Document:

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                                                              Exhibit 10.20

                                  EMPLOYMENT AGREEMENT

     AGREEMENT, dated as of November 8, 1999 (the "AGREEMENT"), between
Semiconductor Components Industries, LLC (the "COMPANY"), with offices at
5005 East McDowell Road, Phoenix, Arizona 85008, and James Thorburn (the
"EXECUTIVE").

     1.  EMPLOYMENT, DUTIES AND AGREEMENTS.

         (a)  The Company hereby agrees to employ the Executive as its Senior
Vice President and Chief Operating Officer and the Executive hereby accepts
such position and agrees to serve the Company in such capacity during the
employment period fixed by Section 3 hereof (the "EMPLOYMENT PERIOD"). The
Executive shall report to the President of the Company or, in the absence of
a President, to the executive officer of the Company acting in a similar
capacity, and shall have such duties and responsibilities as the President or
such executive officer may reasonably determine from time to time as are
consistent with Executive's position as Senior Vice President and Chief
Operating Officer.  During the Employment Period, the Executive shall be
subject to, and shall act in accordance with, the instructions and directions
of the President (or such other executive officer) and all applicable
policies and rules of the Company, in each case, as are consistent with the
Executive's position as Senior vice President and Chief Operating Officer.

         (b)  During the Employment Period, excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive shall devote
his full working time, energy and attention to the performance of his duties
and responsibilities hereunder and shall faithfully and diligently endeavor
to promote the business and best interests of the Company.

         (c)  During the Employment Period, the Executive may not, without the
prior written consent of the Company, directly or indirectly, operate,
participate in the the management, operations or control of, or act as an
executive, officer, consultant, agent or representative of, any type of
business or service (other than as an executive of the Company), provided
that it shall not be a violation of the foregoing for the Executive to manage
his personal, financial and legal affairs so long as such activities do not
interfere with the performance of his duties and responsibilities to the
Company as provided hereunder.

     2.  COMPENSATION.

         (a)  As compensation for the agreements made by the Executive herein
and the performance by the Executive of his obligations hereunder, during the
Employment Period, the Company shall pay the Executive, pursuant to the
Company's normal and customary payroll procedures, a base salary at the rate
of $300,000 per annum, (the "BASE SALARY"). The Board of Directors of the
Company (the "BOARD") shall review the Executive's Base Salary from time to
time.

         (b)  In addition to the Base Salary, during the Employment Period,
the Executive shall be eligible to participate in the executive bonus program
established and approved by the Board (the "PROGRAM") and, pursuant to the
Program, the Executive may earn an annual bonus (the "ANNUAL BONUS") up to a
maximum of 100% of Base Salary based on the achievement of annual performance
objectives as set forth in the Program, provided that with respect to fiscal
year 1999, the Executive shall be entitled to

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receive a pro-rata portion of the Annual Bonus based on the portion of such
year that this Agreement is in effect and determined in accordance with the
Program, including the achievement of the applicable performance objectives
for such year.

         (c)  The Company has paid the Executive a one-time payment of
$270,000 (the "CONSULTATION FEE").

         (d)  On the date hereof, the Company shall cause SCG Holding
Corporation (the "PARENT") to grant the Executive an option (the "OPTION") to
purchase 750,000 shares of common stock of the Parent at an exercise price of
$1.00 per share. The Option shall be subject to and governed by the SCG
Holding Corporation 1999 Founders Stock Option Plan (the "OPTION PLAN") and
shall be evidenced by a stock option grant agreement as provided under the
Option Plan. 8.4 percent of the Option shall become exercisable on the Grant
Date (as defined in the applicable Stock Option Grant Agreement); an
additional 8.3 percent of the Option shall become exercisable six months
following the Grant Date; an additional 8.3 percent of the Option shall
become exercisable on the first anniversary of the Grant Date; and on each
six-month anniversary following the first one-year anniversary of the Grant
Date, an additional 12.5 percent of the Option shall become exercisable until
100% of the Option is fully vested and exercisable: PROVIDED THAT the
Executive is still employed by the Company on each such date that a portion
of the Option is to become exercisable. Notwithstanding the foregoing, in the
event of a Change in Control (as defined in the Option Plan) during the
Employment Period, the Option shall become fully vested and immediately
exercisable as provided under the Option Plan. The Option or any portion
thereof that has not become exercisable shall automatically expire on the
Date of Termination (as defined in Section 4 below), and the Option or any
portion thereof that has become exercisable as of the Date of Termination
shall expire on the earlier of (i) ninety (90) days after the date the
Executive's Employment is terminated for any reason other than Cause, death
or Disability; (ii) one year after the date the Executive's employment is
terminated by reason of death or Disability; (iii) thirty (30) days after the
date the Executive's employment is terminated for Cause; or (iv) the tenth
anniversary of the Grant Date.

