Document:

Exhibit 10.5

 

Execution Version

 

SECOND
OMNIBUS AMENDMENT

 

THIS SECOND OMNIBUS  AMENDMENT (this “Amendment”) dated as of April 7,
2009 by and among Goldman Sachs Mortgage Company, as buyer (“GSMC”),
Gramercy Warehouse Funding II LLC, as a seller (“Gramercy”), GKK Trading
Warehouse II LLC, as a seller (“GKK” and together with Gramercy,
collectively, “Seller”), Gramercy Capital Corp., as a guarantor, GKK
Capital LP, as a guarantor, Gramercy Investment Trust, as a guarantor and GKK
Trading Corp., as a guarantor, (together with Gramercy Capital Corp., GKK
Capital LP and Gramercy Investment Trust, “Guarantor”) amends (i) that
certain Second Amended and Restated Master Repurchase Agreement between Seller
and GSMC, dated as of June 28, 2007, (as amended from time to time, the “Repurchase
Agreement”) and (ii) that certain Second Amended and Restated Guaranty
dated as of June 28, 2007 by Guarantor for the benefit of GSMC.  Capitalized terms used but not defined herein
shall have the meanings set forth in the Repurchase Agreement.

 

RECITAL

 

WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller, GSMC and Guarantor have
agreed to amend the Repurchase Agreement and the Guaranty as provided herein;

 

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

 

1.             Reduction of Repurchase Price. 
On the date hereof, Seller shall repay a portion of the Repurchase Price
of the Purchased Loan known as “666 Fifth Avenue” in the amount of
$4,000,000.  GSMC and Seller shall
execute a replacement Confirmation with respect to such Purchased Loan in the
form attached hereto as Exhibit A.

 

2.             Financial Covenant Compliance Certificate. 
Seller, GSMC and Guarantor agree to the following, effective as of January 1,
2009:

 

(a)           The definition of “Financial Covenant
Compliance Certificate”, “Financial Covenants” and all related definitions are
hereby deleted in their entirety.

 

(b)           Section 3(e)(2) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety.

 

(c)           Section 12(g)(iv) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety.

 

(d)           Section 14(a)(xi) is hereby deleted
in its entirety.

 

(e)           Section 14(a)(xv) is hereby deleted
in its entirety and replaced by the following:

 

(xv)         any of the covenants of
Guarantor in the Guaranty shall have been breached, and such breach has not
been cured within ten (10) Business Days after receiving written notice of
such breach from Buyer.

 

 

3.             Income Payments.

 

(a)           The definition of “Income” is
hereby deleted in its entirety and replaced by the following:

 

“Income”
shall mean, with respect to any Purchased Loan at any time, any payment or
other cash distribution thereon of principal, interest, dividends, fees,
reimbursements or proceeds (including sales proceeds) or other cash distributions
thereon (including casualty or condemnation proceeds).

 

(b)           The definition of “Release Amount”
is hereby added to 2(c) of Annex I to the Repurchase Agreement:

 

“Release Amount” shall mean (i) with respect to (a) any
arm’s-length sale of a Purchased Loan by Seller to a Person that is not an
Affiliate of Seller or (b) any early prepayment or payoff of a Purchased
Loan (including any discounted pay-off permitted under the terms of the
Agreement), all Income (net of reasonable closing expenses) received in respect
of such sale in excess of the amounts required to be paid to Buyer in
accordance with Section 3(g)(iii)(A) and (ii) with respect to
any sale of a Purchased Loan by Seller to a CDO managed by an Affiliate of
Seller or any other repurchase of a Purchased Loan by Seller, fifty percent
(50%) of all Income (net of reasonable closing expenses) received in respect of
such sale or repurchase in excess of the amounts required to be paid to Buyer
in accordance with Section 3(g)(iii)(A).

 

(c)           Section 3(g)(iii) of Annex I to
the Repurchase Agreement are hereby deleted in its entirety and replaced by the
following:

 

(iii)          Seller shall (A) pay to Buyer on the
Early Repurchase Date, an amount equal to the sum of the Repurchase Price for
such Transaction, all Costs and any other amounts payable by Seller and
outstanding under the Agreement (including, without limitation, Section 3(m) of
this Annex I) with respect to such Transaction against transfer to Seller or
its agent of the related Purchased Loan and (B) deposit the Release Amount
with respect to such Purchased Loan into the Blocked Account.

 

(d)           Section 5(b)(iii) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety and replaced by the
following:

 

third, (A) if a Principal Payment in
respect of any Purchased Loan has been made during such Collection Period, to
Buyer an amount equal to the Principal Payment to be applied to reduce the
Repurchase Price of such Purchased Loan until the Repurchase Price is reduced
to zero, with any remainder to be applied to reduce the Repurchase Price of the
other Purchased Loans pro rata; and (B) if a Purchased Loan
has been repurchased in accordance with Section 3(g) of the Agreement
during such Collection Period, to Buyer the applicable Release Amount to be applied
to reduce the Repurchase Price of the Purchased Loans pro rata;

 

2

 

(f)            Section 5(b)(v) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety and replaced by the
following:

 

fifth, to Buyer the remainder in respect of
the Aggregate Repurchase Price until the Aggregate Repurchase Price for all of
the Purchased Loans has been reduced to zero; and

 

4.             Events of Default.

 

(a)           Section 14(a)(ix) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety and replaced by the
following:

 

a final judgment
by any competent court in the United States of America for the payment of money
shall have been rendered against Seller, and remained undischarged or unpaid
for a period of forty-five (45) days, during which period execution of such
judgment is not effectively stayed;

 

(b)           Section 14(a)(x) of Annex I to
the Repurchase Agreement is hereby deleted in its entirety.

 

(c)           Section 14(a)(xiii) of Annex I to
the Repurchase Agreement is hereby amended to remove the words “or Guarantor”
at the end thereof.

 

(d)           Section 14(a)(xiv) of Annex I to the
Repurchase Agreement is hereby deleted in its entirety and replaced by the
following:

 

an “event of
default” beyond any applicable notice and cure period shall have occurred under
(A) the Securities Repurchase Agreement, (B) any repurchase facility
or loan facility entered into by Seller and Buyer or any affiliate of Buyer or (C) any
facility with Buyer or any affiliate of Buyer in which Seller is a guarantor;
or

 

5.             Change of Control. 
The definition of “Change of Control” is hereby deleted in its
entirety and replaced by the following:

 

“Change
of Control” shall mean the occurrence of any of the following events:

 

(i)            the Parent shall cease to own and control, of record
and beneficially, directly or indirectly, at least 100% of each class of
outstanding Capital Stock of each Seller;

 

(ii)           any “person” or “group” (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) shall be or have the right to be (whether by means of warrants, options
or otherwise), or shall become or obtain rights (whether by means of warrants,
options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of a percentage of
the total voting power of all classes of Capital Stock of the Parent entitled
to vote generally in the election of directors of 49% or more; or

 

3

 

(iii)          a Transfer of all or substantially all of a Seller’s
assets (excluding any such Transfer in connection with any securitization
transaction involving, or the sale of, Repurchased Loans or Repurchased
Securities or other assets of Seller used in other repurchase or other similar
transactions in the ordinary course of such Person’s business).

 

6.             Guaranty.

 

(a)           Section 1.2(a) of the Guaranty
is hereby deleted in its entirety.

 

(b)           Sections 4.6, 4.7, 4.10 and 4.11 of the
Guaranty are hereby deleted in their entirety.

 

7.             Representations. Seller hereby represents and warrants
that, as of the date hereof, neither (i) that certain First Amended and
Restated Credit Agreement dated as of June 28, 2007 by and among GKK
Capital LP, as borrower, the obligors party thereto, the lenders party thereto
and KeyBank National Association, as agent thereunder, as such agreement has
been amended, supplemented or otherwise modified through the date hereof or (ii) that
certain Credit Agreement dated as of July 22, 2008 by and among the
borrowers party thereto, the lenders party thereto and Wachovia Bank, National
Association, as such agreement has been amendment, supplemented or otherwise
modified through the date hereof, provides for more favorable terms with
respect to financial covenants, cross-default, cross-acceleration or recourse
than that provided in the Repurchase Agreement after giving effect to the terms
of this Amendment.

 

8.             SPE Compliance.

 

(a)           On or prior to May 6, 2009 (the “SPE
Compliance Date”), time being of the essence, Seller and Guarantor hereby
covenant and agree to cause the Purchased Loans to be held by a Single-Purpose
Entity (an “SPE Seller”)(which may be Seller or an Affiliate of Seller)
that shall confirm (or reconfirm, as the case may be) in writing its compliance
with, and agreement to be bound by, all terms of and conditions of the
Transaction Documents, including without limitation, the provisions of Section 13
of Annex I to the Repurchase Agreement as of the SPE Compliance Date.

 

(b)           Failure of
Seller and Guarantor to comply with the provisions of subclause (a) above
on or before the SPE Compliance Date shall be an immediate Event of Default
under the Repurchase Agreement.

 

(c)           All
documents or instruments as shall be necessary to transfer the Purchased Loans
to the SPE Seller (the “Transfer Documents”), if any, shall be in form
and substance reasonably satisfactory to Buyer. 
In the event that SPE Seller shall be an Affiliate of Seller, the
Transfer Documents shall include, in form and substance reasonably satisfactory
to Buyer, solvency representations by Seller.

 

(d)           From the date hereof until the SPE
Compliance Date, Buyer agrees to waive any Default or Event of Default solely
relating to or arising out of the ownership by Seller of assets that do not
constitute Purchased Loans. 
Notwithstanding the foregoing waiver, in no 

 

4

 

event shall Buyer be deemed to have waived any rights
or remedies it may have under Section 1.2(b)(iii)(E) of the Guaranty.

 

(e)           Notwithstanding anything to the contrary
contained herein or in any other Transaction Document and for the avoidance of
doubt, each of Seller and Guarantor covenant and agree that in no event shall
Buyer be obligated to advance funds to any Person in connection with any future
funding obligations under any assets owned by Seller as of the date hereof.

 

9.             Continuing Effect. 
Except as expressly amended by this Amendment, the Repurchase Agreement
and the other Transaction Documents remain in full force and effect in
accordance with their respective terms, and are hereby in all respects ratified
and confirmed.

 

10.           References.  All
references to the Repurchase Agreement and the Guaranty in any Transaction
Document or in any other document executed or delivered in connection therewith
shall, from and after the execution and delivery of this Amendment, be deemed a
reference to the Repurchase Agreement and the Guaranty, each as amended hereby,
unless the context expressly requires otherwise.

 

11.           Governing Law. 
This Amendment shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.

 

12.           Counterparts. 
This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.

 

[Signatures appear on the
next page.]

 

5

 

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

 

 

	
  GOLDMAN SACHS MORTGAGE COMPANY,

  	
   

  	
   

  
	
  a New York limited partnership

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  Goldman Sachs Real Estate Funding Corp.,

  	
   

  	
   

  
	
  its
  general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Kevin Gasvoda

  	
   

  	
   

  
	
  Name:
  Kevin Gasvoda

  	
   

  	
   

  
	
  Title:
  Authorized Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GRAMERCY WAREHOUSE FUNDING II LLC,

  	
   

  	
  GKK TRADING WAREHOUSE II LLC,

  
	
  a Delaware limited liability company

  	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  By:  GRAMERCY INVESTMENT TRUST,

  	
   

  	
  By:  GKK TRADING CORP.,

  
	
  a
  Maryland real estate investment trust

  	
   

  	
  its
  sole member and manager

  
	
   

  	
   

  	
   

  
	
  By:  GKK CAPITAL LP,

  	
   

  	
  By:  GRAMERCY CAPITAL CORP.,

  
	
  a
  Delaware limited partnership, its sole member and manager

  	
   

  	
  a
  Maryland corporation, its general partner

  
	
  By:  GRAMERCY CAPITAL CORP.,

  	
   

  	
  By:

  	
   /s/ Robert R.
  Foley

  
	
  a
  Maryland corporation, its general partner

  	
   

  	
  Name:
  Robert R. Foley

  
	
   

  	
   

  	
   

  	
  Title:
  Chief Operating Officer

  
	
  By:

  	
   /s/ Robert R. Foley

  	
   

  	
   

  
	
  Name:
  Robert R. Foley

  	
   

  	
   

  
	
  Title:
  Chief Operating Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GKK TRADING CORP.,

  	
   

  	
  GRAMERCY CAPITAL CORP.,

  
	
  a Delaware corporation

  	
   

  	
  a Maryland corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Robert R.
  Foley

  	
   

  	
  By:

  	
   /s/ Robert R.
  Foley

  
	
  Name:
  Robert R. Foley

  	
   

  	
  Name:
  Robert R. Foley

  
	
  Title:
  Chief Operating Officer

  	
   

  	
  Title:
  Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
  GKK CAPITAL, L.P.,

  	
   

  	
  GRAMERCY INVESTMENT TRUST,

  
	
  a Delaware limited partnership

  	
   

  	
  a Maryland real estate investment trust

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Robert R.
  Foley

  	
   

  	
  By:

  	
   /s/ Robert R.
  Foley

  
	
  Name:
  Robert R. Foley

  	
   

  	
  Name:
  Robert R. Foley

  
	
  Title:
  Chief Operating Officer

  	
   

  	
  Title:
  Chief Operating OfficerExhibit 4.31

 

 

Sale and Contribution Agreement

 

 

relating to

 

a joint venture in the field of 

semiconductors for cellular communication

 

between

 

STMicroelectronics N.V.

 

and

 

NXP B.V.

 

 

dated 10
April 2008

 

 

	
   

  	
  P.O. Box 75084

  
	
   

  	
  1070 AB Amsterdam

  
	
   

  	
  The Netherlands

  

 

 

	
   

  	
  Contents

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
  Interpretation

  	
   

  	
  4

  
	
  2

  	
  Transaction Structure

  	
   

  	
  5

  
	
  3

  	
  Closing Conditions

  	
   

  	
  8

  
	
  4

  	
  Pre-Closing covenants

  	
   

  	
  12

  
	
  5

  	
  Closing

  	
   

  	
  18

  
	
  6

  	
  Post-Closing obligations

  	
   

  	
  20

  
	
  7

  	
  Warranties and liability

  	
   

  	
  27

  
	
  8

  	
  Limitation of liability

  	
   

  	
  29

  
	
  9

  	
  Claims

  	
   

  	
  32

  
	
  10

  	
  Confidentiality

  	
   

  	
  33

  
	
  11

  	
  Miscellaneous

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule 1

  	
  Definitions

  	
   

  	
   

  

 

2

 

Sale and
Contribution Agreement

 

THIS AGREEMENT IS MADE BETWEEN:

 

(1)                 STMicroelectronics N.V., a public company with limited
liability incorporated under the laws of the Netherlands, with corporate seat
in Amsterdam, the Netherlands, and address at WTC Schiphol Airport, Schiphol
Boulevard 265, 1118 BH Schiphol Airport, Amsterdam, the Netherlands, (“ST”);

 

and

 

(2)                 NXP B.V., a private company with limited
liability incorporated under the laws of the Netherlands, with corporate seat
in Eindhoven, the Netherlands, and address at High Tech Campus 60, 5656 AG
Eindhoven, the Netherlands, (“NXP”).

 

WHEREAS:

 

(A)                ST and NXP wish to establish a
joint venture (the “Joint Venture”)
in the field of semiconductors for cellular communication, being (i) in
the case of ST those parts of its Mobile, Multimedia and Communications Groups,
relating to the Baseband, RF, Power Management Unit, Multimedia, Bluetooth, FM
Radio, WiFi and UWB, (as further specified in Schedule 2, “ST’s Relevant Businesses”); and, (ii) in the case of
NXP, those parts of its Mobile and Personal Business Unit relating to the
businesses Baseband, RF, Power Management Unit, Multimedia, Bluetooth, FM
Radio, GPS, USB and UWB, (as further specified in Schedule 3 “NXP’s Relevant Businesses” and together with ST’s Relevant
Businesses, the “Business”) on and subject to the
terms and conditions set out in this Agreement, (the “Transaction”);

 

(B)                The Parties signed a
confidentiality agreement on 3 October 2007, regarding the disclosure to
each other and each other’s representatives and advisors, of information in
connection with the Transaction (the “Confidentiality Agreement”),
as well as a non-binding Memorandum of Understanding, dated 22
January 2008 (“MoU”) setting
forth certain principal terms and the process of due diligence and negotiation
of transaction documents;

 

(C)               Pursuant to the MoU, the Parties
have given each other and their respective representatives and advisors access
to each other’s Data Room, as well as the opportunity to attend a management
presentation, to make joint customer visits and to request such additional
information as deemed necessary;

 

(D)               Pursuant to the MoU, ST and NXP
have negotiated the main terms and conditions of certain of the transaction
documents under which the Joint Venture is intended to be established and the
relationship between the shareholders in the Joint Venture is intended to be
regulated (the “Transaction Documents”);

 

3

 

(E)                The relevant corporate approvals
required prior to the signing of the Transaction Documents have been obtained
by each Party;

 

(F)                The Parties wish to set out in this
Sale and Contribution Agreement (the “Agreement”),
which forms part of the Transaction Documents, the terms and conditions for the
establishment of the Joint Venture.

