Fill and Sign the Form of Employee Matters Agreement Secgov

AMENDMENT TO EMPLOYEE MATTERS AGREEMENT OF MAY 11, 1999 This amendment to the Employee Matters Agreement is dated this 30th day of July, 1999 by and among Motorola, Inc., a Delaware corporation ("PARENT" or "MOTOROLA"), SCG Holding Corporation, a Delaware corporation and a wholly owned subsidiary of Motorola ("THE COMPANY"), and Semiconductor Components Industries, LLC, a Delaware limited liability company ("SCI LLC"), the sole member of which is the Company. WHEREAS, the parties previously entered into that certain agreement of May 11, 1999 known as the Employee Matters Agreement ("THE EMA"); WHEREAS, the parties wish to amend the EMA in the manner set forth herein; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, conditions, representations, warranties and agreements herein, the parties agree as follows: 1. The definitions of the EMA are amended as follows: "INACTIVE NON-TRANSFERRED EMPLOYEES" means all Inactive SCG Employees whose place of employment immediately before their leave of absence began was a location in the United States, Puerto Rico, or Japan. "INACTIVE TRANSFERRED EMPLOYEES" means all Inactive SCG Employees except the Inactive Non-Transferred Employees. "INACTIVE SCG EMPLOYEES" means SCG employees, Transferred Expatriate Employees, and Transferred Shared Services Employees who, immediately prior to the Closing Date, are absent from work due to an authorized leave of absence or due to long term or short term disability, including, without limitation, those employees identified on Schedule 1.3a. "TRANSFERRED EMPLOYEES" means Transferred SCG Employees, Transferred Shared Services Employees, Transferred Expatriate Employees, and Inactive Transferred Employees. "CLOSING DATE" means 12:01 A.M. Phoenix, Arizona time on July 31, 1999. "CLOSING DATE TRANSFERRED EMPLOYEE ACCRUALS" means Effective Date Transferred Employee Accruals" as defined in the Reorganization Agreement. 2. Section 1.4(a) of the EMA is amended to substitute the words "No later than seven Business Days prior to the closing date of the Recapitalization Agreement" for the words "No later than seven Business Days prior to the Closing Date." 3. The parties agree that notwithstanding the provisions in Section 2.1(a) of the EMA, certain Transferred Employees who do not transfer on the Closing Date into an SCG Party will transfer the next business day or as soon as possible thereafter. Notwithstanding this paragraph or any provision in the EMA, the parties agree that the 2 transfer of Transferred Employees in China will be carried out pursuant to the terms of the side letter between the parties on this subject to be executed no later than August 31, 1999. 4. Section 2.6 of the EMA is amended to substitute the term "Inactive Non-Transferred Employees" for each and every reference to "Inactive SCG Employees." 5. Notwithstanding anything to the contrary in the EMA, Motorola hereby agrees to indemnify SCI LLC and the SCG Parties (collectively, "SCI") and hold SCI harmless from and against, and promptly pay or reimburse SCI for, any and all liabilities, obligations, costs or expenses in respect of the Inactive Transferred Employees incurred by SCI or any Employee Benefit Plan established, maintained or contributed to by SCI that relate to or arise in connection with or as a result of (w) the transfer of the employment of any such Inactive Transferred Employee to SCI on or after the Closing Date, (x) any compensation or benefits paid, payable or required to be provided to any such Inactive Transferred Employee in respect of the period commencing at the Closing Date and ending upon the expiration of such employee's authorized leave or termination of disability, as applicable, including, without limitation, all wages, salaries, compulsory or statutory contributions, income or other employment taxes, benefit plan contributions, premiums, and similar amounts, (y) any severance or other termination compensation or benefits paid, payable or required to be provided to any such Inactive Transferred Employee who does not return to active employment with the applicable SCG Party on the expiration of such employee's authorized leave or termination of disability unless such severance or other termination compensation or benefits are the responsibility of SCI LLC or the applicable SCG Party under Paragraph 6.3(b) of the EMA, and (z) the event or events resulting in such Inactive Transferred Employee's leave of absence or disability. Within ten (10) days following the closing date of the Recapitalization Agreement, Motorola shall deliver to SCI LLC a correct and complete list identifying all Inactive Transferred Employees. No indemnifiabIe amount hereunder shall be counted towards the Deductible Amount or Marginal Amount. 