<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  ------------

                                    FORM 8-K
                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 or 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

      Date of report (Date of earliest event reported) December 23, 1993
                                                       -----------------

                         WESTERN DIGITAL CORPORATION            
               -------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)


<TABLE>
<S>                                <C>              <C>                   
          Delaware                    1-8703            95-2647125     
- ----------------------------       ------------     -------------------
(State or Other Jurisdiction       (Commission      (IRS Employer
of Incorporation)                  File Number)     Identification No.)
</TABLE>



<TABLE>
<S>                                                          <C>
8105 Irvine Center Drive, Irvine, California                 92718  
- -----------------------------------------------------------------------
(Address of Principal Executive Offices)                     (Zip Code)
</TABLE>


      Registrant's telephone number, including area code (714) 932-5000
                                                         --------------

                                     N/A
        -------------------------------------------------------------
        (Former Name or Former Address, if Changed Since Last Report)


<PAGE>   2

Item 2.    ACQUISITION OR DISPOSITION OF ASSETS.
           On December 23, 1993, Western Digital Corporation ("Western
           Digital") sold its Irvine, California silicon wafer fabrication
           facility and related assets to the Semiconductor Products Sector of
           Motorola, Inc. ("Motorola") for approximately $110.6 million ($103.9
           million in cash and a $6.7 million note payable over the 60-day
           period after closing), plus certain other considerations, including
           the assumption by Motorola of equipment leases associated with the
           facility.  Concurrent with the sale, Western Digital entered into a
           supply contract for at least two years whereby Motorola will supply
           Western Digital with a significant portion of its silicon wafer
           requirements.  The agreements with Motorola are a result of
           arms-length negotiations between the parties.


ITEM 7.    FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
           (c)     Exhibits.


<TABLE>
<CAPTION>
 Exhibit          Description
- --------          -----------
<S>              <C>
1                Asset Purchase Agreement dated December 16, 1993 by and 
                 between Motorola, Inc. and Western Digital regarding the
                 sale and purchase of Western Digital's wafer fabrication
                 facilities and certain related assets.

2                Supply Agreement dated December 16, 1993 by and between
                 Motorola, Inc. and Western Digital regarding the supply
                 of wafers to Western Digital.
</TABLE>



                                      2


<PAGE>   3

                                  SIGNATURES

                 Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.


                                       WESTERN DIGITAL CORPORATION


Date: January 4, 1994                  By:   ROBERT L. ERICKSON
                                          Robert L. Erickson
                                          Vice President, Law and 
                                          Secretary


                                      3

<PAGE>   4

                                           EXHIBIT INDEX


<TABLE>
<CAPTION>

    Exhibit                                                                             Sequentially         
    Number                                  Description                                 Numbered Page 
   ---------                               -------------                               ---------------
       <S>      <C>
       1        Asset Purchase Agreement dated December 16, 1993 by and between
                Motorola, Inc. and Western Digital regarding the sale and purchase
                of Western Digital's wafer fabrication facilities and certain
                related assets.

       2        Supply Agreement dated December 16, 1993 by and between Motorola,
                Inc. and Western Digital regarding the supply of wafers to Western
                Digital (confidential treatment is being sought).
</TABLE>







<PAGE>   1
                            Exhibit 1 to Form 8-K


                            ASSET PURCHASE AGREEMENT


  This Asset Purchase Agreement is dated as of December 16, 1993 (the
"Agreement") and is by and between Motorola, Inc., a Delaware corporation whose
principal executive offices are at 1303 East Algonquin Road, Schaumburg, IL
60196 ("Motorola"), and Western Digital Corporation, a Delaware corporation
whose principal executive offices are at 8105 Irvine Center Drive, Irvine,
California 92718 (the "Company").

  Subject to the terms and conditions hereinafter set forth, Motorola desires
to purchase the Company's wafer fabrication facilities at 1 Banting in Irvine,
California (the "Banting Site") and certain related assets in exchange for the
consideration described in this Agreement.  The Company is willing to sell, or
cause to be sold, such facilities and assets for this consideration.  In order
to induce Motorola to acquire such facilities and assets, the Company is
prepared to make certain representations, warranties and covenants and provide
certain indemnities and other protections.

For purposes of this Agreement, the following terms shall be defined as
follows:

         "Affiliate" of any Person means any other Person directly or
indirectly controlling (within the meaning
 of Rule 12b-2 under the Exchange Act
as in effect on the Closing Date), or directly or indirectly controlled by or
under direct or indirect common control with such Person.

         "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or Governmental Authority.

         "Subsidiary" of any Person shall mean a corporation, company or other
entity (i) 100% of whose outstanding shares of securities (representing the
right to vote for the election of directors or other managing authority) are,
or (ii) which does not have outstanding shares of securities (as may be the
case in a partnership, joint venture or unincorporated association), but 100%
of whose ownership interest representing the right to make decisions for such
other entity is, now or hereafter owned or controlled, directly or indirectly,
by such Person, but such corporation, company or other entity shall be deemed
to be a Subsidiary only so long as such ownership or control exists.

         "Applicable Environmental Law" shall mean any statute, regulation,
rule, order, or law that regulates or prohibits the use, sale, treatment,
disposal, storage, of any Hazardous Material (as defined below), including but
not limited to the following federal laws:  the Comprehensive, Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act, the Federal Water Pollution Control Act,

December 16, 1993                                                       Page 1 
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<PAGE>   2

the Clean Air Act, the Hazardous Materials Transportation Act, the
Clean Water Act and all applicable California laws concerning Hazardous
Materials.


         "Hazardous Material" shall mean any substance that is prohibited or
regulated by Applicable Environmental Law.

         "Joint Use Agreement" shall mean the Joint Use Agreement executed
concurrently herewith pursuant to which, on and after the Closing Date, the
Company will occupy and use certain portions of the facilities at the Banting
Site for a limited period of time as set forth therein.

         "Wafer Supply Agreement" shall mean the Supply Agreement executed
concurrently herewith (to be effective as of the Closing Date) pursuant to
which Motorola will manufacture and sell semiconductor wafers to the
Company in accordance with the terms thereof.


         Accordingly, the parties agree as follows:

1.       Purchase of Assets; Assumption of Liabilities.

         1.01    Purchase.

         At the Closing Date (as defined in Section 6 below), except as set
forth in Section 1.03 below, the Company shall transfer and deliver to
Motorola, or cause to be transferred and delivered to Motorola, by appropriate
instruments in a form reasonably satisfactory to Motorola, and Motorola shall
acquire and accept, for the consideration hereinafter provided, all right,
title and interest in and to all of the assets and properties of the Company
located at the Banting Site including but not limited to:

         (a)     the real property at the Banting Site, as legally described in
                 Schedule 1.01 (a), comprised of parcels 1 to 3, inclusive, of
                 parcel map no. 89-404, in the City of Irvine, County of Orange
                 California, as per map recorded in book 269, pages 19 to 21,
                 inclusive, of parcel maps, in the office of the County
                 Recorder of said County, including such parcels of land and
                 all buildings, improvements, structures, fixtures and all
                 rights, privileges and easements appurtenant to the land,
                 including all development rights, air rights, water, water
                 rights and water stock relating to the land and any other
                 easements, rights-of-way or appurtenances used in connection
                 with the beneficial use and enjoyment of such parcels of land
                 (the "Real Property");

         (b)     all tangible personal property owned by the Company located at
                 the Banting Site, including without limitation furniture,
                 equipment, materials,

December 16, 1993                                                         Page 2
Revision 7
                 

<PAGE>   3
                 raw material and work in process
                 inventories, supplies and consumable items;
         (c)     the Company s rights under all licenses, permits, warranties,
                 manuals, operating instructions, software, rights and
                 privileges related to the wafer fabrication operations
                 currently conducted by the Company at the Banting Site (the
                 "Wafer Fab Operations");
         (d)     the Company's rights under all service contracts, maintenance
                 contracts, equipment leases, leases of other personal
                 property, purchase orders and other contracts for the
                 acquisition or maintenance of tangible or intangible personal
                 property related to the Wafer Fab Operations; and
         (e)     all books and records, including electronic records, which are
                 related to the Real Property or necessary for conducting  the
                 Wafer Fab Operations.

         The assets, properties and rights to be acquired by Motorola
hereunder, exclusive of the Excluded Assets (as defined below), are
collectively referred to as the "Acquisition Assets."  Should it be determined
at any time up to one year after the Closing Date that any tangible or
intangible assets which, pursuant to this Agreement, should have been
transferred to Motorola are still in the Company's possession, the Company
shall deliver them (or cause them to be delivered) promptly to Motorola, upon
reasonable notice and without additional charge.

         1.02    Assumption of Liabilities.

         On and subject to the terms and conditions of this Agreement, Motorola
agrees to assume and become responsible for all of the Assumed Liabilities as
of the Closing Date, but no other obligation or liability of the Company.
"Assumed Liabilities" means only those contracts and obligations in Schedule
1.02 attached hereto as updated by mutual agreement of the parties as of the
Closing Date.


         1.03    Excluded Assets.

         Notwithstanding the foregoing, there shall be excluded from the
assets, properties and rights to be conveyed to Motorola by the Company
pursuant to this Agreement all of the following assets, properties and rights
(the "Excluded Assets"):

         (a)     all the assets, properties and rights described in Schedule
                 1.03 attached hereto as updated by mutual agreement of the
                 parties as of the Closing Date;

         (b)     all accounts receivable of the Company; and



December 16, 1993                                                       Page 3
Revision 7


<PAGE>   4

         (c)     all of the Company s Intellectual Property, except to the
                 extent included as part of the Acquisition Assets under
                 Section 1.01(c) hereof, and except to the extent licensed or
                 covered under Section 7.11(a) hereof and the Wafer Supply
                 Agreement.  As used herein, the "Company s Intellectual
                 Property" means every item of intellectual property the
                 Company owns or otherwise has the right to use including every
                 invention, patent application, patent, trade name, mark
                 (whether a trademark, service mark or other mark),
                 registration or application to register a mark, copyright,
                 registration or application to register a copyright, mask
                 work, registration or application to register a mask work, and
                 trade secret.


2.       Consideration.

         2.01 Payment at Closing.

         The full consideration to be paid at the Closing by Motorola to the
Company for the sale of the Acquisition Assets shall be as follows:


         (a)     a cash payment of U.S. $100,905,472 by the wire transfer of
                 same day funds the day before the Closing Date to the escrow
                 account described in Section 6.01;

         (b)     an executed non-interest bearing promissory note made by
                 Motorola to the order of the Company (the "Buyer Note") in the
                 form of Exhibit A attached hereto which note shall be in an
                 aggregate principal amount equal to the agreed value of the
                 Company's raw material and work-in-process inventories (except
                 those, if any, included in the Excluded Assets) at the Wafer
                 Fab Operations as of 4:00 p.m. on the Closing Date determined
                 in a manner consistent with Schedule 2.01(b) attached hereto
                 and shall provide for 2 equal principal payments 30 days and
                 60 days after Closing;

         (c)     an additional cash payment equal to the sum of (i) the cost of
                 any capital assets included in the Acquisition Assets which
                 were (A) ordered on or before September 25, 1993 and received
                 by the Company prior to the Closing Date, but had not been
                 entered on the Company's capital asset register as of
                 September 25, 1993, and (B) ordered after September 25, 1993
                 with Motorola's approval (which may be obtained before or
                 after such order was placed) and received by the Company prior
                 to 4:00 p.m. on the Closing Date plus (without duplication)
                 (ii) payments actually made prior to the Closing Date by the
                 Company to third-party vendors of any capital assets which
                 would have met the description of either clause (A) or (B) of
                 clause (i) above in this Section 2.01(C) but for the fact that
                 such
                 

December 16, 1993                                                       Page 4
Revision 7



<PAGE>   5
                 items had not been physically received by the Company
                 as of the Closing Date (it being understood and agreed that
                 the additional cash payment called for by this Section 2.01(C)
                 shall be determined as of the Closing Date in a manner
                 consistent with Schedule 2.01(C) attached hereto which
                 Schedule reflects an aggregate payment of $3,210,378 as of the
                 date of such Schedule, to be updated as mutually agreed by the
                 parties as of the Closing Date); and;

         (d)     assumption of the Assumed Liabilities.

         2.02    Allocation.

         The consideration for the purchase of the Acquisition Assets shall be
allocated among the assets as set forth in Schedule 2.02, which shall be
mutually agreed to by the parties and attached prior to the Closing Date.
Motorola and the Company will each file its federal and state income Tax
Returns, as well as Form 8594, Asset Acquisition Statement, under Section 1060
of the Internal Revenue Code of 1986, as amended (the "Code"), on the basis of
this allocation.

3.       Pre-Closing Covenants.

         3.01    Conduct of the Business Prior to the Closing Date.

         During the period from the date of this Agreement to the Closing Date,
the Company shall conduct its Wafer Fab Operations according to its ordinary
and usual course of business consistent with its customs and practices
("Ordinary Course of Business") and use its reasonable best efforts to maintain
and preserve its business organization, prospects, and advantageous business
relationships and retain the services of employees associated with the Wafer
Fab Operations who are listed on Schedule 3.01 reasonably expected to transfer
to Motorola.  Schedule 3.01 contains a list of current Company employees
involved in the Wafer Fab Operations to whom Motorola has offered employment to
be effective January 1, 1994 (contingent on the Closing).  The process of
identifying the final list of employees to whom such employment will be offered
by Motorola is in progress and the parties agree to update Schedule 3.01 with
the final list as mutually agreed prior to Closing.  The persons listed on such
Schedule 3.01 (as so updated) are referred to herein as the "Listed Employees."

         3.02    Forbearance by the Company.
         During the period from the date of this Agreement to the Closing Date,
the Company shall not, without the prior written consent of Motorola, which
Motorola shall not unreasonably withhold or delay:

         (a)     except in the Ordinary Course of Business, sell or transfer,
                 mortgage,

December 16, 1993                                                         Page 5
Revision 7

                 

<PAGE>   6
                 encumber or otherwise dispose of any of its
                 properties or assets related to the Wafer Fab Operations, or
                 cancel, release or assign any claims held by it;

         (b)     except in the Ordinary Course of Business, make any capital
                 expenditures or investments related to the Wafer Fab 
                 Operations;

         (c)     enter into, amend or terminate any material contract or 
                 agreement related to the Wafer Fab Operations, or
                 make any change in any of its material leases, licenses, 
                 agreements or contracts related to the Wafer Fab Operations, 
                 other than any renewals without adverse changes in terms;

         (d)     increase in any manner the compensation or fringe benefits of
                 any of its employees involved in the Wafer Fab Operations,
                 except for regularly scheduled increases in the Ordinary
                 Course of Business, or pay any pension or retirement allowance
                 not required by any existing plan or agreement to any such 
                 employees, or become a party to, amend or commit itself to 
                 any pension, retirement, profit-sharing or welfare benefit 
                 plan or agreement or employment agreement with or for the 
                 benefit of, any such employee;

         (e)     permit any insurance policy naming it as a beneficiary, a
                 named insured or a loss payee and covering any of the
                 Acquisition Assets to be canceled or terminated or any of the
                 coverage thereunder to lapse unless, simultaneously with such
                 termination or cancellation, or replacement policy or policies
                 providing substantially the same or greater coverage with
                 comparable insurance carriers are in full force and effect;

         (f)     agree to, or make any commitment to, take any of the actions
                 prohibited by this Section 3.02;

         (g)     solicit, or authorize any person to solicit, from any third
                 party, any inquiries or proposals relating to the disposition
                 of all or any part of the Acquisition Assets (including by
                 operation of law) by any person other than Motorola, or
                 provide any such person with information (other than public
                 information) or assistance or negotiate with any such person
                 in furtherance of such inquiries or to obtain a proposal, and
                 the Company shall promptly notify Motorola orally of all of
                 the relevant details relating to all inquiries and proposals
                 which it may receive relating to any of such matters;

         (h)     improperly maintain the Acquisition Assets; or

December 16, 1993
Revision 7                                                                Page 6


<PAGE>   7



         (i)     incorrectly or inaccurately maintain its books, accounts and
                 records necessary for conducting the Wafer Fab Operations or
                 that are related to the Real Property.


4.       Additional Agreements.

         4.01 Access and Information.

         The Company shall afford (or cause to be afforded) to Motorola, and to
Motorola s accountants, counsel and other representatives, full access during
normal business hours, during the period prior to the Closing Date, to all of
the Company s properties, books, contracts, commitments, permits, business
licenses and records to the extent reasonably necessary for purposes of
facilitating the transactions contemplated by this Agreement.  During such
period, the Company shall promptly provide to Motorola a copy of each report,
schedule and other document filed or received pursuant to the requirements of
law that materially effects the Acquisition Assets.

         4.02    Expenses.

         Except as otherwise provided in this Agreement, each of the parties
shall pay its respective costs and expenses (including legal fees) in
connection with this Agreement and the transactions contemplated by this
Agreement.

         4.03    Miscellaneous Agreements and Consents.

         (a)     Subject to the terms and conditions herein provided, each of
the parties hereto agrees to cooperate with the other and to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.  The Company will
use its reasonable efforts to obtain consents of all third parties and
governmental bodies necessary or, in the opinion of Motorola, desirable for the
consummation of the transactions contemplated by this Agreement.

         (b)     With respect to the E-Beam writer covered by the Company's
existing Lease #251:  (i) the E-Beam writer will be included in the Excluded
Assets and the related lease will not be included in the Assumed Liabilities;
(ii) the Company will continue to make the lease payments and otherwise perform
its obligations under such lease, the term of which ends in April 1995; (iii)
within 30 days after the termination of such lease, the Company will either (A)
purchase the equipment covered by such lease and transfer ownership of the same
to Motorola free and clear of any lien, encumbrance or similar interest (with
delivery at the Banting Site) or, at the Company's option, (B) pay $350,000 in
cash to Motorola.


December 16, 1993                                                       Page 7
Revision 7

<PAGE>   8


         4.04    Filings.

         Motorola and the Company have filed Notification and Report Forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart-Scott
Rodino Act") with the Federal Trade Commission ("FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") and shall use
reasonable efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation.   Motorola and the Company will each take, or cause to be taken,
all such other reasonable actions and will file, and, if appropriate, use its
reasonable efforts to have declared effective or approved, all such other
documents and notifications with governmental authorities which are necessary
or appropriate for the consummation of the transactions contemplated by this
Agreement, and each party shall give the other information reasonably requested
by such other party pertaining to it reasonably necessary to enable such other
party to take such actions.

