NXP Semiconductors Annual Report 2016

Plain-text annual report

Table of ContentsAs filed with the Securities and Exchange Commission on March 3, 2017 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 20-F ☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGEACT OF 1934OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934Date of event requiring this shell company report For the transition period from to Commission file number 001-34841 NXP Semiconductors N.V.(Exact name of Registrant as specified in its charter) The Netherlands(Jurisdiction of incorporation or organization)High Tech Campus 60, Eindhoven 5656 AG, the Netherlands(Address of principal executive offices)Jean Schreurs, SVP and Chief Corporate Counsel, High Tech Campus 60, 5656 AG, Eindhoven, the NetherlandsTelephone: +31 40 2728686 / E-mail: jean.schreurs@nxp.com(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Name of each exchange on which registeredCommon shares—par value euro (EUR) 0.20 per share The NASDAQ Global Select MarketSecurities registered or to be registered pursuant to Section 12(g) of the Act.None(Title of class)Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.Common shares—par value EUR 0.20 per share(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 AnnualReport. Class Outstanding at December 31, 2016Ordinary shares, par value EUR 0.20 per share 346,002,862 sharesIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ NoIf 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 theSecurities Exchange Act of 1934. ☐ Yes ☒ NoNote—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 1934from 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 1934during 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 filingrequirements for the past 90 days. ☒ Yes ☐ NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). ☒ Yes ☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issuedby the International Accounting Standards Board ☐ Other ☐If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected tofollow. Item 17 ☐ Item 18 ☐If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No Table of ContentsTABLE OF CONTENTS Page Introduction 1 Part I 2 Item 1. Identity of Directors, Senior Management and Advisers 2 Item 2. Offer Statistics and Expected Timetable 2 Item 3. Key Information 2 A. Selected Financial Data 4 B. Capitalization and Indebtedness 4 C. Reasons for the Offer and Use of Proceeds 4 D. Risk Factors Item 4. Information on the Company 18 A. History and Development of the Company 18 B. Business Overview 18 C. Organizational Structure 27 D. Property, Plant and Equipment 28 Item 4A. Unresolved Staff Comments 28 Item 5. Operating and Financial Review and Prospects 28 A. Operating Results 32 B. Liquidity and Capital Resources 37 C. Research and Development, Patents and Licenses, etc. 43 D. Trend Information 44 E. Off-Balance Sheet Arrangements 44 F. Tabular Disclosure of Contractual Obligations 45 G. Safe Harbor 45 Item 6. Directors, Senior Management and Employees 46 A. Directors and Senior Management 46 B. Compensation 50 C. Board Practices 56 D. Employees 58 E. Share Ownership 58 Item 7. Major Shareholders and Related Party Transactions 59 A. Major Shareholders 59 B. Related Party Transactions 59 C. Interests of Experts and Counsel 59 Item 8. Financial Information 60 A. Consolidated Statements and Other Financial Information 60 B. Significant Changes 60 Item 9. The Offer and Listing 61 A. Offer and Listing Details 61 B. Plan of Distribution 61 C. Markets 61 D. Selling Shareholders 61 E. Dilution 61 F. Expenses of the Issue 61 Table of Contents Page Item 10. Additional Information 61 A. Share Capital 61 B. Memorandum and Articles of Association 61 C. Material Contracts 61 D. Exchange Controls 63 E. Taxation 63 F. Dividends and Paying Agents 68 G. Statement by Experts 68 H. Documents on Display 68 I. Subsidiary Information 68 Item 11. Quantitative and Qualitative Disclosures About Market Risk 68 Item 12. Description of Securities Other than Equity Securities 69 Part II 70 Item 13. Defaults, Dividend Arrearages and Delinquencies 70 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 70 Item 15. Controls and Procedures 70 Item 16. A. Audit Committee Financial Expert 70 B. Code of Ethics 71 C. Principal Accountant Fees and Services 71 D. Exemptions from the Listing Standards for Audit Committees 71 E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 72 F. Change in Registrant’s Certifying Accountant 72 G. Corporate Governance 72 H. Mine Safety Disclosures 74 Part III 75 Item 17. Financial Statements 75 Item 18. Financial Statements 75 Item 19. Exhibits 75 GLOSSARY 80 Financial Statements F-1 Table of ContentsIntroductionThis Annual Report contains forward-looking statements that contain risks and uncertainties. Our actual results may differ significantly from futureresults as a result of factors such as those set forth in Part I. Item 3D. Risk Factors and Part I, Item 5G. Safe Harbor.The financial information included in this Annual Report is based on United States Generally Accepted Accounting Principles (U.S. GAAP), unlessotherwise indicated.In presenting and discussing our financial position, operating results and cash flows, management uses certain non-U.S. GAAP financial measures.These non-U.S. GAAP financial measures should not be viewed in isolation or as alternatives to the equivalent U.S. GAAP measures and should be used inconjunction with the most directly comparable U.S. GAAP measures. A discussion of non-U.S. GAAP measures included in this Annual Report and areconciliation of such measures to the most directly comparable U.S. GAAP measures are set forth under “Use of Certain Non-U.S. GAAP FinancialMeasures” contained in this report under Part I, Item 5A. Operating Results.Unless otherwise required, all references herein to “we”, “our”, “us”, “NXP” and the “Company” are to NXP Semiconductors N.V. and its consolidatedsubsidiaries.A glossary of abbreviations and technical terms used in this Annual Report is set forth on page 80. 1Table of ContentsPART I Item 1.Identity of Directors, Senior Management and AdvisersNot applicable. Item 2.Offer Statistics and Expected TimetableNot applicable. Item 3.Key InformationOn October 27, 2016, NXP entered into a purchase agreement (the “Purchase Agreement”) with Qualcomm River Holdings B.V. (“Buyer”), a wholly-owned, indirect subsidiary of Qualcomm Incorporated. Pursuant to the Purchase Agreement, Buyer commenced a tender offer to acquire all of the issued andoutstanding common shares of NXP for $110 per share in cash, for estimated total cash consideration of $38 billion. The tender offer is not subject to anyfinancing condition. An Extraordinary General Meeting of NXP’s shareholders was convened on January 27, 2017, in connection with the offer where theshareholders of NXP approved all resolutions brought before them, with 95% of the votes cast in favor of each such resolution. In light of the foregoing, thetender offer is now conditioned on the tender of 80% of the outstanding shares of NXP. Buyer, with NXP’s prior written consent (not to be unreasonablywithheld, conditioned or delayed), may reduce the required threshold to a percentage not less than 70% of the outstanding shares. Pending the receipt ofcertain regulatory approvals, as well as satisfaction of other customary closing conditions, the proposed transaction is expected to close by the end ofcalendar 2017.The Purchase Agreement contains certain termination rights for NXP and Buyer. If the Purchase Agreement is terminated under certain circumstances,including termination by NXP to enter into a superior proposal for an alternative acquisition transaction or a termination following a change ofrecommendation by the NXP Board, NXP will be obligated to pay to Buyer a termination compensation equal to $1.25 billion in cash. If the PurchaseAgreement is terminated under certain circumstances, including circumstances relating to the failure to obtain antitrust approvals or failure to complete in allmaterial respects certain internal reorganization steps and related dispositions with respect to NXP, Buyer will be obligated to pay to NXP a terminationcompensation equal to $2 billion in cash.On June 14, 2016, NXP announced an agreement to divest its Standard Products (“SP”) business to a consortium of financial investors consistingof Beijing JianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD (“Wise Road Capital”). On February 6, 2017 we divested SP,receiving $2.75 billion in cash proceeds.NXP B.V. and NXP Funding LLC, subsidiaries of NXP, delivered notice on February 7, 2017 that it will pre-pay (i) all its outstanding floating-rate termloan due March 2017 (“Term Loan E”) in an aggregate principal amount of $388 million, (ii) all its outstanding floating-rate term loan due January 2020(“Term Loan D”) in an aggregate principal amount of $387 million and (iii) all its outstanding floating-rate term loan due December 2020 (“Term Loan F”) inan aggregate principal amount of $1,436 million, in each case, together with accrued interest and applicable fees. The funds for these pre-payments will comefrom the proceeds of the previously announced completion of the divestiture of the Standard Products business of NXP.Additionally, on February 7, 2017, NXP B.V., together with NXP Funding LLC, delivered notice to holders of its 5.75% Senior Notes due 2021 (the“Notes”) that it will redeem on March 9, 2017, $500 million of the outstanding aggregate principal amount of these Notes, which represents all of theoutstanding aggregate principal amount of the Notes, as permitted under Article 3 of the indenture dated February 14, 2013 and paragraph 5 of the Notes. Thefunds for this redemption will come from available surplus cash.A. Selected Financial DataThe following table presents a summary of our selected historical consolidated financial data. We prepare our financial statements in accordance withU.S. GAAP.The results of operations for prior years are not necessarily indicative of the results to be expected for any future period.On December 7, 2015, we acquired Freescale Semiconductor, Ltd. (“Freescale”) for a total consideration of $11.6 billion (the “Merger”). The results oftheir operations and the estimated fair value of the assets acquired and liabilities assumed in the business combination are included in our financialstatements from the date of acquisition forward. 2Table of ContentsThe selected historical consolidated financial data should be read in conjunction with the discussion under Part I, Item 5A. Operating Results and theConsolidated Financial Statements and the accompanying notes included elsewhere in this Annual Report. As of and for the years ended December 31, ($ in millions unless otherwise stated) 2016 2015 2014 2013 2012 Consolidated Statements of Operations: Revenue 9,498 6,101 5,647 4,815 4,358 Gross profit(1) 4,069 2,787 2,640 2,177 1,988 Total operating expenses(2) (4,228) (2,035) (1,601) (1,535) (1,605) Other income (expense)(3) 9 1,263 10 9 29 Operating income (loss) (150) 2,015 1,049 651 412 Financial income (expense) (453) (529) (410) (274) (437) Income (loss) from continuing operations attributable to stockholders 200 1,526 539 348 (116) Income (loss) from discontinued operations attributable to stockholders — — — — 1 Net income (loss) attributable to stockholders 200 1,526 539 348 (115) Per share data: Basic earnings per common share attributable to stockholders in $ - Income (loss) from continuing operations 0.59 6.36 2.27 1.40 (0.46) - Income (loss) from discontinued operations — — — — — - Net income (loss) 0.59 6.36 2.27 1.40 (0.46) Diluted earnings per common share attributable to stockholders in $ - Income (loss) from continuing operations 0.58 6.10 2.17 1.36 (0.46) - Income (loss) from discontinued operations — — — — — - Net income (loss) 0.58 6.10 2.17 1.36 (0.46) Weighted average number of shares of common stock outstanding during the year (in thousands) • Basic 338,477 239,764 237,954 248,526 248,064 • Diluted(4) 347,607 250,116 248,609 255,050 248,064 Consolidated balance sheet data(5): Cash and cash equivalents 1,894 1,614 1,185 670 617 Total assets 24,898 26,354 6,850 6,402 6,393 Net assets 11,156 11,803 801 1,546 1,284 Working capital(6) 3,386 2,820 1,340 939 765 Total debt(7), (8) 9,187 9,212 3,956 3,274 3,446 Total stockholders’ equity 10,935 11,515 538 1,301 1,049 Common stock 71 68 51 51 51 Other operating data: Capital expenditures (389) (341) (329) (215) (251) Depreciation and amortization(9) 2,205 517 405 514 533 Consolidated statements of cash flows data: Net cash provided by (used for): Operating activities 2,303 1,330 1,468 891 722 Investing activities (627) (430) (387) (240) (243) Financing activities (1,392) (449) (554) (598) (574) Net cash provided by (used for) continuing operations 284 451 527 53 (95) Net cash provided by (used for) discontinued operations — — — — (45) (1)Gross profit in 2016 includes a charge of $448 million (2015: $149 million), resulting from the purchase accounting effect on the inventory acquiredfrom Freescale.(2)Total operating expenses in 2016 include charges related to the acquisition of Freescale as follows - $1,430 million for the amortization of acquisition-related intangibles, which includes an impairment charge of $89 million relative to In-process research and development (IPR&D) that was acquiredfrom Freescale, and $53 million of merger and integration related costs. In 2015, total operating expenses include charges related to the acquisition ofFreescale as follows - $226 million in restructuring charges, $105 million for the amortization of acquisition-related intangibles, $49 million of stockbased compensation charges related to employees terminated as a result of the Merger and $42 million of merger related costs.(3)Other income (expense) in 2015 includes the recognition of the gains from the sale of our Bipolar business on November 9, 2015 and the sale of our RFPower business on December 7, 2015. See the section on Other Material Transactions in Part I, Item 4, B, Business Overview.(4)Due to our net loss from continuing operations attributable to stockholders in 2012, all potentially dilutive securities have been excluded from thecalculation of diluted earnings per common share because their effect would be anti-dilutive.(5)Consolidated balance sheet data in 2016 and 2015 includes the impact of purchase accounting on the assets acquired and liabilities assumed inconnection with our acquisition of Freescale.(6)Working capital is calculated as current assets less current liabilities (excluding short-term debt).(7)On December 7, 2015, in connection with the Merger, NXP entered into a $2.7 billion secured term loan (“Term Loan B”). Proceeds from among othersthe Term Loan B were used to (i) pay the cash consideration in connection with the Merger, (ii) effect the repayment of certain amounts underFreescale’s outstanding credit facility and (iii) pay certain transaction costs. 3Table of Contents(8)As adjusted for our cash and cash equivalents our net debt was calculated as follows: ($ in millions) 2016 2015 2014 2013 2012 Long-term debt 8,766 8,656 3,936 3,234 3,141 Short-term debt 421 556 20 40 305 Total debt 9,187 9,212 3,956 3,274 3,446 Less: cash and cash equivalents (1,894) (1,614) (1,185) (670) (617) Net debt 7,293 7,598 2,771 2,604 2,829 Net debt is a non-GAAP financial measure. See “Use of Certain Non-GAAP Financial Measures” under Part I, 5A. Operating Results.(9)Depreciation and amortization includes the effect of purchase accounting related to acquisitions. The effect of purchase accounting in depreciation andamortization was $1,782 million (which includes an impairment charge of $89 million relative to IPR&D that was acquired from Freescale) in 2016,$252 million in 2015, $164 million in 2014, $246 million in 2013 and $273 million in 2012.As used in this Annual Report, “euro”, or “€” means the single unified currency of the European Monetary Union. “U.S. dollar”, “USD”, “U.S. $” or “$”means the lawful currency of the United States of America. As used in this Annual Report, the term “noon buying rate” refers to the exchange rate for euro,expressed in U.S. dollars per euro, as announced by the Federal Reserve Bank of New York for customs purposes as the rate in the city of New York for cabletransfers in foreign currencies.The table below shows the average noon buying rates for U.S. dollars per euro for the five years ended December 31, 2016. The averages set forth in thetable below have been computed using the noon buying rate on the next to last business day of each fiscal month during the periods indicated. Year ended December 31, 2016 2015 2014 2013 2012 Average $ per € 1.1065 1.1150 1.3297 1.3281 1.2859 The following table shows the high and low noon buying rates for U.S. dollars per euro for each of the six months in the six-month period endedFebruary 10, 2016: Month High Low ($ per €) 2016 August 1.1334 1.1078 September 1.1271 1.1158 October 1.1212 1.0866 November 1.1121 1.0560 December 1.0758 1.0375 2017 January 1.0794 1.0416 On February 10, 2017, the noon buying rate was $1.0650 per €1.00.Fluctuations in the value of the euro relative to the U.S. dollar have had a significant effect on the translation into U.S. dollar of our euro-denominatedassets, liabilities, revenue and expenses, and may continue to do so in the future. For further information on the impact of fluctuations in exchange rates onour operations, see the “Fluctuations in Foreign Rates May Have An Adverse Effect On Our Financial Results” section in Part I, Item 3D. Risk Factors andthe “Foreign Currency Risks” section in Part I, Item 11. Quantitative and Qualitative Disclosures About Market Risk.B. Capitalization and IndebtednessNot applicable.C. Reasons for the Offer and Use of ProceedsNot applicable.D. Risk FactorsThe following section provides an overview of the risks to which our business is exposed. You should carefully consider the risk factors describedbelow and all other information contained in this Annual Report, including the Consolidated Financial Statements and related notes. The occurrence of therisks described below could have a material adverse impact on our business, financial condition or results of operations. Various statements in this AnnualReport, including the following risk factors, contain forward-looking statements. Please also refer to Part I, Item 5G. Safe Harbor, contained elsewhere inthis Annual Report. 4Table of ContentsRisks related to our businessThere are risks and uncertainties associated with the pending offer by Qualcomm River Holdings B.V. (“Buyer”), an indirect, wholly ownedsubsidiary of QUALCOMM Incorporated, to purchase all of NXP’s outstanding common shares.As described elsewhere in this Annual Report, on October 27, 2016, Buyer and NXP entered into a definitive agreement (the “Purchase Agreement”)under which Buyer will, subject to the satisfaction or waiver of the conditions in the Purchase Agreement, acquire NXP. Pursuant to the Purchase Agreement,Buyer has commenced a tender offer (the “Offer”) to acquire all of the issued and outstanding common shares of NXP for $110.00 per share in cash. There area number of risks and uncertainties relating to this transaction, including the following: • disruptions from the announcement of the proposed transaction, whether completed or not, may harm our relationships with our employees,customers, distributors, suppliers or other business partners or negatively affect our operating results and business generally; • various conditions to the closing of the transaction may not be satisfied or waived; • 80% of NXP’s outstanding shares (which may be reduced to 70% by the Buyer (with NXP’s prior written consent (not to be unreasonablywithheld, conditioned or delayed))) must be tendered in the Offer as a closing condition to the transaction; • the occurrence of any event, change or other circumstances that could give rise to the termination of the Purchase Agreement, which, amongother things, may cause our share price to decline to the extent that the current price of our common shares reflects an assumption that thetransaction will be completed; • the failure to complete the transaction may result in negative publicity and a negative impression of us in the investment community; • we may be subject to legal proceedings related to the transaction contemplated by the Purchase Agreement; • failure to obtain all regulatory approvals related to the transaction, may delay the closing or result in the imposition of conditions, limitations orrestrictions that could, under certain circumstances, cause Buyer to abandon the transaction; • the Purchase Agreement may be terminated in circumstances that would require us to pay Buyer termination compensation in the amount of$1.25 billion; • developments beyond our control, including but not limited to changes in domestic or global economic conditions that may affect the timing orsuccess of the transaction; • the attention of our employees and management may be diverted due to activities related to the transaction; • our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles andrelationships with us following the completion of the transaction may be adversely affected; and • the Purchase Agreement restricts us from engaging in certain actions without Buyer’s approval, which could prevent us from pursuing certainbusiness opportunities outside the ordinary course of business that arise prior to the closing of the transaction.The semiconductor industry is highly cyclical.Historically, the relationship between supply and demand in the semiconductor industry has caused a high degree of cyclicality in the semiconductormarket. Semiconductor supply is partly driven by manufacturing capacity, which in the past has demonstrated alternating periods of substantial capacityadditions and periods in which no or limited capacity was added. As a general matter, semiconductor companies are more likely to add capacity in periodswhen current or expected future demand is strong and margins are, or are expected to be, high. Investments in new capacity can result in overcapacity, whichcan lead to a reduction in prices and margins. In response, companies typically limit further capacity additions, eventually causing the market to be relativelyundersupplied. In addition, demand for semiconductors varies, which can exacerbate the effect of supply fluctuations. As a result of this cyclicality, thesemiconductor industry has in the past experienced significant downturns, such as in 1997/1998, 2001/2002 and in 2008/2009, often in connection with, orin anticipation of, maturing life cycles of semiconductor companies’ products and declines in general economic conditions. These downturns have beencharacterized by diminishing demand for end-user products, high inventory levels, under-utilization of manufacturing capacity and accelerated erosion ofaverage selling prices. The foregoing risks have historically had, and may continue to have, a material adverse effect on our business, financial condition andresults of operations.Significantly increased volatility and instability and unfavorable economic conditions may adversely affect our business.In 2008 and 2009, Europe, the United States and international markets experienced increased volatility and instability. In 2015, volatility andinstability in financial markets continued following renewed investor concerns related to the economic situation in parts of the world, a decline in the growthrate of the Chinese economy, increased hostilities in the Middle East, and other world events. These, or other events, could further adversely affect theeconomies of the European Union, the United States and those of other countries and may exacerbate the cyclicality of our business. Among other factors, weface risks attendant to declines in general economic conditions, changes in demand for end-user products and changes in interest rates.Despite indications of recovery and aggressive measures taken by governments and central banks, there is a significant risk that the global economycould fall into recession again. If economic conditions remain uncertain or deteriorate, our business, financial condition and results of operations could bematerially adversely affected. 5Table of ContentsAs a consequence of the significantly increased volatility and instability, it is difficult for us, our customers and suppliers to forecast demand trends.We may be unable to accurately predict the extent or duration of cycles or their effect on our financial condition or result of operations and can give noassurance as to the timing, extent or duration of the current or future business cycles. A recurrent decline in demand or the failure of demand to return to priorlevels could place pressure on our results of operations. The timing and extent of any changes to currently prevailing market conditions is uncertain andsupply and demand may be unbalanced at any time.The semiconductor industry is highly competitive. If we fail to introduce new technologies and products in a timely manner, this could adverselyaffect our business.The semiconductor industry is highly competitive and characterized by constant and rapid technological change, short product lifecycles, significantprice erosion and evolving standards. Accordingly, the success of our business depends to a significant extent on our ability to develop new technologiesand products that are ultimately successful in the market. The costs related to the research and development necessary to develop new technologies andproducts are significant and any reduction of our research and development budget could harm our competitiveness. Meeting evolving industry requirementsand introducing new products to the market in a timely manner and at prices that are acceptable to our customers are significant factors in determining ourcompetitiveness and success. Commitments to develop new products must be made well in advance of any resulting sales, and technologies and standardsmay change during development, potentially rendering our products outdated or uncompetitive before their introduction. If we are unable to successfullydevelop new products, our revenue may decline substantially. Moreover, some of our competitors are well-established entities, are larger than us and havegreater resources than we do. If these competitors increase the resources they devote to developing and marketing their products, we may not be able tocompete effectively. Any consolidation among our competitors could enhance their product offerings and financial resources, further strengthening theircompetitive position. In addition, some of our competitors operate in narrow business areas relative to us, allowing them to concentrate their research anddevelopment efforts directly on products and services for those areas, which may give them a competitive advantage. As a result of these competitivepressures, we may face declining sales volumes or lower prevailing prices for our products, and we may not be able to reduce our total costs in line with thisdeclining revenue. If any of these risks materialize, they could have a material adverse effect on our business, financial condition and results of operations.In many of the market segments in which we compete, we depend on winning selection processes, and failure to be selected could adversely affect ourbusiness in those market segments.One of our business strategies is to participate in and win competitive bid selection processes to develop products for use in our customers’ equipmentand products. These selection processes can be lengthy and require us to incur significant design and development expenditures, with no guarantee ofwinning a contract or generating revenue. Failure to win new design projects and delays in developing new products with anticipated technological advancesor in commencing volume shipments of these products may have an adverse effect on our business. This risk is particularly pronounced in markets wherethere are only a few potential customers and in the automotive market, where, due to the longer design cycles involved, failure to win a design-in couldprevent access to a customer for several years. Our failure to win a sufficient number of these bids could result in reduced revenue and hurt our competitiveposition in future selection processes because we may not be perceived as being a technology or industry leader, each of which could have a material adverseeffect on our business, financial condition and results of operations.The demand for our products depends to a significant degree on the demand for our customers’ end products.The vast majority of our revenue is derived from sales to manufacturers in the automotive, identification, wireless infrastructure, lighting, industrial,mobile, consumer and computing markets. Demand in these markets fluctuates significantly, driven by consumer spending, consumer preferences, thedevelopment of new technologies and prevailing economic conditions. In addition, the specific products in which our semiconductors are incorporated maynot be successful, or may experience price erosion or other competitive factors that affect the price manufacturers are willing to pay us. Such customers havein the past, and may in the future, vary order levels significantly from period to period, request postponements to scheduled delivery dates, modify theirorders or reduce lead times. This is particularly common during periods of low demand. This can make managing our business difficult, as it limits thepredictability of future revenue. It can also affect the accuracy of our financial forecasts. Furthermore, developing industry trends, including customers’ use ofoutsourcing and new and revised supply chain models, may affect our revenue, costs and working capital requirements. Additionally, a significant portion ofour products is made to order.If customers do not purchase products made specifically for them, we may not be able to resell such products to other customers or may not be able torequire the customers who have ordered these products to pay a cancellation fee. The foregoing risks could have a material adverse effect on our business,financial condition and results of operations.The semiconductor industry is characterized by continued price erosion, especially after a product has been on the market.One of the results of the rapid innovation in the semiconductor industry is that pricing pressure, especially on products containing older technology,can be intense. Product life cycles are relatively short, and as a result, products tend to be replaced by more technologically advanced substitutes on a regularbasis. 6Table of ContentsIn turn, demand for older technology falls, causing the price at which such products can be sold to drop, in some cases precipitously. In order tocontinue profitably supplying these products, we must reduce our production costs in line with the lower revenue we can expect to generate per unit. Usually,this must be accomplished through improvements in process technology and production efficiencies. If we cannot advance our process technologies orimprove our efficiencies to a degree sufficient to maintain required margins, we will no longer be able to make a profit from the sale of these products.Moreover, we may not be able to cease production of such products, either due to contractual obligations or for customer relationship reasons, and as a resultmay be required to bear a loss on such products. We cannot guarantee that competition in our core product markets will not lead to price erosion, lowerrevenue or lower margins in the future. Should reductions in our manufacturing costs fail to keep pace with reductions in market prices for the products wesell, this could have a material adverse effect on our business, financial condition and results of operations.Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of ourintangible assets.Goodwill and other identifiable intangible assets are recorded at fair value on the date of an acquisition. As a result of our acquisition of Freescale, werecognized goodwill of $7.4 billion and intangible assets of $8.5 billion. We review our goodwill and other intangible assets balance for impairment uponany indication of a potential impairment, and in the case of goodwill, at a minimum of once a year. Impairment may result from, among other things, asustained decrease in share price, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, includingchanges that restrict the activities of or affect the products and services we sell, challenges to the validity of certain registered intellectual property, reducedsales of certain products incorporating registered intellectual property and a variety of other factors. The amount of any quantified impairment must beexpensed immediately as a charge to results of operations. Depending on future circumstances, it is possible that we may never realize the full value of ourintangible assets. Any future determination of impairment of goodwill or other identifiable intangible assets could have a material adverse effect on ourfinancial position, results of operations and stockholders’ equity.As our business is global, we need to comply with laws and regulations in countries across the world and are exposed to international business risksthat could adversely affect our business.We operate globally, with manufacturing, assembly and testing facilities in several continents, and we market our products globally.As a result, we are subject to environmental, labor and health and safety laws and regulations in each jurisdiction in which we operate. We are alsorequired to obtain environmental permits and other authorizations or licenses from governmental authorities for certain of our operations and have to protectour intellectual property worldwide. In the jurisdictions where we operate, we need to comply with differing standards and varying practices of regulatory,tax, judicial and administrative bodies.In addition, the business environment is also subject to many economic and political uncertainties, including the following international businessrisks: • negative economic developments in economies around the world and the instability of governments and international trade arrangements, suchas the expected withdrawal of the United Kingdom from the European Union, the sovereign debt crisis in certain European countries andpotential increase of barriers to international trade; • social and political instability in a number of countries around the world, including continued hostilities and civil unrest in the Middle East. Theinstability may have a negative effect on our business, financial condition and operations via our customers and volatility in energy prices andthe financial markets; • potential terrorist attacks; • epidemics and pandemics, which may adversely affect our workforce, as well as our local suppliers and customers in particular in Asia; • adverse changes in governmental policies, especially those affecting trade and investment; • our customers or other groups of stakeholders might impose requirements that are more stringent than the laws in the countries in which we areactive; • volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, in particular in Greater China;and • threats that our operations or property could be subject to nationalization and expropriation.No assurance can be given that we have been or will be at all times in complete compliance with the laws and regulations to which we are subject orthat we have obtained or will obtain the permits and other authorizations or licenses that we need. If we violate or fail to comply with laws, regulations,permits and other authorizations or licenses, we could be fined or otherwise sanctioned by regulators. In this case, or if any of the international business riskswere to materialize or become worse, they could have a material adverse effect on our business, financial condition and results of operations.In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for publiccompanies, further increasing legal and financial compliance costs. These laws, regulations and standards are subject to varying interpretations, in manycases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory andgoverning bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure. 7Table of ContentsInterruptions in our information technology systems could adversely affect our business.We rely on the efficient and uninterrupted operation of complex information technology applications, systems and networks to operate our business.The reliability and security of our information technology infrastructure and software, and our ability to expand and continually update technologies inresponse to our changing needs is critical to our business. Any significant interruption in our business applications, systems or networks, including but notlimited to new system implementations, computer viruses, cyberattacks, security breaches, facility issues or energy blackouts could have a material adverseimpact on our business, financial condition and results of operations.Our computer systems and networks are subject to attempted security breaches and other cybersecurity incidents, which, if successful, could impactour business.We have, from time to time, experienced attempted cyber-attacks of varying degrees to obtain access to our computer systems and networks. As of thedate of this Annual Report, no such attacks have succeeded in obtaining access to our critical systems. However, such attacks may be successful in the future.Cyber-attacks could result in the misappropriation of our proprietary information and technology, the compromise of personal and confidential informationof our employees, customers or suppliers or interrupt our business. In the current environment, there are numerous and evolving risks to cybersecurity andprivacy, including criminal hackers, state-sponsored intrusions, industrial espionage, employee malfeasance, and human or technological error. Computerhackers and others routinely attempt to breach the security of technology products, services, and systems, and those of customers, suppliers, and some ofthose attempts may be successful. Such breaches could result in, for example, unauthorized access to, disclosure, modification, misuse, loss, or destruction ofour, our customer, or other third party data or systems, theft of sensitive or confidential data including personal information and intellectual property, systemdisruptions, and denial of service. In the event of such breaches, we, our customers or other third parties could be exposed to potential liability, litigation, andregulatory action, as well as the loss of existing or potential customers, damage to our reputation, and other financial loss. In addition, the cost andoperational consequences of responding to breaches and implementing remediation measures could be significant. As these threats continue to develop andgrow, we have been adapting the security measures and we continue to increase the amount we allocate to implement, maintain and/or update securitysystems to protect data and infrastructure. As a global enterprise, we could also be impacted by existing and proposed laws and regulations, as well asgovernment policies and practices related to cybersecurity, privacy and data protection. Additionally, cyber-attacks or other catastrophic events resulting indisruptions to or failures in power, information technology, communication systems or other critical infrastructure could result in interruptions or delays tous, our customers, or other third party operations or services, financial loss, potential liability, and damage our reputation and affect our relationships with ourcustomers and suppliers.In difficult market conditions, our high fixed costs combined with low revenue may negatively affect our results of operations.The semiconductor industry is characterized by high fixed costs and, notwithstanding our utilization of third-party manufacturing capacity, most ofour production requirements are met by our own manufacturing facilities. In less favorable industry environments, like we faced in the second half in 2011,we are generally faced with a decline in the utilization rates of our manufacturing facilities due to decreases in demand for our products. During such periods,our fabrication plants could operate at lower loading level, while the fixed costs associated with the full capacity continue to be incurred, resulting in lowergross profit.The semiconductor industry is capital intensive and if we are unable to invest the necessary capital to operate and grow our business, we may notremain competitive.To remain competitive, we must constantly improve our facilities and process technologies and carry out extensive research and development, each ofwhich requires investment of significant amounts of capital. This risk is magnified by the indebtedness we currently have, since we are required to use aportion of our cash flow to service that debt. If we are unable to generate sufficient cash flow or raise sufficient capital to meet both our debt service andcapital investment requirements, or if we are unable to raise required capital on favorable terms when needed, this could have a material adverse effect on ourbusiness, financial condition and results of operations.We rely to a significant extent on proprietary intellectual property. We may not be able to protect this intellectual property against improper use byour competitors or others.Our success and future revenue growth depends, in part, on our ability to protect our proprietary technology, our products, our proprietary designs andfabrication processes, and other intellectual property against misappropriation by others. We primarily rely on patent, copyright, trademark and trade secretlaws, as well as nondisclosure agreements and other methods, to protect our intellectual property. We may have difficulty obtaining patents and otherintellectual property rights to protect our proprietary products, technology and intellectual property, and the patents and other intellectual property rights wereceive may be insufficient to provide us with meaningful protection or commercial advantage. We may not be able to obtain patent protection or secureother intellectual property rights in all the countries in which we operate, and under the laws of such countries, patents and other intellectual property rightsmay be or become unavailable or limited in scope. Even if new patents are issued, the claims allowed may not be sufficiently broad to effectively protect ourproprietary technology, processes and other intellectual property. In addition, any of our existing patents, and any future patents issued to us may bechallenged, invalidated or circumvented. The protection offered by intellectual property rights may be inadequate or weakened for reasons or circumstancesthat are out of our control. Further, our proprietary technology, designs and 8Table of Contentsprocesses and other intellectual property may be vulnerable to disclosure or misappropriation by employees, contractors and other persons. It is possible thatcompetitors or other unauthorized third parties may obtain, copy, use or disclose our proprietary technologies, our products, designs, processes and otherintellectual property despite our efforts to protect our intellectual property. While we hold a significant number of patents, there can be no assurances thatadditional patents will be issued or that any rights granted under our patents will provide meaningful protection against misappropriation of our intellectualproperty. Our competitors may also be able to develop similar technology independently or design around our patents. We may not have foreign patents orpending applications corresponding to all of our primary patents and applications. Even if foreign patents are granted, effective enforcement in foreigncountries may not be available. In particular, intellectual property rights are difficult to enforce in some countries, since the application and enforcement ofthe laws governing such rights may not have reached the same level as compared to other jurisdictions where we operate, such as the United States, Germanyand the Netherlands. Consequently, operating in some countries may subject us to an increased risk that unauthorized parties may attempt to copy orotherwise use our intellectual property or the intellectual property of our suppliers or other parties with whom we engage. There is no assurance that we willbe able to protect our intellectual property rights or have adequate legal recourse in the event that we seek legal or judicial enforcement of our intellectualproperty rights under the laws of such countries. Any inability on our part to adequately protect our intellectual property may have a material adverse effecton our business, financial condition and results of operations.We may become party to intellectual property claims or litigation that could cause us to incur substantial costs, pay substantial damages or prohibitus from selling our products.We have from time to time received, and may in the future receive, communications alleging possible infringement of patents and other intellectualproperty rights of others. Further, we may become involved in costly litigation brought against us regarding patents, copyrights, trademarks, trade secrets orother intellectual property rights. If any such claims are asserted against us, we may seek to obtain a license under the third party’s intellectual propertyrights. We cannot assure you that we will be able to obtain any or all of the necessary licenses on satisfactory terms, if at all. In the event that we cannotobtain or take the view that we don’t need a license, these parties may file lawsuits against us seeking damages (and potentially treble damages in the UnitedStates) or an injunction against the sale of our products that incorporate allegedly infringed intellectual property or against the operation of our business aspresently conducted. Such lawsuits, if successful, could result in an increase in the costs of selling certain of our products, our having to partially orcompletely redesign our products or stop the sale of some of our products and could cause damage to our reputation. Any litigation could require significantfinancial and management resources regardless of the merits or outcome, and we cannot assure you that we would prevail in any litigation or that ourintellectual property rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged. The award of damages, includingmaterial royalty payments, or the entry of an injunction against the manufacture and sale of some or all of our products, could affect our ability to compete orhave a material adverse effect on our business, financial condition and results of operations.We rely on strategic partnerships, joint ventures and alliances for manufacturing and research and development. However, we often do not controlthese partnerships and joint ventures, and actions taken by any of our partners or the termination of these partnerships or joint ventures could adverselyaffect our business.As part of our strategy, we have entered into a number of long-term strategic partnerships with other leading industry participants. For example, wehave entered into a joint venture with Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) called Systems on Silicon ManufacturingCompany Pte. Ltd. (“SSMC”). We have also established Advanced Semiconductor Manufacturing Corporation Limited (“ASMC”) together with a number ofChinese partners. Furthermore, together with Advanced Semiconductor Engineering Inc. (“ASE”), we established the assembly and test joint venture ASENSemiconductors Co. Ltd. (“ASEN”). In 2015, we established WeEn Semiconductors, a Bipolar joint venture in China with JianGuang Asset Management Co,Ltd. See Part I, Item 4B.- Business Overview, “Other Significant Transactions”.If any of our strategic partners in industry groups or in any of the other alliances we engage with were to encounter financial difficulties or change theirbusiness strategies, they may no longer be able or willing to participate in these groups or alliances, which could have a material adverse effect on ourbusiness, financial condition and results of operations. We do not control some of these strategic partnerships, joint ventures and alliances in which weparticipate. We may also have certain obligations, including some limited funding obligations or take or pay obligations, with regard to some of our strategicpartnerships, joint ventures and alliances. For example, we have made certain commitments to SSMC, in which we have a 61.2% ownership share, wherebywe are obligated to make cash payments to SSMC should we fail to utilize, and TSMC does not utilize, an agreed upon percentage of the total availablecapacity at SSMC’s fabrication facilities if overall SSMC utilization levels drop below a fixed proportion of the total available capacity.We may from time to time desire to exit certain product lines or businesses, or to restructure our operations, but may not be successful in doing so.From time to time, we may decide to divest certain product lines and businesses or restructure our operations, including through the contribution ofassets to joint ventures. We have, in recent years, exited several of our product lines and businesses, and we have closed several of our manufacturing andresearch facilities. We may continue to do so in the future. However, our ability to successfully exit product lines and businesses, or to close or consolidateoperations, depends on a number of factors, many of which are outside of our control. For example, if we are seeking a buyer for a particular business line,none may be available, or we may not be successful in negotiating satisfactory terms with prospective buyers. In addition, we may face internal obstacles toour efforts. In particular, several of our operations and facilities are subject to collective bargaining agreements and social plans or require us to consult withour employee 9Table of Contentsrepresentatives, such as work councils which may prevent or complicate our efforts to sell or restructure our businesses. In some cases, particularly withrespect to our European operations, there may be laws or other legal impediments affecting our ability to carry out such sales or restructuring.If we are unable to exit a product line or business in a timely manner, or to restructure our operations in a manner we deem to be advantageous, thiscould have a material adverse effect on our business, financial condition and results of operations. Even if a divestment is successful, we may face indemnityand other liability claims by the acquirer or other parties.We may from time to time restructure parts of our processes. Any such restructuring may impact customer satisfaction and the costs ofimplementation may be difficult to predict.Between 2008 and 2011, we executed a redesign program and, in 2013 we executed a restructuring initiative designed to improve operationalefficiency and to competitively position the company for sustainable growth. In 2015, we began a restructuring initiative to prepare for and implement theintegration of Freescale into our existing businesses. We plan to continue to restructure and make changes to parts of the processes in our organization.Furthermore, if the global economy remains volatile or if the global economy reenters a deeper and longer lasting recession, our revenues could decline, andwe may be forced to take additional cost savings steps that could result in additional charges and materially affect our business. The costs of implementingany restructurings, changes or cost savings steps may differ from our estimates and any negative impacts on our revenues or otherwise of such restructurings,changes or steps, such as situations in which customer satisfaction is negatively impacted, may be larger than originally estimated.If we fail to extend or renegotiate our collective bargaining agreements and social plans with our labor unions as they expire from time to time, ifregular or statutory consultation processes with employee representatives such as works councils fail or are delayed, or if our unionized employees were toengage in a strike or other work stoppage, our business and operating results could be materially harmed.We are a party to collective bargaining agreements and social plans with our labor unions. We are also required to consult with our employeerepresentatives, such as works councils, on items such as restructurings, acquisitions and divestitures. Although we believe that our relations with ouremployees, employee representatives and unions are satisfactory, no assurance can be given that we will be able to successfully extend or renegotiate theseagreements as they expire from time to time or to conclude the consultation processes in a timely and favorable way. The impact of future negotiations andconsultation processes with employee representatives could have a material impact on our financial results. Also, if we fail to extend or renegotiate our laboragreements and social plans, if significant disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage, we couldincur higher ongoing labor costs or experience a significant disruption of operations, which could have a material adverse effect on our business.Our working capital needs are difficult to predict.Our working capital needs are difficult to predict and may fluctuate. The comparatively long period between the time at which we commencedevelopment of a product and the time at which it may be delivered to a customer leads to high inventory and work-in-progress levels. The volatility of ourcustomers’ own businesses and the time required to manufacture products also makes it difficult to manage inventory levels and requires us to stockpileproducts across many different specifications.Our business may be adversely affected by costs relating to product defects, and we could be faced with product liability and warranty claims.We make highly complex electronic components and, accordingly, there is a risk that defects may occur in any of our products. Such defects can giverise to significant costs, including expenses relating to recalling products, replacing defective items, writing down defective inventory and loss of potentialsales. In addition, the occurrence of such defects may give rise to product liability and warranty claims, including liability for damages caused by suchdefects. If we release defective products into the market, our reputation could suffer and we may lose sales opportunities and incur liability for damages.Moreover, since the cost of replacing defective semiconductor devices is often much higher than the value of the devices themselves, we may at times facedamage claims from customers in excess of the amounts they pay us for our products, including consequential damages. We also face exposure to potentialliability resulting from the fact that our customers typically integrate the semiconductors we sell into numerous consumer products, which are then sold intothe marketplace. We are exposed to product liability claims if our semiconductors or the consumer products based on them malfunction and result in personalinjury or death. We may be named in product liability claims even if there is no evidence that our products caused the damage in question, and such claimscould result in significant costs and expenses relating to attorneys’ fees and damages. In addition, our customers may recall their products if they prove to bedefective or make compensatory payments in accordance with industry or business practice or in order to maintain good customer relationships. If such arecall or payment is caused by a defect in one of our products, our customers may seek to recover all or a portion of their losses from us. If any of these risksmaterialize, our reputation would be harmed and there could be a material adverse effect on our business, financial condition and results of operations. 10Table of ContentsOur business has suffered, and could in the future suffer, from manufacturing problems.We manufacture, in our own factories as well as with third parties, our products using processes that are highly complex, require advanced and costlyequipment and must continuously be modified to improve yields and performance. Difficulties in the production process can reduce yields or interruptproduction, and, as a result of such problems, we may on occasion not be able to deliver products or do so in a timely or cost-effective or competitive manner.As the complexity of both our products and our fabrication processes has become more advanced, manufacturing tolerances have been reduced andrequirements for precision have become more demanding. As is common in the semiconductor industry, we have in the past experienced manufacturingdifficulties that have given rise to delays in delivery and quality control problems. There can be no assurance that any such occurrence in the future wouldnot materially harm our results of operations. Further, we may suffer disruptions in our manufacturing operations, either due to production difficulties such asthose described above or as a result of external factors beyond our control. We may, in the future, experience manufacturing difficulties or permanent ortemporary loss of manufacturing capacity due to the preceding or other risks. Any such event could have a material adverse effect on our business, financialcondition and results of operations.We rely on the timely supply of equipment and materials and could suffer if suppliers fail to meet their delivery obligations or raise prices. Certainequipment and materials needed in our manufacturing operations are only available from a limited number of suppliers.Our manufacturing operations depend on deliveries of equipment and materials in a timely manner and, in some cases, on a just-in-time basis. Fromtime to time, suppliers may extend lead times, limit the amounts supplied to us or increase prices due to capacity constraints or other factors. Supplydisruptions may also occur due to shortages in critical materials, such as silicon wafers or specialized chemicals. Because the equipment that we purchase iscomplex, it is frequently difficult or impossible for us to substitute one piece of equipment for another or replace one type of material with another. A failureby our suppliers to deliver our requirements could result in disruptions to our manufacturing operations. Our business, financial condition and results ofoperations could be harmed if we are unable to obtain adequate supplies of quality equipment or materials in a timely manner or if there are significantincreases in the costs of equipment or materials.Failure of our third party suppliers to perform could adversely affect our ability to exploit growth opportunities.We currently use outside suppliers for a portion of our manufacturing capacity. Outsourcing our production presents a number of risks. If our outsidesuppliers are unable to satisfy our demand, or experience manufacturing difficulties, delays or reduced yields, our results of operations and ability to satisfycustomer demand could suffer. In addition, purchasing rather than manufacturing these products may adversely affect our gross profit margin if the purchasecosts of these products are higher than our own manufacturing costs would have been. Prices for foundry products also vary depending on capacityutilization rates at our suppliers, quantities demanded, product technology and geometry. Furthermore, these outsourcing costs can vary materially fromquarter to quarter and, in cases of industry shortages, they can increase significantly, negatively affecting our gross profit.Loss of our key management and other personnel, or an inability to attract such management and other personnel, could affect our business.We depend on our key management to run our business and on our senior engineers to develop new products and technologies. Our success willdepend on the continued service of these individuals. Although we have several share based compensation plans in place, we cannot be sure that these planswill help us in our ability to retain key personnel, especially considering the fact that the stock options under some of our plans become exercisable upon achange of control (in particular, when a third party, or third parties acting in concert, obtains, whether directly or indirectly, control of us). The loss of any ofour key personnel, whether due to departures, death, ill health or otherwise, could have a material adverse effect on our business. The market for qualifiedemployees, including skilled engineers and other individuals with the required technical expertise to succeed in our business, is highly competitive and theloss of qualified employees or an inability to attract, retain and motivate the additional highly skilled employees required for the operation and expansion ofour business could hinder our ability to successfully conduct research activities or develop marketable products. The foregoing risks could have a materialadverse effect on our business.Disruptions in our relationships with any one of our key customers could adversely affect our business.A substantial portion of our revenue is derived from our top customers, including our distributors. We cannot guarantee that we will be able to generatesimilar levels of revenue from our largest customers in the future. If one or more of these customers substantially reduce their purchases from us, this couldhave a material adverse effect on our business, financial condition and results of operations.We receive subsidies and grants in certain countries, and a reduction in the amount of governmental funding available to us or demands forrepayment could increase our costs and affect our results of operations.As is the case with other large semiconductor companies, we receive subsidies and grants from governments in some countries. These programs aresubject to periodic review by the relevant governments, and if any of these programs are curtailed or discontinued, this could have a material adverse effecton our business, financial condition and results of operations. As the availability of government funding is outside our control, we cannot guarantee that wewill continue to benefit from government support or that sufficient alternative funding will be available if we lose such support. Moreover, if we terminateany activities or operations, including strategic 11Table of Contentsalliances or joint ventures, we may face adverse actions from the local governmental agencies providing such subsidies to us. In particular, such governmentagencies could seek to recover such subsidies from us and they could cancel or reduce other subsidies we receive from them. This could have a materialadverse effect on our business, financial condition and results of operations.Legal proceedings covering a range of matters are pending in various jurisdictions. Due to the uncertainty inherent in litigation, it is difficult topredict the final outcome. An adverse outcome might affect our results of operations.We and certain of our businesses are involved as plaintiffs or defendants in legal proceedings in various matters. For example, we are involved in legalproceedings claiming personal injuries to the children of former employees as a result of employees’ alleged exposure to chemicals used in semiconductormanufacturing clean room environments operated by us or our former parent companies Philips and Motorola. Furthermore, because we continue to utilizethese clean rooms, we may become subject to future claims alleging personal injury that may lead to additional liability. A judgment against us or materialdefense cost could harm our business, financial condition and results of operations.We are exposed to a variety of financial risks, including currency risk, interest rate risk, liquidity risk, commodity price risk, credit risk and othernon-insured risks, which may have an adverse effect on our financial results.We are a global company and, as a direct consequence, movements in the financial markets may impact our financial results. We are exposed to avariety of financial risks, including currency fluctuations, interest rate risk, liquidity risk, commodity price risk and credit risk and other non-insured risks.We have euro-denominated assets and liabilities and, since our reporting currency is the U.S. dollar, the impact of currency translation adjustments to suchassets and liabilities may have a negative effect on our stockholders’ equity. We continue to hold or convert a part of our cash in euros as a hedge for euroexpenses and euro interest payments. We are exposed to fluctuations in exchange rates when we convert U.S. dollars to euro. We enter into diverse financialtransactions with several counterparties to mitigate our currency risk. We only use derivative instruments for hedging purposes.We are also a purchaser of certain base metals, precious metals, chemicals and energy used in the manufacturing process of our products, the prices ofwhich can be volatile. Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform upon their agreedpayment obligations. Credit risk is present within our trade receivables. Such exposure is reduced through ongoing credit evaluations of the financialconditions of our customers and by adjusting payment terms and credit limits when appropriate. We invest available cash and cash equivalents with variousfinancial institutions and are in that respect exposed to credit risk with these counterparties. We actively manage concentration risk on a daily basis adheringto a treasury management policy. We seek to limit the financial institutions with which we enter into financial transactions, such as depositing cash, to thosewith a strong credit rating wherever possible. If we are unable to successfully manage these risks, they could have a material adverse effect on our business,financial condition and results of operations.The impact of a negative performance of financial markets and demographic trends on our defined benefit pension liabilities and costs cannot bepredicted.We sponsor defined benefit pension plans in a number of countries and a significant number of our employees are covered by our defined benefitpension plans. As of December 31, 2016, we had recognized a net accrued benefit liability of $392 million, representing the unfunded benefit obligations ofour defined pension plans. The funding status and the liabilities and costs of maintaining these defined benefit pension plans may be impacted by financialmarket developments. For example, the accounting for such plans requires determining discount rates, expected rates of compensation and expected returnson plan assets, and any changes in these variables can have a significant impact on the projected benefit obligations and net periodic pension costs. Negativeperformance of the financial markets could also have a material impact on funding requirements and net periodic pension costs. Our defined benefit pensionplans may also be subject to demographic trends. Accordingly, our costs to meet pension liabilities going forward may be significantly higher than they aretoday, which could have a material adverse impact on our financial condition.Future changes to Dutch, U.S. and other foreign tax laws could adversely affect us.The European Commission, U.S. Congress and Treasury Department, the Organization for Economic Co-operation and Development, and othergovernment agencies in jurisdictions where we and our affiliates do business have had an extended focus on issues related to the taxation of multinationalcorporations, particularly payments made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the taxlaws in the European Union, U.S. and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and anysuch changes could adversely affect us and our affiliates.Recent examples include the Organization for Economic Co-operation and Development’s recommendations on base erosion and profit shifting, theEuropean Commission’s Anti-Tax Avoidance Directive and the Corporate Tax Package released in October 2016 which includes a Common ConsolidatedCorporate Tax Base. These initiatives include recommendations and proposals that, if enacted in countries in which we and our affiliates do business, couldadversely affect us and our affiliates. 12Table of ContentsWe are exposed to a number of different tax uncertainties, which could have an impact on tax results.We are required to pay taxes in multiple jurisdictions. We determine the taxes we are required to pay based on our interpretation of the applicable taxlaws and regulations in the jurisdictions in which we operate. We may be subject to unfavorable changes in the respective tax laws and regulations to whichwe are subject. Tax controls, audits, change in controls and changes in tax laws or regulations or the interpretation given to them may expose us to negativetax consequences, including interest payments and potentially penalties. We have issued transfer-pricing directives in the areas of goods, services andfinancing, which are in accordance with the Guidelines of the Organization of Economic Co-operation and Development (OECD). As transfer pricing has across border effect, the focus of local tax authorities on implemented transfer pricing procedures in a country may have an impact on results in anothercountry.Transfer pricing uncertainties can also result from disputes with local tax authorities about transfer pricing of internal deliveries of goods and servicesor related to financing, acquisitions and divestments, the use of tax credits and permanent establishments, and tax losses carried forward. These uncertaintiesmay have a significant impact on local tax results. We also have various tax assets resulting from acquisitions. Tax assets can also result from the generationof tax losses in certain legal entities. Tax authorities may challenge these tax assets. In addition, the value of the tax assets resulting from tax losses carriedforward depends on having sufficient taxable profits in the future.We may not be able to maintain a competitive worldwide effective corporate tax rate.We cannot give any assurance as to what our effective tax rate will be in the future, because of, among other things, uncertainty regarding the taxpolicies of the jurisdictions where we operate. Our actual effective tax rate may vary from our expectation and that variance may be material. Additionally,the tax laws of the Netherlands, the U.S., and other jurisdictions could change in the future, and such changes could cause a material change in our effectivetax rate.There may from time to time exist deficiencies in our internal control systems that could adversely affect the accuracy and reliability of our periodicreporting.We are required to establish and periodically assess the design and operating effectiveness of our internal control over financial reporting. Despite thecompliance procedures that we have adopted to ensure internal control over financial controls, there may from time to time exist deficiencies in our internalcontrol systems that could adversely affect the accuracy and reliability of our periodic reporting. Our periodic reporting is the basis of investors’ and othermarket professionals’ understanding of our businesses. Imperfections in our periodic reporting could create uncertainty regarding the reliability of our resultsof operations and financial results, which in turn could have a material adverse impact on our reputation or share price.Environmental laws and regulations expose us to liability and compliance with these laws and regulations, and any such liability may adverselyaffect our business.We are subject to many environmental, health and safety laws and regulations in each jurisdiction in which we operate, which govern, among otherthings, emissions of pollutants into the air, wastewater discharges, the use and handling of hazardous substances, waste disposal, the investigation andremediation of soil and ground water contamination and the health and safety of our employees. We are also required to obtain environmental permits fromgovernmental authorities for certain of our operations. We cannot assure you that we have been or will be at all times in complete compliance with such laws,regulations and permits. If we violate or fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators.As with other companies engaged in similar activities or that own or operate real property, we face inherent risks of environmental liability at ourcurrent and historical manufacturing facilities. Certain environmental laws impose strict, and in certain circumstances, joint and several liability on current orprevious owners or operators of real property for the cost of investigation, removal or remediation of hazardous substances as well as liability for relateddamages to natural resources. Certain of these laws also assess liability on persons who arrange for hazardous substances to be sent to disposal or treatmentfacilities when such facilities are found to be contaminated. While we do not expect that any contamination currently known to us will have a materialadverse effect on our business, we cannot assure you that this is the case or that we will not discover new facts or conditions or that environmental laws or theenforcement of such laws will not change such that our liabilities would be increased significantly. In addition, we could also be held liable for consequencesarising out of human exposure to hazardous substances or other environmental damage. In summary, we cannot assure you that our costs of complying withcurrent and future environmental and health and safety laws, or our liabilities arising from past or future releases of, or exposures to, regulated materials, willnot have a material adverse effect on our business, financial conditions and results of operations.Scientific examination of, political attention to and rules and regulations on issues surrounding the existence and extent of climate change may resultin an increase in the cost of production due to increase in the prices of energy and introduction of energy or carbon tax. A variety of regulatory developmentshave been introduced that focus on restricting or managing the emission of carbon dioxide, methane and other greenhouse gases. Enterprises may need topurchase at higher costs new equipment or raw materials with lower carbon footprints. Environmental laws and regulations could also require us to acquirepollution abatement or remediation equipment, modify product designs, or incur expenses. New materials that we are evaluating for use in our operationsmay become subject to regulation. These developments and further legislation that is likely to be enacted could affect our operations negatively. Changes inenvironmental regulations could increase our production and operational costs, which could adversely affect our results of operations and financialcondition. 13Table of ContentsCertain natural disasters, such as flooding, large earthquakes, volcanic eruptions or nuclear or other disasters, may negatively impact our business.There is increasing concern that climate change is occurring and may cause a rising number of natural disasters.Environmental and other disasters, such as flooding, large earthquakes, volcanic eruptions or nuclear or other disasters, or a combination thereof maynegatively impact our business. If flooding, a large earthquake, volcanic eruption or other natural disaster were to directly damage, destroy or disrupt ourmanufacturing facilities, it could disrupt our operations, delay new production and shipments of existing inventory or result in costly repairs, replacements orother costs, all of which would negatively impact our business. Even if our manufacturing facilities are not directly damaged, a large natural disaster mayresult in disruptions in distribution channels or supply chains and significant increases in the prices of raw materials used for our manufacturing process. Forinstance, the nuclear incident following the tsunami in Japan in 2011 impacted the supply chains of our customers and suppliers. Furthermore, any disasteraffecting our customers (or their respective customers) may significantly negatively impact the demand for our products and our revenues.The impact of any such natural disasters depends on the specific geographic circumstances but could be significant, as some of our factories are locatedin areas with known earthquake fault zones, flood or storm risks, including but not limited to the Philippines, Singapore, Taiwan, Malaysia or Thailand.There is increasing concern that climate change is occurring that may cause a rising number of natural disasters with potentially dramatic effects on humanactivity. We cannot predict the economic impact, if any, of natural disasters or climate change.The price of our common stock historically has been volatile. The price of our common stock may fluctuate significantly.The stock market in recent years has experienced significant price and volume fluctuations that have often been unrelated to the operating performanceof companies. The market price for our common stock has varied between a high of $107.54 on October 20, 2016 and a low of $61.61 on February 9, 2016 inthe twelve-month period ending on December 31, 2016. Although the pending Offer may reduce the volatility of the market price of our common stock in thenear term, volatility may revert to historical levels for many reasons, including in response to the risks described in this section, including the risks associatedwith the Offer, or for reasons unrelated to our operations, such as reports by industry analysts, investor perceptions or negative announcements by ourcustomers, competitors, peer companies or suppliers regarding their own performance, or announcements by our competitors of significant contracts, strategicpartnerships, joint ventures, joint marketing relationships or capital commitments, the passage of legislation or other regulatory developments affecting us orour industry, as well as industry conditions and general financial, economic and political instability. In the past, following periods of market volatility,shareholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resourcesand the attention of executive management from our business regardless of the outcome of such litigation.The Merger with Freescale may not be accretive and may cause dilution to our earnings per share, which may harm the market price of our shares ofcommon stockWe entered into the Merger with the expectation that it will be accretive to earnings per share in the near term. This expectation is based on preliminaryestimates which may materially change. We could also encounter additional transaction and integration-related costs or other factors such as the failure torealize all of the benefits anticipated in the Merger. All of these factors could cause dilution to our earnings per share or decrease or delay the expectedaccretive effect of the Merger and cause a decrease in the price of our shares of common stock.Future sales of our shares of common stock could depress the market price of our outstanding shares of common stock.The market price of our shares of common stock could decline as a result of sales of a large number of shares of our common stock in the market, or theperception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equitysecurities in the future at a time and at a price that we deem appropriate.In the future, we may issue additional shares of common stock in connection with acquisitions and other investments, as well as in connection with ourcurrent or any revised or new equity plans for management and other employees. The amount of our common stock issued in connection with any suchtransaction could constitute a material portion of our then outstanding common stock.Our actual operating results may differ significantly from our guidance.From time to time, we release guidance regarding our future performance that represents our management’s estimates as of the date of release. Thisguidance, which consists of forward-looking statements, is prepared by our management and is qualified by, and subject to, the assumptions and the otherinformation contained or referred to in such release and the factors described under “Forward-Looking Statements”. Our guidance is not prepared with a viewtoward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our independent registered publicaccounting firm nor any other independent expert or outside party compiles or examines the guidance and, accordingly, no such person expresses anyopinion or any other form of assurance with respect thereto.Our guidance is based upon a number of assumptions and estimates that, while presented with numerical specificity, is inherently subject to significantbusiness, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions withrespect to future business decisions, some of which will change. We generally state possible 14Table of Contentsoutcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actualresults could not fall outside of the suggested ranges. The principal reason that we release this data is to provide a basis for our management to discuss ourbusiness outlook with analysts and investors. We do not accept any responsibility for any projections or reports published by any such persons.Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will notmaterialize or will vary significantly from actual results. Accordingly, our guidance is only an estimate of what management believes is realizable as of thedate of release. Actual results will vary from the guidance and the variations may be material. Investors should also recognize that the reliability of anyforecasted financial data diminishes the farther in the future the data is forecasted. In light of the foregoing, investors are urged to put the guidance in contextand not to place undue reliance on it.Any failure to successfully implement our operating strategy, or the occurrence of any of the events or circumstances set forth in, or incorporated byreference into, this Annual Report could result in the actual operating results being different than the guidance, and such differences may be adverse andmaterial.Risks related to our corporate structureUnited States civil liabilities may not be enforceable against us.We are incorporated under the laws of the Netherlands and substantial portions of our assets are located outside of the United States. In addition,certain members of our board, our officers and certain experts named herein reside outside the United States. As a result, it may be difficult for investors toeffect service of process within the United States upon us or such other persons residing outside the United States, or to enforce outside the United Statesjudgments obtained against such persons in U.S. courts in any action. In addition, it may be difficult for investors to enforce, in original actions brought incourts in jurisdictions located outside the United States, rights predicated upon the U.S. laws.In the absence of an applicable treaty for the mutual recognition and enforcement of judgments (other than arbitration awards) in civil and commercialmatters to which the United States and the Netherlands are a party, a judgment obtained against the Company in the courts of the United States, whether ornot predicated solely upon the U.S. federal securities laws, including a judgment predicated upon the civil liability provisions of the U.S. securities law orsecurities laws of any State or territory within the United States, will not be directly enforceable in the Netherlands.In order to obtain a judgment which is enforceable in the Netherlands, the claim must be relitigated before a competent court of the Netherlands; therelevant Netherlands court has discretion to attach such weight to a judgment of the courts of the United States as it deems appropriate; based on case law, thecourts of the Netherlands may be expected to recognize and grant permission for enforcement of a judgment of a court of competent jurisdiction in the UnitedStates without re-examination or relitigation of the substantive matters adjudicated thereby, provided that (i) the relevant court in the United States hadjurisdiction in the matter in accordance with standards which are generally accepted internationally; (ii) the proceedings before that court complied withprinciples of proper procedure; (iii) recognition and/or enforcement of that judgment does not conflict with the public policy of the Netherlands; and(iv) recognition and/or enforcement of that judgment is not irreconcilable with a decision of a Dutch court rendered between the same parties or with anearlier decision of a foreign court rendered between the same parties in a dispute that is about the same subject matter and that is based on the same cause,provided that earlier decision can be recognized in the Netherlands.Based on the foregoing, there can be no assurance that U.S. investors will be able to enforce against us or members of our board of directors, officers orcertain experts named herein who are residents of the Netherlands or countries other than the United States any judgments obtained in U.S. courts in civil andcommercial matters.In addition, there is doubt as to whether a Dutch court would impose civil liability on us, the members of our board of directors, our officers or certainexperts named herein in an original action predicated solely upon the U.S. laws brought in a court of competent jurisdiction in the Netherlands against us orsuch members, officers or experts, respectively.We are a Dutch public company with limited liability. The rights of our stockholders may be different from the rights of stockholders governed by thelaws of U.S. jurisdictions.We are a Dutch public company with limited liability (naamloze vennootschap). Our corporate affairs are governed by our articles of association andby the laws governing companies incorporated in the Netherlands. The rights of stockholders and the responsibilities of members of our board of directorsmay be different from the rights and obligations of stockholders in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, ourboard of directors is required by Dutch law to consider the interests of our company, its stockholders, its employees and other stakeholders, in all cases withdue observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or inaddition to, your interests as a stockholder. See Part II, Item 16G. Corporate Governance.We are a foreign private issuer and, as a result, are not subject to U.S. proxy rules but are subject to Exchange Act reporting obligations that, tosome extent, are more lenient and less frequent than those of a U.S. issuer.We report under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as a non-U.S. company with foreign private issuer status.Because we qualify as a foreign private issuer under the Exchange Act and although we follow Dutch laws and 15Table of Contentsregulations with regard to such matters, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including:(i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the ExchangeAct (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders whoprofit from trades made in a short period of time and (iii) the rules under the Exchange Act requiring the filing with the Commission of quarterly reports onForm 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significantevents. In addition, foreign private issuers are required to file their Annual Report on Form 20-F by 120 days after the end of each fiscal year while U.S.domestic issuers that are large accelerated filers are required to file their Annual Report on Form 10-K within 60 days after the end of each fiscal year. Foreignprivate issuers are also exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. Asa result of the above, even though we are contractually obligated and intend to make interim reports available to our stockholders, copies of which we arerequired to furnish to the Securities and Exchange Commission (the “SEC”) on a Form 6-K, and even though we are required to furnish reports on Form 6-Kdisclosing whatever information we have made or are required to make public pursuant to Dutch law or distribute to our stockholders and that is material toour company, you may not have the same protections afforded to investors in companies that are not foreign private issuers.We are a foreign private issuer and, as a result, in accordance with the listing requirements of the NASDAQ Global Select Market we rely on certainhome country governance practices rather than the corporate governance requirements of the NASDAQ Global Select Market.We are a foreign private issuer. As a result, in accordance with the listing requirements of the NASDAQ Global Select Market we rely on home countrygovernance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of the NASDAQ Global SelectMarket. For an overview of our corporate governance principles, see Item 16G.- Corporate Governance of our 2015 Annual Report, including the sectiondescribing the differences between the corporate governance requirements applicable to common stock listed on the NASDAQ Global Select Market and theDutch corporate governance requirements. Accordingly, you may not have the same protections afforded to stockholders of companies that are not foreignprivate issuers.Risks related to our indebtednessOur debt obligations expose us to risks that could adversely affect our financial condition, which could adversely affect our results of operations.As of December 31, 2016, we had outstanding indebtedness with an aggregate principal amount of $9,361 million. Our substantial indebtedness couldhave a material adverse effect on our business by: • increasing our vulnerability to adverse economic, industry or competitive developments; • requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness,therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities; • exposing us to the risk of increased interest rates because certain of our indebtedness, including our loans under the RCF Agreement and theTerm Loans, bear interest at a variable rate; • making it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of anyour debt instruments, including restrictive covenants and borrowing conditions, could result in an event default under the indentures governingour notes and agreements governing other indebtedness; • restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; • limiting our ability to obtain additional financial for working capital, capital expenditures, restructurings, product development, research anddevelopment, debt service requirements, investments, acquisitions and general corporate or other purposes; and • limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantagecompared to our competitors who are less highly leveraged and who therefore, may be able to take advantage of opportunities that our leverageprevents us from exploiting.Despite our level of indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above and affect ourability to service and repay our debt.If we do not comply with the covenants in our debt agreements or fail to generate sufficient cash to service and repay our debt, it could adverselyaffect our operating results and our financial condition.The RCF Agreement, the Term Loans, the indentures governing our Secured Notes and Unsecured Notes or any other debt arrangements that we mayhave require us to comply with various covenants. If there were an event of default under any of our debt instruments that was not cured or waived, theholders of the defaulted debt could terminate commitments to lend and cause all amounts outstanding with respect to the debt to be due and payableimmediately, which in turn could result in cross defaults under our other debt instruments. Our assets and cash flow may not be sufficient to fully repayborrowings under all of our outstanding debt instruments if some or all of these instruments are accelerated upon an event of default.Our ability to make scheduled payments or to refinance our debt obligations depends on our financial condition and operating performance, which issubject to prevailing economic and competitive conditions and to certain financial, business, competitive, 16Table of Contentslegislative, regulatory and other factors beyond our control. Our business may not generate sufficient cash flow from operations, or future borrowings underthe RCF Agreement or from other sources may not be available to us in an amount sufficient to enable us to repay our indebtedness, or to fund our otherliquidity needs, including our working capital and capital expenditure requirements, and we may be forced to reduce or delay capital expenditures, sell assetsor operations, seek additional capital or restructure or refinance our indebtedness.If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capitalexpenditures, or to sell assets, seek additional capital, restructure or refinance our indebtedness or reduce or delay capital expenditures, strategic acquisitions,investments and alliances, any of which could have a material adverse effect on our business. We cannot guarantee that we will be able to obtain enoughcapital to service our debt and fund our planned capital expenditures and business plan. Our ability to restructure or refinance our debt will depend on thecondition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us tocomply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict usfrom adopting some of these alternatives. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timelybasis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. These alternative measures maynot be successful and may not permit us to meet our scheduled debt service obligations.The rating of our debt by major rating agencies may further improve or deteriorate, which could affect our additional borrowing capacity andfinancing costs.The major debt rating agencies routinely evaluate our debt. These ratings are based on current information furnished to the ratings agencies by us andinformation obtained by the ratings agencies from other sources. An explanation of the significance of such rating may be obtained from such rating agency.There can be no assurance that such credit ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended orwithdrawn entirely by the rating agencies, if, in each rating agency’s judgment, circumstances so warrant. Actual or anticipated changes or downgrades in ourcredit ratings, including any announcement that our ratings are under further review for a downgrade, could affect our market value and/or increase ourcorporate borrowing costs.Increases in interest rates could adversely affect our results of operations.An increase in prevailing interest rates could adversely affect our financial condition. LIBOR (the interest rate index on which our variable rate debt isbased) fluctuates on a regular basis. At December 31, 2016, we had $2,211 million aggregate principal amount of variable interest rate indebtedness underour Term Loan agreements, which are subject to LIBOR floors. Any increased interest expense associated with increases in interest rates affects our cash flowand our ability to service our debt. Therefore, if the LIBOR rate exceeds the LIBOR floors on our Term Loan agreements, our cash interest obligation wouldincrease and could adversely affect our financial condition, results of operations and cash flows. At December 31, 2016, a 100 basis point increase in LIBORrates from their then current levels would result in an increase in our interest expense of $22 million per year. Our RCF Agreement, which was undrawn atDecember 31, 2016, also has a variable interest rate.The conditional conversion feature of the 2019 Cash Convertible Senior Notes, if triggered, may adversely affect our financial condition andoperating results.In the event the conditional conversion feature of the 2019 Cash Convertible Senior Notes is triggered, holders thereof will be entitled to convert the2019 Cash Convertible Senior Notes solely into cash at any time during specified periods at their option. If one or more holders elect to convert their 2019Cash Convertible Senior Notes, we would be required to pay cash to settle any such conversion, which could adversely affect our liquidity. In addition, evenif holders do not elect to convert their 2019 Cash Convertible Senior Notes, we could be required under applicable accounting rules to reclassify all or aportion of the outstanding aggregate principal of the 2019 Cash Convertible Senior Notes as a current rather than long-term liability, which may adverselyaffect our net working capital.The accounting for the 2019 Cash Convertible Senior Notes results in recognized interest expense significantly greater than the stated interest rateof the 2019 Cash Convertible Senior Notes and may result in volatility to our Consolidated Statements of Operations.We will settle conversions of the 2019 Cash Convertible Senior Notes entirely in cash. Accordingly, the conversion option that is part of the 2019Cash Convertible Senior Notes is accounted for as a derivative pursuant to applicable accounting standards relating to derivative instruments and hedgingactivities. In general, this resulted in an initial valuation of the conversion option, which was bifurcated from the debt component of the 2019 CashConvertible Senior Notes, resulting in an original issue discount. The original issue discount is amortized and recognized as a component of interest expenseover the term of the 2019 Cash Convertible Senior Notes, which results in an effective interest rate reported in our Consolidated Statements of Operationssignificantly in excess of the stated coupon of 1.0%. This accounting treatment reduces our earnings, but does not affect the amount of cash interest paid toholders of Notes or our cash flows.For each financial statement period after issuance of the 2019 Cash Convertible Senior Notes, a hedge gain or loss is reported in our ConsolidatedStatements of Operations to the extent the valuation of the conversion option changes from the previous period. The cash convertible note hedge transactionswe entered into in connection with the 2019 Cash Convertible Senior Notes are also accounted for as derivative instruments, generally offsetting the gain orloss associated with changes to the valuation of the conversion option. 17Table of ContentsAlthough we do not expect there to be a material net impact to our Consolidated Statements of Operations as a result of issuing the 2019 Cash ConvertibleSenior Notes and entering into the cash convertible note hedge transactions, we cannot assure you that these transactions will be completely offset, whichmay result in volatility to our Consolidated Statements of Operations. Item 4.Information on the CompanyA. History and Development of the CompanyOur legal name is NXP Semiconductors N.V. and our commercial name is “NXP” or “NXP Semiconductors”.We are incorporated in the Netherlands as a Dutch public company with limited liability (naamloze vennootschap).On August 5, 2010, we made an initial public offering of 34 million shares of our common stock and listed our common stock on the NASDAQ GlobalSelect Market.We are a holding company (the “holding” company) whose only material assets are the direct ownership of 100% of the shares of NXP B.V., a Dutchprivate company with limited liability (besloten vennootschap met beperkte aansprakelijkheid).Our corporate seat is in Eindhoven, the Netherlands. Our principal executive office is at High Tech Campus 60, 5656 AG Eindhoven, the Netherlands,and our telephone number is +31 40 2729999. Our registered agent in the United States is Freescale Semiconductor, Inc., 6501 William Cannon Dr. West,Austin, Texas 78735, United States of America, phone number +1 512 8952000.On March 2, 2015, NXP announced that the company had entered into a definitive agreement under which it would merge with FreescaleSemiconductor, Ltd. (“Freescale”) (the “Merger”). The Merger was consummated on December 7, 2015. As a result, Freescale’s results of operations areincluded in NXP’s Consolidated Statements of Operations as from December 7, 2015.NXP accounted for the Merger under the acquisition method of accounting in accordance with Financial Accounting Standards Board AccountingStandards Topic 805, Business Combinations, with NXP treated as the accounting acquirer, see further discussion below.On June 14, 2016, NXP announced an agreement to divest its Standard Products business to a consortium of financial investors consisting of BeijingJianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD (“Wise Road Capital”). On February 6, 2017 we divested SP, receiving$2.75 billion in cash proceeds.On October 27, 2016, NXP entered into a purchase agreement (the “Purchase Agreement”) with Qualcomm River Holdings B.V. (“Buyer”), a wholly-owned, indirect subsidiary of Qualcomm Incorporated. Pursuant to the Purchase Agreement, Buyer commenced a tender offer to acquire all of the issued andoutstanding common shares of NXP for $110 per share in cash, for estimated total cash consideration of $38 billion. The tender offer is not subject to anyfinancing condition. An Extraordinary General Meeting of NXP’s shareholders was convened on January 27, 2017, in connection with the offer where theshareholders of NXP approved all resolutions brought before them, with 95% of the votes cast in favor of each such resolution. In light of the foregoing, thetender offer is now conditioned on the tender of 80% of the outstanding shares of NXP, and Buyer, with NXP’s prior written consent (not to be unreasonablywithheld, conditioned or delayed), may reduce the required threshold to a percentage not less than 70% of the outstanding shares. Pending the receipt ofcertain regulatory approvals, as well as satisfaction of other customary closing conditions, the proposed transaction is expected to close by the end ofcalendar 2017.The Purchase Agreement contains certain termination rights for NXP and Buyer. If the Purchase Agreement is terminated under certain circumstances,including termination by NXP to enter into a superior proposal for an alternative acquisition transaction or a termination following a change ofrecommendation by the NXP Board, NXP will be obligated to pay to Buyer a termination compensation equal to $1.25 billion in cash. If the PurchaseAgreement is terminated under certain circumstances, including circumstances relating to the failure to obtain antitrust approvals or failure to complete in allmaterial respects certain internal reorganization steps and related dispositions with respect to NXP, Buyer will be obligated to pay to NXP a terminationcompensation equal to $2 billion in cash.B. Business OverviewSemiconductor Market OverviewSemiconductors perform a broad variety of functions within electronic products and systems, including processing data, sensing, storing informationand converting or controlling electronic signals. Semiconductors vary significantly depending upon the specific function or application of the end productin which the semiconductor is used and the customer who is deploying it. Semiconductors also vary on a number of technical characteristics including thedegree of integration, level of customization, programmability and the process technology utilized to manufacture the semiconductor. Advances insemiconductor technology have increased the functionality and performance of semiconductors, improving their features and power consumptioncharacteristics while reducing their size and cost. These advances have resulted in growth of semiconductors and electronic content across a diverse array ofproducts. The semiconductor market totaled $339 billion in 2016. 18Table of ContentsBusiness CombinationsOn October 27, 2016, we announced that we had entered into an agreement to be purchased by a subsidiary of QUALCOMM Incorporated(“Qualcomm”). Pursuant to the agreement, a subsidiary of Qualcomm commenced a tender offer to acquire all of the issued and outstanding common shares ofNXP for $110 per share in cash. Pending the receipt of certain regulatory approvals, as well as satisfaction of other customary closing conditions, theproposed transaction is expected to close by the end of calendar 2017.On December 7, 2015, we completed the Merger with Freescale in a stock and cash transaction.In connection with the Merger, each outstanding share of Freescale common stock was converted into 0.3521 shares of NXP common stock and $6.25in cash, without interest. NXP issued 110 million shares of common stock to former holders of Freescale common stock, representing 32% of the 342 milliontotal shares of outstanding NXP common stock after the Merger. NXP was determined to be the accounting acquirer. Freescale’s financial results from theMerger date through December 31, 2016, are included in our Consolidated Statement of Operations, as discussed herein.The Merger created a market leader in automotive, broad based microcontroller and security semiconductor solutions, with a highly complementaryproduct portfolio. The Merger enables NXP to better serve a broader array of customers in strategic markets.Other Significant TransactionsOn June 14, 2016, we announced an agreement to divest our Standard Products business to a consortium of financial investors consisting of BeijingJianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD (“Wise Road Capital”). On February 6, 2017 we divested SP, receiving$2.75 billion in cash proceeds.On December 7, 2015, we divested our RF Power business to JAC Capital.On November 9, 2015, we completed setting up WeEn Semiconductors, a Bipolar Power joint venture in China with JAC Capital. WeEnSemiconductors, in which JAC Capital owns 51% and we own 49%, combines our advanced technology from our former Bipolar Power business line withJAC Capital’s strong connections in the Chinese manufacturing network and distribution channels to lower manufacturing costs and boost profit margins ofhigh end electronic products in China.Our CompanyWe are a global semiconductor company and a long-standing supplier in the industry, with over 50 years of innovation and operating history. For theyear ended December 31, 2016, we generated revenue of $9,498 million, compared to $6,101 million for the year ended December 31, 2015.We provide leading High Performance Mixed Signal (HPMS) and Standard Product (SP) solutions that leverage our combined portfolio of intellectualproperty, deep application knowledge, process technology and manufacturing expertise in the domains of cryptography—security, high-speed interface,radio frequency (RF), mixed-signal analog-digital (mixed A/D), power management, digital signal processing and embedded system design.Our product solutions are used in a wide range of end-market applications including: automotive, personal security and identification, wireless andwireline infrastructure, mobile communications, multi-market industrial, consumer and computing. We engage with leading global original equipmentmanufacturers (OEM) and sell products in all major geographic regions.Reporting SegmentsNXP is organized into two market oriented reportable segments, High Performance Mixed Signal (“HPMS”) and Standard Products (“SP”). Corporateand Other represents the remaining portion (or “segment”) to reconcile to the Consolidated Financial Statements. You can find a description of each of ourreportable segments below. We also have a manufacturing group that manages our manufacturing and supply chain activities.Markets, applications and productsHPMS products consist of highly differentiated application-specific semiconductors and system solutions, which accounted for 87% of our totalproduct revenue in 2016. We believe the HPMS market is an attractive market due to the growth in excess of the overall semiconductor market, the highbarriers to entry, the loyalty of the customer base, the relative pricing stability and lower long-term capital intensity.SP products consists primarily of discrete semiconductor devices that can be incorporated in many different types of electronics equipment, aretypically sold to a wide variety of customers, and accounted for 13% of our total product revenue in 2016. NXP SP products are differentiated by our abilityto consistently deliver cost effective, high unit volumes, which meet stringent quality levels and are a reflection of our long history of operational supplychain and continuously improved manufacturing processes. As a result we have been successful in improving the overall profitability of our SP segment. 19Table of ContentsHigh Performance Mixed SignalThe HPMS segment consists of the following four business lines: Automotive, Secure Identification Solutions, Secure Connected Devices and SecureInterfaces and Infrastructure.We focus on developing products and system and sub-system solutions that are innovative and allow our customers to bring their end products tomarket more quickly. Our products, particularly our application system and sub-system solutions, help our customers design critical parts of their endproducts and thus help many of them to differentiate themselves based on feature performance, advanced functionality, cost or time-to-market.We apply our technical expertise in the areas of RF, analog, power management, interface, security technologies and digital processing across ourpriority applications markets. Our strong RF capabilities are utilized in our high performance RF for wireless infrastructure and industrial applications, carsecurity and car radio products, mobile connectivity and contactless identification products. Our power technologies and capabilities are applied in AC-DCpower conversion, power management and audio power products, while our ability to design ultra-low power semiconductors is used in a wide range of ourproducts including our consumer, mobile, identification, healthcare products and our microcontrollers. Our high-speed interface design skills are applied invarious interface products, and our security capability is used in our identification solutions, digital networking and microcontroller solutions. Finally, ourdigital processing capabilities are used in our microcontroller and application processor based products, our digital networking products, our Auto DSPs andthe products leveraging our Coolflux ultra-low power DSPs, such as in our hearing aid products.The below table provides an overview of the key applications per each business line, the leading market positions and our key customers. Automotive Secure Identification Solutions Secure Connected Devices Secure Interfaces andInfrastructureKey applications • Car access & immobilizers• In vehicle networking• Car entertainment• ADAS• Telematics• ABS• Transmission/ throttle control• Automotive Lighting• Gateways• Battery Management• Sensors • Secure identity• Tagging • Secure transactions• Mobile handset• Tablet• Personal computer• Smart buildings• White goods & homeappliances• Medical/Personal Healthcare• Industrial/ IoT• Consumer/TV/Set top box • Wireless base stations• Networking• Satellite & CATV infra• Radar• Power supplies• Lighting• Mobile Handsets• Pachinko machinesSelected marketleading positions • #1 in Automotivesemiconductors• #1 Can/LIN/ Flex Ray in-vehicle networking• #1 passive keyless entry/immobilizers• #1 car radio• #1 Chassis & Safety• #1 Powertrain• #2 automotive MCU• #2 audio amplifiers • #1 e-Government• #1 Transport & Accessmanagement• #1 Banking • #1 I broad based MCU• #1 NFC • #1 in RF Power• #1 in communicationprocessorsKey OEM andelectronic manufacturingservices (EMS) endcustomers • Autoliv• Bosch• Continental• Delphi• Denso• Fujitsu Ten• Hyundai• TRW• Valeo• Visteon • Avery Dennison• China Vision Microelectronic• Chutian Dragon• Gemalto• Giesecke• Hengbao• Linxens• Oberthur• Smartrac• Wuhan/Tianyu Info • Amazon• Apple• BBK• Bosch• Continental• Huawei• LG• Samsung• Visteon• ZLG Electronics • Apple• Arris• Cisco• Ericsson• Huawei• NEC• Nokia• Philips• Samsung• ZTEThe table above provides a list of our key OEM, ODM and electronic manufacturing services end customers in alphabetical order, based on 2016revenue, of which some of whom are supplied by distributors. Key distributors across these applications are Arrow, Avnet, Edom, Vitec and WPG.Automotive. Growth in semiconductor sales to the global automotive market relies on global economic trends, the unit growth of automobilesmanufactured and the growth in semiconductor content per vehicle which is being driven by the proliferation of electronic features throughout the vehicle.Among the highest growth applications are advanced driver assistance systems (ADAS), infotainment (information, convenience and connectivity), secure in-vehicle networking and electrified powertrain (hybrid and electric vehicles).Due to the high degree of regulatory scrutiny and safety requirements, the automotive semiconductor market is characterized by stringent qualificationprocesses, zero defect quality processes, functionally safe design architecture, high reliability, extensive design-in timeframes and long product life cycleswhich results in significant barriers to entry.Semiconductor content per vehicle continues to increase due to government regulation for improved safety and emissions, the standardization ofhigher-end options across a greater number of vehicle classes as well as consumer demand for greater fuel efficiency, advanced safety and multimediaapplications. Automotive safety features are evolving from passive safety systems to active safety systems with ADAS such as radar, vision, vehicle-to-vehicle and vehicle-to-infrastructure (V2X) systems. We believe regulatory actions 20Table of Contentsand consumer demand in both the developed and emerging markets should drive the increase in applications such as ADAS, secure connectivity, electronicsafety and stability control. Semiconductor content per vehicle is also increasing to address applications such as engine management, fuel economyimprovement, driver comfort, convenience and user interface. In addition, with the increase in overall semiconductor content in modern automobiles, thedemand for secure in-vehicle networking continues to increase as various subsystems communicate within the automobile and with external devices andnetworks. Data integrity and security hardware features for safeguarding memory, communication and system data are also increasing in importance.As a result of the Merger with Freescale, NXP became the largest semiconductor supplier to the automotive industry with strong positions in CarEntertainment, In-Vehicle Networking, Secure Car Access, Chassis & Safety and Powertrain. The combined portfolio is highly complementary, enabling NXPto address a broader scope of complete and complex solutions for our automotive partners. We continue to invest in growth areas including the evolution ofthe Secure Connected Car, ADAS and other safety and comfort applications.In Car Entertainment, we are the market leader with the broadest portfolio of products offerings addressing both audio and visual head-end unitapplications. Our leadership in audio processing for mid-to-high-end car radio is driven by excellent reception performance as well as high-levels ofintegration of terrestrial, satellite and digital multi-band tuners. Within the low-end and after-market car radio, our leadership is a result of highly integrated,single-chip radio solutions that offer our customers ease of implementation and lower total cost of ownership. In digital reception, we have developed multi-standard radios based on our software-defined radio implementation. In addition, we provide class-AB and class-D audio amplifiers and power analogproducts for car entertainment. Our i.MX applications processors, which are developed and brought to market by our Microcontroller and Processor teams, arehighly integrated ARM-based application processors with integrated audio, video and graphics capability.In the In-vehicle Networking market, we are the market leader, having played a defining role in setting in-vehicle networking standards including theCAN, LIN, FlexRay and more recently the two-wire automotive Ethernet standard. We are a leading supplier to major OEMs and continue to drive newsystem concepts, such as partial networking for enhanced energy efficiency.In the Secure Car Access market, we are the market leader in two-way secure entry products, and have pioneered the development of next generationpassive keyless entry/start with our customers. As a result of our R&D innovations we are a key supplier to almost all major automobile manufacturers forsecure access products.In Chassis & Safety we offer a broad range of sensors and microcontrollers. Our inertial sensors enable vehicle stability control and airbag crashdetection while our pressure sensors are well-positioned for continued growth in tire pressure monitoring, occupancy detection and engine control.In Powertrain, we offer power management solutions which provide the intelligence engine management systems that reduce emissions and improvefuel efficiency. In December 2013, we announced a joint venture with Datang Telecom, targeting the China domestic hybrid and electrical car market. Thisjoint venture became active in April 2014.In ADAS, we are developing solutions for Radar, Vision and Secure V2X. In 2013, we made a strategic investment in Cohda Wireless, an equipmentvendor in the Intelligent Transport Systems (ITS) market with whom we co-operate for V2X solutions. In December 2013, we also announced the intendedsale of our Telematics Module business to Telit Communications which closed in March 2014.We employ our proprietary processes for automotive-grade, high-voltage, RF and non-volatile processes as well as our technology standards andleading edge security IP developed by our Secure Identification Solutions business, to deliver our automotive solutions. We design our products to becompliant with all key global relevant automotive quality standards (such as ISO/TS16949 and VDA6.3).For the full year 2016, we had High Performance Mixed Signal revenue of $3,379 million in automotive applications, compared to $1,342 million in2015, which represents a 151.8% year over year increase. According to Strategy Analytics, the total market for automotive semiconductors was $31.0 billionin 2015, and projects it will grow at a compounded annual growth rate of 6.3% between 2015 and 2019.Secure Identification Solutions (SIS). The SIS business is focused on delivering solutions to address the security and privacy requirements of threespecific end market dynamics: (1) the increasing adoption of chip-based banking cards (“Banking”); (2) the increasing usage of high-volume, single-paymentplatform systems for urban transportation (“Transit—Access”); and (3) the increased need to provide government sponsored products to assure privacy andsecure cross-border movement of people (“eGov”).Nearly all of SIS products consist of multi-functional solutions comprised of passive RF connectivity devices facilitating information transfer from theuser document to reader infrastructure; secure, tamper-proof microcontroller devices in which information is securely encrypted (“secure element”); andsecure real-time operating system software products to facilitate the encryption-decryption of data, and the interaction with the reader infrastructure systems.Our solutions are developed to assure extreme levels of security of user information, undergoing stringent and continued global governmental and bankingcertification processes, as well as delivering the highest level of device performance enabling significant throughput and productivity to our customers.In the banking sector NXP is the market leader in the contact, contactless and dual-interface bank card market. We have innovated and deployed“multi-application” banking solutions which support a combination of payment, transit and access solutions all leveraging a single physical bank card. Inthe transit and access market, NXP’s MIFARE products are ubiquitous throughout the world, having been deployed in over 750 cities, facilitating the masstransit requirements of over one billion people per day. Additionally our transit and access products are deployed in application such as employeeidentification for facility access and security. We are also focused on deploying our technology into new emerging market applications such as interactivegaming, theme-park attendee management and 21Table of Contentssupply chain and inventory product management to support high velocity supply chain management. In the eGovernment sector, NXP is a market leaderproviding solutions for chip-based cross-border passports, drivers-licenses, health cards and other government sponsored identification documents. We havealso worked with emerging market government agencies to facilitate government sponsored identity cards which also serve as payment platforms helping themass-population of under-banked.For the full year 2016, we had High Performance Mixed Signal revenue of $737 million in SIS, compared to $973 million in 2015, which represents a24.3% year over year decline. According to ABI Research, the market size for secure identification ICs was $3.5 billion in 2015, and is expected to grow at acompounded annual rate of 6% to $4.6 billion in 2019.Secure Connected Devices (SCD). The SCD business is focused on delivering solutions to enable the future of connected devices – also known as“Internet of Things” (IoT). We believe the future growth of secure connected devices requires the ability to deliver four fundamental functional capabilities:(1) embedded microcontrollers; (2) connectivity – short range RF and wireless technology (Bluetooth LE, Zigbee, Thread and NFC); (3) security; and(4) sensor. We see end-markets and applications emerging in the area of Mobile Payments, Smart Home-Health, Smart Cities, Wearables and Smart Industrial.The SCD business has a broad portfolio products which we believe enables NXP to successfully compete and deliver all aspects of semiconductor-based technologies for connected devices including microcontrollers, secure mobile transactions solutions and various connectivity solutions.Post-merger, we are the largest supplier of broad based microcontrollers. We differentiate ourselves versus our competitors with a broad portfolio ofproducts addressing different processing power, connectivity standards, peripherals and security levels depending on customers evolving requirements.We have a strong position in multi-purpose 32-bit ARM-based microcontrollers serving a broad array of applications. Our portfolio is highly scalable,and is coupled with our extensive software and design tools. This enables our customers to design-in and deploy our MCUs families, leveraging a consistentsoftware development environment. Due to the scalability of our portfolio we are able to help future-proof our customer’s products as their systems evolve,becoming more complex or requiring greater processing capabilities over time. We believe we have the broadest ARM portfolio in the industry.Our i.MX family of processors are designed in conjunction with a broad suite of additional products including power management solutions, audiocodecs, touch sensors and accelerometers to provide full systems solutions across a wide range of operating systems and applications. Our i.MX 6 family ofapplications processors integrates one, two or four ARM Cortex-A9 cores running up to 1.2 GHz and includes five devices: the single-core i.MX 6Solo andi.MX 6SoloLite, dual-core i.MX 6Dual and i.MX 6DualLite, and quad-core i.MX 6Quad processors. Together, these products provide a family of applicationsprocessors featuring software, power and pin compatibility across single, dual and quad core implementations. Software support includes Linux and Androidimplementations.We are the market leader in secure mobile transactions. NXP has pioneered and led the development of the ISO standard for Near FieldCommunications (NFC), which is rapidly emerging as the de facto standard for secure short-range connectivity. In combination with our industry leadingSmartMX family of secure element device as well as our secure operating system, NXP has garnered market leadership in the deployment of mobile walletsand mobile payment. Our position leverages our decades long position in cryptography and security in the Banking, Transit – Access and eGov sectors.Post-merger NXP has a broad and diverse portfolio of connectivity assets, IP and application knowledge which we believe enables us to fulfill ourcustomer’s connectivity requirements for IoT applications, including smart lighting, smart energy, wireless remote controls & switches and healthcaremonitoring.In February 2015 we acquired Quintic, which brought assets and IP to broaden our connectivity portfolio. Specifically, Quintic is an innovator in thearea of Bluetooth Low Energy (BTLE), a key connectivity standard for IoT devices.Our mobile audio business focuses on smart speaker drivers and leverages many of the same core technologies and competencies as our personalhealthcare business. We also sell software solutions for mobile phones through our NXP Software business. The NXP Software solutions business developsaudio solutions that enable mobile device manufacturers to produce differentiated hand held products that enhance the end-user experience. Our software hasbeen incorporated into over 1 billion mobile devices produced by many of the world’s leading mobile device manufacturers.Our personal healthcare revenue is generated by our hearing aid products, which leverage our proprietary, ultra-low power Coolflux – brand of DSPdevices, our low power audio IC design capabilities and our magnetic induction radio technology. We design customer-specific ICs for major hearing aidOEMs, and many of these customers fund our product development efforts.Our overall High Performance Mixed Signal revenue in the SCD business was $2,146 million in 2016, compared to $1,261 million in 2015, whichrepresents a 70.2% year over year growth. We estimate the worldwide market for Microcontrollers 32-bit was $6.5 billion in 2015, and we expect acompounded annual growth rate of 10.3% between 2015 and 2019.Our leadership in secure/smartcard Microcontrollers and our position in the non-secure Microcontrollers outside Automotive creates a number oneposition in broad based Microcontrollers.Secure Interfaces and Infrastructure (SI&I). Our SI&I businesses consist of: Digital Networking Processors, Secure Interface and System ManagementProducts, High-performance RF Power-Amplifiers (HPRF) and Smart Antennae solutions.NXP is a significant participant in the communications infrastructure market. Our communications processors are programmable semiconductors thatperform tasks related to control and management of digital data, as well as network interfaces. They are designed to 22Table of Contentshandle tasks related to data transmission between nodes within a network, the manipulation of that data upon arrival at its destination and protocolconversion. Our product portfolio includes 32-bit and 64-bit offerings ranging from a single core to 28- and 45-nanometer multicore QorIQ communicationsprocessors. Wireless-infrastructure processors combine communication processors with DSP functionality and specific wireless acceleration technology. Ourportfolio of secure wireless-infrastructure processors targets small cells and macro base stations. These products perform baseband processing and supportmultiple cellular-network air-interfaces such as LTE-Advanced, TD-LTE, LTE, HSPA+, TD-SCDMA, and CDMA2000K. Used by leading original equipmentmanufacturers (OEMs) worldwide, our broad portfolio of wireless-infrastructure and communications processors satisfies wireless infrastructure requirements.We are major supplier in the highly fragmented interface and system management products. Our products address many interface standards and weserve various applications across the mobile, computing, industrial, consumer and automotive markets. We have broad product portfolios including UARTs.Bridges-devices, I2 C, SPI, LED-lighting controllers, low power real-time clocks and watch ICs, HDMI switches and transceivers, and display portmultiplexers. Our core competency is the ability to deliver products that manage high speed data and system voltage over the same interface. We generate alarge part of our revenue by selling products to a very broad customer base, which we serve through our distribution channel. We have successfully engagedwith leading OEMs to drive semi-custom products which in turn allow us to refine and accelerate our innovation and product roadmaps. We are engaged indevelopment activities and standard setting initiatives with many of the innovation leaders in each of these markets. Key growth drivers will be the adoptionrate of new high-speed interface standards such as USB type-C.We are also active in high efficiency AC-DC power conversion ICs for notebook personal computers. Our strength in AC-DC power conversion is basedon our leading edge high-voltage power analog process technologies and engineering capabilities in designing high efficiency power conversion products.Due to worldwide conservation efforts, many countries, states and local governments have adopted regulations that increase the demand for higher powerefficiency solutions in computing and consumer applications, especially in power conversion.We are the market leader in HPRF power amplifiers for markets, such as mobile base stations, wireless connectivity, satellite and CATV infrastructureand receivers, industrial applications, and to a lesser extent the military and aerospace markets. We are engaged with the majority of the largest customers inmobile base stations and in several other application areas.Both Freescale and NXP prior to the Merger were the main suppliers into the HPRF power amplifier market. As a result of the Merger, NXP was requiredto sell its HPRF business. On December 7, 2015 NXP completed the divestment of its RF Power business to JAC Capital.We have an emerging business offering Smart Antennae solutions based on Low Noise Amplifier (LNA) technology. We engage and sell our SmartAntennae solutions to varied customers in the mobile, consumer electronics and cable television infrastructure markets.Our overall revenue in these businesses was $1,824 million in 2016 versus $1,144 million in 2015, which represents an increase of 59.4% year overyear.Standard ProductsOur Standard Products business supplies a broad range of standard semiconductor components, such as small signal discretes, power discretes,protection and signal conditioning devices and standard logic devices, which we largely produce in dedicated in-house high-volume manufacturingoperations. Our portfolio consists of a large variety of catalog products, using widely-known production techniques, with characteristics that are largelystandardized throughout the industry as well as leading discrete solutions especially in the field of ESD protection / EMI filtering and low loss rectificationand power switching. Our Standard Products are often sold as separate components, but in many cases, are used in conjunction with our High PerformanceMixed Signal solutions, often within the same subsystems. Further, we are able to leverage customer engagements where we provide standard productsdevices, as discrete components, within a system to identify and pursue potential High Performance Mixed Signal opportunities.Our products are sold both directly to OEMs as well as through distribution, and are primarily differentiated on cost, packaging type andminiaturization, and supply chain performance. Alternatively, our innovative products include “design-in” products, which require significant engineeringeffort to be designed into an application solution. For these products, our efforts make it more difficult for a competitor to easily replace our product, whichmakes these businesses more predictable in terms of revenue and pricing than is typical for standard products. 