6. The Transferred Employees employed by SCI LLC UK will be eligible to continue to participate in the Employee Benefit Plans maintained by Motorola Ltd. for no more than four (4) calendar months after the Closing Date; provided, however, that with respect to the Retirement Plan maintained by Motorola Ltd., continued participation by the Transferred Employees employed by SCI LLC UK is subject to the approval of the trustees of the said Retirement Plan, in accord with all applicable laws, rules, practices and the terms of the said Retirement Plan. SCI LLC will cause SCI LLC UK to reimburse Motorola, Ltd. for the actual cost to Motorola or Motorola, Ltd. of providing such continued benefits to the Transferred Employees, including a proportionate share of administrative fees, which payment shall be made no later than the twenty-fifth (25th) day of the month preceding the month for which coverage shall continue; provided, however, that payment with respect to coverage for the month of August shall be due no later than August 15, 1999 and provided further that Motorola, Ltd. has provided reasonable evidence to SCI LLC UK of the amount and incurrence of all such costs and fees, including those relating to the continued Retirement Plan coverage referred to below. Motorola, Ltd. shall inform SCI LLC UK of the amount to be reimbursed 3 pursuant to this Agreement no later than the twentieth (20th) day of the month preceding the month for which coverage shall continue; provided, however, that Motorola, Ltd. shall inform SCI LLC UK of the amount to be reimbursed pursuant to this Agreement for the month of August 1999 no later than August 5, 1999. The parties agree that if the trustees approve continued participation of the Transferred Employees employed by SCI LLC UK in the Retirement Plan maintained by Motorola Ltd., the parties will enter into an interim participation agreement to be executed no later than August 31, 1999. Notwithstanding the foregoing, if the trustees approve continued participation of the Transferred Employees employed by SCI LLC UK in the Retirement Plan maintained by Motorola Ltd., Motorola Ltd. shall inform SCI LLC UK of the amount to be reimbursed pursuant to this Agreement for the actual costs of providing continued Retirement Plan benefits, including a proportionate share of the administrative fees, for the month of August 1999 no later than ten (10) Business Days after the trustee approval and SCI LLC UK shall pay that amount to Motorola Ltd. within ten (10) days of such notice. 7. Notwithstanding anything to the contrary in the EMA, with respect to the transfer of assets and liabilities from the trust for the Motorola Japan, Limited Tax Qualified Pension Plan (Retirement Pension Rule) (the "MJL Plan") to the trust for the substantially identical defined benefit Foreign Retirement Plan (the "SCG Japan Foreign Retirement Plan") established by SCG Japan (as defined in Section 6.3(b) of the EMA), and if necessary, from MJL (as defined in Section 6.3(b) of the EMA) to SCG Japan, the aggregate amount to be transferred from the trust for the MJL Plan and from MJL to the SCG Japan Foreign Retirement Plan and to SCG Japan shall be equal to the greater of (i) the Applicable DB Transfer Amount (as defined in Section 4.2(a) and Schedule B of the EMA) and (ii) the amount legally allowed to be transferred under the Corporate Income Tax Law of Japan with respect to qualified pension plans (the "Transfer Amount") to the SCG Japan Foreign Retirement Plan, and if applicable, SCG Japan in respect of the pension liabilities to be assumed by the SCG Japan Foreign Retirement Plan and SCG Japan pursuant to the EMA, in accordance with the applicable Foreign Retirement Plan Transfer Agreement. If such Transfer Amount is greater than the Applicable DB Transfer Amount, then SCI LLC shall pay to Motorola (and not to MJL), no later than thirty-five (35) days after the Closing Date, the difference between the Transfer Amount and the Applicable DB Transfer Amount. Notwithstanding anything to the contrary in Section 4.2(a) of the EMA, the portion of the Applicable DB Transfer Amount payable from the trust of the MJL Plan to the trust of the SCG Japan Foreign Retirement Plan shall be paid no later than sixty (60) days after the Closing Date. 8. Notwithstanding Section 4.2(b) of