         (e)  During the Employment Period:

              (i)  except as specifically provided herein, the Executive
shall be entitled to participate in all savings and retirement plans,
practices, policies and programs of the Company which are made available
generally to other executive officers of the Company; to the extent permitted
by applicable law, the Company will, on or as soon as practicable after the
date hereof, take into account the Executive's service with Zilog, Inc. as if
it were service with the Company  for purposes of eligibility and vesting
under the Company's 401(k) plan administered by Vanguard (the "401(k) PLAN"),
provided that taking such service into account does not affect the
tax-qualified status of the 401(k) Plan; and

              (ii) except as specifically provided herein, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in, and shall receive all benefits under, all welfare benefit
plans, practices, policies and programs provided by the Company which are made
available generally to other executive officers of the Company (for the
avoidance of doubt, such plans, practices, policies or programs shall not
include any plan, practice, policy or program which provides benefits in the
nature of severance or continuation pay). Notwithstanding the foregoing, to
the extent reasonably practicable, the Company will provide medical and
dental benefits at least comparable to the benefits the Executive received
from Zilog, Inc., including without limitation by providing such benefits
through reimbursing the Executive for the cost of continuing his medical
coverage under Zilog's medical plan pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA).

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         (f)  The Company shall provide the Executive with a car allowance
not to exceed $1,200 per month.

         (g)  The Company shall provide the Executive with (i) relocation
benefits in accordance with the Company's relocation policy; (ii) a housing
allowance ("HOUSING ALLOWANCE") not to exceed $4,000 per month until the
earlier of the date the Executive acquires a permanent residence in the
Phoenix, Arizona area and relocates his family thereto or twenty-four (24)
months, plus an additional amount per month to compensate for any federal,
state and local income and payroll taxes that the Executive shall be required
to pay in respect of the housing allowance payments such that the Executive's
net after-tax payment equals his Housing Allowance; and (iii) reasonable
travel expenses between California and Phoenix, Arizona for the Executive and
the Executive's spouse and children for the 24-month-period immediately
following the Effective Date, provided such expenses shall not exceed $1,440
per month net of all income taxes to the extent applicable.

         (h)  The Executive shall be entitled to receive four weeks paid
vacation per calendar year, prorated for any partial year and otherwise
accrued in accordance with the Company's vacation practices applicable
generally to the senior executive officers of the Company.

         (i)  The Company shall reimburse the Executive for all reasonable
business expenses upon the presentation of statements of such expenses in
accordance with the Company's policies and procedures now in force or as such
policies and procedures may be modified with respect to the senior executive
officers of the Company.

     3.  EMPLOYMENT PERIOD.

         The Employment Period commenced on August 2, 1999 (the "EFFECTIVE
DATE") and shall terminate on the third anniversary of the Effective Date
(the "SCHEDULED TERMINATION DATE"). Notwithstanding the foregoing, the
Executive's employment hereunder may be terminated during the Employment
Period prior to the Scheduled Termination Date upon the earliest to occur of
the following events (at which time the Employment Period shall be
terminated):

         (a)  Death.  The Executive's employment hereunder shall terminate
upon his death.

         (b)  Disability.  The Company shall be entitled to terminate the
Executive's employment hereunder for "DISABILITY" if, as a result of the
Executive's incapacity due to physical or mental illness or injury, the
Executive shall have been unable to perform his duties hereunder for a period
of ninety (90) consecutive days, and within thirty (30) days after Notice of
Termination (as defined in Section 4 below) for Disability is given following
such 90-day period the Executive shall not have returned to the performance
of his duties on a full-time basis.

