AMD Saxonia Research, Design and Development Agreement - AMD Saxony Manufacturing GmbH and AMD Saxony Holding GmbH


                                   AMD SAXONIA
                   RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT

                               Dated 11 March 1997


                                     between


                         AMD SAXONY MANUFACTURING GMBH,

                                       and

                             AMD SAXONY HOLDING GMBH




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

 
                                   AMD SAXONIA
                   RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT


THIS AMD SAXONIA RESEARCH, DESIGN AND DEVELOPMENT AGREEMENT (this 'Agreement')
                                                                   ---------
dated as of 11 March, 1997 is entered into between AMD SAXONY MANUFACTURING
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 13186 ('AMD Saxonia'), and 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').
                                                             -----------

WHEREAS, AMD Saxonia is a wholly-owned Subsidiary of AMD Holding which in turn
is a wholly-owned Subsidiary of Advanced Micro Devices, Inc., a corporation
organized and existing under the laws of the State of Delaware, United States of
America ('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 manufacturing
plant to manufacture Wafers using high-volume semiconductor Wafer fabrication
processes and an adjoining research and development center (the 'Design Center')
                                                                 -------------
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 Inc. and AMD Holding are entering into an AMD
Holding Research, Design and Development Agreement (as amended, supplemented or
otherwise modified from time to time, the 'AMD Holding Research Agreement'),
                                           ------------------------------
pursuant to which AMD Inc. will obtain, and AMD Holding will provide, assistance
in the area of research, design and development of semiconductor products, and

WHEREAS, in order to enable it to fulfill its obligations under the AMD Holding
Research Agreement, AMD Holding wishes to obtain assistance in the area of
research, design and development of semiconductor products from AMD Saxonia, and
AMD Saxonia is willing to 

                                       2

 
provide such assistance, in each case on the terms and subject to the conditions
of this Agreement, and

WHEREAS, concurrently herewith (i) AMD Saxonia and AMD Holding 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 Wafer Purchase 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
         Holding hereby retains AMD Saxonia to provide research, design and
         development services ('Services') related to semiconductor products to
                                --------
         or for the benefit of AMD Holding or, at its request, to or for the
         benefit of AMD Inc., Fujitsu AMD Semiconductor Limited ('FASL') or
                                                                  ----
         Subsidiaries of AMD Inc. other than AMD Saxonia, and (ii) AMD Saxonia
         hereby agrees to use its reasonable commercial efforts to provide the
         Services. In furtherance of the foregoing, AMD Saxonia shall furnish
         all personnel, facilities, labor, materials, tools, equipment and
         supervision as may be necessary and commercially reasonable 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 Holding 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
         Holding Research Agreement.

         (b) AMD Holding acknowledges that AMD Saxonia's obligation is to use
         its reasonable commercial efforts to provide the Services and Design
         Activities, and that AMD Saxonia 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 Holding further acknowledges and agrees that AMD
         Saxonia 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 

                                       3

 
         reasonably be expected to delay the 'Completion Date' under, and as
                                              ---------------
         defined in, the AMD Saxonia Wafer Purchase Agreement.

         (c) AMD Saxonia further agrees, during the term of this Agreement, (i)
         only to perform Services and engage in Design Activities specifically
         requested by AMD Holding which request may be made by AMD Inc., FASL or
         one of AMD Inc.'s Subsidiaries acting pursuant to authorization from
         AMD Holding 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 Holding.

         (d) AMD Saxonia and AMD Holding agree that this Agreement is limited to
         research, design and development of semiconductor products. Any
         activities of AMD Saxonia relating to the production of semiconductors,
         including the transfer of production tooling, shall not be deemed to be
         Services or Design Activities hereunder and, to the extent covered
         thereby, shall be subject to the AMD Saxonia Wafer Purchase Agreement.
         In the event of any conflict or inconsistency between this Agreement
         and the AMD Saxonia Wafer Purchase Agreement, the terms of the AMD
         Saxonia Wafer Purchase Agreement shall prevail.


