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As filed with the Securities and Exchange Commission on April 7, 2009

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

Commission file number 333-142287

NXP B.V.

(Exact name of Registrant as specified in charter)

The Netherlands
(Jurisdiction of incorporation or organization)

High Tech Campus 60, Eindhoven 5656 AG, The Netherlands
(Address of principal executive office)

Jean Schreurs, SVP and Senior Corporate Counsel, High Tech Campus 60, 5656 AG, Eindhoven, The Netherlands,

Phonenumber: +31 40 2728686 / jean.schreurs@nxp.com

(Name, title, address, telephone, e-mail of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Floating Rate Senior Secured Notes due 2013
Floating Rate Senior Secured Notes due 2013
77/8% Senior Secured Notes due 2014
85/8% Senior Notes due 2015
91/2% Senior Notes due 2015

(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

Note-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act:

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of Exchange Act).

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In this report amounts are expressed in euros (“euros” or “EUR”) or in US dollars (“dollars”, “US $” or “$”).

Introduction

Specific portions of NXP’s Annual Report 2008 to Shareholders (the “2008 Annual Report”) are incorporated by reference in this report on Form 20-F to the extent noted herein. The 2008 Annual Report (except as noted below) is attached hereto as Exhibit 15(b) and is furnished to the Securities and Exchange Commission (SEC) for information only. The 2008 Annual Report is not filed with the SEC except for such specific portions that are expressly incorporated by reference in this Annual Report on Form 20-F.

The Company uses the U.S. dollar as its reporting currency as from January 1, 2008. For consolidation purposes, the financial statements of the entities, including the Company, with a functional currency other than the U.S. dollar, are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates on the respective balance sheet dates. Items in the statement of operations and cash flow statement are translated at average rates of exchange in the periods involved. The resulting translation adjustments are recorded as a separate component of other comprehensive income (loss) within business’ and shareholder’s equity. Cumulative translation adjustments are recognized as income or expense upon partial or complete disposal or substantially complete liquidation of a foreign entity.

The following table sets out the exchange rates for euros into US dollars applicable for translation of NXP’s financial statements for the periods specified.

(1) The average rates are the accumulated average rates based on monthly quotations.

In presenting and discussing the NXP Group’s financial position, operating results and cash flows, management uses certain non-US GAAP financial measures such as comparable growth; net debt and cash flow before financing activities. These non-US GAAP financial measures should not be viewed in isolation as alternatives to the equivalent US GAAP measure and should be used in conjunction with the most directly comparable US GAAP measure(s). Unless otherwise indicated in this document, a discussion of the non-US GAAP measures included in this document and a reconciliation of such measures to the most directly comparable US GAAP measure(s) is contained on pages 95, 97 and 98 under the heading ‘Reconciliation non-US GAAP information’ in the 2008 Annual Report and is incorporated herein by reference. We also present “Effects of PPA” or discuss our financial results on a basis that excludes the effects of “Purchase Price Accounting” (or “PPA”). Presentations of our financial results on a basis that excludes “Effects of PPA” exclude the effect of the purchase accounting that was applied to our acquisition in 2006 by KASLION Acquisition B.V. and on subsequent acquisition activities.  This effect is primarily the changes in amortization and depreciation charges associated with the fair value of assets and liabilities acquired, net of the tax effect of such changes. A presentation of our financial results that excludes Effects of PPA is not made in accordance with US GAAP, however we have presented such information because we believe that it facilitates the comparison of our financial results between periods without the changes to amortization and depreciation charges that result from acquisition activities.  For more information on purchase accounting and its effect on our financial results, see “Effect of purchase accounting” on pages 20 and 21 of the 2008 Annual Report, which pages are herein incorporated by reference.

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Forward-looking statements

Pursuant to provisions of the United States Private Securities Litigation Reform Act of 1995, NXP is providing the following cautionary statement. This document, including the portions of the 2008 Annual Report incorporated herein, contains certain forward-looking statements with respect to the financial condition, results of operations and business of NXP and certain of the plans and objectives of NXP with respect to these items (including, but not limited to, restructuring cost and cost savings), in particular, among other statements, certain statements in Item 4 “Information on the Company” with regard to management objectives, market trends, market standing, product volumes and business risks, the statements in Item 8 “Financial Information” relating to legal proceedings, the statements in Item 5 “Operating and Financial Review and Prospects” with regard to Management’s current expectations for the short term under the heading “Outlook” and with regard to trends in results of operations, margins, overall market trends, risk management, exchange rates and statements in Item 11 “Quantitative and Qualitative Disclosures about Market Risks” relating to risk caused by derivative positions, interest rate fluctuations and other financial exposure are forward-looking in nature.