 

IT IS AGREED AS FOLLOWS:

 

1                           INTERPRETATION

 

In this Agreement, unless the context
otherwise requires, the provisions in this Clause 1 apply throughout:

 

1.1                 Definitions

 

Capitalised words, including those used in the
preamble of this Agreement, shall have the meaning as defined in Schedule 1.

 

1.2                 References to persons and companies

 

References to:

 

1.2.1                  a person include any individual,
company, partnership or unincorporated association (whether or not having
separate legal personality); and

 

1.2.2                  a company include any company,
corporation or any body corporate, wherever incorporated.

 

1.3                 Headings and references to Clauses,
Schedules, Parts and Paragraphs

 

1.3.1                  Headings have been inserted for
convenience of reference only and do not affect the interpretation of any of
the provisions of this Agreement.

 

1.3.2                  A reference in this Agreement to a
Clause or Schedule is to the relevant Clause of or Schedule to this Agreement;
to a Part is to the relevant Part of the relevant Schedule; and to a
Paragraph is to the relevant Paragraph of (the relevant Part of) the
relevant Schedule.

 

1.4                 ST / NXP / ST’s Relevant Businesses
/ NXP’s Relevant Businesses

 

1.4.1                  Any reference in this Agreement to
the term “ST shall”, shall be interpreted as
meaning that ST shall and/or shall procure that the relevant other members of
the ST Group shall perform the relevant obligation.

 

1.4.2                  Any reference in this Agreement to
a liability or obligation of ST’s Relevant Businesses shall be deemed to
include an obligation on the part of ST to procure that the relevant liability
is discharged or obligation is performed, on and subject to the terms and
conditions set out in this Agreement.

 

1.4.3                  Any reference in this Agreement to
the term “NXP shall”, shall be interpreted as
meaning that NXP shall and/or shall procure that the relevant other members of
the NXP Group shall 

 

4

 

perform the relevant obligation.

 

1.4.4                  Any reference in this Agreement to
a liability or obligation of NXP’s Relevant Businesses shall be deemed to
include an obligation on the part of NXP to procure that the relevant liability
is discharged or obligation is performed, on and subject to the terms and
conditions set out in this Agreement.

 

1.5                 Other references

 

1.5.1                  Whenever used in this Agreement,
the words “include”, “includes” and “including” shall be deemed to be followed
by the phrase “without limitation”.

 

1.5.2                  Any reference in this Agreement to
any gender shall include all genders, and words importing the singular shall
include the plural and vice versa.

 

1.6                 Information

 

References to
books, records or other information include books, records or other information
in any form including paper, electronically stored data, magnetic media, film
and microfilm.

 

1.7                 Legal terms

 

In respect of
any jurisdiction other than the Netherlands, a reference to any Netherlands
legal term shall be construed as a reference to the term or concept which most
nearly corresponds to it in that jurisdiction.

 

2                           TRANSACTION STRUCTURE

 

Subject to
satisfaction (or waiver under Clause 3.4) of the Closing Conditions, the
Parties shall take the following actions to effect the Transaction:

 

2.1                 ST
contribution

 

2.1.1                  ST shall
contribute the ST Relevant Businesses as follows:

 

(a)                 ST shall
establish a new company as a wholly owned subsidiary of ST (as further defined
in Schedule 10, “Dutchco”).
ST shall make the following contributions to Dutchco:

 

(i)                    certain of
ST’s Relevant Businesses (as further specified in Schedule 10); and

 

(ii)                USD 1,520,000,000
(one billion five hundred and twenty million US dollar) together with
(ii) an amount in EURO equal to 80% of the net present value of the
R&D Tax Credits at Closing, taking into account a 10% discount rate, (being
an agreed amount of EUR19,672,277 (nineteen million six hundred and seventy-two
thousand two hundred and seventy-seven euro)),  in
cash, to fund the cash payment to be made by the Company pursuant to Clause
2.3.1(b) (the “Cash Payment”);

 

(b)                 ST shall
establish a new company as a wholly owned subsidiary of ST (as further defined
in Schedule 10, “Swiss Opco”)
and ST shall subscribe for newly issued shares in the capital of Swiss Opco.
The payment obligation for the shares of Swiss 

 

5

 

                                  Opco
shall be satisfied by way of a contribution to Swiss Opco of that part of ST’s
Relevant Businesses that is carried out by the Geneva branch of ST (as further
defined in Schedule 10);

 

(c)                  The Parties
shall establish a new company (as further defined in Schedule 10, the “Company”) and ST shall subscribe for newly
issued shares in the capital of the Company (the “ST JV Shares”).
The payment obligation for the ST JV Shares shall be satisfied by way of a
contribution to the Company of:

 

(i)                    certain parts
of ST’s Relevant Businesses (as further specified in Schedule 10);

 

(ii)                all shares of
Dutchco; and

 

(iii)            all shares of Swiss
Opco; and

 

2.1.2                  ST shall make an
interest-free convertible loan to Dutchco in an amount of USD 350,000,000
(three hundred and fifty million US dollar), to fund working capital requirements
and allow for certain cash flexibility for the Group (the “Working
Capital Loan”), provided that ST shall convert the Working Capital
Loan to equity (as an informal capital contribution and thus against no
issuance of shares) prior to the earlier of (a) the occurrence of the
filing for bankruptcy, application for a moratorium on payments, or liquidation
of the Company (or any material Affiliate of the Company) and (b) if NXP
is a shareholder of the Company upon the expiry of 12 (twelve) months from the
Closing Date;

 

the foregoing in accordance with ST’s Disentanglement Plan and Schedule
10.

 

2.2                 NXP
contribution

 

NXP shall establish two new companies (as further defined in Schedule
10, “WH1” and “WH2”) and:

 

2.2.1                  to WH1 it shall
transfer its Dutch Relevant Businesses and the NXP Relevant IP related thereto,
excluding legal title to any NXP Relevant Registered IP; and

 

2.2.2                  to WH2 it shall
transfer its non-Dutch Relevant Businesses and the NXP Relevant IP related
thereto, excluding legal title to any NXP Relevant Registered IP and excluding
certain other parts of NXP’s Relevant Business;

 

the foregoing in accordance with NXP’s Disentanglement Plan and Schedule
10.

 

 

2.3                 Transfer
by NXP to the Joint Venture

 

2.3.1                  At Closing, NXP
shall transfer the following:

 

(a)                 to the Company,
all the shares of WH1 in return for Shares of the Company representing a
shareholding of 20% (twenty per cent) in the Company; and

 

(b)                 to Dutchco, all
the shares of WH2 in return for the Cash Payment; and

 

2.3.2                  after Closing,
but on the Closing Date, NXP shall transfer to Swiss Opco legal title to the
NXP Relevant Registered IP and those certain other parts of NXP’s Relevant
Businesses as referred to in Clause 2.2.2;

 

6

 

the foregoing in
accordance with NXP’s
Disentanglement Plan and Schedule 10.

 

2.4                 No
Transfer of Liabilities other than Assumed Liabilities

 

2.4.1                  ST undertakes to
the Company and NXP to procure that ST’s Relevant Businesses are contributed to
the Company or the relevant Group Company free of Liabilities, with the
exception only of the ST Assumed Liabilities which shall be contributed
together with ST’s Relevant Businesses, subject to Clause 2.4.3 and Clause 6.5
through Clause 6.10 to the extent (i) they are ST Assumed Financial
Liabilities that must transfer along with the Relevant Businesses following
mandatory law, such as certain of the Unfunded Defined Benefit Liabilities, or
because they are part of an ST Entity provided that in such case these
Liabilities cannot be redeemed or reimbursed prior to Closing, or
(ii) they are deemed ST Assumed Business Liabilities in accordance with
Paragraph 4.2 of Schedule 2.

 

2.4.2                  NXP undertakes
to the Company and ST to procure that NXP’s Relevant Businesses are contributed
to the Company or the relevant Group Company free of Liabilities, with the
exception only of the NXP Assumed Liabilities which shall be contributed
together with NXP’s Relevant Businesses, subject to Clause 2.4.3 and Clause 6.5
through Clause 6.10, to the extent (i) they are NXP Assumed Financial
Liabilities that must transfer along with the Relevant Businesses following
mandatory law, such as certain of the Unfunded Defined Benefit Liabilities, or
because they are part of an NXP Entity provided that in such case these
Liabilities cannot be redeemed or reimbursed prior to Closing, or
(ii) they are deemed NXP Assumed Business Liabilities in accordance with
Paragraph 3.2 of Schedule 3.

 

2.4.3                  Each Party undertakes, in respect of each Assumed Financial
Liability relating to its Relevant Businesses, to fully fund in Cash any such
Assumed Financial Liability in accordance with the Draft Assumed
Financial Liability Statement referred to in Clause 4.10 prior to contributing
the Relevant Businesses at Closing. Notwithstanding the foregoing sentence,
each Party shall not fund in Cash the following Financial Liabilities:
(a) those inter-company debts between the relevant Party’s Contributed
Company listed for NXP in or used by ST for the purposes of disentanglement in accordance
with Schedule 10 of the ST Disentanglement Plan [note:
awaiting clarification from ST/A&O regarding the cross reference to
Schedule 10 of the Disentanglement Plan], and (b) the ST VAT
Claims or the NXP VAT Claims. In relation to the ST VAT Claims and NXP VAT
Claims, it is assumed that these ST VAT Claims and NXP VAT Claims will be repaid by the
relevant Affiliates of the Company if, when and to the extent this Affiliate
obtains a refund for these VAT Claims. If and to the extent this refund is not
made, them each of ST and NXP undertakes to compensate the relevant Affiliate
for the amount of the ST VAT Claim and the NXP VAT Claim respectively. Each
Party, to the extent it is able to do so through its
nominated Directors (under, and as defined in, the Shareholders Agreement),
shall ensure that the
Company or its relevant Affiliate make its best efforts to execute the VAT
refund process in an expeditious manner.

 

2.4.4                  Subject to
Clause 2.4.3 and Clauses 6.5 through 6.10 and the R&Ws, as of the Effective
Time, the Company or relevant other Group Company shall assume, pay when due,
satisfy, discharge, perform and fulfil, to the extent relating to the Relevant
Businesses, all 

 

7

 

                                             Assumed Liabilities.

 

2.4.5                  The Retained
Liabilities, identified for NXP in Paragraph 3.4 of Schedule 3 and for
ST in Paragraph 3.4 of Schedule 2 shall remain for the account of the
relevant member of the NXP Group and ST Group after Closing and be subject to
Clause 6.10 and the relevant provisions of Schedule 2 and Schedule 3.

 

2.5                 Adjustment
to consideration

 

If any payment is made by NXP to ST, or from ST to NXP, in respect of
any claim (i) for any breach of this Agreement (including, for the
avoidance of doubt, a breach of the R&Ws), (ii) pursuant to an
indemnity under this Agreement or (iii) for acquiring the T3G Shares as
set forth in Clause 4.12, the amount of such payment shall deemed to be an
adjustment of the consideration in Shares to be paid by the Company to NXP or
ST, as the case may be, for the transfer of their respective Relevant
Businesses.

 

3                           CLOSING CONDITIONS

 

3.1                 Conditions

 

Closing is conditional upon satisfaction (or
waiver under Clause 3.4) of the following Closing Conditions:

 

3.1.1                  the Closing Anti-trust Approvals
shall have been obtained or, alternatively, any waiting periods under the laws
applicable to such approvals shall have expired or been terminated;

 

3.1.2                  the completion of NXP’s procedure
in respect of the Transaction in compliance with section 25 of the Dutch Works
Council Act (“WCA”), such completion to include:

 

(a)                 the receipt by NXP from its Dutch
works council (“NXP’s Works Council”) of:

 

(i)                    an unconditional positive advice;
or

 

(ii)                an advice with conditions  acceptable to each of the Parties and if required in
accordance with Clause 3.3.3; or

 

(b)                 a resolution of NXP’s board in
respect of the Transaction that deviates from NXP’s Works Council’s advice and:

 

(i)                    against which NXP’s Works Council
has not timely lodged an appeal with the Enterprise Chamber of the Amsterdam
Court of Appeal (‘Ondernemingskamer’); or

 

(ii)                against which NXP’s Works Council
has timely lodged an appeal with the Enterprise Chamber of the Amsterdam Court
of Appeal which appeal is subsequently dismissed by such court and if required
in accordance with Clauses 3.3.5 and 3.3.6.

 

3.1.3                  the completion of the information and
consultation procedure of ST’s French works
council(s) (“ST’s Works Council(s)”),
with respect to the Transaction, in compliance with French law, including ST’s
Works Council’s request (if any) for assistance by an expert;

 

8

 

 

3.1.4                  there
not being a breach by NXP of its obligations under Clause 4 that would be
reasonably likely to have a Material Adverse Effect;

 

3.1.5                  there
not being a breach by ST of its obligations under Clause 4 that would be
reasonably likely to have a Material Adverse Effect;

 

3.1.6                  the
R&Ws given by each of ST and NXP shall be true and accurate, in each case
as at the time set for Closing under Clause 5.2 (or, if applicable, Clause
5.4), as though made as at such time (unless any such R&W is made only as
of a specific date, in which event such R&W shall be true and accurate as
of such specified date), except where the breach of any R&W has not had and
is not reasonably likely to have a Material Adverse Effect;

 

3.1.7                  no
Governmental Authority of competent jurisdiction shall have issued or granted
any order (whether temporary, preliminary or permanent) or otherwise taken any
affirmative action that has the effect of making the consummation of the
Transaction illegal in any jurisdiction in which the Business or the Parties
have any material business or operations or which has the effect of prohibiting
or otherwise preventing the consummation of the Transaction; and

 

3.1.8                  each
of the Ancillary Agreements being in Agreed Terms, save to the extent that any
terms not thus agreed (i) have already been included in the relevant Term
Sheet or (ii) would not, by their absence, be reasonably expected to have
a material financially adverse effect on ST or NXP, as the case may be, or
materially hinder the Relevant Businesses from continuing their business in the
Company (or as Affiliate(s) of the Company) as of Closing. Any such
material terms which have not been already included in the relevant Term Sheet
shall be negotiated between the Parties in good faith, in order to come to full
Agreed Terms prior to Closing in accordance with Clause 4.2.

 

3.2                 Responsibility for satisfaction

 

3.2.1                  To the
maximum extent permitted under applicable Law, each of the Parties shall take
all such actions within its power as are necessary to ensure satisfaction of
and compliance with the Closing Conditions for which it is responsible, being
Clauses 3.1.1, 3.1.3, 3.1.5, 3.1.7 (to the extent relating to ST’s Relevant
Businesses) and 3.1.8 for ST and Clauses 3.1.1, 3.1.2, 3.1.4, 3.1.7 (to the extent
relating to NXP’s Relevant Businesses) and 3.1.8 for NXP.

 

3.2.2                  Without
prejudice to the generality of Clause 3.2.1, with respect to the Closing
Conditions set out in Clause 3.1.1 (Closing Anti-trust Approvals) and 3.1.2
(NXP’s Works Council), each of the Parties shall fulfil its obligations and
exercise its rights in good faith in relation to a Closing Condition. Although
Parties acknowledge that each Party may protect its legitimate interests in
relation to such Closing Condition while exercising such rights in good faith
no Party shall act in a manner which would unduly frustrate the satisfaction
thereof.

 

3.2.3                  Without
prejudice to the generality of Clauses 3.2.1 and 3.2.2, ST and NXP shall,
either jointly or in close consultation with each other:

 

(a)                 as
soon as practicable, and in any event not later than fifteen (15) Business Days
after the Signing Date, prepare and file with the competent Governmental
Authorities

 

9

 

the notices and applications necessary to satisfy the
Closing Condition set out in Clause 3.1.1;

 

(b)                 supply
as promptly as practicable any additional information and documentary material
that may be requested by any competent Governmental Authority in connection
with the Closing Condition set out in Clause 3.1.1 and otherwise cooperate with
and provide all necessary information and assistance reasonably required by any
Governmental Authority in connection with the Closing Condition set out in
Clause 3.1.1; and

 

(c)                  use
their best efforts to cause the expiration or termination of any applicable
waiting period under any applicable Law and the fulfilment (whether explicit or
implicit) of the Closing Condition set out in Clause 3.1.1 as soon as
practicable, including by agreeing to (i) take any action that may be
required in order to obtain an unconditional clearance (including by agreeing
to perform any disposition of assets or businesses that may be required by any
relevant Governmental Authority) or (ii) duly and promptly complying with
any condition that any relevant Governmental Authority may impose to clear this
Agreement and the Transaction, provided that the foregoing provisions of this
Clause 3.2.3(c) shall not require ST or NXP to agree to or take any action
or comply with any condition which would, indirectly or in the aggregate, be
material to ST or NXP, as the case may be, in the context of this Transaction.

 

3.2.4                  In the
event that any administrative or judicial action or proceeding is instituted
(or threatened to be instituted) by a Governmental Authority or any other
person challenging (any part of) the Transaction, each Party shall co-operate
in all respects with the other Party and use its reasonable best efforts to
defend, contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts the
consummation of the Transaction.

