On or before August 12, 2011, the Company informed all employees who will be terminated as part of this restructuring. From August 15 forward, certain employees critical to the transaction will be paid from the transition budget and be separated from the Company as their transition roles wind down and allowing the Company to meet the budgetary levels outlined in the June 2011 Investor Presentation provided to the Supporting Noteholders (the “June 2011 Presentation”).

The Company shall continue or immediately undertake a process to market the Sale Assets (the “Sale Process”). The Sale Process will permit parties to bid on all of the Sale Assets as a group or separately on any of the following group of assets (the “Asset Groups”): (i) the Devens Assets; (ii) the LBIE Claim; (iii) the Core Assets and (iv) the Non-Core Assets (provided that separate bidding on individual assets that comprise Non-Core Assets may be permitted with the consent of the Supporting Noteholders, such consent not to be unreasonably withheld). The Sale Process shall be completed in a bankruptcy case (the “Bankruptcy Case”) filed under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the District of Delaware on terms and conditions reasonably acceptable to the Supporting Noteholders.

The Sale Process shall be effectuated either through or subsequent to one or more auctions pursuant to Section 363 of the Bankruptcy Code, in which holders of 13% Notes provide a “credit-bid” pursuant to Section 363(k) of the Bankruptcy Code for the Sale Assets (the “Stalking Horse Bid”).³ The Stalking Horse Bid will (i) contain a release price of $30 million⁴ in cash or, if the Supporting Noteholders consent in its sole discretion, in other consideration for the sale of the Core Assets such that the holders of the 13% Notes consent to the sale of the Core Assets to a third party in an amount above the release price and (ii) otherwise allow the holders of 13% Notes to allocate, in their discretion, the Stalking Horse Bid among the Asset Groups if one or more bids are received on any of the individual Asset Groups. None of the Sale Assets, other than existing inventory sold in the ordinary course of business, shall be sold or disposed of outside of the Sale Process without the consent of the Supporting Noteholders. Subject to Bankruptcy Court approval, all proceeds from the Sale Assets (net of costs and other amounts required to be paid in connection with sales including without limitation, cure costs, taxes, broker fees, required payments to third parties under the sales agreements and other transaction costs), whether pursuant to the Sale Process, the Stalking Horse Bid or otherwise, will go directly to pay down

the claims of the holders of 13% Notes until such holders are paid in full in cash (including, but not limited to, post-petition interest at the contract rate), to the extent that after such paydown the Company will retain sufficient cash to cover Reserved Cash.

During the Sale Process, the Company will operate pursuant to a budget (the “Budget”), which Budget is outlined on Schedule A hereto. The Sale Process is anticipated to be conducted over a period of approximately three months. The Company will also be permitted to use Reserved Cash for the contemplated purposes, including, without limitation, up to $10.7 million to cover any (a) Company advisor fees and (b) costs of winding up the Bankruptcy Case (exclusive of Severance/PTO Benefits Payments otherwise addressed herein), including a plan of reorganization to the extent the Company so chooses, and, subject to approval of the Bankruptcy Court, an amount not to exceed $50,000 for the fees of the UCC (if any). If the Company decides to pursue confirmation of a plan of reorganization, the Supporting Noteholders agree to support such a plan solely on the terms and conditions set forth in the Restructuring Support Agreement (as defined below), including that such plan not require payments in excess of amounts specified in the Restructuring Support Agreement (including payments of no more than $200,000 to holders of general unsecured claims, unless the holders of the 13% Notes are paid in full).

The Supporting Noteholders will support the Company’s restructuring with consent to cash collateral and/or accounts receivable usage, pursuant to the Budget and agreed upon protections. The cash collateral order will provide (i) that all proceeds of the Sale Process (net of costs and other amounts required to be paid in connection with sales including, without limitation, cure costs, taxes, broker fees, required payments to third parties under the sales agreements and other transaction costs) will go directly to pay down the claims of the holders of 13% Notes until such holders are paid in full in cash (including, but not limited to, post-petition interest at the contract rate), to the extent that after such paydown the Company will retain sufficient cash to cover Reserved Cash and (ii) subject to the approval by the Bankruptcy Court (and subject to any requirements of the Bankruptcy Court), $12.5 million of cash will immediately be used to pay down the claims of the holders of 13% Notes. If the Bankruptcy Court does not permit all or a portion of the net sale proceeds to be immediately paid to the holders of 13% Notes, then such proceeds shall be held in a segregated account by the Company subject to the first priority perfected liens of the holders of 13% Notes pending further order of the Bankruptcy Court. The Supporting Noteholders will also support court approval of a management incentive plan that provides for an amount equal to 5% of gross cash sale proceeds from a third party (i.e. not pursuant to the Stalking Horse Bid or an acquisition vehicle in which management has an equity interest of more than 20% or management has committed to invest more than $1 million) for the Core Assets; provided, however, the amount provided in the management incentive plan shall not be less than $1 million.⁵

If the Stalking Horse Bid is the highest and best bid for either all of the Sale Assets or a subset of the Sale Assets that includes the Core Assets and the sale is consummated:

the company (“NewCo”) that purchases the assets pursuant the Stalking Horse Bid would, subject to agreed corporate governance provisions, support development of the Wafer Business with working capital as outlined on Schedule B hereto, and pursuant to mechanisms to be described in the Asset Purchase Agreement and would offer to hire existing employees, with the same salary or wages, comparable severance and other benefits comparable in the aggregate (“Comparable Terms”), sufficient to support the development of the Wafer Business; and

The board of directors of NewCo will establish a management incentive plan as soon as practicable after consummation of the sale to provide designated members of senior management of NewCo with stock, options and/or other instruments representing, in the aggregate, up to 10% of the equity value of NewCo relating to the Core Assets, and Newco will offer short term transition contracts for certain members of existing management who are required for a transition period on terms to be agreed upon between such members of management and the Supporting Noteholders prior to filing the Bankruptcy Case, with any such costs reducing the budget set forth on Schedule B on a dollar for dollar basis. The transition contracts for the current general counsel and chief financial officer will (i) require such consultants to be available on a full time basis and (ii) contain non-compete clauses for the duration of the transition contracts.

The Company and the Supporting Noteholders shall set forth their agreements and undertakings contemplated by this Proposal in a restructuring support agreement to be executed prior to the filing of the Bankruptcy Case which shall include, among other things, milestones to achieve the restructuring and agreement to provide mutual releases upon consummation of the Sale Process (the “Restructuring Support Agreement”).

On or before August 15, 2011, the Company shall have commenced the Bankruptcy Case in the District of Delaware.

Operating Activities

Other Transition Charges

Severance/PTO/Benefits Payments

Total Budget

This represents all Severance/PTO/Benefits payments required through the completion of the Sales Process, based on the employees the Company intends to terminate prior to the end of the Sale Process. If the Company decides to terminate additional employees prior to the end of the Sale Process, these employees would be entitled to severance to be paid out of the additional $1.9 million reserved for potential additional severance and the Budget will be increased by this amount. If every employee is terminated as a result of the Sale Process (for example, Newco or the third party purchaser of the Core Assets does not offer comparable employment terms to any current employee of the Company), the Company would pay a total of an additional $1.9 million in additional severance and the Budget will be increased by this amount.

Operating Activities

Capex for Wide Wafer Development

Total