         (c)  Cause.  The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the term "CAUSE"
shall mean: (i) a material breach by the Executive of this Agreement: (ii)
the failure by the Executive to reasonably and substantially perform his
duties hereunder (other than as a result of physical or mental illness or
injury); (iii) the Executive's willful misconduct or gross negligence which
is materially injurious to the Company; or (iv) the conviction of or plea of
nolo contendere (or similar plea) by the Executive for a felony or other
serious crime involving moral turpitude. In the case of clauses (i) and (ii)
above, the Company shall provide written notice to the Executive indicating
in reasonable detail the events or circumstances that it believes constitute
Cause

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hereunder and, if such breach or failure is reasonably susceptible to cure,
provide the Executive with thirty (30) days to cure such breach or failure
prior to any termination for Cause.

         (d)  Without Cause.  The Company may terminate the Executive's
employment hereunder during the Employment Period without Cause.

         (e)  Voluntarily.  The Executive may voluntarily terminate his
employment hereunder (other than for Good Reason), provided that the
Executive provides the Company with notice of his intent to terminate his
employment at least three months in advance of the Date of Termination (as
defined in Section 4 below).

         (f)  For Good Reason.  The Executive may terminate his employment
hereunder for Good Reasons. For purposes of this Agreement, "GOOD REASON"
shall mean (i) a material diminution of the Executive's duties and
responsibilities hereunder, or (ii) the Executive elects to terminate his
employment within one year after a Change in Control (as defined below);
PROVIDED THAT in (i) above, the Executive shall notify the Company with
thirty (30) days after the event or events which the Executive believes
constitute Good Reasons hereunder and shall describe in such notice in
reasonable detail such event or events and provide the Company a reasonable
time to cure such diminution (not to exceed thirty (30) days).

     4.  TERMINATION PROCEDURE.

         (a)  Notice of Termination.  Any termination of the Executive's
employment by the Company or by the Executive during the Employment Period
(other than a termination on account of the death of Executive) shall be
communicated by written "NOTICE OF TERMINATION" to the other party hereto in
accordance with Section 12(a).

         (b)  Date of Termination.  "DATE OF TERMINATION" shall mean (i) if
the Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 3(b),
thirty (30) days after Notice of Termination, (iii) if the Executive
voluntarily terminates his employment, the date specified in the notice given
pursuant to Section 3(c) herein which shall not be less than thirty (30) days
after the Notice of Termination, (iv) if the Executive terminates his
employment hereunder for Good Reason pursuant to Section 3(f) herein, thirty
(30) days after Notice of Termination and (v) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination
is given or any later date (within thirty (30) days, or any alternative time
period agreed upon by the parties, after the giving of such notice) set forth
in such Notice of Termination.

     5.  TERMINATION PAYMENTS.

         (a)  Without Cause or for Good Reason.  In the event of the
termination of the Executive's employment during the Employment Period by the
Company without Cause or by the Executive for Good Reason, in addition to the
Executive's accrued but unused vacation and Base Salary through the Date of
Termination (to the extent not theretofore paid) the Executive shall be
entitled to a lump-sum payment, payable within thirty (30) days after the
Date of Termination equal to the product of (A) either (i) three, if the Date
of Termination is on or before September 1, 2001, or (ii) two, if the Date of
Termination is after September 1, 2001 and prior to the Scheduled Termination
Date; and (B) the sum of (i) the highest rate of Executive's annualized Base
Salary in effect at any time up to and including the

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Date of Termination and (ii) the Annual Bonus earned by the Executive in the
year immediately preceding the Date of Termination; PROVIDED that the
payments provided herein are subject to and conditioned upon the Executive
executing a valid general release and waiver (in the form reasonably
acceptable to the Company), waiving all claims the Executive may have against
the Company, its successors, assigns, affiliates, executives, officers and
directors, and such payments are subject to and conditioned upon the
Executive's compliance with the Restrictive Covenants provided in Sections 8
and 9 hereof. Except as provided in this Section 5(a), the Company shall have
no additional obligations under this Agreement.

         (b)  Cause, Disability, Death or Voluntarily.  If the Executive's
employment is terminated during the Employment Period (i) by the Company for
Cause, (ii) voluntarily by the Executive (other than for Good Reason), or
(iii) as a result of the Executive's death of Disability, the Company shall
pay the Executive or the Executive's estate, as the case may be, within
thirty (30) days following the Date of Termination the Executive's accrued but
unused vacation and his Base Salary through the Date of Termination (to the
extent not theretofore paid). Except as provided in this Section 5(b), the
Company shall have no additional obligations under this Agreement.