When used in this document, the words “anticipate,” “believe,” “estimate,” “forecast,” “expect,” “intend,” “plan” and “project,” and similar expressions, as they relate to us, our management or third parties, identify forward-looking statements. Forward-looking statements include statements regarding our business strategy, financial condition, results of operations, and market data, as well as any other statements which are not historical facts. These statements reflect beliefs of our management as well as assumptions made by our management and information currently available to us. Although we believe that these beliefs and assumptions are reasonable, the statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf and include the following:

market demand and semiconductor industry conditions, our ability to successfully introduce new technologies and products, the demand for the goods into which our products are incorporated, our ability to generate sufficient cash or raise sufficient capital to meet both our debt service and research and development and capital investment requirements, our ability to accurately estimate demand and match our production capacity accordingly or obtain supplies from third-party producers, our access to production from third-party outsourcing partners, and any events that might affect their business or our relationship with them, our ability to secure adequate and timely supply of equipment and materials from suppliers, our ability to avoid operational problems and product defects and, if such issues were to arise, to rectify them quickly, our ability to form strategic partnerships and joint ventures and successfully cooperate with our alliance partners, our ability to win competitive bid selection processes to develop products for use in our customers’ equipment and products, our ability to successfully establish a brand identity, our ability to successfully hire and retain key management and senior product architects; and, our ability to maintain good relationships with our suppliers.

Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, we do not have any intention or obligation to update forward-looking statements after we distribute this document. In addition, this document contains information concerning the semiconductor industry, our market segments and business units generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, our market segments and product areas will develop. We have based these assumptions on information currently available to us. If any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what impact any such differences may have on our business, if there are such differences, our future results of operations and financial condition, and the market price of the notes, could be materially adversely affected.

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Part I

Item 1.              Identity of directors, senior management and advisors

Not applicable.

Item 2.              Offer statistics and expected timetable

Not applicable.

Item 3.              Key information

A. Selected financial data

The following table summarizes, for the periods indicated, the Company’s summary historical combined and financial data. We prepare our financial statements in accordance with U.S. GAAP.  For periods ended on or before September 28, 2006, our selected historical combined financial data principally reflects the historical financial position, results of operations and cash flows of the semiconductors businesses that were previously included as a segment of Philips.

The summary historical combined financial data as of December 31, 2005 and 2004, and for the years ended December 31, 2005 and 2004 and for the period January 1, 2006 through September 28, 2006 have been derived from the combined financial statements of the Predecessor periods. The summary historical consolidated financial data as of December 31, 2006, 2007 and 2008 and for the period September 29, 2006 through December 31, 2006 and for the years ended December 31, 2007 and 2008 have been derived from the audited consolidated financial statements.

Prior to January 1, 2008, the Company published its combined and consolidated financial statements in euro’s, but are now published in U.S. dollars. The Company has retroactively applied this change to all periods presented below.

Selected financial data for the years ended December 31 (unless indicated otherwise):

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Definitions:

*    See pages 95, 97 and 98 of the 2008 Annual Report incorporated herein by reference for a reconciliation of non-US GAAP measures to the most directly comparable US GAAP measure(s) and pages 22 and 23 of the 2008 Annual Report, incorporated herein by reference, for a discussion of these non-US GAAP measures.

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D. Risk factors

The information required by this Item is incorporated by reference herein from the following portions of the 2008 Annual Report:

·      The text on pages 68 through 85 under the heading “Risks related to our business”;

·      The text on pages 86 through 88, under the heading “Risks related to our capital Structure”;

The factors and the cautionary statements contained in the section entitled “Introduction” on page 3 should be considered in connection with any forward-looking statements contained in NXP’s Annual Report on Form 20-F. Forward-looking statements can be identified generally as those containing words such as “anticipate,” “believe,” “estimate,” “forecast,” “expect,” “intend,” “plan” and “project,” and similar expressions. From time to time, NXP may also provide oral or written forward-looking statements in other materials NXP releases to the public. The cautionary statements contained in “Introduction” are deemed to apply to these statements.

The risks described are not the only ones that NXP faces. Some risks are not yet known to NXP and some that NXP does not currently believe to be material could later turn out to be material. All of these risks could materially affect NXP’s business, its revenues, operating income, net income, net assets and liquidity and capital resources.

Item 4.          Information on the Company

The information required by this Item is incorporated herein by reference to page 5, entitled “Structure” and “Business Overview” and pages 8 through 18 of the 2008 Annual Report.