 

3.3                 Works Councils

 

3.3.1                  ST
shall use its reasonable best efforts to:

 

(a)                 take
any such reasonable action as is required to complete the information and
consultation procedure with ST’s Works Council and obtain a written opinion
from ST’s Works Council; and

 

(b)                 promptly
co-operate with and (as promptly as practicable) provide all necessary
information and assistance reasonably required by ST’s Works Council.

 

3.3.2                  NXP
shall use its reasonable best efforts to:

 

(a)                 take
any such reasonable action as is required to obtain an unconditional positive
advice or an advice with conditions from NXP’s Works Council which are accepted
by each of the Parties in accordance with Clause 3.3.3, subject to Clauses
3.3.5 and 3.3.6 below; and

 

(b)                 (promptly)
co-operate with and (as promptly as practicable) provide all necessary

 

10

 

information and assistance reasonably required by NXP’s
Works Council.

 

3.3.3                  Each
Party shall provide the other Party with the necessary information concerning
assets and Employees within ten (10) Business Days following the date of
this Agreement in order to enable such Party to comply with its obligations
under Clauses 3.3.1 and 3.3.2.

 

3.3.4                  If any
conditions or arrangements in relation to the Group are introduced by NXP’s
Works Council in its advice as referred to in Clause 3.3.2, these conditions
shall not be accepted by NXP, unless with the prior written consent of ST. Once
approval for these conditions, that might include arrangements that are binding
upon the Company and /or the Group Companies, have been given by each of ST and
NXP, the Parties shall negotiate on the changes (if any) to the Transaction
Documents which are appropriate under the circumstances, bearing in mind the
intent and purpose of the terms and conditions set forth in the Transaction
Documents. The Parties agree and acknowledge that such negotiations should take
place in good faith and as far as reasonably possible should be consistent with
the understandings of the parties reflected in the Transaction Documents.

 

3.3.5                  If,
after Clauses 3.3.2(a), 3.3.2(b) and 3.3.3 have been complied with, NXP’s
Works Council still has not rendered an unconditional positive advice or an
advice with conditions acceptable to each of the Parties, then NXP shall,
unless otherwise agreed by ST, after receipt of the advice, inform NXP’s Works
Council in writing of:

 

(i)                    the
resolution of the board of NXP in respect of the Transaction;

 

and if and insofar as such resolution deviates from the advice:

 

(ii)                the
grounds and motives for such deviation.

 

3.3.6                  If
Clause 3.3.3 applies, Closing shall be postponed for a period equal to one
calendar month after the day on which NXP informed NXP’s Works Council in
writing of its board resolution as set out in Clause 3.3.5, provided that, if
NXP’s Works Council has appealed to the Enterprise Chamber of the Amsterdam
Court of Appeal (Ondernemingskamer)
in respect of such board resolution, Closing shall be postponed until three (3) Business
Days after NXP has received a court order from the Enterprise Chamber of the
Amsterdam Court of Appeal dismissing such appeal and allowing the Parties to
effect the Closing.

 

3.3.7                  For
the purpose of this Clause 3.3 and Clause 3.1.2, the use of the defined term “NXP”
shall include the Dutch Affiliate for which NXP’s Works Council has been
established.

 

3.4                 (Non-)Satisfaction/Waiver

 

3.4.1                  Within
two (2) Business Days of becoming aware of the same, ST shall give notice
to NXP or vice versa, as applicable, of (i) the satisfaction of the
Closing Conditions set out in Clause 3.1 for which it is responsible, as set
out in Clause 3.2.1, or of (ii) any fact or circumstance which could
result in a Closing Condition not being satisfied.

 

3.4.2                  The
Closing Conditions set out in Clauses 3.1.1, 3.1.2, and 3.1.8 may only be
waived by written agreement between ST and NXP.

 

3.4.3                  The
Closing Conditions set out in Clauses 3.1.3, 3.1.4, and 3.1.6 (in relation to a
breach by NXP of any R&Ws), may only be waived by ST.

 

11

 

3.4.4                  The
Closing Condition set out in Clauses 3.1.5, and 3.1.6 (in relation to a breach
by ST of any R&Ws), may only be waived by NXP.

 

3.5                 Long stop date

 

If the Closing Conditions are not satisfied (or waived under Clause 3.4)
on or before the date falling twelve (12) months after the date hereof NXP or
ST may, in its sole discretion, terminate this Agreement (other than Clauses 1,
10 and 11.2 through 11.15) by notice to the other, and no Party shall have any
claim against the other save for any claim arising from breach of any obligation
contained in Clause 3.1.8, 3.3 or 3.4 provided that no such termination notice
may be given by a Party which is in default of its obligations under this
Agreement.

 

4                           PRE-CLOSING COVENANTS

 

4.1                 Other Transaction Documents

 

Subject to Clause 4.2, ST and NXP shall negotiate in good faith
definitive terms for each of the following Transaction Documents:

 

4.1.1                  business
sale, and share sale and purchase agreements (each a “Local Transfer Agreement”) in respect of
their Relevant Businesses;

 

4.1.2                  two umbrella
transitional services agreements (each a “TSA”)
and service level agreements (each an “SLA”):

 

(a)                 for
the provision of transitional services by ST to the Company;

 

(b)                 for
the provision of transitional services by NXP to the Company;

 

4.1.3                  operational
agreements between the Company on the one hand and one of more of the Parties
and/or any of their respective Affiliates on the other (each an “Operational Agreement”), including:

 

(a)                 four
Manufacturing Agreements:

 

(i)                    for
the provision of manufacturing services by ST to the Company;

 

(ii)                for
the provision of manufacturing services by the Company to ST;

 

(iii)            for
the provision of manufacturing services by NXP to the Company; and

 

(iv)              for
the provision of manufacturing services by the Company to NXP.

 

(b)                 one IP
Transfer and Licence Agreement:

 

(i)                    for
the transferring and licensing of IP by ST to the Company;

 

(ii)                for
the transferring and licensing of IP by NXP to the Company;

 

(iii)            for
the licensing of IP by the Company to ST (including the licensing of UWB and
GPS); and

 

(iv)              for
the licensing of IP by the Company to NXP.

 

(c)                  one
R&D Services Agreement:

 

(i)                    for
the provision of R&D services by ST to the Company;

 

12

 

(ii)                for
the provision of R&D services by the Company to ST (including for UWB and
GPS);

 

(iii)            for
the provision of R&D services by NXP to the Company; and

 

(iv)              for
the provision of R&D services by the Company to NXP.

 

(d)                 one
Near Field Communication Technology License Agreement between NXP and the
Company.

 

4.2                 Binding Term Sheets

 

It is recorded that in respect of some of the Transaction Documents the
Parties have negotiated term sheets, which are attached hereto in agreed form
under Schedule 4 (the “Term Sheets”).
As of Signing, the Parties shall negotiate in good faith definitive agreements
in respect of the Term Sheets. If, notwithstanding Clause 3.1.8, Closing occurs
but the Parties have not negotiated definitive agreements in respect of one or
more of the Term Sheets, the Parties shall continue to negotiate in good faith
definitive agreements in respect thereof and, unless otherwise agreed in
writing, subject to and as of Closing, until signing of such definitive
agreements the relevant Term Sheets (as supplemented by such further terms as
may have been agreed to prior to Closing) shall be binding.

 

4.3                 Disentanglement

 

4.3.1                  Each
Party, in preparation for the transfer of its Relevant Businesses to the
Company and the unwinding of the Newco-structure of WH2, has negotiated a Disentanglement
Plan (attached in draft form as Schedule 5 (ST Disentanglement Plan) and
Schedule 6 (NXP Disentanglement Plan)), which is not final as at the
date of Signing. The Parties undertake to discuss in good faith the definitive
terms of the Disentanglement Plans (including the roadmaps setting out the
various steps to unwind the Newco-structure of WH2) in accordance with the
principles laid down in the drafts attached hereto and to finalise these
definitive terms prior to Closing.

 

4.3.2                  Each
Party shall take the actions, and procure the taking of such actions, as set
out in its Disentanglement Plan (the “Disentanglement”),
including the effecting of the Local Transfer Documents, attached as Schedule
11, provided that:

 

(a)                 a
Party shall not be in breach of its obligations under this Clause 4.3 to the
extent that its Relevant Businesses, as a result of the Party not having taken
or not having procured the taking of such actions, are not materially hindered
from continuing their business in the Company (or as Affiliates of the Company)
as of Closing. For the avoidance of doubt, NXP not obtaining the Dutch tax
ruling and ST not obtaining the Dutch and Swiss tax rulings, shall be deemed a
material hindrance of the continuity of the business for the purpose of this
Clause, provided that each of NXP and ST acknowledge that time is of the
essence and that each of them shall file a ruling request with the relevant
authorities within ten (10) Business Days after the date of this Agreement
and shall further diligently pursue obtaining the required rulings;

 

(b)                 deviations
from or supplements to the template Local Transfer Documents may be necessary
pursuant to mandatory local formalities to effect the transfer; and

 

13

 

(c)                  ST may
not be able to obtain the French tax ruling on time and, as a result, may not
be ready to transfer the French assets and liabilities at Closing to the Group.
This will not delay Closing provided that such business is conducted as from
the Effective Time for the account and the benefit of the Group.

 

4.4                 Umbrella Agreements

 

4.4.1                  ST
shall use its reasonable best efforts to procure that, as of Closing, the
Company and other members of the Group (as subsidiaries of ST) fall under and
benefit from the ST Umbrella Agreements.

 

4.4.2                  If (i) consent
of a counterparty to a ST Umbrella Agreement is required for the aforesaid
purpose but is not received prior to Closing; and (ii) one of the NXP
Umbrella Agreements concerns substantially the same subject as such ST Umbrella
Agreement, NXP shall notify the counterparty to such NXP Umbrella Agreement of
the transfer of the Relevant Businesses pursuant to this Agreement. The Parties
shall use reasonable best efforts to obtain a grace period of at least three (3) months
as of the Closing Date allowing the NXP Relevant Businesses the continued
enjoyment of such NXP Umbrella Agreement during such period.

 

4.4.3                  In the
event that a NXP Umbrella Agreement concerns a subject that is not covered by a
ST Umbrella Agreement, NXP shall if so required by ST prior to Closing notify
the counterparty to such NXP Umbrella Agreement of the transfer of the Relevant
Businesses pursuant to this Agreement. The Parties shall use reasonable best
efforts to obtain a grace period of at least three (3) months as of the
Closing Date allowing the NXP Relevant Businesses the continued enjoyment of
such NXP Umbrella Agreement during such period.

 

4.4.4                  Copies
of all notifications together with any responses from the counterparties of the
ST Umbrella Agreements and the NXP Umbrella Agreements will be provided to the
Company, ST and NXP upon dispatch or receipt, as the case may be.

 

4.4.5                  The
Parties shall use their reasonable best efforts to procure that, during the
aforesaid grace periods the Company, or relevant other member of the Group,
arranges with each such counterparty a new agreement, where applicable, with
retroactive effect as of the Closing Date. Any and all costs in relation to the
use of NXP Umbrella Agreements during such grace period and the entering into
of any such new agreements shall be for the account of the Company or relevant
other member of the Group.

 

4.5                 Conduct of business

 

Subject to Clause 4.6, each of ST and NXP shall procure that between
Signing and Closing each of their Relevant Businesses:

 

4.5.1                  carries
on business as a going concern in the ordinary course as carried on prior to
Signing, save as consented to in writing by the other Party, such consent not
be unreasonably withheld or delayed and save as contemplated in the Transaction
Documents, including its Disentanglement Plan;

 

4.5.2                  without
prejudice to the generality of Clause 4.5.1, does not, without the prior
written consent of the other Party, such consent not to be unreasonably
withheld or delayed and

 

14

 

save as contemplated in the Transaction Documents, including its
Disentanglement Plan:

 

(a)                 enter
into any agreement or incur any commitment involving any capital expenditure in
excess of USD 3,000,000 (three million US dollar) per item and USD
15,000,000 (fifteen million US dollar) in aggregate per calendar quarter, in
each case exclusive of VAT;

 

(b)                 enter
into or amend any contract or commitment which (a) is not in the ordinary
course of business, or (b) involves or is likely to involve total annual
expenditure in excess of USD 10,000,000 (ten million US dollar), exclusive
of VAT;

 

(c)                  acquire
or dispose of, or agree to acquire or dispose of, any material asset or
material inventory involving consideration, expenditure or liabilities in
excess of USD 3,000,000 (three million US dollar), exclusive of VAT, other
than in the ordinary course of business;

 

(d)                 acquire
or agree to acquire any share(s) or other interest in any person or
company;

 

(e)                  incur
any additional borrowings or incur any other indebtedness in each case in
excess of USD 1,000,000 (one million US dollar) other than in the ordinary
course of business;

 

(f)                     delay
or cease any capital expenditure in respect of that Party’s Relevant
Businesses, as provided for in the budget made available to the other Party
prior to Signing;

 

(g)                 create,
allot or issue, or allow to be created, allotted or issued, any share capital
of any company that is part of that Party’s Relevant Businesses;

 

(h)                 repay,
redeem or repurchase, or allow to be repaid, redeemed or repurchased, any share
capital of any company that is part of that Party’s Relevant Businesses;

 

(i)                    declare,
make or pay any dividend or other distribution to any shareholders of any
company that is part of that Party’s Relevant Businesses; or

 

(j)                     make
any change in the terms and conditions of employment of any of its directors or
Senior Employees, other than in accordance with the applicable collective
labour agreement or similar annual indexation increase or consistent with past
practice, or employ or terminate the employment of any director or Senior
Employee or make any arrangements with any unions or other employee
representative bodies (including the entering into or, amending of or deviation
from any collective labour agreement or social plan) enter into, adopt or make
any material amendments or variations to retirement benefit plans and other
long-term benefit plans of the Relevant Businesses.

 

4.6                 Excused conduct

 

A Party shall not invoke Clause 4.5.2 against the other Party if, in the
latter Party’s reasonable opinion, adherence to its obligations under Clause
4.5.2 would have a Material Adverse Effect on its ability to continue to manage
its Relevant Businesses or have a Material Adverse Effect on the value of its
Relevant Businesses. Each Party shall inform the other Party of any such
situation as

 

15

 

soon as reasonably practicable thereafter.

 

4.7                 Acting vis-à-vis the other Party

 

It is further agreed that:

 

4.7.1                  in
applying and enforcing Clause 4.5.2, ST and NXP shall act vis-à-vis each other
in accordance with the principles of reasonableness and fairness giving due
consideration to all relevant circumstances; and

 

4.7.2                  under
certain circumstances a Party may not be able to timely request the consent of
the other Party, or await a response from that Party to such request, if the
circumstances require immediate action from the Party or management of that
Party’s Relevant Businesses, but that Party shall nevertheless inform the other
Party of any such situation as soon as reasonably practicable thereafter.

 

4.8                 Security

 

Without detracting from any R&Ws or indemnities set out in this
Agreement, NXP shall procure vis-à-vis the Company or the relevant member of
the Group, that the Collateral Agents (as such term is defined in each of (i) that
certain Senior Secured Indenture among NXP B.V. and NXP Funding LLC (as
issuers) and the Collateral Agents (as defined therein) dated 12 October 2006
and (ii) that certain Collateral Agency Agreement among Kaslion
Acquisition B.V., NXP B.V. and the Collateral Agent (as defined therein) dated
29 September 2006) give written consent (under Section 12.05 of the
aforesaid Indenture and Section 5.03 of the aforesaid Collateral Agency
Agreement) to the release, at Closing, of all relevant Security on any assets
forming part of NXP’s Relevant Businesses.

 

4.9                 European works council and trade unions

 

As early as possible in order to comply with Laws, but in any event
prior to Closing:

 

4.9.1                  each
of ST and NXP shall consult with and notify, to the extent required, its
European and/or other works council(s) regarding the Transaction; and

 

4.9.2                  each
of NXP and ST shall, to the extent required, consult with and notify the relevant
trade unions regarding the Transaction;

 

each Party undertaking to keep the other informed throughout on the
status of such consultations and notification.

 

4.10          Draft Assumed Financial Liabilities Statement

 

4.10.1           Prior
to the date set for Closing, each of ST and NXP shall prepare and deliver to
the other Party a draft statement, together with all related working papers,
setting out the determination of, in respect of NXP’s Relevant Businesses, the
NXP Assumed Financial Liabilities Funding Requirement and, in respect of ST’s
Relevant Businesses, the ST Assumed Financial Liabilities Funding Requirement,
as the case may be, in respect thereof (the “Draft
Assumed Liabilities Statements”).

 

4.10.2           The
Draft Assumed Financial Liabilities Statements shall be in the form set out in Schedule
17 and shall be used to determine whether the Assumed Financial Liabilities
that will be

 

16

 

contributed by each Party at Closing are fully funded
in accordance with Clause 2.4.3 and whether, in relation to any NXP Entity or
ST Entity, as the case may be, there is any Cash to be deducted from the amount
of the Assumed Financial Liabilities. After Closing, the Draft Assumed
Financial Liabilities Statements will be reviewed and amended to reflect the
actual position as at the Effective Time as laid down in the Final Assumed
Financial Liabilities Statements in accordance with Clause 6.8.

