the Subsidiary.

     The opinions rendered herein are as of the date hereof. We assume no
obligation to update or supplement these opinions to reflect any facts which
may hereafter come to our attention or any changes in law which may hereafter
occur. This opinion is being furnished only
<PAGE>   146
to you and is solely for your benefit and is not to be used, circulated, quoted,
relied upon or otherwise referred to for any purpose or any other person without
our prior written consent, except that the Agents and Lenders under the Amended
and Restated Credit Agreement dated March 31, 2000 among SCG Holding
Corporation, Semiconductor Components Industries, LLC, the Lenders listed
therein, the Chase Manhattan Bank as Administrative Agent, Credit Lyonnais New
York Branch, DLJ Capital Funding, Inc., and Lehman Commercial Paper Inc. as
Co-documentation Agents may rely upon this letter with respect to the opinions
set forth in paragraphs 1, 2 and 3 above.

                                             Very truly yours,

                                             McDermott, Will & Emery
<PAGE>   147
                                                                       Exhibit A

                               CERTIFICATE OF THE
                           CHIEF EXECUTIVE OFFICER OF
                             THE CHERRY CORPORATION

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

The undersigned, being the duly elected, qualified and acting Chief Executive
Officer of The Cherry Corporation, a Delaware corporation (the "Company"), for
purposes of the opinions to be rendered by McDermott, Will & Emery in
connection with the sale by the Company of the common stock of Cherry
Semiconductor Corporation (the "Subsidiary") (unless otherwise defined herein,
all terms set forth herein have the same meaning ascribed to such terms in the
Stock Purchase Agreement (the "Agreement") dated as of March 8, 2000, as
amended by Letter Agreement dated March 31, 2000, by and among the Company, SCG
Holding Corporation, a Delaware corporation, and Semiconductor Components
Industries, LLC, a Delaware limited liability company), DOES HEREBY CERTIFY as
follows:

(a)  The authorized, issued and outstanding capital stock of the Subsidiary is
     as set forth under Section 3.2 of the Stock Purchase Agreement; none of the
     shares of capital stock of the Subsidiary is subject to preemptive rights,
     options, calls, subscriptions, restrictions, rights of any kind or
     warrants, including the right of conversion or exchange under any
     outstanding security, instrument or other agreement or other rights to
     subscribe for or purchase any of the Subsidiary Common Stock to be sold by
     the Company pursuant to the Agreement;

(b)  All of the issued and outstanding Subsidiary Common Stock is owned by the
     Company, and is held free and clear of all liens, encumbrances, equities,
     claims, security interests, voting trusts or other defects of title
     whatsoever;

(c)  Except as disclosed in or specifically contemplated by the Agreement, there
     are no other rights calling for the issuance of, and no commitments,
     understandings, plans or arrangements to issue, any shares of capital stock
     of the Subsidiary or any security convertible into or exchangeable for
     capital stock of the Subsidiary;

(d)  There are no voting trusts, proxies, or other agreements or understandings
     of any kind to which Subsidiary or the Company is a party or is bound with
     respect to Subsidiary Common Stock;

(e)  There are no legal or governmental actions, suits or proceedings pending or
     threatened against the Company or the Subsidiary;

(f)  Except as scheduled to the Agreement, there are material legal suits,
     actions or proceedings to which the Subsidiary is a party;

(g)  To my knowledge, the Company and the Subsidiary are in compliance with all
     laws, rules, regulations, judgments, decrees, orders and statutes of any
     court or jurisdiction to which they are subject; and

(h)  The representations and warranties of the Company set forth in Section 4 of
     the Agreement are true and correct as of the date hereof.

(i)  Attached hereto are true and correct copies of the Certificate of
     Incorporation and Bylaws of the Company.
<PAGE>   148
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
           day of           , 2000.

                                                         -----------------------
                                                         Peter B. Cherry
                                                         Chief Executive Officer
<PAGE>   149
                                                                       Exhibit B

                               CERTIFICATE OF THE
                                  PRESIDENT OF
                        CHERRY SEMICONDUCTOR CORPORATION

The undersigned, being the duly elected, qualified and acting President of
Cherry Semiconductor Corporation, a Rhode Island corporation (the
"Subsidiary"), for purposes of the opinions to be rendered by McDermott, Will &
Emery in connection with the sale by The Cherry Corporation (the "Company") of
the common stock of Cherry Semiconductor Corporation (unless otherwise defined
herein, all terms set forth herein have the same meaning ascribed to such terms
in the Stock Purchase Agreement (the "Agreement") dated as of March 8, 2000, as
amended by Letter Agreement dated March 31, 2000, by and among The Cherry
Corporation, SCG Holding Corporation, a Delaware corporation, and
Semiconductor Components Industries, LLC, a Delaware limited liability
company), DOES HEREBY CERTIFY as follows:

(a) The authorized, issued and outstanding capital stock of the Subsidiary is as
    set forth under Section 3.2 of the Stock Purchase Agreement; none of the
    shares of capital stock of the Subsidiary is subject to preemptive rights,
    options, calls, subscriptions, restrictions, rights of any kind or warrants,
    including the right of conversion or exchange under any outstanding
    security, instrument or other agreement or other rights to subscribe for or
    purchase any of the Subsidiary Common Stock to be sold by the Company
    pursuant to the Agreement;

(b) All of the issued and outstanding Subsidiary Common Stock is owned by the
    Company, and is held free and clear of all liens, encumbrances, equities,
    claims, security interests, voting trusts or other defects of title
    whatsoever;

(c) Except as disclosed in or specifically contemplated by the Agreement, there
    are no other rights calling for the issuance of, and no commitments,
    understandings, plans or arrangements to issue, any shares of capital stock
    of the Subsidiary or any security convertible into or exchangeable for
    capital stock of the Subsidiary;

(d) There are no voting trusts, proxies, or other agreements or understandings
    of any kind to which Subsidiary or the Company is a party or is bound with
    respect to Subsidiary Common Stock;

(e) There are no legal or governmental actions, suits or proceedings pending or
    threatened against the Company or the Subsidiary;

(f) Except as scheduled to the Agreement, there are material legal suits,
    actions or proceedings to which the Subsidiary is a party;

(g) To my knowledge, the Company and Subsidiary are in compliance with all laws,
    rules, regulations, judgments, decrees, orders and statutes of any court or
    jurisdiction to which they are subject; and

(h) The representations and warranties of the Company set forth in Section 4 of
    the Agreement are true and correct as of the date hereof.

(i) Attached hereto are true and correct copies of the Certificate of
    Incorporation and Bylaws of the Subsidiary.

<PAGE>   150
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
______ day of _______________, 2000.

                                        --------------------------
                                        Alfred Budnick
                                        President
<PAGE>   151

                                                                       Exhibit C

                                            GUARANTEE AGREEMENT dated as of
                                    August 4, 1999, among SCG HOLDING
                                    CORPORATION, a Delaware corporation
                                    ("Holdings"), each of the subsidiaries
                                    listed on Schedule I hereto (each such
                                    subsidiary individually, a "Subsidiary" and,
                                    collectively, the "Subsidiaries"; and each
                                    such Subsidiary and Holdings, individually,
                                    a "Guarantor" and, collectively, the
                                    "Guarantors") and THE CHASE MANHATTAN BANK,
                                    a New York banking corporation ("Chase"), as
                                    collateral agent (the "Collateral Agent")
                                    for the Secured Parties (as defined in the
                                    Security Agreement).

         Reference is made to the Credit Agreement dated as of August 4, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Semiconductor Components Industries, LLC, a Delaware limited
liability company (the "Borrower"), Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents. Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit Agreement.

         The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiaries is a direct or indirect subsidiary of
Holdings and acknowledges that it will derive substantial benefit from the
making of the Loans by the Lenders and the issuance of Letters of Credit by the
Issuing Bank. The obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned on, among other things, the
execution and delivery by the Guarantors of a Guarantee Agreement in the form
hereof. As consideration therefor and in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit, the Guarantors are
willing to execute this Agreement.

         Accordingly, the parties hereto agree as follows:
<PAGE>   152
                                                                               2

         SECTION 1. Guarantee. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (a) the due and punctual payment of (i) the principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when and
as due, including payments in respect of reimbursement of disbursements made by
the Issuing Bank with respect thereto, interest thereon and obligations to
provide, under certain circumstances, cash collateral in connection therewith
and (iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Loan Parties to the Secured
Parties under the Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of the Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) unless otherwise agreed to in writing by the applicable Lender
party thereto, the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any of
its Affiliates and arising from treasury, depositary and cash management
services in connection with any automated clearing house transfers of funds (all
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being collectively called the "Obligations"). Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligation.

         SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each Guarantor hereunder
shall not be affected by (a) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce or exercise any right
or remedy against the Borrower or any Guarantor under the provisions of the
Credit Agreement, any other Loan Document or otherwise; (b) any recision, waiver
(except the effect of any waiver obtained pursuant to Section 12(b)), amendment
or modification of, or any release from any terms or provisions of any other
Loan Document, any other Guarantee or any other agreement, including with
respect to any other Guarantor under this Agreement, or (c) the failure to
perfect any security interest in, or release of, any of the security held by or
on behalf of the Collateral Agent or any other Secured Party.

         SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other Guarantors or other
obligors.
<PAGE>   153
                                                                               3

         SECTION 4. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other Person.

         SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any waiver or
modification of any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Collateral Agent or any other Secured Party, or by any other
act or omission that may or might in any manner or to any extent vary the risk
of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations).

         SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final and indefeasible payment in full
in cash of the Obligations. The Collateral Agent and the other Secured Parties
may, at their election, foreclose on any security held by one or more of them by
one or more judicial or nonjudicial sales, accept an assignment of any such
security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Borrower or any other
guarantor or exercise any other right or remedy available to them against the
Borrower or any other guarantor, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law,
each of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor against the Borrower or any other Guarantor or guarantor, as the
case may be, or any security.

         SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
or such other Secured Party as designated thereby in cash the amount of such
unpaid Obligations. Upon payment by any Guarantor of any sums to the Collateral
Agent or any Secured Party as provided above, all rights
<PAGE>   154
                                                                               4

of such Guarantor against the Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. If any amount shall
erroneously be paid to any Guarantor on account of such subrogation,
contribution, reimbursement, indemnity or similar right, such amount shall be
held in trust for the benefit of the Secured Parties and shall forthwith be paid
to the Collateral Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.

         SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.

         SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct in all
material respects.

         SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Bank has no further obligation
to issue Letters of Credit under the Credit Agreement and (b) shall continue to
be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Obligation is rescinded or must otherwise be restored
by any Secured Party or any Guarantor upon the bankruptcy or reorganization of
the Borrower, any Guarantor or otherwise.

         SECTION 11. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Collateral Agent, and a counterpart
hereof shall have been executed on behalf of the Collateral Agent, and
thereafter shall be binding upon such Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). In the event that a Guarantor ceases
to be a Subsidiary pursuant to a transaction permitted under the Loan Documents,
such Guarantor shall be released from its obligations under this Agreement
without further action. This Agreement shall be construed as a separate
agreement with respect to each Guarantor and may be amended, modified,
supplemented, waived or released with respect to any Guarantor without the
approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
<PAGE>   155
                                                                               5

         SECTION 12. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.

         (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantors with respect to which such waiver, amendment or modification
relates and the Collateral Agent, subject to any consent required in accordance
with Section 9.02 of the Credit Agreement.

         SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it at
its address or telecopy number set forth in Schedule I, with a copy to the
Borrower.

         SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid and as long as the Commitments have not been terminated
or the LC Exposure does not equal zero.

         (b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
<PAGE>   156
                                                                               6

         SECTION 16. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective as
provided in Section 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.

         SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.

         SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.

         (b) Each Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

         (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         SECTION 19. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
<PAGE>   157
                                                                               7

         SECTION 20. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
into this Agreement as a Guarantor upon becoming a Subsidiary Loan Party. Upon
execution and delivery after the date hereof by the Collateral Agent and such a
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become
a Guarantor hereunder with the same force and effect as if originally named as a
Guarantor herein. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any other Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Guarantor as a party to this Agreement.

         SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor then existing under this Agreement and the other
Loan Documents held by such Secured Party, irrespective of whether or not such
Secured Party shall have made any demand under this Agreement or any other Loan
Document. The rights of each Secured Party under this Section 21 are in addition
to other rights and remedies (including any other rights of setoff) which such
Secured Party may have.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                       SCG HOLDING CORPORATION,

                                       By_________________________________
                                       Name:   Jean-Jacques Morin
                                       Title:   Vice President

                                       EACH OF THE SUBSIDIARIES LISTED ON
                                       SCHEDULE I HERETO,

                                       By: ____________________________
                                       Name:   Jean-Jacques Morin
                                       Title:   Vice President

<PAGE>   158
                                                                               8

                                       THE CHASE MANHATTAN BANK, as
                                       Collateral Agent,

                                       By_________________________________
                                       Name:
                                       Title:
<PAGE>   159
                                                               Schedule I to the
                                                             Guarantee Agreement

            Guarantor                                            Address
            ---------                                            -------
      1.
      2.
      3.
      4.
      5.
      6.
<PAGE>   160
                                                                  Annex 1 to the
                                                             Guarantee Agreement

                           SUPPLEMENT NO. [ ] dated as of [ ], to the Guarantee
               Agreement dated as of August 4, 1999, among SCG HOLDING
               CORPORATION, a Delaware corporation ("Holdings"), each of the
               subsidiaries listed on Schedule I thereto (each such subsidiary
               individually, a "Subsidiary" and, collectively, the
               "Subsidiaries"; and each such Subsidiary and Holdings,
               individually, a "Guarantor" and, collectively, the "Guarantors"),
               and THE CHASE MANHATTAN BANK, a New York banking corporation, as
               collateral agent (the "Collateral Agent") for the Secured Parties
               (as defined in the Security Agreement).

      A. Reference is made to the Credit Agreement dated as of August 4, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Semiconductor Components Industries, LLC, a Delaware limited
liability company (the "Borrower"), Holdings, the lenders from time to time
party thereto (the "Lenders"), The Chase Manhattan Bank, as administrative agent
for the Lenders (in such capacity, the "Administrative Agent"), and Credit
Lyonnais New York Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper
Inc., as co-documentation agents.

      B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guarantee Agreement and the
Credit Agreement.

      C. The Guarantors have entered into the Guarantee Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party that was not in existence or not a Subsidiary Loan Party on the date of
the Credit Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary Loan Party. Section 20 of the Guarantee
Agreement provides that additional Subsidiaries may become Guarantors under the
Guarantee Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the "New Guarantor") is executing
this Supplement in accordance with the requirements of the Credit Agreement to
become a Guarantor under the Guarantee Agreement in order to induce the Lenders
to make additional Loans and the Issuing Bank to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.

      Accordingly, the Collateral Agent and the New Guarantor agree as follows:

      SECTION 1. In accordance with Section 20 of the Guarantee Agreement, the
New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof
except to the extent a representation and warranty expressly relates solely to a
specific date in which case such representation and warranty shall be true and
correct on such date. Each reference to a "Guarantor" in the Guarantee Agreement
shall be deemed to include the New Guarantor. The Guarantee Agreement is hereby
incorporated herein by reference.
<PAGE>   161
      SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

      SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.

      SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.

      SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect
the validity of such provision in any other jurisdiction). The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

      SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.

      SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its out-of-pocket expenses in connection with this Supplement, including the
reasonable fees, disbursements and other charges of counsel for the Collateral
Agent.
<PAGE>   162
                                                                               3

      IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Guarantee Agreement as of the day and year first
above written.

                                      [NAME OF NEW GUARANTOR],

                                      By_______________________________________
                                      Name:
                                      Title:
                                      Address:

                                      THE CHASE MANHATTAN BANK, as Collateral
                                      Agent,

                                      By_______________________________________
                                      Name:
                                      Title:
<PAGE>   163
                                                                       Exhibit D

                                           INDEMNITY, SUBROGATION and
                                    CONTRIBUTION AGREEMENT dated as of August 4,
                                    1999, among SEMICONDUCTOR COMPONENTS
                                    INDUSTRIES, LLC, a Delaware limited
                                    liability company (the "Borrower"), each
                                    subsidiary of SCG Holding Corporation, a
                                    Delaware corporation ("Holdings"), listed on
                                    Schedule I hereto (each such subsidiary
                                    individually, a "Subsidiary" and, each such
                                    Subsidiary and Holdings, individually, a
                                    "Guarantor" and, collectively, the
                                    "Guarantors") and THE CHASE MANHATTAN BANK,
                                    a New York banking corporation ("Chase"), as
                                    collateral agent (in such capacity, the
                                    "Collateral Agent") for the Secured Parties
                                    (as defined in the Security Agreement).

         Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents, and (b) the Guarantee Agreement. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement.

         The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Guarantors have guaranteed the Obligations (as defined in
the Guarantee Agreement) pursuant to the Guarantee Agreement; the Guarantors
have granted Liens on and security interests in certain of their assets to
secure such guarantees pursuant to (a) the Pledge Agreement and (b) the Security
Agreement. The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit are conditioned on, among other things, the execution
and delivery by the Borrower and the Guarantors of an agreement in the form
hereof.

         Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:

         SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but
subject to Section 3), the Borrower agrees that (a) in the event a payment shall
be made by any Guarantor under the Guarantee Agreement, the Borrower shall
indemnify such Guarantor for the full amount of such payment and such Guarantor
shall be subrogated to the rights of the Person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party, the Borrower shall indemnify such Guarantor in an amount
equal to the greater of the book value or the fair market value of the assets so
sold.

         SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other
<PAGE>   164
                                                                               2

Guarantor under the Guarantee Agreement or assets of any other Guarantor shall
be sold pursuant to any Security Document to satisfy a claim of any Secured
Party and such other Guarantor (the "Claiming Guarantor") shall not have been
fully indemnified by the Borrower as provided in Section 1, the Contributing
Guarantor shall indemnify the Claiming Guarantor in an amount equal to the
amount of such payment or the greater of the book value or the fair market value
of such assets, as the case may be, in each case multiplied by a fraction of
which the numerator shall be the net worth of the Contributing Guarantor on the
date hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 12, the date of the Supplement hereto executed and
delivered by such Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights
of such Claiming Guarantor under Section 1 to the extent of such payment.

         SECTION 3. Subordination. Notwithstanding any provision of this
Agreement to the contrary, all rights of each of the Guarantors under Sections 1
and 2 and all other rights of each of the Guarantors in respect of indemnity,
contribution or subrogation from any other Loan Party under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of all Obligations which are then due and payable whether at maturity, by
acceleration or otherwise. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or any other
payments required under applicable law or otherwise) shall in any respect limit
the obligations and liabilities of any Guarantor with respect to its obligations
hereunder, and each Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.

         SECTION 4. Termination. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been
indefeasibly paid in full in cash, and so long as the LC Exposure has not been
reduced to zero, the Issuing Bank is still obligated to issue Letters of Credit
under the Credit Agreement and any of the Commitments under the Credit Agreement
have not been terminated, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any
Obligation is rescinded or must otherwise be restored by any Secured Party or
any Guarantor upon the bankruptcy or reorganization of the Borrower, any
Guarantor or otherwise.

         SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.

         (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and the
<PAGE>   165
                                                                               3

Collateral Agent, subject to any consent required in accordance with Section
9.02 of the Credit Agreement.

         SECTION 7. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Guarantee Agreement and addressed as
specified therein.

         SECTION 8. Binding Agreement; Assignments. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Neither the Borrower nor any Guarantor may assign or transfer any of
its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the consent required in accordance with Section
9.02 of the Credit Agreement. Notwithstanding the foregoing, at the time any
Guarantor is released from its obligations under the Guarantee Agreement in
accordance with such Guarantee Agreement and the Credit Agreement, such
Guarantor will cease to have any rights or obligations under this Agreement.

         SECTION 9. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loans or any
other fee or amount payable under the Credit Agreement or this Agreement or
under any of the other Loan Documents is outstanding and unpaid and as long as
the Commitments have not been terminated or the LC Exposure does not equal zero.

         (b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

         SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

         SECTION 11. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
<PAGE>   166
                                                                               4

         SECTION 12. Additional Guarantors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
into the Guarantee Agreement as a Guarantor upon becoming a Subsidiary Loan
Party. Upon execution and delivery, after the date hereof, by the Collateral
Agent and such a Subsidiary of an instrument in the form of Annex 1 hereto, such
Subsidiary shall become a Guarantor hereunder with the same force and effect as
if originally named as a Guarantor hereunder. The execution and delivery of any
instrument adding an additional Guarantor as a party to this Agreement shall not
require the consent of any Guarantor hereunder. The rights and obligations of
each Guarantor hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Agreement.
<PAGE>   167
                                                                               5

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.

                                      SEMICONDUCTOR COMPONENTS
                                      INDUSTRIES, LLC.,

                                      By_________________________________
                                      Name:   Jean-Jacques Morin
                                      Title:   Vice President

                                      EACH OF THE OTHER SUBSIDIARIES
                                      LISTED ON SCHEDULE I HERETO, as a
                                      Guarantor,

                                      By_________________________________
                                      Name:   Jean-Jacques Morin
                                      Title:   Vice President

                                      THE CHASE MANHATTAN BANK, as
                                      Collateral Agent,

                                      By________________________________
                                      Name:
                                      Title:
<PAGE>   168
                                                               Schedule I to the
                                                      Indemnity, Subrogation and
                                                          Contribution Agreement

                                   GUARANTORS

                 Guarantor                                    Address
                 ---------                                    -------
      1.
      2.
      3.
      4.
      5.
      6.
<PAGE>   169
                                                                  Annex 1 to the
                                                      Indemnity, Subrogation and
                                                          Contribution Agreement

                           SUPPLEMENT NO. [          ] dated as of [          ],
               to the Indemnity, Subrogation and Contribution Agreement dated as
               of August 4, 1999 (as the same may be amended, supplemented or
               otherwise modified from time to time, the "Indemnity, Subrogation
               and Contribution Agreement"), among SEMICONDUCTOR COMPONENTS
               INDUSTRIES, LLC, a Delaware limited liability company (the
               "Borrower"), each subsidiary of SCG Holding Corporation, a
               Delaware corporation ("Holdings"), listed on Schedule I thereto
               (each such subsidiary individually, a "Subsidiary" and, each such
               Subsidiary and Holdings, individually, a "Guarantor" and,
               collectively, the "Guarantors"), and THE CHASE MANHATTAN BANK, a
               New York banking corporation ("Chase"), as collateral agent (the
               "Collateral Agent") for the Secured Parties (as defined in the
               Security Agreement).

      A. Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, SCG Holding Corporation, the lenders
from time to time party thereto (the "Lenders"), Chase, as administrative agent
for the Lenders (in such capacity, the "Administrative Agent"), and Credit
Lyonnais New York Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper
Inc., as co-documentation agents, and (b) the Guarantee Agreement.

      B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.

      C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary Loan Party that was not in existence or
not a Subsidiary Loan Party on the date of the Credit Agreement is required to
enter into the Indemnity, Subrogation and Contribution Agreement as a Guarantor
upon becoming a Subsidiary Loan Party. Section 12 of the Indemnity, Subrogation
and Contribution Agreement provides that additional Subsidiaries may become
Guarantors under the Indemnity, Subrogation and Contribution Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Guarantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Guarantor
under the Indemnity, Subrogation and Contribution Agreement in order to induce
the Lenders to make additional Loans and the Issuing Bank to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
<PAGE>   170
      Accordingly, the Collateral Agent and the New Guarantor agree as follows:

      SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation and
Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.

      SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

      SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.

      SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.

      SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

      SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature
below, with a copy to the Borrower.

      SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>   171
                                                                               3

      IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have duly
executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.

                                     [NAME OF NEW GUARANTOR],

                                     By_______________________________________
                                     Name:
                                     Title:
                                     Address:

                                     THE CHASE MANHATTAN BANK, as Collateral
                                     Agent,

                                     By_______________________________________
                                     Name:
                                     Title:
<PAGE>   172
                                                Schedule I to Supplement No. [ ]
                                               to the Indemnity, Subrogation and
                                                          Contribution Agreement

                                    GUARANTOR

Name                                Address
----                                -------

<PAGE>   173
                                                                  EXECUTION COPY

                                                                       Exhibit E

                                         PLEDGE AGREEMENT dated as of August 4,
                                 1999, among SEMICONDUCTOR COMPONENTS
                                 INDUSTRIES, LLC, a Delaware limited liability
                                 company (the "Borrower"), SCG HOLDING
                                 CORPORATION, a Delaware corporation
                                 ("Holdings"), each subsidiary of Holdings
                                 listed on Schedule I hereto (each such
                                 subsidiary individually a "Subsidiary Pledgor"
                                 and collectively, the "Subsidiary Pledgors";
                                 the Borrower, Holdings and the Subsidiary
                                 Pledgors are referred to herein individually as
                                 a "Pledgor" and collectively as the "Pledgors")
                                 and THE CHASE MANHATTAN BANK, a New York
                                 banking corporation ("Chase"), as collateral
                                 agent (in such capacity, the "Collateral Agent
                                 ") for the Secured Parties (as defined in the
                                 Security Agreement).

         Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents, and (b) the Guarantee Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement") among Holdings, the Subsidiary Pledgors and the
Collateral Agent. Capitalized terms used herein and not defined herein shall
have meanings assigned to such terms in the Credit Agreement.

      The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Pledgors have agreed to guarantee, among other things, all
the obligations of the Borrower under the Credit Agreement. The obligations of
the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are
conditioned upon, among other things, the execution and delivery by the Pledgors
of a Pledge Agreement in the form hereof to secure (a) the due and punctual
payment of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements made by the Issuing Bank
with respect thereto, interest thereon and obligations to provide under certain
circumstances, cash collateral in connection therewith and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) unless otherwise agreed to in writing by the applicable Lender
party thereto, the due and punctual payment and performance of all obligations
of the Borrower or any other Loan Party, monetary or otherwise, under each
Hedging Agreement entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Hedging Agreement was entered into and
(d) the due and punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the Administrative Agent or any of
its Affiliates and arising from treasury, depositary and cash management
services in connection with any automated clearing house transfers of funds (all
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being referred to collectively as the "Obligations").
<PAGE>   174
                                                                               2

      Accordingly, the Pledgors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:

      SECTION 1. Pledge. As security for the payment and performance, as the
case may be, in full of the Obligations, each Pledgor hereby pledges and grants
to the Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of such Pledgor's right, title and
interest in, to and under (a) the Equity Interests owned by it which are listed
on Schedule II hereto and any Equity Interests obtained in the future by such
Pledgor and the certificates representing all such Equity Interests (the
"Pledged Interests"); provided that (i) the Pledged Interests shall not include
more than 65% of the issued and outstanding voting stock of any Foreign
Subsidiary, (ii) the Pledged Interests shall not include any Equity Interests in
any Foreign Joint Venture Company to the extent that such a Pledge is prohibited
by the constitutive documents of such Foreign Joint Venture Company or (iii) to
the extent that applicable law requires that a Subsidiary of such Pledgor issue
directors' qualifying shares, such qualifying shares; (b)(i) the debt securities
owned by it which are listed opposite the name of such Pledgor on Schedule II
hereto, (ii) any debt securities in the future issued to such Pledgor and (iii)
the promissory notes and any other instruments evidencing such debt securities
(the "Pledged Debt Securities"); (c) all other property that may be delivered to
and held by the Collateral Agent pursuant to the terms hereof; (d) subject to
Section 5, all payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed, in respect of, in exchange for or upon the conversion of the
securities referred to in clauses (a) and (b) above; (e) subject to Section 5,
all rights and privileges of such Pledgor with respect to the securities and
other property referred to in clauses (a), (b), (c) and (d) above; and (f) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(f) above being collectively referred to as the "Collateral"). Upon delivery to
the Collateral Agent, (a) any Pledged Interests, any Pledged Debt Securities or
any stock certificates, notes or other securities now or hereafter included in
the Collateral (the "Pledged Securities") shall be accompanied by stock powers
duly executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities theretofore and
then being pledged hereunder, which schedule shall be attached hereto as
Schedule II and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.

