AMD Holding Research, Design and Development Agreement - AMD Saxony Holding GmbH and Advanced Micro Devices Inc.



                                   AMD HOLDING
                   RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT

                               Dated 11 March 1997

                                     between

                            AMD SAXONY HOLDING GMBH,

                                       and

                          ADVANCED MICRO DEVICES, INC.



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                                   AMD HOLDING
                              RESEARCH, DESIGN AND
                             DEVELOPMENT AGREEMENT

THIS AMD HOLDING RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT (this 'Agreement')
dated as of 11 March, 1997 is entered into between AMD SAXONY HOLDING GmbH, a
limited liability company organized and existing under the laws of Germany and
registered in the Commercial Register of the Dresden County Court, HRB 13931
('AMD Holding'), and ADVANCED MICRO DEVICES, INC., a corporation organized and
  -----------
existing under the laws of the State of Delaware, U.S.A. ('AMD Inc.').
                                                           --------

WHEREAS, AMD Saxony Manufacturing GmbH ('AMD Saxonia') is a wholly-owned
                                         -----------
Subsidiary of AMD Holding, which in turn is a wholly-owned Subsidiary of AMD
Inc., and

WHEREAS, AMD Saxonia, AMD Holding and AMD Inc. (together, the 'AMD Companies')
                                                               -------------
are currently involved in the initial planning stages of a project pursuant to
which AMD Saxonia will construct, own and operate inter alia a Plant to
manufacture Wafers using high-volume semiconductor Wafer fabrication processes
along with an adjoining Design Center, each of which is to be located in
Dresden, Germany, and

WHEREAS, it is expected that the Design Center will employ qualified
individuals, mostly hired from local colleges, universities and technical
institutes and having advanced educational degrees, to conduct bona fide
research on advanced semiconductor products and on the redesign and development
of variants of existing semiconductor products, and

WHEREAS, this research is expected to focus on system architecture of
microprocessors, circuit designs and improvements of computation and compression
algorithms, and the products involved are expected to cover a range of advanced
logic devices such as microprocessors and circuits for telecommunications and
multimedia applications, and

WHEREAS, AMD Inc. is engaged in research, development, design, manufacturing and
marketing of semiconductor products, and

WHEREAS, concurrently herewith AMD Holding and AMD Saxonia are entering into an
AMD Saxonia Research, Design and Development Agreement (as amended, supplemented
or otherwise modified from time to time, the 'AMD Saxonia Research Agreement'),
                                              ------------------------------
pursuant to which AMD Holding will obtain, and AMD Saxonia will provide,
assistance in the area of research, design and development of semiconductor
products, and

WHEREAS, AMD Inc. wishes to obtain assistance in the area of research, design
and development of semiconductor products from AMD Holding, and AMD Holding is
willing to provide such assistance, in each case on the terms and subject to the
conditions of this Agreement, and

WHEREAS, concurrently herewith (i) AMD Holding and AMD Saxonia are entering into
that certain AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the 'AMD Saxonia Wafer Purchase
                                           --------------------------
Agreement'), and (ii) AMD
---------

 
Saxonia, AMD Holding and AMD Inc. are entering into that certain License
Agreement (as amended, supplemented or otherwise modified from time to time, the
'License Agreement'), and 
 -----------------
  
WHEREAS, capitalized terms not defined herein shall have the meaning assigned to
them in the AMD Saxonia Research Agreement.

NOW, THEREFORE, in consideration of the mutual covenants expressed herein, the
parties hereby agree as follows:


                                    ARTICLE I
                                Statement of Work

     (a) On the terms and subject to the conditions provided herein, (i) AMD
     Inc. hereby retains AMD Holding to provide, or to arrange for AMD Saxonia
     to provide, research, design and development services ('Services') related
                                                             --------
     to semiconductor products to or for the benefit of AMD Inc. or, at its
     request, to or for the benefit of Fujitsu AMD Semiconductor Limited
     ('FASL') or Subsidiaries of AMD Inc. other than AMD Holding and AMD
       ----
     Saxonia, and (ii) AMD Holding hereby agrees to use its reasonable
     commercial efforts to provide, or to arrange for AMD Saxonia to provide,
     the Services. In furtherance of the foregoing, AMD Holding shall furnish,
     or shall cause AMD Saxonia to furnish, all personnel, facilities, labor,
     materials, tools, equipment and supervision as may be necessary and
     commercially reasonable to provide, or to arrange for AMD Saxonia to
     provide, the Services, including without limitation to research, design and
     develop custom circuits, schematics and layouts, and to perform such other
     activities, as AMD Inc. shall from time to time reasonably request (the
     'Design Activity'); it being understood and agreed that, for all purposes
      ---------------
     of this Agreement, the Services and the Design Activity shall be in all
     respects comparable and consistent with the 'Services' and the 'Design
     Activity' under, and as defined in, the AMD Saxonia Research Agreement.

     (b) AMD Inc. acknowledges that AMD Holding's obligation is to use its
     reasonable commercial efforts to provide, or to arrange for AMD Saxonia to
     provide, the Services and Design Activities, and that AMD Holding therefore
     does not undertake and cannot guarantee that the results of the Services
     and Design Activities will achieve the goals set therefor or that such
     results will have any commercial value. AMD Inc. further acknowledges and
     agrees that AMD Holding shall not be required at any time to take any steps
     hereunder to provide the Services and/or Design Activities to the extent
     such steps at such time could reasonably be expected to delay the
     'Completion Date' under, and as defined in, the AMD Saxonia Wafer Purchase
      ---------------
     Agreement.

     (c) AMD Holding further agrees, during the term of this Agreement, (i) only
     to perform Services and engage, or to arrange for AMD Saxonia to perform
     and engage, in Design Activities specifically requested by AMD Inc. which
     request may be made by AMD Inc., FASL or one of AMD Inc.'s Subsidiaries
     acting pursuant to authorization from AMD Inc. hereunder and (ii) not to
     provide research, design and development services for persons or entities
     other than AMD Inc., its Subsidiaries or FASL, without the prior consent of
     AMD Inc.


                                       2

 
     (d) AMD Holding and AMD Inc. agree that this Agreement is limited to
     research, design and development of semiconductor products. AMD Holding
     further agrees that during the term of this Agreement it shall cause AMD
     Saxonia to comply with AMD Saxonia's obligations under the AMD Saxonia
     Research Agreement.


                                   ARTICLE II
                                    Payments

     (a) AMD Inc. agrees to pay AMD Holding for the Services and Design
     Activities performed under this Agreement an amount equal to the amount
     charged to AMD Holding under the AMD Saxonia Research Agreement, plus Value
     Added Tax, if applicable.

     (b) AMD Inc. will authorize the commencement of Services at such time as
     AMD Holding is able to cause AMD Saxonia to perform the Services
     contemplated under the AMD Saxonia Research Agreement, but in any event no
     later than when the Design Center is completed to AMD Holding's reasonable
     satisfaction. The parties may agree that the Services and Design Activity
     may be phased in over a period of time prior to the completion of the
     Design Center.

     (c) AMD Holding shall within 30 days after the end of each of its fiscal
     months, provide AMD Inc. with an installment invoice in respect of such
     fiscal month detailing the Services rendered and the Design Activity
     undertaken and specifying costs with respect to such Services and Design
     Activity, and the amount payable by AMD Inc. under this Article II with
                                                             ----------
     respect thereto. Some of these costs may be estimated, budgeted or accrued
     costs, but shall be subject to a quarterly adjustment to reflect actual
     costs when finally determined.

     (d) Under this Agreement, invoices shall be rendered and payments shall be
     made in the lawful currency of the Federal Republic of Germany ('DM').
                                                                      --
     Invoices shall be paid in full within thirty (30) days of the receipt of
     such invoice. Payments under this Agreement from AMD Inc. to AMD Holding
     shall be made by wire transfer deposited into [*], or such other account of
     AMD Holding specified by AMD Holding with the prior written consent of the
     Agent (a copy of which consent shall be delivered by AMD Holding to AMD
     Inc.) with not less than 15 days written notice to AMD Inc. All amounts
     under this Agreement not paid when due from AMD Inc. shall bear interest at
     the rate of 7.0% per annum from the date due until paid, calculated on the
     basis of actual days and months elapsed. Accrued interest hereunder shall
     be due and payable at the end of each calendar month.