the EMA or the Foreign Retirement Plan Transfer Agreement for the Retirement Benefit Fund maintained by the Existing Motorola Entity in Malaysia ("MSSB"), the Applicable DC Transfer Amount shall not include the individual account balances accrued as of the Closing Date for the Transferred Employees in Motorola Semiconductor Sdn. Blid. who are "RF Employees" within the meaning of the Motorola Assembly Services Agreement. If (i) an RF Employee's employment with the SCI LLC Party in Malaysia ("SCI Malaysia") terminates prior to or upon the termination of the RF assembly services under the Motorola Assembly Services Agreement and (ii) such RF Employee is not reemployed by Motorola promptly after the earlier of (a) the date the RF Employee's service with SCI Malaysia terminates and (b) 4 the date the assembly services under the Motorola Assembly Services Agreement is terminated, then Motorola shall pay to SCI Malaysia, within thirty (30) days of receiving the notice referred to in the next sentence, an amount in cash equal to the Applicable DC Transfer Amount relating to the accrued benefits of such RF Employee as of the Closing Date. SCI Malaysia shall provide prompt notice to Motorola of the Applicable DC Transfer Amount of such RF Employee. If an RF Employee's employment with SCI Malaysia does not terminate upon the termination of the RF assembly services under the Motorola Assembly Services Agreement, and within six (6) months of the date the RF assembly services terminate SCI Malaysia provides Motorola with a one-time written list of employees who shall remain in its employ, Motorola shall transfer to SCI Malaysia, within thirty (30) days of receiving the list, an amount in cash equal to the Applicable DC Transfer Amount relating to the accrued benefits of such RF Employees as of the Closing Date using such RF Employee's service and compensation earned as of the Closing Date. 9. Coverage under Employee Benefit Plans maintained by SCG Parties for Transferred Employees in China, Hong Kong, Japan, Korea, Singapore, Taiwan, Thailand and the United States shall be effective August 1, 1999 at 12:01 a.m. (local time). 10. For any Transferred Employee who is age fifty (50) or older on the Closing Date and who terminates employment at age 60 or older from the SCG Party in France, Motorola or the Existing SCG Entity in France shall promptly reimburse the SCG Party in France for the portion of the cost of the Retirement Indemnity payable to such Transferred Employee under the applicable industry agreement in effect on the Closing Date relating to the Transferred Employee's service with the Existing SCG Entity in France completed prior to the Closing Date. The above does not require payment of any termination indemnity in France other than the retirement indemnity specified here. 11. Notwithstanding the provisions in Section 4.2(b) of the EMA, the parties agree that, with respect to Brazil, the transfer of any assets and liabilities from a Retirement Plan maintained by Motorola Brazil to a Retirement Plan maintained by the Brazil Sub shall occur no later than the date permissible under local law, the Retirement Plan maintained by Motorola Brazil and the Foreign Retirement Plan Transfer Agreement. Motorola Brazil and the Brazil Sub shall use commercially reasonable efforts to enter into a Foreign Retirement Plan Transfer Agreement by August 31, 1999. 12. Section 4.2(b) of the EMA is amended so as not to require the transfer of retirement plan assets from the Foreign DC Retirement Plan of the Existing SCG Entity in Puerto Rico to an SCG Foreign DC Retirement Plan maintained by an SCG Party in Puerto Rico. This provision shall not relieve SCI LLC or any SCG entity operating in Puerto Rico of any of their other obligations under the EMA, including their obligation under Paragraph 2.4 and their obligations under 4.2(b), to establish an SCG Foreign DC Retirement Plan for applicable Transferred Employees that contains terms that are substantially identical to the terms of the defined contribution plan of the corresponding Existing SCG Entity. SCI LLC or any SCG Party operating in Puerto Rico shall reimburse the Transferred Employees in Puerto Rico for any 1999 or Year 2000 tax consequences of such amendment to such Transferred Employees derived from the Transferred Employees' decisions as to the disposition of their respective retirement assets, as of the Closing Date, 5 in the Foreign DC Retirement Plan of the Existing SCG Entity. Motorola agrees that it will take no affirmative steps to notify the Transferred Employees that they will be reimbursed for such tax consequences, if any, and Motorola agrees further that it will not distribute the Transferred Employees' account balances, except at the request of the Transferred Employees. 