      TO HAVE AND TO HOLD the Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral Agent, its successors and assigns, for the ratable benefit
of the Secured Parties, forever; subject, however, to the terms, covenants and
conditions hereinafter set forth.

      SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees promptly to
deliver or cause to be delivered to the Collateral Agent any and all Pledged
Securities, and any and all certificates or other instruments or documents
representing the Collateral.

      (b) Each Pledgor will cause any Indebtedness for borrowed money owed to
the Pledgor by any Person to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.
<PAGE>   175
                                                                               3

      SECTION 3. Representations, Warranties and Covenants. Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:

         (a) the Pledged Interests represent that percentage as set forth on
      Schedule II of the issued and outstanding shares of each class of the
      Equity Interests of the issuer with respect thereto;

         (b) except for the security interest granted hereunder, such Pledgor
      (i) is and will at all times continue to be the direct owner, beneficially
      and of record, of the Pledged Securities indicated on Schedule II, (ii)
      holds the same free and clear of all Liens, (iii) will make no assignment,
      pledge, hypothecation or transfer of, or create or permit to exist any
      security interest in or other Lien on, the Collateral, other than pursuant
      hereto, and (iv) subject to Section 5, will cause any and all Collateral,
      whether for value paid by such Pledgor or otherwise, to be forthwith
      deposited with the Collateral Agent and pledged or assigned hereunder;

         (c) such Pledgor (i) has the power and authority to pledge the
      Collateral in the manner hereby done or contemplated and (ii) will defend
      its title or interest thereto or therein against any and all Liens (other
      than the Lien created by this Agreement), however arising, of all Persons
      whomsoever;

         (d) no consent of any other Person (including stockholders or creditors
      of any Pledgor) and no consent or approval of any Governmental Authority
      or any securities exchange was or is necessary to the validity of the
      pledge effected hereby;

         (e) by virtue of the execution and delivery by the Pledgors of this
      Agreement, when the Pledged Securities, certificates or other documents
      representing or evidencing the Collateral are delivered to the Collateral
      Agent in accordance with this Agreement, the Collateral Agent will have a
      valid and perfected first lien upon and security interest in such Pledged
      Securities as security for the payment and performance of the Obligations;

         (f) the pledge effected hereby is effective to vest in the Collateral
      Agent, on behalf of the Secured Parties, the rights of the Collateral
      Agent in the Collateral as set forth herein;

         (g) all of the Pledged Interests have been duly authorized and validly
      issued and are fully paid and nonassessable;

         (h) all information set forth herein relating to the Pledged Interests
      is accurate and complete in all material respects as of the date hereof;
      and

         (i) the pledge of the Pledged Interests pursuant to this Agreement does
      not violate Regulation T, U or X of the Federal Reserve Board or any
      successor thereto as of the date hereof.

      SECTION 4. Registration in Nominee Name; Denominations. The Collateral
Agent, on behalf of the Secured Parties, shall have the right (in its sole and
absolute discretion) to hold the Pledged Securities in its own name as pledgee,
the name of its nominee (as pledgee or as subagent) or the name of the Pledgors,
endorsed or assigned in blank or in favor of the Collateral Agent. Each Pledgor
will promptly give to the Collateral Agent copies of any notices or other
communications received by it with respect to Pledged Securities registered in
the name of such Pledgor. The Collateral Agent shall at all times have the right
to exchange the certificates representing Pledged Securities for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.
<PAGE>   176
                                                                               4

      SECTION 5. Voting Rights; Dividends and Interest, etc. (a) Unless and
until an Event of Default shall have occurred and be continuing:

         (i) Each Pledgor shall be entitled to exercise any and all voting
      and/or other consensual rights and powers inuring to an owner of Pledged
      Securities or any part thereof for any purpose consistent with the terms
      of this Agreement, the Credit Agreement and the other Loan Documents;
      provided, however, that such Pledgor will not be entitled to exercise any
      such right if the result thereof could materially and adversely affect the
      rights inuring to a holder of the Pledged Securities or the rights and
      remedies of any of the Secured Parties under this Agreement or the Credit
      Agreement or any other Loan Document or the ability of the Secured Parties
      to exercise the same.

         (ii) The Collateral Agent shall execute and deliver to each Pledgor, or
      cause to be executed and delivered to each Pledgor, all such proxies,
      powers of attorney and other instruments as such Pledgor may reasonably
      request for the purpose of enabling such Pledgor to exercise the voting
      and/or consensual rights and powers it is entitled to exercise pursuant to
      subparagraph (i) above and to receive the cash dividends it is entitled to
      receive pursuant to subparagraph (iii) below.

         (iii) Each Pledgor shall be entitled to receive and retain any and all
      cash dividends, interest and principal paid on the Pledged Securities to
      the extent and only to the extent that such cash dividends, interest and
      principal are permitted by, and otherwise paid in accordance with, the
      terms and conditions of the Credit Agreement, the other Loan Documents and
      applicable laws. All noncash dividends, interest and principal, and all
      dividends, interest and principal paid or payable in cash or otherwise in
      connection with a partial or total liquidation or dissolution, return of
      capital, capital surplus or paid-in surplus, and all other distributions
      (other than distributions referred to in the preceding sentence) made on
      or in respect of the Pledged Securities, whether paid or payable in cash
      or otherwise, whether resulting from a subdivision, combination or
      reclassification of the outstanding capital stock of the issuer of any
      Pledged Securities or received in exchange for Pledged Securities or any
      part thereof, or in redemption thereof, or as a result of any merger,
      consolidation, acquisition or other exchange of assets to which such
      issuer may be a party or otherwise, shall be and become part of the
      Collateral, and, if received by any Pledgor, shall not be commingled by
      such Pledgor with any of its other funds or property but shall be held
      separate and apart therefrom, shall be held in trust for the benefit of
      the Collateral Agent and shall be forthwith delivered to the Collateral
      Agent in the same form as so received (with any necessary endorsement).

      (b) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to dividends, interest or principal that such Pledgor
is authorized to receive pursuant to paragraph (a)(iii) above shall cease, and
all such rights shall thereupon become vested in the Collateral Agent, which
shall subject to the provisions of this paragraph (b) have the sole and
exclusive right and authority to receive and retain such dividends, interest or
principal. All dividends, interest or principal received by the Pledgor
contrary to the provisions of this Section 5 shall be held in trust for the
benefit of the Collateral Agent, shall be segregated from other property or
funds of such Pledgor and shall be forthwith delivered to the Collateral Agent
upon demand in the same form as so received (with any necessary endorsement).
Any and all money and other property paid over to or received by the Collateral
Agent pursuant to the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 7. After all Events of Default have been cured or
waived, the Collateral Agent shall promptly repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.
<PAGE>   177
                                                                               5

      (c) Upon the occurrence and during the continuance of an Event of Default,
all rights of any Pledgor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section
5, and the obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 5, shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers, provided that, unless
otherwise directed by the Required Lenders, the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Pledgors to exercise such rights. After all Events of
Default have been cured or waived, each Pledgor will have the right to exercise
the voting and consensual rights and powers that it would otherwise be entitled
to exercise pursuant to the terms of paragraph (a)(i) above.

      SECTION 6. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to applicable regulatory and legal
requirements, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of any Pledgor, and, to the extent permitted by applicable
law, the Pledgors hereby waive all rights of redemption, stay, valuation and
appraisal any Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.

      The Collateral Agent shall give a Pledgor 10 days' prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of such Pledgor's Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid in full by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 6, any Secured Party
may bid for or purchase, free from any right of redemption, stay or appraisal on
the part of any Pledgor (all said rights being also hereby waived and released),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any Obligation then due and payable to it from such
Pledgor as a credit against the purchase price, and it may, upon compliance with
the terms of sale, hold, retain and dispose of such property without further
accountability to such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any
<PAGE>   178
                                                                               6

portion thereof shall be treated as a sale thereof, (b) the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and (c) such
Pledgor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Obligations paid in full. As an alternative to exercising
the power of sale herein conferred upon it, the Collateral Agent may proceed by
a suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.

      SECTION 7. Application of Proceeds of Sale. The Collateral Agent shall
apply the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:

         FIRST, to the payment of all costs and expenses incurred by the
      Administrative Agent or the Collateral Agent (in its capacity as such
      hereunder or under any other Loan Document) in connection with such
      collection or sale or otherwise in connection with this Agreement or any
      of the Obligations, including all court costs and the reasonable fees and
      expenses of its agents and legal counsel, the repayment of all advances
      made by the Collateral Agent hereunder or under any other Loan Document on
      behalf of any Pledgor and any other costs or expenses incurred in
      connection with the exercise of any right or remedy hereunder or under any
      other Loan Document;

         SECOND, to the payment in full of the Obligations (the amounts so
      applied to be distributed among the Secured Parties pro rata in accordance
      with the amounts of the Obligations owed to them on the date of any such
      distribution); and

         THIRD, to the Pledgors, their successors or assigns, or as a court of
      competent jurisdiction may otherwise direct.

      The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

      SECTION 8. Reimbursement of Collateral Agent. (a) Each Pledgor agrees to
pay upon demand to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees, other charges and disbursements of its
counsel and of any experts or agents, that the Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.

      (b) Without limitation of its indemnification obligations under the other
Loan Documents, each Pledgor agrees to indemnify the Collateral Agent and the
Indemnitees (as defined in Section 9.03 of the Credit Agreement) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations thereunder or the consummation of the other
transactions contemplated thereby or (ii) any claim, litigation, investigation
or
<PAGE>   179
                                                                               7

proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.

      (c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 8 shall remain operative and in full force and effect regardless
of the termination of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 8 shall be payable
on written demand therefor and shall bear interest at the rate specified in
Section 2.13(c) of the Credit Agreement.

      SECTION 9. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem necessary
or advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Pledgor, to ask for, demand,
sue for, collect, receive and give acquittance for any and all moneys due or to
become due under and by virtue of any Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the same;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the Collateral Agent,
or to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.

      SECTION 10. Waivers; Amendment. (a) No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent hereunder and of
the other Secured Parties under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Pledgor in any case shall entitle such Pledgor to any
other or further notice or demand in similar or other circumstances.

      (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between the
Collateral Agent and the Pledgor or Pledgors with respect to which such waiver,
amendment or modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
<PAGE>   180
                                                                               8

      SECTION 11. Securities Act, etc. In view of the position of the Pledgors
in relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act of 1933, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion, (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale, in either case in accordance with a valid exemption from
registration under the Federal Securities Laws. Each Pledgor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions. In
the event of any such sale, the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Pledged Securities at a price
that the Collateral Agent, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this Section 11 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.

      SECTION 12. Registration, etc. Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Securities at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its reasonable best efforts to take or to cause the
issuer of such Pledged Securities to take such action and prepare, distribute
and/or file such documents, as are required or advisable in the reasonable
opinion of counsel for the Collateral Agent to permit the public sale of such
Pledged Securities. Each Pledgor further agrees to indemnify, defend and hold
harmless the Collateral Agent, each other Secured Party, any underwriter and
their respective officers, directors, affiliates and controlling Persons from
and against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in any prospectus (or
any amendment or supplement thereto) or in any notification or offering
circular, or arises out of or is based upon any alleged omission to state a
material fact required to be stated therein or necessary to make the statements
in any thereof not misleading, except insofar as the same may have been caused
by any untrue statement or omission based upon information furnished in writing
to such Pledgor or the issuer of such Pledged Securities by the Collateral Agent
or any other Secured Party expressly for use therein. Each Pledgor further
agrees, upon such written request referred to above, to use its reasonable best
efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under
the Blue Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 12.
<PAGE>   181
                                                                               9

Each Pledgor acknowledges that there is no adequate remedy at law for failure by
it to comply with the provisions of this Section 12 and that such failure would
not be adequately compensable in damages, and therefore agrees that its
agreements contained in this Section 12 may be specifically enforced.

      SECTION 13. Security Interest Absolute. All rights of the Collateral Agent
hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).

      SECTION 14. Termination or Release. (a) This Agreement and the security
interests granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full and the Lenders have no further commitment to lend
under the Credit Agreement, the LC Exposure has been reduced to zero and the
Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.

      (b) Upon any sale or other transfer by any Pledgor of any Collateral that
is permitted under the Credit Agreement to any Person that is not a Pledgor, or,
upon the effectiveness of any written consent to the release of the security
interest granted hereby in any Collateral pursuant to Section 9.02 of the Credit
Agreement, the security interest in such Collateral shall be automatically
released.

      (c) In connection with any termination or release pursuant to paragraph
(a) or (b) or Section 17, the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 14 shall be without recourse to
or warranty by the Collateral Agent.

      SECTION 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it at the address or telecopy number set forth on Schedule I, with a copy to the
Borrower.

      SECTION 16. Further Assurances. Each Pledgor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or in order
better to assure and confirm unto the Collateral Agent its rights and remedies
hereunder.

      SECTION 17. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Pledgor that are contained in
this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to any Pledgor
when a counterpart hereof executed on behalf of such Pledgor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and
<PAGE>   182
                                                                              10

thereafter shall be binding upon such Pledgor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Pledgor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as expressly contemplated
by this Agreement or the other Loan Documents. In the event that a Pledgor
ceases to be a Subsidiary pursuant to a transaction permitted under the Loan
Documents, such Pledgor shall be released from its obligations under this
Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Pledgor and may be amended, modified,
supplemented, waived or released with respect to any Pledgor without the
approval of any other Pledgor and without affecting the obligations of any other
Pledgor hereunder.

      SECTION 18. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of Letters
of Credit by the Issuing Bank, regardless of any investigation made by the
Secured Parties or on their behalf, and shall continue in full force and effect
as long as any Obligation remains unpaid and as long as the Commitments have not
been terminated or the LC Exposure does not equal zero.

      (b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

      SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      SECTION 20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 17. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.

      SECTION 21. Rules of Interpretation. The rules of interpretation specified
in Section 1.03 of the Credit Agreement shall be applicable to this Agreement.
Section headings used herein are for convenience of reference only, are not part
of this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting this Agreement.

      SECTION 22. Jurisdiction; Consent to Service of Process. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that, to the extent permitted by applicable law, all claims in respect of
any such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions
<PAGE>   183
                                                                              11

by suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Collateral Agent or any other Secured
Party may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Pledgor or its properties in
the courts of any jurisdiction.

      (b) Each Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

      (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 15. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

      SECTION 23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

      SECTION 24. Additional Pledgors. Pursuant to Section 5.12 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
into this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary Loan
Party. Upon execution and delivery by the Collateral Agent and a Subsidiary of
an instrument in the form of Annex 1, such Subsidiary shall become a Subsidiary
Pledgor hereunder with the same force and effect as if originally named as a
Subsidiary Pledgor herein. The execution and delivery of such instrument shall
not require the consent of any Pledgor hereunder. The rights and obligations of
each Pledgor hereunder shall remain in full force and effect notwithstanding the
addition of any new Subsidiary Pledgor as a party to this Agreement.
<PAGE>   184
                                                                              12

      IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

                                      SEMICONDUCTOR COMPONENTS INDUSTRIES,
                                      LLC,

                                      By_______________________________________
                                        Name: Jean-Jacques Morin
                                        Title:   Vice President

                                      SCG HOLDING CORPORATION,

                                      By_______________________________________
                                        Name:   Jean-Jacques Morin
                                        Title:   Vice President

                                      EACH OF THE OTHER SUBSIDIARIES LISTED ON
                                      SCHEDULE I HERETO,

                                      By______________________________________
                                        Name:   Jean-Jacques Morin
                                        Title:   Vice President

                                      THE CHASE MANHATTAN BANK, as Collateral
                                      Agent,

                                      By_______________________________________
                                        Name:
                                        Title:
<PAGE>   185
                                                               Schedule I to the
                                                                Pledge Agreement

                               SUBSIDIARY PLEDGORS

<TABLE>
<CAPTION>
                   Name                              Address
                   ----                              -------

<S>                <C>                               <C>
      1.
      2.
      3.
      4.
      5.
      6.
</TABLE>
<PAGE>   186
                                                              Schedule II to the
                                                                Pledge Agreement

                     CAPITAL STOCK OR OTHER EQUITY INTERESTS

<TABLE>
<CAPTION>
                                                            Number and            Percentage
                                                            Class of              of
                                                            Shares                Shares
                                                            or Other              or Other
                 Number of           Registered             Equity                Equity
Issuer           Certificate            Owner               Interests             Interests
------           -----------         ----------             ---------             ---------
<S>              <C>                 <C>                    <C>                   <C>

</TABLE>

                                 DEBT SECURITIES

<TABLE>
<CAPTION>
                     Principal
Issuer               Amount                 Date of Note          Maturity Date
------               ---------              ------------          -------------
<S>                  <C>                    <C>                   <C>

</TABLE>
<PAGE>   187
                                                                  Annex 1 to the
                                                                Pledge Agreement

                         SUPPLEMENT NO. [ ] dated as of [ ], to the PLEDGE
              AGREEMENT dated as of August 4, 1999, among SEMICONDUCTOR
              COMPONENTS INDUSTRIES, LLC, a Delaware limited liability company
              (the "Borrower"), SCG HOLDING CORPORATION, a Delaware corporation
              ("Holdings"), and each subsidiary of Holdings listed on Schedule I
              thereto (each such subsidiary individually a "Subsidiary Pledgor"
              and collectively, the "Subsidiary Pledgors"; the Borrower,
              Holdings and the Subsidiary Pledgors are referred to herein
              individually as a "Pledgor" and collectively as the "Pledgors")
              and THE CHASE MANHATTAN BANK, a New York banking corporation
              ("Chase"), as collateral agent (in such capacity, the "Collateral
              Agent") for the Secured Parties (as defined in the Security
              Agreement )

         A. Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents, and (b) the Guarantee Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement") among Holdings, the Subsidiary Pledgors and the
Collateral Agent.

         B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Pledge Agreement and the Credit
Agreement.

         C. The Pledgors have entered into the Pledge Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party that was not in existence or not a Subsidiary Loan Party on the date of
the Credit Agreement is required to enter into the Pledge Agreement as a
Subsidiary Pledgor upon becoming a Subsidiary Loan Party. Section 24 of the
Pledge Agreement provides that such Subsidiaries may become Subsidiary Pledgors
under the Pledge Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned Subsidiary (the "New Pledgor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Pledgor under the Pledge Agreement in order to
induce the Lenders to make additional Loans and the Issuing Bank to issue
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.

         Accordingly, the Collateral Agent and the New Pledgor agree as follows:

         SECTION 1. In accordance with Section 24 of the Pledge Agreement, the
New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement
with the same force and effect as if originally named therein as a Pledgor and
the New Pledgor hereby agrees (a) to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor there
under are true and correct on and as of the date hereof except to the extent a
representation and warranty expressly relates solely to a specific date in which
case such representation and warranty shall be true and correct on such date. In
furtherance of the foregoing, the New Pledgor, as security for the payment and
performance in full of the Obligations (as defined in the Pledge Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the New Pledgor's right, title and
interest in and to the Collateral (as defined in the Pledge Agreement) of the
New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.

         SECTION 2. The New Pledgor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it
<PAGE>   188
                                                                               2

and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms.

         SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counter parts of this Supplement that, when
taken together, bear the signatures of the New Pledgor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.

         SECTION 4. The New Pledgor hereby represents and warrants that set
forth on Schedule I attached hereto is a true and correct schedule of all its
Pledged Securities.

         SECTION 5. Except as expressly supplemented hereby, the Pledge
Agreement shall remain in full force and effect.

         SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Pledge Agreement shall not in any way be affected or impaired
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

         SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 15 of the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it at the address set
forth under its signature hereto, below, with a copy to the Borrower.

         SECTION 9. The New Pledgor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>   189
                                                                               3

         IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly
executed this Supplement to the Pledge Agreement as of the day and year first
above written.

                                         [NAME OF NEW PLEDGOR],

                                         By_____________________________________
                                           Name:
                                           Title:
                                           Address:

                                         THE CHASE MANHATTAN BANK, as Collateral
                                         Agent,

                                         By_____________________________________
                                           Name:
                                           Title:
<PAGE>   190
                                                                   Schedule I to
                                                              Supplement No. [ ]
                                                         to the Pledge Agreement

                      Pledged Securities of the New Pledgor

                     CAPITAL STOCK OR OTHER EQUITY INTERESTS

<TABLE>
<CAPTION>
                                                       Number and       Percentage
                                                       Class of         of
                                                       Shares           Shares
                                                       or Other         or Other
                 Number of           Registered        Equity           Equity
Issuer           Certificate            Owner          Interests        Interests
------           -----------         ----------        ---------        ---------
<S>              <C>                 <C>               <C>              <C>

</TABLE>

                                 DEBT SECURITIES

<TABLE>
<CAPTION>
                   Principal
Issuer             Amount             Date of Note         Maturity Date
------             ---------          ------------         -------------
<S>                <C>                <C>                  <C>

</TABLE>

<PAGE>   191
                                                                       Exhibit F

                                            SECURITY AGREEMENT dated as of
                                    August 4, 1999, among SEMICONDUCTOR
                                    COMPONENTS INDUSTRIES, LLC, a Delaware
                                    limited liability company (the "Borrower"),
                                    SCG HOLDING CORPORATION, a Delaware
                                    corporation ("Holdings"), each subsidiary of
                                    Holdings listed on Schedule I hereto (each
                                    such subsidiary individually a "Subsidiary"
                                    or a "Guarantor" and, collectively, the
                                    "Subsidiaries" or, with Holdings, the
                                    "Guarantors"; the Guarantors and the
                                    Borrower are referred to collectively herein
                                    as the "Grantors") and THE CHASE MANHATTAN
                                    BANK, a New York banking corporation
                                    ("Chase"), as collateral agent (in such
                                    capacity, the "Collateral Agent") for the
                                    Secured Parties (as defined herein).

         Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents and (b) the Guarantee Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Guarantors and the Collateral Agent.

         The Lenders have agreed to make Loans to the Borrower, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Guarantors has agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit Agreement. The
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Grantors of an agreement in the form hereof to secure (a) the
due and punctual payment of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements made by the Issuing Bank
with respect thereto, interest thereon and obligations to provide, under certain
circumstances, cash collateral in connection therewith and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Loan Parties under or pursuant to the Credit Agreement and the other Loan
Documents, (c) unless otherwise agreed to in writing by the applicable Lender
party thereto, the
<PAGE>   192
due and punctual payment and performance of all obligations of the Borrower or
any other Loan Party, monetary or otherwise, under each Hedging Agreement
entered into with a counterparty that was a Lender (or an Affiliate of a Lender)
at the time such Hedging Agreement was entered into and (d) the due and punctual
payment and performance of all obligations in respect of overdrafts and related
liabilities owed to the Administrative Agent or any of its Affiliates and
arising from treasury, depositary and cash management services in connection
with any automated clearing house transfers of funds (all the monetary and other
obligations described in the preceding clauses (a) through (d) being
collectively called the "Obligations").

         Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:

                                    ARTICLE I

                                   Definitions

         SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Credit Agreement.

         SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:

         "Account Debtor" shall mean any Person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.

         "Accounts" shall mean all "accounts" (as defined in the Uniform
Commercial Code as in effect in the State of New York ("UCC")) of any Grantor
and shall include any and all right, title and interest of any Grantor to
payment for goods and services sold or leased, including any such right
evidenced by chattel paper, whether due or to become due, whether or not it has
been earned by performance, and whether now or hereafter acquired or arising in
the future, including accounts receivable from Affiliates of the Grantors.

         "Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.

         "Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) cash and cash accounts,
(g) Investment Property and (h) Proceeds.

         "Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.

         "Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
<PAGE>   193
                                                                               3

         "Commodity Customer" shall mean a Person for whom a Commodity
Intermediary carries a Commodity Contract on its books.

         "Commodity Intermediary" shall mean (a) a Person who is registered as a
futures commission merchant under the federal commodities laws or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.

         "Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

         "Copyrights" shall mean all of the following: (a) all copyright rights
in any work subject to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and (b) all
registrations and applications for registration of any such copyright in the
United States or any other country, including registrations, recordings,
supplemental registrations and pending applications for registration in the
United States Copyright Office, including those listed on Schedule II.

         "Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

         "Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.

         "Entitlement Holder" shall mean a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such Person is the
Entitlement Holder.

         "Equipment" shall mean "equipment" (as defined in the UCC) of any
Grantor and shall include all equipment, furniture and furnishings, and all
tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.

         "Financial Asset" shall mean (a) a Security, (b) an obligation of a
Person or a share, participation or other interest in a Person or in property or
an enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a Person's claim to it is
evidenced,
<PAGE>   194
                                                                               4

including a certificated or uncertificated Security, a certificate representing
a Security or a Security Entitlement.

         "Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.

         "General Intangibles" shall mean all "general intangibles" (as defined
in the UCC) of any Grantor and shall include choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Hedging Agreements and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to any Grantor to secure payment by an Account Debtor of any
of the Accounts Receivable.

         "Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.

         "Inventory" shall mean "inventory" (as defined in the UCC) of any
Grantor and shall include all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.

         "Investment Property" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of any Grantor, whether now owned or hereafter
acquired by any Grantor.

         "License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).

         "Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.

         "Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or
<PAGE>   195
                                                                               5

granting to any Grantor any right to make, use or sell any invention on which a
Patent, now or hereafter owned by any third party, is in existence, and all
rights of any Grantor under any such agreement.

         "Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

         "Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by an executive officer or
Financial Officer of Holdings.

         "Proceeds" shall mean "proceeds" (as defined in the UCC) of any Grantor
and shall include any consideration received from the sale, exchange, license,
lease or other disposition of any asset or property that constitutes Collateral,
any value received as a consequence of the possession of any Collateral and any
payment received from any insurer or other Person or entity as a result of the
destruction, loss, theft, damage or other involuntary conversion of whatever
nature of any asset or property which constitutes Collateral, and shall include
, (a) any claim of any Grantor against any third party for (and the right to sue
and recover for and the rights to damages or profits due or accrued arising out
of or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by any Grantor or licensed under a Copyright License and (b) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.

