License Agreement - Advanced Micro Devices Inc., AMD Saxony Holding GmbH and AMD Saxony Manufacturing GmbH


 
                                LICENSE AGREEMENT


                               Dated 11 March 1997


                                     between


                          ADVANCED MICRO DEVICES, INC.,

                            AMD SAXONY HOLDING GMBH,

                                       and

                          AMD SAXONY MANUFACTURING GMBH


================================================================================

 
                                LICENSE AGREEMENT

     This LICENSE AGREEMENT (this 'Agreement') dated as of 11 March, 1997 is
between:

     (1) Advanced Micro Devices, Inc., a corporation organized and existing
     under the laws of the State of Delaware, United States of America, with its
     principal place of business at One AMD Place, Sunnyvale, California 94088,
     United States of America ('AMD Inc.');

     (2) AMD Saxony Holding GmbH, a Gesellschaft mit beschrankter Haftung
     organized and existing under the laws of Germany and registered in the
     Commercial Register of the Dresden County Court, HRB 13931 ('AMD Holding');
     and

     (3) AMD Saxony Manufacturing GmbH, a Gesellschaft mit beschrankter Haftung
     organized and existing under the laws of Germany and registered in the
     Commercial Register of the Dresden County Court, HRB 13186 ('AMD Saxonia').

                                    RECITALS

     WHEREAS, AMD Saxonia is a wholly-owned Subsidiary (such and other
capitalized terms having the meanings assigned thereto in Section 1 below) of
AMD Holding, which in turn is a wholly-owned Subsidiary of AMD Inc.;

     WHEREAS, AMD Inc., AMD Holding and AMD Saxonia 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, each of which is to be located in
Dresden, Germany (collectively referred to as the 'Plant'); and

     WHEREAS, AMD Inc. and AMD Holding are entering into an AMD Holding Wafer
Purchase Agreement (as amended, supplemented or otherwise modified from time to
time, the 'AMD Holding Wafer Purchase Agreement'), pursuant to which, among
other things, AMD Inc. will agree to purchase from AMD Holding, and AMD Holding
will agree to supply on an exclusive basis to AMD Inc., all Products as are
ordered from time to time by AMD Inc. from AMD Holding, in each case on the
terms and conditions of the AMD Holding Wafer Purchase Agreement; and

     WHEREAS, concurrently herewith, AMD Holding and AMD Saxonia are entering
into an AMD Saxonia Wafer Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the 'AMD Saxonia Wafer Purchase
Agreement'; together with the AMD Holding Wafer Purchase Agreement, the 'Wafer
Purchase Agreements'), pursuant to which, among other things, AMD Holding will
agree to purchase from AMD Saxonia, and AMD Saxonia will agree to manufacture
and sell to AMD Holding, on an exclusive basis, such Products, all on the terms
and conditions of the AMD Saxonia Wafer Purchase Agreement; and



                                       2

 
     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'), and AMD Holding and AMD Saxonia concurrently herewith 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'; together with the AMD Holding Research Agreement, the 'Research
Agreements') pursuant to which AMD Holding will provide certain research, design
and development Services and Design Activities relating to semiconductor
products to AMD Inc., and pursuant to which AMD Holding will obtain AMD
Saxonia's assistance in providing such Services and Design Activities, in each
case on the terms and subject to the conditions of the relevant Research
Agreement; and

     WHEREAS, in furtherance of the AMD Saxonia Research Agreement, all rights,
title and interest in and to the Developed Intellectual Property shall at all
times be vested solely in AMD Inc.; and

     WHEREAS, it is a condition to the parties entering into the Purchase
Agreements that AMD Inc. grant to AMD Saxonia a perpetual, royalty-free,
non-exclusive license to use the Developed Intellectual Property at the Plant to
design, develop, manufacture, use, distribute and sell products other than the
Products, all on the terms and subject to the conditions contained herein; and

     WHEREAS, concurrently herewith, AMD Saxonia is entering into that certain
Loan Agreement (the 'Loan Agreement') among Dresdner Bank AG, as Agent and
Security Trustee (the 'Agent'), and certain other financial institutions named
in the Loan Agreement, pursuant to which such institutions will make loans from
time to time to AMD Saxonia on the terms and conditions set forth therein; and

     WHEREAS, as the capital stock of AMD Saxonia and all or substantially all
of AMD Saxonia's property and assets are being pledged as security for the full
and timely performance by AMD Saxonia of all of its obligations under the Loan
Agreement, the parties wish to clarify certain questions relating to the
ownership of various intellectual property used in the operation of the Plant
and/or developed by AMD Saxonia under the AMD Saxonia Research Agreement and to
identify certain permitted uses of the Plant and such intellectual property
following termination of the Service Agreements.

     NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

     Section 1. Definitions. The following terms shall, unless the context
                -----------
requires otherwise, have the respective meanings assigned to them as follows:

     (a) 'Affiliates' means, with respect to any Person, a Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such other Person; and, for purposes of this definition, the concept of
'control,' with respect to any Person, signifies the 



                                       3

 
possession of the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, the
possession of voting rights, by contract, or otherwise; provided that FASL shall
                                                        --------
be deemed to be an Affiliate of AMD Inc. for purposes of this Agreement;

     (b) 'Agent' means Dresdner Bank AG, as Agent under the Loan Agreement,
including any successor to Dresdner Bank AG in that capacity;

     (c) 'AMD Companies' means the Subsidiaries of AMD Inc. other than AMD
Saxonia;

     (d) 'AMD Saxonia Persons' means the directors, officers, employees,
self-employed consultants or sub-contractors, and agents of AMD Saxonia;

     (e) 'Banks' means, collectively, the Agent and the other financial
institutions named in the Loan Agreement.