     6.  EMPLOYMENT TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL.

         (a)  In the event the Company terminates the Executive's employment
without Cause within two years following a Change in Control (as defined
below), then, in addition to all other benefits provided to the Executive
under the provisions of this Agreement, the Company shall provide the
Executive with continuation of medical benefits for the greater of (A) two
years after the Date of Termination or (B) the remainder of the Employment
Period. These benefits shall be provided to the Executive at the same cost,
and at the same coverage level, as in effect as of the Executive's Date of
Termination. However, in the event the cost and/or level of coverage shall
change for all employees of the Company, the cost and/or coverage level,
likewise, shall change for the Executive in a corresponding manner; and

         (b)  For purposes of this Agreement, a Change in Control shall have
the meaning set forth in the Option Plan.

     7.  LEGAL FEES.

         (a)  In the event of any contest or dispute between the Company and
the Executive with respect to this Agreement or the Executive's employment
hereunder, each of the parties shall be responsible for their respective
legal fees and expenses.

         (b)  The Company shall pay up to $10,000 of legal fees incurred by
the Executive in review of and counseling regarding this Agreement after
receipt of an invoice reasonably satisfactory to the Company.

     8.  NON-SOLICITATION.

         During the Employment Period and for one (1) year thereafter, the
Executive hereby agrees not to, directly or indirectly, solicit or assist any
other person or entity in soliciting any employee of the Company or any of
their subsidiaries to perform services for any entity (other than the Company
or

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their subsidiaries), or attempt to induce any such employee to leave the
employ of the Company or their subsidiaries.

     9.  CONFIDENTIALITY; NON-DISCLOSURE; NON-DISPARAGEMENT.

         (a)  The Executive hereby agrees that, during the Employment Period
and thereafter, he will hold in strict confidence any proprietary or
Confidential Information related to the Company and its affiliates. For
purposes of this Agreement, the term "CONFIDENTIAL INFORMATION" shall mean
all information of the Company or any of its affiliates (in whatever form)
which is not generally known to the public, including without limitation any
inventions, processes, methods of distribution, customer lists or customers'
or trade secrets; provided, however, that the term Confidential Information
shall not include any information which has become publicly available (other
than by an impermissible disclosure of such information) or any information
that is developed independently or obtained independently without breach of
any confidentiality provision by the Executive without the use of any other
Confidential Information.

         (b)  The Executive hereby agrees that, upon the termination of the
Employment Period, he shall not take, without the prior written consent of
the Company, any drawing, blueprint, specification or other document (in
whatever form) of the Company or its affiliates which is Confidential
Information, including without limitation information relating to its or their
methods of distribution, or any description of any formulas or secret
processes, and will return any such information (in whatever form) then in
his possession.

         (c)  In the event the Executive's employment hereunder is terminated
pursuant to Section 3(d) or 3(c) hereof, the Executive and the Company shall
mutually agree on the time, method and content of any public announcement
regarding the Executive's termination of employment hereunder and neither the
Executive nor the Company shall make any public statements which are
inconsistent with the information mutually agreed upon by the Company and the
Executive and the parties hereto shall cooperate with each other in refuting
any public statements made by other persons, which are inconsistent with the
information mutually agreed upon between the Executive and Company as
described above.

         (d)  The Executive hereby agrees not to defame or disparage the
Company, its affiliates and their officers, directors, members or executives,
and the Company hereby agrees that it shall not disparage or defame the
Executive through any official statement of the Company or through any
statements of the officers of the Company, provided that, in the event the
Executive's employment is terminated for Cause, both the Executive and the
Company shall be permitted, in their discretion, to disclose the facts and
circumstances surrounding such termination. The Executive and the Company
hereby agree to cooperate with each other in refuting any defamatory or
disparaging remarks by any third party made in respect of the Company or its
affiliates or their directors, members, officers or executives or in respect
of the Executive.

    10.  INJUNCTIVE RELIEF.

         It is impossible to measure in money the damages that will accrue to
the non-breaching party in the event that one party breaches any of the
restrictive covenants provided in Sections 8 and 9 hereof. In the event that
either party breaches any such restrictive covenant, the non-breaching party
shall be entitled to an injunction restraining the breaching party from
violating such restrictive covenant (without posting any bond). If the
non-breaching party shall institute any action or proceeding to enforce

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any such restrictive covenant, the breaching party hereby waives the claim or
defense that the non-breaching party has an adequate remedy at law and
agrees not to assert in any such action or proceeding the claim or defense
that the non-breaching party has an adequate remedy at law. The foregoing
shall not prejudice the non-breaching party's right to require the breaching
party to account for and pay over to the non-breaching party, and the
breaching party hereby agrees to account for and pay over, the compensation,
profits, monies, accruals or other benefits derived or received by the
breaching party as a result of any transaction constituting a breach of any
of the restrictive covenants provided in Sections 8 or 9 hereof, subject to
the non-breaching party's obligation to mitigate its damages.