 

4.11          Repayment of expenditure by the Company to NXP

 

4.11.1           The
Company undertakes to repay to NXP the part of the expenditure for capital
equipment actually received by the NXP Relevant Businesses, in the period
between the date hereof and the Effective Time, consistent with the Business
Plan and Schedule 19 for which the costs are incurred by NXP, as
reasonably evidenced by NXP to ST and the Company in writing, in accordance
with and subject to the Clauses below (the “NXP
Interim Capex”).

 

4.11.2           In
respect of the three-month period starting immediately at the date hereof NXP
will be repaid up to an amount of USD 25,000,000 (twenty five million US
dollar) (the “NXP First Allocated Interim
Capex”).

 

4.11.3           The
expenditure for capital equipment actually received by the NXP Relevant
Businesses incurred by NXP (i) in the period starting after this initial
three-month period and ending at the later of the date of satisfaction of the
Closing Conditions referred to in Clauses 3.1.1, 3.1.2, 3.1.3 and 3.1.7 and the
date of obtaining the Dutch and Swiss tax rulings as referred to in Clause
4.3.2(a) (the “NXP Second Allocated
Interim Capex”) and (ii) in the period starting at the later of
the date of satisfaction of the Closing Conditions referred to in Clauses
3.1.1, 3.1.2, 3.1.3 and 3.1.7 and the date of obtaining the Dutch and Swiss tax
rulings as referred to in Clause 4.3.2(a) and ending at the Effective Time
(the “NXP Third Allocated Interim Capex”)
shall be allocated pro rata temporis
to these two periods.

 

4.11.4           The
NXP Second Allocated Interim Capex as allocated pursuant to clause 4.11.3 will
not be repaid. The NXP Third Allocated Interim Capex, as allocated pursuant to
Clause 4.11.3 shall be repaid up to an amount calculated pro rata temporis to USD 25,000,000
(twenty five million US dollar) per quarter, if and to the extent that Closing
is delayed for reasons not due, or attributable to NXP (for the avoidance of
doubt, any delay caused by implementing the WH2 Newco-structure by NXP prior to
Closing shall be deemed due and attributable to NXP).

 

4.11.5           Any
repayment is subject to the assets acquired in connection with the capital
expenditure being part of the NXP Relevant Businesses.

 

4.11.6           If the
later of the date of satisfaction of the Closing Conditions referred to in
Clauses 3.1.1, 3.1.2, 3.1.3 and 3.1.7 and the date of obtaining the Dutch and
Swiss tax rulings as referred to in Clause 4.3.2(a) occurs within the
first three months, the maximum amount to be repaid by Falcon shall not exceed
an amount calculated pro rata temporis
to USD 25,000,000 (twenty five million US dollar) per three-month period.

 

4.11.7           Any
payment under this Clause 4.11 will be made in cash immediately upon Closing
for that part of the capital expenditure that has been paid and for which
evidence of the

 

17

 

payment of the relevant capital expenditure has been
provided by NXP to ST or the Company, provided that, for the avoidance of
doubt, payment shall be conditional on the assets acquired being part of NXP’s
Relevant Businesses as referred to in Clause 4.11.5. For the part of the expenditure
for capital equipment received and not yet paid at the Effective Time, NXP
shall either:

 

(a)                 transfer
the relevant accounts payable to the Company; or

 

(b)                 provide
evidence of the payment of the relevant capital expenditure at the due date, upon
which the Company shall make such payment to NXP.

 

4.11.8           Notwithstanding
anything to the contrary in this Clause 4.11, no amount shall be payable by the
Company (and no transfer of the relevant accounts payable under Clause 4.11.7(a) shall
take place) under this Clause 4.11 to the extent that NXP’s PPE amount (as
reflected in NXP’s PPE Statement determined in accordance with Clause 6.7) does
not exceed an amount equal to the result of:

 

(a)                 90% of
NXP’s PPE Reference Amount; plus

 

(b)                 the
lower of:

 

(i)                    USD
25,000,000 (twenty-five million US dollar), and

 

(ii)                the
sum of the NXP First Allocated Interim Capex and the NXP Third Allocated
Interim Capex.

 

4.12          T3G

 

Prior to Closing, NXP shall use its reasonable best efforts to acquire
the shares in T3G currently held by Datang Mobile Communications Equipment Co.
Ltd, Samsung Electronics Co. Ltd and Motorola Inc. (the “T3G Shares”). If Closing occurs, but NXP
has not yet executed a binding agreement to acquire the T3G Shares, NXP shall
indemnify and hold the Company harmless for the costs (including direct
transaction costs) of acquiring these T3G Shares if the Company acquires such
T3G Shares after Closing.

 

4.13          Accounts

 

Within twenty five (25) Business Days after the date of this Agreement,
each of NXP and ST shall update the relevant Accounts with a list of assets and
Inventory and procure its auditors to deliver an audit comfort letter in
relation thereto.

 

5                           CLOSING

 

5.1                 Effective Time

 

Without prejudice to the Warrantee’s rights arising from the R&Ws or
each Party’s rights arising otherwise from this Agreement, the Relevant
Businesses are for the risk and the account of the Company as of the Effective
Time.

 

5.2                 Date and place

 

5.2.1                  Subject
to the satisfaction (or waiver under Clause 3.4) of each of the Closing
Conditions,

 

18

 

Closing shall take place:

 

(a)                 at
11.00 CET on the first Business Day following the last calendar day of the
reporting month in which (a) notification occurs under Clause 3.4.1 in respect
of that Closing Condition set out in 3.1.1 or 3.1.2 that is last satisfied or,
if later (b) waiver occurs under Clause 3.4 in respect of any Closing
Condition that has not been satisfied or waived; and

 

(b)                 in
Amsterdam, the Netherlands, at the offices of NXP’s Lawyers; or

 

(c)                  at
such other time, date and/or place as the Parties may agree in writing (not
acting unreasonably).

 

5.2.2                  Subject
to Clauses 3 and 4, and without extending or amending any of the obligations of
the Parties thereunder, the Parties shall make their best efforts to cause
Closing to occur at or prior to 2 August 2008.

 

5.3                 Closing events

 

At Closing, each Party shall procure that the actions set out in Schedule
10 for which it is responsible, are taken in the sequence set out in said
Schedule, to the extent that any such action is not taken by NXP or ST, as the
case may be and with the prior written consent of the other, prior to the
Closing.

 

5.4                 Breach of pre-Closing and Closing obligations

 

5.4.1                  If any
Party is in breach, and thereby a Defaulting Party, of any of its material
obligations under Clauses 3, 4 or 5, which breach is attributable to the
Defaulting Party and results in the Closing not occurring, the Defaulting Party
shall immediately owe and pay to the other Party an amount of USD 100,000,000
(one hundred million US dollar). This amount is owed in addition and without
prejudice to all other rights or remedies available to such other Party,
including the right to claim damages, provided that if the damages awarded
exceed the amount of USD 100,000,000 (one hundred million US dollar) actually
paid to the non-Defaulting Party, the Defaulting Party may set off such amount
against any damages due and payable pursuant to this Clause 5.4.1. Parties
acknowledge that the other Party may also request specific performance to
effect Closing.

 

5.4.2                  Concurrent
with and without prejudice to Clause 5.4.1, if any Party breaches any material
obligation in Clause 5.3, ST, in the case of breach by NXP, or NXP, in case of
breach by ST, shall be entitled, (in addition to and without prejudice to all
other rights or remedies available, including the right to claim damages and
the right, if applicable to receive the penalty payment as set forth in Clause
5.4.1) to terminate, by notice, this Agreement (other than Clauses 1, 10 and
11.2 through 11.15), in which event the Parties shall forthwith take all such
action as is necessary to reverse any action already taken under Clause 5.3 and
the Disentanglement Plans.

 

19

 

6                           POST-CLOSING OBLIGATIONS

 

6.1                 Completion of disentanglement

 

To the extent not taken prior to Closing, each Party, as soon as
reasonably practicable after Closing but in any event prior to expiry of a
period of three (3) months after Closing, shall take, and procure the
taking of such actions, as set out in its Disentanglement Plan.

 

6.2                 Wrong pockets

 

6.2.1                  If,
and to the extent applicable, any assets forming part of ST’s or NXP’s Relevant
Businesses have not been transferred by ST or NXP, as applicable, to the
Company, the relevant Party shall transfer these assets to the Company as soon
as reasonably practicable after Closing, at no additional costs.

 

6.2.2                  If,
and to the extent applicable, assets not forming part of ST’s or NXP’s Relevant
Businesses have been transferred by ST or NXP, as applicable, to the Company,
the Company shall transfer these assets to the relevant Party as soon as
reasonably practicable after Closing, at no additional costs.

 

6.2.3                  Without
detracting from the generality of Clause 6.2.2, if at any time after Closing,
any Group Company receives any monies in respect of any NXP Receivables or ST
Receivables, the Company shall procure that the relevant Group Company pays the
amount received, less reasonable administrative expenses, to NXP or ST, as the
case may be, as soon as reasonably practicable.

 

6.2.4                  In the
event that, in respect of differences between assumed and actual inventory
levels, an adjustment payment is made by NXP or ST, or an Affiliate of NXP or
ST, as the case may be, to an Affiliate of the Company, or vice versa, pursuant
to a Local Transfer Agreement, and such payment would not have been due under
this SCA, then the relevant Party shall pay such amount to the Company, or vice
versa, as the case may be, so as to place the relevant Party and its Affiliates
in such position as it would have been in had the payment under the relevant
Local Transfer Agreement not been made.

 

6.3                 Ancillary Agreements

 

Neither NXP nor ST shall claim from or pursue a claim against the Company
or any of the Company’s Affiliates under any Ancillary Agreement in the event
that the fact or circumstance giving rise to such claim is otherwise the
subject of a claim under this Agreement for which NXP or ST is liable. In the
event of NXP or ST, as the case may be, being found liable under this Agreement
(excluding the Ancillary Agreements) after the claim has been satisfied under
the relevant Ancillary Agreement, NXP or ST, as the case may be, shall procure
that the Company or the relevant Group Company is reimbursed with the amount
paid to the relevant member of the NXP Group or the ST Group, as the case may
be, by the Company or the relevant Group Company in respect of the relevant
claim under the relevant Ancillary Agreement. For the avoidance of doubt, the
exclusion of representations, warranties and indemnities set out in the various
Ancillary Agreements will be entirely without prejudice to the representations,
warranties and indemnities set out in this Agreement, unless otherwise provided
in this Agreement.

 

6.4                 Release of Security

 

6.4.1                  Without
detracting from any R&Ws, or indemnities, set out elsewhere in this
Agreement, each Party shall, to the extent not yet realized through the release
referred to in Clause

 

20

 

4.8, undertake, with effect from Closing or as soon as reasonably
practicable thereafter but in any event no later than three (3) months
after the Closing, to perfect all the formalities and execute any documents as
may be reasonably necessary to effect the release of all members of the Group
from any (joint and/or several) Security given by, assumed by or binding upon
them in relation to any of the liabilities of such Party or any of its
Affiliates (excluding members of the Group), provided that such Party shall
indemnify, defend and hold harmless the Company and the other members of the
Group against all amounts paid by any of them or any costs, losses and
liabilities (including without limitation any loss of assets subject to Security)
suffered by them after Closing pursuant to any such Security.

 

6.4.2                  Without
detracting from any R&Ws, or indemnities, set out elsewhere in this
Agreement, the Parties shall use their commercially reasonable best efforts to
procure that the Company or the relevant Group Company procures, with effect
from Closing or as soon as reasonably practicable thereafter but in any event
no later than three (3) months after the Closing, the release of each
Party or its Affiliate (excluding members of the Group) from any (joint and/or
several) Security given by, assumed by or binding upon such Party or Affiliate
in relation to any liability included in any of the Relevant Businesses,
provided that the Company shall indemnify, defend and holds harmless the
relevant Party or Affiliate against all amounts paid by it or any costs, losses
and liabilities (including without limitation any loss of assets subject to
Security) suffered by it after Closing pursuant to any such Security.

 

6.5                 Final Assumed Financial Liabilities Statement

 

6.5.1                  Within
forty (40) Business Days after the Effective Time, the Company shall prepare
and deliver to each of ST and NXP the Final Assumed Financial Liabilities
Statement, in the form set out in Schedule 17.

 

6.5.2                  The
Final Assumed Financial Liabilities Statement shall be used to determine
whether the Assumed Financial Liabilities contributed by each Party were fully
funded when contributed in accordance with Clause 2.4.3 and whether, in
relation to any NXP Entity or ST Entity, as the case may be, there is Cash to
be deducted from the amount of the Assumed Financial Liabilities.

 

6.6                 PPE and Inventory Statements

 

6.6.1                  Within
forty (40) Business Days after the Effective Time, the Company shall prepare
and deliver to each of ST and NXP:

 

(a)                 a statement
reflecting the value of the property, plant and equipment (“PPE”) for each of the NXP Relevant
Businesses and the ST Relevant Businesses, at the Effective Time (the “PPE Statements”); and

 

(b)                 a
statement reflecting the value of the Inventory for each of the NXP Relevant
Businesses and the ST Relevant Businesses at the Effective Time (the “Inventory Statements”).

 

6.6.2                  The
PPE Statements and the Inventory Statements shall be calculated consistently
with the same line items in the Accounts and shall be used to determine whether
the value of the

 

21

 

PPE and Inventory contributed by each Party, at the Effective Time, did
not deviate substantially from the relevant reference amounts set out in Schedule
20 (the “Reference Amounts”).

 

6.7                 Review and determination

 

6.7.1                  In the
event that either Party disagrees with the Final Assumed Financial Liabilities
Statement, it shall within twenty (20) Business Days after receipt thereof,
deliver notice of such disagreement to the other Party, with a copy to the
Company, such notice (the “Notice of
Disagreement”) to specify (a) each item in the Final Assumed
Financial Liabilities Statement with which it disagrees, (b) the amount of
each adjustment proposed by it and (c) in reasonable detail, the reason
for its disagreement in respect of each such item.

 

6.7.2                  In the
event that either Party disagrees with a PPE Statement or an Inventory
Statement, it shall within twenty (20) Business Days after receipt thereof,
deliver a Notice of Disagreement to the other Party, with copy to the Company
to specify (a) what item it disagrees with and (b) in reasonable
detail, the reason for its disagreement in respect thereof.

 

6.7.3                  If no
Party delivers a Notice of Disagreement in terms of Clause 6.7.1, the Final
Assumed Financial Liabilities Statement, the PPE Statements or the Inventory
Statements, as the case may be, shall be final and binding on the Parties and
the Company for all purposes.

 

6.7.4                  If a
Party delivers a Notice of Disagreement in terms of Clause 6.7.1, then the
Parties shall attempt in good faith to reach agreement in respect of those
items in the Final Assumed Financial Liabilities Statement, the PPE Statements
or the Inventory Statements, as the case may be, in respect of which a Notice
of Disagreement has been delivered, provided that if the Parties do not reach
such agreement within twenty (20) Business Days of delivery of the Notice of
Disagreement last delivered, either Party may by notice to the other Party require
that those items in the Final Assumed Financial Liabilities Statement, the PPE
Statements or the Inventory Statements, as the case may be, that have been
properly specified in a Notice of Disagreement in accordance with Clause 6.7.1
or Clause 6.7.2, as relevant, and subsequently have not been agreed upon within
the aforesaid twenty (20) Business Days, be referred to the Reporting
Accountant in the terms of Schedule 17 (Part 2).

 

6.7.5                  In
order to enable the preparation and determination of the Final Assumed
Financial Liabilities Statement, the PPE Statements and the Inventory
Statement, the Company and each Party shall procure the keeping up-to-date and,
subject to reasonable notice, making available to the Company’s and each Party’s
representatives and advisors during normal office hours of all books and
records relating to any member of the Group, and co-operate with them with
regard to the preparation and determination of the Final Assumed Financial
Liabilities Statement, the PPE Statements and the Inventory Statements. The
Company and each Party shall, in so far as it is reasonable to do so, make
available the services of its and its Affiliates’ employees to assist the
Company and each Party in the performance of its obligations and exercise by a
Party of its rights under this Clause 6.7.

 

22

 

6.8                 Adjustment and payment for the Final Assumed Financial
Liabilities Statement

 

6.8.1                  Following
determination of the Final Assumed Financial Liabilities Statement in
accordance with Clause 6.7, the Company shall determine the differences between
the Draft Assumed Financial Liabilities Statements and the Final Assumed
Financial Liabilities Statement and hence the amount of the Assumed Financial
Liabilities Funding Requirement of each Party;

 

(a)                 if the
Assumed Financial Liabilities Funding Requirement is a positive amount, the
relevant Party shall pay to the Company in cash an amount equal to this
positive amount;

 

(b)                 if the
Assumed Financial Liabilities Funding Requirement is a negative amount, the
Company shall pay to the relevant Party in cash an amount equal to this
negative amount.