     (f) 'Beneficiary' shall mean each of the Banks, any receiver appointed to
operate the Plant and any third party purchaser of the capital stock of or all
or substantially all of the assets of AMD Saxonia;

     (g) 'Confidential Information' means confidential technical information
relating to the Proprietary Product Know-how or to the design, manufacture, use
and sale of Products and Improvements as well as other non-public business
information relating to AMD Inc. and the AMD Companies, including, but not
limited to, non-public business plans, marketing plans, sales data and customer
lists; provided that such information is of a nature that would be treated by a
       --------
reasonable recipient under arms-length circumstances as confidential, regardless
of whether provided in writing or orally;

     (h) 'Design Activity' means the activities of AMD Saxonia to provide the
Services, including without limitation to research, design and develop custom
circuits, schematics and layouts and such other activities as shall from time to
time be requested of it pursuant to the AMD Saxonia Research Agreement;

     (i) 'Developed Intellectual Property' means all intellectual property,
including, but not limited to, ideas, conceptions and inventions (whether or not
patentable, reduced to practice or made the subject of a pending patent
application), copyrights (whether or not registered), copyrighted or
copyrightable works, mask works or registrations thereof, software,
semi-conductor topography rights, know-how, trade secrets, manufacturing and
production processes and techniques, research and development information and
other confidential technical information, which intellectual property was made,
conceived or actually or constructively reduced to practice prior to the
termination of the AMD Saxonia Research Agreement, to the extent such
intellectual property was developed wholly by AMD Saxonia or an AMD Saxonia
Person for AMD Saxonia or, with respect to such intellectual property as is
incapable of division into discreet items, where AMD Saxonia or an AMD Saxonia
Person 



                                       4

 
working for AMD Saxonia expended at least 50% of the quantitative or qualitative
man-hours expended in the development thereof;

     (j) 'FASL' means Fujitsu AMD Semiconductor Limited, a joint venture
organized under the laws of Japan between AMD Inc. and Fujitsu Limited;

     (k) 'Improvements' means any and all developments, enhancements,
improvements, upgrades, modifications, updates (including error corrections),
translations and derivative works developed prior to the termination of the AMD
Saxonia Research Agreement with respect to Products;

     (l) 'Information Residuals' means all information which (i) is remembered
by an AMD Saxonia Person after having been exposed thereto in connection with
his or her duties at AMD Saxonia either before or during the term of the AMD
Saxonia Wafer Purchase Agreement or the AMD Saxonia Research Agreement, and (ii)
pertains to the general operation, calibration, configuration and functionality
of the equipment, facilities and fixtures in the Plant or pertains to the
processes, methods, techniques and materials used in connection with the
manufacture of semiconductor products; provided, however, that Information
                                       -----------------
Residuals shall not include any specific design aspects of the Products (or any
part thereof), nor shall it include any Proprietary Product Know-how;

     (m) 'Loan Agreement' has the meaning set forth in the Recitals hereof, as
may be amended, supplemented or otherwise modified from time to time;

     (n) 'Loan Agreement Termination Date' means the first day on which (i) no
obligations of AMD Saxonia are then owing under the Loan Agreement and all
principal of and accrued interest on any loans under the Loan Agreement have
been paid or repaid (as the case may be) in full, and (ii) the Banks have no
further commitments of any kind to extend credit to AMD Saxonia under the Loan
Agreement;

     (o) 'Management Service Agreement' means, together, that certain Management
Service Agreement dated as of January 1, 1996 and that certain letter agreement
dated April 9, 1996 between AMD Inc. and AMD Saxonia, as amended and restated by
AMD Inc., AMD Holding and AMD Saxonia as of the date hereof, and as such amended
and restated agreement may be further amended, supplemented or otherwise
modified from time to time;

     (p) 'Non-Proprietary Know-how' means all knowledge and information relating
to the design, manufacture, use and sale of semiconductor products which does
not constitute Proprietary Product Know-how or Confidential Information;

     (q) 'Person' means an individual, partnership, joint venture, trustee,
trust, corporation, unincorporated association or other entity, or a government,
state or agency or political subdivision thereof;

     (r) 'Plant' means, collectively, the 'Plant' and the ' Design Center,' as
those terms are defined in the AMD Saxonia Wafer Purchase Agreement.



                                       5

 
     (s) 'Post Research Agreement AMD Saxonia Developed Improvements' means any
and all improvements to the Developed Intellectual Property, which are made,
conceived or actually or constructively reduced to practice by AMD Saxonia after
the termination of the AMD Saxonia Research Agreement;

     (t) 'Post Research Agreement AMD Saxonia Developed Intellectual Property'
means any and all intellectual property independently made, conceived or
actually reduced to practice by AMD Saxonia after the termination of the AMD
Saxonia Research Agreement.

     (u) 'Products' means Wafers containing identical individual circuits
meeting Specifications which have been supplied to AMD Saxonia by or on behalf
of AMD Holding in accordance with the AMD Saxonia Wafer Purchase Agreement.

     (v) 'Proprietary Product Know-how' means all knowledge and information of
AMD Inc. or of any of the AMD Companies, including show-how, methods,
techniques, procedures, formulations, formulae, assembly, installation,
operating and quality control procedures and manuals, quality control standards,
technical information, technical and product specifications, equipment
requirements, writings, plans, drawings, designs, layouts, data, equipment,
descriptions, masks, mask works, systems, toolings, software, data,
copyrightable material, trade secrets, customer lists, inventions (whether
patentable or not), improvements, developments and discoveries relating to the
design, fabrication, manufacture, use and sale of Products, including the
implementation of circuit design on such Products, such testing procedures as
are proprietary to AMD Inc., the cutting and sorting of the individual circuits
or die on such Products and the packaging and testing of such die, which
knowledge and information, or any part thereof: (i) derives independent economic
value from not being known to, and not being readily ascertainable by proper
means of, other Persons who can obtain economic value from its disclosure; and
(ii) is the subject of efforts that would be reasonable under arms-length
circumstances to maintain its secrecy.