         4.05    Title Insurance.

         The Company shall obtain and provide to Motorola for Motorola's
benefit an ALTA owner's policy and title insurance for each parcel of real
property conveyed to Motorola pursuant to this Agreement, in an amount and in
the form specified in the Escrow Agreement (as defined in Section 6.01).

         4.06    Surveys.

         With respect to each parcel of real property that the Company owns,
leases, or subleases, and as to which a title insurance policy is to be
procured, the Company will procure a current survey of the real property
certified to Motorola and Chicago Title Company, prepared by a licensed
surveyor and conforming to current ALTA Minimum Detail Requirements for Land
Title Surveys, disclosing the location of all improvements, easements, party
walls, sidewalks, roadways, utility lines, and other matters shown customarily
on such surveys, and showing access affirmatively to public streets and roads
(the "Survey").

         4.07    Employees.

         (a)     Motorola agrees to offer employment to all Listed Employees
(as updated pursuant to Section 3.01) to be effective January 1, 1994.

         (b)     The Company agrees to act as an independent contractor,
providing all services reasonably necessary to continue Wafer Fab Operations in
the Ordinary Course of Business through its employees, for the period between
the Closing Date and 11:59:59 P.M. on December 31, 1993;  provided that the
Closing Date is on or

December 16, 1933                                                         Page 8
Revision 7



<PAGE>   9
before December 31, 1993 (the "Service Period"). Motorola shall within thirty
(30) days after the Closing Date pay a service fee to the Company in an
amount to be mutually agreed upon by the parties prior to Closing (which
amount shall be reasonably calculated to approximate the Company's cost of
providing such services) as full payment therefor.  The Company shall 
continue to maintain and be responsible for the cost of all benefits for
its employees at the Wafer Fab Operations during the Service Period.

         (c)     Motorola shall assume (as an Assumed Liability) the accrued
unused vacation for those Listed Employees hired by Motorola corresponding to
the amount set forth below (the "Assumed Vacation Accrual"):


<TABLE>
                 <S>                               <C>
                 0 to 4 years                      40 hours
                 5 to 9 years                      60 hours
                 10 to 14 years                    80 hours
                 Over 15 years                     100 hours
</TABLE>


Company shall offset against the consideration received from Motorola pursuant
to Section 2.01 or shall pay to Motorola as consideration for the assumption of
the Assumed Vacation Accrual an amount equal to the value of such Assumed
Vacation Accrual based upon the wages of the applicable employees in effect
immediately prior to the Closing Date (the "Vacation Accrual Value").

         4.08    Sales Tax.

         The parties agree that Motorola and Company shall each be responsible
for one-half of any sales tax with respect to the sale of the Acquisition
Assets hereunder.


5.       Conditions.

         5.01 Conditions to Each Party's Obligation to Close.

         The respective obligations of Motorola and the Company to consummate
the purchase and sale of the Acquisition Assets and related transactions as
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions (except as each party may have waived
the condition(s) in writing):

        (a)    All applicable waiting periods under the Hart-Scott-Rodino Act
               shall have expired.

        (b)    The Wafer Supply Agreement and Joint Use Agreement have been
               concurrently executed, and will have an effective date as of the
               Closing Date.
         


December 16, 1993                                                       Page 9
Revision 7


<PAGE>   10
         
        (c)  The Agreement among the Company, Motorola and AT&T dated as of     
             December 8, 1993 Granting Consent to Use of Licensed Technology
             remains in full force and effect.


       5.02  Conditions to Obligations of the Company to Close.

       The obligations of the Company to consummate the sale of the Acquisition
Assets and related transactions as contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions (except as the Company may have waived the condition(s) in writing):

        (a)  Representations and Warranties.  The representations and warranties
             of Motorola set forth in Section 8 hereof shall be true and
             correct in all material respects as of the Closing Date as though
             made on and as of the Closing Date, and the Company shall have
             received a signed certificate from a Vice President of Motorola to
             that effect.
           
        (b)  Performance of Obligations.  Motorola shall have in all
             material respects performed all obligations required to be
             performed by it under this Agreement prior to the Closing Date, 
             and the Company shall have received a signed certificate from a 
             Vice President of Motorola to that effect.

        (c)  Permits, Authorizations, Etc.  Motorola shall have obtained
             any and all material permits, authorizations, consents or approvals
             required to be obtained by Motorola under this Agreement for the
             lawful consummation of the transactions contemplated by this
             Agreements.

        (d)  Legal Opinions.  The Company shall have received a legal
             opinion, in form and substance satisfactory to the Company from 
             Dirk H. Buikema, Division Counsel of Motorola, on the issues of 
             corporate authority and due authorization.

       (e)  Absence of Certain Litigation.  On the Closing Date there shall     
            be no injunction, restraining order or order of any nature issued
            by, or being requested from, any court of competent jurisdiction 
            which directs that any transactions contemplated by this Agreement
            shall not be consummated as herein provided or compels Motorola to
            dispose of or keep separate either a portion of the business 
            conducted by Motorola or the Acquisition Assets, nor shall there
            be instituted, pending or threatened any action, suit or 
            proceeding by any governmental agency or regulatory or administra-
            tive agency or commission challenging this Agreement or any of 
            the transactions contemplated by this Agreement or, which seeks to
         


December 16, 1993                                                       Page 10
Revision 7


<PAGE>   11
         
                 restrain or prevent such Agreement or transactions, or which 
                 would affect Motorola's rights to operate, own or control any 
                 part of the Acquisition Assets.

       (f)       Additional Instruments and Satisfaction.  Motorola shall have
                 (i) delivered the consideration referred to in Section 2.01 
                 and such additional instruments, consents and documents as 
                 the Company reasonably deems necessary to carry out the 
                 purposes of this Agreement, (ii) performed such acts as the 
                 Company reasonably deems appropriate, and all other 
                 proceedings, documents and other items contemplated by this 
                 Agreement shall be satisfactory in form and substance to the 
                 Company.

       5.03      Conditions to Obligations of Motorola to Close.

       The obligation of Motorola to consummate the purchase of the Acquisition
Assets and related transactions as contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions (except as Motorola may have waived the condition(s) in writing):

       (a)       Representations and Warranties.  The representations and
                 warranties of the Company set forth in Section 7 hereof shall 
                 be true and correct in all material respects as of the Closing
                 Date as though made on and as of the Closing Date, and 
                 Motorola shall have received signed certificates from the 
                 President and Chief Financial Officer of the Company to that 
                 effect.

       (b)       Performance of Obligations.  The Company shall have in all
                 material respects performed all obligations required to be 
                 performed by it under this Agreement prior to the Closing 
                 Date, and Motorola shall have received signed certificates 
                 from the President and Chief Financial Officer of the Company 
                 to that effect.

       (c)       Permits, Authorizations, Etc.  The Company shall have obtained
                 any and all consents or waivers from other parties to material
                 agreements, leases, instruments or other contracts, and from
                 governmental agencies or authorities needed for consummation 
                 of the transactions contemplated by this Agreement and shall 
                 have obtained any and all material permits, authorizations, 
                 consents or approvals required for the lawful consummation of 
                 the transactions contemplated by this Agreement.

       (d)       Legal Opinion.  Motorola shall have received a legal opinion,
                 in form and substance satisfactory to Motorola, from Messrs. 
                 Gibson, Dunn & Crutcher, counsel to the Company, to the 
                 effect set forth in attached Schedule 5.03(d).
         

December 16, 1993                                                      Page 11
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<PAGE>   12
    
    
(e)   Absence of Certain Litigation.  On the Closing Date, there
      shall be no injunction, restraining order or order of any nature
      issued by, or being requested from, any court of competent
      jurisdiction which directs that any transaction contemplated by this
      Agreement shall not be consummated as herein provided or compels
      Motorola to dispose of or discontinue or keep separate a portion of
      the business conducted by Motorola or of the Acquisition Assets, nor
      shall there be instituted, pending or threatened any action or
      proceeding by any governmental agency or regulatory or administrative
      agency or commission challenging this Agreement or any of the
      transactions contemplated hereby or which seeks to restrain or prevent
      such Agreement or transactions or which would affect Motorola's rights
      to operate, own or control any part of the Acquisition Assets.
    
(f)   Books, Records.  The Company shall have transferred and
      delivered (or caused to be transferred and delivered) to Motorola, by
      documents satisfactory in form and substance to Motorola, all of the
      books and records currently in its possession which are necessary for
      the conduct of the Wafer Fab Operations by Motorola on and after the
      Closing Date or are related to the Real Property.
    
(g)   Estoppel.  Motorola shall have received an estoppel
      certificate substantially in the form of Schedule 5.03(g) from The
      Irvine Company.
    
(h)   Additional Instruments.  The Company shall have delivered to
      Motorola the instruments described in Section 1.01 and such additional
      instruments, consents and documents contemplated by this Agreement or
      reasonably deemed appropriate by Motorola and performed such acts as
      Motorola reasonably deems necessary to carry out the purposes of this
      Agreement.
    
(i)   Reasonable Satisfaction.  All other proceedings and documents
      and other items in connection with the transactions contemplated by
      this Agreement shall be satisfactory in form and substance to
      Motorola.
    
(j)   Deed and Title Policy.  The Escrow Holder (as defined in
      Section 6.01) shall be prepared to record the grant deed delivered by
      Company and to issue the title policy strictly in accordance with the
      terms of Escrow Agreement (as defined in Section 6.01).
    
(k)   FIRPTA.  Company shall have delivered to Motorola an affidavit
      of non-foreign status in accordance with Section 1445 of the Internal
      Revenue Code in form reasonably satisfactory to Motorola.
    
    

December 16, 1993                                                       Page 12
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<PAGE>   13

6.     Closing and Escrow.

       6.01      Escrow.  The parties have entered into or will enter into a
separate escrow agreement with respect to the delivery and recordation of
certain documents and the transfer of certain funds with respect to
consummation of the purchase and sale of the Acquisition Assets contemplated
hereby (the "Escrow Agreement"), substantially in the form attached as Schedule
6.  On or before December 21, 1993 the parties shall open an escrow ("Escrow")
pursuant to the terms of the Escrow Agreement with Chicago Title Company, 825
N. Broadway, Santa Ana, California 92701, Attention:  Susie Jacobsen ("Escrow
Holder") by executing and delivering the Escrow Agreement to Escrow Holder.
Except as is set forth in Schedule 6 and this Section, the execution and
exchange of documents for the closing of the purchase and sale of the
Acquisition Assets and the other transactions contemplated by this Agreement
shall take place at the offices of Gibson, Dunn & Crutcher on December 21st and
22nd 1993, or such later date or other location as may be necessary for the
performance of the conditions set forth herein but in no event later than March
31, 1994.  The recording of documents and disbursement of funds by the escrow
holder as provided in the Escrow Agreement shall take place on December 23,
1993, or such later date or other location as may be necessary for the
performance of the conditions set forth herein but in no event later than March
31, 1994 (the "Outside Closing Date").  The date the Grant Deed (as defined
below) is recorded in the Official Records of Orange County, California by
Escrow Holder in accordance with the Escrow Agreement is referred to herein as
the "Closing Date" and the "Closing" shall be deemed to take place at the time
of such recordation.  If, however, any applicable waiting period provided for
in Section 7A of the Hart-Scott-Rodino Act applicable to Motorola's acquisition
shall not have expired by that date, the Closing and Closing Date shall take
place as soon as reasonably possible following the expiration of such waiting
period (but in no event later than March 31, 1994).

       6.02      Additional Escrow Instructions.

        The Company and Motorola agree to execute such additional and
supplemental escrow instructions as may be appropriate to enable the Escrow
Holder to comply with the terms of this Agreement; provided, however, that in
the event of any conflict between the provisions of this Agreement and any
supplementary escrow instructions, the terms of this Agreement shall control.

       6.03      Closing Procedures.

       The execution and exchange of documents and payment of consideration
into escrow shall take place at the Closing, subject to the recording and
delivery of documents and disbursement of funds by Escrow Holder pursuant to
the Escrow Agreement on the Closing Date.  All documents shall be deemed
delivered on the date the grant deed delivered by the Company is recorded.  In
the event the Closing does

December 16, 1993                                                       Page 13
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<PAGE>   14
not occur on or before the Outside Closing Date,
Escrow Holder shall, unless it is notified by both parties to the contrary
within five (5) days after the Outside Closing Date, return to the depositor
thereof any items which may have been deposited hereunder together with
interest on any funds being returned by Escrow Holder.

       6.04      Deposits into Escrow by Company.

       At least one (1) business day prior to the Closing Date, Company shall
make the following deliveries into Escrow to be handled by Escrow Holder in
accordance with the terms of the Escrow Agreement:

       (a)       A Grant Deed in the form reasonably satisfactory to Motorola
executed and acknowledged on behalf of Company (with documentary transfer taxes
to be shown on a separate non-recorded affidavit);

       (b)       A Bill of Sale in the form reasonably satisfactory to
Motorola, duly executed on behalf of Company;

       (c)       Instructions for the disbursement of the Cash Payments (as
defined in Section 6.05 below); and

       (d)       Such other documents and instruments as are reasonably
requested by Escrow Holder in order to comply with the terms and conditions of
the Escrow Agreement.

       6.05      Deposits into Escrow by Motorola.

       At least one (1) business day prior to the Closing Date, Motorola shall
make the following deliveries into Escrow to be handled by Escrow Holder in
accordance with the terms of the Escrow Instructions:

       (a)       The Cash Payments (as defined below);

       (b)       Such other documents and instruments as are reasonably
requested by Escrow Holder in order to comply with the terms and conditions of
the Escrow Agreement.

For purposes hereof, the "Cash Payments" shall mean (A) the sum of (1) the cash
payments pursuant to Sections 2.01(a) and (c), (2) the prorations pursuant to
Section 6.06 below, (3) Motorola's portion of any sales tax payment pursuant to
Section 4.08; (B) reduced by the Vacation Accrual Value pursuant to Section
4.07(c).  In the event that any of the foregoing amounts cannot be determined
by the time the Cash Payments are to be deposited into Escrow as provided
above, the parties shall reasonably agree upon the estimated amount of such
item, subject to final adjustment 



December 16, 1993                                                       Page 14
Revision 7


<PAGE>   15
payment(s) within thirty (30) days after the Closing Date or as soon as
the amounts can be accurately ascertained.  Motorola and Company shall inform
Escrow Holder of the agreed-upon amount of the Cash Payments to be delivered
through the Escrow by a joint supplemental escrow instruction to be delivered
to Escrow Holder at least one (1) business day prior to the Closing Date.


       6.06      Prorations and Apportionments.

       (a)       The following items shall be prorated and apportioned as of
                 4:00 p.m. on the Closing Date, so that the Company shall bear
                 all expense with respect to such items for the period preceding
                 such date and time and Motorola shall bear all expense with
                 respect to such items thereafter:

         (i)     All operating leases and maintenance or service contracts
                 included in the Assumed Liabilities;

         (ii)    All expenses of the Real Property (not included in Section
                 6.06(a) above) including taxes (including personal property
                 taxes on personal property included in the Acquisition
                 Assets), real property assessments, water rates and sewer
                 fees, if any, assessments and membership fees of associations
                 in which Motorola will acquire a membership in connection with
                 its purchase of the Real Property, gas, electricity and other
                 utility charges, any unfixed meter charges, if any
                 (apportioned on the basis of the last meter readings), license
                 and permit fees and other expenses customarily prorated.  If
                 possible, in lieu of prorating, utilities and other expenses
                 shall be contracted for in the name of Motorola as of the
                 Closing Date.  In any event, Motorola shall have all prorated
                 utilities and other expenses contracted for in the name of
                 Motorola as soon as reasonably practicable after the Closing
                 Date.

       6.07      Payment of Adjustments to Cash Payment Items.

       Either party owing the other party a sum of money based on adjustments
with respect to the amounts included in the Cash Payments pursuant to Section
6.05 above after the Closing Date shall promptly pay that sum to the other
party, together with interest thereon at the rate of ten percent (10%) per
annum to the date of payment if payment is not made within 10 days after mutual
agreement of the amount due.

       6.08      Costs and Expenses.

       The Company shall pay the costs of the survey of the Real Property, the
premium and other costs and expenses for the title policy and the cost of
documentary 

December 16, 1993                                                       Page 15
Revision 7


<PAGE>   16
or other transfer taxes applicable to the sale.  Motorola and the
Company shall share equally all other costs and charges of the escrow for the
purchase and sale of the Acquisition Assets.

       6.09      Possession.

       Subject to Section 4.07(b) and the Joint Use Agreement, possession of
the Real Property and the other Acquisition Assets will be delivered to
Motorola at 4:00 p.m. on the Closing Date.


7.     Representations and Warranties of the Company.

       The Company represents and warrants to Motorola that:

       7.01      Ownership of Assets.

       (a)       As of the Closing Date the Company shall convey, and Motorola
will receive good, exclusive and marketable title to all of the Acquisition
Assets, free and clear of any liens, claims, debts, security interests,
judgments, mortgages or other encumbrances of any kind, except for the rights
of vendors, suppliers and equipment lessors associated with liabilities of the
Company which are included in the Assumed Liabilities.  The representation and
warranty made in this Section 7.01(a) does not apply to the Real Property.
               
       (b)      The Acquisition Assets shall include all those assets, rights
and properties, tangible and intangible, owned or leased by the Company which
are needed to conduct the Wafer Fab Operations as conducted by the Company
(other than the items referred to in Section 4.03 hereof).

       7.02      Organization and Authority.

       The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware, has corporate power to own all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in the
State of California.  The Company has all necessary Federal, state and local
authorizations to own or lease the Acquisition Assets and to carry on its Wafer
Fab Operations (it being understood that, to the extent previously disclosed to
Motorola, certain of the equipment used in the Wafer Fab Operations is covered
by a "permit to construct" which will need to be finalized).

       7.03      Investment.

       The Company (a) understands that the Buyer Note has not been, and will
not be, 


December 16, 1993                                                    Page 16
Revision 7


<PAGE>   17
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities laws, and is being offered and
sold in reliance upon federal and state exemptions, (b) is acquiring the Buyer
Note solely for its own account for investment purposes, and not with a view to
the distribution thereof, (c) has received certain information concerning
Motorola and has had the opportunity to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding the
Buyer Note, (d) is able to bear the economic risk and lack of liquidity
inherent in holding the Buyer Note, and (e) is an Accredited Investor (as
defined in Regulation D under the Securities Act).