Organizational structure

NXP B.V. was incorporated in The Netherlands as a Dutch private company with limited liability (besloten vennootschap) on December 21, 1990 as a wholly-owned subsidiary of Royal Philips Electronics N.V.  On September 29, 2006, we changed our name from Philips Semiconductors International B.V. to NXP B.V.  Our corporate seat is in Eindhoven, The Netherlands.  Our registered office is at High Tech Campus 60, 5656 AG, Eindhoven, The Netherlands, and our phone number is +31 40 2729999. Our registered agent in the United States is NXP Semiconductors USA, Inc., 1109 McKay Drive, CA 95131 San Jose, United States of America, phone number +1 408 4343000.

NXP B.V. is the parent company of NXP Semiconductors Group, which includes NXP B.V. and its consolidated subsidiaries.  A list of our significant subsidiaries, including name, country of incorporation or residence and proportion of ownership interest and voting power is provided on Exhibit 8 hereto, which is incorporated into this Item by reference.

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Property, plant and equipment

NXP owns and leases manufacturing facilities, research facilities, warehouses and office facilities in numerous countries over the world.

NXP has 13 production sites in 12 countries. NXP believes that its plants are well maintained and, in conjunction with its capital expenditures for new property, plant and equipment, are generally adequate to meet its needs for the foreseeable future. For the net book value of its property, plant and equipment and developments therein, reference is made to note 20 “Property, plant and equipment” on page 166 of the 2008 Annual Report, which is incorporated herein by reference.

The geographic allocation of assets as of December 31, as shown in the table below, is generally indicative of the location of manufacturing facilities:

The headquarters in Eindhoven are leased. The information as shown in note 31, entitled “Contractual obligations” on pages 183 and 184 of the 2008 Annual Report, partly related to the rental of buildings, is incorporated herein by reference.

For environmental issues affecting the Company’s properties, reference is made to “Loss contingencies” in note 24 to the financial statements on page 170 of the 2008 Annual Report, which is incorporated herein by reference.

Capital expenditures in progress are generally expected to be financed through internally generated cash flows. For a description of the geographic spread of revenues and capital expenditures, reference is made to note 5 “Information by segment and main countries” on page 139 of the 2008 Annual Report, which is incorporated herein by reference.

For a description of the Company’s principal acquisitions and divestitures, reference is made to note 7 on pages 147 through 149 of the 2008 Annual Report incorporated herein by reference.

Statements contained herein regarding competitive position are derived from internal data and studies, or from other sources management believes to be reliable.

Item 4A.       Unresolved Staff Comments

Not applicable.

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Item 5.                               Operating and financial review and prospects

A.  Operating Results / D. Trend Information

The following portions of the 2008 Annual Report are incorporated herein by reference:

·                  Page 19 (“Basis of Presentation”);

·                  Pages 20 and 21 (“Effect of purchase accounting”);

·                  Pages 22 and 23 (“Use of certain non-US GAAP financial measures”), except for the paragraphs on page 22 under the headings “Earnings before Interest, Tax and Amortization (EBITA)”, “Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)”, “Adjusted EBITA” and “Adjusted EBITDA” (and such headings are also not incorporated by reference);

·                  Pages 24 through 26 (“Management Summary”);

·                  The text on page 27 under the heading “Performance of the Group 2008 compared to 2007”);

·                  Pages 29 through 35, except for the graphical presentations of results contained therein;

·                  Pages 37 through 48, except for the graphical presentations of results contained therein;

·                  Pages 50 through 56;

·                  Pages 95, 97 and 98;

·                  Page 99.

A discussion of Critical accounting policies on pages 89 through 94 of the 2008 Annual Report is incorporated by reference herein.

B.  Liquidity and Capital Resources

The following portions of the 2008 Annual Report are incorporated herein by reference:

·                  Pages 59 through 64 (“Liquidity and Capital Resources”);

·                  Page 67, the partial paragraph at the beginning of page 68 and the two paragraphs of text under the headings “US Sarbanes-Oxley Act” and “NXP Business Code of Conduct”);

·                  The last section of text on page 68, the first risk on page 69 and the first risk on page 71 under the heading “Risks related to our business”;

·                  Pages 86 through 88 under the heading “Risks related to our capital structure”;

·                  Notes 35 and 36 to the Financial Statements on pages 191 through 194.

C.  Research and Development, Patents and Licenses, etc.

The information required by this item is provided on pages 14, 15, 31, 32, 46, 130, 141 and 152 of the 2008 Annual Report, each of which has been incorporated by reference herein.