     (w) 'Proprietary Technical Documentation' means all documentation
(including that recorded in electronic media) relating to the Proprietary
Product Know-how, including, but not limited to, process recipe books, flow
charts, data bases, lab books, programs, software, formulae, diagrams,
specifications, drawings, sketches, schematics, plans, models, blueprints and
design materials. Proprietary Technical Documentation shall not include any
documentation that pertains to the general operation of the equipment in the
Plant or operation of the Plant itself, such as maintenance histories, service
logs and manuals and operating manuals;

     (x) 'Service Agreements' means the Wafer Purchase Agreements, the Research
Agreements, and the Management Service Agreement;

     (y) 'Services' means the research, design and development services to be
performed by AMD Saxonia under the AMD Saxonia Research Agreement;



                                       6

 
     (z) 'Specifications' means, with respect to a Product, the tooling, masks,
mask-works, specifications, blueprints, drawings, assembly instructions and
other instructions required for the manufacture of that Product;

     (aa) 'Subsidiary' means, with respect to any Person, any other Person of
which more than 50% of the total voting power of shares of stock or other
ownership interest entitled to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof; and

     (bb) 'Wafer' means a silicon wafer onto which many identical individual
integrated circuits have been etched or otherwise imprinted.

     Section 2. Ownership of Intellectual Property.
                ----------------------------------
     (a) Each of AMD Holding and AMD Saxonia acknowledges and agrees that it
shall promptly disclose to AMD Inc. any and all intellectual property made,
conceived or actually or constructively reduced to practice by it and its
Affiliates prior to the termination of the Service Agreements and that AMD Inc.
shall have all ownership rights, title and interest in and to such intellectual
property, subject to the grant of license contained in Section 3 hereof. Each of
AMD Holding and AMD Saxonia further acknowledges and agrees that it is engaged
under its respective Service Agreement in work for hire and hereby assigns to
AMD Inc. any and all such intellectual property referred to in the preceding
sentence; provided, that to the extent any such intellectual property comprises
copyrights which, for purposes of German law, cannot be so assigned, each of AMD
Holding and AMD Saxonia hereby grants and assigns to AMD Inc., to the fullest
extent permitted by applicable law and on a fully-paid and royalty-free basis,
the exclusive right to exploit such copyright worldwide for the entire duration
of such copyright, including without limitation the right to assign or license
such right to any other Person on an exclusive or non-exclusive basis, as the
case may be. Each of AMD Holding and AMD Saxonia agrees to assist AMD Inc., at
AMD Inc.'s expense, in every proper way to enable AMD Inc. to obtain, perfect,
defend and enforce its rights in and to all such intellectual property in any
and all countries, including by the disclosure to AMD Inc. of all pertinent
information and dates with respect thereto and the execution of all
applications, specifications, declarations, oaths, assignments, licenses and all
other instruments which are, or AMD Inc. shall deem, necessary, in order to
apply for and obtain copyright protection, mask or mask-work registration and/or
letters patent and/or in order to assign and convey to AMD Inc., its successors,
assigns and nominees, sole and exclusive rights, title and interest in and to
such intellectual property by copyrights, mask works, patent applications,
patents or other forms of industrial or intellectual property protection.

     (b) Each of AMD Holding's and AMD Saxonia's obligation to execute (or cause
to be executed) instruments or papers such as those described in Section 2(a)
shall continue after the termination of this Agreement and any Service Agreement
with respect to any and all copyrights, masks, mask works, inventions and/or
other industrial or intellectual property rights owned by, assigned to or
required to be assigned to AMD Inc. under the provisions of this Agreement. Each
of AMD Holding and AMD Saxonia agrees that, if testimony or information relative
to any of said matters or related to any interference or litigation is required
by AMD Inc. either during the term of this Agreement or any Service Agreement or
following such termina 



                                       7

 
tion, it shall give all information and testimony and do all things reasonably
requested of it that it may lawfully do; provided that, if such matters shall be
                                         --------
required of it, it will receive reasonable compensation from AMD Inc. for its
costs and time so consumed.

     (c) Each of AMD Holding and AMD Saxonia agrees that, prior to the
termination of its respective Service Agreements, any employee inventions of its
respective employees, as defined in the 'Employee Invention Law' shall be
claimed by it within the time limits set by law. Each of AMD Holding and AMD
Saxonia agrees that it shall use all reasonable efforts to obtain, to the
fullest extent permitted by law, exclusive rights for AMD Inc. for such employee
inventions. Each of AMD Holding and AMD Saxonia further agrees that for free
inventions, as defined in the Employee Invention Law, of its employees, it
shall, on request of AMD Inc., acquire for AMD Inc. a non-exclusive right to use
such free invention. The calculation and payment of the amount of any
consideration for employee inventions qualifying under the Employee Invention
Law shall be the responsibility of AMD Holding or AMD Saxonia as applicable.

     (d) AMD Saxonia hereby acknowledges and agrees that, except to the extent
that such intellectual property qualifies as Developed Intellectual Property so
as to be covered by the license set forth in Section 3 hereof, AMD Saxonia shall
have no rights to use any intellectual property partially made, conceived, or
actually or constructively reduced to writing by AMD Saxonia during the term of
the AMD Saxonia Research Agreement or the AMD Saxonia Wafer Purchase Agreement.

     (e) In accordance with the terms of this Agreement and the Service
Agreements, the parties hereto acknowledge and agree that all right, title and
interest in and to the Developed Intellectual Property and the Proprietary
Product Know-how shall at all times be vested solely in AMD Inc. and that no
rights or licenses, express or implied, are granted by this Agreement other than
as expressly granted in Section 3 hereof. 

     (f) Each of AMD Holding and AMD Saxonia agrees that, from the date of
termination of its respective Service Agreements, it shall discontinue all use
of Confidential Information including all Proprietary Product Know-how and
Proprietary Technical Documentation, unless otherwise agreed upon in writing
with AMD Inc., and that it will, and will cause its Affiliates to, make
available to AMD Inc. all such documents containing Confidential Information for
removal in accordance with the terms of Section 9 hereof.