         "Secured Parties" shall mean (a) the Lenders, (b) the Issuing Bank, (c)
the Administrative Agent, (d) the Collateral Agent, (e) each counterparty to a
Hedging Agreement entered into with the Borrower or any Loan Party if such
counterparty was a Lender (or an Affiliate of a Lender) at the time the Hedging
Agreement was entered into, (f) the beneficiaries of each indemnification
obligation undertaken by any Grantor under any Loan Document and (g) the
successors and assigns of each of the foregoing.

         "Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
<PAGE>   196
                                                                               6

         "Securities Account" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.

         "Security Entitlements" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.

         "Security Interest" shall have the meaning assigned to such term in
Section 2.01.

         "Security Intermediary" shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.

         "Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.

         "Trademarks" shall mean all of the following: (a) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof, including those listed on Schedule V, (b)
all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.

         SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
<PAGE>   197
                                                                               7

                                   ARTICLE II

                                Security Interest

         SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantors, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.

         SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.

                                   ARTICLE III

                         Representations and Warranties

         The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:

         SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in such Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other Person other
than any consent or approval which has been obtained.

         SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete in all material respects. Fully executed Uniform Commercial
Code financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the
Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office and the United States Copyright Office in order to perfect the
Security Interest in Collateral consisting of United States Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the validity
of and to establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the ratable benefit
<PAGE>   198
                                                                               8

of the Secured Parties) in respect of all Collateral in which the Security
Interest may be perfected by filing, recording or registration in the United
States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.

         (b) Each Grantor shall ensure that fully executed security agreements
in the form hereof (or short-form supplements to this Agreement in form and
substance satisfactory to the Collateral Agent) and containing a description of
all Collateral consisting of Intellectual Property shall have been received and
recorded within three months after the execution of this Agreement with respect
to United States Patents and United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and within one
month after the execution of this Agreement with respect to United States
registered Copyrights have been delivered to the Collateral Agent for recording
by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C.
Section 205 and the regulations thereunder, as applicable, and otherwise as may
be required pursuant to the laws of any other necessary jurisdiction in the
United States (or any political subdivision thereof) and its territories and
possessions, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be perfected
by filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction (other than such actions as are necessary to perfect the Security
Interest with respect to any Collateral consisting of Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired or
developed after the date hereof).

         SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the UCC or other analogous applicable law in such jurisdictions and (c) a
security interest that shall be perfected in all Collateral in which a security
interest may be perfected upon the receipt and recording of this Agreement with
the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the three month period (commencing as of the date
hereof) pursuant to 35 U.S.C. Section 261 or 15 U.S.C. Section 1060 or the one
month period (commencing as of the date hereof) pursuant to 17 U.S.C. Section
205 and otherwise as may be required to pursuant to the laws of any other
necessary jurisdiction in the United States (or any political subdivision
thereof) and its territories and possessions. The Security Interest is and shall
be prior to any other Lien on any of the Collateral, other than Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement.

         SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. The Grantor has not filed or
consented to the filing of (a) any financing statement or analogous document
under the UCC or any other applicable laws covering any Collateral, (b) any
assignment in which any Grantor assigns any Collateral or any security agreement
or similar
<PAGE>   199
                                                                               9

instrument covering any Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (c) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement.

                                   ARTICLE IV

                                    Covenants

         SECTION 4.01. Records. Each Grantor agrees to maintain, at its own cost
and expense, such complete and accurate records with respect to the Collateral
owned by it as is consistent with its current practices, but in any event to
include complete accounting records indicating all payments and proceeds
received with respect to any part of the Collateral, and, at such time or times
as the Collateral Agent may reasonably request, promptly to prepare and deliver
to the Collateral Agent an updated Perfection Certificate, noting all material
changes, if any, since the date of the most recent Perfection Certificate.

         SECTION 4.02. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to Section 6.02 of the Credit Agreement.

         SECTION 4.03. Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.

         SECTION 4.04. Inspection and Verification. The Collateral Agent and
such Persons as the Collateral Agent may reasonably designate shall have the
right to inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Collateral is located, at reasonable times and intervals during normal business
hours upon reasonable advance notice to the respective Grantor and to verify
under reasonable procedures the validity, amount, quality, quantity, value,
condition and status of the Collateral. The Collateral Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any Secured Party in accordance with and subject to the
provisions set forth in Section 9.12 of the Credit Agreement.
<PAGE>   200
                                                                              10

         SECTION 4.05. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.02 of the Credit Agreement, and may pay
for the maintenance and preservation of the Collateral, in each case to the
extent any Grantor fails to do so as required by the Credit Agreement or this
Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.

         SECTION 4.06. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other Person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent to the
extent permitted by any contracts or arrangements to which such property is
subject. Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the security
interest.

         SECTION 4.07. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.

         SECTION 4.08. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral owned by it,
except that (a) Inventory may be sold in the ordinary course of business and (b)
unless and until the Collateral Agent shall notify the Grantors that an Event of
Default shall have occurred and be continuing and that during the continuance
thereof the Grantors shall not sell, convey, lease, assign, transfer or
otherwise dispose of any Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Grantors may use and dispose of the
Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document. Without limiting the
generality of the foregoing, each Grantor agrees that it shall not permit any
material Inventory to be in the possession or control of any warehouseman,
bailee, agent or processor at any time unless such warehouseman, bailee, agent
or processor shall have been notified of the Security Interest and shall have
agreed in writing to hold the Inventory subject to the Security Interest and the
instructions of the Collateral Agent and to waive and release any Lien held by
it with respect to such Inventory, whether arising by operation of law or
otherwise.

         SECTION 4.09. Limitation on Modification of Accounts. None of the
Grantors will, without the Collateral Agent's prior written consent, grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full
<PAGE>   201
                                                                              11

amount thereof, release, wholly or partly, any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current practices.

         SECTION 4.10. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.07 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Agent may, without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Collateral Agent
deems advisable. All sums disbursed by the Collateral Agent in connection with
this Section 4.11, including reasonable attorneys' fees, court costs, expenses
and other charges relating thereto, shall be payable, upon demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.

         SECTION 4.11. Legend. If any Accounts Receivable of any Grantor are
evidenced by chattel paper, such Grantor shall legend, in form and manner
satisfactory to the Collateral Agent, such Accounts Receivable and its books,
records and documents evidencing or pertaining thereto with an appropriate
reference to the fact that such Accounts Receivable have been assigned to the
Collateral Agent for the benefit of the Secured Parties and that the Collateral
Agent has a security interest therein.

         SECTION 4.12. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws
pursuant to which each such Patent is issued.

         (b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark sufficient to preclude any findings of
abandonment, (iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law pursuant to which each such Trademark is
issued and (iv) not knowingly use or knowingly permit the use of such Trademark
in violation of any third party rights.
<PAGE>   202
                                                                              12

         (c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws pursuant to which each such Copyright is issued.

         (d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.

         (e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it promptly informs
the Collateral Agent, and, upon request of the Collateral Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Collateral Agent may request to evidence and perfect the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and file
such writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.

         (f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant
or registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.

         (g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.

         (h) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
from the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
<PAGE>   203
                                                                              13

                                    ARTICLE V

                                Power of Attorney

         Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent and attorney-in-fact, and in such
capacity the Collateral Agent shall have the right, with power of substitution
for each Grantor and in each Grantor's name or otherwise, for the use and
benefit of the Collateral Agent and the Secured Parties, upon the occurrence and
during the continuance of an Event of Default (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Collateral or any part thereof; (b)
to demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or bill of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require any
Grantor to notify, Account Debtors to make payment directly to the Collateral
Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with
respect to or otherwise deal with all or any of the Collateral, and to do all
other acts and things necessary to carry out the purposes of this Agreement, as
fully and completely as though the Collateral Agent were the absolute owner of
the Collateral for all purposes; provided, however, that nothing herein
contained shall be construed as requiring or obligating the Collateral Agent or
any Secured Party to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Loan Document
with respect to the Collateral or any part thereof or impose any obligation on
the Collateral Agent or any Secured Party to proceed in any particular manner
with respect to the Collateral or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or hereafter, whether
hereunder, under any other Loan Document, by law or otherwise.
<PAGE>   204
                                                                              14

                                   ARTICLE VI

                                    Remedies

         SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver each item of
Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Collateral
consisting of Intellectual Property, on demand, to cause the Security Interest
to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent (except to the
extent assignment, transfer or conveyance thereof would result in a loss of said
Intellectual Property), or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
UCC or other applicable law. Without limiting the generality of the foregoing,
each Grantor agrees that the Collateral Agent shall have the right, subject to
the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.

         The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral. Such notice, in the case of a public sale, shall
state the time and place for such sale and, in the case of a sale at a broker's
board or on a securities exchange, shall state the board or exchange at which
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if any)
of such sale. At any such sale, the Collateral, or portion thereof, to be sold
may be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral
<PAGE>   205
                                                                              15

Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid by the purchaser or purchasers thereof, but the Collateral Agent shall
not incur any liability in case any such purchaser or purchasers shall fail to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Section, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any Obligation then due and payable to
such Secured Party from any Grantor as a credit against the purchase price, and
such Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor therefor.
For purposes hereof a written agreement to purchase the Collateral or any
portion thereof shall be treated as a sale thereof; the Collateral Agent shall
be free to carry out such sale pursuant to such agreement and no Grantor shall
be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

         SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:

                  FIRST, to the payment of all costs and expenses incurred by
         the Administrative Agent or the Collateral Agent (in its capacity as
         such hereunder or under any other Loan Document) in connection with
         such collection or sale or otherwise in connection with this Agreement
         or any of the Obligations, including all court costs and the reasonable
         fees and expenses of its agents and legal counsel, the repayment of all
         advances made by the Collateral Agent hereunder or under any other Loan
         Document on behalf of any Grantor and any other costs or expenses
         incurred in connection with the exercise of any right or remedy
         hereunder or under any other Loan Document;

                  SECOND, to the payment in full of the Obligations (the amounts
         so applied to be distributed among the Secured Parties pro rata in
         accordance with the amounts of the Obligations owed to them on the date
         of any such distribution); and

                  THIRD, to the Grantors, their successors or assigns, or as a
         court of competent jurisdiction may otherwise direct.

         The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale
<PAGE>   206
                                                                              16

shall be a sufficient discharge to the purchaser or purchasers of the Collateral
so sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

         SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.

                                   ARTICLE VII

                                  Miscellaneous

         SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Borrower.

         SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

         SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the making by the Lenders of the Loans and the
issuance of Letters of Credit by the Issuing Bank, and the execution and
delivery to the Lenders of
<PAGE>   207
                                                                              17

any notes evidencing such Loans, regardless of any investigation made by the
Lenders or on their behalf, and shall continue in full force and effect until
this Agreement shall terminate.

         SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective as to any Grantor when a counterpart hereof executed on behalf
of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the other Loan Documents. This
Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released with
respect to any Grantor without the approval of any other Grantor and without
affecting the obligations of any other Grantor hereunder.

         SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

         SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which the Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof applicable to it.

         (b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.

         (c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment
<PAGE>   208
                                                                              18

of any of the Loans, the invalidity or unenforceability of any term or provision
of this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Collateral Agent or any Lender. All amounts due under this Section
7.06 shall be payable on written demand therefor.

         SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Administrative Agent, the Issuing Bank and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in similar
or other circumstances.

         (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.02 of the Credit Agreement.

         SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.

         SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
<PAGE>   209
                                                                              19

         SECTION 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.

         SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.

         SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Grantor or its properties in the courts of
any jurisdiction.

         (b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

         (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.

         SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when all the Obligations have been indefeasibly paid in full and
the Lenders have no further commitment to lend under the Credit Agreement, the
LC Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement, at which time
the Collateral Agent shall execute and deliver to the Grantors, at the Grantors'
expense, all Uniform Commercial Code termination statements and similar
documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Grantor shall automatically be released from its obligations
hereunder and the Security Interest in the Collateral of such Grantor shall be
automatically released in the event that such Grantor ceases to be a Subsidiary
pursuant to a transaction
<PAGE>   210
                                                                              20

permitted under the Loan Documents, at which time the Collateral Agent shall
execute and deliver to any Grantor, at such Grantor's expense, all documents
that such Grantor shall reasonably request to evidence such release.

         SECTION 7.15. Additional Grantors. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary Loan Party that was not in existence or not a
Subsidiary Loan Party on the date of the Credit Agreement is required to enter
in to this Agreement as a Grantor upon becoming a Subsidiary Loan Party. Upon
execution and delivery by the Collateral Agent and a Subsidiary of an instrument
in the form of Annex 3 hereto, such Subsidiary shall become a Grantor hereunder
with the same force and effect as if originally named as a Grantor herein. The
execution and delivery of any such instrument shall not require the consent of
any Grantor hereunder. The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
<PAGE>   211
                                                                              21

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                     SEMICONDUCTOR COMPONENTS
                                     INDUSTRIES, LLC,

                                     By_________________________________
                                     Name:  Jean-Jacques Morin
                                     Title:   Vice President

                                     SCG HOLDING CORPORATION,

                                     By_________________________________
                                     Name:  Jean-Jacques Morin
                                     Title:   Vice President

                                     EACH OF THE OTHER GUARANTORS
                                     LISTED ON SCHEDULE I HERETO,

                                     By______________________________
                                           Name:   Jean-Jacques Morin
                                           Title:   Vice President

                                     THE CHASE MANHATTAN BANK, as
                                     Collateral Agent,

                                     By__________________________
                                      Name:
                                      Title:
<PAGE>   212
                                                               Schedule I to the
                                                              Security Agreement

                                   GUARANTORS

             Guarantors                                       Address
             ----------                                       -------
      1.
      2.
      3.
      4.
      5.
      6.
<PAGE>   213
                                                              Schedule II to the
                                                              Security Agreement

                                   COPYRIGHTS
<PAGE>   214
                                                             Schedule III to the
                                                              Security Agreement

                                    LICENSES
<PAGE>   215
                                                              Schedule IV to the
                                                              Security Agreement

                                     PATENTS
<PAGE>   216
                                                               Schedule V to the
                                                              Security Agreement

                                   TRADEMARKS
<PAGE>   217
                                                                  Annex 2 to the
                                                              Security Agreement

                                    [Form of]

                             PERFECTION CERTIFICATE

         Reference is made to (a) the Credit Agreement, dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among SCG HOLDING CORPORATION ("Holdings"), SEMICONDUCTOR
COMPONENTS INDUSTRIES, LLC (the "Borrower"), the lenders from time to time party
thereto (the "Lenders"), THE CHASE MANHATTAN BANK, as administrative agent (in
such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent"), and CREDIT LYONNAIS NEW YORK BRANCH, DLJ
CAPITAL FUNDING, INC. and LEHMAN COMMERCIAL PAPER INC., as co-documentation
agents (in such capacity, the "Documentation Agents" and, together with the
Administrative Agent and the Collateral Agent, the "Agents") and (b) the
Security Agreement, dated as of August 4, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Security Agreement") among the
Grantors and the Collateral Agent. Capitalized terms used herein but not defined
herein having the respective meanings set forth in the Credit Agreement and the
Security Agreement.

         The undersigned, a Financial Officer of Holdings, hereby certify to the
Agents and each other Secured Party as follows:

         1. Names. (a) The exact corporate name of each Grantor, as such name
appears in its respective certificate of incorporation, is as follows:

         (b) Set forth below is each other corporate name each Grantor has had
in the past five years, together with the date of the relevant change:

         (c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.

         (d) The following is a list of all other names (including trade names
or similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:

         (e) Set forth below is the Federal Taxpayer Identification Number of
each Grantor:
<PAGE>   218
         2. Current Locations. (a) The chief executive office of each Grantor is
located at the address set forth opposite its name below:

          Grantor      Mailing Address        County        State
          -------      ---------------        ------        -----

         (b) Set forth below opposite the name of each Grantor are all locations
where such Grantor maintains any books or records relating to any Accounts
Receivable (with each location at which chattel paper, if any, is kept being
indicated by an "*"):

          Grantor      Mailing Address        County        State
          -------      ---------------        ------        -----

         (c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:

          Grantor      Mailing Address        County        State
          -------      ---------------        ------        -----

         (d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:

          Grantor      Mailing Address        County        State
          -------      ---------------        ------        -----

         (e) Set forth below opposite the name of each Grantor are the names and
addresses of all Persons other than such Grantor that have possession of any of
the Collateral of such Grantor:

          Grantor      Mailing Address        County        State
          -------      ---------------        ------        -----

         3. Unusual Transactions. All Accounts Receivable have been originated
by the Grantors and all Inventory has been acquired by the Grantors in the
ordinary course of business.
<PAGE>   219
         4. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 4 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.

         5. Schedule of Filings. Attached hereto as Schedule 5 is a schedule
setting forth, with respect to the filings described in Section 4 above, each
filing and the filing office in which such filing is to be made.

         6. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 4 above have been paid or provided for.

         7. Stock Ownership. Attached hereto as Schedule 7 is a true and correct
list of all the duly authorized, issued and outstanding Equity Interests of each
Subsidiary (including the Borrower) and the record and beneficial owners of such
Equity Interests. Also set forth on Schedule 7 is each Equity Interest of
Holdings and each Subsidiary (including the Borrower) that represents 50% or
less of the equity of the entity in which such investment was made.

         8. Notes. Attached hereto as Schedule 8 is a true and correct list of
all notes held by Holdings and each Subsidiary (including the Borrower) and all
intercompany notes between Holdings and each Subsidiary (including the Borrower)
and between each Subsidiary (including the Borrower) and each other such
Subsidiary (including the Borrower).

         9. Advances. Attached hereto as Schedule 9 is (a) a true and correct
list of all advances made by Holdings to any Subsidiary (including the Borrower)
or made by any Subsidiary (including the Borrower) to Holdings or to any other
Subsidiary (including the Borrower), which advances will be on and after the
date hereof evidenced by one or more intercompany notes pledged to the
Collateral Agent under the Pledge Agreement and (b) a true and correct list of
all unpaid intercompany transfers of goods sold and delivered by or to Holdings
or any Subsidiary (including the Borrower).

         10. Mortgage Filings. Attached hereto as Schedule 10 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the entity that owns such property as such name appears in its
certificate of formation, (ii) if different from the name identified pursuant to
clause (i), the exact name of the current record owner of such property
reflected in the records of the filing office for such property identified
pursuant to the following clause and (iii) the filing office in which a Mortgage
with respect to such property must be filed or recorded in order for the
Collateral Agent to obtain a perfected security interest therein.
<PAGE>   220
         IN WITNESS WHEREOF, the undersigned have duly executed this certificate
on this [ ]th day of [ ].

                                      SCG HOLDING CORPORATION,

                                       by
                                         -------------------------------------
                                         Name:
                                         Title: [Financial Officer]
<PAGE>   221
                                                                  Annex 3 to the
                                                              Security Agreement

                           SUPPLEMENT NO. [ ] dated as of [ ], to the Security
                  Agreement dated as of August 4, 1999, among SEMICONDUCTOR
                  COMPONENTS INDUSTRIES, LLC, a Delaware limited liability
                  company (the "Borrower"), SCG HOLDING CORPORATION, a Delaware
                  corporation ("Holdings"), each subsidiary of Holdings listed
                  on Schedule I thereto (each such subsidiary individually a
                  "Subsidiary" or a "Guarantor" and, collectively, the
                  "Subsidiaries" or, with Holdings, the "Guarantors"; the
                  Guarantors and the Borrower are referred to collectively
                  herein as the "Grantors") and THE CHASE MANHATTAN BANK, a New
                  York banking corporation ("Chase"), as collateral agent (in
                  such capacity, the "Collateral Agent") for the Secured Parties
                  (as defined therein).

         A. Reference is made to (a) the Credit Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto (the "Lenders"), Chase, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and Credit Lyonnais New York
Branch, DLJ Capital Funding, Inc. and Lehman Commercial Paper Inc., as
co-documentation agents, and (b) the Guarantee Agreement dated as of August 4,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Guarantors and the Collateral Agent.

         B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.

         C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party that was not in existence or not a Subsidiary Loan Party on the date of
the Credit Agreement is required to enter in to this Agreement as a Grantor upon
becoming a Subsidiary Loan Party. Section 7.15 of the Security Agreement
provides that such Subsidiaries may become Grantors under the Security Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously issued.
<PAGE>   222
         Accordingly, the Collateral Agent and the New Grantor agree as follows:

         SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof except to
the extent a representation and warranty expressly relates solely to a specific
date in which case such representation and warranty shall be true and correct on
such date. In furtherance of the foregoing, the New Grantor, as security for the
payment and performance in full of the Obligations (as defined in the Security
Agreement), does hereby create and grant to the Collateral Agent, its successors
and assigns, for the benefit of the Secured Parties, their successors and
assigns, a security interest in and lien on all of the New Grantor's right,
title and interest in and to the Collateral of the New Grantor. Each reference
to a "Grantor" in the Security Agreement shall be deemed to include the New
Grantor. The Security Agreement is hereby incorporated herein by reference.

         SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.

         SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.

         SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.

         SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.

         SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

         SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to
<PAGE>   223
                                                                               3

the New Grantor shall be given to it at the address set forth under its
signature below, with a copy to the Borrower.

         SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
<PAGE>   224
                                                                               4

         IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

                                      [NAME OF NEW GRANTOR],

                                      By_____________________________
                                        Name:
                                        Title:
                                        Address:

                                       THE CHASE MANHATTAN BANK, as
                                       Collateral Agent,

                                       By_____________________________
                                         Name:
                                         Title:
<PAGE>   225
                                                                      Schedule I
                                                           to Supplement No. [ ]
                                                       to the Security Agreement

                             LOCATION OF COLLATERAL

     Description                                                   Location
     -----------                                                   --------

<PAGE>   226
                                                                       Exhibit G

                        COLLATERAL ASSIGNMENT dated as of August 4, 1999,
                  between SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, a Delaware
                  limited liability company (the "Borrower"), and THE CHASE
                  MANHATTAN BANK, a New York banking corporation ("Chase"), as
                  collateral agent (in such capacity, the "Collateral Agent")
                  for the Secured Parties.

            Reference is made to the Credit Agreement dated as of August 4, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Holdings, the lenders from time to time party
thereto (the "Lenders"), Chase, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and Credit Lyonnais New York Branch, DLJ
Capital Funding, Inc. and Lehman Commercial Paper Inc., as co-documentation
agents.

            All capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.

            The Lenders have agreed to make Loans to the Borrower, and the
Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors has agreed to
guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and the Issuing
Bank to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Borrower of an agreement in the form hereof to
secure (a) the due and punctual payment of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements made by the Issuing Bank
with respect thereto, interest thereon and obligations to provide, under certain
circumstances, cash collateral and (iii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant to
the Credit Agreement and the other Loan Documents, (c) unless otherwise agreed
to in writing by the applicable Lender party thereto, the due and punctual
payment and performance of all obligations of the Borrower or any other Loan
Party, monetary or otherwise, under each Hedging Agreement entered into with a
counterparty that was a Lender (or an Affiliate of a Lender) at the time such
Hedging Agreement was entered into and (d) the due and punctual payment and
performance of all obligations in respect of overdrafts and related liabilities
owed to the Administrative Agent or any of its Affiliates and arising from
treasury, depositary and cash management services in connection with any
automated clearing house transfers of funds (all the
<PAGE>   227
monetary and other obligations described in the preceding clauses (a) through
(d) being collectively called the "Obligations").

            Accordingly, the Borrower and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:

            SECTION 1. Collateral Assignment. As collateral security for the
Obligations, the Borrower hereby assigns to the Collateral Agent, its successors
and assigns, for the ratable benefit of the Secured Parties, and hereby grants
to the Collateral Agent, its successors and assigns, for the ratable benefit of
the Secured Parties a security interest in, all of the Borrower's right, title
and interest in, to and under the following contracts and instruments, as the
same may be modified, amended or supplemented from time to time:

            (a) the Transition Agreements; and

            (b) such other contracts and instruments of the Borrower as the
      Collateral Agent shall designate from time to time to the Borrower in
      writing unless such assignment is prohibited (i) by the terms thereof, and
      the Borrower cannot reasonably obtain a waiver or an amendment of such
      prohibition or (ii) by applicable law.

The contracts and instruments listed in clauses (a) and (b), as amended and in
effect from time to time, are referred to collectively as the "Assigned
Contracts". The security interest assigned by this Section 1 shall include (a)
any and all rights to receive and demand payments under any and all Assigned
Contracts, (b) any and all rights to receive and compel performance under any
and all Assigned Contracts, (c) the right to make all waivers, amendments,
determinations and agreements of or under any and all Assigned Contracts, (d)
the right to take such action, including commencement, conduct and consummation
of legal, administrative or other proceedings, as shall be permitted by the
Assigned Contracts or by law and (e) any and all other rights, interests and
claims now existing or hereafter arising under or in connection with any and all
Assigned Contracts.

            SECTION 2. Agreements, Representations and Warranties. The Borrower
further agrees, represents and warrants to the Collateral Agent and the Secured
Parties that:

            (a) as of the date hereof, the Assigned Contracts are in full force
and effect, there being no default thereunder by the Borrower. The Borrower will
not permit any waiver, supplement, amendment, change or modification to be made
to the Assigned Contracts, without the written consent of the Collateral Agent,
except as permitted in accordance with Section 6.11(b) of the Credit Agreement;
and

            (b) it has the right, power and authority to grant to the Collateral
Agent a security interest in its right, title and interest in and to the
Assigned Contracts. It has not heretofore hypothecated, assigned, mortgaged,
pledged, encumbered or otherwise transferred its right, title or interest under
the Assigned Contracts in any manner to any person other than the Collateral
Agent, nor will it do so at any time hereafter without the Collateral Agent's
prior written consent in each instance. Any such assignment, mortgage, pledge or
encumbrance without the Collateral Agent's consent shall be void and of no force
or effect.

            SECTION 3. No Obligations for Collateral Agent. The Borrower
specifically acknowledges and agrees that the Collateral Agent does not assume,
and shall have no responsibility for, the performance of any obligations to be
performed under or with respect to the Assigned Contracts or by it and it hereby
agrees to indemnify and hold harmless the Collateral Agent with respect to any
and all claims by any person relating to such obligations. The Collateral Agent,
in its discretion, may file or record this Agreement. The Collateral
<PAGE>   228
                                                                               3

Agent agrees to notify the Borrower promptly after any such filing or recording.