                                   ARTICLE II
                                    PAYMENTS


         (a) AMD Holding agrees to pay AMD Saxonia for the Services and Design
         Activities performed under this Agreement an amount equal to AMD
         Saxonia's total cost of labor, materials, overhead and all other costs
         incurred for and reasonably allocated by AMD Saxonia to such Services
         and Design Activities in accordance with German generally accepted
         accounting principles, plus (i) a surcharge of ten percent (10%) on
         such costs and (ii) Value Added Tax ('Tax'), if applicable. Any net
                                               ---
         interest expense or other taxes incurred by AMD Saxonia are
         specifically excluded as a reimbursable cost under this Agreement. Such
         expenses shall be subject to the AMD Saxonia Wafer Purchase Agreement,
         to the extent covered thereby. To the extent certain expenses are
         incurred in support of both the Services and Design Activities, on the
         one hand, and other activities of AMD Saxonia, on the other hand, a
         reasonable allocation by AMD Saxonia of such expenses shall be made
         between the Services and Design Activities, on the one hand, and such
         other activities, on the other hand.


         (b) Subject to Section (b) of Article I hereof, AMD Holding will
                        -----------    ---------
         authorize the commencement of Services when AMD Saxonia is able to
         perform the Services contemplated under this 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, but only those costs
         specifically related to the 

                                       4

 
         Services and Design Activity and not to the completion of the Design
         Center shall be reimbursable pursuant to Section (a) of this Article
                                                  -----------         -------
         II.
         --

         (c) AMD Saxonia shall within 30 days after the end of each of its
         fiscal months, provide AMD Holding 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 Holding
         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 Holding
         to AMD Saxonia shall be made by wire transfer deposited into [*], or
         such other account of AMD Saxonia specified by AMD Saxonia with the
         prior written consent of Dresdner Bank AG as Agent for the Lenders
         under the Loan Agreement (including any successor thereto in such
         capacity, the 'Agent') (a copy of which consent shall be delivered by
                        -----
         AMD Saxonia to AMD Holding) with not less than 15 days written notice
         to AMD Holding. All amounts under this Agreement not paid when due from
         AMD Holding 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 Holding hereunder, including, without
         limitation, the obligation to pay for any Services or Design Activity
         actually performed by AMD Saxonia, are intended to be absolute and
         unconditional. The parties hereto hereby expressly acknowledge, agree,
         and understand that the payment by AMD Holding 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 adverse change
         in the financial or economic condition of AMD Saxonia or any Affiliate
         thereof, including situations or conditions which would render any or
         all of AMD Saxonia or any Affiliate thereof in liquidation, bankruptcy,
         or any kind of insolvency. All obligations of AMD Holding 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
         the other parties hereto under any agreements or any applicable laws.
         The foregoing notwithstanding, AMD Holding 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
         Saxonia or has been the subject of a final, binding arbitral or court
         decision.

                                       5

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


 
         (f) AMD Saxonia 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
         Saxonia to AMD Holding under this Agreement.

         (g) AMD Holding shall, upon reasonable written notice to AMD Saxonia,
         have a right 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 Holding's own cost. The scope of the audit shall not be limited
         in any manner.

         (h) AMD Saxonia and AMD Holding 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 Holding 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 Saxonia 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 Saxonia to the stage at which production of
         semiconductor products is possible, essential work related to the
         Design Activity which AMD Saxonia is unable to perform may have to be
         performed by AMD Inc. on behalf of AMD Holding at AMD Inc. facilities
         outside Germany.

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

                                       6

 
                                   ARTICLE IV
                            CHANGES IN SPECIFICATIONS



         (a) AMD Holding 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 Holding. AMD Holding 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 AMD Saxonia shall include such changed costs in its costs
         reimbursed or to be reimbursed pursuant to Section (a) of Article II,
                                                    -----------    ----------
         and that AMD Saxonia shall have no liability or obligation as a result
         of any such delays.


