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<SEC-DOCUMENT>0001012870-01-001228.txt : 20010321
<SEC-HEADER>0001012870-01-001228.hdr.sgml : 20010321
ACCESSION NUMBER: 0001012870-01-001228
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010320
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ADVANCED MICRO DEVICES INC
CENTRAL INDEX KEY: 0000002488
STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674]
IRS NUMBER: 941692300
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1227
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT:
SEC FILE NUMBER: 001-07882
FILM NUMBER: 1572796
BUSINESS ADDRESS:
STREET 1: ONE AMD PL
STREET 2: P O BOX 3453
CITY: SUNNYVALE
STATE: CA
ZIP: 94088-3453
BUSINESS PHONE: 4087322400
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K405
<TEXT>
<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
Commission File Number 1-7882
ADVANCED MICRO DEVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1692300
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One AMD Place,
Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 732-2400
Securities registered pursuant to Section 12(b) of the Act:
(Name of each exchange
(Title of each class) on which registered)
--------------------- --------------------
$.01 Par Value Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]
Aggregate market value of the voting stock held by non-affiliates as of
February 26, 2001.
$7,175,108,834
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
314,747,355 shares as of February 26, 2001.
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Annual Report to Stockholders for the fiscal year ended
December 31, 2000, are incorporated into Parts II and IV hereof.
(2) Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held on April 26, 2001, are incorporated into Part III hereof.
================================================================================
AMD, Advanced Micro Devices, AMD-K6, AMD Athlon, AMD Duron and 3DNow! are
either our trademarks or our registered trademarks. Vantis is a trademark of
Lattice Semiconductor Corporation. Microsoft, Windows, Windows NT and MS-DOS are
either registered trademarks or trademarks of Microsoft Corporation. Alpha is a
trademark of Compaq Computer Corporation. Pentium is a registered trademark of
Intel Corporation. Other terms used to identify companies and products may be
trademarks of their respective owners.
<PAGE>
PART I
ITEM 1. BUSINESS
Cautionary Statement Regarding Forward-Looking Statements
The statements in this report that are forward-looking are based on current
expectations and beliefs and involve numerous risks and uncertainties that could
cause actual results to differ materially. The forward-looking statements relate
to, among other things, operating results; anticipated cash flows; capital
expenditures; adequacy of resources to fund operations and capital investments;
our ability to increase customer and market acceptance of AMD Athlon(TM) and AMD
Duron(TM) microprocessors, our seventh-generation microprocessors; our ability
to maintain average selling prices for our seventh-generation microprocessors;
our ability, and the ability of third parties, to provide timely infrastructure
solutions (chipsets and motherboards) to support our microprocessors; the effect
of foreign currency hedging transactions; our new submicron integrated circuit
manufacturing and design facility located in Dresden, Germany (Dresden Fab 30);
our ability to ramp production in Dresden Fab 30 and the Fujitsu AMD
Semiconductor Limited (FASL) manufacturing facilities. For a discussion of the
factors that could cause actual results to differ materially from the forward-
looking statements, see the "Financial Condition" and "Risk Factors" sections
set forth in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in our 2000 Annual Report to Stockholders, and
such other risks and uncertainties as set forth below in this report or detailed
in our other Securities and Exchange Commission reports and filings.
General
Advanced Micro Devices, Inc. was incorporated under the laws of Delaware on
May 1, 1969. Our mailing address and executive offices are located at One AMD
Place, Sunnyvale, California 94086, and our telephone number is (408) 732-2400.
Unless otherwise indicated, references to "AMD," "we" and "us" in this report
include our subsidiaries.
We are a semiconductor manufacturer with manufacturing facilities in the
U.S., Europe and Asia and sales offices throughout the world. Our products
include a wide variety of industry-standard digital integrated circuits (ICs)
which are used in many diverse product applications such as telecommunications
equipment, data and network communications equipment, consumer electronics,
personal computers (PCs), workstations and servers.
For segment information with respect to sales, operating results and
identifiable assets, refer to the information set forth in Note 9 of the
Consolidated Financial Statements contained in our 2000 Annual Report to
Stockholders.
For a discussion of the risk factors related to our business operations,
please see the "Cautionary Statement Regarding Forward-Looking Statements,"
"Risk Factors" and "Financial Condition" sections set forth in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in our 2000 Annual Report to Stockholders.
The IC Industry
The IC market has grown dramatically over the past ten years, driven
primarily by the demand for electronic business and consumer products. Today,
virtually all electronic products use ICs, including PCs and related
peripherals, voice and data communications and networking products, facsimile
and photocopy machines, home entertainment equipment, industrial control
equipment and automobiles.
The market for ICs can be divided into separate markets for digital and
analog devices. We participate primarily in the market for digital ICs. The
three types of digital ICs used in most electronic systems are:
. microprocessors, which are used for control and computing tasks, and
complementary chipset devices;
. memory circuits, which are used to store data and programming
instructions; and
. logic circuits, which are employed to manage the interchange and
manipulation of digital signals.
A discussion of the principal parts of the digital IC market in which we
participate follows.
2
<PAGE>
The Microprocessor Market
The microprocessor market is comprised of two broad categories, which are
based on the function of the products. A microprocessor that performs computing
tasks is known as the Central Processing Unit (CPU) of a computer system.
Microprocessors used for control applications are often referred to as embedded
processors. AMD participates primarily in the CPU category, which is the largest
category within the microprocessor market.
A CPU processor is an IC generally consisting of millions of transistors
that serves as the brain of a computer system such as a PC. The microprocessor
is typically the most critical component to the performance and efficiency of a
PC. The microprocessor controls data flowing through the electronic system and
manipulates such data as specified by the hardware or software which controls
the system. In 1981, IBM introduced its first PC containing a microprocessor
based upon the x86 instruction set developed by Intel Corporation and utilizing
the Microsoft(R) Corporation MS-DOS(R) operating system. As circuit design and
very large scale integration process technology have evolved, performance and
functionality of each new generation of x86 microprocessors have increased. The
x86 microprocessor market has been dominated by Intel since IBM's introduction
of the PC.
The x86 microprocessor market is characterized by intense competition,
short product life cycles, and rapid advances in product design and process
technology. Today, the greatest demand for microprocessors is from PC
manufacturers. With few exceptions, PC manufacturers require x86 microprocessors
which are Microsoft Windows(R) compatible. Improvements in the performance
characteristics of microprocessors and decreases in production costs resulting
from advances in process technology have broadened the market for PCs and
increased the demand for microprocessors.
The PC original equipment manufacturer (OEM) market is highly competitive.
Most PC suppliers have evolved from fully integrated manufacturers with
proprietary system designs to vendors focused on building brand recognition and
distribution capabilities. Almost all of these suppliers now rely on Intel or on
third-party manufacturers for the major subsystems of their PCs, such as the
motherboard and chipsets. These suppliers are also increasingly outsourcing the
design and manufacture of complete systems. The third-party manufacturers of
these subsystems, based primarily in Asia, are focused on providing PCs,
motherboards and complementary chipset devices that incorporate the latest
trends in features and performance at low prices. Increasingly, these third-
party manufacturers are also supplying fully configured PC systems through
alternative distribution channels.
Embedded processors are also an important part of the microprocessor
market. Embedded processors are general purpose devices used to carry out a
single application with limited user interface and programmability. A system
designed around an embedded processor usually cannot be programmed by an end
user because the system is preprogrammed to execute a specific task. Key markets
for embedded processors include telecommunications, networking, office
automation, storage, automotive applications and industrial control.
The Memory Market
Memory ICs store data and instructions, and are characterized as either
volatile or non-volatile. Volatile devices lose their stored information after
electrical power is shut off, while non-volatile devices retain their stored
information. The three most significant categories of semiconductor memory are
(1) Dynamic Random Access Memory (DRAM) and (2) Static Random Access Memory
(SRAM), both of which are volatile memories, and (3) non-volatile memory, which
includes Read-Only Memory (ROM), Erasable Programmable Read-Only Memory (EPROM),
Electrically Erasable Electrically Programmable Read-Only Memory (EEPROM) and
Flash memory devices. DRAM provides large capacity main memory, and SRAM
provides specialized high-speed memory. We do not produce any DRAM products,
which are the largest part of the memory market, or SRAM products. Flash and
other non-volatile memory devices are used in applications in which data must be
retained after power is turned off. However, ROM cannot be rewritten, EPROM
requires ultraviolet light as part of an erasure step before it can be
rewritten, and EEPROM utilizes a larger, more expensive, memory cell.
Several factors have contributed to an increasing demand for memory devices
in recent years, including the:
. expanding unit sales of PCs in the business and consumer markets;
. increasing use and functionality of cellular phones;
. increasing use of PCs to perform memory-intensive graphics and
multimedia functions;
. volume of memory required to support faster microprocessors;
. proliferation of increasingly complex PC software; and
. increasing performance requirements of workstations, servers and
networking and telecommunications equipment.
Flash memory devices are being utilized for an expanding range of uses.
Flash memory devices have a size and cost advantage over EEPROM devices, and the
ability of Flash memory devices to be electrically rewritten to update
parameters or
3
<PAGE>
system software provides greater flexibility and ease of use than other non-
volatile memory devices, such as ROM or EPROM devices. Flash memory devices can
store control programs and system-critical data in communication devices such as
cellular telephones and routers (devices used to transfer data between local
area networks). Another common application for Flash memory product is in PC
cards, which are inserted into notebook and subnotebook computers or personal
digital assistants to provide added data storage.
The Logic Market
Logic devices consist of structurally interconnected groupings of simple
logical "AND" and logical "OR" functions, commonly described as "gates."
Typically, complex combinations of individual gates are required to implement
the specialized logic functions required for system applications. The greater
the number of gates on a logic device, the higher that logic device's density
and, in general, device cost (for a particular process and architecture). Logic
devices are generally grouped into five families of products (from lowest
density to highest density):
. standard logic devices;
. programmable logic devices (PLDs);
. conventional gate-arrays;
. standard cells; and
. full custom ICs.
Conventional gate-arrays, standard cells and full-custom ICs are often referred
to as application-specific ICs (ASICs).
Many manufacturers of electronic systems are striving to develop new and
increasingly complex products to address evolving market opportunities rapidly.
Achievement of this goal often precludes the use of standard logic ICs and
ASICs. Standard logic ICs generally perform simple functions and are not
customizable, limiting a manufacturer's ability to adequately tailor an end-
product system. Although ASICs can be manufactured to perform customized
functions, they generally involve relatively high initial design, engineering
and manufacturing costs, significant design risks, and may increase an end-
product's time to market. As a result, ASICs are generally limited to high-
volume products and products for which time to market may be less critical.
A growing category of the full custom IC market is Application Specific
Standard Products (ASSPs). In this category, a full custom design, such as an
Ethernet controller, is used to implement a particular function and is sold to
multiple customers. Because the market requirements for these products have
become increasingly standard, they can achieve the cost advantages of full
custom design with the time to market advantages of a standard product. Almost
all of our networking products are a part of the ASSP category.
Unlike ASICs and standard logic ICs, PLDs are standard products,
purchased by system manufacturers in an unprogrammed or blank state. Each
system manufacturer may then program the PLDs to perform a variety of specific
logic functions. Certain PLDs are reprogrammable. Compared to standard logic
ICs and ASICs, PLDs allow system designers to design and implement custom
logic more quickly. On June 15, 1999, we sold Vantis Corporation (Vantis), our
PLD subsidiary, to Lattice Semiconductor Corporation (Lattice), and we now
function as a foundry and provide administrative services to Vantis.
Product Segments
In 2000, we participated in all three technology areas within the IC
market--microprocessors, memory circuits and logic circuits--through our Core
Products, Voice Communications and Foundry Services segments. Our Core Products
segment includes our PC processors, Memory products and Other IC products. PC
processors include AMD seventh-generation microprocessors and AMD-K6(R)
microprocessors. Memory products include Flash memory devices and EPROM devices.
Other IC products include embedded processors, platform products and networking
products. Our Voice Communications segment consisted of our voice communications
products subsidiary, Legerity, Inc. (Legerity), until July 31, 2000, the
effective date of its sale. Our Foundry Services segment consists of fees for
services that we provide to Legerity and Vantis, our former PLD subsidiary.
On August 4, 2000, we completed the sale of 90 percent of Legerity for
approximately $375 million in cash, effective July 31, 2000. We retained a ten
percent ownership interest in Legerity and a warrant to acquire approximately an
additional ten percent. As part of the transaction, we entered into various
service contracts with Legerity to continue to provide, among other things,
wafer fabrication and assembly, test, mark and pack services to Legerity.
Core Products
Core Products ($4.361 billion, or 94 percent, of our 2000 net sales)
include PC processor, memory and other IC products, with the majority of the
Core Products segment's net sales being derived from PC processors and Flash
memory devices.
4
<PAGE>
PC Processors
In 2000, our most significant microprocessor product sales were from the
AMD Athlon(TM) and AMD Duron(TM) processors, our seventh-generation
microprocessor products. The AMD Athlon and AMD Duron microprocessors are based
on superscalar RISC architecture and are designed to be compatible with
operating system software such as Windows 2000, Windows NT(R), Windows 98 (and
their predecessor operating systems), Linux, Netware and UNIX.
We began volume shipments of AMD Athlon microprocessors in the second half
of 1999. The AMD Athlon processor is an x86-compatible, seventh-generation
design featuring:
. a superpipelined, nine-issue superscalar microarchitecture optimized for
high clock frequency;
. a fully pipelined, superscalar floating point unit;
. high-performance backside L2 cache interface;
. enhanced 3DNow!(TM) technology with 24 additional instructions designed
to improve integer math calculations, data movements for Internet
streaming, and digital signal processor (DSP) communications; and
. a system bus which is a 200 MHz system interface based on the Alpha(TM)
EV6 bus protocol with support for scalable multiprocessing.
We began shipments of AMD Duron processors in the second half of 2000. The
AMD Duron processor, a derivative of the AMD Athlon processor core, is designed
to provide an optimized solution for value-conscious business and home users,
and features:
. full-speed, on-chip L2 cache memory;
. a 200 MHz front side system bus; and
. a superscalar floating point unit with enhanced 3DNow! technology.
Our overall PC processor sales growth in 2001 depends upon a continuing
successful production ramp in Dresden Fab 30, timely volume availability of
chipsets and motherboards from third party suppliers and increasing commercial
and consumer market acceptance of AMD Athlon and AMD Duron microprocessors.
Our microprocessor products have and will continue in 2001 and 2002 to
make significant contributions to our overall revenues, profit margins and
operating results. We plan to continue to make significant capital expenditures
to support our microprocessor products both in the near and long term. Our
ability to increase microprocessor product revenues, and benefit fully from the
substantial financial investments and commitments we have made and continue to
make related to microprocessors, depends upon the success of our seventh-
generation and future generations of microprocessors beginning with the "Hammer"
family of microprocessors that we plan to introduce in 2002. The Hammer
processors will be our first processors capable of 64-bit operation, and are
being designed to deliver leading-edge performance on both the 64-bit software
used by high-end workstations and servers and the 32-bit software used by the
majority of desktop users.
The microprocessor market is characterized by short product life cycles and
migration to ever higher performance microprocessors. To compete successfully
against Intel in this market, we must transition to new process technologies at
a fast pace and offer higher performance microprocessors in significantly
greater volumes. We must achieve acceptable yields while producing
microprocessors at higher speeds.
Intel has dominated the market for microprocessors used in PCs for many
years. Because of its dominant market position, Intel has historically set and
controlled x86 microprocessor and PC system standards and, thus, dictated the
type of product the market requires of Intel's competitors. In addition, Intel
may and does vary prices on its microprocessors and other products at will and
thereby affects the margins and profitability of its competitors due to its
financial strength and dominant position. Intel also exerts substantial
influence over PC manufacturers and their channels of distribution through the
"Intel Inside" brand and other marketing programs. Intel invests billions of
dollars in, and as a result exerts influence over, many other technology
companies. We expect Intel to continue to invest heavily in research and
development, new manufacturing facilities and other technology companies, and to
remain dominant:
. through the Intel Inside and other marketing programs;
. through other contractual constraints on customers, retailers, industry
suppliers and other third parties;
. by controlling industry standards; and
. by controlling supply and demand of motherboards, chipsets and other
system components.
5
<PAGE>
As an extension of its dominant microprocessor market share, Intel also
dominates the PC platform. As a result, PC manufacturers have been increasingly
unable to innovate and differentiate their product offerings. We do not have the
financial resources to compete with Intel on such a large scale. As long as
Intel remains in this dominant position, we may be materially and adversely
affected by its:
. product mix and introduction schedules;
. product bundling, marketing, merchandising and pricing strategies;
. control over industry standards, PC manufacturers and other PC industry
participants, including motherboard, chipset and basic input/output
system (BIOS) suppliers; and
. customer brand loyalty.
As Intel expanded its dominance over the PC system platform, many PC
manufacturers reduced their system development expenditures and now purchase
microprocessors together with chipsets or in assembled motherboards from Intel.
PC OEMs are increasingly dependent on Intel, less innovative on their own and,
to a large extent, distributors of Intel technology. In marketing our
microprocessors to these OEMs and dealers, we depend upon companies other than
Intel for the design and manufacture of core logic chipsets, graphics chips,
motherboards, BIOS software and other components. In recent years, many of these
third-party designers and manufacturers have lost significant market share to
Intel. In addition, these companies produce chipsets, motherboards, BIOS
software and other components to support each new generation of Intel's
microprocessors only if Intel makes information about its products available to
them in time to address market opportunities. Delay in the availability of such
information makes, and will continue to make, it increasingly difficult for
these third parties to retain or regain market share.
To compete with Intel in the microprocessor market in the future, we intend
to continue to form close relationships with third-party designers and
manufacturers of chipsets, motherboards, graphics chips, BIOS software and other
components. Similarly, we intend to expand our chipset and system design
capabilities, and to offer OEMs licensed system designs incorporating our
processors and companion products. We cannot be certain, however, that our
efforts will be successful.
We do not currently plan to develop microprocessors that are bus interface
protocol compatible with the Pentium III, Pentium IV and Celeron processors
because our patent cross-license agreement with Intel does not extend to
microprocessors that are bus interface protocol compatible with Intel's sixth
and subsequent generation processors. Thus, the AMD Athlon and AMD Duron
microprocessors are not designed to function with motherboards and chipsets
designed to work with Intel microprocessors. The same will be true of our Hammer
family microprocessors. Our ability to compete with Intel in the market for
seventh-generation and future generation microprocessors will depend on our:
. success in designing and developing the microprocessors; and
. ability to ensure that the microprocessors can be used in PC platforms
designed to support our microprocessors, or that platforms are available
which support both Intel processors and our processors.
Memory Products
Our Flash memory devices are used in cellular telephones, networking
equipment and other applications that require memory to be non-volatile and
electrically rewritten. This feature provides greater flexibility and ease of
use than EPROMs and other similar integrated circuits that cannot be
electrically rewritten. Flash memory devices also have a size and cost advantage
over EEPROM devices. Communications companies use Flash memory devices in
cellular telephones and related equipment to enable users to add and modify
frequently called numbers and to allow manufacturers to preprogram firmware and
other information. In networking applications, Flash memory devices are used in
hubs, switches and routers to enable systems to store firmware and reprogrammed
Internet addresses and other routing information. Use of Flash memory devices is
proliferating into a variety of other applications, such as set-top boxes,
automotive control systems, personal digital assistants, digital cameras and
other consumer electronic items.
Competition in the market for Flash memory devices will increase in 2001
and beyond as existing manufacturers introduce new products and industry-wide
production capacity increases. In 2000, almost all of our Flash memory devices
were produced in Japan through Fujitsu AMD Semiconductor Limited (FASL), our
joint venture with Fujitsu Limited.
EPROMs represent an older generation of erasable, programmable read-only
memory technology which is used primarily in the electronic equipment industry.
These devices are used in cellular telephones, wireless base stations,
telecommunication
6
<PAGE>
switching equipment, automotive applications, PC hard disk drives, printer
controllers, industrial machine controls and numerous other types of electronic
equipment to store firmware which controls the equipment's operation. EPROMs are
generally preferred over more expensive Flash memory devices in applications
where end users do not need to reprogram the information stored on the IC. We
believe the market for EPROMs, which is significantly smaller than the market
for Flash memory devices, will continue to decline as EPROMs are replaced in
various applications by Flash memory devices.
Other ICs
Embedded Processors. Our embedded processors are x86 software compatible
general purpose processors designed specifically for embedded applications. Our
16-bit family of E86 embedded processors are built around the C186/C188
processor with additional integrated features such as additional memory, serial
ports, high-level data link control channels, or universal serial bus ports. Our
32-bit E86 family of embedded processors includes the AMD-K6-2E+, AMD-K6-IIIE+
and Am(R)486 discrete processors as well as the Elan(TM)SC400 and ElanSC520
fully integrated processors. Our Elan processors integrate the PC AT peripheral
set on chip to serve small form factor applications.
Platform Products. Our platform products include chipsets and motherboard
reference design kits designed to support AMD seventh-generation
microprocessors for use in PCs. As the AMD Athlon and AMD Duron
microprocessors do not function with chipsets and motherboards designed to
work with Intel microprocessors, we must develop compatible platform products.
We license the design interface specifications for these products to third-
party manufacturers to facilitate the sale of our microprocessors. It is
possible that from time to time a third-party manufacturer will be unable to
make chipset products available to the market in a timely manner corresponding
with the introduction of our microprocessor products. As the lack of
availability of these third-party chipsets could impact our ability to sell
our microprocessors, we manufacture a quantity of chipsets within our own
fabrication facilities or our authorized foundries on a limited basis. We are
then able to have a supply of products available for sale, should the need
exist, until they are available from the third-party manufacturers.
Networking Products. Our networking products include logic devices that are
used in the data communication and networking industry to establish and manage
connectivity.
Our product portfolio encompasses the following local area network (LAN)
products:
. home networking controllers and physical layer products;
. Ethernet controllers supporting the enterprise and small business
networking areas;
. Ethernet physical layer and repeater products which are used in
enterprise and small business systems solutions; and
. Ethernet physical layer and switch products which are used in
enterprise, small business and telecommunication systems.
Voice Communications
Voice Communications Products ($140 million, or 3 percent, of our 2000
net sales) included the voice telecommunications products of our former
subsidiary, Legerity. These products are used in infrastructure equipment such
as central office switches, digital loop carriers and digital subscriber loop
access multiplexers (DSLAMS), and in customer premise equipment such as
wireless local loop systems, cable telephony systems, private branch exchange
equipment and voice over digital subscriber line (DSL) systems. In modern
telephone communications systems, voice communications are generally transmitted
between the speaker and the central office switch in analog format, but are
switched and transmitted over longer distances in digital format. Legerity's
subscriber line interface circuits (SLIC) for line cards connect the user's
telephone wire to the telephone company's digital switching equipment.
Legerity's SLAC(TM) line cards are coder/decoders which convert analog voice
signals to a digital format and back. Legerity's DSL products include a
coder/decoder device and a modem device for use in DSLAM applications.
Legerity's cordless telephony products include a baseband controller for the 900
MHz narrow band digital cordless market. On August 4, 2000, we completed the
sale of 90 percent of Legerity for approximately $375 million in cash to
Francisco Partners, L.P., effective July 31, 2000. We retained a ten percent
ownership interest in Legerity and a warrant to acquire approximately an
additional ten percent. As part of the transaction, we entered into various
service contracts with Legerity to continue to provide, among other things,
wafer fabrication and assembly, test, mark and pack services to Legerity.
Foundry Services
Foundry Services ($142 million, or 3 percent of our 2000 net sales) include
fees for services provided to Lattice and Legerity.
Research and Development; Manufacturing Technology
Our expenses for research and development were $642 million in 2000, $636
million in 1999 and $567 million in 1998. These expenses represented 14 percent
of net sales in 2000, 22 percent of net sales in 1999 and 22 percent of net
sales in 1998.
7
<PAGE>
Our research and development expenses are charged to operations as they are
incurred. Most of our research and development personnel are integrated into the
engineering staff.
Manufacturing technology is the key determinant in the improvement in most
semiconductor products. Each new generation of process technology has resulted
in products with higher speeds and greater performance produced at lower cost.
We continue to make significant infrastructure investments to enable us to
continue to achieve high volume, high reliability and low cost production using
leading edge process technology.
Our efforts concerning process technologies are focused in two major areas:
logic technology used by our microprocessors and embedded processors, and non-
volatile memory technology used by Flash memory products. Our goals are to
improve product performance, increase manufacturing volumes and reduce unit
costs.
In order to remain competitive, we must continue to make substantial
investments in the improvement of our process technologies. In particular, we
have made and continue to make significant research and development
investments in the technologies and equipment used to fabricate our
microprocessor products and our Flash memory devices. Portions of these
investments might not be fully recovered if we fail to continue to gain market
acceptance or if the market for our Flash memory products should significantly
deteriorate. In addition, if we are unable to remain competitive with respect
to process technology we will be materially and adversely affected.
Competition
The IC industry is intensely competitive and, historically, has experienced
rapid technological advances in product and system technologies. After a product
is introduced, costs and average selling prices normally decrease over time as
production efficiency and competition increase, and as successive generations of
products are developed and introduced for sale. Technological advances in the
industry result in frequent product introductions, regular price reductions,
short product life cycles and increased product capabilities that may result in
significant performance improvements. Competition in the sale of ICs is based
on:
. performance;
. product quality and reliability;
. price;
. adherence to industry standards;
. software and hardware compatibility;
. marketing and distribution capability;
. brand recognition;
. financial strength; and
. ability to deliver in large volumes on a timely basis.
In each market in which we participate, we face competition from different
groups of companies. With respect to microprocessors, Intel holds a dominant
market position. With respect to Flash memory products, our principal
competitors are Intel, STMicroelectronics N.V., Sharp Electronics Corporation
and Atmel Corporation. We also compete to a lesser degree with Fujitsu, our
joint venture partner in FASL. With respect to the voice communications products
of Legerity, our principal competitors through August 4, 2000, the date we
completed the sale of Legerity, were Infineon Corporation, Lucent Technologies
Inc., Intersil Corporation and LM Ericsson.
8
<PAGE>
Manufacturing Facilities
Our current IC manufacturing facilities are described in the chart set
forth below:
<TABLE>
<CAPTION>
Production Approximate
Wafer Size Technology Clean Room
Facility Location (Diameter in Inches) (in Microns) (Square Footage)
----------------- -------------------- ------------ ----------------
<S> <C> <C> <C>
Austin, Texas
Fab 25....................................... 8 0.18 120,000
Fab 14/15.................................... 6 0.5 42,000
Aizu-Wakamatsu, Japan
FASL JV1 (1)................................. 8 0.35 70,000
FASL JV2 (1)................................. 8 0.25 & 0.35 91,000
Dresden, Germany
Fab 30....................................... 8 0.18 115,100
</TABLE>
__________
(1) We own 49.992 percent of FASL. Fujitsu owns 50.008 percent of FASL.
In July 2000, FASL broke ground for a third fabrication facility, FASL JV3,
for the manufacture of Flash memory devices in Aizu-Wakamatsu. As of December
31, 2000, the building was complete and the clean room was under construction.
We also have foundry arrangements for the production of our products by third
parties.
Our Submicron Development Center is a 42,000 square foot research and
development facility located in Sunnyvale, California.
Our current assembly and test facilities are described in the chart set
forth below:
<TABLE>
<CAPTION>
Approximate
Assembly & Test
Facility Location Square Footage Activity
----------------- -------------- --------
<S> <C> <C>
Penang, Malaysia............................. 377,000 Assembly & Test
Bangkok, Thailand............................ 78,000 Assembly & Test
Singapore.................................... 162,000 Test
Suzhou, China................................ 30,250 Assembly & Test
</TABLE>
Foreign manufacturing and construction of foreign facilities entails
political and economic risks, including political instability, expropriation,
currency controls and fluctuations, changes in freight and interest rates, and
loss or modification of exemptions for taxes and tariffs. For example, if we
were unable to assemble and test our products abroad, or if air transportation
between the United States and our overseas facilities were disrupted, there
could be a material adverse effect on our business.
Certain Material Agreements. Set forth below are descriptions of certain
material contractual relationships we have relating to FASL, Dresden Fab 30 and
Motorola.
FASL. In 1993, we formed FASL, a joint venture with Fujitsu, for the
development and manufacture of Flash memory devices. FASL operates advanced IC
manufacturing facilities in Aizu-Wakamatsu, Japan (FASL JV1 and FASL JV2), for
the production of Flash memory devices. FASL JV1 began volume production in the
first quarter of 1995, and utilizes eight-inch wafer processing technologies
capable of producing products with geometrics of .35-micron or smaller. FASL is
continuing the facilitization of FASL JV2, which began volume production in
1999, and also utilizes eight-inch wafer processing technologies.
FASL JV3, described above under "Manufacturing Facilities," is expected to
cost approximately $1.5 billion when fully equipped. Capital expenditures for
FASL JV2 and FASL JV3 construction to date have been funded by cash generated
from FASL operations and local borrowings by FASL. However, to the extent that
FASL is unable to secure the necessary funds for FASL JV2 and FASL JV3, we may
be required to contribute cash or guarantee third-party loans in proportion to
our 49.992 percent interest in FASL. As of December 31, 2000, we had $38 million
in loan guarantees outstanding with respect to these loans. These planned costs
are denominated in yen and are, therefore, subject to change due to foreign
exchange rate fluctuations. At the end of 2000, the exchange rate was
approximately 112.52 yen to one U.S. dollar.
In connection with FASL, AMD and Fujitsu have entered into various joint
development, cross-license and investment arrangements. Pursuant to these
agreements, the companies are providing their product designs and process and
manufacturing technologies to FASL. In addition, both companies are
collaborating in developing manufacturing processes and designing Flash memory
devices for FASL. The right of each company to use the licensed intellectual
property of the other with respect to certain products is limited both in scope
and geographic areas. For instance, AMD and Fujitsu have cross-licensed their
respective intellectual property to produce stand-alone Flash memory devices
with geometrics of 0.5-micron or smaller within the joint venture. Furthermore,
our ability to sell Flash memory products incorporating Fujitsu intellectual
property, whether or not produced by FASL, is also limited in certain
territories, including Japan and Asia (excluding Taiwan). Fujitsu is likewise
limited in its ability to sell Flash memory devices incorporating our
intellectual property, whether or not produced by FASL, in certain territories
including the United States and Taiwan.
Dresden Fab 30. AMD Saxony Manufacturing GmbH (AMD Saxony), an indirect
wholly owned German subsidiary of AMD, operates Dresden Fab 30 which began
production in the second quarter of 2000. AMD, the Federal Republic of Germany,
the State of Saxony and a consortium of banks are supporting the project. We
currently estimate construction and facilitization costs of Dresden Fab 30 will
be approximately $2.3 billion when the facility is fully equipped by the end of
2003. In
9
<PAGE>
March 1997, AMD Saxony entered into a loan agreement and other related
agreements (the Dresden Loan Agreements) with a consortium of banks led by
Dresdner Bank AG. Because most of the amounts under the Dresden Loan Agreements
are denominated in deutsche marks, the dollar amounts set forth below are
subject to change based on applicable conversion rates. We used the exchange
rate at the end of 2000, which was approximately 2.20 deutsche marks to one U.S.
dollar, to value the amounts denominated in deutsche marks. The Dresden Loan
Agreements provide for the funding of the construction and facilitization of
Dresden Fab 30. The funding consists of:
. equity, subordinated loans and loan guarantees from AMD;
. loans from a consortium of banks; and
. grants, subsidies and loan guarantees from the Federal Republic of
Germany and the State of Saxony.
The Dresden Loan Agreements require that we partially fund Dresden Fab 30
project costs in the form of subordinated loans to, or equity investments in,
AMD Saxony. In accordance with the terms of the Dresden Loan Agreements, we have
invested $410 million as of December 31, 2000 in the form of subordinated loans
to and equity in AMD Saxony. In addition to support from AMD, the consortium
of banks referred to above has made available $750 million in loans to AMD
Saxony to help fund Dresden Fab 30 project costs. AMD Saxony had $375 million of
such loans outstanding as of December 31, 2000.
Finally, the Federal Republic of Germany and the State of Saxony are
supporting the Dresden Fab 30 project, in accordance with the Dresden Loan
Agreements, in the form of:
. guarantees of 65 percent of AMD Saxony bank debt up to a maximum of $750
million in bank debt;
. capital investment grants and allowances totaling $287 million; and
. interest subsidies totaling $141 million.
Of these amounts, AMD Saxony had received approximately $284 million in
capital investment grants and allowances and $38 million in interest subsidies
as of December 31, 2000. The grants and subsidies are subject to conditions,
including meeting specified levels of employment in December 2001 and
maintaining those levels until June 2007. Noncompliance with the conditions of
the grants and subsidies could result in the forfeiture of all or a portion of
the future amounts to be received as well as the repayment of all or a portion
of amounts received to date. As of December 31, 2000, we were in compliance with
all of the conditions of the grants and subsidies.
In February 2001, we amended the Dresden Loan Agreements to reflect new
capacity and increased capital expenditure plans for Dresden Fab 30. Under the
February 2001 amendments, we agreed to increase and extend our guaranty of AMD
Saxony's obligations and to make available to AMD Saxony revolving loans of up
to $500 million. We expanded our obligation to reimburse AMD Saxony for the
cost of producing wafers for us and we also agreed to cancel the cost overrun
facility made available by the banks. Under the February 2001 amendments, we
have been released from financial covenants limiting capital expenditures and
requiring AMD Saxony to achieve capacity and production cost targets by the end
of 2001.
The Dresden Loan Agreements, as amended, also require that we:
. provide interim funding to AMD Saxony if either the remaining capital
investment allowances or the remaining interest subsidies are delayed,
such funding to be repaid to AMD as AMD Saxony receives the grants or
subsidies from the state of Saxony;
. fund shortfalls in government subsidies resulting from any default under
the subsidy agreements caused by AMD Saxony or its affiliates; and
. guarantee up to 35 percent of AMD Saxony's obligations under the Dresden
Loan Agreements, which guarantee must not be less than $99 million or
more than $273 million, until the bank loans are repaid in full.
We entered into foreign currency hedging transactions for Dresden Fab 30 in
1998, 1999 and 2000 and anticipate entering into additional such foreign
currency hedging transactions in 2001 and in future years. We use foreign
currency forward and option contracts to reduce our exposure to currency
fluctuations on our foreign currency exposures in our foreign sales
subsidiaries, liabilities for products purchased from FASL and for foreign
currency denominated fixed asset purchase commitments. The objective of these
contracts is to minimize the impact of foreign currency exchange rate movements
on our operating results and on the cost of capital asset acquisition. Our
accounting policy for these instruments is based on our designation of such
instruments as hedging transactions. We generally do not use derivative
financial instruments for speculative or trading purposes.
10
<PAGE>
Motorola. In 1998, we entered into an alliance with Motorola for the
development of logic and Flash memory process technology. The alliance includes
a seven-year technology development and license agreement, which was amended on
January 21, 2000 to include certain additional technology, and a patent cross-
license agreement. The agreements provide that we will co-develop with Motorola
future generation logic process and embedded Flash technologies. In addition, we
have received certain licenses to Motorola's semiconductor logic process
technologies, including copper interconnect technology, which may be subject to
variable royalty rates. In exchange, we have developed and licensed to Motorola
a Flash module design to be used in Motorola's future embedded Flash products.