 

6.8.2                  Any
payment to be made in accordance with this Clause 6.8 shall include interest
thereon calculated from the day after the Effective Time to the day of payment,
both days inclusive, at the Interest Rate.

 

6.8.3                  The
due date for any payment to be made under this Clause 6.8, shall be the fifth
(5th) Business Day after the Final Assumed Financial Liabilities Statement has
been finally determined in accordance with Clause 6.7.

 

6.9                 Adjustment and payment for the PPE Statements and the
Inventory Statements

 

6.9.1                  Following
determination of the PPE Statements in accordance with Clause 6.7, the Company
shall determine the differences between the relevant Reference Amounts and the
value of the PPE as this is reflected in the respective PPE Statements.

 

6.9.2                  If the
value of the PPE as reflected in a Party’s PPE Statement is more than 10%
(ten  per cent) lower than the relevant
Reference Amount, that Party shall pay to the other Party in cash an amount
equal to the shortfall below 90% (ninety per cent) of the relevant Reference
Amount. For the avoidance of doubt, there shall only be a payment in relation
to a PPE Statement in the situation as set forth in this Clause 6.9.2.

 

6.9.3                  Following
determination of the Inventory Statements in accordance with Clause 6.7, the
Company shall determine the differences between the relevant Reference Amounts
and the value of the Inventory as this is reflected in the respective Inventory
Statements.

 

6.9.4                  If the
value of the Inventory as reflected in a Party’s Inventory Statement is lower
than the relevant Reference Amount that Party shall pay to the other Party in
cash an amount equal to the difference in value between the Inventory as
reflected in the Inventory Statement and the relevant Reference Amount.  For the avoidance of doubt, there shall only
be a payment in relation to an Inventory Statement in the situation as set
forth in this Clause 6.9.4.

 

6.9.5                  Any
payment to be made in accordance with this Clause 6.9 shall include interest
thereon calculated from the day after the Effective Time to the day of payment,
both days inclusive, at the Interest Rate.

 

6.9.6                  The
due date for any payment to be made under this Clause 6.9, shall be the fifth
(5th) Business Day after the PPE Statements and the Inventory Statements have
been finally

 

23

 

determined in accordance with Clause 6.7.

 

6.10          Reciprocal release of liabilities; indemnity against certain
liabilities

 

6.10.1           As of
Closing:

 

(a)                 subject
to any other indemnities included in this Agreement, excluding Clause 6.10.1(b) and
Clause 6.10.2, (i) NXP shall indemnify, defend and hold harmless the
Company and the other members of the Group against all NXP Retained
Liabilities, and (ii) ST shall indemnify, defend and hold harmless the
Company and the other members of the Group against all ST Retained Liabilities;
and

 

(b)                 subject
to any other indemnities included in this Agreement and upon final
determination of the Assumed Financial Liabilities Funding Requirement in
accordance with Clause 6.8 and the satisfaction thereof, the Company shall
indemnify, defend and hold harmless each Party and its Affiliates against all Assumed
Liabilities.

 

6.10.2           As of
Closing:

 

(a)                 the
Company and each relevant Group Company shall be released and discharged (i) by
NXP and each member of the NXP Group from all the NXP Retained Liabilities, and
(ii) by ST and each member of the ST Group from all ST Retained
Liabilities; and

 

(b)                 NXP
and each member of the NXP Group or ST and each member of the ST Group, as the
case may be, shall be released and discharged by the Company or the relevant
Group Company from any and all Assumed Financial Liabilities, provided that the
Assumed Financial Liabilities Funding Requirements as determined in accordance
with Clause 6.8 has been satisfied.

 

6.10.3           For
the avoidance of doubt, the liabilities of each of the Parties under this
Clause 6.10 are not limited in time or amount and shall continue to apply upon
termination of the Shareholders Agreement.

 

6.11          R&D Tax Credits

 

6.11.1           Subject
to Clause 6.11.2, NXP guarantees to ST and the Company that the amounts of the
R&D Tax Credits will be received by NXP France, or such other relevant
Group Company, as the case may be, ultimately within twenty (20) Business Days
after the last day of the month set for those payments, in accordance with the
table set out below.

 

	
  Origin of the R&D Tax Credit

  	
   

  	
  Amount

  	
   

  	
  Date of refund

  	
   

  
	
  NXP Crolles

  	
   

  
	
  December 2005

  	
   

  	
  €

  	
  5.498.435

  	
   

  	
  June 2009

  	
   

  
	
  December 2006

  	
   

  	
  €

  	
  10.000.000

  	
   

  	
  June 2010

  	
   

  
	
  December 2007

  	
   

  	
  €

  	
  3.660.000

  	
   

  	
  June 2011

  	
   

  
	
  NXP France

  	
   

  
	
  December 2006

  	
   

  	
  €

  	
  1.894.931

  	
   

  	
  June 2010

  	
   

  
	
  December 2007

  	
   

  	
  €

  	
  6.990.500

  	
   

  	
  June 2011

  	
   

  
	
  NXP Rennes

  	
   

  
	
  December 2005

  	
   

  	
  €

  	
  1.492.872

  	
   

  	
  June 2009

  	
   

  
	
  December 2006

  	
   

  	
  €

  	
  365.693

  	
   

  	
  June 2010

  	
   

  
	
  December 2007

  	
   

  	
  €

  	
  133.000

  	
   

  	
  June 2011

  	
   

  

 

24

 

6.11.2           The
guarantee by NXP, as set out in Clause 6.11.1, shall not apply if ST and/or the
Company or any of its Affiliates, as applicable, takes any action or refrains
from taking any action that adversely affects receipt of the R&D Tax
Credits in the amounts and ultimately by the dates, as set out in the table in
Clause 6.11.1.

 

6.11.3           If
after Closing the Company receives an amount relating to the June 2008
Refunds, then the Company shall pay to NXP the actual amount of these June 2008
Refunds received within thirty (30) Business Days of receipt.

 

6.11.4           If an
amount of the R&D Tax Credits as referred to in Clause 6.11.1 has not been
fully received by any Group Company ultimately twenty (20) Business Days after
the last day of the month set for those payments, NXP undertakes to pay within
ten (10) Business Days of the relevant Group Company’s notice thereof to
NXP, to the relevant Group Company as referred to in this notice, (i) if
any amount is received, the difference between the amount of the relevant
R&D Tax Credit received and the amount of the relevant R&D Tax Credit
as referred to in Clause 6.11.1 or (ii) if no amount has been received,
the full amount of the relevant R&D Tax Credit as referred to in Clause
6.11.1. If after receipt of the relevant amount from NXP by the relevant Group
Company, any amount of the relevant R&D Tax Credit to which such payment by
NXP is related, is received from the relevant Governmental Authority, the
relevant Group Company shall repay such amount received from the relevant
Governmental Authority to NXP.

 

6.12          Obligation to obtain Third Party Consents

 

6.12.1           It is acknowledged that, in effecting the
Disentanglement, the transfer, pursuant to this Agreement, of Contracts may be
subject to Third Party Consents. NXP shall request ST to give
its prior approval prior to obtaining the Third Party Consents of certain
material Contracts. Insofar as a Third
Party Consent has not been obtained in relation to a Contract, other than a
Project Contract, prior to Closing, except as otherwise mutually agreed between
the Parties, the Parties shall use their reasonable best efforts to obtain such
Third Party Consent as soon as practicable after the Closing Date.

 

6.12.2           In connection with the obtaining of any Third Party Consent referred to
in paragraph 6.12.1, each Party shall supply to the other Party such
information and references (under appropriate non-disclosure arrangements)
regarding it as may be reasonably requested by the other Party or any relevant
third party for the purpose of obtaining Third Party Consents and shall enter
into such undertakings or procure such guarantees in favour of any relevant
third party as may be reasonably requested in respect of the relevant
Contracts.

 

6.12.3           In respect of any Contract other than a Project
Contract, from the Closing Date until the relevant Third Party Consent has been
obtained as contemplated by Clause 6.12.1 or in

 

25

 

the event the Third Party Consent has been
refused:

 

(a)                 to the extent permitted under the relevant Contract, the Parties shall
make such other arrangements between themselves to provide to the Company or
the relevant Group Company the full benefits of the Contract, including the
enforcement at the cost and for the account of the Company or the relevant
Group Company of all rights of NXP or ST, as the case may be, against any other
party thereto;

 

(b)                 to the extent that the Company or the relevant Group
Company is lawfully and practically able to do so, and to the extent that the
Company or the relevant Group Company is receiving the full benefits of the
Contract, the Company or the relevant Group Company shall perform the
obligations of the NXP Group or ST Group, as the case may be, under the
Contract as agent or sub-contractor and shall indemnify the NXP Group or the ST
Group, as the case may be, in respect thereof;

 

(c)                  to the extent that the Company or the relevant Group
Company is not lawfully or practically able to perform the obligations of the
NXP Group or ST Group, as the case may be, under the Contract as agent or
sub-contractor, the NXP Group or ST Group, as the case may be, shall do all
such things as the Company or the relevant Group Company may reasonably require
to enable due performance of the Contract and the Company or the relevant Group
Company shall indemnify the NXP Group or ST Group, as the case may be, in
respect thereof.

 

6.13          Retention of records

 

6.13.1           ST and
NXP shall retain for a period of five (5) years from Closing, or such
longer period as may be prescribed by applicable Law, all books, records and
other written information relating to ST’s or NXP’s Relevant Businesses, as
applicable, which are not delivered to, or in the possession or under the
control of, the Company or another Group Company at or immediately after
Closing and are held by or on behalf of any member of the ST Group or the NXP
Group, as applicable, pursuant to Closing and, to the extent reasonably
required by the other Party or the Company, shall allow the other Party or the
Company, upon reasonable notice, access during normal office hours to such
books, records and other information, including the right to inspect and take
copies (at the expense of the other Party or the Company, as applicable) to the
extent relating to the Relevant Businesses.

 

6.13.2           The
Company shall retain for a period of five (5) years from Closing, or such
longer period as may be prescribed by applicable Law, any books, records or
other written information relating to the Business which are delivered to, or
in the possession or under the control of, the Company or another Group Company
at or immediately after Closing and, to the extent reasonably required by ST or
NXP, the Company shall allow ST or NXP, upon reasonable notice, access during
normal office hours to such books, records and information, including the right
to inspect and take copies (at the expense of ST or NXP, as applicable).

 

6.13.3           Within
30 (thirty) Business Days after the Effective Time, NXP shall provide the
necessary financial information to ST and the Company in order to enable ST to
prepare an opening balance sheet of the Group as per the Effective Time, in
accordance with the ST Accounting Principles.

 

26

 

6.14          Insurance

 

6.14.1           Termination
of coverage

 

As of the date set for Closing, all coverage with
respect to NXP’s Relevant Businesses under any insurance policies of any member
of the NXP Group (the “Insurance Policies”)
in respect of events, occurrences or accidents occurring on or after the
Closing Date shall be cancelled and terminated, excluding those Insurance
Policies in respect of which the sole policy holders or named insured are part
of NXP’s Relevant Businesses.

 

6.14.2           Indemnity

 

Except for claims referred to
in Paragraph 17.1 of Schedule 14, for all claims made on or after the
Effective Time and arising in respect of an event, occurrence or accident
occurring on or after the Effective Time, there shall be no right to recover
any amounts in respect thereof from NXP or any other member of the NXP Group,
or any of its insurers, and the Company shall be responsible for and shall
indemnify, defend and hold harmless NXP and the relevant other members of the
NXP Group from all Losses incurred by NXP or any other member of the NXP Group,
or its insurers, in respect of any such claim or attempted claim by any Group
Company or third party.

 

6.15          Earn-out Obligations

 

Notwithstanding the provisions of Clause 6.10, the Company shall, and
shall procure that the relevant Group Companies, meet all the Earn-Out
Obligations assumed by the relevant Group Company in respect of the Earn-Out
Payments.

 

7                           WARRANTIES AND LIABILITY

 

7.1                 Warranties

 

7.1.1                  Subject
to the remaining provisions of this Clause 7 and to Clauses 8 and 9, each Party
(the “Warrantor”) represents and
warrants to the other Party (the “Warrantee”,
being ST, where NXP is the Warrantor, and NXP, where ST is the Warrantor) that
the statements set out in Schedule 14 (the “R&Ws”, and each a “R&W”)
are true and accurate as at Signing.

 

7.1.2                  The
Warrantee acknowledges and agrees that the Warrantor makes no representation or
warranty as to the accuracy of any forecasts, estimates, projections,
statements of intent or statements of opinion howsoever provided to the
Warrantee or any of its representatives or advisors at or prior to Signing. The
Warrantee acknowledges that no representations or warranties, express or
implied, have been given or are given other than the Warrantor’s R&Ws.

 

7.1.3                  Any
R&W qualified by the expression “so far
as the Warrantor is aware” or any similar expression shall be deemed
to refer to the knowledge of Carlo Bozotti, Aldo Romano, Tommi Uhari, Carlo
Ferro, Pierre Ollivier, Patrice Chastagner and Lisa Jorgenson, where ST is the
Warrantor and the knowledge of Frans van Houten, Theo Claasen, Peter van
Bommel, Guido Dierick, Peter Kleij, Steven McCann and Marc Cetto where NXP is
the Warrantor, each of whom shall be deemed to have knowledge of such matters
as they

 

27

 

would have discovered, had they made reasonable enquiries within the
Warrantor’s Relevant Businesses.

 

7.1.4                  The
applicability of title 1 of Book 7 of the Netherlands Civil Code is hereby
excluded.

 

7.1.5                  For
the avoidance of doubt, a Warrantor’s R&Ws are given only in respect of its
Relevant Businesses (and not in respect of the Warrantee’s Relevant
Businesses).

 

7.2                 Disclosure

 

The R&Ws are subject to,
and the Warrantor shall not be liable for breach of any of the R&Ws, in
relation to any matter or fact which is Disclosed. Each Warrantor shall have
the right and the obligation to update the ST Disclosure Letter or the NXP
Disclosure Letter, as the case may be, for matters not having a Material
Adverse Effect prior to Closing for those R&Ws that are only given at
Signing in Schedule 14 and are being repeated at Closing pursuant to
Clause 7.3.1

 

7.3                 Updating of R&Ws at Closing

 

7.3.1                  Subject
to Clause 7.3.2,  the Warrantor further
represents and warrants to the Warrantee that the R&Ws will also be true
and accurate at Closing, as if they had been repeated at Closing, provided that
(i) all such R&Ws that pertain to or are made with respect to any
companies not yet incorporated at the date hereof, are made as at Closing and
not as of the date hereof and (ii) any R&W’s given at Signing in Schedule
14 shall be read for the purpose of this Clause 7.3.1 without the words “at
Signing”.

 

7.3.2                  No
right to reimbursement of Losses shall arise in favour of the Warrantee under
Clause 7.3.1 in consequence of an event or matter which results in any of the
R&Ws being untrue or inaccurate at the Closing if the event or matter could
not reasonably have been avoided or prevented by the Warrantor, or any of its
directors, officers, or employees.

 

7.4                 Liability for breach

 

7.4.1                  Subject
to Clauses 3.5 and 5.4.2, in the event of any breach by a Party under this
Agreement, the other Party shall not have the right to terminate or rescind
this Agreement and as its sole and exclusive remedy and subject to any other
limitations of liability set out in this Agreement, shall have the right, after
Closing, to claim the Losses suffered or incurred by it as a result of such
breach.

 

7.4.2                  For
purposes of this Agreement, it is agreed that a breach of a R&W shall occur
where same is untrue or inaccurate as at any date on which the same is given.

 

7.5                 Losses suffered by the Business

 

7.5.1                  Subject
to Clause 7.5.2, Parties agree that Losses suffered or incurred by the Company
or any other member of the Group in connection with a breach of a R&W,
shall be deemed to be Losses suffered or incurred by the Warrantee.

 

7.5.2                  Subject
to the limitations of liability as set forth in Clause 8, if Losses are
suffered or incurred at the level of the Group, as set forth in Clause 7.5.1 (a) the
amount of the Losses that the Warrantee shall have the right to claim shall be
limited to the Warrantee’s proportionate share of such Losses, calculated on
the basis of the Warrantee’s

 

28

 

shareholding in the Company at the time of giving notice of the claim
(as set forth in Clause 9.2) and (b) at the election of the Warrantee, the
Warrantor shall pay the full amount of those Losses directly to the Company.

 

8                           LIMITATION OF LIABILITY

 

8.1                 Time limitation

 

A Party (the “Defaulting Party”) shall not be liable in
respect of any claim under the R&Ws or the Tax Indemnity unless a notice of
the claim is given by to the other Party (the “non-Defaulting Party”), specifying the matters set out in
Clause 9.2:

 

8.1.1                  in the
case of any claim under the Tax Indemnity, within thirty (30) days after expiry
of the statutory limitation period applicable in the relevant jurisdiction for
the Tax matter giving rise to such claims and any applicable term during which
additional assessments can be levied under the relevant applicable Law;

 

8.1.2                  in the
case of any claim under Paragraph 14 of Schedule 14 (environmental warranties),
within three (3) years after the Closing; and

 

8.1.3                  in the
case of any other claim, within eighteen (18) months after the Closing;

 

provided that the statutory limitation period applicable in the relevant
jurisdiction shall apply for giving notice of any claim under Paragraphs 1.1, 2
and 3 of Schedule 14 (Incorporation, authority, corporate action).