    7.04      Charter Documents.

    The Company has furnished Motorola with true, complete and correct
copies of its Certificate of Incorporation and its By-laws, certified by its
Secretary.

    7.05      Authorization.

    (a)  The Company has the corporate power and authority to enter
         into this Agreement and to carry out its obligations hereunder.  The
         execution, delivery and performance of this Agreement and the
         consummation of the transactions contemplated hereby have been duly
         authorized by the Company's Board of Directors and no other corporate
         proceedings on the part of the Company are necessary to authorize this
         Agreement and the transactions contemplated hereby.  This Agreement is
         a valid and binding obligation of the Company enforceable against the
         Company in accordance with its terms, except as limited by
         bankruptcy and other laws of general application and relating to
         or affecting enforcement of creditors' rights and except as
        limited by the availability of equitable remedies.

    (b)  Except as set forth in Schedule 7.05 (b) attached hereto, no
         notice to, filing with, or authorization, consent or approval of, any
         government or governmental agency or authority is necessary on the
         part of the Company for the consummation of the transactions
         contemplated by this Agreement.

    7.06 [intentionally omitted]

    7.07 Properties, Leases and Licenses.

    (a)  The tangible personal property included in the Acquisition
         Assets which is of material importance to the Wafer Fab Operations
         (which expressly excludes all items expended or consumed in the
         ordinary course of manufacturing) has been maintained in accordance
         with normal industry practice, is in good operating condition and
         repair (subject to normal wear 
         
December 16, 1993                                                       Page 17
Revision 7



<PAGE>   18
         and tear), is suitable for the purposes
         for which it presently is used and, to the best knowledge of the
         Company, is free from material defects (patent and latent).

    (b)  With respect to the Real Property:
         
         (i)       there are no (A) pending or, to the knowledge of
                   Company, threatened condemnation proceedings
                   relating to such property, (B) pending or to the
                   knowledge of the Company, threatened litigation or
                   administrative actions against the Company or the
                   Real Property relating to the Real Property, or (C)
                   other matters known to the Company having a material
                   adverse impact on the current use of the Real
                   Property;
         
         (ii)      the property is not located within any flood plain
                   or subject to any similar type restriction for which
                   any permits or licenses necessary to the use thereof
                   have not been obtained;
         
         (iii)     to the best knowledge and belief of the Company,
                   except as otherwise previously disclosed to
                   Motorola, all facilities have received all approvals
                   of governmental authorities (including licenses and
                   permits) required in connection with the ownership
                   or operation thereof and have been operated and
                   maintained in all material respects in accordance
                   with applicable laws, rules, and regulations
                   including, without limitation, all building, zoning,
                   environmental, health and safety laws and
                   regulations (including, but not limited to,
                   earthquake, life and safety systems and handicap
                   laws, including without limitation, the Americans
                   with Disabilities Act all state and local disable
                   person access laws applicable thereto) which affect
                   the use and operation thereof, and the Company has
                   not received any notice of violation of law or
                   municipal ordinance, order or requirement from any
                   governmental agency having jurisdiction over the
                   Property, and knows of no facts which would
                   constitute grounds for receiving any notice of a
                   material violation of any such law, municipal order
                   or requirement;
         
         (iv)      there are no leases, subleases, licenses,
                   concessions, or other agreements, written or oral,
                   granting to any party or parties the right of use or
                   occupancy of any portion of the parcel of real
                   property;
         
         

December 16, 1993                                                       Page 18
Revision 7




<PAGE>   19

                 (v)       except for the "Permitted Title Exceptions" set
                           forth in the Escrow Agreement, there are no
                           outstanding options or rights of first refusal to
                           purchase the parcel of real property, or any portion
                           thereof or interest therein;

                 (vi)      there are no parties (other than the Company) in
                           possession of the Real Property;

                 (vii)     all facilities located on the parcel of real
                           property are supplied with utilities and other
                           services necessary for the operation of such
                           facilities, including gas, electricity, water,
                           telephone, sanitary sewer, and storm sewer, all of
                           which services are adequate in accordance with all
                           applicable laws, ordinances, rules, and regulations
                           and are provided via public roads or via permanent,
                           irrevocable, appurtenant easements benefiting the
                           parcel of real property; and

                 (viii)    except for the "Permitted Title Exceptions" set
                           forth in the Escrow Agreement, to the knowledge of
                           Company, there are no liens, restrictions or other
                           encumbrances against the title to the Real Property
                           which will be binding upon Motorola or the Real
                           Property after the Closing Date and which will
                           materially adversely affect the use or value of the
                           Real Property.

With respect to the representation and warranty set forth in Section 7.08(viii)
above, Motorola waives any right to proceed against Company to the extent any
nondisclosed matter is covered by the title insurance policy procured by
Company pursuant to the Escrow Agreement.

         7.08    Inventories.

         All inventories of raw materials and work-in-process related to the
Wafer Fab Operations to be included in the Acquisition Assets, which are
assigned a value in Schedule 2.01(b) attached hereto, consist only of items of
a quality and quantity usable or salable by the Company in the Ordinary Course
of Business.  All such inventory is merchantable and fit for the purpose for
which it was procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective.  It is understood and agreed that in the event
that any of the wafers within the inventories covered by this Section 7.08 are
later designated by the Company to be scrap material, the provisions of the
Wafer Supply Agreement will govern the consequences of scrapping such material
and, as a result, any such event will not be deemed a breach of this Section
7.08.


December 16, 1993                                                     Page 19
Revision 7


<PAGE>   20



         7.09    Commitments.

         To the best knowledge and belief (after due inquiry and investigation)
of the Company, except as disclosed in Schedule 7.09 attached hereto, all
contracts and agreements included in the Assumed Liabilities are valid,
binding, enforceable, fully assignable and in full force and effect and will
not expire prior to January 1, 1994 (except for such contracts and agreements
which will be renewed on substantially similar economic terms).  Neither the
Company nor, to the best knowledge of the Company, any other party to any such
contract or agreement is in default, or will be in default upon Closing Date,
under any such contract or agreement (including, but not limited to, any event
which would, with the giving of notice or the passage of time or both,
constitute an event of default).  True, correct and complete copies of all such
written contracts and agreements have been previously given to Motorola.  The
Company is not a party to any employment, consulting or similar agreement with
or for the benefit of any of its employees involved in the Wafer Fab
Operations.  The Company does not expect that any change is reasonably likely
to occur in the relationships of the Company with suppliers to its Wafer Fab
Operations which change would be materially adverse to the Wafer Fab Operations
(provided that this representation and warranty shall not include changes in
such relationships arising due to this transaction).

         7.10    Absence of Certain Changes.

         Since September 25, 1993 there has not been:

         (a)     any change in the nature of the Wafer Fab Operations, or
                 manner of conducting the Wafer Fab Operations which has had,
                 or may reasonably be expected to have, a material adverse
                 effect on the Wafer Fab Operations;

         (b)     any material damage, destruction or other casualty loss
                 (whether or not covered by insurance) affecting the
                 Acquisition Assets;

         (c)     any increase in the compensation payable or to become payable
                 by the Company to any Listed Employees or to agents directly
                 involved in the Wafer Fab Operations over the amount paid, at
                 September 25, 1993, other than normal merit increases,
                 increases which are not material and increases consented to by
                 Motorola in writing;

         (d)     any sale, lease, transfer or assignment of any of the
                 Acquisition Assets, tangible or intangible, other than
                 nonmaterial transfers (such as transfers of finished goods)
                 for a fair consideration in the Ordinary Course of Business;

December 16, 1993
Revision 7                                                               Page 20


<PAGE>   21

         (e)     any material acceleration, termination, modification or
                 cancellation of any contract, lease, sublease, license, or
                 sublicense (or series of related contracts, leases, subleases,
                 licenses, and sublicenses) relating to the Wafer Fab
                 Operations or the Real Property to which the Company is a
                 party or by which it is bound;

         (f)     any delaying or postponing by the Company (beyond practice in
                 the Ordinary Course of Business) of the payment of accounts
                 payable and other liabilities related to the Wafer Fab
                 Operations;

         (g)     any loan to, or entry into any other transaction with, any of
                 the Listed Employees substantially involved in the Wafer Fab
                 Operations outside the Ordinary Course of Business;

         (h)     any entry into or commitment to enter into any employment
                 contract or collective bargaining agreement, written or oral,
                 with Listed Employees or modification of the terms of any such
                 existing contract or agreement;

         (i)     any adoption of (A) bonus, (B) profit-sharing, (C) incentive
                 compensation, (D) pension, (E) retirement, (F) medical,
                 hospitalization, life, or other insurance, (G) severance, or
                 (H) other plan, contract, or commitment for any Listed
                 Employees, or any modification or termination of any such
                 existing plan, contract or commitment; or

         (j)     any commitment to do any of the foregoing.

         7.11    Intellectual Property.

         (a)     Pursuant to law, the Company owns or has the right to use
                 under license, sublicense, agreement, or permission all
                 Relevant Intellectual Property.  As used herein, "Relevant
                 Intellectual Property" means only the copyrighted works, mask
                 works, and trade secrets which are owned or used by the
                 Company and which are necessary for the conduct of the Wager
                 Fab Operations by Motorola on and after the Closing Date.
                 Immediately after the Closing Date, each item of Relevant
                 Intellectual Property is hereby licensed to Motorola by the
                 Company as otherwise will be available for use by Motorola on
                 identical terms and conditions to those under which each item
                 of Relevant Intellectual Property is used or is available for
                 use by the Company.

         (b)     With respect to each such item of Relevant Intellectual
                 Property:

December 16, 1993                                                       Page 21
Revision 7





<PAGE>   22
                 (i)       the license, sublicense, agreement, or permission
                           covering the item is legal, valid, binding,
                           enforceable, and in full force and effect;

                 (ii)      the license, sublicense, agreement, or permission
                           will continue to be legal, valid, binding,
                           enforceable, and in full force and effect on
                           identical terms to those available to the Company;

                 (iii)     neither the Company nor to the Company's knowledge
                           any other party to the license, sublicense,
                           agreement, or permission is in breach or default,
                           and no event has occurred which with notice or lapse
                           of time would constitute a breach or default or
                           permit termination, modification, or acceleration
                           thereunder;

                 (iv)      neither the Company nor to the Company's knowledge
                           any other party to the license, sublicense,
                           agreement, or permission has repudiated any
                           provision thereof;

                 (v)       with respect to each sublicense, the representations
                           and warranties set forth in subsection (a) above and
                           this subsection (b) are true and correct with
                           respect to the underlying license;

                 (vi)      the underlying item of Relevant Intellectual
                           Property is not subject to any outstanding judgment,
                           order, decree, stipulation or injunction; and

                 (vii)     no complaint, action, suit, proceeding, hearing,
                           investigation, claim, or demand is pending or, to
                           the Company s knowledge, is threatened which
                           challenges the legality, validity, or enforceability
                           of the underlying item of Relevant Intellectual
                           Property.


         7.12    Undisclosed Liabilities.

         To the best knowledge of the Company, except for the Assumed
Liabilities, there are no liabilities of the Company of any kind whatsoever
attributable to pre-Closing activities, whether or not accrued and whether or
not contingent or absolute, in respect of which Motorola may properly be held
liable at or after the Closing Date as a result of the consummation of the
transactions contemplated by this Agreement.  This representation and warranty
does not apply to liabilities under Applicable Environmental Law.



December 16, 1993                                                       Page 22
Revision 7


<PAGE>   23



         7.13    Insurance.

         Schedule 7.13 sets forth the following information with respect to
each insurance policy covering any of the Acquisition Assets (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
within the past four years:

         (a)     the name, address, and telephone number of the agent;

         (b)     the name of the insurer, the name of the policyholder, and the
                 name of each covered insured;

         (c)     the policy number and the period of coverage;

         (d)     the scope (including an indication of whether the coverage was
                 on a claims made, occurrence, or other basis) and amount
                 (including a description of how deductibles and ceilings are
                 calculated and operate) of coverage; and

         (e)     a description of any retroactive premium adjustments or other
                 loss-sharing arrangements.

         The Company has been covered during the past four years by insurance
in scope and amount customary and reasonable for the business in which it has
engaged during the aforementioned period.  Schedule 7.13 describes any
self-insurance arrangements affecting the Company.

         7.14    Litigation.

         The Company (i) is not subject to any unsatisfied judgment, order,
decree, stipulation or injunction and (ii) is not a party or, to the knowledge
of the Company, threatened to be made a party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator which is attributable to
pre-Closing activities by the Company and which could reasonably be expected to
have an adverse impact on the Acquisition Assets.


         7.15    Taxes.

         (a)     The Company has filed all Tax Returns (as defined below) that
                 it was required to file.  All such Tax Returns were correct and
                 complete in all material respects.  All Taxes shown as due on
                 such Tax Returns have 
         


December 16, 1993                                                       Page 23
Revision 7



<PAGE>   24
                 been paid.  There are no security interests on any of the 
                 assets of the Company that arose in connection with any
                 failure (or alleged failure) to pay any Tax (as defined
                 below).  "Tax" means any federal, state, local, or foreign
                 income, gross receipts, license, payroll, employment, excise,
                 severance, stamp, occupation, premium, windfall profits,
                 environmental (including taxes under Code Sec. 59A), customs
                 duties, capital stock, franchise, profits, withholding, social
                 security (or similar), unemployment, disability, real 
                 property, personal property, sales, use, transfer, 
                 registration, value added, alternative or add-on minimum,
                 estimated, or other tax of any kind whatsoever, including any
                 interest, penalty, or addition thereto, whether disputed or
                 not.  "Tax Return" means any return, declaration, report,
                 claim for refund, or information return or statement relating
                 to Taxes, including any schedule or attachment thereto, and
                 including any amendment thereof.


       (b)       The Company has withheld and paid all Taxes required to have
                 been withheld and paid in connection with amounts paid
                 or owing to any employee, creditor, independent contractor, or
                 other third party.


       7.16      Employees.

       The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes.  The Company has not
committed any unfair labor practice.  The Company does not have any knowledge
of any organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of the Company.  No work stoppage
involving the Company is pending or, to the best of the Company's knowledge,
threatened.  Neither the Company nor, to the best of the Company's knowledge,
any supplier of the Company, is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative proceeding which
could materially and adversely affect the Acquisition Assets.  Employees of the
Company are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.

       7.17      Employee Benefits.

       The Company Profit Sharing Plan is a qualified plan under I.R.C. Section
401(a), as amended.  The Company s Wafer Fab Operations constitute a "trade or
business" under I.R.C. Section  401(k)(10)(A)(ii) and I.R.C. Regulation Section
1.401(k)-1(d).  The Acquisition Assets constitute substantially all the 
assets used in that trade or business for the purposes of I.R.C. Section 
401(k)(10)(A)(ii) and I.R.C.  Regulation Section  401(k)-1(d).  The Company has
no benefit plan insured by the Pension Benefit Guaranty Corporation.



December 16, 1993                                                       Page 24
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<PAGE>   25

 7.18     [intentionally omitted]

 7.19     Environment, Health, and Safety.

          Except as otherwise previously disclosed, to the best knowledge
          of the Company with respect to the Acquisition Assets:

 (a)     The Company, its predecessors and its affiliates each has
         complied with all laws (including rules and regulations thereunder) of
         federal, state, local, and foreign governments (and all agencies
         thereof) concerning the environment, public health and safety, and
         employee health and safety, and no charge, complaint, action, suit,
         proceeding, hearing, investigation, claim, demand, or notice has been
         filed or commenced against any of them alleging any failure to comply
         with any such law or regulation.

(b)      The Company has no liability (and there is no basis related to
         the past or present operations, properties, or facilities of its
         respective predecessors and affiliates for any present or future
         charge, complaint, action, suit, proceeding, hearing, investigation,
         claim, or demand against giving rise to any liability) under the
         Comprehensive Environmental Response, Compensation and Liability Act
         of 1980, the Resource Conservation and Recovery Act of 1976, the
         Federal Water Pollution Control Act of 1972, the Clean Air Act of
         1970, the Safe Drinking Water Act of 1974, the Toxic Substances
         Control Act of 1976, the Refuse Act of 1899, or the Emergency Planning
         and Community Right-to-Know Act of 1986 (each as amended), or any
         other law (or rule or regulation thereunder) of any federal, state,
         local, or foreign government (or agency thereof), concerning release
         or threatened release of hazardous substances, public health and
         safety, or pollution or  protection of the environment.

(c)      The Company has no liability (and none of the Company and its
         respective predecessors and affiliates has handled or disposed of any
         substance, arranged for the disposal of any substance, or owned or
         operated any property or facility in any manner that could form the
         basis for any present or future charge, complaint, action, suit,
         proceeding, hearing, investigation, claim, or demand (under the common
         law or pursuant to any statute) against the Company giving rise to any
         liability) for damage to any site, location, or body of water (surface
         or subsurface) or for illness or personal injury.

(d)      The Company has no liability (and there is no basis for any
         present or future charge, complaint, action, suit, proceeding,
         hearing, investigation, claim, or demand against the Company giving
         rise to any liability) under the Occupational Safety and Health Act,
         as amended, or any other law (or 

December 16, 1993                                                       Page 25
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<PAGE>   26
         rule or regulation thereunder) of any
         federal, state, local, or foreign government (or agency thereof)
         concerning employee health and safety.

    (e)  The Company has no liability (and the Company has not exposed
         any employee to any substance or condition that could form the basis
         for any present or future charge, complaint, action, suit, proceeding,
         hearing, investigation, claim, or demand (under the common law or
         pursuant to statute) against giving rise to any liability) for any
         illness of or personal injury to any employee.

    (f)  The Company has obtained and been in compliance with all the
         terms and conditions of all permits, licenses, and other
         authorizations which are required under, and has complied with all
         other limitations, restrictions, conditions, standards, prohibitions,
         requirements, obligations, schedules, and timetables which are
         contained in, all federal, state, local, and foreign laws (including
         rules, regulations, codes, plans, judgments, orders, decrees,
         stipulations, injunctions, and charges thereunder) relating to public
         health and safety, worker health and safety, and pollution or
         protection of the environment, including laws relating to emissions,
         discharges, releases, or threatened releases of pollutants,
         contaminants, or chemical, industrial, hazardous, or toxic materials
         or wastes into ambient air, surface water, group water, or lands or
         otherwise relating to the manufacture, processing, distribution, use,
         treatment, storage, disposal, transport, or handling of pollutants,
         contaminants, or chemical, industrial, hazardous, or toxic materials
         or wastes.