     11.  REPRESENTATIONS.

          (a)  The parties hereto hereby represent that they each have the
authority to enter into this Agreement and that the execution of, and
performance of duties under, this Agreement shall not constitute a breach of
or otherwise violate any other agreement to which they are a party.

          (b)  The Executive hereby represents to the Company that he will not
utilize or disclose any confidential information obtained by the Executive in
connection with his former employment with respect to his duties and
responsibilities hereunder.

     12.  MISCELLANEOUS.

          (a)  Any notice or other communication required or permitted under
this Agreement shall be effective only if it is in writing and shall be
deemed to be given when delivered personally or four days after it is mailed
by registered or certified mail, postage prepaid, return receipt requested or
one day after it is sent by a reputable overnight courier service and, in
each case, addressed as follows (or if it is sent through any other method
agreed upon by the parties):

          If to the Company:

          Semiconductor Components Industries, LLC
          5005 East McDowell Road
          Phoenix, Arizona 85008
          Attention: Board of Directors and Secretary

          with a copy to:

          Paul Shim
          Cleary, Gottlieb, Steen & Hamilton
          One Liberty Plaza
          New York, NY 10006

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          If to the Executive:

          James Thorburn
          Semiconductor Components Industries, LLC
          5005 East McDowell Road
          Phoenix, Arizona 85008

          with a copy to:

          Paul A. Reiner
          Paul, Hastings, Janofsky & Walker
          345 California Street
          San Francisco, CA 94104

or to such other address as any party hereto may designate by notice to the
others.

          (b)  This Agreement shall constitute the entire agreement among the
parties hereto with respect to the Executive's employment hereunder, and
supersedes and is in full substitution for any and all prior understandings
or agreements with respect to the Executive's employment (it being understood
that any stock options granted to the Executive shall be governed by the
relevant option plan and related stock option grant agreement and any other
related documents).

          (c)  This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be waived only by
an instrument in writing signed by the party or parties against whom or which
enforcement of such waiver is sought. The failure of any party hereto at any
time to require the performance by any other party hereto of any provision
hereof shall in no way affect the full right to require such performance at
any time thereafter, nor shall the waiver by any party hereto of a breach of
any provision hereof be taken or held to be a waiver of any succeeding breach
of such provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.

          (d)  The parties hereto acknowledge and agree that each party has
reviewed and negotiated the terms and provisions of this Agreement and has
had the opportunity to contribute to its revision. Accordingly, the rule of
construction to the effect that ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this Agreement. Rather,
the terms of this Agreement shall be construed fairly as to both parties
hereto and not in favor or against either party.

          (e)  (i)  This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, assigns, heirs, executors,
administrators and other legal representatives. Neither this Agreement nor
any right or obligation hereunder may be assigned by either party, except
that the Company may assign this Agreement upon a Change in Control.

               (ii)  The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume this
Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such succession had taken place. As
used in the Agreement, "the Company" shall mean both the Company as defined
above and any such successor that assumes this Agreement, by operation of law
or otherwise.

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          (f)  Any provision of this Agreement (or portion thereof) which is
deemed invalid, illegal or unenforceable in any jurisdiction shall, as to
that jurisdiction and subject to this Section, be ineffective to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the remaining provisions thereof in such jurisdiction or rendering that
or any other provisions of this Agreement invalid, illegal, or unenforceable
in any other jurisdiction. If any covenant should be deemed invalid illegal
or unenforceable because its scope is considered excessive, such covenant
shall be modified so that the scope of the covenant is reduced only to the
minimum extent necessary to render the modified covenant valid, legal and
enforceable. No waiver of any provision or violation of this Agreement by
Company shall be implied by Company's forbearance or failure to take action.

          (g)  The Company may withhold from any amounts payable to the
Executive hereunder all federal, state, city or other taxes that the Company
may reasonably determine are required to be withheld pursuant to any
applicable law or regulation, (it being understood, that the Executive shall
be responsible for payment of all taxes in respect of the payments and
benefits provided herein).