E.  Off-Balance Sheet Arrangements

The following portions of the 2008 Annual Report are incorporated herein by reference:

·                  Pages 65 and 66;

·                  Notes 31 and 32 to the Financial Statements on pages 183 through 185.

F.  Tabular Disclosure of Contractual Obligations

The information required by this item is provided on page 65 and 66 of the 2008 Annual Report, which has been incorporated herein by reference.

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Item 6.                               Directors, senior management and employees

A. Directors and senior management

The information required by this Item is set forth on pages 100 through 104 of the 2008 Annual Report, which are incorporated herein by reference.

B. Compensation

The remuneration of the members of the Board of Management is determined by the Supervisory Board upon a recommendation of its Nominating and Compensation Committee. The total remuneration of members of the Board of Management include a variable part, which is determined annually by the Supervisory Board, taking into account the financial results and other factors. The remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders. Other than our independent Chairman, Sir Peter Bonfield, the members of the Supervisory Board do not receive any compensation for their service.

The aggregate remuneration paid in 2008 to, or for the benefit of, the members of the Board of Management was USD 18.9 million (2007: USD 4.5 million; 2006: USD 0.9 million).

When pension rights are granted to the member of the Board of Management, necessary payments (if insured) and all necessary provisions are made in accordance with the applicable accounting principles.

In 2008, the present members of the Board of Management were granted 98,041,400 stock options representing depository receipts in NXP’s parent company KASLION Acquisition B.V. at a weighted average exercise price of USD 1.90 (2007: 184,947,600 stock options were granted). No stock options were granted to the members of the Supervisory Board.

The registrant does not report to its shareholders, or otherwise make public, the information specified in this Item for individually named directors and officers.

C. Board practices

Members of the Board of Management and the Supervisory Board, other than its Chairman, are appointed and dismissed by the General Meeting of Shareholders and hold office until they are removed or replaced by the General Meeting of Shareholders. The Chairman of the Supervisory Board is appointed and dismissed jointly by KASLION Holding B.V. and Koninklijke Philips Electronics N.V. and holds office until being removed or replaced by these companies acting jointly. Members of the Management Team, other than members of the Board of Management, are appointed and dismissed by the Board of Management and hold office until they are removed or replaced by the Board of Management.

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Information on the members of the Operating Committee, the Audit Committee and the Nomination and Compensation Committee is provided on pages 103 and 104 of the 2008 Annual Report, which is incorporated herein by reference. The terms of reference under which the Supervisory Board and its Operating Committee, the Audit Committee and the Nomination and Compensation Committee operate are described on pages 105 through 108 of the 2008 Annual Report, which are incorporated herein by reference. No member of our Supervisory Board has a service contract with the Company or any subsidiary providing for benefits upon termination of employment.

D. Employees

Information required by this Item is set forth under the heading “Employment” on pages 57 and 58 of the 2008 Annual Report, which is incorporated herein by reference.

E. Share ownership

Information required by this Item is set forth on pages 107 and 146 of the 2008 Annual Report, which are incorporated herein by reference. Members of the Supervisory Board do not own (rights to) shares in NXP or its parent company KASLION. The aggregate (indirect) share ownership of the members of the Board of Management represents less than 1% of the outstanding ordinary shares in the Company.

For a discussion of the stock options and equity rights of NXP’s parent company KASLION, see note 33 “Shareholder’s equity” and note 34 “Share-based compensation” of “Notes to the Consolidated Financial Statements” on pages 185 through 191 of the 2008 Annual Report, which are incorporated herein by reference.

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Item 7.                               Major shareholders and related party transactions

A. Major shareholders

All of the Company’s issued and outstanding capital stock is held by KASLION Acquisition B.V. KASLION’s address is High Tech Campus 60, 5656 AG, Eindhoven, The Netherlands. On September 29, 2006 all of the Company’s issued and outstanding shares were acquired by KASLION from Royal Philips Electronics N.V.

The following table sets forth information regarding beneficial ownership of the equity securities of KASLION as of April 7, 2009 by each person who is known by us to beneficially own more than 5% of the equity securities of KASLION.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned. KASLION has only ordinary shares of its capital stock outstanding. Holders of ordinary shares are entitled to vote. Percentage ownership is based on 4,305,030,000 ordinary shares of KASLION outstanding, as of April 7, 2009.

(1) Includes shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account.

B. Related party transactions

The information required by this Item is provided in note 6 to the Financial Statements (“Related-party transactions”) on pages 145 through 147 of the 2008 Annual Report, incorporated herein by reference. As of December 31, 2008 there were no personal loans or guarantees outstanding to members of the Board of Management, the Management Team or the Supervisory Board.