    (g)  All properties and equipment used by the Company (or any
         predecessors or affiliates) have been free of asbestos, PCB's,
         methylene chloride, trichloroethylene, 1, 2-trans-dichloroethylene,
         dioxins, dibenzofurans, and Extremely Hazardous Substances (as defined
         in Section 302 of the Emergency Planning and Community Right-to-Know
         Act of 1986, as amended).

    (h)  All product labeling of the Company has been in conformity
         with applicable laws (including rules and regulations thereunder).

    (i)  No pollutant, contaminant, or chemical, industrial, hazardous,
         or toxic material or waste ever has been buried, stored, spilled,
         leaked, discharged, emitted, or released on any real property that
         Company (or predecessor or affiliate) owns or ever has owned or that
         Company (or predecessor or affiliate) leases or ever has leased.


December 16, 1993                                                       Page 26
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<PAGE>   27



       7.20      Legal Compliance.

       Except as otherwise previously disclosed, to the best knowledge of the
Company with respect to the Acquisition Assets, the Company has complied in all
material respects with all laws (including rules and regulations thereunder) of
federal, state, local, and foreign governments (and all agencies thereof) which
affect any of the Acquisition Assets.

       7.21      [intentionally omitted]

       7.22      Brokers and Finders.

       Neither the Company nor any officers, directors, stockholders or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finders' fees, and no
broker or finder has acted directly or indirectly for the Company in connection
with this Agreement or the transactions contemplated hereby.

       7.23      [intentionally omitted]

       7.24      Disclosure.

       No written representation, statement or information made or furnished by
the Company (or any agent) to Motorola in this Agreement contains any statement
of a material fact that was untrue when made or omits or shall omit any
material fact necessary to make the information contained in such
representation, statement or information not misleading.

       7.25      Other Agreements.

       Except as otherwise previously disclosed, to the best knowledge of the
Company with respect to the Acquisition Assets, the Company is not a party to
or bound by any agreement requiring Motorola to pay any royalty, fee or other
payment in connection with conducting Wafer Fab Operations.


8.     Representations and Warranties of Motorola.

       Motorola represents and warrants to the Company that:

       8.01      Organization and Authority.

       Motorola is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware, has corporate power to own
all of its properties 


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<PAGE>   28
                 and assets and to carry on its business as it is now
                 being conducted.

       8.02      Authorization.

       Motorola has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder.  The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all corporate proceedings on
the part of Motorola which are necessary to authorize this Agreement and the
transactions contemplated hereby.  This Agreement is a valid and binding
obligation of Motorola enforceable against Motorola in accordance with its
terms, except as limited by bankruptcy and other laws of general application
relating to or affecting enforcement of creditors' rights and except as 
limited by the availability of equitable remedies.

       Neither the execution, delivery and performance of this Agreement by
Motorola, nor the consummation of the transactions contemplated hereby,  nor
compliance by Motorola with any of the provisions hereof or thereof will (i)
violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under (x) the Certificate of Incorporation or
Bylaws of Motorola or (y) any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Motorola is a party or by which Motorola may be bound, or by which it is, or
any of its properties or assets may be subject, except for such violations,
conflicts, breaches and defaults which would not, in the aggregate, have a
material adverse effect on the business, results of operations, prospects or
financial condition of Motorola and its subsidiaries taken as a whole, or (ii)
subject to compliance with the statutes and regulations referred to in the next
paragraph, to Motorola's knowledge, violate any material judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable to
Motorola or any of its properties or assets.

       Other than in connection with or in compliance with the provisions of
the Delaware General Corporation Law and the Hart-Scott-Rodino Act, to
Motorola's knowledge, no notice to, filing with, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Motorola of the transactions contemplated by this Agreement.


9.     Termination.

       9.01  Termination of Agreement.

       Certain of the parties may terminate this Agreement as provided below:


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<PAGE>   29



       (a)       Motorola and the Company may terminate this Agreement by
                 mutual written consent at any time prior to the Closing Date;

       (b)       Motorola may terminate this Agreement by giving written notice
                 to the Company at any time prior to the Closing Date in the 
                 event the Company is in breach, and the Company may terminate
                 this Agreement by giving written notice to Motorola at any
                 time prior to the Closing Date in the event Motorola is in
                 breach of any material representation, warranty, or covenant
                 contained in this Agreement in any material respect;

       (c)       Motorola may terminate this Agreement by giving written notice
                 to the Company at any time prior to the Closing Date if the 
                 Closing Date shall not have occurred on or before March 31, 
                 1994 by reason of the failure of any condition precedent
                 (unless the failure results primarily from Motorola breaching 
                 any representation, warranty, or covenant contained in this
                 Agreement); or

       (d)       the Company may terminate this Agreement by giving written
                 notice to Motorola at any time prior to the Closing Date if the
                 Closing Date shall not have occurred on or before March 31, 
                 1994 by reason of the failure of any condition precedent
                 (unless the failure results primarily from the Company 
                 breaching any representation, warranty, or covenant contained 
                 in this Agreement).

        9.02     Effect of Termination.

       In the event of termination, this Agreement shall forthwith become void
and there shall be no liability on the part of either Motorola or the Company,
or their respective officers or directors except in the case of a willful
breach.  Obligations with respect to confidentiality, under the agreement
attached as Schedule 9.02, shall survive termination of this Agreement.


10.    Indemnification.

       10.01     Indemnification by the Company.

       Subject to the limitations contained in this Section 10, the Company
agrees to indemnify and hold harmless Motorola and its Affiliates and its
Subsidiaries against and in respect of any or all of the following, including
any damage, expense, loss, claims, incidental and consequential damages, and
any such amounts related to, arising from or caused by the following:


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<PAGE>   30



         (a)     all liabilities of any nature, whether accrued, absolute,
                 contingent or otherwise, arising from, caused by or attributed
                 to any act or omission by the Company on or prior to the
                 Closing Date, including, without limitation:

                 (i)       all tax liabilities, if any, accrued in respect of
                           or measured by the Company's, or any affiliated or
                           predecessor company's income for any period prior to
                           the Closing Date, or arising out of transactions
                           entered into, or any set of facts existing, prior to
                           the Closing Date;

                 (ii)      any and all losses, liabilities, damages or
                           obligations resulting from or relating to any claim
                           or action by any creditor, potential creditor or
                           person claiming any proprietary or equity interest
                           in the Acquisition Assets or the Wafer Fab
                           Operations questioning the validity of or otherwise
                           seeking to rescind the transfer of all right, title
                           and interest in the Acquisition Assets and the Wafer
                           Fab Operations to Motorola;

                 (iii)     any and all losses, liabilities, damages or
                           obligations relating to any liability of the Company
                           to the Pension Benefit Guaranty Corporation, or to
                           any multiemployer plan, which is enforced or which
                           is attempted to be enforced against either the
                           Acquisition Assets or the Wafer Fab Operations;

                 (iv)      any and all losses, liabilities, damages or
                           obligations resulting from or relating to any claim
                           or action by any Company employee related to or
                           resulting from inaccurate personnel file information
                           provided to Motorola or the validity of the 
                           Company's obtaining a Company employee's 
                           authorization for disclosure of such information;

                 (v)       all actions, suits, proceedings, claims, demands,
                           assessments (whether asserted prior to or following
                           the Closing Date), judgments, costs and expenses
                           incident to any of the foregoing;

                 (vi)      any Hazardous Material storage, use, manufacture,
                           transportation, disposal, release, discharge or
                           emission by the Company, including, but not limited
                           to, the Wafer Fab Operations, on or prior to the
                           Closing Date;


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<PAGE>   31



                 (vii)     with respect to Hazardous Material other than
                           trichloroethylene ("TCE"), any Hazardous Material
                           which is found to be present in or on the Real
                           Property, on or prior to Closing Date as a result of
                           any acts or omissions of the Company on or prior to
                           the Closing Date;

                 (viii)    the exposure to any Hazardous Material on or prior
                           to the Closing Date, of any existing or former
                           Company employee engaged in the Wafer Fab Operations
                           or its related activities, or any other person
                           engaged in activities on the Real Property, the
                           presence of which is attributable to any act or
                           omission of the Company on or prior to the Closing
                           Date;  and

                 (ix)      any disposal into any landfill or other disposal
                           facility of a Hazardous Material by the Company or
                           by any person to whom Hazardous Materials have been
                           directly or indirectly delivered, by the Company
                           including, but not limited to, the Wafer Fab
                           Operations.

         (b)     all damage or deficiency resulting from the inaccuracy of a
                 representation or warranty made by the Company in this
                 Agreement, or resulting from a misrepresentation, breach of
                 warranty or nonfulfillment of an agreement, or covenant
                 contained herein, upon the part of the Company under, or in a
                 document delivered in connection with, this Agreement or from
                 a misrepresentation in or omission from a certificate or other
                 instrument furnished or to be furnished to Motorola hereunder,
                 and all claims relating to a matter covered by any such
                 representation or warranty, whether or not such claim is
                 valid;

         (c)     with respect to TCE Hazardous Material, any TCE which is found
                 to be present in or on the Real Property (or other real
                 property, on which the presence of TCE is claimed to be the
                 result of the Wafer Fab Operations or related activities
                 taking place on the Real Property), at any time on or prior to
                 the Closing Date or after the Closing Date, other than TCE
                 which is proved to be present in or on the Real Property (or
                 such other real property) as a result of disposal, release,
                 discharge or emission by Motorola or which is proved to be
                 present in or on the Real Property (or such other property) as
                 a result of disposal, release, discharge or emission by a new
                 source which had not begun any of the activities which result
                 in any such disposal, release, discharge or emission prior to
                 the Closing Date.


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<PAGE>   32



         10.02     Indemnification by Motorola.

         Subject to the limitations contained in this Section 10, Motorola
agrees to indemnify and hold harmless the Company and its Affiliates and its
Subsidiaries against and in respect of any or all of the following, including
any damage, expense, loss, claims, incidental and consequential damages, and
any such amounts related to, arising from or caused by the following:

         (a)     all liabilities of any nature, whether accrued, absolute,
                 contingent or otherwise, arising from, caused by or attributed
                 to any act or omission by Motorola after the Closing Date,
                 including without limitation:
                 
                 (i)      any Hazardous Material storage, use, manufacture, 
                          transportation, disposal, release, discharge or 
                          emission by Motorola in connection with the use of 
                          the Acquisition Assets after the Closing Date;
                 
                 (ii)     any Hazardous Material which is found to be present 
                          in or on the Real Property as a result of acts or 
                          omissions of Motorola after the Closing Date;

                 (iii)    the exposure to any Hazardous Material after the
                          Closing Date of any person engaged in activities on
                          the Real Property, provided the presence of such
                          Hazardous Material is not the result of any act of
                          omission by the Company on or prior to the Closing
                          Date; and

                 (iv)     any disposal after the Closing Date into any landfill
                          or other disposal facility of a Hazardous Material by
                          Motorola or by any person to whom Hazardous Materials
                          have been directly or indirectly delivered in
                          connection with the use by Motorola of the
                          Acquisition Assets; and

         (b)     all damage or deficiency resulting from the inaccuracy of a
                 representation or warranty made by Motorola in this Agreement,
                 or resulting from a misrepresentation, breach of warranty or
                 nonfulfillment of an agreement, or covenant contained herein,
                 upon the part of Motorola under, or in a document delivered in
                 connection with, this Agreement or from a misrepresentation in
                 or omission from a certificate or other instrument furnished
                 or to be furnished to the Company hereunder, and all claims
                 relating to a matter covered by any such representation or
                 warranty, whether or not such claim is valid.



December 16, 1993                                                       Page 32
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<PAGE>   33



         10.03     Matters Involving Third Parties.

         If any third party shall notify any party hereto (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against any other party (the "Indemnifying Party") under this
Section, then the Indemnified party shall notify each Indemnifying Party
thereof promptly; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder unless (and then
solely to the extent) the Indemnifying Party thereby is damaged.

         In the event any Indemnifying Party notifies the Indemnified Party
within 15 days after the Indemnified Party has given notice of the matter
giving rise to the claim that the Indemnifying Party is assuming the defense
thereof, (a) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of the Indemnifying Party s choice reasonably
satisfactory to the Indemnified Party, (b) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest), (c) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld), and (d) the
Indemnifying Party will not consent to the entry of any judgment with respect
to the matter, or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the written consent of the
Indemnified Party such consent not to be unreasonably withheld.

         However, in the event that the Indemnifying Party does not notify the
Indemnified Party with 15 days after receipt of notice from the Indemnified
Party, that the Indemnifying Party will be assuming the defense thereof, the
Indemnified Party may defend against, or enter into any settlement with respect
to, the matter in any manner it deems appropriate.

         10.04     Other Indemnification Provision.

         The foregoing indemnification provisions are in addition to, and not
in derogation of, any statutory or common law remedy any party may have for
breach of representation, warranty, or covenant.



December 16, 1993                                                       Page 33
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<PAGE>   34



         10.05     Tax Indemnification Procedure.

         If any Tax arises out of the Wafer Fab Operations or the Acquisition
Assets before the Closing Date is assessed or claimed on or after such date by
a taxing authority, Motorola shall notify the Company and it will take over the
defense of each such tax claim as well as the liability for any settlement,
penalty, interest or tax due.  Motorola will take such action as is necessary
to cooperate in any proceedings with respect to any such tax or proposed tax.

         If any Sales Tax payment arising out of Motorola s purchase of the
Acquisition Assets is challenged by a taxing authority, Motorola and the
Company shall mutually agree on the defense of such claim and split the cost of
such defense equally.  Any additional tax, penalty or interest shall be split
equally.  Any tax refund shall likewise be split equally.


         11.     Miscellaneous.

         11.01     Survival.

         With the exception of (i) the representations and warranties with
respect to the condition of certain Acquisition Assets in Sections 7.07(a) and
7.08 hereof, which shall survive the Closing Date for one (1) year, (ii) any
representation and warranty covering Taxes which shall survive until expiration
of applicable statute(s) of limitation and (iii) the license and other rights
granted to Motorola pursuant to Section 7.11 hereof which shall survive the
Closing Date forever, all of the other representations and warranties of the
parties contained in Sections 7 and 8 of this Agreement shall survive the
Closing Date hereunder for five (5) years.  All of the covenants and
indemnities of the parties contained in this Agreement shall survive the
Closing Date forever.

         11.02     Press Releases and Announcements.

         No party shall issue any press release or announcement relating to the
subject matter of this Agreement prior to the Closing Date without the prior
written approval of the other parties; provided, however, that any party may
make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing party will advise the other parties
prior to making the disclosure).

         11.03     No Third Party Beneficiaries.

         This Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective successors and permitted assigns.





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<PAGE>   35



         11.04     Entire Agreement.

         This Agreement (including the documents referred to herein)
constitutes the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, that may have related in any way to the subject matter hereof.

         11.05     Succession and Assignment.

         This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns.  No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other party;
provided, however, that Motorola may (i) assign any or all of its rights and
interests hereunder to one or more of its Subsidiaries and (ii) designate one
or more of its Subsidiaries to perform its obligations hereunder (in any or all
of which Motorola nonetheless shall remain liable and responsible for the
performance of all of its obligations hereunder).

         11.06     Counterparts.

         This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.

         11.07     Headings.

         The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

         11.08     Notices.

         All notices, requests, demands, claims, and other communications
hereunder will be in writing.  Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set
forth below:

         If to the Company:

                 Corporate Secretary
                 Western Digital Corporation
                 8105 Irvine Center Drive
                 Irvine, California  92713



December 16, 1993                                                       Page 35
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<PAGE>   36


         If to Motorola:

                 Corporate Secretary
                 Motorola Inc.
                 1303 East Algonquin Road
                 Schaumburg, Illinois  60196


         Any party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended.  Any party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other party notice
in the manner herein set forth.

         11.09     Governing Law.

         This Agreement shall be governed by and construed in accordance with
the internal laws (and not the law of conflicts) of the State of California.

         11.10     Amendments and Waivers.

         No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the Company and Motorola.  No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.

         11.11     Severability.

         Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.  If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or 



December 16, 1993                                                       Page 36
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<PAGE>   37
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.

         11.12     Construction.

         The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.  Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.  Nothing in the Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Schedules
identify the exception with reasonable particularity and describes the relevant
facts in reasonable detail.  The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance.
If any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.

         11.13     Incorporation of Exhibits and Schedule.

         The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.

         11.14     Specific Performance.

         Each of the parties acknowledges and agrees that the other parties
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or
otherwise are breached.  Accordingly, each of the parties agrees that the other
parties shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction over the parties and
the matter (subject to the provisions set forth below), in addition to any
other remedy to which it may be entitled, at law or in equity.

         11.15     Alternative Dispute Resolution.

         The parties will attempt to settle any claim or controversy arising
out of this Agreement through consultation and negotiation in good faith and in
a spirit of mutual cooperation.  If those attempts fail, then such dispute will
be mediated by a mutually-


December 16, 1993                                                       Page 37
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<PAGE>   38
acceptable mediator to be chosen by the parties within fifteen (15)
business days after written notice by one of the parties demanding mediation. 
Neither the Company nor Motorola may unreasonably withhold consent to the
selection of the mediator.  By mutual agreement, however, the Company and
Motorola may postpone mediation until the Company and Motorola have each
completed some specified but limited discovery regarding the dispute.  The
parties may also mutually agree to replace mediation with some other form of
alternative dispute resolution ("ADR"), such as neutral fact-finding or a
mini-trial.

         Any dispute which the parties cannot resolve through negotiation,
mediation or another form of ADR within forty-five (45) days of the date of the
initial demand for ADR by one of the parties may be submitted to any federal or
state court of competent jurisdiction located in the State of California for
resolution.  The Company and Motorola agree to waive any objection to personal
jurisdiction or venue in any forum located in the State of California.  The use
of any ADR procedures will not be construed under the doctrine of laches,
waiver or estoppel to affect adversely the rights of any party.  Nothing in
this Section 11.15 will prevent any party from resorting to judicial
proceedings if (i) good faith efforts to resolve the dispute under these
procedures have been unsuccessful, or (ii) interim relief from a court is
necessary to prevent serious and irreparable injury to such party.

         11.16     Mutual Release.

         Motorola releases the Company and the Company releases Motorola from
every claim of infringement of every patent (whether a U.S. patent or
otherwise) for any acts carried out anywhere in the world at any time on or
before the Closing Date.