Motorola will have additional rights, subject to certain conditions, to make
stand-alone Flash devices, and to make and sell certain data networking devices.
The rights to data networking devices may be subject to variable royalty payment
provisions.
Marketing and Sales
Our products are marketed and sold under the AMD trademark. We employ a
direct sales force through our principal facilities in Sunnyvale, California,
and field sales offices throughout the United States and abroad (primarily
Europe and Asia Pacific). We also sell our products through third-party
distributors and independent representatives in both domestic and international
markets pursuant to nonexclusive agreements. The distributors also sell products
manufactured by our competitors, including those products for which we are an
alternate source. One of our OEMs, Compaq Computer Corporation, accounted for
approximately 11 percent of our 2000 net sales. No other single distributor or
OEM customer accounted for ten percent or more of our net sales in 2000.
Distributors typically maintain an inventory of our products. In most
instances, our agreements with distributors protect their inventory of our
products against price reductions, as well as products that are slow moving or
have been discontinued. These agreements, which may be canceled by either party
on a specified notice, generally allow for the return of our products if the
agreement with the distributor is terminated. The market for our products is
generally characterized by, among other things, severe price competition. The
price protection and return rights we offer to our distributors could materially
and adversely affect us if there is an unexpected significant decline in the
price of our products.
Our international sales operations entail political and economic risks,
including expropriation, currency controls, exchange rate fluctuations, changes
in freight rates and changes in rates and exemptions for taxes and tariffs.
Raw Materials
Certain raw materials we use in the manufacture of our products are
available from a limited number of suppliers. For example, we are dependent on
key chemicals from a limited number of suppliers, and a few foreign companies
principally supply several types of the IC packages purchased by us.
Interruption of supply, increased demand in the industry or currency
fluctuations could cause shortages in various essential materials. We would have
to reduce our manufacturing operations if we were unable to procure certain of
these materials. This reduction in our manufacturing operations could have a
material adverse effect on our business. To date, we have not experienced
significant difficulty in obtaining the raw materials required for our
manufacturing operations.
Environmental Regulations
We could possibly be subject to fines, suspension of production, alteration
of our manufacturing processes or cessation of our operations if we fail to
comply with present or future governmental regulations related to the use,
storage, handling, discharge or disposal of toxic, volatile or otherwise
hazardous chemicals used in our manufacturing processes. Such regulations could
require us to acquire expensive remediation equipment or to incur other expenses
to comply with environmental regulations. Any failure to control the use,
disposal or storage of, or adequately restrict the discharge of, hazardous
substances could subject us to future liabilities and could have a material
adverse effect on our business.
Intellectual Property and Licensing
We have been granted over 3,700 United States patents, and have several
thousand patent applications pending in the United States. In certain cases, we
have filed corresponding applications in foreign jurisdictions. We expect to
file future patent applications in both the United States and abroad on
significant inventions as we deem appropriate.
11
<PAGE>
In January 1995, we reached an agreement with Intel to settle all
previously outstanding legal disputes between the two companies. As part of the
settlement, in December 1995, we signed a five-year, comprehensive cross-license
agreement with Intel which expired on December 31, 2000. We are currently
negotiating a new agreement with Intel but there can be no assurance that a new
agreement will be successfully negotiated. The lack of a patent cross-license
with Intel could lead to expensive and time-consuming litigation, the outcomes
of which could have a material adverse effect on our business.
In addition, we have entered into numerous cross-licensing and technology
exchange agreements with other companies under which we both transfer and
receive technology and intellectual property rights. Although we attempt to
protect our intellectual property rights through patents, copyrights, trade
secrets and other measures, we cannot give any assurance that we will be able to
protect our technology or other intellectual property adequately or that
competitors will not be able to develop similar technology independently. We
cannot give any assurance that any patent applications that we may file will be
issued or that foreign intellectual property laws will protect our intellectual
property rights. We cannot give any assurance that any patent licensed by or
issued to us will not be challenged, invalidated or circumvented, or that the
rights granted thereunder will provide competitive advantages to us.
Furthermore, we cannot give any assurance that others will not independently
develop similar products, duplicate our products or design around our patents
and other rights.
From time to time, we have been notified that we may be infringing
intellectual property rights of others. If any claims are asserted against us,
we may seek to obtain a license under the third party's intellectual property
rights. We could decide, in the alternative, to resort to litigation to
challenge these claims. These challenges could be extremely expensive and time-
consuming and could materially and adversely affect our business. We cannot give
any assurance that all necessary licenses can be obtained on satisfactory terms,
or that litigation may always be avoided or favorably concluded.
Backlog
We manufacture and market standard lines of products. Consequently, a
significant portion of our sales are made from inventory on a current basis.
Sales are made primarily pursuant to purchase orders for current delivery, or
agreements covering purchases over a period of time, which are frequently
subject to revision and cancellation without penalty. Generally, in light of
current industry practice and experience, we do not believe that such agreements
provide meaningful backlog figures or are necessarily indicative of actual sales
for any succeeding period.
Employees
On January 31, 2001, we employed approximately 14,696 employees, none of
whom are represented by collective bargaining arrangements. We believe that our
relationship with our employees is generally good.
Executive Officers of the Registrant
W. J. Sanders III--Mr. Sanders, 64, is Chairman of the Board and Chief
Executive Officer of Advanced Micro Devices, Inc. Mr. Sanders co-founded AMD in
1969.
Hector de J. Ruiz--Dr. Ruiz, 55, is President and Chief Operating Officer
of Advanced Micro Devices, Inc. Dr. Ruiz joined AMD in January 2000. Before
joining AMD, Dr. Ruiz was President of Motorola Inc.'s Semiconductor Products
Sector. Dr. Ruiz held various executive positions with Motorola since 1977.
Benjamin M. Anixter--Mr. Anixter, 63, is Vice President, External Affairs
of Advanced Micro Devices, Inc., and has been since 1987. Mr. Anixter became a
corporate officer in April of 1999. He has been with AMD since 1971.
Robert R. Herb--Mr. Herb, 39, is Executive Vice President, Chief Sales and
Marketing Officer of Advanced Micro Devices, Inc. Mr. Herb joined AMD in 1983.
In 1998, Mr. Herb became an officer of AMD and was promoted to Senior Vice
President and Co-Chief Marketing Officer. From 1996 until 1998, Mr. Herb served
as the Vice President of Group Strategic Marketing for the Computation Products
Group. Before that, he was a director of marketing for the Personal Computer
Products Division.
12
<PAGE>
Walid Maghribi--Mr. Maghribi, 48, is Senior Vice President and President of
the Memory Group of Advanced Micro Devices, Inc. Mr. Maghribi joined AMD in 1986
and was Group Vice President, Memory Group before being promoted to Senior Vice
President and President of the Memory Group in 2001. Before joining AMD, Mr.
Maghribi was Director of Operations of Seeq Technology, after joining the
company in 1982.
Thomas M. McCoy--Mr. McCoy, 50, is Senior Vice President, General Counsel
and Secretary of Advanced Micro Devices, Inc. Before his appointment as Senior
Vice President, Mr. McCoy held the office of Vice President, General Counsel and
Secretary from 1995 to 1998. Before his appointment as Vice President, General
Counsel and Secretary, Mr. McCoy was with the law firm of O'Melveny and Myers
where he practiced law, first as an associate and then as a partner, from 1977
to 1995.
Robert J. Rivet--Mr. Rivet, 46, is Senior Vice President and Chief
Financial Officer of Advanced Micro Devices, Inc. Mr. Rivet joined AMD in
September 2000. Before joining AMD, he was Senior Vice President and Director of
Finance of the Semiconductor Products Sector of Motorola. Mr. Rivet served in a
number of positions in Motorola Semiconductor operations since 1981, after
joining the company in 1976 as a senior financial analyst and senior accountant.
William T. Siegle--Dr. Siegle, 62, is Senior Vice President, Technology and
Manufacturing Operations, Chief Scientist of Advanced Micro Devices, Inc. Dr.
Siegle was Group Vice President, Technology Development Group and Chief
Scientist from 1997 until 1998. Before his appointment as Group Vice President,
Dr. Siegle served as Vice President, Integrated Technology Department and Chief
Scientist since 1990.
Stan Winvick--Mr. Winvick, 61, is Senior Vice President, Human Resources
of Advanced Micro Devices, Inc. Before his appointment as Senior Vice President
in 1991, Mr. Winvick served as Vice President, Human Resources since 1980.
Stephen J. Zelencik--Mr. Zelencik, 66, is Senior Vice President, Market
Development of Advanced Micro Devices, Inc. Before his appointment as Senior
Vice President, Market Development in 1999, Mr. Zelencik served as Senior Vice
President and Co-Chief Marketing Officer. From 1979 until 1998, Mr. Zelencik was
Senior Vice President and Chief Marketing Executive.
ITEM 2. PROPERTIES
Our principal engineering, manufacturing, warehouse and administrative
facilities comprise approximately 5.1 million square feet and are located in
Sunnyvale, California; Austin, Texas; and Dresden, Germany. Over 3.1 million
square feet of this space is in buildings we own.
We lease property containing two buildings with an aggregate of
approximately 364,000 square feet, located on 45.6 acres of land in Sunnyvale,
California (One AMD Place). The lease term ends in December 2018. In 2000, we
renewed a lease agreement for approximately 175,000 square feet located adjacent
to One AMD Place (known as AMD Square) to be used by the product groups as
engineering offices and laboratory facilities.
We also own or lease facilities containing approximately 1.2 million square
feet for our operations in Malaysia, Thailand, Singapore and China. We lease
approximately 15 acres of land in Suzhou, China for our assembly and test
facility. We acquired approximately 115 acres of land in Dresden, Germany for
Dresden Fab 30. Dresden Fab 30 is encumbered by a lien securing borrowings of
AMD Saxony. Fab 25, our fabrication facility in Austin, Texas, is encumbered by
a lien securing our 11% Senior Secured Notes due 2003.
We lease 24 sales offices in North America, 11 sales offices in Asia
Pacific, 10 sales offices in Europe and one sales office in South America for
our direct sales force. These offices are located in cities in major electronics
markets where concentrations of our customers are located.
Leases covering our facilities expire over terms of generally one to 20
years. We currently do not anticipate significant difficulty in either retaining
occupancy of any of our facilities through lease renewals prior to expiration or
through month-to-month occupancy, or replacing them with equivalent facilities.
13
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
1. Environmental Matters. Since 1981, we have discovered, investigated and
begun remediation of three sites where releases from underground chemical tanks
at our facilities in Santa Clara County, California, adversely affected the
groundwater. The chemicals released into the groundwater were commonly in use in
the semiconductor industry in the wafer fabrication process prior to 1979. At
least one of the released chemicals (which we no longer use) has been identified
as a probable carcinogen.
In 1991, we received four Final Site Clean-up Requirements Orders from the
California Regional Water Quality Control Board, San Francisco Bay Region
relating to the three sites. One of the orders named us as well as TRW
Microwave, Inc. and Philips Semiconductors Corporation. In January 1999, we
entered into a settlement agreement with Philips whereby Philips assumed costs
allocated to us under this order, although we are responsible for these costs in
the event that Philips does not fulfill its obligations under the settlement
agreement. Another of the orders named us as well as National Semiconductor
Corporation.
The three sites in Santa Clara County are on the National Priorities List
(Superfund). If we fail to satisfy federal compliance requirements or
inadequately perform the compliance measures, the government (1) can bring an
action to enforce compliance or (2) can undertake the desired response actions
itself and later bring an action to recover its costs, and penalties, which is
up to three times the costs of clean-up activities, if appropriate. The statute
of limitations has been tolled on the claims of landowners adjacent to the Santa
Clara County Superfund sites for causes of action such as negligence, nuisance
and trespass.
We have computed and recorded the estimated environmental liability in
accordance with applicable accounting rules and have not recorded any potential
insurance recoveries in determining the estimated costs of the cleanup. The
amount of environmental charges to earnings has not been material during any of
the last three fiscal years. We believe that the potential liability, if any, in
excess of amounts already accrued with respect to the foregoing environmental
matters will not have a material adverse effect on our business.
We received a notice dated October 14, 1998 from the Environmental
Protection Agency (EPA) indicating that the EPA has determined AMD to be a
potentially responsible party that arranged for disposal of hazardous substances
at a site located in Santa Barbara County, California. We are currently in
settlement discussions with the EPA and believe that any settlement will not
have a material adverse effect on our financial condition or results of
operations.
2. Securities Class Action Litigation. Between March 10, 1999 and April 22,
1999, AMD and certain individual officers of AMD were named as defendants in a
number of lawsuits that were consolidated under Ellis Investment Co., Ltd., et
al v. Advanced Micro Devices, Inc. et al. Following appointment of lead counsel,
the case was re-named Hall et al. v. Advanced Micro Devices, Inc., et al. On
September 5, 2000, the parties stipulated to, and the United States District
Court for the Northern District of California entered, an order whereby all
plaintiffs' claims and causes of action against all defendants were voluntarily
dismissed without prejudice.
3. Other Matters. We are a defendant or plaintiff in various other actions
which arose in the normal course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect on
our business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock (symbol AMD) is listed on the New York Stock Exchange. The
information regarding market price range, dividend information and number of
holders of our common stock appearing under the captions "Supplementary
Financial Data" and "Financial Summary" on pages 46 and 47 of our 2000 Annual
Report to Stockholders is incorporated herein by reference.
14
<PAGE>
During 2000, we did not make any sales of our equity securities which were
not registered under the Securities Act of 1933, as amended.
ITEM 6. SELECTED FINANCIAL DATA
The information regarding selected financial data for the fiscal years 1996
through 2000, under the caption "Financial Summary" on page 47 of our 2000
Annual Report to Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 8 through
22 of our 2000 Annual Report to Stockholders is incorporated herein by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information appearing under the caption "Quantitative and Qualitative
Disclosure about Market Risk" on pages 14 through 15 of our 2000 Annual Report
to Stockholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements at December 31, 2000 and December 26,
1999 and for each of the three years in the period ended December 31, 2000, and
the report of independent auditors thereon, and our unaudited quarterly
financial data for the two-year period ended December 31, 2000, appearing on
pages 23 through 45 of our 2000 Annual Report to Stockholders are incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under the captions "Item 1--Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement
for our Annual Meeting of Stockholders to be held on April 26, 2001 (2001 Proxy
Statement) is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Directors' Compensation and Benefits,"
"Committees and Meetings of the Board of Directors," "Executive Compensation,"
"Employment Agreements" and "Change in Control Arrangements" in our 2001 Proxy
Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Principal Stockholders and Security
Ownership of Directors and Executive Officers" in our 2001 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Relationships and Related Party
Transactions" in our 2001 Proxy Statement is incorporated herein by reference.
15
<PAGE>
With the exception of the information specifically incorporated by
reference in Part III of this Annual Report on Form 10-K from our 2001 Proxy
Statement, our 2001 Proxy Statement shall not be deemed to be filed as part of
this report. Without limiting the foregoing, the information under the captions
"Board Compensation Committee Report on Executive Compensation," "Board Audit
Committee Report" and "Performance Graph" in our 2001 Proxy Statement is not
incorporated by reference in this Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)
1. Financial Statements
The financial statements listed in the accompanying Index to Consolidated
Financial Statements and Financial Statement Schedule covered by the Report of
Independent Auditors are filed or incorporated by reference as part of this
Annual Report on Form 10-K. The following is a list of such financial
statements:
<TABLE>
<CAPTION>
Page References
-----------------------
2000 Annual
Form Report to
10-K Stockholders
------- --------------
<S> <C> <C>
Report of Ernst & Young LLP, Independent Auditors............................................ -- 45
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2000......................................................................... -- 23
Consolidated Balance Sheets at December 31, 2000 and December 26, 1999....................... -- 24
Consolidated Statements of Stockholders' Equity for each of the three years in the period
ended December 31, 2000................................................................... -- 25
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2000......................................................................... -- 26
Notes to Consolidated Financial Statements................................................... -- 27-44
</TABLE>
2. Financial Statement Schedule
The financial statement schedule listed below is filed as part of this
Annual Report on Form 10-K.
<TABLE>
<CAPTION>
Page References
------------------------
2000 Annual
Form Report to
10-K Stockholders
-------- --------------
<S> <C> <C>
Schedule for the three years in the period ended December 31, 2000:
Schedule II Valuation and Qualifying Accounts............................................. F-3 __
</TABLE>
All other schedules have been omitted because the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the Consolidated
Financial Statements or Notes thereto. With the exception of the information
specifically incorporated by reference into Parts II and IV of this Annual
Report on Form 10-K, the 2000 Annual Report to Stockholders is not to be deemed
filed as part of this report.
16
<PAGE>
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits are filed as part
of, or incorporated by reference into, this Annual Report on Form 10-K. The
following is a list of such Exhibits:
Exhibit
Number Description of Exhibits
------ -----------------------
2.1 Agreement and Plan of Merger dated October 20, 1995, between AMD and
NexGen, Inc., filed as Exhibit 2 to AMD's Quarterly Report for the
period ended October 1, 1995, and as amended as Exhibit 2.1 to AMD's
Current Report on Form 8-K dated January 17, 1996, is hereby
incorporated by reference.
2.2 Amendment No. 2 to the Agreement and Plan of Merger, dated January
11, 1996, between AMD and NexGen, Inc., filed as Exhibit 2.2 to AMD's
Current Report on Form 8-K dated January 17, 1996, is hereby
incorporated by reference.
2.3 Stock Purchase Agreement dated as of April 21, 1999, by and between
Lattice Semiconductor Corporation and AMD, filed as Exhibit 2.3 to
AMD's Current Report on Form 8-K dated April 26, 1999, is hereby
incorporated by reference.
2.3(a) First Amendment to Stock Purchase Agreement, dated as of June 7,
1999, between AMD and Lattice Semiconductor Corporation, filed as
Exhibit 2.3 (a) to AMD's Quarterly Report on Form 10-Q for the period
ended June 27, 1999, is hereby incorporated by reference.
2.3(b) Second Amendment to Stock Purchase Agreement, dated as of June 15,
1999, between AMD and Lattice Semiconductor Corporation, filed as
Exhibit 2.3 (b) to AMD's Quarterly Report on Form 10-Q for the period
ended June 27, 1999, is hereby incorporated by reference.
2.4 Reorganization Agreement, dated as of May 21, 2000, by and between
AMD and BoldCo, Inc., filed as Exhibit 2.1 to AMD's Current Report on
Form 8-K dated May 21, 2000, is hereby incorporated by reference.
2.5 Recapitalization Agreement, dated as of May 21, 2000, by and between
BraveTwo Acquisition, L.L.C., AMD and BoldCo, Inc., filed as Exhibit
2.2 to AMD's Current Report on Form 8-K dated May 21, 2000, is hereby
incorporated by reference.
3.1 Certificate of Incorporation, as amended, filed as Exhibit 3.1 to
AMD's Amendment No. 1 to its Annual Report on Form 10-K for the
fiscal year ended December 26, 1999, is hereby incorporated by
reference.
3.2 By-Laws, as amended, filed as Exhibit 3.2 to AMD's Annual Report on
Form 10-K for the fiscal year ended December 26, 1999, are hereby
incorporated by reference.
3.3 Certificate of Amendment to Restated Certificate of Incorporation
dated May 25, 2000, filed as Exhibit 3.3 to AMD's Quarterly Report on
Form 10-Q for the period ended July 2, 2000, is hereby incorporated
by reference.
4.1 Form of AMD 11% Senior Secured Notes due August 1, 2003, filed as
Exhibit 4.1 to AMD's Current Report on Form 8-K dated August 13,
1996, is hereby incorporated by reference.
4.2(a) Indenture, dated as of August 1, 1996, between AMD and United States
Trust Company of New York, as trustee, filed as Exhibit 4.2 to AMD's
Current Report on Form 8-K dated August 13, 1996, is hereby
incorporated by reference.
4.2(b) First Supplemental Indenture, dated as of January 13, 1999, between
AMD and United States Trust Company of New York, as trustee, filed as
Exhibit 4.2(b) to AMD's Annual Report on Form 10-K for the fiscal
year ended December 27, 1998, is hereby incorporated by reference.
4.2(c) Second Supplemental Indenture, dated as of April 8, 1999, between AMD
and United States Trust Company of New York, as trustee, filed as
Exhibit 4.2(c) to AMD's Annual Report on Form 10-K for the fiscal
year ended December 26, 1999, is hereby incorporated by reference.
17
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
4.2(d) Third Supplemental Indenture, dated as of July 28, 2000, between AMD
and the United States Trust Company, as trustee, filed as Exhibit
4.2(d) to AMD's Quarterly Report on Form 10-Q for the period ended
October 1, 2000, is hereby incorporated by reference.
4.3 Intercreditor and Collateral Agent Agreement, dated as of August 1,
1996, among United States Trust Company of New York, as trustee,
Bank of America NT&SA, as agent for the banks under the Credit
Agreement of July 19, 1996, and IBJ Schroder Bank & Trust Company,
filed as Exhibit 4.3 to AMD's Current Report on Form 8-K dated
August 13, 1996, is hereby incorporated by reference.
4.4 Payment, Reimbursement and Indemnity Agreement, dated as of August
1, 1996, between AMD and IBJ Schroder Bank & Trust Company, filed as
Exhibit 4.4 to AMD's Current Report on Form 8-K dated August 13,
1996, is hereby incorporated by reference.
4.5 Deed of Trust, Assignment, Security Agreement and Financing
Statement, dated as of August 1, 1996, among AMD, as grantor, IBJ
Schroder Bank & Trust Company, as grantee, and Shelley W. Austin, as
trustee, filed as Exhibit 4.5 to AMD's Current Report on Form 8-K
dated August 13, 1996, is hereby incorporated by reference.
4.6 Security Agreement, dated as of August 1, 1996, among AMD and IBJ
Schroder Bank & Trust Company, as agent for United States Trust
Company of New York, as trustee, and Bank of America NT&SA, as agent
for banks, filed as Exhibit 4.6 to AMD's Current Report on Form 8-K
dated August 13, 1996, is hereby incorporated by reference.
4.7 Lease, Option to Purchase and Put Option Agreement, dated as of
August 1, 1996, between AMD, as lessor, and AMD Texas Properties,
LLC, as lessee, filed as Exhibit 4.7 to AMD's Current Report on Form
8-K dated August 13, 1996, is hereby incorporated by reference.
4.8 Reciprocal Easement Agreement, dated as of August 1, 1996, between
AMD and AMD Texas Properties, LLC, filed as Exhibit 4.8 to AMD's
Current Report on Form 8-K dated August 13, 1996, is hereby
incorporated by reference.
4.9 Sublease Agreement, dated as of August 1, 1996, between AMD, as
sublessee, and AMD Texas Properties, LLC, as sublessor, filed as
Exhibit 4.9 to AMD's Current Report on Form 8-K dated August 13,
1996, is hereby incorporated by reference.
4.10 Indenture, dated as of May 8, 1998, by and between AMD and The Bank
of New York, as trustee, filed as Exhibit 4.1 to AMD's Current
Report on Form 8-K dated May 8, 1998, is hereby incorporated by
reference.
4.11 Officers' Certificate, dated as of May 8, 1998, filed as Exhibit 4.2
to AMD's Current Report on Form 8-K dated May 8, 1998, is hereby
incorporated by reference.
4.12 Form of 6% Convertible Subordinated Note due 2005, filed as Exhibit
4.3 to AMD's Current Report on Form 8-K dated May 8, 1998, is hereby
incorporated by reference.
4.13 AMD hereby agrees to file on request of the Commission a copy of all
instruments not otherwise filed with respect to AMD's long-term debt
or any of its subsidiaries for which the total amount of securities
authorized under such instruments does not exceed ten percent of the
total assets of AMD and its subsidiaries on a consolidated basis.
*10.1 AMD 1982 Stock Option Plan, as amended, filed as Exhibit 10.1 to
AMD's Annual Report on Form 10-K for the fiscal year ended December
26, 1993, is hereby incorporated by reference.
*10.2 AMD 1986 Stock Option Plan, as amended, filed as Exhibit 10.2 to
AMD's Annual Report on Form 10-K for the fiscal year ended December
26, 1993, is hereby incorporated by reference.
18
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
*10.3 AMD 1992 Stock Incentive Plan, as amended.
*10.4 AMD 1980 Stock Appreciation Rights Plan, as amended, filed as Exhibit
10.4 to AMD's Annual Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by reference.
*10.5 AMD 1986 Stock Appreciation Rights Plan, as amended, filed as Exhibit
10.5 to the Company's Annual Report on Form 10-K for the fiscal year
ended December 26, 1993, is hereby incorporated by reference.
*10.6 Forms of Stock Option Agreements, filed as Exhibit 10.8 to AMD's
Annual Report on Form 10-K for the fiscal year ended December 29,
1991, are hereby incorporated by reference.
*10.7 Form of Limited Stock Appreciation Rights Agreement, filed as Exhibit
4.11 to AMD's Registration Statement on Form S-8 (No. 33-26266), is
hereby incorporated by reference.
*10.8 AMD 1987 Restricted Stock Award Plan, as amended, filed as Exhibit
10.10 to AMD's Annual Report on Form 10-K for the fiscal year ended
December 26, 1993, is hereby incorporated by reference.
*10.9 Forms of Restricted Stock Agreements, filed as Exhibit 10.11 to AMD's
Annual Report on Form 10-K for the fiscal year ended December 29,
1991, are hereby incorporated by reference.
*10.10 Resolution of Board of Directors on September 9, 1981, regarding
acceleration of vesting of all outstanding stock options and
associated limited stock appreciation rights held by officers under
certain circumstances, filed as Exhibit 10.10 to AMD's Annual Report
on Form 10-K for the fiscal year ended March 31, 1985, is hereby
incorporated by reference.
*10.12 Amended and Restated Employment Agreement, dated as of November 3,
2000, between AMD and W. J. Sanders III.
*10.13 AMD 2000 Stock Incentive Plan.
*10.14 AMD's U.S. Stock Option Program for options granted after April 25,
2000.
*10.15 Vice President Incentive Program.
*10.16 AMD Executive Incentive Plan, filed as Exhibit 10.14(b) to AMD's
Quarterly Report on Form 10-Q for the period ended June 30, 1996, is
hereby incorporated by reference.
*10.17 Form of Bonus Deferral Agreement, filed as Exhibit 10.12 to AMD's
Annual Report on Form 10-K for the fiscal year ended March 30, 1986,
is hereby incorporated by reference.
*10.18 Form of Executive Deferral Agreement, filed as Exhibit 10.17 to AMD's
Annual Report on Form 10-K for the fiscal year ended December 31,
1989, is hereby incorporated by reference.
*10.19 Director Deferral Agreement of R. Gene Brown, filed as Exhibit 10.18
to AMD's Annual Report on Form 10-K for the fiscal year ended December
31, 1989, is hereby incorporated by reference.
10.20 Intellectual Property Agreements with Intel Corporation, filed as
Exhibit 10.21 to AMD's Annual Report on Form 10-K for the fiscal year
ended December 29, 1991, are hereby incorporated by reference.
*10.21 Form of Indemnification Agreements with former officers of Monolithic
Memories, Inc., filed as Exhibit 10.22 to AMD's Annual Report on Form
10-K for the fiscal year ended December 27, 1987, is hereby
incorporated by reference.
*10.22 Form of Management Continuity Agreement, filed as Exhibit 10.25 to
AMD's Annual Report on Form 10-K for the fiscal year ended December
29, 1991, is hereby incorporated by reference.
19
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
**10.23(a) Joint Venture Agreement between AMD and Fujitsu Limited, filed as
Exhibit 10.27(a) to AMD's Amendment No. 1 to its Annual Report on
Form 10-K for the fiscal year ended December 26, 1993, is hereby
incorporated by reference.
**10.23(b) Technology Cross-License Agreement between AMD and Fujitsu
Limited, filed as Exhibit 10.27(b) to AMD's Amendment No. 1 to
its Annual Report on Form 10-K for the fiscal year ended December
26, 1993, is hereby incorporated by reference.
**10.23(c) AMD Investment Agreement between AMD and Fujitsu Limited, filed
as Exhibit 10.27(c) to AMD's Amendment No. 1 to its Annual Report
on Form 10-K for the fiscal year ended December 26, 1993, is
hereby incorporated by reference.
**10.23(d) Fujitsu Investment Agreement between AMD and Fujitsu Limited,
filed as Exhibit 10.27(d) to AMD's Amendment No. 1 to its Annual
Report on Form 10-K for the fiscal year ended December 26, 1993,
is hereby incorporated by reference.
**10.23(e) First Amendment to Fujitsu Investment Agreement dated April 28,
1995, filed as Exhibit 10.23(e) to AMD's Annual Report on Form
10-K for the fiscal year ended December 29, 1996, is hereby
incorporated by reference.
10.23(f) Second Amendment to Fujitsu Investment Agreement, dated February
27, 1996, filed as Exhibit 10.23 (f) to AMD's Annual Report on
Form 10-K for the fiscal year ended December 29, 1996, is hereby
incorporated by reference.
**10.23(g) Joint Venture License Agreement between AMD and Fujitsu Limited,
filed as Exhibit 10.27(e) to AMD's Amendment No. 1 to its Annual
Report on Form 10-K for the fiscal year ended December 26, 1993,
is hereby incorporated by reference.
**10.23(h) Joint Development Agreement between AMD and Fujitsu Limited,
filed as Exhibit 10.27(f) to AMD's Amendment No. 1 to its Annual
Report on Form 10-K for the fiscal year ended December 26, 1993,
is hereby incorporated by reference.
**10.23(i) Fujitsu Joint Development Agreement Amendment, filed as Exhibit
10.23(g) to AMD's Quarterly Report on Form 10-Q for the period
ended March 31, 1996, is hereby incorporated by reference.
*10.24 AMD's Stock Option Program for Employees Outside the U.S. for
options granted after April 25, 2000.
**10.25 Technology Development and License Agreement, dated as of October
1, 1998, among AMD and its subsidiaries and Motorola, Inc. and
its subsidiaries, filed as Exhibit 10.25 to AMD's Annual Report
on Form 10-K for the fiscal year ended December 27, 1998, is
hereby incorporated by reference.
**10.25(a) Amendment to the Technology Development and License Agreement,
entered into as of October 1, 1998, by AMD and its subsidiaries
and Motorola, Inc. and its subsidiaries, filed as Exhibit
10.25(a) to AMD's Annual Report on Form 10-K for the fiscal year
ended December 26, 1999, is hereby incorporated by reference.
**10.25(b) Amendment 2 to the Technology Development and License Agreement,
entered into as of October 1, 1998, by AMD and its subsidiaries
and Motorola, Inc. and its subsidiaries, filed as Exhibit
10.25(b) to AMD's Quarterly Report on Form 10-Q for the period
ended July 2, 2000, is hereby incorporated by reference.
**10.26 Patent License Agreement, dated as of December 3, 1998, between
AMD and Motorola, Inc., filed as Exhibit 10.26 to AMD's Annual
Report on Form 10-K for the fiscal year ended December 27, 1998,
is hereby incorporated by reference.
10.27 Lease Agreement, dated as of December 22, 1998, between AMD and
Delaware Chip LLC, filed as Exhibit 10.27 to AMD's Annual Report
on Form 10-K for the fiscal year ended December 27, 1998, is
hereby incorporated by reference.
20
<PAGE>
Exhibit
Number Description of Exhibits
- --------- -----------------------
*10.28(a) AMD Executive Savings Plan (Amendment and Restatement, effective
as of August 1, 1993), filed as Exhibit 10.30 to AMD's Annual
Report on Form 10-K for the fiscal year ended December 25, 1994,
is hereby incorporated by reference.
*10.28(b) First Amendment to the AMD Executive Savings Plan (as amended and
restated, effective as of August 1, 1993), filed as Exhibit
10.28(b) to AMD's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997, is hereby incorporated by reference.
*10.28(c) Second Amendment to the AMD Executive Savings Plan (as amended
and restated, effective as of August 1, 1993), filed as Exhibit
10.28(b) to AMD's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997, is hereby incorporated by reference.
*10.29 Form of Split Dollar Agreement, as amended, filed as Exhibit
10.31 to AMD's Annual Report on Form 10-K for the fiscal year
ended December 25, 1994, is hereby incorporated by reference.
*10.30 Form of Collateral Security Assignment Agreement, filed as
Exhibit 10.32 to AMD's Annual Report on Form 10-K for the fiscal
year ended December 26, 1993, is hereby incorporated by
reference.
*10.31 Forms of Stock Option Agreements to the 1992 Stock Incentive
Plan, filed as Exhibit 4.3 to AMD's Registration Statement on
Form S-8 (No. 33-46577), are hereby incorporated by reference.
*10.32 1992 United Kingdom Share Option Scheme, filed as Exhibit 4.2 to
AMD's Registration Statement on Form S-8 (No. 33-46577), is
hereby incorporated by reference.
**10.33 AMD 1998 Stock Incentive Plan, filed as Exhibit 10.33 to AMD's
Annual Report on Form 10-K for the fiscal year ended December 27,
1998, is hereby incorporated by reference.
*10.34 Form of indemnification agreements with officers and directors of
AMD, filed as Exhibit 10.38 to AMD's Annual Report on Form 10-K
for the fiscal year ended December 25, 1994, is hereby
incorporated by reference.
*10.36 1995 Stock Plan of NexGen, Inc., as amended, filed as Exhibit
10.36 to AMD's Annual Report on Form 10-K for the fiscal year
ended December 29, 1996, is hereby incorporated by reference.
**10.37 Patent Cross-License Agreement dated December 20, 1995, between
AMD and Intel Corporation, filed as Exhibit 10.38 to AMD's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995,
is hereby incorporated by reference.
10.38 Contract for Transfer of the Right to the Use of Land between AMD
(Suzhou) Limited and China-Singapore Suzhou Industrial Park
Development Co., Ltd., filed as Exhibit 10.39 to AMD's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995,
is hereby incorporated by reference.
*10.39 NexGen, Inc. 1987 Employee Stock Plan, filed as Exhibit 99.3 to
Post-Effective Amendment No. 1 on Form S-8 to AMD's Registration
Statement on Form S-4 (No. 33-64911), is hereby incorporated by
reference.
*10.40 1995 Stock Plan of NexGen, Inc. (assumed by AMD), as amended,
filed as Exhibit 10.37 to AMD's Quarterly Report on Form 10-Q for
the period ended June 30, 1996, is hereby incorporated by
reference.
*10.41 Form of indemnity agreement between NexGen, Inc. and its
directors and officers, filed as Exhibit 10.5 to the Registration
Statement of NexGen, Inc. on Form S-1 (No. 33-90750), is hereby
incorporated by reference.
21
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
**10.45 Agreement for Purchase of IBM Products between IBM and NexGen,
Inc. dated June 2, 1994, filed as Exhibit 10.17 to the
Registration Statement of NexGen, Inc. on Form S-1 (No. 33-
90750), is hereby incorporated by reference .
**10.48(a) C-4 Technology Transfer and Licensing Agreement dated June 11,
1996, between AMD and IBM Corporation, filed as Exhibit 10.48 to
AMD's Amendment No. 1 to its Quarterly Report on Form 10-Q/A for
the period ended September 29, 1996, is hereby incorporated by
reference.