            SECTION 4. Remedies upon Default. Upon the commencement and during
the continuance of an Event of Default, the Collateral Agent may, at its option,
without notice to or demand upon the Borrower (both of which are hereby waived
for the purpose of this Section 4), in addition to all other rights and remedies
provided under any of the Loan Documents, in its own name or the name of the
Borrower, demand, sue upon or otherwise enforce the Assigned Contracts to the
same extent as if the Collateral Agent were the party named in the Assigned
Contracts, and exercise all other rights of the Borrower under the Assigned
Contracts in such manner as it may determine. Any moneys actually received by
the Collateral Agent pursuant to the exercise of any of the rights and remedies
granted in this Collateral Assignment shall be applied as provided in the
Security Agreement.

            SECTION 5. Reimbursement of Collateral Agent. (a) The Borrower
agrees to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder or (iv) the
failure of the Borrower to perform or observe any of the provisions hereof
applicable to it.

            (b) Without limitation of its indemnification obligations under the
other Loan Documents, the Borrower agrees to indemnify the Collateral Agent and
the other Indemnitees against, and hold each of them harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
fees, disbursements and other charges of counsel, incurred by or asserted
against any of them arising out of, in any way connected with, or as a result of
the execution, delivery or performance of this Agreement or any claim,
litigation, investigation or proceeding relating hereto or to any of the
Assigned Contracts, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee or any Affiliate of such Indemnitee.

            (c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 5 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 5
shall be payable upon written demand therefor.

            SECTION 6. Collateral Agent Appointed Attorney-in-Fact. Upon the
occurrence and during the continuation of an Event of Default, the Collateral
Agent shall have the right, as the true and lawful attorney-in-fact and agent of
the Borrower, with power of substitution for the
<PAGE>   229
                                                                               4

Borrower and in the Borrower's name, the Collateral Agent's name or otherwise
for the use and benefit of the Collateral Agent (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Assigned Contracts or any part
thereof; (b) to demand, collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Assigned Contracts; (c) to sign the
name of the Borrower on any invoice or bill of lading relating to any of the
Assigned Contracts; (d) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Assigned Contracts or to
enforce any rights in respect of any Assigned Contracts; (e) to settle,
compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Assigned Contracts; and (f) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Assigned Contracts, and to do all other acts and things necessary
to carry out the purposes of this Collateral Assignment, as fully and completely
as though the Collateral Agent were the Borrower named in the Assigned
Contracts; provided, however, that nothing herein contained shall be construed
as requiring or obligating the Collateral Agent or any Secured Party to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any Secured Party, or to present or file any
claim or notice, or to take any action with respect to the Assigned Contracts or
any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted to be taken by the
Collateral Agent or any Secured Party with respect to the Assigned Contracts or
any part thereof shall give rise to any defense, counterclaim or offset in favor
of the Borrower or to any claim or action against the Collateral Agent or any
Secured Party. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of the Borrower for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section 6 shall in no event relieve the Borrower of any of
its obligations hereunder or under the other Loan Documents with respect to the
Assigned Contracts or any part thereof or impose any obligation on the
Collateral Agent or any Secured Party to proceed in any particular manner with
respect to the Assigned Contracts or any part thereof, or in any way limit the
exercise by the Collateral Agent or any Secured Party of any other or further
right that it may have on the date of this Collateral Assignment or hereafter,
whether hereunder, under any other Loan Document, by law or otherwise.

            SECTION 7. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Administrative Agent, the Issuing Bank and the
Lenders under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
<PAGE>   230
                                                                               5

            (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Borrower with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with Section 9.02 of the Credit Agreement.

            SECTION 8. Security Interest Absolute. All rights of the Collateral
Agent hereunder and all obligations of the Borrower hereunder shall be absolute
and unconditional irrespective of (a) any lack of validity or enforceability of
the Credit Agreement, any other Loan Document, any agreement with respect to any
of the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrower in respect of the Obligations or this Agreement.

            SECTION 9. Termination. This Agreement shall terminate when all the
Obligations have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the LC Exposure has been reduced
to zero and the Issuing Bank has no further commitment to issue Letters of
Credit under the Credit Agreement. Upon such termination, the Collateral Agent
shall take such action as the Borrower shall reasonably request at the expense
of the Borrower to reassign and deliver to the Borrower, without recourse or
warranty, the Assigned Contracts and related documents, if any, in which the
Collateral Agent shall have any interest under this Collateral Assignment and
which shall then be held by the Collateral Agent or be in its possession and the
Borrower's obligations hereunder and the security interest of the Collateral
Agent in the Assigned Contracts shall terminate. In connection with any
termination or release, the Collateral Agent shall execute and deliver to the
Borrower, at the Borrower's expense, all Uniform Commercial Code termination
statements and similar documents that the Borrower shall reasonably request to
evidence such termination. Any execution and delivery of termination statements
or documents pursuant to this Section 9 shall be without recourse to or warranty
by the Collateral Agent.

            SECTION 10. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement.

            SECTION 11. Further Assurances. The Borrower covenants to execute
and deliver to the Collateral Agent, promptly after demand, such additional
assurances, writings or other instruments as may reasonably be required by the
Collateral Agent to effectuate the purposes hereof.

            SECTION 12. Binding Effect: Several Agreement; Assignments. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party, and all
covenants, promises and agreements by or on behalf of the Borrower that are
contained in this Agreement shall bind and inure to the benefit of
<PAGE>   231
                                                                               6

its successors and assigns. This Agreement shall become effective as to the
Borrower when a counterpart hereof executed on behalf of the Borrower shall have
been delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
the Borrower and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of the Borrower, the Collateral Agent
and the other Secured Parties and their respective successors and assigns,
except that the Borrower shall have no right to assign or transfer its rights or
obligations hereunder or any interest herein (and any such assignment or
transfer shall be void) except as expressly contemplated by this Agreement or
the other Loan Documents.

            SECTION 13. Survival of Agreement: Severability. (a) All covenants.
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Secured Parties and shall survive the making by the Lenders of the Loans and
the issuance by the Issuing Bank of Letters of Credit, and the execution and
delivery to the Lenders of any notes evidencing such Loans, regardless of any
investigation made by the Lenders or on their behalf, and shall continue in full
force and effect until this Agreement shall terminate.

            (b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

            SECTION 14.  GOVERNING LAW.  THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.

            SECTION 15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract (subject to Section 12),
and shall become effective as provided in Section 12. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.

            SECTION 16. Jurisdiction; Consent to Service of Process. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in
<PAGE>   232
                                                                               7

other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Collateral Agent,
the Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Borrower or its properties in the courts of any
jurisdiction.

            (b) The Borrower irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

            (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

            SECTION 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 17.

            SECTION 18. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.

            IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                        SEMICONDUCTOR COMPONENTS
                                        INDUSTRIES, LLC,

                                          by

                                          -------------------------------
                                          Name: Jean-Jacques Morin
                                          Title:  Vice President
<PAGE>   233
                                                                               8

                                        THE CHASE MANHATTAN BANK, as
                                        Collateral Agent,

                                          by

                                          --------------------------------
                                        Name:
                                        Title:

<PAGE>   234
                                                               EXHIBIT H

                        REAFFIRMATION AGREEMENT, dated as
                  of _______________, 2000 (as the same may from time to time be
                  amended, supplemented or otherwise modified, this
                  "Agreement"), among SCG Holding Corporation, a Delaware
                  corporation ("Holdings"), Semiconductor Components Industries,
                  LLC, a Delaware limited liability company (the Borrower"),
                  each Subsidiary of Holdings listed on Schedule I hereto (the
                  "Subsidiaries" and, together with Holdings and the Borrower,
                  the "Reaffirming Parties") and THE CHASE MANHATTAN BANK, as
                  Administrative Agent, Issuing Bank and Collateral Agent (in
                  such capacities, "Chase") for the benefit of the Lenders (such
                  term and each other capitalized term used but not defined
                  herein having the meaning assigned to such term in the Amended
                  and Restated Credit Agreement referred to below).

            WHEREAS Holdings, the Borrower, each of the Lenders and Chase have
entered into the Credit Agreement, dated as of August 4, 1999, as amended and
restated as of ______________, 2000 (the "Amended and Restated Credit
Agreement");

            WHEREAS each Reaffirming Party expects to realize, or has realized,
substantial direct and indirect benefits as a result of Holdings and the
Borrower entering into the Amended and Restated Credit Agreement and as a result
of the Amended and Restated Credit Agreement becoming effective; and

            WHEREAS the execution and delivery of this Agreement is a condition
precedent to the effectiveness of the Amended and Restated Credit Agreement;
<PAGE>   235
            NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                    ARTICLE I

                     Reaffirmation/Amendment and Restatement

            SECTION 1.01. Reaffirmation. Each of the Reaffirming Parties hereby
consents to the Amended and Restated Credit Agreement and hereby confirms its
respective guarantees, pledges and grants of security interests, as applicable,
and agrees that notwithstanding the effectiveness of the Amended and Restated
Credit Agreement such guarantees, pledges and grants of security interests shall
continue to be in full force and effect and shall accrue to the benefit of the
Lenders and the other Secured Parties under the Amended and Restated Credit
Agreement.

            SECTION 1.02. Amendment and Restatement. On and after the
effectiveness of the Amended and Restated Credit Agreement, (i) each reference
in each of the Collateral Assignment, the Pledge Agreement, the Security
Agreement, the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement (such agreements referred to herein collectively as the
"Collateral Documents") to the "Credit Agreement", "thereunder", "thereof" or
words of like import shall mean and be a reference to the Amended and Restated
Credit Agreement (as such agreement may be amended, modified or supplemented and
in effect from time to time), (ii) the definition of any term defined in any
Collateral Document by reference to the terms defined in the Original Credit
Agreement shall be amended to be defined by reference to the defined term in the
Amended and Restated Credit Agreement, as the same may be amended, modified or
supplemented and in effect from time to time, (iii) Schedules I through V to the
Security Agreement are hereby amended and restated in their entirety as set
forth on Schedules I through V, respectively, hereto and (iv) Schedule II to the
Pledge Agreement is hereby amended and restated in its entirety as set forth on
Annex II attached hereto.

                               ARTICLE II

                     Representations and Warranties

            Each Reaffirming Party hereby represents and warrants, which
representations and warranties shall survive execution and delivery of this
Agreement, as follows:

            SECTION 2.01. Organization. Such Reaffirming Party is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
formation.

            SECTION 2.02. Authority; Enforceability. Such Reaffirming Party has
the power and authority to execute, deliver and carry out the terms and
provisions of this Agreement and has taken all necessary action to authorize the
execution, delivery and
<PAGE>   236
                                                                               3

performance by it of this Agreement. Such Reaffirming Party has duly executed
and delivered this Agreement, and this Agreement constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.

            SECTION 2.03. Loan Documents. The representations and warranties of
such Reaffirming Party contained in each Loan Document are true and correct in
all material respects on and as of the Restatement Effective Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

                               ARTICLE III

                              Miscellaneous

            SECTION 3.01. Indemnity. Each Reaffirming Party shall indemnify
Chase, each Lender and each Related Party of any of the foregoing Persons (each
such Person being called an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any other agreement or instrument contemplated
hereby, the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder or the consummation of the transactions
contemplated hereby and thereby, or (ii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee or any Affiliate of such Indemnitee (or any
officer, director, employee, advisor or agent of such Indemnitee or any such
Indemnitee's Affiliates).

            SECTION 3.02. Setoff, etc. In addition to, and without limitation
of, any rights of Chase and the Lenders under applicable law, if an Event of
Default shall have occurred and be continuing, Chase, each Lender and each of
their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of any Reaffirming Party against any of and all
the obligations of any Reaffirming Party then existing under this Agreement or
any other Loan Document held by Chase or such Lender, irrespective of whether or
not Chase or such Lender shall have made any demand under this Agreement or such
other
<PAGE>   237
                                                                               4

Loan Document. The rights of Chase and each Lender under this Section 3.02 are
in addition to other rights and remedies (including other rights of setoff)
which Chase or such Lender may have.

            SECTION 3.03. Notices. All notices and other communications
hereunder shall be made at the addresses, in the manner and with the effect
provided in Article IX of the Amended and Restated Credit Agreement; provided
that, for this purpose, the address of each Reaffirming Party shall be the one
specified for the Borrower under the Amended and Restated Credit Agreement.

            SECTION 3.04. Limitation of Liability. To the extent permitted by
applicable law, each Reaffirming Party shall not assert, and each hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, the transactions
contemplated hereby, any Loan or Letter of Credit or the use of the proceeds
thereof.

            SECTION 3.05. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. EACH REAFFIRMING PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME
COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT
CHASE OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY REAFFIRMING
PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
<PAGE>   238
                                                                               5

            SECTION 3.06. Loan Document. This Agreement is a Loan Document
executed pursuant to the Amended and Restated Credit Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.

            SECTION 3.07. Section Captions. Section captions used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.

            SECTION 3.08. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

            SECTION 3.09. WAIVER OF JURY TRIAL. EACH OF THE REAFFIRMING PARTIES
AND CHASE BY ITS ACCEPTANCE HEREOF HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

            SECTION 3.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and assigns.

            SECTION 3.11.  Amendment. This Agreement may be waived, modified
or amended only be a written agreement executed by each of the parties hereto.

            SECTION 3.12. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
but all of which shall
<PAGE>   239
                                                                               6

together constitute one and the same agreement. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.

            SECTION 3.13. No Novation. After the Restatement Effective Date, all
the obligations of the Borrower under the Original Credit Agreement shall become
obligations under the Amended and Restated Credit Agreement, secured by the
Collateral Documents as reaffirmed hereby. Neither this Agreement nor the
execution, delivery or effectiveness of the Amended and Restated Credit
Agreement shall extinguish the obligations for the payment of money outstanding
under the Amended and Restated Credit Agreement or discharge or release the Lien
or priority of the Collateral Assignment, the Pledge Agreement or the Security
Agreement or any other security therefor. Nothing herein contained shall be
construed as a substitution or novation of the obligations outstanding under the
Original Credit Agreement or the Amended and Restated Credit Agreement or
instruments securing the same, which shall remain in full force and effect,
except to any extent modified hereby or by instruments executed concurrently
herewith. Nothing implied in this Agreement or in any other document
contemplated hereby or thereby shall be construed as a release or other
discharge of the Borrower or any Guarantor or any Grantor or any Pledgor or any
party to the Indemnity, Subrogation and Contribution Agreement or any party to
the Collateral Assignment under any Collateral Document from any of its
obligations and liabilities as a "Borrower", "Guarantor", "Grantor", "Pledgor",
"party to the Indemnity, Subrogation and Contribution Agreement" or "party to
the Collateral Assignment" under the Original Credit Agreement or the Collateral
Documents. Each of the Original Credit Agreement and the Collateral Documents
shall remain in full force and effect, until and except to any extent modified
hereby or in connection herewith and therewith.
<PAGE>   240
                                                                               7

            IN WITNESS WHEREOF, each Reaffirming Party and Chase have caused
this Agreement to be duly executed and delivered as of the date first above
written.

                            SCG HOLDING CORPORATION,

                             by:
                                ---------------------------------
                                Name:
                                Title:

                            SEMICONDUCTOR COMPONENTS
                            INDUSTRIES, LLC,

                            by:
                                ---------------------------------
                                Name:
                                Title:

                           SCG (MALAYSIA SMP) HOLDING
                           CORPORATION,

                              by:
                                ---------------------------------
                                Name:
                                Title:

                           SCG (CZECH) HOLDING
                           CORPORATION,

                              by:
                                ---------------------------------
                                Name:
                                Title:

                           SCG (CHINA) HOLDING
                           CORPORATION,

                              by:
                                ---------------------------------
                                Name:
                                Title:
<PAGE>   241
                                                                               8

                           SCG INTERNATIONAL
                           DEVELOPMENT, LLC

                              by:
                                ---------------------------------
                                Name:
                                Title:

                          SEMICONDUCTOR COMPONENTS
                          INDUSTRIES PUERTO RICO, INC.,

                              by:
                                ---------------------------------
                                Name:
                                Title:

                           THE CHASE MANHATTAN BANK, as
                           Administrative Agent, Issuing Bank and
                           Collateral Agent,

                              by:
                                ---------------------------------
                                Name:
                                Title:
<PAGE>   242
                                                                      Schedule I

                                   Guarantors
<TABLE>
<CAPTION>

Name                                                             Address
<S>                                                              <C>
</TABLE>
<PAGE>   243
                                                                     Schedule II

                                   Copyrights
<PAGE>   244
                                                                    Schedule III

                                    Licenses
<PAGE>   245
                                                                     Schedule IV

                                     Patents
<PAGE>   246
                                                                      Schedule V

                                   Trademarks
<PAGE>   247
                                                                        Annex II

                               Pledged Securities<PAGE>   1
                                                                   EXHIBIT 10.3

                        STOCK PURCHASE AGREEMENT

                             BY AND BETWEEN

                     THE CHERRY CORPORATION, SELLER

                                  AND

          SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, PURCHASER

                                  AND

              SCG HOLDING CORPORATION, PARENT OF PURCHASER

<PAGE>   2
                           TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                            PAGE

<S>                                                                         <C>
ARTICLE I      THE TRANSACTION........................................        1

      1.1.     Sale of Stock..........................................        1

ARTICLE II     CONSIDERATION..........................................        1

      2.1.     Purchase Price.........................................        1

      2.2.     Payment................................................        1

ARTICLE III    CLOSING................................................        1

      3.1.     Closing................................................        1

      3.2.     Deliveries by Purchaser................................        2

      3.3.     Deliveries by Seller...................................        2

      3.4.     Closing Actions........................................        3

      3.5.     Determination of Post-Closing Adjustment...............        3

      3.6.     Post-Closing Adjustment For Tax Benefits...............        5

ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF SELLER...............        5

      4.1.     Organization and Qualification.........................        6

      4.2.     Capitalization.........................................        6

      4.3.     Authority; Non-Contravention; Approvals................        6

      4.4.     Financial Information..................................        8

      4.5.     Books and Records......................................        8

      4.6.     Absence of Undisclosed Liabilities.....................        8

      4.7.     Absence of Certain Changes or Events...................        8

      4.8.     Taxes..................................................        9

      4.9.     Interim Change.........................................        9

      4.10.    Real Estate............................................        9

      4.11.    Real Estate Leases.....................................       10

      4.12.    Employee Plans.........................................       10

      4.13.    Material Contracts.....................................       11

      4.14.    Intellectual Property and Proprietary Information......       12

      4.15.    Legal Proceedings......................................       13

      4.16.    Compliance with Law....................................       14

      4.17.    Licenses and Permits...................................       14
</TABLE>

                                      -i-
<PAGE>   3
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
      4.18.    Employees..............................................       14

      4.19.    Environmental Matters..................................       14

      4.20.    Brokers' Fees..........................................       15

      4.21.    Disclaimer.............................................       15

      4.22.    Affiliate Relationships; Indebtedness..................       16

ARTICLE V      REPRESENTATIONS AND WARRANTIES OF PURCHASER............       16

      5.1.     Organization and Qualification.........................       16

      5.2.     Authority; Non-Contravention; Approvals................       16

      5.3.     Litigation.............................................       17

      5.4.     Availability of Funds..................................       18

      5.5.     Knowledge of Purchaser.................................       18

      5.6.     Purchaser's Business Investigation.....................       18

      5.7.     Financial Statements...................................       18

      5.8.     Investment Intent......................................       19

      5.9.     Brokers' Fees..........................................       19

ARTICLE VI     COVENANTS OF SELLER....................................       19

      6.1.     Interim Conduct of Business............................       19

      6.2.     Access.................................................       20

      6.3.     Records and Documents..................................       20

      6.4.     Consummation...........................................       21

      6.5.     Hart-Scott-Rodino Consent..............................       21

      6.6.     Notification of Certain Matters........................       21

      6.7.     Acquisition Proposals..................................       21

      6.8.     Non-Solicitation.......................................       22

ARTICLE VII    COVENANTS OF PARENT AND PURCHASER......................       22

      7.1.     Consummation...........................................       22

      7.2.     Hart-Scott-Rodino Consent..............................       22

      7.3.     Confidentiality........................................       22

      7.4.     Records and Documents..................................       23
</TABLE>

                                      -ii-
<PAGE>   4
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                        <C>
      7.5.     Insurance..............................................       23

      7.6.     Notification of Breach.................................       23

      7.7.     Non-Solicitation.......................................       23

      7.8.     Conduct of Business by Parent and Subsidiary
               Pending the Closing....................................       23

      7.9.     Control of the Subsidiary's Operations.................       24

      7.10.    Cherry Name............................................       24

      7.11.    WARN Act Compliance....................................       26

      7.12.    Notification of Certain Matters........................       26

      7.13.    Directors' and Officers' Indemnification...............       26

      7.14.    Trademarks Assignments.................................       27

ARTICLE VIII   TAX MATTERS............................................       27

      8.1.     Section 338(h)(10) Elections...........................       27

      8.2.     Liability for Taxes....................................       27

      8.3.     Tax Proceedings........................................       29

      8.4.     Payment of Taxes.......................................       29

      8.5.     Tax Returns............................................       29

      8.6.     Tax Allocation Arrangements............................       30

      8.7.     Cooperation and Exchange of Information................       30

      8.8.     Conflict...............................................       30

ARTICLE IX     ADDITIONAL AGREEMENTS..................................       31

      9.1.     Option Plans...........................................       31

      9.2.     Seller and Subsidiary Benefit Plans....................       31

      9.3.     Certain New Plans......................................       31

      9.4.     Funding of Success Bonus...............................       32

      9.5.     No Limitation..........................................       32

ARTICLE X        CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
               PURCHASER..............................................       32

      10.1.    Accuracy of Warranties and Performance of Covenants....       32

      10.2.    No Pending Action......................................       33
</TABLE>

                                     -iii-
<PAGE>   5
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                       <C>
      10.3.    Hart-Scott-Rodino......................................       33

      10.4.    Cure Period............................................       33

      10.5.    Parent Required Consents and Approvals.................       33

ARTICLE XI     CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER..........       33

      11.1.    Accuracy of Warranties and Performance of Covenants....       33

      11.2.    No Pending Action......................................       34

      11.3.    Hart-Scott-Rodino......................................       34

      11.4.    Cure Period............................................       34

ARTICLE XII    SURVIVAL AND INDEMNIFICATION...........................       34

      12.1.    Survival...............................................       34

      12.2.    Indemnification........................................       34

      12.3.    General Provisions Relating to Indemnification.........       35

      12.4.    Characterization as Price Adjustment...................       38

ARTICLE XIII   TERMINATION............................................       38

      13.1.    Termination or Abandonment.............................       38

      13.2.    Effect of Termination..................................       38

ARTICLE XIV    GENERAL PROVISIONS.....................................       39

      14.1.    Amendments and Waiver..................................       39

      14.2.    Notices................................................       39

      14.3.    Expenses...............................................       40

      14.4.    Counterparts...........................................       40

      14.5.    Successors and Assigns; Beneficiaries..................       40

      14.6.    Entire Agreement.......................................       41

      14.7.    Announcements..........................................       41

      14.8.    Partial Invalidity.....................................       41

      14.9.    Governing Law; Jurisdiction............................       41

      14.10.   Other Rules of Construction............................       41

      14.11.   Authorship.............................................       41

      14.12.   Specific Performance...................................       42
</TABLE>

                                      -iv-
<PAGE>   6
                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                      <C>
      14.13.   Joint and Several Obligations..........................       42
</TABLE>

                                      -v-
<PAGE>   7
SCHEDULES

<TABLE>
<S>      <C>
3.5      Net Working Capital Amount

4.2      Stock Owned by Subsidiaries

4.3(b)   Consents

4.3(c)   Seller Required Statutory Approvals

4.4(a)   Audited Financial Statements

4.4(b)   Interim Financial Statements

4.6      Absence of Undisclosed Liabilities

4.7      Changes 4.8 Taxes 4.9 Interim Change

4.8      Taxes

4.9      Interim Change

4.10     Owned Real Estate

4.11     Real Estate Leases

4.12     Employee Plans

4.13     Material Contracts

4.14(a)  Intellectual Property

4.14(b)  Infringement of Subsidiary Intellectual Property

4.15     Legal Proceedings

4.16     Compliance with Law

4.18     Employees

4.19     Environmental Matters

4.22     Affiliate Relationship/Indebtedness

5.2      Parent Required Consents and Approvals

5.7      Financial Statements of Purchaser

6.1      Interim Conduct of Business from Agreement Date to Closing
</TABLE>

                                      -vi-
<PAGE>   8
                            STOCK PURCHASE AGREEMENT

      THIS AGREEMENT (the "AGREEMENT") is made and entered into this 8th day of
March, 2000, by and between SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, a Delaware
limited liability company ("PURCHASER"), SCG HOLDING CORPORATION, a Delaware
corporation and the parent of the Purchaser ("PARENT"), and THE CHERRY
CORPORATION, a Delaware corporation ("SELLER").

      WHEREAS, Cherry Semiconductor Corporation, a Rhode Island corporation
(including its subsidiaries where applicable, "SUBSIDIARY"), is a wholly-owned
subsidiary of Seller;

      WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
purchase all of the outstanding capital stock of Cherry Semiconductor
Corporation ("SUBSIDIARY COMMON STOCK"), subject to the terms and conditions of
this Agreement.

      NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:

                                   ARTICLE I

                                 THE TRANSACTION

1.1. SALE OF STOCK. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined below), Seller shall sell, transfer and
convey to Purchaser and Purchaser shall purchase all of Seller's right, title
and interest in and to the Subsidiary Common Stock free and clear of all liens,
claims and encumbrances or other restrictions of any kind other than those
arising under state and federal securities laws.

                                   ARTICLE II

                                  CONSIDERATION

2.1. PURCHASE PRICE. The aggregate purchase price for the Subsidiary Common
Stock shall be $250 million (the "PURCHASE PRICE").

2.2. PAYMENT. The Purchase Price shall be payable in cash at the Closing by wire
transfer of immediately available funds to an account designated by Seller.

                                  ARTICLE III

                                     CLOSING

3.1. CLOSING. The transfer of Subsidiary Common Stock contemplated by this
Agreement (the "CLOSING") shall take place at the offices of McDermott, Will &
Emery, 227 West Monroe Street, Chicago, Illinois 60606, on (a) the later of (i)
the third business day following the date on which the last of the conditions
set forth in Articles X and XI is fulfilled or

                                       1
<PAGE>   9
waived or (ii) the day Seller's accounting systems are capable of recording the
Closing (which shall be no later than the last day of the month containing such
third business day); or (b) at such other time and place as Purchaser and the
Seller shall agree. The date on which the Closing occurs is referred to in this
Agreement as the "CLOSING DATE." Upon consummation, the Closing will be deemed
to take place as of the close of business on the Closing Date (the "EFFECTIVE
TIME").