         11.17     [Intentionally Omitted]


         11.18     [Intentionally Omitted]


12.      Post-Closing Activities.

         12.01     Further Assistance.

         From and after the Closing Date, upon the request of Motorola, the
Company shall execute, acknowledge and deliver to Motorola (or cause to be
executed, acknowledged and delivered by others) all such further bills of sale,
assignments, transfers, conveyances, and other documents, in a form reasonably
satisfactory to Motorola, as may be required to convey, transfer and deliver to
Motorola, and protect Motorola's right, title and interest in the Acquisition
Assets, and as otherwise may be 


December 16, 1993                                                       Page 38
Revision 7



<PAGE>   39
appropriate to carry out the transactions contemplated by this Agreement.

         12.02     Regulatory Filings.

         Each of the parties hereto will furnish to the other parties hereto
such necessary information and reasonable assistance as such other parties may
reasonably request in connection with its preparation of necessary filings or
submissions to any governmental agency.

         12.03     [intentionally omitted]

         12.04     Litigation and IRS Support.

         In the event and for so long as any party actively is contesting or
defending against any charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand in connection with (i) any transaction
contemplated under the agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other parties will cooperate with the
contesting or defending party and his or its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
his or its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor).


         IN WITNESS WHEREOF, Motorola, and the Company have caused this
Agreement to be signed by their respective corporate seals to be affixed
hereto, all as of the date first written above.


MOTOROLA INC.,                                  WESTERN DIGITAL CORPORATION, 
a Delaware Corporation                          a Delaware Corporation

By:__________________________                   By:__________________________ 
    Murray A. Goldman                                A. Travis White 
    Senior Vice President                            Executive Vice President
     and Assistant General Manager                    Group General Manager
    Semiconductor Products Sector                    Microcomputer Products


December 16, 1993                                                      Page 39
Revision 7



<PAGE>   40
                          WESTERN DIGITAL CORPORATION
                            8105 IRVINE CENTER DRIVE
                               IRVINE, CA  92718
                                 (714) 932-5000
                                                                              

                                                                    Dated as of
                                                              December 23, 1993
Motorola Inc.
6501 William Cannon Drive West
Austin, TX  78721

Attn:   Richard Timmins
        Vice President/Controller
        Microcontroller Technologies Group
        Mail Drop OE16

Dear Rick:
           Reference is made to the Asset Purchase Agreement dated as of
December 16, 1993 (the "Agreement") by and between Motorola Inc.  ("Motorola")
and Western Digital Corporation (the "Company").  As used herein, the terms
"Closing" and "Closing Date" shall have the meanings ascribed to them in the
Agreement.  In consideration of the mutual promises contained herein, Motorola
and the Company hereby agree as follows:

           1.      Section 2.01(b) of the Agreement provides for calculation of
the amount to be paid by Motorola to the Company for raw material and
work-in-process inventories based on Schedule 2.01(b) to the Agreement, to be
updated as of 4:00 p.m. on the Closing Date.  The parties have agreed to use
the dollar amount set forth in such Schedule 2.01(b) ($6,735,267.65) for
purposes of the Closing and hereby agree to adjust that amount to reflect the
final raw material and work-in-process schedule which will be prepared in a
manner consistent with such Schedule 2.01(b) and will be available after the
Closing.  If the adjusted amount is higher than the amount used for Closing,
Motorola will pay the additional amount to the Company in two equal
installments at the time of payments on the Buyer Note.  If the adjusted amount
is lower, then the difference will be offset against the two installments due
under the Buyer Note.

           2.      Sections 3.01 and 4.07 of the Agreement, as well as other
sections of the Agreement, refer to "Listed Employees" as reflected in Schedule
3.01 to the Agreement.  Such Schedule 3.01 has been prepared as of the most
recent 


<PAGE>   41
Motorola Inc.
Page 2


practicable time prior to the Closing; however, the parties are
continuing the process of determining whether certain additional Company
employees (approximately 15 or less in number) will become "Listed Employees"
subject to such additional employees qualifying under Motorola's employment
policies.  The persons to be added to the list of "Listed Employees" will be
designated in writing by Motorola in its discretion prior to January 1, 1994.

        3.  Schedule 1.03 (Excluded Assets) to the Agreement contains,
among other things, a schedule of excluded supplies which will need to be
updated as of 4:00 p.m. on the Closing Date.  Since this update will not be
available until after the Closing, the parties agree to complete such update in
a manner consistent with the schedule of excluded supplies which is included in
such Schedule 1.03 as of the Closing.

        4.   The allocation referred to in Section 2.02 of the Agreement
will be completed and agreed to by the parties by January 30, 1994.

                   
                                Very truly yours,
                                Western Digital Corporation


                                By:_____________________________
                                       Timothy J. Leyden
                                       Vice President and
                                 Controller, Microcomputer Products


Accepted to and accepted
as of the date first
written above:

Motorola Inc.


By:______________________________
         Richard Timmins
    Vice President and Controller
  Microcontroller Technologies Group



<PAGE>   42



                LIST IDENTIFYING CONTENTS OF OMITTED SCHEDULES 
                   PURSUANT TO REGULATION S-K ITEM 601(B)(2)



<TABLE>
           <S>                      <C>
           Schedule 1.01(a)         Description of Real Property
           Schedule 1.02            Assumed Liabilities
           Schedule 1.03            Excluded Assets
           Schedule 2.01(b)         Raw Material/WIP
           Schedule 2.01(c)         Capital Float
           Schedule 3.01            Listed Employees
           Schedule 5.03(d)         Legal Opinion by Gibson Dunn & Crutcher
           Schedule 5.03(g)         Estoppel Certificate
           Schedule 6               Joint Escrow Instructions
           Schedule 7.05(b)         Government Approvals and Consents
           Schedule 7.09            Excluded Contracts
           Schedule 7.13            Insurance Information
           Schedule 9.02            Confidentiality Agreement
</TABLE>


           Registrant will furnish supplementally a copy of any omitted
schedule to the Commission upon request.


<PAGE>   43



                                   EXHIBIT A


                                PROMISSORY NOTE


$6,735,267.65                                               December 23, 1993

    FOR VALUE RECEIVED, Motorola, Inc., the undersigned promises to pay to the
order of Western Digital Corporation or holder the sum of Six Million Seven
Hundred Thirty-Five Thousand, Two Hundred Sixty-Seven and 65/100 dollars
($6,735,267.65) payable in two (2) equal installments, thirty (30) and sixty
(60) days from the date hereof.

    At the option of the holder, this note shall become immediately due and
payable without notice or demand upon occurrence of any of the following
events:  (a) voluntary or involuntary filing of a petition in bankruptcy or for
reorganization;  (b) application for appointment or appointment of a Receiver;
or  (c) assignment for the benefit of creditors or adjudication in bankruptcy
by or against the undersigned.

    The liability of the undersigned hereunder shall be absolute and
unconditional.  Maker hereby waives presentment, demand for payment, notice of
dishonor, protest, and any and all notices and demands in connection with the
performance, default or enforcement of this note.

    All amounts in arrears to bear interest at the rate of one and a half
percent per month or the legal maximum until finally paid.  If after any
default, the holder shall place this note with an attorney for collection,
then, if permitted by law, the undersigned agrees to pay all costs and expenses
of such action, and a reasonable attorney's fee.


Witness:

                          
_________________________             _____________________________
                                       Richard F. Timmins
                                       Vice President and Controller
                                       Microcontroller Technologies Group
                                       Motorola Inc.
                          
                          

             END OF EXHIBIT 1 TO FORM 8-K




<PAGE>   1


                             EXHIBIT 2 TO FORM 8-K





                                SUPPLY AGREEMENT
                                    BETWEEN
                          WESTERN DIGITAL CORPORATION
                                      AND
                                 MOTOROLA INC.


                               DECEMBER 16, 1993






<PAGE>   2



                                    CONTENTS



<TABLE>
<S>   <C>                                                                   <C>
I.    DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
II.   AGREEMENT TERM . . . . . . . . . . . . . . . . . . . . . . . . . .     4
III.  STATEMENT OF WORK  . . . . . . . . . . . . . . . . . . . . . . . .     4
IV.   ORDERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4
        A.  Purchase Orders And Weekly Releases  . . . . . . . . . . . .     4
        B.  Capacity Planning  . . . . . . . . . . . . . . . . . . . . .     5
        C.  Performance Shortfalls . . . . . . . . . . . . . . . . . . .     7
        D.  Change Orders. . . . . . . . . . . . . . . . . . . . . . . .     7
        E.  Scrapped Wafers  . . . . . . . . . . . . . . . . . . . . . .     8
                1.   Wafers Scrapped at Western Digital's Request  . . .     8
                2.   Wafers Scrapped Due to Motorola Processing  . . . .     9
V.    INVOICES AND PAYMENT TERMS . . . . . . . . . . . . . . . . . . . .     9
VI.   PRICING  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9
        A.  Wafer Price  . . . . . . . . . . . . . . . . . . . . . . . .     9
        B.  Wafer Device Yield . . . . . . . . . . . . . . . . . . . . .     9
VII.  SUPPORT SERVICES . . . . . . . . . . . . . . . . . . . . . . . . .    10
        A.  Engineering Lots . . . . . . . . . . . . . . . . . . . . . .    10
        B.  Test Changes - Process Improvement Support . . . . . . . . .    10
        C.  Motorola Report Requirements . . . . . . . . . . . . . . . .    11
        D.  Mask Sets  . . . . . . . . . . . . . . . . . . . . . . . . .    11
        E.  Probe Cards  . . . . . . . . . . . . . . . . . . . . . . . .    11
        F.  Prototype Device Development . . . . . . . . . . . . . . . .    11
                1.   Prototype Design Information  . . . . . . . . . . .    11
                2.   Prototype Capacity Reservation  . . . . . . . . . .    12
                3.   Prototype Diagnostics - Acceptance  . . . . . . . .    12
VIII. GENERAL SALES TERMS  . . . . . . . . . . . . . . . . . . . . . . .    12
        A.  Packing Requirements . . . . . . . . . . . . . . . . . . . .    12
        B.  Quality Assurance  . . . . . . . . . . . . . . . . . . . . .    13
        C.  Failure Analysis . . . . . . . . . . . . . . . . . . . . . .    13
        D.  Delivery Terms . . . . . . . . . . . . . . . . . . . . . . .    13
        E.  Minimum Device Per Wafer Standards . . . . . . . . . . . . .    13
IX.   ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . .    13
        A.  Drawing, Design and Specification Changes  . . . . . . . . .    13
        B.  Motorola Changes . . . . . . . . . . . . . . . . . . . . . .    14
        C.  Material/Process Failure Analysis  . . . . . . . . . . . . .    14
        D.  IBM SQP Support  . . . . . . . . . . . . . . . . . . . . . .    14
        E.  IBM Maverick Initiative  . . . . . . . . . . . . . . . . . .    14
        F.  Support Customer Questionnaires, Surveys, and
 Audits . . . .    14
        G.  Customer Audit . . . . . . . . . . . . . . . . . . . . . . .    14
        H.  No Ozone Depleting Substances  . . . . . . . . . . . . . . .    15
        I.  Work in Process ("WIP") Processing . . . . . . . . . . . . .    15
        J.  Right to process Wafers  . . . . . . . . . . . . . . . . . .    15
X.  OPERATIONS AND DISPUTE RESOLUTION  . . . . . . . . . . . . . . . . .    15
                                                                          

</TABLE>


                                      i


<PAGE>   3

<TABLE>
<S>     <C>                                                                 <C>
        A.  Operations Managers Appointment and Duties . . . . . . . . .    15
        B.  Executive Committee. . . . . . . . . . . . . . . . . . . . .    16
        C.  Mediation  . . . . . . . . . . . . . . . . . . . . . . . . .    16
XI.   WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    16
XII.  INTELLECTUAL PROPERTY AND CONFIDENTIALITY  . . . . . . . . . . . .    17
XIII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . .    19
        A.  No Waiver of Default . . . . . . . . . . . . . . . . . . . .    19
        B.  Entire Agreement . . . . . . . . . . . . . . . . . . . . . .    19
        C.  Assignment, Transfer or Sale of Facility . . . . . . . . . .    20
        D.  Compliance with Laws . . . . . . . . . . . . . . . . . . . .    20
        E.  Independent Contractor . . . . . . . . . . . . . . . . . . .    20
        F.  Employees  . . . . . . . . . . . . . . . . . . . . . . . . .    20
        G.  Similar Products . . . . . . . . . . . . . . . . . . . . . .    21
        H.  Notices  . . . . . . . . . . . . . . . . . . . . . . . . . .    21
        I.  Termination Provisions . . . . . . . . . . . . . . . . . . .    22
        J.  Government Contract Conditions . . . . . . . . . . . . . . .    22
        K.  Importation And Exportation  . . . . . . . . . . . . . . . .    22
        L.  Limitation of Liability  . . . . . . . . . . . . . . . . . .    22
        M.  Section Titles . . . . . . . . . . . . . . . . . . . . . . .    23
        N.  Counterparts.  . . . . . . . . . . . . . . . . . . . . . . .    23
        O.  Time of the Essence  . . . . . . . . . . . . . . . . . . . .    23
        P.  Force Majeure  . . . . . . . . . . . . . . . . . . . . . . .    23
        Q.  Severability . . . . . . . . . . . . . . . . . . . . . . . .    23
        R.  Governing Law. . . . . . . . . . . . . . . . . . . . . . . .    23
        S.  Survival . . . . . . . . . . . . . . . . . . . . . . . . . .    23
</TABLE>
                                                                    

                                      ii


<PAGE>   4


                                SUPPLY AGREEMENT
                                    BETWEEN
                          WESTERN DIGITAL CORPORATION
                                      AND
                                 MOTOROLA INC.
   This Supply Agreement (this "Agreement") is made and entered into on
December 16, 1993, by and between Motorola, Inc., a Delaware corporation,
located at 3501 Ed Bluestein Boulevard, P.O. Box 6000, Austin, Texas 78762 and
Western Digital Corporation, a Delaware corporation located at 8105 Irvine
Center Drive, Irvine, California 92718 ("Western Digital").  This Agreement
shall be effective (the "Effective Date") as of the Closing Date, as such term
is defined in the Asset Purchase Agreement by and between the parties dated
concurrent herewith (the "Asset Purchase Agreement"); provided, however, that
if for any reason the Closing, as such term is defined in the Asset Purchase
Agreement, does not occur within the time periods required pursuant to Section
6 of the Asset Purchase Agreement then this Agreement shall be null and void
and have no further effect.
                               
                                I. DEFINITIONS

   The definitions set forth in this Article I shall apply to the corresponding
words and phrases set forth with initial capitalization in this Agreement,
whether used in the singular or the plural.

    1.1  CONFIDENTIAL INFORMATION

   shall mean any Trade Secret (as defined below) (other than any Trade Secret
covered by Section IX(J)(2) hereinbelow) one Party (the "Disclosing Party")
discloses to the other Party (the "Receiving Party") pursuant to this Agreement
either:

    A.       in a document (any written, graphic, machine readable, or other
             tangible form) which is either
             
             1.      marked "Confidential" or in some other manner to indicate
                     its confidential nature; or 
             
             2.      a tape or electronic transfer of data that is inherently
                     known to have a confidential nature, such as a tape for
                     reticle generation, a netlist, a database for 
                     testing, etc.;

    B.       orally, provided that the Disclosing Party:
    

                                      1


<PAGE>   5
    
             1.      at the time of disclosure, states that such orally
                     disclosed Trade Secret is confidential, and 
             
             2.      within a reasonable time (not to exceed thirty
                     (30) days) after its oral disclosure, delivers to
                     the Receiving Party a document setting forth written
                     confirmation of the prior oral confidential disclosure
                     and setting forth the Trade Secret so disclosed.

        1.2      "CYCLE TIME"

        shall mean the total time from starting a Wafer until shipment of the
Finished Wafer to Western Digital as set forth in Schedule 1.2.  
    
        1.3    "DEVICE"

        shall mean a Die that is identified by a Western Digital manufacturing
device code, regardless of whether or not the Die has been separated from a
Wafer.

        1.4      "DEVICES PER WAFER" OR "DPW"

        shall mean the number of Good Devices that fit on a given Wafer.

        1.5      "DEVICE PER WAFER YIELD"

        shall mean the ratio of Good Devices to DPW for a given Wafer.

        1.6      "DIE"

        shall mean an individual integrated circuit or component which when
completed create an integrated circuit.  
    
        1.7      "ENGINEERING LOT"

        shall mean a group of Wafers which are processed to experiment with
changes in the manufacturing process.  
    
        1.8      "FINAL RELEASE ORDER"

        shall mean a final detailed order placed seven (7) days prior to
starting production of a Lot of Wafers.

        1.9      "FINISHED WAFER"

        shall mean a completely processed, Background and Probed Wafer which
meets the minimum Device Per Wafer Yield requirements set forth in Schedule 1.9
and meets the applicable Finished Wafer thickness specification.

        1.10     "FINISHED WAFER DELIVERY RECEIPT"

        shall mean Western Digital's written verification of an order that has
been delivered by Motorola to fulfill a Final Release Order.  

                                      2
    

<PAGE>   6
        1.11     "FIRST BUSINESS DAY"

        shall mean Monday or such other day as the parties shall mutually agree
from time to time.

        1.12     "GOOD DEVICE"

        shall mean Devices which successfully complete the unit probe program
and are operational integrated circuit products in unpackaged form.  

        1.13    "HOLDS"

        shall have that meaning set forth in Section IV(C) hereof.

        1.14     "LOT"

        shall mean a group of Wafers (each Wafer containing a quantity of
Devices) which are processed as a group.  Each Lot will be assigned a specific
alpha/numeric identification that distinguishes it from any other group that
contains the same type of Die so that each Lot can be separately identified and
tracked throughout the life of all Die produced in a Lot.

        1.15     "MONTH" OR "WEEK"

        shall mean a Motorola fiscal month or week.

        1.16     "PRE-RELEASE ORDER"

        shall mean a preliminary detailed order issued fourteen (14) days prior
to starting production of a lot of Wafers.  Pre-Release Order are for planning
purposes and are subject to modification by a Change Order or corresponding
Final Release Order.

        1.17     "PROBE"

        shall mean Motorola's final test of a processed wafer to determine if
it qualifies as a Finished Wafer.  

        1.18     "PROTOTYPE DEVICE"

        shall have the meaning as defined in Section VII(F).