**10.48(b) Amendment No. 1 to the C-4 Technology Transfer and Licensing
Agreement, dated as of February 23, 1997, between AMD and
International Business Machine Corporation, filed as Exhibit
10.48(a) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
**10.49(a) Design and Build Agreement dated November 15, 1996, between AMD
Saxony Manufacturing GmbH and Meissner and Wurst GmbH, filed as
Exhibit 10.49(a) to AMD's Annual Report on Form 10-K for the
fiscal year ended December 29, 1996, is hereby incorporated by
reference.
10.49(b) Amendment to Design and Build Agreement dated January 16, 1997,
between AMD Saxony Manufacturing GmbH and Meissner and Wurst
GmbH filed as Exhibit 10.49(b) to AMD's Annual Report on Form
10-K for the fiscal year ended December 29, 1996, is hereby
incorporated by reference.
**10.50(a-1) Syndicated Loan Agreement with Schedules 1, 2 and 17, dated as
of March 11, 1997, among AMD Saxony Manufacturing GmbH, Dresdner
Bank AG and Dresdner Bank Luxembourg S.A., filed as Exhibit
10.50(a) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
**10.50(a-2) Supplemental Agreement to the Syndicated Loan Agreement dated
February 6, 1998, among AMD Saxony Manufacturing GmbH, Dresdner
Bank AG and Dresdner Bank Luxembourg S.A., filed as Exhibit
10.50(a-2) to AMD's Annual Report on Form 10-K/A (No.1) for the
fiscal year ended December 28, 1997, is hereby incorporated by
reference.
10.50(a-3) Supplemental Agreement No. 2 to the Syndicated Loan Agreement as
of March 11, 1997, dated as of June 29, 1999, among AMD Saxony
Manufacturing GmbH, Dresdner Bank AG and Dresdner Bank
Luxembourg S.A., filed as Exhibit 10.50 (a-3) to AMD's Quarterly
Report on Form 10-Q for the period ended June 27, 1999, is
hereby incorporated by reference.
***10.50(a-4) Amendment Agreement No. 3 to the Syndicated Loan Agreement,
dated as of February 20, 2001, among AMD Saxony Manufacturing
GmbH, AMD Saxony Holding GmbH, Dresdner Bank AG, Dresdner Bank
Luxembourg S.A and the banks party thereto.
**10.50(b) Determination Regarding the Request for a Guarantee by AMD
Saxony Manufacturing GmbH, filed as Exhibit 10.50(b) to AMD's
Quarterly Report on Form 10-Q for the period ended March 30,
1997, is hereby incorporated by reference.
**10.50(c) AMD Subsidy Agreement, between AMD Saxony Manufacturing GmbH and
Dresdner Bank AG, filed as Exhibit 10.50(c) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is
hereby incorporated by reference.
**10.50(d) Subsidy Agreement, dated February 12, 1997, between Sachsische
Aufbaubank and Dresdner Bank AG, with Appendices 1, 2a, 2b, 3
and 4, filed as Exhibit 10.50(d) to AMD's Quarterly Report on
Form 10-Q for the period ended March 30, 1997, is hereby
incorporated by reference.
10.50(e) AMD, Inc. Guaranty, dated as of March 11, 1997, among AMD,
Saxony Manufacturing GmbH and Dresdner Bank AG, filed as Exhibit
10.50(e) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
10.50(f-1) Sponsors' Support Agreement, dated as of March 11, 1997, among
AMD, AMD Saxony Holding GmbH and Dresdner Bank AG, filed as
Exhibit 10.50(f) to AMD's Quarterly Report on Form 10-Q for the
period ended March 30, 1997, is hereby incorporated by
reference.
22
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
10.50(f-2) First Amendment to Sponsors' Support Agreement, dated as of
February 6, 1998, among AMD, AMD Saxony Holding GmbH and
Dresdner Bank AG, filed as Exhibit 10.50(f-2) to AMD's Annual
Report on Form 10-K for the fiscal year ended December 28, 1997,
is hereby incorporated by reference.
10.50(f-3) Second Amendment to Sponsors' Support Agreement, dated as of
June 29, 1999, among AMD, AMD Saxony Holding GmbH, Dresdner Bank
AG and Dresdner Bank Luxembourg S.A., filed as Exhibit 10.50 (f-
3) to AMD's Quarterly Report on Form 10-Q for the period ended
June 27, 1999, is hereby incorporated by reference.
***10.50(f-4) Third Amendment to Sponsors' Support Agreement, dated as of
February 20, 2001, among AMD, AMD Saxony Holding GmbH,
Dresdner Bank AG and Dresdner Bank Luxembourg S.A.
10.50(g-1) Sponsors' Loan Agreement, dated as of March 11, 1997, among AMD,
AMD Saxony Holding GmbH and Saxony Manufacturing GmbH, filed as
Exhibit 10.50(g) to AMD's Quarterly Report on Form 10-Q for the
period ended March 30, 1997, is hereby incorporated by
reference.
10.50(g-2) First Amendment to Sponsors' Loan Agreement, dated as of
February 6, 1998, among AMD, AMD Saxony Holding GmbH and AMD
Saxony Manufacturing GmbH, filed as Exhibit 10.50(g-2) to AMD's
Annual Report on Form 10-K for the fiscal year ended December
28, 1997, is hereby incorporated by reference.
10.50(g-3) Second Amendment to Sponsors' Loan Agreement, dated as of June
25, 1999, among AMD and AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(g-3) to the Company's
Quarterly Report on Form 10-Q for the period ended June 27,
1999, is hereby incorporated by reference.
10.50(h) Sponsors' Subordination Agreement, dated as of March 11, 1997,
among AMD, AMD Saxony Holding GmbH, AMD Saxony Manufacturing
GmbH and Dresdner Bank AG, filed as Exhibit 10.50(h) to AMD's
Quarterly Report on Form 10-Q for the period ended March 30,
1997, is hereby incorporated by reference.
10.50(i) Sponsors' Guaranty, dated as of March 11, 1997, among AMD, AMD
Saxony Holding GmbH and Dresdner Bank AG, filed as Exhibit
10.50(i) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
**10.50(j) AMD Holding Wafer Purchase Agreement, dated as of March 11,
1997, among AMD and AMD Saxony Holding GmbH, filed as Exhibit
10.50(j) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
***10.50(j-1) First Amendment to AMD Holding Wafer Purchase Agreement, dated
as of February 20, 2001, between AMD and AMD Saxony Holding
GmbH.
**10.50(k) AMD Holding Research, Design and Development Agreement, dated as
of March 11, 1997, between AMD Saxony Holding GmbH and AMD,
filed as Exhibit 10.50(k) to AMD's Quarterly Report on Form 10-Q
for the period ended March 30, 1997, is hereby incorporated by
reference.
**10.50(l-1) AMD Saxonia Wafer Purchase Agreement, dated as of March 11,
1997, between AMD Saxony Holding GmbH and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(l) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is
hereby incorporated by reference.
10.50(l-2) First Amendment to AMD Saxonia Wafer Purchase Agreement, dated
as of February 6, 1998, between AMD Saxony Holding GmbH and AMD
Saxony Manufacturing GmbH, filed as Exhibit 10.50 (l-2) to AMD's
Annual Report on Form 10-K for the fiscal year ended December
28, 1997, is hereby incorporated by reference.
***10.50(l-3) Second Amendment to AMD Saxonia Wafer Purchase Agreement, dated
as of February 20, 2001, between AMD Saxony Holding GmbH and AMD
Saxony Manufacturing GmbH.
**10.50(m) AMD Saxonia Research, Design and Development Agreement, dated as
of March 11, 1997, between AMD Saxony Manufacturing GmbH and AMD
Saxony Holding GmbH, filed as Exhibit 10.50(m) to AMD's
Quarterly Report on Form 10-Q for the period ended March 30,
1997, is hereby incorporated by reference.
10.50(n) License Agreement, dated March 11, 1997, among AMD, AMD Saxony
Holding GmbH and AMD Saxony Manufacturing GmbH, filed as Exhibit
10.50(n) to AMD's Quarterly Report on Form 10-Q for the period
ended March 30, 1997, is hereby incorporated by reference.
23
<PAGE>
Exhibit
Number Description of Exhibits
------ -----------------------
10.50(o) AMD, Inc. Subordination Agreement, dated March 11, 1997, among
AMD, AMD Saxony Holding GmbH and Dresdner Bank AG, filed as
Exhibit 10.50(o) to AMD's Quarterly Report on Form 10-Q for the
period ended March 30, 1997, is hereby incorporated by reference.
**10.50(p-1) ISDA Agreement, dated March 11, 1997, between AMD and AMD Saxony
Manufacturing GmbH, filed as Exhibit 10.50(p) to AMD's Quarterly
Report on Form 10-Q for the period ended March 30, 1997, is
hereby incorporated by reference.
**10.50(p-2) Confirmation to ISDA Agreement, dated February 6, 1998, between
AMD and AMD Saxony Manufacturing GmbH, filed as Exhibit
10.50(p-2) to AMD's Annual Report on Form 10-K for the fiscal
year ended December 28, 1997, is hereby incorporated by
reference.
10.51 Loan and Security Agreement, dated as of July 13, 1999, among
AMD, AMD International Sales and Service, Ltd. and Bank of
America NT&SA as agent, filed as Exhibit 10.51 to AMD's Quarterly
Report on Form 10-Q for the period ended June 27, 1999, is hereby
incorporated by reference.
10.51(a) First Amendment to Loan and Security Agreement, dated as of July
30, 1999, among AMD, AMD International Sales and Service, Ltd.
and Bank of America NT&SA, as agent, filed as Exhibit 10.51(a) to
AMD's Quarterly Report on Form 10-Q for the period ended June 27,
1999, is hereby incorporated by reference.
10.51(a-1) Second Amendment to Loan and Security Agreement, dated as of
February 12, 2001, among AMD, AMD International Sales and
Service, Ltd. and Bank of America N.A. (formerly Bank of America
NT&SA), as agent.
*10.52 Agreement, dated as of June 16, 1999, between AMD and Richard
Previte, filed as Exhibit 10.52 to AMD's Quarterly Report on Form
10-Q for the period ended June 27, 1999, is hereby incorporated
by reference.
*10.54 Management Continuity Agreement, between AMD and Robert R. Herb,
filed as Exhibit 10.54 to AMD's Annual Report on Form 10-K for
the fiscal year ended December 26, 1999, is hereby incorporated
by reference.
*10.55 Employment Agreement, dated as of January 13, 2000, between AMD
and Hector de J. Ruiz, filed as Exhibit 10.55 to AMD's Annual
Report on form 10-K for the fiscal year ended December 26, 1999,
is hereby incorporated by reference.
*10.56 Form of indemnification agreements with officers and directors of
AMD, filed as Exhibit 10.56 to AMD's Annual Report on Form 10-K
for the fiscal year ended December 26, 1999, is hereby
incorporated by reference.
*10.57 Employment Agreement, dated as of September 27, 2000, between AMD
and Robert J. Rivet, filed as Exhibit 10.57 to AMD's Quarterly
Report on Form 10-Q for the period ended October 1, 2000, is
hereby incorporated by reference.
13 Pages 8 through 47 of AMD's 2000 Annual Report to Stockholders,
which have been incorporated by reference into Parts II and IV of
this annual report.
21 List of AMD subsidiaries.
23 Consent of Ernst & Young LLP, Independent Auditors, refer to page
F-2 herein.
24 Power of Attorney.
______________
* Management contracts and compensatory plans or arrangements required to be
filed as an Exhibit to comply with Item 14(a)(3) of Form 10-K.
** Confidential treatment has been granted as to certain portions of these
Exhibits.
*** Confidential treatment has been requested with respect to certain portions
of this Exhibit.
24
<PAGE>
AMD will furnish a copy of any exhibit on request and payment of AMD's
reasonable expenses of furnishing such exhibit.
(b) Reports on Form 8-K.
1. A Current Report on Form 8-K dated October 11, 2000 reporting under
Item 5 - Other Events was filed announcing AMD's third quarter
earnings.
2. A Current Report on Form 8-K dated December 11, 2000 reporting under
Item 5 - Other Events was filed with respect to expected financial
results for the fourth quarter ended December 31, 2000.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Advanced Micro Devices, Inc.
March 19, 2001
By: /s/ Robert J. Rivet
---------------------------------
Robert J. Rivet
Senior Vice President,
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and March 19, 2001
- ----------------------------------- Chief Executive Officer
W. J. Sanders III (Principal Executive Officer)
* Senior Vice President, Chief Financial March 19, 2001
- ----------------------------------- Officer (Principal Financial Officer)
Robert J. Rivet
* Director, President and Chief March 19, 2001
- ----------------------------------- Operating Officer
Hector de J. Ruiz
* Director March 19, 2001
- -----------------------------------
Friedrich Baur
* Director March 19, 2001
- -----------------------------------
Charles M. Blalack
* Director March 19, 2001
- -----------------------------------
R. Gene Brown
* Director March 19, 2001
- -----------------------------------
Robert B. Palmer
* Director March 19, 2001
- -----------------------------------
Joe L. Roby
* Director
- ----------------------------------- March 19, 2001
Leonard Silverman
*By: /s/ Robert J. Rivet
-------------------------------
(Robert J. Rivet,
Attorney-in-Fact)
</TABLE>
26
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
COVERED BY THE REPORT OF INDEPENDENT AUDITORS
ITEM 14(a) (1) and (2)
The information under the following captions, which is included in AMD's
2000 Annual Report to Stockholders, a copy of which is attached hereto as
Exhibit 13, is incorporated herein by reference:
<TABLE>
<CAPTION>
Page References
---------------
2000 Annual
Form Report to
10-K Stockholders
---- ------------
<S> <C> <C>
Report of Ernst & Young LLP, Independent Auditors..................................................... -- 45
Consolidated Statements of Operations for each of the three years in the period ended December
31, 2000............................................................................................ -- 23
Consolidated Balance Sheets at December 31, 2000 and December 26, 1999................................ -- 24
Consolidated Statements of Stockholders' Equity for each of the three years in the period ended
December 31, 2000................................................................................... -- 25
Consolidated Statements of Cash Flows for each of the three years in the period ended December
31, 2000............................................................................................ -- 26
Notes to Consolidated Financial Statements............................................................ -- 27-44
Schedule for the three years in the period ended December 31, 2000:
Schedule II Valuation and Qualifying Accounts.................................................... F-3 --
</TABLE>
All other schedules have been omitted because the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the Consolidated
Financial Statements or Notes thereto. With the exception of the information
specifically incorporated by reference into Parts II and IV of this Annual
Report on Form 10-K, our 2000 Annual Report to Stockholders is not to be deemed
filed as part of this report.
F-1
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of Advanced Micro Devices, Inc. of our report dated January 9, 2001 with
respect to the consolidated financial statements of Advanced Micro Devices, Inc.
included in the 2000 Annual Report to Stockholders of Advanced Micro Devices,
Inc.
Our audits also included the financial statement schedule of Advanced Micro
Devices, Inc. listed in Item 14(a). This schedule is the responsibility of the
management of Advanced Micro Devices, Inc. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.
We also consent to the incorporation by reference in the following
Registration Statements of our report dated January 9, 2001 with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Advanced Micro
Devices, Inc.
. Registration Statement on Form S-8 (No. 33-16095) pertaining to the
Advanced Micro Devices, Inc. 1987 Restricted Stock Award Plan;
. Registration Statements on Forms S-8 (Nos. 33-39747, 333-33855 and 333-
77495) pertaining to the Advanced Micro Devices, Inc. 1991 Employee
Stock Purchase Plan;
. Registration Statements on Forms S-8 (Nos. 33-10319, 33-26266, 33-36596
and 33-46578) pertaining to the Advanced Micro Devices, Inc. 1982 and
1986 Stock Option Plans and the 1980 and 1986 Stock Appreciation Rights
Plans;
. Registration Statements on Forms S-8 (Nos. 33-46577 and 33-55107)
pertaining to the Advanced Micro Devices, Inc. 1992 Stock Incentive
Plan;
. Registration Statement on Form S-8 (No. 333-00969) pertaining to the
Advanced Micro Devices, Inc. 1991 Employee Stock Purchase Plan and to
the 1995 Stock Plan of NexGen, Inc;
. Registration Statements on Forms S-8 (Nos. 333-04797 and 333-57525)
pertaining to the Advanced Micro Devices, Inc. 1996 Stock Incentive
Plan;
. Registration Statement on Form S-8 (No. 333-68005) pertaining to the
Advanced Micro Devices, Inc. 1998 Stock Incentive Plan;
. Registration Statement on Form S-3 (No. 333-47243), as amended,
pertaining to debt securities, preferred stock, common stock, equity
warrants and debt warrants issued or issuable by Advanced Micro Devices,
Inc.;
. Post-Effective Amendment No. 1 to the Registration Statement on Form S-8
(No. 33-95888-99) pertaining to the 1995 Stock Plan of NexGen, Inc. and
the NexGen, Inc. 1987 Employee Stock Plan;
. Post-Effective Amendment No. 1 to the Registration Statement on Form S-8
(No. 33-92688-99) pertaining to the 1995 Employee Stock Purchase Plan of
NexGen, Inc.;
. Post-Effective Amendment No. 1 on Form S-8 to the Registration Statement
on Form S-4 (No. 33-64911) pertaining to the 1995 Employee Stock
Purchase Plan of NexGen, Inc., the 1995 Stock Plan of NexGen, Inc. and
the NexGen, Inc. 1987 Employee Stock Plan; and
. Post-Effective Amendment No. 2 on Form S-3 to the Registration Statement
on Form S-4 (No. 33-64911) pertaining to common stock issuable to
certain warrantholders.
/s/ Ernst & Young LLP
San Jose, California
March 15, 2001
F-2
<PAGE>
SCHEDULE II
ADVANCED MICRO DEVICES, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 27, 1998,
December 26, 1999 and December 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Additions
Charged
(Reductions
Balance Credited) Balance
Beginning To End of
of Period Operations Deductions(1) Period
--------- ------------ ------------- --------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Years ended:
December 27, 1998.......................... $11,221 $1,498 $ (56) $12,663
December 26, 1999.......................... 12,663 3,543 (828) 15,378
December 31, 2000.......................... 15,378 8,154 (820) 22,712
</TABLE>
(1) Accounts (written off) recovered, net.
F-3
<PAGE>
AMD-22934-A
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>AMD 1992 STOCK INCENTIVE PLAN, AS AMENDED
<TEXT>
<PAGE>
Exhibit 10.3
ADVANCED MICRO DEVICES, INC.
1992 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this Plan is to encourage key personnel, whose long-term
employment is considered essential to the Company's continued progress, to
remain in the employ of the Company or its subsidiaries. By means of the Plan,
the Company also seeks to attract new key employees whose future services are
necessary for the continued improvement of operations. The Company intends
future increases in the value of securities granted under this Plan to form part
of the compensation for services to be rendered by such employees in the future.
2. Definitions
The terms defined in this Section 2 shall have the respective meanings set
forth herein, unless the context otherwise requires.
(a) Affiliate: The term "Affiliate" shall mean any corporation,
---------
partnership, joint venture or other entity in which the Company holds an equity,
profits or voting interest of thirty percent (30%) or more.
(b) Award Price: The term "Award Price" shall mean a price designated by
-----------
the Board or its delegate and which is not less than the Fair Market Value per
Share on the date the Stock Appreciation Right is granted. In the case of a
General Right which is exercisable only in lieu of exercising a Related Option,
unless otherwise specified in the Right Agreement, the Award Price shall be the
exercise price of such Related Option.
(c) Board or its delegate: The term "Board or its delegate" shall mean
---------------------
the Company's Board of Directors or its delegate as set forth in Sections 3(d)
and 3(e) hereinbelow.
(d): "Change of Control" Unless otherwise defined in a Participant's
-----------------
employment agreement, the term "Change of Control" shall be deemed to mean any
of the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such person any
securities acquired directly from the Company or any of its Affiliates)
representing more than 20% of either the then outstanding shares of the Common
Stock of the Company or the combined voting power of the Company's then
outstanding voting securities; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board and any
new director (other than a director designated by a person who has entered into
an agreement or arrangement with the Company to effect a transaction described
in clause (i) or (ii) of this sentence) whose appointment, election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) there is consummated a merger or
consolidation of the Company or subsidiary thereof with or into any
<PAGE>
other corporation, other than a merger or consolidation which would result in
the holders of the voting securities of the Company outstanding immediately
prior thereto holding securities which represent immediately after such merger
or consolidation more than 50% of the combined voting power of the voting
securities of either the Company or the other entity which survives such merger
or consolidation or the parent of the entity which survives such merger or
consolidation; or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 80% of the combined voting power of
the voting securities of which are owned by persons in substantially the same
proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing (i) unless otherwise provided in a Participant's
employment agreement, no "Change of Control" shall be deemed to have occurred if
there is consummated any transaction or series of integrated transactions
immediately following which the record holders of the Common Stock of the
Company immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Company immediately prior to such
transaction or series of transactions and (ii) unless otherwise provided in a
Participant's employment agreement, "Change of Control" shall exclude the
acquisition of securities representing more than 20% of either the then
outstanding shares of the Common Stock of the Company or the combined voting
power of the Company's then outstanding voting securities by the Company or any
of its wholly owned subsidiaries, or any trustee or other fiduciary holding
securities of the Company under an employee benefit plan now or hereafter
established by the Company.
(d) Code: The term "Code" shall mean the Internal Revenue Code of 1986,
----
as amended to date and as it may be amended from time to time.
(e) Company: The term "Company" shall mean Advanced Micro Devices, Inc.,
-------
a Delaware corporation.
(f) Constructive Termination: The term "Constructive Termination" shall
------------------------
mean a resignation by a Participant who has been elected by the Company's Board
of Directors as a corporate officer of the Company, due to diminution or adverse
change in the circumstances of such Participant's employment with the Company,
as determined in good faith by the Participant, including, without limitation,
reporting relationships, job description, duties, responsibilities,
compensation, perquisites, office or location of employment. Constructive
Termination shall be communicated by written notice to the Company, and such
termination shall be deemed to occur on the date such notice is delivered to the
Company.
(g) Disinterested Director: The term "Disinterested Director" shall mean
----------------------
a Non-Employee Director, as defined by Rule 16b-3 under the Securities Exchange
Act of 1934.
(h) Event Price per Share: The term "Event Price per Share" as used in
---------------------
Section 12 with respect to the exercise of a Limited Right shall mean the
highest price per Share paid in connection with the event constituting a Change
of Control. Any securities or property which are part or all of the
consideration paid for Shares in connection with the event constituting a Change
of Control shall be valued in determining the Event Price per Share at the
highest of (A) the valuation placed on such securities or property by the
corporation, person or other entity which paid such price or (B)
2
<PAGE>
the valuation placed on such securities or property by the Board of Directors.
(i) Fair Market Value per Share: The term "Fair Market Value per Share"
---------------------------
shall mean as of any day (i) the closing price for Shares on the New York Stock
Exchange as reported on the composite tape on the day as of which such
determination is being made or, if there was no sale of Shares reported on the
composite tape on such day, on the most recently preceding day on which there
was such a sale, or (ii) if the Shares are not listed or admitted to trading on
the New York Stock Exchange on the day as of which the determination is made,
the amount determined by the Board or its delegate to be the fair market value
of a Share on such day.
(j) ISO: The term "ISO" shall mean a stock option described in Section
---
422(b) of the Code.
(k) NSO: The term "NSO" shall mean a nonstatutory stock option not
---
described in Sections 422(b) or 423(a) of the Code.
(l) Option: The term "Option" shall mean (except as herein otherwise
------
provided) a stock option granted under this Plan.
(m) Outside Director: The term "Outside Director" shall mean a member of
----------------
the Board of Directors of the Company who is not also an employee of the Company
or an Affiliate.
(n) Participant: The term "Participant" shall mean any person who holds
-----------
an Option or a Stock Appreciation Right granted under this Plan.
(o) Plan: The term "Plan" shall mean this Advanced Micro Devices, Inc.
----
1992 Stock Incentive Plan, as amended from time to time.
(p) Shares: The term "Shares" shall mean shares of Common Stock of the
------
Company and any shares of stock or other securities received as a result of the
adjustments provided for in Section 14 of this Plan.
(q) Stock Appreciation Right: The term "Stock Appreciation Right" shall
------------------------
mean a right granted under this Plan to receive, without payment to the Company,
cash and/or Shares equivalent in value to the Spread as defined in Sections 11
and 12 of this Plan.
(r) Related Option: The term "Related Option" shall mean an Option with
--------------
respect to which a Right has been granted which is exercisable only to the
extent that such Option has not previously been exercised.
(s) Rights: The term "General Right" shall mean a Stock Appreciation
------
Right granted pursuant to the provisions of Section 11 of this Plan. The term
"Limited Right" shall mean a Stock Appreciation Right granted pursuant to the
provisions of Section 12 of this Plan. The term "Right" shall mean any General
Right or Limited Right.
(t) Window Period: The term "Window Period" shall mean the period
-------------
beginning on the third business day following the date of release for
publication of the quarterly and annual summary statements of sales and earnings
of the Company and ending on the twelfth business day
3
<PAGE>
following such date.
3. Administration
(a) The Board of Directors (the "Board"), whose authority shall be
plenary, shall administer the Plan and may delegate part or all of its
administrative powers with respect to part or all of the Plan pursuant to
Section 3(d); provided, however, that the Board of Directors shall delegate
administration of the Plan to the extent required by Section 3(e).
(b) Except for automatic grants of Options to Outside Directors pursuant
to Section 8 hereof, the Board or its delegate shall have the power, subject to
and within the limits of the express provisions of the Plan:
(1) To grant Options and Rights pursuant to the Plan.
(2) To determine from time to time which of the eligible persons
shall be granted Options or Rights under the Plan, the number of Shares for
which each Option or Right shall be granted, the term of each granted
Option or Right and the time or times during the term of each Option or
Right within which all or portions of each Option or Right may be exercised
(which at the discretion of the Board or its delegate may be accelerated).
(3) To grant Options and/or Rights in exchange for cancellation of
Options and/or Rights granted earlier at different exercise prices,
provided, however, nothing contained herein shall empower the Board or its
delegate to grant an ISO under conditions or pursuant to terms that are
inconsistent with the requirements of Section 422 of the Code.
(4) To prescribe the terms and provisions of each Option and/or Right
granted (which need not be identical) and the form of written instrument
that shall constitute the Option and/or Right agreement.
(5) To take appropriate action to amend any Option and/or Right
hereunder, including to amend the vesting schedule of any outstanding
Option or Right, or to cause any Option granted hereunder to cease to be an
ISO, provided that no such action adverse to a Participant's interest may
be taken by the Board or its delegate without the written consent of the
affected Participant.
(c) The Board or its delegate shall also have the power, subject to and
within the limits of the express provisions of this Plan:
(1) To construe and interpret the Plan and Options and Rights granted
under the Plan, and to establish, amend and revoke rules and regulations
for administration of the Plan. The Board or its delegate, in the exercise
of this power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission or
inconsistency in the Plan or in any Option or Right agreement in a manner
and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(2) Generally, to exercise such powers and to perform such acts as
are deemed
4
<PAGE>
necessary or expedient to promote the best interests of the Company.
(d) The Board of Directors may, by resolution, delegate administration of
the Plan (including, without limitation, the Board's powers under Sections 3(b)
and (c) above), under either or both of the following:
(1) with respect to the participation of or granting of Options or
Rights to an employee who is not subject to Section 16 of the Exchange Act,
to a committee of one or more members of the Board of Directors, whether or
not such members of the Board of Directors are Disinterested Directors;
(2) with respect to matters other than the selection for
participation in the Plan, substantive decisions concerning the timing,
pricing, amount or other material term of an Option or Right, to a
committee of one or more members of the Board of Directors, whether or not
such members of the Board of Directors are Disinterested Directors, or to
one or more officers of the Company.
(e) Unless each member of the Board is a Disinterested Director, the Board
shall, by resolution, delegate administration of the Plan with respect to the
participation in the Plan of employees who are subject to Section 16 of the
Exchange Act, including its powers to select such employees for participation in
the Plan, to make substantive decisions concerning the timing, pricing, amount
or any other material term of an Option or Right, to a committee of two or more
Disinterested Directors. Any committee to which administration of the Plan is so
delegated pursuant to this Section 3(e) may also administer the Plan with
respect to an employee described in Section 3(d)(1) above.
(f) Except as required by Section 3(e) above, the Board shall have
complete discretion to determine the composition, structure, form, term and
operations of any committee established to administer the Plan. If
administration is delegated to a committee, unless the Board otherwise provides,
the committee shall have, with respect to the administration of the Plan, all of
the powers and discretion theretofore possessed by the Board and delegable to
such committee, subject to any constraints which may be adopted by the Board
from time to time and which are not inconsistent with the provisions of the
Plan. The Board at any time may revest in the Board any of its administrative
powers under the Plan, except under circumstances where a committee is required
to administer the Plan under Section 3(e) above.
(g) The determinations of the Board or its delegate shall be conclusive
and binding on all persons having any interest in this Plan or in any awards
granted hereunder.
4. Shares Subject to Plan
Subject to the provisions of Section 14 (relating to adjustments upon
changes in stock), the Shares which may be sold pursuant to Options granted
under the Plan plus the Shares with respect to which Rights may be exercised
under the Plan shall not exceed in the aggregate eighteen million seven hundred
thousand (18,700,000) Shares of the Company's authorized Common Stock and may be
unissued shares or reacquired shares or shares bought on the market for the
purposes of issuance under the Plan. If any Options or Rights granted under the
Plan shall for any reason terminate or
5
<PAGE>
expire without having been exercised in full, the Shares subject to such Options
or Rights shall be available again for the purposes of the Plan. On the exercise
of a General of Limited Right, the Related Option, if any, shall be considered
to have been exercised to the extent such General or Limited Right is exercised
for the purpose of determining the number of Shares available for the grant of
further Options or Rights pursuant to the Plan.
5. Eligibility
Options and/or Rights may be granted only to full or part-time employees of
the Company and/or of any Affiliate. Outside Directors shall not be eligible for
the benefits of the Plan, except as provided in Section 8 hereof. Any employee
or Outside Director may hold more than one Option and Right at any time.
6. Stock Options -- General Provisions
(a) Except for automatic grants of Options to Outside Directors under
Section 8 hereof, each Option granted pursuant to the Plan may, at the
discretion of the Board or its delegate, be granted either as an ISO or as an
NSO. No option may be granted alternatively as an ISO and as an NSO.
(b) To the extent that the aggregate exercise price for ISOs which are
exercisable for the first time by a Participant during any calendar year (under
this Plan or any other plans of the Company or its Affiliates) exceeds $100,000,
such options shall be treated as NSOs.
(c) No ISO may be granted to a person who, at the time of grant, owns
stock possessing more than 10% of the total combined voting power of the Company
or any of its Affiliates unless the exercise price is at least 110% of the Fair
Market Value per Share of the stock subject to the option and the term of the
option does not exceed five (5) years from the date such ISO is granted.
(d) No ISO may be granted to a consultant or advisor eligible to receive
Options under this Plan.
7. Terms of Option Agreement
Except as otherwise required by the terms of Section 8 hereof, each option
agreement shall be in such form and shall contain such terms and conditions as
the Board or its delegate from time to time shall deem appropriate, subject to
the following limitations:
(a) The term of any Option (other than an ISO) shall not be greater than
ten (10) years and one day from the date it was granted. The term of any ISO
shall not be greater than ten (10) years from the date it was granted.
(b) The exercise price of each Option shall be not less than the Fair
Market Value per Share of the stock subject to the Option on the date the Option
is granted.
(c) Unless otherwise specified in the Option Agreement an option shall not
be transferable otherwise than by will, pursuant to the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement
6
<PAGE>
Income Security Act, or the rules thereunder.
(d): Except as otherwise provided in paragraph (e) of this Section 7 or in
a Participant's employment agreement, the rights of a Participant (other than an
Outside Director) to exercise an Option shall be limited as follows:
(1) DEATH OR DISABILITY: If a Participant's service is terminated by
-------------------
death or disability, then the Participant or the Participant's estate, or
such other person as may hold the Option, as the case may be, shall have
the right for a period of twelve (12) months following the date of death or
disability, or for such other period as the Board may fix, to exercise the
Option to the extent the Participant was entitled to exercise such Option
on the date of his death or disability, or to such extent as may otherwise
be specified by the Board (which may so specify after the date of his death
or disability but before expiration of the Option), provided the actual
date of exercise is in no event after the expiration of the term of the
Option. A Participant's estate shall mean his legal representative or any
person who acquires the right to exercise an Option by reason of the
Participant's death or disability.
(2) MISCONDUCT: If a Participant is determined by the Board to have
----------
committed on act of theft, embezzlement, fraud, dishonesty, a breach of
fiduciary duty to the Company (or Affiliate), or deliberate disregard of
the rules of the Company (or Affiliate), or if a Participant makes any
unauthorized disclosure of any of the trade secrets or confidential
information of the Company (or Affiliate), engages in any conduct which
constitutes unfair competition with the Company (or Affiliate), induces any
customer of the Company (or Affiliate) to break any contract with the
Company (or Affiliate), or induces any principal for whom the Company (or
Affiliate) acts as agent to terminate such agency relationship, then,
unless otherwise provided in a Participant's employment agreement, neither
the Participant, the Participant's estate nor such other person who may
then hold the Option shall be entitled to exercise any Option with respect
to any Shares whatsoever, after termination of service, whether or not
after termination of service the Participant may receive payment from the
Company (or Affiliate) for vacation pay, for services rendered prior to
termination, for services rendered for the day on which termination occurs,
for salary in lieu of notice, or for any other benefits. In making such
determination, the Board shall give the Participant an opportunity to
present to the Board evidence on his behalf. For the purpose of this
paragraph, unless otherwise provided in a Participant's employment
agreement, termination of service shall be deemed to occur on the date when
the Company dispatches notice or advice to the Participant that his service
is terminated.
(3) TERMINATION FOR OTHER REASONS: If a Participant's service is
-----------------------------
terminated for any reason other than those mentioned above under "DEATH OR
DISABILITY" or "MISCONDUCT," the Participant, the Participant's estate, or
such other person who may then hold the Option may, within three months
following such termination, or within such longer period as the Board may
fix, exercise the Option to the extent such Option was exercisable by the
Participant on the date of termination of his employment or service, or to
the extent otherwise specified by the Board (which may so
7
<PAGE>
specify after the date of the termination but before expiration of the
Option) provided the date of exercise is in no event after the expiration
of the term of the Option.
(4) EVENTS NOT DEEMED TERMINATIONS: Unless otherwise provided in a
------------------------------
Participant's employment agreement, the service relationship shall not be
considered interrupted in the case of (i) a Participant who intends to
continue to provide services as a director, employee, consultant or advisor
to the Company or an Affiliate; (ii) sick leave; (iii) military leave; (iv)
any other leave of absence approved by the Board, provided such leave is
--------
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing; or (v) in
the case of transfer between locations of the Company or between the
Company or its Affiliates. In the case of any employee on an approved leave
of absence, the Board may make such provisions respecting suspension of
vesting of the Option while on leave from the employ of the Company or an
Affiliate as it may deem appropriate, except that in no event shall an
Option be exercised after the expiration of the term set forth in the
Option.
(e): Unless otherwise provided in a Participant's employment agreement, if
any Participant's employment is terminated by the Company for any reason other
than for Misconduct or, if applicable, by Constructive Termination, within one
year after a Change of Control has occurred, then all Options held by such
Participant shall become fully vested for exercise upon the date of termination,
irrespective of the vesting provisions of the Participant's Option agreement.