23Table of ContentsOur key product applications, markets and customers are described in the table below. Key Products • SS Transistors and Diodes• SS MOS• Power MOS• Interface protection devices• General Purpose LogicKey OEM andelectronic manufacturing services (EMS)end customers • Apple• BBK• Bosch• Continental• Delphi• Delta Electronics• Huawei• Lear• Samsung• ValeoThe table above provides a list of our key OEM and electronic manufacturing services end customers in alphabetical order, based on 2016 revenue, ofwhich some of whom are supplied by distributors. Key distributors across these applications are Arrow, Avnet, Future and WPG.In 2016, our Standard Products business generated net revenue of $1,220 million, compared to $1,241 million in 2015, which represents a 1.7% yearover year decline.We are the number one global supplier of small-signal discretes with one of the broadest product portfolios in the industry. We have a strong positiondue to our strong cost competitiveness, supply chain performance, leverage of our OEM relationships and a broadening portfolio. We are focusing onexpanding our share of higher margin products in this business. In addition, we are also building a small signal MOSFET product line, which leverages oursmall signal transistors and diodes packaging operations and strong customer relationships. In addition to our small signal discretes products, we have aPower MOSFET product line, which is focused on the low-voltage segment of this market. The majority of our revenue in Power MOSFETs is to automotivecustomers.We estimate that the market for discretes, excluding RF & Microwave, was $17 billion in 2015 and growth is expected with a CAGR of 4% to $20billion in 2019.Additionally, the Standard Products segment also includes Standard Logic ICs. We have the number two position in Standard Logic IC markets basedon worldwide revenue for 2015, which we deploy in a large number of our High Performance Mixed Signal solutions. We offer several product families forlow-voltage applications in communication equipment, personal computers, personal computer peripherals and consumer and portable electronics. Our 3Vand 5V families hold a leading share of the logic market. We continue to expand into the higher margin product range in this business by expanding, amongothers, our switches and translators (or custom logic) portfolio and optimizing our manufacturing. We estimate the worldwide Standard Logic market at $1.4billion in 2015, and is estimated to grow with compound annual rate of 1.1% between 2015 and 2019.Corporate and OtherWe manufacture integrated circuits and discrete semiconductors through a combination of wholly owned manufacturing facilities, manufacturingfacilities operated jointly with other semiconductor companies and third-party foundries and assembly and test subcontractors. Our manufacturing operationsprimarily focus on manufacturing and supplying products to our High Performance Mixed Signal and Standard Products businesses. We manage ourmanufacturing assets together through one centralized organization to ensure we realize scale benefits in asset utilization, purchasing volumes and overheadleverage across businesses.In the future, we expect to outsource an increased part of our internal demand for wafer foundry and packaging services to third-party manufacturingsources in order to increase our flexibility to accommodate increased demand mainly in our High Performance Mixed Signal and to a lesser extent inStandard Products businesses.The manufacturing of a semiconductor involves several phases of production, which can be broadly divided into “front-end” and “back-end”processes. Front-end processes take place at highly complex wafer manufacturing facilities (called fabrication plants or “wafer fabs”), and involve theimprinting of substrate silicon wafers with the precise circuitry required for semiconductors to function. The front-end production cycle requires high levelsof precision and involves as many as 300 process steps. Back-end processes involve the assembly, test and packaging of semiconductors in a form suitable fordistribution. In contrast to the highly complex front-end process, back-end processing is generally less complicated, and as a result we tend to determine thelocation of our back-end facilities based more on cost factors than on technical considerations.We primarily focus our internal and joint venture wafer manufacturing operations on running proprietary specialty process technologies that enable usto differentiate our products on key performance features, and we generally outsource wafer manufacturing in process technologies that are available at third-party wafer foundries when it is economical to do so. In addition, we increasingly 24Table of Contentsfocus our in-house manufacturing on our competitive 8-inch facilities, which predominantly run manufacturing processes in the 140 nanometer, 180nanometer and 250 nanometer process nodes, and have concentrated the majority of our manufacturing base in Asia. This focus increases our return oninvested capital and reduces capital expenditures.Our front-end manufacturing facilities use a broad range of production processes and proprietary design methods, including CMOS, bipolar, bipolarCMOS (“BiCMOS”) and double-diffused metal on silicon oxide semiconductor (“DMOS”) technologies. Our wafer fabs produce semiconductors with linewidths ranging from 90 nanometers to 3 microns for integrated circuits and 0.5 microns to greater than 4 microns for discretes. This broad technologyportfolio enables us to meet increasing demand from customers for system solutions, which require a variety of technologies.Our back-end manufacturing facilities test and package many different types of products using a wide variety of processes. To optimize flexibility, weuse shared technology platforms for our back-end assembly operations. Most of our assembly and test activities are maintained in-house. Finally, a number ofour High Performance Mixed Signal products enjoy significant packaging cost and innovation benefits due to the scale of our Standard Products business,which manufactures tens of billions of units per year.The following table shows selected key information with respect to our major front-end and back-end facilities: Site Ownership Wafer sizes used Line widths used (vm) Technology/Products (Microns) Front-end(1) Singapore(2) 61.2% 8” 0.14-0.25 CMOSNijmegen, the Netherlands 100% 8” 0.14-0.80 CMOS, BiCMOS, LDMOSHamburg, Germany(4) 100% 6”/8” 0.5-3.0 DiscretesManchester, United Kingdom(4) 100% 6” 0.5 Power discretesOak Hill, Austin, US 100% 8” 0.25 CMOS, BiCMOS, Sensors,LDMOS, HDTMOS, PowerCMOSChandler, US 100% 8” 0.25-0.50 CMOS, eNVM, PowerCMOSAustin Technology andManufacturing Center, US 100% 8” 0.09-0.18 CMOS, eNVM, PowerCMOS,Advanced CMOS, SoCBack-end(3) Kaohsiung, Taiwan 100% — — NFC, Automotive Car-access, Micro-controllersBangkok, Thailand 100% — — Automotive In-Vehicle Networkingand Sensors, Banking and e-Passportmodules, Standard LogicGuangdong, China(4) 100% — — Discrete devices and Standard LogicSeremban, Malaysia(4) 100% — — Discrete devices and Standard LogicCabuyao, Philippines(4) 100% — — Power discrete and AutomotiveSensorsKuala Lumpur, Malaysia 100% — — Micro-processors, Micro-controllers,Power Management, Analog andMixed Signal, RF devicesTianjin, China 100% — — Micro-controllers, AutomotiveMCU, Analog and Sensors (1)In front-end we entered into a joint venture with JAC Capital for the Bipolar products in which we currently hold a 49% interest. The Jilin front end fabtransferred into this JV.(2)Joint venture with TSMC; we are entitled to 60% of the joint venture’s annual capacity.(3)In back-end manufacturing we entered into a joint venture with ASE in Suzhou, China (ASEN), in which we currently hold a 40% interest.(4)These facilities were divested in connection with the sale of the Standard Products business to JAC Capital that closed on February 6, 2017.We use a large number of raw materials in our front- and back-end manufacturing processes, including silicon wafers, chemicals, gases, lead frames,substrates, molding compounds and various types of precious and other metals. Our most important raw materials are the raw, or substrate, silicon wafers weuse to make our semiconductors. We purchase these wafers, which must meet exacting specifications, from a limited number of suppliers in the geographicregion in which our fabrication facilities are located. At our wholly owned fabrication plants, we use raw wafers ranging from 6 inches to 8 inches in size. OurSSMC wafer fab facility, which produces 8 inch wafers, is jointly owned by TSMC and ourselves. We are leveraging our experience in that fab facility inoptimizing our remaining wholly owned Nijmegen and Hamburg wafer fabs. The Merger has added multiple 8 inch fabs for production of a wide portfolio ofanalog, mixed signal and processors products and this large scale and knowledge base will enable us to further optimize processes. Our other remaining fabsare small and are focused exclusively on manufacturing power discretes. Emerging fabrication technologies employ larger wafer sizes and, accordingly, weexpect that our production requirements will in the future shift towards larger substrate wafers. 25Table of ContentsWe typically source our other raw materials in a similar fashion as our wafers, although our portfolio of suppliers is more diverse. Some of our suppliersprovide us with materials on a just-in-time basis, which permits us to reduce our procurement costs and the negative cash flow consequences of maintaininginventories, but exposes us to potential supply chain interruptions. We purchase most of our raw materials on the basis of fixed price contracts, but generallydo not commit ourselves to long-term purchase obligations, which permits us to renegotiate prices periodically.Sales, Marketing and CustomersWe market our products worldwide to a variety of OEMs, ODMs, contract manufacturers and distributors. We generate demand for our products bydelivering High Performance Mixed Signal solutions to our customers, and supporting their system design-in activities by providing application architectureexpertise and local field application engineering support.Our sales and marketing teams are organized into six regions, which are EMEA (Europe, the Middle East and Africa), the Americas, Japan, South Korea,Greater China and Asia Pacific. These sales regions are responsible for managing the customer relationships, design-in and promotion of new products. Weseek to further expand the presence of application engineers closely supporting our customers and to increase the amount of product development work thatwe can conduct jointly with our leading customers. Our web-based marketing tool is complementary to our direct customer technical support.Our sales and marketing strategy focuses on deepening our relationship with our top OEMs and electronic manufacturing service customers anddistribution partners and becoming their preferred supplier, which we believe assists us in reducing sales volatility in challenging markets. We have long-standing customer relationships with most of our customers. Our 10 largest OEM end customers, some of whom are supplied by distributors, in alphabeticalorder, are Apple, BBK, Bosch, Continental, Delphi, Denso, Huawei, Samsung, TRW and ZTE. When we target new customers, we generally focus oncompanies that are leaders in their markets either in terms of market share or leadership in driving innovation. We also have a strong position with ourdistribution partners being a top three semiconductor supplier (other than microprocessors and memory ICs) through distribution worldwide. Our 3 largestdistribution partners are Arrow, Avnet and WPG.Our revenue is primarily the sum of our direct sales to original equipment manufacturers, or OEMs, plus our distributors’ resale of NXP products. Onedistributor accounted for more than 10% of total 2016 revenue: Avnet accounted for 13% of our revenue in 2016, 14% in 2015 and 13% in 2014. WPGaccounted for less than 10% of our revenue in 2016, 14% in 2015 and 13% in 2014. No other distributor accounted for more than 10% of our revenue in2016, 2015 or 2014. No individual OEM for which we had direct sales to accounted for more than 10% of revenue in 2016, 2015 or 2014.Research and Development, Patents and Licenses, etc.See the discussion set forth under Part I, Item 5C. Research and Development, Patents and Licenses, etc.CompetitionWe compete with many different semiconductor companies, ranging from multinational companies with integrated research and development,manufacturing, sales and marketing organizations across a broad spectrum of product lines, to “fabless” semiconductor companies, to companies that arefocused on a single application market segment or standard product. Most of these competitors compete with us with respect to some, but not all, of ourbusinesses.Our key competitors (excluding those related to the Standard Products business which was divested on February 6, 2017) in alphabetical order includeAnalog Devices Inc., Broadcom, Cavium, Infineon, Intel, Linear Technology, Maxim Integrated Products, Microchip, Renesas, Power Integrations, SiliconLaboratories, STMicroelectronics and Texas Instruments.The basis on which we compete varies across market segments and geographic regions. Our High Performance Mixed Signal businesses competeprimarily on the basis of our ability to timely develop new products and the underlying intellectual property and on meeting customer requirements in termsof cost, product features, quality, warranty and availability. In addition, our High Performance Mixed Signal system solutions businesses require in-depthknowledge of a given application market in order to develop robust system solutions and qualified customer support resources.Legal ProceedingsThe information set forth under the “Litigation” caption of note 17 of our notes to the Consolidated Financial Statements included in Part III, Item 18of this Report is incorporated herein by reference. For additional discussion of certain risks associated with legal proceedings, see Part I, Item 3D. RiskFactors above.Environmental RegulationThe information set forth under the “Environmental remediation” caption of note 17 of our notes to the Consolidated Financial Statements included inPart III, Item 18 of this Report is incorporated herein by reference. For additional discussion of certain risks associated with environmental regulation, see PartI, Item 3D. Risk Factors above. 26Table of ContentsC. Organizational StructureA list of our significant subsidiaries, including name, country of incorporation or residence and proportion of ownership interest and voting power isprovided as “Exhibit 21.1” under Part III, Item 19. Exhibits and is incorporated herein by reference.CORPORATE STRUCTUREThe following chart reflects our corporate structure as of December 31, 2016. (1)For a more detailed description of our Long-Term Incentive Plans see the discussion set forth under “Share Based Compensation Plans” contained inthis Report in Part I, Item 6B. Compensation.(2)As of December 31, 2016, we had $1,150 million aggregate principal amount of 2019 Cash Convertible Senior Notes outstanding.(3)As of December 31, 2016, no borrowings were outstanding under the RCF Agreement.(4)As of December 31, 2016, we had $2,211 million aggregate principal amount outstanding under the Term Loans.(5)As of December 31, 2016, we had $6,000 million aggregate principal amount of Unsecured Notes outstanding.(6)This list of material subsidiaries includes the subsidiaries that are guarantors under our RCF Agreement and our Secured Term Credit Agreement. Othersubsidiaries provide a guarantee under certain of our other outstanding indebtedness. See Item 5B. Liquidity and Capital Resources, under the captions2016 Financing Activities, 2015 Financing Activities and 2014 Financing Activities. 27Table of ContentsD. Property, Plant and EquipmentNXP uses 108 sites in 32 countries with 13.6 million square feet of total owned and leased building space of which 10.4 million square feet is ownedproperty.The following table sets out our principal real property holdings as of December 31, 2016: Location Use Owned/leased Building space(square feet) Eindhoven, the Netherlands Headquarters Leased 152,666 Hamburg, Germany (1) Manufacturing Owned 749,609 Nijmegen, the Netherlands Manufacturing Owned 1,515,550 Singapore (SSMC) * Manufacturing Owned 757,852 Bangkok, Thailand Manufacturing Owned 547,882 Cabuyao, Philippines (2) Manufacturing Owned 494,656 Kaohsiung, Taiwan Manufacturing Owned 636,395 Manchester, United Kingdom (2) Manufacturing Owned 264,340 Guangdong, China (2) Manufacturing Leased 927,569 Tianjin, China Manufacturing Owned 447,624 Seremban, Malaysia (2) Manufacturing Owned 322,285 Kuala Lumpur, Malaysia Manufacturing Owned 828,858 Chandler, United States Manufacturing Owned 1,173,196 Austin (Oak Hill), United States Manufacturing Owned 1,514,389 Austin (Ed Bluestein), United States Manufacturing Owned 1,158,731 *Joint venture between TSMC and NXP.(1)As of February 6, 2017, this property has been divested with the sale of the Standard Products business. NXP will lease part of this property from theformer SP business.(2)As of February 6, 2017, these properties have been divested with the sale of the Standard Products business.Areas which are not fully closed are not considered as buildings (eg. sport fields, parking space). If it is not possible to differentiate between productionfacility and offices in the same building all is considered manufacturing. Item 4A.Unresolved Staff CommentsNot applicable. Item 5.Operating and Financial Review and ProspectsCritical Accounting EstimatesThe preparation of financial statements and related disclosures in accordance with U.S. GAAP requires our management to make judgments,assumptions and estimates that affect the amounts reported in our Consolidated Financial Statements and the accompanying notes. Our management bases itsestimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonableunder the circumstances. Actual results may differ from these estimates under different assumptions or conditions.The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in ourconsolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need tomake estimates regarding matters that are inherently uncertain. Our most critical accounting estimates include: • the valuation of inventory, which impacts gross margin; • the assessment of recoverability of goodwill, identified intangible assets and tangible fixed assets, which impacts gross margin or operatingexpenses when we record asset impairments or accelerate their depreciation or amortization; • revenue recognition, which impacts our results of operations; • the recognition of current and deferred income taxes (including the measurement of uncertain tax positions), which impacts our provision forincome taxes; • the assumptions used in the determination of postretirement benefit obligations, which impacts operating expenses; • the assumptions used in the determination of share based compensation, which impacts gross margin and operating expenses; and • the recognition and measurement of loss contingencies, which impacts gross margin or operating expenses when we recognize a losscontingency or revise the estimates for a loss contingency.In the following section, we discuss these policies further, as well as the estimates and judgments involved. 28Table of ContentsInventoriesInventories are valued at the lower of cost or market. We regularly review our inventories and write down our inventories for estimated losses due toobsolescence. This allowance is determined for groups of products based on sales of our products in the recent past and/or expected future demand. Futuredemand is affected by market conditions, technological obsolescence, new products and strategic plans, each of which is subject to change with little or noforewarning. In estimating obsolescence, we utilize information that includes projecting future demand.The need for strategic inventory levels to ensure competitive delivery performance to our customers are balanced against the risk of inventoryobsolescence due to rapidly changing technology and customer requirements.The change in our reserves for inventories was primarily due to the normal review and accrual of obsolete or excess inventory. If actual future demandor market conditions are less favorable than those projected by our management, additional inventory write-downs may be required.GoodwillGoodwill is required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets maybe impaired. Such events or changes in circumstances can be significant changes in business climate, operating performance or competition, or upon thedisposition of a significant portion of a reporting unit. A significant amount of judgment is involved in determining if an indicator of impairment hasoccurred between annual test dates. This impairment review compares the fair value for each reporting unit containing goodwill to its carrying value.Determining the fair value of a reporting unit involves the use of significant estimates and assumptions, including projected future cash flows, discount ratesbased on weighted average cost of capital and future economic and market conditions. We base our fair-value estimates on assumptions we believe to bereasonable. Actual cash flow amounts for future periods may differ from estimates used in impairment testing.For the annual impairment assessment in 2016, we determined that for each of our reporting units, it was more likely than not that the fair value of thereporting units exceeded the carrying value. During the fourth quarter of each of the prior two fiscal years, we have completed our annual impairmentassessments and concluded that goodwill was not impaired in any of these years.Impairment or disposal of identified intangible assets and tangible fixed assetsWe perform reviews of property, plant and equipment, and certain identifiable intangibles, excluding goodwill, to determine if facts and circumstancesindicate that the useful life is shorter than what we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts andcircumstances exist, we assess the recoverability of the long-lived assets by comparing the projected undiscounted net cash flows associated with the relatedasset or group of assets over their remaining lives against their respective carrying amounts. In the event such cash flows are not expected to be sufficient torecover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flowsattributable to the assets or based on appraisals. Impairment losses, if any, are based on the excess of the carrying amount over the fair value of those assets.The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other long-lived assets are complexand subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changesin our business strategy and our forecasts for specific product lines. In 2016, we recognized an impairment charge of $89 million relative to IPR&D that wasacquired from Freescale . In 2015, we recognized disposals of intangibles relative to our sale of the Bipolar and RF Power Businesses. In 2014, noimpairments or disposal of identified intangible assets and tangible fixed assets were required to be recognized.Revenue recognitionThe Company’s revenue is derived from sales to distributors, made-to-order sales to Original Equipment Manufacturers (“OEMs”) and similarcustomers.Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or the service has been provided, the sales price isfixed or determinable, and collection is reasonably assured, based on the terms and conditions of the sales contract. For made-to-order sales, these criteria aremet at the time the product is shipped and delivered to the customer and title and risk have passed to the customer. Acceptance of the product by thecustomer is generally not contractually required, since, for made-to-order customers, design approval occurs before manufacturing and subsequently deliveryfollows without further acceptance protocols. Payment terms used are those that are customary in the particular geographic market. When management hasestablished that all aforementioned conditions for revenue recognition have been met and no further post-shipment obligations exist, revenue is recognized.For sales to distributors, revenue is recognized upon sale to the distributor (sell-in accounting). We record reductions to sales associated with reservesfor allowances for collectibility, discounts, price protection, product returns and distributor incentive programs at the time the related sale is recognized. Theestablishment of such reserves is dependent on a variety of factors, including contractual terms, analysis of historical data, current economic conditions,industry demand and both the current and forecasted pricing environments. The process of evaluating these factors is highly subjective and requiressignificant estimates, including, but not limited to, forecasted demand, returns, pricing assumptions and inventory levels. In future periods, additionalprovisions may be necessary due to a deterioration in the semiconductor pricing environment, reductions in anticipated demand for semiconductor productsand/or lack of market acceptance for new products. If these factors result in a significant adjustment to our reserves, they could significantly impact our futureoperating results. 29Table of ContentsDistributor reserves estimate the impact of credits granted to distributors under certain programs common in the semiconductor industry wherebydistributors receive certain price adjustments to meet individual competitive opportunities, or are allowed to return or scrap a limited amount of product inaccordance with contractual terms agreed upon with the distributor, or receive price protection credits when our standard published prices are lowered fromthe price the distributor paid for product still in its inventory. The Company’s policy is to use a rolling historical experience rate, as well as a prospectiveview of products and pricing in the distribution channel for distributors who participate in our volume rebate incentive program, in order to estimate theproper provision for this program at the end of any given reporting period. We continually monitor the actual claimed allowances against our estimates, andwe adjust our estimates as appropriate to reflect trends in pricing environments and inventory levels. Distributor reserves are also adjusted when recenthistorical data does not represent anticipated future activity.Income taxesDeferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax basis of assets andliabilities and their reported amounts. Measurement of deferred tax assets and liabilities is based upon the enacted tax rates expected to apply to taxableincome in the years in which those temporary differences are expected to be recovered or settled. Deferred tax liabilities for withholding taxes on dividendsfrom subsidiaries are recognized in situations where the company does not consider the earnings indefinitely reinvested and to the extent that thesewithholding taxes are not expected to be refundable.Deferred tax assets, including assets arising from loss carryforwards, are recognized, net of a valuation allowance, if based upon the available evidenceit is more likely than not that the asset will be realized.The income tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained uponexamination by the relevant taxing authorities. The income tax benefit recognized is measured based on the largest benefit that is more than 50% likely to berealized upon resolution of the uncertainty. Unrecognized tax benefits are presented as a reduction to the deferred tax asset for related net operating losscarryforwards, unless these would not be available, in which case the uncertain tax benefits are presented together with the related interest and penalties as aliability, under accrued liabilities and other non-current liabilities based on the timing of the expected payment. Penalties are recorded as income taxexpense, whereas interest is reported as financial expense in the statement of operations.Postretirement benefitsThe Company’s employees participate in pension and other postretirement benefit plans in many countries. The costs of pension and otherpostretirement benefits and related assets and liabilities with respect to the Company’s employees participating in defined-benefit plans are based uponactuarial valuations.The projected defined-benefit obligation is calculated annually by qualified actuaries using the projected unit credit method. For the Company’s majorplans, the discount rate is derived from market yields on high quality corporate bonds. Plans in countries without a deep corporate bond market use adiscount rate based on the local government bond rates.In calculating obligation and expense, the Company is required to select actuarial assumptions. These assumptions include discount rate, expectedlong-term rate of return on plan assets and rates of increase in compensation costs determined based on current market conditions, historical information andconsultation with and input from our actuaries. Changes in the key assumptions can have a significant impact to the projected benefit obligations, fundingrequirements and periodic pension cost incurred. A sensitivity analysis is provided in note 15, “Postretirement Benefit Plans”.The Company determines the fair value of plan assets based on quoted prices or comparable prices for non-quoted assets. For a defined-benefit pensionplan, the benefit obligation is the projected benefit obligation; for any other postretirement defined benefit plan it is the accumulated postretirement benefitobligation.Share-based compensationWe recognize compensation expense for all share-based awards based on the grant-date estimated fair values, net of an estimated forfeiture rate. We usethe Black-Scholes option pricing model to determine the estimated fair value for certain awards. Share-based compensation cost for restricted share units(“RSU“s) with time-based vesting is measured based on the closing fair market value of our common stock on the date of the grant, reduced by the presentvalue of the estimated expected future dividends, and then multiplied by the number of RSUs granted. Share-based compensation cost for performance-basedshare units (“PSU“s) granted with performance or market conditions is measured using a Monte Carlo simulation model on the date of grant.Our valuation models and generally accepted valuation techniques require us to make assumptions and to apply judgment to determine the fair valueof our awards. These assumptions and judgments include estimating the volatility of our stock price, expected dividend yield, employee turnover rates andemployee stock option exercise behaviors. Due to the lack of extensive history as a public company, the computation of the expected volatility assumptionsused in the Black-Scholes calculations for grants was based on historical volatilities and implied volatilities of our peer group companies. When establishingthe expected life assumption, we used the ‘simplified’ method prescribed in ASC Topic 718 for companies that do not have adequate historical data. The risk-free interest rate is measured as the prevailing yield for a U.S. Treasury security with a maturity similar to the expected life assumption. We also estimate aforfeiture rate at the time of grant and revise this rate in subsequent periods if actual forfeitures or vesting differ from the original estimates. 30Table of ContentsWe evaluate the assumptions used to value our awards on a quarterly basis. If factors change and we employ different assumptions, share-basedcompensation expense may differ significantly from what we have recorded in the past. If there are any modifications or cancellation of the underlyingunvested securities, we may be required to accelerate, increase or cancel any remaining unearned share-based compensation expense.Litigation and claimsWe are regularly involved as plaintiffs or defendants in claims and litigation relating to matters such as commercial transactions and intellectualproperty rights. In addition, our divestments sometimes result in, or are followed by, claims or litigation by either party. From time to time, we also are subjectto alleged patent infringement claims. We rigorously defend ourselves against these alleged patent infringement claims. There can be no assurance that theCompany’s accruals will be sufficient to cover the extent of its potential exposure to losses. Historically, legal actions have not had a material adverse effecton the Company’s business, results of operations or financial condition.The estimated aggregate range of reasonably possible losses is based on currently available information in relation to the claims that have arisen andon the Company’s best estimate of such losses for those cases for which such estimate can be made. For certain claims, the Company believes that an estimatecannot currently be made. The estimated aggregate range requires significant judgment, given the varying stages of the proceedings (including the fact thatmany of them are currently in preliminary stages), the existence of multiple defendants (including the Company) in such claims whose share of liability hasyet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of the various potential outcomes of suchclaims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than the current estimate.Use of Certain Non-GAAP Financial MeasuresNet debt is a non-GAAP financial measure and represents total debt (short-term and long-term) after deduction of cash and cash equivalents.Management believes this measure is an appropriate reflection of our net leverage.We understand that, although net debt is used by investors and securities analysts in their evaluation of companies, this concept has limitations as ananalytical tool and it should not be used as an alternative to any other measure in accordance with U.S. GAAP. 31Table of ContentsA. Operating ResultsYear Ended December 31, 2016 Compared to Year Ended December 31, 2015Results of OperationsThe following table presents the composition of operating income for the years ended December 31, 2016 and 2015. ($ in millions, unless otherwise stated) 2016 2015 Revenue 9,498 6,101 % nominal growth 55.7 8.0 Gross profit 4,069 2,787 Research and development (1,560) (890) Selling, general and administrative (SG&A) (1,141) (922) Amortization of acquisition-related intangible assets (1,527) (223) Other income (expense) 9 1,263 Operating income (loss) (150) 2,015 RevenueThe following table presents revenue by segment for the years ended December 31, 2016 and 2015. 2016 2015 ($ in millions, unless otherwise stated) Revenue % nominal growth Revenue % nominal growth High Performance Mixed Signal (“HPMS”) 8,086 71.3 4,720 12.2 Standard Products (“SP”) 1,220 (1.7) 1,241 (2.7) Corporate and Other 192 37.1 140 (14.6) Total 9,498 55.7 6,101 8.0 Revenue increased by $3,397 million to $9,498 million in 2016 compared to $6,101 million in 2015, a nominal increase of 55.7%, reflecting theinclusion of the operations of Freescale.Our HPMS segment reported an increase in revenue of $3,366 million to $8,086 million in 2016 compared to $4,720 million in 2015, resulting in71.3% nominal growth. The increase was primarily due to incremental revenue from the acquired Freescale businesses from December 7, 2015, onward, partlyoffset by the divestment of RF Power on December 7, 2015.Revenue for our SP segment decreased $21 million to $1,220 million in 2016, compared to $1,241 million in 2015. The decrease was primarilyattributable to the transfer of the Bipolar Power business line activities into a joint venture (WeEn Semiconductors) with JAC Capital in China.Revenue for Corporate and Other amounted to $192 million in 2016, compared to $140 million in 2015 and mainly related to our manufacturingoperations.Gross ProfitThe following table presents gross profit by segment for the years ended December 31, 2016 and 2015. 2016 2015 ($ in millions, unless otherwise stated) Gross Profit % of segmentrevenue Gross Profit % of segmentrevenue HPMS 3,625 44.8 2,367 50.1 SP 437 35.8 417 33.6 Corporate and Other 7 3.6 3 2.1 Total 4,069 42.8 2,787 45.7 Gross profit in 2016 was $4,069 million, or 42.8% of revenue compared to $2,787 million, or 45.7% of revenue in 2015. The increase of $1,282 millionwas primarily driven by the inclusion of the operating activity of Freescale partly offset by the effects of PPA, and to a lesser extent, stock basedcompensation expense. The decrease in the gross profit percentage was primarily driven by the effect of purchase accounting in our HPMS segment.Our HPMS segment had a gross profit of $3,625 million, or 44.8% of revenue in 2016, compared to $2,367 million, or 50.1% of revenue in 2015. Thedecrease in the gross profit percentage of 5.3 points as a percentage of revenue was primarily driven by the effects of purchase accounting in two areas—inventory of $448 million (2015: $149 million) and property, plant and equipment of $209 million (2015: $15 million), both as a result of the acquisition ofFreescale, and to a lesser extent, restructuring activity ($12 million) and stock based compensation expense ($42 million).Gross profit in our SP segment was $437 million, or 35.8% of revenue in 2016, compared to $417 million, or 33.6% of revenue in 2015. The increase inthe gross profit percentage of 2.2 points was a result of lower depreciation expense as a result of the fixed assets of the SP business being classified as held forsale and depreciation being discontinued on those fixed assets. 32Table of ContentsOperating ExpensesThe following table presents operating expenses by segment for the years ended December 31, 2016 and 2015. 2016 2015 ($ in millions, unless otherwise stated) Operating expenses % of segmentrevenue Operating expenses % of segmentrevenue HPMS 3,937 48.7 1,674 35.5 SP 168 13.8 223 18.0 Corporate and Other 123 — 138 — Total 4,228 44.5 2,035 33.4 The following table below presents the composition of operating expenses by line item in the statement of operations. ($ in millions, unless otherwise stated) 2016 2015 Research and development 1,560 890 Selling, general and administrative 1,141 922 Amortization of acquisition-related intangible assets 1,527 223 Operating expenses 4,228 2,035 Operating expenses were $4,228 million, or 44.5% of revenue in 2016, compared to $2,035 million, or 33.4% of revenue in 2015, an increase of $2,193million, or an increase of 11.1 points as a percentage of revenue. The increase in operating expenses was primarily due to the acquisition of Freescale: theinclusion of their operating activity from December 7, 2015 onward and the related amortization of acquisition related intangibles of $1,430 million (2015:$105 million).In our HPMS segment, operating expenses amounted to $3,937 million, or 48.7% of revenue in 2016, compared to $1,674 million, or 35.5% of revenuein 2015. The increase was primarily driven by the acquisition of Freescale: the inclusion of their operating activity from December 7, 2015 onward and therelated amortization of acquisition related intangibles of $ 1,430 million (2015: $105 million), which includes an impairment charge of $89 million (2015:nil) relative to IPR&D that was acquired from Freescale.Operating expenses in our SP segment decreased to $168 million, or 13.8% of revenue in 2016 compared to $223 million or 18.0% of revenue in 2015.The decrease in operating expenses was primarily driven by a continued strong focus on cost controls and the effect of the divestment of the Bipolaractivities.Restructuring ChargesTotal restructuring and restructuring related costs amounted to $68 million in 2016, compared to $264 million in 2015.In 2016, the restructuring charges were for various specific targeted actions and were comprised of employee severance costs. In 2015, the restructuringcharges mainly related to the acquisition of Freescale and were comprised of severance costs of $239 million, and other exit costs of $27 million.Other Income (Expense)The following table presents other income (expense) for the years ended December 31, 2016 and 2015. ($ in millions, unless otherwise stated) 2016 2015 Other income (expense) 9 1,263 Other income (expense) reflects income of $9 million for 2016 compared to $1,263 million of income in 2015. Included in 2015 is the gain on the saleof NXP’s Bipolar Power business line and RF Power business to JAC Capital in the fourth quarter of 2015. 33Table of ContentsFinancial Income (Expense) ($ in millions) For the years ended December 31, 2016 2015 Interest income 11 6 Interest expense (408) (227) Foreign exchange rate results (15) (193) Net gain (loss) on extinguishment of debt (32) — Change in fair value of the warrant liability — (31) Other (9) (84) Total (453) (529) Financial income (expense) was an expense of $453 million in 2016, compared to an expense of $529 million in 2015. The decrease in financialincome (expense) is primarily attributable to (i) a more favorable impact of foreign exchange rate results, (ii) lower other financial income and expense relateditems than in 2015, offset by (iii) the increase in interest expense, net, as a result of the debt that we assumed in the acquisition of Freescale and by (iv) a $32million loss on the early extinguishment of debt due to certain financing activities completed during 2016. Beginning on January 1, 2016, as a result of theacquisition of Freescale, NXP concluded that the functional currency of the holding company was USD. With this change in functional currency, the U.S.dollar-denominated notes held by NXP no longer need to be re-measured, resulting in less foreign exchange rate results in our operations and the warrantswere reclassified to stockholders’ equity, and mark-to-market accounting was no longer applicable.Benefit (Provision) for Income TaxesThe effective tax rate reflects the impact of tax incentives, a portion of our earnings being taxed in foreign jurisdictions at rates different than theNetherlands statutory tax rate and the mix of income and losses in various jurisdictions. We recorded a tax benefit of $851 million in 2016, which reflects abenefit of 141.1% compared with a benefit of $104 million (7.0%) for 2015.ASC 740, Income Taxes, requires that we consider all available evidence in forming a judgement regarding the valuation allowance as of December 31,2016, including events that occur subsequent to year end but prior to the issuance of the financial statements. As a result of the February 6, 2017 dispositionof SP, we concluded that the valuation allowance should be reduced by $395 million as of December 31, 2016, as the SP divestiture provided an objectivelyverifiable source of income against which tax losses can be utilized. As a result, we recognized an additional benefit of $392 million in the benefit(provision) for income taxes in the consolidated statement of operations and an additional $7 million in capital in excess of par value in the consolidatedbalance sheet in the fourth quarter. In the second quarter, the valuation allowance in the U.S. was reduced by $107 million as a result of our determinationthat sufficient positive evidence existed to support a more likely than not determination that the U.S. deferred tax assets were realizable.As a result, the significant change in our effective tax rate was primarily due to the reversals of valuation allowances in the Netherlands and Germany asa result of the SP divestiture, a reversal of the valuation allowance in the U.S. related to the Company’s determination that sufficient positive evidenceexisted to support a more likely than not determination that the U.S. deferred tax assets were realizable, and the impact of purchase accounting as a result ofthe acquisition of Freescale, slightly offset by the impact of the inclusion of the operations of Freescale, which resulted in significant amortization expensefor acquired intangibles, additional depreciation expense as a result of the fair value adjustments on tangible assets and a significant impact to the mix ofincome and losses between jurisdictions. In addition, the tax expense related to transactions associated with internal restructurings resulting from theFreescale acquisition represented a higher percentage of earnings before tax for 2016 as compared to 2015.As previously discussed, on February 6, 2017 we divested Standard Products, receiving $2.75 billion in cash proceeds. In relation to the gain that willbe realized, the Company currently estimates that we will incur approximately $450 million of capital gains taxes that will come due in increments during2017, 2018 and 2019. Cash payments for income taxes that are relative to our ongoing operations are expected to remain at approximately $30 to $35million per quarter during 2017. In relation to the gain we expect additional cash payments for income taxes to be approximately $30 million in the firstquarter of 2017 and approximately $90 million in each of the second, third and fourth quarters of 2017. For the years ended December 31, 2018 and 2019, wecurrently estimate in each year additional cash payments for income taxes relative to this gain of approximately $75 million.Results Relating to Equity-accounted InvesteesResults relating to the equity-accounted investees amounted to a gain of $11 million in 2016, compared to a gain of $9 million in 2015.Non-controlling InterestsNon-controlling interests are related to the third party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $59 million in 2016, compared to a profit of $73 million in 2015. 34Table of ContentsYear Ended December 31, 2015 Compared to Year Ended December 31, 2014Results of OperationsThe following table presents the composition of operating income for the years ended December 31, 2015 and 2014. ($ in millions, unless otherwise stated) 2015 2014 Revenue 6,101 5,647 % nominal growth 8.0 17.3 Gross profit 2,787 2,640 Research and development (890) (763) Selling, general and administrative (SG&A) (922) (686) Amortization of acquisition-related intangible assets (223) (152) Other income (expense) 1,263 10 Operating income 2,015 1,049 RevenueThe following table presents revenue by segment for the years ended December 31, 2015 and 2014. 2015 2014 ($ in millions, unless otherwise stated) Revenue % nominal growth Revenue % nominal growth High Performance Mixed Signal (“HPMS”) 4,720 12.2 4,208 19.1 Standard Products (“SP”) 1,241 (2.7) 1,275 11.4 Corporate and Other 140 (14.6) 164 19.7 Total 6,101 8.0 5,647 17.3 Revenue increased by $454 million to $6,101 million in 2015 compared to $5,647 million in 2014, a nominal increase of 8.0%. The increase wasdriven by growth in our HPMS segment, offset by a decrease in SP and Corporate and Other.Our HPMS segment saw an increase in revenue of $512 million to $4,720 million in 2015 compared to $4,208 million in 2014. The increase wasprimarily driven by the acquisition of Freescale and the inclusion of their activity from December 7, 2015, onward, increased demand in Secure ConnectedDevices with the ramp up of mobile transactions in high-end smartphone and tablet platforms and increased demand in Automotive, driven mainly by carentertainment products. These increases were partially offset by the divestment of RF Power on December 7, 2015. Our Secure Identification Solutionsbusiness remained essentially flat year on year.Revenue for our SP segment decreased by $34 million to $1,241 million in 2015, compared to $1,275 million in 2014. The decrease was primarily dueto decreased demand in general applications.Revenue for Corporate and Other amounted to $140 million in 2015, compared to $164 million in 2014 and mainly related to our manufacturingoperations.Gross ProfitThe following table presents gross profit by segment for the years ended December 31, 2015 and 2014. 2015 2014 ($ in millions, unless otherwise stated) Gross Profit % of segmentrevenue Gross Profit % of segmentrevenue HPMS 2,367 50.1 2,253 53.5 SP 417 33.6 382 30.0 Corporate and Other 3 2.1 5 3.0 Total 2,787 45.7 2,640 46.8 Gross profit in 2015 was $2,787 million, or 45.7% of revenue compared to $2,640 million, or 46.8% of revenue in 2014, an increase of $147 million.Our gross profit is heavily influenced by customer mix, product mix and manufacturing costs.Our HPMS segment had a gross profit of $2,367 million, or 50.1% of revenue in 2015, compared to $2,253 million, or 53.5% of revenue in 2014. Thedecrease in the gross profit percentage of 3.4 points as a percentage of revenue was primarily driven by the impact of purchase accounting on inventory of$149 million and property, plant and equipment of $15 million, as a result of the merger with Freescale.Gross profit in our SP segment was $417 million, or 33.6% of revenue in 2015, compared to $382 million, or 30.0% of revenue in 2014. The increase inthe gross profit percentage of 3.6 points was primarily driven by a more beneficial product mix and improved manufacturing costs. 35Table of ContentsOperating ExpensesThe following table presents operating expenses by segment for the years ended December 31, 2015 and 2014. 2015 2014 ($ in millions, unless otherwise stated) Operating expenses % of segmentrevenue Operating expenses % of segmentrevenue HPMS 1,674 35.5 1,278 30.4 SP 223 18.0 262 20.5 Corporate and Other 138 — 61 — Total 2,035 33.4 1,601 28.4 The following table below presents the composition of operating expenses by line item in the statement of operations. ($ in millions, unless otherwise stated) 2015 2014 Research and development 890 763 Selling, general and administrative 922 686 Amortization of acquisition-related intangible assets 223 152 Operating expenses 2,035 1,601 Operating expenses were $2,035 million, or 33.4% of revenue in 2015, compared to $1,601 million, or 28.4% of revenue in 2014, an increase of $434million, or an increase of 5.0 points as a percentage of revenue. The increase in operating expenses was primarily due to the acquisition of Freescale: theinclusion of their activity from December 7, 2015 onward and the related amortization of acquisition related intangibles of $105 million, the restructuringcharge of $226 million, the charge for the acceleration of share-based compensation costs of $49 million for employees terminated in relation to the Mergerand $42 million of merger-related costs.In our HPMS segment, operating expenses amounted to $1,674 million, or 35.5% of revenue in 2015, compared to $1,278 million, or 30.4% of revenuein 2014. The increase was primarily driven by the acquisition of Freescale—the inclusion of their activity from December 7, 2015 onward and the relatedamortization of acquisition related intangibles of $105 million, the restructuring charge of $226 million and the charge for the acceleration of share-basedcompensation costs of $49 million for employees terminated in relation to the Merger.Operating expenses in our SP segment decreased to $223 million, or 18.0% of revenue in 2015 compared to $262 million or 20.5% of revenue in 2014.The decrease in operating expenses was mainly driven by a strong focus on cost control to compensate for the decrease in revenue.Operating expenses in Corporate and Other increased by $77 million to $138 million in 2015 compared to $61 million in 2014. The increase comparedto the prior year period was primarily due to merger-related costs in connection with the acquisition of Freescale as noted above.Restructuring ChargesTotal restructuring and restructuring related costs amounted to $264 million in 2015 compared to $57 million in 2014.In 2015, restructuring charges included employee severance costs of $239 million, and other exit costs of $27 million. The majority of these costsrelated to the acquisition of Freescale.In 2014, we had restructuring charges, which related to a workforce reduction charge as a result of redundancy at our ICN 8 wafer fab in Nijmegen of$16 million and at our wafer fab in Hamburg of $5 million. The remaining restructuring and restructuring related costs were for the cumulative impact ofspecific targeted actions.Other Income (Expense)The following table presents other income (expense) for the years ended December 31, 2015 and 2014. ($ in millions, unless otherwise stated) 2015 2014 Other income (expense) 1,263 10 Other income (expense) reflects income of $1,263 million for 2015 compared to $10 million of income in 2014. Included in 2015 is the gain on thesale of NXP’s Bipolar Power business line and RF Power business to JAC Capital in the fourth quarter average of 2015. We established a 49% owned jointventure (JV) with JAC Capital to combine NXP’s advanced technology from its Bipolar Power business line with JAC Capital’s connections in the Chinesemanufacturing network and distribution channels. The results of the Bipolar Power business were previously consolidated in the reportable segment SP. Thenew joint venture will be reported in Corporate and Other going forward. The results of the RF Power business were previously consolidated in the reportablesegment HPMS. 36Table of ContentsFinancial Income (Expense) ($ in millions) For the years ended December 31, 2015 2014 Interest income 6 3 Interest expense (227) (158) Foreign exchange rate results (193) (246) Net gain (loss) on extinguishment of debt — (3) Change in fair value of the warrant liability (31) (2) Other (84) (64) Total (529) (410) Financial income (expense) was an expense of $529 million in 2015, compared to an expense of $410 million in 2014. In 2015, financial income(expense) included a loss of $193 million as a result of changes in foreign exchange rates mainly applicable to the re-measurement of our U.S. dollar-denominated notes and short-term loans, which reside in a euro functional currency entity, compared to a loss of $246 million in 2014. Net interest expenseamounted to $221 million in 2015 compared to $155 million in 2014. The increase in net interest expense was due to interest on our outstanding TermLoans, the Cash Convertible Senior Notes and the Secured Notes that we assumed in the acquisition of Freescale, together with the amortization of relateddebt issuance costs and the accretion of the debt discount on the newly issued Term Loan B and on the Cash Convertible Senior Notes. Starting in 2016, weexpect to incur significantly higher aggregate interest expense due to the full annual effect of the borrowings we incurred to acquire Freescale, including theimpact of purchase accounting on such debt. The related debt issuance costs will be charged to interest expense using the effective interest method over therespective borrowing terms. The change in fair value of the warrant liability, an expense of $31 million, resulted from the mark-to-market adjustment on theWarrant liability due to the increase in NXP’s share price over the 12-month period (2014: $2 million). In 2015, other included expenses of $71 millionrelated to the financing activities for the acquisition of Freescale. As of January 1, 2016, as a result of the acquisition of Freescale, NXP has concluded thatthe functional currency of the holding company is USD. Beginning from January 1, 2016, the warrants will now be classified in stockholders’ equity, andmark-to-market accounting will no longer be applicable. In addition our U.S. dollar-denominated notes and short-term loans will no longer need to be re-measured.Benefit (Provision) for Income TaxesThe effective tax rate was (7.0)% for 2015 compared with 6.3% for 2014. Our effective tax rate reflects the impact of our earnings being taxed in foreignjurisdictions at rates below the Netherlands statutory rate of 25.0%, and the relative mix of income and losses in these foreign jurisdictions including thosewhere a full valuation allowance is recorded, in addition to tax incentives in certain jurisdictions. We recognized a benefit from income taxes of $104 millionin 2015 compared with a provision for income taxes of $40 million in 2014. In 2015 we recognized a benefit from income taxes compared to a tax expense in2014 due to increased tax benefits for R&D tax allowances & incentives, tax benefits from a change in the valuation allowance and the impact of purchaseaccounting on intangible assets in relation to the acquisition of Freescale.Results Relating to Equity-accounted InvesteesResults relating to the equity-accounted investees amounted to a gain of $9 million in 2015, compared to a gain of $8 million in 2014.Non-controlling InterestsNon-controlling interests are related to the third party share in the results of consolidated companies, predominantly SSMC. Their share of non-controlling interests amounted to a profit of $73 million in 2015, compared to a profit of $68 million in 2014.B. Liquidity and Capital ResourcesLiquidity and Capital ResourcesAs of December 31, 2016, our cash balance was $1,894 million, of which $316 million was held by SSMC, our consolidated joint venture companywith TSMC. Under the terms of our joint venture agreement with TSMC, a portion of this cash can be distributed by way of a dividend to us, but 38.8% of thedividend will be paid to our joint venture partner. In 2016, a dividend of $325 million was distributed, of which $126 million was distributed to the jointventure partner.Taking into account the available undrawn amount under the RCF Agreement, we had access to $2,494 million of liquidity as of December 31, 2016.Our capital expenditures were $389 million in 2016, compared to $341 million in 2015.The total amount of cash used for financing activities amounted to $1,392 million.As of December 31, 2016, we had an undrawn availability of $600 million remaining under the RCF Agreement.For the year ended December 31, 2016, we incurred total net interest expense of $397 million compared to $221 million during 2015. The weightedaverage interest rates on our debt instruments as of December 31, 2016 and December 31, 2015 were 3.7% and 3.9%, respectively. 37Table of ContentsWe repurchased 15.5 million shares of our common stock pursuant to our share buyback program during 2016 at a weighted average price of $82.36per share.Our sources of liquidity include cash on hand, cash flow from operations and amounts available under the RCF Agreement. We believe that, based onour current level of operations as reflected in our results of operations for the year ended December 31, 2016, these sources of liquidity will be sufficient tofund our operations, capital expenditures, and debt service for at least the next twelve months.From time to time, we engage in discussions with third parties regarding potential acquisitions of, or investments in, businesses, technologies andproduct lines, such as our recent acquisition Freescale. Any such transaction could require significant use of our cash and cash equivalents, or require us toarrange for new debt and equity financing to fund the transaction. Our ability to make scheduled payments or to refinance our debt obligations depends onour financial and operating performance, which is subject to prevailing economic and competitive conditions. In the future, we may not be able to maintain alevel of cash flows from operating activities sufficient to permit us to pay principal, premium, if any, and interest on our indebtedness. Our business may notgenerate sufficient cash flow from operations, or we may not have enough capacity under the RCF Agreement, or from other sources in an amount sufficientto enable us to repay our indebtedness, including the RCF Agreement, the Unsecured Notes or to fund our other liquidity needs, including working capitaland capital expenditure requirements. In any such case, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additionalcapital or restructure or refinance our indebtedness. See Part I, Item 3D. Risk Factors. The Purchase Agreement restricts us from engaging in certain actionswithout Buyer’s approval, including material acquisitions outside the ordinary course of business.Cash Flow from Operating ActivitiesIn 2016 our operating activities provided $2,303 million in cash. This was primarily the result of net income of $259 million, adjustments to reconcilethe net income of $1,673 million and changes in operating assets and liabilities of $371 million. The net income includes non-cash items, such asdepreciation and amortization of $2,205 million, share-based compensation of $338 million, amortization of the discount on debt and debt issuance costs of$50 million, a loss on extinguishment of debt of $32 million and changes in deferred taxes of $925 million.In 2015 our operating activities provided $1,330 million in cash. This was primarily the result of net income of $1,599 million and changes inoperating assets and liabilities of $56 million. Net income includes non-cash items, such as the gain on the sale of assets of $1,263 million, depreciation andamortization of $517 million and share-based compensation of $216 million.In 2014 our operating activities provided $1,468 million in cash. This was primarily the result of net income of $607 million and changes in operatingassets and liabilities of $82 million. Net income includes non-cash items, such as depreciation and amortization, of $778 million.Cash Flow from Investing ActivitiesNet cash used for investing activities amounted to $627 million in 2016 and principally consisted of cash outflows for purchases of interests inbusiness (net of cash) of $202 million, capital expenditures of $389 million and $59 million for the purchase of identified intangible assets, mainly related tothe purchase of licenses, partly offset by proceeds of $20 million from the sale of business (net of cash).Net cash used for investing activities amounted to $430 million in 2015 and principally consisted of cash outflows for purchases of interests inbusiness (net of cash) of $1,692 million, capital expenditures of $341 million and $12 million for the purchase of identified intangible assets, mainly relatedto the purchase of software offset by proceeds of $1,605 million from the sale of business (net of cash).Net cash used for investing activities amounted to $387 million in 2014 and principally consisted of cash outflows for capital expenditures of $329million and $36 million for the purchase of identified intangible assets, mainly related to the purchase of software.Cash Flow from Financing ActivitiesNet cash used for financing activities was $1,392 million in 2016, $449 million in 2015 and $554 million in 2014. The cash flows related to financingtransactions in 2016, 2015 and 2014 are primarily related to the financing activities described below under the captions 2016 Financing Activities, 2015Financing Activities and 2014 Financing Activities, respectively. 38Table of ContentsIn addition to the financing activities described below, net cash used for financing activities by year included: Year ended December 31, 2016 2015 2014 Net (repayments) borrowings under revolving credit facility — — (150) Proceeds from the sale of warrants — — 134 Cash paid for Notes hedge derivatives — — (208) Dividends paid to non-controlling interests (126) (51) (50) Cash proceeds from exercise of stock options 115 51 145 Purchase of treasury shares (1,280) (475) (1,435) Excess tax benefits from share-based compensation plans 5 — — 2016 Financing Activities2020 Term LoanOn September 22, 2016, NXP entered into a new $1,440 million aggregate principal amount Senior Secured Term Loan Facility due December 7, 2020.Concurrently, NXP repaid the $1,440 million principal amount Senior Secured Term Loan Facility due December 7, 2020.2022 Senior Unsecured NotesOn August 11, 2016, NXP B.V., together with NXP Funding LLC, issued U.S. dollar-denominated 3.875% Senior Unsecured Notes with an aggregateprincipal amount of $1,000 million, due September 1, 2022. The interest is payable semi-annually on March 1 and September 1 of each year, beginning onMarch 1, 2017. The Notes were issued at par and were recorded at their fair value of $1,000 million on the accompanying Consolidated Balance Sheet. NXPused the net proceeds from the offering of the Notes to redeem the remaining $960 million aggregate principal amount of its outstanding Senior SecuredNotes due 2022 and to pay for certain costs and expenses related thereto.2021 Additional Senior Unsecured NotesOn August 1, 2016, NXP B.V., together with NXP Funding LLC, issued an aggregate principal amount of $500 million of 4.125% Senior UnsecuredNotes due 2021 (the “Additional Notes”). The Additional Notes were issued at a price of 101.875% and are of the same class as the existing 4.125% SeniorNotes due 2021 originally issued on May 23, 2016. NXP used the net proceeds from the offering of the Additional Notes to redeem $200 million aggregateprincipal amount of its outstanding Senior Notes due 2016 and used the remainder of the proceeds for general corporate purposes.2021 and 2023 Senior Unsecured NotesOn May 23, 2016, NXP B.V. together with NXP Funding LLC issued U.S. dollar-denominated 4.125% and 4.625% Senior Unsecured Notes withaggregate principal amounts of $850 million, due June 1, 2021 and $900 million, due June 1, 2023. The interest is payable semi-annually on June 1 andDecember 1 of each year, beginning on December 1, 2016. These Notes were issued at par and were recorded at their fair value of $850 million and $900million, respectively, on the accompanying Consolidated Balance Sheet. NXP used the net proceeds from the offering of the Notes and cash on hand to repay$1,250 million aggregate principal amount of its existing Secured Term Loan B due 2020 and $500 million aggregate principal amount of its outstandingSenior Secured Notes due 2021.2016 Senior Unsecured NotesOn February 23, April 27 and August 1, 2016, NXP B.V., together with NXP Funding LLC, issued redemption notices for an aggregate principalamount of $200 million, $100 million and $200 million, respectively, of its outstanding 3.5% Senior Unsecured Notes due 2016. The funds from thisredemption came from available surplus cash. 39Table of Contents2015 Financing ActivitiesRCF AgreementOn December 7, 2015, NXP B.V. and NXP Funding LLC, entered into a $600 million revolving credit facility agreement (the “RCF Agreement”). Thereare currently no borrowings under this facility.Secured Bridge Term Credit AgreementOn December 7, 2015, NXP B.V. and NXP Funding LLC, entered into a $1,000 million secured bridge term credit facility agreement (the “SecuredBridge Term Credit Agreement”). The Secured Bridge Term Credit Agreement was repaid in full on December 16, 2015.Secured NotesIn connection with the Merger, the Indenture, dated as of May 31, 2013 (the “2021 Freescale Indenture”), by and among Freescale Semiconductor, Inc.(the “Freescale Issuer”), an indirect, wholly-owned subsidiary of Freescale, Freescale Semiconductor Holdings II, Ltd., Freescale Semiconductor Holdings III,Ltd., Freescale Semiconductor Holdings IV, Ltd., Freescale Semiconductor Holdings V, Inc. and SigmaTel LLC (the “Freescale Indenture Guarantors”) andThe Bank of New York Mellon Trust Company, N.A., as trustee (the “2021 Freescale Trustee”), governing Freescale’s 5.00% Senior Secured Notes due 2021(the “2021 Freescale Notes”) and the Indenture, dated as of November 1, 2013 (the “2022 Freescale Indenture” and, together with the 2021 FreescaleIndenture, the “Freescale Indentures”), by and among the Freescale Issuer, the Freescale Indenture Guarantors and Wells Fargo Bank, National Association, astrustee (the “2022 Freescale Trustee”, together with the 2021 Freescale Trustee, the “Freescale Trustees”), governing Freescale’s 6.00% Senior Secured Notesdue 2022 (the “2022 Freescale Notes” and, together with the 2021 Freescale Notes, the “Secured Notes”) were amended and restated on December 7, 2015(the “A&R Freescale Indentures”). In accordance with the A&R Freescale Indentures, among other things, (x) certain amendments previously approved by theholders of the Freescale Notes as part of the consents solicitations that launched on March 23, 2015 and closed on April 2, 2015 became operative and (y) theNXP B.V., NXP Funding LLC, NXP Semiconductors Netherlands B.V., NXP Semiconductors UK Limited, NXP Semiconductors USA, Inc., NXPSemiconductors Germany GmbH, NXP Semiconductors Hong Kong Limited, NXP Semiconductors Philippines Inc., NXP Semiconductors Singapore Pte. Ltd.,NXP Semiconductors Taiwan Ltd. and NXP Manufacturing (Thailand) Ltd. entered into and acceded to the A&R Freescale Indentures as additionalguarantors.2020 Senior Unsecured Notes and 2022 Senior Unsecured NotesOn June 9, 2015 our subsidiary, NXP B.V. together with NXP Funding LLC issued U.S dollar-denominated 4.125% and 4.625% Senior UnsecuredNotes with an aggregate principal amounts of $600 million due 2020 and $400 million due 2022, respectively (the “2020 Senior Unsecured Notes” and the“2022 Senior Unsecured Notes”). The 2020 Senior Unsecured Notes bear interest at a rate of 4.125% per year, while the 2022 Senior Unsecured Notes bearinterest at a rate of 4.625% per year, payable semi-annually on June 15 and December 15 of each year, beginning on December 15, 2015. The 2020 SeniorUnsecured Notes will mature on June 15, 2020. The 2022 Senior Unsecured Notes will mature on June 15, 2022. The 2020 Senior Unsecured Notes and the2022 Senior Unsecured Notes were issued at par and were recorded at their fair value of $600 million and $400 million, respectively, on the accompanyingConsolidated Balance Sheet.Term Loan BOn December 7, 2015, NXP B.V. and NXP Funding LLC, in connection with the Merger entered into a $2,700 million secured term credit agreement(the “Secured Term Credit Agreement”). The term loan under the Secured Term Credit Agreement was issued at 99.25% of par and was recorded at a fair valueof $2,680 million on the accompanying Consolidated Balance Sheet.The net proceeds of the 2020 Senior Unsecured Notes and 2022 Senior Unsecured Notes, together with the net proceeds of the Term Loan B, theSecured Bridge Term Credit Agreement, cash-on-hand and/or other available financing resources, were used to (i) pay the cash consideration in connectionwith the acquisition of Freescale, (ii) effect the repayment of certain amounts under Freescale’s outstanding credit facility and (iii) pay certain transactioncosts.2014 Financing Activities2017 Term LoanOn February 18, 2014, our subsidiary, NXP B.V. together with NXP Funding LLC entered into a new $400 million aggregate principal amount SeniorSecured Term Loan Facility due March 4, 2017 (the “2017 Term Loan”). Concurrently, NXP repaid the $486 million principal amount Senior Secured TermLoan Facility due March 4, 2017. A $100 million draw-down under our existing Revolving Credit Facility and $5 million of cash on hand were used to settlethe combined transactions, as well as pay the related call premium of $5 million and accrued interest of $4 million.2019 Cash Convertible Senior NotesOn November 24, 2014, NXP issued 2019 Cash Convertible Senior Notes with an aggregate principal amount of $1,150 million, which matureDecember 1, 2019. The 2019 Cash Convertible Senior Notes were issued at par and were recorded at their fair value of $1,150 million on the accompanyingConsolidated Balance Sheet. We used the net proceeds of $1,134 million (i) to fund the cost of 40Table of Contentsentering into the cash convertible note hedge transactions (the cost of which were partially offset by the proceeds that NXP received from entering intowarrant transactions) with certain hedge counterparties, as described below, (ii) to repay up to €225 million in respect of intercompany loans to our subsidiaryNXP B.V., (iii) to fund the repurchase of $150 million of our common stock in privately negotiated transactions conducted concurrently with the pricing ofthe 2019 Cash Convertible Senior Notes, and (iv) for general corporate purposes, including additional share repurchases and potential acquisitions.In connection with the pricing of the 2019 Cash Convertible Senior Notes, NXP entered into separate privately negotiated cash convertible note hedgeand warrant transactions with counterparties that include the initial purchasers of the 2019 Cash Convertible Senior Notes or their respective affiliates (the“hedge counterparties”). The cash convertible note hedge transactions will be cash settled upon exercise and are expected generally to offset any cashpayments NXP is required to make in excess of the principal amount of the 2019 Cash Convertible Senior Notes upon conversion. The warrant transactionswill be net share settled upon exercise and could therefore have a dilutive effect with respect to NXP’s common stock to the extent that the market price pershare of NXP’s common stock exceeds the strike price of the warrants. The strike price of the warrant transactions will initially be $133.32 per share, whichrepresents a premium of 75% over the last reported sale price of NXP’s common stock on November 24, 2014, and is subject to certain adjustments under theterms of the warrant transactions.Debt PositionShort-term DebtAs of December 31, 2016, our short-term debt amounted to $421 million.As of December 31, 2015, our short-term debt of $556 million included other short-term bank borrowings of $6 million, related to a local bank loan inChina. 41Table of ContentsLong-term DebtAs of December 31, 2016, we had outstanding debt of: ($ in millions) December 31,2015 Accrual/releaseOriginalIssuance/DebtDiscount and DebtIssuance Cost Debt Exchanges/Repurchases/NewBorrowings Other(17) December 31,2016 U.S. dollar-denominated secured term credit agreementdue March 2017 (1) 386 2 — (388) — U.S. dollar-denominated secured term credit agreementdue January 2020 (2) 382 1 — (4) 379 U.S. dollar-denominated secured term credit agreementdue December 2020 (3) 2,632 23 (1,264) 14 1,405 U.S. dollar-denominated 3.75% senior unsecured notesdue June 2018 (4) 746 2 — — 748 U.S. dollar-denominated 4.125% senior unsecurednotes due June 2020 (5) 594 1 — — 595 U.S. dollar-denominated 5.75% senior unsecured notesdue February 2021 (6) 496 1 — — 497 U.S. dollar-denominated 5.00% senior secured notesdue May 2021 (7) 519 — (500) (19) — U.S. dollar-denominated 6.00% senior secured notesdue January 2022 (8) 1,022 — (960) (62) — U.S. dollar-denominated 4.125% senior unsecurednotes due June 2021 (9) — (1) 1,350 — 1,349 U.S. dollar-denominated 4.625% senior unsecurednotes due June 2022 (10) 396 1 — — 397 U.S. dollar-denominated 4.625% senior unsecurednotes due June 2023 (11) — (7) 900 — 893 U.S. dollar-denominated 3.875% senior unsecurednotes due June 2023 (12) — (7) 1,000 — 993 U.S. dollar-denominated 5.75% senior unsecured notesdue March 2023 (13) 496 — — — 496 U.S. dollar-denominated 1.00% cash convertible seniornotes due December 2019 (14) 972 42 — — 1,014 8,641 58 526 (459) 8,766 RCF Agreement (15) — — Other long-term debt (16) 15 — — (15) — Total long-term debt 8,656 58 526 (474) 8,766 (1)On February 18, 2014, we entered into the 2017 Term Loan for an aggregate principal amount of $400 million at a rate of interest of LIBOR plus 2.00%with a floor of 0.75%.(2)On November 27, 2013, we entered into the 2020 Term Loan for an aggregate principal amount of $400 million at a rate of interest of LIBOR plus2.50% with a floor of 0.75%.(3)On September 22, 2016, we entered into a new Term Loan F for an aggregate principal amount of $1,440 million at a rate of interest of LIBOR plus2.50% with a floor of 0.00%.(4)On May 20, 2013, we issued $750 million aggregate principal amount of 3.75% Senior Unsecured Notes due 2018.(5)On June 9, 2015, we issued $600 million aggregate principal amount of 4.125% Senior Unsecured Notes due 2020.(6)On February 14, 2013, we issued $500 million aggregate principal amount of 5.75% Senior Unsecured Notes due 2021.(7)On December 7, 2015, we entered into the A&R Indenture governing the 2021 Freescale Notes, Freescale’s 5.00% Senior Secured Notes due 2021. Thenotes were fully redeemed in 2016.(8)On December 7, 2015, we entered into the A&R Indenture governing the 2022 Freescale Notes, Freescale’s 6.00% Senior Secured Notes due 2022. Thenotes were fully redeemed in 2016.(9)On May 23, 2016, and August 1, 2016, we issued $850 million and $500 million, respectively, aggregate principal amount of 4.125% SeniorUnsecured Notes due 2021.(10)On June 9, 2015, we issued $400 million aggregate principal amount of 4.625% Senior Unsecured Notes due 2022.(11)On May 23, 2016, we issued $900 million aggregate principal amount of 4.625% Senior Unsecured Notes due 2023.(12)On August 11, 2016, we issued $1,000 million aggregate principal amount of 3.875% Senior Unsecured Notes due 2022.(13)On March 15, 2013, we issued $500 million aggregate principal amount of 5.75% Senior Unsecured Notes due 2023.(14)On November 24, 2014, we issued $1,150 million aggregate principal amount of 1.00% Cash Convertible Senior Notes due 2019.(15)On December 7, 2015, we entered into a $600 million Revolving Credit Facility agreement due 2020.(16)Other long-term debt consists primarily of capital lease obligations.(17)Other mainly relates to the reclassification of the current portion of long-term debt and the purchase price accounting step-up of the Freescale Notes. 42Table of ContentsWe may from time to time continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges, in open marketpurchases, privately negotiated transactions or otherwise. See the discussion in the “Liquidity and Capital Resources” section in Part I, Item 5A. OperatingResults and Part II, Item 10C. Material Contracts.Certain Terms of the 2019 Cash Convertible Senior NotesWe have issued $1,150 million aggregate principal amount of 2019 Cash Convertible Senior Notes, which bear interest at 1.00% per annum andmature on December 1, 2019, unless earlier converted, repurchased or redeemed. The 2019 Cash Convertible Senior Notes pay interest on June 1 andDecember 1 of each year, beginning on June 1, 2015. The 2019 Cash Convertible Senior Notes are senior unsecured obligations of NXP Semiconductor N.V.and will be settled solely in cash upon conversion. We may not redeem the 2019 Cash Convertible Senior Notes prior to their maturity date other thanfollowing the occurrence of certain tax law changes as set forth in the indenture governing the 2019 Cash Convertible Senior Notes (the “Convertible NotesIndenture”). Upon the occurrence of certain events which constitute a “fundamental change” under the Convertible Notes Indenture, such as certain changeof control, the holders of 2019 Cash Convertible Senior Notes may require us to repurchase for cash all or part of their 2019 Cash Convertible Senior Notes ata price equal to 100% of the principal amount thereof plus accrued and unpaid interest.Prior to September 1, 2019, holders may convert their 2019 Cash Convertible Senior Notes only upon satisfaction of certain conditions specified in theConvertible Notes Indentures. On or after September 1, 2019 until the close of business on the second scheduled trading day immediately preceding thematurity date, holders may, at their option, convert their 2019 Cash Convertible Senior Notes solely into cash at any time.Upon conversion, in lieu of receiving any shares of our common stock, a holder will receive, per $1,000 principal amount of 2019 Cash ConvertibleSenior Notes being converted, an amount in cash equal to the settlement amount, determined as described in the Convertible Notes Indenture. Theconversion rate will initially be 9.7236 shares of our common stock per $1,000 principal amount (equivalent to an initial conversion price of $102.84 pershare). The conversion rate for the 2019 Cash Convertible Senior Notes is subject to customary anti-dilution adjustments and will also be adjusted for anyfundamental change or tax redemption, each as described in the Convertible Notes Indenture.Concurrently with the issuance of the 2019 Cash Convertible Senior Notes, we entered into cash convertible note hedge and warrant transactions. Forfurther information on the cash convertible note hedge and warrant transactions, please see “—Financial Instruments.”Cash Convertible Note Hedge Transactions and Warrant TransactionsOn November 24, 2014 and November 25, 2014, in connection with our issuances of the 2019 Cash Convertible Senior Notes, we entered into cashconvertible note hedge transactions with affiliates of the initial purchasers of the 2019 Cash Convertible Senior Notes (in such capacity, the “OptionCounterparties”) to offset any cash payment we are required to make in excess of the principal amount of the 2019 Cash Convertible Senior Notes.In these transactions, we paid $208 million for call options relating to, subject to customary anti-dilution adjustments, 11.18 million shares of NXP’scommon stock (which is equal to the number of shares that initially underlie the 2019 Cash Convertible Senior Notes), with a strike price of $102.84 pershare. The Option Counterparties or their respective affiliates may enter into, or unwind, various over-the-counter derivatives and/or purchase or sell ourcommon stock in open market and/or privately negotiated transactions prior to maturity of the 2019 Cash Convertible Senior Notes, including during anyobservation period for the settlement of conversions of the 2019 Cash Convertible Senior Notes, or upon any repurchase of the 2019 Cash Convertible SeniorNotes by us, which could adversely impact the price of our common stock and of the 2019 Cash Convertible Senior Notes.Separately, we sold warrants to the Option Counterparties for $134 million giving them the right to purchase from us, subject to customary anti-dilution adjustments, 11.18 million shares of NXP’s common stock, with a strike price of $133.32 per share. The warrants will have a dilutive effect withrespect to our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants on or prior to theexpiration date of the warrants.C. Research and Development, Patents and Licenses, etc.Research and DevelopmentWe believe that our future success depends on our ability to both improve our existing products and to develop new products for both existing andnew markets. We direct our research and development efforts largely to the development of new High Performance Mixed Signal semiconductor solutionswhere we see significant opportunities for growth. We target applications that require stringent overall system and subsystem performance. As new andchallenging applications proliferate, we believe that many of these applications will benefit from our solutions. We have assembled a global team of highlyskilled semiconductor and embedded software design engineers with expertise in RF, analog, power management, interface, security and digital processing.As of December 31, 2016, we had 8,520 employees in research and development, of which 8,151 support our High Performance Mixed Signal businesses and369 support our Standard Products businesses. Our research and development expenses were $1,560 million in 2016 (of which 95% related to our HighPerformance Mixed Signal businesses) and $890 million in 2015. 43Table of ContentsTo outpace market growth we invest in research and development to extend or create leading market positions, with an emphasis on fast growingsizable market segments, such as identification and smart mobile, and emerging markets, such as the Internet of Things and automotive solid state lighting.Finally, we invest a few percent of our total research and development expenditures in research activities that develop fundamental new technologies orproduct categories that could contribute significantly to our company growth in the future.We annually perform a fundamental review of our business portfolio and our related new product and technology development opportunities in orderto decide on changes in the allocation of our research and development resources. For products targeting established markets, we evaluate our research anddevelopment expenditures based on clear business need and risk assessments. For break-through technologies and new market opportunities, we look at thestrategic fit and synergies with the rest of our portfolio and the size of the potential addressable market. Overall, we allocate our research and development tomaintain a healthy mix of emerging growth and mature businesses.Intellectual PropertyThe creation and use of intellectual property is a key aspect of our strategy to differentiate ourselves in the marketplace. We seek to protect ourproprietary technologies by obtaining patents, trademarks, domain names, retaining trade secrets and defending, enforcing and utilizing our intellectualproperty rights, where appropriate. We believe this strategy allows us to preserve the advantages of our products and technologies, and helps us to improvethe return on our investment in research and development. We have a broad portfolio of 9,000 patent families (each patent family including all patents andpatent applications originating from the same invention). To protect certain confidential technical information and software, we rely on copyright and tradesecret law and enter into confidentiality agreements as applicable. In situations where we believe that a third party has infringed on our intellectual property,we enforce our rights through all available legal means to the extent that we determine the benefits of such actions to outweigh any costs and risks involved.We own a number of trademarks that are used in the conduct of our business. Where we consider it desirable, we develop names for our new productsand secure trademark protection. Our trademarks allow us to further distinguish our company and our products and are important in our relationships withcustomers, suppliers, partners and end-users.While our patents, trademarks, trade secrets and other intellectual property rights constitute valuable assets, we do not view any individual right orasset as being material to our operations as a whole. We believe it is the combination of our patents and other intellectual property rights and assets thatcreates an advantage for our business.In addition to obtaining our own patents and other intellectual property rights, we have entered into licensing agreements and other arrangementsauthorizing us to use intellectual property rights, confidential technical information, software and related technology owned by third parties. We also engage,in certain instances, in licensing and selling of certain of our own patents and technology.D. Trend InformationWithin the overall umbrella of Secure Connections for a Smarter World, NXP addresses four key macro growth trends: Intelligent Devices, Mobility,Hyper-connectivity and Security that drive applications such as the Connected Car, Portable & Wearable and the Internet of Things, with Security being arequirement across all applications. Our innovative solutions are used in a wide range of applications. Many electronic payment and government ID servicesare enabled by our secure identification solutions and with the transition of those services to new form factors in secure connected devices, there is strongmarket demand for embedded security solutions such as mobile payment, cyber-security and authentication. Fast innovation in smart phones & tablets drivesdemand for our secure interface and power solutions while always-on requirements in secure connected devices further drive demand for our advanced mobileaudio, sensing and connectivity solutions, with advanced magnetic induction radios for implantable medical devices such as hearing aids as an example.Cities, buildings and industrial production systems all want to become smart, connected and secure; they provide fertile new markets for our broad range ofmicrocontrollers smart grid, intelligent logistics and industrial security solutions. Next generation networks which deliver the increasing demand for data areenabled by our new high-performance RF power amplifier products allow wireless network operators to expand network capacity with fewer base stations andDigital Networks. Our new high-performance RF power amplifier products allow wireless network operators to expand network capacity with fewer basestations. The automotive industry brings fast trends in advanced driver assistance, seamless consumer electronics experience and energy efficiency, and werespond to those by delivering solutions for secure car access, car entertainment and in-vehicle networking. In addition, we leverage our core competencies toinnovate in the transition to highly and eventually fully automated cars with ground breaking solutions in secure vehicle-to-infrastructure & vehicle-to-vehicle and radar.We believe that we are strategically positioned to capture rapid growth in emerging markets through our strong position in Asia Pacific (excludingJapan), which represented 62% of our revenue in 2016, compared to 69% of our revenue in 2015. In particular, Greater China represented 42% of our revenuein 2016, compared to 53% of our revenue in 2015.E. Off-balance Sheet ArrangementsAs of December 31, 2016, we had no material off-balance sheet arrangements. 44Table of ContentsF. Tabular Disclosure of Contractual ObligationsPresented below is a summary of our contractual obligations as of December 31, 2016. ($ in millions) Total 2017 2018 2019 2020 2021 2022 andthereafter Long-term and short-term debt (1) 9,361 406 768 1,167 2,370 1,850 2,800 Capital lease obligations 15 15 — — — — — Operating leases 113 33 23 17 12 5 23 Interest on the notes (2) 1,514 338 319 306 267 156 128 Long-term purchase contracts 550 397 43 48 14 14 34 Total contractual cash obligations (2)(3)(4) 11,553 1,189 1,153 1,538 2,663 2,025 2,985 (1)The amounts noted herein represent contractual payments of principal only.(2)The cash interest on the notes was determined on the basis of LIBOR interest rates for floating rate instruments and on the basis of contractual agreedinterest rates for other debt instruments.(3)As of December 31, 2016, we had reserves of $158 million recorded for uncertain tax positions, including interest and penalties. We are not includingthis amount in the long-term contractual obligations table presented because of the difficulty in making reasonably reliable estimates of the timing ofcash settlements, if any, with the respective taxing authorities.(4)Certain of these obligations are denominated in currencies other than U.S. dollars, and have been translated from foreign currencies into U.S. dollarsbased on an aggregate average rate of $1.1065 per €1.00, in effect at December 31, 2016. As a result, the actual payments will vary based on anychange in exchange rate.Our debt instruments had accrued interest of $48 million as of December 31, 2016 (December 31, 2015: $46 million).In addition to the above obligations, we enter into a variety of agreements in the normal course of business, containing provisions that certain penaltiesmay be charged if we do not fulfill our commitments. It is not possible to predict with certainty the maximum potential amount of future payments underthese or similar provisions due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular case.Historically, payments pursuant to such provisions have not been material and we believe that any future payments required pursuant to such provisionswould not have a material adverse effect on our consolidated financial condition. However, such payments may be material to our consolidated statement ofoperations for a specific period.We sponsor pension plans in many countries in accordance with legal requirements, customs and the local situation in the countries involved. Theseare defined-benefit pension plans, defined contribution pension plans and multi-employer plans. Contributions to funded pension plans are made asnecessary, to provide sufficient assets to meet future benefits payable to plan participants. These contributions are determined by various factors, includingfunded status, legal and tax considerations and local customs. The expected cash outflows in 2016 and subsequent years are uncertain and may change as aconsequence of statutory funding requirements as well as changes in actual versus currently assumed discount rates, estimations of compensation increasesand returns on pension plan assets.G. Safe HarborThis Annual Report includes forward-looking statements. When used in this Annual Report, 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 anyother statements that are not historical facts. These statements reflect beliefs of our management, as well as assumptions made by our management andinformation currently available to us. Although we believe that these beliefs and assumptions are reasonable, these statements are subject to numerousfactors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks anduncertainties expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf and include, inaddition to those listed under Part I, Item 3D. Risk Factors and elsewhere in this Report, the following: • our ability to complete merger and acquisition-related activity and risks and uncertainties associated with the pending offer by Qualcomm RiverHoldings B.V., a wholly-owned subsidiary of QUALCOMM Incorporated, to purchase all of NXP’s outstanding common shares; • the diversion of management time on transaction-related issues; • the outcome of regulatory reviews of the transaction; • 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, raise sufficient capital or refinance our debt at or before maturity to meet both our debt service and research anddevelopment and capital investment requirements; • our ability to accurately estimate demand and match our production capacity accordingly; • our ability to 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; 45Table of Contents• 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; • our ability to develop products for use in our customers’ equipment and products; • our ability to successfully hire and retain key management and senior product engineers; and • our ability to maintain good relationships with our suppliers.We do not assume any obligation to update any forward-looking statements and disclaim any obligation to update our view of any risks oruncertainties described herein or to publicly announce the result of any revisions to the forward-looking statements made in this Report, except as requiredby law.In addition, this Report contains information concerning the semiconductor industry and business segments generally, which is forward-looking innature and is based on a variety of assumptions regarding the ways in which the semiconductor industry, our market and business segments will develop. Wehave based these assumptions on information currently available to us, including through the market research and industry reports referred to in this Report.Although we believe that this information is reliable, we have not independently verified and cannot guarantee its accuracy or completeness. If any one ormore of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what impact any suchdifferences may have on our business, if there are such differences, they could have a material adverse effect on our future results of operations and financialcondition, and the trading price of our common stock. Item 6.Directors, Senior Management and EmployeesA. Directors and Senior ManagementThe following description sets forth certain information about management and management-related matters. We have a one-tier board structure.Board of DirectorsSet forth below are the names, ages and positions as of December 31, 2016, of the persons who serve as members of our board of directors. Name Age PositionRichard L. Clemmer 65 Executive director, president and chief executive officerSir Peter Bonfield 72 Non-executive director and chairman of the boardJohannes P. Huth 56 Non-executive director and vice-chairman of the boardKenneth A. Goldman 67 Non-executive directorDr. Marion Helmes 51 Non-executive directorJosef Kaeser 59 Non-executive directorIan Loring 50 Non-executive directorEric Meurice 60 Non-executive directorPeter Smitham 74 Non-executive directorJulie Southern 57 Non-executive directorGregory Summe 60 Non-executive directorRick Tsai 65 Non-executive director • Richard L. Clemmer (1951, American). Mr. Clemmer became executive director, president and chief executive officer on January 1, 2009. Prior tothat, from December 2007, Mr. Clemmer was a member of the supervisory board of NXP B.V. and a senior advisor of Kohlberg Kravis Roberts & Co.Prior to joining NXP, he was the President and CEO of Agere Systems, served as Chairman of u-Nav Microelectronics Corporation, and was executivevice president and chief financial officer at Quantum Corporation. Prior to that, Mr. Clemmer worked for Texas Instruments Incorporated as senior vicepresident and semiconductor group chief financial officer. Mr. Clemmer also serves on the board of NCR Corporation. • Sir Peter Bonfield CBE FREng (1944, British). Sir Peter has been appointed as a non-executive director and as the chairman of our board of directorsin August 2010. Prior to that, Sir Peter was the chairman of the supervisory board of NXP B.V. from September 29, 2006. Sir Peter served as chiefexecutive officer and chairman of the executive committee for British Telecom plc from 1996 to 2002 and prior to that was chairman and chiefexecutive officer of ICL plc (now Fujitsu Services Holdings Ltd.). Sir Peter also worked in the semiconductor industry during his tenure as a divisionaldirector at Texas Instruments Incorporated, for whom he held a variety of senior management positions around the world. Sir Peter currently holds non-executive directorships at Taiwan Semiconductor Manufacturing Company Limited, Mentor Graphics Corporation and serves as Chairman of GlobalLogic Inc. Sir Peter is Chair of Council and Senior Pro-Chancellor at Loughborough University, Chairman of the Board, East West Institute UK andBoard Director, East West Institute USA and Board Mentor at CMi in Belgium. He is also Advisor to Longreach LLP in Hong Kong, Alix Partners UKLLP in London and G3 Good Governance Ltd in London. 46Table of Contents• Johannes P. Huth (1960, German). Mr. Huth has been appointed as a non-executive director and vice-chairman of our board of directors in August2010. Prior to that, Mr. Huth was a member and chairman of our supervisory board and a member and vice-chairman of NXP B.V.’s supervisory boardfrom September 29, 2006. Mr. Huth joined Kohlberg Kravis Roberts & Co. LLP in May 1999 and is a Member of KKR and Head of KKR’s operations inEurope, the Middle East and Africa. He is also a member of the Firm’s Management Committee and several of the Firm’s Investment Committees. Priorto joining KKR, he was a member of the Management Committee of Investcorp and jointly responsible for Investcorp’s operations in Europe. From1986 to 1991, he worked at Salomon Brothers, where he was a Vice President in the Mergers and Acquisitions departments in London and New York.Mr. Huth currently is also member of the Supervisory Board of GEG German Estate Group AG, member of the Board of SoftwareOne AG and member ofthe Board of Cognita Ltd. He is the Chairman of the Trustees of Impetus – Private Equity Foundation, a charitable organization set up by the PrivateEquity industry focused on providing support to charities involved with young people not in education, employment or training. He is Vice-Chair ofthe Board of Trustees of the Design Museum, trustee of the Staedel Museum in Frankfurt and trustee of The Education Endowment Foundation. He is aVisiting Fellow of Oxford University and a Fellow of the Royal Society of Arts. He earned a BSc with Highest Honors from the London School ofEconomics and an MBA from the University of Chicago. Mr. Huth is also a member of the Global Advisory Board of the Booth School of Business atthe University of Chicago. • Kenneth A. Goldman (1949, American). Mr. Goldman has been appointed as a non-executive director of our board of directors effective August 6,2010. Mr. Goldman is chief financial officer of Yahoo!, Inc responsible for Yahoo!’s global finance functions including financial planning andanalysis, controllership, tax, treasury and investor relations since October 2012. Prior to that, Mr. Goldman served as senior vice president, finance andadministration, and chief financial officer of Fortinet, Inc, a provider of unified threat management solutions, from September 2007 to September 2012.From November 2006 to August 2007, Mr. Goldman served as executive vice president and chief financial officer of Dexterra, Inc. From August 2000until March 2006, Mr. Goldman served as senior vice president, finance and administration, and chief financial officer of Siebel Systems, Inc., and fromDecember 1999 to December 2003, Mr. Goldman served on the Financial Accounting Standards Board’s primary advisory group. Mr. Goldman alsoserves on the board of directors of Yahoo! Japan, Trinet, GoPro, Inc. and several private companies. Mr. Goldman in 2015 was appointed to a three yearterm on the Standards Advisory Group which advises the PCAOB. Mr. Goldman was a member of board of trustees of Cornell University from 2005 to2013 and was designated as Emeritus Trustee. He was formerly a member of the Treasury Advisory Committee on the Auditing Profession, a publiccommittee that made recommendations in September 2008 to encourage a more sustainable auditing profession. Mr. Goldman holds a B.S. in ElectricalEngineering from Cornell University and an M.B.A. from the Harvard Business School. • Dr. Marion Helmes (1965, German). Dr. Helmes has been appointed a non-executive director of our board of directors in October 2013. Dr. Helmeswas the Speaker of the Management Board of Celesio AG until July 2014; in addition she was CFO of Celesio from January 2012 until July 2014. Priorto joining Celesio, she was member of the board of management and CFO of Q-Cells SE and from 1997 until 2010 she held various management rolesat ThyssenKrupp, including CFO of ThyssenKrupp Stainless and CFO of ThyssenKrupp Elevator. Dr. Helmes is currently also non-executive director,Vice-Chairman, member of the Presiding Committee, member of the Compensation Committee and member of the Audit and Finance Committee ofProSiebenSat.1 Media SE. Dr. Helmes is currently also non-executive director, Member of the Nomination Committee and Chairman of the AuditCommittee of Bilfinger SE and also non-executive director, Member of the Nomination Committee and the Audit Committee of British AmericanTobacco plc. • Josef Kaeser (1957, German). Mr. Kaeser has been appointed as a non-executive director of our board of directors effective September 1, 2010.Mr. Kaeser is the president and chief executive officer of Siemens AG since August 2013. Prior to this, from May 2006 to August 2013, he wasexecutive vice president and chief financial officer of Siemens AG. From 2004 to 2006, Mr. Kaeser served as chief strategy officer for Siemens AG andas the chief financial officer for the mobile communications group from 2001 to 2004. Mr. Kaeser has additionally held various other positions withinthe Siemens group since he joined Siemens in 1980. Mr. Kaeser also serves on the managing board of Siemens AG and the board of directors of SiemensLtd., India, Daimler AG and Allianz Deutschland AG. • Ian Loring (1966, American). Mr. Loring has been appointed a non-executive director of our board of directors in August 2010. Mr. Loring became amember of our supervisory board and the supervisory board of NXP B.V. on September 29, 2006 and is a managing director of Bain Capital Partners,LLC. Prior to joining Bain Capital Partners in 1996, Mr. Loring worked at Berkshire Partners and has previously also worked at Drexel BurnhamLambert. Mr. Loring played a leading role in Bain Capital’s media, technology and telecommunications investments such as Warner Music Group,ProSiebenSat.1 Media, Advertising Directory Solutions, iHeart Media (formerly Clear Channel Communication Inc.), and Blue Coat Systems, Inc. Heserves as a director of The Weather Company, BMC Software, Inc., Viewpoint, Inc. and Vertafore, Inc. • Eric Meurice (1956, French). Mr. Meurice has been appointed as a non-executive director of the board of directors effective April 1, 2014.Mr. Meurice was the CEO and Chairman of the management board of ASML Holding NV (The Netherlands), a leading provider of manufacturingequipment and technology to the semiconductor industry from 2004 to 2013. Under his watch, ASML became the largest Lithography vendor in theworld, leading to a significant equity investment and funding commitment by its customers. Before Joining ASML, he was Executive Vice President ofThomson Television, where he completed the merger of his division with TCL Corporation, one of the largest Chinese consumer electronics company.Before 2001, he served as head of Dell Computers’ Western, Eastern Europe and EMEA emerging market businesses. He gained extensive technologyexperience in the semiconductor industry between 1984 and 1994, first at Intel, in the micro-controller group, and then at ITT Semiconductors, aprovider then of digital video and audio DSP integrated circuits. Mr. Meurice is an independent director of IPG Photonics, a US 47Table of Contents based Laser supplier, since June 2014 and of UMICORE, a Belgium based materials specialist, since April 2015. He served on the board of Verigy LTD(former HP test division), until its acquisition by Advantest in 2011. From July 1, 2013 to April 1, 2014 he was non-executive director of ARMHoldings plc (UK, semiconductor intellectual property supplier). • Peter Smitham (1942, British). Mr. Smitham has been appointed as a non-executive director of our board of directors effective December 7, 2015,Mr. Smitham retired from his position as a partner of the private equity firm Permira on December 31, 2009, but until August 1, 2015, he was a memberof Permira Advisers LLP, which he joined in 1985, the year the London office was founded. Mr. Smitham was the managing partner of the Londonoffice from 1994 until 1998 and led Permira’s European business from 1996 until 2000. He has worked on numerous transactions focusing ontechnology, including Memec Group Holdings Limited, The Roxboro Group, Solartron Group and Technology plc. Until its merger with NXP,Mr. Smitham was a director of Freescale; he joined the Freescale board in June 2007 and has been a member of the Compensation and LeadershipCommittee and the Nominating and Corporate Governance Committee of the Freescale board. He has a degree in Geography from Swansea University,Wales, and attended the Senior Executive Program at Stanford Business School. • Ms. Julie Southern (1959, British). Ms. Southern has been appointed a non-executive director of our board of directors in October 2013. She was withVirgin Atlantic Limited (UK) from 2000 to May 2013. From 2010 to 2013 Ms. Southern was chief commercial officer and from 2000 to 2010 she waschief financial officer of Virgin Atlantic. Prior to joining Virgin Atlantic, she was group finance director at Porsche Cars Great Britain and finance andoperations director at W H Smith – H J Chapman & Co Ltd. Prior to that, she was chartered accountant at Price Waterhouse Coopers. Ms. Southerncurrently holds non-executive directorships at Rentokil-Initial Plc, Cineworld PLC and DFS PLC and is Chair of the respective Audit Committees. Atthe same time, Ms. Southern is a non-executive director and Chair of the Remuneration Committee for Stagecoach Group plc. • Gregory L. Summe (1956 American). Mr. Summe has been appointed as a non-executive director of our board of directors effective December 7,2015, Mr. Summe is the Managing Partner of Glen Capital Partners, an investment fund, which he founded in 2013. Mr. Summe was the managingdirector and vice chairman of Global Buyout at The Carlyle Group, a leading global private equity firm, from September 2009 to May 2014. Prior tojoining Carlyle, he was the chairman and chief executive officer of PerkinElmer, Inc., a designer, manufacturer and deliverer of advanced technologysolutions addressing health and safety concerns, a company he led from 1998 to September 2009. He also served as a senior advisor to Goldman SachsCapital Partners, from 2008 to 2009 and also was a director of Freescale from September 2010 until its merger with NXP in December 2015; Mr. Summeserved as Chairman of the Freescale board since May 2014 and was also Chairman of the Compensation and Leadership Committee of the Freescaleboard. Prior to joining PerkinElmer, Mr. Summe was with AlliedSignal, now Honeywell International, an inventor and manufacturer of technologiesaddressing global macro trend challenges such as safety, security, and energy, serving as the president of General Aviation Avionics, president of theAerospace Engines Group and president of the Automotive Products Group. Before joining AlliedSignal, he was the general manager of CommercialMotors at General Electric and was a partner with the consulting firm of McKinsey & Company, Inc. Mr. Summe holds B.S. and M.S. degrees inelectrical engineering from the University of Kentucky and the University of Cincinnati, and an M.B.A. with distinction from the Wharton School atthe University of Pennsylvania. He is in the Engineering Hall of Distinction at the University of Kentucky. Mr. Summe also serves on the boards ofdirectors of LMI Aerospace, Inc. and the State Street Corporation. Mr. Summe previously served on the board of directors of Automatic Data Processing,Inc., Biomet Inc., Veyance Technologies, Inc., Export Trading Group Ltd, Euromax Holdings Inc. and TRW Corp. • Dr. Rick Tsai (1951, Taiwan/Republic of China). Dr. Tsai has been appointed as a non-executive director of our board of directors effective July 1,2014. Dr. Tsai served as Chairman and Chief Executive Officer of Chunghwa Telecom Co., Ltd., Taiwan’s largest integrated telecom service provider,from January, 2014 to December 2016. Prior to joining Chunghwa Telecom, Dr. Tsai served as the Chairman and Chief Executive Officer of TSMCSolar and TSMC: Solid State Lighting from 2011 to 2014. From 2001 to 2011, he held the following successive positions in TSMC: President andChief Operation Officer, President and Chief Executive Officer and President of New Business. Prior to joining TSMC, Dr. Tsai was based in the UnitedStates and worked for Hewlett-Packard for several years. Dr. Tsai received a B.S. degree in physics from the National Taiwan University, Taipei, Taiwanand a Ph.D. degree in material science and engineering from Cornell University, Ithaca N.Y. Dr. Tsai also serves as a member of the board of directors ofLam Research Corporation and member of the board and Audit Committee of USI Corporation. 48Table of ContentsManagement TeamSet forth below are the names, ages as of December 31, 2016, and positions of the executive officers who together with our chief executive officer,Mr. Clemmer, constitute our management team. Name Age PositionRichard L. Clemmer 65 Executive director, president and chief executive officerDaniel Durn 50 Executive vice president and chief financial officerTareq Bustami 47 Senior Vice President and general manager Digital NetworkingbusinessGuido Dierick 57 Executive vice president and general counselPaul Hart 40 Senior Vice President and general manager Radio Frequency businessPeter Kelly 59 Executive vice president strategy, M&A and integrationSteve Owen 56 Executive vice president sales & marketingDavid Reed 58 Executive vice president and general manager operationsFrans Scheper 54 Executive vice president and general manager Standard ProductsKeith Shull 65 Executive vice president and chief human resources officerKurt Sievers 47 Executive vice president and general manager HPMS AutomotiveRuediger Stroh 54 Executive vice president and general manager HPMS Identification • Daniel Durn (1966, American). Mr. Durn is executive vice president and chief financial officer of NXP and member of the management team. Hejoined NXP in 2015, having served as CFO of Freescale up until the Merger. Prior to Freescale, he was CFO and executive vice president of finance andadministration at Globalfoundries, the industry’s second largest semiconductor foundry, head of M&A and strategy at Advanced TechnologyInvestment Company (ATIC) and also served as vice president in technology investment banking at Goldman, Sachs & Company and was a member oftheir merger leadership group. • Tareq Bustami (1969, American). Mr. Bustami is senior vice president and general manager of the Digital Networking business at NXP. He joinedNXP in 2015, having served as general manager at Freescale up until the merger with NXP. He has more than 20 years of semiconductor experiencefocused on the networking industry. He rejoined Freescale in 2012 to lead product strategy, product definition and marketing operations for DigitalNetworking. Previously, he ran product marketing for LSI’s networking multicore family of processors. He began his career at Freescale where he ledproduct marketing for the company’s PowerQUICC III family. • Guido Dierick (1959, Dutch). Mr. Dierick is executive vice president, general counsel, secretary of our board of directors and member of themanagement team. Since 2000 he has been responsible for legal and intellectual property matters at NXP. He previously was employed by Philips from1982 and worked in various legal positions. • Paul Hart (1976, American). Mr. Hart is senior vice president and general manager of the Radio Frequency business. He joined NXP in 2015, havingserved as general manager at Freescale up until the merger with NXP. He has 15 years of experience in the high power RF field, focusing on technologydevelopment and customer enablement. He joined Motorola Semiconductor as an RF engineer in 2001 and transferred to Freescale in 2006. • Peter Kelly (1957, American). Mr. Kelly is executive vice president and a member of the management team, focusing on Strategy, M&A, and theintegration with Freescale. He joined NXP in March, 2011 and previously served as NXP’s chief financial officer. Mr. Kelly has over 30 years ofapplicable experience in the global technology industry and has extensive financial expertise having worked in financial management positions inseveral other companies, including as CFO of UGI Corp. and Agere Systems Inc. Mr. Kelly also serves on the board of Plexus, Corp. • Steve Owen (1960, British). Mr. Owen is executive vice president, global sales & marketing and member of the management team. He has extensiveexperience in developing business internationally and served in various marketing and sales leadership positions at NXP and Philips since 1998. • David Reed (1958, American). Mr. Reed is executive vice president of Technology and Operations at NXP. He joined NXP in 2015, having served asgeneral manager at Freescale until the merger with NXP. He has 30 years of extensive international experience with global execution of fabs,assembly/test, packaging, R&D, foundries and joint ventures for Analog, Automotive, Logic and Wireless customers. He joined FreescaleSemiconductor in 2012 as Senior Vice President, Manufacturing Operations. Previously he was vice president and general manager atGLOBALFOUNDRIES. He began his career at Texas Instruments in 1984 where he held multiple overseas and leadership assignments. 