        1.19     "RISK STARTS"

        shall be defined as Wafers related to Die that have not been released
to production by Western Digital but for which the fabrication process has been
released by Western Digital.

        1.20     "RUSH LOT"

        shall mean Wafer Lots which are to be processed on an accelerated basis
equal to sixty-five one hundredths (.65) of the then current Cycle Time.

                                      3

<PAGE>   7
     1.21     "SCRAPPED WAFERS"
shall have the meaning as defined in Section IV(E)(1) .
 
     1.22     "TRADE SECRET"
shall mean any information, including a formula, pattern, compilation,
program, device, method, technique, or process, that: derives independent
economic value, actual or potential, from not being generally known to the
public or to other persons who can obtain economic value from its disclosure or
use; and is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.  Without limiting the generality of the foregoing,
Trade Secrets include information concerning designs of Devices, layout data,
and test programs for testing Wafers and Devices.

     1.23     "WAFER"
shall mean a crystalline substrate for integrated circuit production which
when fully processed may consist of several potential finished Devices.

     1.24     "FINISHED WAFER SPECIFICATIONS"
shall mean the specifications related to the warranty of Wafers as set
forth in Schedule XI.

     1.25     "WAFER STANDARD PRICE"
shall be the price for Finished Wafers set forth in Schedule 1.25.

                               II.  AGREEMENT TERM

     Unless terminated earlier under Section XIII(I), the term of this Agreement
to supply Wafers to Western Digital shall be three (3) years from the Effective
Date (the "Term").  The last Final Release Order to be received by Motorola no
later than seven days prior to the end of the Term.
     
                             III.  STATEMENT OF WORK

     During the Term of this Agreement, Motorola will manufacture and sell
Finished Wafers to Western Digital at the Wafer Standard Price, in the
quantities and to the requirements set forth herein and perform other services
as described in this Agreement.  Motorola will make sufficient wafer starts to
meet the minimum quantity requirements according to the timetable for delivery
of Finished Wafers and with the Cycle Times as set forth in this Agreement.
Motorola will achieve the minimum Device Per Wafer Yield as set forth in
Schedule 1.9.

    Subject to Western Digital's confidentiality obligations and such reasonable
confidentiality restrictions as Western Digital may require, Western Digital
will be 

                                        4

<PAGE>   8
responsible for supplying Motorola with Western Digital's technical
information and reasonable assistance regarding the production of masks sets
and Probe necessary for the manufacture of Devices as required by this
Agreement.  Western Digital will provide such technical information and
assistance in a timely manner, so that Motorola may meet delivery timetables.
   
   In no event will Motorola sell Wafers containing Western Digital's Devices
to any other party.

                              IV. ORDERING

A. PURCHASE ORDERS AND WEEKLY RELEASES

   Thirty (30) days prior to the beginning of each Western Digital fiscal
quarter, Western Digital shall issue a blanket purchase order ("Purchase
Order") in an amount sufficient to cover the price of the Finished Wafers
Western Digital forecasts purchasing from Motorola during such quarter (the
"Purchase Order Period").  Purchase Orders will list the anticipated quantity
of Double Level Metal ("DLM") or Triple Level Metal ("TLM") Finished Wafers
that Western Digital anticipates purchasing during such quarter.

   On the First Business Day of each week, two weeks prior to Western Digital's
actual desired date for wafer start, Western Digital will issue a non-binding
Pre-Release Order.  The Pre-Release Order will list the quantity of DLM or TLM
Finished Wafers that Western Digital forecasts for start two weeks later.  Each
Pre-Release Order will be followed by a Final Release Order, on the First
Business Day of each week, one week prior to Western Digital s actual desired
date for wafer start.  Final Release Orders may not be modified or canceled by
Western Digital without the consent of Motorola.

   Motorola will make sufficient weekly wafer starts to deliver to Western
Digital the Finished Wafers as described on the Final Release Order within the
Cycle Times.  Western Digital will coordinate the timing of its Pre-Release
Orders and Final Release Orders so that, Western Digital will receive Finished
Wafers on the date it desires such Finished Wafers (provided that Motorola
delivers the Finished Wafers within the Cycle Time).  

B.  CAPACITY PLANNING

    In order to plan for the efficient utilization of the plant manufacturing
capacity, the parties agree to exchange such other forecasts and information as
is reasonably requested by the other party.  Each month, Western Digital will
provide Motorola with a six (6) month forecast of its Finished Wafer
requirements which shall be used by Motorola for planning purposes only in
order to allocate sufficient plant capacity to fulfill Western Digital's
forecasted Finished Wafer requirements; provided, however, that such forecasts


                                      5


<PAGE>   9

Western Digital shall not constitute a commitment by Western Digital to
Motorola with respect to such forecasted requirements.  Motorola and Western
Digital shall meet as often as reasonably requested by the other party, but at
least quarterly, to address capacity planning and capacity utilization issues.

   Motorola has determined that as of the Effective Date, the manufacturing
capacity of the wafer fabrication facility located at 1 Banting Way, Irvine,
California (the "Wafer Fab Facility") is two thousand (2000) DLM, or DLM
Equivalent (as defined below), Finished Wafers per week ("Initial Fab
Capacity").  The parties also agree that, for purposes of measuring the
additional manufacturing process requirements, a TLM Finished Wafer shall be
converted to the equivalent DLM Finished Wafer (the "DLM Equivalent") by
reference to the following: (i) each TLM Finished Wafer shall be deemed
equivalent to one DLM Finished Wafer if eight hundred and fifty (850) or fewer
TLM Finished Wafers per week are ordered by Western Digital under a Final
Release Order,  (ii) each TLM Finished Wafer ordered by Western Digital on a 
Final Release Order over and above eight hundred and fifty (850) per week but
less that one thousand (1000) per week shall be deemed equivalent to one and 
two tenths (1.2) of a DLM Finished Wafer, (iii) the DLM Equivalent for each 
TLM Finished Wafer ordered by Western Digital on a Final Release Order over 
and above one thousand (1000) per week shall be reasonably determined and 
negotiated by the parties based upon the actual additional manufacturing 
process requirements of such volumes of TLM Finished Wafers.

   During calendar years 1994 and 1995, Motorola agrees to provide to Western
Digital the minimum number of DLM Equivalent Finished Wafers per calendar
quarter as set forth in Schedule IV(B) (the "WD Finished Wafer Capacity");
provided, however, that all Wafers started prior to the Effective Date hereof
shall be processed to Finished Wafers by Motorola but shall not count against
the WD Finished Wafer Capacity.  Notwithstanding, however: (i) Motorola is
entitled to one hundred percent (100%) of any capacity above the Initial Fab
Capacity, and  (ii) as of the beginning of the fourth calendar quarter of 1994,
and thereafter, Motorola shall be entitled to a minimum of fifty percent (50%)
of the Initial Fab Capacity.  Motorola may reject any Purchase Order,
Pre-Release Order, or Final Release Order which would exceed the WD Finished
Wafer Capacity.  Motorola will accept Purchase Orders, Pre-Release Orders, and
Final Release Orders which conform to the requirements of this Agreement and
provide sufficient Wafer starts therefor.

   Western Digital's utilization of the WD Finished Wafer Capacity for any
given week shall be determined with reference to the Finished Wafers ordered by
Western Digital in a Final Release Order and for which Western Digital issues a
Finished Wafer Delivery 

                                      6

<PAGE>   10
Receipt.  WD Finished Wafer Capacity which is not
utilized by Western Digital in any given quarter due to Western Digital's
failure to place Pre-Release Orders or Final Release Orders sufficient to
utilize the WD Finished Wafer Capacity available in any given quarter will not
carry over to any subsequent quarter.

   The parties agree that to the extent that, for any reason, Western Digital
does not receive the total number of Finished Wafers equal to the total WD
Finished Wafer Capacity, such production capacity will have been made available
to Motorola for which Motorola will pay to Western Digital a contingent
capacity fee of up to fifteen million dollars ($15,000,000) (the "Contingent
Capacity Fee") paid as follows:  (i) on or before January 15, 1995, Motorola
will pay to Western Digital in cash a sum equal to ten million dollars
($10,000,000) less Earned Capacity Credits (as defined below) attributable to
Finished Wafers delivered by Motorola to Western Digital pursuant to this
Agreement in calendar 1994; provided, however, in no event shall Motorola pay
to Western Digital an amount less than zero; and  (ii) on or before January 15,
1996, Motorola will pay to Western Digital in cash a sum equal to fifteen
million dollars ($15,000,000) less the aggregate Earned Capacity Credits
attributable to Finished Wafers delivered by Motorola to Western Digital
pursuant to this Agreement in calendar 1994 and 1995; ; provided, however, in
no event shall Motorola pay to Western Digital an amount less than zero.  As
used herein, the dollar amount of "Earned Capacity Credits" attributable to a
particular period shall be equal to the number of Finished Wafers delivered in
that period multiplied by one hundred and fifty dollars ($150).  The amount of
Contingent Capacity Fee which, at any given point in time, has not been paid to
Western Digital shall be referred to herein as the "Unpaid Contingent Capacity
Fee."  Upon termination of this Agreement for any reason prior to January 15,
1996, Motorola shall pay to Western Digital, in addition to any other amounts
due to Western Digital, the Unpaid Contingent Capacity Fee.

   Throughout the Term of this Agreement the parties shall cooperate to
maintain records that accurately reflect Western Digital's utilization of the
Wafer capacity.  The parties shall cooperate to mutually verify these records
for accuracy and completeness as often as either party may reasonably request
but in no event less frequently than monthly.  

C.  PERFORMANCE SHORTFALLS

   A "Performance Shortfall" shall be defined as an amount equal to the number
of Finished Wafers ordered by Western Digital in a Final Release Order that are
not shipped to Western Digital within the applicable Cycle Time.  On a monthly
basis during the Term of this Agreement the parties shall cooperate to
determine the existence and amount of any Performance Shortfall.

                                      7

<PAGE>   11

   Motorola will exercise its best efforts to allocate capacity to make up any
Performance Shortfalls in the number of Finished Wafers required to meet the WD
Finished Wafer Capacity as soon as possible.  Motorola shall allocate Wafer
production capacity to make up any Performance Shortfalls in the number of
Western Digital's Finished Wafers such that Western Digital is allocated as 
much additional capacity possible in proportion to the percentage of Wafer 
production allocated to Western Digital with reference to other entities to 
which Motorola is contractually obligated to produce Wafers for at the Wafer 
Fab Facility ("Customers") so that Western Digital is allocated an additional
pro rata share of the capacity so that Western Digital's Performance Shortfall 
make up Wafer capacity allocation is no less favorable than any other Customer 
and all Customers have their capacity allocation reduced on a pro rata basis 
in order to provide capacity to make up the Performance Shortfall.  

D.  CHANGE ORDERS.

   Western Digital may make changes to any Pre-Release Order (a "Change Order")
to increase the quantity of Finished Wafers that had been ordered in a
Pre-Release Order, and Motorola shall accept such Change Order provided that
such increases do not exceed one hundred and twenty-five percent (125%) of the
quantities to be purchased under the relevant quarterly Purchase Order on a
cumulative basis for such quarter.

   Western Digital may issue Change Orders to any Pre-Release Order to decrease
the quantity of Finished Wafers that had been ordered in a Pre-Release Order,
and Motorola shall accept such Change Order provided that such decreases are
not below seventy-five percent (75%) of the quantities to be purchased under
the relevant quarterly Purchase Order on a cumulative basis for such quarter.

   Western Digital may issue a Change Order to suspend the processing of Wafers
for a maximum of forty-five (45) days (a "Hold On-Line") or have processing of
Wafers resumed by notifying Motorola at no additional charge; provided,
however, that the following limits on the number of Wafers on hold shall apply:
(i) during the first and second calendar quarters of 1994 no more than one
thousand (1000) Wafers may be on Hold On-Line at any given time, (ii) during
the third calendar quarter of 1994 no more than seven hundred and fifty (750)
Wafers may be on Hold On- Line at any given time, (iii) during the fourth
calendar quarter of 1994 and thereafter throughout the Term of this Agreement
no more than five hundred (500) Wafers may be on Hold On-Line at any given
time.  The delivery schedules and Cycle Times for any Wafers on Hold On-Line
shall be increased by one day for each day such Wafers are on Hold On-Line.  By
the end of the forty-five (45) day Hold On-Line period, Western Digital will
notify Motorola of its 

                                      8

<PAGE>   12
decision to: (i) reactivate processing of the Hold On-Line Wafers, (ii)
scrap the Hold On-Line Wafers in accordance with Section IV(E)(1), or (iii)
have such Hold On-Line Wafers taken out of the production line by Motorola
whereupon Motorola will store such Wafers within the Wafer Fab Facility until
directed otherwise by Western Digital (a "Hold Off-Line") at no additional
charge.  A Hold Off-Line shall not exceed one year, after which Motorola may
dispose of such Wafers.  In the event Western Digital elects to place Wafers on
Hold Off-Line it shall be billed an adjusted price for each Hold Off-Line
Wafer based upon the point of production at which the Wafers were when Western
Digital notified Motorola to place such Wafers on Hold Off-Line status in
accordance with the percentages of the Wafer Standard Price set forth in
Schedule IV(D) (the "Partially Processed Wafer Price").  Upon Western Digital's
request Motorola shall either: (i) dispose of the Hold Off-Line Wafers or (ii)
provided Motorola approves such request, which approval shall not be
unreasonably withheld, Motorola will reactivate processing of the Hold Off-Line
Wafers and process them into Finished Wafers and deliver such Finished Wafers
in accordance with the terms and conditions set forth herein (the "Hold
Off-Line Completion Processing"); provided, however, that Motorola may charge
Western Digital for the Hold Off-Line Completion Processing ("Completion
Charge") provided that the sum of the Completion Charge and the Partially
Processed Wafer Price shall not exceed the then current Wafer Standard Price.
Any Hold Off-Line Wafers disposed of under this Section shall count against the
WD Finished Wafer Capacity.

    Western Digital may also issue a Change Order to have any given Lot be
processed as a Rush.  Western Digital may, at no additional charge, have a
maximum of ten (10) Lots of any kind (prototype or non-prototype) on Rush
status in Motorola's fabrication line at any one time.  

E.  SCRAPPED WAFERS

    1. WAFERS SCRAPPED AT WESTERN DIGITAL'S REQUEST

       Western Digital may issue Change Orders to scrap Wafers as it may
       determine necessary from time to time ("Scrapped Wafers");  provided,
       however, that: (i) Western Digital shall pay the Partially Processed
       Wafer Price for each Scrapped Wafer, (ii) each Scrapped Wafer shall
       count as a Finished Wafer against the WD Finished Wafer Capacity, and
       (iii) upon Western Digital's request, Motorola shall deliver the 
       Scrapped Wafers to Western Digital.


    2. WAFERS SCRAPPED DUE TO MOTOROLA PROCESSING

       If Wafers are scrapped due to problems in Motorola's processing of
       such Wafers, Motorola will promptly notify Western Digital and Western
       Digital shall 
    

                                      9


<PAGE>   13
     not be charged for such Scrapped Wafers and such Scrapped Wafer shall
     not count as a Finished Wafers against the WD Finished Wafer Capacity.
     Motorola shall at Western Digital's option and upon notice from Western
     Digital:  (i) restart new Wafers with the same device to replace such
     Scrapped Wafers,  (ii) restart new Wafers with a different device to
     replace such Scrapped Wafers, or  (iii) cancel its order for such Wafers
     without charge.
                         
                         V.  INVOICES AND PAYMENT TERMS

    Motorola shall submit an invoice to Western Digital at the end of each week
for Finished Wafers which were shipped to Western Digital during that week (the
"Weekly Invoice").  Within thirty (30) days of Western Digital's receipt of the
Weekly Invoice Western Digital shall remit payment to Motorola for all Finished
Wafers for which Western Digital has issued a Finished Wafer Delivery Receipt.
   
    Western Digital shall pay all applicable sales taxes on the Finished Wafers
delivered to Western Digital hereunder and for which Western Digital has issued
a Finished Wafer Delivery Receipt.

                                  VI.  PRICING

A.  WAFER PRICE

    The prices for all Finished Wafers delivered pursuant to this Agreement
shall be at the Wafer Standard Price applicable on the date upon which the
Finished Wafers are delivered to Western Digital hereunder, provided that
Western Digital does not require a Substantially Different Process (as defined
below) to produce such Finished Wafers.  A "Substantially Different Process" is
a process which is different from the current process in that it requires a
significant increase in the number of steps in the process or a significant
increase in the complexity of processing and such increased complexity results
in increases to the cost of processing such Finished Wafers.  

B.  WAFER DEVICE YIELD

    The Device Per Wafer Yield for Western Digital Devices in production as of
the Effective Date is set forth in Schedule 1.9.  The Device Per Wafer Yield
for Western Digital Devices which are not currently in production ("New
Devices") and which do not require a Substantially Different Process shall be
established pursuant to the following procedure:


                                     10

<PAGE>   14

   Motorola shall process five hundred (500) Wafers for New Device mask sets
("Baseline Wafers") whereupon the following formula shall be used to establish
an Device Per Wafer for that Device type:

   The Device Per Wafer shall be calculated according to the following formula
based upon the actual Device Per Wafer Yield realized in the production of the
Baseline Wafers:

    DPW  =   Average Actual Die Per Wafer From The Baseline Wafers ("ADPW") 
            --------------------------------------------------------------
            ([SIGMA]D        (ADPW)            *     (Quantity of D Wafers))
                      ----------------------      ----------------------------
                      Standard Die Per Wafer      Total Western Digital Wafers

             [SIGMA]D = Sum of all Western Digital Devices (ED) in the
                        production line.

   The DPW established pursuant to the foregoing section with reference to the
Baseline Wafers (the "Initial DPW") shall remain in effect for the remainder of
the quarter within which the final Baseline Wafers used to determine the DPW
were processed ("Baseline Quarter").  For all quarters beyond the Baseline
Quarter the Initial DPW shall be increased by (the "D0 Curve") percentages set
forth on Schedule 1.9 (the "Updated DPW").

   Motorola shall provide Western Digital any and all information relating to
the processing of the Baseline Wafers as Western Digital may reasonably request
including, without limitation, information related to any conditions or
problems encountered in processing of the Baseline Wafers that may have
effected the actual Device Per Wafer Yield of the Baseline Wafers (the
"Baseline Processing Data").