For purposes of this subsection (e), the term "Change of Control" shall have the
meaning assigned by this Plan, unless a different meaning is defined in an
individual Participant's Option agreement or employment agreement.
(d) Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Board or its delegate shall
deem appropriate.
8. Automatic Grants to Outside Directors
[deleted]
9. Payments and Loans Upon Exercise of Options
With respect to Options other than Options granted to Outside Directors
pursuant to Section 8, the following provisions shall apply:
(a) The exercise price of Shares sold pursuant to an Option shall be paid
either in full in cash or by certified check at the time the Option is exercised
or in accordance with any deferred payment arrangement that the Board or its
delegate in its discretion may approve.
(b) In addition, if and to the extent authorized by the Board or its
delegate, Participants may make all or any portion of any payment due to the
Company upon exercise of an Option (i) by delivery of any property (including
securities of the Company) other than cash, so long as such property constitutes
valid consideration for the stock under applicable law and has a fair market
value on date of delivery equal to the exercise price, or (ii) by delivery to
the Company of a
8
<PAGE>
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company from sale or loan proceeds the amount
required to pay the exercise price and any applicable tax withholding. If
securities of the Company are delivered in payment of the exercise price
pursuant to this paragraph, such securities shall have been owned for at least
six months (or such other period as the Board or its delegate may require) and
have a fair market value on the date of surrender equal to the exercise price.
Any securities delivered by a Participant who is subject to Section 16 of the
Exchange Act must be the same class of stock as the stock to be received upon
exercise of the Option.
(c) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual Participants, including officers, on such
terms as may be approved by the Board of Directors for the purpose of financing
the exercise of Options granted under the Plan and the payment of any taxes that
may be due by reason of such exercise.
(d) In addition, a Participant may elect to have the Company withhold from
the number of Shares otherwise issuable upon exercise of an Option, a sufficient
number of Shares with an aggregate Fair Market Value per Share on the date of
exercise equal to the exercise price. Any such election shall be subject to the
approval of the Board or its delegate and must be made in compliance with rules
and procedures established by the Board or its delegate.
10. Tax Withholding
(a) Where, in the opinion of counsel to the Company, the Company has or
will have an obligation to withhold taxes relating to the exercise of any Option
or Right, the Board or its delegate may in its discretion require that such tax
obligation be satisfied in a manner satisfactory to the Company. In satisfying
such obligation with respect to a General or Limited Right exercised for cash,
the Company may withhold such taxes from any cash award. With respect to the
exercise of an Option or a General Right, in whole or in part, for Shares, the
Company may require the payment of such taxes before Shares deliverable pursuant
to such exercise are transferred to the holder of the Option or General Right.
(b) With respect to the exercise of an Option or a General Right, in whole
or in part, for Shares, a Participant may elect (a "Withholding Election") to
pay his withholding tax obligation by the withholding of Shares from the total
number of Shares deliverable pursuant to the exercise of such Option or General
Right or by delivering to the Company a sufficient number of previously acquired
Shares owned for at least six months or such other period as the Board or its
delegate may require. The value of Shares withheld or delivered shall be the
Fair Market Value per Share on the date the exercise becomes taxable. All
Withholding Elections are subject to the approval of the Board or its delegate
and must be made in compliance with rules and procedures established by the
Board or its delegate.
11. Stock Appreciation Rights -- General Rights
(a) The Board or its delegate shall have authority in its discretion to
grant a General Right to any eligible employee. A General Right may be granted
to a Participant irrespective of whether such Participant holds, is being
granted, or has been previously granted an Option, a Limited Right or a General
Right under the Plan. A General Right may be made exercisable without regard to
the exercisability of any Option or may be made exercisable only to the extent
of,
9
<PAGE>
and in lieu of, a Related Option. A General Right may be granted with respect to
some or all of the Shares issuable pursuant to the Related Option.
(b) With respect to the exercise of any General Right for Shares by any
Participant, and with respect to the exercise of a General Right for Shares or
cash by a Participant who is not subject to Section 16 of the Exchange Act, the
term "Spread" as used in paragraph (c) of this Section 11 shall mean an amount
equal to the product computed by multiplying (i) the excess of (A) the Fair
Market Value per Share on the date such General Right is exercised over (B) the
Award Price by (ii) the number of Shares with respect to which such General
Right is being exercised. With respect to the exercise of any General Right for
cash by a Participant who is subject to Section 16 of the Exchange Act pursuant
to an election made in accordance with paragraphs (c) and (d) of this Section
11, the term "Spread" as used in paragraph (c) of this Section 11 shall mean an
amount equal to the product computed by multiplying (i) the excess of (A) the
highest Fair Market Value per Share during a Window Period over (B) the Award
Price by (ii) the number of Shares with respect to which such General Right is
being exercised. With respect to the exercise of a General Right for cash
pursuant to an election made in accordance with paragraph (f) of this Section 11
by a Participant who is subject to Section 16 of the Exchange Act, the term
"Spread" as used in paragraph (c) of this Section 11 shall mean an amount equal
to the product computed by multiplying (i) the excess of (A) the Fair Market
Value per Share on the date the election becomes effective over (B) the Award
Price by (iii) the number of Shares with respect to which the General Right is
being exercised.
(c) On the exercise of a General Right as provided in paragraph (g) of
this Section 11, the holder thereof (subject to compliance with paragraph (d) or
paragraph (f) of this Section 11, if applicable) shall be entitled at his
election to receive either:
(i) a number of Shares equal to the quotient computed by dividing the
Spread by the Fair Market Value per Share on the date of exercise of the
General Right; provided, however, that in lieu of fractional Shares the
Company shall pay cash equal to the same fraction of the Fair Market Value
per Share on the date of exercise of the General Right; or
(ii) an amount in cash equal to the Spread; or
(iii) a combination of cash in the amount specified in such holder's
notice of exercise, and a number of Shares calculated as provided in clause
(i) of this paragraph (c), after reducing the Spread by such cash amount,
plus cash in lieu of any fractional Share as provided above.
(d) This paragraph (d) shall only apply to Participants who are subject
to Section 16 of the Exchange Act. Unless an election to receive cash upon the
exercise of a General Right is made pursuant to paragraph (f) of this Section
11, the Board or its delegate shall have sole discretion to consent to or
disapprove, in whole or in part, the election pursuant to either clause (ii) or
(iii) of paragraph (c) of this Section 11 of a holder of a General Right to
receive cash upon the exercise of a General Right ("Cash Election"). Such
consent or disapproval may be given at any time after the Cash Election to which
it relates. If the Board or its delegate shall disapprove a Cash Election, in
lieu of paying the cash (or any portion thereof) specified in such Cash
Election, the Board or its delegate shall determine the cash, if any, to be paid
pursuant to such Cash Election and shall issue a number of Shares calculated as
provided in clause (i) of paragraph (c) of this Section 11, after
10
<PAGE>
reducing the Spread by such cash to be paid plus cash in lieu of any fractional
Share. A Cash Election may be made only (x) with respect to a General Right
which has been held at least six months from the date of grant of such General
Right, and (y) during a Window Period. A Cash Election made in advance of a
Window Period shall be deemed to have been made and to take effect on the first
day of the first Window Period occurring after such election.
(e) Notwithstanding the provision of paragraph (c) of this Section 11, if
the employment of any Participant is terminated by the Company for any reason
other than for Misconduct (or, if applicable, by Constructive Termination)
within one year after a Change of Control has occurred, then such Participant's
General Right shall become fully vested and may be exercised only for cash
during a period of sixty days beginning on the date of termination; provided,
however, that with respect to a General Right held by a Participant who is
subject to Section 16 of the Exchange Act, the event constituting a Change of
Control shall have been subject to stockholder approval by non-insider
stockholders of the Company, as determined under Rule 16(b)(3) of the Exchange
Act, and if such General Right has not been outstanding for at least six months
on the date of termination, then the sixty-day period shall not begin until the
expiration of six months from the date of grant of such General Right. Upon such
exercise, a holder of a General Right shall be entitled to receive an amount in
cash equal to the Spread which, for purposes of this paragraph (e) of this
Section 11, shall mean an amount equal to the product computed by multiplying
(i) the excess of (A) the Fair Market Value per Share on the date such General
Right is exercised over (B) the Award Price, by (ii) the number of Shares with
respect to which such General Right is being exercised.
(f) An election by a Participant who is subject to Section 16 of the
Exchange Act to receive cash upon the exercise of a General Right may be made
without compliance with paragraph (d) of this Section 11, if such election is
irrevocable and the receipt of cash pursuant to such election occurs no earlier
than six months after such election is made. An election made pursuant to this
paragraph (f) may be changed only by a subsequent irrevocable election to take
effect no earlier than six months after the date such subsequent election is
made.
(g) To exercise a General Right, the holder shall (i) give notice thereof
to the Company in form satisfactory to the Board or its delegate addressed to
the Secretary of the Company specifying (A) the number of Shares with respect to
which such holder is exercising the General Right and (B) the amount such holder
elects to receive in cash, if any, and the amount he elects to receive in Shares
with respect to the exercise of the General Right; provided, however, that
notice of the exercise of a General Right pursuant to paragraph (e) of this
Section 11 shall only specify the number of Shares with respect to which the
General Right is being exercised for cash; and (ii) if requested by the Company,
deliver the Right Agreement relating to the General Right being exercised and
the Option Agreement for any Related Option to the Secretary of the Company, who
shall endorse thereon a notation of such exercise and return the Right Agreement
and Option Agreement to the Participant. The date of exercise of a General Right
which is validly exercised shall be the date on which the Company shall have
received the notice referred to in the first sentence of this paragraph (g).
12. Stock Appreciation Rights -- Limited Rights
(a) The Board or its delegate shall have authority in its discretion to
grant a Limited
11
<PAGE>
Right to the holder of a Related Option. A Limited Right may be granted with
respect to all or some of the Shares covered by such Related Option. A Limited
Right may be granted either at the time of grant of the Related Option or at any
time thereafter during its term. A Limited Right may be granted to a Participant
irrespective of whether such Participant is being granted or has been granted a
General Right with respect to the same Related Option. Unless specified in the
Right Agreement as an Automatic Right, a Limited Right may be exercised only
during a period of sixty days beginning on the date of a Change of Control;
provided, however, that with respect to a Limited Right held by a Participant
who is subject to Section 16 of the Exchange Act the event constituting a Change
of Control shall have been subject to stockholder approval by non-insider
stockholders of the Company, as determined under Rule 16(b)(3) of the Exchange
Act, and if such Limited Right has not been outstanding for at least six months
on the date of the Change of Control, then the sixty-day period shall not begin
until the expiration of six months from the date of grant of such Limited Right.
Notwithstanding the provisions of the immediately preceding sentence, each
Limited Right shall be exercisable only if and to the extent that the Related
Option is exercisable. A Limited Right granted as an Automatic Right, shall be
exercised automatically and only for cash, on satisfaction of conditions
specified in the Right Agreement.
(b) The term "Spread" as used in this Section 12 with respect to the
exercise of any Limited Right shall mean an amount equal to the product computed
by multiplying (i) the excess of (A) either (x) the highest Fair Market Value
per Share during the sixty-day period ending on the date of the Change of
Control, or (y) the Event Price per Share, whichever is greater, over (B) the
exercise price per Share at which the Related Option is exercisable, by (ii) the
number of Shares with respect to which such Limited Right is being exercised.
(c) Upon the exercise of a Limited Right as provided in paragraph (e) of
this Section 12, the holder thereof shall receive an amount in cash equal to the
Spread.
(d) Notwithstanding any other provision of this Plan, no General Right
which has a Related Option may be exercised for cash at any time when any
Limited Right which was granted with respect to the same Related Option may be
exercised.
(e) To exercise a Limited Right, the holder shall (i) give notice thereof
to the Company in form satisfactory to the Board or its delegate specifying the
number of Shares with respect to which such holder is exercising the Limited
Right, and (ii) if requested by the Company, deliver the Right Agreement
relating to the Limited Right being exercised and the Option Agreement for the
Related Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return the Right Agreement and the Option
Agreement to the employee. The date of exercise of a Limited Right which is
validly exercised shall be deemed to be the date on which the Company shall have
received the notice referred to in the first sentence of this paragraph (e).
13. Stock Appreciation Rights -- General Provisions
(a) Either a General Right or a Limited Right, or both a General Right and
a Limited Right, may be granted with respect to the same Related Option. Upon
the exercise of a Right, any Related Option shall cease to be exercisable to the
extent of the stock with respect to which the Right is exercised. Upon the
exercise or termination of any Related Option, the Right or Rights that relate
thereto will cease to be exercisable to the extent of the number of Shares with
respect to which the Related Option is exercised or terminated.
12
<PAGE>
(b) The Company intends that Sections 11, 12 and 13 shall comply with the
requirements of Rule 16b-3 (the "Rule") under the Exchange Act during the term
of this Plan. Should any provision of these Sections 11, 12 and 13 fail to
comply with or be unnecessary to comply with the requirements of the Rule, the
Board may amend this Plan to add to or modify the provisions of this Plan
accordingly without seeking stockholder approval.
(c) Unless otherwise specified in the Right Agreement, no General or
Limited Right shall be transferable except by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder; provided, however, that the terms of a General or Limited Right
granted with respect to an ISO shall comply with the requirements of the Code as
necessary to maintain the status of the Related Option as an ISO including,
without limitation, transferability and exercisability restrictions.
(d) A person exercising a General Right shall not be treated as having
become the registered owner of any Shares issued on such exercise until such
Shares are issued.
(e) Each General or Limited Right shall be on such terms and conditions
not inconsistent with this Plan as the Board or its delegate may determine and
shall be evidenced by a Right Agreement setting forth such terms and conditions
executed by the Company and the holder of the General or Limited Right.
14. Adjustments of and Changes in the Stock
If there is any change in the Common Stock of the Company by reason of any
stock dividend, stock split, spin-off, split up, merger, consolidation,
recapitalization, reclassification, combination or exchange of shares, or any
other similar corporate event, then the Board or its delegate shall make
appropriate adjustments to the number of Shares of Common Stock of the Company
theretofore appropriated or thereafter subject or which may become subject to an
Option or Right under the Plan. Outstanding Options and Rights shall also be
automatically converted as to price and other terms if necessary to reflect the
foregoing events. No right to purchase fractional shares shall result from any
adjustment in Options or Rights pursuant to this Section 14. In case of any such
adjustment, the Shares subject to the Option or Right shall be rounded down to
the nearest whole Share. Notice of any adjustment shall be given by the Company
to each holder of any Option or Right which shall have been so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.
15. Effective Date of the Plan
The Plan shall become effective when adopted by the Board, but no Option or
Right granted under this Plan shall be exercisable until the Plan is approved by
the affirmative vote of a majority of the holders of voting stock who are
present or represented and entitled to vote at a meeting of stockholders of the
Company duly called and held.
16. Amendment of the Plan
(a) The Board of Directors at any time, and from time to time, may amend
the Plan,
13
<PAGE>
subject to the limitation, however, that, except as provided in Section 14
(relating to adjustments upon changes in stock), no amendment for which
stockholder approval is required shall be effective unless such approval is
obtained within the required time period. Whether stockholder approval is
required shall be determined by the Board of Directors and shall be consistent
with the rules of the Securities and Exchange Commission, the Code or the stock
exchange(s) on which the Company's shares are listed, as such rules are in
effect at the time the Plan amendment is adopted by the Board of Directors.
Approval of the stockholders may be obtained by the affirmative vote of a
majority of the holders of the Company's voting stock who are present or
represented and entitled to vote at a meeting of stockholders of the Company
duly called and held, or by the written consent of the holders of a majority of
the outstanding voting stock of the Company.
(b) It is expressly contemplated that the Board may, without seeking
approval of the Company's stockholders, amend the Plan in any respect necessary
to provide the Company's employees with the maximum benefits provided or to be
provided under Section 422 of the Code or Section 16 of the Securities and
Exchange Act of 1934 and the regulations promulgated thereunder relating to
employee incentive stock options and/or to bring the Plan or Options granted
under it into compliance therewith.
(c) Rights and obligations under any Option or Right granted before any
amendment of the Plan shall not be altered or impaired by amendment of the Plan,
except with the consent of the person who holds the Option or Right, which
consent may be obtained in any manner that the Board or its delegate deems
appropriate.
(d) The Board of Directors may not amend the provisions of Section 8
hereof more than once every six months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act, or the rules thereunder.
17. Termination or Suspension of the Plan
The Board of Directors at any time may suspend or terminate the Plan. The
Plan, unless sooner terminated, shall terminate at the end of ten years from the
date the Plan is adopted by the Board or approved by the stockholders of the
Company, whichever is earlier. No Option or Right may be granted under the Plan
while the Plan is suspended or after it is terminated. Rights and obligations
under any Option or Right granted while the Plan is in effect, including the
maximum duration and vesting provisions, shall not be altered or impaired by
suspension or termination of the Plan, except with the consent of the person who
holds the Option or Right, which consent may be obtained in any manner that the
Board or its delegate deems appropriate.
18. Registration, Listing, Qualification, Approval of Stock and Options
All Options and Rights granted under the Plan are subject to the
requirement that if at any time the Board shall determine in its discretion that
the registration, listing or qualification of the shares of stock subject
thereto on any securities exchange or under any applicable law, or the consent
or approval by any governmental regulatory body or the stockholders of the
Company, is necessary or desirable as a condition of or in connection with the
issuance of shares upon exercise of the Option or Right, the Option or Right may
not be exercised in whole or in part unless such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any condition not acceptable to the Board of Directors.
14
<PAGE>
19. No Right to Employment
Nothing in this Plan or in any Option or Right agreement shall be deemed to
confer on any employee any right to continue in the employ of the Company or any
Affiliate or to limit the rights of the Company or its Affiliates, which are
hereby expressly reserved, to discharge an employee at any time, with or without
cause, or to adjust the compensation of any employee.
20. Miscellaneous
The use of any masculine pronoun or similar term is intended to be without
legal significance as to gender.
15
<PAGE>
Updated February 19, 2001
ADVANCED MICRO DEVICES, INC.
1992 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
-----------------
Page
----
1. Purpose............................................................... 1
2. Definitions........................................................... 1
3. Administration........................................................ 4
4. Shares Subject to Plan................................................ 5
5. Eligibility........................................................... 6
6. Stock Options -- General Provisions................................... 6
7. Terms of Option Agreement............................................. 6
8. Automatic Grants to Outside Directors................................. 8
9. Payments and Loans Upon Exercise of Options........................... 8
10. Tax Withholding....................................................... 9
11. Stock Appreciation Rights -- General Rights........................... 9
12. Stock Appreciation Rights -- Limited Rights........................... 11
13. Stock Appreciation Rights -- General Provisions....................... 12
14. Adjustments of and Changes in the Stock............................... 13
15. Effective Date of the Plan............................................ 13
16. Amendment of the Plan................................................. 13
17. Termination or Suspension of the Plan................................. 14
18. Registration, Listing, Qualification, Approval of Stock and Options... 14
19. No Right to Employment................................................ 15
20. Miscellaneous......................................................... 15
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>AMENDED AND RESTATED EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>
[EXECUTION COPY]
EXHIBIT 10.12
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AS OF NOVEMBER 3, 2000
BETWEEN
ADVANCED MICRO DEVICES, INC.
AND
W. J. SANDERS III
<PAGE>
TABLE OF CONTENTS
Page
1. Term.................................................................... 2
2. Position and Duties..................................................... 2
3. Salary.................................................................. 3
4. Bonus................................................................... 4
5. Stock Options and Related Incentive Plans............................... 5
6. Reimbursement of Expenses............................................... 7
7. Other Benefits During Service........................................... 7
8. Special Retirement Benefit; Change of Control........................... 8
9. Disability Benefits.................................................... 10
10. Death During Service; Split Dollar Policy.............................. 10
11. Confidential Information............................................... 11
12. Inventions, Patents, Copyrights and Proprietary Information............ 12
13. Termination by Company................................................. 12
14. Termination by Executive............................................... 15
15. Consequences of a Section 14 Termination by Executive, a Termination by
Company for Certain Reasons or a Breach by Company..................... 15
16. Other Benefits Following Termination of Service........................ 17
17. Indemnification........................................................ 19
18. Remedies............................................................... 19
19. Binding Agreement...................................................... 19
20. No Attachment.......................................................... 20
21. Assignment............................................................. 20
22. Waiver................................................................. 20
23. Notice................................................................. 20
24. Governing Law.......................................................... 21
25. Costs.................................................................. 21
26. Severability........................................................... 21
27. Arbitration............................................................ 21
28. Entire Agreement....................................................... 22
29. Survival............................................................... 22
i
<PAGE>
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
DATED AS OF NOVEMBER 3, 2000
ADVANCED MICRO DEVICES, INC.
AND
W. J. SANDERS III
This Amended and Restated Employment Agreement (the "Agreement") is made and
---------
entered into as of the 3rd day of November, 2000 (the "Effective Date") by and
--------------
between W. J. Sanders III ("Executive") and Advanced Micro Devices, Inc., a
---------
Delaware corporation ("Company") and amends and restates in its entirety the
-------
agreement between them as of September 29, 1996.
R E C I T A L S
A. Executive and Company entered into an employment agreement as of
July 1, 1991 (the "Original Employment Agreement"), which was amended and
-----------------------------
completely restated as of September 29, 1996 (the "Prior Employment Agreement").
--------------------------
B. Executive is the founder of Company and remains instrumental to
developing and expanding its business and operations, possesses unique and
invaluable knowledge, skills and judgment with respect to such business, and
maintains strong ties with the business community essential to the continued
success and growth of Company.
C. The non-management directors believe that Executive is uniquely
qualified to protect and enhance the best interests of Company and its
stockholders and that entering into this amended employment contract to provide
for Executive's continued stewardship will be of great value to Company and the
long-term interests of its stockholders.
D. Company recognizes that, as is the case with many publicly held
corporations, the possibility of a change of control may exist and that the
uncertainty and questions which such possibility may raise among management may
result in the departure or distraction of management personnel to the detriment
of Company and its stockholders.
E. The non-management members of Company's Board of Directors have
determined that in the event of that contingency it is imperative to be able to
rely upon management's continuance and in particular Executive's leadership, and
that appropriate steps should be taken to reinforce and encourage that
leadership and to reward Executive's essential service.
F. Executive and Company now desire to recognize Executive's
extraordinary service; provide him continuing incentives to promote and enhance
Company's short and long term strategies and opportunities by extending bonus
opportunities and providing
1
<PAGE>
additional stock-based, long term incentives; better align his compensation and
termination benefits relative to other executives, within and outside the
Company, recognizing his unique and special contributions and responsibilities;
prepare for and facilitate a smooth transition of executive roles and leadership
upon his anticipated retirement as chief executive officer in early 2002;
provide for his continuing service as Chairman through 2003; respond to changing
practices in executive compensation since his employment contract was last
revised; and modify certain other terms and conditions contained in the Prior
Employment Agreement.
G. Executive and Company desire to address more particularly the
results of his retirement as chief executive officer, and provide reasonable
accommodations to him thereafter consistent with those being made in the
marketplace for long-serving leaders of his stature.
1. Term
The term of services under this Agreement commenced as of September 1,
1996 and shall terminate on December 27, 2003.
2. Position and Duties
(a) Executive shall be employed by Company as its Chairman and Chief
Executive Officer through the earlier of the annual stockholders meeting in 2002
or June 30, 2002 (the "Initial Term"). Executive shall report directly and
------------
solely to Company's Board of Directors ("Board"). The Board agrees to nominate
-----
Executive for election to the Board as a member of its slate at each annual
meeting of stockholders during the Initial Term and the Extended Term.
Executive agrees to serve on the Board if elected. The duties and
responsibilities of Chairman and Chief Executive Officer shall be as defined in
the By-Laws of Company in effect as of the date hereof, and shall be without
consideration of other positions Executive may hold with Company. Executive's
services are mutually agreed to be unique.
(b) Executive shall be employed by Company as its Chairman from the
completion of the Initial Term through December 27, 2003 (the "Extended Term").
-------------
During such period, Executive shall continue for all purposes of this Agreement
and the Prior Employment Agreement to be an executive officer and key employee
of Company and shall report directly and solely to the Board.
(c) During Executive's period of service hereunder, Executive agrees
to perform such services not inconsistent with his position as shall from time
to time be assigned to him by Company's Board. During the Initial Term, except
for disability, illness and reasonable vacation periods, Executive shall devote
substantially his full productive time, attention, and energies to the position
of Chairman and Chief Executive Officer.
(d) Without the prior express authorization of Company, Executive
shall not, directly or indirectly, during the term of service:
(1) Render services of a business, professional or commercial nature
to any other person or firm, whether for compensation or otherwise; or
2
<PAGE>
(2) Engage in any activity competitive with or adverse to Company's
business or welfare, whether alone, as a partner, or as an officer, director,
employee or holder (directly or indirectly, such as by means of a trust or
option arrangement) of more than 1% of the capital stock of any class of any
other corporation.
Notwithstanding the foregoing requirement of substantially full-time services to
be rendered by Executive on behalf of Company, his expenditure of reasonable
amounts of time in connection with outside activities, not competitive with
Company's business, such as additional outside directorships (but only with
Board approval), or charitable or professional activities, or, after the Initial
Term, other business ventures shall not be considered to be in violation of this
Agreement, subject, however, to the requirement that in no event shall any such
activities materially interfere with the performance of Executive required under
this Agreement. Further, it is understood and agreed by the parties hereto that
Executive is entitled to engage in passive and personal investment activities
not materially interfering with his performance hereunder. Service as an
executive of an affiliate of Company, whether separately compensated or not,
shall not be considered to be in contravention of this paragraph (d).
3. Salary
(a) Through the Initial Term Executive shall continue to receive an
annual base salary of $1,000,000 in cash, plus increases for indexed adjustments
under the Prior Employment Agreement and as provided below. The Board of
Directors (or such Committee as may be designated by the Board) shall review
Executive's salary at least annually at or before the first regularly scheduled
Board meeting following the annual stockholders meeting of each fiscal year
during the Initial Term. The Board (or designated Committee), in its
discretion, may increase the base salary based upon relevant circumstances. The
base salary shall not be reduced during the Initial Term. The Compensation
Committee of the Board shall fulfill the Board's obligations under this Section
3(a) until such designation is revoked by the Board. In addition to any and all
deferred balances and prior accrued salary obligations of Company, if during any
one year period of January 1 to December 31 commencing in the year 2000, the
Consumer Price Index for Urban Wage Earners, San Francisco, published by the
Bureau of Labor Statistics of the U.S. Department of Labor ("CPI-W") increases,
-----
the salary for the following one year period from January 1 to December 31 shall
be automatically increased by the same percentage. All past and ongoing indexed
salary increases shall be accrued on a continuous basis and shall bear interest
from the date of accrual at an annual rate of 120% of the federal long-term
rate, with compounding from the effective date of the Prior Employment
Agreement. The accrued balance of all indexed salary increases under this and
prior agreements, together with accrued interest thereon, shall be paid at the
earliest time at which a deduction for federal income tax purposes will be
allowed for payment of such amounts under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), but in any event no later than March 31,
----
2004, which earliest time shall be referred to as the "Section 162(m) Deferred
-----------------------
Payment Date".
- ------------
(b) During the Extended Term Executive shall receive an annual base
salary of no less than $750,000 (plus adjustments calculated as provided above
for CPI-W increases, from base year 1996 through the Extended Term on an amount
of $500,000) for the period January 1, 2002 through December 29, 2002 and of no
less than $600,000 (plus the same adjustments) for the period January 1, 2003
through December 28, 2003. The Board (or
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designated committee), in its discretion, may increase the annual base salary
based upon relevant circumstances. The base salary shall not be reduced during
the Extended Term.
(c) Except as provided above, base salary shall be paid in
installments consistent with Company's usual payroll practices for executive
officers.
4. Bonus
(a) Executive shall, as provided in, and subject to, this Section 4(a)
and Sections 4(b) and (c) below, receive an incentive bonus for each of
Company's fiscal years ending December 31, 1997, December 31, 1998, December 31,
1999, December 31, 2000, December 30, 2001 and December 29, 2002 under Company's
1996 Executive Incentive Plan in an amount equal to six-tenths of one percent
(0.6%) of Adjusted Operating Profits of Company in excess of twenty percent
(20%) of the Adjusted Operating Profits of Company for Company's immediately
preceding fiscal year. For the fiscal year ending December 28, 2003, such
annual bonus shall be in an amount equal to two-tenths of one percent (0.2%) of
Adjusted Operating Profits of Company in excess of twenty percent (20%) of the
Adjusted Operating Profits for Company's immediately preceding fiscal year. The
annual bonus shall be paid immediately upon release by Company of its
operational results for the last quarter of each fiscal year referred to above.
The amount payable under this Section 4(a) or Section 4(b) shall not be subject
to the further discretion of Company's Compensation Committee and shall not be
reduced or deferred except as specifically provided in this Section 4 or as
otherwise agreed to by Executive.
For purposes of all calculations, "Adjusted Operating Profits" of
Company shall be deemed to constitute operating income, as reported on Company's
financial statements, increased for any pre-tax operating income and decreased
for any pre-tax operating loss from the Fujitsu joint venture (and any other
joint ventures approved by Executive and the Board for these purposes) and
increased by any expenses accrued for profit sharing plan contributions, bonuses
under Company's Executive Bonus Plan, bonuses to the Chief Operating Officer of
Company and, in fiscal years 2002 and 2003, any other Chief Executive Officer,
and bonuses (including bonuses under this Agreement and the Prior Employment
Agreement) provided for in Sections 4(a), (b) and (d) hereof. The provisions of
this Agreement with respect to bonus-related benefits following a termination of
service shall supersede any "in service" provisions (including last day of year
service requirements) of the 1996 Executive Incentive Plan.
(b) The maximum bonus initially payable to Executive under Section
4(a) above in each fiscal year shall not be greater than $5,000,000. The amount
of the bonus which exceeds the maximum bonus payable in any one fiscal year, if
any (the "Excess Bonus") shall be carried over (on a "first-in, first-out"
------------
basis) and added to the bonus (if any) determined for any of the next three
fiscal years, whether or not any one or more of such fiscal years ends before or
after the end of the Extended Term; provided the Excess Bonus, or portion
thereof, does not cause the bonus payable in any fiscal year to exceed
$5,000,000 or any higher maximum bonus payable in that year.
(c) If there shall be a combination of Company with another company or
a reorganization or capital restructuring of Company, or any other occurrence
similar to any of the foregoing, and as a result thereof the amount or value of
the bonuses payable pursuant to the
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bonus formula set forth in Section 4(a) above would be, or could reasonably be
expected to be, significantly affected thereby, appropriate adjustment will, at
the request of either party, be negotiated to establish a substitute formula to
yield an equitable and comparable result. If the parties cannot agree upon such
substitute formula, or if the parties cannot agree as to whether or not an
occurrence which would give rise to the right of either party to request
adjustment pursuant to the foregoing has occurred, the parties shall submit such
matter to arbitration under the provisions of Section 27.
(d) In addition to the bonus payable in each fiscal year under Section
4(a), Executive shall be entitled to receive as an additional bonus such
additional amounts as the Board (or such Committees as may be designated by the
Board) shall determine in its discretion. In determining the amount of such
additional amounts, the Board (or Committee) shall consider among other things
Executive's contribution to the accomplishment of Company's long-range business
goals, the success of various corporate strategies in which Executive
participated in reaching those goals, and Executive's unique services in
connection with the maintenance or increase in stockholder value of Company. The
Compensation Committee of the Board shall fulfill the Board's obligations under
this Section 4(d), until such designation is revoked by the Board.
5. Stock Options and Related Incentive Plans
(a) Executive shall be eligible to participate in the Stock Option
Plans of Company and any additional or successor incentive plan or plans. Any
option grants made to Executive pursuant to such plans shall provide for an
expiration date of ten (10) years following the date of grant subject to earlier
termination following termination of service only pursuant to Section 5(c), 13
or 15 hereof.
(b) As of the Effective Date, Executive was granted time-based options
to purchase an aggregate 1,200,000 shares of Company's Common Stock (the "New
---
Option" or "New Options"), pursuant to Company stock incentive plans (as
- ------
amended) under which the options are duly authorized (the "Option Plan" or
-----------
"Options Plans"). The New Options shall have an exercise price equal to one
- --------------
hundred percent (100%) of the fair market value of Company Common Stock as of
the Effective Date. Of the New Option shares, 350,000 shares shall become
vested and fully exercisable on and after November 15, 2000; 350,000 shares
shall become vested and fully exercisable on and after November 15, 2001;
250,000 shares shall become vested and fully exercisable on and after November
15, 2002; and 250,000 shares shall become vested on and after November 15, 2003
and shall become fully exercisable on the date Executive ceases to be an
executive officer or any earlier date on which an exercise would not render the
option "spread" nondeductible to Company by reason of Section 162(m) of the
Code, but in no event later than June 30, 2004; provided in each case that
--------
(except as provided elsewhere in this Agreement or as accelerated under other
provisions of this Agreement) Executive is providing services to Company as an
officer, director or employee on the applicable vesting date. Each New Option
shall be transferable upon election by Executive, to the extent consistent with
applicable restrictions under Company's registration of the underlying shares
with the SEC.
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(c) Each New Option described in this Section 5 shall be subject to,
and governed by, the terms and provisions in the applicable Option Plan, except
to the extent of modifications that are expressly provided for in this
Agreement. Notwithstanding anything in the applicable Option Plan to the
contrary, the New Options shall be exercisable, to the extent vested as provided
in Section 5(b) (or vested and made exercisable by acceleration as provided for
elsewhere in this Agreement or the Option Plan), for the following periods after
the last date of termination of all of Executive's services to Company in any
and all capacities as a director, officer or employee of Company:
(i) in the case of a termination because of death or disability (including
Disability), five years;
(ii) in the case of a termination by reason of Executive's voluntary
resignation or retirement, other than pursuant to Section 14,
(A) before age 65, without the consent of the Board, one year;
(B) before age 65, with the consent of the Board, three years;
and
(C) after age 65, five years;
(iii) in the case of a termination by Company pursuant to Section 13(a)
(ii) of this Agreement, 30 days; and
(iv) in the case of a termination by Executive pursuant to Section 14, or
by Company pursuant to Section 13(a)(iii), or by Company for reasons not
otherwise referred to above, five years, in each case except as expressly
otherwise provided in Section 15(a)(iv).
(d) Executive agrees to enter into stock option agreements with
Company containing the terms and provisions of the New Options together with
such other terms and conditions as counsel for Company may reasonably require to
assure compliance with applicable federal and state securities law and stock
exchange requirements in connection with the issuance of shares of Company
Common Stock upon exercise of the New Options granted as provided herein.
Company will undertake, as soon as practicable, to register the shares
underlying the New Options on Form S-8 under the Securities Act of 1933 (to the
extent not previously registered) and shall keep such Form S-8 in effect for the
entire period the New Options remain outstanding.