     (e) The obligations of AMD Inc. hereunder, including, without limitation,
     the obligation to pay for any Services or Design Activity performed by or
     on behalf of AMD Holding, are intended to be absolute and unconditional.
     The parties hereto hereby expressly acknowledge, agree, and understand that
     the payment by AMD Inc. of all amounts payable by it hereunder shall in no
     way be prevented, delayed, or otherwise affected as a result of any dispute
     between the parties (or between any of their Affiliates) nor by any breach
     of this Agreement or any other agreement entered into in connection
     herewith and/or any


                                       3

* CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND 
  EXCHANGE COMMISSION.

 
     adverse change in the financial or economic condition of AMD Holding, AMD
     Saxonia or any Affiliate thereof, including situations or conditions which
     would render any or all of AMD Holding, AMD Saxonia or any Affiliate
     thereof in liquidation, bankruptcy, or any kind of insolvency. All
     obligations of AMD Inc. under or in connection with this Agreement shall be
     paid and performed in all events in the manner and at the times herein
     provided, irrespective of and without prejudice to, any rights or remedies
     that are available to AMD Inc. under any other agreements or any applicable
     laws. The foregoing notwithstanding, AMD Inc. shall be entitled to setoff,
     and to raise rights of retention, in respect of payment claims due from it
     hereunder only to the extent its counterclaim is undisputed by AMD Holding
     or has been the subject of a final, binding arbitral or court decision.

     (f) AMD Holding shall keep and maintain, in accordance with German
     generally accepted accounting principles, books of account and other
     records with respect to the costs and other amounts charged by AMD Holding
     to AMD Inc. under this Agreement.

     (g) AMD Inc. shall, upon reasonable written notice to AMD Holding, have a
     right to perform special audits of AMD Holding by either outside auditors
     or one or more of the internal auditors of the AMD Companies, at AMD Inc.'s
     own cost. In addition, AMD Holding shall cause AMD Saxonia to permit AMD
     Inc. to perform special audits of AMD Saxonia by either outside auditors or
     one or more of the internal auditors of the AMD Companies, at AMD Inc.'s
     own cost. The scope of the foregoing audits shall not be limited in any
     manner.

     (h) AMD Holding and AMD Inc. agree that the purpose of this Agreement and
     the related Services and Design Activity is the creation of intellectual
     property. However, from time to time, such intellectual property may be
     transferred in the form of tangible personal property. The transfer of any
     tangible personal property is solely for the purpose of conveying or
     exchanging intellectual property or 'Ideas'. Examples of such tangible
                                          -----
     personal property may include, but are not limited to, magnetic tapes,
     pattern generation tapes, test tapes, schematic diagrams, prototypes and
     prototype tooling. Both parties agree that, in the aggregate, the fair
     market value of such tangible property transferred to AMD Inc. shall not
     exceed U.S. $5,000 dollars per year. The provisions of this paragraph are
     intended solely for valuation purposes under the various state sales and
     use tax rules in the U.S.A. and do not in any way alter the compensation
     provisions of this Article II, which is the sole and controlling provision
                        ----------
     for the compensation to AMD Holding for the Services and Design Activities
     under this Agreement.


                                   ARTICLE III
                         Work Performed Outside Germany

     (a) The parties recognize that to implement the intent and purpose of this
     Agreement, and to bring the research, design and development efforts of AMD
     Holding to the stage at which production of semiconductor products is
     possible, essential work related to the Design Activity which AMD Holding
     is unable to perform may have to be performed directly by AMD Inc. at AMD
     Inc. facilities outside Germany.


                                       4

 
     (b) It is expressly agreed that all cost for work performed by or on behalf
     of AMD Inc., at any facility other than the Design Center, will be absorbed
     by AMD Inc. and will not be charged back to AMD Holding.