49Table of Contents• Frans Scheper (1962, Dutch). Mr. Scheper has been executive vice president and general manager for the Standard Products business since November,2009, and has been a member of the management team since January, 2010. He has previously served as general manager of the general applications(discretes) business line within the multimarket business and served in various positions at Philips since 2000. • Keith Shull (1951, American). Mr. Shull is executive vice president and chief human resources officer for NXP. He joined NXP in 2015 and has over35 years of experience, having led global HR organizations in a range of industries worldwide, including Arrow Electronics, Visteon and WalterEnergy. • Kurt Sievers (1969, German). Mr. Sievers is executive vice president, member of the management team and general manager of the Automotivebusiness for NXP. He has previously managed our High Performance Mixed Signal businesses focused on the automotive application markets and theautomotive safety and comfort business line and served in various positions at Philips since 1995. • Ruediger Stroh (1962, German). Mr. Stroh is executive vice president, member of the management team and general manager of the Security &Connectivity business for NXP. Before joining NXP in May, 2009, he led LSI Corporation’s Storage Peripherals business, overseeing silicon solutionsfor hard disk and solid state drives addressing consumer and enterprise markets. Previously, he headed Agere System Inc’s storage division and servedas chief executive officer for a number of start-up companies. Mr. Stroh began his career at Siemens AG where he held multiple management positionsbefore joining Infineon Technologies AG.B. CompensationIn accordance with Dutch law, our stockholders have adopted a compensation policy for the board of directors. The remuneration of our non-executivedirectors is determined at the general meeting of shareholders and the remuneration of our executive directors is resolved upon by our board of directors, withdue observance of our compensation policy. Our chief executive officer is our only executive director. The executive director does not participate in thediscussions of our board of directors on his compensation, nor does the chief executive officer vote on such a matter. To the extent the stockholders at afuture stockholder meeting do not adopt the proposal of the board, the board must prepare a new proposal. After adoption of a proposal, only subsequentamendments will require stockholder approval. Furthermore, any proposed share or option-based director compensation (including any performanceconditions relating to such compensation) must be submitted by our board to the general meeting of stockholders for its approval, detailing the number ofshares or options over shares that may be awarded to the directors and the criteria that apply to such award or any modification of such rights.Compensation Policy and ObjectivesThe objective in establishing the compensation policies for our chief executive officer, the other members of our management team and other membersof our leadership, is to provide a compensation package that is aligned with our strategic goals and that enables us to attract, motivate and retain highlyqualified professionals who provide leadership for NXP’s success in dynamic and competitive markets. NXP seeks to accomplish this goal in a way thatrewards performance and is aligned with its shareholders’ long-term interests. We believe that the best way to achieve this is by linking executivecompensation to individual performance targets, on the one hand, and to NXP’s performance, on the other hand. Our executive compensation packagetherefore includes a significant variable part, consisting of an annual cash incentive, shares and stock options. Executive performance targets are determinedannually, at the beginning of the year, and assessed after the year once the financial performance of the year is known by, respectively, our nominating andcompensation committee, our executive director or the other members of our management team. The compensation package for our board of directors,including our chief executive officer, the other members of our management team and our NXP leadership is benchmarked on a regular basis against othercompanies in the high-tech and semiconductors industry.Summary Compensation TableThe following table summarizes the total compensation paid to our chief executive officer and to each member of our board of directors, in each of theyears presented. Any amounts that are paid to individuals in Euros are presented in U.S. dollars, where the average exchange rate for the year was used forconversion. In addition to this Form 20-F which is completed on the basis of U.S GAAP and the SEC requirements for Form 20-F, NXP Semiconductors N.V.has statutory filing requirements in the Netherlands. As a result, NXP is also required to submit to its shareholders on an annual basis audited financialstatements completed on the basis of International Financial Reporting Standards (IFRS). The table below provides information under both bases ofaccounting to enable the reader of our financial statements to have the holistic view of all compensation related information for these individuals underapplicable requirements for NXP. Specific IFRS related disclosures have been indicated as such (12). 50Table of ContentsName and Principal Position Year Base Salaryand/orDirectors Fees AnnualIncentive Performanceand RestrictedShare Units StockOptions Grant DateFair Value ofShare andOptionAwards Cost ofShare andOptionAwards(IFRS) OtherCompensation PensionCosts PensionAllowances TotalCompensation Total Costs(IFRS) ($) ($) 1) (#) 2) (#) 3) ($) 4) ($) 5) ($) 6) ($) ($) 7) ($) 4) ($) 5) Richard L. Clemmer 201610) 1,263,580 546,815 139,266 30,751 14,500,097 12,749,940 1,033,574 18,100 572,394 17,934,560 16,184,403 Executive director, chiefexecutive officer andpresident 201510) 1,273,330 1,530,511 71,918 165,877 10,500,021 13,184,688 1,117,837 13,927 577,052 15,012,678 17,697,345 201410) 1,514,520 1,756,844 120,755 161,675 11,471,923 13,312,485 1,336,479 781,479 — 16,861,245 18,701,807 Sir Peter Bonfield 2016 398,788 — 2,019 — 200,043 224,478 — — — 598,831 623,266 Non-executive directorand chairman of theboard 2015 312,625 — 2,740 — 200,020 272,796 — — — 512,645 585,421 2014 370,705 — 3,117 — 200,049 225,775 — — — 570,754 596,480 Johannes P. Huth 2016 94,500 — 2,019 — 200,043 224,478 — — — 294,543 318,978 Non-executive directorand vice-chairman of theboard 2015 91,000 — 2,740 — 200,020 272,796 — — — 291,020 363,796 2014 91,000 — 3,117 — 200,049 225,775 — — — 291,049 316,775 Kenneth A. Goldman 2016 109,167 — 2,019 — 200,043 224,478 — — — 309,210 333,645 Non-executive director 2015 101,000 — 2,740 — 200,020 272,796 — — — 301,020 373,796 2014 101,000 — 3,117 — 200,049 225,775 — — — 301,049 326,775 Dr. Marion Helmes 2016 96,250 — 2,019 — 200,043 224,478 — — — 296,293 320,728 Non-executive director 2015 91,000 — 2,740 — 200,020 246,763 — — — 291,020 337,763 2014 91,000 — 3,117 — 200,049 144,145 — — — 291,049 235,145 Josef Kaeser 2016 96,250 — 2,019 — 200,043 224,478 — — — 296,293 320,728 Non-executive director 2015 91,000 — 2,740 — 200,020 272,796 — — — 291,020 363,796 2014 91,000 — 3,117 — 200,049 225,775 — — — 291,049 316,775 Ian Loring 2016 85,000 — 2,019 — 200,043 224,478 — — — 285,043 309,478 Non-executive director 2015 85,000 — 2,740 — 200,020 272,796 — — — 285,020 357,796 2014 85,000 — 3,117 — 200,049 225,775 — — — 285,049 310,775 Eric Meurice 9) 2016 105,416 — 2,019 — 200,043 203,373 — — — 305,459 308,789 Non-executive director 2015 99,000 — 2,740 — 200,020 196,817 — — — 299,020 295,817 2014 69,914 — 3,117 — 200,049 35,503 — — — 269,963 105,417 Peter Smitham 8) 2016 94,500 — 2,019 — 200,043 35,624 — — — 294,543 130,124 Non-executive director 2015 — — — — — — — — — — — 2014 — — — — — — — — — — — Gregory L. Summe 8) 2016 96,250 — 2,019 — 200,043 35,624 — — — 296,293 131,874 Non-executive director 2015 — — 1,947 — 167,929 56,535 — — — 167,929 56,535 2014 — — — — — — — — — — — Michel Plantevin 9) 2016 — — — — — — — — — — — Non-executive director 2015 — — — — — — — — — — — 201411) 36,438 — — — — (125,473) — — — 36,438 (89,035) Jean-Pierre Saad 9) 2016 — — — — — — — — — — — Non-executive director 2015 — — — — — — — — — — — 201411) 32,603 — — — — (20,383) — — — 32,603 12,220 Julie Southern 2016 96,250 — 2,019 — 200,043 224,478 — — — 296,293 320,728 Non-executive director 2015 91,000 — 2,740 — 200,020 246,763 — — — 291,020 337,763 2014 91,000 — 3,117 — 200,049 144,145 — — — 291,049 235,145 Rick Tsai 9) 2016 85,000 — 2,019 — 200,043 203,373 — — — 285,043 288,373 Non-executive director 2015 85,000 — 2,740 — 200,020 196,817 — — — 285,020 281,817 2014 42,500 — 3,117 — 200,049 35,503 — — — 242,549 78,003 Total 2016 2,620,951 546,815 16,700,570 14,799,280 1,033,574 18,100 572,394 21,492,404 19,591,114 2015 2,319,955 1,530,511 12,468,130 15,492,363 1,117,837 13,927 577,052 18,027,412 21,051,645 2014 2,616,680 1,756,844 13,272,364 14,654,800 1,336,479 781,479 — 19,763,846 21,146,282 1)The annual incentive amount is related to the performance in the year reported, which is then paid to the individual in the subsequent year. SeeItem 6.B “Compensation” for additional information regarding the incentive plan. The amounts reported are the amounts that have been accrued asannual incentive bonus for our chief executive officer for our performance in the respective years. The actual annual incentive amount for 2016 maydiffer and will be paid in 2017 based on achievement of the predetermined targets.2)Represents the number of Performance and Restricted share units granted to the individual in the year reported. See Item 6.B “Compensation” and Note8 Share-based Compensation to the Consolidated Financial Statements in Item 18 “Financial Statements” for additional information regarding ourlong-term incentive plans. 51Table of Contents3)Represents the number of Stock Options granted to the individual in the year reported. See Item 6.B “Compensation” and Note 8 Share-basedCompensation to the Consolidated Financial Statements in Item 18 “Financial Statements” for additional information regarding our long-termincentive plans.4)Amounts reflect the aggregate grant date fair value of Performance and Restricted share units and Stock Option awards granted in accordance withFASB ASC Topic 718. These amounts do not represent the actual amounts paid to or realized by the individuals in the year reported. See Note 8 Share-based Compensation to the Consolidated Financial Statements in Item 18, “Financial Statements” of this Form 20-F for the fiscal year endedDecember 31, 2016 for additional information.5)Amounts reflect the costs of Performance and Restricted share units and Stock Options in accordance with IFRS 2. These amounts do not represent theactual amounts paid to or realized by the individuals in the year reported, but represent amounts charged to the income of the year. Total costs (IFRS)includes this item, not the grant date fair value of the awards.6)Amounts primarily relate to additional arrangements for our CEO such as housing compensation and relocation allowances, medical insurance,accident insurance, school fee reimbursement and company car arrangements are broadly in line with those for the NXP executives globally.7)Due to legislative changes in the Netherlands, effective January 1, 2015 a new pension arrangement applies to our chief executive officer (as to otheremployees working under a Dutch employment contract). Refer to below explanation under the heading Pensions.8)Peter Smitham and Mr. Gregory L. Summe were appointed as non-executive directors of the Company effective December 7, 2015.9)Eric Meurice was appointed effective April 1, 2014 and Mr. Rick Tsai was appointed effective July 1, 2014. Mr. Michel Plantevin and Mr. Jean-PierreSaad resigned as non-executive directors of the Company on May 20, 2014.10)In 2016, Mr. Clemmer received 13,105 performance share units that had financial performance conditions, no performance share units that had marketsperformance conditions and 126,161 restricted share units.In 2015, Mr. Clemmer received 71,918 performance share units that had financial performance conditions, no performance share units that had marketsperformance conditions and no restricted share unitsIn 2014, Mr. Clemmer received 70,116 performance share units that had financial performance conditions, 50,639 performance share units that hadmarkets performance conditions and no restricted share units 11)As a result of the resignation by Mr. Michel Plantevin and Mr. Jean-Pierre Saad as noted in Note 9, 20,111 awards were forfeited resulting in a reversalof the related costs in accordance with IFRS 2.12)During 2016, NXP decided to expand its disclosures of compensation information, specifically in the areas of the cost for compensation charged to theincome statement (IFRS), including Performance and Restricted Share Units and Stock Options, for our chief executive officer and the other members ofour board of directors. In our previous filings, the required disclosures were not explicitly displayed as prescribed by IAS 24 paragraph 17 and section383c Book 2 Title 9 of the Dutch Civil Code. Therefore, the expanded disclosure over the years 2014, 2015 and 2016 are presented in the above table.In connection with the disclosure requirements of IAS 24 paragraph 17, we consider the board of directors as our key management personnel.Base SalaryWe currently pay our chief executive officer an annual base salary of €1,142,000, the chairman of our board of directors an annual fixed fee of€275,000 and the other members of our board of directors an annual fixed fee of $85,000 gross. Since the annual meeting of shareholders of June 2, 2016,members of our Audit Committee receive an additional annual fixed fee of $15,000 (2014 through 2016: $6,000) gross and the chairman receives anadditional annual fixed fee of $15,000 (2014 through 2016: $10,000); members of our Nominating & Compensation Committee receive an additional annualfixed fee of $12,000 (2014 through 2016: $6,000) gross and the chairman receives an additional annual fixed fee of $13,000 (2014 through 2016: $8,000).For the year ended December 31, 2016, the current and former members of our management team as a group (in total 12 members) received a total aggregateBase salary of €5,889,544, compared to a total aggregate Base salary of €7,303,951 (in total 19 members) in 2015 and €5,704,410 (in total 14 members) in2014.Annual IncentiveEach year, our chief executive officer, the other members of our management team and our other executives can qualify to earn a variable cashincentive, subject to whether certain specific and challenging performance targets have been met. For our chief executive officer, the on-target cash incentivepercentage is set at 75% of the base salary, with the maximum cash incentive set at 150% of the annual base salary. The cash incentive pay-out in any yearrelates to the achievements of the preceding financial year in relation to agreed targets.To support the performance culture, the Annual Incentive plan is based on EBIT at group level and business / support level, as well as market sharetargets. Any targets are set by the board of directors, at the proposal of its nominating & compensation committee. NXP market share is based on the “WorldSemiconductors Trade Statistics” (WSTS), an industry association in which NXP participates. WSTS collects the revenue (billings) of all majorsemiconductor companies and calculates the size of the total market (TAM) based on this input. We have set a target for market share growth and willmeasure our performance against this commonly recognized source of market share data. We calculate our market share by dividing our revenue by the totalmarket size adjusted for sectors NXP is not active in (TAM focus) and incidental adjustments for material deviations.Over the year 2016, our chief executive officer realized a target achievement of 57.7% and thus an amount of €494,201 has been accrued as an annualincentive bonus for our chief executive officer for our performance in 2016. Over the year 2015, our chief executive officer realized a target achievement of161.5%, and thus an amount of €1,383,248 was accrued in 2015 (paid in 2016) as an annual incentive bonus for our performance in 2015 (over the year2014, the target achievement was 154%, and thus an amount of €1,324,720 was accrued in 2014 (paid in 2015)). The total annual incentive bonus amountpaid in 2016 to members of our management team, including our chief executive officer, is €2,443,300. In 2015, an amount of €5,518,340 has been paid tomembers of our management team, including our chief executive officer, and in 2014, an amount of €5,047,102 has been paid. 52Table of ContentsShare Based Compensation PlansThe purpose of our share based compensation plans, is to align the interests of directors and management with those of our stockholders by providingadditional incentives to improve our medium and long term performance, by offering the participants an opportunity to share in the success of NXP.In the period from 2007 until our initial public offering in August 2010, we granted stock options (“MEP Options”) to the members of our managementteam and to approximately 135 of our other executives under the Management Equity Stock Option Plan (“MEP”). The MEP Options became fullyexercisable upon the Private Equity Consortium ceasing to hold 30% of our shares of common stock on September 18, 2013. Current employees owningMEP Options may exercise such MEP Options during the period of five years as of September 18, 2013, subject to these employees remaining employed byus and subject to the applicable laws and regulations. As of December 31, 2016, a total of 2,534,272 MEP Options were granted and outstanding to a group of11 (current) NXP executives (which includes our chief executive officer and other members of the management team). These MEP Options can be exercised atexercise prices which vary from €2.00 to €40.00 per MEP Option.Since 2010, we have maintained annual Long Term Incentive Plans, under which performance stock, restricted stock and stock options may be grantedto the members of our board of directors, management team, our other executives, selected other key employees/talents of NXP and selected new hires. Underthese Long Term Incentive Plans, equity incentives may be granted on, or the first NASDAQ trading day after NXP publishes its quarterly financials. In viewof the merger with Freescale, a specific grant under the 2015 plan was made to Freescale employees who joined NXP on December 7, 2015. Performance stockunits and restricted stock units vest over a period of one to four years, subject to relevant performance criteria relating to operating income being met in thecase of performance stock units, and stock options vest over four years. Beginning with the 2014 LTIP plans, performance stock units granted to the membersof our management team, including the CEO, vest over a period of four years, and restrictive stock units granted to the non-executive directors in our boardvest over a period of one year. In view of the previously announced tender offer by Qualcomm to acquire all the issued and outstanding NXP shares, inOctober 2016, the board of directors, advised by its nominating & compensation committee, resolved to only grant restricted stock units under the 2016Long term Incentive Plan.The size of the annual equity pool available for Long Term Incentive Plan 2010 awards from November 2, 2010 up to the fourth quarter of 2011 was foran aggregate of up to 7,200,000 common shares in our share capital. On December 31, 2016, grants to 69 participants were outstanding, in total representingsome 520,224 shares of common stock, consisting of 520,224 stock options.The size of the annual equity pool available for Long Term Incentive Plan 2011 awards from November 1, 2011 up to the fourth quarter of 2012 was foran aggregate of up to 8.6 million (including 1.4 million which remained from the 2010 LTIP pool) common shares in our share capital. On December 31,2016, grants to 222 participants were outstanding, in total representing 1,012,256 shares of common stock, consisting of 1,012,256 stock options.The size of the annual equity pool available for Long Term Incentive Plan 2012 awards from October 25, 2012 up to the fourth quarter of 2013 was foran aggregate of up to 9.3 million (including 2.1 million which remained from the 2011 LTIP pool) common shares in our share capital. On December 31,2016, grants to 441 participants were outstanding, in total representing 1,390,410 shares of common stock, consisting of 1,390,410 stock options.The size of the annual equity pool available for Long Term Incentive Plan 2013 awards from October 24, 2013 up to the fourth quarter of 2014 is for anaggregate of up to 6.7 million (including 0.4 million which remained from the 2012 LTIP pool) common shares in our share capital. On December 31, 2016,grants to 159 participants were outstanding, in total representing 1,211,569 shares of common stock, consisting of 240,775 performance stock units, 40,860restricted stock units and 929,934 stock optionsThe size of the annual equity pool available for Long Term Incentive Plan 2014 awards from October 23, 2014 up to the fourth quarter of 2015 is for anaggregate of up to 7.5 million (including 2.2 million which remained from the 2013 LTIP pool) common share in our share capital. On December 31, 2016grants to 2,095 participants were outstanding, in total representing 1,568,915 shares of common stock, consisting of 234,575 performance stock units,623,829 restricted stock units and 710,511 stock options.The size of the annual equity pool available for Long Term Incentive Plan 2015 awards from October 29, 2015 up to the fourth quarter of 2016 is for anaggregate of up to 5.2 million (including 4.2 million which remained from the 2014 LTIP pool) common share in our share capital. On December 31, 2016grants to 6,118 participants were outstanding, in total representing 2,943,761 shares of common stock, consisting of 258,547 performance stock units,1,464,138 restricted stock units and 1,221,076 stock options.In view of the Merger, NXP exchanged on December 7, 2015 the outstanding Freescale equity into 4,924,043 restricted stock units and 2,871,861stock options. On December 31, 2016 grants to 3,685 participants were outstanding, in total representing 3,611,528 shares of common stock, consisting of2,227,287 restricted stock units and 1,384,241 stock options.The size of the annual equity pool available for Long Term Incentive Plan 2016 awards from October 27, 2016 up to the fourth quarter of 2017 is for anaggregate of up to 5.6 million (including 4.3 million which remained from the 2015 LTIP pool) common share in our share capital. On December 31, 2016grants to 6,111 participants were outstanding, in total representing 2,564,765 shares of common stock, consisting of 2,564,765 restricted stock units. In lightof the announced tender offer by Qualcomm on all the NXP shares, only restricted stock units were granted under the 2016 Long term Incentive Plan.As of December 31, 2016, under the above equity plans, a total amount of 9,702,924 stock options, 733,897 performance stock units and 6,920,879restricted stock units were outstanding, in total representing 17,357,700 shares of common stock.Shares to be delivered under any equity program may be newly issued, for up to 10% of our share capital, or they may come out of treasury stock or bepurchased from time to time upon the decision of our board of directors. 53Table of ContentsAs of December 31, 2016, the following stock options, restricted stock units, performance stock units and shares of common stock were outstandingwith members of our board of directors:Richard L. Clemmer, CEO and presidentAs of December 31, 2016, our chief executive officer held 925,399 shares of common stock and had been granted the following (vested and unvested)stock options and (unvested) performance stock units, which were outstanding: Series Number of StockOptions ExercisePrice (in $) Stock OptionsVested Number of Stock Options per vesting schedule 10/29/17 10/29/18 10/29/19 2016/February 30,751 76.31 7,687 7,688 7,688 7,688 Series Number of StockOptions ExercisePrice (in $) Stock OptionsVested Number of Stock Options per vesting schedule 10/29/17 10/29/18 10/29/19 2015/October 165,877 73.00 41,469 41,469 41,469 41,470 Series Number of StockOptions ExercisePrice (in $) Stock OptionsVested Number of Stock Optionsper vesting schedule 10/23/17 10/23/18 2014/October 161,675 64.18 80,837 40,419 40,419 Series Number of StockOptions ExercisePrice (in $) Stock optionsVested Stock Optionsper vestingschedule 10/24/17 2013/October 344,635 39.58 258,476 86,159 Series Number of StockOptions (all vested) ExercisePrice (in $) 2012/October 410,000 23.49 Series Number of StockOptions (all vested) ExercisePrice (in $) 2011/November 410,000 16.84 Series Number of StockOptions (all vested) ExercisePrice (in $) 2010/November 360,252 13.27 Series Number of StockOptions (all vested) ExercisePrice (in €) 2009/1 51,400 2.00 2009/2 1,400,000 15.00 2009/3 234,000 30.00 2009/4 374,252 40.00 Total 2,059,652 Series Number ofRestrictedStock Units Number of Restricted Stock Units per vesting schedule 10/27/17 10/27/18 10/27/19 2016/October 126,161 42,053 42,053 42,054 54Table of ContentsSeries Number ofPerformanceStock Units Number of Performance Stock Units per vesting schedule 10/29/17 10/29/18 10/29/19 10/29/20 2016/February 13,105 Maximum 6,552 Maximum 9,828 Maximum 13,105 Up to 13,105 Series Number ofPerformanceStock Units Number of Performance Stock Units per vesting schedule 10/23/17 10/23/18 10/23/19 10/23/20 2015/October 71,918 Maximum 35,958 Maximum 53,938 Maximum 71,918 Up to 71,918 Series Number ofPerformanceStock Units Number of Performance Stock Units per vesting schedule 10/23/17 10/23/18 10/23/19 2014/October 52,587 Maximum 35,038 Maximum 52,587 Up to 52,587 Series Number ofPerformanceStock Units Number of Performance Stock Units pervesting schedule 11/1/17 11/1/18 2014/October 33,760 Maximum 16,880 Maximum 33,760 Other members of our board of directorsAs of December 31, 2016, the other members of our board of directors held the following number of shares of common stock:Sir Peter Bonfield: 32,611 from vested stock unitsMr. Goldman: 21,433 from vested stock unitsMr. Huth: 12,560 from vested stock unitsDr. Helmes: 9,914 from vested stock unitsMr. Kaeser: 33,915 from vested stock unitsMr. Loring: 40,912 from vested stock unitsMs. Southern: 6,940 from vested stock unitsMr. Meurice: 5,857 from vested stock unitsDr. Tsai: 5,857 from vested stock unitsMr. Summe: 4,381 from the exchange of Freescale stock unitsTo each of the non-executive members of our board of directors, the following restricted stock units had been granted and were outstanding as ofDecember 31, 2016: Series Number ofRestrictedStock Units Number ofStock Units pervesting schedule 10/27/17 2016/October 2,019 2,019 PensionsIt has been our long-standing practice that our chief executive officer and eligible members of the management team under a Dutch employmentcontract participate in the executives’ pension plan, which we established in the Netherlands and which consists of a combination of a career average and adefined-contribution plan. Due to legislative changes in the Netherlands, effective January 1, 2015 a new pension arrangement applies to our employeesworking under Dutch employment contracts, including our chief executive officer. Since January 1, 2015, pension plans which allow pension accrual basedon a pensionable salary exceeding an amount of €100,000 (threshold is adapted by the fiscal authorities each year, 2016: €101,519) are, for fiscal purposes,considered to be non-qualifying schemes. 55Table of ContentsThe following pension arrangement is in place for our chief executive officer, and members of the management team and other executives under Dutchcontract with effect from January 1, 2015: • Pension Plan in the Netherlands, which is a Collective Defined Contribution plan with an age-dependent fixed contribution percentage up to amaximum pensionable salary of €100,000 (2016: €101,519). The Pension Plan has a target retirement age of 67 and a target accrual rate of1.85%; • Introduction of a Benefit Allowance of 12.3% of the pensionable salary above €101,519 (2016) for all current and new employees • Compensation of remaining loss in pension accrual, compared to 2014, as an individual Retirement allowance • Individual compensation (Retirement allowance) will be protected for 5 years (up to end 2019) and then reduced to 75%, 50%, 25% in thefollowing 3 years (2020-2021-2022). No individual compensation after year 8 (January 2023 onwards)The total pension cost of the Company related to these revised pension arrangements (including the temporary Retirement Allowance for the remaining7 years) is at a comparable level over a period of time to the pension cost under the former Executive Pension Plan.The changed pension arrangements as per January 1, 2015 resulted for our chief executive officer into a decrease in pension, retirement or similarbenefits from €589,262 ($781,479) in 2014 to €12,491 ($13,927) in 2015, and an increase in Pension Allowances from nil in 2014 to €517,535 ($577,052) in2015. As said, a similar approach was followed for the other MT members in The Netherlands – as other lower ranked management members.In 2016, we paid for our chief executive officer a total pension plan contribution of €16,358 ($18,100) in 2016 (€12,491 ($13,927) in 2015 and€589,262 ($781,479) in 2014) and an aggregated amount of €517,319 ($572,394) as Retirement Allowance and individual Allowance in 2016 (€517,535($577,052) in 2015).Additional ArrangementsOur chief executive officer has a contract of employment until December 31, 2017, and most of the other members of our management team and ourexecutives have a contract of employment for an indefinite term. The main elements of any new employment contract that we will enter into with a member ofthe board of directors will be made public no later than the date of the public notice convening the general meeting of stockholders at which the appointmentof such member of the board of directors will be proposed. Non-executive directors of our board do not have a contract of employment.In addition to the main conditions of employment, a number of additional arrangements apply to our chief executive officer and other members of themanagement team; these arrangements do not apply to the non-executive members of our board of directors. These additional arrangements, such as housingcompensation and relocation allowances, medical insurance, accident insurance, school fee compensation and company car arrangements are broadly in linewith those for the NXP executives globally. In the event of disablement, our chief executive officer and other members of the management team are entitledto benefits in line with those for other NXP executives. In the event of our chief executive officer’s death while in the service of NXP, any unvested equityawards (including any NXP stock options, performance stock units and restricted stock units) will vest. In line with regulatory requirements, the Company’spolicy forbids personal loans, guarantees or similar arrangements to members of our board, and consequently no loans, guarantees or similar arrangementswere granted to such members since 2010, nor were any such loans outstanding as of December 31, 2016. The contract of employment entered into with ourchief executive officer as of January 1, 2009, provides that if our chief executive officer terminates his employment within six months of a change of control,then he will be entitled to two years’ base salary (gross) plus twice the amount of his target annual bonus (gross).Unless the law provides otherwise, the members of our board of directors are expected to be reimbursed by us for various costs and expenses, such asreasonable costs of defending claims, as formalized in the articles of association. Under certain circumstances, described in the articles of association, such asan act or failure to act by a member of our board of directors that can be characterized as intentional (opzettelijk), intentionally reckless (bewust roekeloos) orseriously culpable (ernstig verwijtbaar), there will be no entitlement to this reimbursement.C. Board PracticesManagement StructureWe have a one-tier board structure, consisting of an executive director and non-executive directors.Powers, Composition and FunctionThe number of executive and non-executive directors is determined by the board of directors. The board of directors consists of one executive directorand eleven non-executive directors. The executive director, Mr. Clemmer, has been appointed as our chief executive officer.The appointment of the directors will be made by our general meeting of stockholders upon a binding nomination of the board of directors. Aresolution to appoint a director nominated by the board of directors is adopted by a simple majority of the votes cast. The 56Table of Contentsnomination shall state whether the director is proposed to be an executive or non-executive director. The general meeting of stockholders may at all timesoverrule the binding nature of such a nomination by a resolution adopted by at least a two thirds majority of the votes cast, provided such majority representsmore than half of our issued share capital. The board of directors may then make a new nomination. If a nomination has not been made or has not been madein due time, this shall be stated in the notice and the general meeting of stockholders shall be free to appoint a director at its discretion. The latter resolutionof the general meeting of stockholders must also be adopted by at least two thirds majority of the votes cast, provided such majority represents more than halfof our issued share capital.Under our articles of association and Dutch corporate law, the members of the board of directors are collectively responsible for the management,general and financial affairs and policy and strategy of our company. Our executive director will be responsible for the day-to-day management of theCompany and for the preparation and execution of board resolutions, to the extent these tasks are not delegated to a committee of the board of directors. Ourchief executive officer or all directors acting jointly may represent our company with third parties.A conflict of interest between the Company and one or more of our directors is not expected to have any impact on the authority of directors torepresent the Company. Under our board regulations, a conflict needs to be reported to the board of directors and the board of directors shall resolve on theconsequences, if any. Dutch law, in case of a conflict, does not allow the directors concerned to participate in discussions or vote on such matters.Our non-executive directors will supervise the executive director and our general affairs and provide general advice to the executive director.Furthermore the non-executive directors will perform such acts that are delegated to them pursuant to our articles of association or by our board regulation.One of the non-executive directors has been appointed as chairman of the board and another non-executive director has been appointed as vice-chairman ofthe board of directors.Each director owes a duty to us to properly perform the duties assigned to him and to act in the corporate interest of our company. Under Dutch law, thecorporate interest extends to the interests of all corporate stakeholders, such as stockholders, creditors, employees, customers and suppliers.Our directors are appointed for one year and will be re-electable each year at the general meeting of stockholders. The members of our board ofdirectors may be suspended or dismissed at any time by the general meeting of stockholders. A resolution to suspend or dismiss a director will have to beadopted by at least a two thirds majority of the votes cast, provided such majority represents more than half of our issued share capital and unless the proposalto suspend or dismiss a member of the board of directors is made by the board of directors itself, in which case resolutions shall be adopted by a simplemajority of votes cast. Dutch law facilitates the suspension of executive directors by the board.In the event that one or more directors are prevented from acting or in the case of a vacancy or vacancies for one or more directors, the board ofdirectors remains properly constituted. The board of directors is expected to have the power, without prejudice to its responsibility, to cause our company tobe represented by one or more attorneys. These attorneys shall have such powers as shall be assigned to them on or after their appointment and in conformitywith our articles of association, by the board of directors.The board of directors has adopted board regulations governing its performance, its decision making, its composition, the tasks and working procedureof the committees and other matters relating to the board of directors, the chief executive officer, the non-executive directors and the committees establishedby the board of directors. In accordance with our board regulations, resolutions of our board of directors will be adopted by a simple majority of votes cast ina meeting at which at least the majority of its members is present or represented. Each member of the board of directors has the right to cast one vote. In a tievote, the proposal will be rejected.Board CommitteesWhile retaining overall responsibility, our board of directors has assigned certain of its tasks to permanent committees. Members of the permanentcommittees will be appointed by the board of directors. The board of directors will also determine the tasks of each committee. Our board of directors hasestablished an audit committee and a nominating and compensation committee, each of which will have the responsibilities and composition describedbelow: • Audit Committee. Our audit committee consists of five independent non-executive directors, Messrs. Goldman, Kaeser, Summe, and Dr. Helmes andMs. Southern; all five members are independent directors under the Dutch corporate governance rules and under the NASDAQ and SEC auditcommittee structure and membership requirements. Mr. Goldman, who is appointed as chairman of the audit committee, qualifies as an “auditcommittee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K and as determined by our board of directors. Our auditcommittee assists the board of directors in supervising, monitoring and advising the board of directors on financial reporting, risk management,compliance with relevant legislation and regulations and our business code of conduct. It will oversee the preparation of our financial statements, ourfinancial reporting process, our system of internal business controls and risk management, our internal and external audit process and our internal andexternal auditor’s qualifications, independence and performance. Our audit committee also reviews our annual and interim financial statements andother public disclosures, prior to publication. At least once per year, the non-executive directors who are part of the audit committee reports theirfindings to the plenary board of directors. Our audit committee also recommends to our stockholders the appointment of external auditors. The externalauditor attends most meetings of the audit committee. The findings of the external auditor, the audit approach and the risk analysis are also discussed atthese meetings. • Nominating and Compensation Committee. Our nominating and compensation committee consists of four non-executive directors, Sir Peter Bonfieldand Messrs. Huth, Meurice and Smitham; all four members are independent directors under the Dutch corporate 57Table of Contents governance rules and under the NASDAQ and SEC compensation committee structure and membership requirements. Mr. Meurice is appointed aschairman of this committee. The nominating & compensation committee determines selection criteria and appointment procedures for members of ourboard of directors, periodically assesses the scope and composition of our board of directors and evaluates the performance of its individual members. Itis responsible for recommending to the board of directors the compensation package for our executive directors, with due observance of theremuneration policy adopted by the general meeting of stockholders. It reviews employment contracts entered into with our executive directors, makesrecommendations to our board of directors with respect to major employment-related policies and oversees compliance with our employment andcompensation-related disclosure obligations under applicable laws.Limitation of Liability and Indemnification MattersUnless prohibited by law in a particular circumstance, our articles of association require us to reimburse the members of the board of directors and theformer members of the board of directors for damages and various costs and expenses related to claims brought against them in connection with the exerciseof their duties. However, there shall be no entitlement to reimbursement if and to the extent that (i) a Dutch court has established in a final and conclusivedecision that the act or failure to act of the person concerned may be characterized as willful ( opzettelijk ), intentionally reckless ( bewust roekeloos ) orseriously culpable ( ernstig verwijtbaar ) conduct, unless Dutch law provides otherwise or this would, in view of the circumstances of the case, beunacceptable according to standards of reasonableness and fairness, or (ii) the costs or financial loss of the person concerned are covered by an insurance andthe insurer has paid out the costs or financial loss. We may enter into indemnification agreements with the members of the board of directors and our officersto provide for further details on these matters. We have purchased directors’ and officers’ liability insurance for the members of the board of directors andcertain other officers, substantially in line with that purchased by similarly situated companies.At present, there is no pending litigation or proceeding involving any member of the board of directors, officer, employee or agent whereindemnification will be required or permitted. We are not aware of any threatened litigation or proceedings that might result in a claim for suchindemnification.Insofar as indemnification of liabilities arising under the Securities Act of 1933, as amended, may be permitted to members of the board of directors,officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification isagainst public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.D. EmployeesAs of December 31, 2016 we had 40,400 full-time equivalent employees. The following table indicates the % of full–time equivalent employees pergeographic area: % as of December 31, 2016 2015 Europe and Africa 18 20 Americas 15 16 Greater China 28 27 Asia Pacific 39 37 Total 100 100 We have not experienced any material strikes or labor disputes in the past. A number of our employees are members of a labor union. In variouscountries, local law requires us to inform and consult with employee representatives on matters relating to labor conditions. We consider our employeerelations to be good.E. Share OwnershipInformation with respect to share ownership of members of our board of directors is included in Part I, Item 7. Major Shareholders and Related PartyTransactions and notes 18 and 20 to our Consolidated Financial Statements, which are incorporated herein by reference. Information with respect to the grantof shares and stock options to employees is included in note 9 to our Consolidated Financial Statements which are incorporated herein by reference. In orderto maintain a strong alignment between the interests of NXP’s management and our shareholders, we have adopted an equity ownership policy for thePresident/CEO and the other members of our management team. The number of shares to be maintained by the members of our management team increaseseach time our shares are being delivered upon the vesting of stock options or other rights to our shares. The management team members are required tomaintain a certain number of our shares until the time that he or she is no longer employed by us. 58Table of ContentsItem 7.Major Shareholders and Related Party TransactionsA. Major ShareholdersThe following table shows the amount and percentage of our common stock beneficially owned as of December 31, 2016, December 31, 2015 andDecember 31, 2014 by (i) each person who is or was known by us to own beneficially more than 5% of our common stock, (ii) each current member of ourboard of directors, and (iii) all members of the board and named executive officers as a group. A person is a “beneficial owner” of a security if that person hasor shares voting or investment power over the security or if he has the right to acquire beneficial ownership within 60 days. Unless otherwise noted, thesepersons may be contacted at our executive offices and, unless otherwise noted, have to our knowledge sole voting and investment power over the shareslisted. Common Stock Beneficially Owned as of December 31 2016 2015 2014 Number %* Number %* Number %* T. Rowe(1) 32,862,425 9.50 — — 1,715,115 0.68 FMR LLC(2) 12,618,417 3.65 22,525,068 6.51 22,796,838 9.05 Blackstone Funds — — 33,275,028 9.62 — — Wellington Management Company, LLP — — — — 18,843,170 7.48 Richard L. Clemmer 4,553,772 1.32 4,188,683 1.21 3,410,762 1.36 Sir Peter Bonfield 32,611 0.01 30,487 0.01 25,312 0.01 Johannes P. Huth 12,560 0.004 8,135 0.002 98,351 0.04 Kenneth Goldman 21,433 0.006 33,526 0.01 28,351 0.011 Dr. Marion Helmes 9,914 0.003 6,487 0.002 1,685 0.001 Josef Kaeser 33,915 0.01 30,487 0.01 25,312 0.01 Ian Loring 40,912 0.01 36,486 0.01 28,351 0.011 Eric Meurice 5,857 0.002 3,117 0.001 — — Julie Southern 6,940 0.002 4,127 0.001 1,072 0.001 Rick Tsai 5,857 0.002 3,117 0.001 — — Peter Smitham — — — — — — Gregory L. Summe 4,381 0.001 4,381 0.001 — — All directors as a group 4,728,152 1.37 4,349,033 1.26 3,619,196 1.44 *Percentage computations are based on 346,002,862 shares of our common stock issued and outstanding as of December 31, 2016 and December 31,2015 and 251,751,500 as of December 31, 2014.(1)Information about the number of common shares owned by T. Rowe Price Associates, Inc. (“T. Rowe”) on December 31, 2016, is based solely on aSchedule 13G filed by T. Rowe with the SEC on February 7, 2017, reporting share ownership as of December 31, 2016. T. Rowe’s address is 100 E.Pratt Street, Baltimore, Maryland 21202. T. Rowe beneficially owned an aggregate of 32,862,425 common shares, has sole power to vote 10,917,873shares and the sole power to dispose of 32,847,258 shares of our common stock.(2)Information about the number of common shares owned by FMR LLC (“FMR”) on December 31, 2016, is based solely on a Schedule 13G filed byFMR LLC and Abigail P. Johnson with the SEC on February 14, 2017, reporting share ownership as of December 31, 2016. The address of FMR is 245Summer Street, Boston, Massachusetts 02210. FMR, along with certain of its subsidiaries and affiliates, and other companies, beneficially owned anaggregate of 12,618,417 common shares, has sole power to vote 1,654,656 shares and the sole power to dispose of 12,618,417 shares of our commonstock. Abigail P. Johnson is a Director, the Chairman, and the Chief Executive Officer of FMR. Members of the Johnson family, including Abigail P.Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR, representing 49% of the voting power ofFMR. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series Bvoting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership ofvoting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the InvestmentCompany Act of 1940, to form a controlling group with respect to FMR.No shareholders held different voting rights.As described elsewhere in this Annual Report, on October 27, 2016, Qualcomm River Holdings B.V., an indirect, wholly-owned subsidiary ofQUALCOMM Incorporated, and NXP entered into a definitive agreement which will result, subject to the satisfaction or waiver of the conditions in theagreement, in a change in control of NXP.B. Related Party TransactionsThe transactions NXP has with related parties are not deemed to be material, individually or in the aggregate. See Part III, Item 18. FinancialStatements, note 20 Related-party Transactions.C. Interests of Experts and CounselNot applicable. 59Table of ContentsItem 8.Financial InformationA. Consolidated Statements and Other Financial InformationConsolidated StatementsSee Part III, Item 18. Financial Statements.Dividend PolicyWe currently retain all of our earnings for use in the operation and expansion of our business, to repurchase or redeem capital stock, and in therepayment of our debt. We have never declared or paid any cash dividends on our common stock and may not pay any cash dividends in the foreseeablefuture. Whether or not dividends will be paid in the future will depend on, among other things, our results of operations, financial condition, level ofindebtedness, cash requirements, covenants in our financings, contractual restrictions and other factors that our board of directors and our stockholders maydeem relevant. If, in the future, our board of directors decides not to allocate profits to our reserves (making such profits available to be distributed asdividends), any decision to pay dividends on our common stock will be at the discretion of our stockholders. In addition, under the terms of the PurchaseAgreement, we must obtain consent in advance from Buyer to declare, set aside or pay any dividend on our common stock.B. Significant ChangesNot applicable. 60Table of ContentsItem 9.The Offer and ListingA. Offer and Listing DetailsThe following table shows the high and low closing sales prices of the common stock on the stock market of NASDAQ as reported in the Official PriceList for the following periods: Most recent six monthsJanuary 2017 December 2016 November 2016 October 2016 September 2016 August 2016High Low High Low High Low High Low High Low High Low98.79 96.00 99.00 97.10 99.55 96.59 104.49 98.66 102.01 81.40 88.94 81.85On February 10, 2017, the closing sales price of the common stock on the stock market of NASDAQ was $101.99. 2016 2015 2014 High Low High Low High Low 1st quarter 84.44 64.00 108.03 72.38 59.91 42.94 2nd quarter 94.49 75.04 112.25 95.33 66.44 55.72 3rd quarter 102.01 76.05 99.28 79.26 73.01 60.50 4th quarter 104.49 96.59 97.95 73.00 77.85 53.90 High Low 2016 104.49 64.00 2015 112.25 72.38 2014 77.85 42.94 2013 45.95 25.29 2012 26.97 16.01 B. Plan of DistributionNot applicable.C. MarketsThe shares of common stock of the Company are listed on the stock market of the NASDAQ Global Select Market in New York under the ticker symbol“NXPI”.D. Selling ShareholdersNot applicable.E. DilutionNot applicable.F. Expenses of the IssueNot applicable. Item 10.Additional InformationA. Share CapitalNot applicable.B. Memorandum and Articles of AssociationThe information required by this section is incorporated by reference to Exhibit 3.2 of Amendment No. 7 to the Company’s Registration Statement onForm F-1, filed on August 5, 2010 (File No. 333-166128).C. Material ContractsOther than the material contracts described below, we have not entered into any material contracts other than in the ordinary course of business. 61Table of Contents2016On May 23, 2016, we entered into the Senior Indenture between NXP B.V. and NXP Funding LLC as Issuers, each of the guarantors party thereto andDeutsche Bank Trust Company Americas as Trustee in connection with the issuance of 4.125% and 4.625% Senior Unsecured Notes with aggregate principalamounts of $850 million, due June 1, 2021 and $900 million, due June 1, 2023. On August 1, 2016, NXP B.V., together with NXP Funding LLC, issued anadditional aggregate principal amount of $500 million of 4.125% Senior Unsecured Notes due 2021 under this agreement.On June 14, 2016, we entered into an agreement with Beijing JianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD(“Wise Road Capital”) to divest our Standard Products business. On February 6, 2017 we divested SP, receiving $2.75 billion in cash proceeds.On June 13, 2016, we entered into amendments to the Shareholder Agreements with certain former Freescale shareholders (the “Sponsors”) to amendthe transfer restrictions for the Sponsors in relation to NXP shares received in the Merger.On August 11, 2016, we entered into the Senior Indenture among NXP B.V. and NXP Funding LLC as Issuers, each of the guarantors party thereto andDeutsche Bank Trust Company Americas as Trustee in connection with the issuance of $1,000 million aggregate principal amount of 3.875% SeniorUnsecured Notes due 2022.On September 22, 2016, we entered in the 2016 New Term Loan Joinder Agreement by and among the Tranche F Lenders defined therein, NXP B.V.and NXP Funding LLC as Borrowers and Credit Suisse AG as Administrative Agent in connection with the entry into Term Loan F for an aggregate principalamount of $1,440 millionOn October 27, 2016, NXP entered into a purchase agreement (the “Purchase Agreement”) with Qualcomm River Holdings B.V. (“Buyer”), a wholly-owned, indirect subsidiary of Qualcomm Incorporated. Pursuant to the Purchase Agreement, Buyer commenced a tender offer to acquire all of the issued andoutstanding common shares of NXP for $110 per share in cash, for estimated total cash consideration of $38 billion. The tender offer is not subject to anyfinancing condition. An Extraordinary General Meeting of NXP’s shareholders was convened on January 27, 2017, in connection with the offer where theshareholders of NXP approved all resolutions brought before them, with 95% of the votes cast in favor of each such resolution. In light of the foregoing, thetender offer is now conditioned on the tender of 80% of the outstanding shares of NXP, and Buyer, with NXP’s prior written consent (not to be unreasonablywithheld, conditioned or delayed), may reduce the required threshold to a percentage not less than 70% of the outstanding shares. Pending the receipt ofcertain regulatory approvals, as well as satisfaction of other customary closing conditions, the proposed transaction is expected to close by the end ofcalendar 2017.The Purchase Agreement contains certain termination rights for NXP and Buyer. If the Purchase Agreement is terminated under certain circumstances,including termination by NXP to enter into a superior proposal for an alternative acquisition transaction or a termination following a change ofrecommendation by the NXP Board, NXP will be obligated to pay to Buyer a termination compensation equal to $1.25 billion in cash. If the PurchaseAgreement is terminated under certain circumstances, including circumstances relating to the failure to obtain antitrust approvals or failure to complete in allmaterial respects certain internal reorganization steps and related dispositions with respect to NXP, Buyer will be obligated to pay to NXP a terminationcompensation equal to $2 billion in cash.2015On March 1, 2015, we entered into a Merger Agreement, by and among the Company, Freescale and Nimble Acquisition Limited (“Merger Sub”), aBermuda exempted limited liability company and Sub, providing for the merger of Sub with and into Freescale (the “Merger”), with Freescale surviving theMerger as a wholly-owned, indirect subsidiary of the Company.Concurrently with the execution and delivery of the Merger Agreement, Freescale Holdings L.P. (“Freescale LP”), the largest holder of FreescaleCommon Shares, the Company and certain limited partners of Freescale LP, entered into a support agreement (the “Support Agreement”) whereby FreescaleLP committed, among other things, subject to the terms and conditions of the Support Agreement, to vote all of its Freescale Common Shares (representing64% of the Freescale Common Shares outstanding as of the date of the Support Agreement) for the adoption of (and not to participate in any litigationchallenging) the Merger Agreement.On December 7, 2015, we entered into the Bermuda Merger Agreement, by and among the Company, Freescale and Merger Sub, consummating theMerger. As per the same date, we entered into Shareholders Agreements with the Sponsors, containing transfer restrictions for the Sponsors in relation to NXPshares received in the Merger and the requirement for NXP to use its best efforts to cause to be declared effective by the SEC a registration statement on FormF-1 or Form F-3 or such other available form covering the NXP ordinary shares requested to be included by certain of the Sponsors.In connection with the Merger, we also entered into the following financing agreements: • 2020 Senior Unsecured Notes and 2022 Senior Unsecured Notes: On June 2, 2015, NXP B.V. and NXP Funding LLC entered into an indenture inrelation to $600 million aggregate principal amount of 2020 Senior Unsecured Notes and $400 million aggregate principal amount of 2022Senior Unsecured Notes that they issued. • RCF Agreement: NXP B.V. and NXP Funding LLC, as Borrowers, the several lenders party thereto, the Collateral Agent, Morgan Stanley SeniorFunding Inc., as RCF Administrative Agent, the joint lead arrangers, the joint bookrunners and the co-managers, each as detailed therein, enteredon December 7, 2015 into a $600 million RCF Agreement. All present and future obligations of the Borrowers arising under and pursuant to theterms of the RCF Agreement are guaranteed pursuant to RCF 62Table of Contents Guaranty Agreement by and among NXP B.V., NXP Funding LLC, NXP Semiconductors Netherlands B.V. and NXP Semiconductors Taiwan Ltd.(collectively, the “NXP Credit Guarantors”) and Freescale Semiconductor Holdings V, Inc. and Freescale Semiconductor Inc. (collectively, the“Freescale Credit Guarantors”) dated as of December 7, 2015; • Term Loan B: The Borrowers, the several lenders party thereto, Morgan Stanley Senior Funding LLC, as Collateral Agent, Credit Suisse AG, asTerm Loan Administrative Agent, the joint lead arrangers, the joint bookrunners and the co-managers, each as detailed therein, entered into a$2,700 million New Secured Term Credit Agreement. All present and future obligations of the Borrowers arising under and pursuant to the termsof the New Secured Term Credit Agreement are guaranteed pursuant to the Term Loan Guaranty Agreement by and among each of the NXPCredit Guarantors and each of the Freescale Credit Guarantors dated as of December 7, 2015; • Secured Bridge Term Credit Agreement: The Borrowers, the Collateral Agent, Credit Suisse AG, as Bridge Loan Administrative Agent, and thelenders party thereto, entered on December 7, 2015 into a Secured Bridge Term Credit Agreement. All present and future obligations of theBorrowers arising under and pursuant to the terms of the Secured Bridge Term Credit Agreement are guaranteed pursuant to the Bridge LoanGuaranty Agreement by and among each of the NXP Credit Guarantors and each of the Freescale Credit Guarantors dated as of December 7, 2015.Amounts outstanding under the Secured Bridge Term Credit Agreement were repaid in full on December 16, 2015; and • Secured Notes: NXP B.V., NXP Funding LLC, NXP Semiconductors Netherlands B.V., NXP Semiconductors UK Limited, NXP SemiconductorsUSA, Inc., NXP Semiconductors Germany GmbH, NXP Semiconductors Hong Kong Limited, NXP Semiconductors Philippines Inc., NXPSemiconductors Singapore Pte. Ltd., NXP Semiconductors Taiwan Ltd. and NXP Manufacturing (Thailand) Ltd. entered into and acceded to theA&R Freescale Indentures as additional guarantors.On May 28, 2015, we entered into an agreement to sell our RF Power business to JAC Capital, and on December 7, 2015 we completed this divestment.D. Exchange ControlsCash dividends payable on our ordinary shares and cash interest payments to holders of our debt securities may be remitted from the Netherlands tononresidents without legal restrictions imposed by the laws of the Netherlands, except that (i) such payments must be reported to the Dutch Central Bank forstatistical purposes only and (ii) the transfer of funds to jurisdictions subject to general economic sanctions adopted in connection with policies of the UnitedNations, European Commission or similar measures imposed directly by the Government of the Netherlands may be restricted.E. TaxationCertain Tax Considerations-Holder of Common StockSummary of Dutch Tax ConsiderationsThe following summary describes the material Dutch tax consequences of the ownership and disposition of our shares of common stock as of the datehereof and is intended as general information only. This summary does not contain a detailed description of all the Dutch tax law consequences applicable toyou as a holder of shares of common stock in the Company in light of your particular circumstances and does not address the effects of any non-Dutch taxlaws. For Dutch tax purposes, a holder of our shares may include an individual who or an entity that does not have the legal title of the shares, but to whomnevertheless the shares are attributed based either on such individual or entity holding a beneficial interest in the shares or based on specific statutoryprovisions, including statutory provisions pursuant to which shares are attributed to an individual who is, or who has directly or indirectly inherited from aperson who was, the settlor, grantor or similar originator of a trust, foundation or similar entity that holds the shares.If you are considering the purchase, ownership or disposition of our shares, you should consult your own tax advisors concerning the Dutch taxconsequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.The following summary is based on the Dutch tax law as applied and interpreted by Dutch tax courts and as published and in effect on the date hereof,without prejudice to any amendments introduced at a later date and implemented with or without retroactive effect. For the purpose of this paragraph, “Dutchtaxes” means taxes of whatever nature levied by or on behalf of the Netherlands or any of its subdivisions or taxing authorities. The Netherlands means thepart of the Kingdom of the Netherlands located in Europe and does not include Bonaire, St. Eustatius and Saba. Any reference hereafter made to a treaty forthe avoidance of double taxation concluded by the Netherlands includes the Tax Regulation for the Kingdom of the Netherlands (Belastingregeling voor hetKoninkrijk), the Tax Regulation for the country of the Netherlands (Belastingregeling voor het land Nederland) and the Agreement between the TaipeiRepresentative Office in the Netherlands and the Netherlands Trade and Investment Office in Taipei for the avoidance of double taxation. 63Table of ContentsWithholding TaxA stockholder is generally subject to Dutch dividend withholding tax at a rate of 15 percent on dividends distributed by us, if any. Generally, we areresponsible for the withholding of such dividend withholding tax at source; the dividend withholding tax is for the account of the stockholder.Dividends distributed by us include, but are not limited to: • distributions of profits in cash or in kind, whatever they be named or in whatever form; • proceeds from the liquidation of the Company, or proceeds from the repurchase of shares by the Company, in excess of the average paid-incapital recognized for Dutch dividend withholding tax purposes; • the par value of shares issued to a stockholder or an increase in the par value of shares, to the extent that no contribution, recognized for Dutchdividend withholding tax purposes, has been made or will be made; and • partial repayment of paid-in capital, that is (i) not recognized for Dutch dividend withholding tax purposes, or (ii) recognized for Dutch dividendwithholding tax purposes, to the extent that we have net profits (zuivere winst), unless (a) the general meeting of stockholders has resolved inadvance to make such repayment and (b) the par value of the shares concerned has been reduced with an equal amount by way of an amendmentto our articles of association. The term net profits includes anticipated profits that have yet to be realized.Notwithstanding the above, no withholding is required in the event of a repurchase of shares, if certain conditions are fulfilled.Furthermore, subject to certain exceptions under Dutch domestic law, we may not be required to transfer to the Dutch tax authorities the full amount ofDutch dividend withholding tax withheld in respect of dividends distributed by us, if we have received a profit distribution from a qualifying foreignsubsidiary (including a subsidiary resident on Bonaire, St. Eustatius or Saba), which distribution is exempt from Dutch corporate income tax and has beensubject to a foreign withholding tax of at least 5 percent. The amount that does not have to be transferred to the Dutch tax authorities can generally notexceed the lesser of (i) 3 percent of the dividends distributed by us and (ii) 3 percent of the profit distributions that we received from qualifying foreignsubsidiaries in the calendar year in which we distribute the dividends (up to the moment of such dividend distribution) and in the two previous calendaryears. Further limitations and conditions apply. We will, upon request, provide stockholders with information regarding the Dutch dividend withholding taxthat was retained by us.If a stockholder is resident in a country other than the Netherlands under the provisions of a treaty for the avoidance of double taxation between theNetherlands and such country, such stockholder may, depending on the terms of such treaty, be entitled to an exemption from, reduction in or refund ofDutch dividend withholding tax on dividends distributed by us.If a stockholder is subject to Dutch corporate income tax and is entitled to the participation exemption in relation to the benefits derived from theshares held by it and such shares are attributable to an enterprise carried out in the Netherlands, such stockholder will generally be entitled to an exemptionfrom Dutch dividend withholding tax on dividends distributed by us.If a stockholder (i) is resident in another member state of the European Union or an appointed state of the European Economic Area, i.e. Iceland,Norway and Liechtenstein, according to the tax laws of that state and, under the terms of a double taxation agreement concluded by that state with a thirdstate, is not considered to be resident for tax purposes outside the European Union, Iceland, Norway or Liechtenstein; and (ii) owns an interest in us to whichthe Dutch participation exemption would be applicable if the stockholder were resident in the Netherlands; such stockholder will generally be eligible for anexemption from Dutch dividend withholding tax on dividends distributed by us.Furthermore, if a stockholder: (a)is an entity which is resident for Dutch tax purposes in a member state of the European Union, Iceland, Norway or Liechtenstein or which is aqualifying stockholder resident elsewhere; (b)is not subject to a tax levied by reference to its profits in its country of residence; and (c)would not have been subject to Dutch corporate income tax had the stockholder been resident in the Netherlands for Dutch tax purposes;such stockholder will be eligible for a full refund of Dutch dividend withholding tax on dividends distributed by us, unless such stockholder iscomparable to an exempt investment institution (vrijgestelde beleggingsinstelling) or fiscal investment institution (fiscale beleggingsinstelling), asdescribed respectively in article 6a and 28 of the Dutch corporate income tax act 1969 ( Wet op de vennootschapsbelasting 1969). For purposes of (a) above,a qualifying stockholder is an entity that (i) is resident for Dutch tax purposes in a jurisdiction which has an arrangement for the exchange of tax informationwith the Netherlands and (ii) holds its shares as a portfolio investment, i.e. such shares are not held with a view to the establishment or maintenance of lastingand direct economic links between the stockholder and the company and the shares do not allow the stockholder to participate effectively in the managementor control of the company.A stockholder who is considered to be resident in the United States and is entitled to the benefits of the convention between the United States and theNetherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, dated December 18, 1992, as amendedmost recently by the Protocol signed March 8, 2004 (the “Treaty”), will be entitled to a reduction in the Dutch withholding tax by way of an exemption,reduction or refund, as follows: • if the U.S. stockholder is an exempt pension trust, as described in article 35 of the Treaty, or an exempt organization, as described in article 36 of theTreaty, the U.S. stockholder will be exempt from Dutch dividend withholding tax; 64Table of Contents• if the U.S. stockholder is a company which holds directly at least 10 percent of the voting power in the company, the U.S. stockholder will be subject toDutch withholding tax at a rate not exceeding 5 percent; • if the U.S. stockholder is a company which holds directly at least 80 percent of the voting power in the company and certain other conditions are met,the U.S. stockholder will be exempt from Dutch dividend withholding tax; and • in all other cases, the U.S. stockholder will be subject to Dutch dividend withholding tax at a rate of 15 percent.According to Dutch domestic anti-dividend stripping rules, no credit against Dutch (corporate) income tax, exemption from, reduction in or refund of,Dutch dividend withholding tax will be granted if the recipient of the dividend paid by us is not considered to be the beneficial owner ( uiteindelijkgerechtigde ) of such dividends as meant in these rules.Taxes on Income and Capital GainsThe description of taxation set out in this section of the Report does not apply to any stockholder who is an individual for whom the income or capitalgains derived from our shares of common stock are attributable to employment activities, the income from which is taxable in the Netherlands.A stockholder will not be subject to Dutch taxes on income or capital gains in respect of the ownership and disposal of our shares, other than Dutchdividend withholding tax as described above, except if: (i)the stockholder is, or is deemed to be, resident in the Netherlands for Dutch (corporate) income tax purposes; (ii)the stockholder derives profits from an enterprise, whether as entrepreneur (ondernemer) or pursuant to a co-entitlement to the net worth of suchenterprise other than as an entrepreneur or a stockholder, which enterprise is, in whole or in part, carried on through a permanent establishment(vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in the Netherlands, to which permanent establishment or a permanentrepresentative the shares are attributable; (iii)the stockholder is an individual and derives benefits from miscellaneous activities (resultaat uit overige werkzaamheden ) carried out in theNetherlands in respect of the shares, including, without limitation, activities which are beyond the scope of active portfolio investmentactivities; (iv)the stockholder is an individual and has a substantial interest (aanmerkelijk belang) or a fictitious substantial interest (fictief aanmerkelijkbelang) in the company, which is not attributable to the assets of an enterprise; (v)the stockholder is not an individual and (a) the stockholder has a substantial interest or a fictitious substantial interest in the company, (b) themain purpose, or one of the main purposes of the shareholding is the avoidance of the levy of Dutch income tax or dividend withholding tax onsomeone other than the stockholder, and (c) there is an artificial arrangement or series of arrangements; (vi)the stockholder is not an individual and is entitled to a share in the profits of an enterprise or a co-entitlement to the net-worth of an enterprise,other than by way of the holding of securities, which enterprise is effectively managed in the Netherlands and to which enterprise the shares areattributable; or (vii)the stockholder is an individual and is entitled to a share in the profits of an enterprise, other than by way of the holding of securities, whichenterprise is effectively managed in the Netherlands and to which enterprise the shares are attributable.Generally, a stockholder has a substantial interest if such stockholder, alone or together with its partner, directly or indirectly (a) owns, or holds certainrights on, shares representing five percent or more of the total issued and outstanding capital of the company, or of the issued and outstanding capital of anyclass of shares of the company; (b) holds rights to, directly or indirectly, acquire shares, whether or not already issued, representing five percent or more of thetotal issued and outstanding capital of the company, or of the issued and outstanding capital of any class of shares of the company; or (c) owns, or holdscertain rights on, profit participating certificates that relate to five percent or more of the annual profit of the company or to five percent or more of theliquidation proceeds of the company. A stockholder will also have a substantial interest if its partner or one of certain relatives of the stockholder or of itspartner has a substantial interest.Generally, a stockholder has a fictitious substantial interest in the company if, without having an actual substantial interest in the company (i) anenterprise has been contributed to the company in exchange for shares on an elective non-recognition basis; (ii) the shares have been obtained underinheritance law or matrimonial law, on a non-recognition basis, while the disposing stockholder had a substantial interest in the company; (iii) the shareshave been acquired pursuant to a share merger, legal merger or legal demerger, on an elective non-recognition basis, while the stockholder prior to thistransaction had a substantial interest in an entity that was party thereto; or (iv) the shares held by the stockholder, prior to dilution, qualified as a substantialinterest and, by election, no gain was recognized upon disqualification of these shares. 65Table of ContentsGift Tax and Inheritance TaxNo Dutch gift or inheritance tax is due in respect of any gift of the shares by, or inheritance of the shares on the death of, a stockholder, except if: (i)at the time of the gift or death of the stockholder, the stockholder is resident, or is deemed to be resident, in the Netherlands; (ii)the stockholder passes away within 180 days after the date of the gift of the shares and is not, or not deemed to be, at the time of the gift, but is, ordeemed to be, at the time of its death, resident in the Netherlands; or (iii)the gift of the shares is made under a condition precedent and the stockholder is resident, or is deemed to be resident, in the Netherlands at thetime the condition is fulfilled.For purposes of Dutch gift or inheritance tax, an individual who is of Dutch nationality will be deemed to be resident in the Netherlands if theindividual has been resident in the Netherlands at any time during the ten years preceding the date of the gift or his/her death. For purposes of Dutch gift tax,any individual, irrespective of its nationality, will be deemed to be resident in the Netherlands if he has been resident in the Netherlands at any time duringthe 12 months preceding the date of the gift.Other Taxes and DutiesNo other Dutch taxes, including turnover tax and taxes of a documentary nature, such as capital tax, stamp or registration tax or duty, are payable by oron behalf of a stockholder by reason only of the purchase, ownership and disposal of the shares.ResidencyA stockholder will not become resident, or deemed resident in the Netherlands for tax purposes by reason only of holding the shares.United States Federal Income Tax ConsiderationsThe following summary describes the material United States federal income tax consequences of the ownership and disposition of our shares as of thedate hereof. The summary set forth below is applicable only to United States Holders (as defined below) (i) who are residents of the United States for purposesof the Treaty, (ii) whose shares do not, for purposes of the Treaty, form part of the business property of a permanent establishment, or pertain to a fixed base, inthe Netherlands, and (iii) who otherwise qualify for the full benefits of the Treaty. Except where noted, this summary deals only with shares held as capitalassets. As used herein, the term “United States Holder” means a beneficial owner of a share that is for United States federal income tax purposes: • an individual citizen or resident of the United States; • a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws ofthe United States, any state thereof or the District of Columbia; • an estate the income of which is subject to United States federal income taxation regardless of its source; or • a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authorityto control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to betreated as a United States person.This summary does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject tospecial treatment under the United States federal income tax laws, including if you are: • a dealer in securities or currencies; • a financial institution; • a regulated investment company; • a real estate investment trust; • an insurance company; • a tax-exempt organization; • a person holding our shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle; • a trader in securities that has elected the mark-to-market method of accounting for your securities; • a person liable for alternative minimum tax; • a person who owns or is deemed to own 10% or more of our voting stock; • a person holding our shares in connection with a trade or business conducted outside of the United States; • a partnership or other pass-through entity for United States federal income tax purposes; or • a person whose “functional currency” is not the United States dollar.The summary below is based upon the provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), and regulations,rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified, perhaps retroactively, so as toresult in United States federal income tax consequences different from those discussed below.If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds our shares, the tax treatment of a partnerwill generally depend upon the status of the partner and the activities of the partnership. If you are a partnership or a partner of a partnership holding ourshares, you should consult your tax advisors. 66Table of ContentsThis summary does not contain a detailed description of all the United States federal income tax consequences to you in light of your particularcircumstances and does not address the Medicare tax on net investment income or the effects of any state, local or non-United States tax laws. If you areconsidering the purchase, ownership or disposition of our shares, you should consult your own tax advisors concerning the United States federal income taxconsequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.Taxation of DividendsThe gross amount of distributions on the shares (including any amounts withheld in respect of Dutch withholding taxes to the extent such amounts areactually transferred to the Dutch tax authorities, as described under “Certain Tax Considerations—Holder of Common Stock—Summary of Dutch TaxConsiderations—Withholding Tax” above) will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits, asdetermined under United States federal income tax principles. Such amounts taxable as dividends (including any portion thereof withheld and paid over tothe Dutch tax authorities) will be includable in your gross income as ordinary income on the day actually received by you or on the day received by yournominee or agent that holds the shares on your behalf. Such dividends will not be eligible for the dividends received deduction allowed to corporationsunder the Code.With respect to non-corporate United States investors, certain dividends received from a qualified foreign corporation may be subject to reduced ratesof taxation. A qualified foreign corporation includes a foreign corporation that is eligible for the benefits of a comprehensive income tax treaty with theUnited States which the United States Treasury Department determines to be satisfactory for these purposes and which includes an exchange of informationprovision. The United States Treasury Department has determined that the Treaty meets these requirements. We believe we are currently eligible for thebenefits of the Treaty. A foreign corporation is also treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares thatare readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our shares, which arelisted on the NASDAQ Global Select Market, are considered readily tradable on an established securities market in the United States. There can be noassurance that our shares will be considered readily tradable on an established securities market in later years.Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from a risk of loss or that elect totreat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless ofour status as a qualified foreign corporation. For this purpose, the minimum holding period requirement will not be met if a share has been held by a holderfor 60 days or less during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respectto such dividend, appropriately reduced by any period in which such holder is protected from risk of loss. In addition, the rate reduction will not apply todividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. Thisdisallowance applies even if the minimum holding period has been met. You should consult your own tax advisors regarding the application of these rules toyour particular circumstances.The maximum rate of withholding tax on dividends paid to you pursuant to the Treaty is 15 percent. You may be required to properly demonstrate tothe Company and the Dutch tax authorities your entitlement to the reduced rate of withholding under the Treaty. Subject to certain conditions andlimitations, Dutch withholding taxes on dividends may be treated as foreign taxes eligible for credit against your United States federal income tax liability.However, amounts withheld to reflect Dutch withholding taxes will not be creditable to the extent that we are allowed to reduce the amount of thewithholding tax that is actually transferred to the Dutch tax authorities, as described under “Certain Tax Considerations—Holder of Common Stock—Summary of Dutch Tax Considerations—Withholding Tax” above. For purposes of calculating the foreign tax credit, dividends paid on the shares will betreated as income from sources outside the United States and will generally constitute passive category income. Further, in certain circumstances, if you: • have held shares for less than a specified minimum period during which you are not protected from risk of loss, or • are obligated to make payments related to the dividends,you will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on the shares. The rules governing the foreign tax credit arecomplex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined underUnited States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of theshares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain recognized on a sale or exchange.However, we do not expect to determine earnings and profits in accordance with United States federal income tax principles. Therefore, you should expectthat a distribution will generally be treated as a dividend (as discussed above).Passive Foreign Investment CompanyBased on the composition of our income and valuation of our assets, including goodwill, we do not believe we were a passive foreign investmentcompany (a “PFIC”) for the 2016 taxable year, and we do not expect to become one in the future, although there can be no assurance in this regard. If,however, we are or become a PFIC, you could be subject to additional United States federal income taxes on gain recognized with respect to the shares and oncertain distributions, plus an interest charge on certain taxes treated as having been deferred under the PFIC rules. Non-corporate United States Holders willnot be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in thepreceding taxable year. 67Table of ContentsTaxation of Capital GainsFor United States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange of a share in an amount equal to thedifference between the amount realized for the share and your tax basis in the share. Such gain or loss will generally be capital gain or loss. Capital gains ofnon-corporate United States Holders (including individuals) derived with respect to capital assets held for more than one year are eligible for reduced rates oftaxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by you will generally be treated as United States sourcegain or loss.Information Reporting and Backup WithholdingIn general, information reporting will apply to dividends in respect of our shares and the proceeds from the sale, exchange or redemption of our sharesthat are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. Backup withholding mayapply to such payments if you fail to provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend andinterest income.Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income taxliability provided the required information is furnished to the Internal Revenue Service.F. Dividends and Paying AgentsNot applicable.G. Statement by ExpertsNot applicable.H. Documents on DisplayIt is possible to read and copy documents referred to in this Report on Form 20-F that have been filed with the SEC at the SEC’s public reference roomlocated 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 www.sec.gov.I. Subsidiary InformationNot applicable. Item 11.Quantitative and Qualitative Disclosures about Market RiskWe are exposed to changes in interest rates and foreign currency exchange rates because we finance certain operations through fixed and variable ratedebt instruments and denominate our transactions in a variety of foreign currencies. Changes in these rates may have an impact on future cash flow andearnings. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financialinstruments. We do not enter into financial instruments for trading or speculative purposes.By using derivative instruments, we are subject to credit and market risk. The fair market value of the derivative instruments is determined by usingvaluation models whose inputs are derived using market observable inputs, including interest rate yield curves, as well as foreign exchange and commodityspot and forward rates, and reflects the asset or liability position as of the end of each reporting period. When the fair value of a derivative contract is positive,the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty credit risk in the event of non-performance by counterpartiesto our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major financial institutions ofinvestment grade credit rating. Our exposure to market risk is not hedged in a manner that completely eliminates the effects of changing market conditions onearnings or cash flow.Interest Rate RiskEffective February 10, 2017, we have repaid all outstanding Term Loans (see note 24, “Subsequent Events”, to the Consolidated Financial Statementsincluded in Part III, Item 18 of this Report for additional information), substantially reducing our interest rate risk going forward. Our RCF Agreement has a$600 million borrowing capacity with floating rate interest, but there are currently no borrowings under this facility. At December 31, 2016, without takinginto account the aforementioned repayment of the Term Loans, a hypothetical increase in LIBOR based interest rates of 100 basis points would have causedour interest expense on our floating rate debt to increase by $22 million on an annualized basis. 68Table of ContentsAdditional information regarding our notes is provided in notes 2, Significant Accounting Policies, and 16, Debt, of our notes to the ConsolidatedFinancial Statements included in Part III, Item 18 of this Report is incorporated herein by reference.Foreign Currency RisksWe are also exposed to market risk from changes in foreign currency exchange rates, which could affect operating results as well as our financialposition and cash flows. We monitor our exposures to these market risks and generally employ operating and financing activities to offset these exposureswhere appropriate. If we do not have operating or financing activities to sufficiently offset these exposures, from time to time, we may employ derivativefinancial instruments such as swaps, collars, forwards, options or other instruments to limit the volatility to earnings and cash flows generated by theseexposures. Derivative financial instruments are only used for hedging purposes and not for trading or speculative purposes. Counterparties to our derivativescontracts are all major banking institutions. In the event of financial insolvency or distress of a counterparty to our derivative financial instruments, we maybe unable to settle transactions if the counterparty does not provide us with sufficient collateral to secure its net settlement obligation to us, which couldhave a negative impact on our results. The Company measures all derivative financial instruments based on fair values derived from market prices of theinstruments or from option pricing models, as appropriate and record these as assets or liabilities in the balance sheet. Changes in the fair values arerecognized in the statement of operations immediately unless cash flow hedge accounting is applied. A summary of our foreign currency accounting policiesis provided in note 2, Significant Accounting Policies, of our notes to the Consolidated Financial Statements included in Part III, Item 18 of this Report isincorporated herein by reference.At December 31, 2016 our net liability related to foreign currency option and forward contracts designated as hedges of foreign currency risk on certainoperating expenditure transactions was negligible. If our forecasted operating expenditures for currencies in which we hedge were to decline by 20% andforeign exchange rates were to change unfavorably by 20% in our hedged foreign currency, we would incur a negligible loss.Financial assets and liabilities held by consolidated subsidiaries that are not denominated in the functional currency of those entities are subject to theeffects of currency fluctuations and may affect reported earnings. As a global company, we face exposure to adverse movements in foreign currency exchangerates. We may hedge currency exposures associated with certain assets and liabilities denominated in nonfunctional currencies and certain anticipatednonfunctional currency transactions. As a result, we could experience unanticipated gains or losses on anticipated foreign currency cash flows, as well aseconomic loss with respect to the recoverability of investments.Our primary foreign currency exposure relates to the U.S. dollar to euro exchange rate. However, our foreign currency exposures also relate, but are notlimited, to the Chinese Yuan, the Japanese Yen, the Pound Sterling, the Malaysian Ringgit, the Singapore Dollar, the Taiwan Dollar and the Thailand Baht.Equity Price RiskCash Convertible Senior NotesOur Cash Convertible Senior Notes include conversion and settlement provisions that are based on the price of our common stock at conversion or atmaturity of the notes. In addition, the hedges and warrants associated with these convertible notes also include settlement provisions that are based on theprice of our common stock. The amount of cash we may be required to pay to the holders at conversion or maturity of the notes is determined by the price ofour common stock. The amount of cash that we may receive from hedge counterparties in connection with the related hedges and the number of shares thatwe may be required to provide warrant counterparties in connection with the related warrants are also determined by the price of our common stock. Item 12.Description of Securities Other than Equity SecuritiesNot applicable. 69Table of ContentsPART II Item 13.Defaults, Dividend Arrearages and DelinquenciesNone Item 14.Material Modifications to the Rights of Security Holders and Use of ProceedsNone Item 15.Controls and ProceduresDisclosure Controls and ProceduresAs of the end of the period covered by this Report, our management, with the participation of our chief executive officer and chief financial officer,conducted an evaluation pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) of theeffectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financialofficer concluded that as of the end of the period covered by this Report such disclosure controls and procedures were effective to provide reasonableassurance that information required to be disclosed in reports we filed or submitted under the Exchange Act was recorded, processed, summarized andreported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and included controls and procedures designedto ensure that information required to be disclosed in such reports was accumulated and communicated to our management, including our chief executiveofficer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.Management’s Report on Internal Control over Financial ReportingThe Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules13a-15(f) and 15(d)-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance, notabsolute assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.generally accounting principles.Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 based on the criteriaestablished in “Internal Control - Integrated Framework (2013)” by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Based on that assessment our management concluded that our internal control over financial reporting was effective as of December 31, 2016.NXP acquired Freescale Semiconductor on December 7, 2015 and integration continues to be ongoing. For the year ended December 31, 2016management incorporated the internal controls of the acquired entity into its evaluation of internal control over financial reporting, whereas for the yearended December 31, 2015 management’s assessment and conclusion on the effectiveness of internal control over financial reporting, excluded the entity.During 2016, other than the aforementioned, there have not been any changes in the Company’s internal controls over financial reporting that havematerially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.It should be noted that any control system, regardless of how well it is designed and operated, can provide only reasonable, not absolute, assurance thatits objectives will be met. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or bymanagement override of the control. In addition, controls may become inadequate because of changes in conditions, or the degree of compliance with thepolicies or procedures may deteriorate. Because of these and other inherent limitations of control systems, there can be no assurance that any design willsucceed in achieving its stated goals under all potential future conditions, regardless of how remote.Attestation Report of the Independent Registered Public Accounting FirmFor the year ended December 31, 2016 an attestation report regarding internal control over financial reporting of the Company’s independentregistered public accounting firm is required. The attestation is included in Part III, Item 18. Financial Statements. Item 16A.Audit Committee Financial ExpertMr. Goldman, chairman of our audit committee, qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) ofRegulation S-K and as determined by our board of directors. Our board of directors has determined that Mr. Goldman is an independent director under theNASDAQ Global Select Market Corporate Governance Rules. 70Table of ContentsItem 16B.Code of EthicsThe NXP Code of Conduct outlines our general commitment to be a responsible social partner and the way in which we attempt to interact with ourstakeholders, including stockholders, suppliers, customers, employees and the market. The Code of Conduct expresses our commitment to an economically,socially and ethically sustainable way of working. It covers our policy on a diverse array of subjects, including corporate gifts, child labor, InternationalLabor Organization conventions, working hours, sexual harassment, free-market competition, bribery and the integrity of financial reporting.The NXP Code of Conduct is available on our website at www.nxp.com/investor/governance. We will disclose on this website any amendments to, orwaivers from, our Code of Business Conduct and Ethics (to the extent applicable to any principal executive officer, principal financial officer, principalaccounting officer or controller, or persons performing similar functions). The information contained on our website or that can be accessed through ourwebsite neither constitutes part of this Report on Form 20-F nor is incorporated by reference herein. Item 16C.Principal Accountant Fees and ServicesThe Company has instituted a comprehensive auditor independence policy that regulates the relation between the Company and its external auditorsand is available on our website ( www.nxp.com/investor ). The policy includes rules for the pre-approval by the audit committee of all services to be providedby the external auditor. The policy also describes the prohibited services that may not be provided. Proposed services may be pre-approved at the beginningof 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 particularengagement (specific pre-approval). The annual pre-approval is based on a detailed, itemized list of services to be provided, designed to ensure that there isno 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 budgetedamounts 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 auditcommittee states otherwise. During 2016, there were no services provided to the Company by the external auditors which were not pre-approved by the auditcommittee.The external auditor attends, in principle, all meetings of the audit committee. The findings of the external auditor, the audit approach and the riskanalysis are also discussed at these meetings. The external auditor attends the meeting of the board of directors at which the report of the external auditor withrespect to the audit of the annual accounts is discussed, and at which the annual accounts are approved. In its audit report on the annual accounts to the boardof directors, the external auditor refers to the financial reporting risks and issues that were identified during the audit, internal control matters, and any othermatters, as appropriate, requiring communication under the auditing standards generally accepted in the Netherlands and the United States.Our Consolidated Financial Statements included in this Report have been audited by KPMG Accountants N.V., an independent registered publicaccounting firm. These financial statements have been approved by the board of directors.The aggregate fees billed for professional services rendered for the fiscal periods 2016 and 2015 were as follows:Aggregate fees KPMG ($ in millions) 2016 2015 Audit fees 3.8 4.9 Other fees 0.1 0.1 3.9 5.0 Audit fees consist of fees for the examination of both the consolidated and statutory financial statements and for 2015 include fees paid by Freescale toKPMG prior to the acquisition. Audit fees also include fees that only our independent registered accounting firm can reasonably provide such as comfortletters and review of documents filed with the SEC. Other fees consist of fees for professional services by our independent registered public accounting firmfor permissible non-audit services. Item 16D.Exemptions from the Listing Standards for Audit CommitteesNot applicable. 71Table of ContentsItem 16E.Purchases of Equity Securities by the Issuer and Affiliated PurchasersThe following table provides a summary of shares repurchased by the Company in 2016: Period begin Period end Period Total Numberof SharesPurchased Average PricePaid per Share Total Number ofShares Purchasedas Part of PubliclyAnnounced Plans orPrograms MaximumNumber of Sharesthat May Yet BePurchased Underthe Plans orPrograms January 1 February 7 January 1,701,372 75.69 1,701,372 16,900,178 February 8 March 6 February 2,220,591 67.98 2,220,591 14,679,587 March 7 April 3 March 225,509 81.33 225,509 14,454,078 April 4 May 8 April 1,675,063 81.61 1,675,063 12,779,015 May 9 June 5 May 326,400 87.19 216,147 12,562,868 June 6 July 3 June 2,328,764 85.99 2,328,764 10,234,104 July 4 August 7 July 2,957,291 84.26 2,957,291 7,276,813 August 8 September 4 August 2,890,078 87.67 2,890,078 4,386,735 September 5 October 2 September 606,382 86.81 606,382 3,780,353 October 3 November 6 October 515,609 100.82 515,609 3,264,744 November 7 December 4 November 55,110 98.85 55,110 3,209,634 December 5 December 31 December 35,699 97.99 35,699 3,173,935 Total 2016 15,537,868 82.36 15,427,615 From time to time, last in September 2015, the General Meeting of Shareholders authorized the Board of Directors to repurchase shares of our commonstock. On that basis, the Board of Directors resolved to repurchase shares to cover in part employee stock options and equity rights under its long termincentive plans. The purchases identified in the table were all pursuant to this authorization. Item 16F.Change in Registrant’s Certifying AccountantNot applicable. Item 16G.Corporate GovernanceThe Dutch Corporate Governance CodeSince our initial public offering in August 2010, we have been required to comply with the Dutch corporate governance code. The Dutch corporategovernance code, as revised, became effective on January 1, 2009, and applies to all Dutch companies listed on a government-recognized stock exchange,whether in the Netherlands or elsewhere. The code is based on a “comply or explain” principle. Accordingly, companies are required to disclose in theirAnnual Reports filed in the Netherlands whether or not they are complying with the various rules of the Dutch corporate governance code that are addressedto the board of directors or, if any, the supervisory board of the company and, if they do not apply those provisions, to give the reasons for such non-application. The code contains principles and best practice provisions for managing boards, supervisory boards, stockholders and general meetings ofstockholders, financial reporting, auditors, disclosure, compliance and enforcement standards.The Dutch corporate governance code provides that if a company indicates to what extent it applies the best practice provisions, such company will bedeemed to have applied the Dutch corporate governance code.The following discussion summarizes the primary differences between our corporate governance structure and best practice provisions of the Dutchcorporate governance code: • Best practice provisions II.2.4 and II.2.5 state that stock options granted to members of our board shall, in any event, not be exercised in the first threeyears after the date of granting and shares granted to board members without financial consideration shall be retained for a period of at least five yearsor until at least the end of the employment, if this period is shorter. Under our equity incentive schemes, part of the stock options granted to our chiefexecutive officer are exercisable one year after the date of grant, and members of our board who received restrictive shares and performance shares arenot required to retain these shares for at least five years. Although a deviation from the Corporate Governance Code, we hold the view that thecombination of equity incentives granted to our chief executive officer, in relation to his obligation—laid down in the NXP Executive EquityOwnership Policy of October 2013—to maintain at least 20% of the after tax number of NXP shares delivered upon the vesting of any performancestock units granted as of October 2013, as well as the applicable strict vesting and performance criteria, will enhance the goal of promoting long-terminvestments in the Company. The same is true for the equity grants made to other members of our board, which also have very strict vesting criteriawith the purpose of creating long-term commitment to the Company. 72Table of Contents• Pursuant to best practice provision IV.1.1, a general meeting of stockholders is empowered to cancel binding nominations of candidates for the board,and to dismiss members of the board by a simple majority of votes of those in attendance, although the company may require a quorum of at least onethird of the voting rights outstanding. If such quorum is not represented, but a majority of those in attendance vote in favor of the proposal, a secondmeeting may be convened and its vote will be binding, even without a one-third quorum. Our articles of association currently state that the generalmeeting of stockholders may at all times overrule a binding nomination by a resolution adopted by at least a two-thirds majority of the votes cast, ifsuch majority represents more than half of the issued share capital. Although a deviation from provision IV.1.1 of the Dutch Corporate GovernanceCode, we hold the view that these provisions will enhance the continuity of the Company’s management and policies.Effective January 1, 2012, Dutch law does not allow directors to vote on a matter with regard to which they have an interest.The NASDAQ Global Select Market Corporate Governance RulesWe are a foreign private issuer. As a result, in accordance with the listing requirements of the NASDAQ Global Select Market, we rely on home countrygovernance requirements and are exempt from certain corporate governance requirements that would otherwise apply in accordance with the listingrequirements of the NASDAQ Global Select Market. These exemptions and home country rules relied on by us are described below: • We are exempt from NASDAQ’s quorum requirements applicable to meetings of stockholders. Pursuant to Dutch corporate law, the validity of aresolution by the general meeting of stockholders does not depend on the proportion of the capital or stockholders represented at the meeting (i.e.quorum), unless the law or articles of association of a company provide otherwise. Our articles of association provide that a resolution proposed to thegeneral meeting of stockholders by the board of directors shall be adopted by a simple majority of votes cast, unless another majority of votes orquorum is required under Dutch law or our articles of association. All other resolutions shall be adopted by a two thirds majority of the votes cast,provided such majority represents at least half of the issued share capital, unless another majority of votes or quorum is required under Dutch law. Tothis extent, our practice varies from the requirement of Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a quorum, and thatsuch quorum may not be less than one-third of the outstanding voting stock. • We are exempt from NASDAQ’s requirements regarding the solicitation of proxies and provision of proxy statements for meetings of stockholders. Weinform stockholders of meetings in a public notice. We prepare a proxy statement and solicit proxies from the holders of our listed stock. Our practicein this regard, however, differs from the typical practice of U.S. corporate issuers in that the advance record date for determining the holders of recordentitled to attend and vote at our stockholder meetings is determined by Dutch law (currently 28 days prior to the meeting). As an administrativenecessity, we establish a mailing record date in advance of each meeting of stockholders for purposes of determining the stockholders to which theproxy statement and form of proxy will be sent. However, only stockholders of record on the specified record date are entitled to attend and vote,directly or by proxy, at the meeting. • NASDAQ requires stockholder approval prior to the issuance of securities when a stock option or purchase plan is to be established or materiallyamended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors,employees or consultants. Under Dutch law and the Dutch corporate governance code, stockholder approval is only required for equity compensationplans (or changes thereto) for members of the board, and not for equity compensation plans for other groups of employees. However, we note that underDutch law, the stockholders have the power to issue shares or rights to subscribe for shares at the general meeting of the stockholders unless such powerhas been delegated to the board. On June 2, 2015, our general meeting of stockholders has empowered our board of directors to issue additional sharesand grant rights to subscribe for shares of common stock, up to 10% of the issued share capital which authorization can be used for general purposesand an additional 10% if the shares of common stock are issued or rights are granted in connection with an acquisition, merger or (strategic) alliance,and to restrict or exclude pre-emptive rights pertaining to (the right to subscribe for) shares for a period of 18 months from June 2, 2015 untilDecember 2, 2016. • As a foreign private issuer, we are exempt from NASDAQ’s requirement that compensation committees be comprised exclusively of independentdirectors provided that we describe the home country practice followed in lieu of such requirement and disclose the reasons for not having such anindependent compensation committee. Under Dutch law and the Dutch corporate governance code, the general meeting of stockholders must adopt apolicy in respect of the remuneration of the board. In accordance with our articles of association and our board rules, the remuneration of the executivedirectors is determined by the board of directors upon the recommendation of our nominating and compensation committee. Accordingly, applicablelaws, regulations and corporate governance rules and practices do not require independence of the members of our nominating and compensationcommittee. Currently, all three members of our nominating and compensation committee are independent directors under the Dutch corporategovernance rules and under the NASDAQ and SEC compensation committee structure and membership requirements. • We are exempt from NASDAQ’s requirement to have independent director oversight of director nominations. In accordance with Dutch law, our articlesof association require that our directors will be appointed by the general meeting of stockholders upon the binding nomination of the board. Inaccordance with our board rules, the nominating and compensation committee will recommend the nomination of directors to our board. 73Table of Contents• NASDAQ requires us to adopt a nominations committee charter or a board resolution addressing the nominations process. In accordance with the Dutchcorporate governance code, we have adopted the committee’s charter. However, the nominations process has been set out in our articles of associationand board rules.Moreover, we will not distribute Annual Reports to all of our stockholders in accordance with NASDAQ rules. Dutch law requires that the externalauditors be appointed at the general meeting of stockholders and not by the audit committee. Our audit committee, which consists of members of our board ofdirectors, shall only make a recommendation to the stockholders through the board of directors for the appointment and compensation of the independentregistered public accounting firm and shall oversee and evaluate the work of our independent registered public accounting firm. Item 16H.Mine Safety DisclosuresNot applicable. 74Table of ContentsPART III Item 17.Financial StatementsNot applicable. Item 18.Financial StatementsSee pages F-1 to F-[ ] Item 19.Exhibits ExhibitNumber Description of Document 2.1# Sale and Purchase Agreement, dated as of December 22, 2010, between NXP Semiconductors N.V., NXP B.V., the Dover Corporation, KnowlesElectronics, LLC and EFF Acht Beteiligungsverwaltung GmbH (incorporated by reference to Exhibit 2.1 of the Form 20-F of NXPSemiconductors N.V. filed on March 13, 2012) 3.1 Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of Amendment No. 7 to the Registration Statement on Form F-1 of NXPSemiconductors N.V., filed on August 2, 2010 (File No. 333-166128)) 3.2 Articles of Association of NXP Semiconductors N.V. (incorporated by reference to Exhibit 3.2 of Amendment No. 7 to the RegistrationStatement on Form F-1 of NXP Semiconductors N.V., filed on August 2, 2010 (File No. 333-166128)) 4.1 Secured Term Credit Agreement dated March 4, 2011, as amended by (i) the Joinder and Amendment Agreement dated as of November 18, 2011,(ii) the New Term Loan Joinder Agreement dated as of February 16, 2012, (iii) the New Term Loan Joinder Agreement dated as of December 10,2012, (iv) the 2013 New Term Loan Joinder Agreement dated as of November 27, 2013, and (v) the 2014 New Term Loan Joinder Agreementdated as of February 18, 2014, among NXP B.V. and NXP Funding LLC as borrowers, Barclays Bank PLC as Administrative Agent, MorganStanley Senior Funding, Inc. as Global Collateral Agent, Mizuho Corporate Bank, Ltd. as Taiwan Collateral Agent, and the lenders party thereto.(incorporated by reference to Exhibit 4.8 of the Form 20-F of NXP Semiconductors N.V. filed on March 13, 2012) 4.2 Secured Revolving Credit Agreement dated April 27, 2012, as amended by an Incremental Joinder Agreement dated as of October 29, 2012,among NXP Semiconductors N.V., NXP B.V. and NXP Funding LLC as borrower, Morgan Stanley Senior Funding, Inc. as Global CollateralAgent and Administrative Agent, Mizuho Corporate Bank, Ltd. as Taiwan Collateral Agent and the lenders party thereto. (incorporated byreference to Exhibit 4.10 of the Form 20-F of NXP Semiconductors N.V. filed on March 1, 2013) 4.3 Senior Unsecured Indenture dated as of February 14, 2013 among NXP B.V. and NXP Funding LLC as Issuers, each of the Guarantors named onthe signature page thereto as borrower and Deutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 4.13 ofForm 20-F of NXP Semiconductors N.V. filed on March 13, 2012) 4.4 Senior Unsecured Indenture dated as of March 12, 2013 among NXP B.V. and NXP Funding LLC as Issuers, each of the Guarantors named on thesignature pages thereto and Deutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 4.7 of the Form-20F ofNXP Semiconductors N.V. filed on February 28, 2014) 4.5 Senior Unsecured Indenture dated as of May 20, 2013 among NXP B.V. and NXP Funding LLC as Issuers, each of the Guarantors named on thesignature pages thereto and Deutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 4.8 of the Form-20F ofNXP Semiconductors N.V. filed on February 28, 2014) 4.6 Senior Unsecured Indenture dated as of September 24, 2013 among NXP B.V. and NXP Funding LLC as Issuers, each of the Guarantors namedon the signature page thereto and Deutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 4.9 of the Form-20Fof NXP Semiconductors N.V. filed on February 28, 2014) 4.7 Senior Unsecured Indenture dated as of November 24, 2014 among NXP Semiconductors N.V. as Issuer and Deutsche Bank Trust CompanyAmericas as Trustee (incorporated by reference to Exhibit 4.7 of the Form 20-F of NXP Semiconductors N.V. filed on March 6, 2015) 4.8 Support Agreement, dated as of March 1, 2015, by and among NXP Semiconductors N.V., Freescale Holdings L.P. and certain limited partners ofFreescale Holdings L.P. (incorporated by reference to Exhibit 2 of the Form 6-K of NXP Semiconductors N.V. filed on March 3, 2015) 4.9 Commitment Letter, dated as of March 1, 2015, by and among NXP B.V., Credit Suisse Securities (USA) LLC and Credit Suisse AG, CaymanIslands Branch (incorporated by reference to Exhibit 3 of the Form 6-K of NXP Semiconductors N.V. filed on March 3, 2015) 75Table of ContentsExhibitNumber Description of Document 4.10 Senior Unsecured Indenture dated June 9, 2015 among NXP B.V. and NXP Funding LLC as Issuers, each of the Guarantors named on thesignature pages thereto and Deutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 4.10 of the Form 20-F ofNXP Semiconductors N.V. filed on February 26, 2016) 4.11 Secured Term Credit Agreement dated as of December 7, 2015 among NXP B.V. and NXP Funding LLC as Borrowers, the several lenders fromtime to time parties thereto, Morgan Stanley Senior Funding, Inc. as Collateral Agent, Credit Suisse AG as Administrative Agent, Credit SuisseSecurities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Deutsche Bank Securities Inc. and Bank of America, N.A. asJoint Lead Arrangers and Joint Bookrunners, and Goldman Sachs Lending Partners LLC, Citigroup Global Markets Limited and CoöperativeCentrale Raiffeisen-Boerenleenbank B.A. as Co-Managers (incorporated by reference to Exhibit 2 of the Form 6-K of NXP Semiconductors N.V.filed on December 7, 2015) 4.12 Term Loan Guaranty Agreement dated as of December 7, 2015 among the guarantors listed on the signature pages thereto, Credit Suisse AG asAdministrative Agent and Morgan Stanley Senior Funding, Inc. as Collateral Agent (incorporated by reference to Exhibit 3 of the Form 6-K ofNXP Semiconductors N.V. filed on December 7, 2015) 4.13 RCF Agreement dated as of December 7, 2015 among NXP B.V. and NXP Funding LLC as Borrowers, the several lenders from time to timeparties thereto, Morgan Stanley Senior Funding, Inc. as Collateral Agent, Morgan Stanley Senior Funding, Inc., as Administrative Agent,Citibank, N.A. as Letter of Credit Issuer, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC,Deutsche Bank Securities Inc. and Bank of America N.A. as Joint Lead Arrangers and Joint Bookrunners, and Goldman Sachs Lending PartnersLLC, Citigroup Markets Limited and Coöperative Centrale Raiffeisen-Boerenleenbank B.A. as Co-Managers (incorporated by reference toExhibit 4 of the Form 6-K of NXP Semiconductors N.V. filed on December 7, 2015) 4.14 RCF Guaranty Agreement dated as of December 7, 2015 among NXP B.V., NXP Funding LLC and each of the the subsidiary guarantors listed onthe signature pages thereto, Morgan Stanley Senior Funding, Inc. as Collateral Agent and Morgan Stanley Senior Funding, Inc. asAdministrative Agent (incorporated by reference to Exhibit 5 of the Form 6-K of NXP Semiconductors N.V. filed on December 7, 2015) 4.15 Secured Bridge Term Credit Agreement dated as of December 7, 2015 among NXP B.V. and NXP Funding LLC as Borrowers, the lenders fromtime to time parties thereto, Morgan Stanley Senior Funding, Inc. as Collateral Agent and Credit Suisse AG as Administrative Agent(incorporated by reference to Exhibit 6 of the Form 6-K of NXP Semiconductors N.V. filed on December 7, 2015) 4.16 Bridge Loan Guaranty Agreement dated as of December 7, 2015 among NXP B.V., NXP Funding LLC and each of the subsidiary guarantorslisted on the signature pages thereto, Morgan Stanley Senior Funding, Inc. as Collateral Agent and Credit Suisse AG as Administrative Agent(incorporated by reference to Exhibit 7 of the Form 6-K of NXP Semiconductors N.V. filed on December 7, 2015) 4.17 Supplemental Guaranty dated as of December 7, 2015 to the guarantee dated as of March 4, 2011 among NXP B.V., each of the Guarantors listedon the signature pages thereto, Barclays Bank PLC as Administrative Agent, Morgan Stanley Senior Funding, Inc. as Global Collateral Agentand Mizuho Corporate Ban, Ltd. as Taiwan Collateral Agent (incorporated by reference to Exhibit 10.4 of the Form 8-K of FreescaleSemiconductor, Ltd. filed on December 7, 2015) 4.18 Amended and Restated 2021 Freescale Indenture dated as of December 7, 2015 among Freescale Semiconductor, Inc., the Guarantors listed onthe signature pages thereto and the Bank of New York Mellon Trust Company, N.A. as Trustee (incorporated by reference to Exhibit 8 of theForm 6-K of NXP Semiconductors N.V. filed on December 7, 2015) 4.19 Amended and Restated 2022 Freescale Indenture dated as of December 7, 2015 among Freescale Semiconductor, Inc., the Guarantors listed onthe signature pages thereto and Wells Fargo Bank, National Association as Trustee (incorporated by reference to Exhibit 9 of the Form 6-K ofNXP Semiconductors N.V. filed on December 7, 2015) 4.20 Senior Indenture dated as of May 23, 2016, between NXP B.V. and NXP Funding LLC as Issuers, each of the guarantors party thereto andDeutsche Bank Trust Company Americas as Trustee (incorporated by reference to Exhibit 2 of the Form 6-K of NXP Semiconductors N.V. filedon August 2, 2016) 4.21 Senior Indenture dated as of August 11, 2016, among NXP B.V. and NXP Funding LLC as Issuers, each of the guarantors party thereto andDeutsche Bank Trust Company Americas as Trustee 4.22 2016 New Term Loan Joinder Agreement dated as of September 22, 2016, by and among the Tranche F Lenders defined therein, NXP B.V. andNXP Funding LLC as Borrowers and Credit Suisse AG as Administrative Agent10.1 Intellectual Property Transfer and License Agreement dated as of September 28, 2006 between Koninklijke Philips Electronics N.V. and NXPB.V. (incorporated by reference to Exhibit 10.1 of the Amendment No. 3 to the Registration Statement on Form F-1 of NXP Semiconductors N.V.filed on June 30, 2010 (File No. 333-166128))10.2 Intellectual Property Transfer and License Agreement dated as of November 16, 2009 among NXP B.V., Virage Logic Corporation and VL C.V.