(e) All outstanding options, stock appreciation rights, restricted
stock and other stock-based awards held by Executive prior to November 3, 2000
("Prior Options") shall remain outstanding in accordance with their original
-------------
terms and (i) as to options granted prior to September 29, 1996, the terms of
the Original Employment Agreement and the Management Continuity Agreement dated
July 1, 1991 between Company and the Executive (the "MCA") and (ii) as to
---
options contemplated by and granted pursuant to the Prior Employment Agreement,
the terms thereof. In the event of any inconsistency or ambiguity with respect
to any options, rights, restricted stock or stock-based awards, the provisions
that are most favorable to the Executive shall prevail.
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(f) Notwithstanding any provision of this Agreement to the contrary,
in no event shall any New Option be exercisable beyond the maximum 10-year
period allowed therefor under the applicable Plan.
6. Reimbursement of Expenses
Executive shall be authorized to incur and shall be reimbursed by
Company for reasonable expenses for the advancement of Company's business
pursuant to standing Company policy and those specific categories of such
expenses as the Board has defined, which shall not during the period of any
service hereunder be reduced as to Executive.
7. Other Benefits During Service
(a) During the period of any service hereunder, Executive shall also
be entitled to receive all other benefits of service which are, and which may be
in the future, generally available to members of Company's management, and
specifically, an allowance for use of automobiles as provided from time to time
by action of the Board of Directors, as well as, without limitation, group
health, disability, and life insurance benefits and participation in any Company
profit-sharing, retirement or pension plan, and vacation consistent with the
vacation policies of Company.
(b) No later than March 31st of each year during the term, Company
shall pay Executive an amount necessary to reimburse Executive for federal and
state income taxes payable with respect to income recognized by the Executive
for income tax purposes as a result of (i) Company providing the Executive with
the services of any individuals hired as a driver/security guard, and (ii) the
amount paid under this Section 7(b), so that Executive will be in the same
after-tax position as if no such taxes had been imposed. Company (consistent
with past practice) shall reimburse or pay the costs of any driver/guard and
security, provided that reimbursement of any residential security costs
(exclusive of any driver/guard or any payments under clauses (i) and (ii) above)
incurred other than while traveling on Company business shall not exceed
$100,000.
(c) In addition, Company shall provide up to $25,000 each year for
expenses incurred by Executive for estate, tax and financial planning, insurance
(including annuity) products and benefits, and related attorneys' fees. If such
expenses are less than $25,000 in any one year after 1995, the unused amount(s)
shall cumulate and be available to Executive in any year thereafter. Company
acknowledges that $117,247 in unused amount from periods prior to the effective
date of the Prior Employment Agreement and all unused additional amounts since
the date of the Prior Employment Agreement shall also be available to Executive
in future periods for these purposes.
(d) If Executive enters into loan agreements for the purpose of
exercising any options or warrants (whether such options or warrants arose by
virtue of this Agreement or any other past, present, or future agreement between
Executive and Company), or paying taxes thereon or on the vesting of restricted
stock, Company shall guarantee such loans for a period ending two (2) years
after the date of the event causing tax liability to be incurred by reason of
such exercise or vesting. Company's obligation to guarantee such loans shall
continue
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<PAGE>
notwithstanding Executive's termination of service and shall apply to loans
entered into prior to termination of service which may run for a period beyond
the Date of Termination (as such term is defined in Section 13(b) hereof), as
well as loans obtained subsequent to the Date of Termination, provided that the
loan was obtained in connection with the exercise of any option or warrant
whenever granted or the vesting of restricted stock. The amount of said
guaranteed loans shall not exceed the lesser of: (a) the amount of the exercise
price, plus the actual tax paid during the two year period by reason of such
exercise and/or vesting, or (b) three and one-half million dollars ($3,500,000).
In addition, if Executive enters into any one or more loan agreements for any
reason whatsoever, Company shall guarantee such loans for a period ending 180
days after retirement, death, or Disability, or other termination of service
hereunder (or after any extended period of consulting, as may be approved by the
Board) or, in the case termination by Company other than for good cause as set
forth in Section 13(a)(ii) hereof or upon the termination by Executive pursuant
to Section 14. The amount of said guaranteed loans shall not exceed three and
one-half million dollars ($3,500,000).
8. Special Retirement Benefit; Change of Control
(a) Company will maintain a non-discretionary supplemental retirement
arrangement (the "Special Retirement Benefit") to provide additional cash
--------------------------
payments to Executive that will be paid to Executive upon, or at Executive's
election after, the Section 162(m) Deferred Payment Date. The Special
Retirement Benefit will accrue from September 29, 1996, at the rate of $400,000
per year on each of December 31, 1997, December 31, 1998, December 31, 1999,
December 31, 2000 and December 31, 2001.
(b) The Special Retirement Benefit will be due and payable to
Executive on (or at Executive's election after) the Section 162(m) Deferred
Payment Date and shall be increased by interest at the rate of 9% per year,
compounded annually from September 29, 1996 or the applicable date of accrual
under Section 8(a) until paid (the "Interest"). Except for payment as otherwise
--------
provided in Section 8(c) and (e), payment of the Special Retirement Benefit plus
the Interest (collectively, the "Retirement Payment") shall be made to Executive
------------------
only if Executive is Chief Executive Officer of Company on his 65th birthday,
provided, however, that a pro rata portion of the Special Retirement Benefit
- -------- -------
(determined by multiplying the maximum Special Retirement Benefit by a fraction,
the numerator of which is the number of months from January 1, 1997 until
Executive's death or Disability and the denominator of which is 60), plus
Interest, will be paid to Executive or his designated beneficiary or in the
absence of a designated beneficiary, his estate (the applicable beneficiary or
estate being herein referred to as "Estate") upon his death or to him or to his
------
duly authorized representative in event of his Disability as defined in Section
9 hereof.
(c) If Executive's Service hereunder is terminated by Executive
pursuant to Section 14 hereof prior to 2002 or by Company pursuant to Section
13(a)(iii) hereof prior to 2002, or if Company shall terminate Executive's
service under this Agreement other than for good cause or because of his death
or Disability prior to 2002, the unaccrued installments of the Special
Retirement Benefit that would have been payable had he remained as Chief
Executive Officer through December 31, 2001, plus Interest, shall be accelerated
and accrued immediately and the entire amount of the Retirement Payment shall be
payable to Executive no later than the Section 162(m) Deferred Payment Date.
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<PAGE>
(d) All cash payments pursuant to the Special Retirement Benefit will
be paid from the general funds of Company and no special or separate fund will
be established and no segregation of assets will be made to assure the payment
of funds pursuant to the Special Retirement Benefit. Executive shall have no
right, title or interest whatever in or to any investment which Company may make
to aid it in meeting its obligations under the Special Retirement Benefit.
Nothing contained in this Agreement, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between Company and Executive or any other person. To
the extent that Executive acquires a right to receive payments pursuant to the
Special Retirement Benefit, such right shall be no greater than the right of an
unsecured creditor of Company.
(e) In the event or anticipation of a Change of Control, as defined in
this Section 8, the unaccrued installments of the Special Retirement Benefit
shall be accelerated and accrued and the entire amount of the Special Retirement
Benefit, plus Interest (in an amount not less than that which would have been
payable had he remained as Chief Executive Officer through 2001), shall be
payable to Executive immediately prior to such Change of Control or as soon
thereafter as practicable.
(f) For purposes of this Agreement, the term "Change of Control" shall
mean a change of control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or in response
------------
to any other form or report to the Securities and Exchange Commission or any
stock exchange on which Company's shares are listed which requires the reporting
of a change of control. In addition, a Change of Control shall be deemed to
have occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act, but excluding a person described in (and who
continues to satisfy the requirements and conditions of) the proviso at Rule
13d-1(b)(1)(i), (ii) and (iii) and who has not become subject to Rule 13d-
1(e)(1) or (g) is or becomes the beneficial owner, directly or indirectly, of
securities of Company representing more than 35% of the combined voting power of
Company's then outstanding securities; or (ii) in any two-year period,
individuals who were members of the Board at the beginning of such period, plus
each new director (other than a participant or designate of a participant in a
transaction described in clause (i), (ii), (iii) or (iv) of this sentence) whose
election or nomination for election was approved by at least two-thirds of the
directors in office immediately prior to such election or nomination, cease for
any reason to constitute at least a majority of the Board; (iii) there is
consummated a merger or consolidation of Company with or into any other entity,
other than a merger or consolidation which would result in the holders of the
voting securities of Company outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation more
than 50% of the combined voting power of the voting securities of either Company
or the other entity which survives such merger or consolidation or the parent of
the entity which survives such merger or consolidation; (iv) the stockholders of
Company approve a plan of complete liquidation of Company or there is
consummated the sale or disposition by Company of all or substantially all of
Company's assets, other than a sale or disposition by Company of all or
substantially all of Company's assets to an entity at least 65% of the combined
voting power of the voting securities of which are owned by persons in
substantially the same proportions as their ownership of Company immediately
prior to such sale; or (v) a majority of the members of the Board in office
prior to the happening of any event and who are still in office after such
event,
9
<PAGE>
determines in its sole discretion within one year after such event, that as a
result of such event that there has been a Change of Control.
Notwithstanding the foregoing definition, the term "Change of
Control" for purposes of this Agreement (a) shall exclude the acquisition of
securities representing more than 35% of the combined voting power of Company
(i) by Executive or any group with which Executive is affiliated (as the terms
"group" and "affiliate" are defined under the Exchange Act), (ii) by Company,
(iii) by any of its wholly-owned subsidiaries (unless after giving effect to the
acquisition, less than 65% of the voting power of the subsidiary is held by
Company and persons who were stockholders of Company immediately prior to the
acquisition), or (iv) by any trustee (or other fiduciary) holding securities of
Company under an employee benefit plan now or hereafter established by Company;
and (b) shall not apply to the Prior Options, which shall be governed by the
provisions of Section 5(e) and the applicable agreements referred to therein. As
used herein, the term "beneficial owner" shall have the same meaning as under
Section 13(d) of the Exchange Act, and related case law.
9. Disability Benefits
"Disability" shall mean Executive's incapacity due to physical or
mental illness or cause, which results in the Executive being absent from the
performance of his duties with Company on a full-time basis for a period of six
(6) consecutive months. The existence or cessation of a physical or mental
illness which renders Executive absent from the performance of his duties on a
full-time basis shall, if disputed by Company or Executive, be conclusively
determined by written opinions rendered by two qualified physicians, one
selected by Executive, and one selected by Company. During the period of
absence, Executive shall be deemed to be on disability leave of absence, with
his compensation paid in full. During the period of such disability leave of
absence, the Board of Directors may designate an interim Chief Executive Officer
on such terms as it deems proper.
Upon the expiration of twelve (12) consecutive months of such
disability leave of absence, Executive's service may be terminated by Company
pursuant to the provisions of Section 13(a)(i); provided, however, that prior to
the Date of Termination (as defined in Section 13), Executive shall have the
right to return to full-time service. At Company's request, Executive shall be
required to provide the written opinions of two qualified physicians, one
selected by Executive and one selected by Company, to verify Executive's
condition of health. If Company refuses to permit Executive to resume full-time
service as Chairman and Chief Executive Officer, Company shall be deemed to have
terminated this Agreement under Section 13(a)(iii) hereof.
10. Death During Service; Split Dollar Policy
If Executive dies during the term of service contemplated by this
Agreement, Company shall pay the regular compensation that would otherwise be
payable to Executive up to the end of the month in which his death occurs, plus,
as a death benefit, compensation for a period of twelve (12) months thereafter
at the same monthly rate of base compensation which prevailed during the month
of his death. In addition, Executive shall be entitled to receive the payments
and benefits enumerated in Sections 8(b) and 13(c). Any amounts payable to
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<PAGE>
Executive under this Agreement which are unpaid at the date of Executive's death
or payable hereunder or otherwise by reason of his death, unless otherwise
expressly provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's Estate.
Company shall provide Executive with a split dollar life insurance
policy in the amount of one million dollars ($1,000,000). Under the terms of
such split dollar arrangement, on Executive's death, Company shall recover its
cumulative premiums paid. If Executive's employment with Company terminates for
any reason or Executive desires for any reason to dissolve the split dollar
arrangement, Executive may take ownership of the policy by paying to Company an
amount equal to Company's cumulative premiums paid, in which event Company shall
assign to Executive all of its interest under such policy.
11. Confidential Information
This and the next following Section 12 supersede all previous
agreements, if any, between Executive and Company relating to confidential
affairs of Company and to inventions conceived or made by Executive. Executive's
obligations hereunder are made partly in consideration of the salary to be paid
during service by Company. Confidential information shall mean all information
generated by Executive or obtained by Executive from or disclosed to Executive
by Company which relates to Company's past, present, and future research,
development and business activities, trade secrets, including in particular, all
matters of a technical nature, such as "know-how," formulae, secret processes or
machines, inventions, and research projects, and matters of a business nature,
such as information about costs, profits, markets, sales, lists of customers,
and any other information of a similar nature, also including plans for further
development. Except as authorized by Company in writing, Executive shall hold
all such confidential information in trust and confidence for Company, and
agrees not to disclose them to anyone outside of Company, either during or after
service with Company. This commitment shall impose no obligation upon Executive
with respect to any portion of the confidential information which (i) is now or
hereafter, through no act or failure to act on his part, becomes generally known
or publicly available, (ii) is hereafter furnished to Executive by a third party
as matter of right and without restriction on disclosure, or (iii) is furnished
to others by Company without restriction on disclosure. Executive further agrees
to deliver promptly to Company on termination of employment with Company, or at
any time it may so request all memoranda, notes, records, reports, manuals,
drawings, blueprints, and any other documents containing any confidential
information as defined above, including all copies of such materials which
Executive may then possess or have under his control. The rights and obligations
set forth in this Section 11 shall survive according to the terms hereof and
continue after any expiration or termination of this Agreement or the service
specified herein. In the event of a breach or threatened breach by Executive of
the provisions of this Section 11, Company shall be entitled to an injunction
restraining Executive from disclosing, in whole or in part, any of such
confidential information, or from rendering any services to any person, firm,
corporation, association, or other entity to whom such confidential information,
in whole or in part, has been disclosed or is threatened to be disclosed.
11
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12. Inventions, Patents, Copyrights and Proprietary Information
Executive agrees that all inventions, works of authorship, trade
secrets, and proprietary information (including new contributions, improvements,
ideas, or discoveries), patentable or unpatentable, copyrightable or
uncopyrightable, conceived, made or first actually reduced to practice by him
solely or jointly with others during the period of his service with Company and
which are either related in any manner to the business (commercial or
experimental) of Company or of any of its subsidiaries, including product,
service, research and development fields in which Company or any of its
subsidiaries has been or is engaged or plans to engage, or to Executive's
employment activities, or are conceived, made or first reduced to practice in
whole or in part on Company time or with the use of Company facilities or
materials (except any invention which qualifies fully for exemption under
Section 2870 of the California Labor Code) shall belong to Company; provided
--------
that works of authorship concerning Executive or the electronics industry, and
any copyrights thereon, shall belong to Executive and Executive shall seek
authorization in writing pursuant to Section 11 for disclosure of any
confidential information contained therein. Executive further agrees that he
will:
(a) Promptly disclose such inventions, works of authorship, trade
secrets and proprietary information to Company;
(b) Notify Company of any invention which he claims qualifies for
exemption under Section 2870 of the California Labor Code and offer to disclose
such inventions to Company in confidence;
(c) Assign to Company, at its request and without additional
compensation, the entire rights to the inventions for the United States and all
foreign countries;
(d) Sign all papers within the truth, necessary to carry out the
above; and
(e) Give testimony (but without expense to Executive) in support of
his inventorship, idea or trade secret, or as otherwise reasonably deemed
necessary by counsel to Company.
Executive agrees to accept the compensation provided by this
Agreement as his sole compensation for the use, lease, sale or other transfer by
Company of any such inventions, works of authorship, trade secrets and
proprietary information or of any such patents obtained by it in such
inventions, works of authorship, trade secrets or proprietary information.
To the best of Executive's knowledge, there is no other contract to
assign inventions, works of authorship, patents, trade secrets, or other
proprietary information that is now in existence between him and any other
person, corporation or partnership, unless Executive has so indicated below, and
unless a copy of any such other contract is attached hereto.
13. Termination by Company
(a) Company shall have the right to terminate Executive's service
hereunder under the following circumstances:
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(i) Upon ten (10) days' written notice from Company to Executive in the
event of disability which has incapacitated him from performing his duties
for twelve (12) consecutive months as determined under Section 9, subject
to Executive's right to reinstatement as provided in Section 9, provided
that any such determination after Executive reaches age 65 shall not
prejudice any rights or benefits to which he would have been entitled had
he voluntarily retired as of such date under this Agreement.
(ii) For good cause upon ten (10) days' written notice from Company.
Termination by Company of Executive's service for "good cause" as used in
this Agreement shall mean (A) that the Board of Directors has found that
Executive has committed a material act of theft, misappropriation, or
conversion of corporate funds, or (B) a termination of Executive's
employment during the Initial Term (other than in contemplation of, in
connection with or following a Change in Control (as defined in Section 8
hereof)) as a result of Executive's demonstrably willful, deliberate and
continued failure to follow reasonable directives of the Board of Directors
(other than for any such failure resulting from Executive's incapacity due
to physical or mental illness or any such actual or anticipated failure in
connection with a resignation by Executive pursuant to Section 14 hereof)
within Executive's ability to perform, which failure has had a material
adverse effect on Company. For purposes of the previous sentence, no act
or failure to act by Executive shall be deemed "willful" unless done, or
omitted to be done, by Executive in bad faith and without reasonable belief
that his action or omission was in the best interest of Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for good cause under clause (B) above unless and until: (1)
there shall have been delivered to Executive a copy of a resolution duly
adopted by the Board of Directors in good faith at a meeting of the Board
of Directors called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with his counsel, to
be heard before the Board of Directors), finding that Executive was guilty
of conduct set forth above in clause (B) and specifying the particulars
thereof in reasonable detail, and (2) Executive shall have been provided
the opportunity to correct the performance at issue within 20 business days
after his receipt of the resolution; and (3) if Executive contests such
finding (or a conclusion that he has failed to timely cure the performance
in response thereto), the arbitrators by final determination in an
arbitration proceeding pursuant to Section 27 hereof have concluded that
Executive's conduct met the standard for termination for "good cause" above
and that the Board of Directors' conduct met the standards of good faith
and satisfied the procedural and substantive conditions of this Section 13.
(iii) Upon ninety-five (95) days' written notice to Executive where the
Board by majority vote, elects to terminate Executive for any reason, other
than the reasons referred to in subparagraphs (i) or (ii) above.
(b) Except as provided in the following sentences of this clause
(b) and clauses (c) and (d), as used in this Agreement "Date of Termination"
-------------------
shall mean the date specified in the written notice of termination given by
Company pursuant to Section 13(a)(i), (ii) or (iii) hereof, or the effective
date of a termination of services for any other reason. If Executive dies, the
date of Executive's death shall be the Date of Termination. Further, if within
sixty (60) days after any notice of termination is given, the party receiving
such notice of termination
13
<PAGE>
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date as finally determined by mutual written
agreement of the parties or by a final and binding arbitration award. Any party
giving notice of a dispute shall pursue the resolution of such dispute. During
the period until the dispute is finally resolved in accordance with this Section
13(b), Company will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue Executive as a participant in all compensation,
employee benefit, health and welfare and insurance plans, programs, arrangements
and perquisites in which Executive was participating or to which he was entitled
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Section 13(b). Amounts paid under this
Section 13(b) shall be repaid to Company or be offset against or reduce any
other amounts due Executive under this Agreement, if appropriate, only upon the
final resolution of the dispute.
(c) If Executive's service hereunder is terminated by reason of
Executive's death or Disability pursuant to Section 13(a)(i) hereof, Executive
or his Estate shall be entitled to receive 100% of his base salary (including
adjustments) for the remainder of the Initial Term, the amounts provided under
Section 10, his compensation under Sections 4(a), (b) and 4(d) hereof for the
fiscal year in which the Date of Termination occurs and for the following fiscal
year, and any Excess Bonus remaining unpaid as of the date the foregoing bonuses
are paid. Company may purchase insurance to cover all or any part of its
obligations set forth in the preceding sentence, and Executive agrees to take a
physical examination to facilitate the obtaining of such insurance. In addition
to the foregoing, the New Options and all Prior Options (collectively, the
"Options") which otherwise would have vested within two years following the Date
- --------
of Termination shall accelerate, vest and become exercisable on the Date of
Termination. The New Options shall remain exercisable as provided in Section
5(c). In addition, Executive or his estate (or spouse or dependents, as
applicable) shall be entitled to the benefits contemplated by Section 16(a)(i)
and (iii).
(d) If Executive's service hereunder is terminated pursuant to
Section 13(a)(ii) hereof, or by reason of Executive's voluntary termination
other than pursuant to Section 14 hereof, Company shall be obligated to pay
Executive only such severance compensation as the Board by majority vote deems
appropriate, or none at all, and such other benefits and compensation as is
expressly provided for under other provisions of this Agreement (including but
not limited to Sections 4(b), 5(c), 5(e), 8, 16 and 17) and Company's ongoing
obligations under Sections 3 and 4 shall cease (except as to any and all
obligations that are either accrued or deferred or both). Any and all of
Company's obligations under other sections of this Agreement shall continue. The
New Option shall remain exercisable as provided in Section 5(c).
(e) If Executive's service hereunder is terminated pursuant to
Section 13(a)(iii), the provisions of Sections 15 and 16 hereof shall apply.
(f) All Prior Options shall be and remain subject to the
provisions of Section 5(e) hereof.
14
<PAGE>
14. Termination by Executive
Executive shall have the right to terminate his service under this
Agreement upon 30 days' notice to Company given within 180 days following the
date on which the Executive becomes aware of any of the following events:
(a) Executive is not elected or retained as Chairman and Chief
Executive Officer and a director of Company at any time during the Initial Term
or as Chairman and a director of Company at any time during the Extended Term;
(b) any assignment to Executive of any duties other than those
reasonably contemplated by, or any limitation of the powers or prerogatives of
Executive in any respect not reasonably contemplated by, Section 2 hereof;
(c) any removal of Executive from responsibilities substantially
similar to those described or contemplated in Section 2 hereof (except pursuant
to Section 13 (a)(ii) hereof);
(d) any reduction in, or limitation upon, the compensation,
reimbursable expenses or other benefits provided in Sections 3 through 10, other
than by valid public law or regulation;
(e) any assignment to Executive of duties that would require him to
relocate or transfer his current principal place of residence in Southern
California, or would make the continuance of such current principal place of
residence unreasonably difficult or inconvenient for him; or
(f) a Change of Control of Company (as defined in Section 8 hereof);
provided that in such event no advance notice shall be required.
15. Consequences of a Section 14 Termination by Executive, a Termination by
Company for Certain Reasons or a Breach by Company
(a) If Executive's service hereunder is terminated by Executive
pursuant to Section 14 hereof during the Initial Term or the Extended Term, or
by Company pursuant to Section 13(a)(iii) hereof during the Initial Term or the
Extended Term, or if Company shall otherwise terminate Executive's services
under this Agreement (other than for good cause or because of death or
disability) during the Initial Term or the Extended Term, the following shall
apply:
(i) Executive shall continue to receive Executive's base salary (in effect
in the fiscal year in which the Date of Termination occurs and as adjusted
under Section 3) until the end of the Extended Term; provided, however,
--------
that in the event of a Change of Control (as defined in Section 8 hereof),
such base salary shall be payable for no less than three years following
the Date of Termination. Company shall as soon as practicable but no later
than 10 business days after the Date of Termination pay to Executive in a
lump sum the full amount to which he is entitled under this Section
15(a)(i).
15
<PAGE>
(ii) Executive shall be entitled to receive the bonuses that would have
been paid to Executive under Sections 4(a), (b) and 4(d) hereof for (x) the
fiscal year in which such Date of Termination occurred, (y) the fiscal year
following the fiscal year in which the Date of Termination occurred, and
(z) any subsequent fiscal year to the extent that the carry-over provisions
of Section 4(b) hereof are applicable, provided that no bonus shall be
first accrued for any period following the last fiscal year in which the
last day of the Extended Term occurs. Notwithstanding the foregoing, in
the event of a Change of Control (as defined in Section 8 hereof), Company
shall pay Executive immediately an amount equal to the average of the two
highest bonuses paid (or payable) to Executive for the last five full
fiscal years immediately prior to such Change of Control, plus any and all
amounts that may be carried-over pursuant to Section 4(b) hereof, and shall
pay Executive as soon as determinable the difference between any greater
amount determined pursuant to the preceding sentence and such average
amount previously paid. Except as provided with respect to a Change of
Control, any bonuses otherwise payable pursuant to this Section 15(a)(ii)
shall be paid to Executive (or his Estate) at the same time as such bonuses
would have been paid to Executive if Executive's service hereunder had not
been terminated. The bonus payable for the fiscal year following the
fiscal year in which the Date of Termination occurs shall be calculated and
paid as if Executive's service hereunder had not been terminated,
notwithstanding any "in service", eligibility status or other requirements
under the 1996 Executive Incentive Plan.
(iii) The vesting and exercisability of all New Options and all other
options, stock appreciation rights, restricted stock or other stock-based
awards granted by Company to Executive shall accelerate and all of them
shall become fully vested and exercisable on the Date of Termination.
(iv) Any New Options that are exercisable without regard to this Section
15 shall remain exercisable as provided in Section 5(c), except that any
New Options that become exercisable solely by reason of the provisions of
Section 15(a)(iii) before September 12, 2001 shall remain exercisable for a
period of only three years.
(v) In addition to all other amounts payable to Executive under this
Section 15, the Executive shall be entitled to receive, not later than the
15th day following the Date of Termination, all benefits payable to him
under any of Company's tax-qualified employee benefit plans and any other
plan, program or arrangement relating to deferred compensation, retirement
or other benefits including, without limitation, the Special Retirement
Benefit and any profit sharing, 401(k), employee stock ownership plan, or
any plan established as a supplement to any of the aforementioned plans or
expressly provided by other provisions of this Agreement, whether now
existing or hereafter established, with additional service and benefit
credits (based on not less than the amount of salary and bonus Executive
would have received under this Agreement had his services not terminated)
for periods through the Extended Term.
(vi) Company shall also pay to Executive, not later than the 15th day
following the Date of Termination, an amount equal to all unvested Company
contributions credited to the Executive's account under any tax-qualified
employee benefit plan maintained by Company as of the Date of Termination.
16
<PAGE>
(vii) Company shall also pay to Executive all legal fees and expenses
incurred by the Executive (1) in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement (Executive shall have no obligation to repay any
such legal fees or expenses regardless of the outcome of any contest or
dispute), or (2) in connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder.
(viii) Company shall also pay to Executive, not later than the second day
following the Date of Termination, a pro rata amount of his base salary
under Section 3 hereof, in effect on the Date of Termination, for each day
of vacation or sick leave which has accrued as of the Date of Termination,
but which is unpaid as of such date, to which Executive is entitled under
Company's vacation and sick leave policies.
(b) Upon a Change of Control, Company's obligation to pay the benefits
described herein shall be absolute and unconditional, shall be paid as soon as
practicable but not more than ten (10) business days thereafter or (if expressly
provided herein) as earlier or later herein provided, and shall not be affected
by any circumstances or any set-off, counter-claim, recoupment, defense or other
right which Company or any of its subsidiaries may have or claim against
Executive or anyone else.
16. Other Benefits Following Termination of Service
(a) If Executive's service is terminated by Company other than
pursuant to Section 13(a)(ii), or terminated by Executive pursuant to Section 14
on or before the last day of the Extended Term, or if Executive completes the
term of service contemplated by Section 2, or if Executive dies, retires from
service as Chief Executive Officer or Chairman (or both) with the consent of the
Board before age 65, or retires as Chief Executive Officer or Chairman (or both)
after age 65, in addition to the benefits provided under Section 15 in the
applicable circumstances, Executive shall also be entitled to the following
benefits:
(i) Company shall provide at its expense for his lifetime, his spouse's
lifetime and until his youngest child or other eligible dependent reaches
age 21, health and welfare benefits, at least comparable to those benefits
in effect on the date hereof or, if greater, immediately prior to the Date
of Termination, including but not limited to medical, dental, disability,
spouse and dependent care, and life insurance coverage. At Company's
election, health benefits may be provided by reimbursing Executive or his
spouse or child's guardian, as the case may be, for the cost of converting
group policy to individual coverage, or for the cost of extended COBRA
coverage. Company shall also pay to Executive or his spouse or child's
guardian, as the case may be, an amount calculated to pay any income taxes
due as a result of the payment by Company on Executive's behalf for such
health benefits. Such tax payment shall be calculated to place Executive
(and his spouse and dependents) in the same after-tax position as if no
such income taxes had been imposed. Notwithstanding anything to the
contrary in this Agreement, if Executive's service terminates after
completion of thirty (30) years of service or
17
<PAGE>
Executive dies or is disabled, benefits pursuant to this Section 16(a)(i) shall
continue as above provided in the case of a retirement, expiration or
termination.
(ii) Company shall allow Executive the continued use of a Company
automobile and security/driver on the same terms which existed on the date
hereof or, if greater, immediately prior to the Date of Termination, until
five (5) years after the expiration of the Extended Term.
(iii) Company shall provide Executive (or his surviving spouse) up to
$25,000 each year for expenses incurred by Executive (or surviving spouse)
for estate, tax and financial planning, insurance (including annuity)
products and benefits and related legal fees, until five years after the
expiration of the Extended Term. Such amount shall cumulate as provided in
Section 7(c) hereof and be paid at the conclusion of such period to the
extent not used.
(iv) Company shall provide Executive with an office and secretarial
services equivalent to those provided to Executive in his Southern
California office on the date hereof or, if greater, immediately prior to
the Date of Termination, until five years after the expiration of the
Extended Term.
(v) Company shall provide continued access to and use of Company
facilities and services comparable to those provided to him prior to his
retirement as Chief Executive Officer, including access to Company
aircraft, apartments, memberships, and clubs, on substantially the same
basis as such facilities and services are now provided or are provided to
him prior to his retirement as Chief Executive Officer, for business and
for personal use, as the case may be, until five years after the expiration
of the Extended Term; provided that in the case of Company aircraft, such
access shall be subject to the approval of Company's chief executive
officer.
(b) Unless Executive's service is terminated by Company for good
cause, for at least ten (10) years following the Date of Termination, Executive
shall continue to be indemnified under Company's Certificate of Incorporation
and Bylaws at least to the same extent as prior to the Date of Termination or
any earlier Change of Control, whichever is greater, and Executive shall
continue to be covered by the directors' and officers' liability insurance, the
fiduciary liability insurance and the professional liability insurance policies
that are the same as, or shall be provided coverage at least equivalent to,
those Company carried prior to the Date of Termination or any earlier Change of
Control, whichever is greater.
(c) If all or any portion of the amounts payable to Executive or his
Estate under this Agreement or otherwise are subject to the excise tax imposed
by Section 4999 of the Code (or similar state tax and/or assessment), Company
shall pay to Executive an amount necessary to place Executive in the same
after-tax position as Executive would have been in had no such excise tax been
imposed. The amount payable pursuant to the preceding sentence shall be
increased to the extent necessary to pay income and excise taxes due on such
amount. The determination of the amount of any such additional amount shall
initially be made by the independent accounting firm then employed by Company.
If at a later date it is determined (pursuant to final regulations or published
rulings of the IRS, final judgment of a court of
18
<PAGE>
competent jurisdiction or otherwise) that the amount of excise taxes payable by
Executive is greater than the amount initially so determined, then Company (or
its successor) shall pay Executive an amount equal to the sum of (1) such
additional excise taxes, (2) any interest, fines and penalties resulting from
such underpayment, plus (3) an amount necessary to reimburse Executive for any
income, excise or other taxes payable by Executive with respect to the amounts
specified in (1) and (2) above, including any income, excise or other taxes
payable with respect to such amounts, and the reimbursement provided by this
clause.
(d) Notwithstanding anything in this Section 16 to the contrary,
Executive may elect in his sole discretion not to have any portion of any
payment be paid or not to have the vesting of any Options accelerated in order
to avoid any "excess parachute payment" under Section 280G(b)(1) of the Code.
17. Indemnification
In addition to the provisions of Section 16(b), in the event Executive
is made, or threatened to be made, a party to any legal action or proceeding,
whether civil or criminal or administrative, by reason of the fact that
Executive is or was a director or officer of Company or serves or served any
other corporation fifty percent (50%) or more owned or controlled by Company in
any capacity at Company's request, Executive shall be indemnified by Company,
and Company shall pay Executive's related expenses when and as incurred, all to
the full extent permitted by law.
18. Remedies
Company recognizes that because of Executive's special talents,
stature and opportunities in the semiconductor industry, in the event of
termination by Company hereunder (except under Section 13(a)(ii)), or in the
event of termination by Executive under Section 14, before the end of the
Extended Term, Company acknowledges and agrees that the provisions of this
Agreement regarding further payment of base salary, bonuses, and the
exercisability of Options and other benefits constitute fair and reasonable
provisions for the consequences of such termination, do not constitute a
penalty, and such payments and benefits shall not be limited or reduced by
amounts Executive might earn or be able to earn from any other employment or
ventures during the remainder of the Extended Term. Notwithstanding the
foregoing, amounts paid or benefits provided under Section 16(a)(ii) through (v)
shall be so limited or reduced. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise.
19. Binding Agreement
This Agreement shall be binding upon and inure to the benefit of
Executive, his heirs, distributees and assigns, and Company, its successors and
assigns. Except as contemplated by Section 5(b), Executive may not, without the
express written permission of Company, assign or pledge any rights or
obligations hereunder to any person, firm or corporation. If the Executive
should die while any amount would still be payable to Executive if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with this Agreement to the Executive's Estate.
19
<PAGE>
20. No Attachment
Except as required by law or with the consent of Company or by laws of
descent and distribution or permitted designation, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
21. Assignment
Company will require any successor (whether direct or indirect, by
operation of law, by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of Company) to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that Company would be required to perform it if no such succession had taken
place. Failure of Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall at Executive's election be deemed a
material breach of this Agreement and shall entitle the Executive to
compensation from Company in an amount equal to the greater of (A) the same
amount on the same terms as the Executive would be entitled under Section 15 and
Section 16 hereof upon a termination without good cause by Company, or (B) the
benefits hereunder upon a Change of Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be the Date of Termination. As used in this Agreement,
"Company" shall mean Company as defined above and, unless the context otherwise
requires, any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
22. Waiver
No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
23. Notice
For the purposes of this Agreement and the Prior Employment Agreement,
notices and all other communications provided for in this Agreement or the Prior
Employment Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered and acknowledged or delivered by United States
registered mail, return receipt requested, addressed to the Executive at 10659
Bellagio Road, Los Angeles, California 90077, with a copy to Diana L. Walker,
O'Melveny & Myers LLP, 400 South Hope Street, Los Angeles, California 90071-
2899 in the case of Executive, and in the case of Company, to the attention of
the Chairman of the Compensation Committee of the Board of Directors with copies
to the Chief Financial Officer and the Secretary of Company at the principal
executive offices of Company,
20
<PAGE>
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
24. Governing Law
This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware.
25. Costs
Company shall pay all the expenses of Executive, including attorneys'
fees, in the negotiation and preparation of this Agreement, in addition to
Company's own expenses in connection therewith.
26. Severability
If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall to the full extent consistent
with law continue in full force and effect. If any provision of this Agreement
shall be held invalid in part, such invalidity shall in no way affect the rest
of such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent consistent
with law continue in full force and effect.