 

8.2                 Minimum claims

 

Subject to any other limitations set out in this Agreement, the
Defaulting Party shall only be liable under the R&Ws in respect of any
individual claim, or a series of claims arising from identical facts, to the
extent that the liability agreed or determined in respect of any such claim or
series of claims exceeds an amount of USD 500,000 (five hundred thousand US
dollar). In relation to paragraph 17.1 of Schedule 14 (claims third
parties) this clause 8.2 shall apply with the amount set out in the preceding
sentence being USD 2,500,000 (two million five hundred thousand US dollar).

 

8.3                 Aggregate minimum claims

 

Subject to any other limitations set out in this Agreement, the
Defaulting Party shall only be liable under the R&Ws in respect of any
claim if the aggregate amount of all claims for which it would otherwise be
liable under this Agreement, exceeds USD 10,000,000 (ten million US dollar), in
which case the Defaulting Party shall be liable for the full amount and not
just the excess. Any liability of the Defaulting Party under this Agreement in
relation to paragraph 17.1 of Schedule 14 (claims third parties) shall
not be subject to, and also (in relation to any liability for other claims
under the R&Ws) not count towards, the amount of USD 10,000,000 (ten
million US dollar) referred to in the preceding sentence.

 

8.4                 Maximum liability

 

As from Closing, save for any claims under Paragraph 14 of Schedule
14 (environmental

 

29

 

warranties), Paragraph 10 of Schedule 14 (IP warranties),
Paragraph 7.1 of Schedule 14 (to the extent relating to IP warranties)
and Paragraph 11 of Schedule 14 (to the extent relating to pension
warranties), the aggregate liability of the Defaulting Party in respect of all
claims under the R&Ws shall not exceed an amount of USD 250,000,000 (two
hundred and fifty million US dollar).

 

8.5                 Provisions

 

The Defaulting Party shall not be liable under this Agreement in respect
of any claim if and to the extent that any allowance, provision or reserve is
made in the relevant Accounts (and not released prior to the Effective Time),
or in the relevant Final Assumed Financial Liabilities Statement, for the
matter giving rise to the claim.

 

8.6                 Matters arising after Signing / Closing

 

Subject to Clauses 3.1.6, 7.2 and 7.3.1, the Defaulting Party shall not
be liable under this Agreement in respect of any matter, act, omission or circumstance
(or any combination thereof), including the aggravation of a matter or
circumstance, to the extent that the same would not have occurred but for:

 

8.6.1                  any
matter or thing done or omitted to be done pursuant to and in compliance with
this Agreement or otherwise at the request or with the approval of the
non-Defaulting Party;

 

8.6.2                  any
act, omission or transaction of the non-Defaulting Party, or the non-Defaulting
Party’s respective directors, officers, employees or agents or successors in
title, after Signing;

 

8.6.3                  the
passing of, or any change in, any Law or administrative practice of any
Governmental Authority after Signing, including any increase in the rates of
Tax or any imposition of Tax or any withdrawal of relief from Tax not actually
in effect at Signing;

 

8.6.4                  any
change after Signing of any generally accepted interpretation or application of
any Law; or

 

8.6.5                  any
change in any accounting or Tax policy, basis or practice of NXP or ST, as
applicable, introduced or having effect after Signing.

 

8.7                 Insurance

 

The Defaulting Party shall not be liable in respect of any claims made
by the non-Defaulting Party to the extent that the Losses in respect of which a
claim is made are covered by a policy of insurance in force immediately prior to
the Effective Time and insofar as the Company has a right of recovery.

 

8.8                 Net financial benefit

 

The Defaulting Party shall not be liable under this Agreement in respect
of any claims to the extent of any corresponding savings actually made by the
non-Defaulting Party arising in respect of such Losses or the facts giving rise
to such Losses (for example, without limitation, where the amount (if any) by
which any Tax for which would otherwise have been accountable or liable to be
assessed is actually or will actually be reduced or extinguished as a result of
the matter giving rise to such liability).

 

30

 

8.9                Mitigation
of Losses

 

The non-Defaulting Party shall use all
reasonable efforts to procure that all reasonable steps are taken and all
reasonable assistance is given to avoid or mitigate any Losses which in the
absence of mitigation might give rise to a liability in respect of any claim
under this Agreement.

 

8.10         Non-Defaulting
Party’s right to recover

 

8.10.1    The Warrantor shall not be liable in respect of any Losses
relating to any actual liability unless and until such actual liability is due
and payable, or any Losses relating to any liability which is contingent unless
and until such contingent liability becomes an actual liability and is due and
payable, provided that this Clause 8.10.1 shall not operate to exclude
liability in relation to a claim made in respect of an actual or contingent
liability within the relevant time limit specified in Clause 8.1 and specifying
the matters set out in Clause 9.2.

 

8.10.2    If the Warrantor has paid an amount in discharge of any claim
under this Agreement and any member of the Warrantee’s Group subsequently
recovers (whether by payment, discount, credit, relief, insurance or otherwise)
from a third party a sum which indemnifies or compensates any member of the
Warrantee’s Group (in whole or in part) in respect of the Loss which is the
subject matter of the claim, then the Warrantee shall procure that the relevant
member of the Warrantee’s Group forthwith pays to the Warrantor the full amount
recovered, less any costs and expenses reasonably incurred in obtaining such
recovery and limited to the amount actually paid by the Warrantor in respect of
the claim.

 

8.11         Double
claims

 

The non-Defaulting Party shall not be entitled
to recover from the Defaulting Party under this Agreement more than once in
respect of the same Losses suffered. Subject to any other limitations set out
in this Agreement, in the event that any matter, act, omission or circumstance
(or any combination thereof) giving rise to a breach of a R&W is the
subject of an indemnity under this Agreement, the non-Defaulting Party’s claim
shall be limited to a claim under said indemnity.

 

8.12         Non-applicability
to certain claims

 

Notwithstanding the foregoing provisions of this Clause 8:

 

8.12.1           the provisions of this Clause 8, save for Clauses
8.1.1,  8.5 and 8.7 through 8.11, shall
not apply to any claims made under the Tax Indemnity.

 

8.12.2           the provisions of this Clause 8, save for Clauses 8.8
through 8.11, shall not apply to any claims made under Paragraph 1
(Incorporation; existence; solvency), 2 (Authority) or 3 (Corporate action) of Schedule
14;

 

8.12.3           the provisions of this Clause 8, save for Clauses 8.8
through 8.11, shall not apply to any claims made under the indemnities included
in Clause 6.10 and Clause 6.11.1, Paragraph 6.4 of Schedule 3
(Calamba environmental indemnity), Paragraphs 3 and 4 of Schedule 7
(employment indemnities) and Paragraph 1.14 of Schedule 8 (pension
indemnity).

 

31

 

9                          CLAIMS

 

9.1                Notification
of potential claims

 

If the Warrantee becomes aware of any matter or circumstance that may
give rise to a claim against the Warrantor, under the R&Ws, the Warrantee,
shall within forty (40) Business Days deliver a notice to Warrantor setting out
such information as is available to it as is reasonably necessary to enable the
Warrantor to assess the merits of the claim, to act to preserve evidence and to
make such provision as the Warrantor may consider necessary, provided that
failure to give such notification within the aforesaid forty (40) Business Days
shall not affect Warrantee’s right to make the claim except to the extent
Warrantor shall have been or will be actually prejudiced as a result of such
failure.

 

9.2                Notification
of claims

 

Without detracting from Clause 9.1, notices of
claims under the R&Ws shall be given by the Warrantee to the Warrantor
within the time limits specified in Clause 8.1, specifying full information of
the legal and factual basis of the claim and the evidence on which the
Warrantee relies and, if practicable, an estimate of the amount of Losses which
are, or are to be, the subject of the claim (including any Losses which are
contingent on the occurrence of any future event).

 

9.3                Commencement
of proceedings

 

Without detracting from Clause 9.2, any claim
notified to the Warrantor shall (if it has not been previously satisfied,
settled or withdrawn) be deemed to be irrevocably withdrawn six (6) months
after the notice is given pursuant to Clause 9.2 or, in the case of any
contingent liability, six (6) months after such contingent liability
becomes an actual liability and is due and payable unless legal proceedings in
respect of it (i) have been formally commenced and (ii) are being and
continue to be pursued with reasonable diligence.

 

9.4                Investigation
by the Warrantor

 

In connection with any matter or circumstance
notified by the Warrantee pursuant to Clause 9.1 or 9.2:

 

9.4.1                  the
Warrantee shall allow the Warrantor and its financial, accounting, legal and
other advisors to investigate the matter or circumstance alleged to give rise
to such claim and whether and to what extent any amount is or may be payable in
respect of such claim; and

 

9.4.2                  the
Warrantee shall disclose to the Warrantor all information of which it is aware
which relates to the claim and shall give, subject to being paid reasonable
costs and expenses, all such information and assistance, including access to
premises and personnel, and the right to examine and copy or photograph any
assets, accounts, documents and records, in each case as the Warrantor or its
financial, accounting, legal or other advisors may reasonably request.

 

9.5                Procedure for third party
claims

 

9.5.1               If
the claim notified to the Warrantor is a result of or in connection with a
claim by or liability to a third party then:

 

32

 

(a)                 no
admissions in relation to such third party claim shall be made by or on behalf
of the Warrantee and the claim shall not be compromised, disposed of or settled
without the prior written consent of the Warrantor;

 

(b)                 the
Warrantor shall be entitled at its own expense, by notice to the Company and
the Warrantee, and the Company and the Warrantee shall duly and fully
co-operate to allow the Warrantor, to take such action as it deems necessary to
avoid, dispute, deny, defend, resist, appeal, compromise or contest such claim
or liability (including making counterclaims or other claims against third
parties) in the name of and on behalf of the Warrantee, the Company or its
relevant Affiliate, as the case may be, and to control the conduct of any
related proceedings, negotiations or appeals; and

 

(c)                  where
the Warrantor has issued a notice pursuant to Clause (b), the Warrantee and the
Company shall give, and shall procure that their Affiliates give, subject to being
paid reasonable costs and expenses, all such information and assistance
including access to premises and personnel, and the right to examine and copy
or photograph any assets, accounts, documents and records, as the Warrantor may
reasonably request for the purpose referred to in Clause (b), including
instructing such professional or legal advisors as the Warrantor may nominate
to act on behalf of the Warrantee and the Company, but in accordance with the
Warrantor’s instructions, it being agreed that the Warrantor shall keep the
Warrantee and the Company informed of all relevant matters relating to the
claim and shall forward or procure to be forwarded to the Warrantee and the
Company copies of all material external correspondence (other than such correspondence
as is subject to legal professional privilege of the Warrantor) relating to the
claim.

 

9.5.2                  If the Company or the Warrantor, as the case may be,
conducts the defence of a claim, the Company or the Warrantor, as the case may
be, shall conduct the defence to the best of its abilities, taking into account
not only its own interests but also the Warrantor’s and Warrantee’s or the
Company’s interest, as the case may be.

 

10                   CONFIDENTIALITY

 

10.1         Announcements

 

No announcement or circular in connection with
the existence or the subject matter of this Agreement shall be made or issued
by or on behalf of ST or NXP without the prior written approval of ST and NXP.
This shall not affect any announcement or circular required by Law or the rules of
any recognised stock exchange on which the shares of either Party are listed,
provided that the Party with an obligation to make an announcement or issue a
circular shall consult with the other Party insofar as is reasonably
practicable before complying with such an obligation.

 

10.2         Confidentiality
undertaking

 

10.2.1           The
Confidentiality Agreement shall cease to have any force or effect from Closing.

 

33

 

10.2.2           Subject
to Clause 10.1 and Clause 10.2.3, each of the Parties shall treat as strictly
confidential and not disclose or use any information contained in or received
or obtained as a result of entering into this Agreement (or any agreement
entered into pursuant to this Agreement) which relates to:

 

(a)                 the
provisions of this Agreement or any agreement entered into pursuant to this
Agreement;

 

(b)                 the
negotiations relating to this Agreement (or any such other agreement); or

 

(c)                  a
Party to this Agreement or the business carried on by it or any member of its
group of companies.

 

10.2.3           Clause
10.2.2 shall not prohibit disclosure or use of any information if and to the
extent:

 

(a)                 the
disclosure or use is required by Law or any recognised stock exchange on which
the shares of any Party are listed;

 

(b)                 the
disclosure or use is required to vest the full benefit of this Agreement in any
Party;

 

(c)                  the
disclosure or use is required for the purpose of any judicial proceedings
arising out of this Agreement or any other agreement entered into under or
pursuant to this Agreement or the disclosure is made to a Tax Authority in
connection with the Tax affairs of the disclosing Party;

 

(d)                 the
disclosure is made to professional advisors of any Party on terms that such
professional advisors undertake to comply with the provisions of Clause 10.2.2
in respect of such information as if they were a party to this Agreement;

 

(e)                  the
information is or becomes publicly available (other than by breach of the
Confidentiality Agreement or of this Agreement);

 

(f)                     the
other Party has given prior written approval to the disclosure or use; or

 

(g)                 the
information is independently developed after Closing;

 

provided that
prior to disclosure or use of any information pursuant to Clause 10.2.3(a),
(b), or (c), the Party concerned shall promptly notify the other Party of such
requirement with a view to providing the other Party with the opportunity to
contest such disclosure or use or otherwise to agree the timing and content of
such disclosure or use.

 

11                   MISCELLANEOUS

 

11.1         Further assurances

 

Each of the Parties shall
from time to time execute such documents and perform such acts and things as
the other Party may reasonably require to transfer their Relevant Businesses to
the Joint Venture, and to give any Party the full benefit of this Agreement.

 

11.2         Whole
agreement

 

11.2.1           This
Agreement, together with the Transaction Documents, contains the whole
agreement

 

34

 

between the Parties relating to the subject matter of
this Agreement, to the exclusion of any terms implied by Law which may be
excluded by contract, and supersedes any previous written or oral agreement
between the Parties in relation to the matters dealt with in this Agreement.

 

11.2.2           ST
acknowledges that it has not been induced to enter into this Agreement by any
representation, warranty or undertaking not expressly set out in this
Agreement.

 

11.2.3           NXP
acknowledges that it has not been induced to enter into this Agreement by any
representation, warranty or undertaking not expressly set out in this
Agreement.

 

11.3         Precedence

 

In the event of a conflict between, on the one hand, the provisions of
any of the Local Transfer Agreements, or any other agreements and documents
relating to the transfer to the Company (or relevant Affiliates of the Company)
of the Relevant Businesses, and, on the other hand, the provisions of this
Agreement (excluding the Local Transfer Agreements and said other agreements
and documents), the provisions of this Agreement shall prevail.

 

11.4         Assignment

 

Any Party may assign, grant any security interest over or otherwise
transfer, in whole or in part, any of its rights and obligations under this
Agreement, provided that such assignment, granting or transfer takes place to a
party that becomes a shareholder of the Company in accordance with the
provisions of the Shareholders Agreement. Any other assignment, granting of
security interest over or other transfer shall require the prior written
consent of the other Party.

 

11.5         Waiver

 

No waiver of any provision of this Agreement
shall be effective unless in writing and signed by or on behalf of the waiving
Party.

 

11.6         Variation

 

No variation of this Agreement shall be
effective unless in writing and signed by or on behalf of each of the Parties.

 

11.7         Third
party rights

 

This Agreement does not contain a stipulation
in favour of a third party (‘derdenbeding’),
except for the Company  and the relevant
Group Companies in relation to all provisions of this Agreement pursuant to
which the Company and/or the Group Companies are granted certain rights or are
the recipient of certain guarantees, covenants or undertakings and for the
relevant members of the NXP Group in relation to Clause 6.10 and Clause 6.14.

 

11.8         Rescission

 

Without prejudice to Clauses 3.5 and 5.4.2,
each Party waives its right to rescind (‘ontbinden’)
this Agreement on the basis of section 6:265 of the Netherlands Civil Code. The
mistaken party shall bear the risk of any mistake (‘dwaling’)
in making this Agreement.

 

35

 

11.9         Costs

 

Unless this Agreement provides otherwise, all
costs which a Party has incurred or must incur in preparing, concluding or
performing this Agreement, including the relevant Transaction Costs and
Disentanglement Costs, are for its own account. The Start-Up Costs shall be
borne by either the Company or by ST and NXP pro rata to their shareholdings in
the Company. For the avoidance of doubt, all Restructuring Costs shall be for
the account of the Company, unless provided otherwise in this Agreement. NXP
will bear all the WH2 Reorganisation Costs.

 

11.10  Interest

 

If any Party defaults in the payment when due
of any sum payable under this Agreement, the liability of that Party shall be
increased to include interest on such sum from the date when such payment is
due until the date of actual payment (as well after as before judgement) at the
Interest Rate.