     (g) AMD Inc. hereby acknowledges and agrees that it and the AMD Companies
shall have no right, title or interest in or to any Post Research Agreement AMD
Saxonia Developed Intellectual Property or Post Research Agreement AMD Saxonia
Developed Improvements and that AMD Saxonia shall be entitled to apply for and
exploit, at its own expense, any patent or other intellectual property
protection for any such Post Research Agreement AMD Saxonia Developed
Intellectual Property.

     (h) In addition, AMD Inc. hereby waives, and agrees to cause each other AMD
Company to waive, any and all rights, claims and/or causes of action such entity
now has or in the future may have against AMD Saxonia, its successors and
assigns, or against a Beneficiary, based on: (i) its use, in any manner
whatsoever, of any Non-Proprietary Know-how or of 



                                       8

 
Information Residuals; (ii) its use, within the scope of the license granted in
Section 3(a) hereof, of the Developed Intellectual Property; or (iii) its use,
in any manner whatsoever, of Post Research Agreement AMD Saxonia Developed
Improvements or Post Research Agreement AMD Saxonia Developed Intellectual
Property. The preceding sentence notwithstanding, AMD Inc. does not waive any
rights, claims or causes of action based on the infringement and/or
misappropriation of any patents, copyrights, mask works, trademarks and trade
secrets, whether registered or not, which are owned by AMD Inc. or by an
Affiliate of AMD Inc. other than AMD Saxonia and not licensed to AMD Saxonia
hereunder; provided, however, that the use of Information Residuals shall not be
deemed to constitute an infringement and/or misappropriation of any intellectual
property rights of AMD Inc. or any AMD Company.

     (i) Anything in this Agreement to the contrary notwithstanding, nothing
contained herein shall prohibit or restrain in any way AMD Saxonia from using
any know-how which has become publicly known other than through the action or
breach by AMD Saxonia, an AMD Saxonia Person or a Beneficiary of this Agreement.

     (j) AMD Inc. shall pay any fees for the registration, maintenance and
renewal of any of the Developed Intellectual Property. Notwithstanding the
foregoing, AMD Inc. shall not be obliged to maintain any registration relating
to the Developed Intellectual Property which, in its sole discretion, does not
justify the expense of maintenance. Before allowing any registration relating to
the Developed Intellectual Property to lapse, however, AMD Inc. shall give AMD
Saxonia at least thirty (30) days' prior notice of its intention to allow such
registration to lapse and shall (if the whole of the rights in such Developed
Intellectual Property are exclusively owned by AMD Inc.) offer to AMD Saxonia an
assignment thereof for nominal consideration; provided that all expense of any
such transfer or assignment shall be borne solely by AMD Saxonia. In addition,
to the extent AMD Inc. in its sole discretion determines not to pursue any
material registrable but as yet unregistered copyright or patent forming a part
of the Developed Intellectual Property and if such copyright or patent is
capable of being pursued, AMD Inc. shall notify AMD Saxonia promptly after AMD
Inc.'s decision not to pursue such copyright or patent, and AMD Saxonia may, at
its option, take any necessary actions at its sole expense to pursue such
copyright design or patent in AMD Inc.'s name.

     Section 3. Grant of License.
                ----------------

     (a) AMD Inc. hereby grants to AMD Saxonia and AMD Saxonia hereby accepts,
upon the terms and conditions herein set forth, a perpetual, worldwide,
fully-paid, royalty-free, non-exclusive license to: (i) use the Developed
Intellectual Property to design, develop, manufacture and/or assemble at the
Plant products other than the Products or Improvements; (ii) use the Developed
Intellectual Property in the marketing, distribution and sale, throughout the
world, of products manufactured at the Plant incorporating, or assembled at the
Plant using, such Developed Intellectual Property; and (iii) (x) create and
produce at the Plant derivative works of the Developed Intellectual Property,
(y) use such derivative works for the design, development, manufacture and/or
assembly of products at the Plant and (z) market, distribute and sell,
throughout the World, products manufactured or assembled at the Plant
incorporating some or all of such derivative works.



                                       9

 
     (b) AMD Saxonia shall observe reasonable requirements of AMD Inc. and all
requirements of applicable laws with respect to the marking of any product
covered by a claim of a patent or copyright which is part of the Developed
Intellectual Property and which is incorporated in any product manufactured,
sold or otherwise transferred by AMD Saxonia. In the event that such marking of
such a product is not feasible, AMD Saxonia shall observe the reasonable
requirements of AMD Inc. and all requirements of applicable laws with respect to
the marking of any packaging and advertising, sales or technical literature
pertaining thereto, including without limitation with words and numbers
identifying the patents applicable thereto.

     (c) It is hereby acknowledged and agreed that AMD Saxonia shall have no
right to use any trademark or service mark of AMD Inc. without the prior written
consent of AMD Inc. or as expressly contemplated in the AMD Saxonia Wafer
Purchase Agreement (and, if such consent is given by AMD Inc., AMD Saxonia shall
only use such trademarks or service marks on any AMD Saxonia products that are
sold to AMD Inc. and/or under AMD Inc.'s supervision).

     Section 4. Royalties. The license and rights granted to AMD Saxonia
                ---------
hereunder shall be royalty free, and AMD Saxonia shall have no obligations to
pay royalties, license fees or other fees to AMD Inc. or its Subsidiaries or
Affiliates in connection with (i) AMD Saxonia's use of the license and rights
granted to it pursuant to this Agreement or (ii) the grant of the licenses and
rights hereunder.

     Section 5. Permitted Uses. Anything herein to the contrary notwithstanding,
                --------------
the parties hereby acknowledge and agree that, following the termination of the
AMD Saxonia Wafer Purchase Agreement, the operation of the Plant by AMD Saxonia,
its successors and assigns, or by a Beneficiary shall not, absent a separate
infringement or other unlawful violation, under this Agreement or otherwise, of
a proprietary, substantial and identifiable right of AMD Inc. or of any AMD
Company, constitute: (i) a breach of the terms of this Agreement or of any of
the Service Agreements, or (ii) an infringement upon any intellectual property
right of AMD Inc. or another AMD Company.