27. Arbitration
(a) Any disagreement, dispute, controversy or claim arising out of or
in any way related to this Agreement or the subject matter hereof or the
interpretation hereof or any arrangements relating hereto or contemplated herein
or the breach, termination or invalidity hereof or the provision or failure to
provide any other benefits upon a change of control pursuant to any other bonus
or compensation plans, stock option plan, stock ownership plan, stock purchase
plan, life insurance plan or similar plan or agreement with Company and/or any
of its subsidiaries as "change of control" may be defined in such other
agreement or plan, which benefits constitute "parachute payments" within the
meaning of Section 280G of the Code, shall be settled exclusively and finally by
arbitration. If this Section 27 conflicts with any provision in any such
compensation or bonus plan, stock option plan or any other similar plan or
agreement, this provision requiring arbitration shall control.
(b) The arbitration shall be conducted in accordance with the
Commercial Arbitration Rules (the "Arbitration Rules") of the American
-----------------
Arbitration Association (the "AAA"). The arbitral tribunal shall consist of
---
three arbitrators, one chosen by Company, one chosen by the Executive and one
chosen by the preceding two persons.
(c) Company shall pay all of the fees, if any, and expenses of such
arbitration, and shall also pay all Executive's expenses, including attorneys'
fees, incurred in connection with the arbitration regardless of the final
outcome of such arbitration.
21
<PAGE>
(d) The arbitration shall be conducted in Los Angeles if initiated by
Company and in San Francisco if initiated by the Executive or in any other city
in the United States of America as the parties to the dispute may designate by
mutual written consent.
(e) Any decision or award of the arbitral tribunal shall be final and
binding upon the parties to the arbitration proceeding. The parties hereto
hereby waive to the extent permitted by law any rights to appeal or to review of
such award by any court or tribunal. The parties hereto agree that the arbitral
award may be enforced against the parties to the arbitration proceeding or their
assets wherever the award may be entered in any court having jurisdiction
thereof.
(f) The parties stipulate that discovery may be held in any such
arbitration proceeding as provided in Section 1283.05 of the California Code of
Civil Procedure, as may be amended or revised from time to time.
28. Entire Agreement
Except as otherwise specifically provided herein, as of the Effective
Date, all previous agreements relating to the continuing employment of the
Executive to the extent inconsistent herewith, including, but not limited to the
Prior Employment Agreement and the MCA, are hereby superseded, and this
Agreement embodies all agreements, contracts, and understandings by and between
the parties hereto. Notwithstanding the foregoing, nothing contained in this
Agreement shall adversely affect or limit any rights Executive may have or any
benefits Executive may be entitled to receive under any other agreements, plans,
programs or otherwise, including, without limitation, any pension, retirement,
health, welfare or fringe benefit arrangements, the Restricted Stock Award
Agreement dated August 5, 1994 between Company and Executive and any and all
stock option, stock appreciation rights or restricted stock award agreements or
other stock based benefits held by Executive. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
29. Survival
The terms of this Agreement shall survive a termination of Executive's
services.
W. J. SANDERS III ADVANCED MICRO DEVICES, INC.
/s/ W.J. Sanders III By: /s/ Charles M. Blalack
- -------------------- ----------------------------
CHARLES M. BLALACK
Chairman, Compensation
Committee
22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>2000 STOCK INCENTIVE PLAN
<TEXT>
<PAGE>
Exhibit 10.13
ADVANCED MICRO DEVICES, INC.
2000 STOCK INCENTIVE PLAN
As adopted October 19, 2000
1. PURPOSE
The purpose of this Plan is to encourage key personnel and advisors whose
long-term service is considered essential to the Company's continued progress,
to remain in the service of the Company or its Affiliates. By means of the
Plan, the Company also seeks to attract new key employees and advisors whose
future services are necessary for the continued improvement of operations. The
Company intends future increases in the value of securities granted under this
Plan to form part of the compensation for services to be rendered by such
persons in the future. It is intended that this purpose will be affected
through the granting of Options.
2. DEFINITIONS
The terms defined in this Section 2 shall have the respective meanings set
forth herein, unless the context otherwise requires.
(a) "Affiliate" The term "Affiliate" shall mean any corporation,
partnership, joint venture or other entity in which the Company holds an equity,
profits or voting interest of thirty percent (30%) or more.
(b) "Board" The term "Board" shall mean the Company's Board of Directors
or its delegate as set forth in Section 3(d) below.
(c) "Change of Control" Unless otherwise defined in a Participant's
employment agreement, the term "Change of Control" shall be deemed to mean any
of the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company or any of its
Affiliates) representing more than 20% of either the then outstanding shares of
the Common Stock of the Company or the combined voting power of the Company's
then outstanding voting securities; (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board and
any new director (other than a director designated by a person who has entered
into an agreement or arrangement with the Company to effect a transaction
described in clause (i) or (ii) of this sentence) whose appointment, election,
or nomination for election by the Company's stockholders, was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose appointment, election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board; or (iii) there is consummated a merger or
consolidation of the Company or subsidiary thereof with or into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding securities which represent immediately after such merger or
consolidation more than 50% of the combined voting power of the voting
securities of either the Company or the other entity which survives such merger
or consolidation or the parent of the entity which survives such merger or
consolidation; or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 80% of the combined voting power of
the voting securities of which are owned by persons in substantially the same
proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing (i) unless otherwise provided in a Participant's
employment agreement, no "Change of Control" shall be deemed to have occurred if
there is consummated any transaction or series of integrated transactions
immediately following which the record holders of the Common Stock of the
Company immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Company immediately prior to such
transaction or series of transactions and (ii) unless otherwise
<PAGE>
provided in a Participant's employment agreement, "Change of Control" shall
exclude the acquisition of securities representing more than 20% of either the
then outstanding shares of the Common Stock of the Company or the combined
voting power of the Company's then outstanding voting securities by the Company
or any of its wholly owned subsidiaries, or any trustee or other fiduciary
holding securities of the Company under an employee benefit plan now or
hereafter established by the Company.
(d) "Code" The term "Code" shall mean the Internal Revenue Code of 1986,
as amended to date and as it may be amended from time to time.
(e) "Company" The term "Company" shall mean Advanced Micro Devices, Inc.,
a Delaware corporation.
(f) "Constructive Termination" The term "Constructive Termination" shall
mean a resignation by a Participant who has been elected by the Board as a
corporate officer of the Company due to diminution or adverse change in the
circumstances of such Participant's employment with the Company, as determined
in good faith by the Participant; including, without limitation, reporting
relationships, job description, duties, responsibilities, compensation,
perquisites, office or location of employment. Constructive Termination shall
be communicated by written notice to the Company, and such termination shall be
deemed to occur on the date such notice is delivered to the Company.
(g) "Fair Market Value per Share" The term "Fair Market Value per Share"
shall mean as of any day (i) the closing price for Shares on the New York Stock
Exchange as reported in The Wall Street Journal on the day as of which such
determination is being made or, if there was no sale of Shares reported in The
Wall Street Journal on such day, on the most recently preceding day on which
there was such a sale, or (ii) if the Shares are not listed or admitted to
trading on the New York Stock Exchange on the day as of which the determination
is made, the amount determined by the Board or its delegate to be the fair
market value of a Share on such day.
(h) "Insider" The term "Insider" means an officer or director of the
Company or any other person whose transactions in the Company's Common Stock are
subject to Section 16 of the Exchange Act.
(i) "Option" The term "Option" shall mean a nonstatutory stock option
granted under this Plan.
(j) "Participant" The term "Participant" shall mean any person who holds an
Option granted under this Plan.
(k) "Plan" The term "Plan" shall mean this Advanced Micro Devices, Inc.
2000 Stock Incentive Plan, as amended from time to time.
(l) "Shares" The term "Shares" shall mean shares of Common Stock of the
Company and any shares of stock or other securities received as a result of
the adjustments provided for in Section 9 of this Plan.
3. ADMINISTRATION
(a) The Board, whose authority shall be plenary, shall administer the Plan
and may delegate part or all of its administrative powers with respect to part
or all of the Plan pursuant to Section 3(d).
(b) The Board or its delegate shall have the power, subject to and within
the limits of the express provisions of the Plan:
(1) To grant Options pursuant to the Plan.
(2) To determine from time to time which of the eligible persons shall
be granted Options under the Plan, the number of Shares for which each
Option shall be granted, the term of each granted
2
<PAGE>
Option and the time or times during the term of each Option within which
all or portions of each Option may be exercised (which at the discretion of
the Board or its delegate may be accelerated.)
(3) To prescribe the terms and provisions of each Option granted
(which need not be identical) and the form of written instrument that shall
constitute the Option agreement.
(4) To take appropriate action to amend any Option hereunder,
including to amend the vesting schedule of any outstanding Option, provided
that no such action adverse to a Participant's interest may be taken by the
Board or its delegate without the written consent of the affected
Participant.
(5) To determine whether and under what circumstances an Option may be
settled in cash or Shares.
(c) The Board or its delegate shall also have the power, subject to and
within the limits of the express provisions of this Plan:
(1) To construe and interpret the Plan and Options granted under the
Plan, and to establish, amend and revoke rules and regulations for
administration of the Plan. The Board or its delegate, in the exercise of
this power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission or
inconsistency in the Plan or in any Option agreement in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully
effective.
(2) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company.
(d) The Board may, by resolution, delegate administration of the Plan
(including, without limitation, the Board's powers under Sections 3(b) and (c)
above), under either or both of the following:
(1) with respect to the participation of or granting of Options to an
employee, consultant or advisor, to a committee of one or more members of
the Board;
(2) with respect to matters other than the selection for participation
in the Plan, substantive decisions concerning the timing, pricing, amount
or other material term of an Option, to a committee of one or more members
of the Board.
(e) The Board shall have complete discretion to determine the composition,
structure, form, term and operations of any committee established to administer
the Plan. If administration is delegated to a committee, unless the Board
otherwise provides, the committee shall have, with respect to the administration
of the Plan, all of the powers and discretion theretofore possessed by the Board
and delegable to such committee, subject to any constraints which may be adopted
by the Board from time to time and which are not inconsistent with the
provisions of the Plan. The Board at any time may revest in the Board any of
its administrative powers under the Plan.
(f) The determinations of the Board or its delegate shall be conclusive and
binding on all persons having any interest in this Plan or in any awards granted
hereunder.
4. SHARES SUBJECT TO PLAN
Subject to the provisions of Section 9 (relating to adjustments upon
changes in capitalization), (i) the Shares which may be available for issuance
of Options under the Plan shall not exceed in the aggregate 9,000,000 Shares of
the Company's authorized Common Stock and (ii) the Shares which may be available
for issuance of Options that are issued at below Fair Market Value per Share
under the Plan shall not exceed in the aggregate 2,500,000 Shares of the
Company's authorized Common Stock. In each case, the Shares of the Company's
Common Stock may be unissued Shares or reacquired Shares or Shares bought on the
market for the purposes of issuance under the Plan. If any Options granted
under the Plan shall for any reason be forfeited or canceled, terminate or
expire, the Shares
3
<PAGE>
subject to such Options shall be available again for the purposes of the Plan.
Shares which are delivered or withheld from the Shares otherwise due on exercise
of an Option shall become available for future awards under the Plan. Shares
that have actually been issued under the Plan upon exercise of an Option that
are no longer subject to forfeiture shall not in any event be returned to the
Plan and shall not become available for future awards under the Plan.
5. ELIGIBILITY
All Options issued under the Plan shall be nonqualified stock options.
Options may be granted only to full or part-time employees, officers,
consultants and advisors of the Company and/or of any Affiliate; provided that
--------
such consultants and advisors render bona fide services not in connection with
the offer and sale of securities in a capital-raising transaction. Options
awarded to Insiders may not exceed in the aggregate forty-five (45%) percent of
all Shares that are available for grant under the Plan and employees of the
Company who are not Insiders must receive at least fifty (50%) percent of all
Shares that are available for grant under the Plan. Options that are issued to
Insiders at below Fair Market Value per Share may not exceed in the aggregate
forty-five percent (45%) of all Shares that are available to grant at below Fair
Market Value per Share under the Plan and employees of the Company who are not
Insiders must receive a least fifty percent (50%) of such Options. Any
Participant may hold more than one Option at any time; provided that the maximum
--------
number of shares which are subject to Options granted to any individual shall
not exceed in the aggregate three million (3,000,000) Shares over the full ten-
year life of the Plan.
6. TERMS OF STOCK OPTIONS
Each Option agreement shall be in such form and shall contain such terms
and conditions as the Board, or its delegate, from time to time shall deem
appropriate, subject to the following limitations:
(a) The term of any Option shall not be greater than ten (10) years and
one day from the date it was granted.
(b) Options may be granted at an exercise price that is not less than the
par value per Share of the Shares at the time an Option is granted.
(c) Unless otherwise specified in the Option agreement, no Option shall be
transferable otherwise than by will, pursuant to the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
(d) Except as otherwise provided in paragraph (e) of this Section 6 or in
a Participant's employment agreement, the rights of a Participant to exercise an
Option shall be limited as follows:
(1) DEATH OR DISABILITY: If a Participant's service is terminated by
death or disability, then the Participant or the Participant's estate, or
such other person as may hold the Option, as the case may be, shall have
the right for a period of twelve (12) months following the date of death or
disability, or for such other period as the Board may fix, to exercise the
Option to the extent the Participant was entitled to exercise such Option
on the date of his death or disability, or to such extent as may otherwise
be specified by the Board (which may so specify after the date of his death
or disability but before expiration of the Option), provided the actual
date of exercise is in no event after the expiration of the term of the
Option. A Participant's estate shall mean his legal representative or any
person who acquires the right to exercise an Option by reason of the
Participant's death or disability.
(2) MISCONDUCT: If a Participant is determined by the Board to have
committed an act of theft, embezzlement, fraud, dishonesty, a breach of
fiduciary duty to the Company (or Affiliate), or deliberate disregard of
the rules of the Company (or Affiliate), or if a Participant makes any
unauthorized disclosure of any of the trade secrets or confidential
information of the Company (or Affiliate), engages in any conduct which
constitutes unfair competition with the Company (or Affiliate), induces any
customer of the Company (or Affiliate) to break any contract with the
Company (or Affiliate), or induces any principal
4
<PAGE>
for whom the Company (or Affiliate) acts as agent to terminate such agency
relationship, then, unless otherwise provided in a Participant's employment
agreement, neither the Participant, the Participant's estate nor such other
person who may then hold the Option shall be entitled to exercise any
Option with respect to any Shares whatsoever, after termination of service,
whether or not after termination of service the Participant may receive
payment from the Company (or Affiliate) for vacation pay, for services
rendered prior to termination, for services rendered for the day on which
termination occurs, for salary in lieu of notice, or for any other
benefits. In making such determination, the Board shall give the
Participant an opportunity to present to the Board evidence on his behalf.
For the purpose of this paragraph, unless otherwise provided in a
Participant's employment agreement, termination of service shall be deemed
to occur on the date when the Company dispatches notice or advice to the
Participant that his service is terminated.
(3) TERMINATION FOR OTHER REASONS: If a Participant's service is
terminated for any reason other than those mentioned above under "DEATH OR
DISABILITY" or "MISCONDUCT," the Participant, the Participant's estate, or
such other person who may then hold the Option may, within three months
following such termination, or within such longer period as the Board may
fix, exercise the Option to the extent such Option was exercisable by the
Participant on the date of termination of his employment or service, or to
the extent otherwise specified by the Board (which may so specify after the
date of the termination but before expiration of the Option) provided the
date of exercise is in no event after the expiration of the term of the
Option.
(4) EVENTS NOT DEEMED TERMINATIONS: Unless otherwise provided in a
Participant's employment agreement, the service relationship shall not be
considered interrupted in the case of (i) a Participant who intends to
continue to provide services as a director, employee, consultant or advisor
to the Company or an Affiliate; (ii) sick leave; (iii) military leave; (iv)
any other leave of absence approved by the Board, provided such leave is
--------
for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by
the Company and issued and promulgated to employees in writing; or (v) in
the case of transfer between locations of the Company or between the
Company or its Affiliates. In the case of any employee on an approved
leave of absence, the Board may make such provisions respecting suspension
of vesting of the Option while on leave from the employ of the Company or
an Affiliate as it may deem appropriate, except that in no event shall an
Option be exercised after the expiration of the term set forth in the
Option.
(e) Unless otherwise provided in a Participant's employment agreement, if
any Participant's employment is terminated by the Company for any reason other
than for Misconduct or, if applicable, by Constructive Termination, within one
year after a Change of Control has occurred, then all Options held by such
Participant shall become fully vested for exercise upon the date of termination,
irrespective of the vesting provisions of the Participant's Option agreement.
For purposes of this subsection (e), the term "Change of Control" shall have the
meaning assigned by this Plan, unless a different meaning is defined in an
individual Participant's Option agreement or employment agreement.
(f) Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Board or its delegate shall
deem appropriate.
(g) The Board may modify, extend or renew outstanding Options and
authorize the grant of new Options in substitution therefor; provided that any
--------
such action may not, without the written consent of a Participant, impair any
such Participant's rights under any Option previously granted.
7. PAYMENT OF PURCHASE PRICE
(a) The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be determined by the Board
or its delegate and may consist entirely of (i) cash, (ii) certified or
cashier's check, (iii) promissory note, (iv) other Shares which (x) either have
been owned by the Participant for
5
<PAGE>
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value per Share on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (v) delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price, or (vi) any combination of the foregoing methods of payment. Any
promissory note shall be a full recourse promissory note having such terms as
may be approved by the Board and bearing interest at a rate sufficient to avoid
imputation of income under Sections 483, 1274 or 7872 of the Code; provided that
--------
Participants who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the note is adequately
secured by collateral other than the Shares; provided further, that the portion
-------- -------
of the exercise price equal to the par value, if any, of the Shares must be paid
in cash;
(b) The Company may make loans or guarantee loans made by an appropriate
financial institution to individual Participants, including Insiders, on such
terms as may be approved by the Board for the purpose of financing the exercise
of Options granted under the Plan and the payment of any taxes that may be due
by reason of such exercise.
8. TAX WITHHOLDING
(a) Where, in the opinion of counsel to the Company, the Company has or
will have an obligation to withhold federal, state or local taxes relating to
the exercise of any Option, the Board may in its discretion require that such
tax obligation be satisfied in a manner satisfactory to the Company. The
Company may require the payment of such taxes before Shares are transferred to
the holder of the Option.
(b) A Participant may elect (a "Withholding Election") to pay his minimum
statutory withholding tax obligation by the withholding of Shares from the total
number of Shares deliverable under such Option, or by delivering to the Company
a sufficient number of previously acquired Shares, and may elect to have
additional taxes paid by the delivery of previously acquired Shares, in each
case in accordance with rules and procedures established by the Board.
Previously owned Shares delivered in payment for such additional taxes must have
been owned for at least six months prior to the delivery or must not have been
acquired directly or indirectly from the Company and may be subject to such
other conditions as the Board may require. The value of Shares withheld or
delivered shall be the Fair Market Value per Share on the date the Option
becomes taxable. All Withholding Elections are subject to the approval of the
Board and must be made in compliance with rules and procedures established by
the Board.
9. ADJUSTMENTS OF AND CHANGES IN CAPITALIZATION
If there is any change in the Common Stock of the Company by reason of any
stock dividend, stock split, spin-off, split up, merger, consolidation,
recapitalization, reclassification, combination or exchange of Shares, or any
other similar corporate event, then the Board shall make appropriate adjustments
to the number of Shares theretofore appropriated or thereafter subject or which
may become subject to an Option under the Plan. Outstanding Options shall also
be automatically converted as to price and other terms if necessary to reflect
the foregoing events. No right to purchase fractional Shares shall result from
any adjustment in Options pursuant to this Section 9. In case of any such
adjustment, the Shares subject to the Option shall be rounded down to the
nearest whole Share. Notice of any adjustment shall be given by the Company to
each holder of any Option which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
10. PRIVILEGES OF STOCK OWNERSHIP
No Participant will have any rights of a stockholder with respect to any
Shares until the Shares are issued to the Participant. After Shares are issued
to the Participant, the Participant will be a stockholder and have all the
rights of a stockholder with respect to such Shares, including the right to vote
and receive all dividends or other distributions made or paid with respect to
such Shares.
6
<PAGE>
11. EXCHANGE AND BUYOUT OF AWARDS
The Board or its delegate may, at any time or from time to time, authorize
the Company, with the consent of the respective Participants, to issue new
Options in exchange for the surrender and cancellation of any or all outstanding
Options to optionees who are not Insiders. The Board or its delegate may at any
time buy from a Participant an Option previously granted with payment in cash,
Shares or other consideration, based on such terms and conditions as the Board
or its delegate and the Participant may agree.
12. EFFECTIVE DATE OF THE PLAN
This Plan will become effective when adopted by the Board (the "Effective
Date").
13. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the Plan.
(b) Rights and obligations under any Option granted before any amendment
of the Plan shall not be altered or impaired by amendment of the Plan, except
with the consent of the person who holds the Option, which consent may be
obtained in any manner that the Board or its delegate deems appropriate.
14. REGISTRATION, LISTING, QUALIFICATION, APPROVAL OF STOCK
An award under this Plan will not be effective unless such award is in
compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange
or automated quotation system upon which the Shares may then be listed or
quoted, as they are in effect on the date of grant of the award and also on the
date of exercise or other issuance. Notwithstanding any other provision in this
Plan, the Company will have no obligation to issue or deliver certificates for
Shares under this Plan prior to: (a) obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and/or (b)
completion of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company will be under no
obligation to register the Shares with the Securities and Exchange Commission or
to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.
15. NO RIGHT TO EMPLOYMENT
Nothing in this Plan or in any Option shall be deemed to confer on any
employee any right to continue in the employ of the Company or any Affiliate or
to limit the rights of the Company or its Affiliates, which are hereby expressly
reserved, to discharge an employee at any time, with or without cause, or to
adjust the compensation of any employee.
16. MISCELLANEOUS
The use of any masculine pronoun or similar term is intended to be without
legal significance as to gender.
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>AMD'S U.S. STOCK OPTION
<TEXT>
<PAGE>
EXHIBIT 10.14
AMD's
U.S. Stock Option
Program
For options granted
after April 25, 2000
<PAGE>
AMD's success is a direct result of the creativity, innovation, and hard work of
employees like you. In recognition of this, we maintain a portfolio of programs
that enable you to share in our success:
. Cash and deferred profit sharing plans, which entitle you to a share of AMD's
profits.
. The stock purchase plan, which enables you to buy AMD common stock at a
discounted price and participate as an owner of the company.
. The stock option program, under which you can benefit from AMD's long-term
success as the company's common stock price grows.
WHO RECEIVES STOCK OPTIONS?
Congratulations on being selected to receive a stock option award. AMD limits
the granting of stock options to those employees whose individual contributions
most influence AMD's performance and add to shareholder value. The number of
options you are granted reflects competitive compensation practices, your
position at AMD, and, most importantly, your individual performance.
WHAT ARE STOCK OPTIONS?
Stock options give you the right to buy shares of AMD common stock at the
"exercise price" within a specified number of years. You "exercise" your option
by purchasing the underlying shares any time after you "vest" in the option (see
How Your Stock Options Vest), but before the option expires.
The attractiveness of stock options lies in the potential for increases in the
market price of the company's common stock over time. For example, if you are
granted options to buy 100 shares of AMD stock at an exercise price of $35 per
share, and the market price of the stock rises to $45, then your "unrealized"
financial gain is $10 per share (the difference between the exercise price and
the current market price). To realize that gain, you first have to have the
right to buy those 100 shares. If you do, you can buy the stock. You can then
keep the shares for potential future gain, or sell them in the market at any
time for the current market price. In this example, if you purchase shares and
then sell them when the market price moved up to $50, you would have a gain of
$15 per share ($50 - $35).
Enclosed with this brochure is your stock option document. It gives the date
your option was granted, the price to purchase the shares, and the first and
last dates you can purchase the shares.
HOW YOUR STOCK OPTIONS VEST
You earn the right to purchase shares according to the schedule for your grant
("vesting"). Each stock option grant has its own vesting period. The following
table shows the typical schedule for an initial grant to a newly eligible
employee or for an annual grant
Percent of Granted Options
That Are Fully Vested
-----------------------------------
Anniversary of Initial Annual
Grant Date Grant Grant
- -------------------------------------------------------------------------------
First* 40% 25%
Second 60% 50%
Third 80% 75%
Fourth 100% 100%
*After the first year, awards vest in monthly increments over the remaining
time.
If you receive stock option grants in several years, their vesting periods will
overlap. For example, the following chart illustrates the vesting for a
hypothetical employee who receives an initial grant when he/she joins AMD and
then annual grants thereafter based on varying performance ratings:
Calendar # of Options Options Vesting in the Year
----------------------------------
Year Granted 2 3 4 5 6
- -----------------------------------------------------------------------------
1 550 220 165 110 55
2 580 145 145 145 145
3 0
4 540 135 135
5 600 150
Total 220 310 255 335 430
The above vesting chart is based on continuous active service with AMD.
The stock option document for your grant shows the vesting dates for your
options.
2
<PAGE>
IF YOU DIE OR BECOME DISABLED
If you have at least 15 years of AMD service and your AMD employment is
terminated because of your death or total disability, here's what happens on
your termination date:
. If you are on an unpaid leave of absence, any options that would have become
vested in the calendar year in which your leave began are immediately vested.
. If you are not on an unpaid leave of absence, you become immediately vested in
any options that would have become vested in that calendar year.
This accelerated vesting of options does not occur if your AMD employment is
terminated because of your death or disability and you have less than 15 years
of service.
IF AMD EXPERIENCES A "CHANGE IN CONTROL"
You become 100% vested in your outstanding options if AMD experiences a "change
in control", and your employment is terminated by AMD for any reason other than
for misconduct or, if applicable, by constructive termination within one year
after such a change. A "change in control" occurs when:
. More than 20% of AMD has been acquired by a single person or entity,
. Certain changes in the majority of AMD's Board of Directors occur during a
two-year period,
. A merger or consolidation of the company with or into another company,
. Stockholders of the company approve a plan of complete liquidation, or
. There is a sale or disposition of all or substantially all the company's
assets.
IF YOU TAKE A LEAVE OF ABSENCE
You may not exercise any options during an unpaid leave of absence. Also, if
your unpaid leave of absence exceeds 30 consecutive days, the vesting dates for
your unvested options are automatically extended by the number of days by which
your unpaid leave exceeds 30 days. "Unpaid" means that AMD is not paying you a
salary. Unpaid leaves include personal leaves as well as disability, medical,
pregnancy and workers compensation leaves during which you are receiving
disability or workers' compensation benefits through AMD's benefit plans or
insurance. For more details, check with Treasury Services.
3
<PAGE>
EXERCISING YOUR STOCK OPTIONS
Once your options are vested, you can exercise them-- that is, you can purchase
AMD common stock at the exercise price. You have a limited number of years from
the date of grant to exercise the options and take advantage of any increase in
the price of AMD stock above the exercise price. Most grants have a ten-year
life. The document for your stock option grant discloses the date on which your
options expire.
Your final opportunity to purchase your vested options is the last regular
business day of AMD before their expiration date. If you are waiting until that
last day, be sure that Treasury Services receives your completed Stock Option
Exercise form before 5:00 p.m. Pacific time.
If you leave AMD before the expiration date for your options, you have a limited
period of time after your termination date in which to exercise vested options.
See the section When You Leave AMD.
Treasury Services must receive your completed Stock Option Exercise form in
order for you to exercise your options and purchase shares, unless you are doing
an E*TRADE OptionsLink sale. You are responsible for knowing which options can
be exercised and the expiration dates for your options. Detailed information
regarding the number of shares exercisable can be obtained 24 hours a day/7
days a week via the following:
. The internet at www.optionslink.com, or
. The OptionsLink interactive voice response system at 1-(800) 838-0908.
Note: While you may look at your account information at any time through
OptionsLink, if you conduct an electronic transaction on the internet, then
E*Trade will act as your broker for that transaction and the net proceeds will
be deposited into your OptionsLink account (see the E*Trade OptionsLink brochure
for further details). If you wish to utilize a broker other than E*Trade, you
will have to contact that broker directly outside of the OptionsLink system.
For more details on exercising your options, please refer to the summary
entitled "Stock Option Exercise Procedures" which is available at
http://amdonline/treassvc.
There are four ways to exercise vested AMD options that have not expired:
Cash Purchase
You can pay for the options yourself or arrange for your broker to pay for them.
On the next business day after receipt of your completed Stock Option Exercise
form, Treasury Services will notify you of the cost for the exercised options
plus applicable Federal, State, Social Security and Medicare tax withholding.
You must give Treasury Services a cashier's check or money order for the
exercise cost plus taxes within two weeks from the exercise date. You may elect
to receive either a stock certificate or have your shares electronically
transferred to your brokerage account.
Financing through a Broker (also known as "Same
Day Sale and Exercise")
You can contact any of AMD's designated brokers or you can do an electronic
trade through E*Trade (refer to the E*Trade OptionsLink brochure).
If you elect a "same day exercise and sale," you may:
. Sell all shares.
. Sell enough shares to cover the cost of the exercise and associated required
taxes. You will then receive the remaining shares from your exercise. This
option may not be available through E*Trade.
. Sell only the number of shares you decide on and receive the balance of the
shares. If the shares sold do not cover all the costs of exercising the
options and associated required taxes, you must pay the balance through a
cashier's check or money order to Treasury Services on the next business day
following your exercise date. This option may not be available through
E*Trade.
Stock Swap Exercise
You can use AMD shares you have owned at least six months to pay for the
exercise price of the options. To initiate a stock swap, you must complete and
submit a Share Withholding/Delivery Election form in addition to a Stock Option
Exercise form to Treasury Services. You may not pay the exercise price by
requesting that Treasury Services withhold some of the shares resulting from the
options being purchased.
4
<PAGE>
Stock Withholding Exercise
You can exercise options and pay the required tax withholding from the shares of
AMD stock that you would otherwise receive through exercising your options. You
receive the balance of the AMD shares obtained through the purchased options. To
withhold shares to pay your taxes, you must send a completed Share
Withholding/Delivery Election form and a Stock Option Exercise form to Treasury
Services.
You may not pay the exercise price of your options by having Treasury Services
withhold some of the shares that would otherwise be issued to you.
WHEN TO EXERCISE
It is entirely your decision when to exercise vested options, keeping in mind
the expiration date for your options. (See the sections Exercising Stock Options
and When You Leave AMD.)
The timing of an exercise and/or sale can have a large impact on any value you
ultimately obtain from the option. In deciding when to exercise, you may wish to
consult with your financial advisor, stockbroker, or reputable publications in
which stock market analysts voice their opinions about future potential stock
values. It is also prudent to consult with a tax advisor to determine the
impact of exercising stock options on your tax obligations.
On the date... You Owe Federal Taxes on...
- --------------------------------------------------------------------------------
Your stock option No taxes are due.
grant is approved
- --------------------------------------------------------------------------------
You exercise your The difference (gain) between the market
options and sell value of the shares of AMD common stock
the shares of AMD on the exercise date, and the exercise price
stock at a later date. of the options upon purchasing the options.
The gain is taxable as ordinary income and
subject to mandatory withholding for federal
income, FICA, Medicare and applicable state
and local taxes.
When you sell the shares of stock, you owe
tax on the difference between the market
value of the shares on the sale date and the
market value of the shares on the option
exercise date. Gains are taxed at the short-
term or long-term capital gains rate based on
how long you have held the shares. The hold-
ing period starts on the option exercise
date.
Months Held Capital Gains Rate
12 or less short-term
more than 12 long-term
- --------------------------------------------------------------------------------
You exercise your The difference between the market value of
options and sell the the shares and the exercise price of the
shares on the same options. The gain is taxable as ordinary
day. income and subject to mandatory withholding
for federal income, FICA, Medicare and
applicable state and local taxes.
TAXES
Your stock options are what the IRS calls "nonqualified" options. The table
above summarizes the current U.S. federal tax consequences associated with these
options. Depending on your state of residence, you may also owe state and local
taxes when you exercise your options or sell the shares obtained by exercising
your options.
5
<PAGE>
WHEN YOU LEAVE AMD
You forfeit all unvested options when you leave AMD. If you are not a Vice
President or Officer of AMD, you normally have three months from your
termination date in which to exercise vested options that have not expired. For
example, if March 14 is your final day as an AMD employee, your last day to
purchase vested options is June 14 if it is a regular business day at AMD. If
June 14 is not a regular business day, the final day to buy your options is the
last regular AMD business day before June 14.
However, you (or your beneficiary) have 12 months from your termination date to
exercise vested options:
. If your termination is due to your total disability.
. If you die while employed at AMD.
. If you have been a Vice President or Officer of AMD for at least 90 days when
you terminate.
If you are uncertain about the final day to purchase options, be sure to contact
Treasury Services at least several days before the date on which you think that
your right to exercise your options ends.
FORFEITING STOCK OPTIONS
Your stock options are forfeited under the earliest of these circumstances:
. You do not exercise the options before their expiration date,
. The options are not vested when you leave AMD,
. You do not exercise your options within the period for exercising them after
you leave AMD, or
. If you die while still an AMD employee and your beneficiary to whom the
options were transferred does not exercise the options within 12 months after
your death.
If you are terminated because of misconduct, AMD reserves the right to cancel
all your options, whether vested or unvested.
NO REINSTATEMENT OF FORFEITED STOCK OPTIONS IF REHIRED BY AMD
If you have a break in service with AMD, your nonvested options are canceled
and will not be reinstated, even if you are rehired the day after your break in
service.
TRANSFER OF STOCK OPTIONS
Your stock options may be transferred only as follows:
. By a court-issued qualified domestic relations order,
. By your last will and testament, or
. By the laws of descent and distribution if you left no valid will.
Stock options transferred by a qualified domestic relations order expire twelve
months after the date of transfer.
Any other transfer or assignment of your stock options will not be accepted and
gives AMD the right to terminate your options as of the date of the attempted
transfer or assignment.
CHANGES IN CAPITALIZATION OF AMD
The Board of Directors will adjust the number of shares or the class of stock
subject to your options if the outstanding number of AMD common stock changes
as a result of changes in the capitalization of the company. These changes in
capitalization include stock dividends, mergers, consolidations, re-
capitalization, or split-up, combinations or exchange of shares.
6
<PAGE>
FOR MORE INFORMATION
This brochure summarizes some of the important features of the current AMD stock
option program. For more details, consult the official plan documents,
your individual stock option documents, and the stock option
plan prospectus, all of which can be obtained from
Treasury Services, 1 AMD Place, Sunnyvale, California.
The mailing address is Treasury Services,
P.O. Box 3453, MS 106, Sunnyvale, CA 94088.
In the case of any conflict between this brochure and the official plan
documents, the official plan documents will govern.
AMD reserves the right to amend or terminate the
program in whole or in part, at any time
and for any reason, with or without notice to participants.
Participation in the AMD stock option program does not confer on any
participant any rights whatsoever with respect to continued
employment with the company.