 

11.11  Notices

 

11.11.1    Any
notice in connection with this Agreement (a “Notice”)
shall be:

 

(a)                 in
writing;

 

(b)                 in
English; and

 

(c)                  delivered
by hand, fax, registered post or by courier using an internationally recognised
courier company.

 

11.11.2    A
Notice to ST shall be sent to ST at the following address, or such other person
or address as ST may notify to NXP from time to time:

 

ST N.V.

39 Chemin de Champ des Filles

1228 Plan les
Ouates, Geneva

Switzerland

Fax: +41 22 929
5906

Attention: General
Counsel

 

11.11.3    A
Notice to NXP shall be sent to NXP at the following address, or such other
person or address as NXP may notify to ST from time to time:

 

NXP B.V.

High Tech Campus
60

5656 AG Eindhoven

The Netherlands

Fax: + 31 40 272 9658

Attention: General
Counsel

 

11.11.4    A
Notice shall be effective upon receipt and shall be deemed to have been
received:

 

(a)                 at
the time of delivery, if delivered by hand, registered post or courier;

 

(b)                 at
the time of transmission in legible form, if delivered by fax.

 

36

 

11.12  Invalidity

 

If any provision in this Agreement shall be
held to be illegal, invalid or unenforceable, in whole or in part, under any
Law:

 

11.12.1    such
provision or part shall to that extent be deemed not to form part of this
Agreement but the legality, validity or enforceability of the remainder of this
Agreement shall not be affected;

 

11.12.2    ST
and NXP shall use reasonable efforts to agree a replacement provision that is
legal, valid and enforceable to achieve so far as possible the intended effect
of the illegal, invalid or unenforceable provision.

 

11.13  Counterparts

 

This Agreement may be entered into in any
number of counterparts, all of which taken together shall constitute one and
the same instrument. ST and NXP may enter into this Agreement by signing any
such counterpart.

 

11.14  Dispute
resolution

 

11.14.1    The
Parties will attempt in good faith to resolve promptly any dispute arising out
of or relating to this Agreement by negotiation. If the matter is not resolved
in the normal course of business any Party may give the other Party notice of
any such dispute not resolved, after which the dispute will be referred to the
CEOs of the Parties, who will similarly attempt to resolve the dispute.

 

11.14.2    If
the dispute has not been resolved within sixty (60) days after delivery of the
notice referred to in Paragraph 11.14.1, then at the election of any Party, the
dispute will be finally and exclusively settled by arbitration pursuant to the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by three
arbiters appointed according to said Rules, the foregoing without prejudice to
any Party’s right to seek injunctive relief before a competent court.
Arbitration shall take place in Paris and the procedure will be conducted in
the English language in accordance with the rules of law. The right, if
any, to discovery is excluded.

 

11.15  Governing
law

 

This Agreement and the documents to be entered
into pursuant to it, save as expressly otherwise provided therein, shall be
governed by and construed in accordance with the Law of the Netherlands.

 

37

 

AGREED AND SIGNED ON 10
APRIL 2008 BY:

 

	
  STMicroelectronics N.V.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Carlo Bozotti

  
	
  Title:

  	
  President and
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  NXP B.V.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Frans van Houten

  
	
  Title:

  	
  President and CEO

  
			

 

38

 

Schedule
1   Definitions

 

Definitions

 

(Clause 1.1)

 

“ABO” means Accumulated Benefit Obligation
as defined under US GAAP standard FAS87, using actuarial and economic
assumptions set forth in Appendix 8.1.3  to
Schedule 6, for all rights and benefits accrued by the Employees up to
the Effective Time. For other long term benefit plans in Section 2 of
Appendix 8.2.1 that are outside the scope of FAS 87, the ABO calculation shall
reflect the same principle of measuring the accrued liability as the expected
projected cost of the benefit recognised over the service period to be rendered
in exchange for the long-service benefit;

 

“Accounts”
means, in respect of each Party’s Relevant Businesses, the combined financial
statements in respect of the Relevant Businesses for the 12 (twelve) month
period ended on the Accounts Date, as set out in Schedule 15 (Part 1)
in the case of ST’s Relevant Businesses, and Schedule 15 (Part 2)
in the case of NXP’s Relevant Businesses;

 

“Accounts Date”
means 31 December 2007;

 

“Affiliate” means, when
used with reference to a specified Person, any other Person that directly or
indirectly is Controlled by the specified Person, and any other Person which,
in terms of sections 2:24a and 2:24b of the Netherlands Civil Code, qualifies
as a “subsidiary” of such specified Person, provided that a reference to an
Affiliate of ST or NXP shall exclude, as of Closing, the Group Companies;

 

“Agreed Terms” means, in relation to a document, such
document in the terms agreed between ST and NXP and signed for identification
by ST’s Lawyers and NXP’s Lawyers with such alterations as may be agreed in
writing between ST and NXP from time to time;

 

“Agreement” means this Sale and Contribution Agreement and
all the Schedules thereto, explicitly including the Transaction Documents and
any annexes to Schedules;

 

“Ancillary Agreements” means the Local Transfer Agreement,
the TSAs, the SLAs, and the Operational Agreements;

 

“Anti-trust Approvals” means in respect of
any notifications, applications or requests required or necessary under any
statutory provisions in connection with the conclusion or performance of this
Agreement, including the Closing Anti-trust Approvals, (i) the relevant
Governmental Authority having stated in writing that the subject matter of the
notification, application or request is permitted, or (ii) that the
relevant Governmental Authority shall not conduct any further investigation, or
(iii) the applicable waiting periods under the applicable laws to such
approvals have expired or been terminated, and “Anti-trust Approval” means any one of them or the relevant one
of them, as the context requires;

 

“APBO” means Accumulated Postretirement Benefit Obligation in
accordance with FAS 106 

 

39

 

using
actuarial and economic assumptions set forth in Appendix 8.1.3 to Schedule 7,
for all rights and benefits accrued by the Employees up to the Effective Time;

 

“Assumed Business Liabilities” means,
collectively, the NXP Assumed Business Liabilities and the ST Assumed Business
Liabilities, and “Assumed Business Liability”
means any one of them or the relevant one of them, as the context requires;

 

“Assumed Financial Liabilities” means
collectively, the NXP Assumed Financial Liabilities and the ST Assumed Financial
Liabilities, and “Assumed Financial
Liability” means any of them or the relevant one of them, as the
context requires;

 

“Assumed Liabilities”
means, collectively, the Assumed Financial Liabilities and the Assumed Business
Liabilities;

 

“Assumed Financial Liabilities Funding Requirement”  means any one of the ST Assumed Financial Liabilities
Funding Requirement and the NXP Assumed Financial Liabilities Funding
Requirement or the relevant one of them, as the context requires;

 

“Automatic Transfer Employees” means all those Employees who
will transfer with the Relevant Businesses by operation of relevant national
Laws;

 

“Back-End
operations” means  operations
relating to that part of the manufacturing process that commences with shipment
out of the relevant wafer factory;

 

“Business” has the meaning set out in recital (A);

 

“Business Day” means a day which is not a Saturday, a Sunday,
or a public holiday in the Netherlands;

 

“Cash” means cash in hand, cash in transit, cash at bank and cash equivalents;

 

“Closing” means the performance of the actions set out in
Clause 5.3;

 

“Closing Anti-trust Approvals” means the
approvals listed in Schedule 9;

 

“Closing Conditions” means the conditions set out in Clause
3.1, and “Closing Condition” means any one of
them or the relevant one of them, as the context requires;

 

“Closing Date” means the date set for Closing in Clause 5.1;

 

“Company” has the meaning set out in Clause 2.1;

 

“Confidentiality Agreement” has the meaning set out in
recital (A);

 

“Contracts” means the NXP
Relevant Contracts and the ST Relevant Contracts, and “Contract” means any of them or the relevant
one of them, as the context requires;

 

“Contributed Company”  shall either be a NXP Contributed Company or
a ST Contributed Company, as the case may be;

 

“Controlled” means the possession, directly or indirectly,
of (i) more than 50% (fifty percent) of the voting shares, or
(ii) the power to direct or cause the direction of the management and
policies of, a Person or other entity whether by means of voting rights,
contracts or otherwise;

 

40

 

“Data Room” means the ST Data Room or the NXP Data Room,
as the case may be;

 

“Defined Benefit Liabilities” means liabilities of pension, other
long-term benefit plans or other post employment benefit plans, which plans are
classified as defined benefit under US GAAP standards FAS 87, FAS 106 or FAS
112;

 

“Disclosed” means (a) disclosed in the Due Diligence
Information in such manner as to enable the Warrantee to make an informed and
accurate assessment of the matter concerned, or (b) disclosed in the ST
Disclosure Letter or NXP Disclosure Letter, as the case may be;

 

“Disentanglement” has the meaning set out in Clause 4.3;

 

“Disentanglement Costs” means all costs
incurred in connection with the Disentanglement Plans, including costs, fees
and expenses for the relocation of employees and equipment and installations,
the registration of IP and the establishment of a virtually stand-alone IT
infrastructure, other than those fees, costs and expenses which are covered by
the Start-Up Costs or the WH2 Reorganisation Costs;

 

“Disentanglement Plan” means:

 

(a)                 in respect of ST’s Relevant Businesses,
the contents of Schedule 5 (including the appendices thereto); and

 

(b)                 in respect of NXP’s Relevant Businesses,
the contents of Schedule 6 (including the appendices thereto);

 

“Draft Assumed Financial Liabilities Statements”  has the meaning set out in Clause 4.10.1 and “Draft Assumed Financial Liabilities Statement”  means any one of them or the relevant one of them, as
the context requires;

 

“Domain Names and Trademarks” has the
meaning set out in Paragraph 10 of Schedule 14;

 

“Due Diligence Information” means (a) the
information contained in the relevant Data Room, (b) the documents and written
information provided to the Warrantee during and pursuant to question and
answer sessions and (c) the written information provided to the Warrantee
in management presentations, all of which are electronically stored on the
DVDs, attached hereto as  Exhibit 1 to Schedule 14, where ST
is the Warrantee and as Exhibit 2 to Schedule 14 where NXP is the
Warrantee;

 

“Dutchco” has the meaning set out in Clause 2.1.1;

 

“Earn-out Payments” has the meaning set out in Paragraph 3.4
of Schedule 3;

 

“Earn-out Obligations” means the non payment obligations
under the agreements referred to in Paragraphs 3.4(d)(i) and
3.4(d)(ii) of Schedule 3;

 

“Effective Time” means 13h00 GMT on 2 August 2008;

 

“Employees” means ST
Relevant Employees and/or NXP Relevant Employees, as the case may be and “Employee” means any one of them or the
relevant one of them, as the context requires;

 

41

 

“Employment Costs” means:

 

(a)                 the amounts payable or paid to or in
respect of the employment of the relevant Employee (including salary, wages,
Tax and social security contributions, employer’s pension contributions, bonus,
insurance premiums, payments or allowances or any other consideration for
employment); and

 

(b)                 the costs of providing any non-cash
benefits, which the employer is required to provide, by Law or contract or
customarily provides in connection with such employment (including other
employee benefit provisions);

 

“Employment Liabilities” means any and all costs, losses and
liabilities, other than Employment Costs, directly arising out of or directly
connected with employment or the employment relationship, or the initiation or
the termination of employment, or of the employment relationship (including all
Losses in connection with any claim, award, judgement or agreement for
redundancy pay, or damages or compensation for unfair or wrongful dismissal or
breach of contract or discrimination);

 

“Encumbrance” means any claim, charge, pledge, mortgage,
lien, option, equity, power of sale, hypothecation, usufruct, retention of
title, right of pre-emption, right of first refusal or other third party rights
or security interest of any kind or an agreement to create any of the
foregoing;

 

“Escrow Agent” means such escrow agent as agreed on mutually
between the Parties prior to Closing;

 

“Event” means any transaction, act, omission or event of
whatsoever nature and includes any change in the residence of any person for
the purposes of any Tax, and references to an Event effected prior to the
Effective Time, includes references to a transaction completed after the
Effective Time in pursuance of a legally binding obligation or an arrangement,
in either case whether or not conditional, incurred or entered into prior to
the Effective Time;

 

“Final Assumed Financial Liabilities Statement” means, in
respect of NXP’s Relevant Businesses, a final statement to be provided after
the Effective Time, setting out the NXP Assumed Financial Liabilities Funding
Requirement and, in respect of ST’s Relevant Businesses, a final statement to
be provided after the Effective Time setting out the ST Assumed Financial
Liabilities Funding Requirement each of which shall be prepared, delivered,
reviewed and determined in accordance with Clause 6.5 and Clause 6.7;

 

“Financial
Liabilities”  means any
indebtedness, bank loans, bank overdrafts, bonds, finance leases or other
borrowings, Employment Liabilities (including, for the avoidance of doubt,
Defined Benefit Liabilities), provisions of a debt nature; and balance of debt
from capitalised operating leases other than those operating leases identified
in the Disentanglement Plan;

 

“Front-End
operations” means  operations
relating to that part of the manufacturing process that takes place prior to
shipment out of the relevant wafer factory;

 

“Governmental Authority” means, to the extent it has
jurisdiction, any supranational governmental commission, council, directorate,
court, trade agency, regulatory body or other authority, or any national
government, any legislature, any political subdivision of a national

 

42

 

government or
of any state, county, province or local jurisdiction therein, or any agency or
instrumentality of any such government or political subdivision;

 

“Group” means the Company and Relevant Businesses, taken as a
whole;

 

“Group Companies” means the Company and all companies that as
at Closing form part of the Relevant Businesses including WH1 and WH2, and
“Group Company” means any one of them or the relevant one of them, as the
context requires;

 

“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended;

 

“Insurance Costs” means deductibles, allocated loss
adjustment expenses (ALAE), retention amounts (including therein any of the ST
Group or the NXP Group’s, as applicable, captive insurer retention amounts or
reinsurance amounts), third party administration fees, other charges and
reasonable recovery expenses, collectively;

 

“Insurance Policies” has the meaning set out in Clause 6.14;

 

“Intellectual Property” or “IP”
means trade marks, service marks, trade names, domain names, logos, patents,
inventions, design rights, copyrights, semi-conductor topography rights,
database rights and all other similar rights in any part of the world
(including Know-how) including, where such rights are obtained or enhanced by
registration, any registration of such rights and applications and rights to
apply for such registrations;

 

“Interest Rate” means 3 months USD LIBOR rate compounded on a
daily basis;

 

“Inventory”  means work-in-progress (including wafers and dies),
part-processed stocks, finished goods, goods for resale and stock-in-transit,
excluding, for the avoidance of doubt, raw materials (including goldwire,
moulding compounds and lead frames) and consumables;

 

“Inventory Statements” has the meaning set out in Clause 6.6;

 

“IT Hardware” means all information technology related
hardware equipment, used or held for use in connection with the operation of
ST’s Relevant Businesses or NXP’s Relevant Businesses, as the case may be;

 

“June 2008 Refunds” means the refunds of the R&D tax
credits relating to NXP France set for refund in June 2008 and relating to
the period from December 2003 until December 2004, amounting to EUR
6,170,649 (six million one hundred seventy thousand six hundred and forty-nine
euro), of which EUR 5,570,100 (five million five hundred seventy thousand and
one hundred euro) relates to NXP Crolles and EUR 600,549 (six hundred thousand
five hundred and forty-nine euro) relates to NXP Rennes;

 

“Know-how” means all technical and commercial
information, data and documents of whatever nature, including without
limitation drawings, specifications, photographs, samples, models, processes,
procedures, reports and correspondence, including any copyright and/or database
rights and other rights for the protection of know-how as they may exist, but
excluding any (right in) software and Patents and any other intellectual
property rights therein;

 

“Law” means any applicable statute, law, ordinance,
rule or regulation of any Governmental Authority;

 

43

 

“Liabilities” means all liabilities, duties and obligations
of every description, including any indebtedness, bank loans, bank overdrafts,
bonds, finance leases or other borrowings, Employment Liabilities, balance of
debt from capitalised operating leases and provisions of a debt nature whether
deriving from contract, common law, statute or otherwise, whether present or
future, actual or contingent, ascertained or unascertained or disputed and
whether owed or incurred severally or jointly or as principal or surety; and “Liability” means any one of them or the relevant one of
them, as the context requires;

 

“Local Transfer Agreements” and “Local
Transfer Agreement” have the meanings set out in Clause 4.1.1;

 

“Losses” means all damage, losses, liabilities, costs
(including reasonable legal costs and reasonable experts’ and consultants’
fees), charges, expenses, claims and demands, but excluding any indirect or
consequential damage;

 

“Market Value of Assets” means the value of assets of
Defined Benefit pension plans and other long term benefit plans, in accordance with the definition of Market
Value of Assets applicable under US GAAP standard FAS 87;

 

“Material Adverse Effect” means a change,
effect, circumstance or development that is materially adverse to the financial
condition, properties, assets, liabilities, products (whether in development or
marketed) business, research programs or results of operations of a Party’s Relevant
Businesses, taken as a whole, provided that none of the following (or the
results thereof), in and of themselves, shall be deemed to give rise to a
Material Adverse Effect: (a) any change after Signing in any Law or
generally accepted accounting principles, or interpretations thereof,
applicable to any of the Relevant Businesses, (b) any change in economic
conditions or financial markets generally, (c) any change in business
conditions generally affecting any industry in which any of the Relevant Businesses
operate, (d) any acts of war, declared or undeclared, armed hostilities,
sabotage or terrorism, and (e) any loss or, adverse change in the
relationship with, employees, customers or suppliers of any of the Relevant
Businesses proximately caused by the pendency or announcement of the
Transaction or any other transactions contemplated by this Agreement,
(f) any facts or circumstances known to the Party invoking the relevant
provision against the other Party, prior to the date hereof which could reasonably
be expected to have such effect and (g) any change in forecasts or
projections of the Relevant Business;

 

“Member States” means the member states of the European Union
from time to time, and “Member State”
means any of them or the relevant one of them, as the context requires;

 

“Non-Automatic Transfer Employees” means all those Employees
who will not transfer with the Relevant Businesses by operation of relevant
national Laws;

 

“Non-EU Country” means any country that is not a Member
State;

 

“Notary” means any civil law notary of De Brauw Blackstone
Westbroek N.V., or such notary’s substitute;

 

“Notice” has the meaning set out in Clause 11.11.1;

 

44

 

“NXP”
has the meaning set out in the introduction of this Agreement;

 

“NXP Assumed Business Liabilities” has the meaning set out in Schedule 3, and “NXP Assumed Business
Liability” means any one of them or the relevant one of them, as the
context requires;

 

“NXP Assumed Financial Liabilities” means, subject to Clause 2.4.2,:

 

(a)                 in respect of each NXP Entity as at the Effective Time the position held by the NXP
Entity in any indebtedness, bank loans, bank overdrafts, bonds, finance leases
or other borrowings, at Closing,

 

(a)                 in respect of NXP’s Relevant Businesses as at the
Effective Time, certain Unfunded Defined Benefits Liabilities in respect of any
NXP Employees,

 

and “NXP Assumed Financial Liability” means
any one of them or the relevant one of them, as the context requires;

 

The NXP Assumed Financial Liabilities shall be
determined on the basis of the ST Accounting Principles.