         3.2. DELIVERIES BY PURCHASER. At the Closing, Purchaser shall deliver
the following:

         (a) Two Hundred Fifty Million Dollars ($250,000,000 U.S.) payable by
wire transfer of immediately available funds to an account designated by Seller;

         (b) an officer's certificate to the effect that all of Parent and
Purchaser's representations and warranties are true and correct in all material
respects as if made at and as of the Closing and in the case of representations
and warranties made as of a specified date earlier than the Closing Date such
date, and to the effect that Parent and Purchaser each have fulfilled all of
their respective agreements and covenants and have satisfied all Closing
conditions to be performed by them;

         (c) secretary certificates of each of Parent and Purchaser as to the
resolutions authorizing the transactions contemplated hereby; and

         (d) such other instruments or documents as may be reasonably necessary
or appropriate to carry out the transactions contemplated hereby.

         3.3. DELIVERIES BY SELLER. At the Closing, Seller shall deliver the
following:

         (a) certificates evidencing all of the Subsidiary Common Stock, with
fully executed stock powers;

         (b) a legal opinion opining to the subjects of Sections 4.1, 4.2,
4.3(a), 4.3(b)(i) and 4.3(b)(ii) and 4.3(c) to the extent typically covered in
opinions of Seller's counsel in transactions of this type and subject to typical
exceptions and qualifications;

         (c) an officer's certificate to the effect that all of Seller's
representations and warranties are true and correct in all material respects as
if made at and as of the Closing and in the case of representations and
warranties made as of a specified date earlier than the Closing Date, such date
and to the effect that Seller has fulfilled all of its agreements and covenants
and has satisfied all Closing conditions to be performed by it;

         (d) secretary certificate of Seller as to the resolutions authorizing
the transactions contemplated hereby;

         (e) the minute books and stock records of the Subsidiary; and

                                       2
<PAGE>   10
         (f) such other instruments or documents as may be reasonably necessary
or appropriate to carry out the transactions contemplated by this Agreement.

         3.4. CLOSING ACTIONS. At the Closing, the articles of incorporation of
the Cherry Semiconductor Corporation shall be amended to change the name of the
Subsidiary so that neither the word "Cherry" nor any words similar thereto are
likely to be confused with the Cherry marks that are part of the name of the
Subsidiary.

         3.5. DETERMINATION OF POST-CLOSING ADJUSTMENT.

         (a) As soon as practicable, but in any event no later than thirty (30)
days after the Closing Date, Seller shall cause the Subsidiary to prepare a
consolidated balance sheet (the "CLOSING DATE BALANCE SHEET") of the Subsidiary
as of the Closing Date. The Closing Date Balance Sheet shall not give effect to
the transactions contemplated by this Agreement and shall be prepared in
accordance with GAAP consistent with the Subsidiary's Audited Financial
Statements (as defined in Section 4.4(a)). After Closing, Purchaser and
Subsidiary shall permit Seller and its representatives to have reasonable access
to Subsidiary's books and records for preparation of the Closing Date Balance
Sheet.

         (b) Seller shall cause Arthur Andersen LLC (the "AUDITOR") to audit as
soon as practicable but no later than ninety (90) days after the Closing Date
the Closing Date Balance Sheet as soon as possible after the completion thereof
and Seller shall deliver to the Purchaser upon receipt of the Auditor's opinion
with respect thereto, a copy of the Closing Date Balance Sheet and the Auditor's
opinion. The Auditor's opinion shall state that the Closing Date Balance Sheet
(i) has been audited in accordance with generally accepted auditing standards,
(ii) has been prepared in accordance with GAAP and (iii) fairly presents the
financial condition of the Subsidiary as of the Closing Date. The fees and
expenses of the Auditor shall be paid by the Purchaser.

         (c) Concurrently with the delivery of the Auditor's opinion with
respect to the Closing Date Balance Sheet, Seller shall cause the Auditor to
prepare and deliver to the Purchaser a certificate setting forth the
Post-Closing Adjustment (the "AUDITOR'S POST-CLOSING CERTIFICATE"). The
"POST-CLOSING ADJUSTMENT" shall be an amount equal to (i) the Net Working
Capital of the Subsidiary as of the Closing Date, as determined from the Closing
Date Balance Sheet (the "CLOSING DATE NET WORKING CAPITAL AMOUNT"), minus (ii)
$27,500,000 minus (iii) the amount of any Indebtedness other than Intercompany
Amounts (for purposes of this Agreement the Purchaser agrees that all existing
operating leases of Subsidiary, as determined for the Audited Financial
Statements, are not capitalized leases).

         (d) Following delivery to the Purchaser of the Auditor's Post-Closing
Certificate and the Closing Date Balance Sheet, the Purchaser, Seller and their
representatives shall have the right to review all such data and materials
(including the Auditor's work papers) as is reasonably necessary to enable the
Purchaser, Seller and their representatives to verify the accuracy of the
Auditor's Post-Closing Certificate and the information contained therein.

                                       3
<PAGE>   11
         (e) If the Purchaser does not give notice in writing to Seller of its
objections to any item or items in the Closing Date Balance Sheet or the
Auditor's Post-Closing Certificate within forty-five (45) business days after
its receipt of the Auditor's Post-Closing Certificate, then the Post-Closing
Adjustment shall be deemed to be finally determined for purposes of this
Agreement.

         (f) If the Purchaser gives notice in writing to Seller of its
objections to any item or items in the Closing Date Balance Sheet or the
Auditor's Post-Closing Certificate within forty-five (45) business days after
its receipt of the Auditor's Post-Closing Certificate, Purchaser and the Seller
shall endeavor to resolve all such objections within forty-five (45) business
days after receipt of such notice. Each notice of objections shall outline in
reasonable detail the basis for each objection and, wherever reasonably
possible, the dollar amount involved. If such notice is timely given and
Purchaser and the Seller are able to resolve the disputed matters, then the
Post-Closing Adjustment as modified in accordance with the parties' agreement
shall be deemed to be finally determined for purposes of this Agreement.

      (g) If Purchaser and the Seller are unable to resolve all such objections
within such forty-five (45) business day period, then Purchaser and the Seller
shall select a mutually agreed upon independent accounting firm (the "DISPUTE
AUDITOR") (which shall be one of the "Big Five" accounting firms) to determine
all items in dispute and to deliver a certificate to Purchaser and the Seller as
soon as practicable, which certificate shall include such firm's determination
of the Post-Closing Adjustment computed pursuant to and in accordance with the
provisions of this Agreement, but which otherwise may be in such form and
contain such information as such firm, in its sole discretion, deems necessary
or appropriate. In resolving such disputes and providing such certificate, the
Dispute Auditor shall employ such procedures as it, in its sole discretion,
deems necessary or appropriate in the circumstances.

      (h) Upon the receipt by Purchaser and the Seller of the certificate of the
Dispute Auditor pursuant to Section 3.5(g), the Post-Closing Adjustment shall be
deemed to be finally determined for purposes of this Agreement and shall be
binding upon the parties.

      (i) The fees and expenses of the Dispute Auditor shall be borne 50% by
Purchaser and 50% by the Seller; provided that if the Dispute Auditor determines
that one party's position is completely correct then such party shall not pay
any of the fees, costs and expenses charged by the Dispute Auditor and the
objecting party shall pay all of such fees, costs and expenses of the
independent accounting firm.

      (j) The Purchase Price shall be decreased by the amount by which the
Post-Closing Adjustment is negative or increased by the amount by which the
Post-Closing Adjustment is positive. Buyer (if the Post-Closing Adjustment is
positive) or Seller (if the Post-Closing Adjustment is negative) shall promptly
(and in any event within five (5) business days) after the final determination
thereof make payment to the other party by wire transfer in immediately
available funds of the amount of such difference, together with interest thereon
at a per annum rate of 5% from the Closing Date to the date of payment. The
Post-Closing Adjustment shall be

                                       4
<PAGE>   12
the sole remedy for any matters, facts or circumstances reflected in the
calculation of the Post-Closing Adjustment, and such matters, facts or
circumstances shall not entitle either party to indemnification rights or other
damages.

      For purposes of calculating the Net Working Capital Amount, the term "NET
WORKING CAPITAL" shall mean Current Assets minus Current Liabilities, as
calculated using the methodology set forth on Schedule 3.5. The term "CURRENT
ASSETS" and "CURRENT LIABILITIES" shall mean the line items set forth on
Schedule 3.5, which items shall be calculated on the same basis as reflected as
line items on the Audited Financial Statements; provided that the Intercompany
Amount (see below) shall be excluded, and items classified as current solely as
a result of the transactions contemplated by this Agreement (such as long term
deferred taxes) shall be excluded. All intercompany trade or other intercompany
receivables and payables, and all tax accounts, receivables, payables, or cash
overdrafts, current or deferred, short or long-term (collectively, the
"INTERCOMPANY AMOUNT"), will be forgiven at Closing by the applicable party
without compensation.

      3.6. POST-CLOSING ADJUSTMENT FOR TAX BENEFITS. Parent shall pay to Seller
in immediately available funds an amount equal to the amount of any net
reduction in taxes actually realized as a result of (i) Seller's payment of a
success bonus in connection with the transactions contemplated hereby, (ii)
Seller's payment of any excise parachute taxes on behalf of the Subsidiary, and
(iii) the exercise of options on Seller's common stock held by employees of the
Subsidiary on or after the Closing Date (collectively, the "TAX BENEFIT").
Within One Hundred Twenty (120) days after the Closing, Purchaser shall deliver
to the Seller a certificate setting forth the amount of the Tax Benefit.
Purchaser and Subsidiary shall permit Seller and its representatives to have
reasonable access to Subsidiary's books and records to verify the Tax Benefit
certificate. In the event that Seller gives notice in writing to Purchaser of
its objections to the amount of the Tax Benefit, then any dispute arising with
respect to the Tax Benefit shall be resolved using the same procedures set forth
to resolve disputes under Section 3.5 above.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF SELLER

      Seller hereby represents and warrants to Purchaser, as of the date hereof,
and as of the Closing Date, as set forth below. For purposes of this Agreement,
a "MATERIAL ADVERSE EFFECT" shall mean any effect which is materially adverse to
the business, assets, properties, operations or financial condition of the
Subsidiary, when taken as a whole. For purposes of this Agreement, the phrase
"TO THE KNOWLEDGE OF SELLER," or other language of similar effect, shall mean to
the actual knowledge of Peter B. Cherry, Dan A. King or Alfred S. Budnick. The
exceptions, modifications, descriptions and disclosures in any Schedule attached
hereto are made for all purposes of this Agreement and are exceptions to all
representations and warranties set forth in this Agreement where it is
reasonably clear from the face of such exception, modification, description or
disclosure that it specifically relates to such other representation or
warranty.

                                       5
<PAGE>   13
Disclosure of an item in response to one section of this Agreement shall
constitute disclosure in response to every section of this Agreement
notwithstanding the fact that no express cross-reference is made where it is
reasonably clear from the face of such exception, modification, description or
disclosure that it specifically relates to such other representation or
warranty. Disclosure of any items not otherwise required to be disclosed shall
not create any inference of materiality.

      4.1. ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized in good standing and validly existing under the laws of Delaware.
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Rhode Island and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Subsidiary
is qualified to do business and is in good standing in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing will not have a Material Adverse
Effect.

      4.2. CAPITALIZATION.

      (a) The authorized capital stock of the Subsidiary consists of 250,000
shares of Subsidiary Common Stock. As of the date of this Agreement, 160,190
shares of Subsidiary Common Stock were issued and outstanding, all of which were
validly issued and are fully paid, nonassessable and free of preemptive rights,
and are owned by the Seller.

      (b) Other than the options (the "OPTIONS") issued and outstanding pursuant
to the Subsidiary's 1999 Stock Option Plan, as amended (the "OPTION PLAN")
(which shall be terminated at the Closing pursuant to Section 9.1), there are no
outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights of any kind or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement (together, "RIGHTS"), obligating the Subsidiary or
the Seller to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Subsidiary. There are no voting
trusts, proxies or other agreements or understandings of any kind to which
Subsidiary or the Seller is a party or is bound with respect to the voting of
any shares of capital stock of the Subsidiary.

      (c) Seller has good title to the Subsidiary Common Stock, free and clear
of all liens, claims and encumbrances.

      (d) Except as set forth on Schedule 4.2, the Subsidiary does not own stock
or have any equity investment or other interest in, does not have the right to
acquire any such interest, and does not control, directly or indirectly, any
corporation, partnership or joint venture.

                                       6
<PAGE>   14
      4.3. AUTHORITY; NON-CONTRAVENTION; APPROVALS.

      (a) Seller has full corporate power and authority to enter into this
Agreement and, subject to the Seller Required Statutory Approvals (as defined in
Section 4.3(c)), to consummate the transactions contemplated hereby. All
corporate acts required to be taken by Seller to authorize the execution and
delivery of this Agreement and all agreements and transactions contemplated
hereby have been duly and properly taken. This Agreement has been duly executed
and delivered by the Seller, and, assuming the due authorization, execution and
delivery hereof by Parent and Purchaser, constitutes a valid and legally binding
agreement of the Seller, enforceable against the Seller in accordance with its
terms, except that such enforcement may be subject to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (b) general equitable
principles.

      (b) The execution and delivery of this Agreement by the Seller do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge, adverse
claim, levy, mortgage, pledge, assessment or encumbrance of any kind upon any of
the properties or assets of the Seller or the Subsidiary under any of the terms,
conditions or provisions of (i) the respective charters or by-laws of the Seller
or the Subsidiary, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to the Seller or the Subsidiary or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Seller or the
Subsidiary is now a party or by which the Seller or the Subsidiary or any of
their respective properties or assets may be bound or affected. The consummation
by the Seller of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Seller Required Statutory Approvals and (y) in the case
of the terms, conditions or provisions described in clause (iii) above, to
obtaining (prior to the Effective Time) consents required from commercial
lenders, lessors or other third parties as specified on Schedule 4.3(b).
Excluded from the foregoing sentences of this paragraph (b), insofar as they
apply to the terms, conditions or provisions described in clauses (ii) and (iii)
of the first sentence of this paragraph (b), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not have a Material Adverse
Effect.

      (c) Except for (i) the filing requirements by the Seller and the
termination or expiration of waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), and (ii) any
required filings with or approvals from applicable state authorities or public
service commissions as specified on Schedule 4.3(c) (the filings and

                                       7
<PAGE>   15
approvals referred to in clauses (i) through (ii) are collectively referred to
as the "Seller Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Seller or the consummation by the Seller of
the transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a Material
Adverse Effect.

      (d) As used in this Agreement, the term "subsidiary" shall mean, when used
with reference to any person or entity, any corporation, partnership, joint
venture or other entity of which such person or entity (either acting alone or
together with its other subsidiaries) owns, directly or indirectly, 50% or more
of the stock or other voting interests, the holders of which are entitled to
vote for the election of a majority of the board of directors or any similar
governing body of such corporation, partnership, joint venture or other entity.

      4.4. FINANCIAL INFORMATION.

      (a) The audited financial statements of the Subsidiary for the two (2)
years ended February 28, 1999 (the "AUDITED FINANCIAL STATEMENTS") attached
hereto as Schedule 4.4(a) are (i) accurate and complete in all material
respects, (ii) in accordance with the books of account and records of Subsidiary
in all material respects, and (iii) prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby ("GAAP"). The Audited Financial Statements fairly
present in all material respects the consolidated financial position and results
of operations and shareholders' equity and cash flows of the Subsidiary and its
consolidated subsidiaries, as of the respective dates thereof and for the
respective periods covered thereby.

      (b) The interim financial statements (the "INTERIM FINANCIAL STATEMENTS"
and together the Audited Financial Statements, the "FINANCIAL STATEMENTS") of
the Subsidiary for the nine (9) months ended November 30, 1999 (the "FINANCIAL
STATEMENT DATE") attached hereto as Schedule 4.4(b) were prepared from
Subsidiary's books of account and records, in accordance with GAAP and
consistent with the same accounting principles as used in the preparation of the
Financial Statements, except that the Interim Financial Statements have not been
audited, are subject to normal year end adjustments and contain no notes which
are typically included as part of financial statements prepared in accordance
with GAAP. The Interim Financial Statements fairly present in all material
respects the consolidated financial position and results of operations and
shareholders' equity and cash flows of the Subsidiary and its consolidated
subsidiaries, as of the date thereof and for the period covered thereby.

      4.5. BOOKS AND RECORDS. The Seller has previously delivered to Parent
copies of minutes of (i) all meetings of the stockholder of the Subsidiary
(whether annual or special) and (ii) actions by written consent in lieu of a
Subsidiary stockholder meeting from March 1, 1997, until the date hereof.

                                       8
<PAGE>   16
      4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on Schedule
4.6 hereto, the Subsidiary had not at November 30, 1999, nor has incurred since
that date, any liabilities or obligations of Subsidiary (whether absolute,
accrued, contingent or otherwise) of any nature, except (a) liabilities,
obligations or contingencies (i) which are accrued or reserved against in the
Financial Statements or Interim Financial Statements or reflected in the notes
thereto or (ii) which were incurred after November 30, 1999, and were incurred
in the ordinary course of business and consistent with past practices, (b)
liabilities, obligations or contingencies which (i) would not, in the aggregate,
have a Material Adverse Effect or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities and obligations which are of a
nature not required to be reflected in the financial statements of the
Subsidiary prepared in accordance with GAAP consistently applied and which were
incurred in the ordinary course of business.

4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on Schedule 4.7,
since November 30, 1999, there has not been any change in the business,
operations, properties, assets, liabilities, financial condition or results of
operations of the Subsidiary and its subsidiaries, taken as a whole that would
have a Material Adverse Effect, except for changes that affect the industries in
which the Subsidiary operates generally. Since November 30, 1999, neither Seller
nor the Subsidiary have taken any actions that would be prohibited after the
date of this Agreement pursuant to Section 6.1 hereof.

      4.8. TAXES.

      (a) The Seller and its subsidiaries have (i) duly filed with the
appropriate governmental authorities all Tax Returns required to be filed by
them for all periods ending on or prior to the Effective Time, other than those
Tax Returns the failure of which to file would not have a Material Adverse
Effect, and (ii) duly paid in full or made adequate provision for the payment of
all Taxes for all past and current periods. There are no unresolved issues of
law or fact arising out of a notice of deficiency, proposed deficiency or
assessment from the Internal Revenue Services ("IRS") or any other governmental
taxing authority with respect to Taxes which, if decided adversely would have a
Material Adverse Effect. Except as set forth on Schedule 4.8, neither the Seller
nor the Subsidiary has waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency
other than waivers and extensions which are no longer in effect. Seller has not
filed an election under Rev. Proc. 91-11, 1991-1 C.B. 470, as modified by Rev.
Proc. 91-39, 1991-2 C.B. 694, or Rev. Proc. 95-39, 1995-2 C.B. 399.

      (b) For purposes of this Agreement, the term "Taxes" shall mean all taxes,
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall profits,
severance, customs, import, export, employment or similar taxes, charges, fees,
levies or other assessments imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof, whether computed on a
separate, consolidated, unitary, combined or any other basis, and such term
shall include any interest, fines, penalties or additional amounts and any
interest in respect of any additions, fines or

                                       9
<PAGE>   17
penalties attributable or imposed or with respect to any such taxes, charges,
fees, levies or other assessments.

      (c) For purposes of this Agreement, the term "Tax Return" shall mean any
return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.

      4.9. INTERIM CHANGE. Except as set forth in Schedule 4.9, since November
30, 1999, the Subsidiary has been operated in the ordinary course, consistent
with past operations.

      4.10. REAL ESTATE.

      (a) Schedule 4.10 sets forth an accurate and complete list of each parcel
of real property owned by Subsidiary (the "OWNED REAL ESTATE"). Subsidiary is
the sole legal and equitable owner of all right, title and interest in and has
title in fee simple to, and is in possession of, all Owned Real Estate which it
purports to own, including the buildings, structures and improvements situated
thereon and appurtenances thereto, in each case free and clear of all tenancies
and other possessory interests, security interests, conditional sale or other
title retention agreements, liens, encumbrances, mortgages, pledges,
assessments, easements, rights of way, covenants, restrictions, reservations,
options, rights of first refusal, defects in title, encroachments and other
burdens (together, "ENCUMBRANCES"), except as set forth on Schedule 4.10 or
except in such instances as could not reasonably be expected to result in a
Material Adverse Effect.

      (b) Except for the FAA towers on the Owned Real Estate, no portion of any
Owned Real Estate has been condemned, requisitioned or otherwise taken by any
public authority, and, to the knowledge of Seller, no such condemnation,
requisition or taking is threatened or contemplated.

      (c) To Seller's knowledge, the Owned Real Estate is in compliance in all
material respects with all applicable zoning, building, health, fire, water, use
or similar statutes, codes, ordinances, laws, rules or regulations, except for
such instances as could not reasonably be expected to result in a Material
Adverse Effect. To Seller's knowledge, the zoning of each parcel of Owned Real
Estate permits the existing improvements and the continuation following
consummation of the transaction contemplated hereby of the business of the
Subsidiary as presently conducted thereon, except for such instances as could
not reasonably be expected to result in a Material Adverse Effect.

      4.11. REAL ESTATE LEASES . Schedule 4.11 sets forth a list of all real
property leased, subleased, licensed and/or occupied by the Subsidiary (the
"LEASED REAL ESTATE"). Schedule 4.11 identifies the lease or sublease and street
address or other description with respect to each parcel of Leased Real Estate
(the "REAL ESTATE LEASES"). The Subsidiary is currently in peaceable possession
of the premises covered by each Real Estate Lease. True and correct copies of
each Real Estate Lease have been provided to Parent.

                                       10
<PAGE>   18
      4.12. EMPLOYEE PLANS.

      (a) Schedule 4.12 lists all of the existing employee compensation and
benefit plans and all stock option or other equity based, bonus, incentive and
deferred compensation, severance or other termination, employment, consulting
and non-competition plans, programs, arrangements or agreements which are
entered into, sponsored, maintained or contributed to by Seller or the
Subsidiary for the benefit of the employees of the Subsidiary (collectively, the
"SELLER BENEFIT PLANS"). With respect to any Seller Benefit Plans: (a) there are
no actions, suits or claims (other than routine claims for benefits in the
ordinary course) pending or, to the knowledge of Seller, threatened, and Seller
does not have any knowledge of any facts which could give rise to any such
actions, suits or claims (other than routine claims for benefits in the ordinary
course), which could subject Subsidiary or Purchaser to any liability from and
after the Closing Date; (b) to the knowledge of Seller, none of Seller or any
entity that together with the Seller is treated as a single employer under
Section 414(b), (c) or (m) of the Code or any other person has engaged in a
prohibited transaction, as such term is defined in Code Section 4975 or ERISA
Section 406, which would subject Subsidiary or Purchaser to any taxes, penalties
or other liabilities resulting from prohibited transactions under Code Section
4975 or under ERISA Sections 409 or 502(i); (c) no event has occurred and no
condition exists that could, directly or indirectly, subject Subsidiary or
Purchaser to any tax or penalty under Code Sections 511, 4971, 4972, 4977, 4978,
4978A, 4979, 4979A, 4980B or 5000, or to liability under Title I or Title IV of
ERISA; and (d) Seller's Savings and Retirement Plan is intended to qualify under
Section 401(a) of the Code and it has received a favorable determination letter
issued by the Internal Revenue Service and, to the knowledge of Seller, no event
or circumstance exists that has adversely affected or is likely to adversely
affect such qualification.

      (b) Except as set forth in Schedule 4.12, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, either alone or in combination with another event (whether
contingent or otherwise) will (A) entitle any current or former employee,
consultant, officer or director of the Subsidiary to any increased or modified
benefit or payment; (B) increase the amount of compensation due to any such
employee, consultant, officer or director, (C) accelerate the vesting, payment
or funding of any compensation, stock-based benefit, incentive or other benefit
(other than Seller's Savings and Retirement Plan); (D) result in any "parachute
payment" under Section 280G of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered); or (E) cause
any compensation to fail to be deductible under Section 162(m), or any other
provision of the Code.

      (c) With respect to those Seller Benefit Plans that are listed on Schedule
4.12 under the heading "Subsidiary Plans" (the "Subsidiary Plans"), (i) each
such Subsidiary Plan has been operated and administered in material compliance
with all applicable laws, statutes and regulations, except for any failures to
comply that, individually or in the aggregate, would not reasonably be expected
to result in material liability of the Subsidiary or any of its subsidiaries,
(ii) no Subsidiary Plan is intended to qualify under Section 401(a) of the Code
or is subject to

                                       11
<PAGE>   19
Section 412 of the Code or Title IV of ERISA and (iii) all contributions,
premiums and expenses due or payable under or in respect of such Subsidiary
Plans have been paid on a timely basis or, to the extent not yet due, have been
adequately accrued on the Subsidiary's financial statements.

      4.13. MATERIAL CONTRACTS. Schedule 4.13 sets forth an accurate list of all
Contracts (as defined below) related to the business of the Subsidiary to which
the Subsidiary is a party or is otherwise bound meeting any of the descriptions
set forth below (the "MATERIAL Contracts"):

      (a) all Real Estate Leases requiring annual payments in excess of
$250,000;

      (b) all lease agreements and management contracts with an annual revenue
in excess of $250,000;

      (c) all management and service contracts and purchase orders and other
contracts for the purchase of materials or services requiring annual payments in
excess of $250,000;

      (d) all machinery leases, equipment leases and other personal property
leases requiring annual payments in excess of $250,000;

      (e) all Contracts between or among the Seller and the Subsidiary and any
of their respect subsidiaries, affiliates, employees or directors, including any
intercompany Indebtedness;

      (f) all Contracts with any person containing any provision or covenant
prohibiting or materially limiting the ability of the Subsidiary to engage in
any business activity or compete with any person or prohibiting or materially
limiting the ability of any person to compete with the Subsidiary;

      (g) all material partnership, joint venture, strategic alliance or other
collaborative Contracts;

      (h) all Contracts under which any material Indebtedness of the Subsidiary
has been or may be created, incurred, assumed or guaranteed (excluding routine
checking account overdraft agreements involving petty cash amounts);

      (i) all Contracts that (i) limit or contain restrictions on the ability of
the Subsidiary to pay dividends or any other distributions on or otherwise
issue, redeem or otherwise dispose of its capital stock, to incur indebtedness,
to incur or suffer to exist any encumbrances, to purchase or sell any assets and
properties, to change the lines of business in which it participates or engages
or to engage in any merger or other business combination or (ii) require the
Subsidiary to maintain specified financial ratios or levels of net worth or
other indicia of financial condition; and

      (j) all other material Contracts not entered into in the ordinary course.

                                       12
<PAGE>   20
For purposes of this Agreement, "CONTRACT" shall mean any binding contract or
agreement, whether written or oral, manifesting an agreement or understanding
between two or more parties. "INDEBTEDNESS" of any person means each and every
obligation of such person which is either (i) an obligation for borrowed money,
(ii) an obligation evidenced by notes, bonds, debentures or similar instruments,
(iii) capitalized lease obligations, (iv) cash overdrafts, or (v) any obligation
in the nature of guarantees of the obligations described in clauses (i) through
(iv) above of any person; provided, however, that Indebtedness shall not mean
trade payables or accruals incurred in the ordinary course of business.