   In the event that Western Digital concludes, based upon its analysis of the
Baseline Processing Data, that the Device Per Wafer Yield results obtained for
certain of the Baseline Wafers do not accurately reflect the Device Per Wafer
Yield that can be expected for such Device type Wafers ("Unrepresentative
Wafers") then upon Western Digital's notice to Motorola of such
Unrepresentative Wafers, Motorola shall recalculate the Initial DPW based upon
the Device Per Wafer Yield realized from the Baseline Wafers after excluding
the Device Per Wafer Yield related to the Unrepresentative Wafers.

   Provided that the Baseline Wafers meet or exceed the parametric test
criteria provided by Western Digital Baseline Wafers shall be priced at the
 then current Wafer price for the  given Wafer type (DLM or TLM).

                             VII.  SUPPORT SERVICES

A.  ENGINEERING LOTS

   Motorola shall provide Western Digital with engineering and operational
support associated with establishing Motorola's capability to produce new
Devices under this Agreement.  Western Digital shall pay an additional ten
percent (10%) above the Wafer 


                                      11


<PAGE>   15
Standard Price (after subtracting Probe costs) for all Wafers related to an 
Engineering Lot.  Each Engineering Lot Wafer shall count against the WD
Finished Wafers Capacity.  

B.  TEST CHANGES - PROCESS IMPROVEMENT SUPPORT

   Motorola agrees to take reasonable steps to improve the economies of Device
fabrication and manufacture including accommodating test changes as may be
mutually agreed (taking into account any impact on capacity).  Western Digital
will provide at no charge to Motorola, High Pin Count Test Capacity for Western
Digital products produced by Motorola that exceed existing test capacities.
Priorities to be determined by Western Digital.  

C.  MOTOROLA REPORT REQUIREMENTS

   Motorola shall provide Western Digital with information requested by Western
Digital which is reasonably related to Western Digital's administration of this
Agreement including all reports and information identified in Schedule VII(C).

D.  MASK SETS

   Western Digital shall either furnish to or, if Western Digital requests that
Motorola create such, reimburse Motorola for, the costs associated with the
creation of the initial mask set for each new Device type not listed on
Schedule VII(D) (the "Initial Mask Set"); provided that for each Initial Mask
Set ordered during the Term of this Agreement Motorola shall charge Western
Digital a price that the parties shall negotiate in good faith. taking into
account the actual costs incurred by Motorola in the production of such Initial
Mask Set.  All costs and charges associated with mask sets other than the
Initial Mask Sets which are necessary or advisable to produce the Finished
Wafers in the volumes and within the time periods specified herein shall be
paid by Motorola.  

E.  PROBE CARDS

   Western Digital shall reimburse Motorola for the costs associated with the
creation of the initial production probe card for each Device type not listed
on Schedule VII(D) ("Initial Probe Card"); provided that for each Initial Probe
Card ordered by Western Digital during the Term of this Agreement Motorola
shall charge Western Digital a price that the parties shall negotiate such
price in good faith, taking into account the actual costs incurred by Motorola
in the production of such Initial Probe Card.  All costs and charges associated
with the replacement or maintenance of the Initial Probe Cards or probe cards
other than the Initial Probe Cards which are necessary or advisable to produce
the Finished Wafers in the volumes and within the time periods specified herein
shall be paid by Motorola.  

                                      12

<PAGE>   16
F.  PROTOTYPE DEVICE DEVELOPMENT

   Western Digital may, at its discretion, provide to Motorola designs for new
Devices ("New Design") or modifications of existing Devices ("Revised Design").
Such New Designs and Revised Designs shall be processed by Motorola in
accordance with the terms and conditions of this section (the "Prototype
Devices").  Each Prototype Device Wafer shall count against the WD Finished
Wafer Capacity.  Any non-standard processing of Prototype Device designs must
be approved in writing in advance by Western Digital.

             1.      PROTOTYPE DESIGN INFORMATION

                     Western Digital shall provide to Motorola an initial data
             base for reticle generation, or acceptable production reticles for
             the Prototype Devices to be fabricated by Motorola (the "Prototype
             Database") by electronic transmission of such data or by such
             other format as reasonable under the circumstances.  Western
             Digital shall retain ownership in one set of reticles per device
             and any additional reticles required as a result of development
             work related to Prototype Device revisions.  Motorola shall be
             responsible for the costs associated with any replacement reticle
             sets.  All reticles and data base for a given Device shall be
             returned to Western Digital within five (5) days of Western
             Digital written request for therefor.

             2.      PROTOTYPE CAPACITY RESERVATION

                     Upon seven (7) days prior written notice from Western
             Digital to Motorola of Western Digital's desire to have Motorola
             fabricate a particular Prototype Device design, Motorola shall
             make available the resources and processing capacity for mask
             preparation and wafer starts for material for the Prototype Device
             design fabrication as necessary to produce the Prototype Device
             designs specified by Western Digital in such written notice.

             3.      PROTOTYPE DIAGNOSTICS - ACCEPTANCE

                     Each lot of Wafers based upon the Prototype Device designs
             ("Prototype Lot") shall be subject to the then current diagnostic
             (i/v) tests and sample plan (accept/reject) criteria applicable to
             the type of material (DLM or TLM) used. If the Prototype Lot does
             not pass this criteria, Motorola shall provide such Prototype Lot
             to Western Digital at no cost and the Prototype Device Wafer shall
             not count against the WD Finished Wafer Capacity.  In addition, at
             Western Digital's request and at no additional charge, Motorola
             shall immediately restart fabrication of that 

                                      13

             

<PAGE>   17
             Prototype Device design as a Rush Lot; provided, however, that
             such Rush Lots shall not count against the Rush Lots which
             Western Digital is permitted to specify elsewhere in this
             Agreement.  Motorola shall provide Western Digital a copy of all
             Diagnostics Data along with each Lot of Wafers based upon the
             Prototype Device designs. Motorola shall provide Western Digital
             with detailed documentation on Prototype Device array and test
             structures and any non-standard processing which the Prototype
             Device Wafers were subjected to.

                           VIII. GENERAL SALES TERMS

A.  PACKING REQUIREMENTS

   Motorola shall properly pack, mark, and ship all Wafers or other items to be
delivered to Western Digital under this Agreement as follows: A packing list
shall accompany each shipping package unit; Each packing list, bill of lading
or equivalent and an invoice which shall: identify every applicable Western
Digital Purchase Order number, and every Device code of every Device and
circuits on every Wafer being shipped; specify by Device code the quantity of
both Devices and Wafers being shipped, and the location to which Wafers or
items are being shipped; Each shipping package unit shall be properly marked
with the applicable order number(s).  All Wafers and other items to be
delivered to Western Digital under this Agreement shall be properly packed,
marked and shipped in accordance with Western Digital packing criteria QC000159
attached hereto as Schedule VIII(A).  

B.  QUALITY ASSURANCE

   Motorola shall, through its quality assurance organization, inspect Wafers
delivered to Western Digital under this Agreement according to the Quality
Assurance Specifications requirements of Schedule VIII(B).

   In order to avoid undue delay in the processing of the Devices, Motorola
shall notify Western Digital of any known or suspected failure mechanisms
and/or defects which are or which it suspects might be present in a completed
Device.  Western Digital shall use reasonable efforts to provide Motorola the
information it reasonably requests in connection with Motorola's efforts to
correct such failure mechanisms and/or defects.  

C.  FAILURE ANALYSIS

   Motorola shall provide Western Digital with failure analysis reports on all
returns by Western Digital customers, qualification unit failures, and
reliability monitor failures describing root cause and corrective action within
a reasonable time of Motorola's receipt of such returns.  

                                      14

<PAGE>   18
D.  DELIVERY TERMS

   Title and risk of loss or damage to the products will pass to Western
Digital FOB destination Western Digital facility in Irvine, California;
provided, however, that title and risk of loss or damage to products delivered
within the Wafer Fab Facility in Irvine will pass upon Western Digital's
issuance of a Finished Wafer Delivery Receipt therefor.

E.  MINIMUM DEVICE PER WAFER STANDARDS

   Motorola shall not ship any Finished Wafer with actual Device Per Wafer
Yield less than that set forth in the Minimum Device Per Wafer Yield Schedule
("Substandard Wafers") without the prior written approval of Western Digital.
In the event Western Digital approves shipment of Substandard Wafers: (i) the
Substandard Wafers shall not be counted against Western Digital's Finished
Wafer capacity utilization, and (ii) Western Digital shall be charged only that
portion of the then current Wafer price based upon percentage of actual Device
Per Wafer Yield so that if the actual Device Per Wafer Yield was forty percent
(40%) of the DPW then Western Digital would be charged forty percent (40%) of
the then current Wafer price.

                           IX. ADDITIONAL COVENANTS

A.  DRAWING, DESIGN AND SPECIFICATION CHANGES

   Changes to the drawings, designs, and specifications related to the Devices,
Wafers and technical specifications related thereto as referred to in this
Agreement may be requested by either party.  Upon request for change, Motorola
shall submit a report to Western Digital setting forth its best judgment as to
the probable effect, if any, of the requested change in the function,
performance, reliability, schedule, payment, unit prices, delivery, or other
criteria ("Change Report") within a reasonable time after a request for change
by Western Digital and with a request for change by Motorola.  The parties will
then mutually agree as to the appropriate action.  

B.  MOTOROLA CHANGES

   Motorola shall obtain Western Digital's written approval prior to
implementing any change to any requirement which is referenced in Western
Digital documents RL000100 and/or QC000156 and/or QC000175, and which affects
any product or products procured by Western Digital under this Agreement
including, without limitation, any changes to the processes used to fabricate
the Devices.  

C.  MATERIAL/PROCESS FAILURE ANALYSIS

   Motorola will perform material/process analysis and take action necessary to
correct any deficiencies discovered as a result of such analysis whenever there
is a known or 

                                      15

<PAGE>   19
suspected material or process problem.  Motorola and Western
Digital work together to bring about continuous process improvement.  

D. IBM SQP SUPPORT

   Motorola shall support Western Digital in meeting the requirements of the
IBM SQP agreement.  A copy of the latest IBM SQP agreement is attached hereto
as Exhibit A (the ("IBM Agreement").  Motorola shall support Western Digital in
responding to and complying to any changes to the IBM SQP from and after the
Effective Date of this Agreement including, without limitation any changes to
the monthly KPI report as defined in the IBM Agreement.  

E. IBM MAVERICK INITIATIVE

   Motorola is responsible for meeting the requirements of the IBM "Maverick
initiative" (including "no rework policy") as described in the Jedec Proposal
dated 8/4/93 a copy of which Motorola has in its possession.  Motorola shall
support Western Digital in responding to and complying with agreed to changes
to the Maverick initiative from and after the Effective Date of this Agreement.

F. SUPPORT CUSTOMER QUESTIONNAIRES, SURVEYS, AND AUDITS

   Motorola shall complete all reasonable questionnaires and surveys from
Western Digital customers.  These questionnaires and surveys shall be completed
by Motorola in a timely manner.  

G. CUSTOMER AUDIT

   Upon two weeks prior notice, Motorola shall permit Western Digital's
customers to audit the Motorola Facility(ies) that produce Western Digital
Devices pursuant to this Agreement and to perform source inspection of
customers product if required by Western Digital contract with its customer.
Western Digital's customers must agree to comply with Motorola's security,
safety and confidentiality requirements.  Motorola shall support such audits by
Western Digital customers including, setting the date of such audit, presenting
the Fab Quality systems, supplying guides to support the physical audit and
taking all requested corrective action to the audit results in a timely manner.

H. NO OZONE DEPLETING SUBSTANCES

   The United States Clean Air Act amendments of 1990 provide specific
requirements for the usage and elimination of ozone depleting substances
("ODS").  Motorola's Wafer Fab Facility shall either be free of ODS or Motorola
shall have a plan, which must be provided to Western Digital, for the
elimination of ODS within the time frames dictated by the United States Clean
Air Act.

                                      16



<PAGE>   20



I.  WORK IN PROCESS ("WIP") PROCESSING

   As of the Effective Date of this Agreement, a certain quantity of Wafers
shall be at various stages of processing within the Wafer Fab Facility (the
"WIP Wafers") Motorola will process the WIP Wafers and deliver same to Western
Digital as Finished Wafers in accordance with the Cycle Times set forth herein
(taking into account time spent processing the Wafers prior to the Effective
Date hereof) and other requirements applicable to Finished Wafers as set forth
herein (the "Finished WIP Wafer").  For each Finished WIP Wafer, Western
Digital shall pay Motorola the Wafer Standard Price applicable to all Finished
Wafers on the date upon which the Finished WIP Wafer is delivered to Western
Digital.  Finished WIP Wafers shall not count against the WD Finished Wafer
Capacity.  

J.  RIGHT TO PROCESS WAFERS

   1    Western Digital hereby grants to Motorola the right to use any
part of or all of Western Digital's Intellectual Property (as defined in
Section 1.03 of the Asset Purchase Agreement as the "Company's Intellectual
Property"), whether now existing or hereafter acquired which is necessary to
make Finished Wafers for Western Digital hereunder.

   2.   Western Digital hereby agrees that Western Digital shall make no
claim under any Western Digital Intellectual Property, whether now existing or
hereafter acquired, to prevent Motorola from using or disclosing or to require
Motorola to pay any royalty for using or disclosing, anywhere in the world, any
process for making CMOS wafers that is identical to or substantially the same
as either of the specific processes of making CMOS wafers that Western Digital
has disclosed or hereafter discloses to Motorola for Motorola to use to make
0.9 micron, double-level metal and triple-level metal wafers for Western
Digital hereunder.  This Section IX(J)(2) shall in fact survive after
termination of this Agreement, regardless of the basis for such termination.

                     X. OPERATIONS AND DISPUTE RESOLUTION

A.  OPERATIONS MANAGERS APPOINTMENT AND DUTIES

   Each party shall appoint an individual with overall responsibility for
monitoring performance and addressing any performance deficiencies under this
Agreement (the "Managers").  Subject to and in accordance with the terms and
requirements of this Agreement, the Managers shall meet as often as necessary
and shall respectively serve as each party's chief coordinator to effect the
purposes of this Agreement and to address resolution of disputes hereunder.  In
the event any issue or dispute is not resolved for 


                                      17


<PAGE>   21
whatever reason within ten (10) days from the commencement of such issue or
dispute, either Manager may refer the issue or dispute to the Executive 
Committee.  

B.  EXECUTIVE COMMITTEE.

   Each party shall appoint a member of its management to serve on an executive
committee (the "Executive Committee").  The Executive Committee shall meet by
teleconference or in person at the Wafer Fab Facility, as often as either party
may reasonably request for the purpose of reviewing high level operational
priorities and objectives related to this Agreement and resolving disputes that
arise under this Agreement that have not been resolved by the Operating
Oversight Committee.  In the event that the Executive Committee is unable to
resolve a dispute within fifteen (15) days after the initial request to resolve
such dispute is received by the Executive Committee, then either party may
submit the matter for resolution as provided under Section X(C) hereof.

   Notwithstanding anything to the contrary contained herein, and irrespective
of the existence of any dispute between the parties, Motorola shall continue to
provide to Western Digital all products and services upon the terms and
conditions hereof during the pendency of any such dispute.  

C.  MEDIATION

   Motorola and Western Digital will attempt to settle any claim or controversy
through consultation and negotiation in good faith and a spirit of mutual
cooperation.  If those attempts fail, then the dispute will be mediated by a
mutually-acceptable mediator to be chosen by Motorola and Western Digital
within ten (10) days after written notice by a party demanding mediation.
Neither party may unreasonably withhold consent to the selection of a mediator,
and Motorola and Western Digital will share the costs of the mediation equally.

   Any dispute which cannot be resolved through negotiation or mediation within
thirty (30) days of the date of the initial demand by either party shall then
be finally resolved by the courts.  The use of any alternative dispute
resolution procedure will not be construed under the doctrines of laches,
waiver or estoppel to affect adversely the rights of either party.  And nothing
in this paragraph will prevent either party from resorting to judicial
proceedings if: (a) good faith efforts to resolve the dispute under these 
procedures have been unsuccessful, or (b) interim relief from a court is 
necessary to prevent serious and irreparable injury to one party or to others.


                                      18

<PAGE>   22

                                  XI. WARRANTY

   Motorola warrants that Finished Wafers sold hereunder shall at the time of
shipment be free and clear of liens and encumbrances, be in compliance with the
specifications set forth in Schedule XI, and be shall free from defects in
material and workmanship.  As determined by the Incoming Quality Inspection
which shall be performed by Western Digital, subject to good faith
verification, per Western Digital's Vendor Incoming Inspection document.

   THIS WARRANTY EXTENDS TO WESTERN DIGITAL ONLY AND MAY BE INVOKED BY WESTERN
DIGITAL ONLY FOR ITS CUSTOMERS.  MOTOROLA SHALL NOT ACCEPT WARRANTY RETURNS
DIRECTLY FROM WESTERN DIGITAL'S CUSTOMERS OR USERS OF WESTERN DIGITAL'S
PRODUCTS.  MOTOROLA DOES NOT WARRANT FINISHED WAFERS REJECTED BY WESTERN
DIGITAL AS A RESULT OF THE FOLLOWING, UNLESS, OTHERWISE PREVIOUSLY AGREED TO BY
THE PARTIES IN WRITING: (1) CHANGES TO WESTERN DIGITAL'S RELIABILITY TESTING,
OR (2) SUBSTANTIAL CHANGES IN WESTERN DIGITAL S PROCESSING OF THE FINISHED
WAFERS AFTER DELIVERY TO WESTERN DIGITAL.  THIS WARRANTY IS IN LIEU OF ALL
OTHER WARRANTIES WHETHER EXPRESS, IMPLIED OR STATUTORY INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE.  THIS WARRANTY
DOES NOT APPLY TO DEFECTS ARISING AS A RESULT OF WESTERN DIGITAL'S DESIGN OR
FORMULA.  WESTERN DIGITAL'S SOLE REMEDY FOR ANY BREACH SHALL BE LIMITED TO THE
REMEDIES SET FORTH IN THIS AGREEMENT.

   Within five (5) calendar days of Western Digital's request therefor Motorola
will provide Western Digital a return material authorization ("RMA") for all
Wafers to be returned under warranty ("Defective Wafers").

   Unless Motorola and Western Digital mutually agree that Motorola will repair
such Defective Wafers, Motorola will, at Western Digital's option, replace the
Defective Wafers with new Finished Wafers (as Performance Shortfalls in
accordance with Section IV(C) hereof) or refund the purchase price of such
Finished Wafers.  Defective Wafers shall not count against the WD Finished
Wafer Capacity.