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Item 8.                               Financial information

See Item 18 “Financial Statements”.

Item 9.                               The offer and listing

The Company’s Floating Rate Senior Secured Notes due 2013 (U.S. dollar-denominated), Floating Rate Senior Secured Notes due 2013 (euro-denominated); 77/8% Senior Secured Notes due 2014, 85/8% Senior Notes due 2015 and 91/2% Senior Notes due 2015, each of which is co-issued by NXP Funding LLC, the Company’s wholly-owned subsidiary, and guaranteed by certain wholly-owned subsidiaries of the Company, are listed on the Alternative Securities Market of the Irish Stock Exchange.

Item 10.                         Additional information

B. Articles of association

The information required by this section is incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form F-4, filed on April 23, 2007 (File No. 333-142287).

C. Material contracts

The information required by this Item is incorporated by reference to Exhibit 10 of the Company’s Registration Statement on Form F-4, filed on April 23, 2007 (File No. 333-142287) to the first three paragraphs on page 11 of the 2008 Annual Report under the heading “Mobile & Personal”, which is incorporated by reference herein, and to Exhibit 4(31) hereto.

D. Exchange controls

Cash dividends payable on ordinary shares of NXP B.V. and cash interest payments to holders of debt securities of NXP B.V. may be remitted from the Netherlands to nonresidents without legal restrictions imposed by the laws of The Netherlands, except that (i) such payments must be reported to the Dutch Central Bank for statistical purposes only and (ii) the transfer of funds to jurisdictions subject to general economic sanctions adopted in connection with policies of the United Nations, European Commission or similar measures imposed directly by the Government of The Netherlands may be restricted.

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E. Taxation

United States Taxation

This section describes the material United States federal income tax consequences to a United States holder (as defined below) of owning the notes. It applies to you only if you hold your notes as capital assets for tax purposes. This section does not apply to you if you are a member of a class of holders subject to special rules, such as:

·                  a dealer in securities or currencies,

·                  a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings,

·                  a bank,

·                  a life insurance company,

·                  a tax-exempt organization,

·                  a person that owns notes that are a hedge or that are hedged against interest rate or currency risks,

·                  a person liable for the alternative minimum tax,

·                  a person that owns notes as part of a straddle or conversion transaction for tax purposes,

·                  a person whose functional currency for tax purposes is not the U.S. dollar.

If you purchase or have purchased notes at a price other than the initial offering price, which for this purpose will equal the first price to the public (not including bond houses, brokers or similar person or organizations acting in the capacity of underwriters, placement agents or wholesalers) at which a substantial amount of the notes is sold for money, the rules regarding the taxation of amortizable bond premium or market discount may also apply to you. You should consult your tax advisor regarding this possibility.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis.

If a partnership holds the notes, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the notes should consult its tax advisor with regard to the United States federal income tax treatment of an investment in the notes.

Please consult your own tax advisor concerning the consequences of owning these notes in your particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.

You are a United States holder if you are a beneficial owner of a note and you are:

·                  a citizen or resident of the United States,

·                  a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia,

·                  an estate whose income is subject to United States federal income tax regardless of its source, or

·                  a trust if (1) a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or (2) it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

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Payments of Interest

You will be taxed on any interest on your note, whether payable in U.S. dollars or euro, as ordinary income at the time you receive the interest or when it accrues, depending on your method of accounting for tax purposes.

Interest paid by the Company on the notes is income from sources outside the United States subject to the rules regarding the foreign tax credit allowable to a United States holder. Under the foreign tax credit rules, interest paid or accrued in taxable years beginning before January 1, 2007, with certain exceptions, will be “passive” or “financial services” income, while interest paid or accrued in taxable years beginning after December 31, 2006 will, depending on your circumstances, be “passive” or “general” income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit. Special sourcing rules may apply to any holder that actually or constructively owns 10% or more of the voting power of shares of the Company and to certain other persons related to such holders.

Cash Basis Taxpayers.  If you are a taxpayer that uses the cash receipts and disbursements method of accounting for tax purposes and you receive an interest payment that is denominated in, or determined by reference to, euro, you must recognize income equal to the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars.

Accrual Basis Taxpayers.  If you are a taxpayer that uses an accrual method of accounting for tax purposes, you may determine the amount of income that you recognize with respect to an interest payment denominated in, or determined by reference to, euro by using one of two methods. Under the first method, you will determine the amount of income accrued based on the average exchange rate in effect during the interest accrual period or, with respect to an accrual period that spans two taxable years, that part of the period within the taxable year.