         (b) AMD Saxonia will use its reasonable commercial efforts to inform
         AMD Holding 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 Saxonia to do so will not excuse AMD Holding of the
         obligation to compensate AMD Saxonia 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 Saxonia 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 Saxonia
         shall send a final invoice to AMD Holding 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.
                                                        ----------

                                  ARTICLE VI
                        REPRESENTATIONS AND WARRANTIES

AMD Holding represents and warrants to AMD Saxonia as follows:

         (a) Organization; Corporate Power. AMD Holding is a Gesellschaft mit
             -----------------------------
         beschrankter Haftung duly organized and existing under the laws of the
         Federal Republic of Germany and registered in Dresden, Germa

                                       7

 
         ny; AMD Holding 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
         Holding 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 Holding of this Agreement have been duly authorized
         by all necessary corporate action (including any necessary shareholder
         action) on the part of AMD Holding, 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 Holding (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 Holding) or violate the charter of AMD
         Holding, 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 Holding is a party
         or by which AMD Holding 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 Holding, and AMD Holding 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 Holding.

         (c) Valid and Binding Obligations. This Agreement constitutes the
             -----------------------------
         legal, valid, and binding obligation of AMD Holding, enforceable
         against AMD Holding 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).

                                       8

 
                                   ARTICLE VII
                             WARRANTY AND DISCLAIMER

         (a) AMD Saxonia covenants and warrants (i) that it will perform all
         Services and Design Activity under this Agreement substantially 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
         SAXONIA ASSUMES NO LIABILITY IN TORT OR STRICT LIABILITY, NOR SHALL AMD
         SAXONIA BE LIABLE TO AMD HOLDING 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 HOLDING OR ANY
         SUBSIDIARY OR AFFILIATE THEREOF. IN NO EVENT SHALL THE LIABILITY OF AMD
         SAXONIA ARISING IN CONNECTION WITH ANY SERVICES OR DESIGN ACTIVITY
         PROVIDED HEREUNDER EXCEED THE ACTUAL AMOUNT PAID BY AMD HOLDING TO AMD
         SAXONIA 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.

                                       9

 
                                    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 labor
         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 Holding and AMD Saxonia 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 Holding nor AMD Saxonia shall act or omit to act in such a way
as to suggest the contrary to any third party.

                                       10

 
                                   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 Saxonia and accordingly neither
party hereto shall have the right to transfer or assign its interest in this
Agreement or, in the case of AMD Saxonia, 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
                                            -----      ----------------
Saxonia 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
Saxonia shall have no right to waive any of its rights or remedies under this
Agreement without the prior written consent of the Agent. AMD Holding shall have
                                                   -----
no right to waive any of its rights or remedies under this Agreement without the
prior written consent of AMD Inc.


                                   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 any
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 

                                       11

 
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 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 Holding:

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


with a copy to:

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

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


with a copy to:

Dresdner Bank AG, as Agent
Dr. Kulz-Ring 10
01067 Dresden
Attention: Direktion
Facsimile: 49-351-489-1350

                                       12

 
                                   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 Holding and
AMD Saxonia except as specifically provided in any such other agreement.


                                  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 

                                       13

 
         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 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.

                                       14

 
                                   ARTICLE XIX
                       CONSENT TO JURISDICTION AND FORUM:
                   AMD HOLDING AND AMD SAXONIA 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 Saxonia hereby irrevocably appoints CT Corporation Services as
         its agent to receive on behalf of AMD Saxonia 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.

         (c) 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.


                                   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

                                       15

 
         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 XXI
                                    LANGUAGE

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


                                  ARTICLE XXII
                                ENTIRE AGREEMENT

This Agreement, the AMD Holding Research Agreement, the AMD Saxonia 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
Holding acknowledges and agrees that it has not relied upon any representation
or warranty of the AMD Saxonia in entering into this Agreement and that this
Agreement shall remain in force notwithstanding the breach by AMD Saxonia of any
such representation or warranty, and AMD Saxonia acknowledges and agrees that it
has not relied upon any representation or warranty of AMD Holding in entering
into this Agreement except as expressly set forth herein.


                                  ARTICLE XXIII
                                  COUNTERPARTS

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

                                       16

 
                                  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 Deutsche Mark 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 MANUFACTURING GMBH               AMD SAXONY HOLDING GMBH



/s/ Jack L. Saltich                         /s/ Marvin D. Burkett
---------------------------------           ---------------------------------
Geschaftsfuhrer                             Geschaftsfuhrer

                                       17