Benefits Department
One AMD Place
P.O. Box 3453, Mailstop 181
Sunnyvale, CA 94088
Rev. 6/00
7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.15
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>AMD VICE PRESIDENT INCENTIVE PLAN
<TEXT>
<PAGE>
Exhibit 10.15
VICE PRESIDENT
INCENTIVE PROGRAM
Summary
Personal and Confidential
AMD [LOGO]
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
I. Purpose
The Vice President Incentive Program (VPIP) provides an incentive for AMD's
Vice Presidents (Participants) to maximize both short-term financial
performance against plan, as well as long-term revenue growth and Return on
Equity (ROE). This summary presents an overview of the program. Further
details about how the program is administered, including specific formulas
for each component, can be obtained from Corporate Compensation.
II. Plan Overview
The VPIP consists of two plans (Plans):
. The Short-Term Plan (STP) provides a bonus for achieving planned
performance for the current fiscal year (Plan Year).
. The Long-Term Plan (LTP) annually provides a bonus for sustained
corporate performance over a three-fiscal-year period relative to
external measures.
Within these Plans, Participants are rewarded for meeting or exceeding
performance objectives as follows:
Table I
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Plan Component Measure(s)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STP Corporate Performance . Adjusted Operating Income vs. Plan
. Economic Value Added (EVA) Improvement vs. Plan
Division Performance . Division Sales vs. Plan
. Division Operating Profit vs. Plan
Individual Performance . Discretionary Individual & Division-Specific Objectives
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
LTP Relative Profitability . AMD ROE vs. S&P 500 ROE over 3 years
Relative Sales Growth . AMD Sales Growth vs. WSTS Sales Growth (3 years)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
A separate communication outlining the assigned target percentages for
each component of the Plans, and division assignments and financial
goals for the STP, will be provided to Participants each year.
1
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
III. Plan Funding
. The VPIP is funded by a maximum of three percent of AMD's adjusted
Operating Income (OI)/1/, for any given Plan Year. In the aggregate, if
calculated bonuses exceed the 3 percent limit, each Participant's bonus
will be scaled back to conform.
. Bonuses will not be paid for any Plan Year in which OI is less than or
equal to $0.
. LTP bonuses generated but not paid due to the above funding limitations
will be carried over for possible payout in future Plan years. (See
provisions under section V.)
IV. Short Term Plan (STP)
The STP uses three different components to measure and reward the
Participant's annual contributions: Corporate, Division and Individual.
The payout opportunity and weight of each component vary depending upon the
Participant's role and the tier to which he/she is assigned by management.
The weighting for Participants with Product Line or Manufacturing
responsibility emphasizes Division Performance.
A. Corporate Performance Bonus (CPB)
The CPB is generated when specific levels of adjusted OI/1/ and EVA
Improvement are achieved relative to the business plan. The OI portion
has a weighting of 70%, while the EVA Improvement portion has a weighting
of 30%. Target multipliers are derived as follows:
Table II
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Performance Level
-------------------------------------------------------------------------
Threshold Target (1.0 Multiplier) 2.0 Multiplier
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Income 70% Weighting 25% Of Prior Year OI 100% Of Plan 125% Of Plan
-----------------------------------------------------------------------------------------------------------------------------
Eva Improvement 30% Weighting 25% Of Plan 100% Of Plan 125% Of Plan
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
/1/ Adjusted Operating Income (OI), referred to as "OI" throughout the plan
document, is OI as reported in the GAAP profit and loss statement, adjusted for
pre-tax income/loss from FASL.
2
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
===============================================================================
For example, if Actual OI equals planned OI for the year, the resulting
OI multiplier would be 1.0. If Actual EVA Improvement equals 125% of
planned EVA Improvement, the EVA Improvement multiplier would be 2.0.
The combined CPB Target Multiplier is calculated as follows:
------------------------------------------------------------------------
(OI Multiplier x 70%) + (EVA Multiplier x 30%) = Combined CPB Multiplier
------------------------------------------------------------------------
So, in our example, the Combined CPB Multiplier would be 1.3:
---------------------------------------------
(1.0 x 70%) + (2.0 x 30%) = 1.3
---------------------------------------------
Formulas generate target multipliers for actual performance falling
outside of or between the parameters in Table II. While either
multiplier can exceed two (2.0) individually, the maximum combined CPB
multiplier, and thus the maximum CPB award, is two (2.0) times the CPB
target amount.
The actual CPB is calculated as follows:
----------------------------------------------------------------
Combined CPB Multiplier x CPB Target % x Base Salary = CPB
----------------------------------------------------------------
B. Division Performance Bonus (DPB)
The DPB, unless otherwise specified, depends on division Sales and
Operating Profit (OP) performance against plan for the division(s)
supported by the participant. Target multipliers are derived as follows:
Table III
<TABLE>
<CAPTION>
-----------------------------------------------------------
Performance Level
-----------------------------------------------------------
Target
Threshold (1.0 Multiplier) 2.0 Multiplier
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actual Sales
Sales Success ------------- 80% 100% -135%
Planned Sales
--------------------------------------------------------------------------------------------------------------------------
Actual OP - Planned OP
Profit Success/2/ ---------------------- -3% 0% 6%
Planned Sales
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________________
/2/ Operating Profit performance is related to Planned Sales to allow for a DPB
payout if reasonable profits are maintained relative to the original sales plan,
even though actual sales may have fluctuated.
3
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
For example, if Actual Sales are equal to Planned Sales, the resulting
Sales Success Multiplier is 1.0. If the difference between Actual OP
and Planned OP as a percent of Planned Sales is 6%, the Profit Success
multiplier is 2.0.
The Combined DPB Target Multiplier is calculated as follows:
-------------------------------------------------------------------
Sales Success Multiplier x Profit Success Multiplier =
Combined DPB Multiplier
-------------------------------------------------------------------
So, in our example, the Combined DPB Target Multiplier is 2.0:
------------------------------
(1.0 x 2.0) = 2.0
------------------------------
We use Pretax OP from the Economic Profit and Loss statement to
calculate actual and planned profit success. Planned Division Sales and
Planned Division OP are the numbers approved by the Board of Directors
as part of the business plan for the Plan Year.
Formulas generate target multipliers for actual performance falling
outside of or between the parameters in Table III. The threshold
performance level for both factors must be met in order for a bonus to
be generated. While either multiplier can exceed two (2.0) individually,
the maximum combined DPB multiplier, and thus the maximum DPB award, is
two (2.0) times the DPB target amount.
Table IV displays combined DPB Multipliers resulting from various Sales
Success and Profit Success Factors. Formulas are used to calculate
values falling between those shown.
Table IV
Sample DPB Multipliers
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
SALES SUCCESS %
*80 80 90 100 110 120 130 140
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROFIT SUCCESS%
*-3 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-3 0.000 0.200 0.350 0.500 0.650 0.800 0.950 1.100
-1 0.000 0.333 0.583 0.833 1.083 1.333 1.583 1.833
0 0.000 0.400 0.700 1.000 1.300 1.600 1.900 2.000
1 0.000 0.467 0.817 1.167 1.517 1.867 2.000 2.000
3 0.000 0.600 1.050 1.500 1.950 2.000 2.000 2.000
5 0.000 0.733 1.283 1.834 2.000 2.000 2.000 2.000
7 0.000 0.867 1.517 2.000 2.000 2.000 2.000 2.000
9 0.000 1.000 1.750 2.000 2.000 2.000 2.000 2.000
----------------------------------------------------------------------
</TABLE>
* Less than.
4
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
The actual DPB is calculated as follows:
--------------------------------------------------------------
Combined DPB Multiplier x DPB Target % x Base Salary = DPB
--------------------------------------------------------------
For Participants in a corporate role, a weighted average DPB multiplier is
calculated using planned sales at the group level. Similarly, Participants
assigned to multiple divisions or groups have a weighted average DPB
multiplier.
C. Individual Performance Bonus (IPB)
Officers and Group Vice Presidents establish individual performance
expectations for each Participant reporting to them. These expectations
might include specific division goals such as product releases, financial
targets and organizational development. The Officer/Group VP then assesses
performance against these expectations and an IPB is recommended. The IPB
target and maximum are 10 percent and 20 percent of base salary,
respectively, for all Participants. However executive management may adjust
the average target percent in any given Plan Year based on the performance
of the Company.
Typical guidelines are outlined in Table V:
Table V
IPB Guidelines
-----------------------------------------------------
IPB
Performance Percentage
Assessment Range
-----------------------------------------------------
Exceptional 16 - 20%
Successful 8 - 16%
Most Goals Met 4 - 8%
Improvement Required 0%
-----------------------------------------------------
D. STP Bonus Calculation
The total STP bonus is calculated as follows:
-----------------------------------------
STP Bonus = CPB + DPB + IPB
-----------------------------------------
5
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
V. Long-Term Plan (LTP)
The LTP rewards sustained corporate performance for both ROE and sales
growth relative to competitive measures over a rolling three-year period.
The LTP has an annual target bonus of 30% of base salary and a maximum
opportunity of 60% for all Participants, subject to proration provisions in
Section VII. The model below illustrates the LTP cycles.
Long-Term Performance Plan Model
[GRAPH APPEARS HERE]
A. LTP Plan Components
Specifically, the LTP is comprised as follows:
. ROE Component: compares AMD's three-year ROE against the three-year
ROE for the S&P 500.
. Sales Component: compares the difference between AMD's three-year
sales growth and the three-year semiconductor industry sales growth,
as published by Worldwide Semiconductor Trade Statistics (WSTS)/3/.
Target multipliers are derived as follows in Table VI:
___________________
/3/ Semiconductor industry data may be modified to be more representative of
AMD's product offerings. For instance, the DRAM market segment may be excluded
from the Total Semiconductor Sales data.
6
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
Table VI
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Performance Level
------------------------------------------------------------------------
Target Maximum
Threshold (1.0 Multiplier) (2.0 Multiplier)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AMD ROE minus S&P
Roe Component -6% 0 6%
500 ROE (3-year)
-------------------------------------------------------------------------------------------------------------------------------
AMD Sales Growth %
Sales Component minus WSTS Sales -30% 0 20%
Growth % (3-year)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
For example, if AMD's 3-year ROE is 10% and the S&P ROE is 10%, a
multiplier of 1.0 is generated for the ROE component. If AMD's 3-year
Sales Growth is 30% and the WSTS Sales Growth is 10%, a multiplier of
2.0 is generated for the Sales component.
Then, the Combined LTP Target Multiplier is calculated:
-----------------------------------------------------------
ROE Component Multiplier x Sales Component Multiplier
= Combined LTP Multiplier
-----------------------------------------------------------
So, in our example, the Combined LTP Multiplier is 2.0:
-----------------------
(1.0 x 2.0) = 2.0
-----------------------
The threshold performance level for both factors must be met in order
for an LTP bonus to be possible. Formulas generate multipliers for
actual performance falling between the parameters on Table VI. The
maximum multiplier when both factors are combined is two (2.0).
Table VII displays combined LTP Multipliers resulting from various ROE
and Sales Growth performance levels. Formulas are used to calculate
values falling between those shown.
7
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
Table VII
Sample LTP Multipliers
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
AMD ROE less S&P 500 ROE (3-year)
-6 -4 -2 0 2 4 6
---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AMD Sales Growth %
less WSTS Sales
Growth % (3-year)
-30 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-20 0.000 0.111 0.222 0.333 0.445 0.556 0.667
-10 0.000 0.222 0.444 0.667 0.889 1.111 1.334
0 0.000 0.333 0.667 1.000 1.333 1.667 2.000
10 0.000 0.500 1.000 1.500 2.000 2.000 2.000
20 0.000 0.666 1.333 2.000 2.000 2.000 2.000
--------------------------------------------------------------------------------
</TABLE>
B. LTP Bonus Calculation
The LTP bonus is calculated as follows:
----------------------------------------------------------------
Combined LTP Multiplier x LTP Target (30%) x Base Salary = LTP
----------------------------------------------------------------
C. LTP Carry-Over Provision
In the event an LTP bonus is calculated but all or a portion is
not paid due to the OI funding limitations (see Section III),
that amount will be carried over for up to three following Plan
Years. Carry-over bonus amounts will be paid at the earliest
possible payout date (on a first in, first out basis) during the
three-year carryover period, subject to the three percent maximum
payout cap and other eligibility provisions. Any amount carried
over but not payable during the three-year carry-over period
reverts to zero.
The Vice President must be an active Plan participant in the year
a carry-over amount is applied in order to be eligible to receive
it.
VI. Timing of Payouts
Bonuses are paid out by the end of the first quarter following the close of
a Plan Year.
8
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
VII. Eligibility For Participation And Receipt Of Bonuses
A. Unless otherwise determined by the CEO, all non-Sales Vice Presidents
are Participants in the VPIP. This includes Sr. Vice Presidents and
Group Vice Presidents.
B. To be eligible to receive any bonus under the VPIP, a Participant must
be employed by AMD at the time of payout of the bonus.
C. To be eligible to receive an STP bonus of any amount, a Participant
must have been actively employed in the VPIP for at least some portion
of the Plan Year. A Participant who is actively employed for less than
an entire Plan Year (i.e., became a participant mid-year or was on an
unpaid leave), and who is otherwise eligible to receive an STP bonus
for that Plan Year, will receive an STP bonus, prorated according to
the number of months of active employment in the 12-month STP Plan
Year. For purposes of this provision, a full month's credit will be
given where the Participant was actively employed in the VPIP for at
least 15 days of a partial month.
D. To be eligible to receive an LTP bonus of any amount, a Participant
must have been actively employed in the VPIP for at least 12 months. A
Participant who is actively employed for less than an entire three-
year LTP bonus period (i.e., became a Participant at some time during
the period, or was on an unpaid leave), and who is otherwise eligible
to receive an LTP bonus, will receive an LTP bonus, prorated according
to the number of months of active employment out of the 36-month LTP
bonus period. For purposes of this provision, a full month's credit
will be given where the Participant was actively employed for at least
15 days of a partial month.
E. If a Participant dies during the Plan period, any VPIP bonus will be
paid in full so long as the Participant was on active status for at
least 6 months of the Plan Year. If active for less than 6 months, any
award generated at the end of the year will be prorated as above.
Bonus payments will be made to the designated recipient of the
Participant's final paycheck.
9
<PAGE>
================================================================================
AMD VICE PRESIDENT INCENTIVE PROGRAM
================================================================================
F. Payment to a Participant of any calculated bonus for which the
Participant is otherwise eligible is contingent upon that
Participant's sustained satisfactory performance during the Plan
period for which the bonus was calculated, as determined by the
Participant's immediate superior.
G. No Participant has any earned or vested entitlement to any bonus(es)
under the VPIP. Any and all bonus payments are made at the sole
discretion of the Chief Executive Officer.
H. AMD reserves the right to retroactively or prospectively modify or
terminate the VPIP, in whole or in part, and AMD reserves the right to
deny the participation of, or payout of a bonus to, a Participant, at
its sole discretion, with or without notice or cause.
VIII. Other Important Plan Provisions
A. Base Salary is defined as the Participant's annualized base pay rate
at the end of the Plan Year. For the LTP bonus, the annualized base
pay rate at the end of Plan Year three will be the basis for bonus
determination.
B. Operating Income, for Plan purposes, is adjusted for pre-tax
income/loss from FASL. This is otherwise referred to as Operating
Profit on the Non-GAAP profit and loss statement.
C. Because Year 3 LTP bonus calculations may be based on the closest WSTS
and/or S&P 500 estimate at the time of payout, adjustments (positive
or negative) may be made as soon as possible following availability of
actual data.
D. No allowance will be made for factors beyond the control of
Participants that either adversely or favorably affect the Company's
performance.
10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.24
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>AMD'S STOCK OPTION PROGRAM
<TEXT>
<PAGE>
EXHIBIT 10.24
AMD's
Stock Option Program
for Employees
Outside the U.S.
For options granted
after April 25, 2000
<PAGE>
Congratulations on being selected to receive a stock option award. AMD's success
is a direct result of the creativity, innovation, and hard work of employees
like you. In recognition of this, we maintain a stock option program, under
which you can benefit from AMD's long-term success as the company's common stock
price grows.
AMD limits the granting of stock options to those employees whose individual
contributions most influence AMD's performance and add to shareholder value. The
number of options you are granted reflects competitive compensation practices,
your position at AMD, and, most importantly, your individual performance.
WHAT ARE STOCK OPTIONS?
Stock options give you the right to buy shares of AMD common stock at the
"exercise price" within a specified number of years. You "exercise" your option
by purchasing the underlying shares any time after you "vest" in the option (see
How Your Stock Options Vest), but before the option expires.
The attractiveness of stock options lies in the potential for increases in the
market price of the company's common stock over time. For example, if you are
granted options to buy 100 shares of AMD stock at an exercise price of $35 per
share, and the market price of the stock rises to $45, then your "unrealized"
financial gain is $10 per share (the difference between the exercise price and
the current market price). To realize that gain, you first have to be vested in
those 100 options. If you are, you can exercise your options by buying the
stock. You can then hold the shares for potential future gain, or sell them in
the market at any time for the current market price. In this example, if you
exercise your options and sell the purchased shares when the market price moved
up to $50, you would realize a gain of $15 per share ($50 - $35).
Enclosed with this brochure is your stock option document. It gives the grant
date, exercise price, and the vesting and expiration dates for your options.
HOW YOUR STOCK OPTIONS VEST
You earn the right to exercise your stock options according to the vesting
schedule for your grant. Each stock option grant has its own vesting period. The
stock option document for your grant shows the vesting dates for your options.
The following table shows the typical vesting schedules. An initial grant is the
first grant to an eligible employee and an annual grant is a grant that can be
awarded each year subsequent to an initial grant.
Percent of Granted Options
That Are Fully Vested
--------------------------------------
Anniversary of Initial Annual
Grant Date Grant Grant
- --------------------------------------------------------------------------------
First* 40% 25%
Second +20% = 60% +25% = 50%
Third +20% = 80% +25% = 75%
Fourth +20% = 100% +25% = 100%
*After the first year, awards vest in monthly increments over the remaining
time.
If you receive stock option grants in several years, their vesting periods will
overlap. For example, the following chart illustrates the vesting for a
hypothetical employee who receives an initial grant when he/she joins AMD and
then annual grants thereafter based on varying performance ratings:
Calendar # of Options Options Vesting in Calendar Year
--------------------------------------
Year Granted 2 3 4 5 6
- --------------------------------------------------------------------------------
1 150 60 30 30 30
2 100 25 25 25 25
3 160 40 40 40
4 200 50 50
5 220 55
Total 60 55 95 145 170
The above vesting chart is based on continuous active service with AMD.
<PAGE>
IF YOU DIE OR BECOME DISABLED
If you have at least 15 years of AMD service and your AMD employment is
terminated because of your death or total disability, here's what happens on
your termination date:
. If you are on an unpaid leave of absence, any options that would have become
vested in the calendar year in which your leave began are immediately vested.
. If you are not on an unpaid leave of absence, you become immediately vested in
any options that would have become vested in that calendar year.
This accelerated vesting of options does not occur if your AMD employment is
terminated because of your death or disability and you have less than 15 years
of service.
IF AMD EXPERIENCES A "CHANGE IN CONTROL"
You become 100% vested in your outstanding options if AMD experiences a "change
in control," and your employment is terminated by AMD for any reason other than
for misconduct or, if applicable, by constructive termination within one year
after such a change. A "change in control" occurs when:
. More than 20% of AMD has been acquired by a single person or entity,
. Certain changes in the majority of AMD's Board of Directors occur during a
two-year period,
. A merger or consolidation of the company with or into another company,
. Stockholders of the company approve a plan of complete liquidation, or
. There is a sale or disposition of all or substantially all the company's
assets.
IF YOU TAKE A LEAVE OF ABSENCE
You may not exercise any options during an unpaid leave of absence. Also, if
your unpaid leave of absence exceeds 30 consecutive days, the vesting dates for
your unvested options are automatically extended by the number of days by which
your unpaid leave exceeds 30 days. "Unpaid" means that AMD is not paying you a
salary. For more details, check with Treasury Services.
<PAGE>
EXERCISING YOUR STOCK OPTIONS
Once your options are vested, you can exercise them-- that is, you can purchase
AMD common stock at the exercise price. You have a limited number of years from
the date of grant to exercise the options and take advantage of any increase in
the price of AMD stock above the exercise price. Most grants have a ten-year
life. The document for your stock option grant discloses the date on which your
options expire.
Your final opportunity to purchase your vested options is the last regular
business day of AMD before their expiration date. If you are waiting until that
last day, be sure that Treasury Services receives your completed Stock Option
Exercise form before 5:00 p.m. local time in Sunnyvale, California.
If you leave AMD before the expiration date for your options, you have a limited
period of time after your termination date in which to exercise vested options.
See the section When You Leave AMD.
Treasury Services must receive your completed Stock Option Exercise form in
order for you to purchase your options. You should review your annual stock
option statement before exercising your vested options. (See the section Annual
Statements.) You are responsible for knowing which options can be exercised and
the expiration dates for your options.
The following describes the different ways to purchase vested AMD options that
have not expired. However, some countries have currency exchange restrictions.
You should check if local laws restrict or prohibit your ability to purchase
your options with cash.
Cash Purchase
You can pay for the options yourself or arrange for your broker to pay for them.
On the next business day after receipt of your completed Stock Option Exercise
form, Treasury Services will notify you of the cost for the exercised options.
Within two weeks following the exercise date, Treasury Services must receive
from you either a certified check or bank wire for the exercise cost in U.S.
dollars. A stock certificate is issued to you usually within three weeks after
your payment is received by Treasury Services.
Financing through a Broker (also known as "Same Day Exercise and Sale")
You can contact one of AMD's designated brokers to buy shares of AMD stock at
the exercise price and sell them at market price on the same day. You must
submit a completed Stock Option Exercise form to Treasury Services on the same
day that you contact the broker.
If you elect a "same day exercise and sale," you may:
. Sell all of the shares from the exercised options. You will receive a check
from the sale of the shares minus the cost of the exercised options and the
broker's fee.
. Sell enough of the shares acquired through the exercise of the options (at the
market price) to cover the cost of exercising those options and the broker's
fee. You then receive the balance of the AMD shares obtained through
exercising the options.
. Sell only the number of shares you decide on and receive the balance of the
shares. If the shares sold do not cover all the costs of exercising the
options, you must pay the balance through sending a certified check or bank
wire to Treasury Services on the next business day following the exercise
date.
You also can finance your option exercise through the broker and hold the
acquired shares for a later sale. The shares will be registered to and sent to
the broker.
Stock Swap Exercise
You can use AMD shares you have owned at least six months to pay for the
exercise price of the options. To initiate a stock swap, you must complete and
submit a Share Withholding/Delivery Election form in addition to a Stock Option
Exercise form to Treasury Services. You may not pay the exercise price by
requesting that Treasury Services withhold some of the shares resulting from the
options being purchased.
<PAGE>
WHEN TO EXERCISE
It is entirely your decision when to exercise vested options, keeping in mind
the expiration date for your options. (See the sections Exercising Stock Options
and When You Leave AMD.)
The timing of an exercise and/or sale can have a large impact on any value you
ultimately obtain from the option. In deciding when to exercise, you may wish to
consult with your financial advisor, stockbroker, or reputable publications in
which stock market analysts voice their opinions about future potential stock
values. It is also prudent to consult with a tax advisor to determine the impact
of exercising stock options on your tax obligations. In some countries (for
example, the United Kingdom), favorable tax treatment may apply if you hold tax-
qualified stock options for a certain period after the date of grant or the date
on which you last exercised options.
TAXES
AMD is required by law to report all stock option transactions to both the U.S.
and foreign tax authorities. Tax regulations on stock options and selling shares
of a foreign company can be complex. In most countries, you owe no taxes when
your stock option grant is approved. However, you may be liable for taxes on the
gain you receive upon exercising your options. (The "gain" is the difference
between the market value of the shares of AMD common stock on your exercise date
and the exercise price of your options.) In certain countries you may owe taxes
when you become vested in your options, even if you do not purchase them. In
addition, when you sell your shares of AMD stock, any profit that you receive
(the difference between the sale price and the market price on your exercise
date) is subject to your country's tax requirements. We recommend that you
consult with a tax advisor to determine your potential tax obligations.
Withholding tax requirements vary by country. You are responsible for notifying
your local office when you exercise your options. Your local office will advise
if tax withholding is required and how you can satisfy this requirement.
QUALIFIED OR NON-QUALIFIED STOCK OPTIONS
Unless you are an employee in the U.K., your stock options are "non-qualified"
options. Most stock options for U.K. employees are granted from a qualified
stock option scheme. However, some U.K. employees have received or will receive
non-qualified stock options either because the market value of all their
outstanding stock options exceed the aggregate value allowed under a qualified
scheme, or because the grants are/were made from a non-qualified scheme or were
repriced. Contact Treasury Services if you are unsure whether you hold qualified
or non-qualified U.K. stock options.
<PAGE>
WHEN YOU LEAVE AMD
You forfeit all unvested options when you leave AMD. You normally have three
months from your termination date in which to exercise vested options that have
not expired. For example, if March 14 is your final day as an AMD employee, your
last day to purchase vested options is June 14 if it is a regular business day
at AMD. If June 14 is not a regular business day, the final day to buy your
options is the last regular AMD business day before June 14.
However, you have 12 months from your termination date to exercise vested
options if your termination is due to your total disability. Similarly, if you
die while employed at AMD, your beneficiary, or your estate if you have not
designated a beneficiary, has 12 months from the date of your death in which to
exercise your vested options.
If you are uncertain about the final day to purchase options, be sure to contact
Treasury Services at least several weeks before the date on which you think that
your right to exercise your options ends.
FORFEITING STOCK OPTIONS
Your stock options are forfeited under the earliest of these circumstances:
. You do not exercise the options before their expiration date,
. You are not vested to them when you leave AMD,
. You do not exercise your options within the period for exercising them after
you leave AMD, or
. If you die while still an AMD employee and your beneficiary to whom the
options were transferred does not exercise the options within 12 months after
your death.
If you are terminated because of misconduct, AMD reserves the right to cancel
all your options, whether vested or unvested.
NO REINSTATEMENT OF FORFEITED STOCK OPTIONS IF REHIRED BY AMD
If you have a break in service with AMD, your non-vested options are canceled
and will not be reinstated, even if you are rehired the day after your break in
service.
ANNUAL STATEMENTS
Each year, you will receive from Treasury Services a statement detailing the
status of your stock options. This statement includes the number of options you
have been granted to date, their exercise prices, and their vesting and
expiration dates. Your statement also lists the transactions on options that you
have exercised.
Also enclosed with your statement are the forms that you must complete and
return to Treasury Services if you wish to purchase your options.
TREASURY SERVICES DEPARTMENT
Treasury Services is located at AMD's Sunnyvale, California office. The staff
can be contacted as follows:
Phone: 010-408-749-3790
Fax: 010-408-749-3106
Treasury Services' normal hours are between 8:00 a.m. to 5:00 p.m. U.S. Pacific
time during AMD's regular business day.
TRANSFER OF STOCK OPTIONS
Your stock options may be transferred only as follows:
. By a court-issued qualified domestic relations order,
. By your last will and testament, or
. By the laws of descent and distribution if you left no valid will.
Stock options transferred by a qualified domestic relations order expire twelve
months after the date of transfer.
Any other transfer or assignment of your stock options will not be accepted and
gives AMD the right to terminate your options as of the date of the attempted
transfer or assignment.
CHANGES IN CAPITALIZATION OF AMD
The Board of Directors will adjust the number of shares or the class of stock
subject to your options if the out-standing number of AMD common stock changes
as a result of changes in the capitalization of the company. These changes in
capitalization include stock dividends, mergers, consolidations, re-
capitalization, or split-up, combinations or exchange of shares.
<PAGE>
FOR MORE INFORMATION
This brochure summarizes some of the important features of the current AMD stock
option program. For more details, consult the official plan
documents, your individual stock option documents, and
the stock option plan prospectus, all of which can be
obtained from Treasury Services,
1 AMD Place, Sunnyvale, California.
The mailing address is
Treasury Services, P.O. Box 3453, MS 106, Sunnyvale, CA 94088, U.S.A.
In the case of any conflict between this brochure and the official plan
documents, the official plan documents will govern.
AMD reserves the right to amend or terminate the program in
whole or in part, at any time and for any reason,
with or without notice to participants.
Participation in the AMD stock option program does not confer on any participant
any rights whatsoever with respect to continued employment with the company.
[AMD LOGO]
Benefits Department
One AMD Place
P.O. Box 3453, Mailstop 181
Sunnyvale, CA 94088
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.50(A4)
<SEQUENCE>8
<FILENAME>0008.txt
<DESCRIPTION>AMENDMENT AGREEMENT NO. 3
<TEXT>
<PAGE>
EXHIBIT 10.50(a-4)
Redacted Version
AMENDMENT AGREEMENT NO. 3
February 20, 2001
by and between
AMD SAXONY MANUFACTURING GMBH
and
AMD SAXONY HOLDING GMBH
and
DRESDNER BANK AG
and
the Other
BANKS and FINANCIAL INSTITUTIONS
named herein
and
DRESDNER BANK LUXEMBOURG S.A.
_______________________________________
TO THE
SYNDICATED LOAN AGREEMENT
dated
11 March 1997 (As Amended)
AND OTHER OPERATIVE DOCUMENTS
_______________________________________
Baker & McKenzie/Doser Amereller Noack
Frankfurt
<PAGE>
INDEX
-----
Page
Preamble
(S) 1 Definitions
(S) 2 Amendment of the Loan Agreement
(S) 3 Amendment of the Security Documents
(S) 4 Condition Precedent
(S) 5 Representations and Warranties
(S) 6 Miscellaneous
2
<PAGE>
Schedules
Schedule 1 Marked Version of the Loan Agreement
Schedule 2 Amendment Agreement to Sponsors` Support Agreement
Schedule 3 Amendment Agreement to the AMD Saxonia Wafer Purchase
Agreement
Schedule 4 Amendment Agreement to the AMD Holding Wafer Purchase
Agreement
Schedule 5 Amendment Agreement to Sponsors` Guaranty
Schedule 6 Amendment Agreement to Sponsors` Subordination Agreement
Schedule 7 Amendment Agreement to AMD Inc. Subordination Agreement
Schedule 8 Marked Version of the AMD Saxonia Security Assignment of
Current Assets
Schedule 9 Marked Version of the AMD Holding SecurityAssignment of
Current Assets
Schedule 10 Marked Version of the AMD Saxonia Assignment of Contractual
Rights
Schedule 11 Revolving Loan Facility Agreement
Schedule 12 Legal Opinion of O'Melveny & Myers LLP
Schedule 13 Legal Opinion of Norr, Stiefenhofer & Lutz
Schedule 14 Legal Opinion of Baker & McKenzie/Doser Amereller Noack
Schedule 15 Legal Opinion of White & Case, Feddersen
*** Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by an
asterisk and has been filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended, and the Commission's rules and regulations promulgated under the
Freedom of Information Act, pursuant to a request for confidential treatment.
3
<PAGE>
AMENDMENT AGREEMENT TO THE SYNCIDATED LOAN AGREEMENT
----------------------------------------------------
DATED 11 MARCH 1997 (AS AMENDED)
--------------------------------
by and between
1. AMD SAXONY MANUFACTURING GMBH, Dresden, registered in the Commercial
Register of the Dresden Amtsgericht [Local Court] HRB 13186,
- hereinafter referred to as "AMD Saxonia" -
2. AMD SAXONY HOLDING GMBH, Dresden, registered in the Commercial Register of
the Dresden Amtsgericht HRB 13931
- hereinafter referred to as "AMD Holding" -
3. DRESDNER BANK AG,
- hereinafter referred to as "Security Agent" -
4. the other Banks and Financial Institutions named on the signature pages
herein
- the parties referred to at 3 and 4 hereinafter each referred
to as a "Bank" or together as the "Banks", as the case may be -
and
5. DRESDNER BANK LUXEMBOURG S.A.
- hereinafter referred to as "Agent"
or "Paying Agent", as the case may be -
PREAMBLE
--------
1. On 11 March 1997, AMD Saxonia, Dresdner Bank AG (in its capacity as Agent
and Security Agent), the Banks and Dresdner Bank Luxembourg S.A. (in its
capacity as Paying Agent) entered into a Syndicated Loan Agreement with
respect to loan facilities totalling DM 1,650,000,000 for the purpose of
co-financing the Project Costs defined therein. On 1 July 1997, Dresdner
Bank AG assigned its rights and duties from its role as Agent to Dresdner
Bank Luxembourg S.A. pursuant to (S) 22.11 of the Syndicated Loan
Agreement.
4
<PAGE>
2. In view of substantial technological changes and the increased financing
requirements resulting therefrom, the financing obligations of AMD Holding
and of AMD Inc. agreed in connection with the Syndicated Loan Agreement as
well as other provisions of the Syndicated Loan Agreement and of the
related documentation were changed and supplemented on 6 February 1998
within the framework of Supplemental Agreements to the Syndicated Loan
Agreement and the Operative Documents referred to therein.
3. As a result of changes in the AMD Inc. Senior Secured Note Indenture, the
Syndicated Loan Agreement as well as the Sponsors' Support Agreement and
the Sponsors' Loan Agreement as amended on 6 February 1998 were again
changed and supplemented on 29 June 1999.
4. In view of the development that has meanwhile occurred in the
microprocessor production area and the further technical development of
the manufacturing processes, additional investments are required which
exceed the scope envisaged so far in the Syndicated Loan Agreement.
5. The parties hereto agreed, inter alia, on the following changes in
accordance with the terms of this Amendment Agreement. Facility B provided
for in the Syndicated Loan Agreement as a reserve for Cost Overruns will
not be drawn by AMD Saxonia but will be cancelled so that the total loan
facility granted under the Syndicated Loan Agreement will be reduced by DM
150,000,000 to DM 1,500,000,000. The total additional investment
requirements remaining as expected will be funded . as follows:
(i) from the Cash Flow of AMD Saxonia which will be generated within the
framework of the reimbursement obligations in accordance with the
terms of the AMD Holding and AMD Saxonia Wafer Purchase Agreements
as amended; and
(ii) by an additional interim financing to be provided by the Sponsors.
to AMD Saxonia in the form of a subordinated revolving loan facility
in an amount of up to US$ 500,000,000 (which may be provided in Euro
or in US$).
The Sponsors' Guaranty will not expire after Completion of the Project but
continue to apply for the whole term of the Syndicated Loan Agreement and
amount to the greater of (i) thirty-five per cent (35%) of the outstanding
amount of
5
<PAGE>
the loan and (ii) DM 217,500,000 plus interest thereon and costs, but
subject to a maximum amount of DM 600,000,000.
6. The parties hereto also agreed to make certain changes to the Syndicated
Loan Agreement as amended on 6 February 1998 and 29 June 1999 and in the
Operative Documents referred to therein in accordance with the terms of
this Amendment Agreement.
7. In view of the circumstances and stipulations made in paragraphs 4, 5 and
6 of the Preamble, the parties hereto agreed to change the Syndicated Loan
Agreement as amended on 6 February 1998 and 29 June 1999 (hereinafter the
"Loan Agreement") and the Operative Documents referred to therein in
accordance with the following provisions.
(S) 1
Definitions
1.1 The individual terms defined in the Loan Agreement will have the same
meanings when used in this Amendment Agreement, except where the context
otherwise requires.
1.2 Unless the context requires otherwise, any reference to an Operative
Document or a Project Agreement shall be a reference to such Document or
Agreement as it shall have been, or from time to time be, amended,
supplemented or replaced in accordance with the terms of the Loan
Agreement and the respective Operative Document or Project Agreement.