      Except as set forth on Schedule 4.13, each Material Contract is valid and
binding and is in full force and effect as to Subsidiary or Seller, as
applicable, assuming the other party thereto is bound which, to Seller's
knowledge, is the case for each Material Contract. No event has occurred which
is or, after the giving of notice or passage of time, or both, would constitute
a material default under or a material breach of any Material Contract by
Subsidiary or Seller, as applicable, or, to the knowledge of Seller, by any
other party thereto which could reasonably be expected to result in a Material
Adverse Effect.

      4.14. INTELLECTUAL PROPERTY AND PROPRIETARY INFORMATION.

      (a) For purposes of this Agreement, "INTELLECTUAL PROPERTY" shall mean all
proprietary and other rights in and to: (i) trademarks, service marks, brand
names, certification marks, trade dress, assumed names, trade names and other
indications of origin, including all applications for registration therefor and
all renewals, modifications and extensions thereof ("TRADEMARKS"); (ii) patents,
including design patents and utility patents, reissues, divisions,
continuations-in-part and extensions thereof, in each case including all
applications therefor ("PATENTS"); (iii) inventors' certificates and invention
disclosures; (iv) works of authorship, whether copyrightable or not, copyrights,
copyright registrations and applications for registration of copyrights and all
renewals, modifications and extensions thereof, mask works, moral rights and
design rights ("COPYRIGHTS"); (v) computer systems, including programs,
software, object and source code, databases, algorithms, and documentation
therefor, in each case including all copyrights therefor ("COMPUTER SYSTEMS");
(vi) trade secrets and other protectible information, including ideas, formulas,
compositions, technical documentation, operating manuals and guides, plans,
designs, sketches, inventions, production molds, product specifications,
engineering reports and drawings, manufacturing and production processes and
techniques; drawings, specifications, research records, invention records and
technical data; and all other know-how, protected by patent, copyright or trade
secret law; (vii) registrations of, and applications to register, any of the
foregoing with any Governmental Authority and any renewals or extensions thereof
("REGISTRATIONS"); (viii) the goodwill associated with each of the foregoing;
and (viii) any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing; in each case in any
jurisdiction.

      (b) Immediately after the Closing, Subsidiary shall retain all of its
right, title and interest in or rights under Contract to use all material
Intellectual Property Rights set forth on Schedule

                                       13
<PAGE>   21
4.14 (a) and Attachment A to Schedule 4.14(a) and used in or necessary to the
conduct of its business as presently conducted, except for the Cherry names and
marks identified in paragraph 7.10(a) hereto and subject to the limited
trademark license of paragraph 7.10(b) (the "SUBSIDIARY INTELLECTUAL PROPERTY").
To Seller's knowledge, the Subsidiary is not infringing any Intellectual
Property of any other person and, to Seller's knowledge, no claim is pending
asserting any such infringement. Except for the agreements listed under the
caption "Royalties and/or Licenses" on Schedule 4.14(a), the use of the
Subsidiary Intellectual Property or the manufacturing and sale of products by
the Subsidiary will not require the payment of any royalties by Subsidiary to
any person after the acquisition of Subsidiary Common Stock hereunder. Schedule
4.14(a) and Attachment A to Schedule 4.14(a) list all material Patents,
Trademarks, Copyrights, Computer Systems (other than commercially-available
software used pursuant to a "shrink-wrap" license) and Registrations owned by
the Subsidiary and all material Contracts relating to a license or sublicense or
other right to use any Subsidiary Intellectual Property granted by or to the
Subsidiary. To Seller's knowledge, except as set forth on Schedule 4.14(b), no
other person is presently infringing upon any Subsidiary Intellectual Property.

      4.15. LEGAL PROCEEDINGS. Except as set forth in Schedule 4.15, (a) neither
the Subsidiary nor the Seller is engaged in or a party to any action, suit or
other legal proceeding involving the Subsidiary or that will have a material
adverse effect on Seller's ability to consummate the transactions contemplated
hereby, (b) to the knowledge of Seller, neither the Subsidiary nor the Seller is
threatened with any action, suit or other legal proceeding involving the
Subsidiary, (c) Seller has no knowledge of any investigation threatened by any
governmental or regulatory authority with respect to the Subsidiary or that will
have a material adverse effect on Seller's ability to consummate the
transactions contemplated hereby, and (d) neither the Seller nor the Subsidiary
is subject to any judgment, order, writ, injunction, stipulation or decree of
any court or any governmental agency directly applicable thereto affecting the
Subsidiary or that will have a material adverse effect on Seller's ability to
consummate the transactions contemplated hereby.

      4.16. COMPLIANCE WITH LAW. Except as set forth on Schedule 4.16, the
operation of the business of the Subsidiary complies as of the date hereof in
all material respects with all applicable statutes, codes, laws, ordinances,
rules and regulations, except where non-compliance could not reasonably be
expected to result in a Material Adverse Effect.

      4.17. LICENSES AND PERMITS. Subsidiary currently has all of the licenses
and permits from all Federal, state, local and foreign authorities as are
necessary for the conduct of the business of the Subsidiary as currently
conducted as of the date hereof, except where the failure to have any license or
permit could not reasonably be expected to result in a Material Adverse Effect.

      4.18. EMPLOYEES.

      (a) Subsidiary has paid or properly accrued for all wages, salaries,
commissions, bonuses and other cash compensation (other than accrued vacation,
holiday and sick pay) to which

                                       14
<PAGE>   22
employees and former employees of the Subsidiary are entitled to as of the
Closing. Schedule 4.18 contains a list of the employees of the Subsidiary as of
the date of this Agreement having a base salary in excess of $105,000.

      (b) Except as set forth on Schedule 4.18, with respect to the current and
former employees of the Subsidiary (i) to the knowledge of Seller, Subsidiary
has complied in all material respects with all applicable laws regarding labor,
employment and employment practices, terms and conditions of employment,
occupational safety and health and wages and hours, except in such instances as
could not reasonably be expected to result in a Material Adverse Effect, (ii)
Subsidiary is not a party to or bound by, any collective bargaining agreement or
other written contract concerning employment, or any affirmative action plan
established pursuant to any local, state or federal law or order of any
governmental body or court affecting the Subsidiary, and (iii) there is no labor
strike or labor dispute, slowdown or stoppage actually pending or to Seller's
knowledge, threatened against or affecting the Subsidiary and the Subsidiary has
not experienced any labor strikes or material labor disputes, slowdowns or
stoppages during the past five years.

      4.19. ENVIRONMENTAL MATTERS.

      (a) Except as set forth on Schedule 4.19, the location, construction,
occupancy, maintenance, operation and use of the Owned Real Estate or the Leased
Real Estate, are each in material compliance with all applicable Environmental
Laws.

      (b) Except as set forth on Schedule 4.19, or as permitted in accordance
with any applicable Environmental Laws, there are no Pre-Closing Environmental
Conditions.

      (c) Except as set forth on Schedule 4.19, neither Subsidiary nor Seller
(in respect to the Owned Real Estate, Leased Real Estate or operations or
activities of Subsidiary) has received any notice, request for information,
complaint or administrative or judicial order in the past three years, and there
is no investigation, action, suit or proceeding pending, and no threatened,
alleged or asserted actual or potential liability under any Environmental Law or
arising from or related to a release or threatened release of Hazardous
Materials.

      (d) Seller has made available to Parent copies and results of all material
reports, studies, analyses, tests or monitoring results possessed or initiated
by Seller pertaining to Hazardous Materials in, on or under the Owned Real
Estate or the Leased Real Estate or concerning compliance with Environmental
Laws (collectively, the "ENVIRONMENTAL REPORTS"). The representations and
warranties contained in this Section 4.19 are deemed to be made subject to and
modified by the disclosures set forth in Schedule 4.19 and this Section shall
not be deemed to be breached with respect to any matter disclosed in Schedule
4.19.

"ENVIRONMENTAL LAWS" means all present federal, regional and local
administrative, regulatory and judicial laws, rules, statutes, codes,
ordinances, regulations, licenses, permits, rulings, injunctions, decrees and
judgments, which are in effect on the date hereof relating to the

                                       15
<PAGE>   23
protection of human health, safety, natural resources or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata).

"HAZARDOUS MATERIALS" shall mean any solid, liquid or gaseous material which is
now defined, listed or identified as "HAZARDOUS" (including "SUBSTANCES" or
"WASTES"), "TOXIC", a "POLLUTANT" or a "CONTAMINANT" pursuant to any
Environmental Law which is applicable to the site in question, including
asbestos, chlorinated solvents, polychlorinated biphenyls, radon, fuel oil,
petroleum (including its derivatives, by-products or other hydrocarbons) and any
other materials, which are dangerous, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic or mutagenic or which are prohibited,
limited, controlled or regulated under any applicable Environmental Law.

"PRE-CLOSING ENVIRONMENTAL CONDITIONS" shall mean any environmental conditions,
environmental liabilities or the presence or release of Hazardous Materials at
or related to the Owned Real Estate or the Leased Real Estate or operations
thereon prior to the Closing Date; provided that Pre-Closing Environmental
Conditions shall not include the presence of tetrachloroethene (PCE) which is
either (i) addressed in the Settlement Agreement and Covenant Not To Sue - Re
property at 1900 South County Trail Case #97-058 (Brownfield Agreement) or (ii)
identified in the Johnson Company reports and studies completed by or on behalf
of Purchaser and Parent (including any PCE contamination related to the PCE
contamination identified in those reports and studies).

      4.20. BROKERS' FEES. Neither the Subsidiary nor Seller have any liability
or obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Purchaser
or the Subsidiary is or will become liable or obligated.

      4.21. DISCLAIMER. The representations and warranties set forth in this
Article IV are the only representations and warranties made by Seller with
respect to the Subsidiary. Except as specifically set forth herein, Seller is
selling the Subsidiary to Purchaser "AS IS" and "WHERE IS" and with all faults.
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, ALL WARRANTIES, EXPRESS OR IMPLIED, ARE
HEREBY DISCLAIMED AND EXCLUDED, INCLUDING WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. Seller makes no representation or warranty as
to the accuracy or reliability of any forecasts or projections of revenues,
sales, expenses or profits of the Subsidiary. Notwithstanding the foregoing,
Seller shall not be relieved of any liability for, and this Section 4.21 shall
in no way affect, a claim for actual fraud.

      4.22. AFFILIATE RELATIONSHIPS; INDEBTEDNESS. At the Closing, except as set
forth on Schedule 4.22, the Subsidiary will be in possession of, and have or at
the Closing will have marketable title to, valid leasehold interests in or valid
rights to use, all real and tangible personal property which is used by
Subsidiary in connection with its business and that historically have been held
by Seller or any of its affiliates. Except as reflected in the Financial
Statements or on

                                       16
<PAGE>   24
Schedule 4.22, there is no Indebtedness between the Subsidiary and Seller or its
affiliates. At the Closing, the Subsidiary will have no Indebtedness to any
person, including Seller or any of its affiliates, except for trade payables or
accruals incurred in the ordinary course of business.

                                   ARTICLE V

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

      Purchaser and Parent jointly and severally hereby represent and warrant to
Seller as of the date hereof, and as of the Closing Date, as set forth below.
For purposes of this Agreement, the phrase "to the knowledge of Purchaser or
Parent" or other language of similar effect, shall mean to the actual knowledge
of Steve Hanson, Dario Sacomani, Samuel Anderson or Ralph Quinsey.

      5.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the state of its organization and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted.

      5.2. AUTHORITY; NON-CONTRAVENTION; APPROVALS. Except as set forth on
Schedule 5.2:

      (a) Parent and Purchaser each have full corporate power and authority to
enter into this Agreement and, subject to the Parent Required Statutory
Approvals (as defined in Section 5.2(c)), to consummate the transactions
contemplated hereby. All corporate acts required to be taken by Parent and
Purchaser to authorize the execution and delivery of this Agreement and all
transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by each of Parent and Purchaser,
and, assuming the due authorization, execution and delivery hereof by Seller,
constitutes a valid and legally binding agreement of each of Parent and
Purchaser enforceable against each of them in accordance with its terms, except
that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.

      (b) The execution and delivery of this Agreement by each of Parent and
Purchaser do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or
Purchaser or any of their respective subsidiaries under any of the terms,
conditions or provisions of (i) the respective charters or by-laws of Parent or
Purchaser or any of their respective subsidiaries, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to Parent or
Purchaser or any of their respective subsidiaries or any of their respective
properties or assets or (iii) any note, bond, mortgage, indenture, deed of

                                       17
<PAGE>   25
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Parent or Purchaser or
any of their respective subsidiaries is now a party or by which Parent or
Purchaser or any of their respective subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Purchaser of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, financial
condition or results of operations of Parent and its subsidiaries, taken as a
whole.

      (c) Except for the filing requirements by Parent and the expiration or
termination of waiting periods under the HSR Act (the "PARENT REQUIRED STATUTORY
APPROVALS"), no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by
Parent or Purchaser or the consummation by Parent and Purchaser of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, financial
condition or results of operations of Parent and its subsidiaries, taken as a
whole.

      5.3. LITIGATION. Neither Parent nor Purchaser is engaged in or a party to,
or, to the knowledge of Parent, threatened with any action or suit or other
legal proceeding that would have a material adverse effect on its ability to
consummate this Agreement and the transactions contemplated thereby. Parent has
no knowledge of any investigation threatened by any governmental or regulatory
authority that would have a material adverse effect on its ability to consummate
this Agreement and the transactions contemplated thereby. Neither Parent,
Purchaser nor any of their respective subsidiaries is subject to any judgment or
decree of any court or any governmental agency directly applicable thereto that
would have a material adverse effect on its ability to consummate this Agreement
and the transactions contemplated thereby.

      5.4. AVAILABILITY OF FUNDS. Prior to the date hereof, Parent has delivered
to Seller true and correct copies of the commitment letter and related documents
(the "Financing Commitments") providing for the financing of the transactions
contemplated hereby (the "Financing"). The Financing Commitments are binding
commitments and have not been amended or modified or withdrawn or rescinded in
any respect. The funds to be made available to Purchaser through the Financing,
together with funds otherwise available to Purchaser, will be sufficient to
enable Parent and Purchaser to consummate the transactions contemplated hereby
on

                                       18
<PAGE>   26
a timely basis. Except for the consents and approvals described on Schedule 5.2,
neither Parent nor Purchaser know of any facts or circumstances that would
affect their ability to complete the Financing.

      5.5. KNOWLEDGE OF PURCHASER. Except as disclosed to Seller, neither Parent
nor Purchaser has any actual knowledge of any information which makes, or if
known to Seller would make, any representation, warranty or covenant of Seller
contained herein untrue. Except as disclosed to Seller, neither Parent nor
Purchaser has any knowledge of any facts or circumstances which would constitute
a breach of any representation, warranty or covenant of Seller contained herein,
or which would, with the passage of time or adequate notice or both, constitute
such a breach, or which would entitle either Parent or Purchaser to make a claim
for indemnification under this Agreement. Parent and Purchaser have reviewed and
understand the terms and use restrictions of the Lemelson License set forth on
Schedule 4.14, including an option for Subsidiary to acquire at its expense,
after the Sale of Subsidiary Common Stock, extended license rights during a
limited ninety (90) day period specified in the Lemelson License. Parent and
Purchaser understand and agree that the terms of the Lemelson License shall be
maintained in confidence as provided therein.

      5.6. PURCHASER'S BUSINESS INVESTIGATION. Parent and Purchaser have
conducted such investigation of the Subsidiary as they have deemed necessary in
order to make an informed decision concerning the transactions contemplated
hereby. Parent and Purchaser have reviewed all of the documents, records,
reports and other materials identified in the Schedules hereto, and is familiar
with the content thereof. Parent and Purchaser acknowledge that they have been
given access to and has visited and examined the assets and operations of the
Subsidiary and the premises of the Subsidiary and are familiar with the
condition thereof. For the purpose of conducting these investigations, Parent
and Purchaser have employed the services of their own agents, representatives,
experts and consultants. In all matters affecting the condition of the
Subsidiary's assets or the contents of the documents, records, reports or other
materials in connection with the transactions contemplated hereby, Parent and
Purchaser are relying upon the advice and opinion offered by their own agents,
representatives, experts, consultants, employees and officers. All materials and
information requested by Parent and Purchaser have been provided to Parent and
Purchaser to Parent's satisfaction.

      5.7. FINANCIAL STATEMENTS. The audited income statement of the Parent for
the period ended December 31, 1999, and the balance sheet at the end of such
period attached hereto as Schedule 5.7, were prepared in conformity with
generally accepted accounting principles (except as set forth therein) and when
taken as a whole, present fairly, in all material respects, the financial
position of the Parent at the date indicated therein and the results of
operations for the period indicated therein.

      5.8. INVESTMENT INTENT. Purchaser and Parent acknowledge that the
Subsidiary Common Stock has not been, and will not be as of the Closing Date,
registered under the Securities Act of 1933, as amended, or the securities laws
of any state or other regulatory body and is being offered and sold in reliance
upon federal and state exemptions. Purchaser and

                                       19
<PAGE>   27
Parent are acquiring the Subsidiary Common Stock for their own account with the
present intention of holding such securities for investment purposes and not
with a view to or for sale in connection with any public distribution of such
securities in violation of any federal or state securities laws. Purchaser and
Parent are sophisticated investors, familiar with the business so that they are
capable of evaluating the merits and risks of their investment in the Subsidiary
Common Stock. Purchaser and Parent have had the opportunity to investigate on
their own the business of the Subsidiary and the management and financial
affairs of the Subsidiary and have had the opportunity to review the
Subsidiary's operations and facilities.

      5.9. BROKERS' FEES. Neither Parent nor Purchaser have any liability or
obligation to pay any fees or commissions to any broker, employee, finder or
agent with respect to the transactions contemplated by this Agreement for which
Seller could become liable or obligated.

                                   ARTICLE VI

                               COVENANTS OF SELLER

      6.1. INTERIM CONDUCT OF BUSINESS. Except as set forth on Schedule 6.1 or
as otherwise specifically provided herein, from the date hereof until the
Closing, Seller shall operate the Subsidiary consistent with past practice and
in the ordinary course of business in all material respects, and shall use
reasonable efforts to preserve intact the Subsidiary's business organizations
and assets and maintain its rights, franchises and existing relations with
customers, suppliers, employees and business associates. Except as expressly
contemplated by this Agreement, as required by a governmental authority of
competent jurisdiction or as set forth on Schedule 6.1, without the prior
written consent of Purchaser, Seller will not, and will cause Subsidiary not to:

      (a) Capital Stock. (i) Issue, sell, pledge, dispose of or encumber, or
authorize or propose the issuance, sale, pledge, disposition or encumbrance of,
any shares of its capital stock or any Rights, (ii) enter into any agreement
with respect to the foregoing, (iii) permit any additional shares of capital
stock to become subject to Options, other Rights or similar stock-based employee
rights or (iv) permit the exercise of any Options.

      (b) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, or declare or make any distribution on any shares of Subsidiary Common
Stock or directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of Subsidiary Common Stock.

      (c) Compensation; Employment Agreements; Etc. Enter into or amend any
employment, consulting, severance or similar agreements or arrangements with any
of the directors, officers or employees or former directors, officers or
employees of the Subsidiary, or grant any salary or wage increase, make any
award or grant under the Option Plan or any similar plan of the Seller or
increase any employee benefit (including incentive or bonus payments) relating
to any employee

                                       20
<PAGE>   28
of Subsidiary, except (i) in the ordinary course of business consistent with
past practices, (ii) for changes required by law, or (iii) to satisfy
contractual obligations existing as of the date hereof.

      (d) Benefit Plan. Enter into or amend in any material respect (except (i)
as may be required by applicable law, (ii) to satisfy contractual obligations
existing as of the date hereof or (iii) as expressly provided for herein) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, bonus, group insurance or other employee benefit,
incentive or welfare plan disproportionately affecting employees of the
Subsidiary.

      (e) Acquisitions and Dispositions.

      (i) Other than the acquisition of assets used in the operations of the
business of the Subsidiary in the ordinary course, acquire on behalf of the
Subsidiary all of the assets, business or properties of any other entity.

      (ii) Other than in the ordinary course of business consistent with past
practices, sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue any portion of its assets, business or properties.

      (f) Indebtedness and Encumbrances. Other than in the ordinary course of
business consistent with past practices, incur any Indebtedness or voluntarily
incur any Encumbrance on any assets or properties of the Subsidiary.

      (g) Capital Expenditures. Commit or authorize to be made after Closing
capital expenditures or commitments on behalf of the Subsidiary for additions to
property, plant or equipment constituting capital assets in an aggregate amount
exceeding $1,000,000.

      6.2. ACCESS. From the date hereof through the Closing Date, Seller shall
give Parent and its representatives access during normal business hours and
under reasonable circumstances to all properties and records of the Subsidiary,
to senior employees of Subsidiary (which shall mean Al Budnick and those
employees who report directly to Al Budnick), and all financial and other
information in its possession relating to the Subsidiary as Parent may from time
to time reasonably request. Parent shall not contact any other employee or any
customer, supplier, landlord or tenant of Seller without the prior consent of an
authorized officer of Seller, which will not be unreasonably withheld.

      6.3. RECORDS AND DOCUMENTS. Following the Closing Date, Seller shall grant
to Parent and its representatives, at Parent's reasonable request, reasonable
access to and the right to make copies at its expense of those records and
documents in Seller's possession related to the Subsidiary as may be reasonably
necessary for Purchaser's operation of the Subsidiary after the Closing. Seller
shall deliver to Purchaser copies of Subsidiary's year end audited financial
statements for the year ended February 29, 2000 upon their completion and shall
use its commercially reasonable efforts to deliver such financial statements
before the Closing Date.

                                       21
<PAGE>   29
      6.4. CONSUMMATION. Subject to the terms and conditions provided herein,
Seller agrees to use all reasonable efforts to take, or cause to be taken all
actions and to do, or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement in accordance with its terms; except
that this covenant shall not require Seller to make any payment or incur any
economic burden not provided for herein.

      6.5. HART-SCOTT-RODINO CONSENT. As promptly as possible, but in any event
not later than five (5) business days after the execution hereof, Seller shall
file with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "ANTITRUST DIVISION") a premerger
notification in accordance with the HSR Act with respect to the sale of the
Subsidiary pursuant to this Agreement. Seller shall furnish promptly to the FTC
and the Antitrust Division any additional information requested by either of
them pursuant to the HSR Act in connection with such filings and shall
diligently take, or cooperate in the taking of, all steps that are necessary or
desirable and proper to expedite the termination of the waiting period under the
HSR Act. 6.6. NOTIFICATION OF CERTAIN MATTERS. Seller agrees to give prompt
notice to Parent of, and to use its reasonable best efforts to prevent or
promptly remedy, (i) the occurrence or failure to occur of any event which
occurrence or failure to occur would reasonably be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect at the Effective Time and (ii) any material failure on its
part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.6 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.

      6.7. ACQUISITION PROPOSALS. Seller shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Purchaser with respect to any
Acquisition Proposal. Seller shall not, and shall cause its subsidiaries and the
officers, directors, agents and advisors of Seller and its Subsidiaries not to,
initiate, solicit or encourage inquiries or proposals with respect to, or engage
in any negotiations concerning, or provide any confidential information to, or
have any discussions with, any person relating to, any Acquisition Proposal. For
the purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean (a) a merger
or consolidation, or any similar transaction, involving the Subsidiary, (b) a
purchase or other acquisition of substantially all of the business assets of the
Subsidiary, (c) a purchase or other acquisition (including by way of merger,
consolidation, share exchange, tender or exchange offer or otherwise) of
beneficial ownership of the Subsidiary Common Stock, (d) any substantially
similar transaction, or (e) any inquiry or indication of interest with respect
to any of the foregoing, in each case other than the transactions contemplated
by this Agreement. Seller shall notify Parent immediately upon receipt of any
Acquisition Proposal (including the material terms thereof except for the
identity of the parties).

                                       22
<PAGE>   30
         6.8. NON-SOLICITATION. For the period beginning on the date hereof and
ending three (3) years from the earlier to occur of the Closing or the date this
Agreement is terminated, none of Seller nor any of its representatives (as
defined in the Confidentiality Agreement dated January 13, 2000) will (a)
solicit for employment or employ any employees of the Subsidiary or cause any
employees of the Subsidiary to leave the employment of the Subsidiary and work
for the Seller or any or its representatives; provided, however, that the
foregoing shall not apply to employees of the Subsidiary hired by the Seller or
any of its representatives as a result of the use of general solicitation (such
as an advertisement) not specifically directed to employees of the Subsidiary,
or (b) intentionally and purposefully interfere with any relationships between
Subsidiary and its existing customers, lessors, lessees or suppliers.

                                  ARTICLE VII

                        COVENANTS OF PARENT AND PURCHASER

         7.1. CONSUMMATION. Subject to the terms and conditions provided herein,
Parent and Purchaser each agree to use all reasonable efforts to take, or cause
to be taken all actions and to do, or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement in accordance with its
terms.

         7.2. HART-SCOTT-RODINO CONSENT. As promptly as possible, but in any
event not later than five (5) business days after the execution hereof, Parent
and Purchaser shall file with the FTC and the Antitrust Division, including
payment of the required filing fee, a premerger notification in accordance with
the HSR Act with respect to the purchase of the Subsidiary pursuant to this
Agreement. Parent and Purchaser shall furnish promptly to the FTC and the
Antitrust Division any additional information requested by either of them
pursuant to the HSR Act in connection with such filings and shall diligently
take, or cooperate in the taking of, all steps that are necessary or desirable
and proper to expedite the termination of the waiting period under the HSR Act.

         7.3. CONFIDENTIALITY. In addition to its obligations under the
Confidentiality Agreement dated January 13, 2000 (the "CONFIDENTIALITY
AGREEMENT"), which Parent and Purchaser agree shall remain in full force and
effect, Parent and Purchaser each agree that they will not disclose, nor will
they permit any of their employees, agents or representatives to disclose, to
any third party any confidential information obtained from Seller or the
Subsidiary in connection with this Agreement, including any information provided
pursuant to Section 6.2, or the fact that discussions regarding this transaction
are taking place, except as required by law or regulation. Upon consummation of
the transactions contemplated hereby, solely with respect to confidential
information relating to the Subsidiary, obligations under the Confidentiality
Agreement and this Section 7.3 shall terminate. If this Agreement is terminated
without consummation of the transactions contemplated hereunder, promptly after
termination, Parent and Purchaser shall each destroy or return to Seller all
such confidential information, including any copies, extracts or other
reproductions in whole or in part. Such return or destruction shall

                                       23
<PAGE>   31
be certified in writing to Seller by an authorized officer of Parent. The
provisions of this Section 7.3 shall survive any termination of this Agreement.