(incorporated by reference to Exhibit 10.2 of the Amendment No. 3 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filedon June 30, 2010 (File No. 333-166128)) 76Table of ContentsExhibitNumber Description of Document10.3 Shareholders’ agreement dated as of March 30, 1999, as amended among EBD Investments Pte. Ltd., Koninklijke Philips Electronics N.V. andTaiwan Semiconductor Manufacturing Company Ltd. (incorporated by reference to Exhibit 10.4 of the Amendment No. 3 to the RegistrationStatement on Form F-1 of NXP Semiconductors N.V. filed on June 30, 2010 (File No. 333-166128))10.4 Lease Agreement dated as of December 23, 2004 between Jurong Town Corporation and Systems on Silicon Manufacturing Company Pte. Ltd.for the property at No. 70 Pasir Ris Drive 1, Singapore (incorporated by reference to Exhibit 10.8 of the Amendment No. 2 to the RegistrationStatement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.5 Lease Agreement dated September 26, 2003 between Huangjiang Investment Development Company and NXP Semiconductors (Guangdong)Company Ltd. for the property at Tian Mei High Tech Industrial Park, Huang, Jiang Town, Dongguan City, China (incorporated by reference toExhibit 10.9 of the Amendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No.333-166128))10.6 Building Lease Contract dated as of May 12th, 2000 between the Export Processing Zone Administration (Ministry of Economic Affairs) andNXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.10 of the Amendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.7 Agreement with regard to the Lease of Standard Plant Basements dated as of July 1, 2011 between the Export Processing Zone Administration(Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 4.8 of the Form-20F of NXPSemiconductors N.V. filed on February 28, 2014)10.8 Agreement with regard to the Lease of Additional Land dated as of July 1, 2008 between the Export Processing Zone Administration (Ministryof Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.14 of the Amendment No. 2 to theRegistration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.9 Agreement with regard to the Lease of a Dangerous Goods Warehouse dated as of November 27, 2009 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.15 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.10 Agreement with regard to the Lease of Land at Property Number AL012 dated as of July 1, 2008 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.18 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.11 Agreement with regard to the Lease of Land at Property Number AL020 dated as of July 1, 2008 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.19 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.12 Agreement with regard to the Lease of Land at Property Number AL020 dated as of July 1, 2008 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.19 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.13 Agreement with regard to the Lease of Land at Property Number CL102 dated as of July 1, 2008 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.21 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.14 Agreement with regard to the Lease of Land dated as of September 30, 2008 between the Export Processing Zone Administration (Ministry ofEconomic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.22 of the Amendment No. 2 to theRegistration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.15 Agreement with regard to the Lease of Land at Property Number CL102 dated as of July 1, 2008 between the Export Processing ZoneAdministration (Ministry of Economic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.21 of theAmendment No. 2 to the Registration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128)) 77Table of ContentsExhibitNumber Description of Document10.16 Agreement with regard to the Lease of Land dated as of September 30, 2008 between the Export Processing Zone Administration (Ministry ofEconomic Affairs) and NXP Semiconductors Taiwan Ltd. (incorporated by reference to Exhibit 10.22 of the Amendment No. 2 to theRegistration Statement on Form F-1 of NXP Semiconductors N.V. filed on June 10, 2010 (File No. 333-166128))10.17 Management Equity Stock Option Plan Terms and Conditions dated August 2010 (incorporated by reference to Exhibit 10.19 of the Form-20Fof NXP Semiconductors N.V. filed on March 13, 2012)10.18 Management Equity Stock Option Plan Terms and Conditions dated January 2011 (incorporated by reference to Exhibit 10.20 of the Form-20Fof NXP Semiconductors N.V. filed on March 13, 2012)10.19 Long Term Incentive Plan 2010 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock Unit Plan, Restricted StockUnit Plan and Share Plan (incorporated by reference to Exhibit 10.21 of the Form-20F of NXP Semiconductors N.V. filed on March 13, 2012)10.20 NXP Global Equity Incentive Program (incorporated by reference to Exhibit 10.26 of the Amendment No. 3 to the Registration Statement onForm F-1 of NXP Semiconductors N.V. filed on June 30, 2010 (File No. 333-166128))10.21 Long Term Incentive Plan 2011 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock Unit Plan, Restricted StockUnit Plan and Share Plan (incorporated by reference to Exhibit 4.8 of the Form-20F of NXP Semiconductors N.V. filed on March 13, 2012)10.22 Agreement and Plan of Merger, dated as of March 1, 2015, by and among NXP Semiconductors N.V., Freescale Semiconductor, Ltd. and NimbleAcquisition Limited (incorporated by reference to Exhibit 1 of the Form 6-K of NXP Semiconductors N.V. filed on March 3, 2015) Long TermIncentive Plan 2012/3 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock Unit Plan, Restricted Stock Unit Planand Share Plan (incorporated by reference to Exhibit 10.22 of the Form-20F of NXP Semiconductors N.V. filed on March 1, 2013). Long TermIncentive Plan 2013/4 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock Unit Plan and Restricted Stock UnitPlan (incorporated by reference to Exhibit 10.22 of the Form-20F of NXP Semiconductors N.V. filed on February 28, 2014). Long TermIncentive Plan 2014/5 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock Unit Plan, the Restricted Stock UnitPlan and the Keep Restricted Stock Unit Plan (incorporated by reference to Exhibit 10.22 of the Form-20F of NXP Semiconductors N.V. filed onFebruary 28, 2014). Long Term Incentive Plan 2015/6 Terms and Conditions with regard to the Stock Option Plan, the Performance Stock UnitPlan and the Restricted Stock Unit Plan (incorporated by reference to Exhibit 10.22 of the Form 20-F of NXP Semiconductors N.V. filed onFebruary 26, 2016). Long Term Incentive Plan 2016/7 Terms and Conditions with regard to the Restricted Stock Unit Plan10.23 Employee Stock Purchase Plan Terms and Conditions (incorporated by reference to Exhibit 4.1 of the Form S-8 of NXP Semiconductors N.V.filed on August 8, 2013)10.24 Agreement and Plan of Merger, dated as of March 1, 2015, by and among NXP Semiconductors N.V., Freescale Semiconductor, Ltd. and NimbleAcquisition Limited (incorporated by reference to Exhibit 1 of the Form 6-K of NXP Semiconductors N.V. filed on March 3, 2015)10.25 Shareholders’ agreement dated as of December 7, 2015 among NXP Semiconductors N.V., P4 Sub L.P. 1, Permira IV L.P. 2, Permira InvestmentsLimited and P4 Co-Investment L.P. (incorporated by reference to Exhibit 10.25 of the Form 20-F of NXP Semiconductors N.V. filed on February26, 2016)10.26 Shareholders’ agreement dated as of December 7, 2015 among NXP Semiconductors N.V., Carlyle Partners IV Cayman, L.P., CPIV CoinvestmentCayman, L.P., Carlyle Asia Partners II, L.P., CAP II Co-Investment, L.P., CEP II Participations S.a.r.l. SICAR, Carlyle Japan Partners, L.P. and CJPCo-Investment, L.P. (incorporated by reference to Exhibit 10.26 of the Form 20-F of NXP Semiconductors N.V. filed on February 26, 2016)10.27 Shareholders’ agreement dated as of December 7, 2015 among NXP Semiconductors N.V., Blackstone Capital Partners (Cayman) V L.P.,Blackstone Capital Partners (Cayman) V-A L.P., BCP (Cayman) V-S L.P., BCP V Co-Investors (Cayman) L.P., Blackstone Firestone TransactionParticipation Partners (Cayman) L.P., Blackstone Firestone Principal Transaction Partners (Cayman) L.P., Blackstone Family InvestmentPartnership (Cayman) V L.P., Blackstone Family Investment Partnership (Cayman) V-SMD L.P. and Blackstone Participation Partnership(Cayman) V L.P. (incorporated by reference to Exhibit 10.27 of the Form 20-F of NXP Semiconductors N.V. filed on February 26, 2016)10.28 Shareholders’ agreement dated as of December 7, 2015 among NXP Semiconductors N.V., TPG Partners IV — AIV, L.P., TPG Partners V — AIV,L.P., and TPG FOF V-B, L.P. (incorporated by reference to Exhibit 10.28 of the Form 20-F of NXP Semiconductors N.V. filed on February 26,2016) 78Table of ContentsExhibitNumber Description of Document10.29 Amendment, dated as of June 13, 2016, to the Shareholders Agreement dated as of December 7, 2015 among the Company and BlackstoneCapital Partners (Cayman) V L.P., Blackstone Capital Partners (Cayman) V-A L.P., BCP (Cayman) V-S L.P., BCP V Co-Investors (Cayman) L.P.,Blackstone Firestone Transaction Participation Partners (Cayman) L.P., Blackstone Firestone Principal Transaction Partners (Cayman) L.P.,Blackstone Family Investment Partnership (Cayman) V L.P., Blackstone Family Investment Partnership (Cayman) V-SMD L.P. and BlackstoneParticipation Partnership (Cayman) V L.P. (incorporated by reference to Exhibit 1 of the Form 6-K of NXP Semiconductors N.V. filed on June 14,2016)10.30 Amendment, dated as of June 13, 2016, to the Shareholders Agreement dated as of December 7, 2015 among the Company and Carlyle PartnersIV Cayman, L.P., CPIV Coinvestment Cayman, L.P., Carlyle Asia Partners II, L.P., CAP II Co-Investment, L.P., CEP II Participations S.a.r.l.SICAR, Carlyle Japan Partners, L.P. and CJP Co-Investment, L.P. (incorporated by reference to Exhibit 2 of the Form 6-K of NXPSemiconductors N.V. filed on June 14, 2016)10.31 Amendment, dated as of June 13, 2016 to the Shareholders Agreement dated as of December 7, 2015 among the Company and P4 Sub L.P. 1,Permira IV L.P. 2, Permira Investments Limited and P4 Co-Investment L.P. (incorporated by reference to Exhibit 3 of the Form 6-K of NXPSemiconductors N.V. filed on June 14, 2016)10.32 Amendment, dated as of June 13, 2016 to the Shareholders Agreement dated as of December 7, 2015 among the Company and TPG Partners IV— AIV, L.P., TPG Partners V — AIV, L.P., TPG FOF V-A, L.P. and TPG FOF V-B, L.P. (incorporated by reference to Exhibit 4 of the Form 6-K ofNXP Semiconductors N.V. filed on June 14, 2016)10.33 Sale and Purchase Agreement, dated June 14, 2016, between NXP B.V., Beijing Jianguang Asset Management Co., Ltd. and Wise Road CapitalLTD10.34 Purchase Agreement, dated October 27, 2016, by and between Qualcomm River Holdings B.V. and NXP Semiconductors N.V. (incorporated byreference to Exhibit 2 of the Form 6-K of NXP Semiconductors N.V. filed on October 27, 2016)12.1 Certification of R.L. Clemmer filed pursuant to 17 CFR 240. 13a-14(a)12.2 Certification of D. Durn filed pursuant to 17 CFR 240. 13a-14(a)13.1 Certification of R.L. Clemmer furnished pursuant to 17 CFR 240. 13a-14(b)13.2 Certification of D. Durn furnished pursuant to 17 CFR 240. 13a-14(b)21.1 List of Significant Subsidiaries of the Registrant23 Consent of KPMG Accountants N.V. #Confidential treatment previously requested and granted 79Table of ContentsGLOSSARY 32 bit ARM microcontrollers Microcontroller based on a 32-bit processor core developed and licensed by ARM Technologies.AC-DC Conversion of alternating current to direct current.Analog A form of transmission that is a continuous wave of an electrical signal that varies in frequency and/oramplitude in response to variations of physical phenomena such as human speech or music.Back-end The packaging, assembly and testing stages of the semiconductors manufacturing process, which takes placeafter electronic circuits are imprinted on silicon wafers in the front-end process.BiCMOS A process technology that combines bipolar and CMOS processes, typically by combining digital CMOScircuitry with higher voltage or higher speed bipolar circuitry.Bipolar A process technology used to create semiconductors for applications involving the use of higher power levelsthan are possible with a CMOS chip. Due to the geometry of a bipolar circuit, these devices are significantlylarger than CMOS devices. The speed of the most advanced bipolar devices exceeds those attainable withCMOS, but only at very large electrical currents. As a result, the number of bipolar devices that can beintegrated into a single product is limited.Bluetooth low energy Bluetooth low energy (BLE) is a wireless computer network technology that, in comparison with “classic”Bluetooth, requires considerably less power and provides a similar communication range. BLE has beenincluded in the majority of smart phones for the past couple of years, with its initial application as thecommunication between the smart phone and other personal devices like fitness trackers and head-sets.Recently also other applications like communication with light bulbs are emerging.CAN Controller Area Network. A network technology used in automotive network architecture.CATV An abbreviation for cable television.Car access and immobilizers An automobile technology segment focused on keyless entry and car immobilization applications. Anautomobile immobilizer is an electronic device fitted to an automobile which prevents the engine from runningunless the correct key (or other token) is present.Chip Semiconductor device.CMOS Complementary Metal Oxide Semiconductor. The most common integrated circuit fabrication technology inthe semiconductor industry. The technology is used to make integrated circuits where small size and high speedare important. As a result of the very small feature sizes that can be attained through CMOS technology,however, the ability of these integrated circuits to cope with high electrical currents and voltages is limited.Coolflux DSP A low power digital signal processor designed for mobile audio applications.Digital A form of transmission where data is represented by a series of bits or discrete values such as 0 and 1.Diode A semiconductor that allows currents to flow in one direction only.Discrete semiconductors Unlike integrated circuits, which contain up to tens of millions of transistors, discrete semiconductors are singledevices, usually with two terminals (diodes) or three terminals (transistors). These are either applied asperipheral components on printed circuit boards, or used for special purposes such as very high powerapplications.DMOS Diffused Metal on Silicon Oxide Semiconductor. A process technology used to manufacture integrated circuitsthat can operate at high voltage.DSP Digital signal processor. A specialized microprocessor optimized to process sequences of numbers or symbolswhich represent signals.EMI filtering Electromagnetic interference (or EMI, also called radio frequency interference or RFI when in high frequency orradio frequency) is disturbance that affects an electrical circuit due to either electromagnetic induction orelectromagnetic radiation emitted from an external source. 80Table of ContentseNVM Embedded non-volatile memory (eNVM) offers broad areas of applications for MCU(microcontroller) in Automotive, Mobility, and Security markets with key advantages such as dense boarddesigns with reduced number of parts, reduced system costs, reduced noise, higher system speed due to fastcode access, in-system on-board re-programmability of code and data storage, lower power dissipation,improved reliability, and real-time control application.e-passport A passport with secure data source chip used in providing personalized information.ESD Electrostatic discharge. The sudden and momentary electric current that flows between two objects caused bydirect contact or induced by an electrostatic field. This term is used in the context of electronics to describemomentary unwanted currents that may cause damage to electronic equipment.Fab (or wafer fab) A semiconductor fabrication facility in which front-end manufacturing processes take place.Fabless semiconductor company A semiconductor company that does not have any internal wafer fab manufacturing capacity but insteadfocuses on designing and marketing its products, while outsourcing manufacturing to an independent foundry.FlexRay A new communications protocol designed for the high data transmission rates required by advancedautomotive control systems.Foundry A semiconductor manufacturer that manufactures chips for third parties.Front-end The wafer processing stage of the semiconductors manufacturing process in which electronic circuits areimprinted onto raw silicon wafers. This stage is followed by the packaging, assembly and testing stages, whichtogether comprise the back-end process.HDMI High-Definition Multimedia Interface. A compact audio/video interface for transmitting uncompressed digitaldataHDTMOS High cell density TMOS (HDTMOS) is an advancement in power MOSFET technology that reduces powerdissipation. This results in lower thermal generation and a reduction in the component’s total part count.HPRF power amplifier High power RF (HPRF) system mainly consists of RF power amplifiers and waveguide distribution system. RFpower amplifiers produce RF energy and waveguides transmit this RF energy to the accelerator modules.HSPA+ Evolved High-Speed Packet Access, or HSPA+, is a technical standard for wireless, broadbandtelecommunication with higher speeds for the end user that are comparable to the newer LTE networks.I2 C A multi-master serial single-ended computer bus that is used to attach low-speed peripherals to a motherboard,embedded system or mobile phone.IC Integrated Circuit. A miniaturized electronic circuit that has been manufactured in the surface of a thin substrateof semiconductor material.ICN 6,8 NXP wafer fab facilities located in Nijmegen, Netherlands, processing 6” or 8” diameter wafers. As of endDecember 2014, only ICN 8 is still in use.i.MX i.MX applications processors are multicore ARM-based solutions for multimedia and display applications withscalability, high performance and low power capabilities.In-process research and development The value allocated to incomplete research and development projects in acquisitions treated as purchases.IoT The Internet of Things (IoT) is the network of physical objects—devices, vehicles, buildings and other itemswhich are embedded with electronics, software, sensors and network connectivity, which enables these objectsto collect and exchange data. The Internet of Things allows objects to be sensed and controlled remotely acrossexisting network infrastructure, creating opportunities for more direct integration of the physical world intocomputer-based systems.LDMOS Laterally Diffused Metal Oxide Semiconductor. A transistor used in RF/microwave power amplifiers.LED Light Emitting Diode. A semiconductor device which converts electricity into light.LIBOR London Interbank Offered Rate. The benchmark rate at which interbank term deposits within the leadings banksin London would be charged if borrowing from other banks.LIN Local Interconnect Network. A network technology used in automotive network architecture.LNA Low-Noise Amplifier. An electronic amplifier used to amplify very weak signals. 81Table of ContentsLTE Long Term Evolution (LTE) is a 4G wireless broadband technology standard for wireless communication ofhigh-speed data for mobile phones and data terminals, increasing the capacity and speed using a different radiointerface together with core network improvements.Memory Any device that can store data in machine readable format. Usually used synonymously with random accessmemory and read only memory.Microcontroller A microprocessor combined with memory and interface integrated on a single circuit and intended to operate asan embedded system.Micron A metric unit of linear measure which equals one millionth of a meter. A human hair is about 100 microns indiameter.MIFARE Trademarked name, owned by NXP, for the most widely used contactless smart card, or proximity card,technology, for payment in transportation systems.Mixed-signal The mixed-signal part of an application solution refers to the devices and sub-system solutions that translatereal world analog signals and phenomena such as radio frequency communication and power signals, sound,light, temperature, pressure, acceleration, humidity and chemical characteristics into digital or power signalsthat can be fed into the central microprocessing or storage devices at the heart of an application systemsolution.MOS Metal Oxide Semiconductor. A metal insulator semiconductor structure in which the insulating layer is anoxide of the substrate material.MOSFET Metal Oxide Semiconductor Field Effect Transistor. A device used for amplifying or switching electronicsignals.Nanometer A metric unit of linear measure which equals one billionth of a meter. There are 1,000 nanometers in 1 micron.NFC Near field communication. A technology which allows devices to establish a secure point-to-point wirelessconnection at very close ranges (within several centimeters), and which is being increasingly adopted in mobiledevices and point-of-sale terminals or other devices.ODM Original Design Manufacturer. A company which manufactures a product which ultimately will be branded byanother firm for sale.OEM Original Equipment Manufacturer. A manufacturer that designs and manufactures its products for the endconsumer market.Power MOS A specific type of metal oxide semiconductor designed to handle large amounts of power.Process technologies The technologies used in front-end processes to convert raw silicon wafers into finished wafers containinghundreds or thousands of chips.QorIQ QorIQ processing platforms are complete system on chip (SoC) processors for networking applications acrosscarrier, enterprise, military and industrial markets.Rectifier An electrical device that converts alternating current to direct current.RF Radio Frequency. A high frequency used in telecommunications. The term radio frequency refers to alternatingcurrent having characteristics such that, if the current is input to an antenna, an electromagnetic (EM) field isgenerated suitable for wireless broadcasting and/or communications.Radio Frequency Identification An RF chip used for identification.Semiconductors Generic term for devices such as transistors and integrated circuits that control the flow of electrical signals. Themost common semiconductor material for use in integrated circuits is silicon.Silicon A type of semiconducting material used to make wafers. Silicon is widely used in the semiconductor industry asa base material.SoC A system on a chip or system on chip (SoC) is an integrated circuit (IC) that integrates all components of acomputer or other electronic system into a single chip. It may contain digital, analog, mixed-signal, and oftenradio-frequency functions—all on a single chip substrate.Solid State Lighting A type of lighting that uses semiconductor light-emitting diodes (LEDs), organic light-emitting diodes (OLED),or polymer light-emitting diodes (PLED) as sources of illumination rather than electrical filaments, plasma orgas. 82Table of ContentsSPI Serial Peripheral Interface Bus. A synchronous serial data link standard that operates in full duplex mode.SS MOS Small signal power discrete including a metal oxide semiconductor field effect transistor.SS Transistor A small signal transistor.Substrate The base material made from silicon on which an integrated circuit is printed.TD-LTE Time-division Long-Term Evolution (TD-LTE), is a 4G telecommunications technology and standard. It is oneof two variants of the Long Term Evolution (LTE) technology standard.TD-SCDMA Time Division Synchronous Code Division Multiple Access (TD-SCDMA) is a 3G format of choice for thenational standard of 3G mobile telecommunication in China.Telematics The science of sending, receiving and storing information via telecommunication devices.UART Universal Asynchronous Receiver/Transmitter. An integrated circuit used for serial communications over acomputer or peripheral device serial port.USB Universal Serial Bus. A standard that provides a serial bus standard for connecting devices, usually to acomputer.Wafer A disk made of a semiconducting material, such as silicon, usually either 100, 125, 150, 200 or 300 millimetersin diameter, used to form the substrate of a chip. A finished wafer may contain several thousand chips.White goods A term which refers to large household appliances such as refrigerators, stoves, dishwashers and other similaritems.Yield The ratio of the number of usable products to the total number of manufactured products.ZigBee ZigBee is a technology of data transfer in wireless networks. It has low energy consumption and is designed formulti-channel control systems, alarm systems, and lighting control. It also has other various home and industryapplications. 83Table of ContentsSIGNATURESThe 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 tosign this Annual Report on its behalf. NXP Semiconductors N.V.(Registrant)/s/ RICHARD L. CLEMMER /s/ DANIEL DURN Richard L. Clemmer Daniel DurnChief Executive Officer(Principal Executive Officer) Chief Financial Officer(Principal Financial and Accounting Officer)Date: March 3, 2017 84Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTSThe following financial statements and related schedules, together with the report of independent registered public accounting firms thereon, are filedas part of this Annual Report:Consolidated Financial Statements Report of Independent Registered Public Accounting Firm, KPMG Accountants N.V. F-2 Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014 F-3 Consolidated Statements of Comprehensive Income for the years ended December 31, 2016, 2015 and 2014 F-4 Consolidated Balance Sheets as of December 31, 2016 and 2015 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014 F-6 Consolidated Statements of Changes in Equity for the years ended December 31, 2016, 2015 and 2014 F-8 Notes to the Consolidated Financial Statements F-9 F-1Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersNXP Semiconductors N.V.:We have audited the accompanying consolidated balance sheets of NXP Semiconductors N.V. and subsidiaries as of December 31, 2016 and 2015, and therelated consolidated statements of operations, comprehensive income, cash flows, and changes in equity for each of the years in the three-year period endedDecember 31, 2016. We also have audited NXP Semiconductors N.V.’s internal control over financial reporting as of December 31, 2016, based on criteriaestablished in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).NXP Semiconductors N.V.’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financialreporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report onInternal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on theCompany’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtainingan understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessaryin the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NXP SemiconductorsN.V. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three-year periodended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also in our opinion, NXP Semiconductors N.V. maintained, inall material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control – IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). /s/ KPMG Accountants N.V.Amstelveen, the NetherlandsMarch 3, 2017 F-2Table of ContentsNXP Semiconductors N.V.Consolidated Statements of Operations ($ in millions, unless otherwise stated) For the years ended December 31, 2016 2015 2014 Revenue 9,498 6,101 5,647 Cost of revenue (5,429) (3,314) (3,007) Gross profit 4,069 2,787 2,640 Research and development (1,560) (890) (763) Selling, general and administrative (1,141) (922) (686) Amortization of acquisition-related intangible assets (1,527) (223) (152) Other income (expense) 9 1,263 10 Operating income (loss) (150) 2,015 1,049 Financial income (expense): Extinguishment of debt (32) — (3) Other financial income (expense) (421) (529) (407) Income (loss) before income taxes (603) 1,486 639 Benefit (provision) for income taxes 851 104 (40) Results relating to equity-accounted investees 11 9 8 Net income (loss) 259 1,599 607 Less: Net income (loss) attributable to non-controlling interests 59 73 68 Net income (loss) attributable to stockholders 200 1,526 539 Earnings per share data: Net income (loss) per common share attributable to stockholders in $: – Basic 0.59 6.36 2.27 – Diluted 0.58 6.10 2.17 Weighted average number of shares of common stock outstanding during the year (in thousands): – Basic 338,477 239,764 237,954 – Diluted 347,607 250,116 248,609 See accompanying notes to the consolidated financial statements. F-3Table of ContentsNXP Semiconductors N.V.Consolidated Statements of Comprehensive Income ($ in millions, unless otherwise stated) For the years ended December 31, 2016 2015 2014 Net income (loss) 259 1,599 607 Other comprehensive income (loss), net of tax: Change in net investment hedge — (190) (214) Change in fair value cash flow hedges * — — 2 Change in foreign currency translation adjustment (124) 131 140 Change in net actuarial gain (loss) (27) 31 (66) Change in net unrealized gains (losses) available-for-sale securities 4 (1) 1 Total other comprehensive income (loss) (147) (29) (137) Total comprehensive income (loss) 112 1,570 470 Less: Comprehensive income (loss) attributable to non-controlling interests 59 73 68 Total comprehensive income (loss) attributable to stockholders 53 1,497 402 *Reclassification adjustments included in Cost of revenue in the Consolidated Statements of Operations.See accompanying notes to the consolidated financial statements. F-4Table of ContentsNXP Semiconductors N.V.Consolidated Balance Sheets ($ in millions, unless otherwise stated) As of December 31, 2016 2015 Assets Current assets: Cash and cash equivalents 1,894 1,614 Accounts receivables, net 1,033 1,047 Assets held for sale 1,104 15 Inventories, net 1,113 1,879 Other current assets 254 257 Total current assets 5,398 4,812 Non-current assets: Other non-current assets 962 602 Property, plant and equipment, net 2,352 2,922 Identified intangible assets, net 7,343 8,790 Goodwill 8,843 9,228 Total non-current assets 19,500 21,542 Total assets 24,898 26,354 Liabilities and equity Current liabilities: Accounts payable 973 1,014 Liabilities held for sale 198 — Restructuring liabilities - current 129 197 Accrued liabilities 712 781 Short-term debt 421 556 Total current liabilities 2,433 2,548 Non-current liabilities: Long-term debt 8,766 8,656 Restructuring liabilities 22 43 Deferred tax liabilities 1,659 2,293 Other non-current liabilities 862 1,011 Total non-current liabilities 11,309 12,003 Equity: Non-controlling interests 221 288 Stockholders’ equity: Preferred stock, par value €0.20 per share: Authorized: 645,754,500 (2015: 645,754,500 shares) Issued: none Common stock, par value €0.20 per share: Authorized: 430,503,000 shares (2015: 430,503,000 shares) Issued and fully paid: 346,002,862 shares (2015: 346,002,862 shares) 71 68 Capital in excess of par value 15,679 15,150 Treasury shares, at cost: 10,609,980 shares (2015: 3,998,982 shares) (915) (342) Accumulated other comprehensive income (loss) 34 181 Accumulated deficit (3,934) (3,542) Total Stockholders’ equity 10,935 11,515 Total equity 11,156 11,803 Total liabilities and equity 24,898 26,354 See accompanying notes to the consolidated financial statements. F-5Table of ContentsNXP Semiconductors N.V.Consolidated Statements of Cash Flows ($ in millions, unless otherwise stated) For the years ended December 31, 2016 2015 2014 Cash flows from operating activities: Net income (loss) 259 1,599 607 Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Depreciation and amortization 2,205 517 405 Share-based compensation 338 216 133 Excess tax benefits from share-based compensation plans (5) — — Change in fair value of warrant liability — 31 2 Amortization of discount on debt 34 39 3 Amortization of debt issuance costs 16 11 13 Net (gain) loss on sale of assets (11) (1,263) (10) (Gain) loss on extinguishment of debt 32 — 3 Results relating to equity-accounted investees (11) (9) (8) Changes in deferred taxes (925) (168) 1 Changes in operating assets and liabilities: (Increase) decrease in receivables and other current assets (51) (78) (111) (Increase) decrease in inventories 568 82 (42) Increase (decrease) in accounts payable and accrued liabilities (156) 127 222 Decrease (increase) in other non-current assets 5 30 13 Exchange differences 15 193 246 Other items (10) 3 (9) Net cash provided by (used for) operating activities 2,303 1,330 1,468 Cash flows from investing activities: Purchase of identified intangible assets (59) (12) (36) Capital expenditures on property, plant and equipment (389) (341) (329) Proceeds from disposals of property, plant and equipment 1 7 4 Proceeds from disposals of assets held for sale — — 6 Purchase of interests in businesses, net of cash acquired (202) (1,692) (8) Proceeds from sale of interests in businesses, net of cash divested 20 1,605 1 Proceeds from return of equity investment — 1 — Other 2 2 (25) Net cash provided by (used for) investing activities (627) (430) (387) Cash flows from financing activities: Net (repayments) borrowings of short-term debt (6) (2) (17) Amounts drawn under the revolving credit facility 200 — 800 Repayments under the revolving credit facility (200) — (950) Repurchase of long-term debt (3,295) (3,586) (92) Principal payments on long-term debt (38) (32) (15) Proceeds from the issuance of long-term debt 3,259 3,680 1,150 Cash paid for debt issuance costs (26) (32) (16) Proceeds from the sale of warrants — — 134 Cash paid for Notes hedge derivatives — — (208) Dividends paid to non-controlling interests (126) (51) (50) Cash proceeds from exercise of stock options 115 51 145 Purchase of treasury shares (1,280) (475) (1,435) Hold-back payments on prior acquisitions — (2) — Excess tax benefits from share-based compensation plans 5 — — Net cash provided by (used for) financing activities (1,392) (449) (554) Effect of changes in exchange rates on cash positions (4) (22) (12) Increase (decrease) in cash and cash equivalents 280 429 515 Cash and cash equivalents at beginning of period 1,614 1,185 670 Cash and cash equivalents at end of period 1,894 1,614 1,185 See accompanying notes to the consolidated financial statements. F-6Table of ContentsNXP Semiconductors N.V.Consolidated Statements of Cash Flows (Continued) ($ in millions, unless otherwise stated) For the years ended December 31, 2016 2015 2014 Supplemental disclosures to the consolidated cash flows Net cash paid during the period for: Interest 348 172 138 Income taxes 67 40 24 Net gain (loss) on sale of assets: Cash proceeds from the sale of assets 21 1,612 11 Book value of these assets (10) (349) (10) Non-cash gains (losses) — — 9 11 1,263 10 Non-cash investing and financing information: Assets received in lieu of cash from the sale of businesses: Fair value of available-for-sale securities — — 9 Issuance of common stock for business combinations — 9,686 — Exchange of Term Loan B for Term Loan F 1,422 — — Exchange of Term Loan A1 for Term Loan E — — 400 See accompanying notes to the consolidated financial statements. F-7Table of ContentsNXP Semiconductors N.V.Consolidated Statements of Changes in EquityFor the years ended December 31, 2016, 2015 and 2014 ($ in millions, unless otherwise stated) Outstandingnumber ofshares (inthousands) Commonstock Capital inexcess ofpar value Treasurysharesat cost Accumulatedothercomprehensiveincome (loss) Accumulateddeficit Totalstockholders’equity Non-controllinginterests Totalequity Balance as of December 31, 2013 247,581 51 6,175 (167) 347 (5,105) 1,301 245 1,546 Net income (loss) 539 539 68 607 Other comprehensive income (137) (137) (137) Share-based compensation plans 125 125 125 Treasury shares (23,246) (1,435) (1,435) (1,435) Shares issued pursuant to stock awards 8,245 383 (238) 145 145 Dividends non-controlling interests (50) (50) Balance as of December 31, 2014 232,580 51 6,300 (1,219) 210 (4,804) 538 263 801 Net income (loss) 1,526 1,526 73 1,599 Other comprehensive income (29) (29) (29) Share-based compensation plans 218 218 218 Treasury shares (5,336) (475) (475) (475) Shares issued pursuant to stock awards 5,008 315 (264) 51 51 Issuance of common stock for businesscombination, net of issuance costs 109,751 17 8,632 1,037 9,686 9,686 Dividends non-controlling interests (51) (51) Changes in participation 3 3 Balance as of December 31, 2015 342,003 68 15,150 (342) 181 (3,542) 11,515 288 11,803 Net income (loss) 200 200 59 259 Other comprehensive income (147) (147) (147) Reclassification of Warrants 168 168 168 Share-based compensation plans 336 336 336 Excess tax benefits from share-basedcompensation plans 21 21 21 Treasury shares (15,538) (1,280) (1,280) (1,280) Shares issued pursuant to stock awards 8,927 707 (592) 115 115 Dividends non-controlling interests (126) (126) Other 3 4 7 7 Balance as of December 31, 2016 335,392 71 15,679 (915) 34 (3,934) 10,935 221 11,156 See accompanying notes to the consolidated financial statements. F-8Table of ContentsNXP Semiconductors N.V.Notes to the Consolidated Financial StatementsAll amounts in millions of $ unless otherwise stated1 The CompanyNXP Semiconductors N.V. (including our subsidiaries, referred to collectively herein as “NXP”, “NXP Semiconductors”, “we”, “our”, “us” and the“Company”) is a global semiconductor company incorporated in the Netherlands as a Dutch public company with limited liability (naamloze vennootschap).We provide leading High Performance Mixed Signal and Standard Product solutions that leverage our deep application insight and our technology andmanufacturing expertise in radio frequency, analog, power management, interface, security and digital processing products. Our product solutions are used ina wide range of application areas including: automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer, computing andsoftware solutions for mobile phones.On December 7, 2015, we acquired Freescale Semiconductor, Ltd. (“Freescale”). The results presented in the Consolidated Financial Statements andNotes to the Consolidated Financial Statements include Freescale’s results of operations for the periods of December 7, 2015 through December 31, 2015 and2016 (the “Post-Merger Period”).On October 27, 2016, NXP entered into a purchase agreement (the “Purchase Agreement”) with Qualcomm River Holdings B.V. (“Buyer”), a wholly-owned, indirect subsidiary of Qualcomm Incorporated. Pursuant to the Purchase Agreement, Buyer commenced a tender offer to acquire all of the issued andoutstanding common shares of NXP for $110 per share in cash, for estimated total cash consideration of $38 billion. The tender offer is not subject to anyfinancing condition. An Extraordinary General Meeting of NXP’s shareholders was convened on January 27, 2017, in connection with the offer where theshareholders of NXP approved all resolutions brought before them, with 95% of the votes cast in favor of each such resolution. In light of the foregoing, thetender offer is now conditioned on the tender of 80% of the outstanding shares of NXP, and Buyer, with NXP’s prior written consent (not to be unreasonablywithheld, conditioned or delayed), may reduce the required threshold to a percentage not less than 70% of the outstanding shares. Pending the receipt ofcertain regulatory approvals, as well as satisfaction of other customary closing conditions, the proposed transaction is expected to close by the end ofcalendar 2017.The Purchase Agreement contains certain termination rights for NXP and Buyer. If the Purchase Agreement is terminated under certain circumstances,including termination by NXP to enter into a superior proposal for an alternative acquisition transaction or a termination following a change ofrecommendation by the NXP Board, NXP will be obligated to pay to Buyer a termination compensation equal to $1.25 billion in cash. If the PurchaseAgreement is terminated under certain circumstances, including circumstances relating to the failure to obtain antitrust approvals or failure to complete in allmaterial respects certain internal reorganization steps and related dispositions with respect to NXP, Buyer will be obligated to pay to NXP a terminationcompensation equal to $2 billion in cash.On June 14, 2016, NXP announced an agreement to divest its Standard Products (“SP”) business to a consortium of financial investors consistingof Beijing JianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD (“Wise Road Capital”). On February 6, 2017 we divested SP,receiving $2.75 billion in cash proceeds.2 Significant Accounting PoliciesThe Consolidated Financial Statements include the accounts of the Company together with its consolidated subsidiaries, including NXP B.V. and allentities in which the Company holds a direct or indirect controlling interest, in such a way that the Company would have the power to direct the activities ofthe entity that most significantly impact the entity’s economic performance and the obligation to absorb the losses or the right to receive benefits of theentity that could be potentially significant to the Company. Investments in companies in which the Company exercises significant influence but does notcontrol, are accounted for using the equity method. The Company’s share of the net income of these companies is included in results relating to equity-accounted investees in the consolidated statements of operations.All intercompany balances and transactions have been eliminated in the Consolidated Financial Statements. Net income (loss) includes the portion ofthe earnings of subsidiaries applicable to non-controlling interests. The income (loss) and equity attributable to non-controlling interests are disclosedseparately in the consolidated statements of operations and in the consolidated balance sheets under non-controlling interests.Certain items previously reported have been reclassified to conform to the current period presentation.Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenue and expenses during the reporting period. Actual results could differ from those estimates. F-9Table of ContentsFair value measurementsFair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at themeasurement date. In the absence of active markets for an identical asset or liability, we develop assumptions based on market observable data and, in theabsence of such data, utilize internal information that we consider to be consistent with what market participants would use in a hypothetical transaction thatoccurs at the measurement date. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our marketassumptions. Priority is given to observable inputs. These two types of inputs form the basis for the following fair value hierarchy. • Level 1: Quoted prices for identical assets or liabilities in active markets. • Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets thatare not active; and valuations based on models where the inputs or significant value drives are observable, either directly or indirectly. • Level 3: Significant inputs to the valuation model are unobservable.Foreign currenciesThe Company uses the U.S. dollar as its reporting currency. As of January 1, 2016, as a result of the acquisition of Freescale, NXP has concluded thatthe functional currency of the holding company is the U.S. dollar. Prior to January 1, 2016, the functional currency of the holding company (defined as NXPSemiconductors N.V. and NXP B.V.) was the euro. For consolidation purposes, the financial statements of the entities within the Company with a functionalcurrency other than the U.S. dollar, are translated into U.S. dollars. Assets and liabilities are translated using the exchange rates on the applicable balancesheet dates. Income and expense items in the statements of operations, statements of comprehensive income and statements of cash flows are translated atmonthly exchange rates in the periods involved.The effects of translating the financial position and results of operations from functional currencies to reporting currency are recognized in othercomprehensive income and presented as a separate component of accumulated other comprehensive income (loss) within stockholder’s equity. If theoperation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is recorded under non-controlling interests.The following table sets out the exchange rates for U.S. dollars into euros applicable for translation of NXP’s financial statements for the periodsspecified. $ per € 1 period end average(1) high low 2016 1.0474 1.1065 1.0474 1.1423 2015 1.0915 1.1150 1.0869 1.2155 2014 1.2155 1.3262 1.2155 1.3857 (1)The average of the noon-buying rate at the end of each fiscal month during the period presented.Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions orvaluation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation atyear-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of operations, except when theforeign exchange exposure is part of a qualifying cash flow or net investment hedge accounting relationship, in which case the related foreign exchangegains and losses are recognized directly in other comprehensive income to the extent that the hedge is effective and presented as a separate component ofaccumulated other comprehensive income (loss) within stockholders’ equity. To the extent that the hedge is ineffective, such differences are recognized inthe statement of operations. Currency gains and losses on intercompany loans that have the nature of a permanent investment are recognized as translationdifferences in other comprehensive income and are presented as a separate component of accumulated other comprehensive income (loss) within equity.Derivative financial instruments including hedge accountingThe Company uses derivative financial instruments in the management of its foreign currency risks and the input costs of gold for a portion of ouranticipated purchases within the next 12 months.The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments or from option pricingmodels, as appropriate, and records these as assets or liabilities in the balance sheet. Changes in the fair values are immediately recognized in the statement ofoperations unless cash flow hedge accounting is applied.Changes in the fair value of a derivative that is highly effective and designated and qualifies as a cash flow hedge are recorded in accumulated othercomprehensive income (loss), until earnings are affected by the variability in cash flows of the designated hedged item. The application of cash flow hedgeaccounting for foreign currency risks is limited to transactions that represent a substantial currency risk that could materially affect the financial position ofthe Company.Foreign currency gains or losses arising from the translation of a financial liability designated as a hedge of a net investment in a foreign operation arerecognized directly in other comprehensive income, to the extent that the hedge is effective, and are presented as a separate component of accumulated othercomprehensive income (loss) within stockholders equity. F-10Table of ContentsTo the extent that a hedge is ineffective, the ineffective portion of the fair value change is recognized in the consolidated statement of operations.When the hedged net investment is disposed of, the corresponding amount in the accumulated other comprehensive income is transferred to the statement ofoperations as part of the profit or loss on disposal.On initial designation of the hedge relationship between the hedging instrument and hedged item, the Company documents this relationship,including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be usedto assess the effectiveness of the hedging relationship. The Company makes an assessment, both at the inception of the hedge relationship as well as on anongoing basis, of whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of therespective hedged items attributable to the hedged risk, and whether the actual results of each hedge are within a range of 80-125 percent.When cash flow hedge accounting is discontinued because it is not probable that a forecasted transaction will occur within a period of two monthsfrom the originally forecasted transaction date, the Company continues to carry the derivative on the consolidated balance sheets at its fair value, and gainsand losses that were accumulated in other comprehensive income are recognized immediately in earnings. In situations in which hedge accounting isdiscontinued, the Company continues to carry the derivative at its fair value on the consolidated balance sheets, and recognizes any changes in its fair valuein earnings.The gross notional amounts of the Company’s foreign currency derivatives were $789 million at December 31, 2016 (2015: $213 million).The gross notional amounts by currency were as follows: 2016 2015 Euro 459 4 Chinese renminbi 45 (28) Japanese yen 35 26 Malaysian ringgit 73 60 Taiwan dollar 94 78 Thai baht 43 30 Other 40 43 789 213 Cash and cash equivalentsCash and cash equivalents include all cash balances and short-term highly liquid investments with a maturity of three months or less at acquisition thatare readily convertible into known amounts of cash. Cash and cash equivalents are stated at face value which approximates fair value.ReceivablesReceivables are carried at amortized cost, net of allowances for doubtful accounts and net of rebates and other contingent discounts granted todistributors. When circumstances indicate a specific customer’s ability to meet its financial obligation to us is impaired, we record an allowance againstamounts due and value the receivable at the amount reasonably expected to be collected. For all other customers, we evaluate our trade accounts receivablefor collectibility based on numerous factors including objective evidence about credit-risk concentration, collective debt risk based on average historicallosses, and specific circumstances such as serious adverse economic conditions in a specific country or region.InventoriesInventories are stated at the lower of cost or market, less advance payments on work in progress. The cost of inventories is determined using the first-in,first-out (FIFO) method. An allowance is made for the estimated losses due to obsolescence. This allowance is determined for groups of products based onpurchases in the recent past and/or expected future demand and market conditions. Abnormal amounts of idle facility expense and waste are not capitalizedin inventory. The allocation of fixed production overheads to the inventory cost is based on the normal capacity of the production facilities.Property, plant and equipmentProperty, plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method over the expected economic life of the asset. Depreciation of special tooling is also based on the straight-line method unless a depreciationmethod other than the straight-line method better represents the consumption pattern. Gains and losses on the sale of property, plant and equipment areincluded in other income and expense. Plant and equipment under capital leases are initially recorded at the lower of the fair value of the leased property orthe present value of minimum lease payments. These assets and leasehold improvements are amortized using the straight-line method over the shorter of thelease term or the estimated useful life of the asset. F-11Table of ContentsGoodwillWe record goodwill when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired. Weassign the goodwill to our reporting units based on the relative expected fair value provided by the acquisition. We perform an annual impairment assessmentin the fourth quarter of each year, or more frequently if indicators of potential impairment exist, which includes evaluating qualitative and quantitativefactors to assess the likelihood of an impairment of a reporting unit’s goodwill. We perform impairment tests using a fair value approach when necessary. Thereporting unit’s carrying value used in an impairment test represents the assignment of various assets and liabilities, excluding certain corporate assets andliabilities, such as cash, investments and debt.Identified intangible assetsLicensed technology and patents are generally amortized on a straight-line basis over the periods of benefit. We amortize all acquisition-relatedintangible assets that are subject to amortization over their estimated useful life based on economic benefit. Acquisition-related in-process R&D assetsrepresent the fair value of incomplete R&D projects that had not reached technological feasibility as of the date of acquisition; initially, these assets are notsubject to amortization. Assets related to projects that have been completed are subject to amortization, while assets related to projects that have beenabandoned are impaired and expensed to R&D. In the quarter following the period in which identified intangible assets become fully amortized, we removethe fully amortized balances from the gross asset and accumulated amortization amounts.We perform a quarterly review of finite-lived identified intangible assets to determine whether facts and circumstances indicate that the useful live isshorter than we had originally estimated or that the carrying amount of assets may not be recoverable. If such facts and circumstances exist, we assessrecoverability by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives againsttheir respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. If an asset’s usefullife is shorter than originally estimated, we accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. Weperform an annual impairment assessment in the fourth quarter of each year for indefinite-lived intangible assets, or more frequently if indicators of potentialimpairment exist, to determine whether it is more likely than not that the carrying value of the assets may not be recoverable. If necessary, a quantitativeimpairment test is performed to compare the fair value of the indefinite-lived intangible asset with its carrying value. Impairments, if any, are based on theexcess of the carrying amount over the fair value of those assets.Research and developmentCosts of research and development are expensed in the period in which they are incurred, except for in-process research and development assetsacquired in business combinations, which are capitalized and, after completion, are amortized over their estimated useful lives.AdvertisingAdvertising costs are expensed when incurred.Debt issuance costsDirect costs incurred to obtain financings are capitalized and subsequently amortized over the term of the debt using the effective interest rate method.Upon extinguishment of any related debt, any unamortized debt issuance costs are expensed immediately.Revenue recognitionThe Company’s revenue is derived from sales to distributors, made-to-order sales to Original Equipment Manufacturers (“OEMs”) and similarcustomers.Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or the service has been provided, the sales price isfixed or determinable, and collection is reasonably assured, based on the terms and conditions of the sales contract. For made-to-order sales, these criteria aremet at the time the product is shipped and delivered to the customer and title and risk have passed to the customer. Acceptance of the product by thecustomer is generally not contractually required, since, for made-to-order customers, design approval occurs before manufacturing and subsequently deliveryfollows without further acceptance protocols. Payment terms used are those that are customary in the particular geographic market. When management hasestablished that all aforementioned conditions for revenue recognition have been met, revenue is recognized. F-12Table of ContentsFor sales to distributors, revenue is recognized upon sale to the distributor (sell-in accounting). The same recognition principles apply and similarterms and conditions as for sales to other customers are applied. However, for some distributors contractual arrangements are in place, which allow thesedistributors to return products if certain conditions are met. These conditions generally relate to the time period during which a return is allowed and reflectcustomary conditions in the particular geographic market. Other return conditions relate to circumstances arising at the end of a product life cycle, whencertain distributors are permitted to return products purchased during a pre-defined period after the Company has announced a product’s pendingdiscontinuance. However, long notice periods associated with these announcements prevent significant amounts of product from being returned. Repurchaseagreements with OEMs or distributors are not entered into by the Company.Distributor reserves estimate the impact of credits granted to distributors under certain programs common in the semiconductor industry wherebydistributors receive certain price adjustments to meet individual competitive opportunities, or are allowed to return or scrap a limited amount of product inaccordance with contractual terms agreed upon with the distributor, or receive price protection credits when our standard published prices are lowered fromthe price the distributor paid for product still in its inventory. The Company’s policy is to use a rolling historical experience rate, as well as a prospectiveview of products and pricing in the distribution channel for distributors who participate in our volume rebate incentive program, in order to estimate theproper provision for this program at the end of any given reporting period. We continually monitor the actual claimed allowances against our estimates, andwe adjust our estimates as appropriate to reflect trends in pricing environments and inventory levels. Distributor reserves are also adjusted when recenthistorical data does not represent anticipated future activity.For sales where return rights exist, the Company has determined, based on historical data, that only a very small percentage of the sales of this type todistributors is actually returned. In accordance with this historical data, a pro rata portion of the sales to these distributors is not recognized but deferred untilthe return period has lapsed or the other return conditions no longer apply.Revenue is recorded net of sales taxes, customer discounts, rebates and other contingent discounts granted to distributors. We include shipping chargesbilled to customers in revenue and include the related shipping costs in cost of revenue.RestructuringThe provision for restructuring relates to the estimated costs of initiated restructurings that have been approved by Management. When such plansrequire discontinuance and/or closure of lines of activities, the anticipated costs of closure or discontinuance are recorded at fair value when the liability hasbeen incurred. The Company determines the fair value based on discounted projected cash flows in the absence of other observable inputs such as quotedprices. The restructuring liability includes the estimated cost of termination benefits provided to former or inactive employees after employment but beforeretirement, costs to terminate leases and other contracts, and selling costs associated with assets held for sale and other costs related to the closure of facilities.One-time employee termination benefits are recognized ratably over the future service period when those employees are required to render services to theCompany, if that period exceeds 60 days or a longer legal notification period. However, generally, employee termination benefits are covered by a contract oran ongoing benefit arrangement and are recognized when it is probable that the employees will be entitled to the benefits and the amounts can be reasonablyestimated.Financial income and expenseFinancial income and expense is comprised of interest income on cash and cash equivalent balances, the interest expense on borrowings, the accretionof the discount or premium on issued debt, the gain or loss on the disposal of financial assets, impairment losses on financial assets and gains or losses onhedging instruments recognized in the statement of operations. For periods prior to January 1, 2016, the mark-to-market of our warrant liability and foreignexchange results on our U.S. dollar denominated debt that resides in a Euro entity were also included. As of January 1, 2016, as a result of the acquisition ofFreescale, NXP concluded that the functional currency of the holding company is USD. Beginning from January 1, 2016, the warrants are classified instockholders’ equity, and mark-to-market accounting is no longer applicable. In addition our U.S. dollar-denominated notes, term loans and RCF agreementsare no longer re-measured.Borrowing costs that are not directly attributable to the acquisition, construction or production of property, plant and equipment are recognized in thestatement of operations using the effective interest method.Income taxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected taxconsequences of temporary differences between the tax basis of assets and liabilities and their reported amounts. Measurement of deferred tax assets andliabilities is based upon the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled. Deferred tax liabilities for income taxes or withholding taxes on dividends from subsidiaries are recognized in situations where thecompany does not consider the earnings indefinitely reinvested and to the extent that the withholding taxes are not expected to be refundable.Deferred tax assets, including assets arising from loss carryforwards, are recognized, net of a valuation allowance, if based upon the available evidenceit is more likely than not that the asset will be realized. F-13Table of ContentsThe income tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained uponexamination by the relevant taxing authorities. The income tax benefit recognized is measured based on the largest benefit that is more than 50 percent likelyto be realized upon resolution of the uncertainty. The liability for unrecognized tax benefits and the related interest and penalties is recorded under accruedliabilities and other non-current liabilities in the balance sheet based on the timing of the expected payment. Penalties are recorded as income tax expense,whereas interest is reported as financial expense in the statement of operations.The Company recognizes windfall tax benefits associated with share-based awards directly to stockholders’ equity when realized. A windfall taxbenefit occurs when the actual tax benefit realized by the Company upon an employee’s disposition of a share-based award exceeds the deferred tax asset, ifany, associated with the award that the Company had recorded. The Company records windfall tax benefits to stockholders’ equity. A shortfall occurs whenthe actual tax benefit realized by the Company upon an employee’s disposition of a share-based award is less than the deferred tax asset, if any, associatedwith the award that the Company has recorded. The Company records shortfall tax detriments when realized to stockholders’ equity to the extent thatprevious windfall tax benefits exist (referred to as the APIC windfall pool), with any remainder recognized in income tax expense. When assessing whether atax benefit relating to share-based compensation has been realized, the Company follows the tax law ordering method, under which current year share-basedcompensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.Postretirement benefitsThe Company’s employees participate in pension and other postretirement benefit plans in many countries. The costs of pension and otherpostretirement benefits and related assets and liabilities with respect to the Company’s employees participating in the various plans are based upon actuarialvaluations.Some of the Company’s defined-benefit pension plans are funded with plan assets that have been segregated and restricted in a trust, foundation orinsurance company to provide for the pension benefits to which the Company has committed itself.The net liability or asset recognized in the balance sheet in respect of the postretirement plans is the present value of the projected benefit obligationless the fair value of plan assets at the balance sheet date. Most of the Company’s plans are unfunded and result in a provision or a net liability.For the Company’s major plans, the discount rate is derived from market yields on high quality corporate bonds. Plans in countries without a deepcorporate bond market use a discount rate based on the local government bond rates.Benefit plan costs primarily represent the increase in the actuarial present value of the obligation for benefits based on employee service during theyear and the interest on this obligation in respect of employee service in previous years, net of the expected return on plan assets and net of employeecontributions.Actuarial gains and losses arise mainly from changes in actuarial assumptions and differences between actuarial assumptions and what has actuallyoccurred. They are recognized in the statement of operations, over the expected average remaining service periods of the employees only to the extent thattheir net cumulative amount exceeds 10% of the greater of the present value of the obligation or of the fair value of plan assets at the end of the previous year(the corridor). Events which invoke a curtailment or a settlement of a benefit plan will be recognized in our statement of operations.In calculating obligation and expense, the Company is required to select actuarial assumptions. These assumptions include discount rate, expectedlong-term rate of return on plan assets, assumed health care trend rates and rates of increase in compensation costs determined based on current marketconditions, historical information and consultation with and input from our actuaries. Changes in the key assumptions can have a significant impact to theprojected benefit obligations, funding requirements and periodic cost incurred.Unrecognized prior-service costs related to the plans are amortized to the statements of operations over the average remaining service period of theactive employees.Contributions to defined-contribution and multi-employer pension plans are recognized as an expense in the statements of operations as incurred.The Company determines the fair value of plan assets based on quoted prices or comparable prices for non-quoted assets. For a defined-benefit pensionplan, the benefit obligation is the projected benefit obligation; for any other postretirement defined benefit plan it is the accumulated postretirement benefitobligation.The Company recognizes as a component of other comprehensive income, net of taxes, the gains or losses and prior service costs that arise during theyear but are not recognized as a component of net periodic benefit cost. Amounts recognized in accumulated other comprehensive income, including thegains or losses and the prior services costs are adjusted as they are subsequently recognized as components of net periodic benefit costs.For all of the Company’s postretirement benefit plans, the measurement date is December 31, our year-end. F-14Table of ContentsShare-based compensationWe recognize compensation expense for all share-based awards based on the grant-date estimated fair values, net of an estimated forfeiture rate. We usethe Black-Scholes option pricing model to determine the estimated fair value for certain awards. Share-based compensation cost for restricted share units(“RSU”s) with time-based vesting is measured based on the closing fair market value of our common stock on the date of the grant, reduced by the presentvalue of the estimated expected future dividends, and then multiplied by the number of RSUs granted. Share-based compensation cost for performance-basedshare units (“PSU”s) granted with performance or market conditions is measured using a Monte Carlo simulation model on the date of grant.The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods in ourConsolidated Statements of Operations. For stock options and RSUs, the grant-date value, less estimated pre-vest forfeitures, is expensed on a straight-linebasis over the vesting period. PSUs are expensed using a graded vesting schedule. The vesting period for stock options is generally four years, for RSUs isgenerally three years and PSUs is one to three years.Earnings per shareBasic earnings per share attributable to stockholders is calculated by dividing net income or loss attributable to stockholders of the Company by theweighted average number of common shares outstanding during the period.To determine diluted share count, we apply the treasury stock method to determine the dilutive effect of outstanding stock option shares, RSUs, PSUsand Employee Stock Purchase Plan (“ESPP”) shares. Under the treasury stock method, the amount the employee must pay for exercising share-based awards,the amount of compensation cost for future service that the Company has not yet recognized, and the amount of excess tax benefits that would be recorded inadditional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.Concentration of riskFinancial instruments, including derivative financial instruments, that may potentially subject NXP to concentrations of credit risk, consist principallyof cash and cash equivalents, short-term investments, long-term investments, accounts receivable and forward contracts.We sell our products to OEMs and to distributors in various markets, who resell these products to OEMs, or their subcontract manufacturers. One of ourdistributors accounted for 13% of our revenue in 2016, 14% in 2015 and 13% in 2014 and one other distributor accounted for less than 10% of our revenuein 2016, 14% in 2015 and 13% in 2014. No other distributor accounted for greater than 10% of our revenue for 2016, 2015 or 2014. No individual OEM forwhich we had direct sales to accounted for more than 10% of our revenue for 2016, 2015 or 2014.Credit exposure related to NXP’s foreign currency forward contracts is limited to the realized and unrealized gains on these contracts.NXP is party to certain hedge transactions related to its 2019 Cash Convertible Senior Notes. NXP is subject to the risk that the counterparties to thesetransactions may not be able to fulfill their obligations under these hedge transactions.NXP purchased options and issued warrants to hedge potential cash payments in excess of the principal and contractual interest related to its 2019Cash Convertible Senior Notes, which were issued during fiscal 2014. The 2019 Cash Convertible Senior Note hedges are adjusted to fair value eachreporting period and unrealized gains and losses are reflected in NXP’s Consolidated Statements of Operations. Because the fair value of the 2019 CashConvertible Senior Notes embedded conversion derivative and the 2019 Cash Convertible Senior Notes hedges are designed to have similar offsettingvalues, there was no impact to NXP’s Consolidated Statements of Operations relating to these adjustments to fair value.The Company is using outside suppliers or foundries for a portion of its manufacturing capacity.We have operations in Europe and Asia subject to collective bargaining agreements which could pose a risk to the Company in the near term but we donot expect that our operations will be disrupted if such is the case.Accounting standards adopted in 2016In April 2015, the FASB issued ASU No. 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accountingfor Fees Paid in a Cloud Computing Arrangement. Under this standard, if a cloud computing arrangement includes a software license, the software licenseelement of the arrangement should be accounted for consistent with the acquisition of other software licenses. If a cloud computing arrangement does notinclude a software license, the arrangement should be accounted for as a service contract. The new standard became effective for us on January 1, 2016. Theadoption of this standard did not have a significant impact on our financial position or results of operations.In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-PeriodAdjustments. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period inthe reporting period in which the adjustment amounts are determined and sets forth new disclosure requirements related to the adjustments. The new standardbecame effective for us on January 1, 2016. The adoption of this standard did not have a significant impact on our financial position or results of operations. F-15Table of ContentsIn November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740), which changes how deferred taxes areclassified on our balance sheets and is effective for financial statements issued for annual periods beginning after December 15, 2016, with early adoptionpermitted. ASU 2015-17 requires all deferred tax assets and liabilities to be classified as non-current. The Company adopted this standard as of January 1,2016 with prospective application. The adoption of this standard did not have a significant impact on our financial position. Prior periods were notretrospectively adjusted.New standards to be adopted after 2016In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), whichsupersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognizerevenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods orservices. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, whichdelayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt thestandard as of the original effective date. The standard permits the use of either the retrospective or cumulative effect transition method, and we are currentlyevaluating the method of adoption. The Company is still in the process of completing its analysis on the impact of this guidance, at this time, with theconsideration that the Company currently recognizes distributor revenue based on sell-in accounting, the Company does not expect the adoption of Topic606 to have a material impact on our financial position and results of operations.In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and FinancialLiabilities (Subtopic 825-10). The new standard requires equity investments (except those accounted for under the equity method of accounting, or those thatresult in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities touse the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets andfinancial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s)and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The newstandard will be effective for us on January 1, 2018. The expected adoption method of ASU 2016-01 is being evaluated by the Company and the adoption isnot expected to have a significant impact on our financial position or results of operations.In February, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize almost all leases on their balancesheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as eitheroperating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenuerecognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees andlessors. The new standard will be effective for us on January 1, 2019 with early adoption permitted. We are currently evaluating the potential impact thatTopic 842 may have on our financial position and results of operations.In March, 2016 the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The new standardrequires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid incapital pools. The standard also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liabilityaccounting. In addition, the ASU allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. The new standard willbe effective for us on January 1 2017. The Company does not expect the adoption of this guidance to have a material impact on our financial position andresults of operations.In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations(Reporting Revenue Gross versus Net). In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): IdentifyingPerformance Obligations and Licensing. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-ScopeImprovements and Practical Expedients and ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SECGuidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. InDecember 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. Theseamendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, Revenue from Contracts with Customers(Topic 606).The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and howit should apply the control principle to certain types of arrangements. ASU 2016-10 clarifies the following two aspects of ASU 2014-09: identifyingperformance obligations and licensing implementation guidance. ASU 2016-11 rescinds several SEC Staff Announcements that are codified in Topic 605,including, among other items, guidance relating to accounting for consideration given by a vendor to a customer, as well as accounting for shipping andhandling fees and freight services. ASU 2016-12 provides clarification to Topic 606 on how to assess collectability, present sales tax, treat noncashconsideration, and account for completed and modified contracts at the time of transition. In addition, ASU 2016-12 clarifies that an entity retrospectivelyapplying the guidance in Topic 606 is not required to disclose the effect of the accounting change in the period of adoption. The effective date and transitionrequirements for these amendments are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and forinterim periods within those years, beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have a materialimpact on our financial position or results of operations. F-16Table of ContentsIn August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses how certain cashreceipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash flow, and other Topics. ASU2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. The Company does not expect theadoption of this guidance to have a material impact on our financial position or results of operations.In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. Under ASU2016-16, the selling (transferring) entity is required to recognize a current tax expense or benefit upon transfer of the asset. Similarly, the purchasing(receiving) entity is required to recognize a deferred tax asset or deferred tax liability, as well as the related deferred tax benefit or expense, upon receipt ofthe asset. The new standard will be effective for us on January 1, 2017, due to the Company’s decision to early adopt. The Company does not expect theadoption of this guidance to have a material impact on our financial position or results of operations.In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 introducesa screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of thegross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screenreduces the number of transactions that need to be further evaluated as a business. ASU 2017-01 is effective for annual reporting periods, and interim periodstherein, beginning after December 15, 2017. The Company does not expect the adoption of this guidance to have a material impact on our financial positionor results of operations.3 Acquisitions and Divestments2016There were no material divestments during 2016. On August 8, 2016, we acquired a business for $200 million. The total purchase price has beenpreliminarily allocated to goodwill ($14 million), other intangible assets ($177 million), inventories ($8 million) and tangible fixed assets ($1 million). Theother intangible assets relate to core technology ($172 million) with an amortization period of 7 years and existing technology ($5 million) with anamortization period of 2 years. The measurement period still remains open pending the completion of valuation procedures related to the acquired assets andassumed liabilities.2015On December 7, 2015, we acquired Freescale for a purchase price of $11,639 million. Acquisition-related transaction costs ($42 million) such aslegal, accounting and other related expenses were recorded as a component of selling, general and administrative expense in our consolidated statements ofoperations.Under the terms of the merger agreement, each holder of Freescale common shares received (i) 0.3521 of an NXP ordinary share and (ii) $6.25 incash per such common share.The total purchase price amounts to $11,639 million and consisted of the following: Cash payment of $6.25 per Freescale common share 1,948 Total value of NXP ordinary shares delivered 9,449 Value of NXP restricted share units delivered to holders of Freescale restricted share units andperformance-based restricted share units 157 Value of NXP stock options delivered to holders of Freescale stock options 85 Total purchase price 11,639 The total purchase price has been allocated to the tangible and identified intangible assets acquired and liabilities assumed based on theirestimated fair values as of the date of the merger, December 7, 2015. The fair value of acquired tangible and identified intangible assets is determined basedon inputs that are unobservable and significant to the overall fair value measurement. As such, acquired tangible and identified intangible assets areclassified as Level 3 assets. During 2016, we made certain adjustments to the preliminary allocation of the purchase price. A decrease of $33 million wasrecorded to deferred taxes, an increase of $3 million was recorded to accounts payable, accrued liabilities and other current liabilities, a decrease of$5 million was recorded to inventories with a corresponding net decrease of $25 million recorded to goodwill. Our valuation procedures related to theacquired assets and assumed liabilities was completed during the fourth quarter of 2016.The identified intangible assets consist of existing technology and platform technology, In-Process Research & Development (“IPR&D”), orderbacklog, trade name and customer relationships. The useful lives range between one year and nineteen years. F-17Table of ContentsThe allocation of the purchase price is as follows: Total purchase price 11,639 Estimated fair value of net tangible assets acquired and liabilities assumed: Cash and cash equivalents 427 Accounts receivable, net 511 Inventories, net 1,280 Other current assets 93 Property, plant and equipment 1,827 Other non-current assets 64 Accounts payable, accrued liabilities and other current liabilities (714) Deferred taxes (2,292) Other long-term liabilities (329) Long-term debt (5,091) (4,224) Fair value (and useful lives) of identified intangible assets acquired: Customer relationships (included in customer-related) (19 years) 764 Developed technology (included in technology-based) (5 years) 5,371 Sales order backlog (included in marketing-related) (1 year) 190 Trade name (included in marketing-related) (5 years) 81 In-process research and development* 2,017 Other 41 8,464 Goodwill 7,399 *Acquired IPR&D is an intangible asset classified as an indefinite lived asset until the completion or abandonment of the associated research anddevelopment effort. IPR&D will be amortized over an estimated useful life to be determined at the date the associated research and development effort iscompleted, or expensed immediately when, and if, the project is abandoned. Acquired IPR&D is not amortized during the period that it is consideredindefinite lived, but rather is subject to annual testing for impairment or when there are indicators for impairment.Goodwill is primarily attributable to the anticipated synergies and economies of scale expected from the operations of the combined company and tothe assembled workforce of Freescale. All of the goodwill has been allocated to NXP’s HPMS segment. Goodwill is not deductible for income tax purposes.The cash consideration paid in connection of the acquisition of Freescale, the repayment of certain amounts under Freescale’s outstanding creditfacility and Secured Notes and the payment of certain transaction costs in relation to the acquisition of Freescale were funded by cash on hand, the SecuredBridge Term Credit Agreement, the net proceeds of the 2020 Senior Unsecured Notes and 2022 Senior Unsecured Notes and the net proceeds of Term LoanB. See Note 16, “Debt” in the Consolidated Financial Statements.Pro forma financial information (unaudited)The following unaudited pro forma financial information presents combined consolidated results of operations for each of the fiscal years presented, asif Freescale had been acquired as of January 1, 2014: 2015 2014 Revenue 9,850 9,904 Net income (loss) attributable to stockholders (84) (277) Net income (loss) per common share attributable to stockholders: - Basic (0.25) (0.81) - Diluted (0.25) (0.81) The pro forma information excludes the result of operations of NXP’s RF Power business and includes adjustments to amortization and depreciation foridentified intangible assets and property, plant and equipment acquired, adjustments to share-based compensation expense and interest expense for theadditional indebtedness incurred to complete the acquisition. The pro forma result has been prepared for comparative purposes only and does not purport tobe indicative of the revenue or operating results that would have been achieved had the acquisition actually taken place as of January 1, 2014 or of theresults of future operations of the combined business. In addition, the result is not intended to be a projection of future results and does not reflect synergiesthat might be achieved from the combined operations. F-18Table of ContentsOther acquisitionsIn addition to the above mentioned acquisition of Freescale, we completed two other acquisitions qualifying as business combinations: the acquisitionof Quintic’s Bluetooth Low Energy (“BTLE”) and Wearable businesses, located in China and the USA, and the acquisition of Athena SCS Ltd. (“Athena”),located in the United Kingdom. Both acquisitions were not significant to our consolidated results of operations.The aggregate purchase price consideration of $102 million was allocated to goodwill ($40 million), other intangible assets ($68 million) and netliabilities assumed ($6 million). The other intangible assets relate to core technology ($29 million) with an amortization period varying up to 14 years,existing technology, ($17 million) with an amortization period varying up to 5 years and in-process R&D ($22 million).The results of BTLE are consolidated in the Secure Connected Devices business line. The results of Athena are consolidated in the SecureIdentification Solutions business line. Both business lines are part of the reportable segment HPMS.DivestmentsIn February 2015, we announced the establishment of a 49% owned joint venture (WeEn) with JianGuang Asset Management Co., Ltd. (JAC Capital)in China to combine NXP’s advanced technology from its Bipolar Power business line with JAC Capital’s connections in the Chinese manufacturing networkand distribution channels. This transaction closed on November 9, 2015. The results of the Bipolar Power business were included in the reportable segmentSP.In May 2015, we announced an agreement with JianGuang Asset Management Co., Ltd. (JAC Capital) in China to sell NXP’s RF Power Business. Thistransaction closed on December 7, 2015. The results of the RF Power business were consolidated in the reportable segment HPMS.The gain on the sale of these businesses of $1,257 million is included in other income (expense).2014There were no significant acquisitions or divestments in 2014.4 Assets Held for SaleOn June 14, 2016, NXP announced an agreement to divest its Standard Products (“SP”) business to a consortium of financial investors consistingof Beijing JianGuang Asset Management Co., Ltd (“JAC Capital”) and Wise Road Capital LTD (“Wise Road Capital”). On February 6, 2017, we divested SP,receiving $2.75 billion in cash proceeds. At December 31, 2016, the SP business segment met the criteria to be classified as held for sale. The results of the SPbusiness segment are consolidated in the reportable segment SP.The SP business segment presentation as held for sale does not meet the criteria to be classified as a discontinued operation at December 31, 2016primarily due to the disposal of this business not representing a strategic shift that will have a major effect on the Company’s operations and financial results.The following table summarizes the carrying value of assets and liabilities held for sale which is primarily relative to the SP business: 2016 Trade accounts receivable, net 3 Other assets 28 Inventories, net 208 Property, plant and equipment, net 396 Identified intangible assets, net 133 Goodwill 336 Assets held for sale 1,104 Trade accounts payable (110) Accrued and other liabilities (88) Liabilities held for sale (198) F-19Table of Contents5 Supplemental Financial InformationStatement of Operations InformationDepreciation, amortization and impairmentDepreciation and amortization, including impairment charges, are as follows: 2016 2015 2014 Depreciation of property, plant and equipment 609 262 219 Amortization of internal use software 24 26 31 Amortization of other identified intangible assets (*) 1,572 229 155 2,205 517 405 (*) Includes impairment charges relative to IPR&D, which was acquired as part of the acquisition of Freescale of $89 million for 2016.Depreciation of property, plant and equipment is primarily included in cost of revenue.Other income (expense) 2016 2015 2014 Result on disposal of businesses 8 1,257 6 Result on disposal of properties 1 6 3 Other income (expense) — — 1 9 1,263 10 Financial income (expense) 2016 2015 2014 Interest income 11 6 3 Interest expense (408) (227) (158) Total interest expense, net (397) (221) (155) Net gain (loss) on extinguishment of debt (32) — (3) Foreign exchange rate results (15) (193) (246) Change in fair value of the warrant liability — (31) (2) Miscellaneous financing costs/income, net (9) (84) (4) Total other financial income (expense) (56) (308) (255) Total (453) (529) (410) From May 2011 until December 31, 2015, the Company applied net investment hedging. As of January 1, 2016, as a result of the acquisition ofFreescale, NXP has concluded that the functional currency of the holding company is USD. Beginning from January 1, 2016, the warrants will now beclassified in stockholders’ equity, and mark-to-market accounting will no longer be applicable. In addition our U.S. dollar-denominated notes, term loans andRCF agreements will no longer need to be re-measured. The U.S. dollar exposure of the net investment in U.S. dollar functional currency subsidiaries of$1.7 billion was hedged by certain U.S. dollar-denominated notes. As a result, a charge of $190 million in 2015 and a charge of $214 million in 2014 wasrecorded in other comprehensive income (loss) relating to the foreign currency result on the U.S. dollar-denominated notes that were recorded in a eurofunctional currency entity.Equity-accounted investeesResults related to equity-accounted investees at the end of each period were as follows: 2016 2015 2014 Company’s share in income (loss) 11 8 8 Other results — 1 — 11 9 8 F-20Table of ContentsThe total carrying value of investments in equity-accounted investees is summarized as follows: 2016 2015 Shareholding % Amount Shareholding % Amount ASMC 27 21 27 21 ASEN 40 56 40 46 WeEn 49 62 49 59 Others 15 15 154 141 Investments in equity-accounted investees are included in Corporate and Other.The fair value of NXP’s shareholding in the publicly listed company ASMC based on the quoted market price at December 31, 2016 is $35 million.Balance Sheet InformationCash and cash equivalentsAt December 31, 2016 and December 31, 2015, our cash balance was $1,894 million and $1,614 million, respectively, of which $316 million and$485 million was held by SSMC, our consolidated joint venture company with TSMC. Under the terms of our joint venture agreement with TSMC, a portionof this cash can be distributed by way of a dividend to us, but 38.8% of the dividend will be paid to our joint venture partner. During 2016, a dividend of$325 million (2015: $130 million) has been paid by SSMC.6 Restructuring ChargesAt each reporting date, we evaluate our restructuring liabilities, which consist primarily of termination benefits, to ensure that our accruals are stillappropriate. During 2016, we recognized $52 million of employee severance costs in our restructuring liabilities, which was primarily related to specifictargeted actions.In December 2015, we began the implementation of the planned restructuring and cost reduction activities in connection with the acquisition ofFreescale. We recognized $216 million of employee severance costs and $23 million of other exit costs related to this plan in 2015.There were no material new restructuring projects in 2014.The following table presents the changes in the position of restructuring liabilities in 2016 by segment: BalanceJanuary 1,2016 Additions Utilized Released Otherchanges(1) BalanceDecember 31,2016 HPMS 234 52 (131) (3) (4) 148 SP 6 — (2) — (1) 3 Corporate and Other — — — — — — 240 52 (133) (3) (5) 151 (1)Other changes primarily related to translation differences and internal transfers.The total restructuring liability as of December 31, 2016 of $151 million is classified in the balance sheet under current liabilities ($129 million) andnon-current liabilities ($22 million).The utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years.The following table presents the changes in the position of restructuring liabilities in 2015 by segment: BalanceJanuary 1,2015 Additions Utilized Released Otherchanges(1) BalanceDecember 31,2015 HPMS 14 226 (17) (1) 12 234 SP 5 8 (6) — (1) 6 Corporate and Other 21 5 (23) (1) (2) — 40 239 (46) (2) 9 240 (1)Other changes primarily related to translation differences and internal transfers.The total restructuring liability as of December 31, 2015 of $240 million is classified in the balance sheet under current liabilities ($197 million) andnon-current liabilities ($43 million).The utilization of the restructuring liabilities mainly reflects the execution of ongoing restructuring programs the Company initiated in earlier years. F-21Table of ContentsThe components of restructuring charges less releases recorded in the liabilities in 2016, 2015 and 2014 are as follows: 2016 2015 2014 Personnel lay-off costs 52 239 43 Other exit costs 19 27 1 Release of provisions/accruals (3) (2) (16) Net restructuring charges 68 264 28 The restructuring charges less releases recorded in operating income are included in the following line items in the statement of operations: 2016 2015 2014 Cost of revenue 18 18 16 Selling, general and administrative 9 155 3 Research & development 41 91 9 Net restructuring charges 68 264 28 7 Provision for Income TaxesIn 2016, NXP generated a loss before income taxes of $603 million (2015: an income of $1,486 million; 2014: an income of $639 million). Thecomponents of income (loss) before income taxes are as follows: 2016 2015 2014 Netherlands 537 1,528 398 Foreign (1,140) (42) 241 (603) 1,486 639 The components of the benefit (provision) for income taxes are as follows: 2016 2015 2014 Current taxes: Netherlands (7) (13) (7) Foreign (67) (51) (32) (74) (64) (39) Deferred taxes: Netherlands 205 (4) 2 Foreign 720 172 (3) 925 168 (1) Total benefit (provision) for income taxes 851 104 (40) A reconciliation of the statutory income tax rate in the Netherlands as a percentage of income (loss) before income taxes and the effective incometax rate is as follows: (in percentages) 2016 2015 2014 Statutory income tax in the Netherlands 25.0 25.0 25.0 Rate differential local statutory rates versus statutory rate of the Netherlands 24.2 (4.3) (2.5) Net change in valuation allowance 72.6 (13.8) 2.4 Prior year adjustments 0.1 — 0.5 Non-taxable income 1.7 (0.1) (0.3) Non-deductible expenses/losses (7.0) 4.0 5.6 Sale of non-deductible goodwill — 2.7 — Other taxes and tax rate changes 7.1 1.0 — Tax effects of remitted and unremitted earnings and withholding taxes (2.7) 0.1 1.3 Tax on gains related to internal corporate reorganization transactions (10.3) — — Unrecognized tax benefits (0.5) 0.1 0.6 Netherlands tax incentives 17.9 (18.5) (21.5) Foreign tax incentives 13.0 (3.2) (4.8) Effective tax rate 141.1% (7.0%) 6.3% F-22Table of ContentsThe Company benefits from income tax holidays in certain jurisdictions which provide that we pay reduced income taxes in those jurisdictionsfor a fixed period of time that varies depending on the jurisdiction. The predominant income tax holiday is expected to expire at the end of 2024. The impactof this tax holiday decreased foreign taxes by $24 million and $29 million for 2016 and 2015, respectively. The benefit of this tax holiday on net income pershare (diluted) was $0.07 (2015: $0.11).Deferred tax assets and liabilitiesThe principal components of deferred tax assets and liabilities are presented below: 2016 2015 Operating loss and tax credit carryforwards 1,031 963 Accrued interest 432 545 Other accrued liabilities 107 147 Pensions 86 87 Stock Based Compensation 58 73 Restructuring 40 61 Receivables 36 11 Inventories (including purchase accounting basis difference) 27 (109) Other assets 10 9 Long-term debt — 179 Total Gross Deferred Tax Assets 1,827 1,966 Valuation Allowance (127) (632) Total Net Deferred Tax Assets 1,700 1,334 Intangible assets (including purchase accounting basis difference) (2,431) (2,952) Undistributed earnings of foreign subsidiaries (367) (359) Property, plant and equipment (including purchase accounting basis difference) (134) (226) Total Deferred Tax Liabilities (2,932) (3,537) Net Deferred Tax Position (1,232) (2,203) The classification of the deferred tax assets and liabilities in the Company’s consolidated balance sheets is as follows: 2016 2015 Deferred tax assets within other current assets — 26 Deferred tax assets within other non-current assets 427 69 Deferred tax liabilities within accrued liabilities — (5) Deferred tax liabilities within non-current liabilities (1,659) (2,293) (1,232) (2,203) The Company has significant deferred tax assets resulting from net operating loss carryforwards, tax credit carryforwards and deductible temporarydifferences that may reduce taxable income or taxes payable in future periods. Valuation allowances have been established for deferred tax assets based on a“more likely than not” threshold. The realization of our deferred tax assets depends on our ability to generate sufficient taxable income within the carrybackor carryforward periods provided for in the tax law for each applicable tax jurisdiction. The valuation allowance decreased by $505 million during 2016(2015: $5 million increase).ASC 740, Income Taxes, requires that we consider all available evidence in forming a judgement regarding the valuation allowance as of December 31,2016, including events that occur subsequent to year end but prior to the issuance of the financial statements. As a result of the February 6, 2017 dispositionof SP, NXP concluded that the valuation allowance should be reduced by $395 million as of December 31, 2016, as the SP divestiture provided anobjectively verifiable source of income against which tax losses can be utilized. As a result, the Company recognized an additional benefit of $392 million inthe benefit (provision) for income taxes in the consolidated statement of operations and an additional $7 million in capital in excess of par value in theconsolidated balance sheet in the fourth quarter. In the second quarter, the valuation allowance in the U.S. was reduced by $107 million as a result of theCompany’s determination that sufficient positive evidence existed to support a more likely than not determination that the U.S. deferred tax assets wererealizable.At December 31, 2016 tax loss carryforwards of $1,899 million (inclusive of $270 million of U.S. state tax losses) will expire as follows: Balance December 31, Scheduled expiration 2016 2017 2018 2019 2020 2021 2022-2026 later unlimited Tax loss carryforwards 1,899 26 10 29 10 1 947 290 586 F-23Table of ContentsThe Company also has tax credit carryforwards of $749 million (excluding the effect of unrecognized tax benefits), which are available to offset futuretax, if any, and which will expire as follows: BalanceDecember 31,2016 Scheduled expiration 2017 2018 2019 2020 2021 2022-2026 later unlimited Tax credit carryforwards 749 1 8 12 32 18 336 282 60 The net income tax payable (excluding the liability for unrecognized tax benefits) as of December 31, 2016 amounted to $10 million (2015: $26million) and includes amounts directly payable to or receivable from tax authorities.The Company does not indefinitely reinvest the undistributed earnings of its subsidiaries. Consequently, the Company has recognized a deferredincome tax liability of $367 million at December 31, 2016 (2015: $359 million) for the additional income taxes and withholding taxes payable upon thefuture remittances of these earnings of foreign subsidiaries.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2016 2015 2014 Balance as of January 1, 149 125 143 Assumed in the acquisition of Freescale — 121 — Decreases from activities which are held for sale (7) — — Increases from tax positions taken during prior periods 1 1 — Decreases from tax positions taken during prior periods (3) (111) (21) Increases from tax positions taken during current period 10 15 3 Decreases relating to settlements with the tax authorities (4) (2) — Balance as of December 31, 146 149 125 Of the total unrecognized tax benefits at December 31, 2016, $125 million, if recognized, would impact the effective tax rate. All other unrecognizedtax benefits, if recognized, would not affect the effective tax rate as these would be offset by compensating adjustments in the Company’s deferred tax assetsthat would be subject to valuation allowance based on conditions existing at the reporting date.The Company classifies interest related to unrecognized tax benefits as financial expense and penalties as income tax expense. The total relatedinterest and penalties recorded during the year 2016 amounted to $2 million (2015: $7 million; 2014: $3 million). As of December 31, 2016 the Companyhas recognized a liability for related interest and penalties of $12 million (2015: $14 million; 2014: $7 million). It is reasonably possible that the totalamount of unrecognized tax benefits may significantly increase/decrease within the next 12 months of the reporting date due to, for example, completion oftax examinations; however, an estimate of the range of reasonably possible change cannot be made.The Company files income tax returns in the Netherlands, the USA and in various other foreign jurisdictions. Tax filings of our subsidiaries areroutinely audited in the normal course of business by tax authorities around the world. Tax years that remain subject to examination by major taxjurisdictions (the Netherlands, Germany, USA, China, Taiwan, Thailand, Malaysia, the Philippines and India) vary by country, ranging from 2004 through2016.8 Earnings per ShareThe computation of earnings per share (EPS) is presented in the following table: 2016 2015 2014 Net income (loss) 259 1,599 607 Less: Net income (loss) attributable to non-controlling interests 59 73 68 Net income (loss) attributable to stockholders 200 1,526 539 Weighted average number of shares outstanding (after deduction of treasury shares) during theyear (in thousands) 338,477 239,764 237,954 Plus incremental shares from assumed conversion of: Options 1) 5,582 6,194 6,753 Restricted Share Units, Performance Share Units and Equity Rights 2) 3,548 4,158 3,902 Warrants 3) — — — Dilutive potential common share 9,130 10,352 10,655 Adjusted weighted average number of shares outstanding (after deduction of treasury shares)during the year (in thousands) 1) 347,607 250,116 248,609 EPS attributable to stockholders in $: Basic net income (loss) 0.59 6.36 2.27 Diluted net income (loss) 0.58 6.10 2.17 F-24Table of Contents 1)Stock options to purchase up to 1.4 million shares of NXP’s common stock that were outstanding in 2016 (2015: 0.7 million shares; 2014: 0.5 millionshares) were anti-dilutive and were not included in the computation of diluted EPS because the exercise price was greater than the average fair marketvalue of the common stock or the number of shares assumed to be repurchased using the proceeds of unrecognized compensation expense and exerciseprices was greater than the weighted average number of shares underlying outstanding stock options.2)Unvested RSU’s, PSU’s and equity rights of 0.9 million shares that were outstanding in 2016 (2015: 0.5 million shares; 2014: 1.2 million shares) wereanti-dilutive and were not included in the computation of diluted EPS because the number of shares assumed to be repurchased using the proceeds ofunrecognized compensation expense was greater than the weighted average number of outstanding unvested RSU’s, PSU’s and equity rights or theperformance goal has not been met.3)Warrants to purchase up to 11.2 million shares of NXP’s common stock at a price of $133.32 per share were outstanding in 2016 (2015: 11.2 millionshares at a price of $133.32; 2014: nil). Upon exercise, the warrants will be net share settled. At the end of 2016 and 2015, the warrants were notincluded in the computation of diluted EPS because the warrants’ exercise price was greater than the average fair market value of the common shares.9 Share-based CompensationShare-based compensation expense is included in the following line items in our statement of operations: 2016 2015 2014 Cost of revenue 49 15 10 Research and development 123 45 20 Selling, general and administrative 166 156 103 338 216 133 Long Term Incentive Plans (LTIP’s)The LTIP was introduced in 2010 and is a broad-based long-term retention program to attract, retain and motivate talented employees as well as alignstockholder and employee interests. The LTIP provides share-based compensation (“awards”) to both our eligible employees and non-employee directors.Awards that may be granted include performance shares, stock options and restricted shares. The number of shares authorized and available for awards atDecember 31, 2016 was 3.0 million.A charge of $331 million was recorded in 2016 for the LTIP (2015: $206 million; 2014: $123 million).A summary of the activity for our LTIP’s during 2016 is presented below.Stock optionsThe options have a strike price equal to the closing share price on the grant date. The fair value of the options has been calculated using the Black-Scholes formula, using the following assumptions: • an expected life varying from 5.76 to 6.25 years, calculated in accordance with the guidance provided in SEC Staff bulletin No. 110 forplain vanilla options using the simplified method, since our equity shares have been publicly traded for only a limited period of time andwe do not have sufficient historical exercise data; • a risk-free interest rate varying from 0.8% to 2.8% (2015: 0.8% to 2.8%; 2014: 0.8% to 2.8%); • no expected dividend payments; and • a volatility of 40-50% based on the volatility of a set of peer companies. Peer company data has been used given the short period of timeour shares have been publicly traded.Changes in the assumptions can materially affect the fair value estimate. Stock options Weighted averageexerciseprice in USD Weighted averageremaining contractualterm Aggregate intrinsicvalue Outstanding at January 1, 2016 10,034,650 38.53 Granted 108,419 80.44 Exercised 2,734,739 32.12 Forfeited 239,678 54.81 Outstanding at December 31, 2016 7,168,652 41.07 6.0 408 Exercisable at December 31, 2016 4,857,680 30.97 5.5 326 The weighted average per share grant date fair value of stock options granted in 2016 was $34.59 (2015: $34.05; 2014: $29.10). F-25Table of ContentsThe intrinsic value of the exercised options was $145 million (2015: $112 million; 2014: $129 million), whereas the amount received by NXP was$88 million (2015: $39 million; 2014: $55 million).At December 31, 2016, there was a total of $56 million (2015: $110 million) of unrecognized compensation cost related to non-vested stock options.This cost is expected to be recognized over a weighted-average period of 1.5 years (2015: 1.8 years).Performance share unitsFinancial performance conditions Shares Weighted average grantdate fair valuein USD Outstanding at January 1, 2016 775,324 49.68 Granted 32,716 82.53 Vested 398,951 30.00 Forfeited 375 49.60 Outstanding at December 31, 2016 408,714 71.52 The weighted average grant date fair value of performance share units granted in 2016 was $82.53 (2015: $75.28; 2014: $62.29).Market performance conditions Shares Weighted average grantdate fair valuein USD Outstanding at January 1, 2016 1,905,269 26.85 Granted — — Vested 1,580,086 27.28 Forfeited — — Outstanding at December 31, 2016 325,183 38.63 The fair value of the performance share units at the time of vesting was $147 million (2015: $66 million; 2014: $70 million). At December 31, 2016,there was a total of $12 million (2015: $32 million) of unrecognized compensation cost related to non-vested performance share units. This cost is expectedto be recognized over a weighted-average period of 1.8 years (2015: 1.9 years).Restricted share units Shares Weighted average grantdate fair value in USD Outstanding at January 1, 2016 8,237,861 78.03 Granted 2,739,672 98.16 Vested 3,688,422 75.61 Forfeited 368,232 76.00 Outstanding at December 31, 2016 6,920,879 87.48 The weighted average grant date fair value of restricted share units granted in 2016 was $98.16 (2015: $79.22; 2014: $63.42). The fair value of therestricted share units at the time of vesting was $334 million (2015: $209 million; 2014: $110 million).At December 31, 2016, there was a total of $422 million (2015: $432 million) of unrecognized compensation cost related to non-vested restricted shareunits. This cost is expected to be recognized over a weighted-average period of 1.6 years (2015: 1.6 years).Management Equity Stock Option Plan (“MEP”)Awards are no longer available under these plans. Current employees owning vested MEP Options may exercise such MEP Options during the five yearperiod subsequent to September 18, 2013, subject to these employees remaining employed by us and subject to the applicable laws and regulations.No charge was recorded in 2016 (2015: no charge, 2014: no charge) for options granted under the MEP.The following table summarizes the information about NXP’s outstanding MEP Options and changes during 2016. F-26Table of ContentsStock options Stock options Weighted averageexercise price in EUR Weighted averageremaining contractualterm Aggregate intrinsicvalue Outstanding at January 1, 2016 2,748,942 24.14 Granted — — Exercised 214,670 29.64 Forfeited — — Expired — — Outstanding at December 31, 2016 2,534,272 23.67 1.7 177 Exercisable at December 31, 2016 2,534,272 23.67 1.7 177 The intrinsic value of exercised options was $13 million (2015: $12 million; 2014: $74 million), whereas the amount received by NXP was $7 million(2015: $4 million; 2014: $86 million).The number of vested options at December 31, 2016 was 2,534,272 (2015: 2,748,942 vested options) with a weighted average exercise price of €23.67(2015: €24.14 weighted average exercise price).At December 31, 2016, there was no unrecognized compensation cost related to non-vested stock options.10 Accounts Receivables, netAccounts receivable are summarized as follows: 2016 2015 Accounts receivable from third parties 1,035 1,048 Allowance for doubtful accounts (2) (1) 1,033 1,047 11 Inventories, netInventories are summarized as follows: 2016 2015 Raw materials 52 66 Work in process 854 1,376 Finished goods 207 437 1,113 1,879 The portion of finished goods stored at customer locations under consignment amounted to $53 million as of December 31, 2016 (2015: $69 million).The amounts recorded above are net of an allowance for obsolescence of $84 million as of December 31, 2016 (2015: $84 million).12 Property, Plant and Equipment, netThe following table presents details of the Company’s property, plant and equipment, net of accumulated depreciation: Useful Life(in years) 2016 2015 Land 111 160 Buildings 9 to 50 1,153 854 Machinery and installations 2 to 10 3,006 4,156 Other Equipment 1 to 5 278 227 Prepayments and construction in progress 118 108 4,666 5,505 Less accumulated depreciation (2,314) (2,583) Property, plant and equipment, net of accumulated depreciation 2,352 2,922 Land with a book value of $111 million (2015: $160 million) is not depreciated.There was no significant construction in progress and therefore no related capitalized interest. F-27Table of Contents13 Identified Intangible AssetsThe changes in identified intangible assets were as follows: Total Other intangibleassets Software Balance as of January 1, 2015: Cost 1,866 1,715 151 Accumulated amortization/impairment (1,293) (1,207) (86) Book value 573 508 65 Changes in book value: Acquisitions/additions 8,551 8,543 8 Transfer to assets held for sale (38) (38) — Amortization (255) (229) (26) Translation differences (41) (35) (6) Total changes 8,217 8,241 (24) Balance as of December 31, 2015: Cost 9,978 9,832 146 Accumulated amortization/impairment (1,188) (1,083) (105) Book value 8,790 8,749 41 Changes in book value: Acquisitions/additions 299 289 10 Transfer to assets held for sale (138) (138) — Amortization (1,507) (1,483) (24) Impairment (89) (89) — Translation differences (12) (10) (2) Total changes (1,447) (1,431) (16) Balance as of December 31, 2016: Cost 9,512 9,397 115 Accumulated amortization/impairment (2,169) (2,079) (90) Book value 7,343 7,318 25 Identified intangible assets as of December 31, 2016 and 2015 respectively were composed of the following: December 31, 2016 December 31, 2015 Gross carryingamount Accumulatedamortization Gross carryingamount Accumulatedamortization IPR&D 1) 1,380 — 2,016 — Marketing-related 81 (18) 119 (18) Customer-related 1,146 (322) 1,287 (224) Technology-based 6,790 (1,739) 6,410 (841) 9,397 (2,079) 9,832 (1,083) Software 115 (90) 146 (105) Identified intangible assets 9,512 (2,169) 9,978 (1,188) 1)IPR&D is not subject to amortization until completion or abandonment of the associated research and development effort.The estimated amortization expense for these identified intangible assets, excluding software, for each of the five succeeding years is: 2017 1,423 2018 1,432 2019 1,472 2020 1,190 2021 462 All intangible assets, excluding goodwill, are subject to amortization and have no assumed residual value.The expected weighted average remaining life of identified intangibles is 5 years as of December 31, 2016. F-28Table of Contents14 GoodwillThe changes in goodwill in 2016 and 2015 were as follows: 2016 2015 Balances as of January 1 Cost 9,414 2,328 Accumulated impairment (186) (207) Book value 9,228 2,121 Changes in book value: Acquisitions 14 7,464 Purchase accounting adjustments related to Freescale acquisition (25) — Transfer to assets held for sale (349) (179) Translation differences (25) (178) Total changes (385) 7,107 Balances as of December 31 Cost 9,029 9,414 Accumulated impairment (186) (186) Book value 8,843 9,228 No goodwill impairment charges were required to be recognized in 2016 or 2015.In 2016, goodwill includes $14 million related to an acquisition of a business for $200 million.In 2015, goodwill includes the acquisitions of Freescale, Quintic’s Bluetooth Low Energy and Wearable businesses and Athena SCS Ltd.Transfer to assets held for sale in 2016 includes our SP business, which closed in the first quarter of 2017. In 2015, transfer to assets held for saleincludes our RF Power Business and Bipolar Power business, which were subsequently divested.The fair value of the reporting units substantially exceeds the carrying value of the reporting units.See note 23, “Segments and Geographical Information”, for goodwill by segment and note 3, “Acquisitions and Divestments”.15 Postretirement Benefit PlansPensionsOur employees participate in employee pension plans in accordance with the legal requirements, customs and the local situation in the respectivecountries. These are defined-benefit pension plans, defined-contribution plans and multi-employer plans.The Company’s employees in The Netherlands participate in a multi-employer plan, implemented for the employees of the Metal and ElectricalEngineering Industry (“Bedrijfstakpensioenfonds Metalektro or PME”) in accordance with the mandatory affiliation to PME effective for the industry inwhich NXP operates. As this affiliation is a legal requirement for the Metal and Electrical Engineering Industry it has no expiration date. This PME multi-employer plan (a career average plan) covers 1,300 companies and 616,000 participants. The plan monitors its risk on an aggregate basis, not by company orparticipant and can therefore not be accounted for as a defined benefit plan. The pension fund rules state that the only obligation for affiliated companies willbe to pay the annual plan contributions. There is no obligation for affiliated companies to fund plan deficits. Affiliated companies are also not entitled to anypossible surpluses in the pension fund.Every participating company contributes the same fixed percentage of its total pension base, being pensionable salary minus an individual offset. TheCompany’s pension cost for any period is the amount of contributions due for that period.The contribution rate for the mandatory scheme will decrease from 26.1% (2016) to 25.8% (2017). PME multi-employer plan 2016 2015 2014 NXP’s contributions to the plan 36 37 48 (including employees’ contributions) 4 4 4 Average number of NXP’s active employees participating in the plan 2,415 2,668 2,881 NXP’s contribution to the plan exceeded more than 5 percent of the total contribution (as ofDecember 31 of the plan’s year end) No No No The amount for pension costs included in the statement of operations for the year 2016 was $102 million (2015: $69 million; 2014: $77 million) ofwhich $44 million (2015: $21 million; 2014: $21 million) represents defined-contribution plans and $32 million (2015: $32 million; 2014: $41 million)represents the PME multi-employer plans. F-29Table of ContentsDefined-benefit plansThe benefits provided by defined-benefit plans are based on employees’ years of service and compensation levels. Contributions are made by theCompany, as necessary, to provide assets sufficient to meet the benefits payable to defined-benefit pension plan participants.These contributions are determined based upon various factors, including funded status, legal and tax considerations as well as local customs. TheCompany funds certain defined-benefit pension plans as claims are incurred.The total cost of defined-benefit plans amounted to $26 million in 2016 (2015: $16 million; 2014: $15 million) consisting of $27 million ongoingcost (2015: $20 million; 2014: $15 million) and a gain of $1 million from special events resulting from restructurings, curtailments and settlements (2015:$4 million; 2014: nil).The table below provides a summary of the changes in the pension benefit obligations and defined-benefit pension plan assets for 2016 and 2015,associated with the Company’s dedicated plans, and a reconciliation of the funded status of these plans to the amounts recognized in the consolidatedbalance sheets. 2016 2015 Projected benefit obligation Projected benefit obligation at beginning of year 561 447 Service cost 17 12 Interest cost 14 11 Actuarial (gains) and losses 53 (18) Curtailments and settlements (15) (16) Benefits paid (21) (14) Pension liabilities held-for-sale (28) — Benefit obligation assumed in acquisitions — 177 Exchange rate differences (17) (38) Projected benefit obligation at end of year 564 561 Plan assets Fair value of plan assets at beginning of year 190 157 Actual return on plan assets 3 7 Employer contributions 21 10 Curtailments and settlements (15) (12) Benefits paid (21) (14) Pension assets held-for-sale (2) — Plan assets acquired in acquisitions — 56 Exchange rate differences (4) (14) Fair value of plan assets at end of year 172 190 Funded status (392) (371) Classification of the funded status is as follows - Prepaid pension cost within other non-current assets — 4 - Accrued pension cost within other non-current liabilities (380) (368) - Accrued pension cost within accrued liabilities (12) (7) Total (392) (371) Accumulated benefit obligation Accumulated benefit obligation for all Company-dedicated benefit pension plans 524 518 Plans with assets less than accumulated benefit obligation Funded plans with assets less than accumulated benefit obligation - Fair value of plan assets 171 73 - Accumulated benefit obligations 327 209 - Projected benefit obligations 357 243 Unfunded plans - Accumulated benefit obligations 195 196 - Projected benefit obligations 204 204 Amounts recognized in accumulated other comprehensive income (before tax) Total AOCI at beginning of year 42 70 - Net actuarial loss (gain) 54 (21) - Exchange rate differences (5) (7) Total AOCI at end of year 91 42 The weighted average assumptions used to calculate the projected benefit obligations were as follows: 2016 2015 Discount rate 2.0% 2.5% Rate of compensation increase 1.9% 2.2% F-30Table of ContentsThe weighted average assumptions used to calculate the net periodic pension cost were as follows: 2016 2015 2014 Discount rate 2.5% 2.6% 3.7% Expected returns on plan assets 3.5% 4.2% 4.2% Rate of compensation increase 2.2% 1.8% 2.3% For the Company’s major plans, the discount rate used is based on high quality corporate bonds (iBoxx Corporate Euro AA 10+).Plans in countries without a deep corporate bond market use a discount rate based on the local sovereign rate and the plans maturity (BloombergGovernment Bond Yields).Expected returns per asset class are based on the assumption that asset valuations tend to return to their respective long-term equilibria. The ExpectedReturn on Assets for any funded plan equals the average of the expected returns per asset class weighted by their portfolio weights in accordance with thefund’s strategic asset allocation.The components of net periodic pension costs were as follows: 2016 2015 2014 Service cost 17 12 10 Interest cost on the projected benefit obligation 14 11 13 Expected return on plan assets (6) (6) (7) Amortization of net (gain) loss 2 3 (1) Curtailments & settlements (1) (6) — Other — 2 — Net periodic cost 26 16 15 A sensitivity analysis shows that if the discount rate increases by 1% from the level of December 31, 2016, with all other variables held constant, thenet periodic pension cost would decrease by $4 million. If the discount rate decreases by 1% from the level of December 31, 2016, with all other variablesheld constant, the net periodic pension cost would increase by $3 million.The estimated net actuarial loss (gain) and prior service cost that will be amortized from accumulated other comprehensive income into net periodicbenefit cost over the next year (2017) are $2 million and nil respectively.Plan assetsThe actual pension plan asset allocation at December 31, 2016 and 2015 is as follows: 2016 2015 Asset category: Equity securities 29% 29% Debt securities 52% 55% Insurance contracts 7% 6% Other 12% 10% 100% 100% We met our target plan asset allocation. The investment objectives for the pension plan assets are designed to generate returns that, along with thefuture contributions, will enable the pension plans to meet their future obligations. The investments in our major defined benefit plans largely consist ofgovernment bonds, “Level 2” Corporate Bonds and cash to mitigate the risk of interest fluctuations. The asset mix of equity, bonds, cash and other categoriesis evaluated by an asset-liability modeling study for our largest plan. The assets of funded plans in other countries mostly have a large proportion of fixedincome securities with return characteristics that are aligned with changes in the liabilities caused by discount rate volatility. Total pension plan assets of$172 million include $161 million related to the German and Japanese pension funds. F-31Table of ContentsThe following table summarizes the classification of these assets. 