     Section 6. Infringement Procedures.
                -----------------------

     (a) In the event AMD Saxonia has actual knowledge of (i) any products or
processes that may infringe or misappropriate or in any way adversely affect AMD
Inc.'s right in and to any of the Developed Intellectual Property, or (ii) any
actual or potential challenge to or claim against its or AMD Inc.'s use of any
of the Developed Intellectual Property, AMD Saxonia will promptly give notice
thereof (including reasonable details) to AMD Inc. In the event that AMD Inc.
elects to undertake any demand, suit or other action on account of any actual or
suspected infringement, or any defense of any such challenge or claim, AMD
Saxonia shall cooperate fully, as AMD Inc. may reasonably request and at AMD
Inc.'s expense, in connection with any such demand, suit, action or defense;
provided that nothing herein shall obligate AMD Inc. or AMD Saxonia to make any
such demand, suit, action or defense.

     (b) AMD Inc. may at any time instruct AMD Saxonia that AMD Saxonia's use of
any of the Developed Intellectual Property must be modified or discontinued,
whereupon AMD Saxonia shall immediately modify or discontinue (as the case may
be) such Developed 



                                       10

 
Intellectual Property in accordance with such notification at AMD Saxonia's sole
expense; provided that (i) AMD Inc. consults with AMD Saxonia prior to making
such instruction, and (ii) AMD Inc. reasonably believes that AMD Saxonia's
continued use of such Developed Intellectual Property may cause AMD Inc. and/or
another AMD Company to incur liability or expense or may otherwise have an
adverse effect on the market or competitive position (other than with respect to
AMD Saxonia) of AMD Inc. or one or more other AMD Company; provided, further,
that AMD Inc. shall modify or discontinue its use of the Developed Intellectual
Property to the same extent that AMD Inc. requires AMD Saxonia to modify or
discontinue AMD Saxonia's use of such Developed Intellectual Property under this
Section 6(b).

     Section 7. Confidentiality.
                ---------------

     (a) AMD Saxonia shall hold all Confidential Information in strict
confidence and shall not disclose and shall cause the AMD Saxonia Persons not to
disclose any such Confidential Information to any Person without the prior
written consent of AMD Inc., except to the extent: (i) specifically required by
applicable law, by this Agreement, by the Service Agreements or by the Loan
Agreement (ii) such Confidential Information is or becomes generally available
to the public other than as a result of a disclosure by AMD Saxonia, one of the
AMD Saxonia Persons or a Beneficiary, (iii) such Confidential Information
becomes available to AMD Saxonia on a non-confidential basis from a third party
(not including any Subsidiary or Affiliate of AMD Inc.) provided such third
party is not bound by confidentiality agreements or by legal, fiduciary or
ethical constraints on disclosure of such information; or (iv) the recipient is
a Beneficiary or a legal or other professional advisor to AMD Saxonia and, in
any such case, is either bound by legal, fiduciary or ethical constraints on
disclosure of such information, or agrees (for the benefit of AMD Inc.) to hold
such Confidential Information in confidence on the terms of this Section 7. The
parties hereto agree that, the foregoing notwithstanding, to the extent AMD
Holding requests that AMD Saxonia perform Design Activities and/or Services
under the AMD Saxonia Research Agreement in conjunction with a third party, AMD
Saxonia may disclose Confidential Information to such third party to the extent
reasonably necessary or desirable for purposes of such Design Activities and
Services; provided that such third party enters into a confidentiality
undertaking in form and substance reasonably satisfactory to AMD Inc.

     (b) Subject to compliance with the terms of Sections 21 and 22 hereof, AMD
Saxonia agrees and acknowledges that money damages would not be sufficient
remedy for any breach of this Section 7 by AMD Saxonia and that AMD Inc. shall
be entitled to injunctive relief, specific performance and/or any other
appropriate equitable remedy.

     (c) AMD Inc. hereby waives, and agrees to cause all other AMD Companies to
waive, any and all rights, claims and/or causes of action such entity now has or
in the future may have against AMD Saxonia, its successors and assigns, or
against a Beneficiary, based on: (i) its use, in any manner whatsoever, of any
Non-Proprietary Know-how or Information Residuals; (ii) its use, within the
scope of the license granted in Section 3(a) hereof, of the Developed
Intellectual Property; or (iii) its use, in any manner whatsoever, of Post
Research Agreement AMD Saxonia Developed Improvements or Post Research Agreement
AMD Saxonia Developed Intellectual Property. The preceding sentence
notwithstanding, AMD Inc. does not waive any rights, claims or causes of action
based on the infringement and/or misappropriation of any patents, copyrights,
mask works, trademarks and trade secrets, whether registered or not, 



                                       11

 
which are owned by AMD Inc. or by an Affiliate of AMD Inc. other than AMD
Saxonia and not licensed to AMD Saxonia hereunder; provided, however, that the
use of Information Residuals shall not be deemed to constitute an infringement
and/or misappropriation of any intellectual property rights of AMD Inc. or any
AMD Company.

     Section 8. Term and Termination.
                --------------------

     (a) This Agreement shall commence on the date hereof and remain in full
force and effect until the date five (5) years from the Loan Agreement
Termination Date, unless sooner terminated as hereinafter provided.

     (b) This Agreement may be terminated: (i) by AMD Inc. if, subsequent to the
occurrence of a Trigger Event (as defined below), AMD Saxonia is in material
breach of any of its express obligations hereunder in respect of the
restrictions on its use of, or in respect of its affirmative obligations with
regard to, the Developed Intellectual Property, and such breach is not
substantially cured by AMD Saxonia within thirty (30) days of its receipt of
notice thereof; or (ii) by either AMD Inc. or AMD Saxonia at any time on or
after the date on which both (x) the last copyright or patent for any of the
Developed Intellectual Property expires, and (y) all principal, interest and
other amounts owed or to be owed by AMD Saxonia under the Loan Agreement have
been paid in full by or for the account of AMD Saxonia (and the Federal Republic
of Germany has been reimbursed in full by or for the account of AMD Saxonia to
the extent the Federal Republic of Germany makes any payment in respect of its
guarantee of amounts outstanding under the Loan Agreement). Any such termination
will be effective immediately upon receipt of notice of such termination by the
non-terminating party. Upon termination of this Agreement, unless otherwise
agreed among AMD Inc. and AMD Saxonia, AMD Saxonia agrees to immediately
discontinue all use of the Developed Intellectual Property. In the event of a
breach by AMD Saxonia of any of its obligations contained in this Agreement that
do not relate to restrictions on the use of, or affirmative obligations with
regard to, the Developed Intellectual Property, such breach shall not give rise
to any right on the part of AMD Inc. to terminate this Agreement.