         7.4. RECORDS AND DOCUMENTS. Following the Closing Date, Parent and
Purchaser shall each grant to Seller and its representatives, at Seller's
reasonable request, reasonable access to and the right to make copies at its
expense of those records and documents covering any period prior to the Closing
related to the Subsidiary as may be reasonably necessary for litigation,
preparation of financial statements, the 338(h)(10) election, tax returns and
audits or other valid business purposes. If either Parent or Purchaser elect to
dispose of such records for six years after the Closing, Parent or Purchaser as
applicable shall first give Seller sixty (60) days' written notice, during which
period Seller shall have the right to take such records without further
consideration; provided, however, that Purchaser may maintain such books,
records and other data in microfiche, magnetic or other readily reproducible
form in lieu of retaining the originals thereof.

         7.5. INSURANCE. Purchaser shall procure and maintain insurance with
carriers and in a form and with such limits as may be reasonably appropriate for
the business as conducted by Purchaser. In addition, for a period of six (6)
years following the Closing, Seller and its successors and assigns shall be
named as additional insureds on all such liability insurance policies carried by
Purchaser. Purchaser shall provide Seller with a certificate of insurance
evidencing the foregoing. All premiums, assessments and other charges incurred
in maintaining such insurance in full force and effect, as well as the payment
of any deductibles or self-insured retentions, shall be the sole responsibility
of Parent and Purchaser.

         7.6. NOTIFICATION OF BREACH. Purchaser shall promptly notify Seller of
any information which makes, or if known to Seller would make, any
representation, warranty or covenant of Seller contained herein untrue. If a
breach is cured (whether or not subject of a notice) prior to the Closing, such
breach shall be deemed not to have occurred for all purposes of this Agreement.

         7.7. NON-SOLICITATION. For the period beginning on the date hereof and
ending three (3) years from the earlier to occur of the Closing or the date this
Agreement is terminated, none of Purchaser nor Parent nor any of their
respective representatives (as defined in the Confidentiality Agreement) will
(a) solicit for employment or employ any employees of the Seller or any of its
subsidiaries or cause any employees of the Seller or any of its subsidiaries to
leave the employment of Seller or any of Seller's subsidiaries and work for the
Subsidiary, Purchaser or Parent or any of their representatives; provided,
however, that the foregoing shall not apply to employees of the Seller hired by
the Subsidiary, Purchaser or Parent or any of their representatives as a result
of the use of general solicitation (such as an advertisement) not specifically
directed to employees of the Seller or the Seller's subsidiaries, or (b)
intentionally or purposefully interfere with any relationships between the
Seller and its subsidiaries, existing customers, lessors, lessees or suppliers.

                                       24
<PAGE>   32
         7.8. CONDUCT OF BUSINESS BY PARENT AND SUBSIDIARY PENDING THE CLOSING.
Except as otherwise contemplated by this Agreement, after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, both
Purchaser and Parent shall not, and shall cause its subsidiaries to not, take
any actions which could reasonably be expected to affect its ability to fund the
Purchase.

         7.9. CONTROL OF THE SUBSIDIARY'S OPERATIONS. Nothing contained in this
Agreement shall give to either Parent or Purchaser, directly or indirectly,
rights to control or direct the Subsidiary's operations prior to the Effective
Time. Prior to the Effective Time, the Subsidiary shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision of its operations.

         7.10. CHERRY NAME.

         (a) Purchaser and Parent each hereby acknowledge that, except for the
limited trademark license of paragraph 7.10(b) to Subsidiary for inventory and
products being manufactured, nothing herein, including the sale of the
Subsidiary Common Stock made hereunder, shall provide Purchaser, Parent or
Subsidiary with any right, license, claim or interest in the names and marks
"Cherry", "Cherry Semiconductor Corporation", "Cherry Semiconductor", "CSC",
CHERRY and design and the Three Cherry and Leaf Design (the "Cherry Marks").
Except as provided in paragraph 7.10(b), promptly after the Closing Date and no
later than 90 days after the Closing Date, Parent, Purchaser and Subsidiary
shall remove or otherwise obliterate the Cherry Marks from all signs,
letterhead, business cards, advertising media, promotional materials, manuals,
packaging, labels, documents, products or things held by, sold, offered for sale
or used by or for Subsidiary. On or promptly after the Closing Date, Purchaser
and Subsidiary shall take whatever action is necessary at their expense to amend
all licenses and permits and other deeds and registrations of Subsidiary to
reflect the Subsidiary's name change (or to obtain new ones, if any terminate by
operation of law) and Seller will cooperate with Purchaser and Subsidiary to
effect such transfer. Within ninety (90) days after the Closing, Purchaser shall
provide Seller with appropriate documentation showing that, except as allowed
under paragraph 7.10(b), the name "Cherry Semiconductor Corporation" or any name
similar thereto or similar to any of the Cherry Marks are no longer listed as
the permit, license holder or the registrant for any licenses, permits or other
registrations of the Subsidiary or displayed on any products, documents or other
things held by, sold, offered for sale or used by or for the Subsidiary.

         (b) (i) Seller hereby grants to Subsidiary a limited, worldwide,
paid-up, royalty free, nonexclusive license to use, for a transition period of
six (6) months after the Closing, any trademark owned by Seller and used by
Subsidiary as of the Closing Date as a visible trademark on or in association
with Subsidiary's products current as of the Closing Date and on or in
association with materials (including printed materials, advertising materials,
data sheets, application notes, packing slips, packing materials, and electronic
materials) used on or before the Closing Date in connection with the sale,
offering for sale, distribution, or advertising of any such products of
Subsidiary (collectively, the "Cherry Products"). The aforementioned license
shall apply only to trademarks that are visible to a purchaser of the Cherry
Products ("Licensed

                                       25
<PAGE>   33
Visible Trademarks"). This license is personal to Subsidiary, shall not be
sublicensed and shall not be assigned except as part of the sale, merger or
other disposition of Subsidiary's entire business, and is granted for the six
(6) month transition period to allow Subsidiary to dispose of any inventory that
bears any Licensed Visible Trademark and to change tooling that places any
Licensed Visible Trademark on Cherry Products.

         (ii) Notwithstanding Section 7.10(b)(i), for any Cherry Product that
must be re-qualified with a product purchaser when a Licensed Visible Trademark
on the Cherry Product or its packaging is changed or removed, Subsidiary shall
be permitted, for up to one and one half (1 1/2) years after Closing, to use
Licensed Visible Trademarks in order to continue advertising, selling and
distributing Cherry Products during the period of such re-qualification.

         (iii) Seller hereby grants to Subsidiary a limited, worldwide, paid-up,
royalty free, nonexclusive license to use any trademark owned by Seller and used
by Subsidiary as of the Closing Date on any Cherry Product, or on "Items" such
as equipment, software, or materials used in connection with the manufacture,
sale, offering for sale, distribution, or advertising of Cherry Products,
provided that the Items are not sold or given to purchasers or persons or
entities outside of Subsidiary's business and the Cherry Products are sold or
given to purchasers or persons or entities outside of Subsidiary's business only
with encapsulated trademarks of Seller which are not visible to purchasers or
such outside persons or entities in the ordinary course of use of such products
("Licensed Nonviewed Trademarks"). Subsidiary and its successors and assigns
agree to remove the Licensed Nonviewed Trademarks when any such Cherry Product
or Items are replaced by redesigned substitute products or Items or are
discontinued. This license shall terminate with the discontinuance or
replacement of the Cherry Products or Items bearing such Licensed Nonviewed
Trademarks. The license of this subparagraph is personal to Subsidiary, shall
not be sublicensed and shall not be assigned, except as part of the sale, merger
or other disposition of Subsidiary's entire business.

         (iv) During the period of time that any Licensed Visible Trademark is
used in connection with any Cherry Product, or any Licensed Nonviewed Trademark
is included in encapsulated Cherry Products or Items not provided to purchasers
or persons or entities outside Subsidiary's business, such Cherry Products or
Items manufactured by Subsidiary shall meet the quality control standards
required by Seller and used by Subsidiary prior to the Closing ("Quality
Standards"). So long as any Licensed Visible Trademark is used by Subsidiary, or
any Licensed Nonviewed Trademark is included in encapsulated Cherry Products
provided to purchasers or other persons or entities outside of Subsidiary's
business or used in association with Items not shown to purchasers or other
persons or entities outside of Subsidiary's business, Seller shall have the
right at reasonable times and on reasonable notice to conduct, during regular
business hours, an examination of Cherry Products and Items manufactured and
used by Subsidiary and bearing the Licensed Visible Trademark or

                                       26
<PAGE>   34
Licensed Nonviewed Trademark (including those in-process, assembled or tested)
at Subsidiary's facilities to determine the compliance of such Cherry Products
and Items with the Quality Standards. If at any time such Cherry Products and
Items fail to conform to the Quality Standards, Seller shall so notify
Subsidiary in writing. Upon such notification, Subsidiary shall immediately take
such steps as are necessary to promptly restore the Cherry Products and Items to
the required Quality Standards or, if unable to do so within a reasonable time,
cease to use the Licensed Visible Trademark or Licensed Nonviewed Trademark on
such Cherry Products and Items until such Quality Standards can be achieved.

         (v) Seller hereby grants to Subsidiary the right to use after the
Closing all part numbers, model numbers and the like, with or without a prefix,
in use by Subsidiary prior to the Closing to identify Cherry Products to
customers after closing. Subsidiary shall further have the right to create and
use additional part or model numbers for any series or numbering scheme in use
by Subsidiary as of the Closing.

         (vi) Parent, Purchaser and Subsidiary shall indemnify and hold Seller
harmless against all third party claims arising after Closing for damage or
injury arising from third party use of products manufactured, distributed or
sold by Subsidiary that bear the Licensed Visible Trademarks or Licensed
Nonviewed Trademarks pursuant to the trademark license contained in this Section
7.10 (the "Trademark License"), provided, however, that nothing contained in
this Section 7.10 shall limit or preclude any rights of Parent, Purchaser or
Subsidiary to be indemnified, defended or held harmless under this Agreement,
including, without limitation, under Section 12.2(b).

         7.11. WARN ACT COMPLIANCE. Parent and Purchaser shall retain full
responsibility for compliance with the Worker's Adjustment and Retraining
Notification Act of 1988, as amended, and be solely responsible for furnishing
any required notice of any "PLANT CLOSING" or "MASS LAYOFF", as applicable,
which arise as a result of any facility closings, reductions in work force or
termination or other action, that Parent, Purchaser or their affiliates may
cause or initiate on or after the Closing Date with respect to the Subsidiary
and shall jointly and severally indemnify Seller for any liability, expense and
cost related thereto, including reasonable attorneys' fees related thereto.

         7.12. NOTIFICATION OF CERTAIN MATTERS. Each of Parent and Purchaser
agrees to give prompt notice to Seller of, and to use its reasonable best
efforts to prevent or promptly remedy, (i) the occurrence or failure to occur of
any event which occurrence or failure to occur would reasonably be likely to
cause any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at the Effective Time and (ii) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 7.12 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice

                                       27
<PAGE>   35
         7.13. DIRECTORS' AND OFFICERS' INDEMNIFICATION. For a period of six
years from the Effective Time, the Subsidiary shall, to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present and
former director, officer, employee and agent of the Subsidiary or any of its
subsidiaries against any loss, damage, cost or expense (including attorneys
fees), judgments and fines and amounts paid in settlement in connection with any
actual or threatened claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of, relating to or
in connection with any action or omission occurring prior to the Effective Time.
The obligations of the Subsidiary under this Section 7.13 are solely those of
the Subsidiary and in no event shall any claim may be made against Parent or
Purchaser with respect thereto. Neither Parent nor Purchaser shall take any
action which would materially impair the Subsidiary's ability to comply with its
obligations under this Section 7.13.

         7.14. TRADEMARKS ASSIGNMENTS. Within ninety (90) days after the
Closing, Purchaser shall cause Subsidiary to amend all of its trademark and
copyright registration, and assignments for issued patents, if any, set forth on
Attachment A hereto and all licenses on Schedule 4.14(a) and all permits held by
the Subsidiary, at Subsidiary's expense post-Closing, to reflect the name change
of the Subsidiary after the acquisition of Subsidiary Common Stock.

                                  ARTICLE VIII

                                   TAX MATTERS

         8.1. SECTION 338(H)(10) ELECTIONS. At Purchaser's request, Seller (as
the common parent of the affiliated group that includes Subsidiary (the "Seller
Group")) shall within the time period prescribed by law for the filing thereof,
join with Parent in making a timely, irrevocable and effective election under
Section 338(h)(10) of the Code and similar elections under state and local
income tax law, if applicable (collectively, the "Section 338(h)(10) Elections")
with respect to Purchaser's purchase of the Subsidiary Common Stock. Purchaser
shall prepare an Internal Revenue Service Form 8023 with respect to Purchaser's
purchase of the Subsidiary Common Stock and such form shall be duly executed by
an authorized person for each of Parent and Seller in connection with the
Closing. Purchaser shall prepare the state and local tax forms, if any,
necessary for effectuating the Section 338(h)(10) Elections in the applicable
states (the "State Forms") and any schedules (the "Tax Schedules") required to
be attached to the Internal Revenue Service Form 8023 or the State Forms
(collectively, the "Forms"). Seller shall provide any cooperation the Purchaser
shall reasonably require in preparing the Tax Schedules and State Forms and
shall execute any State Forms presented to it by Purchaser. Purchaser shall duly
and timely file the Forms (together with the applicable Tax Schedules) as
prescribed by Treasury Regulation Section 1.338(h)(10)-1 (as in effect and as it
may hereafter be amended) or the corresponding provisions of state and local
income tax law. Parent, Purchaser and Seller shall prepare all relevant Tax
Returns in a manner consistent with the Tax Schedules.

                                       28
<PAGE>   36
          8.2. LIABILITY FOR TAXES

         (a) Except to the extent such Taxes are taken into account as a
liability in the determination of the Closing Date Net Working Capital Amount,
Seller shall be liable for, and shall indemnify and hold Parent, Purchaser and
the Subsidiary harmless from, (i) any Taxes caused by or resulting from the sale
of the Subsidiary Common Stock (including, without limitation, all Taxes arising
from the Section 338(h)(10) Elections), (ii) any Taxes imposed on or incurred by
the Subsidiary arising out of the inclusion of the Subsidiary in the Seller
Group, any predecessor group or any combined, consolidated, unitary or similar
group (a "Group") prior to the Closing Date, or with respect to the Taxes of any
other person as successor or transferee, by contract or otherwise, (iii) any
Taxes imposed on or incurred by the Subsidiary (or any Group with respect to the
taxable items of the Subsidiary) for any taxable period ending on or before the
Closing Date (or the portion, determined as described in paragraph (c) of this
Section 8.2, of any such Taxes for any taxable period beginning on or before and
ending after the Closing Date which is allocable to the portion of such period
occurring on or before the Closing Date (the "Pre-Closing Period")) except for
Taxes arising from transactions by the Subsidiary outside the ordinary course of
business on the Closing Date after the Closing, (iv) any sales, use, value
added, transfer, real property transfer or gain, gross receipts, excise, stamp,
documentary or similar Taxes arising from the transactions contemplated in this
Agreement, (v) any Taxes arising out of a breach of the representations
contained in Section 4.8 hereof and (vi) any attorneys' fees or other costs
incurred by Purchaser or the Subsidiary in connection with any payment from
Seller under this paragraph (a) of Section 8.2.

         (b) Parent and Purchaser shall be liable for, and shall indemnify and
hold Seller harmless from, (i) any Taxes imposed on or incurred by or with
respect to the Subsidiary for which Seller is not liable under paragraph (a) of
this Section 8.2 and (ii) any attorneys' fees or other costs incurred by Seller
in connection with any payment from Parent and Purchaser under this paragraph
(b) of Section 8.2.

         (c) Whenever it is necessary for purposes of paragraph (a) or (b) of
this Section 8.2 to determine the portion of any Taxes imposed on or incurred by
the Subsidiary (or any Group) for a taxable period beginning on or before and
ending after the Closing Date which is allocable to the Pre-Closing Period, the
determination shall be made, in the case of property, ad valorem or similar
Taxes (which are not measured by, or based upon, production) or franchise or
capital Taxes (which are not measured by, or based upon, net income), on a per
diem basis, except any consequences of the Section 338(h)(10) Elections shall be
excluded, and, in the case of other Taxes, by assuming that the Pre-Closing
Period constitutes a separate taxable period of the Subsidiary and by taking
into account the actual taxable events occurring during such period (except that
exemptions, allowances and deductions for a taxable period beginning on or
before and ending after the Closing Date that are calculated on an annual or
periodic basis, such as the deduction for depreciation, shall be apportioned to
the Pre-Closing Period ratably on a per diem basis, any deductions resulting
from any payments made by Subsidiary or Seller under

                                       29
<PAGE>   37
Sections 9.1 or 9.4 below shall be allocated to the Pre-Closing Periods and any
consequences of the Section 338(h)(10) Elections shall be excluded).

         (d) Seller and Purchaser will, to the extent permitted by applicable
law, elect with the relevant taxing authorities to close all taxable periods of
the Subsidiary as of the close of business on the Closing Date.

         (e) Purchaser agrees to pay to Seller any refund received after the
Closing Date by Parent, Purchaser or Subsidiary, in respect of any Taxes for
which Seller is liable under paragraph (a) of this Section 8.2, except to the
extent such refund is taken into account as an asset in the determination of the
Post-Closing Adjustment. Seller agrees to pay to Purchaser any refund received
by Seller in respect of any Taxes for which Parent or Purchaser is liable under
paragraph (b) of this Section 8.2. The parties shall cooperate in order to take
all necessary steps to claim any such refund. Any such refund received by a
party for the account of the other party shall be paid to such other party
within thirty (30) days after such refund is received.

         (f)      (i) Seller and Purchaser agree that any payment made with
         respect to Taxes pursuant to this Section 8.2 or as an indemnity under
         Article XII shall be treated by the parties on their Tax Returns as an
         adjustment to the Purchase Price for the Subsidiary Common Stock.

                  (ii) If, contrary to the intent of the parties as expressed
         hereof, any payment made pursuant to this Agreement is treated as
         taxable income of the recipient, then the payor shall indemnify and
         hold harmless the recipient from any liability for Taxes attributable
         to the recipient of such payment. For purposes of this Section, the
         indemnified party will be considered to be liable for Tax in respect of
         any payment treated as taxable income at the highest marginal tax rate
         then in effect for corporations in the jurisdiction so characterizing
         the payment for the year such payment is considered to be earned by the
         indemnified party.

         8.3. TAX PROCEEDINGS. In the event Purchaser or the Subsidiary or any
of their affiliates receives notice (the "Proceeding Notice") of any
examination, claim, adjustment or other proceeding with respect to the liability
of the Subsidiary for Taxes for any period for which Seller is or may be liable
under paragraph (a) of Section 8.2, Purchaser shall notify Seller in writing
thereof (the "Purchaser Notice") no later than the earlier of (a) thirty (30)
days after the receipt by Purchaser, the Subsidiary or any of their affiliates
of the Proceeding Notice, or (b) ten (10) days prior to the deadline for
responding to the Proceeding Notice. As to any such Taxes for which Seller
acknowledges in writing that it is solely liable under paragraph (a) of Section
8.2, Seller shall be entitled at its expense to control or settle the contest of
such examination, claim, adjustment or other proceeding, provided Seller
notifies Purchaser in writing that it desires to do so no later than the earlier
of (i) thirty (30) days after receipt of the Purchaser Notice, or (ii) five (5)
days prior to the deadline for responding to the Proceeding Notice. The parties
shall cooperate with each other and with their respective affiliates, and will
consult with each other, in the negotiation and settlement of any proceeding
described in this Section 8.3.

                                       30
<PAGE>   38
         8.4. PAYMENT OF TAXES. All Taxes with respect to the Subsidiary shall
be paid by the party that is legally responsible therefor. Except as otherwise
provided in this Article VIII, any amount to which a party is entitled under
this Article VIII shall be promptly paid to such party by the party obligated to
make such payment following written notice to the party so obligated stating
that the Taxes to which such amount relates are due and providing details
supporting the calculation of such amount.

         8.5. TAX RETURNS. (a) All Tax Returns which relate to any income Taxes
of the Subsidiary shall be prepared and filed by the party that is legally
responsible therefor. For all other Tax Returns, Seller shall be responsible for
the timely filing (taking into account any extensions received from the relevant
tax authorities) of all such Tax Returns required by law to be filed by the
Subsidiary or any of its Subsidiaries, on or prior to the Closing Date. All
taxable items of the Subsidiary for the period beginning on March 1 of the
calendar year in which the Closing occurs and extending through the Closing
(and, to the extent required in the applicable regulations, through the close of
business on the Closing Date, but in no event including items arising from
transactions by the Subsidiary outside the ordinary course of business after the
Closing) will be included in the consolidated federal income Tax Return of the
Seller Group will be correct and complete in all material respects and will be
reported on a basis consistent with previously filed Tax Returns. All Taxes
indicated as due and payable on such Tax Returns shall be paid by Seller as and
when required by law. Purchaser and its affiliates, including the Subsidiary,
shall cooperate with Seller and shall make available all necessary records and
timely take all action necessary to allow Seller and its affiliates to prepare
and file the Tax Returns which they are responsible for preparing and filing
under this Section 8.5.

         (b) The Subsidiary (or, where relevant, the combined or consolidated
group of which the Subsidiary is a member) shall be responsible for the timely
filing (taking into account any extensions received from the relevant tax
authorities) of all Tax Returns required by law to be filed by the Subsidiary
after the Closing Date, it being understood that all Taxes indicated as due and
payable or such returns shall be the responsibility of the Purchaser or the
Subsidiary, except for such Taxes which are the responsibility of Seller
pursuant to Section 8.2, which Seller shall pay as and when required by law.

         8.6. TAX ALLOCATION ARRANGEMENTS. Effective as of the Closing, all
liabilities and obligations between the Subsidiary, on one hand, and Seller and
any affiliates thereof, on the other hand, under any tax indemnity, sharing,
allocation or similar agreement or arrangement in effect prior to the Closing
shall be extinguished in full, and any liabilities or rights existing under any
such agreement or arrangement shall cease to exist and shall no longer be
enforceable. Seller and its affiliates shall execute any documents necessary to
effectuate the provisions of this Section 8.6.

         8.7. COOPERATION AND EXCHANGE OF INFORMATION. Each party will provide,
or cause to be provided, to the other party copies of all correspondence
received from any taxing authority by such party or any of its affiliates in
connection with the liability of the Subsidiary for Taxes for any period for
which such other party is or may be liable under paragraph (a) or (b) of

                                       31
<PAGE>   39
Section 8.2. The parties will provide each other with such cooperation and
information as they may reasonably request of each other in preparing or filing
any Tax Return or claim for refund, in determining a liability or a right of
refund or in conducting any audit or other proceeding in respect of Taxes
imposed on the parties or their respective affiliates. The parties and their
affiliates will preserve and retain all Tax Returns, schedules, work papers and
all material records or other documents relating to any such Tax Returns,
claims, audits or other proceedings until the expiration of the statutory period
of limitations (including extensions) of taxable periods to which such documents
relate and until the final determination of any payments which may be required
with respect to such periods under this Agreement and shall make such documents
available to the other party or any affiliate thereof, and their respective
officers, employees and agents, upon reasonable notice and at reasonable times,
it being understood that such representatives shall be entitled to make copies
of any such books and records relating to the Subsidiary as they shall deem
necessary. Any information obtained pursuant to this Section 8.7 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting any audit or other
proceeding. Each party shall provide the cooperation and information required by
this Section 8.7 at its own expense.

         8.8. CONFLICT. In the event of a conflict between the provisions of
this Article VIII and any other provisions of this Agreement, the provisions of
this Article VIII shall control.

                                   ARTICLE IX

                              ADDITIONAL AGREEMENTS

         9.1. OPTION PLANS. Simultaneously with the Closing, the Seller shall
take such action as may be necessary to cause each Option to be canceled in
exchange for a cash payment, in full satisfaction thereof, in the amount equal
to that which would have been received in the transactions contemplated hereby
by the option holder had the Option been exercised immediately prior to the
Effective Time, less the aggregate exercise price which such option holder would
have been required to pay upon such exercise (the "OPTION CASH-OUT AMOUNT").
Seller shall pay Subsidiary prior to the Closing, and Subsidiary shall pay to
each holder of an Option simultaneously with the Closing, the Option Cash-Out
Amount. Effective as of the Effective Time and subject to the consummation of
the transactions contemplated hereby, Seller shall, or shall cause the
Subsidiary to, terminate the Option Plan.

         9.2. SELLER AND SUBSIDIARY BENEFIT PLANS. From and after the Closing,
Seller shall remain solely responsible for all liabilities and obligations under
(i) the Seller Benefit Plans (other than those Seller Benefit Plans that are
Subsidiary Plans) and (ii) the agreements listed on Schedule 4.12 under the
heading "Agreements Regarding Section 4999 Payments" and shall honor the
obligations thereunder in respect of the employees and former employees of the
Subsidiary or any of its subsidiaries. Notwithstanding the foregoing, (i) with
respect to those Subsidiary Plans that are cash bonus or other incentive
compensation plans, the Seller shall remain responsible for, and shall indemnify
the Subsidiary from and against or pay or reimburse the Subsidiary for, any
Damages in excess of the amounts reserved therefor on the Closing Date

                                       32
<PAGE>   40
Balance Sheet accrued or payable under such bonus or incentive compensation
plans in respect of any periods preceding the Closing Date and (ii) with respect
to the Option Plan (including, without limitation, Damages relating to claims
made by holders of Options in respect of the Option Cash-Out Amount) and the
agreements listed on Schedule 4.12 under the heading "Success Bonus Agreements",
the Seller shall remain responsible for, and shall indemnify the Subsidiary from
and against or pay or reimburse the Subsidiary for, any liabilities payable by
the Subsidiary in respect of the Option Plan or agreements in excess of the
amount contributed by the Seller to the Subsidiary prior to the Closing to fund
the amounts payable under such Plan (in accordance with Section 9.1 hereof) and
agreements.

         9.3. CERTAIN NEW PLANS.

         (a) Prior to the Closing Date, the Seller shall cause the Subsidiary to
establish a defined contribution plan and related trust (the "SUBSIDIARY 401(K)
PLAN") that is qualified under Sections 401(a) and 401(k) of the Code and that
contains terms and conditions that are substantially the same as the terms and
conditions of The Cherry Corporation Savings and Retirement Plan and related
trust, as in effect on the date hereof (the "CHERRY 401(K) PLAN"), except that
the Subsidiary 401(k) Plan shall cover only employees of the Subsidiary. Prior
to the Closing Date and in connection with the establishment of the Subsidiary
401(k) Plan, the Seller shall cause the trustee under the Cherry 401(k) Plan to
transfer to the trust forming part of the Subsidiary 401(k) Plan assets, in cash
and/or pro rata in kind, at fair market value, equal to the aggregate account
balances (both vested and unvested) of the employees of the Subsidiary who are
participants in the Cherry 401(k) Plan immediately prior to such transfer and
otherwise in accordance with the requirements of Section 414(l) of the Code.