 

“NXP Assumed Financial Liabilities Funding Requirement” means
the result of:

 

(a)                 the aggregate of all NXP Assumed Financial Liabilities;

 

less

 

(b)                 in respect of each NXP Contributed Company, all Cash held by or on behalf
of it, as at the Effective Time, including any Cash
contributed in relation to the funding obligations pursuant to Clause 2.4.3.

 

“NXP Assumed Liabilities”  means, collectively, the NXP Assumed Business Liabilities
and the NXP Assumed Financial Liabilities;

 

“NXP Contributed Companies”  means those Affiliates of NXP forming part of the NXP’s Relevant
Business of which the shares shall be transferred to the Company (including
without limitation WH1, WH2 and the local Newcos in accordance with the methods and principles set
out in NXP’s Disentanglement Plan and the NXP Entities), and “NXP Contributed Company”  means any one of them or the relevant one of them, as the
context requires;

 

“NXP Data
Room” means the electronic data room containing documents and
information in respect of each of NXP’s Relevant Businesses, made available by
NXP, the contents of which are listed in Appendix 1 to the Disclosure Letter;

 

“NXP
Disclosure Letter” means the letter
from NXP to ST, attached as Schedule 14 (Part 2);

 

“NXP Entities”
means Beijing T3G Technology Co. Ltd. and
NXP France, the shares of which are to be transferred to the Company (directly
or indirectly as subsidiaries of WH1  or
WH2) in accordance with the methods and principles set out in the NXP
Disentanglement Plan;

 

“NXP First
Allocated Interim Capex” has the meaning set out in Clause 4.11.2;

 

“NXP Group”
means NXP and its Affiliates from time to time, excluding, after Closing, the
Group Companies;

 

45

 

“NXP Interim
Capex” has the meaning set out in Clause 4.11.1;

 

“NXP’s
Lawyers” means De Brauw Blackstone Westbroek N.V. of Tripolis 300,
Burgerweeshuispad 301, 1076 HR Amsterdam, the Netherlands (reference Arne
Grimme and Dieter Wolff);

 

“NXP Moveable
Assets” has the
meaning set out in Schedule 3;

 

“NXP
Receivables” has the meaning set out in Schedule 3;

 

“NXP’s
Relevant Businesses” has the meaning set out in Schedule 3;

 

“NXP Relevant
Contracts” has the meaning set out in Schedule 3, and “NXP Relevant
Contract” means any
one of them or the relevant one of them, as the context requires;

 

“NXP Relevant Employees” means all those
persons that are immediately prior to Closing employed by NXP or any of its
Affiliates and identified under NXP’s Disentanglement Plan, attached as Schedule
6, to be transferred with NXP’s Relevant Businesses;

 

“NXP Relevant
IP” has the meaning set out in Schedule 3;

 

“NXP Relevant
Registered IP” means all registered IP forming part of NXP Relevant
IP;

 

“NXP Remaining Business” means the
business activities of the NXP Group, other than NXP’s Relevant Businesses;

 

“NXP Retained Liabilities” has the meaning set out in Schedule 3  and “NXP Retained Liability” means any one
of them or the relevant one of them, as the context requires;

 

“NXP Second
Allocated Interim Capex” has the meaning set out in 4.11.2;

 

“NXP Senior
Employees” means Marc Cetto, GertJan Kaat, Andreas Brenner, Dan
Rabinovitsj, Dennis Kish and Jacques Noel;

 

“NXP Third
Allocated Interim Capex” has the meaning set out in 4.11.2,

 

“NXP Umbrella Agreements” means all agreements applicable to, but not exclusively related to,
NXP’s Relevant Businesses;

 

“NXP VAT
Claims” means the claims identified as such in Schedule 21;

 

“NXP’s Works
Council” has the meaning set out in Clause 3.1.2;

 

“Operational
Agreements” and “Operational Agreement”
have the meaning set out in Clause 4.1.3;

 

“Parties”
means ST and NXP, and “Party” means
any one of them or the relevant one of them, as the context requires;

 

“Patents”
shall have the meaning given thereto in the IP Transfer and License Agreement;

 

“PBO”
means Projected Benefit Obligation as defined under US GAAP standard FAS87,
using actuarial and economic assumptions set forth in Appendix 8.1.3  to Schedule 6, for all rights and

 

46

 

benefits accrued by the
Employees up to the Effective Time. For other long term benefit plans in Section 2
of Appendix 8.2.1 that are outside the scope of FAS 87, the PBO calculation
shall reflect the same principle of measuring the accrued liability as the
expected projected cost of the benefit recognised over the service period to be
rendered in exchange for the long-service benefit;

 

“Permits”
means licences, permits, consents, approvals, authorizations, registrations,
franchises, exemptions and orders of any Governmental Authority;

 

“Person” means any individual, company, corporation,
partnership, joint venture, association, joint stock corporation, trust,
unincorporated organisation or Governmental Authority;

 

“Personal IT Equipment”
means desktops, laptops, blackberries and mobile phones;

 

“PPE” has the meaning set out in Clause 6.6;

 

“PPE Statements” has the meaning set out in Clause 6.6;

 

“Project Contracts” means the
contracts relating to the Projects (as such term has been defined in the
Projects Transfer Agreement between ST, NXP and the Company);

 

“R&D Tax Credits” means those R&D tax credits to be
paid by the relevant Governmental Authority to NXP France (following the merger
between NXP Crolles, NXP France and NXP Rennes), as set out in the table
included in Clause 6.11.1;

 

“Reasonable and Prudent Operator” means a party seeking to
perform its contractual and other obligations and in so doing and in the
general conduct of its undertaking exercising that degree of skill, diligence,
prudence and foresight which would reasonably and ordinarily be expected from a
skilled and experienced operator in substantial compliance with all applicable
laws engaged in the same type of undertaking in the same locality and under the
same or similar circumstances and conditions;

 

“Reference
Amounts” has the meaning set out in Clause 6.6;

 

“Relevant
Businesses” means ST’s Relevant Businesses and/or NXP’s Relevant
Businesses, as the context requires, and “Relevant
Business” means any one of them or the relevant one of them, as the
context requires;

 

“Relevant IP”  has the meaning
set out in Schedule 14;

 

“Relevant IT Assets”  has the meaning set out in Schedule 14;

 

“Relevant Licensed IP” has the meaning set out in Schedule 14;

 

“Reporting
Accountant” means a registered accountant of international repute and
with relevant experience having regard to the relevant expertise required,;

 

“Restructuring
Costs” means all restructurings costs, fees and expenses
incurred by the Company or any of its Affiliates relating to employee
relocation, retraining, severance or termination; the rationalisation,
reduction or elimination of product lines; the consolidation, relocation or
closure of manufacturing and administrative locations; impairment of inventory
and

 

47

 

fixed assets
specifically related to the aforementioned restructuring initiatives and
similar items, as determined and calculated in accordance with the ST
Accounting Principles, consistently applied;

 

“Retained Liabilities” means the
NXP Retained Liabilities and the ST Retained Liabilities, and “Retained
Liability” means any one of them or the relevant one of them, as the
context requires;

 

“Security”
means any right to Encumbrance, guarantee, indemnity, surety, letter of comfort
or other assurance, security, right of set-off, obligation to contribute (‘bijdrageplicht’) or undertaking, given by a person to
secure or support the obligations (actual or contingent) of any other person,
whether given directly, by way of counter-indemnity or otherwise;

 

“Senior
Employees” means the NXP Senior Employees or the ST Senior
Employees, as applicable;

 

“Signing”
means the signing by the Parties of this Agreement;

 

“Signing Date”
means the day on which the last Party signing this Agreement has signed this
Agreement;

 

“Shareholders
Agreement” means the agreement between ST, NXP and the Company,
attached hereto in agreed form as Schedule 16;

 

“Silabs IP” means the NXP Relevant IP that has been obtained
by NXP as a result of the acquisition by NXP of Silicon Laboratories, Inc;

 

“SLAs”
and “SLA” have the meaning set out in Clause
4.1.2;

 

“ST”
has the meaning set out in the introduction of this Agreement;

 

“ST Accounting Principles”  means ST’s Group accounting principles that are in
accordance with US GAAP as applied by ST as at the Effective Time and
thereafter, as set out in Schedule 18;

 

“ST Assumed Business Liabilities” has the meaning set out in Schedule
2, and “ST Assumed Business Liability” means
any one of them or the relevant one of them, as the context requires;

 

“ST Assumed
Financial Liabilities” means, subject to Clause 2.4.1,:

 

(a)                 in respect of each ST Entity as at the Effective Time the position held by the ST Entity in any indebtedness, bank loans, bank
overdrafts, bonds, finance leases or other borrowings, at Closing,

 

(b)                 in respect of ST’s Relevant Businesses as at the
Effective Time, certain Unfunded Defined Benefits Liabilities in respect of any
ST Employees,

 

and “ST Assumed Financial Liability” means
any one of them or the relevant one of them, as the context requires;

 

The ST Assumed Financial Liabilities shall be
determined on the basis of the ST Accounting Principles.

 

“ST Assumed Financial Liabilities Funding Requirement” means the result of:

 

48

 

(a)                 the aggregate of all ST Assumed Financial Liabilities;

 

less

 

(b)                 in respect of each ST Contributed Company, all Cash held by or on behalf
of it, as at the Effective Time, including any Cash
contributed in relation to the funding obligations pursuant to Clause 2.4.3;

 

“ST Assumed Liabilities”  means, collectively, the ST Assumed Business Liabilities
and the ST Assumed Financial Liabilities;

 

“ST Contributed Companies”  means those Affiliates of ST forming part of ST’s Relevant
Businesses of which the shares shall be transferred to the Company including
without limitation local Newco’s in accordance with the methods and principles
set out in the ST Disentanglement Plan and the ST Entities, and “ST
Contributed Company”  means any one
of them or the relevant one of them, as the context requires;

 

“ST Data Room”
means the electronic data room containing documents and information in respect
of each of ST’s Relevant Businesses, made available by ST, the contents of
which are listed in Appendix 1 to the Disclosure Letter;

 

“ST
Disclosure Letter” means the letter from ST to NXP, attached as Schedule
14 (Part 3);

 

“ST Entities”
means ST R&D Oy, the shares of which are to be transferred (directly or indirectly) to the Company in accordance with the methods and principles set out in
the ST Disentanglement Plan;

 

“ST Group”
means ST and its Affiliates from time to time, excluding after Closing the
Group Companies;

 

“ST’s Lawyers”
means Allen & Overy LLP;

 

“ST Moveable
Assets” has the meaning set out in Schedule 2;

 

“ST
Receivables” has the meaning set out in Schedule 2;

 

“ST’s
Relevant Businesses” has the meaning set out in Schedule 2;

 

“ST Relevant Contracts” has the meaning set out in Schedule 2, and “ST Relevant Contract”
means any one of them or the relevant one of them, as the context requires;

 

“ST Relevant Employees” means all those
persons that are immediately prior to Closing employed by ST or any of its
Affiliates and identified under ST’s Disentanglement Plan, attached as Schedule
5, to be transferred with ST’s Relevant Businesses;

 

“ST
Relevant IP” has the meaning set out in Schedule 2;

 

“ST Retained Liabilities” has the meaning set out in Schedule 2  and “ST Retained Liability” means any one
of them or the relevant one of them, as the context requires;

 

“ST Senior
Employees” means Tommi Uhari, Jean-Francois Mathieu, Leon Cloetens,
Monica De Virgilis, Patrice Meilland, Jyrki Hannikainen, Francis Litty and
Pierre Bacuvier;

 

49

 

“ST
Umbrella Agreements” means all
agreements applicable to, but not exclusively related to, ST’s Relevant
Businesses;

 

“ST VAT
Claims” means the claims identified as such in Schedule 21 (part
2) [Note: awaiting clarification from ST/A&O
regarding the cross reference to Schedule 21 (part 2)];

 

“ST’s Works
Council(s)” has the meaning set out in Clause 4.9;

 

“Start-Up
Costs”  means cost of setting up the
various new companies that will form the Group and the filing fees in relation
to the Closing Anti-trust Approvals required to be made in any jurisdiction in
connection with the Transaction, including all costs, penalties and fines
resulting from not filing in any jurisdiction where it is determined that an
anti-trust filing should have taken place.

 

“Swiss Opco”
has the meaning set out in Clause 2.1.1;

 

“T3G”
means Beijing T3G Technology Co. Ltd.;

 

“Tax”
means all forms of taxation whether direct or indirect and whether levied by
reference to income, profits, gains, net wealth, net worth, equity, asset
values, turnover, gross receipts, added value or other reference, and
statutory, governmental, state, provincial, local governmental or municipal
impositions, duties, contributions, rates and levies (including sales and use
taxes, social security contributions and any other payroll taxes), whenever and
wherever imposed (whether imposed by way of a withholding or deduction for or
on account of tax or otherwise) and in respect of any person, and all
penalties, charges, costs and interest relating thereto;

 

“Tax
Authority” means any taxing or other authority competent to impose
any liability in respect of Tax or responsible for the administration and/or
collection of Tax or enforcement of any Law in relation to Tax;

 

“Tax
Indemnity” has the meaning set out in Schedule 13;

 

“Term Sheets” has the meaning set out in Clause 4.1 and “Term Sheet” means any one of them or the
relevant one of them, as the context requires;

 

“Third Party
Consents” means all consents, licences, approvals, permits,
authorisations or waivers required from third parties in respect of the
assignment or transfer to the Company or relevant Group Company of any
Contract, and “Third Party Consent” means any one
of them or the relevant one of them, as the context requires;

 

“Transaction”
has the meaning set out in recital (A);

 

“Transaction Costs”
means all fees, costs and expenses and stamp, transfer, registration and
similar taxes incurred in connection with the Transaction, other than those
fees, costs and expenses which are covered by the Start-Up Costs;

 

“Transaction
Documents” means the Agreement, the Local Transfer Agreements, the
TSAs, the SLAs and the Operational Agreements;

 

“TSAs”
and “TSA” have the meaning set out in Clause
4.1.2;

 

50

 

“Unfunded
Defined Benefits Liability” has the meaning set out in Schedule 8;

 

“VAT”
means, within the European Union, such Tax as may be levied in accordance with
(but subject to derogation from) the Directive 2006/112/EC, and outside the
European Union, any Tax levied by reference to added value, or sales and/or
consumption;

 

“WCA”
has the meaning set out in Clause 3.1.2;

 

“WH2
Reorganisation Costs” means the costs, fees and expenses (including,
without limitation, Tax) incurred by the Group after Closing to unwind the
Newco-structure of WH2 (excluding NXP France and T3G) or otherwise caused by
having newly incorporated companies holding the various assets and liabilities
compared, and in excess, to the costs incurred by the Group if such assets and
liabilities would have been transferred to companies newly incorporated by the
Group;

 

“Working
Capital Loan” has the meaning set out in Clause 2.1.2;

 

51

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]