2016 2015 Level I Level II Level III Level I Level II Level III Equity securities — 48 — — 49 — Debt securities 9 72 — 7 81 — Insurance contracts — 12 — — 12 — Other 5 11 4 3 10 3 14 143 4 10 152 3 The Company currently expects to make $11 million of employer contributions to defined-benefit pension plans and $6 million of expected cashpayments in relation to unfunded pension plans.Estimated future pension benefit paymentsThe following benefit payments are expected to be made (including those for funded plans): 2017 21 2018 16 2019 17 2020 18 2021 20 Years 2022-2026 128 Postretirement health care benefitsIn addition to providing pension benefits, NXP provides retiree healthcare benefits in the US and the UK which are accounted for as defined-benefitplans.The accumulated postretirement benefit obligation at the end of 2016 equals $18 million (2015: $54 million).16 DebtShort-term debt 2016 2015 Short-term bank borrowings — 6 Current portion of long-term debt (*) 421 550 Total 421 556 (*) Net of adjustment for debt issuance costs.At December 31, 2015, short-term bank borrowings of $6 million consisted of a local bank borrowing by our Chinese subsidiary. The applicableweighted average interest rate during 2015 was 2.5%. F-32Table of ContentsLong-term debtThe following table summarizes the outstanding long-term debt as of December 31, 2016 and 2015: 2016 2015 Maturities Amount Effectiverate Amount Effectiverate Floating-rate term loan Mar, 2017 388 2.770 392 2.750 Floating-rate term loan Jan, 2020 387 3.270 391 3.250 Floating-rate term loan Dec, 2020 1,436 3.270 2,700 3.750 Fixed-rate 3.5% senior unsecured notes Sep, 2016 — — 500 3.500 Fixed-rate 3.75% senior unsecured notes Jun, 2018 750 3.750 750 3.750 Fixed-rate 4.125% senior unsecured notes Jun, 2020 600 4.125 600 4.125 Fixed-rate 4.125% senior unsecured notes Jun, 2021 1,350 4.125 — — Fixed-rate 5.75% senior unsecured notes Feb, 2021 500 5.750 500 5.750 Fixed-rate 5% senior secured notes May, 2021 — — 500 5.000 Fixed-rate 3.875% senior unsecured notes Sep, 2022 1,000 3.875 — — Fixed-rate 6% senior secured notes Jan, 2022 — — 960 6.000 Fixed-rate 4.625% senior unsecured notes Jun, 2022 400 4.625 400 4.625 Fixed-rate 5.75% senior unsecured notes Mar, 2023 500 5.750 500 5.750 Fixed-rate 4.625% senior unsecured notes Jun, 2023 900 4.625 — — Fixed-rate 1% cash convertible notes Dec, 2019 1,150 1.000 1,150 1.000 Floating-rate revolving credit facility Dec, 2020 — — — — Total principal 9,361 9,343 Liabilities arising from capital lease transactions 15 31 Unamortized discounts, premiums and debtissuance costs (61) (82) Fair value of embedded cash conversion option (128) (167) Purchase accounting fair value adjustmentFreescale Senior Secured Notes — 81 Total debt, including unamortized discounts,premiums, debt issuance costs and fair valueadjustments 9,187 9,206 Current portion of long-term debt (421) (550) Long-term debt 8,766 8,656 Range ofinterest rates Averagerate ofinterest Principalamountoutstanding2016 Duein2017 Dueafter2017 Dueafter2021 Averageremainingterm(in years) Principalamountoutstanding2015 USD notes 2.8%-5.8% 4.1% 8,211 406 7,805 2,800 4.2 8,193 2019 Cash Convertible Senior Notes 1.0%-1.0% 1.0% 1,150 — 1,150 — 2.9 1,150 Revolving Credit Facility (1) — — — — — — — — Bank borrowings — — — — — — — — Liabilities arising from capital lease transactions 2.5%-13.8% 3.0% 15 15 — — 1.3 31 3.7% 9,376 421 8,955 2,800 4.1 9,374 (1) We do not have any borrowings under the $600 million Revolving Credit Facility as of December 31, 2016.As of December 31, 2016, the following principal amounts of long-term debt are due in the next 5 years: 2017 421 2018 768 2019 1,167 2020 2,370 2021 1,850 Due after 5 years 2,800 9,376 F-33Table of ContentsAs of December 31, 2016, the book value of our outstanding long-term debt was $8,766 million, less debt issuance costs of $61 million and lessoriginal issuance/debt discount of $128 million.As of December 31, 2016, the fixed rate notes and floating rate notes represented 76% and 24% respectively of the total principal amount of the notesoutstanding at December 31, 2016. The remaining tenor of secured debt is on average 4.1 years.Accrued interest as of December 31, 2016 is $48 million (December 31, 2015: $46 million).2016 Financing Activities2020 Term LoanOn September 22, 2016, NXP entered into a new $1,440 million aggregate principal amount Senior Secured Term Loan Facility due December 7, 2020.Concurrently, NXP repaid the $1,440 million principal amount Senior Secured Term Loan Facility due December 7, 2020.2022 Senior Unsecured NotesOn August 11, 2016, NXP B.V., together with NXP Funding LLC, issued U.S. dollar-denominated 3.875% Senior Unsecured Notes with an aggregateprincipal amount of $1,000 million, due September 1, 2022. The interest is payable semi-annually on March 1 and September 1 of each year, beginning onMarch 1, 2017. The Notes were issued at par and were recorded at their fair value of $1,000 million on the accompanying Consolidated Balance Sheet. NXPused the net proceeds from the offering of the Notes to redeem the remaining $960 million aggregate principal amount of its outstanding Senior SecuredNotes due 2022 and to pay for certain costs and expenses related thereto.2021 Additional Senior Unsecured NotesOn August 1, 2016, NXP B.V., together with NXP Funding LLC, issued an aggregate principal amount of $500 million of 4.125% Senior UnsecuredNotes due 2021 (the “Additional Notes”). The Additional Notes were issued at a price of 101.875% and are of the same class as the existing 4.125% SeniorNotes due 2021 originally issued on May 23, 2016. NXP used the net proceeds from the offering of the Additional Notes to redeem $200 million aggregateprincipal amount of its outstanding Senior Notes due 2016 and used the remainder of the proceeds for general corporate purposes.2021 and 2023 Senior Unsecured NotesOn May 23, 2016, NXP B.V. together with NXP Funding LLC issued U.S. dollar-denominated 4.125% and 4.625% Senior Unsecured Notes withaggregate principal amounts of $850 million, due June 1, 2021 and $900 million, due June 1, 2023. The interest is payable semi-annually on June 1 andDecember 1 of each year, beginning on December 1, 2016. These Notes were issued at par and were recorded at their fair value of $850 million and$900 million, respectively, on the accompanying Consolidated Balance Sheet. NXP used the net proceeds from the offering of the Notes and cash on hand torepay $1,250 million aggregate principal amount of its existing Secured Term Loan B due 2020 and $500 million aggregate principal amount of itsoutstanding Senior Secured Notes due 2021.2016 Senior Unsecured NotesOn February 23, April 27 and August 1, 2016, NXP B.V., together with NXP Funding LLC, issued redemption notices for an aggregate principalamount of $200 million, $100 million and $200 million, respectively, of its outstanding 3.5% Senior Unsecured Notes due 2016. The funds from thisredemption came from available surplus cash.Certain terms and Covenants of the U.S. dollar-denominated notesThe Company is not required to make mandatory redemption payments or sinking fund payments with respect to the notes. With respect to the TermLoans, the Company is required to repay $18 million annually.The indentures governing the notes contain covenants that, among other things, limit the Company’s ability and that of restricted subsidiaries to incuradditional indebtedness, create liens, pay dividends, redeem capital stock or make certain other restricted payments or investments; enter into agreementsthat restrict dividends from restricted subsidiaries; sell assets, including capital stock of restricted subsidiaries; engage in transactions with affiliates; andeffect a consolidation or merger. The Company has been in compliance with any such indentures and financing covenants. F-34Table of ContentsCertain portions of long-term and short-term debt as of December 31, 2016 in the principal amount of $2,211 million (2015: $4,943 million) have beensecured by collateral on substantially all of the Company’s assets and of certain of its subsidiaries.Each series of the Senior Unsecured Notes are fully and unconditionally guaranteed jointly and severally, on a senior basis by certain of theCompany’s current and future material wholly owned subsidiaries (“Guarantors”).Pursuant to various security documents related to the above mentioned term loans and the $600 million committed revolving credit facility, theCompany and each Guarantor has granted first priority liens and security interests in, amongst others, the following, subject to the grant of further permittedcollateral liens: (a)all present and future shares of capital stock of (or other ownership or profit interests in) each of its present and future direct subsidiaries, other thanSMST Unterstützungskasse GmbH, and material joint venture entities; (b)all present and future intercompany debt of the Company and each Guarantor; (c)all of the present and future property and assets, real and personal, of the Company, and each Guarantor, including, but not limited to, machinery andequipment, inventory and other goods, accounts receivable, owned real estate, leaseholds, fixtures, general intangibles, license rights, patents,trademarks, trade names, copyrights, chattel paper, insurance proceeds, contract rights, hedge agreements, documents, instruments, indemnificationrights, tax refunds, but excluding cash and bank accounts; and (d)all proceeds and products of the property and assets described above.Notwithstanding the foregoing, certain assets may not be pledged (or the liens not perfected) in accordance with agreed security principles, including: • if the cost of providing security is not proportionate to the benefit accruing to the holders; and • if providing such security requires consent of a third party and such consent cannot be obtained after the use of commercially reasonableefforts; and • if providing such security would be prohibited by applicable law, general statutory limitations, financial assistance, corporate benefit,fraudulent preference, “thin capitalization” rules or similar matters or providing security would be outside the applicable pledgor’scapacity or conflict with fiduciary duties of directors or cause material risk of personal or criminal liability after using commerciallyreasonable efforts to overcome such obstacles; and • if providing such security would have a material adverse effect (as reasonably determined in good faith by such subsidiary) on the abilityof such subsidiary to conduct its operations and business in the ordinary course as otherwise permitted by the indenture; and • if providing such security or perfecting liens thereon would require giving notice (i) in the case of receivables security, to customers or(ii) in the case of bank accounts, to the banks with whom the accounts are maintained. Such notice will only be provided after thesecured notes are accelerated.Subject to agreed security principles, if material property is acquired by the Company or a Guarantor that is not automatically subject to a perfectedsecurity interest under the security documents, then the Company or relevant Guarantor will within 60 days provide security over this property and delivercertain certificates and opinions in respect thereof as specified in the indenture governing the notes.2019 Cash Convertible Senior NotesIn November 2014, NXP issued $1,150 million principal amount of its 2019 Cash Convertible Senior Notes (the “Notes”). The 2019 Cash ConvertibleSenior Notes have a stated interest rate of 1.00%, matures on December 1, 2019 and may be settled only in cash. The indenture for the 2019 Cash ConvertibleSenior Notes does not contain any financial covenants. Contractual interest payable on the 2019 Cash Convertible Senior Notes began accruing in December2014 and is payable semi-annually each December 1st and June 1st. The initial purchasers’ transaction fees and expenses totaling $16 million werecapitalized as deferred financing costs and are amortized over the term of the 2019 Cash Convertible Senior Notes using the effective interest method.Prior to September 1, 2019, holders may convert their 2019 Cash Convertible Senior Notes into cash upon the occurrence of one of the followingevents: • the price of NXP’s common stock reaches 130% of the conversion price on each applicable trading day during certain periods of timespecified in the 2019 Cash Convertible Senior Notes; • specified corporate transactions occur; or • the trading price of the 2019 Cash Convertible Senior Notes falls below 98% of the product of (i) the last reported sales price of NXP’scommon stock and (ii) the conversion rate on the date.On or after September 1, 2019, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders mayconvert their 2019 Cash Convertible Senior Notes into cash at any time, regardless of the foregoing circumstances. NXP may not redeem the 2019 CashConvertible Senior Notes prior to maturity. F-35Table of ContentsThe initial cash conversion rate for the 2019 Cash Convertible Senior Notes is 9.7236 shares of NXP’s common stock per $1,000 principal amount of2019 Cash Convertible Senior Notes, equivalent to a cash conversion price of $102.84 per share of NXP’s common stock, with the amount due on conversionpayable in cash. Upon cash conversion, a holder will receive the sum of the daily settlement amounts, calculated on a proportionate basis for each day, duringa specified observation period following the cash conversion date.If a “fundamental change” (as defined below in this section) occurs at any time, holders will have the right, at their option, to require us to repurchasefor cash all of their 2019 Cash Convertible Senior Notes, or any portion of the principal thereof that is equal to $1,000 or a multiple of $1,000 (provided thatthe portion of any global note or certified note, as applicable, not tendered for repurchase has a principal amount of at least $200,000, on the fundamentalchange repurchase date. A fundamental change is any transaction or event (whether by means of an exchange offer, change of common stock, liquidation,consolidation, merger, reclassification, recapitalization or otherwise) in which more than 50% of NXP’s common stock is exchanged for, converted into,acquired for or constitutes solely the right to receive, consideration. A transaction or transactions described above will not constitute a fundamental change,however, if at least 90% of the consideration received or to be received by our common shareholders, excluding cash payments for fractional shares, inconnection with such transaction or transactions consists of shares of common equity that are listed or quoted on any permitted exchange or will be so listedor quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions such considerationbecomes the reference property for the 2019 Cash Convertible Senior Notes.As of December 31, 2016, none of the conditions allowing the holders of the 2019 Cash Convertible Senior Notes to convert the 2019 CashConvertible Senior Notes into cash had been met.The requirement that NXP must settle the conversion of the Notes in cash gives rise to a derivative instrument that must be bifurcated from the debthost. The embedded cash conversion option within the Cash Convertible Notes is required to be separated from the Cash Convertible Notes and accountedfor separately as a derivative liability, with changes in fair value reported in our Consolidated Statements of Income in other (expense) income, net until thecash conversion option settles or expires. The initial fair value liability of the embedded cash conversion option simultaneously reduced the carrying valueof the Cash Convertible Notes (effectively an original issuance discount). The embedded cash conversion option is measured and reported at fair value on arecurring basis, within Level 3 of the fair value hierarchy. The fair value of the embedded cash conversion option at December 31, 2016 was $258million (2015: $241 million) which is recorded in other long-term liabilities in the accompanying balance sheet. For the year ended December 31, 2016, thechange in the fair value of the embedded cash conversion option resulted in a loss of $17 million (2015: a loss of $38 million).Concurrently with the pricing of the 2019 Cash Convertible Senior Notes, NXP entered into hedge transactions, or the Notes Hedges, with variousparties whereby NXP has the option to receive the cash amount that may be due to the Notes holders at maturity in excess of the $1,150 million principalamount of the notes, subject to certain conversion rate adjustments in the Notes Indenture. These options expire on December 1, 2019, and must be settled incash. The aggregate cost of the Notes Hedges was $208 million. The Notes Hedges are accounted for as derivative assets, and are included in Other assets inNXP’s Consolidated Balance Sheet. As of December 31, 2016, the estimated fair value of the Notes Hedges was $258 million (2015: $241 million).The Notes Embedded Conversion Derivative and the Notes Hedges are adjusted to fair value each reported period and unrealized gains and losses arereflected in NXP’s Consolidated Statements of Operations. Because the fair values of the Notes Embedded Conversion Derivative and the Notes Hedges aredesigned to have similar offsetting values, there was no impact to NXP’s Consolidated Statements of Operations relating to these adjustments to fair valueduring fiscal 2016 (2015: no impact).In separate transactions, NXP also sold warrants, to various parties for the purchase of up to 11.18 million shares of NXP’s common stock at a strikeprice of $133.32 per share in a private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended, or the Securities Act. The Warrantsexpire on various dates from March 2, 2020, through April 30, 2020, and will be net share settled. NXP received $134 million in cash proceeds from the saleof the Warrants, which were at the time of issuance recorded in Other non-current liabilities. As of January 1, 2016, as of result of the acquisition of Freescale,NXP has concluded that the functional currency of the holding company is USD. Consequently, beginning from January 1, 2016, the Warrants with acarrying value of $168 million were reclassified to stockholders’ equity, and mark-to-market accounting is no longer applicable. The Warrants are includedin diluted earnings per share to the extent the impact is dilutive. As of December 31, 2016, the Warrants were not dilutive.The principal amount, unamortized debt discount and net carrying amount of the liability component of the 2019 Cash Convertible Senior Notes as ofDecember 31, 2016 and 2015 was as follows: (in millions) As of December 31 2016 2015 Principal amount of 2019 Cash Convertible Senior Notes 1,150 1,150 Unamortized debt discount of 2019 Cash Convertible Senior Notes 136 178 Net liability of 2019 Cash Convertible Senior Notes 1,014 972 F-36Table of ContentsThe effective interest rate, contractual interest expense and amortization of debt discount for the 2019 Cash Convertible Senior Notes for fiscal 2016and 2015 were as follows: (in millions, except percentage) 2016 2015 Effective interest rate 5.14% 5.14% Contractual interest expense 12 12 Amortization of debt discount 40 38 As of December 31, 2016, the if-converted value of the 2019 Cash Convertible Senior Notes exceeded the principal amount of the Notes. The total fairvalue of the 2019 Cash Convertible Senior Notes was $1,310 million.Impact of Conversion Contingencies on Financial StatementsAt the end of each quarter until maturity of the 2019 Cash Convertible Senior Notes, NXP will reassess whether the stock price conversion conditionhas been satisfied. If one of the early conversion conditions is satisfied in any future quarter, NXP would classify its net liability under the 2019 CashConvertible Senior Notes as a current liability on the Consolidated Balance Sheet as of the end of that fiscal quarter. If none of the early conversionconditions have been satisfied in a future quarter prior to the one-year period immediately preceding the maturity date, NXP would classify its net liabilityunder the 2019 Cash Convertible Senior Notes as a non-current liability on the Consolidated Balance Sheet as of the end of that fiscal quarter. If the holdersof the 2019 Cash Convertible Senior Notes elect to convert their 2019 Cash Convertible Senior Notes prior to maturity, any unamortized discount andtransaction fees will be expensed at the time of conversion.17 Commitments and ContingenciesLease CommitmentsAt December 31, 2016 and 2015, there were no material capital lease obligations. Long-term operating lease commitments totaled $113 million as ofDecember 31, 2016 (2015: $172 million). The long-term operating leases are mainly related to the rental of buildings and tools. These leases expire atvarious dates during the next 30 years. Future minimum lease payments under operating leases are as follows: 2017 33 2018 23 2019 17 2020 12 2021 5 Thereafter 23 Total future minimum leases payments 113 Rent expense amounted to $68 million in 2016 (2015: $70 million; 2014: $63 million).Purchase CommitmentsThe Company maintains purchase commitments with certain suppliers, primarily for raw materials, semi finished goods and manufacturing services andfor some non-production items. Purchase commitments for inventory materials are generally restricted to a forecasted time-horizon as mutually agreed uponbetween the parties. This forecasted time-horizon can vary for different suppliers. As of December 31, 2016, the Company had purchase commitments of$550 million, which are due through 2025.LitigationWe are regularly involved as plaintiffs or defendants in claims and litigation relating to a variety of matters such as contractual disputes, personalinjury claims, employee grievances and intellectual property litigation. In addition, our acquisitions, divestments and financial transactions sometimes resultin, or are followed by, claims or litigation. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that theoutcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position.However, such outcomes may be material to our consolidated statement of operations for a particular period. The Company records an accrual for any claimthat arises whenever it considers that it is probable that it is exposed to a loss contingency and the amount of the loss contingency can be reasonablyestimated. F-37Table of ContentsBased on the most current information available to it and based on its best estimate, the Company also reevaluates at least on a quarterly basis theclaims that have arisen to determine whether any new accruals need to be made or whether any accruals made need to be adjusted. Based on the proceduresdescribed above, the Company has an aggregate amount of approximately $22 million accrued for legal proceedings pending as of December 31, 2016,compared to approximately $28 million as of December 31, 2015. The accruals are included in “Accrued liabilities” and “Other non-current liabilities”.There can be no assurance that the Company’s accruals will be sufficient to cover the extent of its potential exposure to losses, but historically, legal actionshave not had a material adverse effect on the Company’s business, results of operations or financial condition.The Company also estimates the aggregate range of reasonably possible losses in excess of the amount accrued based on currently availableinformation for those cases for which such estimate can be made. The estimated aggregate range requires significant judgment, given the varying stages of theproceedings (including the fact that many of them are currently in preliminary stages), the existence of multiple defendants (including the Company) in suchclaims whose share of liability has yet to be determined, the numerous yet-unresolved issues in many of the claims, and the attendant uncertainty of thevarious potential outcomes of such claims. Accordingly, the Company’s estimate will change from time to time, and actual losses may be more than thecurrent estimate. As at December 31, 2016, the Company believes that for all litigation pending its aggregate exposure to loss in excess of the amountaccrued could range between $0 and approximately $125 million.Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling our products. Theresolution of intellectual property litigation may require us to pay damages for past infringement or to obtain a license under the other party’s intellectualproperty rights that could require one-time license fees or ongoing royalties, require us to make material changes to our products and/or manufacturingprocesses, require us to cross-license certain of our patents and other intellectual property and/or prohibit us from manufacturing or selling one or moreproducts in certain jurisdictions, which could adversely impact our operating results in future periods.In addition, the Company is currently assisting Motorola in the defense of eight personal injury lawsuits due to indemnity obligations included in theagreement that separated Freescale from Motorola in 2004. The multi-plaintiff lawsuits are pending in the Circuit Court of Cook County, Illinois. Theseclaims allege a link between working in semiconductor manufacturing clean room facilities and birth defects in 53 individuals. The eight suits allegeexposures that occurred between 1965 and 2006. Each suit seeks an unspecified amount of damages in compensation for the alleged injuries; however, eachplaintiff will likely seek substantial compensatory and punitive damages from Motorola which, if proven and recovered, the Company considers to bematerial. A portion of any indemnity due to Motorola will be reimbursed to NXP if Motorola receives an indemnification payment from its insurancecoverage. Motorola has denied liability for these alleged injuries based on numerous defenses. Motorola has potential insurance coverage for many of theyears indicated above, but with differing types and levels of coverage, self-insurance retention amounts and deductibles. Motorola has no insurance coveragefor a potential punitive damage award. We are in discussions with Motorola and their insurers regarding the availability of applicable insurance coverage foreach of the individual cases.Environmental remediationIn each jurisdiction in which we operate, we are subject to many environmental, health and safety laws and regulations that govern, among otherthings, emissions of pollutants into the air, wastewater discharges, the use and handling of hazardous substances, waste disposal, the investigation andremediation of soil and ground water contamination and the health and safety of our employees. We are also required to obtain environmental permits fromgovernmental authorities for certain of our operations.As with other companies engaged in similar activities or that own or operate real property, the Company faces inherent risks of environmental liabilityat our current and historical manufacturing facilities. Certain environmental laws impose liability on current or previous owners or operators of real propertyfor the cost of removal or remediation of hazardous substances. Certain of these laws also assess liability on persons who arrange for hazardous substances tobe sent to disposal or treatment facilities when such facilities are found to be contaminated.Soil and groundwater contamination has been identified at our properties in Hamburg, Germany and Nijmegen, the Netherlands and near Phoenix,Arizona, United States. The remediation processes at these locations are expected to continue for many years.As of December 31, 2016 we have recorded $84 million for environmental remediation costs, which are primarily included in other non-currentliabilities in the accompanying Consolidated Balance Sheet. This amount represents the undiscounted future cash flows of our estimated share of costsincurred in environmental cleanup sites without considering recovery of costs from any other party or insurer, since in most cases potentially responsibleparties other than us may exist and be held responsible.18 Stockholders’ EquityThe share capital of the Company as of December 31, 2016 and 2015 consists of 1,076,257,500 authorized shares, including 430,503,000 authorizedshares of common stock, and 645,754,500 authorized but unissued shares of preferred stock.At December 31, 2016, the Company has issued and paid up 346,002,862 shares (2015: 346,002,862 shares) of common stock each having a par valueof €0.20 or a nominal stock capital of €69 million. F-38Table of ContentsShare-based awardsThe Company has granted share-based awards to the members of our board of directors, management team, our other executives, selected other keyemployees/talents of NXP and selected new hires to receive the Company’s shares in the future. See note 9, “Share-based Compensation”.Treasury sharesIn connection with the Company’s share repurchase programs, which originally commenced in 2011, and which were extended effective August 1,2013 and February 6, 2014, and in accordance with the Company’s policy to provide share-based awards from its treasury share inventory, shares which havebeen repurchased and are held in treasury for delivery upon exercise of options and under restricted and performance share programs, are accounted for as areduction of stockholders’ equity. Treasury shares are recorded at cost, representing the market price on the acquisition date. When issued, shares are removedfrom treasury shares on a first-in, first-out (FIFO) basis.Differences between the cost and the proceeds received when treasury shares are reissued, are recorded in capital in excess of par value. Deficiencies inexcess of net gains arising from previous treasury share issuances are charged to retained earnings.The following transactions took place resulting from employee option and share plans in 2016: 2016 Total shares in treasury at beginning of year 3,998,982 Total cost 342 Shares acquired under repurchase program 15,537,868 Average price in $ per share 82.36 Amount paid 1,280 Shares delivered 8,926,870 Average price in $ per share 79.25 Amount received 115 Total shares in treasury at end of year 10,609,980 Total cost 915 19 Accumulated Other Comprehensive Income (Loss)Total comprehensive income (loss) represents net income (loss) plus the results of certain equity changes not reflected in the Consolidated Statementsof Operations. The after-tax components of accumulated other comprehensive income (loss) and their corresponding changes are shown below: Netinvestmenthedge Currencytranslationdifferences Change in fairvalue cash flowhedges Net actuarialgain/(losses) Unrealizedgains/lossesavailable-for salesecurities Accumulated OtherComprehensiveIncome (loss) As of December 31, 2014 (331) 627 (2) (85) 1 210 Other comprehensive income (loss) beforereclassifications (190) 131 (2) 28 (1) (34) Amounts reclassified out of accumulatedother comprehensive income (loss) — — 2 — — 2 Tax effects — — — 3 — 3 Other comprehensive income (loss) (190) 131 — 31 (1) (29) As of December 31, 2015 (521) 758 (2) (54) — 181 Reclassification 521 (521) — Other comprehensive income (loss) beforereclassifications — (124) — (22) 6 (140) Amounts reclassified out of accumulatedother comprehensive income (loss) — — (1) — — (1) Tax effects — — 1 (5) (2) (6) Other comprehensive income (loss) — (124) — (27) 4 (147) As of December 31, 2016 — 113 (2) (81) 4 34 20 Related-party TransactionsThe Company’s related parties are the members of the board of directors of NXP Semiconductors N.V., the members of the management team of NXPSemiconductors N.V., equity-accounted investees and Qualcomm Incorporated.OtherWe have a number of strategic alliances and joint ventures. We have relationships with certain of our alliance partners in the ordinary course ofbusiness whereby we enter into various sale and purchase transactions, generally on terms comparable to transactions with third parties. However, in certaininstances upon divestment of former businesses where we enter into supply arrangements with the former owned business, sales are conducted at cost. F-39Table of ContentsThe following table presents the amounts related to revenue and expenses incurred in transactions with these related parties: 2016 2015 2014 Revenue 59 8 11 Purchase of goods and services 116 85 103 The following table presents the amounts related to receivable and payable balances with these related parties: 2016 2015 Receivables 13 24 Payables 29 24 21 Fair Value of Financial Assets and LiabilitiesThe following table summarizes the estimated fair value and carrying amount of our financial instruments measured on a recurring basis: December 31, 2016 December 31, 2015 Fair valuehierarchy Carryingamount Estimatedfair value Carryingamount Estimatedfair value Assets: Notes hedges 31) 258 258 241 241 Other financial assets 2 40 40 47 47 Derivative instruments-assets 2 3 3 2 2 Liabilities: Short-term debt 2 (15) (15) (22) (22) Short-term debt (bonds) 2 (406) (406) (534) (535) Long-term debt (bonds) 2 (7,752) (8,011) (7,669) (7,723) 2019 Cash Convertible Senior Notes 2 (1,014) (1,310) (972) (1,260) Other long-term debt 2 (1) (1) (15) (15) Notes Embedded Conversion Derivative 31) (258) (258) (241) (241) Warrants 2 — — (168) (168) Derivative instruments-liabilities 2 (6) (6) (4) (4) 1) During the fourth quarter of 2016, the Notes hedges and the Notes Embedded Conversion Derivative were transferred from level 2 to level 3 of the fairvalue hierarchy.The following methods and assumptions were used to estimate the fair value of financial instruments:Other financial assets and derivativesFor other financial assets and derivatives the fair value is based upon significant other observable inputs depending on the nature of the other financialasset and derivative.Notes hedges and Notes Embedded Conversion DerivativeAt December 31, 2016, the Notes hedges and the Notes Embedded Conversion Derivative are measured at fair value using level 3 inputs. Theinstruments are not actively traded and are valued at the measurement date using an option pricing model that uses observable inputs for the share price ofNXP’s common stock, the risk-free interest rate, dividend yield and the term, in combination with a significant unobservable input for volatility, that wedetermine based upon a hypothetical market place and is a factor of 32%-48%. The change in the fair value of the Notes hedges and Notes EmbeddedConversion Derivative was solely the gain and loss, respectively for each instrument that was recognized.DebtThe fair value is estimated on the basis of observable inputs other than quoted prices in active markets for identical liabilities for certain issues, or onthe basis of discounted cash flow analyses. Accrued interest is included under accrued liabilities and not within the carrying amount or estimated fair value ofdebt.WarrantsAt the time of the issuance of the 2019 Cash Convertible Senior Notes, NXP entered into separate warrant transactions with various parties for thepurchase of up to 11.18 million shares of NXP’s common stock at a price of $133.32 per share in a private placement. The warrants expire on various datesfrom March 2, 2020, through April 30, 2020, and will be net share settled. NXP received $134 million in cash proceeds from the sale of the Warrants, whichwas recorded in other non-current liabilities. As of January 1, 2016, as a result of the acquisition of Freescale, NXP has concluded that the functional currencyof F-40Table of Contentsthe holding company is USD. Consequently, beginning from January 1, 2016, the warrants with a carrying value of $168 million were reclassified tostockholders’ equity, and mark-to-market accounting is no longer applicable. The warrants are included in diluted earnings per share to the extent the impactis dilutive. As of December 31, 2016, the warrants were not dilutive.Assets and liabilities recorded at fair value on a non-recurring basisWe measure and record our non-marketable equity investments (non-marketable equity method and cost method investments) and non-financial assets,such as intangible assets and property, plant and equipment, at fair value when an impairment charge is required.22 Other Financial Instruments, Derivatives and Currency RiskWe conduct business in diverse markets around the world and employ a variety of risk management strategies and techniques to manage foreigncurrency exchange rate and interest rate risks. Our risk management program focuses on the unpredictability of financial markets and seeks to minimize thepotentially adverse effects that the volatility of these markets may have on our operating results. One way we achieve this is through the active hedging ofrisks through the selective use of derivative instruments.Derivatives are recorded on our Consolidated Balance Sheets at fair value which fluctuates based on changing market conditions.The Company does not purchase or hold financial derivative instruments for trading purposes.Currency riskThe Company’s transactions are denominated in a variety of currencies. The Company uses financial instruments to reduce its exposure to the effects ofcurrency fluctuations. Accordingly, the Company’s organizations identify and measure their exposures from transactions denominated in other than theirown functional currency. We calculate our net exposure on a cash flow basis considering balance sheet items, actual orders received or made and anticipatedrevenue and expenses. The Company generally hedges foreign currency exposures in relation to transaction exposures, such as receivables/payables resultingfrom such transactions and part of anticipated sales and purchases. The Company generally uses forwards to hedge these exposures. As of January 1, 2016, asa result of the acquisition of Freescale, NXP has concluded that the functional currency of the holding company is USD. Beginning from January 1, 2016, ourU.S. dollar-denominated notes and short term loans will no longer need to be re-measured. Prior to January 1, 2016, the U.S. dollar-denominated debt held byour Dutch subsidiary (which had at that time a euro functional currency) could have generated adverse currency results in financial income and expensesdepending on the exchange rate movement between the euro and the U.S. dollar. This exposure was partially mitigated by the application of net investmenthedge accounting, which had been applied since May 2011. The U.S. dollar exposure of the net investment in U.S. dollar functional currency subsidiarieswas hedged by certain of our U.S. dollar denominated debt. The hedging relationship was assumed to be highly effective. Foreign currency gains or losses onthis U.S. dollar debt that were recorded in a euro functional currency entity that were designated as, and to the extent they were effective, as a hedge of the netinvestment in our U.S. dollar foreign entities, were reported as a translation adjustment in other comprehensive income within equity, and offset in whole orin part the foreign currency changes to the net investment that were also reported in other comprehensive income. Absent the application of net investmenthedging, these amounts would have been recorded as a loss within financial income (expense) in the statement of operations. No amount resulting fromineffectiveness of net investment hedge accounting was recognized in the statement of operations in 2015 and 2014.23 Segments and Geographical InformationNXP is organized into two reportable segments, High Performance Mixed Signal (“HPMS”) and Standard Products (“SP”). Corporate and Otherrepresents the remaining portion to reconcile to the Consolidated Financial Statements. Effective with the Merger, the operations of Freescale were primarilyincorporated into the HPMS reportable segment.Our HPMS business segment delivers high performance mixed signal solutions to our customers to satisfy their system and sub-systems needs acrosseight application areas: automotive, identification, mobile, consumer, computing, wireless infrastructure, lighting and industrial, and software solutions formobile phones. Our SP business segment offers standard products for use across many application markets, as well as application-specific standard productspredominantly used in application areas such as mobile handsets, computing, consumer and automotive. The segments each include revenue from the saleand licensing of intellectual property related to that segment.Because the Company meets the criteria for aggregation set forth under ASC 280 “Segment Reporting”, and the operating segments have similareconomic characteristics, the Company aggregates the results of operations of the Automotive, Secure Identification Solutions, Secure Connected Devicesand Secure Interfaces and Infrastructure operating segments into one reportable segment, HPMS, and the Standard Products and General Purpose Logicoperating segments into another reportable segment, SP.Our Chief Executive Officer, who is our CODM, regularly reviews financial information at the reporting segment level in order to make decisions aboutresources to be allocated to the segments and to assess their performance. Segment results that are reported to the CODM include items directly attributable toa segment as well as those that can be allocated on a reasonable basis. Asset information by segment is not provided to our CODM as the majority of ourassets are used jointly or managed at corporate level. Arithmetical allocation of these assets to the various businesses is not deemed to be meaningful and assuch total assets per segment has been omitted. F-41Table of ContentsDetailed information by segment for the years 2016, 2015 and 2014 is presented in the following tables. Revenue 2016 2015 2014 HPMS 8,086 4,720 4,208 SP 1,220 1,241 1,275 Corporate and Other (1) 192 140 164 9,498 6,101 5,647 Operating income (loss) 2016 2015 2014 HPMS (302) 1,885 983 SP 268 264 120 Corporate and Other (1) (116) (134) (54) (150) 2,015 1,049 (1) Corporate and Other is not a segment under ASC 280 “Segment Reporting”. Corporate and Other includes revenue related to ManufacturingOperations, unallocated expenses not related to any specific business segment and corporate restructuring charges. Goodwill assigned to segments Cost at January 1,2016 Acquisitions Transfer toasset held forsale Translationdifferences andother changes Cost atDecember 31, 2016 HPMS 8,769 14 (6) (49) 8,728 SP 373 — (343) 2 32 Corporate and Other (1) 272 — — (3) 269 9,414 14 (349) (50) 9,029 See note 3 for further information regarding the acquisition of Freescale. Accumulatedimpairment atJanuary 1, 2016 Translation differencesand other changes Accumulatedimpairment atDecember 31, 2016 HPMS (154) — (154) SP (32) — (32) Corporate and Other (1) — — — (186) — (186) (1) Corporate and Other is not a segment under ASC 280 “Segment Reporting”.Geographical Information Revenue (1) Property, plant and equipment 2016 2015 2014 2016 2015 2014 China 3,882 3,135 2,756 251 360 116 Netherlands 285 177 171 183 161 169 United States 906 415 396 922 1,115 5 Singapore 984 526 452 166 186 200 Germany 623 392 450 52 98 80 Japan 550 316 245 1 2 1 South Korea 369 268 287 — 1 1 Malaysia 231 41 47 378 473 79 Other countries 1,668 831 843 399 526 472 9,498 6,101 5,647 2,352 2,922 1,123 (1) Revenue attributed to geographic areas is based on the customer’s shipped-to location (except for intellectual property license revenue which isattributable to the Netherlands).24 Subsequent EventsNXP B.V. and NXP Funding LLC, subsidiaries of NXP, delivered notice on February 7, 2017 that it will pre-pay (i) all its outstanding floating-rate termloan due March 2017 (“Term Loan E”) in an aggregate principal amount of $388 million, (ii) all its outstanding floating-rate term loan due January 2020(“Term Loan D”) in an aggregate principal amount of $387 million and (iii) all its outstanding floating-rate term loan due December 2020 (“Term Loan F”) inan aggregate principal amount of $1,436 million, in each case, together with accrued interest and applicable fees. The funds for these pre-payments will comefrom the proceeds of the previously announced completion of the divestiture of the Standard Products business of NXP. F-42Table of ContentsAdditionally, on February 7, 2017, NXP B.V., together with NXP Funding LLC, delivered notice to holders of its 5.75% Senior Notes due 2021 (the“Notes”) that it will redeem on March 9, 2017, $500 million of the outstanding aggregate principal amount of these Notes, which represents all of theoutstanding aggregate principal amount of the Notes, as permitted under Article 3 of the indenture dated February 14, 2013 and paragraph 5 of the Notes. Thefunds for this redemption will come from available surplus cash. F-43Exhibit 4.21NXP B.V.NXP FUNDING LLCas IssuersEACH OF THE GUARANTORS PARTY HERETOandDEUTSCHE BANK TRUST COMPANY AMERICAS,as Trustee$1,000,000,000 3.875% Senior Notes due 2022 SENIOR INDENTUREDated as of August 11, 2016 TABLE OF CONTENTS Page ARTICLE 1 Definitions and Incorporation by Reference 1 SECTION 1.01. Definitions 1 SECTION 1.02. Other Definitions 19 SECTION 1.03. Incorporation by Reference of TIA 20 SECTION 1.04. Rules of Construction 20 ARTICLE 2 The Notes 21 SECTION 2.01. Issuable in Series 21 SECTION 2.02. Form and Dating 22 SECTION 2.03. Execution and Authentication 22 SECTION 2.04. Registrar, Transfer Agent and Paying Agent 23 SECTION 2.05. Paying Agent to Hold Money in Trust 24 SECTION 2.06. Holder Lists 24 SECTION 2.07. Transfer and Exchange 24 SECTION 2.08. Replacement Notes 25 SECTION 2.09. Outstanding Notes 26 SECTION 2.10. Temporary Notes 26 SECTION 2.11. Cancellation 26 SECTION 2.12. Common Codes, CUSIP and ISIN Numbers 27 SECTION 2.13. Currency 27 ARTICLE 3 Redemption 28 SECTION 3.01. Notices to Trustee 28 SECTION 3.02. Selection of Notes To Be Redeemed or Repurchased 28 SECTION 3.03. Notice of Redemption 29 SECTION 3.04. Effect of Notice of Redemption 30 SECTION 3.05. Deposit of Redemption Price 30 SECTION 3.06. Notes Redeemed in Part 30 SECTION 3.07. Publication 30 iARTICLE 4 Covenants 31 SECTION 4.01. Payment of Notes 31 SECTION 4.02. Withholding Taxes 31 SECTION 4.03. Offer to Repurchase upon Change of Control Triggering Event 33 SECTION 4.04. U.S. Federal Income Tax Treatment of the Co-Issuer 36 SECTION 4.05. Limitation on Liens 36 SECTION 4.06. Limitation on Sale and Leaseback Transactions 36 SECTION 4.07. Guarantees by Subsidiaries 37 SECTION 4.08. Compliance Certificate 37 SECTION 4.09. Further Instruments and Acts 37 ARTICLE 5 Successor Company 38 SECTION 5.01. Merger and Consolidation of the Company 38 SECTION 5.02. Merger and Consolidation of the Co-Issuer 39 SECTION 5.03. Merger and Consolidation of a Guarantor 39 ARTICLE 6 Defaults and Remedies 40 SECTION 6.01. Events of Default 40 SECTION 6.02. Acceleration 41 SECTION 6.03. Other Remedies 42 SECTION 6.04. Waiver of Past Defaults 42 SECTION 6.05. Control by Majority 42 SECTION 6.06. Limitation on Suits 43 SECTION 6.07. [Reserved] 43 SECTION 6.08. Collection Suit by Trustee 43 SECTION 6.09. Trustee May File Proofs of Claim 43 SECTION 6.10. Priorities 44 SECTION 6.11. Undertaking for Costs 44 SECTION 6.12. Waiver of Stay or Extension Laws 44 ARTICLE 7 Trustee 45 SECTION 7.01. Duties of Trustee 45 SECTION 7.02. Rights of Trustee 46 SECTION 7.03. Individual Rights of Trustee 48 SECTION 7.04. Trustee’s Disclaimer 48 SECTION 7.05. Notice of Defaults 48 SECTION 7.06. [Reserved] 49 SECTION 7.07. Compensation and Indemnity 49 SECTION 7.08. Replacement of Trustee 50 iiSECTION 7.09. Successor Trustee by Merger 52 SECTION 7.10. Eligibility 52 SECTION 7.11. Certain Provisions 52 SECTION 7.12. Preferential Collection of Claims Against Issuer 52 ARTICLE 8 Discharge of Indenture; Defeasance 52 SECTION 8.01. Discharge of Liability on Notes; Defeasance 52 SECTION 8.02. Conditions to Defeasance 54 SECTION 8.03. Application of Trust Money 55 SECTION 8.04. Repayment to Issuers 55 SECTION 8.05. Indemnity for U.S. Government Obligations 55 SECTION 8.06. Reinstatement 55 ARTICLE 9 Amendments 56 SECTION 9.01. Without Consent of Holders 56 SECTION 9.02. With Consent of Holders 56 SECTION 9.03. Revocation and Effect of Consents and Waivers 58 SECTION 9.04. Notation on or Exchange of Notes 58 SECTION 9.05. Trustee to Sign Amendments 59 SECTION 9.06. Payment for Consent 59 ARTICLE 10 Note Guarantees 59 SECTION 10.01. Note Guarantees 59 SECTION 10.02. Limitation on Liability 62 SECTION 10.03. Successors and Assigns 62 SECTION 10.04. No Waiver 63 SECTION 10.05. Modification 63 SECTION 10.06. Non-Impairment 63 ARTICLE 11 Miscellaneous 63 SECTION 11.01. Trust Indenture Act of 1939 63 SECTION 11.02. Noteholder Communications; Noteholder Actions 63 SECTION 11.03. Notices 64 SECTION 11.04. Certificate and Opinion as to Conditions Precedent 66 SECTION 11.05. Statements Required in Certificate or Opinion 66 SECTION 11.06. When Notes Disregarded 66 iiiSECTION 11.07. Rules by Trustee, Paying Agent and Registrar 66 SECTION 11.08. Legal Holidays 67 SECTION 11.09. Governing Law 67 SECTION 11.10. Consent to Jurisdiction and Service 67 SECTION 11.11. No Recourse Against Others 67 SECTION 11.12. Successors 67 SECTION 11.13. Multiple Originals 68 SECTION 11.14. Table of Contents; Headings 68 SECTION 11.15. Applicable Law; Provision of Information to Trustee 68 SECTION 11.16. Force Majeure 68 SECTION 11.17. Prescription 68 Schedule 1 Agreed Security Principles Appendix A Provisions Relating to the Notes Exhibit A Form of Reg. S/144A Note Exhibit B Form of Certificate of Transfer Exhibit C Form of Officer’s Compliance Certificate ivINDENTURE dated as of August 11, 2016, among NXP B.V. (the “Company”), NXP Funding LLC (the “Co-Issuer” and, together with theCompany, the “Issuers”), the Guarantors (as defined herein) and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”).Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (a) the Issuers’ dollar-denominated 3.875% Senior Notes due 2022 issued on the date hereof (the “Original Notes”) and (b) an unlimited principal amount of additional securitieshaving identical terms and conditions as either the Original Notes, except for any differences in the issue price, the interest (whether accrued prior to the issuedate of the Additional Notes or otherwise) or the maturity (the “Additional Notes”) that subject to the conditions and in compliance with the covenants setforth herein may be issued on any later issue date. Unless the context otherwise requires, in this Indenture references to the “Notes” include the Original Notesand any Additional Notes that are actually issued.This Indenture is subject to, and will be governed by, the provisions of the TIA that are required to be a part of and govern indentures under theTIA, except as otherwise set forth herein.ARTICLE 1Definitions and Incorporation by ReferenceSECTION 1.01. Definitions“Notes Applicable Premium” means, with respect to any Note on any redemption date, the greater of (A) 1% of the principal amount of such Note onsuch redemption date and (B) the excess (to the extent positive) of:(a) the present value at such redemption date of (i) the outstanding principal amount of such Note being redeemed, plus (ii) any required interestpayments due on such Note through August 1, 2022 (the date one month prior to the maturity date of the Notes) that would be due after such redemption datebut for such redemption, computed using a discount rate equal to the Treasury Rate at such redemption date plus 50 basis points; over(b) the outstanding principal amount of such Note;in each case, as calculated by the Issuers or on behalf of the Issuers by such Person as the Issuers shall designate.“actual knowledge” of any Trustee shall be construed to mean that such Trustee shall not be charged with knowledge (actual or otherwise) of theexistence of facts that would impose an obligation on it to make any payment or prohibit it from making any payment unless a Responsible Officer of suchTrustee has received written notice that such payments are required or prohibited by this Indenture in which event the Trustee shall be deemed to have actualknowledge within one Business Day of receiving that notice.“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect commoncontrol with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct themanagement and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms“controlling” and “controlled” have meanings correlative to the foregoing.“Agreed Security Principles” means the Agreed Security Principles as set out in Schedule 1, as applied reasonably and in good faith by the Company.“Attributable Liens” means, in connection with any Sale and Leaseback Transaction, the lesser of (i) the fair market value of the assets subject to suchSale and Leaseback Transaction, as determined by an Officer or the Board of Directors in good faith, and (ii) the present value (discounted at a rate per annumequal to the average interest payable under the Notes under this Indenture compounded semi-annually) of the obligations of the lessee for rental paymentsduring the term of the related lease.“Board of Directors” means (1) with respect to the Company or any corporation, the board of directors or managers, as applicable, of the corporation, orany duly authorized committee thereof; (2) with respect to any partnership, the board of directors or other governing body of the general partner of thepartnership or any duly authorized committee thereof; and (3) with respect to any other Person, the board or any duly authorized committee of such Personserving a similar function. Whenever any provision requires any action or determination to be made by, or any approval of, a Board of Directors, such action,determination or approval shall be deemed to have been taken or made if approved by a majority of the directors (excluding employee representatives, if any)on any such Board of Directors (whether or not such action or approval is taken as part of a formal board meeting or as a formal board approval).“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in London, United Kingdom, or New York,New York, United States are authorized or required by law to close; provided, however, that for any payments to be made under this Indenture, such day shallalso be a day on which the second generation Trans-European Automated Real-time Gross Settlement Express Transfer (“TARGET2”) payment system is openfor the settlement of payments.“Capital Stock” of any Person means any and all shares of, rights to purchase, warrants or options for, or other equivalents of or partnership or otherinterests in (however designated), equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reportingpurposes on the basis of GAAP. The amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time anydetermination thereof is to be made as determined on the basis of GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or anyother amount due under such lease prior to the first date such lease may be terminated without penalty. 2“Change of Control” means: (1)the Issuers become aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice orotherwise) that any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other thanone or more Permitted Holders, is or has become the “beneficial owner” (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act)of more than 50% of the Voting Stock of the Company (or its successor); provided, however, that (x) for purposes of this clause (1) such person orgroup shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right isexercisable immediately or only after the passage of time, directly or indirectly; (y) a transaction will not be deemed to involve a Change ofControl under this clause (1) if (a) the Company becomes a direct or indirect wholly owned subsidiary of a holding company (including theParent) and (b)(i) the direct or indirect holders of the Voting Stock of such holding company (including the Parent) immediately following thattransaction are substantially the same as the holders of the Company’s Voting Stock immediately prior to that transaction or (ii) immediatelyfollowing that transaction no “person” or “group” of related persons (other than a holding company (including the Parent) satisfying therequirements of this sentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company(including the Parent); and (z) any Voting Stock of which any Permitted Holder is the “beneficial owner” (as such term is used in Rules 13d-3and 13d-5 under the Exchange Act) shall not be included in any Voting Stock of which any such “person” or “group” of related persons is the“beneficial owner” (as so defined), unless that person or group of related persons is not an affiliate of a Permitted Holder and has greater votingpower with respect to that Voting Stock; or; (2)the sale, lease, transfer, conveyance or other disposition, in one transaction or a series of related transactions, of all or substantially all of theassets of the Company and its Subsidiaries taken as a whole to a Person, other than (w) where the Company is the surviving entity following suchsale, lease, transfer, conveyance or other disposition, (x) a Subsidiary, (y) any such sale, lease, transfer, conveyance or other disposition where theshares of the Company’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, amajority of the Voting Stock of the surviving Person or parent entity thereof immediately after giving effect to such transaction or (z) one ormore Permitted Holders.“Change of Control Triggering Event” means, with respect to the Notes, the occurrence of (1) a Change of Control that is accompanied or followed bya downgrade of the relevant Notes within the Ratings Decline Period for such Change of Control by each of Moody’s and S&P (or, in the event Moody’s orS&P or both shall cease rating the Notes (for reasons outside the control of the Company), the Company shall select any other “nationally recognizedstatistical rating organisation” within the meaning of Section 3(a)(62) of the Exchange Act, the equivalent of such ratings by such other nationallyrecognized rating agency) and (2) the rating of the Notes on any 3day during such Ratings Decline Period is below the lower of the rating by such nationally recognized rating agency in effect (a) immediately preceding thefirst public announcement of the Change of Control (or occurrence thereof if such Change of Control occurs prior to public announcement) and (b) on theIssue Date; provided that a Change of Control Trigger Event will not be deemed to have occurred in respect of a particular Change of Control if suchnationally recognized rating agency making the reduction in rating does not publicly announce or confirm or inform the Trustee at the Company’s requestthat the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of or in connection withthe Change of Control. For the avoidance of doubt, no Change of Control Triggering Event will be deemed to have occurred in connection with anyparticular Change of Control unless and until such Change of Control has actually been consummated.“Consolidated EBITDA” for any period means: (1)the consolidated net income (loss) of the Company determined on the basis of GAAP, excluding: (a)any extraordinary, exceptional, unusual or nonrecurring gain, loss or charge (as determined in good faith by an Officer or the Board of Directorsof the Company) or any charges or reserves in respect of any restructuring, redundancy or severance expense; (b)any non-cash compensation charge or expense arising from any grant of stock, stock options or other equity based awards and any non-cashdeemed finance charges in respect of any pension liabilities or other provisions; and (c)any purchase accounting effects including, but not limited to, adjustments to inventory, property and equipment, software and other intangibleassets and deferred revenue in component amounts required or permitted by GAAP and related authoritative pronouncements (including theeffects of such adjustments pushed down to the Company and the Subsidiaries), as a result of any consummated acquisition; (2) before: (a)(x) consolidated interest expense of the Company and its Subsidiaries for such period, to the extent such expense was deducted (and not addedback) in computing consolidated net income (loss) of the Company (including (i) amortization of original issue discount resulting from theissuance of Indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit orbankers acceptances, (iii) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark tomarket valuation of hedging obligations or other derivative instruments pursuant to GAAP), (iv) the interest component of Capitalized LeaseObligations, and (v) net payments, if any, pursuant to interest rate hedging obligations with respect to Indebtedness, and excluding (vi) accretionor accrual of discounted liabilities other than Indebtedness, (vii) any expense resulting from the discounting of any 4 Indebtedness in connection with the application of purchase accounting in connection with any acquisition, (viii) amortization of deferredfinancing fees, debt issuance costs, commissions, fees and expenses and (ix) any expensing of bridge, commitment and other financing fees), plus(y) consolidated capitalized interest of the Company for such period, whether paid or accrued; less (z) interest income for such period; (b)Taxes or other payments, including deferred Taxes, based on income, profits or capital (including without limitation withholding taxes) andfranchise taxes of any of the Company and its Subsidiaries whether or not paid, estimated, accrued or required to be remitted to anyGovernmental Authority; (c)consolidated depreciation expense and consolidated amortization or impairment expense, including (i) any expenses, charges or other costsrelated to any equity offering, investment, acquisition (including one-time amounts paid in connection with the acquisition or retention of oneor more individuals comprising part of a management team retained to manage the acquired business; provided that such payments are made inconnection with such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), disposition,recapitalization or the Incurrence of any Indebtedness permitted by this Indenture (in each case whether or not successful) in each case, asdetermined in good faith by an Officer or the Board of Directors of the Company; (ii) any minority interest expense (whether paid or not)consisting of income attributable to minority equity interests of third parties in such period; and (iii) other non-cash charges, write-downs oritems reducing consolidated net income (loss) of the Company (excluding any such non-cash charge, write-down or item to the extent itrepresents an accrual of or reserve for cash charges in any future period) or other items classified by the Company as special items less othernon-cash items of income increasing consolidated net income (loss) of the Company (excluding any such non-cash item of income to the extentit represents a receipt of cash in any future period).“Consolidated Net Tangible Assets” means, at any date, the total assets appearing on the Company’s most recent consolidated balance sheet, preparedin accordance with GAAP, less all current liabilities as shown on such balance sheet, and Intangible Assets.“Consolidated Secured Leverage Ratio” means, as of any date of determination, the ratio of (x) the sum of the aggregate outstanding SecuredIndebtedness of the Company and its Subsidiaries (excluding hedging obligations), minus the cash and cash equivalents of the Company and its Subsidiariesat such date to (y) the aggregate amount of Consolidated EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date ofsuch determination for which internal consolidated financial statements of the Company are available; provided, however, that for the purposes ofcalculating Consolidated EBITDA for such period, if, as of such date of determination: (1)since the beginning of such period the Company or any Subsidiary has disposed of any company, any business, or any group of assetsconstituting an operating unit of a business (any such disposition, a “Sale”) or if the transaction giving rise to the 5 need to calculate the Consolidated Secured Leverage Ratio is such a Sale, Consolidated EBITDA for such period will be reduced by an amountequal to the Consolidated EBITDA (if positive) attributable to the assets which are the subject of such Sale for such period or increased by anamount equal to the Consolidated EBITDA (if negative) attributable thereto for such period; provided that if any such sale constitutes“discontinued operations” in accordance with the then applicable GAAP, Consolidated EBITDA shall be reduced by an amount equal to theConsolidated EBITDA (if positive) attributable to such operations for such period or increased by an amount equal to the Consolidated EBITDA(if negative) attributable thereto for such period; (2)since the beginning of such period, the Company or any Subsidiary (by merger or otherwise) has made an investment in any Person that therebybecomes a Subsidiary, or otherwise has acquired any company, any business, or any group of assets constituting an operating unit of a business(any such investment or acquisition, a “Purchase”), including any such Purchase occurring in connection with a transaction causing acalculation to be made hereunder, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto as if suchPurchase occurred on the first day of such period, including anticipated cost savings and synergies; and (3)since the beginning of such period, any Person (that became a Subsidiary or was merged or otherwise combined with or into the Company or anySubsidiary since the beginning of such period) will have made any Sale or any Purchase that would have required an adjustment pursuant toclause (1) or (2) above if made by the Company or a Subsidiary since the beginning of such period, Consolidated EBITDA for such period willbe calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.For the purposes of this definition and the definition of Consolidated EBITDA, (a) calculations will be as determined in good faith by an Officer or theBoard of Directors of the Company (including in respect of cost savings and synergies and anticipated cost savings and synergies) and (b) in determining theamount of Secured Indebtedness outstanding on any date of determination, pro forma effect shall be given to any Incurrence, repayment, repurchase,defeasance or other acquisition, retirement or discharge of Secured Indebtedness as if such transaction had occurred on the first day of the relevant period.“Credit Facility” means, with respect to the Company or any of its Subsidiaries, one or more debt facilities, indentures or other arrangements(including the Revolving Credit Agreement or commercial paper facilities and overdraft facilities) with banks, other financial institutions or investorsproviding for revolving credit loans, term loans, notes, receivables financing (including through the sale of receivables to such institutions or to specialpurpose entities formed to borrow from such institutions against such receivables), letters of credit or other Indebtedness, in each case, as amended, restated,modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole orin part and whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks or institutions andwhether provided under the original Revolving Credit 6Agreement or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements,instruments and documents executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuantthereto and any Guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other Guarantees,pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term “Credit Facility” shall includeany agreement or instrument (1) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (2) adding Subsidiaries of theCompany as additional borrowers or guarantors thereunder, (3) increasing the amount of Indebtedness Incurred thereunder or available to be borrowedthereunder or (4) otherwise altering the terms and conditions thereof.“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for thebenefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicablejurisdictions from time to time in effect and affecting the rights of creditors generally (including, in the case of any Guarantor incorporated or organized inEngland or Wales, administration, administrative receivership, voluntary arrangement and schemes of arrangement).“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into whichit is convertible or for which it is exchangeable) or upon the happening of any event:(1) matures or is mandatorily redeemable for cash or in exchange for Indebtedness pursuant to a sinking fund obligation or otherwise;(2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeablesolely at the option of the Company or a Subsidiary); or(3) is or may become (in accordance with its terms) upon the occurrence of certain events or otherwise redeemable or repurchasable forcash or in exchange for Indebtedness at the option of the holder of the Capital Stock in whole or in part,in each case on or prior to the earlier of (a) the Stated Maturity of the Notes or (b) the date on which there are no Notes outstanding; provided, however, thatonly the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of theholder thereof prior to such date will be deemed to be Disqualified Stock.“DTC” means The Depository Trust Company or any successor securities clearing agency. 7“Dollar Equivalent” means, with respect to any monetary amount in a currency other than dollars, at any time of determination thereof by theCompany or the Trustee, the amount of dollars obtained by converting such currency other than dollars involved in such computation into dollars at the spotrate for the purchase of dollars with the applicable currency other than dollars as published in The Financial Times in the “Currency Rates” section (or, if TheFinancial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may be selected in good faith byan Officer or the Board of Directors) on the date of such determination.“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, asamended.“fair market value” may be conclusively established by means of an Officer’s Certificate or a resolution of the Board of Directors of the Companysetting out such fair market value as determined by such Officer or such Board of Directors in good faith.“GAAP” means generally accepted accounting principles in the United States of America as in effect on the date of any calculation or determinationrequired hereunder. Except as otherwise set forth in this Indenture, all ratios and calculations based on GAAP contained in this Indenture shall be computedin accordance with GAAP. At any time after the Issue Date, the Company may elect to establish that GAAP shall mean the GAAP as in effect on or prior to thedate of such election, provided that any such election, once made, shall be irrevocable. At any time after the Issue Date, the Company may elect to applyInternational Financial Reporting Standards (“IFRS”) accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shallthereafter be construed to mean IFRS (except as otherwise provided elsewhere in this Indenture), including as to the ability of the Company to make anelection pursuant to the previous sentence; provided that any such election, once made, shall be irrevocable; provided, further, that any calculation ordetermination in this Indenture that require the application of GAAP for periods that include fiscal quarters ended prior to the Company’s election to applyIFRS shall remain as previously calculated or determined in accordance with GAAP; provided, further again, that the Company may only make such electionif it also elects to report any subsequent financial reports required to be made by the Company, including pursuant to Section 13 or Section 15(d) of theExchange Act, in IFRS. The Company shall give notice of any such election made in accordance with this definition to the Trustee and the Holders.“Governmental Authority” means any nation, sovereign or government, any state, province, territory or other political subdivision thereof, and anyentity or authority exercising executive, legislative, judicial, regulatory, self-regulatory or administrative functions of or pertaining to government, includinga central bank or stock exchange.“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person,including any such obligation, direct or indirect, contingent or otherwise, of such Person:(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whetherarising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or tomaintain financial statement conditions or otherwise); or 8(2) entered into primarily for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or toprotect such obligee against loss in respect thereof (in whole or in part);provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business. The term“Guarantee” used as a verb has a corresponding meaning.“Guarantor” means any Subsidiary that Guarantees the Notes.“Holder” means each Person in whose name the Notes are registered on the Registrar’s books, which shall initially be the respective nominee of DTC.“Incur” means issue, create, assume, enter into any Guarantee of, incur, extend or otherwise become liable for; and the terms “Incurred” and“Incurrence” have meanings correlative to the foregoing and any Indebtedness pursuant to any revolving credit or similar facility shall only be “Incurred” atthe time any funds are borrowed thereunder.“Indebtedness” means, with respect to any Person on any date of determination (without duplication):(1) the principal of indebtedness of such Person for borrowed money;(2) the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;(3) all reimbursement obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (theamount of such obligations being equal at any time to the aggregate then undrawn and unexpired amount of such letters of credit or other instrumentsplus the aggregate amount of drawings thereunder that have not been reimbursed) (except to the extent such reimbursement obligations relate to tradepayables and such obligations are satisfied within 30 days of Incurrence), in each case only to the extent that the underlying obligation in respect ofwhich the instrument was issued would be treated as Indebtedness;(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except tradepayables), where the deferred payment is arranged primarily as a means of raising finance, which purchase price is due more than one year after the dateof placing such property in service or taking final delivery and title thereto;(5) Capitalized Lease Obligations of such Person; 9(6) the principal component of all obligations, or liquidation preference, of such Person with respect to any Disqualified Stock (butexcluding any accrued dividends);(7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not suchIndebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the fair market value of suchasset at such date of determination (as determined by an Officer or the Board of Directors in good faith) and (b) the amount of such Indebtedness ofsuch other Persons;(8) Guarantees by such Person of the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person; and(9) to the extent not otherwise included in this definition, net obligations of such Person under any hedging obligations (the amount ofany such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligation that would bepayable by such Person at such time).The term “Indebtedness” shall not include any lease, concession or license of property (or Guarantee thereof) which would be considered an operatinglease under GAAP as in effect on the Issue Date, any asset retirement obligations, any prepayments of deposits received from clients or customers in theordinary course of business, or obligations under any license, permit or other approval (or Guarantees given in respect of such obligations) Incurred prior tothe Issue Date or in the ordinary course of business.The amount of Indebtedness of any Person at any time in the case of a revolving credit or similar facility shall be the total amounts of funds borrowedand then outstanding. The amount of Indebtedness of any Person at any date shall be determined as set forth above or otherwise provided in this Indenture,and (other than with respect to letters of credit or Guarantees of Indebtedness specified in clause (7) or (8) above) shall equal the amount thereof that wouldappear on a balance sheet of such Person (excluding any notes thereto) prepared on the basis of GAAP.Notwithstanding the above provisions, in no event shall the following constitute Indebtedness: (i)contingent obligations Incurred in the ordinary course of business; (ii)in connection with the purchase by the Company of any business, any post-closing payment adjustments to which the seller may becomeentitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such businessafter the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent suchpayment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter; or (iii)for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or termination obligations, pension fundobligations or contributions or similar claims, obligations or contributions or social security or wage Taxes. 10“Intangible Assets” means the value (net of applicable reserves), as shown on or reflected in the Company’s most recent consolidated balance sheet, of(i) all trade names, trademarks, licenses, patents, copyrights and goodwill, (ii) organizational and development costs, (iii) deferred charges (other than prepaiditems such as insurance, taxes, interest, commissions, rents and similar items and tangible assets being amortized) and (iv) unamortized debt discount andexpenses, less unamortized premium.“Issue Date” means August 11, 2016.“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retentionagreement or lease in the nature thereof).“Moody’s” means Moody’s Investors Service, Inc. or any of its successors or assigns that is a Nationally Recognized Statistical Rating Organization.“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical rating organization within the meaning of Section3(a)(62) of the Exchange Act.“Note Documents” means the Notes (including Additional Notes) and this Indenture.“Note Guarantee” has the meaning given to such term in Section 10.01.“Offering Memorandum” means the offering memorandum of the Issuers dated as of August 8, 2016 in connection with the offering and sale of theNotes.“Officer” means, with respect to any Person, (1) the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief FinancialOfficer, any Vice President, the Treasurer, any Managing Director or the Secretary (a) of such Person or (b) if such Person is owned or managed by a singleentity, of such entity, or (2) any other individual designated as an “Officer” for the purposes of this Indenture by the Board of Directors of such Person.“Officer’s Certificate” means, with respect to any Person, a certificate signed by one Officer of such Person.“Opinion of Counsel” means a written opinion from legal counsel reasonably satisfactory to the Trustee. The legal counsel may be an employee of orcounsel to the Company or its Subsidiaries.“Parent” means NXP Semiconductors N.V. or any successor thereto.“Permitted Holders” means the members of management of the Company and any direct or indirect parent companies (including the Parent) on theIssue Date who are holders of equity interests of the Company (or any of its direct or indirect parent companies) and any group (within the meaning ofSection 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor 11provision) of which any of the foregoing are members; provided, that, in the case of such group and without giving effect to the existence of such group orany other group, such member or members of management, collectively, have beneficial ownership of more than 50% of the total voting power of the VotingStock of the Company or any of its direct or indirect parent companies.“Permitted Liens” means, with respect to any Person: (1)pledges, deposits or Liens under workmen’s compensation laws, unemployment insurance laws, social security laws or similar legislation, orinsurance related obligations (including pledges or deposits securing liability to insurance carriers under insurance or self-insurancearrangements), or in connection with bids, tenders, completion guarantees, contracts (other than for borrowed money) or leases, or to secureutilities, licenses, public or statutory obligations, or to secure surety, indemnity, judgment, appeal or performance bonds, guarantees ofgovernment contracts (or other similar bonds, instruments or obligations), or as security for contested Taxes or import or customs duties or for thepayment of rent, or other obligations of like nature, in each case Incurred in the ordinary course of business; (2)Liens imposed by law, including carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s and repairmen’s or other like Liens, in eachcase for sums not yet overdue for a period of more than 60 days or that are bonded or being contested in good faith by appropriate proceedings; (3)Liens for Taxes, assessments or other governmental charges not yet delinquent or which are being contested in good faith by appropriateproceedings; provided that appropriate reserves required pursuant to GAAP have been made in respect thereof; (4)Liens in favor of issuers of surety, performance or other bonds, guarantees or letters of credit or bankers’ acceptances (not issued to supportIndebtedness for borrowed money) issued pursuant to the request of and for the account of the Company or any Subsidiary in the ordinary courseof its business; (5)encumbrances, ground leases, easements (including reciprocal easement agreements), survey exceptions, or reservations of, or rights of others for,licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or otherrestrictions (including minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to theconduct of the business of the Company and its Subsidiaries or to the ownership of its properties which do not in the aggregate materiallyadversely affect the value of said properties or materially impair their use in the operation of the business of the Company and its Subsidiaries; (6)Liens on assets or property of the Company or any Subsidiary securing hedging obligations; 12 (7)leases, licenses, subleases and sublicenses of assets (including real property and intellectual property rights), in each case entered into in theordinary course of business; (8)Liens arising out of judgments, decrees, orders or awards not giving rise to an Event of Default so long as any appropriate legal proceedingswhich may have been duly initiated for the review of such judgment, decree, order or award have not been finally terminated or the period withinwhich such proceedings may be initiated has not expired; (9)Liens arising by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as todeposit accounts or other funds maintained with a depositary or financial institution; (10)Liens arising from Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operatingleases entered into by the Company and its Subsidiaries in the ordinary course of business; (11)Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Subsidiary (or at the time the Company or aSubsidiary acquires such property, other assets or shares of stock, including any acquisition by means of a merger, consolidation or otherbusiness combination transaction with or into the Company or any Subsidiary); provided, however, that such Liens are not created, Incurred orassumed in anticipation of or in connection with such other Person becoming a Subsidiary (or such acquisition of such property, other assets orstock); provided, further, that such Liens are limited to all or part of the same property, other assets or stock (plus improvements, accession,proceeds or dividends or distributions in connection with the original property, other assets or stock) that secured (or, under the writtenarrangements under which such Liens arose, could secure) the obligations to which such Liens relate; (12)Liens on assets or property of the Company or any Subsidiary securing Indebtedness or other obligations of the Company or such Subsidiaryowing to the Company or another Subsidiary, or Liens in favor of the Company or any Subsidiary; (13)Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously permitted to be secured under this Indenture; (14)any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (15)(a) mortgages, liens, security interests, restrictions, encumbrances or any other matters of record that have been placed by any government,statutory or regulatory authority, developer, landlord or other third party on property over which the Company or any Subsidiary of theCompany has easement rights or on any leased property and subordination or similar arrangements relating thereto and (b) any condemnation oreminent domain proceedings affecting any real property; 13 (16)any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangementpursuant to any joint venture or similar agreement; (17)Liens on property or assets under construction (and related rights) in favor of a contractor or developer or arising from progress or partialpayments by a third party relating to such property or assets; (18)Liens securing or arising by reason of any netting or set-off arrangement entered into in the ordinary course of banking or other trading activities,or liens over cash accounts securing cash pooling or cash management arrangements; (19)Liens arising out of conditional sale, title retention, hire purchase, consignment or similar arrangements for the sale of goods entered into in theordinary course of business; and (20)other Liens (including successive extensions, renewals, alterations or replacements thereof) not excepted by clauses (1) through (19) above,provided that after giving effect thereto the aggregate principal amount of the Secured Indebtedness of the Company and its SignificantSubsidiaries secured by such Liens does not exceed the greatest of (A) $6,545 million, (B) the amount that would cause the ConsolidatedSecured Leverage Ratio to exceed 2.5 to 1.0 and (C) 15% of the Consolidated Net Tangible Assets, in each case after giving effect to suchIncurrence and the application of the proceeds therefrom.“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limitedliability company, government or any agency or political subdivision thereof or any other entity.“Preferred Stock” as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred asto the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares ofCapital Stock of any other class of such Person.“Principal Property” means the property, plants and equipment owned by the Company or any of its Significant Subsidiaries, except if an Officer orthe Board of Directors determined in good faith (taking into account, among other things, the importance of such property, plants and equipment to theCompany’s and its Significant Subsidiaries’ business, financial condition and earnings taken as a whole) that such property, plants or equipment is not ofmaterial importance to the Company’s and its Significant Subsidiaries’ business, taken as a whole.“Public Debt” means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (1) a public offering registeredunder the Securities Act or (2) a private placement to institutional investors that is purchased for resale in accordance with Rule 144A or Regulation S underthe Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC for publicresale. 14“Ratings Decline Period” means, with respect to any Change of Control, the period that (1) begins on the earlier of (a) the date of the first publicannouncement of the occurrence of such Change of Control or of the intention by the Company or a stockholder of the Company, as applicable, to effectsuch Change of Control or (b) the occurrence of such Change of Control and (2) ends on the 60th day following consummation of such Change of Control;provided, however, that such period shall be extended for so long as the rating of the Notes of a series, as noted by the applicable rating agency, is underpublicly announced consideration for downgrade by the applicable rating agency.“Refinance” means refinance, refund, replace, renew, repay, modify, restate, defer, substitute, supplement, reissue, resell, extend or increase (includingpursuant to any defeasance or discharge mechanism) and the terms “refinances,” “refinanced” and “refinancing” as used for any purpose in this Indentureshall have a correlative meaning.“Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant toany defeasance or discharge mechanism) any Indebtedness existing on the date of this Indenture or Incurred in compliance with this Indenture (includingIndebtedness of the Company that refinances Indebtedness of any Subsidiary and Indebtedness of any Subsidiary that refinances Indebtedness of theCompany or another Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided, however, that: (1)if the Indebtedness being refinanced constitutes Subordinated Indebtedness, the Refinancing Indebtedness has a final Stated Maturity at the timesuch Refinancing Indebtedness is Incurred that is the same as or later than the final Stated Maturity of the Indebtedness being refinanced or, ifshorter, the Notes; (2)such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price)that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value)then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest orpremiums required by the instruments governing such existing Indebtedness and costs, expenses and fees Incurred in connection therewith); and (3)if the Indebtedness being refinanced is expressly subordinated to the Notes, such Refinancing Indebtedness is subordinated to the Notes on termsat least as favorable to the Holders as those contained in the documentation governing the Indebtedness being refinanced;provided, however, that Refinancing Indebtedness in respect of any Credit Facility or any other Indebtedness may be Incurred from time to time after thetermination, discharge or repayment of any such Credit Facility or other Indebtedness.“Responsible Officer” means, when used with respect to the Trustee, any officer within the Corporate Trust Administration of the Trustee (or anysuccessor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the 15above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of suchindividual’s knowledge of and familiarity with the particular subject.“Revolving Credit Agreement” means the revolving credit agreement entered into on December 7, 2015 by, among others, the Company and theCo-Issuer, as borrowers, Morgan Stanley Senior Funding, Inc., as collateral agent, Morgan Stanley Senior Funding, Inc. as administrative agent, Citibank,N.A., as letter of credit issuer, Morgan Stanley Senior Funding, Inc., Barclays Bank plc, Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLCand Bank of America, N.A., as joint-lead arrangers and joint bookrunners and Goldman Sachs Lending Partners LLC, Citigroup Markets Limited andCoöperative Centrale Raiffeisen-Boerenleenbank B.A., as co-managers, as may be amended, supplemented or otherwise modified from time to time, and anyRefinancing Indebtedness in respect thereto.“S&P” means Standard & Poor’s Investors Ratings Services or any of its successors or assigns that is a Nationally Recognized Statistical RatingOrganization.“Sale and Leaseback Transaction” means an arrangement relating to any Principal Property owned by the Company or a Significant Subsidiary on theIssue Date or thereafter acquired by the Company or a Significant Subsidiary whereby the Company or a Significant Subsidiary transfers such property to aPerson and the Company or a Significant Subsidiary leases it from such Person.“SEC” means the U.S. Securities and Exchange Commission or any successor thereto.“Secured Indebtedness” means any Indebtedness secured by a Lien and any Attributable Lien.“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, as amended.“Significant Subsidiary” means any Subsidiary that meets any of the following conditions: (1)the Company’s and its Subsidiaries’ investments in and advances to the Subsidiary exceed 10% of the Total Assets of the Company and itsSubsidiaries on a consolidated basis as of the end of the most recently completed fiscal year; (2)the Company’s and its Subsidiaries’ proportionate share of the Total Assets (after intercompany eliminations) of the Subsidiary exceeds 10% ofthe Total Assets of the Company and its Subsidiaries on a consolidated basis as of the end of the most recently completed fiscal year; or (3)the Company’s and its Subsidiaries’ equity in the income from continuing operations before income taxes, extraordinary items and cumulativeeffect of a change in accounting principle of the Subsidiary exceeds 10% of such income of the Company and its Subsidiaries on a consolidatedbasis for the most recently completed fiscal year. 16“Stated Maturity” means, with respect to any indebtedness or security, the date specified in such indebtedness or security as the fixed date on whichthe payment of principal of such indebtedness or security is due and payable, including pursuant to any mandatory redemption provision, but shall notinclude any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.“Subordinated Indebtedness” means, with respect to any Person, any Indebtedness (whether outstanding on the Issue Date or thereafter Incurred) whichis expressly subordinated in right of payment to the Notes pursuant to a written agreement.“Subsidiary” means, with respect to any Person: (1)any corporation, association, or other business entity (other than a partnership, joint venture, limited liability company or similar entity) ofwhich more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to votein the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Personor one or more of the other Subsidiaries of that Person or a combination thereof; or (2) anypartnership, joint venture, limited liability company or similar entity of which: (a)more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, asapplicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or acombination thereof whether in the form of membership, general, special or limited partnership interests or otherwise; and (b)such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.“Taxes” means all present and future taxes, levies, imposts, deductions, charges, duties, assessments and withholdings and any charges of a similarnature (including interest, penalties and other liabilities with respect thereto) that are imposed or levied by any government or other taxing authority.“Term Loans” means (A) the secured term loan credit agreement entered into on March 4, 2011, as amended by (i) the joinder and amendmentagreement dated as of November 18, 2011, (ii) the new term loan joinder agreement dated as of February 2012, (iii) the new term loan joinder agreementdated as of December 10, 2012, (iv) the 2013 new term loan joinder agreement dated as of November 27, 2013 and (v) the 2014 new term loan joinderagreement dated as of February 18, 2014, by and among the Company and the Co-Issuer, as borrowers, the financial institutions from time to time to theparties thereto, Barclays Bank PLC, as administrative agent, Morgan Stanley Senior Funding, Inc., as collateral agent, and Mizuho Corporate Bank, Ltd., asTaiwan collateral agent and (B) the secured term loan credit agreement entered into on December 7, 2015, by and among the Company and the Co-Issuer, asborrowers, Credit Suisse Securities (USA) LLC, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC and Bank of America, N.A., as joint 17lead arrangers and joint bookrunners, Goldman Sachs Lending Partners LLC, Citigroup Global Markets Limited and Coöperative Centrale Raiffeisen-Boerenleenbank B.A., as co-managers, Credit Suisse AG, as administrative agent, and Morgan Stanley Senior Funding, Inc., as collateral agent, in each case,as may be amended, supplemented or otherwise modified from time to time.“TIA” means the Trust Indenture Act of 1939, as amended.“Total Assets” means the consolidated total assets of the Company and its Subsidiaries in accordance with GAAP as shown on the most recent balancesheet of such Person.“Treasury Rate” means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled andpublished in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days (but not morethan five Business Days) prior to the redemption date (or, if such statistical release is not so published or available, any publicly available source of similarmarket data selected by an Officer or the Board of Directors in good faith)) most nearly equal to the period from the redemption date to August 1, 2022 (thedate one month prior to the maturity date of the Notes); provided, however, that if the period from the redemption date to August 1, 2022 (the date one monthprior to the maturity date of the Notes) is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, theTreasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United StatesTreasury securities for which such yields are given, except that if the period from the redemption date to such applicable date is less than one year, the weeklyaverage yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.“Uniform Commercial Code” means the New York Uniform Commercial Code.“U.S. Government Obligations” means securities that are (1) direct obligations of the United States of America for the timely payment of which its fullfaith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States ofAmerica the timely payment of which is unconditionally Guaranteed as a full faith and credit obligation of the United States of America, which, in eithercase, are not callable or redeemable at the option of the Company thereof, and shall also include a depositary receipt issued by a bank (as defined inSection 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest onany such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt, provided that (except as required bylaw) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received bythe custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidencedby such depositary receipt.“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors. 18“Wholly Owned Subsidiary” means a Subsidiary of the Company, all of the Capital Stock of which (other than directors’ qualifying shares or sharesrequired by any applicable law or regulation to be held by a Person other than the Company or another Wholly Owned Subsidiary) is owned by the Companyor another Wholly Owned Subsidiary.SECTION 1.02. Other Definitions Term Defined inSection“Additional Amounts” 4.02(a)“Additional Notes” Preamble“Agent Members” Appendix A“Applicable Law” 11.15“Applicable Procedures” Appendix A“Authorized Agent” 11.10“Co-Issuer” Preamble“Company” Preamble“covenant defeasance option” 8.01(b)“defeasance trust” 8.02(a)(1)“Definitive Note” Appendix A“Event of Default” 6.01(a)“Global Note Legend” Appendix A“Guaranteed Obligations” 10.01(a)“Interest Amount” 2.04(d)“Issuers” Preamble“legal defeasance option” 8.01(b)“Notes” Preamble“Notes Custodian” Appendix A“Offer to Purchase” 4.03(a)“Offer Expiration Date” 4.03(c)“Original Notes” Preamble“Paying Agent” 2.04(a)“Payor” 4.02(a)“Permitted Payments” 4.06(c)“protected purchaser” 2.08“purchase date” 4.03(c)“Purchase Price” 4.03(c)“QIB” Appendix A“Qualified Institutional Buyer” Appendix A“Regulation S” Appendix A“Regulation S Notes” Appendix A“Relevant Taxing Jurisdiction” 4.02(a)(3)“Registrar” 2.04(a)“Restricted Period” Appendix A“Restricted Notes Legend” Appendix A“Rule 144A” Appendix A“Rule 144A Notes” Appendix A“Securities Act” Appendix A“Successor Company” 5.01(a)(1)“Transfer Agent” 2.04(a)“Transfer Restricted Notes” Appendix A“Trustee” Preamble 19SECTION 1.03. Incorporation by Reference of TIAThis Indenture is subject to the provisions of the TIA which are elsewhere in this Indenture incorporated by reference in and made a part of thisIndenture. The following TIA terms have the following meanings:“Commission” means the SEC.“indenture securities” means the Securities and the Note Guarantees.“indenture security holder” means a Holder.“indenture to be qualified” means this Indenture.“indenture trustee” or “institutional trustee” means the Trustee.“obligor” on the indenture securities means the Company, the Note Guarantors and any other obligor on the indenture securities.All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule havethe meanings assigned to them by such definitions.SECTION 1.04. Rules of ConstructionUnless the context otherwise requires:(a) a term has the meaning assigned to it;(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;(c) “or” is not exclusive;(d) “including” means including without limitation;(e) words in the singular include the plural and words in the plural include the singular; and 20(f) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature asunsecured Indebtedness.ARTICLE 2The NotesSECTION 2.01. Issuable in SeriesThe Original Notes are a single series and shall be substantially identical except as to denomination. Additional Notes issued after the Issue Datemay be issued in one or more series. The Issuers may, without the consent of the Holders, increase the principal amount of the Original Notes by issuingAdditional Notes in the future on the same terms and conditions, except for any differences in the issue price, the interest (whether accrued prior to the issuedate of the Additional Notes or otherwise) or the maturity. The Additional Notes will have the same CUSIP number as the Original Notes, provided that anyAdditional Notes that are not fungible with the Original Notes for U.S. federal income tax purposes will be issued under a separate CUSIP number.With respect to any Additional Notes issued after the Issue Date (except for Notes authenticated and delivered upon registration of transfer of, orin exchange for, or in lieu of, other Notes pursuant to Sections 2.07, 2.08, 2.09, 2.10 or 3.06 or Appendix A), there shall be (a) established in or pursuant to aresolution of the Board of Directors of the Company and (b)(i) set forth or determined in the manner provided in an Officer’s Certificate of the Company or(ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Notes:(1) whether such Additional Notes shall be issued as part of a new or existing series of Notes and the title of such Additional Notes(which shall distinguish the Additional Notes of the series from Notes of any other series);(2) the aggregate principal amount of such Additional Notes which may be authenticated and delivered under this Indenture (except forNotes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of the same series pursuant to Sections 2.07,2.08, 2.09, 2.10 or 3.06 or Appendix A and except for Notes which, pursuant to Section 2.03, are deemed never to have been authenticated and deliveredhereunder);(3) the date or dates on which the principal of any such Additional Notes is payable, or the method by which such date or dates shall bedetermined or extended;(4) the issue price and issuance date of such Additional Notes, including the date from which interest on such Additional Notes shallaccrue, the rate or rates at which such Additional Notes shall bear interest, if any, or the method by which such rate or rates shall be determined, the date ordates on which such interest shall be payable and the record date, if any, for the interest payable on any interest payment date; 21(5) the period or period within the date or dates on which, the price or prices at which and the terms and conditions upon which any suchAdditional Notes may be redeemed, in whole or in part, at the option of the Issuers; and(6) if applicable, that such Additional Notes shall be issuable in whole or in part in the form of one or more Global Notes and, in suchcase, the respective depositaries for such Global Notes, the form of any legend or legends which shall be borne by such Global Notes in addition to or in lieuof those set forth in Exhibit A hereto and any circumstances in addition to or in lieu of those set forth in Section 2.3 of Appendix A in which any such GlobalNote may be exchanged in whole or in part for Additional Notes registered, or any transfer of such Global Note in whole or in part may be registered, in thename or names of Persons other than the depositary for such Global Note or a nominee thereof.If any of the terms of any Additional Notes are established by action taken pursuant to a resolution of the Board of Directors, a copy of anappropriate record of such action shall be certified by an Officer’s Certificate and delivered to the Trustee at or prior to the delivery of the Officer’s Certificateof the Company or the indenture supplemental hereto setting forth the terms of the Additional Notes.This Indenture is unlimited in aggregate principal amount. The Original Notes and, if issued, any Additional Notes will be treated as a singleclass for all purposes under this Indenture, including with respect to voting, waivers, amendments, redemptions and offers to purchase, except as otherwisespecified with respect to a new series of Additional Notes.SECTION 2.02. Form and DatingProvisions relating to the Notes are set forth in Appendix A, which is hereby incorporated in and expressly made a part of this Indenture. The(a) Original Notes and (b) any Additional Notes (if issued as Transfer Restricted Notes) shall each be substantially in the form of Exhibit A (in the event ofAdditional Notes, with such changes as may be required to reflect any differing terms), which is hereby incorporated in and expressly made a part of thisIndenture. Any Additional Notes issued other than as Transfer Restricted Notes shall each be substantially in the form of Exhibit A (without the RestrictedNotes Legend), which is hereby incorporated in and expressly made part of this Indenture. The Notes may have notations, legends or endorsements requiredby law, stock exchange rule, agreements to which the Issuers are subject, if any, or usage, provided that any such notation, legend or endorsement is in a formacceptable to the Company and the Trustee. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in registered form andonly in minimum denominations of $200,000 and whole multiples of $1,000 in excess thereof.SECTION 2.03. Execution and AuthenticationOne Officer shall sign the Notes for each Issuer by manual or facsimile signature.If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be validnevertheless. 22A Note shall not be valid until an authorized signatory of the Trustee or an authentication agent manually signs the certificate of authenticationon the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.The Trustee or an authentication agent shall authenticate and make available for delivery Notes as set forth in Appendix A following receipt ofan authentication order signed by an Officer of each Issuer directing the Trustee or an authentication agent to authenticate such Notes.The Trustee may appoint an authentication agent reasonably acceptable to the Issuers to authenticate the Notes. Any such appointment shall beevidenced by an instrument signed by a Responsible Officer, a copy of which shall be furnished to the Issuers. Unless limited by the terms of suchappointment, an authentication agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by theTrustee includes authentication by such agent. An authentication agent has the same rights as any Registrar, Paying Agent or agent for service of notices anddemands.SECTION 2.04. Registrar, Transfer Agent and Paying Agent(a) The Issuers shall maintain a registrar (the “Registrar”) and a transfer agent in the Borough of Manhattan, City of New York where Notesmay be presented for transfer or exchange (the “Transfer Agent”) and for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes oftheir transfer and exchange. The Issuers initially appoint Deutsche Bank Trust Company Americas, in the Borough of Manhattan, City of New York, who hasaccepted such appointment, as Paying Agent for the Notes. The Issuers initially appoint Deutsche Bank Trust Company Americas, in the Borough ofManhattan, City of New York, who has accepted such appointment, as Registrar and Transfer Agent. Deutsche Bank Trust Company Americas will act asRegistrar, Transfer Agent and Paying Agent in connection with the Global Notes with respect to the Notes settled through DTC.(b) The Issuers shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to or appointed under thisIndenture. Such agreement shall implement the provisions of this Indenture that relate to such agent, including applicable terms of the TIA that areincorporated into this Indenture. Any Registrar or Paying Agent appointed hereunder shall be entitled to the benefits of this Indenture as though a partyhereto. The Issuers shall notify the Trustee of the name and address of any such agent. If the Issuers fail to maintain a Registrar or Paying Agent, the Trusteeshall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. Either Issuer or any Subsidiary may act as Paying Agentor Registrar.(c) The Issuers may change any Registrar, Paying Agent or Transfer Agent upon written notice to such Registrar, Paying Agent or TransferAgent and to the Trustee, without prior notice to the Holders; provided, however, that no such removal shall become effective until (i) acceptance of anappointment by a successor as evidenced by an appropriate agreement entered into by the Issuers and such successor Registrar, Paying Agent, or TransferAgent, as the case may be, and delivered to the Trustee or (ii) written notification to the Trustee that the Trustee shall, to the extent that it determines that it isable, serve as Registrar or Paying Agent or Transfer Agent until the appointment of a successor in accordance with clause (i) above. 23(d) The Interest Amount shall be calculated by applying the applicable rate to the principal amount of each Note outstanding at thecommencement of the interest period, computed on the basis of a 360-day year comprised of twelve 30-day months and rounding the resultant figure upwardsto the nearest available currency unit. The determination of the Interest Amount by the Paying Agent shall, in the absence of willful default, bad faith ormanifest error, be final and binding on all parties.SECTION 2.05. Paying Agent to Hold Money in TrustNo later than 10:00 a.m. New York time on each due date of the principal of, interest and premium (if any) on any Note, the Issuers shall depositwith the Paying Agent (or if either Issuer or a Restricted Subsidiary of either Issuer is acting as Paying Agent, segregate and hold in trust for the benefit of thePersons entitled thereto) a sum sufficient to pay such principal, interest and premium (if any) when so becoming due and subject to receipt of such monies,the Paying Agent shall make payment on the Notes in accordance with this Indenture. The Issuers shall require each Paying Agent to agree in writing (andeach Paying Agent party to this Indenture agrees) that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by thePaying Agent for the payment of principal, interest and premium (if any) on the Notes, but such Paying Agent may use such monies as banker in the ordinarycourse of business without accounting for profits (other than in the case of Article 8), and shall notify the Trustee of any default by the Issuers in making anysuch payment. If either Issuer or a Restricted Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separatetrust fund. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the PayingAgent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. For the avoidance of doubt,the Paying Agent and the Trustee shall be held harmless and have no liability with respect to payments or disbursements to be made by the Paying Agent andTrustee for which payment instructions are not made or that are not otherwise deposited by the respective times set forth in this Section 2.05.SECTION 2.06. Holder ListsThe Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses ofHolders. If the Trustee is not the Registrar, the Issuers shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Daysbefore each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee mayreasonably require of the names and addresses of Holders.SECTION 2.07. Transfer and ExchangeThe Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer and incompliance with Appendix A. When a Note is presented to the Registrar with a request to register a transfer, the Registrar shall register 24the transfer as requested if its requirements therefor are met. When Notes are presented to the Registrar with a written request to exchange them for an equalprincipal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registrationof transfers and exchanges, the Issuers shall execute and the Trustee or an authentication agent shall authenticate Notes at the Registrar’s request. The Issuersmay require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant tothis Section. The Issuers are not required to register the transfer or exchange of any Notes (i) for a period of 15 days prior to any date fixed for the redemptionof any Notes, (ii) for a period of 15 days immediately prior to the date fixed for selection of Notes to be redeemed in part or (iii) which the Holder has tendered(and not withdrawn) for repurchase in connection with a Change of Control Triggering Event.Prior to the due presentation for registration of transfer of any Note, the Issuers, the Trustee, the Paying Agent, and the Registrar may deem andtreat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal and (subject toSection 2 of the Notes) interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of either Issuer, theTrustee, the Paying Agent, or the Registrar shall be affected by notice to the contrary.Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interest in such Global Note may beeffected only through a book-entry system maintained by (a) the Holder of such Global Note (or its agent) or (b) any Holder of a beneficial interest in suchGlobal Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to thesame benefits under this Indenture as the Notes surrendered upon such transfer or exchange.SECTION 2.08. Replacement NotesIf a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, theIssuers shall issue and the Trustee or an authentication agent shall authenticate a replacement Note if the requirements of Section 8-405 of the UniformCommercial Code are met, such that the Holder (a) notifies the Issuers or the Trustee within a reasonable time after such Holder has notice of such loss,destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (b) makes such request to the Issuers or theTrustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and(c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Issuers, such Holder shall furnish an indemnity bond sufficientin the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, the Paying Agent and the Registrar from any loss that any of them may sufferif a Note is replaced. The Issuers and the Trustee may charge the Holder for their expenses in replacing a Note including reasonable fees and expenses ofcounsel. In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Issuers in theirdiscretion may pay such Note instead of issuing a new Note in replacement thereof. 25Every replacement Note is an additional obligation of the Issuers.The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to thereplacement or payment of mutilated, lost, destroyed or wrongfully taken Notes.SECTION 2.09. Outstanding NotesNotes outstanding at any time are all Notes authenticated by the Trustee or an authentication agent except for those canceled by it, thosedelivered to it for cancellation and those described in this Section 2.09 as not outstanding. Subject to Section 11.06, a Note does not cease to be outstandingbecause the Issuers or an Affiliate of either Issuer holds the Note.If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee and the Issuers receive proof satisfactory to them thatthe replaced Note is held by a protected purchaser.If the Paying Agent receives (or if either Issuer or a Restricted Subsidiary of either Issuer is acting as Paying Agent and such Paying Agentsegregates and holds in trust) in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest andpremium, if any, payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent isnot prohibited from paying such amount to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portionsthereof) cease to be outstanding and interest on them ceases to accrue.SECTION 2.10. Temporary NotesIn the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Issuersmay prepare and the Trustee or an authentication agent shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of DefinitiveNotes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trusteeor an authentication agent shall authenticate Definitive Notes and deliver them in exchange for temporary Notes upon surrender of such temporary Notes atthe office or agency of the Issuers, without charge to the Holder.SECTION 2.11. CancellationThe Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee anyNotes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration oftransfer, exchange, payment or cancellation and shall dispose of canceled Notes in accordance with its customary procedures or deliver canceled Notes to theIssuers pursuant to written direction by an Officer of either Issuer. Certification of the 26destruction of all canceled Notes shall be delivered to the Issuers. The Issuers may not issue new Notes to replace Notes it has redeemed, paid or delivered tothe Trustee for cancellation. Neither the Trustee nor an authentication agent shall authenticate Notes in place of canceled Notes other than pursuant to theterms of this Indenture.SECTION 2.12. Common Codes, CUSIP and ISIN NumbersThe Issuers in issuing the Notes may use Common Codes, CUSIP and ISIN numbers (if then generally in use) and, if so, the Trustee shall useCommon Codes, CUSIP and ISIN numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that norepresentation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance maybe placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of suchnumbers. The Issuers will promptly notify the Trustee and the Paying Agent of any change in the Common Code, CUSIP or ISIN numbers.SECTION 2.13. CurrencyThe U.S. dollar, is the sole currency of account and payment for all sums payable by the Issuers under or in connection with the Notes, includingdamages. Any amount received or recovered in a currency other than the U.S. dollar, whether as a result of, or the enforcement of, a judgment or order of acourt of any jurisdiction, in the winding-up or dissolution of either Issuer or otherwise by any Holder of a Note, as the case may be, or by the Trustee, inrespect of any sum expressed to be due to it from the Issuers will only constitute a discharge to the Issuers to the extent of the U.S. dollar amount which therecipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicableto make that purchase on that date, on the first date on which it is practicable to do so).If that U.S. dollar amount is less than the U.S. dollar amount expressed to be due to the recipient or the Trustee under any Note, the Issuers willindemnify them against any loss sustained by such recipient or the Trustee as a result. In any event, the Issuers will indemnify the recipient or the Trusteeagainst the cost of making any such purchase. For the purposes of this currency indemnity provision, it will be prima facie evidence of the matter statedtherein for the Holder of a Note or the Trustee to certify in a manner reasonably satisfactory to the Issuers (indicating the sources of information used) the lossit incurred in making any such purchase. These indemnities constitute a separate and independent obligation from the Issuers’ other obligations, will giverise to a separate and independent cause of action, will apply irrespective of any waiver granted by any Holder of a Note or the Trustee (other than a waiver ofthe indemnities set out herein) and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect ofany sum due under any Note or to the Trustee.Except as otherwise specifically set forth herein, for purposes of determining compliance with any dollar-denominated restriction herein, theDollar Equivalent amount for purposes hereof that is denominated in a non-dollar currency shall be calculated based on the relevant currency exchange ratein effect on the date such non-dollar amount is Incurred or made, as the case may be. 27The Company may elect irrevocably to convert all dollar-denominated restrictions into non dollar-denominated restrictions at the applicablespot rate of exchange prevailing on the date of such election, and all references in this Indenture to determining Dollar Equivalents and dollar amounts shallapply mutatis mutandis as though referring to non-dollar amounts.ARTICLE 3RedemptionSECTION 3.01. Notices to TrusteeIf the Issuers elect to redeem Notes pursuant to Sections 5 or 6 of the Notes, they shall notify the Trustee and the relevant Paying Agent in writingof the redemption date and the principal amount of Notes to be redeemed and the section of the Note pursuant to which the redemption will occur.The Issuers shall give each written notice to the Trustee and the relevant Paying Agent provided for in this Article 3 at least 15 days, but notmore than 60 days, before the redemption date unless the Trustee or the relevant Paying Agent (as the case may be) consents to a shorter period. In the case ofa redemption pursuant to Section 5 of the Notes, such notice shall be accompanied by an Officer’s Certificate from the Issuers to the effect that suchredemption will comply with the conditions herein.In the case of a redemption provided for by Section 6 of the Note, prior to the publication or mailing of any notice of redemption of the Notespursuant to the foregoing, the Issuers will deliver to the Trustee (a) an Officer’s Certificate stating that they are entitled to effect such redemption and settingforth a statement of facts showing that the conditions precedent to their right so to redeem have been satisfied and (b) an opinion of an independent taxcounsel of recognized standing to the effect that the circumstances referred to above exist. The Trustee will accept such Officer’s Certificate and opinion assufficient existence of the satisfaction of the conditions precedent described above, in which event it will be conclusive and binding on the Holders. Anysuch notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.SECTION 3.02. Selection of Notes To Be Redeemed or RepurchasedIf less than all of the Notes of a series are to be redeemed at any time, the Trustee or the Registrar, as applicable, will select the Notes forredemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed, as certified to the Trustee or theRegistrar, as applicable, by the Issuers, and in compliance with the requirements of DTC, or if the Notes are not so listed or such exchange prescribes nomethod of selection and the Notes are not held through DTC, or DTC prescribes no method of selection, on a pro rata basis; provided, however, that no Noteof $200,000 in aggregate principal amount or less shall be redeemed in part and only Notes in integral multiples of $1,000 will be redeemed. 28Neither the Trustee nor the Registrar will be liable for any selections made by it in accordance with this Section. Provisions of this Indenture that apply toNotes called for redemption also apply to portions of Notes called for redemption. The Trustee or the Registrar, as applicable, shall notify the Issuerspromptly of the Notes or portions of Notes to be redeemed.SECTION 3.03. Notice of Redemption.(a) At least 15 days but not more than 60 days before a date for redemption of Notes, the Issuers shall transmit a notice of redemption inaccordance with Section 11.03 and as provided below to each Holder of Notes to be redeemed at such Holder’s registered address; provided, however, thatany notice of a redemption provided for by Section 6 of the Notes shall not be given (i) earlier than 90 days prior to the earliest date on which the Payorwould be obligated to make a payment of Additional Amounts if a payment in respect of the Notes were then due and (ii) unless at the time such notice isgiven, the obligation to pay Additional Amounts remains in effect.The notice shall identify the Notes to be redeemed and shall state:(1) the redemption date;(2) the redemption price, and, if applicable, the appropriate calculation of such redemption price and the amount of accrued interest tothe redemption date;(3) the name and address of the Paying Agent;(4) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;(5) if fewer than all the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes tobe redeemed;(6) that, unless the Issuers default in making such redemption payment or the Paying Agent is prohibited from making such paymentpursuant to the terms of this Indenture, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;(7) the Common Codes, CUSIP or ISIN number, as applicable, if any, printed on the Notes being redeemed; and(8) that no representation is made as to the correctness or accuracy of the Common Codes, CUSIP or ISIN number, as applicable, if any,listed in such notice or printed on the Notes.(b) At the Issuers’ request, the Trustee shall give the notice of redemption in the Issuers’ name and at the Issuers’ expense. In such event,the Issuers shall provide the Trustee and the Paying Agent with the information required and within the time periods specified by this Section 3.03. 29SECTION 3.04. Effect of Notice of RedemptionOnce notice of redemption is delivered, Notes called for redemption cease to accrue interest, become due and payable on the redemption dateand at the redemption price stated in the notice, provided, however, that any redemption notice given in respect of the redemption referred to in Section 5 ofthe Notes may, at the Issuers’ discretion, be subject to the satisfaction of one or more conditions precedent to the extent permitted under such Section 5. Uponsurrender to the Paying Agent, the Notes shall be paid at the redemption price stated in the notice, plus accrued interest, if any, to the redemption date;provided, however, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payableto the Holder of the redeemed Notes registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect thevalidity of the notice to any other Holder.SECTION 3.05. Deposit of Redemption PriceNo later than 10:00 a.m. New York time on the redemption date, the Issuers shall deposit with the relevant Paying Agent (or, if either Issuer or aRestricted Subsidiary of either Issuer is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accruedinterest on all Notes or portions thereof to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered bythe Issuers to the Trustee for cancellation. On and after the redemption date, interest shall cease to accrue on Notes or portions thereof called for redemptionso long as the Issuers have deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest, if any, on, the Notes tobe redeemed, unless the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture. For the avoidance of doubt, thePaying Agent and the Trustee shall be held harmless and have no liability with respect to payments or disbursements to be made by the Paying Agent andTrustee for which payment instructions are not made or that are not otherwise deposited by the respective times set forth in this Section 3.05.SECTION 3.06. Notes Redeemed in PartSubject to the terms hereof, upon surrender of a Note that is redeemed in part, the Issuers shall execute, and the Trustee or an authentication agentshall authenticate, for the Holder (at the Issuers’ expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.SECTION 3.07. PublicationWhere any notice is required to be published or delivered to DTC pursuant to this Indenture, the Issuers must provide the form of such notice tothe Trustee and the Paying Agents at least 8 Business Days prior to the final date for publication unless the Trustee agrees to a shorter period. 