If you elect the second method, you would determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period, or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, under this second method, if you receive a payment of interest within five business days of the last day of your accrual period or taxable year, you may instead translate the interest accrued into U.S. dollars at the exchange rate in effect on the day that you actually receive the interest payment. If you elect the second method it will apply to all debt instruments that you hold at the beginning of the first taxable year to which the election applies and to all debt instruments that you subsequently acquire. You may not revoke this election without the consent of the Internal Revenue Service.

When you actually receive an interest payment, including a payment attributable to accrued but unpaid interest upon the sale or retirement of your note, denominated in, or determined by reference to, euro for which you accrued an amount of income, you will recognize ordinary income or loss measured by the difference, if any, between the exchange rate that you used to accrue interest income and the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars.

Purchase, Sale and Retirement of the Notes

Your tax basis in your note will generally be the U.S. dollar cost, as defined below.

If you purchase your note with euro, the U.S. dollar cost of your note will generally be the U.S. dollar value of the purchase price on the date of purchase. However, if you are a cash basis taxpayer, or an accrual basis taxpayer if you so elect, and your note is traded on an established securities market, as defined in the applicable Treasury Regulations, the U.S. dollar cost of your note will be the U.S. dollar value of the purchase price on the settlement date of your purchase.

You will generally recognize gain or loss on the sale or retirement of your note equal to the difference between the amount you realize on the sale or retirement and your tax basis in your note. Such gain or loss will generally be treated as United States source gain or loss. If your note is sold or retired for an amount in euro, the amount you realize will be the U.S. dollar value of such amount on the date the note is disposed of or retired, except that in the case of a note that is traded on an established securities market, as defined in the applicable Treasury regulations, a cash basis taxpayer, or an accrual basis taxpayer that so elects, will determine the amount realized based on the U.S. dollar value of the euro on the settlement date of the sale.

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You will recognize capital gain or loss when you sell or retire your note, except to the extent:

·                  attributable to accrued but unpaid interest, or

·                  attributable to changes in U.S. dollar/euro exchange rates as described below.

Capital gain of a noncorporate United States holder that is recognized in taxable years beginning before January 1, 2011 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year.

You must treat any portion of the gain or loss that you recognize on the sale or retirement of a note as ordinary income or loss to the extent attributable to changes in U.S. dollar/euro exchange rates. However, you take exchange gain or loss into account only to the extent of the total gain or loss you realize on the transaction.

Exchange of Amounts in Other Than U.S. Dollars

If you receive euro as interest on your note or on the sale or retirement of your note, your tax basis in the euro will equal its U.S. dollar value when the interest is received or at the time of the sale or retirement. If you purchase euro, you generally will have a tax basis equal to the U.S. dollar value of the euro on the date of your purchase. If you sell or dispose of euro, including if you use it to purchase notes or exchange it for U.S. dollars, any gain or loss recognized generally will be ordinary income or loss.

The Netherlands Taxation

The following summary of the Netherlands tax consequences is based on the current tax law and jurisprudence of the Netherlands as applicable to holders of Floating Rate Senior Secured Notes due 2013, Floating Rate Senior Secured Notes due 2013, 77/8% Senior Secured Notes due 2014, 85/8% Senior Notes due 2015 and / or 91/2% Senior Notes due 2015 (together “Note” or “Notes”). For informational purposes we note that a convention has been concluded between the United States of America and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes in income. The information given below is neither intended as tax advice nor purports to describe all of the tax considerations that may be relevant to a noteholder who has a substantial interest (‘aanmerkelijk belang’) in the Issuer. Noteholders are advised to consult their tax counsel with respect to the tax consequences of purchasing, holding and/or selling the Notes.

A)        All payments by the Issuer in respect of the Notes can be made without withholding or deduction for or on account of any taxes, duties or charges of any nature whatsoever that are or may be withheld or assessed by the Netherlands Tax Authorities or any political subdivision thereof or therein.

B)        A corporate noteholder, that derives income from a Note or that realizes a gain on the disposal, deemed disposal, exchange or redemption of the Note, will not be subject to any Netherlands taxes on such income or capital gains, unless:

(i)         the noteholder is, or is deemed to be a resident of the Netherlands; or

(ii)        the noteholder has (an interest in) an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands, to which enterprise or part of an enterprise the Note is attributable; or

(iii)       the holder has a substantial interest, as defined in Netherlands tax law, in the share capital of the Issuer and the substantial interest does not form part of the business assets of the holder. For the purposes of this clause (iii), a substantial interest is generally present if a corporation directly or indirectly, owns or has certain other rights over, shares constituting five per cent. or more of the Issuer’s aggregate issued share capital or, if the Issuer has several classes of shares, of the issued share capital of any class of shares or, if the Issuer has issued profit certificates, of profit certificates entitling him to at least five per cent of the annual profit or to at least five per cent of the liquidation proceeds.