                                   ARTICLE IV
                            Changes in Specifications

     (a) AMD Inc. may from time to time request changes in the specifications of
     semiconductor products undergoing research, design and development during
     the course of the Design Activity, which request may be made by AMD Inc.,
     FASL or one of AMD Inc.'s Subsidiaries acting pursuant to authorization
     from AMD Inc. AMD Inc. acknowledges that such changes may result in
     additional delays as well as alteration of designs, drawings, materials,
     and other items used in the development process and consequently may result
     in changed costs or delay, that such changed costs may be included in the
     amounts payable to AMD Saxonia by AMD Holding and, consequently, payable to
     AMD Holding by AMD Inc. pursuant to Section (a) of Article II hereof and
                                                        ----------
     that AMD Holding shall have no liability or obligation as a result of any
     such delays.

     (b) AMD Holding will use its reasonable commercial efforts to inform AMD
     Inc. of the changes in cost in sufficient time to authorize or approve such
     changed costs before they are incurred provided that the failure by AMD
                                            --------
     Holding to do so will not excuse AMD Inc. of the obligation to compensate
     AMD Holding in respect of any such changes in cost.


                                    ARTICLE V
                      Effective Date: Term and Termination

     (a) This Agreement shall become effective on the date hereof and shall
     terminate on the earliest of (i) the Loan Agreement Termination Date and
     (ii) any date upon which the AMD Holding Wafer Purchase Agreement
     terminates in accordance with its terms.

     (b) The provisions of Articles V(c), XV, XVII, XVIII, XIX, and XX of this
                           ------------------------------  ---      --
     Agreement shall survive any termination of this Agreement.

     (c) Within 30 days after termination of this Agreement, AMD Holding shall
     send a final invoice to AMD Inc. for any uninvoiced Services or Design
     Activity. Such invoice shall be paid in accordance with the payment
     provisions set forth in Section (d) of Article II hereof.
                                            ----------


                                       5

 
                                   ARTICLE VI
                         Representations and Warranties

AMD Inc. represents and warrants to AMD Holding as follows:

     (a) Organization; Corporate Power. AMD Inc. is a corporation duly
         -----------------------------
     incorporated, validly existing, and in good standing under the laws of the
     State of Delaware; AMD Inc. is duly qualified or licensed and (where the
     term has a technical meaning) is in good standing as a foreign corporation
     authorized to do business in each jurisdiction where, because of the nature
     of its activities or properties, such qualification or licensing is
     required, except for such jurisdictions where the failure to be so
     qualified or licensed will not materially adversely affect its financial
     condition, business, operations, or prospects; and AMD Inc. has all
     requisite corporate power and authority (i) to own, operate, and lease its
     assets and properties and to carry on the business in which it is engaged
     and in which it currently proposes to engage; and (ii) to execute, deliver,
     and perform its obligations under this Agreement.

     (b) Corporate Authority; No Conflict. The execution, delivery, and
         --------------------------------
     performance by AMD Inc. of this Agreement have been duly authorized by all
     necessary corporate action (including any necessary shareholder action) on
     the part of AMD Inc., and do not and will not (i) violate any provision of
     any law, rule, regulation, order, writ, judgment, injunction, decree,
     determination, or award presently in effect binding on AMD Inc. (which
     violation, in the case of performance only, individually or in the
     aggregate could reasonably be expected to have a material adverse effect on
     the financial condition, business, operations or prospects of AMD Inc.) or
     violate the charter of AMD Inc., or (ii) result in a breach of, result in a
     mandatory prepayment or acceleration of indebtedness evidenced or secured
     by, or constitute a default under, any indenture or loan or credit
     agreement, or any other agreement or instrument, to which AMD Inc. is a
     party or by which AMD Inc. or its properties are bound or affected, or
     (iii) result in or require (in either case except as contemplated by the
     Operative Documents), the creation or imposition of any encumbrance of any
     nature upon or with respect to any of the properties now owned or hereafter
     acquired by AMD Inc., and AMD Inc. is not in default under or in violation
     of its charter, or any such law, rule, regulation, order, writ, judgment,
     injunction, decree, determination, award, indenture, agreement, or
     instrument, which default or violation, individually or in the aggregate,
     could reasonably be expected to have a material adverse effect on the
     financial condition, business, operations, or prospects of AMD Inc.