30ARTICLE 4CovenantsSECTION 4.01. Payment of NotesThe Issuers shall promptly pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and in thisIndenture. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with thisIndenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from payingsuch money to the Holders on that date pursuant to the terms of this Indenture.SECTION 4.02. Withholding Taxes(a) All payments made by or on behalf of either Issuer, a Successor Company or a Guarantor (a “Payor”) on the Notes or the Note Guarantees willbe made free and clear of and without withholding or deduction for, or on account of, any Taxes unless the withholding or deduction of such Taxes is thenrequired by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of:(1) The Netherlands or any political subdivision or Governmental Authority thereof or therein having power to tax;(2) any jurisdiction from or through which payment on any such Note or Note Guarantee is made by the relevant Payor or its agents, orany political subdivision or Governmental Authority thereof or therein having the power to tax; or(3) any other jurisdiction in which the Payor is incorporated or organized, engaged in business for tax purposes, resident for tax purposes,or any political subdivision or Governmental Authority thereof or therein having the power to tax (each of clause (1), (2) and (3), a “Relevant TaxingJurisdiction”),will at any time be required from any payments made with respect to any Note or Note Guarantee, including payments of principal, redemption price,premium, if any, or interest, the Payor will pay (together with such payments) such additional amounts (the “Additional Amounts”) as may be necessary inorder that the net amounts received in respect of such payments by the Holders after such withholding or deduction (including any such deduction orwithholding from such Additional Amounts), will not be less than the amounts which would have been received in respect of such payments on any suchNote or Note Guarantee in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable for or onaccount of:(1) any Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant Holder orthe beneficial owner of a Note (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of power over the relevant Holder orbeneficial owner, if the relevant Holder or beneficial owner is an estate, nominee, trust, partnership, limited liability company or corporation) and theRelevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment or adependent agent in, or being physically present in, the Relevant Taxing Jurisdiction) but excluding, in each case, any connection arising solely from theacquisition, ownership or holding of such Note or the receipt of any payment in respect thereof; 31(2) any Taxes that are imposed or withheld by reason of the failure by the Holder or the beneficial owner of the Note to comply with a writtenrequest of the Payor addressed to the Holder, after reasonable notice, to provide certification, information, documents or other evidence concerning thenationality, residence, identity or connection with the Relevant Taxing Jurisdiction of the Holder or such beneficial owner or to make any declaration orsimilar claim or satisfy any other reporting requirement relating to such matters, which is required by a statute, regulation or administrative practice of theRelevant Taxing Jurisdiction as a precondition to exemption from all or part of such Taxes;(3) any Taxes that are payable otherwise than by deduction or withholding from a payment of the principal, premium, if any, or interest on theNotes;(4) any estate, inheritance, gift, value added, sales, use, excise, transfer, personal property or similar Taxes;(5) any Taxes imposed in connection with a Note presented for payment (where presentation is required for payment) by or on behalf of aHolder or beneficial owner who would have been able to avoid such Tax by presenting the relevant Note to, or otherwise accepting payment from, anotherpaying agent;(6) any Taxes imposed or required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, asamended (the “Code”), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretationsthereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal orregulatory legislation, rules or practices implementing such an intergovernmental agreement); or(7) any combination of the above.Such Additional Amounts will also not be payable (x) if the payment could have been made without such deduction or withholding if thebeneficiary of the payment had presented the Note for payment (where presentation is required for payment) within 15 days after the relevant payment wasfirst made available for payment to the Holder or (y) where, had the beneficial owner of the Note been the Holder, such beneficial owner would not have beenentitled to payment of Additional Amounts by reason of clauses (1) to (7) inclusive above.(b) The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant TaxingJurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment ofany Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes, in such form as provided in the ordinary course by theRelevant Taxing Jurisdiction and as is reasonably available to the Payor, and will provide such certified copies to the Trustee. Such copies shall be madeavailable to the Holders upon request. The Payor will attach to each certified copy a certificate stating (x) that the amount of withholding Taxes evidenced bythe certified copy was paid in connection with payments in respect of the principal amount of Notes then outstanding and (y) the amount of such withholdingTaxes paid per $1,000 principal amount of the Notes. 32(c) If any Payor will be obligated to pay Additional Amounts under or with respect to any payment made on any Note or Note Guarantee, atleast 30 days prior to the date of such payment, the Payor will deliver to the Trustee an Officer’s Certificate stating the fact that Additional Amounts will bepayable and the amount so payable and such other information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevantpayment date (unless such obligation to pay Additional Amounts arises less than 45 days prior to the relevant payment date, in which case the Payor maydeliver such Officer’s Certificate as promptly as practicable after the date that is 30 days prior to the payment date). The Trustee will be entitled to rely solelyon such Officer’s Certificate as conclusive proof that such payments are necessary.(d) Wherever in this Indenture or the Note Guarantees there is mentioned, in any context:(1) the payment of principal,(2) purchase prices in connection with a purchase of Notes,(3) interest, or(4) any other amount payable on or with respect to any of the Notes,such reference shall be deemed to include payment of Additional Amounts as described in this Section 4.02 to the extent that, in such context, AdditionalAmounts are, were or would be payable in respect thereof.(e) The Payors will pay any present or future stamp, court or documentary taxes, or any other excise, property or similar Taxes, that arise in anyRelevant Taxing Jurisdiction from the execution, delivery, registration or enforcement of any Notes, any Note Guarantees, this Indenture or any otherdocument or instrument in relation thereto (other than a transfer or exchange of the Notes), and the Payors agree to indemnify the Holders for any such taxespaid by such Holders.(f) The foregoing obligations of this Section 4.02 will survive any termination, defeasance or discharge of this Indenture and will apply mutatismutandis to any subsequent Relevant Taxing Jurisdiction.SECTION 4.03. Offer to Repurchase upon Change of Control Triggering Event(a) Not later than 60 days following a Change of Control Triggering Event, unless the Issuers have exercised their right to redeem all ofthe Notes as described under Section 5 of the Notes, the Issuers will make an Offer to Purchase all of the outstanding Notes at a purchase price in cashequal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the purchase date. 33Notwithstanding anything to the contrary herein, an Offer to Purchase may be made in advance of a Change of Control Triggering Event, conditionalupon the applicable Change of Control or Change of Control Triggering Event.(b) An “Offer to Purchase” means an offer by the Company, the Co-Issuer or both Issuers to purchase Notes as required by this Indenture.An Offer to Purchase must be made by written offer (the “offer”) sent to the Holders. The Issuers will notify the Trustee, at least 5 Business Days (or suchshorter period as is acceptable to the Trustee) prior to sending the offer to Holders, of their obligation to make an Offer to Purchase, and the offer will besent by the Company, the Co-Issuer or the Issuers or, at their written request, by the Trustee in their name and at their expense.(c) The offer must include or state the following, which shall (where applicable) be the terms of the Offer to Purchase:(1) the provision of this Indenture pursuant to which the Offer to Purchase is being made;(2) the aggregate principal amount of the outstanding Notes offered to be purchased pursuant to the Offer to Purchase (the“purchase amount”);(3) the purchase price, including the portion thereof representing accrued and unpaid interest (the “Purchase Price”);(4) an expiration date not less than 30 days or more than 60 days after the date of the offer (the “Offer Expiration Date”) and asettlement date for purchase (the “purchase date”) not more than five Business Days after the Offer Expiration Date;(5) that a Holder may tender all or any portion of its Notes pursuant to an Offer to Purchase, subject to the requirement that anyportion of a Note tendered must be in denominations of $200,000 principal amount and integral multiples of $1,000 in excess thereof;(6) the place or places where Notes are to be surrendered for tender pursuant to the Offer to Purchase;(7) that each Holder electing to tender a Note pursuant to the offer will be required to surrender such Note at the place or placesspecified in the offer prior to the close of business on the Offer Expiration Date (such Note being, if the Issuers or the Trustee so requires, duly endorsedor accompanied by a duly executed written instrument of transfer);(8) that interest on any Note not tendered, or tendered but not purchased by the Company, the Co-Issuer or the Issuers, asapplicable, pursuant to the Offer to Purchase, will continue to accrue; 34(9) on the purchase date the Purchase Price will become due and payable on each Note accepted for purchase pursuant to the Offerto Purchase, and interest on Notes purchased will cease to accrue on and after the purchase date;(10) a statement that, if Notes in an aggregate principal amount less than or equal to the purchase amount are duly tendered andnot withdrawn pursuant to the Offer to Purchase, the Company, the Co-Issuer or the Issuers will purchase all such Notes;(11) a statement that if any Note is purchased in part, new Notes equal in principal amount to the unpurchased portion of the Notewill be issued;(12) a statement that if any Note contains a CUSIP number, no representation is being made as to the correctness of the CUSIPnumber either as printed on the Notes or as contained in the offer and that the Holder should rely only on the other identification numbers printed onthe Notes; and(13) a statement that, if the Notes are held in book entry form, Holders must comply with the applicable procedures of theDepositary.(d) Prior to the purchase date, the Company, the Co-Issuers, or the Issuers, as applicable, will accept tendered Notes for purchase asrequired by the Offer to Purchase and deliver to the Trustee all Notes so accepted together with an Officers’ Certificate specifying which Notes havebeen accepted for purchase. On the purchase date the Purchase Price will become due and payable on each Note accepted for purchase, and interest onNotes purchased will cease to accrue on and after the purchase date. The Trustee will promptly return to Holders any Notes not accepted for purchaseand send to Holders new Notes equal in principal amount to any unpurchased portion of any Notes accepted for purchase in part.(e) The Issuers will not be required to make an Offer to Purchase upon a Change of Control Triggering Event, with respect to the Notes ofa series if (i) a third party makes the offer to purchase in the manner, at the times and otherwise in compliance with the requirements set forth pursuantto this Section 4.03 and purchases all such Notes validly tendered and not withdrawn under such Offer to Purchase or (ii) a notice of redemption hasbeen given pursuant to Section 5 of the Notes.(f) The Issuers will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securitieslaws or regulations (or rules of any exchange on which the Notes are then listed) in connection with the repurchase of Notes pursuant to thisSection 4.03. To the extent that the provisions of any securities laws or regulations (or exchange rules) conflict with provisions of this Indenture, theIssuers will comply with the applicable securities laws and regulations (or exchange rules) and will not be deemed to have breached their obligations,or require a repurchase of the Notes, under the Change of Control Triggering Event provisions of this Indenture by virtue of the conflict. 35SECTION 4.04. U.S. Federal Income Tax Treatment of the Co-IssuerThe Co-Issuer may not hold any material assets, become liable for any material obligations or engage in any business activities, provided that itmay be a co-obligor or Guarantor with respect to the Notes or any other Indebtedness issued by the Company or a Guarantor, and may engage in anyactivities directly related thereto or necessary in connection therewith. The Co-Issuer is treated as a disregarded entity of the Company for U.S. federal incometax purposes, and for so long as any of the Notes remain outstanding, the Issuers will not take any action that is inconsistent with the Co-Issuer being treatedas a disregarded entity of the Company for U.S. federal income tax purposes.SECTION 4.05. Limitation on LiensThe Issuers will not, and will not permit any Significant Subsidiary to, issue or assume any Indebtedness if such Indebtedness is secured by aLien, other than a Permitted Lien, upon any Principal Property of the Issuers or any Significant Subsidiary without:(a) at the same time providing that the Notes and the obligations hereunder are directly, equally and ratably secured with (or prior to, in thecase of Liens with respect to Subordinated Indebtedness) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured; or(b) providing such other Lien for the Notes and the obligations hereunder as may be approved by a majority in aggregate principal amount ofHolders of Notes of such series.SECTION 4.06. Limitation on Sale and Leaseback TransactionsThe Issuers will not, and will not permit any Significant Subsidiary to, enter into any Sale and Leaseback Transaction with respect to anyPrincipal Property unless:(a) the Company or such Significant Subsidiary would be entitled to incur Indebtedness secured by a mortgage on the property to be leased inan amount equal to Attributable Liens with respect to such Sale and Leaseback Transaction without equally and ratably securing the Notes of such seriespursuant to Section 4.05 of this Indenture;(b) the net proceeds of the sale of the Principal Property to be leased are applied within 365 days of the effective date of the Sale and LeasebackTransaction to (i) the purchase, construction, development or acquisition of another Principal Property or (ii) the repayment of (x) any series of Notes,(y) Indebtedness of the Issuers that ranks equally with, or is senior to, the Notes or (z) any Indebtedness of one or more Significant Subsidiaries; provided, ineach case, that in lieu of applying such amount to such retirement, the Issuers may deliver Notes to the Trustee for cancellation, such Notes to be credited atthe cost thereof to the Issuers;(c) such Sale and Leaseback Transaction was entered into prior to the Issue Date; 36(d) such Sale and Leaseback Transaction involves a lease for not more than three years (or which may be terminated by the Company or aSignificant Subsidiary within a period of not more than three years); or(e) such Sale and Leaseback Transaction with respect to any Principal Property was between only the Company and a Subsidiary of theCompany or only between Subsidiaries of the Company.SECTION 4.07. Guarantees by SubsidiariesThe following Subsidiaries will, subject to the Agreed Security Principles, jointly and severally, guarantee the Notes on a senior unsecured basison the Issue Date in accordance with Article 10: NXP Semiconductors Netherlands B.V., NXP Semiconductors USA, Inc. and Freescale Semiconductor, Inc.SECTION 4.08. Compliance CertificateThe Company shall deliver to the Trustee within 120 days after the end of each fiscal year, an Officer’s Certificate in substantially the form ofExhibit C hereto stating that a review of the activities of the Company during the preceding fiscal year has been made under the supervision of the signingOfficer with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating,as to the Officer signing such Officer’s Certificate, that to the best of his or her knowledge, the Company has kept, observed, performed and fulfilled each andevery covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of thisIndenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledgeand what action the Issuers are taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remainsin existence by reason of which payments on account of the principal of or interest or Additional Amounts, if any, on the Notes is prohibited or if such eventhas occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto, and reciting the details of suchaction. Within 30 days after the occurrence of a Default, the Company shall deliver to the Trustee a written notice of any events of which it is aware wouldconstitute certain Defaults their status and what action the Company is taking or proposes to take with respect thereto.The Trustee shall not be deemed to have knowledge of any Default or Event of Default except any Default or Event of Default of which itsResponsible Officer shall have received written notification in accordance with Section 11.03 or obtained actual knowledge.SECTION 4.09. Further Instruments and ActsUpon request of the Trustee, the Issuers shall execute and deliver such further instruments and do such further acts as may be reasonablynecessary or proper to carry out more effectively the purpose of this Indenture. 37ARTICLE 5Successor CompanySECTION 5.01. Merger and Consolidation of the Company(a) The Company will not consolidate with or merge with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all orsubstantially all its assets, as an entirety or substantially as an entirety, in one transaction or a series of related transactions, to any Person, or permit anyPerson to consolidate with or merge with or into it, unless:(1) either (a) the Company will be the surviving Person of any such consolidation or merger or any such sale, assignment, conveyance,lease, transfer or other disposition or (b) the resulting, surviving or transferee Person of any such consolidation or merger or any such sale, assignment,conveyance, lease, transfer or other disposition will be a Person organized and existing under the laws of any member state of the European Union onJanuary 1, 2004, the United States of America, any state thereof or the District of Columbia, Canada or any province of Canada, Norway or Switzerland (or, aPerson not organized under such laws which agrees (i) to submit to the jurisdiction of the United States district court for the Southern District of New York,and (ii) to indemnify and hold harmless the Holders against certain Taxes and expenses due as a result of such transaction, if any), and, in the case of (y), suchPerson expressly assumes, by supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all theobligations of the Company under the Notes and this Indenture (any such Person under (a) or (b), a “Successor Company”)(2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the SuccessorCompany or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiaryat the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and(3) the Company shall have delivered to the Trustee (i) an Officer’s Certificate and an Opinion of Counsel, each to the effect that suchtransaction and such supplemental indenture (if any) comply with this Indenture and (ii) an Opinion of Counsel to the effect that such supplementalindenture (if any) has been duly authorized, executed and delivered and is a legal, valid and binding agreement enforceable against the Successor Company(in each case, in form and substance reasonably satisfactory to the Trustee), provided that, in each case in giving an Opinion of Counsel, counsel may rely onan Officer’s Certificate as to any matters of fact, including as to satisfaction of Sections 5.01(a)(2).The restriction in Section 5.01(a)(3) shall not be applicable to (A) the consolidation with or merger with or into the Company, or the sale,assignment, conveyance, lease, transfer or other disposition of the all or substantially all the Company’s assets to an Affiliate, if an Officer or the Board ofDirectors determines in good faith that the purpose of such transaction is principally to change the Company’s state of incorporation or convert theCompany’s form of organization to another form; or (B) the consolidation with or merger with or into the Company, or the sale, assignment, conveyance,lease, transfer or other disposition of the 38all or substantially all the Company’s assets to a single Wholly Owned Subsidiary in accordance with applicable law, provided that, if no supplementalindenture needs to be executed in relation to such transaction, the Company will notify the Trustee of such transaction (but no Officer’s Certificate orOpinion of Counsel shall need to be delivered to the Trustee in relation thereto).(b) If any consolidation or merger or any sale, assignment, conveyance, lease, transfer or other disposition of all or substantially all of theCompany’s assets occurs in accordance with this Indenture, the Successor Company (if other than the Company) will succeed to, and be substituted for theCompany and may exercise every right and power under this Indenture and the Notes with the same effect as if such Successor Company had been named inthe Company’s place in this Indenture, and the Company will be released from all its obligations and covenants under this Indenture and the Notes.SECTION 5.02. Merger and Consolidation of the Co-Issuer(a) The Co-Issuer may not consolidate with, merge with or into any Person or permit any Person to merge with or into the Co-Issuer unlessconcurrently therewith, a Subsidiary of the Company that is a limited liability company or corporation organized under the laws of the United States ofAmerica, any state thereof or the District of Columbia (which may be the Co-Issuer or the continuing Person as a result of such transaction) expressly assumesall the obligations of the Co-Issuer under the Notes and this Indenture.(b) Upon the consummation of any transaction effected in accordance with Section 5.02(a), the resulting, surviving Co-Issuer willsucceed to, and be substituted for the Co-Issuer and may exercise every right and power under this Indenture and the Notes with the same effect as ifsuch successor Person had been named in the Co-Issuer’s place in this Indenture and the Co-Issuer will be released from all its obligations andcovenants under this Indenture and the Notes.(c) Any such surviving or transferee Co-Issuer must be a disregarded entity for U.S. federal income tax purposes, which is either a directWholly Owned Subsidiary of the Company, or held through one or more Subsidiaries of the Company that are treated as disregarded entities for U.S. federalincome tax purposes.SECTION 5.03. Merger and Consolidation of a Guarantor(a) No Guarantor may:(1) consolidate with or merge with or into any Person, or(2) sell, convey, transfer or dispose of all or substantially all its assets, as an entirety or substantially as an entirety, in one transaction or aseries of related transactions, to any Person, or(3) permit any Person to merge with or into the Guarantor unless 39(A) the other Person is the Company, the Co-Issuer or a Guarantor (or becomes a Guarantor concurrently with the transaction); or(B) (1) either (x) such Guarantor is the continuing Person or (y) the resulting, surviving or transferee Person expressly assumes allof the obligations of the Guarantor under its Note Guarantee; and (2) immediately after giving effect to the transaction, no Default has occurred and iscontinuing; or(C) the transaction constitutes a sale or other disposition (including by way of consolidation or merger) of the Guarantor or the saleor disposition of all or substantially all the assets of the Guarantor otherwise permitted by this Indenture.ARTICLE 6Defaults and RemediesSECTION 6.01. Events of Default(a) An “Event of Default” occurs if or upon:(1) default in any payment of interest or Additional Amounts, if any, on any Note when due and payable, if that default continues for aperiod of 30 days, or failure to comply for 30 days with the notice provisions in connection with a Change of Control Triggering Event;(2) default in the payment of the principal amount of or premium, if any, on any Note issued under this Indenture when due at its StatedMaturity or upon optional redemption or otherwise (including the failure to pay the repurchase price for such Notes tendered pursuant to an Offer toPurchase), if that default or failure continues for a period of two days;(3) failure to comply for 90 days after written notice by the Trustee on behalf of the Holders or by the Holders of 30% in aggregateprincipal amount of the outstanding Notes with any of the Issuers’ obligations under Article 4 or 5 (in each case, other than an Event of Default underSection 6.01 (a)(1) or 6.01(a)(2));(4) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidencedany Indebtedness for money borrowed by either Issuer or any of its Significant Subsidiaries (or the payment of which is Guaranteed by either Issuer or any ofits Significant Subsidiaries) other than Indebtedness owed to either Issuer or a Significant Subsidiary, whether such Indebtedness or Guarantee now exists, oris created after the Issue Date, which default:(a) is caused by a failure to pay principal at the Stated Maturity on such Indebtedness, immediately upon the expiration of thegrace period provided in such Indebtedness; or 40(b) results in the acceleration of such Indebtedness prior to its express maturity not rescinded or cured within 30 days after suchacceleration;and, in each case, the aggregate principal amount of any such Indebtedness, together with the aggregate principal amount of any other suchIndebtedness under which there has been a payment default or the maturity of which has been so accelerated and remains undischarged after such 30day period, aggregates to €200.0 million or more;(5) either Issuer or a Significant Subsidiary institutes or consents to the institution of any proceeding under any Debtor Relief Law, ormakes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator,rehabilitator, administrator, administrative receiver or similar office is appointed without the application or consent of such Person and the appointmentcontinues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any materialpart of its property or assets is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for reliefis entered in any such proceeding;(6) failure by the Issuers or any Significant Subsidiary to pay final judgments aggregating in excess of €200.0 million (exclusive of anyamounts that a solvent insurance company has acknowledged liability for), which judgments are not paid, discharged or stayed for a period of 60 days afterthe judgment becomes final and non-appealable; and(7) any Guarantee ceases to be in full force and effect, other than in accordance with the terms of this Indenture or a Guarantor denies ordisaffirms in writing its obligations under its Guarantee, other than in accordance with the terms thereof or upon release of the Guarantee in accordance withthis Indenture.(b) A default under Sections 6.01(a)(3), 6.01(a)(4) or 6.01(a)(6) will not constitute an Event of Default until the Trustee or the Holders of30% in aggregate principal amount of the outstanding Notes under this Indenture notify the Issuers of the default and the Issuers do not cure suchdefault within the time specified in Sections 6.01(a)(3), 6.01(a)(4) or 6.01(a)(6), as applicable, after receipt of such notice.SECTION 6.02. Acceleration(a) If an Event of Default (other than an Event of Default described in Section 6.01(a)(5) above) occurs and is continuing the Trustee by notice toeither Issuer or the Holders of at least 30% in aggregate principal amount of the outstanding Notes under this Indenture by written notice to either Issuer andthe Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, includingAdditional Amounts, if any, on all the Notes under this Indenture to be due and payable. Upon such a declaration, such principal, premium and accrued andunpaid interest, including Additional Amounts, if any, will be due and payable immediately. In the event of a declaration of acceleration of the Notesbecause an Event of Default described in Section 6.01(a)(4) has occurred and is continuing, the declaration of acceleration of the Notes shall be automaticallyannulled if the event of default or payment default triggering such Event of Default 41pursuant to Section 6.01(a)(4) shall be remedied or cured, or waived by the holders of the Indebtedness, or the Indebtedness that gave rise to such Event ofDefault shall have been discharged in full, within 30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the accelerationof the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment ofprincipal, premium or interest, including Additional Amounts, if any, on the Notes that became due solely because of the acceleration of the Notes, have beencured or waived.(b) If an Event of Default described in Section 6.01(a)(5) above occurs and is continuing, the principal of, premium, if any, and accrued andunpaid interest, including Additional Amounts, if any, on all the Notes will become and be immediately due and payable without any declaration or other acton the part of the Trustee or any Holders.SECTION 6.03. Other RemediesSubject to the duties of the Trustee as provided for in Article 7, if an Event of Default occurs and is continuing, the Trustee may pursue anyavailable remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delayor omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy orconstitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to theextent permitted by law.SECTION 6.04. Waiver of Past DefaultsHolders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may, on behalf of the Holders of allthe Notes, waive all past or existing Defaults or Events of Default except a continuing Default in the payment of the principal, premium or interest, andAdditional Amounts, if any, on the Notes and rescind any acceleration with respect to the Notes and its consequences if rescission would not conflict withany judgment or decree of a court of competent jurisdiction. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequentor other Default or impair any consequent right.SECTION 6.05. Control by MajorityThe Holders of a majority in aggregate principal amount of the Notes then outstanding may direct in writing the time, method and place ofconducting any proceeding for exercising any remedy available to the Trustee or to exercise any trust or power conferred on the Trustee. However, theTrustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is undulyprejudicial to the rights of other Holders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other actiondeemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled toindemnification or other security reasonably satisfactory to it against all losses, liabilities and expenses caused by taking or not taking such action. 42SECTION 6.06. Limitation on Suits(a) Except to enforce the right to receive payment of principal or interest when due on the Notes, no Holder may pursue any remedy with respectto this Indenture or the Notes unless:(1) such Holder has previously given to the Trustee written notice that an Event of Default is continuing;(2) Holders of at least 30% in aggregate principal amount of the outstanding Notes have requested in writing the Trustee to pursue theremedy;(3) such Holders have offered in writing to the Trustee reasonable security or indemnity against any loss, liability or expense;(4) the Trustee has not complied with such request within 60 days after the receipt of the written request and the offer of security orindemnity; and(5) the Holders of a majority in aggregate principal amount of the outstanding Notes have not given the Trustee a written directionthat, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.(b) A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.SECTION 6.07. [Reserved]SECTION 6.08. Collection Suit by TrusteeIf an Event of Default specified in Sections 6.01(a)(1) or 6.01(a)(2) occurs and is continuing, the Trustee may recover judgment in its own nameand as trustee of an express trust against the Issuers or any other obligor on the Notes for the whole amount then due and owing (together with interest on anyunpaid interest to the extent lawful) and the amounts provided for in Section 7.07.SECTION 6.09. Trustee May File Proofs of ClaimThe Trustee may file such proofs of claim and other papers or documents and take such actions as may be necessary or advisable in order to havethe claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Issuers, their creditors or their property and, unless prohibited bylaw or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, andany Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shallconsent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses,disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. 43SECTION 6.10. PrioritiesIf the Trustee collects any money or property pursuant to this Article 6, including upon enforcement of any Liens, it shall pay out the money orproperty in the following order:FIRST: to the Trustee, the Registrar, the Transfer Agent and the Paying Agents for amounts due under Section 7.07;SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind,according to the amounts due and payable on the Notes for principal and interest, respectively; andTHIRD: to the Issuers.The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. At least 15 days before such recorddate, the Trustee shall mail to each Holder and the Issuers a notice that states the record date, the payment date and amount to be paid.SECTION 6.11. Undertaking for CostsIn any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by itas the Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in itsdiscretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and goodfaith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee or a Paying Agent or a suit by Holders ofmore than 10% in principal amount of the Notes then outstanding.SECTION 6.12. Waiver of Stay or Extension LawsThe Issuers (to the extent they may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take thebenefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performanceof this Indenture; and the Issuers (to the extent that they may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall nothinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though nosuch law had been enacted. 44ARTICLE 7TrusteeSECTION 7.01. Duties of Trustee(a) The duties and responsibilities of the Trustee are as provided by the TIA and as set forth herein. If an Event of Default has occurred and iscontinuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as aprudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.(b) Except during the continuance of an Event of Default:(i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no impliedcovenants or obligations shall be read into this Indenture against the Trustee; and(ii) in the absence of wilfull misconduct on its part, the Trustee may conclusively rely, as to the truth of the statements and thecorrectness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture.However, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but neednot confirm or investigate the accuracy of mathematical calculations or other facts stated therein).(c) The Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act or its ownwillful misconduct, except that:(i) this Section 7.01(c) does not limit the effect of Section 7.01(b);(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that theTrustee was negligent in ascertaining the pertinent facts; and(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a directionreceived by it pursuant to Sections 6.02 or 6.05;(d) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.01(a), 7.01(b) and 7.01(c) and the TIA.(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur liability in the performanceof any of its duties hereunder to take or omit to take any action under this Indenture or take any action at the request or direction of Holders, if it hasreasonable grounds for believing that repayment of such funds is not assured to it or it does not receive indemnity reasonably satisfactory 45to it in its discretion against any loss, liability or expense which might reasonably be incurred by it in compliance with such request or direction norshall the Trustee be required to do anything which is illegal or contrary to applicable laws. The Trustee will not be liable to the Holders if prevented ordelayed in performing any of its obligations or discretionary functions under this Indenture by reason of any present or future law applicable to it, byany governmental or regulatory authority or by any circumstances beyond its control.(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers.(g) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.SECTION 7.02. Rights of TrusteeSubject to TIA Sections 315(a) through (d):(a) The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in itsopinion, based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction or, to the extent applicable, the State of NewYork. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction, or, to theextent applicable, the State of New York or if it is determined by any court or other competent authority in that jurisdiction, or, to the extentapplicable, in the State of New York, that it does not have such power.(b) The Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to havebeen signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.(c) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trusteeshall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel.(d) The Trustee may act through attorneys and agents and shall not be responsible for the misconduct or gross negligence of any agentappointed with due care.(e) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within itsrights or powers conferred upon it by this Indenture; provided, however, that the Trustee’s conduct does not constitute willful misconduct or grossnegligence.(f) The Trustee may retain professional advisers to assist it in performing its duties under this Indenture. The Trustee may consult withcounsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes 46shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faithand in accordance with the advice or opinion of such counsel.(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any Officer’s Certificate, Opinion ofCounsel, or any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, note,other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into suchfacts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine thebooks, records and premises of the Issuers, personally or by agent or attorney at the sole cost of the Issuers.(h) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order ordirection of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee indemnity or othersecurity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred by it in compliance with such request,order or direction.In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Holders, each representing lessthan the requisite majority in aggregate principal amount of the Notes then outstanding, pursuant to the provisions of this Indenture, the Trustee, in its solediscretion, may determine what action, if any, shall be taken and shall be held harmless and shall not incur any liability for its failure to act until suchinconsistency or conflict is, in its reasonable opinion, resolved.(i) Except with respect to Section 4.01, the Trustee shall have no duty to inquire as to the performance of the Issuers with respect to thecovenants contained in Article 4.(j) The Trustee shall not have any obligation or duty to monitor, determine or inquire as to compliance, and shall not be responsible orliable for compliance with restrictions on transfer, exchange, redemption, purchase or repurchase, as applicable, of minimum denominations imposedunder this Indenture or under applicable law or regulation with respect to any transfer, exchange, redemption, purchase or repurchase, as applicable, ofany interest in any Notes.(k) If any Note Guarantor is substituted to make payments on behalf of the Issuers pursuant to Article 10, the Issuers shall promptly notifythe Trustee of such substitution.(l) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to,and shall be enforceable by the Trustee in its capacity hereunder and by each agent (including Deutsche Bank Trust Company Americas) and custodianand other Person employed with 47due care to act as agent hereunder (including without limitation each Transfer Agent and Paying Agent). Each Paying Agent and Transfer Agent shallnot be liable for acting in good faith on instructions believed by it to be genuine and from the proper party.(m) The Trustee shall not be required to give any bond or surety with respect to the performance of its duties or the exercise of its powersunder this Indenture.(n) The permissive right of the Trustee to take the actions permitted by this Indenture will not be construed as an obligation or duty to doso.(o) Anything in this Indenture to the contrary notwithstanding, in no event shall the Trustee be liable for special, indirect orconsequential loss or damage of any kind whatsoever (including but no limited to lost profits), even if the Trustee has been advised of the likelihood ofsuch loss or damage and regardless of the form of action(p) The Trustee may assume without inquiry in the absence of actual knowledge that the Issuers are each duly complying with theirobligations contained in this Indenture required to be performed and observed by them, and that no Default or Event of Default or other event whichwould require repayment of the Notes has occurred.SECTION 7.03. Individual Rights of TrusteeThe Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers or theirAffiliates with the same rights it would have if it were not Trustee. For the avoidance of doubt, any Paying Agent, Transfer Agent or Registrar may do thesame with like rights.SECTION 7.04. Trustee’s DisclaimerThe Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not beaccountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers’ direction under any provision of thisIndenture, and it shall not be responsible for any statement of the Issuers in this Indenture or in any document issued in connection with the sale of the Notesor in the Notes other than the Trustee’s certificate of authentication. The Trustee shall not be charged with knowledge of the identity of any SignificantSubsidiary unless either (a) a Responsible Officer shall have actual knowledge thereof or (b) the Trustee shall have received notice thereof in accordance withSection 11.03 hereof from the Issuers or any Holder.SECTION 7.05. Notice of DefaultsIf a Default or Event of Default occurs and is continuing and the Trustee is informed of such occurrence by either Issuer, the Trustee must givenotice of the Default to the Holders within 60 days after the Trustee is informed of such occurrence. Except in the case of a Default in payment of principal ofor interest or premium, if any, on any Note, the Trustee may withhold the notice if and so long as a committee of its trust officers of the Trustee in good faithdetermines that withholding the notice is in the interests of Holders. Notice to Holders under this Section will be given in the manner and to the extentprovided in TIA Section 313(c). 48SECTION 7.06. [Reserved]SECTION 7.07. Compensation and IndemnityThe Issuers, or, upon the failure of the Issuers to pay, each Note Guarantor (if any), jointly and severally, shall pay to the Trustee from time totime such compensation as the Issuers and Trustee may from time to time agree for its acceptance of this Indenture and services hereunder and under theNotes. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.In the event of the occurrence of an Event of Default or the Trustee considering it expedient or necessary or being requested by the Issuers toundertake duties which the Trustee and the Issuers agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee, theIssuers shall pay to the Trustee such additional remuneration as shall be agreed between them.The Issuers and each Note Guarantor (if any), jointly and severally, shall reimburse the Trustee promptly upon request for all reasonabledisbursements, advances and expenses incurred or made by it (as evidenced in an invoice from the Trustee), including costs of collection, in addition to thecompensation for its services. Such expenses shall include the properly incurred compensation and expenses, disbursements and advances of the Trustee’sagents, counsel, accountants and experts. The Issuers and each Note Guarantor (if any), jointly and severally shall indemnify the Trustee and the PayingAgents and their respective officers, directors, agents and employers against any and all loss, liability, taxes (other than taxes based on the income of theTrustee or the Paying Agents) or expenses (including reasonable attorneys’ fees) incurred by or in connection with the acceptance or administration of itsduties under this Indenture and the Notes, including the costs and expenses of enforcing this Indenture against the Issuers (including this Section 7.07) anddefending itself against any claim (whether asserted by the Issuers or any Holder or any other person) or liability in connection with the exercise orperformance of any of its powers or duties hereunder.The Trustee shall notify the Issuers of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided,however, that any failure so to notify the Issuers shall not relieve the Issuers or any Note Guarantor of its indemnity obligations hereunder. Except in caseswhere the interests of the Issuers and the Trustee may be adverse, the Issuers shall defend the claim and the indemnified party shall provide reasonablecooperation at the Issuers’ and any Note Guarantor’s expense in the defense. Notwithstanding the foregoing, such indemnified party may, in its solediscretion, assume the defense of the claim against it and the Issuers and any Note Guarantor shall, jointly and severally, pay the reasonable fees and expensesof the indemnified party’s defense (as evidenced in an invoice from the Trustee). Such indemnified parties may have separate counsel of their choosing andthe Issuers and any Note Guarantor, jointly and severally, shall pay the reasonable fees and expenses of such counsel (as evidenced in an invoice from theTrustee); provided, however, that the Issuers shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in 49such indemnified parties’ reasonable judgment, there is no conflict of interest between the Issuers and any Note Guarantor, as applicable, and such parties inconnection with such defense. The Issuers need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. TheIssuers need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willfulmisconduct, negligence or bad faith.To secure the Issuers’ and any Note Guarantor’s payment obligations in this Section 7.07, the Trustee and the Paying Agents have a lien prior tothe Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particularNotes.The Issuers’ and any Note Guarantor’s payment obligations pursuant to this Section and any lien arising thereunder shall survive the satisfactionor discharge of this Indenture, any rejection or termination of this Indenture under any Debtor Relief Law or the resignation or removal of the Trustee and thePaying Agents. Without prejudice to any other rights available to the Trustee and the Paying Agents under applicable law, when the Trustee and the PayingAgents incur expenses after the occurrence of a Default specified in Section 6.01(a)(6) with respect to the Issuers, the expenses are intended to constituteexpenses of administration under the Debtor Relief Law.In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever(including, but not limited to, loss of profit) irrespective of whether such Trustee has been advised of the likelihood of such loss or damage and regardless ofthe form of action.For the avoidance of doubt, the rights, privileges, protections, immunities and benefits given to the Trustee in this Section 7.07, including itsright to be indemnified, are extended to, and shall be enforceable by the Trustee in each of its capacities hereunder including, without limitation, as Registrar,Transfer Agent and Paying Agent, and by each agent (including Deutsche Bank Trust Company Americas), custodian and other Person employed with duecare to act as agent hereunder.SECTION 7.08. Replacement of Trustee(a) The Trustee may resign at any time by so notifying the Issuers. If the Trustee is no longer eligible under Section 7.10 or in the circumstancesdescribed in TIA Section 310(b), any Holder that satisfies the requirements of TIA Section 310(b) may petition any court of competent jurisdiction for theremoval of the Trustee in writing and the appointment of a successor Trustee. The Holders of a majority in principal amount of the Notes then outstandingmay remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Issuers shall be entitled to remove the Trustee or any Holderwho has been a bona fide Holder for not less than six months may petition any court for removal of the Trustee and appointment of a successor Trustee, if:(i) the Trustee has or acquires a conflict of interest that is not eliminated; 50(ii) the Trustee is adjudged bankrupt or insolvent;(iii) a receiver or other public officer takes charge of the Trustee or its property; or;(iv) the Trustee otherwise becomes incapable of acting as Trustee hereunder.(b) If the Trustee resigns, is removed pursuant to Section 7.08(a) or if a vacancy exists in the office of Trustee for any reason (the Trusteein such event being referred to herein as the retiring Trustee), the Issuers shall promptly appoint a successor Trustee.(c) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon theresignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of theTrustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer allproperty held by it as Trustee to the successor Trustee, provided, that all sums owing to the Trustee hereunder have been paid and subject to the lienprovided for in Section 7.07 and the recognition of the retiring Trustee’s lien thereto by the successor Trustee.(d) If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee or theHolders of 10% in principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.(e) If the Trustee fails to comply with Section 7.10, unless the Trustee’s duty to resign is stayed as provided in Section 310(b) of the TIA,any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.(f) Notwithstanding the replacement of the Trustee pursuant to this Section, the Issuers’ obligations under Section 7.07 shall continue forthe benefit of the retiring Trustee.(g) For the avoidance of doubt, the rights, privileges, protections, immunities and benefits given to the Trustee in this Section 7.08,including its right to be indemnified, are extended to, and shall be enforceable by each Paying Agent, Transfer Agent and Registrar employed to acthereunder.(h) The Trustee agrees to give the notices provided for in, and otherwise comply with, TIA Section 310(b). 51SECTION 7.09. Successor Trustee by MergerIf the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, anothercorporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by thisIndenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication ofany predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor tothe Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such casessuch certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.SECTION 7.10. EligibilityThe Indenture must always have a Trustee that satisfies the requirements of TIA Section 310(b) and has a combined capital and surplus of at least$25,000,000 as set forth in its most recent published annual report of condition.SECTION 7.11. Certain ProvisionsEach Holder by accepting a Note authorizes and directs on his or her behalf the Trustee to enter into and to take such actions and to make suchacknowledgements as are set forth in this Indenture or other documents entered into in connection therewith. The Trustee shall not be responsible for thelegality, validity, effectiveness, suitability, adequacy or enforceability of any obligation or rights created or purported to be created thereby or pursuantthereto, nor shall it be responsible or liable to any person because of any invalidity of any provision of such documents or the unenforceability thereof,whether arising from statute, law or decision of any court.SECTION 7.12. Preferential Collection of Claims Against IssuerThe Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee whohas resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated.ARTICLE 8Discharge of Indenture; DefeasanceSECTION 8.01. Discharge of Liability on Notes; Defeasance(a) Any Note Guarantees and this Indenture will be discharged and cease to be of further effect (except as to surviving rights ofconversion or transfer or exchange of the Notes, as expressly provided for in this Indenture) as to all outstanding Notes when 52(1) either (a) all the Notes previously authenticated and delivered (other than certain lost, stolen or destroyed Notes and certain Notes for whichprovision for payment was previously made and thereafter the funds have been released to the Issuers) have been delivered to the Trustee forcancellation; or (b) all Notes not previously delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due andpayable at their Stated Maturity within one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory tothe Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers; (2) the Issuers have deposited or causedto be deposited with the Trustee (or such entity designated by the Trustee for this purpose) money, U.S. Government Obligations, or a combinationthereof, as applicable, in an amount sufficient to pay and discharge the entire indebtedness on the Notes not previously delivered to the Trustee forcancellation, for principal, premium, if any, and interest to the date of deposit (in the case of Notes that have become due and payable), or to the StatedMaturity or redemption date, as the case may be; (3) the Issuers have paid or caused to be paid all other sums payable under this Indenture; and (4) theIssuers have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel each to the effect that all conditions precedent under thisSection 8.01 have been complied with, provided that any such counsel may rely on any Officer’s Certificate as to matters of fact (including as tocompliance with the foregoing clauses (1), (2) and (3)).(b) Subject to Sections 8.01(c) and 8.02, either Issuer at any time may terminate (i) all of its obligations and all obligations of each NoteGuarantor (if any) under the Notes, any Note Guarantees and this Indenture (“legal defeasance option”) or (ii) its obligations under Article 4 (other thanSections 4.01, 4.02 and 4.04) and under Article 5 (other than Sections 5.01(a)(1) and 5.01(a)(2)), and thereafter any omission to comply with suchobligations shall not constitute a Default or an Event of Default with respect to the Notes, and the operation of Sections 6.01(a)(3) (other than withrespect to Sections 5.01(a)(1) and 5.01(a)(2)), 6.01(a)(4), 6.01(a)(5), 6.01(a)(6) (with respect to the Issuers and Significant Subsidiaries) and 6.01(a)(7)(“covenant defeasance option”). The Issuers at their option at any time may exercise their legal defeasance option notwithstanding their prior exerciseof their covenant defeasance option. In the event that the Issuers terminate all of their obligations under the Notes and this Indenture by exercising itslegal defeasance option, the obligations under any Note Guarantees shall each be terminated simultaneously with the termination of such obligations.If the Issuers exercise their legal defeasance option or its covenant defeasance option, each Note Guarantor (if any) will be released from all itsobligations under its Note Guarantee.Upon satisfaction of the conditions set forth herein and upon request of the Issuers, the Trustee shall acknowledge in writing the discharge ofthose obligations that the Issuers terminate.(c) Notwithstanding Sections 8.01(a) and (b) above, the Issuers’ and any Note Guarantors’ obligations in Sections 2.04, 2.05, 2.06, 2.07,2.08, 2.09, 2.10, 2.11, 7.01, 7.02, 7.03, 7.07, 7.08 and this Article 8, as applicable, shall survive until the Notes have been paid in full. Thereafter, theIssuers’ and any Note Guarantors’ obligations in Sections 7.07, 8.05 and 8.06, as applicable, shall survive. 53SECTION 8.02. Conditions to Defeasance(a) The Issuers may exercise their legal defeasance option or their covenant defeasance option only if:(1) Either Issuer has irrevocably deposited in trust (the “defeasance trust”) with the Trustee (or such entity designated by the Trustee forthis purpose) cash in U.S. dollars or U.S. Government Obligations or a combination thereof for the payment of principal, premium, if any, and interest on theNotes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of:(A) in the case of legal defeasance, an Opinion of Counsel in the United States to the effect that, subject to customary assumptions andexclusions, the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit anddefeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case ifsuch deposit and defeasance had not occurred. Such Opinion of Counsel in the United States must be based on a ruling of the U.S. Internal Revenue Serviceor a change in applicable U.S. federal income tax law that is issued or becomes effective after the issuance of the Notes;(B) in the case of covenant defeasance, an Opinion of Counsel in the United States to the effect that, subject to customary assumptionsand exclusions, the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenantdefeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case ifsuch covenant defeasance had not occurred;(C) an Officer’s Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying,defrauding or preferring any creditors of the Issuers;(D) an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions andexclusions), each stating that all conditions precedent provided for or relating to legal defeasance or covenant defeasance, as the case may be, have beencomplied with;(E) an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulatedinvestment company under the U.S. Investment Company Act of 1940; and(F) the Issuers deliver to the Trustee all other documents or other information that the Trustee may reasonably require in connection witheither defeasance option. 54(b) Before or after a deposit, the Issuers may make arrangements satisfactory to the Trustee for the redemption of Notes at a future datein accordance with Article 3.SECTION 8.03. Application of Trust MoneyThe Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the depositedmoney and the money from the Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of andinterest on the Notes.SECTION 8.04. Repayment to IssuersThe Trustee and the Paying Agent shall promptly turn over to the Issuers upon request any money or U.S. Government Obligations held by it asprovided in this Article which, in the written opinion of an internationally recognized firm of independent public accountants delivered to the Trustee (whichdelivery shall only be required if U.S. Government Obligations have been so deposited), are in excess of the amount thereof which would then be required tobe deposited to effect an equivalent discharge or defeasance in accordance with this Article 8.Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Issuers upon written request any moneyheld by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to theIssuers for payment as general creditors, and the Trustee and the Paying Agent shall have no further liability with respect to such monies.SECTION 8.05. Indemnity for U.S. Government ObligationsThe Issuers and any Note Guarantor, jointly and severally, shall pay and shall indemnify the Trustee against any tax, fee or other charge imposedon or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.SECTION 8.06. ReinstatementIf the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of anylegal proceeding or by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting suchapplication, the Issuers’ obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to thisArticle 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article8; provided, however, that if the Issuers have made any payment of principal of or interest on any Notes because of the reinstatement of its obligations, theIssuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by theTrustee or Paying Agent. 55ARTICLE 9AmendmentsSECTION 9.01. Without Consent of HoldersThe Issuers, the Trustee and the other parties thereto may amend or supplement any Note Documents without notice to or consent of any Holderto:(1) cure any ambiguity, omission, defect, error or inconsistency, conform any provision to the “Description of the Notes” in the OfferingMemorandum, or reduce the minimum denomination of the Notes;(2) provide for the assumption by a Successor Company of the obligations of the Issuers under any Note Document, as permitted by thisIndenture;(3) provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued inregistered form for U.S. federal income tax purposes);(4) add to the covenants or provide for a Guarantee for the benefit of the Holders or surrender any right or power conferred upon theIssuers;(5) make any change that does not adversely affect the rights of any Holder in any material respect;(6) at the Issuers’ election, comply with any requirement of the SEC in connection with the qualification of this Indenture under the TIA,if such qualification is required;(7) make such provisions as necessary (as determined by an Officer or the Board of Directors in good faith) for the issuance of AdditionalNotes;(8) to add Guarantees with respect to the Notes, or to confirm and evidence the release, termination, discharge or retaking of anyGuarantee with respect to the Notes when such release, termination, discharge or retaking is provided for under this Indenture or the Agreed SecurityPrinciples; or(9) to evidence and provide for the acceptance and appointment under this Indenture of a successor Trustee pursuant to the requirementsthereof or to provide for the accession by the Trustee to any Note Document.SECTION 9.02. With Consent of Holders(a) The Issuers, the Trustee and the other parties thereto, as applicable, may amend, supplement or otherwise modify the Note Documents with theconsent of the holders of a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchaseof, or tender offer or exchange offer for, Notes) and, 56subject to certain exceptions, any default or compliance with any provisions thereof may be waived with the consent of the holders of a majority in aggregateprincipal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, theNotes). However, without the consent of Holders holding not less than 100% (or, in the case of clauses (7) and (10), 90%; and in the case of clause (8), 75%)of the then outstanding aggregate principal amount of the Notes), an amendment or waiver may not, with respect to any Notes held by a non-consentingHolder:(1) reduce the principal amount of Notes whose Holders must consent to an amendment;(2) reduce the stated rate of or extend the stated time for payment of interest on any Note;(3) reduce the principal of or extend the Stated Maturity of any Note;(4) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed, in each case asdescribed in Section 5 of the Notes;(5) make any Note payable in money other than that stated in the Note;(6) impair the right of any Holder to receive payment of principal of and interest on such Holder’s Notes on or after the due dates thereforor to institute suit for the enforcement of any such payment on or with respect to such Holder’s Notes;(7) make any change to Section 4.02 that adversely affects the right of any Holder of such Notes in any material respect or amend theterms of such Notes in a way that would result in a loss of an exemption from any of the Taxes described thereunder or an exemption from any obligation towithhold or deduct Taxes so described thereunder unless the Payor agrees to pay Additional Amounts, if any, in respect thereof;(8) release any Note Guarantee other than pursuant to the terms of this Indenture and the Agreed Security Principles;(9) waive a Default or Event of Default with respect to the nonpayment of principal, premium or interest (except pursuant to a rescissionof acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of such Notes and a waiver of the payment default thatresulted from such acceleration); or(10) make any change in this Section 9.02(a) which require the Holders’ consent described in this sentence.(b) It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposedamendment of the Note Documents, but it shall be sufficient if such consent approves the substance thereof. A consent to any amendment or waiverunder this Indenture by any Holder of Notes given in connection with a tender of such Holder’s Notes will not be rendered invalid by such tender. 57After an amendment under this Section 9.02 becomes effective, in case of Holders of Definitive Notes, the Issuers shall mail to the Holders anotice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of anamendment under this Section 9.02.The Notes issued on the Issue Date, and any Additional Notes part of the same series, will be treated as a single class for all purposes under thisIndenture, including with respect to waivers and amendments, except as the relevant amendment, waiver, consent, modification or similar action affects therights of the Holders of the different series of Notes dissimilarly. For the purposes of calculating the aggregate principal amount of Notes that have consentedto or voted in favor of any amendment, waiver, consent, modifications or other similar action, the Issuers (acting reasonably and in good faith) shall beentitled to select a record date as of which the principal amount of any Notes shall be calculated in such consent or voting process.SECTION 9.03. Revocation and Effect of Consents and Waivers(a) A written consent to an amendment or a waiver by a Holder shall bind the Holder and every subsequent Holder of that Note or portion of theNotes that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any suchHolder or subsequent Holder may revoke the written consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice ofrevocation before the date on which the Trustee receives an Officer’s Certificate from the Company certifying that the requisite number of consents have beenreceived. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by theIssuers or the Trustee of the requisite number of consents, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenturesupplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Issuers andthe Trustee.(b) The Issuers may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give theirwritten consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, thennotwithstanding Section 9.03(a), those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shallbe entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to beHolders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.SECTION 9.04. Notation on or Exchange of NotesIf an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may placean appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Issuers or the 58Trustee so determine, the Issuers in exchange for the Note shall issue and the Trustee or an authentication agent shall authenticate a new Note that reflects thechanged terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.SECTION 9.05. Trustee to Sign AmendmentsThe Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not impose any personal obligations on theTrustee or adversely affect the rights, duties, liabilities or immunities of the Trustee under this Indenture. If it does, the Trustee may, but need not sign it. Insigning such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall befully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment complies with this Indenture and that suchamendment has been duly authorized, executed and delivered and is the legal, valid and binding obligation of the Issuers and the Note Guarantors (if any)enforceable against them in accordance with its terms, subject to customary exceptions.SECTION 9.06. Payment for ConsentNeither the Issuers nor any Affiliate of either Issuer shall, directly or indirectly, pay or cause to be paid any consideration, whether by way ofinterest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Note Documents(or the appointment of any proxy in relation to any of the foregoing) unless such consideration is offered (subject to limitations of applicable law) to be paidto all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement orproxies in relation thereto.ARTICLE 10Note GuaranteesSECTION 10.01. Note Guarantees.(a) Subject to the limitations set forth in Schedule 10.1, each Guarantor hereof hereby irrevocably Guarantees (collectively, the “NoteGuarantees”), as primary obligor and not merely as surety, on a senior unsecured basis to each Holder and to the Trustee and its successors and assigns(i) the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all payment obligations of the Issuers underthis Indenture and the Notes, whether for payment of principal of, premium, or interest and all other monetary obligations of the Issuers under thisIndenture or in respect of the Notes and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuerswhether for payment obligations resulting from a Change of Control Triggering Event, fees, expenses, indemnification or otherwise under thisIndenture and the Notes (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Any such Note Guarantor further 59agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Note Guarantor, andthat such Note Guarantor shall remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation.(b) Each Note Guarantor waives presentation to, demand of payment from and protest to the Issuers of any of the Guaranteed Obligationsand also waives notice of protest for nonpayment. Each Note Guarantor waives notice of any default under the Notes or the Guaranteed Obligations.The obligations of each Note Guarantor hereunder shall not be affected by (i) the failure of any Holder, or the Trustee to assert any claim or demand orto enforce any right or remedy against the Issuers or any other Person under this Indenture, the Notes or any other agreement or otherwise; (ii) anyextension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, theNotes or any other agreement; (iv) the release of any Notes held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (v) thefailure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in theownership of such Note Guarantor, except as provided in Section 10.02(c).(c) Each Note Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the NoteGuarantors, such that such Note Guarantor’s obligations would be less than the full amount claimed. Each Note Guarantor hereby waives any right towhich it may be entitled to have the assets of the Issuers first be used and depleted as payment of the Issuers’ or such Note Guarantor’s obligationshereunder prior to any amounts being claimed from or paid by such Note Guarantor hereunder. Each Note Guarantor hereby waives any right to whichit may be entitled to require that the Issuers be sued prior to an action being initiated against such Note Guarantor.(d) Each Note Guarantor further agrees that its Note Guarantee herein constitutes a guarantee of payment when due (and not a guaranteeof collection) and waives any right to require that any resort be had by any Holder or the Trustee to any Note held for payment of the GuaranteedObligations.(e) If any Note Guarantor makes payments under its Note Guarantee, each Note Guarantor must contribute its share of such payments.Each Note Guarantor’s share of such payment will be computed based on the proportion that the net worth of the relevant Note Guarantor representsrelative to the aggregate net worth of all the Note Guarantors combined.(f) Each Note Guarantor agrees that its Note Guarantee shall remain in full force and effect until payment in full of the GuaranteedObligations. Except as expressly set forth in Sections 8.01(b) and 10.02 the obligations of each Note Guarantor hereunder shall not be subject to anyreduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shallnot be subject to any defense of setoff, counterclaim, recoupment or termination 60whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality ofthe foregoing, the obligations of each Note Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder orthe Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement, by any waiver ormodification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing oromission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Note Guarantor or wouldotherwise operate as a discharge of such Note Guarantor as a matter of law or equity.(g) Each Note Guarantor agrees that its Note Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at anytime payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder orthe Trustee upon the bankruptcy or reorganization of the Issuers or otherwise unless such Note Guarantee has been released in accordance with thisIndenture.(h) Subject to the limitations set forth in Schedule 10.1, in furtherance of the foregoing and not in limitation of any other right which anyHolder or the Trustee has at law or in equity against any Note Guarantor by virtue hereof, upon the failure of the Issuers to pay the principal of orinterest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or toperform or comply with any other Guaranteed Obligation, each Note Guarantor hereby promises to and shall, upon receipt of written demand by theTrustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of theNotes, (ii) accrued and unpaid interest on the Notes and (iii) all other monetary obligations of the Issuers to the Holders and the Trustee, including anyother unpaid principal amount of such Guaranteed Obligations, accrued and unpaid interest on such Guaranteed Obligations (but only to the extent notprohibited by law) and any Additional Amounts.(i) Each Note Guarantor agrees that it shall not be entitled to exercise any right of subrogation in relation to the Holders in respect of anyGuaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Note Guarantor further agrees that, as between it,on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may beaccelerated as provided in Article 6 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventingsuch acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of suchGuaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due andpayable by such Note Guarantor for the purposes of this Section 10.01.(j) Each Note Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees and expenses)incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01. 61(k) Upon request of the Trustee, each Note Guarantor shall execute and deliver such further instruments and do such further acts as theTrustee may reasonably require to carry out more effectively the purpose of this Indenture.SECTION 10.02. Limitation on Liability(a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligationsguaranteed hereunder by any Note Guarantor shall not exceed the maximum amount that can be hereby guaranteed by the applicable Note Guarantor withoutrendering the Note Guarantee, as it relates to such Note Guarantor, voidable under applicable law relating to fraudulent conveyance, fraudulent transfer,corporate benefit, financial assistance or similar laws affecting the rights of creditors generally.(b) A Note Guarantee as to any Note Guarantor shall terminate and release and be of no further force or effect and such Note Guarantor shall bedeemed to be released from all obligations under this Article 10 upon:(1) a sale or other disposition (including by way of consolidation or merger) of the Capital Stock of such Guarantor or of a Person whoholds all of the Capital Stock of such Guarantor, such that the Guarantor does not remain a Subsidiary, or the sale or disposition of all or substantially all theassets of the Guarantor, in each case, otherwise permitted by this Indenture,(2) defeasance or discharge of the Notes, as provided in Article 8,(3) in accordance with the provisions of the Agreed Security Principles,or(4) so long as no Event of Default has occurred and is continuing, to the extent that such Guarantor (i) is unconditionally released anddischarged from its liability with respect to the Revolving Credit Agreement (other than pursuant to the repayment and discharge thereof) and (ii) does notguarantee any other Credit Facility or Public Debt.In all cases, the Issuers and such Note Guarantors that are to be released from their Note Guarantees shall deliver to the Trustee an Officer’sCertificate and an Opinion of Counsel certifying compliance with this Section 10.02(b). At the request of the Issuers, the Trustee shall execute and deliver anappropriate instrument evidencing such release (in the form provided by the Issuers).SECTION 10.03. Successors and AssignsThis Article 10 shall be binding upon each Note Guarantor and its successors and assigns and shall inure to the benefit of the successors andassigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privilegesconferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the termsand conditions of this Indenture. 62SECTION 10.04. No WaiverNeither a failure nor a delay on the part of, the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shalloperate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights,remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefitswhich either may have under this Article 10 at law, in equity, by statute or otherwise.SECTION 10.05. ModificationNo modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Note Guarantor therefrom,shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in thespecific instance and for the purpose for which given. No notice to or demand on any Note Guarantor in any case shall entitle such Note Guarantor to anyother or further notice or demand in the same, similar or other circumstances.SECTION 10.06. Non-ImpairmentThe failure to endorse a Note Guarantee on any Note shall not affect or impair the validity thereof.ARTICLE 11MiscellaneousSECTION 11.01. Trust Indenture Act of 1939The Indenture shall incorporate and be governed by the provisions of the TIA that are required to be part of and to govern indentures qualifiedunder the TIA, except that the following provisions of the TIA will not be incorporated by or govern this Indenture: Sections 310(a), 312, 313 (other than asprovided in Section 7.05 of this Indenture), 314 and 316. For the avoidance of doubt, this Indenture will not be qualified under the TIA.SECTION 11.02. Noteholder Communications; Noteholder Actions(a) The rights of Holders to communicate with other Holders with respect to this Indenture or the Notes are as provided by the TIA. Neither theCompany nor the Trustee will be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the TIA.(b) (1) Any request, demand, authorization, direction, notice, consent to amendment, supplement or waiver or other action provided bythis Indenture to be given or taken by a Holder (an “act”) may be evidenced by an instrument signed by the Holder delivered to the Trustee. The factand date of the execution of the instrument, or the authority of the person executing it, may be proved in any manner that the Trustee deems sufficient. 63(2) The Trustee may make reasonable rules for action by or at a meeting of Holders, which will be binding on all the Holders.(c) Any act by the Holder of any Note binds that Holder and every subsequent Holder of a Note that evidences the same debt as the Noteof the acting Holder, even if no notation thereof appears on the Note. Subject to paragraph (d), a Holder may revoke an act as to its Notes, but only ifthe Trustee receives the notice of revocation before the date the amendment or waiver or other consequence of the act becomes effective.(d) The Company may, but is not obligated to, fix a record date (which need not be within the time limits otherwise prescribed by TIASection 316(c)) for the purpose of determining the Holders entitled to act with respect to any amendment or waiver or in any other regard, except thatduring the continuance of an Event of Default, only the Trustee may set a record date as to notices of default, any declaration or acceleration or anyother remedies or other consequences of the Event of Default. If a record date is fixed, those Persons that were Holders at such record date and onlythose Persons will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be Holders after the record date. No act willbe valid or effective for more than 90 days after the record date.SECTION 11.03. NoticesAny notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:if to the Issuers:NXP B.V.High Tech Campus 605656 AG EindhovenThe NetherlandsAttention of: Guido DierickFax: +(31) 40 272 4005with a copy to:NXP Semiconductors N.V.High Tech Campus 605656 AG EindhovenThe NetherlandsAttention of: Erik ThyssenFax: +(31) 20 5407500 64if to the Trustee, Paying Agent, Registrar or Transfer Agent:Deutsche Bank Trust Company Americas60 Wall Street16th FloorMS: NYC60-1630New York, New York 10005United StatesAttention of:Trust and Agency Services – NXP B.V.Fax: +(1) 732 578 4635with a copy to:Deutsche Bank National Trust Company for Deutsche Bank TrustCompany AmericasMS: JCY03-0699100 Plaza One – 6th FloorJersey City, New Jersey 07311United StatesAttention of:Trust and Agency Services – NXP B.V.Fax: +(1) 732 578 4635Each of the Issuers or the Trustee by notice to the others may designate additional or different addresses for subsequent notices orcommunications.Any notice or communication sent to a Holder of Definitive Notes shall be in writing and shall be made by first-class mail, postage prepaid, or byhand delivery to the Holder at the Holder’s address as it appears on the registration books of the Registrar, with a copy to the Trustee.If and so long as any Notes are represented by one or more Global Notes and ownership of book-entry interests therein are shown on the recordsof DTC or any successor securities clearing agency appointed by the Depositary at the request of the Issuers, notices will be delivered to such securitiesclearing agency for communication to the owners of such book-entry interests, delivery of which shall be deemed to satisfy the notice requirements of thisSection 11.03.Notices given by first-class mail, postage prepaid, will be deemed given seven calendar days after mailing. Notices given by publication will bedeemed given on the first date on which any of the required publications is made, or if published more than once on different dates, on the first date on whichpublication is made; provided that, if notices are mailed, such notice shall be deemed to have been given on the later of such publication and the seventhcalendar day after being so mailed. Failure to mail, cause to be delivered or otherwise transmit a notice or communication to a Holder or any defect in it shallnot affect its sufficiency with respect to other Holders. If a notice or communication is mailed or sent in the manner provided above, it is duly given, whetheror not the addressee receives it. 65SECTION 11.04. Certificate and Opinion as to Conditions PrecedentUpon any request or application by the Issuers to the Trustee to take or refrain from taking any action under this Indenture, the Issuers shallfurnish to the Trustee:(a) an Officer’s Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, allconditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and any other matters that theTrustee may reasonably request; and(b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, allsuch conditions precedent have been complied with and any other matters that the Trustee may reasonably request.SECTION 11.05. Statements Required in Certificate or OpinionEach certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant toSection 8) shall include:(a) a statement that the Person making such certificate or opinion has read such covenant or condition;(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained insuch certificate or opinion are based;(c) a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable himto express an informed opinion as to whether or not such covenant or condition has been complied with; and(d) a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with.SECTION 11.06. When Notes DisregardedIn determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes ownedby the Issuers, any Note Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with theIssuers or any Note Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall beprotected in relying on any such direction, waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded. Subject to theforegoing, only Notes outstanding at the time shall be considered in any such determination.SECTION 11.07. Rules by Trustee, Paying Agent and RegistrarThe Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules fortheir functions. 66SECTION 11.08. Legal HolidaysIf a payment date is a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue forthe intervening period. If a regular record date is not a Business Day, the record date shall not be affected.SECTION 11.09. Governing LawThis Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.SECTION 11.10. Consent to Jurisdiction and ServiceThe Issuers and each Note Guarantor (if any) irrevocably (i) agree that any legal suit, action or proceeding against the Issuers or any NoteGuarantor arising out of or based upon this Indenture, the Notes or any Note Guarantee or the transactions contemplated hereby may be instituted in any U.S.Federal or state court in the Borough of Manhattan, The City of New York court and (ii) waive, to the fullest extent they may effectively do so, any objectionwhich they may now or hereafter have to the laying of venue of any such proceeding. The Company and each Note Guarantor have appointed (and anySubsidiary becoming a Note Guarantor shall appoint) NXP Funding LLC, as their authorized agent (the “Authorized Agent”) upon whom process may beserved in any such action arising out of or based on this Indenture, the Notes or the transactions contemplated hereby which may be instituted in any NewYork court, expressly consent to the jurisdiction of any such court in respect of any such action, and waive any other requirements of or objections topersonal jurisdiction with respect thereto. Such appointment shall be irrevocable. The Issuers represent and warrant that the Authorized Agent has agreed toact as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may benecessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such serviceto the Issuers and each Note Guarantor shall be deemed, in every respect, effective service of process upon the Issuers and each Note Guarantor.SECTION 11.11. No Recourse Against OthersNo director, officer, employee, incorporator or shareholder of the Issuers or any of their respective Subsidiaries or Affiliates as such, will have anyliability for any obligations of the Issuers under the Note Documents, or for any claim based on, in respect of, or by reason of, such obligations or theircreation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.SECTION 11.12. SuccessorsAll agreements of the Issuers and each Note Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee inthis Indenture shall bind its successors. 67SECTION 11.13. Multiple OriginalsThe parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the sameagreement. One signed copy is enough to prove this Indenture.SECTION 11.14. Table of Contents; HeadingsThe table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience ofreference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.SECTION 11.15. Applicable Law; Provision of Information to TrusteeIn order to comply with the laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including,without limitation, those relating to the funding of terrorist activities and money laundering, including Section 326 of the USA PATRIOT Act of the UnitedStates (“Applicable Law”), the Trustee is required to obtain, verify, record and update certain information relating to individuals and entities which maintaina business relationship with the Trustee. Accordingly, each of the parties agree to provide to the Trustee, upon their request from time to time suchidentifying information and documentation as may be available for such party in order to enable the Trustee to comply with Applicable Law.SECTION 11.16. Force MajeureThe Trustee, Registrar, Paying Agent and Transfer Agent shall not incur any liability for not performing any act or fulfilling any duty, obligationor responsibility hereunder by reason of any occurrence beyond the control of the Trustee (including but not limited to any act or provision of any present orfuture law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or theunavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).SECTION 11.17. Prescription.Claims against either Issuer or any Guarantor for the payment of principal, or premium, if any, on the Notes will be prescribed five years after theapplicable due date for payment thereof. Claims against either Issuer or any Guarantor for the payment of interest on the Notes will be prescribed three yearsafter the applicable due date for payment of interest. 68IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.NXP B.V.by /s/ Jean SchreursName: Jean SchreursTitle: Authorized SignatoryNXP FUNDING LLCby /s/ Jean SchreursName: Jean SchreursTitle: Authorized Signatory [Signature Page to Indenture]DEUTSCHE BANK TRUST COMPANY AMERICAS, asTrusteeBy Deutsche Bank National Trust Companyby /s/ Robert S. PeschlerName: Robert S. PeschlerTitle: Vice Presidentby /s/ Linda RealeName: Linda RealeTitle: Vice President [Signature Page to Indenture]NXP SEMICONDUCTORS NETHERLANDS B.V.by /s/ Jean SchreursName: Jean SchreursTitle: Authorized Signatory [Signature Page to Indenture]NXP SEMICONDUCTORS USA, INC.by /s/ Jean SchreursName: Jean SchreursTitle: Authorized Signatory [Signature Page to Indenture]FREESCALE SEMICONDUCTOR, INC.by /s/ Jean SchreursName: Jean SchreursTitle: Authorized Signatory [Signature Page to Indenture]SCHEDULE 1AGREED SECURITY PRINCIPLES 1.Agreed Security Principles 1.1The Guarantees to be provided by the Guarantors will be given in accordance with certain agreed security principles (the “Agreed SecurityPrinciples”). This Schedule 1 identifies the Agreed Security Principles and addresses the manner in which the Agreed Security Principles will impacton or be determinant of the Guarantees to be taken in relation to this Indenture, and of any future Liens or security, if any, to be taken as of the datesuch Liens are granted. 1.2The Agreed Security Principles embody a recognition by all parties that there may be certain legal, commercial and practical difficulties in obtainingeffective security from the Company and each of its Restricted Subsidiaries in every jurisdiction in which the Company and its Restricted Subsidiariesare located. In particular: (a)general statutory or other legal limitations or requirements, financial assistance, corporate benefit, fraudulent preference, “thin capitalization”rules, retention of title claims and similar matters may limit the ability of the Company or any of its Restricted Subsidiaries to provide aGuarantee or may require that it be limited as to amount or otherwise, and if so the same shall be limited accordingly, provided that the Companyor the relevant Restricted Subsidiary shall use reasonable endeavors to overcome such obstacle. The Company will use reasonable endeavors toassist in demonstrating that adequate corporate benefit accrues to each of the Restricted Subsidiary; (b)the Company and its Restricted Subsidiaries will not be required to give Guarantees or enter into security document if (or to the extent) it is notwithin the legal capacity of the Company or its relevant Restricted Subsidiary or if the same would conflict with the fiduciary duties of theirdirectors or contravene any legal prohibition or regulatory condition or result in, or could reasonably be expected to result in, a material risk ofpersonal or criminal liability for any officer or director of the Company or any of the Restricted Subsidiaries, provided that the Company andeach of its Restricted Subsidiaries shall use reasonable endeavors to overcome any such obstacle; (c)a key factor in determining whether or not security shall be taken is the applicable cost (including adverse effects on interest deductibility,registration taxes and notarial costs) which shall not be disproportionate to the benefit to the Holders of obtaining such security; 1 (d)where there is material incremental cost involved in creating security over all assets owned by any of the Issuers or a Guarantor in a particularcategory (e.g. real estate), regard shall be had to the principle stated at paragraph 1.2(c) of this Schedule 1 which shall apply to the immaterialassets and, subject to the Agreed Security Principles, only the material assets in that category (e.g. real estate of material economic value) shall besubject to security; (e)it is expressly acknowledged that it may be either impossible or impractical to create security over certain categories of assets in which eventsecurity will not be taken over such assets; (f)any assets subject to contracts, leases, licenses or other arrangements with a third party that exist concurrently or are not prohibited by thisAgreement and which (subject to override by the Uniform Commercial Code and other relevant provisions of applicable law), effectively preventthose assets from being charged will be excluded from any relevant security document; provided that reasonable endeavors to obtain consent tocreating Liens in any such assets shall be used by the Company and each of its Restricted Subsidiaries to avoid or overcome such restrictions ifeither collateral agent reasonably determines that the relevant asset is material (which endeavors shall not include the payment of any consentfees), but unless effectively prohibited by contracts, leases, licenses or other arrangements with a third party that exist concurrently or are notprohibited by this Indenture, this shall not prevent security being given over any receipt or recovery under such contract, lease or license; (g)the giving of a Guarantee, the granting of security or the perfection of the security granted will not be required if it would have a material adverseeffect (as reasonably determined in good faith by management of the relevant obligor) on the ability of the relevant obligor to conduct itsoperations and business in the ordinary course as otherwise permitted by this Indenture; (h)in the case of accounts receivable, a material adverse effect on either Issuer’s or a Guarantor’s relationship with or sales to the customergenerating such receivables or material legal or commercial difficulties (as reasonably determined by management of the relevant obligor ingood faith) provided that none of the Issuers and the Guarantors may utilize this exception unless, after giving effect thereto no less than amajority of the book value of the accounts receivable of the Company and its Subsidiaries on a consolidated basis (as measured at the end ofeach fiscal quarter) is subject to perfected liens, and provided further that any accounts receivable of the Issuers and the Guarantors excludedfrom Collateral by virtue of this clause (except where prohibited by law and subject to the remainder of these Agreed Security Principles) shall besubject to perfected Liens promptly if and when the corporate credit of the Company is downgraded to “B” or lower from S&P and “B2” or lowerfrom Moody’s; 2 (i)security will be limited so that the aggregate of notarial costs and all registration and like taxes relating to the provision of security shall notexceed an amount to be agreed. Any additional costs may be paid by the Holders at their option; and (j)all security shall be given in favor of a single security trustee or collateral agent and not the secured parties individually. “Parallel debt”provisions and other similar structural options will be used where necessary and such provisions will be contained in the intercreditor agreementand not the individual security documents unless required under local law. No action will be required to be taken in relation to the guarantees orsecurity when any lender assigns or transfers any of its participation in this Indenture to a new lender. 2.Terms of security documentsThe following principles will be reflected in the terms of any security document to be executed and delivered: (a)subject to Permitted Liens and these Agreed Security Principles the security will be first ranking and the perfection of security (when required)and other legal formalities will be completed as soon as practicable and, in any event, within the time periods specified in the Note Documentsor, if earlier or to the extent no such time period is specified in the Note Documents, within the time periods specified by applicable law in orderto ensure due perfection; (b)the security will not be enforceable until an Event of Default has occurred and notice of acceleration of the Notes has been given by the Trusteeor the Notes have otherwise become due and payable prior to the scheduled maturity thereof (an “Enforcement Event”); (c)prior to the Maturity Date, notification of any Liens over bank accounts will be given (subject to legal advice) to the banks with whom theaccounts are maintained only if an Enforcement Event has occurred; (d)notification of receivables security to debtors who are not members of the Company or its Subsidiaries will only be given if an EnforcementEvent has occurred; (e)notification of any security interest over insurance policies will be served on any insurer of the Company’s or any Restricted Subsidiaries’ assets; (f)the security documents should only operate to create security rather than to impose new commercial obligations. Accordingly, they should notcontain material additional representations, undertakings or indemnities (such as in respect of insurance, information or the payment of costs)unless these are the same as or consistent with those contained in this Indenture or are necessary for the creation or perfection of the security; 3 (g)in respect of the share pledges and pledges of intra-group receivables, until an Enforcement Event has occurred, the pledgors will be permitted toretain and to exercise voting rights to any shares pledged by them in a manner which does not materially adversely affect the value of thesecurity (taken as a whole) or the validity or enforceability of the security or cause an Event of Default to occur, and the pledgors will bepermitted to receive dividends on pledged shares and payment of intra-group receivables and retain the proceeds and/or make the proceedsavailable to Holdings and its Subsidiaries to the extent not prohibited under this Indenture; (h)the Collateral Agents will only be able to exercise a power of attorney in any security document following the occurrence of an EnforcementEvent or with respect to perfection or further assurance obligations that following request, the relevant obligor has failed to satisfy; (i)no obligor shall be required to provide surveys on real property (unless such surveys already exist in which case there shall be no requirementthat such surveys be certified to the Holders) or to remove any encumbrances on title that are reflected in any title insurance or any other existingencumbrances on real property (not including Liens securing Indebtedness of the Company or any of its Restricted Subsidiaries); (j)no obligor shall be required to protect any Liens in the United States prior to the occurrence of an Enforcement Event by means other thancustomary filings (including UCC-1s, mortgage or deed of trust filings and patent and trademark filings) and delivery of share certificates(accompanied by powers of attorney executed in blank) and any intercompany promissory notes; and (k)information, such as lists of assets, will be provided if, and only to the extent, required by local law to be provided to protect or create, perfect orregister the security and, to the extent so required will be provided annually (unless required to be provided by local law more frequently, butnot more frequently than quarterly) and following the occurrence and during the continuance of an Event of Default, on the Collateral Agents’reasonable request. 4APPENDIX APROVISIONS RELATING TO THE NOTES 1. Definitions.Capitalized terms used but not otherwise defined in this Appendix A shall have the meanings assigned to them in the Indenture. For the purposesof this Appendix A the following terms shall have the meanings indicated below:“Applicable Procedures” means, with respect to any transfer or transaction involving a Regulation S Global Note or beneficial interest therein,the rules and procedures of the Depositary for such Global Note, DTC, in each case to the extent applicable to such transaction and as in effect from time totime.“Definitive Note” means a certificated Note that does not include the Global Note Legend.“Depositary” means DTC.“DTC” means The Depository Trust Company, its nominees and their respective successors.“Global Note Legend” means the legend set forth under that caption in Exhibit A to the Indenture.“Notes Custodian” means the custodian with respect to a Global Note (as appointed by the applicable Depositary) or any successor personthereto.“QIB” means a “qualified institutional buyer” as defined in Rule 144A.“Regulation S” means Regulation S under the Securities Act.“Regulation S Notes” means all Notes offered and sold outside the United States in reliance on Regulation S.“Restricted Period”, with respect to any Notes, means the period of 40 consecutive days beginning on and including the later of (a) the day onwhich such Notes are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S, noticeof which day shall be promptly given by either Issuer to the Trustee, and (b) the Issue Date with respect to such Notes.“Restricted Notes Legend” means the legend set forth under that caption in Exhibit A to the Indenture.“Rule 144A” means Rule 144A under the Securities Act.“Rule 144A Notes” means all Notes offered and sold to QIBs in reliance on Rule 144A. A-1“Securities Act” means the Securities Act of 1933.“Transfer Restricted Notes” means Definitive Notes and any other Notes that bear or are required to bear the Restricted Notes Legend.2. The Notes.2.1 Form and Dating.(a) The Notes issued on the date hereof will be (i) offered and sold by the Issuers pursuant to a Purchase Agreement dated as of August 8, 2016among the Issuers and the initial purchasers named therein and (ii) resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons other than U.S.Persons (as defined in Regulation S) in reliance on Regulation S. Such Notes may thereafter be transferred to, among others, QIBs and purchasers in relianceon Regulation S. Additional Notes offered after the date hereof may be offered and sold by the Issuers from time to time pursuant to one or more PurchaseAgreements in accordance with applicable law.(b) Notes issued in global form will be substantially in the form of Exhibit A to the Indenture (including the Global Note Legend thereon andthe “Schedule of Increases or Decreases in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A tothe Indenture (but without the Global Note Legend thereon and without the “Schedule of Increases or Decreases in the Global Note” attached thereto). EachGlobal Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amountof outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time totime be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase ordecrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of theTrustee, in accordance with instructions given by the Holder thereof as required by Section 2 hereof.(c) [Reserved].(d) [Reserved].(e) [Reserved].(f) Book-Entry Provisions. This Section 2.1(f) shall apply only to a Global Note deposited with or on behalf of the Depositary.The Issuers shall execute and the Trustee or an authentication agent shall, in accordance with this Section 2.1(f) and Section 2.2 andpursuant to an order of the Issuers signed by one Officer, authenticate and deliver initially one or more Global Notes that (i) shall be registered in the name ofthe Depositary for such Global Note or Global Notes or the nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary orpursuant to such Depositary’s instructions or held by the Notes Custodian. A-2Members of, or participants in, DTC (“Agent Members’) shall have no rights under the Indenture with respect to any Global Note held ontheir behalf by the Depositary or by the Notes Custodian or under such Global Note, and the Depositary may be treated by the Issuers, the Trustee and anyagent of the Issuers or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shallprevent the Issuers, the Trustee or any agent of the Issuers or the Trustee from giving effect to any written certification, proxy or other authorization furnishedby DTC or impair, as between DTC and their respective Agent Members, the operation of customary practices thereof governing the exercise of the rights of aholder of a beneficial interest in any Global Note.(g) Definitive Notes. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Notes will not be entitled to receivephysical delivery of certificated Notes.2.2 Authentication. The Trustee or an authentication agent shall authenticate and make available for delivery upon a written order of theCompany signed by one of its Officers (a) Original Notes for original issue on the date hereof in an aggregate principal amount of $1,000,000,000 and(b) subject to the terms of the Indenture, Additional Notes. Such order shall (a) specify the amount of the Notes to be authenticated, the date on which theoriginal issue of Notes is to be authenticated, (b) direct the Trustee or an authentication agent to authenticate such Notes and (c) certify that all conditionsprecedent to the issuance of such Notes have been complied with in accordance with the terms hereof.2.3 Transfer and Exchange of Global Notes. (a) A Global Note may not be transferred except as a whole by the Depositary to a nominee of theDepositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to asuccessor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if:(1) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or thatit is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within120 days after the date of such notice from the Depositary;(2) the Company, in its sole discretion, determines that the Global Notes (in whole but not in part) should be exchanged for DefinitiveNotes and delivers a written notice to such effect to the Trustee; or(3) there has occurred and is continuing a Default or Event of Default with respect to the Notes and Holders have requested DefinitiveNotes. A-3Upon the occurrence of any of the preceding events in (1),(2) or (3) above, Definitive Notes shall be issued in such names as the Depositary shallinstruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.10 of the Indenture. Every Noteauthenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section or Section 2.08 or 2.10 of theIndenture, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other thanas provided in this Section, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.3(b), (c) or (f) hereofupon prior written notice given to the Trustee by or on behalf of the Depositary.(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will beeffected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the RestrictedGlobal Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficialinterests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the otherfollowing subparagraphs, as applicable:(1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Personswho take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth inthe Private Placement Legend. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the formof a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect thetransfers described in this Section.(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficialinterests that are not subject to Section 2.3(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:(A) both:(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the ApplicableProcedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal tothe beneficial interest to be transferred or exchanged; and(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account tobe credited with such increase; or A-4(B) both:(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the ApplicableProcedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferredor exchanged; and(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name suchDefinitive Note shall be registered to effect the transfer or exchange referred to in Section 2.3(b)(1) above.Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes orotherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.3(h) hereof.(3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred toa Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirementsof Section 2.3(b)(2) above and the Registrar receives the following:(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver acertificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must delivera certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. Abeneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note ortransferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complieswith the requirements of Section 2.3(b)(2) above and:(A) [Reserved.](B) [Reserved.] A-5(C) the Registrar receives the following:(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for abeneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including thecertifications in item (3) thereof; or(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Personwho shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in theform of Exhibit B hereto, including the certifications in item (4) thereof;and, in each such case set forth in this subparagraph (C), if the Registrar so requests or if the Applicable Procedures so require, an Opinionof Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the SecuritiesAct and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act.If any such transfer is effected pursuant to subparagraph (B) or (C) above at a time when an Unrestricted Global Note has not yet been issued, theIssuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.2 hereof, the Trustee shall authenticate one or more UnrestrictedGlobal Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (C)above.Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, abeneficial interest in a Restricted Global Note.(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted GlobalNote proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes deliverythereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:(A) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit Bhereto, including the certifications in item (1) thereof;(B) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; A-6(C) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act inaccordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (4) thereof; or(D) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in ExhibitB hereto, including the certifications in item (3) thereof,the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.3(h) hereof, and theCompany shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriateprincipal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.3(c) shall beregistered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrarthrough instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whosenames such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.3(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.(2) [Reserved.](3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Notemay exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereofin the form of an Unrestricted Definitive Note only if:(A) [Reserved.](B) [Reserved.](C) the Registrar receives the following:(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for anUnrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item(3) thereof; or(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to aPerson who shall take delivery thereof in the A-7form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certificationsin item (4) thereof;and, in each such case set forth in this subparagraph (C), if the Registrar so requests or if the Applicable Procedures so require, an Opinionof Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the SecuritiesAct and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act.(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in anUnrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Personwho takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.3(b)(2) hereof, theTrustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.3(h) hereof, andthe Issuers will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in theappropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.3(c)(4) will beregistered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requeststhrough instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver suchDefinitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interestpursuant to this Section 2.3(c)(4) will not bear the Private Placement Legend.(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposesto exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takesdelivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the followingdocumentation:(A) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth inExhibit B hereto, including the certifications in item (1) thereof; A-8(B) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 orRule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; or(C) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the SecuritiesAct in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item 4 thereof;the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of subparagraph(A) above, the 144A Global Note, and in the case of subparagraphs (B) and (C) above, the Regulation S Global Note.(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note mayexchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takesdelivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:(A) [Reserved.](B) [Reserved.](C) the Registrar receives the following:(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the UnrestrictedGlobal Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (3) thereof; or(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in theform of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto,including the certifications in item (4) thereof;and, in each such case set forth in this subparagraph (C), if the Registrar so requests or if the Applicable Procedures so require, an Opinionof Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the SecuritiesAct and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintaincompliance with the Securities Act. A-9Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.3(d)(2), the Trustee will cancel the Definitive Notes andincrease or cause to be increased the aggregate principal amount of the Unrestricted Global Note.(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note mayexchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes deliverythereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer,the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one ofthe Unrestricted Global Notes.If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to Section 2.3(d)(1), (d)(2) or (d)(3) above at a timewhen an Unrestricted Global Note has not yet been issued, the Issuers will issue and, upon receipt of an Authentication Order in accordance with Section 2.2hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of DefinitiveNotes so transferred.(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance withthe provisions of this Section 2.3(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange,the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in formsatisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide anyadditional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.3(e).(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in thename of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto,including the certifications in item (1) thereof;(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit Bhereto, including the certifications in item (2) thereof; and(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then thetransferor A-10must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item(3) thereof, if applicable.(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereoffor an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Noteif:(A) [Reserved.](B) [Reserved.](C) the Registrar receives the following:(i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, acertificate from such Holder in the form of Exhibit B hereto, including the certifications in item 3 thereof; or(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take deliverythereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including thecertifications in item (4) thereof;and, in each such case set forth in this subparagraph (C), if the Registrar so requests, an Opinion of Counsel in form reasonablyacceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions ontransfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the SecuritiesAct.(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to aPerson who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, theRegistrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.(f) [Reserved.] A-11(g) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specificallystated otherwise in this subsection (g) or the applicable provisions of this Indenture.(1) Private Placement Legend.(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchangetherefor or substitution thereof) shall bear the legend in substantially the following formTHIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATIONHEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OFSUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THISSECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HASPURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTIONTERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR] [IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THELATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THEOWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATIONSTATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLEFOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIEDINSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THEACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ONRULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION SUNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR(7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS ACQUIRING THE SECURITY FOR ITS OWNACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNTOF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITHANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE A-12REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCHOFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. [IN THE CASE OF REGULATION S NOTES: BY ITSACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF AU.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THESECURITIES ACT.](B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.3 (and all Notes issued in exchange therefor or substitution thereof), any Regulation S Global Note andany Additional Notes issued in transactions registered with the SEC will not bear the Private Placement Legend.(2) Global Note Legend. Each Global Note will bear a legend in substantially the following form:“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODYFOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCESEXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO APPENDIX A OF THEINDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO APPENDIX A OF THE INDENTURE,(3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND(4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERREDEXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THEDEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARYOR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OFTHE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FORREGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. ORSUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.OR A-13SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,HAS AN INTEREST HEREIN.”(h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged forDefinitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned toor retained and canceled by the Trustee in accordance with Section 2.11 of the Indenture. At any time prior to such cancellation, if any beneficial interest in aGlobal Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or forDefinitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on suchGlobal Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged foror transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increasedaccordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.(i) General Provisions Relating to Transfers and Exchanges.(1) To permit registrations of transfers and exchanges, the Issuers will execute and the Trustee will authenticate Global Notes andDefinitive Notes upon receipt of an Authentication Order in accordance with Section 2.2 hereof or at the Registrar’s request.(2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for anyregistration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmentalcharge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchange pursuant to theIndenture).(3) The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part,except the unredeemed portion of any Note being redeemed in part.(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes willbe the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under the Indenture, as the Global Notes orDefinitive Notes surrendered upon such registration of transfer or exchange. A-14(5) Neither the Registrar nor the Issuers will be required:(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 daysbefore the day of any selection of Notes for redemption under Section 3.02 of the Indenture and ending at the close of business on theday of selection;(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portionof any Note being redeemed in part; or(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat thePerson in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and intereston such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.