                                      19


<PAGE>   23

   In the event repeated field failures occur with respect to a Device, or a
significant field failure occurs which requires immediate consideration,
Western Digital and Motorola shall discuss a solution thereof in good faith.

                 XII. INTELLECTUAL PROPERTY AND CONFIDENTIALITY

   A.        Except as provided on Section IX(J)(2) and except as required for
the performance of this Agreement, each Party shall treat as confidential all
Confidential Information of the other Party, shall not use such Confidential
Information and shall not disclose such Confidential Information to any third
party except as required for the performance of this Agreement, and subject to
confidentiality obligations at least as protective as those set forth herein.
Without limiting the foregoing, the Receiving Party shall use at least the same
degree of care which it uses to prevent the disclosure of its own confidential
information of like importance to prevent the disclosure of Confidential
Information disclosed to it by the Disclosing Party.

   B.        The Receiving Party has no obligation to refrain from making a
disclosure of Confidential Information if such disclosure is: 

    1.       in response to a valid order of a court or other governmental
             body of the United States or any political subdivision thereof;
             provided, however, that the Receiving Party making the disclosure
             pursuant to the order shall first have given notice to the
             Disclosing Party and made a reasonable effort to obtain a
             protective order requiring that the information and/or documents
             so disclosed be used only for the purposes for which the order was
             issued; or

    2.       otherwise required by law, or

    3.       necessary to establish rights under this Agreement.

   C.        The Receiving Party has no obligation to refrain from either
making a disclosure of, or using any information that: 

    1.       is already in the possession of the Receiving Party without
             obligation of confidence;

    2.       is independently developed by the Receiving Party; 

    3.       is or becomes publicly available without breach of this Agreement; 

    4.       is rightfully received by the Receiving Party from a third party.

                                      20

<PAGE>   24



   D.        The obligation to protect the Confidential Information shall
survive for three (3) years following the expiration or termination of this
Agreement.

   E.        Except for patents of AT&T, if any, covering the specific
processes for making CMOS Wafers, disclosed or to be disclosed by Western
Digital to Motorola, Motorola agrees to defend at its expense any suits brought
against Western Digital based upon a claim that any process performed by
Motorola under this Agreement directly infringe any patent or copyright and to
pay costs and damages finally awarded, in any such suit against Western
Digital, provided that Motorola is notified promptly in writing of the suit and
at Motorola's request and at its expense Motorola is given control of said suit
and all requested reasonable assistance for defense thereof.  If the use or
sale of any of the Finished Wafers is enjoined as a result of such suit,
Motorola, at its option and at no expense to Western Digital, shall either:
(i) obtain for Western Digital the right to use and sell the Finished Wafers,
(ii) substitute an equivalent method for performing the activity which is
acceptable to and qualified by Western Digital and extend this indemnity
thereto, or  (iii) accept return of the Finished Wafers and refund the purchase
price.  Motorola will use its best efforts to provide a remedy under clause (i)
or (ii) prior to refunding the purchase price under clause (iii).  This
indemnity does not extend to any suit based upon any infringement or alleged
infringement of any patent or copyright when such infringement is made
necessary by any article of Western Digital's design or formula.  This is the
entire liability of Motorola to Western Digital for patent or copyright
infringement relating to Finished Wafers or Motorola's activities.

   F.        Western Digital agrees to defend at its expense any suits brought
against Motorola based upon a claim that any Finished Wafers, or their Die,
furnished by Motorola to Western Digital infringes any patent or copyright when
such infringement is necessary for Motorola's compliance with Western Digital's
specifications or formula, and to pay costs and damages finally awarded in such
suit against Motorola, provided that Western Digital is notified promptly in
writing of the suit and at Western Digital's request and at its expense is
given control of said suit and all requested reasonable assistance for defense.
This Section XII(F) shall in fact survive after termination of this Agreement,
regardless of the basis for such termination.

   G.        The sale of Finished Wafers does not convey any license by
implication, estoppel, or otherwise, under any proprietary or patent rights of
Motorola covering combinations of Finished Wafers with other elements.

   H.        Western Digital agrees to indemnify, defend and hold harmless
Motorola from and against all damages, liabilities, costs and expenses
(including reasonable attorneys' fees for 

                                      21

<PAGE>   25
outside counsel but not in house counsel) arising out of any claims or suits 
filed against Motorola by AT&T alleging that the production of Wafers by
Motorola for supply to Western Digital pursuant to this Agreement using any
process disclosed to Motorola pursuant to this Agreement or the Asset Purchase
Agreement infringes any patent held by AT&T as of the closing date of the Asset
Purchase Agreement.  This Section XII(H) shall in fact survive after
termination of this Agreement, regardless of the basis for such termination.

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING FROM INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENT OR
COPYRIGHTS.

                        XIII. MISCELLANEOUS PROVISIONS

A.  NO WAIVER OF DEFAULT

    No course of dealing or failure of either party to strictly enforce any
term, right, or corrective with respect to any transaction, objection or order
hereunder shall be constructed as a waive of such item, right, or cancellation.
The failure of either party to exercise any termination right hereunder shall
not constitute a waiver of the rights granted herein with respect to any
subsequent default.  

B.  ENTIRE AGREEMENT

    This Agreement and that certain Asset Purchase Agreement between the
parties of even date herewith and the attached schedules and exhibits, which
are incorporated herein by this reference, contain the entire agreement of the
parties and supersedes all prior agreements, whether written or oral, with
respect to the subject matter.  Modification or amendment of this Agreement or
any part may be made only by written instrument executed by both parties.

C. ASSIGNMENT, TRANSFER OR SALE OF FACILITY

   Neither party shall assign, sublicense or otherwise transfer this Agreement
or any rights or obligations arising under this Agreement without the prior
written approval of the other party, provided, however, that no such consent
shall be required for the assignment of any rights or obligations arising under
this Agreement to any affiliate, subsidiary or division or in connection with a
merger, consolidation, sale of substantially all of the assets of either party
or an affiliate, subsidiary or division or any change of control, in which
event, this Agreement shall apply to, inure to the benefit of and be binding
upon the parties hereto and upon their respective successors in interest.
Motorola 

                                      22


<PAGE>   26
shall not delegate or subcontract its performance of this Agreement to
any third party.  In addition, Motorola may not transfer the manufacture of the
Devices to any physical location other than the Wafer Fab Facility prior to
qualifying such other location under criteria provided by Western Digital for
manufacture of the Devices.  

D.  COMPLIANCE WITH LAWS

   Each party shall at all times during the Term of this Agreement perform its
duties and obligations hereunder in full compliance with all requirements of
applicable laws, statutes, ordinances, rules, regulations, orders and decrees
of any state federal or local governmental entities.  

E.  INDEPENDENT CONTRACTOR

   It is agreed that Motorola is an independent contractor for the performance
of services under this Agreement, and that for accomplishment of the desired
result Western Digital is to have no control over the methods and means of
accomplishment, except as specifically set forth in this Agreement.  Motorola
is and shall be the sole employer and principal of any and all persons
providing services under this Agreement, and shall be obligated to perform all
requirements of an employer under federal, state, and local laws and ordinances
including, without limitation, payment of compensation to such personnel
including, without limitation, payment of all federal, state and local taxes or
contributions imposed or required under unemployment insurance, social security
and income tax laws with respect to such persons and for any injury to them in
the course of their employment.  Under no circumstances shall Motorola or its
employees or agents be construed to be employees of Western Digital, nor shall
Motorola's employees or agents be entitled to participate in the profit
sharing, pension, or other plans established for the benefit of Western
Digital's employees.  Under no circumstances shall Western Digital or its
employees or agents be construed to be employees of Motorola, nor shall Western
Digital's employees or agents be entitled to participate in the profit sharing,
pension, or other plans established for the benefit of Motorola's employees.

F.  EMPLOYEES

   Except pursuant to mutual written consent, during the term of this Agreement
Western Digital and Motorola s Semiconductor Product Sector will not recruit,
as an employee, consultant or in any other capacity, any personnel of the other
party who have provided services pursuant to this Agreement. 

G.  SIMILAR PRODUCTS

   It is understood by each party that the other has substantial independent
development relating to the subject matter of this Agreement and other
products.  This Agreement shall 

                                      23



<PAGE>   27
not limit a party's development, manufacture or marketing of other
products with ideas, concepts, techniques, know-how, designs, formulas,
algorithms or technology similar to the products that are the subject matter of
this Agreement; provided that such products are developed by the developing
party without reference to the other party's trade secrets or intellectual
property.  This Agreement shall not prohibit or restrict a party from
undertaking similar efforts with third parties, including competitors of the
other party, provided that such party does not breach its obligations under
this Agreement.  

H.  NOTICES

   All notices, requests, demands and other communications required or
permitted hereunder, other than routine operational communications under this
Agreement, shall be in writing and shall be deemed to have been duly given,
made and received only when personally delivered or delivered by Federal
Express or other nationally recognized courier service, or two (2) days after
having been deposited in the United States mail, certified mail, postage
prepaid, return receipt requested (except when such notice is a termination
notice, in which event any two (2) of the delivery methods described above must
be used), addressed as set forth below:


<TABLE>
<S>                     <C>

If to Western Digital:  Western Digital Corporation
                        8105 Irvine Center Drive
                        Irvine, CA  92718
         Attention:     A. Travis White
                        Executive Vice President,
                        General Manager, Microcomputer Products

                     
With a copy to:         Western Digital Corporation
                        8105 Irvine Center Drive
                        Irvine, CA  92718
         Attention:     Robert L. Erickson
                        Vice President Law & Administration


If to Motorola:         Motorola
                        3501 Ed Bluestein Boulevard
                        P.O. Box 6000
                        Austin, TX  78762
         Attention:     N.E. Stouder
                        Corporate Vice President, Manufacturing
</TABLE>


                                      24


<PAGE>   28

<TABLE>
<S>                  <C>
With a copy to:      Motorola Law Department
                     3501 Ed Bluestein Boulevard
                     P.O. Box 6000
                     Austin, TX  78762
       Attention:    Dirk Buikema, Esq.
</TABLE>


   Any party may change the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section for the giving of notice.  

I.  TERMINATION PROVISIONS

   Either party will be considered to be in default if any of the following
occurs: (a) it assigns this Agreement or any of its rights under this Agreement
in violation of Section XIII(C), (b) it fails to perform any material
obligation under this Agreement, including the obligation to pay amounts when
due; (c) it makes an assignment for the benefit of its creditors, or a
receiver, trustee in bankruptcy or similar officer is appointed to take charge
of its assets; (d) it files for relief under state or federal bankruptcy laws;
or (e) there is a substantial change in its ownership.  In that event, the
non-defaulting party may terminate this Agreement if the other has failed to
take corrective action within 30 days after its receipt of a notice of default
and intent to terminate.  

J.  GOVERNMENT CONTRACT CONDITIONS

   If Western Digital s purchase order is placed pursuant to a U.S. Government
contract:  (a) under no circumstances will Motorola provide an SF1411 or any
other cost data;  (b) Motorola will provide an SF1412 only in limited
circumstances and only upon written agreement prior to order acceptance;  (c)
no Government terms and conditions shall apply to this Agreement or any order
unless agreed to in writing by Motorola.  

K.  IMPORTATION AND EXPORTATION

   Both parties agree that they will comply with all U.S. export laws and that
they will not directly or indirectly export, reexport, resell, ship or divert
any product or technical data or software furnished hereunder to any country
for which the U.S. at the time of export or reexport requires an export license
or other governmental approval without first obtaining such license or
approval.  

L.  LIMITATION OF LIABILITY

   UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR LOSS OF DATA,
REPROCUREMENT COSTS, LOST REVENUE OR PROFITS, OR FOR ANY OTHER SPECIAL,
INCIDENTAL OR CONSEQUENTIAL 

                                      25

<PAGE>   29
DAMAGES, EVEN IF THEY WERE FORESEEABLE OR ONE PARTY
HAS INFORMED THE OTHER OF THEIR POTENTIAL.

    In no event shall Motorola be liable for any breach of this agreement to the
extent it arises from Western Digital s breach of any of the warranties and
representations made by Western Digital in the Asset Purchase Agreement.  

    Motorola's total liability for breach of this Agreement will not exceed
the sum of Fifteen Million   Dollars ($15,000,000) plus the Unpaid Contingent
Capacity Fee (the "Liability Limitation"), provided that the Liability
Limitation shall not apply and shall have no force or effect, in the event
that Motorola has not delivered at least seventy-five percent (75%) of
the total number of Finished Wafers that Motorola has agreed to deliver under
this Agreement for the period beginning three (3) months before and three (3)
months after the events upon which Western Digital's claim is based ("Wafer
Delivery Failure"), unless such Wafer Delivery Failure occurs as a direct
result of a force majeure event as specified in Section XIII(P) hereof, for
which there is no reasonable cure.  

M.  SECTION TITLES

    Section titles as to the subject matter of particular sections herein are
for convenience only and are in no way to be construed as part of this
Agreement or as a limitation of the scope of the particular sections to which
they refer.  

N.  COUNTERPARTS.

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

O.  TIME OF THE ESSENCE

    Time is of the essence as to each and every provision of this Agreement.

P.  FORCE MAJEURE

    Neither party shall be in default of its obligations under this Agreement to
the extent that its performance is delayed or prevented by causes beyond its
reasonable control, including, without limitation, acts of God, acts of third
party suppliers directly related to performance of work under this Agreement,
civil disorders, acts of any civil or military authority, or judicial action.
Motorola shall notify Western Digital at the earliest indication of any
interruption in supplying Finished Wafers or other difficulty which may impact
the availability of products under this Agreement.  


                                      26

<PAGE>   30
Q.  SEVERABILITY

   If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions  shall not in any way be affected or impaired.  

R.  GOVERNING LAW.

   This Agreement shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of California.  

S.  SURVIVAL

   All obligations contemplated to be performed, whether as a whole or in part,
after termination of this Agreement, shall in fact survive after termination of
this Agreement regardless of the basis for such termination.

    IN WITNESS WHEREOF, Motorola and Western Digital have caused this Agreement
to be signed by their respective duly authorized officers, as of the date above
first written.  


MOTOROLA INC.                     WESTERN DIGITAL CORPORATION

By:_________________________      By:____________________________
Murry A. Goldman                  A. Travis White
Sr. Vice President                Executive Vice President
and Assistant General Manager     MCP Operations
Semiconductor Products Section    Western Digital Corporation
Motorola, Inc.



                                      27


<PAGE>   31



                LIST IDENTIFYING CONTENTS OF OMITTED SCHEDULES 
                   PURSUANT TO REGULATION S-K ITEM 601(b)(2)


<TABLE>
             <S>                   <C>
             Schedule 1.2           Finished Wafer Cycle Time Schedule
             Schedule IV(D)         Partially Processed Wafer Price Schedule
             Schedule VII(C)        Motorola Report Requirements
             Schedule VII(D)        Western Digital Device Types
             Schedule VIII(A)       Packing Criteria
             Schedule VIII(B)       Quality Assurance Specifications
             Schedule XI            Finished Wafer Specifications
             Exhibit A              Supplier Quality Program
</TABLE>

             Registrant will furnish supplementally a copy of any omitted
schedule to the Commission upon request.



<PAGE>   32



                                  SCHEDULE 1.9
                    MINIMUM DEVICE PER WAFER YIELD SCHEDULE


<TABLE>
<CAPTION>
                          Q1   1994        Q2   1994        Q3   1994        Q4   1994        Q1   1995        Q2   1995
    Western Digital          DPW              DPW              DPW              DPW              DPW              DPW
    Current Device
         Codes
  <S>                        <C>              <C>              <C>              <C>              <C>              <C>
  1028EA                      *                *                *                *                *                *
  3396EE                      *                *                *                *                *                *
  6112EB                      *                *                *                *                *                *
  6125EB                      *                *                *                *                *                *
  6140EB                      *                *                *                *                *                *
  7613EC                      *                *                *                *                *                *
  7855EB                      *                *                *                *                *                *
  9127ED                      *                *                *                *                *                *
  9133EA01                    *                *                *                *                *                *
  9324EC                      *                *                *                *                *                *
</TABLE>



                     MINIMUM DEVICES PER WAFER CALCULATION

Each month a standard deviation will be calculated from the immediately
preceding three months for each Western Digital Device.  A minimum device per
wafer ("MDPW") will be calculated as the point * standard deviations
from the mean.  If the standard deviation of the Devices per Wafer for any
Device type as calculated for any given month is greater than the previous
month's standard deviation then the previous month's standard deviation will be
used to calculate the MDPW, otherwise the current month's standard deviation
will be used to calculate the MDPW.

                                                             D0 Curve

<TABLE>
<CAPTION>
                  Q1   1994        Q2   1994        Q3   1994        Q4   1994        Q1   1995        Q2   1995
<S>                   <C>              <C>              <C>              <C>              <C>              <C>
DO CURVE               *                *                *                *                *                *
</TABLE>


* Confidential portion has been omitted and filed separately with the 
  Commission.




<PAGE>   33



                                 SCHEDULE 1.25

                         WAFER STANDARD PRICE SCHEDULE


<TABLE>
<CAPTION>
                            1994                                               1995
               Q1        Q2        Q3        Q4                   Q1        Q2        Q3        Q4
<S>           <C>        <C>       <C>       <C>                  <C>       <C>       <C>       <C>
DLM PRICE      *          *         *         *                    *         *         *        *
TLM PRICE      *          *         *         *                    *         *         *        *
</TABLE>


Prices are for Finished Wafers of the Wafer types indicated delivered to
Western Digital.  Quarters indicated are according to the Motorola fiscal year.



* Confidential portion has been omitted and filed separately with the
  Commission.


<PAGE>   34



                                 SCHEDULE IV(B)
                    WESTERN DIGITAL FINISHED WAFER CAPACITY
                         (Finished Wafers per Quarter)


<TABLE>
<CAPTION>
             1st Qtr             2nd Qtr           3rd Qtr             4th Qtr
             -------             -------           -------             -------
 <S>           <C>                 <C>               <C>                 <C>
 1994           *                   *                 *                   *
 1995           *                   *                 *                   *
 1996           *                   *                 *                   *
</TABLE>


  WIP means Wafers in process in the Wafer Fab Facility as of the Effective Date
  of this Agreement.


* Confidential portion has been omitted and filed separately with the
  Commission.