     (c) For purposes of this Section 8, any of the events described in
subsections (i)-(v) below shall be a 'Trigger Event':

          (i) termination of the AMD Saxonia Research Agreement for any reason
     whatsoever other than upon or following repayment by or for the account of
     AMD Saxonia) of the Loan Agreement and reimbursement in full of the Federal
     Republic of Germany by or for the account of AMD Saxonia to the extent the
     Federal Republic of Germany makes any payment in respect of its guarantee
     of amounts outstanding under the Loan Agreement;

          (ii) AMD Inc. ceasing to beneficially own, directly or indirectly,
     more than 50% of the share capital of AMD Saxonia having ordinary voting
     power for the election of directors of AMD Saxonia or AMD Saxonia ceasing
     to beneficially own the Plant;


                                       12

 
          (iii) a court having jurisdiction in the premises shall enter a decree
     or order for relief in respect of AMD Inc. in an involuntary case under any
     applicable bankruptcy, insolvency or other similar law now or hereafter in
     effect, which decree or order is not stayed; or any other similar relief
     shall be granted under any applicable federal or state law;

          (iv) a decree or order of a court having jurisdiction in the premises
     for the appointment of a receiver, liquidator, sequestrator, trustee,
     custodian or other officer having similar powers over AMD Inc. or over all
     or a substantial part of its property, shall have been entered; or the
     involuntary appointment of an interim receiver, trustee or other custodian
     of AMD Inc. for all or a substantial part of its property; or the issuance
     of a warrant of attachment, execution or similar process against any
     substantial part of the property of AMD Inc.; and the continuance of any
     such events in this subpart (iv) for 90 days unless stayed, dismissed,
     bonded or discharged; or

          (v) AMD Inc. shall have an order for relief entered with respect to it
     or commence a voluntary case under any applicable bankruptcy, insolvency or
     other similar law now or hereafter in effect, or shall consent to the entry
     of an order for relief in an involuntary case, or to the conversion of an
     involuntary case to a voluntary case, under any such law, or shall consent
     to the appointment of or taking possession by a receiver, trustee or other
     custodian for all or a substantial part of its property; the making by AMD
     Inc. of any assignment for the benefit of creditors; or the inability or
     failure by AMD Inc. or the admission by AMD Inc. in writing of its
     inability to pay its debts as such debts become due; or the Board of
     Directors of AMD Inc. (or any committee thereof) adopting any resolution or
     otherwise authorizing action to approve any of the foregoing.

     (d) Section 8(b) above notwithstanding and without derogating from any
obligations of AMD Holding under the AMD Saxonia Wafer Purchase Agreement to
purchase inventory and/or work-in-progress upon a termination of that agreement,
AMD Saxonia shall have the right to market and sell all of its inventory of
products which utilizes any of the Developed Intellectual Property (including
derivative works of such Developed Intellectual Property) existing as of the
effective date of termination of this Agreement for the three month period
following such effective date to the extent AMD Saxonia may do so at the time of
such termination in accordance with rights and licenses granted to it under this
Agreement. At the termination of such three-month period, however, AMD Saxonia
shall destroy any such products, including any derivative works, which remain in
the possession or control of AMD Saxonia or any of the AMD Saxonia Persons.

     (e) The provisions of Sections 2, 5, 7, 9, 10, 19, 20, 21 and 22 shall
survive any termination of this Agreement, unless this Agreement has been
terminated by mutual consent of AMD Inc., AMD Holding and AMD Saxonia after the
Loan Agreement Termination Date.

     Section 9. Proprietary Technical Documentation.
                -----------------------------------

     (a) Each of AMD Holding and AMD Saxonia acknowledges and agrees that any
and all Proprietary Technical Documentation, including all copies or parts
thereof, shall be and remain the sole property of AMD Inc. and AMD Inc. shall
retain the sole right to obtain 



                                       13

 
copyright protection, mask or mask work registration and/or letters patent in
any and all countries upon such Proprietary Technical Documentation.

     (b) Each of AMD Holding and AMD Saxonia further agrees that, upon the
termination of the respective Service Agreements to which it is a party, AMD
Inc. shall be entitled to remove all Proprietary Technical Documentation and all
other documentation containing Confidential Information in accordance with the
procedure set forth below, and that it shall not, without the written consent of
AMD Inc., retain or take any copies or other reproductions of, nor shall it
knowingly withhold from AMD Inc., any such Proprietary Technical Documentation
or other documentation containing Confidential Information in its possession.

     (c) Promptly following the termination of the AMD Saxonia Research
Agreement or of this Agreement, AMD Inc. shall be entitled to enter the Plant
and any other AMD Saxonia premises for the purposes of removing all Confidential
Information, including Proprietary Technical Documentation. AMD Saxonia shall
cooperate with AMD Inc. and shall provide AMD Inc. with full access to its
records and the records of all AMD Saxonia Persons and Affiliates (including
without limitation any digital or other media on which Proprietary Product
Know-how or other Confidential Information has been recorded) for purposes of
allowing AMD Inc. to remove such Proprietary Technical Documentation and any
other documentation containing Confidential Information. Representatives of AMD
Saxonia shall be entitled to accompany AMD Inc. at all times while AMD Inc. is
in the Plant for the purposes of recording those documents that are removed by
AMD Inc. and/or lodging an objection to such removal on the basis that such
documentation does not constitute Confidential Information. To the extent AMD
Inc. desires to remove documentation that is not Confidential Information, AMD
Inc. shall be permitted to do so at its sole expense.