     (c) Valid and Binding Obligations. This Agreement constitutes the legal,
         -----------------------------
     valid, and binding obligation of AMD Inc., enforceable against AMD Inc. in
     accordance with its respective terms, subject, however, to applicable
     bankruptcy, insolvency, reorganization, moratorium, or similar laws
     affecting creditors' rights generally and except as the enforceability
     thereof may be limited by general principles of equity (regardless of
     whether considered in a proceeding in equity or law).


                                       6

 
                                   ARTICLE VII
                               Warranty Disclaimer

     (a) AMD Holding covenants and warrants (i) that it will perform
     substantially, or cause AMD Saxonia to perform substantially, all Services
     and Design Activity under this Agreement in accordance with the standards
     and practices of care, skill and diligence customarily observed by similar
     firms under similar circumstances at the time they are rendered, and (ii)
     that all Services and Design Activities shall be free of material defects
     in workmanship.

     (b) THE WARRANTY CONTAINED IN THIS ARTICLE VII IS THE SOLE AND EXCLUSIVE
     WARRANTY AS TO THE SERVICES AND DESIGN ACTIVITIES RENDERED AND PROVIDED
     HEREUNDER, AND IS EXPRESSLY IN LIEU OF ANY EXPRESS OR IMPLIED WARRANTIES,
     IN FACT OR IN LAW, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
     MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. AMD HOLDING ASSUMES NO
     LIABILITY IN TORT OR STRICT LIABILITY, NOR SHALL AMD HOLDING BE LIABLE TO
     AMD INC. OR ANY SUBSIDIARY OR AFFILIATE THEREOF FOR LOSS OF USE OF SERVICES
     OR DESIGN ACTIVITY OR ANY OTHER INCIDENTAL, SPECIAL, OR CONSEQUENTIAL
     DAMAGES INCURRED BY AMD INC. OR ANY SUBSIDIARY OR AFFILIATE THEREOF. IN NO
     EVENT SHALL THE LIABILITY OF AMD HOLDING ARISING IN CONNECTION WITH ANY
     SERVICES OR DESIGN ACTIVITY PROVIDED HEREUNDER EXCEED THE ACTUAL AMOUNT
     PAID BY AMD INC. TO AMD HOLDING FOR SERVICES OR DESIGN ACTIVITY INVOLVED IN
     SUCH CLAIM.

                                  ARTICLE VIII
                                  Severability

If any term or provision of this Agreement or the application of this Agreement
to any person, entity or circumstance is found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remainder of this Agreement shall not be affected, but shall be valid and
enforceable as if the invalid term, condition or provision were not a part of
this Agreement.


                                   ARTICLE IX
                                    Headings

The headings contained in this Agreement are for convenience of reference only
and shall not be deemed to be a part of this Agreement or to affect the meaning
or interpretation of this Agreement.


                                       7

 
                                    ARTICLE X
                                  Force Majeure

     (a) A party to this Agreement shall not be liable for the consequences of
     any failure to perform, or default in performing, any of its obligations,
     other than its payment obligations, under this Agreement, if that party can
     show that such failure is caused by Force Majeure (as defined below).

     (b) Where there has been any such failure, the said failure shall not be
     considered non-compliance with any term or condition of this Agreement, and
     all the obligations and times which because of such failure could not be
     fulfilled shall be deemed to have been suspended while the failure
     continues. In addition, the party for whom such obligations and/or times
     have been suspended shall be entitled to take reasonable steps during the
     pendency of the relevant Force Majeure to limit its losses resulting from
     such Force Majeure, and following the termination of such Force Majeure
     such obligations and/or times shall continue to be suspended for such
     further reasonable period as is necessary for such party to restore its
     capacity to perform such obligations and/or meet such times.

     (c) For purposes of this Article X, 'Force Majeure' means an event which is
                              ---------   -------------
     not within the reasonable control of the party seeking to rely on the
     existence of Force Majeure, where the adverse effect of such event on such
     party's compliance with its obligations under this Agreement is not
     preventable by such party using all reasonable care and diligence. Such
     events may include, without limitation, the following: acts of war (whether
     declared or undeclared), invasion, armed conflict, acts of one or more
     enemy of the United States of America, Germany or any other country or
     jurisdiction; blockade or embargo, revolution, riot, bombs, insurrection,
     or other civil disturbance, sabotage, terrorism, or the threat of any of
     the foregoing, nuclear explosion, radioactive or chemical contamination or
     ionizing radiation, strikes, lockouts, industrial action or labour
     disputes, any effect of the natural elements including, without limitation,
     lightning, fire, earthquake, flood, strike and other unusual or extreme
     adverse weather, or environmental conditions or actions of the elements,
     epidemic or plague, loss of or damage to the Design Center and/or
     machinery, equipment or materials at, for or in transit to the Design
     Center, acts of God and any events or circumstances analogous to any of the
     above.