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An individual noteholder, who derives or is deemed to derive income from a Note or who realizes a gain on the disposal, deemed disposal, exchange or redemption of the Note, will not be subject to any Netherlands taxes on such income or capital gains, unless the conditions as mentioned under (i) or (ii) above are met, or unless:

(iv)       the individual noteholder has elected to be taxed as a resident of the Netherlands; or

(v)        the individual noteholder is entitled to a share in the profits of an enterprise that has its place of management in the Netherlands, other than by way of securities or through an employment contract, and to which enterprise the Note is attributable; or

 (vi)     such income or gain ‘results from other activities performed in the Netherlands’ (‘resultaat uit overige werkzaamheden’) as defined in the Personal Income Tax Act 2001 (‘Wet Inkomstenbelasting 2001’). Such definition includes but is not limited to the case where the individual holder of a Note or a Note coupon or any of his spouse, his partner, a person deemed to be his partner, or other persons sharing such person’s house or household, or certain other of such person’s relatives has a substantial interest in the Issuer or any other corporate entity that legally or de facto, directly or indirectly, has the disposition of the proceeds of the Notes. For the purposes of this clause (vi), a substantial interest is generally present if such individual alone or together with his spouse or partner, as the case may be, directly or indirectly, owns, or has certain other rights over, shares constituting five per cent. or more of a company’s aggregate issued share capital or, if a company has several classes of shares, of the issued share capital of any class of shares or, if a company has issued profit certificates, of profit certificates entitling him to at least five per cent. of the annual profit or to at least five per cent of the liquidation proceeds.

C)                         No gift, estate or inheritance taxes will arise in the Netherlands in respect of the transfer or deemed transfer of a Note by way of a gift by, or on the death of, a noteholder who is not a resident or deemed resident of the Netherlands, provided that:

(i)         such Note is not attributable to an enterprise, owned by the donor or the deceased or in which the donor or the deceased has, at the time of the gift, or had, at the time of his death an interest and that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands; and

(ii)        such Note is not attributable to an enterprise that has its place of management in the Netherlands in which the donor or deceased is or was entitled to share in the profits, other than by way of securities or through an employment contract; and

(iii)       in the case of a gift of such Note by an individual holder who at the date of the gift was neither resident nor deemed to be resident in the Netherlands, such individual holder does not die within 180 days after the date of the gift while being resident or deemed to be resident in the Netherlands.

D)        There will be no registration tax, capital tax, transfer tax, customs duty, stamp duty, property transfer tax or any other similar tax or duty due in the Netherlands in respect of or in connection with the issue, transfer and/or delivery of the Notes or the execution, delivery and/or enforcement by legal proceedings of the relevant documents or the performance of Issuer’s obligations thereunder and under the Notes.

E)         No value added tax will be due in the Netherlands in respect of payments in consideration of the issue of the Notes, and/or in respect of payments of interest and principal on a Note, and/or in respect of the transfer of a Note, and/or in connection with the documents or in connection with the arrangements contemplated thereby, other than value added tax on the fees attributable to services which are not expressly exempt from value added tax, such as management, administrative, notarial and similar activities, safekeeping of the Notes and the handling and verifying of documents.

Additional remark to A)

We inform you that on June 7, 2005, the last necessary approval for the EU Savings Directive (“Directive”) was granted by the EU’s council of Economic and Finance Ministers. Therefore, the Directive has come into effect on July 1, 2005. The Directive requires the disclosure of information by paying agents in EU member states and certain other countries and territories. These paying agents are required to provide to the Tax Authorities of other EU member states details of payments of interest and other similar income paid to individual beneficial owners resident

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in that other EU member state. Austria, Belgium, Luxembourg and certain other countries and territories will instead of disclosure impose a withholding tax on such payments. [As from July 1, 2005 the withholding tax will amount to 15%. On July 1, 2008 and July 1, 2011, the percentages will be increased to 20% respectively 35%.

H. Documents on display

It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public reference room located at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The Company’s SEC filings are also publicly available through the SEC’s website at http://www.sec.gov.