     (d) As soon as AMD Inc. has completed the foregoing exercise, it shall
certify to AMD Saxonia in writing that it has removed all Confidential
Information known to it. AMD Inc. hereby acknowledges and agrees, on behalf of
itself and all other AMD Companies, that any and all documentation or other
items that it knowingly chooses not to remove from the Plant shall thereafter be
deemed not to constitute Proprietary Technical Documentation or to contain
Confidential Information.

     (e) Except where such failure was due to circumstances beyond its control
(in which case, the removal process shall be completed as soon as reasonably
practicable) or due to a breach by AMD Saxonia of its covenants to cooperate
with AMD Inc., if AMD Inc. fails to complete the foregoing document removal
process within thirty (30) days following the termination of the AMD Saxonia
Research Agreement, AMD Inc. and all other AMD Companies shall be deemed to have
waived any and all rights, claims and/or causes of action they have or in the
future may have against AMD Saxonia, its successors and assigns, or against a
Beneficiary based on the disclosure or use, for any purpose, by such Person of
any documentation left in the Plant on the grounds that such documentation or
the information contained therein is in any manner proprietary to AMD Inc. or
another AMD Company.

     (f) In connection with the foregoing, AMD Inc. agrees to indemnify and hold
harmless AMD Saxonia from and against any and all losses, costs and expenses
resulting from 



                                       14

 
any damage caused to the Plant by AMD Inc. during the course of conducting the
document removal process.

     Section 10. Disclaimer.
                 ----------

     (a) EACH PARTY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, IN CONNECTION WITH THE DEVELOPED INTELLECTUAL PROPERTY AND
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, NEITHER PARTY SHALL HAVE ANY LIABILITY IN TORT OR
STRICT LIABILITY, NOR SHALL IT BE LIABLE TO THE OTHER FOR ANY ORDINARY,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES INCURRED BY SUCH OTHER PARTY IN
RELATION TO THE DEVELOPED INTELLECTUAL PROPERTY.

     (b) IN FURTHERANCE OF THE FOREGOING, NEITHER PARTY WARRANTS THAT THE
MANUFACTURE OF ANY PRODUCTS INTEGRATING THE DEVELOPED INTELLECTUAL PROPERTY WILL
NOT INFRINGE ANY PATENT OR SIMILAR INTELLECTUAL PROPERTY RIGHTS OWNED OR
POSSESSED BY ANY THIRD PARTIES.

     Section 11. Indemnification. AMD Saxonia agrees to indemnify, defend and
                 ---------------
hold harmless AMD Inc. from and shall pay all costs, fees and expenses
(including reasonable attorney's fees) incurred by AMD Inc. arising out of a
breach by AMD Saxonia of this Agreement, but only to the extent the breach takes
place after the termination of the AMD Saxonia Research Agreement. AMD Inc.
agrees to indemnify, defend and hold harmless AMD Saxonia from and shall pay all
costs, fees and expenses (including reasonable attorney's fees) incurred by AMD
Saxonia arising out of a breach by AMD Inc. of this Agreement.

     Section 12. Representations and Warranties. Each of AMD Holding and AMD
                 ------------------------------
Inc. hereby represents and warrants to AMD Saxonia that:

     (a) Organization; Corporate Power. It is duly incorporated and validly
         -----------------------------
existing under the laws of the jurisdiction of its organization; it 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 in such
jurisdiction, 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 it 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 it of this Agreement have been duly authorized by all necessary
corporate action (including any necessary shareholder action) on its part and do
not and will not (i) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination, 



                                       15

 
or award presently in effect binding on it (which violation, 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. and its Subsidiaries on a consolidated
basis) or violate its charter, 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 it is a party or by which it or its
properties are bound, or (iii) result in or require (in either case except as
contemplated by the Operative Documents as defined in the Loan Agreement) the
creation or imposition of any encumbrance of any nature upon or with respect to
any of the of the properties now owned by it, and it 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 it and its Subsidiaries on a
consolidated basis.

     (c) Valid and Binding Obligation. This Agreement constitutes its legal,
         ----------------------------
valid and binding obligation, enforceable against it in accordance with its
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).

     Section 13. Relationship of Parties. Each of the parties 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 none of AMD Inc., AMD Holding or AMD Saxonia
shall act or omit to act in such a way as to suggest the contrary to any third
party.

     Section 14. Assignment. This Agreement shall be binding upon and enure to
                 ----------
the benefit of each party hereto and their respective successors and assigns;
provided, however, that AMD Saxonia shall not have the right to transfer or
--------  -------
assign its interest in this Agreement without the prior written consent of both
AMD Inc. and, prior to the Loan Agreement Termination Date, the Agent; provided
                                                                       --------
further, that AMD Saxonia may assign this Agreement to the Agent as security for
-------
the obligations of AMD Saxonia under the Loan Agreement and that, in connection
with the enforcement of rights under such security, the rights of AMD Saxonia
may be assigned to a transferee of the capital stock or all or substantially all
of the assets of AMD Saxonia, so long as any transfer of the rights of AMD
Saxonia under this Agreement in connection with the enforcement of rights under
such security shall include the obligations of AMD Saxonia, including that any
such transfer shall not change the location where and the manner in which the
Developed Intellectual Property may be used pursuant to the rights and licenses
granted under this Agreement.

     Section 15. 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. Prior to the Loan Agreement Termination Date, AMD Saxonia shall have
no right to 



                                       16

 
waive any of its rights or remedies under this Agreement without the prior
written consent of the Agent.

     Section 16. 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.

     Section 17. Further Assurances. At any time from time to time, upon the
                 ------------------
request of either party, the parties agree to execute and deliver such further
documents and do such other acts and things as any party may reasonably request
in order to effect fully the purpose of this Agreement. Without limiting the
foregoing, each of AMD Inc. and AMD Holdings agrees to prepare and execute from
time to time, at the expense of AMD Saxonia, such license agreements
substantially on the terms hereof confirming the licenses and rights of AMD
Saxonia granted hereby in any specific patent or copyright comprising Developed
Intellectual Property as AMD Saxonia may reasonably request.