                                   ARTICLE XI
                             Relationship of Parties

AMD Inc. and AMD Holding shall at all times be independent contractors with
respect to each other. Nothing in this Agreement shall constitute either party
hereto as the partner, joint venturer, employee or agent of the other such party
and neither AMD Inc. nor AMD Holding shall act or omit to act in such a way as
to suggest the contrary to any third party.


                                       8

 
                                   ARTICLE XII
                                   Assignment

This Agreement shall be binding upon and inure to the benefit of each party
hereto and their respective successors and assigns; provided, however, that this
                                                    --------
Agreement contemplates personal services of AMD Holding and accordingly neither
party hereto shall have the right to transfer or assign its interest in this
Agreement or, in the case of AMD Holding, delegate any obligation hereunder,
without the prior written consent of both the other party hereto and, prior to
the Loan Agreement Termination Date, of the Agent, and provided further that AMD
                                            -----      ----------------
Holding may assign this Agreement to the Agent as security for obligations of
                                         -----
AMD Saxonia under the Loan Agreement and the Agent may further assign this
                                             -----
Agreement to the extent permitted in the proper exercise of the Agent's
                                                                -------
enforcement rights in respect of such security.


                                  ARTICLE XIII
                                     Waivers

No delay or omission in exercise of any right or remedy of either party or any
default by the other, and no custom or practice of the parties at variance with
the terms of this Agreement, shall impair any right or remedy otherwise
available nor shall it be construed as a waiver of any right or remedy. Any
waiver by either party of any default must be in writing and shall not be a
waiver of any other default concerning the same or any other provision. AMD
Holding shall have no right to waive any of its rights or remedies under this
Agreement without the prior written consent of the Agent.
                                                   -----

                                   ARTICLE XIV
                                Rights Cumulative

The rights, remedies and powers of each of the parties contained in this
Agreement are cumulative and not exclusive of any rights, remedies or powers
provided to the parties by applicable law. No single or partial exercise by
either of the parties hereto of any right, remedy or power under this Agreement
shall preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.

                                   ARTICLE XV
                                     Notices

All notices and other communications required or permitted to be given to or
made upon either party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage pre-paid, return
receipt requested, or by pre-paid telex, TWX or telegram, or by pre-paid courier
service, or by telecopier, to the respective parties hereto at their respective
addresses (or to their respective telex, TWX or telecopier numbers) indicated
below, or such other addresses or numbers specified in a notice sent or
delivered in accordance with the provisions of this Article XV. Any such notice
                                                    ----------
or communication shall be deemed to be given for purposes of this Agreement on
the day that such writing or communication is delivered or, in the

                                       9

 
case only of a telex, telecopier, TWX or telegram, sent to the intended
recipient thereof, with confirmation of receipt, in accordance with the
provision of this Article XV, or
                  ----------

If to AMD Inc.:

Advanced Micro Devices, Inc.
One AMD Place
Sunnyvale, California 94088
Attention: General Counsel
Facsimile: (408) 749-3945

If to AMD Holding:

AMD Saxony Holding GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: (49) 351-8412-150

with a copy to:

AMD Saxony Manufacturing GmbH
Washingtonstr. 16 A/B
01139 Dresden
Attention: Geschaftsfuhrer
Facsimile: (49) 351-8412-150

and a copy to:

Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: (49) 351-4851350


                                   ARTICLE XVI
                          No Effect on Other Agreements

No provision of this Agreement shall be construed so as to negate, modify or
affect in any way the provisions of any other agreement between AMD Inc. and AMD
Holding except as specifically provided in any such other agreement.


                                       10

 
                                  ARTICLE XVII
                                  Governing Law

THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.