          (h)  This Agreement shall be governed by and construed in accordance
with the laws of the State of Arizona without reference to its principles of
conflicts of law.

          (i)  This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all of which shall constitute one and
the same instrument.

          (j)  The headings of this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
any provision hereof.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.

                                    SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC

                                    /s/ GEORGE H. CAVE
                                    -----------------------------
                                    Name:   George H. Cave
                                    Title:  Assistant Secretary &
                                             General Counsel

                                    /s/ JAMES THORBURN
                                    -----------------------------
                                    Name:   James Thorburn
                                    Title:  Treasurer

                                      9<PAGE>

                       PLEDGE AND SECURITY AGREEMENT

     This PLEDGE AND SECURITY AGREEMENT (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this "Agreement") is
                                                            ---------
dated as of November 8, 1999 and entered into by and between James Thorburn,
in his individual capacity, ("Grantor") and Semiconductor Components
                              -------
Industries, LLC, (together with its successors and assigns, "Secured Party").
                                                             -------------

                          PRELIMINARY STATEMENTS

     WHEREAS, Secured Party has agreed to loan Grantor the principal amount
of $227,867.50 (the "Loan") in accordance with that certain Promissory
                     ----
Note/Security Interest made by Grantor, dated as of the date hereof (as the
same may be amended, restated, supplemented or otherwise modified from time
to time, the "Note") in order to finance Grantor's acquisition of 70,000
              ----
shares of common stock of Zilog Inc. (the "Property");
                                           --------

     WHEREAS, it is a condition precedent to the making of the Loan by
Secured Party that Grantor shall grant the security interests and undertaken
the obligations contemplated by this Agreement; and

     WHEREAS, it is intended that the security interest granted hereunder
secure the Loan until the Principal Amount and Interest (each term as defined
in the Note) is paid in full by the Grantor.

     NOW, THEREFORE, in consideration of the premises and in order to induce
Secured Party to make the Loan and for other good and valuable consideration,
the receipt and adequacy of which are hereby conclusively acknowledged,
Grantor hereby agrees with Secured Party as follows:

     SECTION 1. Grant and Pledge of Security. Grantor hereby assigns and
                ----------------------------
pledges to Secured Party, and hereby grants to Secured Party a security
interest in, all of Grantor's right, title and interest in and to the
Property, whether now or hereafter acquired (the "Pledged Collateral"), and
any interest of the Grantor in the entries on the books of Zilog Inc. or any
financial intermediary pertaining to the Property, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributable in respect of or in
exchange for any or all of the Property. The Grantor shall deliver to the
Secured Party the certificates representing the Property, together with the
Assignment Separate From Certificates (in the form attached hereto as Exhibit
A) signed by the Grantor equal to the number of certificates delivered, and
such certificates and Assignment shall remain in the possession of the
Secured Party until this Agreement is terminated, at which time, the
Secured Party shall return the certificates and Assignment to the Grantor.
Notwithstanding the foregoing, in the event Grantor wishes to dispose of all
or part of the Pledged Collateral in order to satisfy the Secured Obligations
(as defined in Section 2 hereof), the Secured Party shall permit such
disposition in a manner mutually acceptable to the parties hereto (including
without limitation delivering the certificates to a third-party purchaser or
broker in order to effectuate such sale or disposition), provided the
proceeds of any such sale or disposition shall first be used to satisfy the
Secured Obligations in full. In the case of an Acceleration Event (as defined
in the

<PAGE>

Note), the Grantor hereby appoints the Secured Party as his true and lawful
attorney to take such action as may be necessary or appropriate to cause the
Pledged Collateral to be transferred into the name of the Secured Party or
any assignee of the Secured Party and to take any other action on behalf of
the Grantor permitted hereunder or under applicable law.

     SECTION 2. Security for Obligations. This Agreement secures, and the
                ------------------------
Pledged Collateral is collateral security for, all obligations of every
nature of the Grantor now or hereafter existing under the Note (all such
obligations collectively, the "Secured Obligations").
                               -------------------

     SECTION 3. No Assumption. Notwithstanding any of the foregoing, this
                -------------
Agreement shall not in any way be deemed to obligate Secured Party to assume
any of Grantor's obligations, duties, expenses or liabilities now existing or
hereafter drafted or executed (collectively, the "Grantor Obligations")
                                                  -------------------
unless Secured Party or any such purchaser otherwise expressly agrees to
assume any or all of such Grantor Obligations in writing.