(7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2 hereof.(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.3 to effecta registration of transfer or exchange may be submitted by facsimile. A-15EXHIBIT A[FORM OF NOTE][●]% Senior Notes due 20[●]UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY(“DTC”), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED ISREGISTERED IN THE NAME OF THEIR AUTHORIZED NOMINEE, OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZEDREPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO ITS AUTHORIZED NOMINEE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BYAN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANYPERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, ITS AUTHORIZED NOMINEE, HAS AN INTEREST HEREIN.[[FOR GLOBAL NOTES ONLY] TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT INPART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THISGLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTUREREFERRED TO ON THE REVERSE HEREOF.][[FOR REGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS AFTER THE CLOSING OF THE OFFERING, AN OFFER OR SALE OFSECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE U.S. SECURITIES ACT) MAY VIOLATE THE REGISTRATIONREQUIREMENTS OF THE U.S. SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144ATHEREUNDER.][Restricted Note Legend]THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST ORPARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF INTHE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THEHOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNTFOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE“RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR] [IN THE CASE OF REGULATION SNOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR ANYAFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OFSUCH SECURITY), ONLY (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVEUNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THESECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THESECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOMNOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUROUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL“ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIEDINSTITUTIONAL BUYER AND THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH ANINSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FORINVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OFTHE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TOCLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATIONSATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALERESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOFREPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THISSECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]BY ACCEPTANCE OF A NOTE, EACH HOLDER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (A) NOPORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THE NOTES CONSTITUTES THE ASSETS OF ANY EMPLOYEEBENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), APLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUECODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS, RULESOR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE “SIMILAR LAWS”), OR ENTITY WHOSE UNDERLYINGASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT OR (B) THE PURCHASE ANDHOLDING OF THE NOTES BY SUCH HOLDER WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OFERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.[Each Definitive Note shall bear the following additional legend:]IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCHCERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFERCOMPLIES WITH THE FOREGOING RESTRICTIONS.Common Code. [ ]ISIN No. [ ]CUSIP [ ][●]% Senior Notes due 20[●]No. NXP B.V.NXP FUNDING LLCNXP B.V., a company organized under the laws of The Netherlands, and NXP Funding LLC, a limited liability company organized under the laws ofDelaware, jointly and severally promise to pay to Cede & Co. or its registered assigns, the principal sum [set forth on the Schedule of Increases or Decreases inGlobal Note attached hereto, subject to the adjustments listed therein]1 [of $[ ]], on [ ] [ ], 20[●].Interest Payment Dates: [[ ]] and [[ ]], commencing on [[ ]], 20[ ].Record Dates: [ [ ]] and [ [ ]].Additional provisions of this Note are set forth on the other side of this Note.(Signature page to follow.) 1 Use the Schedule of Increases and Decreases language if Note is in Global Form.IN WITNESS WHEREOF, NXP B.V. and NXP Funding LLC have caused this Note to be signed manually or by facsimile by their duly authorized officers. Dated: NXP B.V. By: Name: Title: NXP FUNDING LLC By: Name: Title: This is one of the Notes referred to in the Indenture.DEUTSCHE BANK TRUST COMPANY AMERICAS, as TrusteeBy: Deutsche Bank National Trust CompanyBy: (Authorized Signatory)[Signature Page to Note][FORM OF BACK OF NOTE][●]% SENIOR NOTES DUE 20[●]1. InterestNXP B.V., a company organized under the laws of The Netherlands, and NXP Funding LLC, a limited liability company organized under thelaws of Delaware (together with NXP B.V. and their respective successors and assigns under the Indenture hereinafter referred to, being herein called “theIssuers”), jointly and severally promise to pay interest on the principal amount of this Note at the rate of [●]% per annum. The Issuers shall pay interest semi-annually on [ [ ]] and [ [ ]] of each year commencing on [ [ ]], 20[ ]. The Issuers will make each interest payment to Holdersof record of the Notes on the immediately preceding [ [ ]] and [ [ ]], respectively. Interest on the Notes shall accrue from the most recent date towhich interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from [Settlement Date] until the principal hereof is due.Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months. Each interest period shall end on (but not include) the relevantinterest payment date.2. Method of PaymentHolders must surrender Notes to the relevant Paying Agent to collect principal payments. The Issuers shall pay principal, premium, if any,Additional Amounts, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public andprivate debts. Principal, premium, if any, Additional Amounts, if any, and interest on the Global Notes will be payable at the specified office or agency of oneor more Paying Agents; provided that all such payments with respect to Notes represented by one or more Global Notes registered in the name of or held by anominee of DTC will be made by wire transfer of immediately available funds to the account specified by the Holder or Holders thereof.Principal, premium, if any, Additional Amounts, if any, and interest on any Definitive Notes will be payable at the specified office or agency ofone or more Paying Agents in New York, maintained for such purposes. In addition, interest on the Definitive Notes may be paid by check mailed to theperson entitled thereto as shown on the register for the Definitive Notes; provided, however, that cash payments on the Notes may also be made, in the case ofa Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a dollar account maintained by the payee with a bank in the UnitedStates of America if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating suchaccount no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).If the due date for any payment in respect of any Note is not a Business Day at the place in which such payment is due to be paid, the Holderthereof will not be entitled to payment of the amount due until the next succeeding Business Day at such place, and will not be entitled to any further interestor other payment as a result of any such delay.3. Registrar, Paying Agent and Transfer AgentInitially, Deutsche Bank Trust Company Americas will act as Registrar, Paying Agent and Transfer Agent. The Issuers may appoint and changeany Registrar, Paying Agent and Transfer Agent. The Issuers or any of its Restricted Subsidiaries may act as Registrar, Paying Agent and Transfer Agent.4. IndentureThe Issuers issued the Notes under the Indenture dated as of August 11, 2016 (the “Indenture”), among the Issuers, the Guarantors party theretoand Deutsche Bank Trust Company Americas, as Trustee (the “Trustee”). The terms of the Notes include those stated in the Indenture. Terms defined in theIndenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all terms and provisions of the Indenture, andHolders (as defined in the Indenture) are referred to the Indenture for a statement of such terms and provisions. In the event of a conflict, the terms of theIndenture control.The Notes are senior obligations of the Issuers. This Note is one of the Notes referred to in the Indenture. The Notes and the Additional Notes aretreated as a single class under the Indenture. The Indenture imposes certain limitations on the ability of the Issuers and their Restricted Subsidiaries to, amongother things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness and layer Indebtedness,enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, issue or sell shares of capital stockof such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens, make asset sales, impair certain securityinterests, issue certain guarantees and designate Restricted and Unrestricted Subsidiaries. The Indenture also imposes limitations on the ability of the Issuersto consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all its property.5. Optional Redemption(a) At any time prior to [ [ ]], 20[ ] (the date one month prior to the maturity date of the Notes), the Issuers may redeem such Notes inwhole or in part, at their option, upon not less than 15 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount ofsuch Notes plus the relevant Notes Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the redemption date(subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).(b) [Reserved](c) [Reserved](d) Any redemption and notice of redemption may, at the Company’s discretion, be subject to the satisfaction of one or more conditionsprecedent.6. Optional Tax RedemptionThe Issuers or any Successor Company may redeem the Notes in whole, but not in part, at any time upon giving not less than 15 nor more than60 days’ notice to the Holders (which notice will be irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accruedand unpaid interest, if any, to, but excluding. the date fixed for redemption (subject to the right of holders of record on the relevant record date to receiveinterest due on the relevant interest payment date) and all Additional Amounts, if any, then due and which will become due on the tax redemption date as aresult of the redemption or otherwise, if any, if a Payor determines in good faith that, as a result of:(1) any change in, or amendment to, the law (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affectingtaxation; or(2) any change in, or amendment to, or the introduction of, an official position regarding the application, administration or interpretation ofsuch laws, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) of a Relevant Taxing Jurisdiction (each of theforegoing in clauses (1) and (2), a “Change in Tax Law”),such Payor is, or on the next interest payment date in respect of the Notes would be, required to pay any Additional Amounts, and such obligation cannot beavoided by taking reasonable measures available to the Issuers, Successor Company or Guarantors (including, for the avoidance of doubt, the appointment ofa new Paying Agent where this would be reasonable but not including assignment of the obligation to make payment with respect to the Notes). In the case ofredemption due to such obligation to pay Additional Amounts as a result of a Change in Tax Law in a jurisdiction that is a Relevant Taxing Jurisdiction atAugust 8, 2016, such Change in Tax Law must become effective on or after August 8, 2016. In the case of redemption due to such obligation to payAdditional Amounts as a result of a Change in Tax Law in a jurisdiction that becomes a Relevant Taxing Jurisdiction after August 8, 2016, such Change inTax Law must become effective on or after the date the jurisdiction becomes a Relevant Taxing Jurisdiction, unless the Change in Tax Law would haveapplied to the prior Relevant Taxing Jurisdiction. Notice of redemption for taxation reasons will be published in accordance with the procedures described inparagraph 8. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the Payorwould be obliged to make such payment of Additional Amounts if a payment in respect of the Notes were then due and (b) unless at the time such notice isgiven, such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of the Notespursuant to the foregoing, the Issuers or Successor Company will deliver to the Trustee (a) an Officer’s Certificate stating that it is entitled to effect suchredemption and setting forth a statement of facts showing that the conditions precedent to its right to redeem have been satisfied and that it would not be ableto avoid the obligation to pay Additional Amounts by taking reasonable measures available to it and (b) an opinion of an independent tax counsel ofrecognized standing to the effect that the relevant Payor has been or will become obligated to pay Additional Amounts as a result of a Change in Tax Law.The Trustee will accept such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent described above, withoutfurther inquiry, in which event it will be conclusive and binding on the Holders.7. Sinking FundThe Issuers are not required to make any mandatory redemption or sinking fund payments with respect to the Notes.8. Notice of RedemptionAt least 15 days but not more than 60 days before a date for redemption of Notes, the Issuers shall transmit a notice of redemption in accordancewith Section 11.03 of the Indenture and as provided below.If less than all of the Notes of a series are to be redeemed at any time, the Trustee or the Registrar, as applicable, will select the Notes forredemption in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed, as certified to the Trustee or theRegistrar, as applicable, by the Issuers, and in compliance with the requirements of DTC, or if the Notes are not so listed or such exchange prescribes nomethod of selection and the Notes are not held through DTC, or DTC prescribes no method of selection, on a pro rata basis; provided, however, that no Noteof $200,000 in aggregate principal amount or less shall be redeemed in part and only Notes in integral multiples of $1,000 will be redeemed. Neither theTrustee nor the Registrar will be liable for any selections made by it in accordance with this Section.If any Note is to be redeemed in part only, the notice of redemption that relates to that Note shall state the portion of the principal amount thereofto be redeemed, in which case a portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. In thecase of a Global Note, an appropriate notation will be made on such Note to decrease the principal amount thereof to an amount equal to the unredeemedportion thereof. Subject to the terms of the applicable redemption notice (including any conditions contained therein), Notes called for redemption becomedue on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption, unlessthe redemption price is not paid on the redemption date.9. Additional AmountsThe Issuers and Guarantors are required to make all payments under or with respect to the Notes or the Note Guarantees free and clear of andwithout withholding or deduction for or on account of any present or future Taxes unless required by law, in which case the relevant Issuer or Guarantor willpay Additional Amounts in accordance with, and subject to the limitations of, Section 4.02 of the Indenture.10. Repurchase of Notes at the Option of Holders upon a Change of Control Triggering EventIf the Company experiences a Change of Control Triggering Event, each Holder will have the right, subject to certain conditions specified in theIndenture, to require the Issuers to repurchase all of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to berepurchased plus accrued and unpaid interest, if any, to but excluding the date of repurchase as provided in, and subject to the terms of, the Indenture.11. [Reserved]12. Denominations; Transfer; ExchangeThe Notes are in registered form in minimum denominations of $200,000 and multiples of $1,000 in excess thereof. A Holder may transfer orexchange Notes in accordance with the Indenture. In connection with any such transfer or exchange, the Indenture will require the transferring or exchangingHolder to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee atDTC, where appropriate, to furnish certain certificates and opinions, and to pay any taxes, duties and governmental charges in connection with such transferor exchange. Any such transfer or exchange will be made without charge to the Holder, other than any taxes, duties and governmental charges payable inconnection with such transfer.13. Persons Deemed OwnersExcept as provided in paragraph 2 of this Note, the registered Holder of this Note will be treated as the owner of it for all purposes.14. Unclaimed MoneyIf money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to theIssuers at their written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must lookto the Issuers for payment as general creditors and the Trustee and the Paying Agent shall have no further liability with respect to such monies.15. Discharge and DefeasanceSubject to certain conditions, the Issuers at any time may terminate some of or all their obligations under the Notes and the Indenture if theIssuers, among other things, deposit or cause to be deposited with the Trustee money or U.S. Government Obligations denominated in U.S. dollars in suchamounts as will be sufficient for the payment of the entire Indebtedness including principal of, premium, if any, and interest on the Notes to the date ofredemption or maturity, as the case may be.16. Amendment, WaiverThe Indenture and the Notes may be amended as set forth in the Indenture.17. Defaults and Remedies(a) The following events constitute “Events of Default” under the Indenture: An “Event of Default” occurs if or upon:(1) default in any payment of interest or Additional Amounts, if any, on any Note issued under the Indenture when due and payable, ifthat default continues for a period of 30 days, or failure to comply for 30 days with the notice provisions in connection with a Change of Control TriggeringEvent;(2) default in the payment of the principal amount of or premium, if any, on any Note issued under the Indenture when due at its StatedMaturity or upon optional redemption or otherwise (including the failure to pay the repurchase price for such Notes tendered pursuant to an Offer toPurchase), if that default or failure continues for a period of two days;(3) failure to comply for 90 days after written notice by the Trustee on behalf of the Holders or by the Holders of 30% in aggregateprincipal amount of the outstanding Notes with any of the Issuers’ obligations under Article 4 or 5 of the Indenture (in each case, other than an Event ofDefault under Section 6.01 (a)(1) or 6.01(a)(2) of the Indenture);(4) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidencedany Indebtedness for money borrowed by either Issuer or any of its Significant Subsidiaries (or the payment of which is Guaranteed by either Issuer or any ofits Significant Subsidiaries) other than Indebtedness owed to either Issuer or a Significant Subsidiary whether such Indebtedness or Guarantee now exists, oris created after the Issue Date, which default:(a) is caused by a failure to pay principal at the Stated Maturity on such Indebtedness, immediately upon the expiration of thegrace period provided in such Indebtedness; or(b) results in the acceleration of such Indebtedness prior to its express maturity not rescinded or cured within 30 days after suchacceleration;and, in each case, the aggregate principal amount of any such Indebtedness, together with the aggregate principal amount of any other suchIndebtedness under which there has been a payment default or the maturity of which has been so accelerated and remains undischarged after such 30day period, aggregates to €200.0 million or more;(5) either Issuer or a Significant Subsidiary institutes or consents to the institution of any proceeding under any Debtor Relief Law, ormakes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator,rehabilitator, administrator, administrative receiver or similar office is appointed without the application or consent of such Person and the appointmentcontinues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or anymaterial part of its property or assets is instituted without the consent of such Person and continues undismissed or unstayed for (60) calendar days, or anorder for relief is entered in any such proceeding;(6) failure by the Issuers or any Significant Subsidiary to pay final judgments aggregating in excess of €200.0 million (exclusive of anyamounts that a solvent insurance company has acknowledged liability for), which judgments are not paid, discharged or stayed for a period of 60 days afterthe judgment becomes final and non-appealable; and(7) any Guarantee ceases to be in full force and effect, other than in accordance with the terms of the Indenture or a Guarantor denies ordisaffirms in writing its obligations under its Guarantee, other than in accordance with the terms thereof or upon release of the Guarantee in accordance withthe Indenture.(b) A default under Sections 6.01(a)(3), 6.01(a)(4) or 6.01(a)(6) of the Indenture will not constitute an Event of Default until the Trusteeor the Holders of 30% in aggregate principal amount of the outstanding Notes under the Indenture notify the Issuers of the default and the Issuers donot cure such default within the time specified in Sections 6.01(a)(3), 6.01(a)(4) or 6.01(a)(6) of the Indenture, as applicable, after receipt of such notice.(c) If an Event of Default (other than an Event of Default described in Section 6.01(a)(5) of the Indenture) occurs and is continuing theTrustee by notice to either Issuer or the Holders of at least 30% in aggregate principal amount of the outstanding Notes under the Indenture by written noticeto either Issuer and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaidinterest, including Additional Amounts, if any, on all the Notes under the Indenture to be due and payable. Notwithstanding the foregoing, in the case of anEvent of Default arising from certain events of bankruptcy or insolvency, the principal of, premium, if any, and accrued and unpaid interest, includingAdditional Amounts, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trusteeor any Holders.18. Trustee Dealings with the IssuersThe Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal withand collect obligations owed to it by the Issuers or their Affiliates and may otherwise deal with the Issuers or their Affiliates with the same rights it wouldhave if it were not Trustee.19. No Recourse Against OthersNo director, manager, officer, employee, incorporator or shareholder of either Issuer or any of its Subsidiaries or any parent company of eitherIssuer shall have any liability for any obligations of either Issuer or any Subsidiary with respect to the Notes or the Indenture, or for any claim based on, inrespect of, or by reason of such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and releaseare part of the consideration for issuance of the Notes.20. AuthenticationThis Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs thecertificate of authentication on the other side of this Note. The signature shall be conclusive evidence that the security has been authenticated under theIndenture.21. AbbreviationsCustomary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants bythe entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to MinorsAct).22. Governing LawTHIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.23. CUSIP Numbers, Common Codes and ISIN NumbersThe Issuers in issuing the Notes may use CUSIP Numbers, Common Codes and ISIN numbers (if then generally in use) and, if so, the Trustee shalluse CUSIP Numbers, Common Codes and ISIN numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice maystate that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and thatreliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in oromission of such numbers.The Issuers will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture which has in itthe text of this Note.[FORM OF ASSIGNMENT FORM]To assign this Note, fill in the form below:I or we assign and transfer this Note to: (Print or type assignee’s legal name) (Insert assignee’s soc. sec. or tax I.D. No.) (Insert assignee’s name, address and zip code)and irrevocably appoint to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.Date: Your Signature: Sign exactly as your name appears on the other side of this Note. Signature Guarantee*: * (Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to theTrustee)[FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE ORREGISTRATION OF TRANSFER RESTRICTED NOTES]This certificate relates to $ principal amount of Notes held in (check applicable box) ☐ book-entry or ☐ definitive registered form by theundersigned.The undersigned (check one box below): ☐ has requested the Trustee by written order to deliver, in exchange for its beneficial interest in the Global Note held by theDepositary, a Definitive Note in definitive, registered form of authorized denominations and an aggregate principal amountequal to its beneficial interest in such Global Note (or the portion thereof indicated above);☐ has requested the Trustee by written order to exchange or register the transfer of a Note.In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144 underthe Securities Act, the undersigned confirms that such Notes are being transferred in accordance with its terms:CHECK ONE BOX BELOW (1) ☐ to the Issuers; or(2) ☐ to the Registrar for registration in the name of the Holder, without transfer; or(3) ☐ pursuant to an effective registration statement under the U.S. Securities Act of 1933; or(4) ☐ inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchasesfor its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made inreliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or(5) ☐ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance withRule 904 under the Securities Act of 1933 and such Note shall be held immediately after the transfer through DTC until the expirationof the Restricted Period (as defined in the Indenture); or(6) ☐ pursuant to Rule 144 under the U.S. Securities Act of 1933 or another available exemption from registration.Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person otherthan the registered Holder thereof, provided, however, that if box (5) or (6) is checked, the Trustee may require, prior to registeringany such transfer of the Notes, such legal opinions, certifications and other information as the Trustee or the Issuers have reasonably requested to confirm thatsuch transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933.Date: Your Signature: Sign exactly as your name appears on the other side of this Note. Signature Guarantee*: * (Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to theTrustee)TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises soleinvestment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the U.S. Securities Act of1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuers asthe undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying uponthe undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: Signature: (to be executed by an executive officer of purchaser)[TO BE ATTACHED TO GLOBAL NOTES][FORM OF SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE]The initial principal amount of this Global Note is $[●]. The following increases or decreases in this Global Note have been made: Date ofIncrease/Decrease Amount of Decrease inPrincipal Amount ofthis Global Note Amount of Increase inPrincipal Amount ofthis Global Note Principal amount ofthis Global Notefollowing suchdecrease or increase Signature of authorizedsignatory of Trustee [FORM OF OPTION OF HOLDER TO ELECT PURCHASE]If you want to elect to have this Note purchased by the Issuers pursuant to Section 4.03 (Offer to Repurchase upon Change of Control TriggeringEvent) of the Indenture, check the box:Change of Control ☐If you want to elect to have only part of this Note purchased by the Issuers pursuant to Section 4.03 of the Indenture, state the amount (minimumamount of $200,000):$ Date: Your Signature: (Sign exactly as your name appears on the other side of the Note)Signature Guarantee*: *(Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to theTrustee)EXHIBIT B[FORM OF CERTIFICATE OF TRANSFER]Deutsche Bank Trust Company AmericasTrust and Agency Services60 Wall Street16th FloorNew York, NY 10005USARe: [●]% Senior Notes due 20[●] NXP B.V. and NXP Funding LLC (the “Notes”)Reference is hereby made to the Senior Indenture dated August 11, 2016 among NXP B.V. and NXP Funding LLC, as Issuers, the guarantors partythereto and Deutsche Bank Trust Company Americas, as Trustee (the “Indenture”). Capitalized terms used but not defined herein shall have the meaningsgiven to them in the Indenture. (the “Transferor”) owns and proposes to transfer the Note/Notes or interest in such Note/Notes (the “Book-Entry Interest”)specified in Annex A hereto, in the principal amount of $ in such Note/Notes or interests (the “Transfer”), to (the “Transferee”), asfurther specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:[CHECK ALL THAT APPLY]1. ☐ Check if Transfer is Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the U.S. Securities Actof 1933 (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the Book- Entry Interest or Definitive Note is being transferred to aPerson that the Transferor reasonably believed and believes is purchasing the Book-Entry Interest or Definitive Note for its own account, or for one or moreaccounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer”within the meaning of Rule 144A to whom notice was given that the Transfer was being made in reliance on Rule 144A and such Transfer is in compliancewith any applicable securities laws of any state of the United States or any other jurisdiction. Upon consummation of the proposed Transfer in accordancewith the terms of the Indenture, the transferred Book-Entry Interest or Definitive Note will be subject to the restrictions on transfer enumerated in theRestricted Notes Legend printed on the Rule 144A Global Note and/or the Rule 144A Definitive Note and in the Indenture and the Securities Act.2. ☐ Check if Transfer is pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Regulation S under the Securities Actand, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (A) at the time the buyorder was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believesthat the Transferee was outside the United States or (B) the transaction was executed in, on or through E-B-1the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction wasprearranged with a buyer in the United States; (ii) no directed selling efforts have been made in contravention of the requirements of Regulation S under theSecurities Act; (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S. Securities Act; and (iv) the transfer is notbeing made to a U.S. Person or for the account or benefit of a U.S. Person. Upon consummation of the proposed transfer in accordance with the terms of theIndenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer printed on the Regulation S Global Note and/orthe Regulation S Definitive Note and contained in the Securities Act, the Indenture and any applicable securities laws of any state of the United States or anyother jurisdiction.3. ☐ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from theregistration requirements of the Securities Act other than Rule 144 or Regulation S and in compliance with the transfer restrictions contained in the Indentureand any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the RestrictedNotes Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with theterms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the RestrictedNotes Legend.4. ☐ Check if Transfer is Pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act andin compliance with the transfer restrictions contained in the Indenture and any applicable securities laws of any state of the United States or any otherjurisdiction; (ii) the Transferor is not (and during the three months preceding the Transfer was not) an Affiliate of any of the Issuers, (iii) at least one year haselapsed since such Transferor (or any previous transferor of such Book-Entry Interest or Definitive Note that was not an Affiliate of any of the Issuers)acquired such Book-Entry Interest or Definitive Note from the Issuers or an Affiliate of any of the Issuers, and (iv) the restrictions on transfer contained in theIndenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposedTransfer in accordance with the terms of the Indenture, the transferred Book-Entry Interest or Rule 144A Definitive Note will no longer be subject to therestrictions on transfer enumerated in the Restricted Notes Legend printed on the Rule 144A Global Note and/or the Rule 144A Definitive Note and in theIndenture.This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers and the Trustee. [Insert Name of Transferor]By: Name: Title: Dated: E-B-2ANNEX A TO CERTIFICATE OF TRANSFER1. The Transferor owns and proposes to transfer the following: CHECK ONE](a) ☐ a Book-Entry Interest held through DTC Account No. , in the:(i) ☐ Rule 144A Global Note ([CUSIP/ISIN/COMMON CODE] ); or(ii) ☐ Regulation S Global Note ([CUSIP/ISIN/COMMON CODE];. or(b) ☐ a Rule 144A Definitive Note; or(c) ☐ a Regulation S Definitive Note.2. After the Transfer the Transferee will hold:[CHECK ONE](a) ☐ a Book-Entry Interest through DTC Account No. in the:(i) ☐ Rule 144A Global Note ([CUSIP/ISIN/COMMON CODE] ); or(ii) ☐ Regulation S Global Note ([CUSIP/ISIN/COMMON CODE] or(b) ☐ a Rule 144A Definitive Note; or(c) ☐ a Regulation S Definitive Note. E-B-3EXHIBIT C[FORM OF OFFICER’S COMPLIANCE CERTIFICATE DELIVERED PURSUANT TOSECTION 4.08 OF THE INDENTURE]OFFICER’S COMPLIANCE CERTIFICATE OF NXP B.V.Pursuant to Section 4.08 of the Senior Indenture dated August 11, 2016 (the “Indenture”) among NXP B.V. (the “Company”) and NXPFunding LLC, as Issuers, the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, the undersigned, [●], [officer], of theCompany, do hereby certify on behalf of the Company that: 1.a review of the activities of the Company during the preceding fiscal year has been made under my supervision with a view to determiningwhether the Company has kept, observed, performed and fulfilled its obligations under the Indenture; and 2.as to the best of my knowledge, the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indentureand is not in default in the performance or observance of any of the terms, provisions and conditions of the Indenture [or, if a Default or Event ofDefault shall have occurred, describe all such Defaults or Events of Default of which you have knowledge and what action the Company istaking or proposes to take with respect thereto] and to the best of my knowledge no event has occurred and remains in existence by reason ofwhich payments on account of the principal of or interest or Additional Amounts, if any, on the Notes is prohibited [or if such event hasoccurred, give a description of the event and what action the Company is taking or proposes to take with respect thereto]. E-C-1IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate this [ ] day of [ ], 20[ ]. NXP B.V.by Name: Title: E-C-2Exhibit 4.22EXECUTION VERSION2016 NEW TERM LOAN JOINDER AGREEMENT(TRANCHE F LOANS)This 2016 New Term Loan Joinder Agreement (this “Agreement”) dated as of September 22, 2016 to the Credit Agreement referenced below is by andamong the Tranche F Lenders, the Borrowers and the Administrative Agent (each as defined below) under the Credit Agreement referenced below.RECITALS:Reference is made to the Credit Agreement dated as of December 7, 2015 (as further amended, restated, supplemented or otherwise modified from timeto time, the “Credit Agreement”), among NXP B.V., with its corporate seat in Eindhoven, the Netherlands (the “Company”), NXP Funding LLC, a Delawarelimited liability company (the “Co-Borrower” and, together with the Company, the “Borrowers”), the lending institutions from time to time parties thereto,Credit Suisse AG, as Administrative Agent (in such capacity, the “Administrative Agent”) and Morgan Stanley Senior Funding, Inc., as Collateral Agent.Pursuant to Section 2.14 of the Credit Agreement, the Company has requested that the New Term Loan Lenders listed on Schedule 1.1(c) hereto (each,a “Tranche F Lender” and collectively, the “Tranche F Lenders”) provide and/or convert Tranche B Loans into New Term Loans under the CreditAgreement (the “Tranche F Loans”) in an aggregate principal amount of $1,439,641,875, including, in the case of certain New Term Loan Lenders who arecurrently Lenders with respect to Tranche B Loans under the Credit Agreement (each, a “Converting Lender”), by converting all or if otherwise specified bythe Administrative Agent, a portion of their outstanding Tranche B Loans into Tranche F Loans (each such Tranche B Loan, a “Converting Tranche BLoan”) in the same aggregate principal amount as such Tranche B Lender’s Tranche B Loan (or lesser amount as may be specified by the AdministrativeAgent) simultaneously with the making of other Tranche F Loans hereunder.The Tranche F Lenders are willing to make available to the Borrowers Tranche F Loans on the terms and subject to the conditions set forth herein. Theproceeds of the Tranche F Loans will be used, together with cash-on-hand, to (i) voluntarily prepay, substantially simultaneously with the issuance of suchTranche F Loans, all Tranche B Loans (other than Cashless Converting Loans (as defined below), with respect to which each related Lender has waived itsright to receive such prepayment as provided herein) and (ii) pay, in connection therewith, all accrued and unpaid interest on all Tranche B Loans to theTranche F Funding Date (as defined below).Therefore, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:SECTION 1. Defined Terms. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has themeaning assigned to such term in the Credit Agreement. The interpretive provisions set forth in Section 1.2 of the Credit Agreement apply to this Agreement.SECTION 2. Tranche F Loans.(a) Each Tranche F Lender hereby agrees, on the terms and subject to the conditions set forth herein and in the Credit Agreement to make (or, in thecase of each Converting Lender, convert its Converting Tranche B Loan to) a Tranche F Loan to the Borrowers on the Tranche F Funding Date (as definedbelow) in a principal amount not to exceed the amount set forth opposite such Tranche F Lender’s name on Schedule 1.1(c) as such Tranche F Lender’s“Tranche F Commitment” (with respect to each Tranche F Lender, the “Tranche F Commitment”).(b) The Tranche F Loans shall be designated as a new Tranche under the Credit Agreement, with terms and provisions identical to the Tranche BLoans, except as set forth below:(i) The Tranche F Commitments shall terminate on the funding thereof on the Tranche F Funding Date (as defined below).(ii) Any ABR Loan which is a Tranche F Loan shall have an Applicable ABR Margin of 1.50% per annum.(iii) Any LIBOR Loan which is a Tranche F Loan shall have an Applicable LIBOR Margin of 2.50% per annum.(iv) The Borrowers shall, jointly and severally, repay to the Administrative Agent after the Tranche F Funding Date, for the benefit of theTranche F Lenders, on March 31, June 30, September 30 and December 31 after the date hereof, beginning with December 31, 2016 (or, in each case, ifnot a Business Day, the immediately preceding Business Day) (each, a “Tranche F Loan Repayment Date”), a principal amount in respect of the then-outstanding Tranche F Loans equal to (x) 0.25% multiplied by (y) the outstanding principal amount of Tranche F Loans on the Tranche F Funding Date(a “Tranche F Loan Repayment Amount”):Notwithstanding anything to the contrary contained herein, all outstanding principal amounts of the Tranche F Loans, including interest payablethereon, shall be due and payable on December 7, 2020 (or, if not a Business Day, the immediately preceding Business Day) (the “Tranche F MaturityDate”).(v) Any prepayment of the Tranche F Loans in connection with a Repricing Transaction or any amendment to the Credit Agreement resultingin a Repricing Transaction shall be made at 100% of the principal amount thereof and accrued interest to the date of payment plus, if such prepaymentoccurs prior to the six-month anniversary of the Tranche F Funding Date, a prepayment premium equal to 1.00% of the principal amount so prepaid.SECTION 3. Amendments to Credit Agreement. The Credit Agreement is amended as follows in accordance with Section 2.14(d) thereof. 2(a) Section 1.1 of the Credit Agreement is amended by adding the following defined term:“Tranche F Loans” shall mean the “Tranche F Loans” as defined in, and made and/or converted in accordance with, the 2016 New Term LoanJoinder Agreement dated as of September 22, 2016 among the Borrowers, the Tranche F Lenders party thereto, and the Administrative Agent.(b) The following definitions in Section 1.1 of the Credit Agreement are amended and restated to read in their entirety (or, in the case of LIBOR Rate,solely to replace the first sentence thereof) as follows:“Applicable ABR Margin” shall mean (x) 2.00% with respect to any Tranche B Loans and (y) 1.50% with respect to any Tranche F Loan.Notwithstanding the foregoing, (a) the Applicable ABR Margin in respect of any Extended Term Loans shall be the applicable percentages per annumset forth in the relevant Extension Amendment, (b) the Applicable ABR Margin in respect of any New Term Loans shall be the applicable percentagesper annum set forth the relevant New Term Loan Joinder Agreement, (c) the Applicable ABR Margin in respect of any Replacement Term Loans shallbe the applicable percentages per annum set forth in the relevant agreement and (d) the Applicable ABR Margin shall be increased as, and to theextent, necessary to comply with the provisions of Section 2.14.“Applicable LIBOR Margin” shall mean (x) 3.00% with respect to any Tranche B Loan and (y) 2.50% with respect to any Tranche F Loan.Notwithstanding the foregoing, (a) the Applicable LIBOR Margin in respect of any Extended Term Loans shall be the applicable percentages perannum set forth in the relevant Extension Amendment, (b) the Applicable LIBOR Margin in respect of any New Term Loans shall be the applicablepercentages per annum set forth in the relevant New Term Loan Joinder Agreement, (c) the Applicable LIBOR Margin in respect of any ReplacementTerm Loans shall be the applicable percentages per annum set forth in the relevant agreement and (d) the Applicable LIBOR Margin shall be increasedas, and to the extent, necessary to comply with the provisions of Section 2.14.“LIBOR Rate” shall mean. for any Interest Period with respect to a LIBOR Loan, (a) the rate per annum equal to the offered rate administered byICE Benchmark Administration (“LIBOR”) or a comparable or successor rate, which rate is approved by the Administrative Agent, on the applicableReuters screen page (or such other commercially available source providing such quotations of LIBOR as designated by the Administrative Agent fromtime to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (fordelivery on the first day of such Interest Period) with a term equivalent to such Interest Period multiplied by (b) the Statutory Reserve Rate; providedthat, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, “LIBOR Rate ” shall be theInterpolated Rate, for a period equal in length to the Interest Period of the Loan; provided further that, notwithstanding the foregoing, if the LIBORRate as determined pursuant to the foregoing provisions would otherwise be less than zero, the LIBOR Rate shall be deemed to be zero for purposes ofthis Agreement; provided further that, notwithstanding the foregoing, in no event shall the LIBOR Rate applicable to the Tranche B Loans made on theClosing Date at any time be less than 0.75% per annum; 3“Repricing Transaction” shall mean the prepayment, refinancing, substitution or replacement of all or a portion of the Tranche B Loans orTranche F Loans, as applicable, with the incurrence by any Borrower or any Restricted Subsidiary of any Indebtedness consisting of broadlysyndicated term loans having an Effective Yield that is less than the Effective Yield of such Tranche B Loans or Tranche F Loans, as applicable, sorepaid, refinanced, substituted or replaced, including without limitation, as may be effected through any amendment, amendment or restatement orother modifications to this Agreement relating to the interest rate for, or weighted average yield of, such Tranche B Loans or Tranche F Loans or theincurrence of any Replacement Term Loans, in each case the primary purpose (as determined by the Borrowers in good faith) of which is to reduce suchEffective Yield and other than in connection with a Change of Control, Initial Public Offering or Transformative Acquisition.“Tranche” shall mean, in relation to any Loan, whether such Loan is a Tranche B Loan, Tranche F Loan or an additional tranche (ascontemplated by and designated pursuant to Section 2.14).(c) Schedule 1.1(d) to this Agreement is added as a new Schedule 1.1(d) to the Credit Agreement.(d) Section 5.1 of the Credit Agreement is amended as follows:(i) in the first parenthetical of clause (b) of Section 5.1, the words “or Tranche F Loans” are added immediately after the words “New TermLoans”; and(ii) the following paragraph is added at the end Section 5.1:(c) In the event that, on or prior to the date falling six months after the Closing Date, the Borrowers (i) make a voluntary prepayment of the Tranche FLoans in connection with a Repricing Transaction or (ii) effects any amendment to this Agreement resulting in a Repricing Transaction, the Borrowersshall pay to the Administrative Agent (x) in the case of clause (i) a prepayment premium of 1.00% of the principal amount of the Tranche F Loansbeing prepaid in connection with the Repricing Transaction and (y) in the case of clause (ii), an amount equal to 1.00% of the aggregate amount of theapplicable Tranche F Loans outstanding immediately prior to such amendment that are subject to an effective pricing reduction pursuant to suchRepricing Transaction; provided that, for the avoidance of doubt, in the case of the exercise by the Company of its rights under Section 13.8(b) inconnection with a Repricing Transaction effected through an amendment, the prepayment premium described in the immediately preceding clause(ii) shall be payable to any Lender replaced pursuant to Section 13.8(b) in respect of the Tranche F Loans assigned pursuant to Section 13.8(b)immediately prior to such Repricing Transaction. 4SECTION 4. Representations And Warranties. Each Borrower represents and warrants that as of the Tranche F Effective Date:(a) no Default or Event of Default shall have occurred and be continuing; and(b) all representations and warranties made by any Credit Party contained in the Credit Agreement or in the other Credit Documents shall be true andcorrect in all material respects with the same effect as though such representations and warranties had been made on and as of the Tranche F Effective Date(except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been trueand correct in all material respects as of said earlier date.SECTION 5. Conditions Precedent to the Tranche F Effective Date. This Agreement shall become effective as of the first date (the “Tranche FEffective Date”) when each of the following conditions shall have been satisfied:(a) New Term Loan Joinder Agreement. The Administrative Agent shall have received this Agreement, executed and delivered by a duly authorizedsignatory of each Borrower, each Tranche F Lender and the Administrative Agent;(b) Solvency. The Administrative Agent shall have received a certificate from an Authorized Officer of the Company in a form reasonably satisfactoryto the Administrative Agent demonstrating that, as of the Tranche F Effective Date, (A) the fair value of the assets of the Company and its Subsidiaries on aconsolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Company and its Subsidiarieson a consolidated basis, respectively; (B) the present fair saleable value of the property of the Company and its Subsidiaries on a consolidated basis will begreater than the amount that will be required to pay the probable liability of the Company and its Subsidiaries on a consolidated basis on their debts andother liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (C) the Company and itsSubsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilitiesbecome absolute and matured; and (D) the Company and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which toconduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Tranche F FundingDate and (ii) each Credit Party (A) has not ceased, and does not expect that it will cease, making payments on its liabilities when due and (B) can, and expectsthat it can, obtain credit in the ordinary course of business;(c) Closing Certificates. The Administrative Agent shall have received a certificate of each Original Credit Party, dated the Tranche F Effective Date,substantially in the form of Exhibit C-1 to the Credit Agreement, with appropriate insertions, executed by the President or any Vice President and theSecretary or any Assistant Secretary of such Original Credit Party (or where customary in the relevant jurisdiction, executed by a director of such OriginalCredit Party), and, if applicable, attaching the documents referred to in clauses (d), (e) and (g) below;(d) Corporate Proceedings of Each Original Credit Party. The Administrative Agent shall have received a copy of the resolutions, in form andsubstance 5satisfactory to the Administrative Agent, of the Board of Directors and, to the extent required under applicable Law or the organizational documents of anyOriginal Credit Party, the shareholders of each Original Credit Party (or a duly authorized committee thereof) authorizing (i) the execution, delivery andperformance of this Agreement (and any agreements relating thereto) to which it is a party and (ii) in the case of the Borrowers, the Tranche F Loanscontemplated hereunder;(e) Corporate Documents. The Administrative Agent shall have received true and complete copies of the certificate of incorporation, by-laws (orequivalent organizational documents) and, to the extent available in the relevant jurisdiction, an extract of the trade register of each Original Credit Party orcertification that such corporate documents delivered on the Tranche F Effective Date are currently in full force and effect and no action has been taken toalter, amend, revise, supplement, modify, revoke or rescind such corporate documents since the Closing Date;(f) Know Your Customer. Each Tranche F Lender shall have received, at least two Business Days prior to the Tranche F Effective Date, alldocumentation and other information about the Borrowers and the Guarantors as shall have been reasonably requested in writing by the AdministrativeAgent at least five Business Days prior to the Tranche F Funding Date and as is mutually agreed to be required by U.S. regulatory authorities under applicable“know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act.; and(g) Representations and Warranties. The representations and warranties set forth in Section 4 above shall be true and correct.SECTION 6. Conditions Precedent to the Tranche F Funding Date. The obligation of each Tranche F Lender to make a Tranche F Loan to theBorrowers on the date specified as the “Date of Borrowing” in the Notice of Borrowing delivered pursuant to clause (b) of this Section 6 (which date shall beduring the period beginning on the Tranche F Effective Date to and including September 22, 2016) (the “Tranche F Funding Date”) is subject thesatisfaction (or waiver) of the following conditions precedent:(a) Representations and Warranties. The representations and warranties set forth in Section 4 above shall be true and correct, before and after givingeffect to the Tranche F Loans, with the same effect as if each reference to “Tranche F Effective Date” in Section 4 above were replaced with “Tranche FFunding Date”;(b) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing in respect of the Tranche F Loans in writing meetingthe requirements of Section 2.3 of the Credit Agreement;(c) Fees. The Administrative Agent shall have received evidence that the fees in the amounts (and at the times) previously agreed in writing by theAdministrative Agent to be received on or prior to the Tranche F Funding Date as well as fees included in Section 2 of the Engagement Letter (defined below)and all reasonable and documented out of pocket expenses for which the Borrowers are responsible and in relation to which invoices have been presentedprior to the Tranche F Funding Date shall be paid on or by such date, and the Company and its Subsidiaries that are party thereto 6shall have complied in all material respects with all of the other terms of the engagement letter dated September 9, 2016 (the “Engagement Letter”, whichEngagement Letter shall not have been terminated by the Borrowers) between Deutsche Bank Securities Inc. and the Company to be complied with on orbefore the Tranche F Funding Date;(d) Legal Opinions. The Administrative Agent shall have received the executed legal opinions of (i) special New York and Delaware counsel to theBorrowers reasonably satisfactory to the Administrative Agent and (ii) special Dutch counsel to the Borrowers reasonably satisfactory to the AdministrativeAgent, in each case in substantially the same form and substance as provided under and in connection with the Credit Agreement or otherwise in form andsubstance reasonably satisfactory to the Administrative Agent and, in each case, to the extent applicable to entities that are Original Credit Parties. EachBorrower, for itself and on behalf of the other Original Credit Parties, and the Administrative Agent hereby instruct counsel to deliver such legal opinions;(e) Collateral Agency Agreement. The Administrative Agent shall have received any required accession, certifications and supplements to theCollateral Agency Agreement, executed and delivered by a duly authorized signatory of each party thereto.(f) Prepayment of Tranche B Loans. The Administrative Agent shall receive, simultaneously with such funding, funds sufficient to (i) prepay in fullthe principal amount of all Tranche B Loans (other than Tranche B Loans that are being converted to (or that are deemed repaid or “cashless rolled” inexchange for) Tranche F Loans pursuant to this Agreement) and (ii) pay, in connection therewith, all accrued and unpaid interest on all Tranche B Loans tothe Tranche F Funding Date.The acceptance of the benefits of the Tranche F Loans shall constitute a representation and warranty by each Credit Party that all the applicableconditions specified above exist as of that time.SECTION 7. Further Covenants.Without limitation of any covenant or undertaking in the Credit Agreement, each of the Borrowers hereby agrees as follows:(a) Not later than 60 days after the Tranche F Funding Date (or such longer period as the Administrative Agent may agree in writing in its solediscretion), the Administrative Agent shall have received counterparts of an Acknowledgement substantially in the form of Exhibit A to this Agreement (withsuch amendments thereto as may be agreed by counsel to the relevant Guarantor and counsel to the Administrative Agent), duly executed by each Guarantor(other than the Borrowers).(b) Subject to the Agreed Security Principles, as soon as is reasonably practicable following the Tranche F Funding Date and in any event within 60days thereafter (or such longer period as the Administrative Agent may agree in writing in its sole discretion), the Collateral Agent shall have received (A) tothe extent that the Collateral Agent has reasonably determined (based on the advice of counsel in each Relevant Jurisdiction) that the Security Documentsthat secure Tranche F Obligations may continue in force and effect in such Relevant Jurisdiction confirmation that such 7Security Documents remain in full force and effect and (B) to the extent that the Collateral Agent has reasonably determined (based on the advice of counselin each Relevant Jurisdiction) that amendments or replacements of the Security Documents that secure such Tranche F Obligations as of the Tranche FFunding Date are required in order to ensure that such obligations under the Credit Agreement and the Guarantors under the Guaranty are secured byCollateral in the Relevant Jurisdictions, then copies of each such required amended or replaced agreement, executed and delivered by a duly authorizedsignatory of each party thereto.(c) Subject to the Agreed Security Principles, if at any time after the Tranche F Funding Date the Borrowers or other Obligors shall incur any SecuredObligations and shall take any Additional Collateral Actions for the benefit of such Secured Obligations, the Obligors shall simultaneously with taking suchAdditional Collateral Actions for the benefit of such other Secured Obligations, take such Additional Collateral Actions as well for the ratable benefit of theTranche F Obligations.The parties hereto agree that any failure to perform the undertakings in this Section 7 on the terms provided herein shall constitute an Event of Default underthe Credit Agreement if such failure continues for 30 days after notice thereof by the Administrative Agent on behalf of the Lenders or the Required Lenders.SECTION 8. Certain Consequences Of Effectiveness.(a) Except as expressly set forth herein, all terms, conditions, covenants, representations and warranties contained in the Credit Agreement and theother Credit Documents and all rights of the Agents and the Lenders and all obligations of the Credit Parties, shall remain in full force and effect. EachBorrower hereby confirms that the Credit Agreement and the other Credit Documents are in full force and effect. Without limiting the foregoing and subjectto confirmation of the satisfaction of the conditions subsequent set forth in Section 7 above by the Administrative Agent and the Collateral Agent, eachBorrower hereby confirms that the Guaranty and the Security Documents to which it is a party, the guarantees by each Borrower set forth therein and all of theCollateral described therein (to the extent required by Section 7 above, with respect to the Tranche F Obligations) do, and shall continue to, guarantee andsecure the payment of all of the Obligations and Secured Obligations (as applicable and, in each case, as defined and subject to the limitations set forththerein and subject to Debtor Relief Laws and to general principles of equity) including, on and after the Tranche F Funding Date (and subject to thelimitations and timing referred to above), the Tranche F Obligations.(b) For all purposes of the Credit Agreement and all other Credit Documents, (i) this Agreement shall constitute a New Term Loan Joinder Agreementand a Credit Document, (ii) the Tranche F Commitments shall constitute New Term Loan Commitments and Commitments, (iii) the Tranche F Lenders shallconstitute New Term Loan Lenders and Lenders, (iv) the Tranche F Loan Repayment Amount shall constitute a Loan Repayment Amount, (v) the Tranche FLoan Repayment Date shall constitute New Term Loan Repayment Amount and a Loan Repayment Date, (vi) the Tranche F Maturity Date shall constitute aNew Term Loan Maturity Date and a Maturity Date, (vii) the Tranche F Funding Date shall constitute an Increased Amount Date and (viii) the Tranche FLoans shall constitute New Term Loans and Loans. 8(c) Notwithstanding anything in the Credit Agreement to the contrary, (i) the Loans funded on the Tranche F Funding Date shall be funded as LIBORLoans with an initial Interest Period ending on December 31, 2016 and (ii) each Tranche F Lender that was a Tranche B Lender immediately prior to theeffectiveness hereof hereby waives any claim for the payment of any breakage loss or expense under Section 2.11 of the Credit Agreement in connection withthe repayment or conversion of its Tranche B Loans on the Tranche F Funding Date.(d) Each undersigned Tranche F Lender hereby consents to (i) its respective allocation of the applicable Loans and Commitments after giving effectto this Agreement and the transactions contemplated herein (as well as in any Assignment and Acceptance entered into by such Lender pursuant toSection 13.7 of the Credit Agreement required to effect such allocation) on the Tranche F Funding Date as set forth in the Register (as such respectiveallocation has been indicated by the Administrative Agent to such Tranche F Lender on or prior to the Tranche F Funding Date) and (ii) any non-pro ratatreatment of payments to the Lenders by the Borrowers resulting from the payments described in this Section 8(d), notwithstanding anything to the contraryin the Credit Agreement.(e) Each Converting Lender that executes and delivers a consent to this Agreement (a “Consent”) electing the “Consent and Cashless Roll Option”shall be deemed to agree, upon the effectiveness of the Agreement on the Tranche F Signing Date that (i) all (or such lesser amount as Deutsche BankSecurities Inc. (“Deutsche Bank”) may allocate to such Lender) of its existing Loans and Commitments shall constitute Loans and Commitments, asapplicable, under the Credit Agreement (each such Loan, to such extent, a “Cashless Converting Loan”) and (ii) it waives any right to receive its share of thecash prepayment of Tranche B Loans referred to herein, solely to the extent to such Cashless Converting Loans.(f) Each existing Tranche B Lender that executes and delivers a Consent electing the “Consent and Assignment Option” shall be repaid in full on theTranche F Funding Date, including for all accrued and unpaid interest, fees, expenses and other compensation owed to such Lender and due and payable bythe Borrower pursuant to the Credit Agreement and this Agreement. Each such Lender agrees that it shall be deemed to have executed an Assignment andAcceptance pursuant to Section 13.7 of the Credit Agreement on the Tranche F Funding Date and assumed an amount equal to the principal amount of suchrepayment (or such lesser amount as Deutsche Bank may allocate to such Lender).SECTION 9. Tranche F Effective Date. This Agreement shall become legally binding on the parties hereto and shall become effective as a New TermLoan Joinder Agreement to the Credit Agreement on the Tranche F Effective Date.SECTION 10 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts(including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the sameinstrument.SECTION 11. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BEGOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9SECTION 12. Waivers Of Jury Trial. EACH BORROWER, THE ADMINISTRATIVE AGENT AND EACH TRANCHE F LENDER HEREBYIRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENTAND FOR ANY COUNTERCLAIM THEREIN.SECTION 13. Costs And Expenses. For the avoidance of doubt, Section 13.6 of the Credit Agreement shall apply to the payment of costs and expensesincurred in connection with this Agreement and any other documents prepared in connection therewith. 10IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. NXP B.V.By: /s/ Jean SchreursName: Jean SchreursTitle: Authorized SignatoryNXP FUNDING LLCBy: /s/ Jean SchreursName: Jean SchreursTitle: Director [Signature Page to NXP New Term Loan Joinder Agreement]CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, asAdministrative AgentBy: /s/ William O’DalyName: William O’DalyTitle: Authorized SignatoryBy: /s/ Karim RahimtoolaName: Karim RahimtoolaTitle: Authorized Signatory [Signature Page to NXP New Term Loan Joinder Agreement]DEUTSCHE BANK AG NEW YORK BRANCH, as Tranche FLenderBy: /s/ Nicholas HagerName: Nicholas HagerTitle: Managing Director By: /s/ Ian DorringtonName: Ian DorringtonTitle: Managing Director [Signature Page to NXP New Term Loan Joinder Agreement]SCHEDULE 1.1(c)TRANCHE F COMMITMENTS(AS OF THE TRANCHE F EFFECTIVE DATE)On file with the Administrative Agent.EXHIBIT AGuarantor AcknowledgementACKNOWLEDGEMENTReference is made to the 2016 New Term Loan Joinder Agreement (the “Agreement”) dated September 22, 2016 relating to the Credit Agreementdated as of December 7, 2015 (as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among NXPB.V., with its corporate seat in Eindhoven, the Netherlands (the “Company”), NXP Funding LLC (the “Co-Borrower” and, together with the Company, the“Borrowers”), the lending institutions from time to time parties thereto, Credit Suisse AG, as Administrative Agent (in such capacity, the “AdministrativeAgent”) and Morgan Stanley Senior Funding, Inc. as Collateral Agent. Unless otherwise specifically defined herein, each term used herein that is defined inthe Agreement has the meaning assigned to such term in the Credit Agreement or the Agreement.Each of the undersigned hereby consents to the foregoing Agreement, including without limitation the extension of the Tranche F Loans referred totherein, and hereby confirms and agrees that (a) notwithstanding the effectiveness of such Agreement, each Credit Document to which it is party is, and shallcontinue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, each reference in any Credit Document to the CreditAgreement, “thereof”, “thereunder”, “therein” and “thereby” and each other similar reference to the Credit Agreement contained therein shall, on and after theTranche F Funding Date, refer to the Credit Agreement as amended by the Agreement and (b) the Guaranty and the Security Documents to which each of theundersigned is a party and all of the Collateral described therein do, and shall continue to, guarantee and secure the payment of all of the Obligations and theSecured Obligations (as applicable and, in each case, as defined and subject to the limitations set forth therein and in the Agreement) which shall include, onand after the Tranche F Funding Date, the obligations in respect of the Tranche F Loans.IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgement to be duly executed as of the date first above written. [GUARANTORS]By: Name: Title: Exhibit 10.22 NXP Restricted Stock Units Plan 2016/17 Page 1 of 7 NXP Restricted Stock Units Plan October 27, 2016TERMS AND CONDITIONSOFNXP RESTRICTED STOCK UNITS PLAN 2016/17Article 1DefinitionsIn this NXP Restricted Stock Units Plan the following definitions shall apply:1. Board: the board of directors of NXP.2. Change of Control: a transaction or series of transactions or the conclusion of an agreement, which alone or takentogether has the effect that as a result thereof a third party, or third parties acting in concert,obtains, whether directly or indirectly, Control of NXP.3. Control: (i) the ownership, whether direct or indirect, of a party or parties acting in concert, of more than50.1% percent of (a) the issued Share capital and/or (b) the voting rights in the general meetingof shareholders; or (ii) the right, whether direct or indirect, of a party or parties acting in concertto control the composition of the majority of the Board of NXP, or the majority of its votingrights, by contract or otherwise.4. Custody Account: a custody account maintained in the name of a Participant.5. Date of Grant: the date at which a Restricted Stock Unit is granted pursuant to this Plan. The Dates of Grant ofany Restricted Stock Units shall be the same dates as the dates of publication of the NXP’annual and/or quarterly results. The relevant Date of Grant and categorization of any RestrictedStock Unit with respect to any grant hereunder shall be determined by NXP.6. Date of Vesting: the date of vesting shall be the first, second or third anniversary of the Date of Grant of suchRestricted Stock Unit as specified in the Grant Letter. For this purpose, Restricted Stock Unitsmay be categorized as “1 Year Term Restricted Stock Units”, “2 Year Term Restricted StockUnits” or “3 Year Term Restricted Stock Units”.7. Eligible Individual: Means an employee of NXP and its direct and indirect subsidiaries or such other person asdetermined by or on behalf of the Board.8. Employing Company: Any of NXP and its direct and indirect subsidiaries and such other company asdesignated by or on behalf of the Board.9. Good Reason: If the Participant does not have an employment agreement with the Employing Company inwhich Good Reason is defined, “Good Reason” means, in the absence of the Participant’swritten consent, any of the following: (i) a material reduction by the Employing Company inthe Page 2 of 7 NXP Restricted Stock Units Plan October 27, 2016 Participant’s base salary or target bonus unless the base salary or target bonus of other NXPemployees or officers in a similar position is reduced by a similar percentage or amount as partof cost reductions, restructuring, or job grade alignment affecting all of the company or theParticipant’s Employing Company or business unit; or (ii) a material diminution in theParticipant’s duties or responsibilities (other than as a result of the Participant’s physical ormental incapacity which impairs his or her ability to materially perform his or her duties orresponsibilities as confirmed by a doctor reasonably acceptable to the Participant or his or herrepresentative and such diminution lasts only for so long as such doctor determines suchincapacity impairs the Participant’s ability to materially perform his or her duties orresponsibilities). A lateral job change that does not materially diminish the Participant’s dutiesor responsibilities will not constitute Good Reason.10. Grant Letter: the letter in which Restricted Stock Units are granted to an Eligible Individual.11. NXP: NXP Semiconductors N.V.12. Participant: an individual who has accepted any Restricted Stock Units under this Plan.13. Plan: this NXP Restricted Stock Units Plan.14. Restricted Stock Unit: the conditional right granted to a Participant to receive one Share, subject to the terms andconditions of this Plan. Restricted Stock Units may be categorized as “1 Year Term RestrictedStock Units”, “2 Year Term Restricted Stock Units” or “3 Year Term Restricted Stock Units”, asapplicable.15. Share: a common share in the share capital of NXP (to be) delivered under this Plan.Article 2Grant of Restricted Stock Units 1.Any Restricted Stock Units may be granted by or on behalf of the Board to an Eligible Individual, subject to the terms and conditions of this Plan andany other NXP policies or guidelines that may apply to such individual. Any Restricted Stock Units offered to any such individual and the terms andconditions governing such rights shall be deemed accepted by such individual with effect from the applicable Date of Grant in case NXP has notreceived, in accordance with a procedure established by NXP, a notice of rejection of such rights within fourteen (14) days of the Grant Letter or suchlater date as may be determined by NXP. 2.The Grant Letter shall reflect, inter alia, the Date of Grant, the number and category of Restricted Stock Units awarded, the vesting schedule andrelevant specifications, if any. Page 3 of 7 NXP Restricted Stock Units Plan October 27, 2016Article 3Vesting of a Restricted Stock Unit 1.A Restricted Stock Unit will vest (i.e. become unconditional and the corresponding Shares will be delivered to the relevant Participant) on orimmediately following the relevant Date of Vesting subject to (i) any specifications in the Grant Letter, and (ii) Article 4 (Termination of Employment).In the event that the Participant’s employment is terminated by the Employing Company without the Participant being a Bad Leaver (as defined inArticle 4(2)) or by the Participant for Good Reason, in either case within twelve months following a Change of Control, all unvested Restricted StockUnits shall become immediately vested (for 100%, accelerated vesting), unless the Grant Letter stipulates differently. 2.Whether any applicable specifications are met, and whether the relevant Participant is still employed by an Employing Company at the relevant time,will be established by the Board or its delegate, in each case, in its sole discretion.Article 4Termination of Employment 1.Unvested Restricted Stock Units shall lapse, on the earliest of the following occasions, without notice and without any compensation: a.if a Participant’s employment terminates and such Participant is no longer employed by any Employing Company; b.upon violation by the Participant of any provision of this Plan or the Grant Letter in which case the Restricted Stock Units shall lapse on the dateof such violation (rather than the date on which such violation comes to the attention of NXP). 2.For purposes of this Program, a “Bad Leaver” shall be a Participant whose employment with NXP or an Employing Company is terminated (i) followingthe Participant committing an act of theft, fraud, serious misconduct or deliberate falsification of records in relation to his duties for NXP or theEmploying Company, (ii) following the Participant being convicted of or pleading guilty to a serious criminal offence (misdrijf) relating to his dutiesfor NXP or the Employing Company (excluding any motoring or non-duty related minor offence), which act or criminal offence referred to in (i) and/or(ii) has a material adverse effect upon NXP or the Employing Company, (iii) with immediate effect because of an urgent cause (dringende reden) asreferred to in article 7:678 of the Dutch Civil Code for cause, (iv) a Participant materially violates the NXP Code of Conduct or similarly significantrule or policy of NXP or the Employing Company, or (v) a Participant within the twelve (12) month period following the termination of employment,directly or indirectly and in any capacity whatsoever, engages in any activities in competition with the activities of any member of the NXP group,including the Participant personally actively soliciting or personally actively endeavoring to entice away or personally actively recruiting any NXPemployees in said period.Article 5Non-transferabilityThe Restricted Stock Units are strictly personal, and may not be assigned, transferred, pledged, hypothecated, or otherwise encumbered or disposed of in anymanner nor may any transaction be entered into with the same effect. The Participant may not engage in any transactions on any exchange on the basis of anyRestricted Stock Units. Page 4 of 7 NXP Restricted Stock Units Plan October 27, 2016Article 6Delivery and Holding of Shares 1.NXP may require a Participant to maintain a Custody Account in connection with this Plan. Nothing contained in this Plan shall obligate NXP toestablish or maintain or cause to establish or maintain a Custody Account for any Participant. The Participant will provide NXP with the details thereof. 2.Subject to the terms and conditions of this Plan and the Grant Letter, and further to the Participants election via the website, NXP will deliver a Share toa Participant on or as soon as reasonably practicable, and in any event within 2.5 months, after the relevant Date of Vesting. In no event shall NXP haveany obligation to deliver any Shares to a Participant prior to the relevant Date of Vesting. 3.Any Shares to be delivered pursuant to Article 6(2) will be credited to the Custody Account.Article 7Capital DilutionNXP may make any equitable adjustment or substitution of the number or kind of Shares subject to the Restricted Stock Units, as it, in its sole discretion,deems equitable to reflect any significant corporate event of or by NXP, for example a change in the outstanding Shares by reason of any stock dividend orsplit, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other corporate change, or any distribution to holders of Sharesother than regular cash dividends.Article 8Costs and Taxes 1.All costs of delivering any Shares under this Plan to a Participant’s Custody Account and any other costs connected with the Shares shall be borne bythe Participant. 2.Any and all taxes, duties, levies, charges or social security contributions (“Taxes”) which arise under any applicable national, state, local or supra-national laws, rules or regulations, whether already effective on the Date of Grant of any Restricted Stock Units or becoming effective thereafter, andany changes or modifications therein and termination thereof which may result for the Participant in connection with this Plan (including, but notlimited to, the grant of the Restricted Stock Units, the ownership of the Restricted Stock Units and/or the delivery of any Shares under this Plan, theownership and/or the sale of any Shares acquired under this Plan) shall be for the sole risk and account of the Participant. 3.NXP and any other Employing Company shall have the right to deduct or withhold (or cause to be deducted or withheld) from any salary payment orother sums due by NXP or any other Employing Company to Participant, or requiring the Participant or beneficiary of the Participant, to pay to NXP anamount necessary to settle any Taxes and any costs determined by NXP necessary to be withheld in connection with this Plan (including, but notlimited to, the grant of the Restricted Stock Units or the delivery of any Shares under this Plan). Page 5 of 7 NXP Restricted Stock Units Plan October 27, 2016Article 9Cash AlternativeIn exceptional circumstances, at the sole discretion of the Board, upon the Date of Vesting, NXP may advise a Participant resident outside the Netherlands torequest in writing an amount in cash as an alternative to Shares. Upon such request the Participant is entitled to receive an amount in U.S. Dollars, equal tothe price of a Share listed at the NASDAQ Global Select Market with dividend, if any, at closing of NASDAQ, multiplied by the relevant number of vestedRestricted Stock Units. If on the date of receipt of the request from the Participant, Shares have not been traded at NASDAQ, the price of a Share will be theopening price of the first subsequent trading day at NASDAQ. Any costs to be paid and any applicable Taxes due shall be deducted from the amount to bereceived by the Participant.Article 10General ProvisionsInsider trading rules 1.Each Participant shall comply with any applicable “insider trading” laws and regulations, including the “NXP Semiconductor N.V.’ Insider TradingPolicy”.Authority for this Plan 2.NXP shall have the authority to interpret this Plan, to establish, amend, and rescind any rules and regulations relating to this Plan, to determine and - ifdeemed necessary or advisable - amend the terms and conditions of any agreements entered into hereunder, to make all other determinations necessaryor advisable for the administration of this Plan. To the extent required by law, the general meeting of shareholders of NXP will be requested to adopt orapprove such changes. 3.NXP may delegate the authority to perform administrative and operational functions with respect to this Plan to officers or employees of subsidiaries ofNXP and to service providers. Such delegation may include the authority to interpret this Plan and establish, amend and rescind rules, regulations termsand conditions in force from time to time applicable to Restricted Stock Units granted and the Shares obtained under this Plan.Shareholder rights 4.No Participant shall have any rights or privileges of shareholders (including the right to receive dividends and to vote) with respect to Shares to bedelivered pursuant to the Restricted Stock Units until such Shares are actually delivered to him in accordance with Article 6 of this Plan. The Sharesdelivered shall carry the same rights as common shares of NXP traded at NASDAQ on the day on which these Shares are delivered.Non-recurring discretionary grant 5.Eligibility and participation shall be at the sole discretion of NXP or the Employing Company and as such do not qualify as terms and conditions ofemployment. The Grant in one year does not create rights for future years. 6.The (value of) Restricted Stock Units granted to, or Shares acquired by a Participant pursuant to such Restricted Stock Unit, under this Plan shall not beconsidered as compensation in determining a Participant’s benefits under any benefit plan of an Employing Company, including but not limited to,group life insurance, long-term disability, family survivors, or any retirement, pension or savings plan. Page 6 of 7 NXP Restricted Stock Units Plan October 27, 20167.Nothing contained in this Plan, Grant Letter or any agreement entered into pursuant hereto shall confer upon any Participant any right to be employedwith any Employing Company for any period of time, or to be entitled to any remuneration or benefits not set forth in this Plan, or to interfere with orlimit in any way with the right of any Employing Company or any of its subsidiaries to terminate such Participant’s employment or to discharge orretire any Participant at any time.Miscellaneous 8.If a provision of this Plan is deemed illegal or invalid, the illegality or invalidity shall not affect the remaining parts of this Plan, this Plan shall beconstrued as if the illegal or invalid provisions had not been included in this Plan. 9.Where the context requires, words in either gender shall include also the other gender.Choice of law and forum 10.This Plan shall be governed by and construed in accordance with the laws of The Netherlands, without regard to its principles of conflict of laws. Anydispute arising under or in connection with this Plan shall be settled by the competent courts in Amsterdam, The Netherlands. • • • • • Page 7 of 7 NXP Restricted Stock Units Plan October 27, 2016Exhibit 10.33 Execution version SALE AND PURCHASE AGREEMENTrelating to all issued and outstanding shares in the share capital ofNexperia Holdco Netherlands B.V.BetweenNXP B.V.(as the Seller)AndBeijing Jianguang asset Management Co., Ltd.AndWise Road Capital LTD(as the Purchasers)Dated 14 June 2016Contents Clause Page 1 DEFINITIONS AND INTERPRETATION 3 2 SALE, PURCHASE AND TRANSFER 3 2.1 Sale and purchase 3 2.2 Transfer 3 2.3 Directions of proportions and nomination other party 3 2.4 Benefit and risk 3 2.5 Transaction structure 4 3 CONSIDERATION 4 3.1 Purchase Price 4 3.2 Payments at Completion 5 3.3 Allocation 5 4 COMPLETION CONDITIONS 5 4.1 Conditions 5 4.2 Responsibility for satisfaction 7 4.3 Merger Clearance Filings 7 4.4 Works Council 9 4.5 CFIUS 11 4.6 Cooperation to complete the Transaction 13 4.7 Satisfaction and waiver of Completion Conditions 14 4.8 Long stop date 14 5 PRE-COMPLETION UNDERTAKINGS 14 5.1 Operation of the Business prior to Completion 14 5.2 Excused conduct 16 5.3 Finalisation of Ancillary Agreements and Schedules 17 5.4 Disentanglement 17 5.5 Overseas Investment Filings 18 5.6 Deposit Amount 18 5.7 Late filing 19 5.8 Intragroup transactions 20 5.9 Estimated statements 21 5.10 Funding of the Estimated Purchase Price 21 5.11 Access to information 21 5.12 Execution of the Notary Letter 22 5.13 Termination of non-disclosure agreements with other bidders 22 6 COMPLETION 22 6.1 Completion date and place 22 2 / 6 6.2 Completion actions 23 6.3 Procurement of sale and transfer of Hamburg Site 25 6.4 Breach of Completion obligations; Default Payment Fee 25 6.5 Acknowledgement of Notary and bank 26 7 COMPLETION ADJUSTMENTS 27 7.1 The Statements 27 7.2 Principles 27 7.3 Determination of the Statements 28 7.4 No forward looking valuations 29 7.5 Adjustment of the Estimated Purchase Price 29 7.6 Payment 30 8 POST-COMPLETION OBLIGATIONS 30 8.1 Pre-Completion Receivables and Pre-Completion Payables 30 8.2 Retention of records 30 8.3 Insurance 31 8.4 Release of Guarantees 32 8.5 Merger Philippines 33 9 WARRANTIES 33 9.1 Seller’s Warranties 33 9.2 Purchasers’ Warranties 34 9.3 Exclusion of certain BW provisions 34 10 LIABILITY 34 10.1 Liability of the Seller 34 10.2 Time limitations 35 10.3 Minimum claims 35 10.4 Aggregate minimum claims 36 10.5 Maximum liability 36 10.6 Purchasers’ awareness 36 10.7 Provisions 36 10.8 Excluded matters 37 10.9 Purchasers’ insurance 38 10.10 Net financial benefit 38 10.11 Breaches capable of remedy 38 10.12 Mitigation of Losses 38 10.13 Purchasers’ right to recover 38 10.14 No double claims 39 10.15 Contingent Liabilities 40 3 / 6 10.16 Liability of the Purchasers 40 10.17 Third-party stipulation 40 10.18 No recourse for Seller 41 10.19 Fraud and gross negligence 41 11 CLAIMS 41 11.1 Notification of potential claims 41 11.2 Notification of claims 41 11.3 Commencement of proceedings 42 11.4 Procedure for Third-Party Claims 42 11.5 Third-party stipulation limitation 43 12 TAX 43 13 EMPLOYEES AND PENSION PLANS 43 13.1 Employees 43 13.2 Pension Plans 43 14 RESTRICTIONS ON SELLER 44 14.1 Non-solicit 44 14.2 Ancillary restrictions 44 15 CONFIDENTIALITY 45 15.1 Public announcements 45 15.2 Confidentiality undertaking 45 16 MISCELLANEOUS 46 16.1 Further assurances 46 16.2 Entire agreement 46 16.3 Assignment 46 16.4 Invalidity 46 16.5 Counterparts 47 16.6 Waiver 47 16.7 Amendment 47 16.8 Third-party rights 47 16.9 No rescission 47 16.10 No withholding and gross up 47 16.11 Method of payment 48 16.12 Set-off 48 16.13 Adjustment of the Purchase Price 48 16.14 Costs 48 16.15 Interest 50 16.16 Notices 50 4 / 617 GOVERNING LAW AND DISPUTE RESOLUTION 51 17.1 Governing law 51 17.2 Dispute resolution 51 17.3 Other disputes 52 5 / 6Schedules Schedule 1 Definitions and interpretationSchedule 2 Dedicated Companies*Schedule 3 Completion StatementsSchedule 4 Disentanglement Completion ActionsSchedule 5 Reporting AccountantsSchedule 6 Merger Clearance FilingsSchedule 7 Seller’s WarrantiesSchedule 8 Purchasers’ WarrantiesSchedule 9 TaxSchedule 10 Disentanglement PlanSchedule 11 Transferred PropertySchedule 12 Restricted EmployeesSchedule 13 Excluded EmployeesSchedule 14 Parties’ details for NoticesSchedule 15 Seller’s Knowledge personsSchedule 16 Agreed Form Deed of TransferSchedule 17 The FundsSchedule 18 Equity Commitment LetterSchedule 19 Escrow AgreementSchedule 20 Agreed Form Ancillary AgreementsSchedule 21 Allocation of the Purchase PriceSchedule 22 Data Room DVDSchedule 23 IT Separation and Hamburg Certified Area set up 6 / 6SALE AND PURCHASE AGREEMENTTHIS AGREEMENT IS DATED 14 JUNE 2016 AND MADE BETWEEN: (1)NXP B.V., a private limited liability company incorporated under the Laws of the Netherlands, with corporate seat in Eindhoven, theNetherlands, and address at High Tech Campus 60, 5656 AG Eindhoven, (the “Seller”); (2)BEIJING JIANGUANG ASSET MANAGEMENT CO., LTD., a private limited liability company, incorporated under the Laws of the People’sRepublic of China, with corporate seat in Beijing, trade register number 110107016735242, address at Beijing International Club Office Tower,Room 302, No. 21, Jian Guo Men Wai Street, Beijing, People’s Republic of China (“JAC Capital”); and (3)WISE ROAD CAPITAL LTD, an exempted limited company incorporated in and under the Laws of the Cayman Islands, with registered officeat c/o Offshore Incorporations (Cayman) Limited, Floor Willow House, Cricket Square, PO Box 2804, Grand Cayman KY1-1112 Cayman Islands,and company registration number 299533 (“Wise Road” and hereinafter jointly with JAC Capital referred to as the “Purchasers” and each a“Purchaser”).BACKGROUND: (A)The Seller’s Group is active in (a) the business of researching, designing, developing, testing, manufacturing, commercializing, packaging,marketing, distributing, selling and servicing discrete semiconductor devices, low complexity ICs and integrated passives through the followingNXP business lines: (i) BL GA Discretes, (ii) BL PowerMOS and (iii) BL Logic, a representative list of such products being included in Schedule18 to the IP Transfer and License Agreement (the “Products”) and (b) the business of designing, developing, building, assembling, installing andmaintaining high speed and high quality semiconductor assembly and test equipment for die placement and taping, integrated circuit testing,molding, wire bonding, vision and data handling, and of developing process recipes and software related to the use and maintenance of saidequipment through ITEC (the businesses under (a) and (b) hereafter the “Business”). For the avoidance of doubt, any business (e.g. in respect ofthe small PowerMOS eSwitch discretes) historically conducted by Freescale Semiconductor does not form part of the Business; (B)Prior to Completion, the Seller will incorporate a private company under the Laws of the Netherlands under the name of “Nexperia HoldCoNetherlands B.V.” (the “Company”), and will hold all the issued and outstanding shares of the Company (the “Shares”). The Business will beconducted through the Target Group Companies ultimately as of Completion; 1 / 52(C)The Seller has initiated a sale of the Business through a controlled auction process and the Purchasers have been selected as the purchasers of theBusiness; (D)The Seller and JAC Capital entered into a non-disclosure agreement dated 8 February 2016 (the “Non-Disclosure Agreement”), pursuant towhich certain confidential information relating to the Business was made available to the members of the Purchasers’ Group and theirRepresentatives; (E)The Seller gave the Purchasers and their Representatives (i) access to the Data Room, (ii) the opportunity to attend and participate in meetingswith the Business’ management and relevant experts, and (iii) the opportunity to ask and to receive answers to questions the Purchasers deemednecessary in relation to the Business and the Transaction. On that basis, the Purchasers and their Representatives have completed acomprehensive due diligence investigation with respect to the Business; (F)At or prior to Completion, the Seller will procure that the Company will directly or indirectly hold all of the issued shares in the DedicatedCompanies and other Target Group Companies (free of Encumbrances) and the Seller will procure the transfer of the assets (free ofEncumbrances) and liabilities attributable to the Business to the Target Group Companies in accordance with Schedule 10 (DisentanglementPlan) and the other provisions of this agreement (the “Disentanglement”), save for those assets and liabilities not to be transferred to the TargetGroup Companies as set out in this agreement; (G)The Seller has been provided with copies of the Equity Commitment Letters, executed by the Fund Investors and the Purchasers; (H)The Seller has been provided with evidence that the Purchasers have taken reasonable steps to ensure that they will have sufficient fundsavailable outside the People’s Republic of China to be readily able to pay the Completion Amount at Completion; (I)The Parties have entered into the Escrow Agreement and the Purchasers have procured the deposit of the Deposit Amount into the EscrowAccount; and (J)Now, in consideration of the foregoing, the Seller wishes to sell and transfer the Shares to the Purchasers in portions to be determined by thePurchasers, and the Purchasers wish to acquire the Shares from the Seller, on the terms and subject to the conditions set out in this agreement (the“Transaction’’). 2 / 52THE PARTIES AGREE AS FOLLOWS: 1DEFINITIONS AND INTERPRETATIONIn this agreement, unless the context otherwise requires, the definitions and provisions of Schedule 1 (Definitions and interpretation) applythroughout. 2SALE, PURCHASE AND TRANSFER 2.1Sale and purchaseOn the terms and subject to the conditions of this agreement, the Seller hereby sells the Shares to the Purchasers, and the Purchasers herebypurchase the Shares from the Seller. 2.2TransferAt Completion, the Seller shall transfer the Shares to the Purchasers free from any Encumbrances and together with all rights and obligationsattached to the Shares. 2.3Directions of proportions and nomination other party 2.3.1Subject to the Purchasers being jointly and severally liable (hoofdelijk aansprakelijk) for all obligations of the Purchasers under this agreement,the Purchasers shall direct the proportions in which they are to receive and accept the Shares and the Shareholder Loan (if applicable) atCompletion no later than fifteen (15) Business Days prior to the Completion Date. 2.3.2The Purchasers shall be entitled to nominate, to the extent permitted by Law, at their own cost, by notice to the Seller delivered no later thanfifteen (15) Business Days prior to the Completion Date, an entity incorporated, and (directly or indirectly) wholly owned jointly, by thePurchasers to which entity all of the Shares will be transferred and the Shareholder Loan will be assigned at Completion (if applicable), providedthat such nomination shall not (i) adversely impact the satisfaction of the Completion Conditions set out in Clause 4.1, or (ii) derogate from thePurchasers’ obligations towards the Seller under this agreement. 2.4Benefit and riskSubject to Completion, the Transaction will be effective as of the Effective Time and consequently, subject to the other provisions of thisagreement, the benefit and risk of the Shares, together with the benefit and risk of the Target Group, will be for the account of the Purchasers as ofthe Effective Time. 3 / 522.5Transaction structure 2.5.1Within a reasonable period after the Signing Date and prior to the Completion Date, the Purchasers may propose to the Seller their desiredstructure for the Transaction, including the funding of the Target Group and the Disentanglement partly through the provision of a shareholderloan by the Seller to the Company or through the Company to any other Target Group Company pursuant to Paragraph 2.3(b) of Schedule 10(Disentanglement Plan). To the extent that such proposal is reasonable and possible, the Seller and the Purchasers shall discuss in good faithfurther details of the proposal, including the amount of the shareholder loan and applicable interest rate (the principal amount and all accruedinterest of the shareholder loan up to and including the Completion Date, the “Shareholder Loan”). 2.5.2The Shareholder Loan shall be acquired by the Purchasers at Completion at its nominal value against payment of the Purchase Price. In this case,the purchase price for the Shares will be reduced accordingly so that the total consideration for the Shares and Shareholder Loan remains thePurchase Price. The Parties will in good faith discuss and negotiate any amendments to this agreement reasonably required in relation to thefurther implications of the use and assignment of the Shareholder Loan (it being understood that any net Tax disadvantage arising as a result ofany interest payments on the Shareholder Loan as referred to in Clause 2.5.1 shall be for the account of the Purchasers). 3CONSIDERATION 3.1Purchase PriceThe purchase price for the Shares and the Shareholder Loan (if applicable) (the “Purchase Price”) is an amount equal to the aggregate of thefollowing amounts: (a)an amount of USD 2,750,000,000 (two billion seven hundred fifty million US dollars) (the “Bid Value”); plus (b)the Working Capital Adjustment; minus (c)the Net Debt Adjustment; plus (d)the Late Filing Amounts (if any). 4 / 523.2Payments at Completion 3.2.1At Completion, the Purchasers shall pay an estimate of the Purchase Price (the “Estimated Purchase Price”) equal to the aggregate of thefollowing amounts in accordance with Clause 6.2.1(c) and 6.2.1(d): (a)the Bid Value; plus (b)the Estimated Working Capital Adjustment; minus (c)the Estimated Net Debt Adjustment; plus (d)the Late Filing Amounts (if any). 3.2.2Both the Estimated Purchase Price and adjustments of the Estimated Purchase Price in accordance with Clause 7.5 are payable only in cashexcept as explicitly set out in this agreement. The Purchasers do not have any right of set-off against, deduction from or suspension of paymentof the Estimated Purchase Price or the Purchase Price except as explicitly set out in this agreement. 3.3AllocationThe Purchase Price will be allocated in accordance with Schedule 21 (Allocation of the Purchase Price) whereby the Duff & Phelps report is tobe finalized in consultation with the Parties, and in accordance with Paragraphs 1.2 and 2 of Schedule 21 (Allocation of the Purchase Price), assoon as possible after Completion and will be final and binding on the Parties for the purposes of such allocation except in the event of manifesterror. The Seller’s Group and the Purchasers’ Group shall adopt such allocation for all purposes, including in respect of Tax. 4COMPLETION CONDITIONS 4.1ConditionsThe obligation of the Seller and the Purchasers to effect Completion is conditional upon satisfaction or, to the extent permitted by Law, waiverof the following conditions precedent (the “Completion Conditions” and each a “Completion Condition”): (a)all obligatory notifications and filings with the Competition Authorities in connection with the Transaction as listed in Schedule 6(Merger Clearance Filings) (the “Merger Clearance Filings”) must have been made and each Competition Authority, to the extentrequired by Law before Completion, has: (i)given the approvals, consents or clearances required under relevant applicable Law for the completion of the Transaction; 5 / 52 (ii)rendered a decision that no approval, consent or clearance is required under relevant applicable Law for the completion of theTransaction; (iii)failed to render a decision within the applicable waiting period under relevant applicable Law and that failure is considered undersuch Law to be a grant of all requisite consents or clearances under such Law; or (iv)referred the Transaction or any part of the Transaction to another Competition Authority in accordance with relevant applicableLaw, and one of the requirements listed in items (i) through (iii) above has been fulfilled in respect of such other CompetitionAuthority; (b)if and to the extent the Dutch Works Council has a right of advice pursuant to article 25 of the Dutch Works Councils Act (Wet op deOndernemingsraden; “WOR”) with respect to the Transaction, the consultation procedure with the Dutch Works Council in accordancewith article 25 WOR has been complied with in accordance with Clause 4.4; (c)if and to the extent there is a requirement under applicable Law to consult with the relevant works council(s) (Betriebsrat/räte) of theSeller’s Group in Germany in compliance with sections 111 et seq. of the German Works Constitution Act (Betriebsverfassungsgesetz),the consultation procedure has been complied with and completed in accordance with Clause 4.4; and (d)the Parties shall have received from the Committee on Foreign Investment in the United States (“CFIUS”) notice that: (i)review of the Transaction, including any subsequent investigation, under Section 721 of the U.S. Defense Production Act of 1950,as amended (“Section 721”), has been concluded and CFIUS has determined that there are no unresolved national securityconcerns with respect to the Transaction; (ii)CFIUS has concluded that the Transaction is not a covered transaction and not subject to review under applicable Law; or 6 / 52 (iii)CFIUS has sent a report to the President of the United States requesting the President’s decision on the CFIUS notice submitted bythe Parties and: (A)the period under Section 721, during which the President may announce his decision to take action to suspend, prohibit orplace any limitations on the transaction, shall have expired without any such action being announced or taken; or (B)the President or his designee shall have announced (or otherwise communicated) a decision not to take any action tosuspend, prohibit or place any limitations on the Transaction,(in each case, the “CFIUS Approval”). 4.2Responsibility for satisfactionWithout prejudice to Clauses 4.3, 4.4 and 4.5, the Seller and the Purchasers shall each use their respective reasonable efforts to ensuresatisfaction of, and compliance with, all Completion Conditions as soon as reasonably possible, it being understood that: (a)the Purchasers have the primary responsibility for the satisfaction of, and compliance with, the Completion Conditions set out in Clauses4.1(a) and 4.1(d); and (b)the Seller has the primary responsibility for the satisfaction of, and compliance with, the Completion Conditions set out in Clauses4.1(b), and 4.1(c). 4.3Merger Clearance Filings 4.3.1The Purchasers shall: (a)as soon as practicable after the Signing Date, prepare and file with the Competition Authorities the Merger Clearance Filings, or a draftthereof, for jurisdictions where submission of a draft prior to formal notification is appropriate and as soon as practicable thereafter theMerger Clearance Filing, necessary to satisfy the Completion Condition set out in Clause 4.1(a) provided that (i) for Singapore, thiscondition shall be satisfied by the Purchasers entering into informal discussions with the local Competition Authorities to discuss thepossible Merger Clearance Filing there, and (ii) the Seller and its legal counsel have 7 / 52 reviewed and approved any Merger Clearance Filings or draft Merger Filings prior to such filing, whereby the Seller and its legal counselshall respond to the draft or final Merger Clearance Filings as soon as reasonably possible and shall not otherwise unreasonably withholdor delay approval; and (b)supply as promptly as practicable any additional information and documentation that may be requested by any Competition Authorityin connection with the Merger Clearance Filings, provided that the Seller and its legal counsel have reviewed and approved suchinformation or documentation prior to its submission, which approval may not be unreasonably withheld or delayed. 4.3.2The Seller shall use its commercially reasonable efforts to procure that the Purchasers swiftly receive all information and documentationavailable within the Seller’s Group in respect of the Business that is reasonably necessary to make or supplement any Merger Clearance Filings.However, the Purchasers are responsible for drafting and submitting all Merger Clearance Filings. 4.3.3The Purchasers shall provide the Seller and its legal counsel with drafts of all written filings and other communication intended to be submittedto any Competition Authority in respect of any Merger Clearance Filings, provide the Seller and its legal counsel with a reasonable opportunityto comment on such filings and communication, not submit such filings or communication without the prior written approval of the Seller, suchapproval not to be unreasonably withheld or delayed, and provide the Seller and its legal counsel with final copies of all such filings andcommunication. The Seller and its legal counsel may (to the extent permitted by Law and any Competition Authority) also, but are not obligedto, participate in all meetings, phone calls, correspondence and discussions with any Competition Authority in connection with a MergerClearance Filing. Business secrets and other confidential information in respect of any Party or the Target Group Companies may be redacted bythe Parties (and/or only provided to a Party’s legal counsel on a privileged basis) as long as the Seller and the Purchasers act reasonably inidentifying such material for redaction. To the extent applicable merger control regimes provide for such possibility, the Seller and its legalcounsel may, but are not obliged to, make confidentiality claims with respect to any of the approvals, consents or clearances as referred to inClause 4.1(a), to the extent relating to the Seller’s Group, the Business or the market definitions used. 4.3.4The Purchasers shall bear all filing fees and other similar costs incurred by them in relation to any Merger Clearance Filings, and shall also bearall costs, penalties and fines (including penalties and fines imposed on any member of the Seller’s Group) resulting from not making (timely orcorrect) Merger 8 / 52 Clearance Filings in any jurisdiction where a Merger Clearance Filing should have taken place, unless failure to make a (timely or correct)Merger Clearance Filing is the result of a breach of an obligation of the Seller set out in Clause 4.3.2 or Clause 4.3.3. 4.3.5The Purchasers shall, and shall procure that their Affiliates will, refrain from carrying out any action (including making or agreeing to make anyacquisition or investment) or omitting anything that could, directly or indirectly, cause delay, hinder, impede or prejudice satisfaction of theCompletion Condition set out in Clause 4.1(a). 4.3.6The Purchasers shall, and shall cause each member of the Purchasers’ Group to, take any action reasonably required in order to obtain aspromptly as practicable clearance for the Transaction from the Competition Authorities pursuant to any Merger Clearance Filings, including byagreeing to perform or accept any disposal of assets or businesses of the Purchasers’ Group and to perform any behavioural remedies orconditions that may be necessary to obtain clearance from the Competition Authorities (the “Merger Clearance Remedies”), whereby thePurchasers shall be entitled to engage in discussions and negotiations with any and all relevant Competition on the nature and scope of suchmeasures, to ensure that any Merger Clearance Remedies agreed upon are the narrowest possible measures with the least possible impact on theBusiness. For the avoidance of doubt, any such disposal of assets or businesses or behavioural remedies will have no impact on the PurchasePrice and any costs related to any disposal of assets or businesses or to any such other remedies, or both, will be for the Purchasers’ sole account.The Seller will provide reasonable cooperation in respect of all Merger Clearance Remedies in relation to relevant access, disentanglementactions and other transitional service support actions. 4.4Works Council 4.4.1The Completion Condition set out in Clause 4.1(b) will be deemed to have been complied with: (a)upon receipt by the Seller or the relevant member of the Seller’s Group from the Dutch Works Council of: (i)an unconditional advice permitting the Parties to pursue the Transaction; (ii)an advice regarding the Transaction with conditions reasonably acceptable to the Seller and, to the extent those conditions mayhave a material impact on (the business of) the Target Group or any Target Group Company after Completion, reasonablyacceptable to the Purchasers; or 9 / 52 (iii)an unconditional and irrevocable waiver in writing of the Dutch Works Council’s right to render advice with respect to theTransaction,and the Seller or the relevant member of the Seller’s Group having adopted a resolution in respect of the Transaction that is compliantwith the Dutch Works Council’s advice; or (b)to the extent none of the situations described under Clause 4.4.1(a) occur, upon the Seller or the relevant member of the Seller’s Groupadopting a resolution in respect of the Transaction that deviates from the Dutch Works Council’s advice, and: (i)the subsequent receipt by the Seller or the relevant member of the Seller’s Group from the Dutch Works Council of anunconditional and irrevocable waiver in writing of: (A)the applicable waiting period in accordance with article 25(6) WOR; and (B)its right to initiate legal proceedings pursuant to article 26 WOR; or (ii)expiration of the applicable waiting period pursuant to article 25(6) WOR without the Dutch Works Council having initiated legalproceedings pursuant to article 26 WOR; or (iii)if the Dutch Works Council has initiated legal proceedings pursuant to article 26 WOR to appeal against the resolution referred toin Clause 4.4.1(b), the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer Hof Amsterdam) has dismissedthe appeal of the Dutch Works Council to the effect that no measures obstructing the Transaction are imposed and the dismissal ofthe Enterprise Chamber has immediate effect (uitvoerbaar bij voorraad). 4.4.2The Completion Condition set out in Clause 4.1(c) will be deemed to have been complied with upon: (a)the conclusion of a reconciliation agreement with the relevant German works council(s) (Betriebsrat/räte) or, in cases this condition (a) isnot met, 10 / 52 (b)final failure to conclude a reconciliation agreement before an arbitration board (Einigungsstelle). 4.4.3The Seller shall as soon as practicable and in any event no later than fifteen (15) Business Days after the Signing Date, provide the Purchasersand their legal counsel with the drafts of the request for advice and other communication intended to be submitted to the relevant works council,provide the Purchasers and their legal counsel with a reasonable opportunity to comment on such drafts of the request for advice and othercommunication, take into account any reasonable comments from the Purchasers, all with the aim to submit the request(s) for advice as soon asreasonably possible, and provide the Purchasers and their legal counsel with final copies of the final request for advice and other communicationsubmitted to the relevant works council. 4.4.4The Purchasers shall use their commercially reasonable efforts to procure that the Seller receives all information and documentation availablewithin the Purchasers’ Group that is reasonably necessary to make or supplement the request for advice. 4.4.5The Seller shall inform the Purchasers on at least a bi-weekly basis of the progress of the works council consultation procedure. 4.4.6The Seller and the Purchasers shall use their respective reasonable efforts to: (a)take any action as may reasonably be required, including negotiating in good faith any changes to this agreement (bearing in mind theintent and purpose of the terms and conditions set forth in this agreement), that is necessary to satisfy the Completion Condition set outin Clauses 4.1(b) and 4.1(c); (b)promptly cooperate with and as promptly as practicable provide all necessary information and assistance reasonably required by therelevant works council; and (c)discuss in good faith to expeditiously resolve any relevant issues raised by the relevant works council during the consultation procedure. 4.5CFIUS 4.5.1As further set out in this Clause 4.5, the Seller and the Purchasers shall work cooperatively to obtain the CFIUS Approval as promptly aspracticable. The Seller and Purchasers shall provide to each other in advance, any analyses, presentations, responses, information, opinions,arguments, or proposals to be made or submitted to CFIUS by or on behalf of any Party in connection with, and shall consult with each other onstrategic matters related to, obtaining the CFIUS Approval. 11 / 524.5.2The Seller and the Purchasers shall, as soon as practicable after the Signing Date submit a draft joint voluntary notice to CFIUS (including, forthe avoidance of doubt, the personal identifier information), as contemplated under 31 C.F.R. §800.401(f), with regard to the Transaction andprovide any other appropriate information pursuant to the CFIUS regulations at 31 C.F.R. Part 800. 4.5.3The Seller and the Purchasers shall also submit a final joint voluntary notice to CFIUS with regard to this agreement and other relatedinformation pursuant to Section 721 (the “CFIUS Notice”), reasonably promptly upon learning from CFIUS that the draft joint voluntary notice,as supplemented with any additional information or documents as CFIUS reasonably requires, is complete. 4.5.4Each Party will cooperate in the preparation and submission of additional information requested by CFIUS, and will promptly notify the otherParties upon receipt of: (a)any comments or questions from CFIUS or any other Governmental Authority in connection with the CFIUS Notice or other filings withCFIUS; and (b)any request by CFIUS or any other Governmental Authority for amendments or supplements to the CFIUS Notice or other filings withCFIUS or any other information in connection with obtaining the CFIUS Approval. 4.5.5The Seller and the Purchasers shall make every reasonable effort to respond to any request for information from CFIUS in the time frame set forthin 31 C.F.R. Part 800. 4.5.6For purposes of satisfying the Completion Condition set out in Clause 4.1(d), the Purchasers and the Seller shall, and shall cause the Purchasers’Group and the Seller’s Group respectively to, use reasonable best efforts to take all such actions within their respective powers as may reasonablybe necessary to obtain the CFIUS Approval, including proposing, negotiating, committing to and effecting, by mitigation agreement, letter ofassurance, national security agreement, or other form of agreement customarily used by CFIUS, any measures that CFIUS requires in accordancewith Section 721(l) (the “Mitigation Measures”), but in all cases only to the extent relating to the equity interests or other securities of theTarget Group and any other assets of the Target Group as are subject to CFIUS jurisdiction (the “U.S. Business”). 12 / 524.5.7For purposes of Clause 4.5.6 only, the terms “reasonable best efforts to take all such actions as are reasonably necessary to obtain CFIUSApproval” shall be interpreted to: (a)include entering into hold separate or other passivity arrangements, the termination, assignment or modification of contracts or businessrelationships, the acceptance of restrictions on business operations, the acceptance of requirements with respect to information sharing,and the Purchasers’ establishment of an irrevocable trust in which the U.S. Business will be held for the benefit of the Purchasers andappointment of independent trustees who are citizens and residents of the United States of America and who will exercise all votinginterests with respect to the U.S. Business, subject to the Purchasers enjoying reasonable investor protections under the trust; and (b)not include any commitment or obligation of Purchasers to divest the U.S. Business. 4.5.8With respect to any Mitigation Measures, the Parties shall be entitled to a reasonable period of time to engage in discussions and negotiationswith CFIUS and between themselves on the nature and scope of such measures, to ensure that any Mitigation Measures agreed upon are thenarrowest possible measures with the least possible impact on the Business and the U.S. Business, so long as CFIUS Approval remains obtainableprior to the date set out in Clause 4.8.1. 4.5.9To the extent that the Mitigation Measures would prevent the Seller from fulfilling its obligations related to the Disentanglement or under theAncillary Agreements, the Parties shall use their reasonable efforts to negotiate alternative arrangements, including costs relating to suchalternative arrangements. 4.6Cooperation to complete the TransactionSubject to Clauses 4.3.6 and 4.5.6, if any administrative or judicial action or proceeding is instituted (or threatened to be instituted) by aGovernmental Authority or any other Person challenging (any part of) the Transaction prior to Completion, each Party shall cooperate in allrespects with the other Party and use its commercially reasonable efforts to defend, contest and resist any such action or proceeding and to havevacated, lifted, reversed or overturned any Governmental Order, whether temporary, preliminary or permanent, that is in effect and thatreasonably prohibits, prevents or restricts the consummation of the Transaction, taking into account the reasonable commercial interests of theParties, the Target Group, and the Business. 13 / 524.7Satisfaction and waiver of Completion Conditions 4.7.1A Party shall inform the other Party in writing within five (5) Business Days of becoming aware of: (a)the satisfaction of any Completion Condition, or (b)any circumstance that will or is likely to result in a failure to satisfy any Completion Condition. 4.7.2The Completion Conditions set out in Clauses 4.1(a), 4.1(c) and 4.1(d) may be waived only by written agreement between the Parties and only tothe extent permitted by Law. The Completion Condition set out in Clauses 4.1(b) may be waived only by the Seller in writing to the Purchasers. 4.8Long stop date 4.8.1If any Completion Condition set out in Clause 4.1(a) or 4.1(d) is not satisfied or waived ultimately on 31 March 2017, the Seller may, at its solediscretion, in addition to and without prejudice to all other rights or remedies available under this agreement, terminate this agreement by noticeto the Purchasers, provided that the Seller may not give such termination notice if it is in material default of its obligations set out in Clause 4. 4.8.2If the Completion Conditions are not satisfied or waived ultimately on 30 April 2017, either Party may, at its sole discretion, in addition to andwithout prejudice to all other rights or remedies available under this agreement, terminate this agreement by notice to the other Parties, providedthat a Party may not give such termination notice if it is in material default of its obligations set out in Clause 4. 4.8.3Clauses 5.6, 15, 16 and 17 survive any termination of this agreement. 5PRE-COMPLETION UNDERTAKINGS 5.1Operation of the Business prior to Completion 5.1.1The Seller shall use its commercially reasonable efforts to procure that between Signing and Completion the relevant members of the Seller’sGroup carry on the Business as a going concern in the ordinary course of business, consistent with past practice. For the avoidance of doubt, thisincludes in relation to the Business’ inventory and the timely making of capital expenditures in the ordinary course of business and materially inline with the relevant capital expenditure programme as prepared by the Business. 14 / 525.1.2Without prejudice to the generality of Clause 5.1.1, except (i) in so far as contemplated in this agreement, (ii) as may be reasonably necessary inconnection with the Disentanglement or the Transaction, as set out in the Disclosed Information to the extent disclosed as set out in Clause 9.1.3,(iii) as may be necessary to comply with applicable Law, or (iv) as agreed or consented to by the Purchasers (such consent not to be unreasonablywithheld or delayed), the Seller shall procure that between Signing and Completion the relevant member of the Seller’s Group will not take anyaction or decision in respect of the Business or any Target Group Company to: (a)create, allot or issue, or allow to be created, allotted or issued, any share capital of any Target Group Company or issue any instruments toa Person other than a Target Group Company that give the right to obtain shares in the relevant Target Group Company; (b)acquire or agree to acquire any share(s) or other interest, or make any capital contributions to or investments in any Person (other than aTarget Group Company); (c)make any loan other than in the ordinary course of business to any Person (other than a Target Group Company); (d)incur any borrowings from Third Parties in excess of USD 2,500,000 (two million five hundred thousand US dollars) (or its equivalent inany other currency) other than in the ordinary course of business; (e)enter into agreements in which the Target Group Companies provide a surety or undertake joint and several liability, or provide securityfor the debt of any Third Party or any member of the Seller’s Group (excluding the Target Group Companies); (f)repay, redeem or repurchase, or allow to be repaid, redeemed or repurchased, any share capital of any Target Group Company to a Personother than the Target Group Companies; (g)create any Encumbrance (other than Permitted Encumbrances) over any material part of the Business; (h)enter into any Business Contracts outside the ordinary course of business; (i)terminate or amend any Business Contracts which, if terminated or amended, would have a material adverse effect on the Business; 15 / 52 (j)sell, transfer, let, lease, encumber, or license any material part of the Business Assets or the Transferred Properties other than in theordinary course of business; (k)sell, transfer, let, license (other than in the ordinary course of business), lease or encumber the Business Intellectual Property; (l)materially amend the aggregate compensation (wages, salary, bonuses, incentives and any other form of compensation, taken as a whole)of the Employees except to the extent resulting from any change of employment terms generally applicable to the relevant employees ofthe Seller’s Group (for example, any increases in accordance with applicable collective labour agreements or any periodic or otherincreases in the context of the existing remuneration policies) in which event the Seller shall inform the Purchasers of such materialamendment and the impact thereof on an annual basis; (m)make any material changes to employment terms and conditions (including compensation, fringe benefits or any other employmentbenefit plan or arrangement) of any Key Employee; (n)set up or materially amend any of the Pension Plans or set up or award material pension rights other than under the Pension Plans; (o)institute or settle any material legal proceedings (other than debt collection in the ordinary course of business) or any legal proceedingswith a claimed amount in excess of USD 1,000,000 (one million US dollars) (or its equivalent in any other currency); or (p)authorise or enter into any agreement or commitment with respect to any of the actions set out under (a) through (o) above. 5.1.3The Purchasers’ response to a request for consent of any matter set forth in Clause 5.1.2 shall be provided by e-mail to the relevantRepresentative of the Seller within five (5) Business Days after the time of sending of the request. In the event such response is not receivedwithin such five (5) Business Days, consent will be deemed to have been given by the Purchasers. 5.2Excused conduct 5.2.1The Purchasers shall not invoke the provisions of Clause 5.1 against the Seller or withhold or delay its consent if doing so can reasonably beforeseen to materially adversely affect the Business, and the Seller shall request the Purchasers’ consent for any matter set forth in Clause 5.1.2 asmuch as reasonably possible in advance. 16 / 525.2.2In applying and enforcing Clause 5.1, the Seller and the Purchasers shall act vis-à-vis each other in accordance with the principles ofreasonableness and fairness giving due consideration to all relevant circumstances. 5.2.3If circumstances require immediate action from the Seller or any member of the Seller’s Group and the Seller is not reasonably able to timelyrequest the consent of the Purchasers or await a response from the Purchasers to such request, no such consent will be required, provided that theSeller informs the Purchasers of any such situation as soon as reasonably practicable thereafter. 5.3Finalisation of Ancillary Agreements and Schedules 5.3.1Where any of the Ancillary Agreements, schedules or annexes to the Ancillary Agreements or any Schedule is not yet in agreed form at theSigning Date, the Seller and the Purchasers shall use their respective reasonable and good faith efforts to finalise the same as soon as practicableafter the Signing Date in accordance with the terms and principles (if any) of such Ancillary Agreement, schedule or annex to the AncillaryAgreement or Schedule established at or prior to the Signing Date, and in any event prior to its execution (at Completion or thereafter). 5.3.2The Seller and the Purchasers shall each use their respective reasonable efforts to mutually agree on documentation which describes the currentpractice with respect to the services as provided by the Target Group prior to Completion with respect to ITEC Equipment in the field of(i) research and development services, (ii) equipment supply, and (iii) maintenance services. 