                                  ARTICLE XVIII
                             Arbitration of Disputes

Arbitration under this Article XVIII shall be the exclusive means for a party to
                       -------------
seek resolution of any dispute arising out of, relating to or connected with
this Agreement, except that either party may bring an action before a competent
court for the issuance of provisional or protective measures.

     (a) The parties hereto agree to submit any dispute, controversy or claim
     ('Dispute') arising out of, relating to or in any way connected with this
       -------
     Agreement to final and binding arbitration in the County of Santa Clara,
     California, under the Commercial Arbitration Rules and Supplementary
     Procedures for International Commercial Arbitration of the American
     Arbitration Association ('AAA') then in force except as modified in
                               ---
     accordance with the provisions of this Article XVIII.
                                                    -----

     (b) The arbitral tribunal shall be composed of three arbitrators, one
     appointed by each party, and the two arbitrators so appointed shall, within
     15 days appoint a third arbitrator who shall be chosen from a country other
     than those of which the parties are nationals, who shall be fluent in
     English, and who shall act as Chairman of the tribunal.

     (c) In arriving at decisions, the arbitrators shall apply the terms and
     conditions of this Agreement in accordance with the laws of the State of
     California.

     (d) The award shall be deemed a U.S. award for purposes of the Convention
     on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the
     'New York Convention'). The English language shall be used in the arbitral
      -------------------
     proceedings and all exhibits and other evidence in a language other than
     English shall be accompanied by English translations when submitted into
     evidence before the arbitral tribunal.

     (e) The arbitrators are empowered to render the following awards in
     accordance with any provision of this Agreement or any related agreement:
     (i) enjoining a party from performing any act prohibited, or compelling a
     party to perform any act required, by the terms of this Agreement or any
     related agreement and any order entered into pursuant to this Agreement and
     (ii) ordering such other legal or equitable relief, including any
     provisional legal or equitable relief, or specifying such procedures as the
     arbitrator deems appropriate, to resolve any Dispute submitted for
     arbitration. The parties shall be entitled to discover all documents and
     other information reasonably necessary for a full understanding of any
     legitimate issue raised in the arbitration. They may use all methods of
     discovery customary under U.S. federal law, including but not limited to


                                       11

 
     depositions, requests for admission, and requests for production of
     documents. The time periods for compliance shall be set by the arbitrators,
     who may also set limits on the scope of such discovery. The arbitrators
     shall not be empowered to award consequential or punitive damages.

     (f) Either party may file an application in any proper court described in
     Article XIX hereof for a provisional remedy in connection with an
     -----------
     arbitrable controversy hereunder, but only upon the ground that the award
     to which the applicant may be entitled may be rendered ineffectual without
     provisional relief.

     (g) The arbitrators shall issue to both parties a written explanation in
     English of the reasons for the award and a full statement of the facts as
     found and the rules of law applied in reaching the decision.

     (h) Any monetary award shall be made and shall be payable in DM free of any
     tax or any deduction.

     (i) The award of the arbitral tribunal will be the sole and exclusive
     remedy between the parties regarding any and all claims and counterclaims
     with respect to the subject matter of the arbitrated dispute. An award
     rendered in connection with an arbitration pursuant to this Article XVIII
                                                                 -------------
     shall be final and binding upon the parties, and any judgment upon which an
     award may be entered and enforced in any court of competent jurisdiction.


                                   ARTICLE XIX
                       Consent to Jurisdiction and Forum:
                           AMD Holding Appointment of
                          Agent for Service of Process

     (a) Subject to Article XVIII, all judicial proceedings brought against
                    -------------
     either party hereto with respect to this Agreement may be brought in the
     United States District Court for the Northern District of California or in
     any branch of the Superior Court of the State of California sitting in the
     City of San Francisco, and by execution and delivery of this Agreement,
     each such party accepts for itself and in connection with its properties,
     generally and unconditionally, the nonexclusive jurisdiction of such
     courts. In addition, each such party hereby irrevocably and unconditionally
     waives, to the fullest extent permitted by law, any objection which it may
     now or hereafter have to the laying of venue of any such proceedings, and
     hereby further irrevocably and unconditionally waives and agrees to the
     fullest extent permitted by law not to plead or claim that any such
     proceeding brought in any such court has been brought in an inconvenient
     forum.