     SECTION 4. Further Assurances and Covenants of Grantor. Grantor agrees
                -------------------------------------------
that from time to time, at the expense of Grantor, Grantor will promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Secured Party may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Grantor shall not, without the prior written consent of
Secured Party, which may be granted or withheld in Secured Party's sole
discretion, sell, assign (by operation of law or otherwise), pledge or
otherwise dispose of or hypothecate all or any part of the Pledged
Collateral. Notwithstanding the foregoing, in the event Grantor wishes to
dispose of all or part of the Pledged Collateral in order to satisfy the
Secured Obligations, the Secured Party shall permit such disposition in a
manner mutually acceptable to the parties hereto (including without
limitation delivering the certificates to a third-party purchaser or broker
in order to effectuate such sale or disposition), provided the proceeds of
any such sale or disposition shall first be used to satisfy the Secured
Obligations in full.

     SECTION 5. Acceleration Event; Grantor's Failure to Perform. In the case
                ------------------------------------------------
of an Acceleration Event (as defined in the Note) or Grantor's failure to
perform any term of this Agreement, in addition to all of Secured Party's
other rights and remedies at law and in equity, Secured Party shall have the
right, upon five days prior notice to Grantor, to dispose in any manner of
all or any portion of the Pledged Collateral and to apply the proceeds as
follows: (i) first to pay Secured Party's expenses (including reasonable
attorney's fees) in connection with collection of the Note; (ii) second, to
apply so much of the remaining proceeds as may be necessary to pay the unpaid
Principal Amount and Interest accrued under the Note; and (iii) third, to pay
any remaining amount of the proceeds to Grantor.

     SECTION 6. Continuing Security Interest; Transfer of Loan. This
                ----------------------------------------------
Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the
indefeasible payment in full of the Secured Obligations, (b) be binding upon
Grantor, its successors and assigns, and (c) inure, together with the rights
and remedies of Secured Party hereunder, to the benefit of Secured Party and
its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c),

                                        2

<PAGE>

neither party may transfer their rights or obligations under this Agreement,
except that the Secured Party may assign or otherwise transfer the Note and
this Agreement to any successor-in-interest, including without limitation any
purchaser of substantially all of the assets of the Secured Party. Upon the
indefeasible payment in full of all Secured Obligations, the security
interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Grantor.

    SECTION 7. Amendments. No amendment, modification, termination or waiver
               ----------
of any provision of this Agreement, or consent to any departure by Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party, and, in the case of any such amendment or
modification by Grantor, such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.

    SECTION 8. Notices. Any notice or other communication herein required or
               -------
permitted to be given hereunder shall be given in accordance with Section
5(d) of the Note.

    SECTION 9. Failure or Indulgence not Waiver; Remedies Cumulative. No
               -----------------------------------------------------
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right, privilege or
option or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right, privilege
or option preclude any other or further exercise thereof or of any other
power, right, privilege or option. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.

    SECTION 10. Severability. In case any provision in or obligation under
                ------------
this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

    SECTION 11. Headings. Section and subsection headings in this Agreement
                --------
are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.

    SECTION 12. Governing Law; Terms; Assignment. THIS AGREEMENT AND THE
                --------------------------------
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ARIZONA. This Agreement shall inure to the benefit of, and be binding upon,
the Secured Party and its successors and assigns and be binding upon the
Grantor and the Grantor's legal representatives, heirs and legatees,
distributees, assigns and transferees by operation of law.

    SECTION 13. Waiver. The provisions of Section 5(e) of the Note are hereby
                ------
incorporated by reference in their entirety.

    SECTION 15. Counterparts. This Agreement may be executed in one or more
                ------------
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple

                                       3

<PAGE>

separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.

                 [Remainder of page intentionally left blank]

                                       4

<PAGE>

     IN WITNESS WHEREOF, Grantor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

GRANTOR:                     James Thorburn, in his individual capacity

                             By:  /s/ James Thorburn
                                  --------------------
                                  Name: James Thorburn
                                  Title: C.O.O.

SECURED PARTY:               Semiconductor Components Industries LLC

                             By:  /s/ George H. Cave
                                  ----------------------
                                  Name: George H. Cave
                                  Title: Assistant Secretary & General Counsel

                                       5

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