Item 11.                         Quantitative and qualitative disclosure about market risk

The information required by this Item is provided on pages 68 through 85 and in note 36 to the Financial Statements (“Other financial instruments, derivatives and currency risk”) on pages 192 through 194 of the 2008 Annual Report, which are incorporated herein by reference.

Item 12.                         Description of securities other than equity securities

Not applicable.

Part II

Item 13.                         Defaults, dividend arrearages and delinquencies

None.

Item 14.                         Material modifications to the rights of security holders and use of proceeds

None.

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Item 15.                         Controls and procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Annual Report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group. Internal control over financial reporting includes maintaining records that, in reasonable detail, accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework has been used as a basis to evaluate the effectiveness of our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) for the Group.

Management has assessed the effectiveness of internal control over financial reporting as of 31 December 2008, and has concluded that such internal control over financial reporting is effective.

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

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Item 16A.                         Audit Committee Financial Expert

The Company does not have an Audit Committee financial expert as defined under the regulations of the US Securities and Exchange Commission serving on its Audit Committee. The information required by this Item is incorporated herein by reference to page 108 of the 2008 Annual Report under the heading “Audit Committee”.

Item 16B.                           Code of Ethics

The Company recognizes that its businesses have responsibilities within the communities in which they operate. The Company has a Financial Code of Ethics which applies to the CEO (the principal executive officer) and CFO (the principal financial and principal accounting officer), and to the heads of the Corporate Control, Corporate Treasury, Corporate Fiscal and Corporate Internal Audit departments of the Company. The Company has published its Financial Code of Ethics within the investor section of its website located at www.nxp.com/investor/governance. No changes have been made to the Code of Ethics since its adoption and no waivers have been granted therefrom to the officers mentioned above in 2008.

Item 16C.                           Principal Accountant Fees and Services

The Company has instituted a comprehensive auditor independence policy that regulates the relation between the Company and its external auditors and is available on the Company’s website (www.nxp.com/investor/governance). The policy includes rules for the pre-approval by the Audit Committee of all services to be provided by the external auditor. The policy also describes the prohibited services that may never be provided. Proposed services may be pre-approved at the beginning of the year by the Audit Committee (annual pre-approval) or may be pre-approved during the year by the Audit Committee in respect of a particular engagement (specific pre-approval). The annual pre-approval is based on a detailed, itemized list of services to be provided, designed to ensure that there is no management discretion in determining whether a service has been approved and to ensure the Audit Committee is informed of each service it is pre-approving. Unless pre-approval with respect to a specific service has been given at the beginning of the year, each proposed service requires specific pre-approval during the year. Any annually pre-approved services where the fee for the engagement is expected to exceed pre-approved cost levels or budgeted amounts will also require specific pre-approval. The term of any annual pre-approval is 12 months from the date of the pre-approval unless the Audit Committee states otherwise. During 2008, there were no services provided to the Company by the external auditors which were not pre-approved by the Audit Committee.

Audit Fees

The information required by this Item is incorporated by reference herein to pages 109 and 110 of the 2008 Annual Report.

Audit-Related Fees

The information required by this Item is incorporated by reference herein to pages 109 and 110 of the 2008 Annual Report.

Tax Fees

The information required by this Item is incorporated by reference herein to pages 109 and 110 of the 2008 Annual Report.

All Other Fees

The information required by this Item is incorporated by reference herein to pages 109 and 110 of the 2008 Annual Report.

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Item 16D.                      Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E.                        Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

Part III

Item 17.                               Financial statements

NXP is furnishing the Financial Statements pursuant to the instructions of Item 18 of Form 20-F.

Item 18.                               Financial statements

The following portions of the 2008 Annual Report as set forth on pages 112 through 205 are incorporated herein by reference:

“Combined and Consolidated statements of operations of the NXP Semiconductors Group”

“Consolidated balance sheets of the NXP Semiconductors Group”

“Combined and Consolidated statements of cash flows of the NXP Semiconductors Group”

“Combined and Consolidated statements of changes in business’ and shareholder’s equity of the NXP Semiconductors Group”

“Notes to the combined and consolidated financial statements of the NXP Semiconductors Group”

“Auditors’ Reports”

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Item 19.                         Exhibits

Index of exhibits

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* Pursuant to Exhibit Instruction 2(b)(i) of Form 20-F, this document has been omitted as an exhibit hereto. The registrant agrees to furnish a copy of this document to the Securities and Exchange Commission upon request.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

NXP B.V.
(Registrant)

Date: April 7, 2009

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Exhibit 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

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”);

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(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

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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

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                                  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;

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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

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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

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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.

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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;

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(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

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(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

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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

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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

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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