     Section 18. Notices. All notices and other communications required or
                 -------
permitted to be given to or made upon any 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 Section 18.
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, TWX or telegram, sent to the intended recipient
thereof, or in the case only of a telecopier, sent to the intended recipient
thereof with confirmation of receipt, all in accordance with the provision of
this Section 18.

     If to AMD Inc.:           Advanced Micro Devices, Inc.
                               One AMD Place
                               P.O. Box 3453
                               Sunnyvale, California 94088-3453
                               Attention: General Counsel
                               Facsimile: (408) 774-7399

     If to AMD Holding:        AMD Saxony Holding GmbH
                               Washingtonstrasse 16 A/B
                               01139 Dresden, GERMANY
                               Attention:  Geschaftsfuhrer
                               Facsimile:  49-351-8412-150



                                       17

 
     If to AMD Saxonia:        AMD Saxony Manufacturing GmbH
                               Washingtonstra(beta)e 16 A/B
                               01139 Dresden, GERMANY
                               Attention:  Geschaftsfuhrer
                               Facsimile:  49-351-8412-150

     with a copy to:           Dresdner Bank A.G.
                               Dr. Kulz-Ring 10
                               01067 Dresden
                               Attention:  Direktion
                               Facsimile: 49-351-489-1350

     Section 19. 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 among AMD Inc., AMD Holding, AMD Saxonia and/or any other
person or entity except as specifically provided in any such other agreement.

     Section 20. 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.

     Section 21. Expert Resolution of Certain Disputes.
                 -------------------------------------

     (a) In the event that following the termination of the AMD Saxonia Research
Agreement or the AMD Saxonia Wafer Purchase Agreement: (i) AMD Inc. reasonably
asserts that any information used by AMD Saxonia constitutes Proprietary Product
Know-how or that any action by AMD Saxonia constitutes an infringement on any
intellectual property rights of AMD Inc., or (ii) AMD Saxonia reasonably asserts
that any document in the Plant that AMD Inc. wishes to remove does not
constitute Proprietary Technical Documentation, the parties agree that they will
refer the dispute between them to a technical expert for binding determination.
Pending resolution of any such dispute, AMD Saxonia shall be entitled to
continue to use the information or document in question on the terms of this
Agreement.

     (b) In the event a dispute of the type set forth in Section 21(a) arises,
the parties shall, within three (3) business days thereafter, appoint a mutually
agreeable, appropriately qualified expert to resolve the dispute between the
parties. If the parties cannot agree on the choice of the expert within such
time frame, either party may request that the President of the European Patent
Office appoint a suitably qualified expert to resolve the dispute. The decision
of the President shall be final and binding on the parties.

     (c) The expert appointed by the parties, or in default, by the Institute,
shall determine what information is required (and in what format) from either or
both parties for the purposes of resolving the dispute and the parties agree to
cooperate with such expert. In no event shall the expert take more than two (2)
weeks from the date of appointment within which to reach his or her decision and
the expert shall provide its decision in writing to both parties. All costs of
the expert shall be shared equally by the parties. The decision of the expert
shall be 



                                       18

 
appealable only pursuant to the dispute resolution procedures set forth in
Section 22, and the decision of the expert shall be admissible to the record in
any proceeding. The decision of the expert shall be final and binding on both
parties unless appealed by the commencement of proceedings pursuant to Section
22 within ten (10) days of such decision.

     (d) With regard to the disputes referred to in Section 21(a), it is the
intent of the parties that the expert resolution procedures contained in this
Section 21 shall be completed and the expert decision rendered before any other
type of dispute resolution procedure, proceeding or action (including, but not
limited to, the arbitration proceedings referred to in Section 22 or any other
form of provisional or preliminary remedies) is commenced, prosecuted or
otherwise pursued.

     Section 22. Arbitration of Disputes. Except as expressly provided in
                 -----------------------
Section 21, arbitration under this Section 22 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 Santa Clara County, 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 Section.

     (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 then 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 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 



                                       19

 
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
Section 23 below 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) 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 Section 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.

     Section 23. Consent to Jurisdiction and Forum; AMD Saxonia Appointment of
                 -------------------------------------------------------------
Agent for Service of Process.
----------------------------

     (a) Subject to Sections 21 and 22, all judicial proceedings brought against
any 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 Santa Clara County,
California, 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.



                                       20

 
     Section 24. Language. This Agreement is in the English language, which
                 --------
language shall be controlling in all respects.

     Section 25. Entire Agreement. This Agreement, the Wafer Purchase Agreements
                 ----------------
and the Research Agreements embody the entire agreement and understanding
between the parties with respect to the subject matter hereto. Neither party has
relied upon any representation or warranty of the other party in entering into
this Agreement except as expressly set forth herein.

     Section 26. 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.

     Section 27. Amendments. No modifications or amendments to this Agreement
                 ----------
shall be binding unless in writing and executed by each of the parties hereto.
In addition, prior to the Loan Agreement Termination Date, no modification or
amendment to this Agreement may be made without the prior written consent of the
Agent.

     Section 28. EMU. 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 Monetary Union. On the date on
which 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.


[Remainder of page intentionally left blank]


                                       21

 
     IN WITNESS OF THE FOREGOING, AMD Inc., AMD Holding and AMD Saxonia have
caused this Agreement to be executed by their authorized representatives as of
the date first written above.



                                            ADVANCED MICRO DEVICES, INC.


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

                                            Its: 
                                               ---------------------------------


                                            AMD SAXONY MANUFACTURING GMBH


                                            /s/ Jack L. Saltich
                                            ----------------------------------
                                            Geschaftsfuhrer



                                            AMD SAXONY HOLDING GMBH


                                            /s/ Marvin D. Burkett
                                            ----------------------------------
                                            Geschaftsfuhrer



                                       22