         (b) Prior to the Closing Date, the Seller shall cause the Subsidiary to
establish a non-qualified deferred compensation program and related grantor
trust (the "SUBSIDIARY DEFERRED COMPENSATION PROGRAM") that contains terms and
conditions that are substantially the same as the terms and conditions of The
Cherry Corporation Deferred Compensation Program and related grantor trust, as
in effect on the date hereof (the "CHERRY DEFERRED COMPENSATION PROGRAM"),
except that the Subsidiary Deferred Compensation Program shall cover only
employees of the Subsidiary who are participants in the Cherry Deferred
Compensation Program on the date hereof (the "DEFERRED COMPENSATION PROGRAM
PARTICIPANTS"). Prior to the Closing Date and in connection with the
establishment of the Subsidiary Deferred Compensation Program, the Seller shall
cause the trustee under the Cherry Deferred Compensation Program to transfer to
the trust forming part of the Subsidiary Deferred Compensation Program assets,
in cash and/or pro rata in kind, at fair market value, equal to the aggregate
account balances of the Deferred Compensation Program Participants, valued as of
the actual date of transfer.

         9.4. FUNDING OF SUCCESS BONUS. Seller shall pay Subsidiary prior to the
Closing an amount equal to amounts required to paid under the Success Bonus
Agreements as a result of the transactions contemplated hereby, and Subsidiary
shall pay all such amounts to the employees

                                       33
<PAGE>   41
entitled to receive payments under the Success Bonus Agreements promptly after
the Effective Time.

         9.5. NO LIMITATION. Notwithstanding anything to the contrary contained
in this Agreement, there shall be no limitation on the Seller's obligations
under this Article IX or the indemnification relating thereto. Without limiting
the generality of the foregoing, the Seller's obligations under this Article IX
or to indemnify Parent and Purchaser for any breach thereof shall not be limited
in any respect by operation of the provisions of Section 5.5 or Section 12.3 of
this Agreement.

                                   ARTICLE X

           CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND PURCHASER

         The obligation of Parent and Purchaser to consummate the transactions
contemplated by this Agreement is subject to fulfillment prior to or at the
Closing of the following conditions (unless waived in writing in the sole
discretion of Parent and Purchaser):

         10.1. ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Seller contained herein shall be accurate in
all Material Respects (except that the representation and warranty contained in
the first sentence of Section 4.7 shall be true and correct in all respects)
when made and as of the Closing Date (except as to matters arising from the date
of this Agreement through Closing in the ordinary course of business). Seller
shall have performed all obligations and complied in all Material Respects with
each and all of the covenants, agreements and conditions required to be
performed or complied with on or prior to the Closing. Seller shall have
delivered an Officer's Certificate confirming the matters in each of the
foregoing sentences; provided, however, that such certificate may disclose any
facts or circumstances arising after the date hereof which would cause any
representations and warranties to be incorrect or agreements or covenants to be
unfulfilled and if Parent and Purchaser nevertheless decide to Close, the breach
or failure shall be deemed cured and may not be relied upon by Parent and
Purchaser to avoid any of its obligations hereunder, impose any liabilities or
obligations upon Seller or otherwise recover from Seller with respect thereto.

         10.2. NO PENDING ACTION. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated hereby or
cause such transactions to be rescinded.

         10.3. HART-SCOTT-RODINO. The waiting period under the HSR Act required
to permit the consummation of the transactions provided for herein shall have
expired or early termination shall have been granted.

                                       34
<PAGE>   42
         10.4. CURE PERIOD. If any of the conditions set forth in Section 10.1
are not satisfied in all Material Respects, Seller shall have until the date
specified in Section 13.1(c) to cure such condition (the "CURE PERIOD").
"MATERIAL RESPECT" with respect to Section 10.1 being one which, disregarding
any reference to materiality or Material Adverse Effect contained in the
relevant representation, warranty or covenant, has a material impact on the
value of the Subsidiary or on the ability of the Subsidiary to carry on the
business of the Subsidiary in substantially the same manner as it was carried on
by the Subsidiary immediately prior to the Closing. If Seller does not cure such
condition within the Cure Period and Purchaser and Parent choose not to waive
such condition, then Parent and Purchaser's sole remedy under the Agreement
shall be as set forth in Article XIII.

         10.5. PARENT REQUIRED CONSENTS AND APPROVALS. The consents and
approvals described on Schedule 5.2 (the "PARENT REQUIRED CONSENTS AND
APPROVALS") shall have been obtained in form and substance reasonably
satisfactory to Parent and shall be in full force and effect.

                                   ARTICLE XI

                  CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

         The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to fulfillment prior to or at the Closing of the
following conditions (unless waived in writing in the sole discretion of
Seller):

         11.1. ACCURACY OF WARRANTIES AND PERFORMANCE OF COVENANTS. The
representations and warranties of Purchaser and Parent contained herein shall be
accurate in all Material Respects when made and as of the Closing Date.
Purchaser and Parent shall have each performed all obligations and complied in
all Material Respects with each and all of the covenants, agreements and
conditions required to be performed or complied with on or prior to the Closing.
Purchaser and Parent shall each have delivered an Officer's Certificate
confirming the matters set forth in each of the foregoing sentences.

         11.2. NO PENDING ACTION. No action, suit, proceeding or investigation
before any court, administrative agency or other governmental authority shall be
pending or threatened wherein an unfavorable judgment, decree or order would
prevent the carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated hereby or
cause such transactions to be rescinded.

         11.3. HART-SCOTT-RODINO. The waiting period under the HSR Act required
to permit the consummation of the transactions provided for herein shall have
expired or early termination shall have been granted.

         11.4. CURE PERIOD. Other than with respect to the deliveries required
by Section 3.2 and Section 5.7, if any of the conditions set forth in Section
11.1 are not satisfied in all Material

                                       35
<PAGE>   43
Respects, Purchaser shall have until the date specified in Section 13.1(d) to
cure such condition. "MATERIAL RESPECT" with respect to Section 11.1 being one
which has a material effect on Purchaser's ability to consummate this Agreement
and the transactions contemplated herein. If Purchaser does not cure such
condition within the cure period set forth above and Seller chooses not to waive
such condition, Seller's sole remedy under the Agreement shall be as set forth
in Article XIII.

                                  ARTICLE XII

                          SURVIVAL AND INDEMNIFICATION

         12.1. SURVIVAL. All covenants and agreements contained in this
Agreement shall survive until fully performed or for as long as provided
therein. All representations and warranties contained in this Agreement or in
any agreement or other document delivered pursuant hereto shall survive the
Closing, and thereafter shall expire and be of no force or effect, through June
30, 2001; provided that (i) the representations and warranties set forth in
Section 4.19 (the "ENVIRONMENTAL REPRESENTATIONS") shall survive until the fifth
anniversary of the Closing Date and (ii) the representations and warranties set
forth in Section 4.8 (the "Tax Representations") shall survive for ninety (90)
days after the expiration of the applicable statute of limitations. Thereafter,
such representations, warranties, covenants and agreements shall be of no
further force or effect. Any claim for indemnification that is asserted by
written notice as provided in Article XII (which shall survive until the claim
is resolved) within the survival period shall survive until resolved pursuant to
a final non-appealable judicial determination or otherwise.

         12.2. INDEMNIFICATION.

         (a) Subject to the provisions and limitations contained herein,
Purchaser and Parent shall jointly and severally indemnify, defend and hold
harmless Seller from and against any and all loss, liabilities, damage, cost or
expense (including reasonable attorneys' fees and expenses and fees and expenses
of accountants and other experts or other reasonable expenses of litigation or
other proceedings or of any claim, default or assessment), judgments and fines
(collectively, "DAMAGES") caused by or arising out of any breach of a
representation or warranty or failure to fulfill any covenant or agreement of
either Purchaser or Parent contained herein.

         (b) Subject to the provisions and limitations contained herein, Seller
shall indemnify and hold harmless Purchaser from and against any Damages caused
by or arising out of any breach of a representation or warranty or failure to
fulfill any covenant or agreement of Seller contained herein.

         12.3. GENERAL PROVISIONS RELATING TO INDEMNIFICATION.

         (a) (i) Except as provided in Section 12.3(a)(ii) below with respect to
the Environmental Representations and as set forth in the last sentence of this
Section 12.3(a)(i),

                                       36
<PAGE>   44
Seller shall not be required to make any payments pursuant to this Article XII,
unless and until the aggregate amount of all claims against Seller pursuant to
this Article XII shall exceed an amount equal to $2,500,000 (the "THRESHOLD
AMOUNT"), as to which Seller shall be responsible only for the excess over the
Threshold Amount. The maximum aggregate amount recoverable from Seller with
respect to any claims relating to this Agreement or the transactions
contemplated hereby shall not exceed $25,000,000 (which amount is inclusive of
the amounts set forth in Section 12.3(a)(ii) below but exclusive of the amounts
set forth in the subsequent sentence of this Section 12.3(a)(i)). The
limitations set forth in the first two sentences of this Section 12.3(a)(i)
shall not apply to the Post-Closing Adjustment Amount or any claim for
indemnification arising out of or relating to a breach of the representations,
warranties and covenants set forth in Sections 4.1, 4.2 or 4.3, the Tax
Representations, Article VIII and Article IX and the maximum amount recoverable
with respect to Sections 4.1, 4.2 or 4.3, the Tax Representations, Article VIII
and Article IX shall be an amount equal to the Purchase Price.

                  (ii) Solely with respect to the Environmental Representations,
Seller shall not be required to make any payments pursuant to this Article XII
with respect to the Environmental Representations, unless and until the
aggregate amount of all claims against Seller solely with respect to the
Environmental Representations shall exceed an amount equal to $500,000 (the
"ENVIRONMENTAL THRESHOLD AMOUNT"), as to which Seller shall be responsible only
for the excess over the Environmental Threshold Amount. Notwithstanding the
amounts set forth in Section 12.3(a)(i), the maximum aggregate amount
recoverable from Seller with respect to any claims relating to breaches of the
Environmental Representations or relating to the environmental conditions of the
Real Estate and the Leased Real Estate shall not exceed $5,000,000. For
avoidance of doubt, the parties hereby confirm that Seller shall not be required
to defend, indemnify or hold harmless Purchaser with respect to any Damages
related to the presence of tetrachloroethene (PCE) which is either (i) addressed
in the Settlement Agreement and Covenant Not To Sue - Re property at 1900 South
County Trail Case #97-058 (Brownfield Agreement) or (ii) identified in the
Johnson Company reports and studies completed by or on behalf of Purchaser and
Parent (including any PCE contamination related to the PCE contamination
identified in those reports and studies).

                  (iii) Except with respect to the payment of the purchase price
and amounts related to breaches of the obligations under Sections 5.1, 5.2, 7.5,
7.10, 7.11, 7.13 and 13.2, Purchaser shall not be required to make any payments
pursuant to this Article XII, unless and until the aggregate amount of all
claims against Purchaser pursuant to this Article XII shall exceed an amount
equal to the Threshold Amount, as to which Purchaser shall be responsible only
for the excess over the Threshold Amount. The maximum aggregate amount
recoverable from Purchaser with respect to any claims relating to this Agreement
or the transactions contemplated hereby shall not exceed an amount equal to
$25,000,000. The limitations set forth in the first two sentences of this
Section 12.3(a)(iii) shall not apply to any claim for indemnification arising
out of or relating to a breach of the representations, warranties and covenants
set forth in Sections 5.1, 5.2, 7.5, 7.10, 7.11, 7.13 and 13.2 and the maximum
amount

                                       37
<PAGE>   45
recoverable with respect Sections 5.1, 5.2, 7.5, 7.10, 7.11 and 7.13 shall be an
amount equal to the Purchase Price.

         (b) The party seeking indemnification shall give written notice to the
indemnifying party of the facts and circumstances giving rise to any claim for
indemnification as soon as reasonably possible but in any event within thirty
(30) days after it obtains knowledge of the basis for a claim for
indemnification hereunder. The party entitled to indemnification shall take all
reasonable steps to mitigate all indemnifiable liabilities and damages upon and
after becoming aware of any event which could reasonably be expected to give
rise to any liabilities and damages that are indemnifiable hereunder. No party
shall be entitled to indemnification to the extent of any insurance, actual
reduction in tax paid or other benefits actually received as a result of the
facts and circumstances relating to any indemnifiable claim. If any Damages are
covered by insurance, then Purchaser shall use all reasonable efforts to recover
the amount of such Damages from the insurer of such insurance which recovery
shall reduce the amount of Damages hereunder in which event Damages shall
include the amount of any increase in insurance premiums directly resulting from
the recovery. In the event the Indemnified Party receives amounts from the
insurer after a claim for indemnification has been paid hereunder, then such
amounts shall be paid to the Indemnifying Party.

         (c) With respect to each third party claim subject to this Article XII
(a "THIRD PARTY CLAIM"), the party seeking indemnification (the "INDEMNIFIED
PARTY") must give prompt notice to the indemnifying party (the "INDEMNIFYING
PARTY") of the Third Party Claim, provided that the failure to so notify shall
not relieve the Indemnifying Party of its obligations hereunder except to the
extent the indemnifying party is prejudiced thereby. The Indemnifying Party may,
at its sole cost and expense, upon notice to the Indemnified Party within thirty
(30) days after the Indemnifying Party receives notice of the Third Party Claim,
assume the defense of the Third Party Claim, with counsel of its choice
reasonably acceptable to the Indemnified Party. The Indemnifying Party shall not
consent to a settlement of, or the entry of any judgment arising from, any Third
Party Claim, unless (i) the settlement or judgment is solely for money damages
not requiring an acknowledgment of fault from the Indemnified Party and the
Indemnifying Party admits in writing its liability to hold the Indemnified Party
harmless from Damages arising from the settlement, or (ii) the Indemnified Party
consents thereto, which consent shall not be unreasonably withheld. The
Indemnifying Party shall provide the Indemnified Party with thirty (30) days
prior notice before it consents to a settlement of, or the entry of a judgment
arising from, any Third Party Claim. The Indemnified Party shall be entitled to
participate in the defense of (but not control) any Third Party Claim, the
defense of which is assumed by the Indemnifying Party, with its own counsel and
at its own expense. The parties shall cooperate in the defense of any Third
Party Claim and the relevant records of each party shall be made available on a
timely basis. If the Indemnifying Party does not assume the defense of any such
claim or proceeding resulting therefrom in accordance with the terms hereof, the
Indemnified Party may defend such claim or proceeding in a reasonable manner,
including settling such claim or proceeding on such terms as the Indemnified
Party may deem appropriate after giving thirty (30) days' notice of the

                                       38
<PAGE>   46
same to the Indemnifying Party and obtaining the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld.

         (d) No party shall have any obligation to indemnify another party or
otherwise have liability hereunder for consequential damages, special damages,
incidental damages, indirect damages, lost profits or similar items.

         (e) Seller shall have no liability under this Article XII to the extent
arising from actions taken or not taken by Parent, Purchaser or its affiliates
after the Closing Date.

         (f) Neither Parent nor Purchaser shall bring a claim or be entitled to
indemnification with respect to a breach of any representation, warranty,
covenant or agreement of which either Parent or Purchaser had actual knowledge
at the date of this Agreement of the facts and circumstances of the breach
underlying such claim and the extent of such breach.

         (g) To the extent that Seller discharges any claim for indemnification
hereunder, Seller shall be subrogated to all rights of both Parent and Purchaser
against third parties.

         (h) After the Closing, the indemnification rights provided hereunder
and the provisions of Section 3.5, Section 7.5, Section 7.10, Section 7.11,
Section 7.13, Section 14.12, Article VIII and Article IX shall be the exclusive
remedy of Seller, Parent and Purchaser with respect to any dispute arising out
of or related to this Agreement.

         (i) If during the five year period commencing on the Closing Date,
Seller shall experience a Change of Control, then in connection with the closing
of such Change of Control transaction, Seller shall provide Purchaser with
either (i) a letter of credit payable to Purchaser in an amount equal to the
maximum amount then recoverable by Purchaser for a breach of the Environmental
Representation to ensure payment by Purchaser in the event of any valid claim
for indemnification hereunder or (ii) sufficient evidence reasonably
satisfactory to Purchaser that the purchaser and/or surviving entity of such
Change of Control transaction has a sufficient financial net worth to satisfy
Seller's indemnification obligations hereunder. A "CHANGE OF CONTROL" shall mean
(i) a transaction in which all of the shares of Seller's common stock are
exchanged for cash or other securities of a third party and such transaction
results in the Seller's stockholders holding less than fifty percent (50%) of
the voting power of the surviving entity, (ii) Seller's consolidation with or
merger into any other person pursuant to which Seller shall not be the
continuing or surviving corporation, or (iii) a sale or transfer of all or
substantially all of the Seller's assets.

         12.4. CHARACTERIZATION AS PRICE ADJUSTMENT. All amounts paid pursuant
to this Agreement by one party to another party (other than interest payments)
shall be treated by such parties as an adjustment to the Purchase Price.

                                       39
<PAGE>   47
                                  ARTICLE XIII

                                   TERMINATION

         13.1. TERMINATION OR ABANDONMENT. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated and abandoned
at any time prior to the Closing:

         (a) by the mutual written consent of Seller and Parent;

         (b) by Seller or Parent if any court of competent jurisdiction or
governmental body, authority or agency having jurisdiction shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable;

         (c) by Parent, if one or more of the conditions to the obligation of
Purchaser and Parent to Close has not been fulfilled by May 31, 2000, or if
Subsidiary shall have suffered a Material Adverse Effect that does not generally
affect the industry in which Subsidiary operates and which is not capable of
cure;

         (d) by Seller, if one or more of the conditions to the obligation of
Seller to Close has not been fulfilled by May 31, 2000; and

         (e) by Seller, if all of the conditions precedent to the obligations of
Parent and Purchaser to Close that are set forth in ARTICLE X of this Agreement
(other than Section 10.5) have been fulfilled and Parent or Purchaser fails to
waive the conditions precedent set forth in Section 10.5 of this Agreement
within 5 business days of receipt of written notice from Seller that all other
conditions precedent set forth in ARTICLE X have been fulfilled.

         13.2. EFFECT OF TERMINATION.

         (a) If any party terminates this Agreement pursuant to Section 13.1
above, all obligations of the parties hereunder shall terminate without any
liability of any party to any other party (except for any liability of any party
then in breach and except with respect to Section 13.2(b)); provided, however,
that the provisions of Section 7.3, Section 13.1, this Section 13.2 and Section
14.3 shall survive termination of this Agreement. Nothing in this Section
13.2(a) shall relieve any party from liability for any willful or intentional
breach of this Agreement.

         (b) In the event that:

                  (i) all of the conditions precedent to the obligations of
         Parent and Purchaser set forth in ARTICLE X of this Agreement have been
         fulfilled, and either Parent or Purchaser fails to consummate the
         transactions contemplated by this Agreement and

                                       40
<PAGE>   48
         Seller is willing and able to consummate the transactions contemplated
         hereby and has furnished Parent with a written demand to effect the
         Closing which is not complied with within 3 business days of delivery
         of such notice; or

                  (ii) Parent terminates this Agreement for failure to satisfy
         the conditions in Section 10.5 if all of the other conditions precedent
         to the obligations of Parent and Purchaser to Close that are set forth
         in ARTICLE X have been fulfilled or Seller terminates this Agreement
         pursuant to Section 13.1(e),

then Parent or Purchaser shall pay Seller $2.5 million in immediately available
funds within 3 business days of Seller's delivery of notice (in the case of the
foregoing clause (i)) or Seller's termination (in the case of the foregoing
clause (ii)). The Parties agree that the amount provided for in this Section
13.2(b) is in the nature of liquidated damages and does not constitute a
penalty. The parties agree that such amount is reasonably intended to compensate
the Seller for its expenses incurred in connection with the negotiation of this
Agreement and any lost opportunity resulting from the Buyer's failure to
consummate the transactions contemplated hereby and, upon payment of such amount
by the Purchaser, the Seller and Subsidiary waive any and all rights to any
payments, damages, amounts, costs, fees or other expenses, and agree that they
shall not bring any action, suit or proceeding of any kind to recover any
amounts in connection with any breach by Parent or Purchaser of this Agreement.

                                  ARTICLE XIV

                               GENERAL PROVISIONS

         14.1. AMENDMENTS AND WAIVER. No amendment, waiver or consent with
respect to any provision of this Agreement shall in any event be effective,
unless the same shall be in writing and signed by the parties hereto, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

         14.2. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:

         (a) If to Seller:

                           Mr. Peter B. Cherry
                           The Cherry Corporation
                           3600 Sunset Avenue
                           Waukegan, IL  60087
                           Facsimile No.:  (847) 360-3390

                                       41
<PAGE>   49
                           With copies to:

                           Mr. William J. Quinlan
                           McDermott, Will & Emery
                           227 West Monroe Street
                           Chicago, IL  60606
                           Facsimile No.:  (312) 984-3669

         (b) If to Purchaser or Parent:

                           On Semiconductor
                           5005 E. McDowell Rd.
                           M/D:  C302
                           Phoenix, AZ 85008
                           Attention:  Chief Executive Officer
                           Facsimile No.:  (602) 244-4830

                           With copies to:

                           Cleary, Gottlieb, Steen & Hamilton
                           One Liberty Plaza
                           New York, NY 10006
                           Attention:  Paul J. Shim
                           Facsimile No.:

                           On Semiconductor
                           5005 E. McDowell Rd.
                           M/D:  A700
                           Law Department
                           Phoenix, AZ 85008
                           Attention:  General Counsel
                           Facsimile No.:  (602) 244-5601

Any party may change its address or add or change parties for receiving notice
by written notice given to the others named above. Notices shall be deemed given
as of the date of receipt.

         14.3. EXPENSES. Except as otherwise expressly provided herein, each
party to this Agreement shall pay its own costs and expenses in connection with
the transactions contemplated hereby.

         14.4. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

                                       42
<PAGE>   50
         14.5. SUCCESSORS AND ASSIGNS; BENEFICIARIES. This Agreement shall bind
and inure to the benefit of the parties named herein and their respective
successors and assigns. No party may assign any rights, benefits, duties or
obligations under this Agreement without the prior written consent of the other
party; provided, however, Parent and Purchaser may assign this Agreement to an
existing affiliate of Purchaser as long as (i) the Parent and Purchaser agree to
remain liable for all obligations of Parent and Purchaser hereunder and (ii) the
assignee has funds that are sufficient to enable assignee to consummate the
transactions contemplated hereby on a timely basis. No third party shall be
entitled to enforce any provision hereof; and no third party is intended to
benefit from this Agreement. In the event of a merger, consolidation, sale of
assets, change of control, or similar transaction involving any party to this
Agreement, such party shall cause its successor or transferee (as the case might
be) to assume all its obligations and duties under this Agreement.

         14.6. ENTIRE AGREEMENT. This Agreement and the Confidentiality
Agreement and the documents referred to herein contain the entire agreement and
understanding among the parties with respect to the transactions contemplated
hereby and supersede all other agreements, understandings and undertakings among
the parties on the subject matter hereof.

         14.7. ANNOUNCEMENTS. No announcement of the specific terms of this
Agreement shall be made by any party without the written approval of the other
party (which approval shall not be unreasonably withheld), except for filings
required under the HSR Act and as otherwise required by applicable law.

         14.8. PARTIAL INVALIDITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court or competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.

         14.9. GOVERNING LAW; JURISDICTION. This Agreement shall be interpreted
in accordance with the substantive laws of the State of Delaware applicable to
contracts made and to be performed wholly within said State. All disputes, legal
actions, suits and proceedings arising out of or relating to this Agreement
shall be brought in a federal district or state court located in Chicago,
Illinois. Each party hereby consents to the jurisdiction of the federal district
or state court in Chicago, Illinois. Each party hereby irrevocably waives all
claims of immunity from jurisdiction and any right to object on the basis that
any dispute, action, suit or proceeding brought in the federal district or state
court of Chicago, Illinois has been brought in an improper or inconvenient venue
or forum.

         14.10. OTHER RULES OF CONSTRUCTION. References in this Agreement to
sections, schedules, attachments and exhibits are to sections of, and schedules,
attachments and exhibits to, this Agreement unless otherwise indicated. Words in
the singular include the plural and in the plural include the singular. The word
"INCLUDING" shall mean including, without limitation. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.

                                       43
<PAGE>   51
         14.11. AUTHORSHIP. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over construction of
this Agreement shall be decided without regard to events of authorship or
negotiation.

         14.12. SPECIFIC PERFORMANCE. Parent, Purchaser and Seller recognize
that any breach of the terms of this Agreement may give rise to irreparable harm
to Parent, Purchaser or Seller for which money damages would not be an adequate
remedy, and accordingly agree that, in addition to other remedies, the
non-breaching party shall be entitled to enforce the terms of this Agreement by
a decree of specific performance without the necessity of proving the inadequacy
of a remedy of money damages.

         14.13. JOINT AND SEVERAL OBLIGATIONS. Even if not expressly stated in
the particular instance, each of Parent and Purchaser are jointly and severally
liable for all of the obligations of the other provided for or referred to
herein.

                                       44
<PAGE>   52
         IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by a duly authorized officer all as of the date first
written above.

PURCHASER:                               SELLER:

SEMICONDUCTOR COMPONENTS                 THE CHERRY CORPORATION
     INDUSTRIES, LLC

By:  /s/ James Thorburn                  By:  /s/ Peter Cherry
Its:  Senior Vice Pres. & Chief          Its:  Chairman & President
         Operating Officer

PARENT:

SCG HOLDING CORPORATION

By:  /s/ James Thorburn
Its:  Senior Vice Pres. & Chief
         Operating Officer

                                       45
<PAGE>   53
                                    SCHEDULES

       3.5        Net Working Capital Amount
       4.2        Stock Owned by Subsidiaries
       4.3(b)     Consents
       4.3(c)     Seller Required Statutory Approvals
       4.4(a)     Audited Financial Statements
       4.4(b)     Interim Financial Statements
       4.6        Absence of Undisclosed Liabilities
       4.7        Changes
       4.8        Taxes
       4.9        Interim Change
       4.10       Owned Real Estate
       4.11       Real Estate Leases
       4.12       Employee Plans
       4.13       Material Contracts
       4.14(a)    Intellectual Property
       4.14(b)    Infringement of Subsidiary Intellectual Property
       4.15       Legal Proceedings
       4.16       Compliance with Law
       4.18       Employees
       4.19       Environmental Matters
       4.22       Affiliate Relationship/Indebtedness
       5.2        Parent Required Consents and Approvals
       5.7        Financial Statements of Purchaser
       6.1        Interim Conduct of Business from Agreement Date to Closing

                                       46

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