13. Notwithstanding the change of the definition of the Closing Date pursuant to Section 1 of this Amendment, the definition of the Closing Date shall be the closing date of the Recapitalization Agreement for purposes of (a) determining the amount of assets and liabilities to be transferred from Retirement Plans maintained by the Existing SCG Entities in Hong Kong, Thailand and the United States and (b) the timeframe for transferring such assets and liabilities pursuant to the EMA, the US Retirement Plan Transfer Agreements and the Foreign Retirement Plan Transfer Agreements. With respect to Japan, the definition of Closing Date for purposes of (a) and (b), above, shall be August 1, 1999. 14. Section 6.3(a) of the EMA is amended by adding a new clause (x) at the end of the first sentence thereof reading as follows: "(x) the continued participation of the SCI LLC UK employees in the Employee Benefit Plans of Motorola, Ltd, for events that occur during the transition period described in Section 6 of this Amendment." 15. With respect to the Retirement Plan maintained by Motorola de Mexico ("Motorola Mexico Retirement Plan"), Motorola shall indemnify and reimburse SCGM, the SCG Party in Mexico, for (x) payments made by SCGM (pursuant to a final judgment issued by a competent authority or by agreement by and between Motorola and SCGM or by settlement of any claim for such payments) in accordance with Article Sixth of the Motorola Plan to the Active Participants, as defined in the Motorola Mexico Retirement Plan, who have been transferred to SCGM through an employer substitution; provided that such payment obligation has been owing before the effective date of the employer substitution (July 31, 1999), or as a consequence of the employer substitution and (y) for reasonable expenses incurred by SCGM for the defense of any claim in such regard, including without limitation reasonable attorneys fees. Notwithstanding the above, should SCGM receive a claim under Article Sixth of the Motorola Mexico Retirement Plan, it shall immediately tender the defense of such claim to Motorola or the Existing SCG Entity in Mexico and shall grant Motorola or the Existing SCG Entity in Mexico all appropriate documentation, including powers of attorney, necessary to select counsel and otherwise fully control the defense and/or settlement of said claim. SCGM shall cooperate in the defense of said claim, including but not limited to making witnesses available upon reasonable request of Motorola or the Motorola SCG Entity. Any payment obligation arising under the SCGM Plan after the effective date of the employer substitution will be the sole and exclusive responsibility of SCGM under the SCGM Plan and in its capacity as substitute employer of Motorola. SCGM shall keep Motorola currently and promptly abreast of any claim made under Article Sixth of the Motorola Mexico Retirement Plan. 16. Except as amended hereby, the EMA shall continue in full force and effect between the parties. 6 17. Notwithstanding Paragraph 8.5 of the EMA, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by or against the parties hereto and their respective successors and assigns; provided, however, that neither party hereto may assign this Agreement except to a party that acquires all or substantially all of the assets of the assigning party or to or for the account of the lenders providing bank financing solely and specificially for the purpose of securing such bank financing in connection with the Recapitalization Agreement and the transactions related thereto. 7 IN WITNESS WHEREOF, each of the parties has caused this amendment to the Employee Matters Agreement to be duly executed on its behalf by its duly authorized officer as of the day and year first written above. MOTOROLA INC. By: /s/ CARL F. KOENEMANN ----------------------------------------- Title: EXECUTIVE VICE PRESIDENT AND CHIEF ------------------------------------- FINANCIAL OFFICER -------------------------------------------- SCG HOLDING CORPORATION By: /s/ THEODORE W. SCHAFFNER ----------------------------------------- Title: VICE-PRESIDENT -------------------------------------- SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC By: /s/ THEODORE W. SCHAFFNER ----------------------------------------- Title: VICE-PRESIDENT -------------------------------------- 8