     (b) AMD Holding hereby irrevocably appoints CT Corporation Services as its
     agent to receive on behalf of AMD Holding and its property service of
     copies of the summons and complaint and any other process which may be
     served in any proceeding in any state or federal court of competent
     jurisdiction in the State of California.


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                                   ARTICLE XX
                                Judgment Currency

The parties hereto agree that, without prejudice to Articles XVII, XVIII and XIX
                                                    --------------------     ---
above:

     (a) if, for purposes of obtaining hereunder an arbitral award or judgment
     of any court, it is necessary to convert a sum due hereunder in DM into
     another currency, the rate of exchange used shall be that at which in
     accordance with normal banking procedures the prevailing party could
     purchase DM with such other currency on the Business Day preceding that on
     which the final award or judgment (as applicable) is given; and

     (b) the obligation of each of the parties hereto in respect of any sum due
     hereunder from it (the 'Payor') to the other party (the 'Recipient') shall,
                             -----                            ---------
     notwithstanding any judgment in a currency other than DM, be discharged
     only to the extent that on the Business Day following receipt by the
     Recipient of any sum adjudged to be so due in such other currency, the
     Recipient may, in accordance with normal banking procedures purchase DM
     with such other currency; in the event that the DM so purchased is less
     than the sum originally due to the Recipient, the Payor, as a separate
     obligation and notwithstanding any such judgment or award hereby agrees to
     indemnify and hold harmless the Recipient against such loss, and if the DM
     so purchased exceeds the sum originally due to the Recipient, the Recipient
     shall remit to the Payor the excess.


                                   ARTICLE XX1
                                    Language

This Agreement is in the English language, which language shall be controlling
in all respects.


                                  ARTICLE XXII
                                Entire Agreement

This Agreement, the AMD Saxonia Research Agreement, the AMD Holding Wafer
Purchase Agreement, the Confidentiality and Intellectual Property Agreement, the
License Agreement and that certain Amended and Restated Management Services
Agreement, dated as of even date hereof, embody the entire agreement and
understanding between the parties with respect to the subject matter hereto. AMD
Inc. acknowledges and agrees that it has not relied upon any representation or
warranty of the AMD Holding or AMD Saxonia in entering into this Agreement and
that this Agreement shall remain in force notwithstanding the breach by AMD
Holding of any such representation or warranty.


                                  ARTICLE XXIII
                                  Counterparts

This Agreement may be executed in one or more counterparts and by different
parties hereto in


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separate counterparts, each of which when so executed and delivered shall be
deemed an original but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.


                                  ARTICLE XXIV
                                   Amendments

No modifications or amendments to this Agreement shall be binding unless in
writing and executed by each of the parties hereto and AMD Inc. and, prior to
the Loan Agreement Termination Date, without the prior written consent of the
Agent.
-----

                                   ARTICLE XXV
                             European Monetary Union

The European Economic and Monetary Union anticipates the introduction of a
single currency and the substitution of the national currencies of Member States
participating in the Monetary Union. On the date on which the DM is replaced by
the single currency, conversion into such currency shall take effect. The
denomination of the original currency shall be retained for so long as this is
legally permissible. Conversions shall be based on the officially fixed rate of
conversion. Neither the introduction of the single currency nor the substitution
of the national currencies of the Member States participating in European
Monetary Union nor the fixing of the official rate of conversion nor any
economic consequences that arise from any of the aforementioned events or in
connection with European Monetary Union shall give rise to any right to
terminate prematurely, contest, cancel, rescind, modify, or renegotiate this
Agreement or any of its provisions or to raise any other objections and/or
exceptions or to assert any claims for compensation. This Agreement shall
continue in full force and effect in accordance with its terms.

IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals as of the date first written above by causing their duly authorized
representatives to sign below.


AMD SAXONY HOLDING GMBH                      ADVANCED MICRO DEVICES, INC.

By: /s/Marvin D. Burkett                     By: /s/Marvin D. Burkett    
   ------------------------------               ------------------------------

Its: _____________________________           Its: ______________________________

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