5.4Disentanglement 5.4.1The Seller shall procure that immediately, or as soon as reasonably possible after the Signing Date, and ultimately at Completion, all necessaryactions are taken in order to effect the Disentanglement as set forth in Schedule 10 (Disentanglement Plan). To the extent that any actions are notcompleted on the Completion Date, the Seller and the Purchasers shall and shall procure that the relevant members of the Seller’s Group and thePurchasers’ Group (for the avoidance of doubt including the Target Group Companies) respectively, shall undertake all steps necessary tocomplete these actions as soon as reasonably possible after Completion, it being understood that the Seller is primarily responsible forcompleting the Disentanglement. The provisions of this Clause 5.4 are also for the benefit of, and are enforceable by, each relevant member ofthe Target Group, as third-party stipulations (onherroepelijk derdenbeding). 5.4.2In order to facilitate and monitor the expedient implementation of the Disentanglement as set forth in Schedule 10 (Disentanglement Plan), theParties shall within one week after the Signing Date nominate a 17 / 52 Disentanglement taskforce consisting of senior management of the Purchasers, the Business and the Seller (and where useful their respectiveRepresentatives). The Disentanglement taskforce will confer on a regular basis and stay in place until the completion of the Disentanglement. 5.5Overseas Investment Filings 5.5.1The Purchasers shall as soon as practicable after the Signing Date, make the necessary filings with the relevant Governmental Authorities of thePeople’s Republic of China, including filings with the National Development and Reform Commission of the People’s Republic of China(“NDRC”), the Ministry of Commerce of the People’s Republic of China (“MOFCOM”) and as soon as practicable thereafter, the StateAdministration of Foreign Exchange of the People’s Republic of China (“SAFE”) (together, the “Overseas Investment Filings”). 5.5.2The Purchasers shall procure that the Overseas Investment Filing and any other applicable approvals from, or registrations with, theGovernmental Authorities of the People’s Republic of China in relation to the payment of the Completion Amount are completed as soon aspossible after Signing, but in any event prior to the last of the Completion Conditions set out in Clause 4.1 has been satisfied or waived. 5.5.3The Purchasers shall: (a)update the Seller on a regular basis, and at least bi-weekly, on the status of the Overseas Investment Filings; (b)provide the Seller (and/or its legal counsel on a privileged basis) with drafts of all formal filings, notices, applications and other materialwritten communications submitted in connection with the Overseas Investment Filings; and (c)provide the Seller with copies of the final confirmation letters and certificates received from NDRC, MOFCOM and SAFE upon receiptthereof. 5.6Deposit AmountDeposit Amount 5.6.1Immediately prior to Signing, the Purchasers have procured the deposit of an amount of USD 200,000,000 (two hundred million US dollars) (the“Deposit Amount”) in cash into the Escrow Account as a security deposit against: (a)satisfaction of the liabilities of the Purchasers under Clause 10.16, including the Default Payment Fee payable by the Purchasers to theSeller under this agreement; and 18 / 52 (b)payment of the Estimated Purchase Price at Completion of the Transaction,and the Parties have for this purpose entered into an escrow agreement with the Escrow Agent, which is attached hereto as Schedule 19 (EscrowAgreement) (the “Escrow Agreement”).Escrow Fee and interest 5.6.2Any escrow fees related to the opening and keeping in place of the Escrow Account and payments to be made from the Escrow Account, shall beborne by the Purchasers. Any interest accrued on the Deposit Amount will be for the Purchasers. 5.6.3Subject to Clause 10.16.3, at Completion any Deposit Amount remaining in the Escrow Account may be used by the Purchasers for the purposeof payment of the Estimated Purchase Price in accordance with Clause 6.2.1(c). 5.6.4The Deposit Amount will, to the extent not paid out in accordance with the terms of this agreement, be held in the Escrow Account until fifteen(15) Business Days after the date of termination of this agreement for whatever reason. Any Deposit Amount remaining in the Escrow Account asat the date fifteen (15) Business Days after the date of termination of this agreement shall be returned to the Purchasers pursuant to the EscrowAgreement, unless the Seller notifies the Purchasers in writing within fifteen (15) Business Days after the date of the termination of thisagreement that it claims payment of an amount pursuant to Clause 5.6.1(a), in which event only the amount of the Deposit Amount in excess ofsuch claimed amount will be returned to the Purchasers. 5.7Late filing 5.7.1In the event the Purchasers fail to submit (i) any of the Merger Clearance Filings pursuant to Clause 4.3.1(a), or (ii) the draft joint voluntarynotice to CFIUS pursuant to Clause 4.5.2: (a)within twenty-five (25) Business Days after the Signing Date, the Purchase Price will be increased with USD 5,000,000 (five million USdollars); and 19 / 52 (b)within thirty-five (35) Business Days after the Signing Date, the Purchase Price will be increased with an additional USD 5,000,000 (fivemillion US dollars),each a “Late Filing Amount” and any of them together “Late Filing Amounts”. It is agreed that the Late Filing Amounts shall thereforenot be more than USD 10,000,000 (ten million US dollars). 5.8Intragroup transactions 5.8.1Except as expressly set out in this agreement or in any other agreement, document or instrument entered into in connection with the Transactionor the Disentanglement, or otherwise agreed in writing between the Seller and the Purchasers, all existing agreements and arrangements prior tothe Effective Time between: (a)one or more members of the Seller’s Group (excluding the Target Group Companies) on the one hand and one or more Target GroupCompanies on the other hand, shall terminate and no longer be effective as of the Effective Time, except for the Local Business TransferAgreements and the Ancillary Agreements; and (b)one or more members of the Seller’s Group (excluding the Target Group Companies) on the one hand and Third Parties on the other hand,relating to services provided to the Business (so-called “umbrella-agreements”) shall no longer be effective with respect to the Businessas of the Effective Time,provided that such termination does not affect, waive, or release any party from, any rights or obligations accrued under such agreements up toand including the Effective Time. 5.8.2Except for the Shareholder Loan and the Promissory Note, prior to or at the Effective Time, the Seller shall procure that all IntragroupReceivables and Intragroup Payables will be settled as much as possible between the relevant members of the Seller’s Group (excluding theTarget Group Companies) and the relevant Target Group Companies. 5.8.3Each Party shall procure that any Intragroup Receivables and Intragroup Payables owed between the Seller’s Group (excluding the Target GroupCompanies) on the one hand and the Target Group Companies on the other hand, that remain outstanding at the Effective Time, will be settled incash in accordance with the applicable payment terms set forth in the relevant agreement that is applicable between such entities or, if there areno such payment terms, within sixty (60) days after the Completion Date. The payments to be made pursuant to this Clause 5.8.3 may not beset-off against any other claims or payments. 20 / 525.9Estimated statements 5.9.1No later than ten (10) Business Days prior to the date set for Completion pursuant to Clause 6.1, the Seller shall deliver to the Purchasers theEstimated Working Capital Statement and the Estimated Net Debt Statement. The Seller shall deliver to the Purchasers within fifteen(15) Business Days after the end of each reporting quarter of the Seller starting from 30 September 2016, the Seller’s good faith drafts of theEstimated Working Capital Statement and the Estimated Net Debt Statement (under the assumption, for the purposes of such draft statements,that the Completion Date will be on the first (1st) Business Day of the reporting month during which the draft statements are prepared). 5.9.2The Seller shall draw up the Estimated Working Capital Statement and the Estimated Net Debt Statement in good faith in the form set out inSchedule 3 (Completion Statements) and in accordance with the policies and principles set out in Clause 7.2. 5.9.3Any amounts included in the determination of the Estimated Working Capital Statement or Estimated Net Debt Statement in currencies otherthan US dollar will be translated into US dollar based on the most recent monthly exchange rates used by the Seller for the consolidation of itsmonthly financial statements. 5.9.4For purposes of calculation of the Estimated Purchase Price, the Estimated Working Capital Statement and the Estimated Net Debt Statement asdelivered by the Seller are final and binding on the Parties. 5.10Funding of the Estimated Purchase PriceThe Purchasers shall not, without the Seller’s written consent, such consent not to be unreasonably withheld or delayed with the understandingthat the Seller may withhold its consent if any termination or amendment adversely affects the amount or quality of the funding commitments,terminate or amend the terms of the Equity Commitment Letters or take any action which should reasonably be expected to make the timelyavailability of the Estimated Purchase Price uncertain, including any changes to, or the inclusion of, any additional conditions precedent to, theutilisation of the funding at Completion. 5.11Access to information 5.11.1Between the Signing Date and the earlier of (i) Completion or (ii) if applicable an earlier termination of this agreement, the Seller shall, uponreasonable 21 / 52 advance notice provide the Purchasers and its Representatives reasonable access during normal business hours to the administration of theBusiness, the Business premises, and the Key Employees. This access includes access to the historical financial data of the Business. To theextent reasonably requested by the Purchasers in view of the requests made by the Purchasers’ banks in relation to the provision of an acquisitionfacility to the Purchasers, the Seller shall use reasonable efforts to support the Purchasers by timely gathering the relevant historical financialdata with a view of preparing unaudited pro forma Business financials for the period 2013-2015, for the risk, cost and account of the Purchasers. 5.11.2The Seller may refuse access on the grounds that access: (a)would be contrary to any Law; or (b)would cause undue material disruption to the business activities of the Seller or its management. 5.11.3The Purchasers shall only seek access in an efficient and timely manner without undue or unnecessary interference or interruption. 5.12Execution of the Notary LetterOn or prior to the date falling one (1) Business Day prior to the Completion Date, the Purchasers and the Seller shall sign the Notary Letter. 5.13Termination of non-disclosure agreements with other biddersImmediately following the Signing Date, the Seller shall make a request to the other bidders in the controlled auction process for the sale of theBusiness to return back or destroy any and all information provided to such bidders in relation to the Business and the controlled auctionprocess. 6COMPLETION 6.1Completion date and placeSubject to the satisfaction (and where applicable continued satisfaction) or waiver of the Completion Conditions, Completion will take place atthe offices of Houthoff Buruma Coöperatief U.A., Gustav Mahlerplein 50, (1082 MA) Amsterdam, the Netherlands, commencing at 11:00 AMCET on the first (1st) Business Day of the Seller’s monthly reporting period that is at least seven (7) Business Days plus such number of BusinessDays as the last of the filings referred to in Clauses 4.3.1(a) and 4.5.2 has been made earlier than thirty-five (35) Business Days after Signing(such additional number of Business Days never to exceed twenty (20)) after the last of the Completion Conditions set out 22 / 52 in Clause 4.1 has been satisfied or waived, or at such other date, time or location as may be agreed in writing by the Seller and the Purchasers,provided that Completion may not take place (i) earlier than 1 January 2017 or (ii) in the third (3rd) reporting month of the Seller in 2017. 6.2Completion actions 6.2.1At Completion, the Seller and the Purchasers (as applicable) shall procure that the following actions are taken in the following sequence: (a)the Seller shall deliver to the Purchasers written evidence that any and all (i) Encumbrances over the Shares and the shares in the sharecapital of the Target Group Companies and any of the Transferred Properties, and (ii) right of pledge on the Business IntellectualProperty have been finally and unconditionally released; (b)the Seller shall deliver to the Purchasers written evidence that it has completed the Disentanglement actions set out in Schedule 4(Disentanglement Completion Actions); (c)the Parties will jointly procure the transfer of the remaining Deposit Amount (if any) in the Escrow Account (minus any fees payable tothe Escrow Agent) to the Notary Account, with reference to “Project Orange”, which amount must be credited to the Notary Account(without any deduction whatsoever, whether for bank transmission charges or otherwise) no later than 11:00 AM CET on the CompletionDate and with value on the Completion Date; (d)the Purchasers shall transfer, or procure the transfer of, an amount equal to (i) the Estimated Purchase Price plus (ii) any amounts owed bythe Purchasers pursuant to Clause 16.14.5 of this agreement or pursuant to Paragraph 10 of Schedule 9 (Tax), (such aggregate amount the“Completion Amount”) minus the remaining Deposit Amount transferred to the Notary Account pursuant to Clause 6.2.1(c) to the NotaryAccount, with reference to “Project Orange”, which amount must be credited to the Notary Account (without any deduction whatsoever,whether for bank transmission charges or otherwise) no later than 11:00 AM CET on the Completion Date and with value on theCompletion Date. The Completion Amount shall be held by the Notary in accordance with the Notary Letter; (e)the Notary will confirm that an amount equal to the Completion Amount has been received in the Notary Account; 23 / 52 (f)the Seller (or a member of the Seller’s Group, as applicable) and the relevant Target Group Company shall deliver executed copies of, orexecute, the following Ancillary Agreements: (i)the IP Transfer and License Agreement; (ii)the IP Sale and Purchase Agreement; (iii)the Trademarks And Domain Names Sale Agreement; (iv)the Manufacturing Services Agreement; (v)the ITEC Equipment Support Services Agreement; and (vi)the Transitional Services Agreement. (g)the Company delivers to the Notary the original and up-to-date shareholders register of the Company; (h)if applicable, the Seller shall assign to the Purchasers the Shareholder Loan, the Purchasers shall accept this assignment and the Sellerand the Purchasers shall procure that the Company acknowledges this assignment, the foregoing to be effected by execution of a deed ofassignment by the Seller, the Purchasers and the Company; (i)the Seller, the Purchasers and the Company each deliver to the Notary an executed and, to the extent required by the Notary, apostilled,power of attorney to execute the Deed of Transfer; (j)the Seller, the Purchasers and the Company deliver to the Notary a written confirmation in the form reasonably requested by the Notary,instructing the Notary to transfer the Shares to the Purchasers; (k)the Seller transfers to the Purchasers the Shares, the Purchasers accept the transfer, and the Company acknowledges the transfer, theforegoing to be effected by execution of the Deed of Transfer by the Seller, the Purchasers and the Company before the Notary; and (l)the Notary will give wire instruction for the transfer of the Completion Amount on the Completion Date to the Seller, in accordance withthe Notary Letter. 24 / 526.3Procurement of sale and transfer of Hamburg Site 6.3.1The Seller shall procure that immediately after the transfer of the Shares but before completion of Clause 6.2.1(l), NXP Semiconductors GermanyGmbH (as the seller of the Hamburg Site) shall sell and transfer the Hamburg Site to the Target Group Company in Germany (as the purchaser ofthe Hamburg Site), which is to be effected by NXP Semiconductors Germany GmbH and the Target Group Company in Germany (i) on the termsand conditions for the sale and purchase of the Hamburg Site as set forth in a separate sale and purchase agreement (as a Schedule to be agreedbetween the Parties prior to Completion), and (ii) executing a deed of transfer before a German notary (Notar). 6.3.2Prior to the sale and transfer of the Hamburg Site referred to in Clause 6.3.1, the Seller and the Purchasers shall procure that NXP SemiconductorsGermany GmbH (as the lessor of the Hamburg Site) and the Target Group Company in Germany (as the lessee of the Hamburg Site) shall enterinto a lease agreement as of completing the transfer of the Shares pursuant to Clause 6.2.1(k) with respect to the Hamburg Site (excluding theHamburg Certified Area which will be subject to Paragraph 2 of Schedule 23 (IT Separation and Hamburg Certified Area set up). This leaseagreement will terminate upon completion of the sale and transfer of the Hamburg Site to the Target Group pursuant to Clause 6.3.1. 6.4Breach of Completion obligations; Default Payment Fee 6.4.1If the Seller or any of the Purchasers breach any obligation under Clause 6.2, (such breaching Party, the “Defaulting Party” and the other Party,the “Non-Defaulting Party”), the Non-Defaulting Party may choose not to proceed with Completion and set the first (1st) Business Day of theSeller’s monthly reporting period of the immediately following month as the new date for Completion. If on the new date set for Completion inaccordance with this Clause 6.4.1, the Defaulting Party breaches any of its obligations under Clause 6.2, the Non-Defaulting Party may, but isnot obliged to, without prejudice to any other rights and remedies available to it, serve notice on the Defaulting Party to terminate thisagreement. 6.4.2If the Purchasers are unable to pay the Completion Amount on the Completion Date for any reason, the Default Payment Fee as set out in Clause10.16.2 will apply. 6.4.3No Party is obliged to proceed with a Completion action under Clause 6.2.1 until the immediately preceding Completion action has beencompleted, provided that if Completion occurs, all Completion Conditions will be deemed to have been satisfied or waived as of Completionunless otherwise agreed upon in writing between the Seller and the Purchasers. 25 / 526.4.4For the purpose of Clause 6.4, a breach by the Company of Clause 6.2 will be deemed a breach by the Seller. 6.5Acknowledgement of Notary and bankThe Parties acknowledge and agree that: (a)with reference to the Rules of Professional Conduct of the Royal Dutch Organisation of Civil Law Notaries, (i)Houthoff Buruma Coöperatief U.A. acts as counsel to the Purchasers in connection with, or acts as counsel for or on behalf of thePurchasers in the event of any dispute relating to, this agreement and any related agreement; (ii)the Notary will execute the notarial deeds connected with this agreement; and (iii)the Notary is related to Houthoff Buruma Coöperatief U.A. as civil law notary, (b)they have engaged the Notary to effect the payments referred to in the Notary Letter and Clause 6.2; (c)each of the Seller and the Purchasers approve of ABN AMRO N.V. as the bank to hold the amounts to be transferred in accordance withthis agreement on the Completion Date; and (d)in the event the wire instruction for the transfer of the funds by the Notary referred to in Clause 6.2.1(l) takes place on the CompletionDate and not on a Business Day thereafter, the investigation by the Notary on the Completion Date into the state of insolvency or otherinsolvency Laws with respect to the Seller and/or the Purchasers will only apply with respect to the period until (but not including) theCompletion Date. The applicability of any insolvency proceedings or other insolvency Laws with respect to the Seller and/or thePurchasers on the Completion Date could affect the validity, binding effect or enforceability of any act performed pursuant to thisagreement or any other part of the Transaction. The Parties accept that risk and will not hold the Notary nor Houthoff BurumaCoöperatief U.A. liable for the consequences of such effect. 26 / 527COMPLETION ADJUSTMENTS 7.1The Statements 7.1.1As soon as practicable, and in any event within sixty (60) Business Days after the Completion Date, the Seller shall prepare and deliver to thePurchasers: (a)an unaudited consolidated statement prepared in the form set out in Paragraph 1 of Schedule 3 (Completion Statements) setting forth theWorking Capital at the Effective Time (the “Working Capital Statement”); and (b)an unaudited consolidated statement prepared in the form set out in Paragraph 2 of Schedule 3 (Completion Statements) setting forth theNet Debt at the Effective Time (the “Net Debt Statement”). 7.1.2To enable the preparation and determination of the Statements, the Purchasers shall procure that all books and records relating to the TargetGroup are kept up-to-date and, subject to reasonable notice, are made available to the Seller’s Representatives during normal office hours, andshall cooperate with the Seller’s Representatives with regard to the preparation and determination of the Statements. The Purchasers shallreasonably make available the services of the directors, employees and other Representatives of the Target Group to assist the Seller in theperformance of the Seller’s obligations and exercise of the Seller’s rights under this Clause 7.1 and Clause 7.3. 7.2PrinciplesThe Statements must be prepared in accordance with: (a)the specific principles, policies, procedures and practices set out in Paragraph 4 of Schedule 3 (Completion Statements); (b)the Accounting Principles as Consistently Applied, subject to Clause 7.2(a) above; and (c)US GAAP, to the extent not covered by the principles, policies, procedures and practices referred to in Clauses 7.2(a) and (b) above;provided that, in the case of a conflict or inconsistency between the various rules to which this Clause 7.2 refers, those referred to in Clause 7.2(a)take precedence over those referred to in sub-clause (b) and (c), and those referred to in sub-clause (b) take precedence over those referred to insub-clause (c). 27 / 527.3Determination of the StatementsThe Seller shall deliver the Working Capital Statement and the Net Debt Statement to the Purchaser at the same time together with relevantsupporting documentation and underlying calculations, and make available the services of the employees and other Representatives reasonablyrequested by the Purchasers to enable the Purchasers to verify the Working Capital Statement and the Net Debt Statement, and: (a)if the Purchasers determine that the Statements have not been prepared by the Seller in accordance with Clause 7.2, the Purchasers shallwithin forty-five (45) Business Days after receipt of the Statements, deliver a notice of such disagreement to the Seller (the “Notice ofDisagreement”), such notice to specify (i) each line item in the Statements with which the Purchasers disagree, (ii) the amount ofadjustment proposed by the Purchasers, and (iii) in reasonable detail, the reason for the Purchasers’ disagreement in respect of each suchline item; (b)if the Purchasers do not deliver the Notice of Disagreement in accordance with Clause 7.3(a), the Statements will be final and binding onthe Seller and the Purchasers for all purposes; (c)if the Purchasers deliver the Notice of Disagreement in accordance with Clause 7.3(a), the Seller will have thirty (30) Business Days fromits receipt of the Notice of Disagreement to review and respond to the Notice of Disagreement: (i)all line items in the Working Capital Statement and the Net Debt Statement that are not included in the Notice of Disagreementwill be final and binding on the Seller (and each relevant other member of the Seller’s Group) and the Purchasers (and eachrelevant other member of the Purchaser’s Group) for all purposes; and (ii)the Seller and the Purchasers shall attempt in good faith to reach agreement in respect of those line items that are included in theNotice of Disagreement, provided that if the Seller and the Purchasers are unable to reach such agreement within forty-five(45) Business Days following the Seller’s receipt of the Notice of Disagreement, the Seller or the Purchasers may by notice to theother Party require that those line items be referred to the Reporting Accountants for resolution in accordance with Schedule 5(Reporting Accountants); and 28 / 52 (d)no adjustment with respect to any line item included in the Statements may be made unless (i) the adjustment amount for such line itemagreed or resolved in accordance with Clause 7.3(c) exceeds USD 250,000 (two hundred fifty thousand US dollars), and (ii) the aggregatenet adjustment amount for all line items referred to in the preceding sub-clause (i) exceeds USD 2,500,000 (two million five hundredthousand US dollars), in which case the aggregate net adjustment amount and not just the excess over USD 2,500,000 (two million fivehundred thousand US dollars), must be adjusted. 7.4No forward looking valuationsThe Purchasers shall not propose adjustments for the Statements to the extent that these adjustments involve a judgement as to the futureearnings potential, prospects or feasibility of the Target Group or other aspects of a forward looking nature except in accordance with theAccounting Principles. 7.5Adjustment of the Estimated Purchase Price 7.5.1Working Capital Adjustment: (a)if the Working Capital exceeds the Estimated Working Capital, the Purchasers shall pay in cash on a dollar-for-dollar basis to the Selleran amount equal to such excess; (b)if the Working Capital is less than the Estimated Working Capital, the Seller shall pay in cash on a dollar-for-dollar basis to thePurchasers an amount equal to such deficit. 7.5.2Net Debt Adjustment: (a)if the Net Debt exceeds the Estimated Net Debt, the Seller shall pay in cash on a dollar-for-dollar basis to the Purchasers an amount equalto such excess; (b)if the Net Debt is less than the Estimated Net Debt, the Purchasers shall pay in cash on a dollar-for-dollar basis to the Seller an amountequal to such deficit. 7.5.3Any payment to be made under this Clause 7.5 will be increased with interest thereon calculated from the Completion Date (inclusive) to thedate of payment (exclusive) at the Interest Rate. 29 / 527.6Payment 7.6.1The due date for any payment to be made under Clause 7.5 is the tenth (10th) Business Day after the Statements have been finally determined inaccordance with Clause 7.3. 7.6.2All payments made under Clause 7.5 must be made in US dollar and on account of the Purchase Price. 7.6.3To the extent applicable, the payments to be made pursuant to Clause 7.5 must be aggregated and discharged by way of set-off against eachother, but not against any other claims or payments. 8POST-COMPLETION OBLIGATIONS 8.1Pre-Completion Receivables and Pre-Completion Payables 8.1.1If at any time after Completion, any member of the Purchasers’ Group receives any amount in respect of the Pre-Completion Receivables, thenthe Purchasers shall procure that the relevant member of the Purchasers’ Group pays the amount received (net of any associated costs and Taxconsequences in respect of either the receipt or payment thereof) to the relevant member of the Seller’s Group, as soon as reasonably practicable.If at any time after Completion, any member of the Purchasers’ Group receives a request for payment in respect of any Pre-Completion Payable,then the Seller shall procure that the relevant member of the Seller’s Group, pays the amount requested (net of any associated costs and Taxconsequences in respect of either the receipt or payment thereof) as soon as reasonably practicable following receipt of such request being passedto it by the Purchasers. 8.1.2If at any time after Completion, any member of the Seller’s group receives any amount in respect of the Business relating to the period after theEffective Time and which is not a Pre-Completion Receivable, then the Seller shall procure that the relevant member of the Seller’s Group paysthe amount received (net of any associated costs and Tax consequences in respect of either the receipt or payment thereof) to the relevantmember of the Target Group, as soon as reasonably practicable and in any event within three (3) Business Days of receipt of such amount. 8.2Retention of records 8.2.1For a period of five (5) years after the Completion Date, or a longer period as may be prescribed by Law, the Purchasers shall retain all books andrecords and, to the extent reasonably required by the Seller, the Purchasers shall allow the Seller access during normal office hours to these booksand records, 30 / 52 including the right to inspect and make copies (at the Seller’s expense), except where such access might result in a breach by the Purchasers ofany applicable Law, or would cause undue disruption to the business activities of the relevant Target Group Company or its management (but insuch event as soon as reasonably possible thereafter). Clauses 5.11.2 and 5.11.3 will apply mutatis mutandis whereby a reference to “Seller” willbe deemed to be reference to “Purchasers”. 8.2.2For a period of five (5) years after the Completion Date, or such longer period as may be prescribed by Law, the Seller’s Group shall retain anybooks and records and other written information relating to the Target Group which is not delivered to the Target Group Companies by theSeller’s Group in the course of the Disentanglement and, to the extent reasonably required by the Purchasers, the Seller shall allow the Purchasersaccess during normal office hours to such information relating to the Target Group, including the right to inspect and make copies (at thePurchasers’ expense), except where such access might result in the breach by the Seller of any applicable Law or would cause material unduedisruption to the business activities of the relevant Seller’s Group entity or its management (but in such event as soon as reasonably possiblethereafter). Clauses 5.11.2 and 5.11.3 will apply mutatis mutandis. This access includes access to the historical financial data of the Business.The Seller shall use reasonable efforts to support the Purchasers by gathering, for the risk, cost and account of the Purchasers, these historicalfinancial data to the extent reasonably requested by the Purchasers. 8.3Insurance 8.3.1The Parties acknowledge and agree that the Insurance Policies will be cancelled with respect to the Business on the Completion Date andcoverage under the Insurance Policies for the Business will end immediately after Completion for any event, occurrences or accidents occurringeither prior to, on or after the Completion Date. Other than as set out in Clause 8.3.3, no member of the Purchasers’ Group, including the TargetGroup Companies after Completion, will be entitled to report or claim any damage under any Insurance Policies irrespective of the terms of anyInsurance Policies, after the Completion Date. 8.3.2The Purchasers shall procure that, as from Completion, the Target Group Companies have insurance that gives cover, reasonably regarded asadequate, against fire, product liability and other risks which are normally insured against by companies carrying on similar business activitiesor owning assets of a similar nature. 8.3.3If in the period as of the Completion Date up to 12:00 pm CET on the date which is twelve (12) months after the Completion Date, the Purchasersbecome 31 / 52aware of any events, occurrences or accidents that occurred prior to the Completion Date and pursuant to which any Target Group Companyincurred damages that may be covered by any Insurance Policy of the Seller’s Group, the Seller shall: (a)report such damages to the insurer and (subject to the insurer accepting to review the claim) use best efforts to seek compensation forsuch damages under such Insurance Policy, provided the Purchasers shall cooperate with the Seller and shall procure that the relevantGroup Companies make available to the Seller all information and documentation reasonably necessary to report and/or claim suchdamages; and (b)pay to the Purchasers any claim amounts it may receive from the insurer under such Insurance Policy,provided the Purchasers have notified the Seller as soon as reasonably practicable after becoming aware of any such event, occurrence oraccident. 8.4Release of Guarantees 8.4.1Subject to Completion, the Parties shall use reasonable efforts to procure, with effect from Completion or as soon as practicable thereafter, therelease of the Seller and any other member of the Seller’s Group from any Guarantees (whether or not joint or several, or both) given by, assumedby or binding upon the Seller or any other member of the Seller’s Group in relation to any Liability of the Target Group Companies. From andafter Completion, the Purchasers shall indemnify, defend and hold harmless the Seller and, as an irrevocable third-party stipulation(onherroepelijk derdenbeding), each other member of the Seller’s Group against all amounts paid by any of them after Completion pursuant toany such Guarantees. 8.4.2Subject to Completion, the Parties shall use reasonable efforts to procure, with effect from Completion or as soon as practicable thereafter, therelease of each Target Group Company from any Guarantees (whether or not joint or several, or both) given by, assumed by or binding upon thatTarget Group Company in relation to any Liability of the Seller or any other member of the Seller’s Group (excluding the Target GroupCompanies). From and after Completion, the Seller shall indemnify, defend and hold harmless the Purchasers and, as an irrevocable third-partystipulation (onherroepelijk derdenbeding) each Target Group Company against all amounts paid by any of them after Completion pursuant toany such Guarantees. 32 / 528.5Merger PhilippinesThe Purchasers shall procure, in relation to the merger between NXP Semiconductors Philippines, Inc. and NXP Semiconductors Cabuyao Inc.(ATCB) as set out in the merger roadmap as included in the Data Room, that all documents, requests, endorsements, applications, declarations,filings, registrations, notices and any other obligations or actions that are required to be made, lodged or performed in respect of this merger, aremade, lodged or performed as soon as practicably possible after Completion, it being understood that to the extent such merger may trigger anypotential liability to Tax for any Target Group Company relating to a period on or after the Completion Date, the Parties agree that (i) they willcooperate to mitigate such potential liability to Tax, (ii) the Seller has the right to decide to postpone or terminate the merger process and (iii) tothe extent the Seller wishes the Purchasers to pursue with the merger, the Seller shall fully compensate the Purchasers for the amount of anyliability to Tax arising as a result of, or the reasonable out of pocket costs (as supported by valid invoices) relating to, the merger being finalised(it being understood that the Purchasers may not terminate or amend the merger process in the event of such full compensation by the Seller). 9WARRANTIES 9.1Seller’s Warranties 9.1.1Subject to Clause 9.1.3, the Seller represents and warrants to the Purchasers that the statements set out in Schedule 7 (Seller’s Warranties) (the“Seller’s Warranties”) are true and accurate on the Signing Date, and will also be true and accurate on the Completion Date unless a Seller’sWarranty is given only on a specific date. 9.1.2Each Purchaser agrees that no representations or warranties, express or implied, have been given or are given by or on behalf of the Seller or anymember of the Seller’s Group to the Purchasers in connection with the Disentanglement or the Transaction, under this agreement, the IP Transferand License Agreement, or any Local Business Transfer Agreement, other than the Seller’s Warranties, except if and to the extent explicitly setout in such Ancillary Agreement. For the avoidance of doubt and notwithstanding the generality of the foregoing, each Purchaser agrees that norepresentations or warranties, express or implied, have been given or are given by or on behalf of the Seller or any member of the Seller’s Groupto the Purchasers as to the accuracy of any forecasts, estimates, projections, statements of intent or statements of opinion howsoever provided tothe Purchasers, any member of the Purchasers’ Group or any of their respective Representatives. 33 / 529.1.3The Seller’s Warranties are limited by the Disclosed Information, and the Seller is not liable for any Seller’s Warranties being untrue orinaccurate in respect of any facts, matters or other information included in the Disclosed Information, provided that such facts, matters or otherinformation have or has been disclosed in such parts of the Disclosed Information where one would expect to find the relevant facts, matters orinformation, and disclosed in such a manner and with such detail that the relevant facts, matters or information are clear from the face of thedocument and that a prudent individual who is knowledgeable in the relevant field reviewing the relevant information would have reasonablyassessed the financial, legal, commercial or other relevance and consequences thereof. 9.2Purchasers’ WarrantiesEach of the Purchasers severally and jointly represents and warrants to the Seller that the statements set out in Schedule 8 (Purchasers’Warranties) (the “Purchasers’ Warranties”) are true and accurate on the Signing Date and on Completion Date. 9.3Exclusion of certain BW provisionsThe applicability of articles 6:89, 7:17 and 7:20 to 7:23 BW inclusive is hereby excluded. 10LIABILITY 10.1Liability of the Seller 10.1.1Subject to the provisions of this Clause 10 and any other applicable limitations of liability, the Seller shall be liable towards the Purchasers ifany of the Seller’s Warranties is not true and accurate at the date on which the Seller’s Warranty is given. 10.1.2Subject to the provisions of this Clause 10 and without prejudice to Clauses 4.8 and 6.4.1, if the Seller is liable towards the Purchasers underClause 10.1.1, the Purchasers as their sole and exclusive remedy may, after Completion, claim the Losses suffered or incurred by the Purchasersas a result thereof, and may not terminate, nullify, or rescind this agreement, or claim specific performance (nakoming). 10.1.3For the avoidance of doubt, Losses suffered by a Target Group Company will be deemed to be Losses suffered by the Purchasers. 10.1.4Subject to Completion, the Parties agree that neither the Seller nor any member of the Seller’s Group shall be liable towards any Target GroupCompany or any other member of the Purchasers’ Group or vice versa in connection with the Disentanglement, except for the obligationsexpressly set out in this agreement. 34 / 5210.1.5Notwithstanding anything to the contrary in any Local Business Transfer Agreement, the Parties agree that the remedies provided for in thisagreement, as limited by this Clause 10, Schedule 9 (Tax) or any other limitations set out in this agreement, shall be the Purchasers’ Group’s andthe Target Group’s sole and exclusive remedy for Losses suffered by the Purchasers, any other member of the Purchasers’ Group (including anyTarget Group Company) in connection with the Disentanglement under, as a result of or in relation to this agreement or any of the LocalBusiness Transfer Agreements. The Purchasers shall not, and shall procure that no other member of the Purchasers’ Group (including the TargetGroup Companies) will, bring any claim against the Seller or any other member of the Seller’s Group under any of the Local Business TransferAgreements, without prejudice to the Purchasers’ right to bring any claim against the Seller under this agreement. 10.2Time limitationsThe Seller is not liable for any claim in connection with the Seller’s Warranties, unless the Purchasers notify the Seller of such claim specifyingthe matters set out in Clause 11.2: (a)in the case of any claim under the Fundamental Warranties within five (5) years after the Completion Date; (b)in the case of any Tax Claim, within ninety (90) days after expiry of the statutory limitation period applicable in the relevant jurisdictionfor the Tax matter giving rise to such claims and any applicable term during which additional assessments can be assessed under therelevant Law; and (c)in the case of any claim in relation to any other Seller’s Warranties, within eighteen (18) months after the Completion Date. 10.3Minimum claimsSubject to any other applicable limitations of liability set out in this agreement, the Seller is liable under the Seller’s Warranties in respect of anyindividual claim, or a series of claims arising from the same facts, only to the extent that the liability agreed or determined in respect of any suchclaim or series of claims exceeds USD 1,400,000 (one million four hundred thousand US dollars), but then for the full amount and not only theexcess. 35 / 5210.4Aggregate minimum claimsSubject to any other applicable limitations of liability set out in this agreement, the Seller is liable under the Seller’s Warranties in respect of anyclaim only to the extent that the aggregate amount of all claims for which the Seller would otherwise be liable under the Seller’s Warrantiesexceeds USD 22,000,000 (twenty-two million US dollars), but then for the full amount and not only the excess. This limitation does not apply toclaims in relation to the Fundamental Warranties and/or any claims under the Tax Indemnity. 10.5Maximum liability 10.5.1The aggregate liability of the Seller in respect of any and all claims for the Losses for which the Seller becomes liable under the Seller’sWarranties, other than claims under the Fundamental Warranties, may not exceed USD 275,000,000 (two hundred seventy-five million USdollars). 10.5.2Without detracting from the limitation of liability set out in Clause 10.5.1, the aggregate liability of the Seller in respect of any and all claims forthe Losses for which the Seller becomes liable under or in connection with this agreement other than for a claim under the FundamentalWarranties and/or in relation to the Disentanglement, may not exceed USD 1,375,000,000 (one billion three hundred seventy-five million USdollars). 10.5.3Without detracting from the limitation of liability set out in Clauses 10.5.1 and 10.5.2, the aggregate liability of the Seller in respect of any andall claims for the Losses for which the Seller becomes liable under or in connection with this agreement, including claims under the FundamentalWarranties and/or in relation to the Disentanglement, may not exceed USD 2,750,000,000 (two billion seven hundred fifty million US dollars). 10.6Purchasers’ awarenessThe Seller is not liable for any Seller’s Warranty being untrue or inaccurate if any member of the Purchaser’s Group or any of their respectiveRepresentatives is aware of such Seller’s Warranty being untrue or inaccurate or aware of any fact or circumstance which could reasonably rendersuch Seller’s Warranty being untrue or inaccurate on the Signing Date. 10.7Provisions 10.7.1Subject to any other applicable limitations of liability set out in this agreement, the Seller is not liable under or otherwise in connection with anybreach of the Seller’s Warranties resulting from any fact, matter or claim for which any specific allowance, provision or reserve is made in theAccounts or the 36 / 52 Statements, unless the Losses incurred in respect of such fact, matter or claim exceed the allowance, provision or reserve in respect thereof in theAccounts or the Statements, in which case the Seller will only be liable for such excess. 10.7.2For purposes of Clause 10.7.1, an allowance, provision or reserve is deemed to be specific if it can be reasonably evidenced on the basis of thefinancial administration of the Target Group that the allowance, provision or reserve was intended by the management of the Target Group torelate fully or partly to the relevant fact, matter or claim. 10.8Excluded mattersThe Seller is not liable under or otherwise in connection with this agreement in respect of any matter, act, omission or circumstance to the extentthat the matter, act, omission or circumstance would not have occurred but for: (a)anything done or omitted to be done at the prior written request or with the prior written approval of the Purchasers or any Affiliate of thePurchasers; (b)anything done or omitted to be done at the request or with the prior written approval of any Target Group Company after the CompletionDate; (c)any act or omission of the Purchasers, any Affiliate of the Purchasers or their respective Representatives after Signing, including anychange in the nature or conduct of the Business as carried on by the Target Group Companies after the Completion Date; (d)the passing of, or any change in, any Law or administrative practice of any Governmental Authority after Signing, including any increasein the rates of Taxation or any imposition of Taxation or any withdrawal of relief from Taxation not actually in effect at the CompletionDate; (e)any change after Signing of any generally accepted interpretation or application of any applicable Law; (f)any change after Signing of US GAAP or any generally accepted interpretation or application of US GAAP; or (g)any existing accounting or Taxation policy, basis or practice of the Purchasers or any Affiliate of the Purchasers as of Signing or anychange in such accounting policy, basis or practice introduced or having effect after Signing. 37 / 5210.9Purchasers’ insuranceThe Seller is not liable in respect of any claim made under or otherwise in connection with this agreement to the extent that any Target GroupCompany or any member of the Purchasers’ Group has a right of recovery under a policy of insurance in respect of such claim. 10.10Net financial benefitThe Seller is not liable in respect of any claim made under or otherwise in connection with this agreement if any Target Group Company or anymember of the Purchasers’ Group has any savings or net financial benefit, including any Tax Benefit, because of such claim or the facts givingrise to such claim, but only to the extent of such savings or net financial benefit. 10.11Breaches capable of remedyNotwithstanding anything to the contrary in this agreement, the Seller is not liable towards the Purchasers under or otherwise in connection withthis agreement, other than in respect of a Tax Claim which will be subject to Schedule 9 (Tax), if and to the extent that (i) a claim is capable ofremedy and, (ii) after notice of such claim is delivered by the Purchasers to the Seller as contemplated by Clause 11.1 or Clause 11.2, such claimis remedied within a reasonable period (not to exceed twenty (20) Business Days) after the date on which such notice is received by the Seller. 10.12Mitigation of LossesThe Purchasers shall procure that all reasonable steps are taken and all reasonable assistance is given by the Purchasers’ Group to avoid ormitigate any Losses suffered or incurred by any member of the Purchasers’ Group or any Target Group Company. 10.13Purchasers’ right to recover 10.13.1If, before the Seller or any Affiliate of the Seller pays an amount in discharge of any claim under or otherwise in connection with this agreementor any Ancillary Agreement , any member of the Purchasers’ Group is entitled to recover (whether by payment, set-off, discount, credit, relief,insurance or otherwise) from a Third Party a sum which indemnifies or compensates any member of the Purchasers’ Group (in whole or in part) inrespect of the Losses which are the 38 / 52 subject matter of the claim, then at the election and in the sole discretion of the Purchasers: (a)the Purchasers shall procure that, before steps are taken to enforce a claim against the Seller or any Affiliate of the Seller followingnotification under Clause 11.1 or Clause 11.2, all reasonable steps are taken to enforce recovery against the Third Party (taking intoaccount the reasonable commercial and other interests of the Purchasers’ Group), and any actual recovery (less any reasonable costsincurred in obtaining such recovery) shall reduce or satisfy, as the case may be, such claim to the extent of such recovery; or (b)the Purchasers shall procure that all such rights of recovery of the relevant member of the Purchasers’ Group are assigned to the Seller, oran Affiliate of the Seller as designated by the Seller. 10.13.2If the Seller or an Affiliate of the Seller has paid an amount in discharge of any claim under or otherwise in connection with this agreement or anyAncillary Agreement and any member of the Purchasers’ Group is subsequently entitled to recover (whether by payment, set-off, discount, credit,relief, insurance or otherwise) from a Third Party a sum which indemnifies or compensates any member of the Purchasers’ Group (in whole or inpart) in respect of the Losses which are the subject matter of the claim, then at the election and in the sole discretion of the Purchasers: (a)the Purchasers shall procure that all reasonable steps are taken to enforce such recovery (taking into account the reasonable commercialand other interests of the Purchasers’ Group) and shall, or shall procure that the relevant member of the Purchasers’ Group, pay to theSeller, as soon as practicable after receipt, an amount equal to the lesser of: (i)any sum recovered from the Third Party less any costs and expenses reasonably incurred in obtaining such recovery; and (ii)the amount previously paid by the Seller or an Affiliate of the Seller to the Purchasers or any member of the Purchasers’ Group inrespect of such Losses; or (b)the Purchasers shall procure that all such rights of recovery of the relevant member of the Purchasers’ Group are assigned to the Seller, oran Affiliate of the Seller as designated by the Seller. 10.14No double claimsNeither the Seller nor any of the Seller’s Affiliates shall be liable under or otherwise in connection with this agreement or any AncillaryAgreement more than once in respect of the same Loss. Neither the Purchasers nor any of the 39 / 52Purchasers’ Affiliates nor any Target Group Company shall be liable under or otherwise in connection with this agreement or any AncillaryAgreement more than once in respect of the same Loss. 10.15Contingent LiabilitiesNeither the Seller nor any of the Seller’s Affiliates shall be obliged to make payment under or otherwise in connection with this agreement or anyAncillary Agreement in respect of any Liability which is contingent unless and until such contingent Liability ceases to be contingent. Nothingin this Clause 10.15 precludes the giving of notice of a claim which is contingent within the time limit set out in Clause 11.1 or 11.2. 10.16Liability of the Purchasers 10.16.1If a Purchasers’ Warranty is untrue or inaccurate on the date on which the Purchasers’ Warranty is given, or in the event of a breach of thisagreement by the Purchasers, the Purchasers shall be liable to the Seller for the Losses suffered or incurred by the Seller or any Affiliate of theSeller as a result of the Purchasers’ Warranty being untrue or inaccurate or as a result of the breach of this agreement, up to an amount equal tothe Bid Value. 10.16.2Without limiting the generality of the preceding Clause 10.16.1, the Purchasers shall severally and jointly immediately owe and pay to the Selleran amount of USD 125,000,000 (one hundred and twenty-five million US dollars) within five (5) Business Days after the first date set forCompletion in accordance with Clause 6.1, if the Purchasers are unable to pay the Completion Amount on such Completion Date for any reason(the “Default Payment Fee”). 10.16.3If and when the Default Payment Fee is due and payable in accordance with Clause 10.16.2, the Seller and the Purchasers shall procure that anamount equal to the Default Payment Fee shall be paid to the Seller out of the Deposit Amount and that prior to the payment of the DefaultPayment Fee to the Seller, an amount equal to the Default Payment Fee is blocked in the Escrow Account and cannot be used for purposes ofpayment of the Completion Amount at Completion. 10.17Third-party stipulationThe provisions of this Clause 10 are also for the benefit of, and will be enforceable by, each relevant member of the Seller’s Group or itssuccessors and permitted assigns, as third-party stipulations (onherroepelijk derdenbeding). 40 / 5210.18No recourse for SellerThe Seller shall not make any claim against any Target Group Company and any Representative of any Target Group Company which it mayhave in respect of a misrepresentation, inaccuracy or omission in or from information or advice provided by any such person for the purpose ofassisting the Seller in relation to the Seller’s Warranties or any other matter covered by this agreement. The provisions of this Clause 10.18 arealso for the benefit of, and will be enforceable by, each relevant member of the Purchasers’ Group (for the avoidance of doubt including theTarget Group Companies as of the Completion Date) or its successors and permitted assigns, as third-party stipulations (onherroepelijkderdenbeding). 10.19Fraud and gross negligenceThe limitations of liability set out in this Clause 10 do not apply in the event the liability of a Party for Losses suffered is attributable partly orwholly to fraud, wilful misconduct or gross negligence on behalf of that Party. 11CLAIMS 11.1Notification of potential claims 11.1.1Without imposing additional time limits to those set out in Clause 11.2, if the Purchasers or any member of the Purchasers’ Group becomes awareof any matter or circumstance that may give rise to a claim against the Seller under or otherwise in connection with this agreement, thePurchasers shall as soon as reasonably practicable after becoming aware of any such matter or circumstance, but in any event within twenty(20) Business Days of becoming aware of such matter or circumstance, notify the Seller in writing setting out such information as is available tothe Purchasers or any member of the Purchasers’ Group as is reasonably necessary to enable the Seller to assess the merits of the claim, to act topreserve evidence and to take any other actions that the Seller may consider necessary. 11.1.2Any failure of the Purchasers to give notice within the time limits referred to in Clause 11.1.1 does not release the Seller of its liability, except forthe amount of Losses that is the result of such failure to give notice within these time limits. 11.2Notification of claimsWithout prejudice to Clause 11.1, notices of claims by the Purchasers under or otherwise in connection with this agreement must be given inwriting by the Purchasers to the Seller within the time limits specified in Clause 10.2, specifying full information of the legal and factual basis ofthe claim and the 41 / 52information on which the Purchasers rely and, to the extent possible, an estimate of the amount of Losses which are, or will be, the subject of theclaim (including any Losses which are contingent on the occurrence of any future event). Any failure of the Purchasers to so give notice does notrelease the Seller of its liability, except for the amount of Losses that is the result of such failure to give proper notice. 11.3Commencement of proceedingsAny claim notified to the Seller will be deemed, if it has not been previously satisfied, settled or withdrawn, to be irrevocably withdrawn andafter the Seller has given written notice to the Purchasers finally denying liability and requiring the Purchasers to commence proceedings: (a)six (6) months after the notice is given pursuant to Clause 11.2, unless legal proceedings in respect of that claim have been formallycommenced; (b)if a claim is contingent or conditional, three (3) months after the claim for which the notice is given pursuant to Clause 11.2 ceases to becontingent or conditional, unless legal proceedings in respect of that claim have been formally commenced; and (c)if legal proceedings commenced pursuant to (a) or (b) above are not being, and do not continue to be, pursued with reasonable diligence. 11.4Procedure for Third-Party ClaimsIf any claim is brought by a Third Party (a “Third-Party Claim”) against any member of the Purchasers’ Group or, as the case may be, anymember of the Seller’s Group (the “Relevant Indemnified Party”), in respect of which indemnification may be sought from the Seller or, as thecase may be, from the Purchasers (the “Relevant Indemnifying Party”) pursuant to this agreement, the Purchasers or, as the case may be, theSeller shall procure that the Relevant Indemnified Party notifies the Relevant Indemnifying Party of the Third-Party Claim in accordance withClause 11.1 or 11.2, as applicable, and: (a)does not (i) make any admissions in relation to the Third-Party Claim, or (ii) compromise, dispose of or settle the Third-Party Claimwithout the prior written consent of the Relevant Indemnifying Party; (b)subject to the Relevant Indemnifying Party acknowledging the indemnity obligation towards the Relevant Indemnified Party for the fullamount of the Losses in connection with such Third-Party Claim, allows the Relevant Indemnifying Party to take such action as it deems 42 / 52 necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third-Party Claim (including making counterclaimsor claims against Third Parties) in the name of and on behalf of the Relevant Indemnified Party and to control the conduct of any relatedproceedings, negotiations or appeals (but at all times taking into account the reasonable commercial and other interests of the RelevantIndemnified Party); and (c)furnishes all such documents, books and records and other information, and gives all such assistance including access to premises andpersonnel, and the right to examine and copy or photograph any assets, accounts, documents and records, as the Relevant IndemnifyingParty may reasonably request for the purpose referred to in the preceding sub-clause (b), including instructing such professional or legaladvisors as the Relevant Indemnifying Party may nominate to act on behalf of the Relevant Indemnified Party, but in accordance withthe Relevant Indemnifying Party’s instructions, it being agreed that the Relevant Indemnifying Party shall keep the RelevantIndemnified Party informed of all relevant matters relating to the claim and shall forward or procure to be forwarded to the RelevantIndemnified Party copies of all material external correspondence relating to the claim other than such correspondence that is subject tolegal professional or litigation privilege of the Relevant Indemnifying Party. 11.5Third-party stipulation limitationThe provisions of this Clause 11 apply mutatis mutandis to any claim made under a third-party stipulation (derdenbeding) included in thisagreement. 12TAXThe provisions of Schedule 9 (Tax), apply in respect of Taxes. 13EMPLOYEES AND PENSION PLANS 13.1EmployeesThe provisions of Paragraph 8 of Schedule 10 (Disentanglement Plan) apply in respect of Employees. 13.2Pension PlansThe provisions of Paragraph 9 of Schedule 10 (Disentanglement Plan) apply in respect of Pension Plans. 43 / 5214RESTRICTIONS ON SELLER 14.1Non-solicitDuring the Restricted Period, the Seller shall not and shall procure that none of its Affiliates shall, directly or indirectly, for its own account or onbehalf of an Affiliate, induce any Restricted Employee to leave the employment of a Target Group Company and in no circumstances shall theSeller or any of its Affiliates employ or attempt to employ any Restricted Employee, offer any contract for services to any Restricted Employee,or in any way have any Restricted Employee perform any activities, in each case except pursuant to an agreement with the Purchasers or theAncillary Agreements. 14.2Ancillary restrictions 14.2.1The Seller shall not, and shall procure that no member of the Seller’s Group will, undertake any Restricted Activity during the Restricted Period. 14.2.2The restrictions in Clause 14.2 do not operate to prohibit any member of the Seller’s Group from: (a)fulfilling any obligation pursuant to this agreement and any agreement entered into pursuant to this agreement; (b)carrying on any businesses of the Seller’s Group at Completion (other than the Business) and any natural extensions or successorsthereof; (c)acquiring the whole or part of any business if the turnover attributed to Restricted Activities of that business does not represent morethan 25% (twenty-five per cent) of the aggregate annual turnover of that business; (d)without detracting from sub-clause (c) of this Clause 14.2.2, holding an interest in a business which is engaged in a Restricted Activity inrespect of which the Seller’s Group does not have a majority shareholding or other controlling interest, or the right to nominate themajority of directors or representatives of similar standing to the board of directors or a governing body of similar standing, provided thatif the business is listed on any recognised stock exchange, a controlling interest will be deemed to exist if the interest held amounts to10% (ten per cent) or more of the outstanding issued share capital of a company. 44 / 5215CONFIDENTIALITY 15.1Public announcements 15.1.1No public announcement, circular or other public communication in connection with the existence or the subject matter of this agreement or theTransaction may be made or issued by or on behalf of the Seller or the Purchasers, or their respective Affiliates, without the prior written approvalof the Purchasers (in the case of any public announcements, circulars or other public communications by the Seller or its Affiliates) or the Seller(in the case of any public announcement, circular or other public communication by the Purchasers or its Affiliates), respectively, whichapproval may not be unreasonably withheld, delayed or given untimely to the extent the communication is required pursuant to applicable Law,or a binding decision of a court or another Governmental Authority, provided that the Seller and its Affiliates may make such publicannouncement, circular or other public communication as they deem reasonably required or advisable to comply with applicable Law or therules of any officially recognised exchange on which the securities of the Seller or any of its Affiliates are listed. 15.1.2The Seller and the Purchasers shall agree on the contents and the timing of any separate or joint press release to be issued in connection with theTransaction. 15.2Confidentiality undertaking 15.2.1The Non-Disclosure Agreement will continue to have force and effect up to Completion in accordance with its terms. 15.2.2Without prejudice to the terms and conditions of the Non-Disclosure Agreement and subject to Clause 15.1, each Party shall treat as strictlyconfidential and not release, disclose or use any information contained in, received or obtained as a result of entering into this agreement andany of the Ancillary Agreements which relates to: (a)the provisions of this agreement or any agreement entered into in connection with the Transaction; (b)the negotiations relating to this agreement or any such other agreement; or (c)the Seller or the Purchasers or the business activities carried on by them or any of their respective Affiliates; 45 / 52unless the disclosure or use is reasonably required to vest the full benefit of this agreement in any Party or is required pursuant to applicable Law,the rules of any officially recognised exchange or a binding decision of a court or another Governmental Authority. 16MISCELLANEOUS 16.1Further assurancesThe Seller and the Purchasers shall at their own cost and expense from time to time execute and procure to be executed such documents andperform and procure to be performed such acts and things as may be reasonably required by each of them to effect the Transaction and to give theParties the full benefit of this agreement. 16.2Entire agreementThis agreement contains the entire agreement of the Parties in relation to its subject matter. All previous agreements and arrangements made bythe Parties in relation to that subject matter are hereby terminated. 16.3AssignmentOther than as set out in Clause 2.3, no Party may, without the prior written consent of the other Parties, assign or grant any security interest overor otherwise transfer, in whole or in part, any of its rights and obligations under this agreement, it being agreed that the Purchasers may createany Encumbrance effective as of Completion on its rights under this agreement in favour of any party providing them with financing in relationto the Transaction. 16.4Invalidity 16.4.1In this Clause 16.4, “enforceable” includes legal, valid and binding (and derivative terms are to be construed accordingly). 16.4.2If any provision in this agreement is held to be or becomes unenforceable, in whole or in part, under any applicable Law: (a)that provision or part of that provision will to the extent of its unenforceability be deemed not to form part of this agreement but, subjectto the restrictions of article 3:41 BW, the enforceability of the remainder of this agreement will not be affected; and (b)the Parties shall use commercially reasonable efforts to agree a replacement provision that is enforceable to achieve so far as possible theintended effect of the unenforceable provision. 46 / 5216.5CounterpartsThis agreement may be entered into in any number of counterparts, all of which taken together will constitute one and the same instrument. TheParties may enter into this agreement by signing any such counterpart. 16.6WaiverNo waiver of any provision of this agreement will be effective unless that waiver is in writing and signed by or on behalf of the Party entitled tomake the waiver. 16.7AmendmentNo amendment of this agreement will be effective unless that amendment is in writing and signed by or on behalf of each Party. 16.8Third-party rightsExcept where this agreement expressly provides otherwise: (a)this agreement contains no stipulations for the benefit of a third party (derdenbedingen) which may be invoked by a third party against aParty; and (b)where this agreement contains a stipulation for the benefit of a third party, this agreement (including the relevant third-party’s rightsunder this agreement) may be terminated, amended, supplemented or waived (in each case either in its entirety or in part) without thatthird-party’s consent. 16.9No rescissionWithout prejudice to Clauses 4.8 and 6.4.1, each Party waives its right to rescind (ontbinden) this agreement, in whole or in part, on the basis ofarticle 6:265 BW or to request a competent court to amend this agreement on the basis of article 6:230(2) BW. If a Party has made an error (heeftgedwaald) in making this agreement, it shall bear the risk of that error. 16.10No withholding and gross upAny sum payable under this agreement must be paid free and clear of all Tax Deductions except as required by Law. If any such sum is subject toa Tax Deduction required by Law, that payment will be increased to ensure that after the Tax Deduction, and taking into account any credit orrefund relating to such deduction or withholding at the level of the relevant recipient receiving the payment to the extent such credit or refund isactually available or can actually 47 / 52be made available within a reasonable period to such relevant recipient, the relevant recipient receives a net amount equal to the amount itwould have been entitled to if the sum payable under this agreement had not been subject to that Tax Deduction. It is agreed and understoodbetween the Parties that the Purchasers, each relevant Target Group Company or other member of Purchasers’ Group will not be obliged to payany additional amount in relation to any payment made in connection with the Disentanglement, except as otherwise provided under thisagreement or any Ancillary Agreement. 16.11Method of paymentAny payment under or otherwise in connection with this agreement must be effected in US dollar unless otherwise agreed between the Parties bycrediting the full amount of the payment (without any deduction whatsoever, whether for bank transmission charges or otherwise) for same dayvalue to the bank account specified by the Party entitled to the payment, reasonably in advance and in sufficient detail to enable payment bytelegraphic or other electronic means to be effected, on or before the due date for payment. 16.12Set-offThe Purchasers do not have any right of set-off against, deduction from, or suspension of payment of the Estimated Purchase Price or thepayments referred to in Clause 10.16.2, except that the Deposit Amount will be set off against the Estimated Purchase Price. 16.13Adjustment of the Purchase PriceAny payment made by the Seller to the Purchasers, or by the Purchasers to the Seller, in each case pursuant to this agreement, other than thepayment of the Estimated Purchase Price at Completion or any payment pursuant to Clause 7.5, will be an adjustment of the Purchase Price equalto any such amount. 16.14Costs 16.14.1Except where this agreement provides otherwise, all costs which a Party has incurred or must incur in preparing, concluding or performing thisagreement are for its own account. 16.14.2Except where this agreement provides otherwise: (a)except as provided under (b) below, all stamp, real estate and other transfer, registration, sales and other similar Taxes, duties, fees,imposts, levies and charges in connection with the Disentanglement or the Transaction shall be borne equally by the Seller on the onehand and the Purchasers on the other hand; 48 / 52 (b)any German real estate transfer tax due in connection with the transfer of the Hamburg Site shall be for the account of the Purchasers upto a maximum amount of the applicable German real estate transfer tax rate times the fair market value allocated to such German realestate and any excess amount, including any interest and penalties relating thereto, shall be borne by the Seller; and (c)the Parties shall reasonably cooperate with analysing any obligations as set forth in items (a) and (b) above and reasonably consult eachother before making any filings or taking any actions in this respect. 16.14.3For the avoidance of doubt, all income Tax payable (whether calculated on capital gains realised or otherwise) in connection with theDisentanglement shall remain for the account of the Seller. 16.14.4Subject to Clauses 16.14.1 and 16.14.2 above and unless otherwise agreed in this agreement or any Ancillary Agreement, the costs and chargesin connection with the Disentanglement will: (a)if relating to the period, or actions undertaken in the period, up to and including the Completion Date, be for the account of the Seller(whereby, for the avoidance of doubt, costs of the Germany notary (Notar) relating to the transfer of the Hamburg Site, advisory fees,transaction bonuses, and any payment obligations towards Employees by the Target Group relating to any Transaction related stay-onscheme or other incentive scheme initiated prior to Completion will be deemed to relate to the period before the Completion Date); and (b)if relating to the period after the Completion Date, be for the account of the Purchasers,provided, however, that: (c)the Purchasers shall be solely responsible and liable for the Employment Costs of the Disentanglement Hires; and (d)the Purchasers shall be solely responsible and liable for the costs of any programs primarily for the benefit of, or preparing, the TargetGroup for the period after Completion (such as corporate branding for the Target Group), including costs of consultants or advisorsengaged for such purpose and the costs of the Seller’s Group to implement such programs prior to Completion. 49 / 5216.14.5To the extent that (a) any of the Taxes, duties, fees, imposts, levies or charges to be borne by the Purchasers in accordance with Clause 16.14.1 orClause 16.14.2, or (b) any of the costs to be borne by the Purchasers in accordance with Clause 16.14.3, have been paid by any member of theSeller’s Group (including, for the avoidance of doubt, the Target Group Companies) on or before Completion or are due by any member of theSeller’s Group (excluding, for this purpose, the Target Group Companies), the Purchasers shall reimburse the amount of such Taxes, duties, fees,imposts, levies charges or costs, in addition to any amounts expressed in this agreement to be payable by the Purchasers, to the Seller on theCompletion Date. 16.14.6To the extent that any of the costs to be borne by the Seller in accordance with Clauses 16.14.2 through 16.14.5, have been paid by any memberof the Purchasers’ Group (excluding, for the avoidance of doubt, the Target Group Companies) or are due by any member of the Purchasers’Group (including, for this purpose, the Target Group Companies), the Seller shall reimburse the amount of such Taxes, duties, fees, imposts,levies charges or costs, in addition to any amounts expressed in this agreement to be payable by the Seller, to the Purchasers on the CompletionDate. 16.14.7Notwithstanding the preceding Clauses, the Seller shall pay all fees of the Notary payable in connection with the Transaction. 16.14.8For the avoidance of doubt, any Chinese capital gains Tax on indirect transfers in connection with the Transaction and/or the Disentanglementand any VAT in connection with the Disentanglement are arranged for separately in Paragraphs 10 and 11 of Schedule 9 (Tax). 16.15InterestIf any Party defaults in the payment when due of any amount payable under or otherwise in connection with this agreement, the liability of thatParty will be increased to include interest on that amount from the date when such payment is due (inclusive) under or otherwise in connectionwith this agreement until the date of actual payment (exclusive) at the Interest Rate. 16.16Notices 16.16.1Any notice, request, consent, claim, demand and other communication between the Parties in connection with this agreement (a “Notice”) mustbe in writing and be given and be deemed to have been duly given if written in the English language and: (a)delivered personally (Notice deemed given upon receipt); 50 / 52 (b)delivered by registered post (Notice deemed given upon confirmation of receipt); (c)delivered by e-mail (Notice deemed given upon receipt by the e-mail server of the Seller); or (d)sent by an internationally recognised overnight courier service such as Federal Express (Notice deemed given upon receipt), with a copyby email.with a copy by email in case of Notice being given by way of the method under (a), (b) or (d) above. 16.16.2All Notices must be sent to the Persons and at the addresses set out in Schedule 14 (Parties’ details for Notices), or such other Persons oraddresses as notified to the other Party from time to time. 17GOVERNING LAW AND DISPUTE RESOLUTION 17.1Governing lawThis agreement (including Clause 17.2) and the documents to be entered into pursuant to it, save as expressly otherwise provided therein, aregoverned by and to be construed in accordance with Dutch Law. 17.2Dispute resolution 17.2.1Parties shall attempt in good faith to resolve promptly any dispute arising out of or in connection with this agreement by negotiation. 17.2.2All disputes arising out of or in connection with this agreement and the documents to be entered into pursuant to it, including disputesconcerning the existence and validity thereof, will be finally and exclusively resolved in accordance with the arbitration rules of theInternational Chamber of Commerce taking into account the following: (a)the arbitral tribunal will be composed of three (3) arbitrators and each of them appointed in accordance with the applicable arbitrationrules; (b)the place of the arbitration will be Singapore; (c)the language of the arbitration will be English; (d)the arbitral tribunal shall decide in accordance with the rules of law (naar de regelen des rechts); and 51 / 52 (e)any dispute and the existence and content of any arbitral proceedings under this Clause 17.2 must be kept strictly confidential by theSeller and the Purchasers, the members of the arbitral tribunal and the International Chamber of Commerce (including the ICC InternalCourt of Arbitration), and no publication of any arbitral award, any other decision of the arbitral tribunal or any materials produced orexchanged in the course of such arbitral proceedings is permitted, except: (i)to the extent that disclosure or publication is required to fulfil a legal duty, protect a legal right, or enforce or challenge an arbitralaward in legal proceedings before a court or other judicial authority; (ii)with the written consent of the Parties; (iii)where required for the preparation or presentation of a claim or defence in arbitral proceedings under this Clause 17.2; (iv)by order of the arbitral tribunal at the request of a Party; or (v)to the extent required pursuant to the Law or the rules of any officially recognised exchange on which the securities of the Partyare listed. 17.3Other disputesThis Clause 17 (Governing Law and Dispute Resolution) shall also apply to disputes arising in connection with the Ancillary Agreements,unless the relevant agreement expressly provides otherwise.[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 52 / 52THIS AGREEMENT HAS BEEN SIGNED ON THE DATE STATED AT THE BEGINNING OF THIS AGREEMENT BY: NXP B.V. /s/ Charles Smit /s/ Sean PitonakName: Charles Smit Name: Sean PitonakTitle: SVP Title: VP BEIJING JIANGUANG ASSET MANAGEMENT CO., LTD/s/ Zhang XinyuName: Zhang XinyuTitle: Attorney-in-lawWISE ROAD CAPITAL LTD/s/ Zhang YuanjieName: Zhang YuanjieTitle: Attorney-in-law SALE AND PURCHASE AGREEMENTSchedule 1 Definitions and interpretation1 DefinitionsCapitalised terms, including those used in the introduction and recitals of this agreement, have the following meaning:Accounts means the unaudited financials in respect of the Business as at, and for the twelve (12) month period ended on, 31 December 2015, asincluded in the Data Room;Accounting Principles means the Seller’s Group’s accounting principles;Affiliate means with respect to any Person, another Person directly or indirectly Controlling, Controlled by, or under common Control with thefirst Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made;Agreed Form means, in relation to a document, that document in a form agreed between the Seller and the Purchasers at Signing with anyalterations as may be agreed in writing between the Seller and the Purchasers from time to time;Allocated Employees means the following employees of the Seller’s Group (other than the Dedicated Employees): (a)employees of the Seller’s Group who prior to Completion are primarily (i.e., at least 50% of their working time) engaged in the Business;and (b)such additional number of relevant employees of the Seller’s Group identified by the Seller and the Purchasers jointly in good faith priorto Completion so that the Employment Costs of the Allocated Employees (taking into account their functions) correspond to the sharedservice costs allocated to the Business;Ancillary Agreements means the agreements set out in Clause 6.2.1 sub-clause (f), any other transitional services agreements or otheragreements to be entered into by the Seller or a member of the Seller’s Group on the one hand, and a Target Group Company on the other hand inconnection with the Transaction, provided that the Ancillary Agreements shall not include any Local Business Transfer Agreement, andAncillary Agreement means any one of them;ATCB means NXP Semiconductors Cabuyao, Inc; SALE AND PURCHASE AGREEMENTATGD means NXP Semiconductors Guangdong Ltd.;ATSN means NXP Semiconductors Malaysia Sdn. Bhd.;Automatic Transfer Employees has the meaning set out in Paragraph 8.2 of Schedule 10 (Disentanglement Plan);Bid Value has the meaning set out in Clause 3.1(a);Business has the meaning set out in consideration (A) of this agreement;Business Assets has the meaning set out in Paragraph 3.1 of Schedule 10 (Disentanglement Plan), and Business Asset means any one of them orthe relevant one of them, as the context requires;Business Contract means any written Contract to which any member of the Seller’s Group is a party and which has been entered into in thecourse of conducting the Business to the extent in force and effect on the Signing Date (unless terminated thereafter in the ordinary course ofbusiness) and/or the Completion Date, except for any (i) Non-Exclusive Contract, (ii) Contract predominantly relating to Intellectual PropertyRights and Technology or to Intellectual Property Rights (which does not comprise R&D Contracts or licenses in connection with the deliveryof products by the Seller’s Group to the counterparty), or (iii) intragroup agreement or umbrella agreement as referred to in sub-clause (b) ofClause 5.8.1;Business Day means a day which is not a Saturday, a Sunday or a public holiday in the Netherlands on which banks are generally open fornormal business;Business Intellectual Property has the meaning set out in the IP Transfer and License Agreement;Business Liabilities has the meaning set out in Paragraph 3.3 of Schedule 10 (Disentanglement Plan), and Business Liability means any one ofthem or the relevant one of them, as the context requires;BW means the Dutch Civil Code (Burgerlijk Wetboek);CFIUS means Committee on Foreign Investment in the United StatesCFIUS Approval has the meaning set out in Clause 4.1(d);CFIUS Notice has the meaning set out in Clause 4.5.3;Company has the meaning set out in recital (B) of this agreement. SALE AND PURCHASE AGREEMENTCompany Intellectual Property has the meaning set out in the IP Transfer and License Agreement;Competition Authorities means the competition authorities in the countries as set out in Schedule 6 (Merger Clearance Filings) or any othercompetition authority to which the Transaction was referred by any of the competition authorities set out in Schedule 6 (Merger ClearanceFilings), and Competition Authority means any one of them or the relevant one of them, as the context requires;Completion means, subject to the satisfactory performance and completion of all actions set out in Clause 6.2 the completion of the sale andtransfer of the Shares to the Purchasers, provided that if the context otherwise requires, Completion may also mean the performance of the actionsset out in Clause 6.2;Completion Amount has the meaning set out in Clause 6.2.1(d);Completion Conditions means the conditions set out in Clause 4.1, and Completion Condition means any one of them or the relevant one ofthem, as the context requires;Completion Date means, subject to the satisfactory performance of all Completion actions set out in Clause 6.2, the date on which Completioncommences;Consistently Applied means consistent application to be measured on the basis of the Accounting Principles incorporating the specificprinciples as applied in the Accounts, without taking into account any summary of uncorrected misstatements relating to the Accounts, if any;Contract means any contract, agreement, lease, licence, commitment, understanding, franchise, warranty, guarantee, mortgage, note, bond,option, warrant, right or other instrument or consensual obligation, whether written or oral and whether express or implied;Control means, with respect to a Person, (i) the direct or indirect ownership of more than 50% (fifty per cent) of the outstanding voting securities(or comparable voting interest or financial participation) of such Person, (ii) the ability to appoint more than one-half of the directors of theboard of directors or equivalent governing body of such Person, or (iii) the possession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of such Person. The terms “Controlling,” “Controlled by” and “under common Control” have thecorrelative meanings; SALE AND PURCHASE AGREEMENTData Room means the virtual data room containing documents and information relating to the Target Group, the contents of which are filed onthe DVD enclosed as Schedule 22 (Data Room DVD);Dedicated Companies means the companies listed Schedule 2 (Dedicated Companies*), Dedicated Company means any one of them or therelevant one of them, as the context requires;Dedicated Employees means (i) the employees of the Dedicated Companies immediately prior to Completion, (ii) the employees of the Seller’sGroup (excluding the Dedicated Companies) who are fully dedicated to the Business immediately prior to Completion, and (iii) the employeesof the Seller’s Group who are fully dedicated to ITEC immediately prior to Completion, in each case excluding the Excluded Employees;Deed of Transfer means the notarial deed of transfer of the Shares to be finalised and attached in Agreed Form prior to Completion in Schedule16 (Agreed Form Deed of Transfer);Defaulting Party has the meaning set out in Clause 6.4.1;Default Payment Fee has the meaning set out in Clause 10.16.2;Deposit Amount has the meaning set out in Clause 5.6.1;Disclosed Information means any facts, matters or other information included or provided in (i) this agreement or any Ancillary Agreement,(ii) the Due Diligence Information, or (iii) any written correspondence prior to 8 June 2016, 23:59 p.m. CET between the Seller, any of itsAffiliates, or any of their respective Representatives on the one hand and the Purchasers, any of its Affiliates or any of their respectiveRepresentatives on the other hand;Disentanglement has the meaning set out in consideration (F) of this agreement;Disentanglement Hires has the meaning set out in Paragraph 1.5 of Schedule 10 (Disentanglement Plan);Due Diligence Information means: (a)the information contained in the Data Room on 8 June 2016, 23:59 p.m. CET, including the questions raised and answers provided in theData Room; SALE AND PURCHASE AGREEMENT (b)the documentation received by any member of the Purchasers’ Group or its Representatives during and pursuant to: (i)the management presentations and expert sessions held in Eindhoven between 4 April and 7 April 2016; and (ii)site visits to the Hamburg Site on 7 April 2016, ATSN on 11 April 2016, ATGD on 12 April 2016 and the Manchester site on28 April 2016;Dutch Works Council means the works council (ondernemingsraad) of NXP Semiconductors Netherlands B.V.;Effective Time means one (1) minute after 23:59 p.m. on the last day of the monthly reporting period of the Seller’s Group immediatelypreceding the Completion Date;Employees means the Dedicated Employees and the Allocated Employees collectively;Employment Costs means: (a)the amounts payable or paid to or in respect of the employment of the relevant Employee (including salary, wages, Tax and socialsecurity contributions, employer’s pension contributions, bonus, insurance premiums, payments or allowances or any other considerationfor employment); and (b)the costs of providing any non-cash benefits which the employer is required to provide by Law or contract or customarily provides inconnection with such employment (including other employee benefit provisions);Employment Liabilities means any and all Losses, excluding Employment Costs, directly arising out of or directly connected with employmentor the employment relationship, or the initiation or the termination of employment, or of the employment relationship (including all Losses inconnection with any claim, award, judgment or agreement for redundancy pay, or damages or compensation for unfair or wrongful dismissal orbreach of contract or discrimination);Encumbrance means any claim, charge, pledge, mortgage, lien, option, equity, power of sale, hypothecation, usufruct, retention of title, right ofpre-emption, right of first refusal or other third-party rights or security interest of any kind or an agreement to create any of the foregoing; SALE AND PURCHASE AGREEMENTEnvironment means any or all of the following media (alone or in combination): ground, soil, ground water, surface water, air and anyecological systems and living organisms supported by these media;Environmental Authority means any Governmental Authority having jurisdiction to determine any matter arising under Environmental Law orrelating to the Environment, or both;Environmental Condition means any contamination or pollution of, or the condition of, ground, soil, ground water, surface water or air inbreach of Environmental Law in the relevant jurisdiction caused by Hazardous Substances which have spread in the soil, air or water;Environmental Law means all Laws of any relevant jurisdiction in force at the Signing Date whose purpose is to protect or prevent pollution ofthe Environment or to regulate emissions, discharges, or releases of Hazardous Substances into the Environment, or to regulate the use, treatment,storage, burial, disposal, transport or handling of Hazardous Substances;Environmental Permit means any license, permit, consent, authorisation, certificate, registration and exemption which is issued, granted orrequired under Environmental Law which is material to the Business as on the Signing Date;Equity Commitment Letters means the binding and irrevocable equity commitment letters from the Fund Investors to the Purchasers and theSeller, confirming their irrevocable commitment to provide the Purchasers with the funding to complete the Transaction at Completion, executedcopies of which are attached as Schedule 18 (Equity Commitment Letter);Escrow Account means the account with the Escrow Agent, no. 0164000100000660346;Escrow Agent means Industrial and Commercial Bank of China (Europe) S.A.;Escrow Agreement has the meaning set out in Clause 5.6.1;Estimated Net Debt means the Seller’s estimate of the Net Debt as at the Effective Time, as set out in the Estimated Net Debt Statement;Estimated Net Debt Adjustment means the amount by which the Estimated Net Debt is greater than the Reference Net Debt (in which case thatamount is expressed as a positive figure) or by which it is less than the Reference Net Debt (in which case that amount is expressed as a negativefigure); SALE AND PURCHASE AGREEMENTEstimated Net Debt Statement means the statement to be prepared in accordance with Clause 5.9.1;Estimated Purchase Price has the meaning set out in Clause 3.2.1;Estimated Statements means the Estimated Working Capital Statement and the Estimated Net Debt Statement;Estimated Working Capital means the Seller’s estimate of the Working Capital as at the Effective Time, as set out in the Estimated WorkingCapital Statement;Estimated Working Capital Adjustment means the amount by which the Estimated Working Capital is greater than the Reference WorkingCapital (in which case that amount is expressed as a positive figure) or by which it is less than the Reference Working Capital (in which case thatamount is expressed as a negative figure);Estimated Working Capital Statement means the statement to be prepared in accordance with Clause 5.9.1;Excluded Assets has the meaning set out in Paragraph 3.2 of Schedule 10 (Disentanglement Plan), and Excluded Asset means any one of them orthe relevant one of them, as the context requires;Excluded Employees means: (a)certain engineers located at the Hamburg Site with in depth knowledge of special processes used for sensor wafer manufacturing; (b)certain engineers located at ATCB with in depth knowledge of assembly and test processes for sensor manufacturing; (c)certain employees of ATCB; and (d)certain employees of the Dedicated Companies primarily engaged in the businesses of the Seller’s Group other than the Business whomthe Seller and the Purchasers jointly identify to be retained by the Seller’s Group prior to Completion,as listed in Schedule 13 (Excluded Employees).Excluded Liabilities has the meaning set out in Paragraph 3.4 of Schedule 10 (Disentanglement Plan), and Excluded Liability means any oneof them or the relevant one of them, as the context requires;Funds means the parties listed in the first column of Schedule 17 (The Funds); SALE AND PURCHASE AGREEMENTFund Investors means the parties listed in the second column of Schedule 17 (The Funds);Fundamental Warranties means the warranties set forth in Paragraphs 2 and 3 of Schedule 7 (Seller’s Warranties);Governmental Authority means, to the extent it has jurisdiction in respect of the relevant matter, any judicial, legislative, executive, regulatoryor competition authority or any other governmental authority, of the Netherlands or any other jurisdiction, including of the European Union;Governmental Order means any final and non-appealable order, writ, judgment, injunction, decree, declaration, stipulation, determination oraward entered by or with any Governmental Authority;Guarantee means any guarantee, indemnity, surety, letter of comfort or other assurance, security, right of set-off, obligation to contribute(bijdrageplicht) or undertaking given by a Person to secure or support the obligations (actual or contingent) of any other Person, whether givendirectly, by way of counter-indemnity or otherwise;Hamburg Certified Area has the meaning set out in Paragraph 2.1 of Schedule 23 (IT Separation and Hamburg Certified Area set up);Hamburg Certified Area Plan has the meaning set out in Paragraph 2.2 of Schedule 23 (IT Separation and Hamburg Certified Area set up);Hamburg Site means the real estate site located at Stresemannallee 101, D-22529 Hamburg, Germany with deed numbers 4229 and 5142 and allbuildings and fixtures located on this site, in each case owned by NXP Semiconductors Germany GmbH on the Signing Date;Hazardous Substances means, to the extent regulated by the applicable Environmental Authority, any wastes, pollutants, contaminants and anyother natural or artificial substance (whether in the form of a solid, liquid, gas or vapour) which is capable of causing harm or damage to theEnvironment;Insurance Policies means all insurance policies in effect at the Effective Time providing coverage to the Business maintained by any member ofthe Seller’s Group, whether such policies are maintained with Third Party insurers or within the Seller’s Group, excluding any insurance policiesmaintained solely by any Target Group Company;Intellectual Property Rights has the meaning set out in the IP Transfer and License Agreement; SALE AND PURCHASE AGREEMENTInterest Rate means 4% (four percent) per annum compounded on a quarterly basis;Intragroup Payables means all amounts owed by a Target Group Company to any member of the Seller’s Group (excluding the Target GroupCompanies) at the Effective Time, excluding the Promissory Note;Intragroup Receivables means all amounts owed by any member of the Seller’s Group (other than the Target Group Companies) to a TargetGroup Company at the Effective Time, excluding the Promissory Note;IP Sale and Purchase Agreement means the intellectual property sale and purchase agreement to be entered into between the Seller and theCompany prior to Completion, attached in Agreed Form in Schedule 20 (Agreed Form Ancillary Agreements);IP Transfer and License Agreement means the intellectual property transfer and license agreement to be entered into between the Seller and theCompany prior to or at Completion, attached in Agreed Form in Schedule 20 (Agreed Form Ancillary Agreements);ITEC means the Industrial Technology & Engineering Center of the Seller’s Group located in Nijmegen, the Netherlands and Hong Kong;ITEC Equipment Support Services Agreement means the ITEC equipment support services agreement to be entered into between the Seller andthe Company prior to or at Completion, attached in Agreed Form in Schedule 20 (Agreed Form Ancillary Agreements);IT Milestones has the meaning set out in Paragraph 1.2 of Schedule 23 (IT Separation and Hamburg Certified Area set up);IT Separation has the meaning set out in Paragraph 6.6 of Schedule 10 (Disentanglement Plan);IT Separation Plan has the meaning set out in Paragraph 1.1 of Schedule 23 (IT Separation and Hamburg Certified Area set up);Key Employees means F. Scheper, E. Just, M. Roos, J. Lange, J. Humphreys, S. Hunkler, R. Buschke, G. Jansen, J. Zhao;Knowledge of the Seller or any similar expression means, with respect to any fact or matter, the actual knowledge of the Seller’s transaction teamcomprising the persons listed Schedule 15 (Seller’s Knowledge persons) after having made due inquires with the management team of theBusiness and any other Key Employees; SALE AND PURCHASE AGREEMENTLate Filing Amounts has the meaning set out in Clause 5.7, and Late Filing Amount means any one of them or the relevant one of them, as thecontext requires;Law means any applicable statute, law, treaty, ordinance, order, rule, directive, regulation, code, executive order, injunction, judgment, decree orother requirement of any Governmental Authority;Liabilities means all liabilities, duties and obligations of every description, whether deriving from Contract, common law, Law or otherwise,whether known or unknown, present or future, actual or contingent, ascertained or unascertained, disputed or undisputed and whether owed orincurred severally or jointly or as principal or surety, and Liability means any one of them or the relevant one of them, as the context requires;Local Business Transfer Agreements means the local business transfer agreements, local share transfer agreement, demerger, spin-off,contribution in kind and other similar agreements, documents or instruments to be entered into between a Target Group Company, on the onehand, and a member of the Seller’s Group (excluding the Target Group Companies), on the other hand, pursuant to which the assets andliabilities attributable to the Business are to be transferred to the Target Group in order to effect the Disentanglement, but excluding anyAncillary Agreement, and Local Business Transfer Agreement means any one of them or the relevant one of them, as the context requires;Losses means all damage, losses, Liabilities, costs (including reasonable legal costs and reasonable experts’ and consultants’ fees), charges,expenses, claims and demands assessed in accordance with 6:96 BW et seq.;Manufacturing Services Agreement means the manufacturing services agreement attached in Agreed Form in Schedule 20 (Agreed FormAncillary Agreements);Merger Clearance Filings has the meaning set out in Clause 4.1(a);Merger Clearance Remedies has the meaning set out in Clause 4.3.6;Mitigation Measures has the meaning set out in Clause 4.5.6;MOFCOM has the meaning set out in Clause 5.5.1;NDRC has the meaning set out in Clause 5.5.1;Net Debt means the amount of debt of the Target Group set out in the line items in Paragraph 2 of Schedule 3 (Completion Statements)(expressed as a positive figure) less the amount of cash, cash equivalents and other financial SALE AND PURCHASE AGREEMENTassets of the Target Group set out in the line items in Paragraph 2 of Schedule 3 (Completion Statements) as per the Effective Time, as finallyagreed or determined between the Seller and the Purchasers in accordance with Clause 7.3, excluding, for the avoidance of doubt, any item to beincluded in calculating the Working Capital and the Promissory Note;Net Debt Adjustment means the amount by which the Net Debt amount is greater than the Reference Net Debt amount (in which case thatamount is expressed as a positive figure) or by which it is less than the Reference Net Debt (in which case that amount is expressed as a negativefigure);Net Debt Statement has the meaning set out in Clause 7.1.1(b);Non-Automatic Transfer Employees has the meaning set out in Paragraph 8.1 of Schedule 10 (Disentanglement Plan);Non-Defaulting Party has the meaning set out in Clause 6.4.1;Non-Disclosure Agreement has the meaning set out in consideration (D) of this agreement.Non-Exclusive Contract means any Contract with Third Parties to which a member of the Seller’s Group is a party and which relates in part to, oris used in part by, the Business to the extent in force and effect on the Completion Date;Non-Transferred Activities has the meaning set out in Paragraph 4.3 of Schedule 10 (Disentanglement Plan);Notary means any civil law notary of Houthoff Buruma Coöperatief U.A., or such notary’s substitute;Notary Account means the third party notarial account of the Notary;Notary Letter means the notary letter to be agreed in good faith by and executed between the Notary, the Seller and the Purchasers inaccordance with Clause 5.12;Notice has the meaning set out in Clause 16.16.1;Notice of Disagreement has the meaning set out in Clause 7.3(a);NXP Hong Kong means NXP Semiconductors Hong Kong Ltd;NXP Trademarks has the meaning set out in the IP Transfer and License Agreement; SALE AND PURCHASE AGREEMENTOrange Field of Business has the meaning set out in the IP Transfer and License Agreement;Out of Scope Activities has the meaning set out in Paragraph 4.3 of Schedule 10 (Disentanglement Plan);Overseas Investment Filings has the meaning set out in Clause 5.5.1;Parties means the Seller and the Purchasers, and Party means either of them or the relevant one of them, as the context requires;Pension Plans means the pension or retirement benefit plans of the Employees, excluding any mandatory plans, government plans or statutorysocial security plans;Pension Obligations means any pension, retirement benefits or similar benefits payable under the Pension Plans on or following retirement,termination of employment, disability or death, for or in respect of any Employee or former employee of the Dedicated Companies, or theirrelevant spouse or dependants;Permitted Encumbrances means (a) Encumbrances for Taxes not due and payable (taking into account any extensions or other arrangementswith respect to payment that are permitted by applicable Governmental Authorities or contemplated under applicable Law) or for Taxes thevalidity of or amount of which is being contested by a members of the Seller’s Group in good faith by appropriate actions, (b) Encumbrances ofwarehousemen, mechanics and materialmen and other similar statutory Encumbrances incurred in the ordinary course of business, (c) anyEncumbrances that do not, individually or in the aggregate, materially detract from the value of any of the applicable property, rights or assets ofthe businesses or materially interfere with the use thereof, and (d) zoning, entitlement, conservation, restriction or other land use regulation byany Governmental Authority, and Permitted Encumbrance means any one of them or the relevant one of them, as the context requires;Person means an individual, a company or corporation, a partnership, a limited liability company, a trust, an association, a foundation or otherlegal entity or unincorporated organisation, including a Governmental Authority;Pre-Completion Payables means all payables accrued or owed by any member of the Seller’s Group (excluding the Target Group Companies) tosuppliers in relation to ordinary course trading activities of the Business at or prior to the Effective Time; SALE AND PURCHASE AGREEMENTPre-Completion Receivables means all receivables accrued by, or prepaid or owed to, any member of the Seller’s Group (excluding the TargetGroup Companies) from customers in relation to ordinary course trading activities of the Business at or prior to the Effective Time;Products has the meaning set out in consideration (A);Promissory Note has the meaning set out in Paragraph 2.3(c) of Schedule 10 (Disentanglement Plan);Purchase Price has the meaning set out in Clause 3.1;Purchasers has the meaning set out in the recitals of this agreement; and Purchaser means any one of them or the relevant one of them, as thecontext requires;Purchasers’ Group means the Purchasers and if applicable the acquiring entity as referred to in Clause 2.3.2 and their respective Affiliates fromtime to time;Purchasers’ Warranties means the warranties provided by the Purchasers to the Seller as included in Schedule 8 (Purchasers’ Warranties), andPurchasers’ Warranty means any one of them or the relevant one of them, as the context requires;Reference Net Debt means an amount of USD nil (zero US dollar);Reference Working Capital means an amount of USD 220,000,000 (two hundred and twenty million US dollars);Relevant Indemnified Party has the meaning set out in Clause 11.4;Relevant Indemnifying Party has the meaning set out in Clause 11.4;Relief means, unless the context otherwise requires, any allowance (including amortisation or depreciation), credit, deduction, exemption orset-off in respect of any Tax or relevant to the computation of any income, profits or gains for the purposes of any Tax, or any right to repaymentof or saving of Tax, and any reference to the use or set off of Relief is to be construed accordingly;Reporting Accountants means KPMG based in The Netherlands, or any other firm of accountants to be agreed by the Seller and the Purchaserswithin five (5) Business Days of a Notice by the Seller to the Purchasers, or vice versa, requiring such agreement; SALE AND PURCHASE AGREEMENTRepresentative means any director, officer, employee, legal advisor, financial advisor, accountant or other agent, of any Person concerned;Restricted Activity means the business of researching, designing, developing, testing, manufacturing, commercializing, packaging, marketing,distributing, selling and servicing discrete semiconductor devices, low complexity ICs and integrated passives as conducted immediately priorto the Completion Date by the following NXP business lines: (i) BL GA Discretes, (ii) BL PowerMOS and (iii) BL Logic, a representative list ofsuch products being included in Schedule 10 to the IP Transfer and License Agreement. For the avoidance of doubt, any business (e.g. in respectof the small PowerMOS eSwitch discretes) historically conducted by Freescale Semiconductor does not form part of the Restricted Activity;Restricted Employees means the Key Employees and the employees set out in Schedule 12 (Restricted Employees);Restricted Period means three (3) years commencing on the Completion Date;Retained Intellectual Property has the meaning set out in the IP Transfer and License Agreement;SAFE has the meaning set out in Clause 5.5.1;Section 721 has the meaning set out in Clause 4.1(d)(i);Seller has the meaning set out in the recitals of this agreement;Seller’s Group means the Seller and its Affiliates collectively from time to time, excluding, from and after Completion, the Target GroupCompanies;Seller’s Warranties means the warranties provided by the Seller to the Purchasers as included in Schedule 7 (Seller’s Warranties), and Seller’sWarranty means any one of them or the relevant one of them, as the context requires;Shares has the meaning set out in recital (B) of this agreement;Shareholder Loan has the meaning set out in Clause 2.5.1;Signing means the signing by the Parties of this agreement;Signing Date means the day on which the last of the Parties has signed this agreement;Software has the meaning set out in the IP Transfer and License Agreement; SALE AND PURCHASE AGREEMENTStatements means the Working Capital Statement and the Net Debt Statement;Sub-Licensable Licensed-In Third Party IP has the meaning set out in the IP Transfer and License Agreement;Tangible Assets means the machinery, materials, prototypes, tools, supplies, furniture, fixtures, improvements, vehicles, equipment and all othertangible assets, but excluding any real property, inventory and IT assets;Target Group or Target Group Companies means the Company and all Affiliates of the Company that are Controlled by the Company fromtime to time, and includes, with respect to any period prior to Completion, the Dedicated Companies, and Target Group Company means anyone of them or the relevant one of them, as the context requires;Taxation or Tax means all forms of taxation whether direct or indirect and whether levied by reference to income, profits, gains, net wealth, assetvalues, turnover, added value or other reference and statutory, fiscal state aid, governmental, state, provincial, local governmental or municipalimpositions, duties, contributions, rates and levies (including social security contributions and any other payroll taxes), whenever and whereverimposed (whether imposed by way of a withholding or deduction or otherwise) and in respect of any Person as well as all interest and penaltiesrelating thereto;Tax Audit means any audit, investigation, visit, inspection, assessment, discovery, access order, or other proceedings from any Tax Authoritywith respect to any Tax matter of a Target Group Company;Tax Authority means any taxing or other authority competent to impose any liability in respect of Taxation or responsible for theadministration or administration and collection of Taxation, or enforcement of any Law in relation to Taxation;Tax Benefit means: (a)any Tax Refund actually received by a Target Group Company or a member of the Purchasers’ Group; (b)any reduction of Tax due by a Target Group Company or a member of the Purchasers’ Group; and (c)the net present value of any future Relief, including, but not limited, to a Relief in the form of additional depreciation or amortisationallowances, at the level of any Target Group Company or member of Purchaser’s SALE AND PURCHASE AGREEMENT Group. The net present value of a future Relief will be calculated (i) using a discount rate equal to the Interest Rate, (ii) as per the dateany amount is due in respect of the relevant claim, and (iii) on the basis of the then prevailing corporate income tax rates;Tax Claim means any claim under the Tax Indemnity or for breach of the Tax Warranties;Tax Deduction means any deduction or withholding for or on account of Tax;Tax Indemnity means the indemnity relating to Taxation set out in Paragraph 2 of Schedule 9 (Tax);Tax Refund means a rebate, refund or repayment in respect of Tax;Tax Return means any return, declaration, report or information relating to Taxes, including any schedule or attachments thereto, and includingany amendment thereof;Tax Warranties means the warranties set out in Paragraph 11 of Schedule 7 (Seller’s Warranties);Technology has the meaning set out in the IP Transfer and License Agreement;Third Party means any Person not being an Affiliate of either the Seller or the Purchasers;Third-Party Claim has the meaning set out in Clause 11.4;Third Party Consents means all consents, licences, approvals, permits, authorisations or waivers required from Third Parties in order to completethe Disentanglement in all materials respects, and Third Party Consent means any one of them or the relevant one of them, as the contextrequires;Trademarks And Domain Names Sale Agreement means the Trademarks And Domain Names Sale Agreement attached in Agreed Form inSchedule 20 (Agreed Form Ancillary Agreements);Transaction has the meaning set out in recital (J) of this agreement;Transferred Inventory means all raw materials, finished goods, dies, semi-finished goods, work in progress and goods in transit attributable tothe Business, net of obsolescence/other inventory related provisions, on the basis of the Seller’s internal reporting systems at the Effective Time,provided that inventory subject to the MSA will be allocated in accordance with the supply model as set out in the MSA; SALE AND PURCHASE AGREEMENTTransferred IT Assets means (a) personal workplace hardware (e.g., laptops, desktops, telephones and mobile phones) used by the Employees,(b) manufacturing IT equipment located on the Transferred Properties to the extent used exclusively to manage the manufacturing activities ofthe Business, (c) manufacturing datacentres located on the Transferred Properties to the extent used exclusively for the applications and datastorage of the Business, and (d) networking equipment and printers used exclusively by the Business, in each case to the extent owned or leasedby any member of the Seller’s Group at the Effective Time and subject to Paragraph 2 of Schedule 23 (IT Separation and Hamburg CertifiedArea set up);Transferred Trademarks has the meaning set out in the IP Transfer and License Agreement;Transferred Patents has the meaning set out in the IP Transfer and License Agreement;Transferred Properties means the property listed in Schedule 11 (Transferred Property), and Transferred Property means any one of them orthe relevant one of them, as the context requires;USD or US dollar means the lawful currency of the United States of America;U.S. Business has the meaning set out in Clause 4.5.6;US GAAP means the generally accepted accounting principles adopted by the U.S. Securities and Exchange Commission;VAT means within the European Union any Tax as may be levied in accordance with (but subject to derogations from) the Directive2006/112/EC and outside the European Union any Tax levied by reference to added value, sales or consumption;WOR means Dutch Works Council’s Act (Wet op de Ondernemingsraden);Working Capital means the amount of the net working capital of the Target Group as per the Effective Time based on the line items set out inParagraph 1 of Schedule 3 (Completion Statements), as finally agreed or determined between the Seller and the Purchasers in accordance withClause 7.3, excluding, for the avoidance of doubt, any item to be included in calculating the Net Debt and the Promissory Note; SALE AND PURCHASE AGREEMENTWorking Capital Adjustment means the amount by which the amount equal to the Working Capital is greater than the Reference WorkingCapital (in which case that amount is expressed as a positive figure) or by which it is less than the Reference Working Capital (in which case thatamount is expressed as a negative figure); andWorking Capital Statement has the meaning set out in Clause 7.1.1(a). 2Headings and references to Clauses, Schedules and Paragraphs 2.1Headings have been inserted for convenience of reference only and do not affect the interpretation of any of the provisions of this agreement. 2.2A reference in this agreement to: (a)a Clause is to the relevant clause of this agreement; (b)a Schedule is to the relevant schedule to this agreement; and (c)a Paragraph is to the relevant paragraph of the relevant Schedule. 3References to rights, liabilities and obligations 3.1Any reference in this agreement to a liability or obligation of (any member of) the Seller’s Group is deemed to incorporate references toobligations on the part of the Seller to procure that the relevant liability is discharged or obligation is performed by the relevant member(s) of theSeller’s Group (including the Target Group Companies until Completion), on the terms of and subject to the conditions set out in this agreement. 3.2Any reference in this agreement to a liability or obligation of (any member of) the Purchasers’ Group or the Target Group post-Completion) isdeemed to incorporate a reference to an obligation on the part of the Purchasers to procure that the relevant liability is discharged or obligationis performed by the relevant member(s) of the Purchasers’ Group (including the Target Group Companies post-Completion), on the terms of andsubject to the conditions set out in this agreement. 3.3The Purchasers are jointly and severally liable (hoofdelijk aansprakelijk) for all Purchasers’ obligations under this agreement. 3.4Each of the Purchasers will be deemed to act on behalf of both Purchasers in the exercise of any rights that the Purchasers may have under thisagreement, unless explicitly indicated otherwise. SALE AND PURCHASE AGREEMENT4InformationReferences to books, records or other information include books, records or other information stored in any form, including paper, magneticmedia, films, microfilms, electronic storage devices and any other data carriers. 5Legal termsIn respect of any jurisdiction other than the Netherlands, a reference to any Netherlands legal term is to be construed as a reference to the term orconcept which most nearly corresponds to it in that jurisdiction. 6Other references 6.1Whenever used in this agreement, the words “include”, “includes” and “including” are to be deemed to be followed by the phrase “withoutlimitation”. 6.2Whenever used in this agreement, the words “as of” include the day or moment in time specified thereafter. 6.3Any reference in this agreement to any gender includes all genders, and words importing the singular shall include the plural and vice versa. 7No presumption against drafting PartyThe Parties agree that they have been represented by counsel during the negotiation and execution of this agreement and, therefore, waive theapplication of any Law or rule of construction providing that ambiguities in an agreement or other document are to be construed against theparty drafting that agreement or document. SALE AND PURCHASE AGREEMENTExhibit 12.1Certification of R.L. Clemmer filed pursuant to 17 CFR 240. 13a-14(a)CERTIFICATIONI, Richard L. Clemmer, certify that: 1.I have reviewed this annual report on Form 20-F of NXP Semiconductors N.V.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the company and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by theannual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and5.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Dated: March 3, 2017/s/ Richard L. Clemmer Richard L. ClemmerExecutive Director, President and Chief Executive OfficerExhibit 12.2Certification of D. Durn filed pursuant to 17 CFR 240. 13a-14(a)CERTIFICATIONI, Daniel Durn, certify that: 1.I have reviewed this annual report on Form 20-F of NXP Semiconductors N.V.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; 4.The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the company and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by theannual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and5.The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to thecompany’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the company’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal controlover financial reporting.Date: March 3, 2017/s/ Daniel Durn Daniel DurnExecutive Vice President and Chief Financial OfficerExhibit 13.1Certification of R.L. Clemmer filed pursuant to 17 CFR 240. 13a-14(b)CERTIFICATIONPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), theundersigned officer of NXP Semiconductors N.V. (the “Company”), hereby certifies, to such officer’s knowledge, that:The Annual Report on Form 20-F for the year ended December 31, 2016 (the “Report”) of the Company fully complies with the requirements of section 13(a)or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.Dated: March 3, 2017/s/ Richard L. Clemmer Richard L. ClemmerExecutive Director, President and Chief Executive OfficerThe foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350,chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.Exhibit 13.2Certification of D. Durn filed pursuant to 17 CFR 240. 13a-14(b)CERTIFICATIONPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), theundersigned officer of NXP Semiconductors N.V. (the “Company”), hereby certifies, to such officer’s knowledge, that:The Annual Report on Form 20-F for the year ended December 31, 2016 (the “Report”) of the Company fully complies with the requirements of section 13(a)or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.Date: March 3, 2017/s/ Daniel Durn Daniel DurnExecutive Vice President and Chief Financial OfficerThe foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350,chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.Exhibit 21.1LIST OF SIGNIFICANT SUBSIDIARIES OF THE REGISTRANT.List of direct and indirect subsidiaries as of December 31, 2016 Country ofincorporation Name legal entityAustralia Cohda Wireless Pty Ltd. (23.1%)Austria NXP Semiconductors Austria GmbHAustria Catena DSP GmbHBelgium NXP Semiconductors Belgium N.V.Brazil NXP Semicondutores Brasil Ltda.British Virgin Islands Freescale Semiconductor Holding LimitedCanada NXP Canada Inc.Cayman Islands Freescale Semiconductor Cayman Holdings Ltd.China NXP Semiconductors Guangdong Ltd.China NXP (China) Management Ltd.China WeEn Semiconductors Co., Ltd. (49%)*China Suzhou ASEN Semiconductors Co., Ltd. (40%)*China Advanced Semiconductor Manufacturing Corporation Ltd (27.47%)*China Datang NXP Semiconductors Co., Ltd (49%)*China NXP Qiangxin (Tianjin) IC Design Co. Ltd. (75%)*China Freescale Semiconductor (China) Ltd.Czech Republic NXP Semiconductors Czech Republic s.r.o.Finland NXP Semiconductors Finland OyFrance NXP Semiconductors France SASGermany SMST Unterstützungskasse GmbHGermany NXP Semiconductors Germany GmbHGermany Nexperia Germany GmbHGermany Catena Germany GmbHHong Kong NXP Semiconductors Hong Kong Ltd.Hong Kong Semiconductors NXP Ltd.Hong Kong NXP Semiconductors Asia Hong Kong LimitedHong Kong Freescale Semiconductor Asia Enablement LimitedHungary NXP Semiconductors Hungary Ltd.Hungary Providence Holdings Befektetési Korlátolt Felelősségű TársaságHungary Nexperia Hungary Kft.India NXP Semiconductors India Pvt. Ltd.India NXP India Pvt. Ltd.India Intoto Software India Private LimitedIndia Zenverge India Technologies Private LimitedIreland GloNav Ltd.Israel NXP Semiconductors Israel LimitedIsrael Freescale Semiconductor Israel LimitedJapan NXP Japan LimitedKorea NXP Semiconductors Korea Ltd.Luxembourg Freescale Semiconductor Luxembourg Investing Services S.à.r.l.Luxembourg Freescale Semiconductor Luxembourg Treasury Services S.à.r.l.Malaysia NXP Semiconductors Malaysia Sdn. Bhd.Malaysia Freescale Asia Fulfillment Centre Sdn Bhd.Malaysia Freescale Semiconductor Malaysia Sdn Bhd.Mexico NXP Semiconductors México, S. de R.L. de C.V.Netherlands NXP B.V.Netherlands NXP Semiconductors Netherlands B.V.Netherlands NXP Software B.V.Netherlands Catena Holding B.V.Netherlands Catena Microelectronics B.V.Netherlands Catena Radio Design B.V.Philippines NXP Semiconductors Philippines, Inc.Philippines NXP Semiconductors Cabuyao, Inc.Philippines Laguna Ventures, Inc. (39.9%)*Philippines NXP Philippines, Inc.Poland NXP Semiconductors Poland Sp.z.o.o.Romania NXP Semiconductors Romania SrlRussia NXP Semiconductors Russia O.O.O.Russia NXP Semiconductors Moscow LLCSingapore NXP Semiconductors Singapore Pte. Ltd.Singapore Systems on Silicon Manufacturing Company Pte Ltd (61.2%)*Singapore Nexperia Singapore Ptd. Ltd.Sweden Catena Wireless Electronics ABSweden NXP Semiconductors Nordic ABSwitzerland NXP Semiconductors Switzerland AGSwitzerland Freescale Semiconductor EME&A SATaiwan NXP Semiconductors Taiwan Ltd.Taiwan Nexperia Taiwan Co. Ltd.Thailand NXP Manufacturing (Thailand) Co., Ltd.Thailand NXP Semiconductors (Thailand) Co., Ltd.Thailand Nexperia (Thailand) Ltd.Turkey NXP Semiconductors Elektonik Ticaret A.S.United Kingdom NXP Semiconductors UK Ltd.United Kingdom NXP Laboratories UK Holding Ltd.United Kingdom NXP Laboratories UK Ltd.United Kingdom Athena SCS LimitedUnited Kingdom Freescale Semiconductor Holding UK LimitedUnited Kingdom Freescale Semiconductor UK LimitedUSA NXP Funding LLCUSA Intoto LLCUSA Freescale Semiconductor International CorporationUSA SigmaTel, LLCUSA Zenverge LLCUSA Freescale Semiconductor Holdings V, Inc.USA NXP USA, Inc.USA Nexperia USA, Inc. * =joint ventureExhibit 23Consent of Independent Registered Public Accounting FirmThe Board of DirectorsNXP Semiconductors N.V.:We consent to the incorporation by reference in the registration statements on Form F-3 (No. 333-209942) and Form S-8 (No. 333-203192, No. 333-190472and No. 333-172711) of NXP Semiconductors N.V. of our report dated March 3, 2017, with respect to the consolidated balance sheets of NXPSemiconductors N.V. and subsidiaries as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, cashflows and changes in equity for each of the years in the three-year period ended December 31, 2016, and the effectiveness of internal control over financialreporting as of December 31, 2016, which report appears in the December 31, 2016 Annual Report on Form 20-F of NXP Semiconductors N.V./s/ KPMG Accountants N.V.Amstelveen The NetherlandsMarch 3, 2017

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