(S) 2
Amendment of the Loan Agreement
2.1 Subject to (S) 4, the Loan Agreement (including Schedules 1, 2, 6, 7, 8,
9, 10, 14, 16, 17, 18, 21, 24 and 63) hereby is and will be amended and
supplemented in accordance with the amendments marked in the version of
the Loan Agreement (including the Schedules) attached hereto as Schedule
--------
1.
-
6
<PAGE>
2.2 Schedules 1, 2, 6, 8, 14 and 16 of the Loan Agreement hereby are and will
be deleted and be replaced by the Schedules 1, 2, 6,8, 14 and 16 referred
to in para. 2.1; Schedule 21 Part I hereby is and will be deleted without
substitution; Schedule 21 Part II hereby is and will be amended and
supplemented in accordance with Schedule 21 referred to in para. 2.1;
Schedules 11, 12 and 13 of the Loan Agreement hereby are and will be
deleted without substitution.
2.3 The land charge to be created pursuant to (S) 8.1.6 of the Loan Agreement
has been extended by notarial declaration of 14 April 1999 to cover the
real property registered in the Land Registry of Wilschdorf (folio 925),
parcels numbers 706 and 707.
2.4 Pursuant to (S) 8.1.6 of the Loan Agreement, AMD Saxonia is obligated to
create a first priority land charge. The land charge has, however, been
registered in the Land Registry of Wilschdorf (folio 851) ranking after a
real servitude in favor of the Energieversorgungscenter Dresden-
Wilschdorf; the same holds true for the real property parcel number 707
(folio 925) which is encumbered with a prior-ranking land charge in the
amount of DM 2.8 million in favor of the City of Dresden. The parties
hereto take note of this situation without, however, releasing AMD Saxonia
from its obligation to create a first priority land charge.
2.5 In addition to the real property referred to in (S)(S) 5.1.4 and 8.1.6 of
the Loan Agreement and in para. 2.3 above, AMD Saxonia acquired other real
property in Boxdorf which is registered in the Land Registry, parcel
number 426 (folio 649). The portion of the real property which will remain
with AMD Saxonia after an intended partial sale and which will probably
have the parcel number 710/3 shall also be encumbered by AMD Saxonia with
a first priority land charge. However, in view of the small size and/or
the small value of such piece of real property, the latter will not be
included in the collective land charge which is already encumbering the
other real property of AMD Saxonia. Therefore, AMD Saxonia undertakes to
create on such piece of real property a first priority land charge in
favor of the Security Agent, in accordance with (S) 8.1.6, with personal
submission to foreclosure and with the amount of the land charge, which
may not be lower than the value of the piece of real property, being
determined by AMD Saxonia and the Security Agent by mutual agreement. The
Banks authorize the Security Agent to do so.
7
<PAGE>
2.6 The remaining provisions of the Loan Agreement together with the Schedules
remain in force to their full extent.
2.7 Any reference in the Operative Documents to an Operative Document shall be
a reference to the Operative Document as amended.
(S) 3
Amendment of the Security Documents
3.1 Subject to (S) 4, the following Security Documents together with the
Schedules hereby are and will be amended and supplemented as follows:
(i) the AMD Saxonia Security Assignment of Current Assets dated 25
September 1997 in accordance with the amendments marked in the
version attached hereto as Schedule 8;
----------
(ii) the AMD Holding Security Assignment of Current Assets dated 25
September 1997 in accordance with the amendments marked in the
version attached hereto as Schedule 9; and
---------------
(iii) the AMD Saxonia Assignment of Contractual Rights dated 25 September
1997 in accordance with the amendments marked in the version
attached hereto as Schedule 10.
-----------
3.2 The Security Documents referred to in paragraphs 3.1 (i) through (iii)
together with the Schedules shall, in all other respects, remain in force
to the full extent.
(S) 4
Condition Precedent
4.1 The validity of this Amendment Agreement is subject to the condition
precedent of the Agent having confirmed to the Banks in writing that it
received the documents set out in (S) 4.1.1 through (S) 4.1.14. The
documents set out in paragraphs 4.1.8 through 4.1.14 must be satisfactory
to the Agent in terms of content and form. The documents specified in (S)
4.1.1 through (S) 4.1.10 must have been entered into and/or
8
<PAGE>
executed in a legally binding manner and their validity may not be subject
to any conditions (except conditions the occurrence of which is connected
with this Amendment Agreement):
4.1.1 Amendment Agreement to Sponsors' Support Agreement pursuant to
Schedule 2;
----------
4.1.2 Amendment Agreement to the AMD Saxonia Wafer Purchase Agreement
pursuant to Schedule 3;
----------
4.1.3 Amendment Agreement to the AMD Holding Wafer Purchase Agreement
pursuant to Schedule 4;
----------
4.1.4 Amendment Agreement to Sponsors' Guaranty pursuant to Schedule 5;
----------
4.1.5 Amendment Agreement to Sponsors' Subordination Agreement pursuant
to Schedule 6;
----------
4.1.6 Amendment Agreement to AMD Inc. Subordination Agreement pursuant to
Schedule 7;
----------
4.1.7 Revolving Loan Facility Agreement pursuant to Schedule 11;
-----------
4.1.8 Written Confirmation of AMD Inc. Regarding the Unchanged Validity
of the AMD Inc. Guaranty of 11 March 1997;
4.1.9 Written Acceptance Confirmation of AMD Inc. and of AMD Saxonia
regarding the amendment decision of the Guarantors.of 17 November
2000;
4.1.10 Written Approval of Sachsische Aufbaubank GmbH regarding the
Amendment of the Loan Agreement and the other Operative Documents
referred to therein;
4.1.11 Legal Opinion of the Law Office O'Melveny & Myers LLP, Counsel to
AMD Inc,. pursuant to Schedule 12 concerning, inter alia, the
-----------
Senior Secured Note Indenture of 1 August 1996 (as amended)
referred to in (S) 15.1.13 of the Loan Agreement and the Loan and
Security Agreement of 13 July 1999 (as amended) likewise referred
to therein;
9
<PAGE>
4.1.12 Legal Opinion of the Law Office Norr, Stiefenhofer & Lutz, Counsel
to the AMD Companies pursuant to Schedule 13;
-----------
4.1.13 Legal Opinion of the Law Office Baker & McKenzie/Doser Amereller
Noack, Counsel to the Agent and to the Banks pursuant to Schedule
--------
14;
--
4.1.14 Legal Opinion of the Law Office White & Case, Feddersen, Counsel
to the Agent and to the Banks pursuant to Schedule 15.
-----------
(S) 5
Representations and Warranties
5.1 AMD Saxonia and AMD Holding represents and warrant to the Banks as follows:
5.1.1 AMD Saxonia and AMD Holding have taken all necessary steps and
obtained all necessary consents to enter into this Amendment
Agreement and the Amendment Agreements to the Operative Documents
and other documents referred to in (S) 3.1 and (S) 4.1.1 through (S)
4.1.9 in a legally binding manner and to exercise its respective
rights thereunder.
5.1.2 the execution of this Amendment Agreement and of the Amendment
Agreements to the Operative Documents referred to in (S) 3.1 and (S)
4.1.1 through (S) 4.1.9 by AMD Saxonia, AMD Holding and AMD Inc. and
the compliance by each of them of their obligations thereunder and
the exercise by each of them of their rights thereunder:
(i) do not violate any provision of applicable law, any judgment
or any requirements or any approvals of any authority or the
like or contractual obligations or any other obligations
applicable to AMD Companies;
(ii) will not result in the termination or acceleration of any
other obligations of AMD Companies;
(iii) will not result in an obligation of AMD Companies to create
any security in favor of any third party, save as contemplated
in the
10
<PAGE>
Security Documents or in the Loan Agreement (as amended by
this Amendment Agreement).
5.1.3 All Operative Documents entered into by AMD Companies and referred
to in (S) 3.1 and (S) 4.1.1 through (S) 4.1.9 constitute legally
binding obligations of AMD Saxonia, AMD Holding and/or AMD Inc.
which are enforceable in accordance with their terms, subject, to
the reservations made in the Legal Opinions. Those reservations
comprise limitations on the enforceability of legal documents which
are governed by German law or by U.S. federal or state law if and
to the extent that express reservations have been made in this
respect in the Legal Opinions to be delivered to and to be approved
by the Agent pursuant to (S) 4.1.11 through (S) 4.1.14.
(S) 6
Miscellaneous
6.1 Pursuant to (S) 22.6 (iii) of the Loan Agreement, the Banks hereby agree
to the naming by the Agent (with the consent of AMD Saxonia) of an
insurance advisor other than Fenchurch Insurance Brokers Ltd., London.
6.2 This Amendment Agreement is part of the Loan Agreement. All references in
the Loan Agreement and in the Operative Documents and all statements and
declarations relating thereto shall apply in the same manner to this
Amendment Agreement.
6.3 This Amendment Agreement and all documents referred to herein shall be
deemed Operative Documents within the meaning of the Loan Agreement.
6.4 The parties hereto may sign several duplicate originals of this Amendment
Agreement which, in each case, will together be deemed to be the original.
6.5 Paragraphs 25.1, 27, 28 and 29 of the Loan Agreement shall apply mutatis
mutandis to this Amendment Agreement.
6.6 The references in the Operative Documents to the General Terms and
Conditions of the Security Agent shall relate to the version applicable
from time to time.
11
<PAGE>
AMD SAXONY MANUFACTURING GMBH
/s/ James Doran
- ---------------
Managing Director
February 20, 2001
AMD SAXONY HOLDING GMBH
/s/ Thomas M. McCoy
- -------------------
Managing Director
February 20, 2001
DRESDNER BANK AG,
(as Security Agent and Lending Bank)
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
Other Lending Banks:
KREDITANSTALT FUR WIEDERAUFBAU
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
LANDESBANK BADEN-WURTTEMBERG
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
12
<PAGE>
SACHSEN LB LANDESBANK SACHSEN GIROZENTRALE
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
BAYERISCHE LANDESBANK GIROZENTRALE
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
HYPOVEREINSBANK LUXEMBOURG SOCIETE ANONYME
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
BHF-BANK AKTIENGESELLSCHAFT
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
COMMERZBANK AKTIENGESELLSCHAFT Filiale Dresden
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
DSL BANK DEUTSCHE SIEDLUNGS- UND LANDESRENTENBANK
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
HAMBURGISCHE LANDESBANK - GIROZENTRALE -
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
13
<PAGE>
IKB DEUTSCHE INDUSTRIEBANK AG
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
LANDESBANK RHEINLAND-PFALZ - GIROZENTRALE
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
ABN AMRO BANK (DEUTSCHLAND) AG, Frankfurt
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
CREDITANSTALT AG
(formerly CREDITANSTALT-BANKVEREIN)
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
THE SUMITOMO BANK, LIMITED, Niederlassung Dusseldorf
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
BANK AUSTRIA CREDITANSTALT DEUTSCHLAND AG
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
DRESDNER BANK LUXEMBOURG S.A.
(as Agent and Paying Agent)
/s/ Marcus Nelgen /s/ Robert von Finckenstein
- ----------------------------------------------
14
<PAGE>
Schedule 1
Marked Version of the Loan Agreement
(including Schedules 1, 2, 6, 7, 8, 9, 10, 14, 16, 17, 18, 21, 24 and 63)
15
<PAGE>
English translation of the legally
binding German Loan Agreement as amended.
Translation prepared for convenience only.
SYNDICATED LOAN AGREEMENT
11 March 1997,
as amended by Supplemental Agreements dated 6 February 1998, 29 June 1999
and
20 February 2001
between
AMD SAXONY MANUFACTURING GMBH
-as Borrower-
and
DRESDNER BANK AG
- as Security Agent -
and
THE OTHER BANKS AND FINANCIAL INSTITUTIONS
named herein
-as Lenders-
and
DRESDNER BANK LUXEMBOURG S.A.
- as Agent and Paying Agent -
Baker & McKenzie/Doser Amereller Noack
Frankfurt
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
Paragraph Page
- --------- ----
<S> <C> <C>
(S) 1 Definitions and Interpretation 6
(S) 2 Facilities 13
(S) 3 Purpose 14
(S) 4 Utilisation of the Facilities 14
(S) 5 Conditions to Drawing 16
(S) 6 Interest, Commitment Fee, Payments 23
(S) 7 Term and Repayment 27
(S) 8 Security 28
(S) 9 Illegality 31
(S) 10 Market Disruption; Alternative method of Calculation 32
(S) 11 Increased Costs 33
(S) 12 Indemnity 34
(S) 13 No Deductions or Withholdings 35
(S) 14 Continuity Clause 36
(S) 15 Representations and Warranties 36
(S) 16 Reporting and Information Requirements 40
(S) 17 Covenants 42
(S) 18 Project Budget; Project Schedule 49
(S) 19 Project Accounts 50
(S) 20 Consent of the Banks 50
(S) 21 Termination of the Facilities by the Banks 51
(S) 22 Agency Provisions 56
(S) 23 Administration of Security 59
(S) 24 Paying Agent 62
(S) 25 Costs 63
(S) 26 Assignment; Sub-participations 64
(S) 27 Miscellaneous 64
(S) 28 Governing Law 69
(S) 29 Jurisdiction 69
</TABLE>
2
<PAGE>
Schedules
Schedule 1 Commitments of the Banks
Schedule 2 Drawdown Schedule
Schedule 3 Drawdown Notice
Schedule 4 Interest Rate Notice
Schedule 5 Notice of Prepayment
Schedule 6 Project Budget
Schedule 7 Project Schedule / Project Phases
Schedule 8 Quarterly Status Report
Schedule 9 [Scheduled Project Phase] Technical Completion Certificate
(Obligors)
Schedule 10 [Scheduled Project Phase] Technical Completion Certificate
(Technical Advisor)
Schedule 11 [left intentionally blank]
Schedule 12 [left intentionally blank]
Schedule 13 [left intentionally blank]
Schedule 14 Management Plan
Schedule 15 Disclosure Schedule
Schedule 16 Statement of Use and Source of Funds
Schedule 17 Financial Covenants
Schedule 18 Certificate of Compliance (Financial Covenants)
Schedule 19 Statement to Report of the Technical Advisor
Schedule 20 Governmental Approvals, Permits and Measures
Schedule 21 Confirmation of Auditor
Schedule 22 Insurance Provisions
Schedule 23 Cash Equivalent Investments
Schedule 24 Guaranty Decision
Schedule 25 AMD/Dresdner Subsidy Agreement
Schedule 26 SAB/Dresdner Subsidy Agreement
Schedule 27 AMD Inc. Guaranty
Schedule 28 Sponsors' Support Agreement
Schedule 29 Sponsors' Loan Agreement
Schedule 30 Sponsors' Subordination Agreement
Schedule 31 Sponsors' Consent and Agreement
Schedule 32 Sponsors' Guaranty
Schedule 33 AMD Holding Wafer Purchase Agreement
Schedule 34 AMD Holding Research, Design and Development Agreement
Schedule 35 AMD Saxonia Wafer Purchase Agreement
Schedule 36 AMD Saxonia Research, Design and Development Agreement
Schedule 37 Management Service Agreement
Schedule 38 License Agreement
Schedule 39 Design/Build Agreement; Contractors' Consent and Agreement
Schedule 40 Material Equipment Supply/Service Contracts; Consent and
Agreement
Schedule 41 AMD Inc. Share Pledge Agreement
3
<PAGE>
Schedule 42 AMD Inc. Subordination Agreement
Schedule 43 AMD Saxonia Land Charge
Schedule 44 AMD Saxonia Security Assignment of Current Assets
Schedule 45 AMD Saxonia Security Assignment of Fixed Assets
Schedule 46 AMD Saxonia Assignment of Insurances
Schedule 47 AMD Saxonia Global Assignment
Schedule 48 AMD Saxonia Charge of Project Accounts
Schedule 49 AMD Saxonia Assignment of Contractual Rights
Schedule 50 AMD Saxonia Assignment (U.S.A.)
Schedule 50a AMD Saxonia Hedging Agreement
Schedule 51 AMD Holding Share Pledge Agreement
Schedule 52 AMD Holding Security Assignment of Current Assets
Schedule 53 AMD Holding Global Assignment
Schedule 54 AMD Holding Charge of Bank Accounts
Schedule 55 AMD Holding Assignment of Contractual Rights
Schedule 56 AMD Holding Assignment (U.S.A.)
Schedule 57 Legal Opinion of Bronson, Bronson & McKinnon LLP (Indenture,
Credit Agreement)
Schedule 58 Legal Opinion of O'Melveny & Myers LLP
Schedule 59 Legal Opinion of Norr Stiefenhofer & Lutz
Schedule 60 Legal Opinion of Doser Amereller Noack/Baker & McKenzie
Schedule 61 Legal Opinion of Feddersen Laule Scherzberg & Ohle Hansen
Ewerwahn
Schedule 62 General Terms and Conditions
Scheduel 63 Maximum 65/35 Guaranty Amount
4
<PAGE>
SYNDICATED LOAN AGREEMENT
-------------------------
between
1. AMD SAXONY MANUFACTURING GMBH, Dresden, registered in the Commercial
Register of the Dresden County Court HRB 13186,
- hereinafter referred to as "AMD Saxonia" -
- as Borrower -
2. DRESDNER BANK AG in Dresden,
- hereinafter also referred to as "Security Agent", as the case may be -
3. The Banks and financial institutions listed in Schedule 1
- the parties referred to at 2 and 3 hereinafter each referred to
as a "Bank" or together as the "Banks", as the case may be -
- as Lenders -.
and
4. DRESDNER BANK LUXEMBOURG S.A.
- hereinafter referred to as the "Agent" or the "Paying Agent",
as the case may be -
PREAMBLE
--------
1. AMD Saxonia proposes to construct, own and operate a fabrication facility
in Dresden for the manufacture of microchip silicon wafers (the
"Fabrication Facility") together with an integrated research and
development center (the "Design Center") (which together are referred to as
the "Project"). AMD Saxonia is a wholly owned subsidiary of AMD Saxony
Holding GmbH domiciled in Dresden, registered in the Commercial Register of
the Dresden County Court under HRB 13931 ("AMD Holding") whose sole
shareholder is Advanced Micro Devices, Inc., a Delaware corporation of One
AMD Place, Sunnyvale, California 94088 - 3453 ("AMD Inc.").
2. The investment cost required for implementation of the Project is to be
partially financed in an amount of up to DM 1,500,000,000 through the
credit facilities made available to AMD Saxonia on and subject to the terms
and conditions of this syndicated loan agreement (the "Agreement").
3. AMD Inc. has made available to AMD Saxonia, via AMD Holding, equity in the
form of ordinary share capital in an aggregate amount of DM 217,550,000,
together with subordinated loans pursuant to the terms of the Sponsors'
Support Agreement and the Sponsors' Loan Agreement, totalling in aggregate
DM 645,000,000 as at 31 December 1999. Furthermore, AMD Inc. has undertaken
to make available to AMD Saxonia
5
<PAGE>
subordinated revolving loans in an aggregate amount of US$ 500,000,000
pursuant to the Revolving Loan Facility Agreement (as defined below) to
finance the general corporate funding requirements of AMD Saxonia.
4. The Free State of Saxony has agreed to provide regional aid for the Project
comprising (i) a dedicated purpose investment grant in an aggregate amount
of DM 476,687,000 (which together with investment subsidies in an aggregate
amount of DM 23,813,000 totals an aggregate amount of DM 500,500,000), and
(ii) a dedicated purpose interest subsidy in an amount of DM 300,000,000
which in each case will be paid to AMD Saxonia by Dresdner Bank AG in
Dresden, in its capacity as house bank.
5. The Banks have agreed to make available to AMD Saxonia the facilities
referred to above on and subject to the following terms and conditions.
IT IS AGREED AS FOLLOWS:
(S) 1
Definitions and Interpretation
1.1 Definitions of terms not defined above are as follows:
AMD/Dresdner Subsidy Agreement (AMD/Dresdner Zuschussvertrag):
the agreement between AMD Saxonia and Dresdner Bank AG in its capacity as
house bank to AMD Saxonia, in the form set out in Schedule 25.
-----------
AMD Companies (AMD-Gesellschaften):
together AMD Saxonia, AMD Holding and AMD Inc.
AMD Holding Wafer Purchase Agreement:
the agreement between AMD Holding and AMD Inc., in the form set out in
Schedule 33.
-----------
AMD K6 microprocessor:
the Microsoft Windows compatible general purpose microprocessor under
development by AMD Inc. to compete with Intel Corporation's Pentium Pro
microprocessor.
AMD Saxonia Wafer Purchase Agreement:
the agreement between AMD Saxonia and AMD Holding, in the form set out in
Schedule 35.
-----------
6
<PAGE>
Available Revolving Loan Facility Amount:
means, on any date, any amount (which must be positive) of:
(i) the Total Revolving Loan Commitment Amount on such date;
less
(ii) the aggregate unpaid principal amount of all Revolving Loans
outstanding on such date.
Auditor (Wirtschaftsprufer):
Ernst & Young Wirtschaftsprufungsgesellschaft mbH or such other firm of
auditors charged with duties relating to the Project as may be appointed by
AMD Saxonia with the consent of the Agent, such consent not to be
unreasonably withheld.
Banks' Auditor (Wirtschaftsprufer der Banken):
BDO Deutsche Warentreuhand AG Wirtschaftsprufungsgesellschaft or such other
firm of auditors charged with duties relating to the Project as may be
appointed by the Banks with the consent of AMD Saxonia, such consent not to
be unreasonably withheld.
Banking Day (Bankarbeitstag):
each day on which banks are generally open for business in London,
Frankfurt am Main, Dresden and Luxembourg.
Capital Expenditure (Investitionskosten):
acquisition and manufacturing costs in respect of fixed and movable assets
in accordance with (S) 266 2 A II of the Commercial Code and acquisition
costs for intangible assets in accordance with (S) 266 2 A I of the
Commercial Code, to the extent the same have a useful operational life of
more than one year (not being expenditures chargeable to the profit and
loss account).
Completion (Fertigstellung):
the date on which the initial satisfaction of all conditions set forth in
the Technical Completion Certificate (Obligors) and the Technical
Completion Certificate (Technical Advisor) set out in Schedules 9 and 10 is
----------- --
confirmed to the Agent by the submission of properly executed originals of
such Certificates.
Disclosure Schedule:
the list of matters disclosed by AMD Saxonia set out in Schedule 15.
-----------
Drawdown Notice (Auszahlungsverlangen):
a Drawdown Notice in the form of the specimen set out in Schedule 3.
----------
Drawdown Schedule (Auszahlungsplan):
the drawdown schedule set out in Schedule 2, as the same may be revised in
----------
accordance with the Project Budget.
Equipment Supply Contract (Liefervertrag):
7
<PAGE>
each agreement (also in the form of an order) between AMD Saxonia and
suppliers (including AMD Inc. or one of its affiliates) relating to the
acquisition by, and delivery to, AMD Saxonia of fixed or tangible current
assets for the Project but excluding Excepted Software Agreements.
Event of Default (Kundigungsgrund):
any event which would entitle a party to an Operative Document, possibly
after the giving or expiry of notice and/or lapse of time, to terminate the
relevant Operative Document.
Excepted Software Agreements (Ausgenommene Softwarevertrage):
means software licences and software service agreements entered into by AMD
Saxonia which are used exclusively:
(i) for financial planning, business administration systems and similar
ancillary administrative functions and which are not linked to, or
connected with (a) the production process in the Fabrication
Facility; (b) general bookkeeping and invoicing and (c) production
planning; or
(ii) in the Design Center.
Facilities (Kredite):
as defined in (S) 2.1.
Guarantors (Burgen):
the Federal Republic of Germany and the Free State of Saxony in their
respective capacities as guarantors pursuant to the 65/35 Guaranty.
Guaranty Decision (Burgschaftsentscheidung):
the decision dated 2 July 1996 set out in Schedule 24 concerning the
-----------
guaranty application made by AMD Saxonia, including the following
documents:
(i) the specimen credit agreement F 13.09.1990 (1993 Edition)
Federal/State or THA;
(ii) the General Terms and Conditions applicable to the assumption of
Guaranties by the Federal Republic of Germany and the States of the
Accession Territory (States) in the edition dated F 04.01.1993
Federal/State;
(iii) Notes relating to applications for guaranties and loans of the
Treuhandanstalt Berlin and/or Federal and State guaranties for
projects in the Accession Territory in the edition dated 1993 F
12.10.1990;
(iv) the Memorandum of Understanding ("Gemeinsame Feststellungen") of 19
February 1997, the Amendment Decision of 12 December 1997 and the
letter from C&L Deutsche Revision AG dated 5 January 1998; and
8
<PAGE>
(v) the letters from C&L Deutsche Revision AG to Dresdner Kleinwort
Benson and Dresdner Kleinwort Wasserstein, respectively, dated 17
November 2000 and 7 February 2001.
65/35 Guaranty (65/35 Burgschaft):
the several maximum amount shortfall guaranties issued by each of the Free
State of Saxony (26%) and the Federal Republic of Germany (39%) in
accordance with the Guaranty Decision up to a maximum aggregate amount of
65 % of the Facilities (in aggregate DM 975,000,000), together with the
shortfall of interest and costs, vested with a first right of satisfaction
in favour of the Banks over all security granted by the AMD Companies as
security for the Banks' risk of recovery (but subject to a set off of 65%
of payments made (if any) under the Sponsors' Guaranty in the form of
Schedule 32, as amended, to this Agreement against the Guarantors'
------------
obligations under the aforesaid shortfall guaranties).
Insurance Advisor (Versicherungsberater):
Fenchurch Insurance Brokers Ltd., London or such other insurance advisor as
may from time to time be appointed by the Agent with the consent of AMD
Saxonia, which consent shall not be unreasonably withheld.
Interest Period (Zinsperiode):
the interest periods to be designated for individual advances, in each case
in accordance with (S)(S) 6.1 to 6.4.
Lending Office (kreditausreichende Geschaftsstelle):
the lending office of each Bank referred to in Schedule 1 to this
----------
Agreement.
LIBOR-Rate (LIBOR-Satz):
the LIBOR-rate so defined in (S) 6.1.1.
Management Plan:
the management plan in the form set out in Schedule 14.
-----------
Material Service Contract (wesentlicher Leistungsvertrag):
each Service Contract
(i) pursuant to which AMD Saxonia incurs obligations in aggregate in
excess of DM 2,500,000 during the term of the contract, or
(ii) which has an initial term in excess of 12 months, or which has an
indefinite term, and in either case cannot be terminated by AMD
Saxonia on less than 12 months' notice; or
(iii) which is listed in Part I of Schedule 40.
-----------
9
<PAGE>
Material Equipment Supply Contract (wesentlicher Liefervertrag):
is each Equipment Supply Contract:
(i) pursuant to which AMD Saxonia incurs obligations in aggregate in
excess of DM 3,750,000, or
(ii) which has an initial term in excess of 12 months, or which has an
indefinite term, and in either case cannot be terminated by AMD
Saxonia on less than 12 months' notice; or
(iii) which is listed in Part I of Schedule 40.
------------
Minimum Liquidity Covenant (Mindestliquiditatskennzahl):
as defined in Schedule 17, (S) 4.
Operative Documents (Transaktionsdokumente):
each of the following:
(i) the Project Agreements;
(ii) this Agreement, the Sponsors' Support Agreement, the Sponsors' Loan
Agreement in the form set out in Schedule 29, the Security Documents,
-----------
the Sponsors' Consent and Agreement in the form set out in Schedule
--------
31, the AMD Saxonia Hedging Agreement in the form set out in Schedule
-- --------
50a, the AMD/Dresdner Subsidy Agreement, the SAB/Dresdner Subsidy
---
Agreement, the Sale and Settlement Agreement between AMD Saxonia and
the City of Dresden dated 11 June 1996, together with amendments
dated 25 October 1996 and 28 February 1997, and the Revolving Loan
Facility Agreement;
(iii) the Loan and Security Agreement dated as of July 13, 1999, as
amended, between, inter alia, AMD Inc. and the Bank of America
National Trust and Savings Association, the AMD Inc. Senior Secured
Note Indenture dated as of 1 August 1996, as amended, between AMD
Inc. and United States Trust Company of New York, as trustee, the
Management Plan, the Project Budget, the Project Schedule, the Plans
and Specifications, the Information Memorandum of AMD Saxonia of
September 1996, the [Scheduled Project Phase] Technical Completion
Certificates (Obligors), the [Scheduled Project Phase] Technical
Completion Certificates (Technical Advisor), in the form set out in
Schedules 9 and 10, the Statement of the Use and Source of Funds, in
----------- --
the form set out in the Schedule 16, and each Consent and Agreement
-----------
required pursuant to the agreements referred to in this definition in
the form set out in Part II of Schedule 40, Annex 3 to Schedule 49,
----------- -----------
Annex 3 to Schedule 55 or in such other form to which the Agent has
-----------
consented; and
(iv) all other Operative Documents within the meaning of the Sponsors'
Support Agreement and each other instrument or document designated by
the Agent (with the consent of AMD Saxonia) as an Operative Document
under this Agreement or the Sponsors' Support Agreement.
10
<PAGE>
Plans and Specifications (Plane und Spezifikationen):
the plans and specifications to be prepared by AMD Saxonia and to be
approved by the Technical Advisor, the Agent and each Sponsor for the
fitting out of the Plant and the Design Center, as the same may be amended
from time to time with the consent of each of the AMD Companies and the
Agent. Amendments which do not reduce or affect the value of the Plant and
the Design Center or the capacity and purpose of the Plant as set out in
the Plans and Specifications originally approved, shall not require the
consent of the Agent.
Project Accounts (Projektkonten):
as defined in (S) 19.1.
Project Agreements (Projektvertrage):
the AMD Saxonia Wafer Purchase Agreement, the AMD Holding Wafer Purchase
Agreement, the AMD Saxonia Research, Design and Development Agreement, in
the form set out in Schedule 36, the AMD Holding Research, Design and
-----------
Development Agreement, in the form set out in Schedule 34, the Management
-----------
Service Agreement, in the form set out in Schedule 37, the License
-----------
Agreement, in the form set out in Schedule 38, the Design/Build Agreement,
-----------
in the form set out in Schedule 39, the Equipment Supply Contracts, the
-----------
Service Contracts, the AMD Inc. Guaranty, in the form set out in Schedule
--------
27 and each other instrument or document designated by the Agent (with the
--
consent of AMD Saxonia) as a Project Agreement for the purposes of this
Agreement.
Project Budget (Projektbudget):
the budget set out in Schedule 6, including such amendments thereto made
----------
with the consent of the Agent in accordance with (S) 18.2 of this
Agreement.
Project Costs (Projektkosten):
all Capital Expenditure and other costs which are incurred by AMD Saxonia
in connection with the Project.
Project Phase (Projektabschnitt):
each project phase set out in the Project Schedule contemplated for the
implementation of the Project.
Project Schedule (Projektzeitplan):
the timetable in the form set out in Schedule 7, including amendments
----------
thereto made with the consent of the Agent in accordance with (S) 18.2 of
this Agreement.
Reference Rate (Basissatz):
the reference rate so defined in (S) 6.1.1.
Reference Banks (Referenzbanken):
the Agent together with Commerzbank AG and ABN AMRO Bank (Deutschland) AG
or such other Banks designated by the Agent in their stead, subject to the
approval of AMD Saxonia, such approval not to be unreasonably withheld.
11
<PAGE>
Revolving Loans:
the subordinated unsecured revolving loans made by the Sponsors under the
terms of the Revolving Loan Facility Agreement.
Revolving Loan Facility Agreement:
the US$ 500,000,000 subordinated unsecured revolving loan facility
agreement dated 20 February 2001 between AMD Inc., AMD Holding and AMD
Saxonia.
SAB/Dresdner Subsidy Agreement (SAB/Dresdner Zuwendungsvertrag):
the agreement between the Sachsische Aufbaubank GmbH, Dresden and Dresdner
Bank AG, Dresden in its capacity as house bank to AMD Saxonia, in the form
set out in Schedule 26.
-----------
Security Documents (Sicherheitenvertrage):
the agreements and other documents referred to in (S) 8.1.
Service Contract (Leistungsvertrag):
each contract in respect of services to be performed in favour of AMD
Saxonia (with the exception of the AMD Saxonia Wafer Purchase Agreement,
the Management Service Agreement as set out in Schedule 37 and employment
-----------
contracts) which is not an Equipment Supply Contract but excluding Excepted
Software Agreements.
Sponsors (Sponsoren):
together, AMD Inc. and AMD Holding.
Sponsors' Support Agreement:
the agreement entered into between AMD Inc., AMD Holding, the Agent and the
Security Agent entitled "Sponsors' Support Agreement", in the form set out
in Schedule 28.
-----------
Subsidy Agreement (Zuschussvertrag/Zuwendungsvertrag):
together, the AMD/Dresdner Subsidy Agreement and the SAB/Dresdner Subsidy
Agreement.
Technical Advisor (Technischer Berater):
Fraunhofer Institut fur Siliziumtechnologie, Itzehoe, or such other
technical advisor as may be appointed by the Agent with the consent of AMD
Saxonia, which consent shall not be unreasonably withheld.
Total Revolving Loan Commitment Amount:
means US$ 500,000,000 (five hundred million US Dollars) or the "Euro
Equivalent" (under, and as defined therein) thereof, or such reduced amount
as shall have been agreed upon by each of the Sponsors, AMD Saxonia, the
Agent, and the Banks.
US GAAP:
the generally accepted accounting principles as set forth from time to time
in the opinions and pronouncements of the United States Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the
12
<PAGE>
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession),
which are applicable to the circumstances as of the date of determination.
1.2 The terms referred to in the introduction to this Agreement, in the
Preamble and in (S) 1.1 above shall, except where the context otherwise
requires, have the same meanings when used in this Agreement. Unless the
context requires otherwise, such terms shall also have such meanings when
used in agreements, written notifications, confirmations and other
documents which are issued pursuant to the terms of this Agreement. Unless
the context requires otherwise, any reference to an Operative Document or a
Project Agreement shall be a reference to such Document or Agreement as it
shall have been, or from time to time be, amended, varied, re-issued,
replaced, novated or supplemented, in each case, in accordance with its
terms and this Agreement.
(S) 2
Facilities
2.1 The Banks hereby agree to make available to AMD Saxonia a long term
investment loan in an amount of up to DM 1,500,000,000 (in words: one
billion five hundred million Deutsche Marks) (hereinafter "Facility A" or
the "Facilities", as the case may be). The Facilities will be made
available by each of the Banks in an amount corresponding to its commitment
as set out in Schedule 1, as amended.
----------
2.2 Each Bank shall make available its respective commitment under the
Facilities pursuant to (S) 2.1 and Schedule 1, separately and independently
----------
from each other Bank, through its Lending Office. AMD Saxonia may draw the
Facilities from all the Banks only in the proportion of their respective
commitments in accordance with (S) 2.1 and Schedule 1. No Bank shall be
----------
liable to provide or make available any advance in respect of amounts to be
provided or made available by the other Banks; any joint and several
liability of the Banks is hereby excluded. The Paying Agent shall be
obliged to distribute to AMD Saxonia the advances to be made by the other
Banks only to the extent that the Paying Agent has in fact received payment
of such advances. Each Bank shall have a claim against AMD Saxonia in the
amount of advances made by such Bank, secured pro rata by the security to
be granted in accordance with the terms and conditions of this Agreement.
2.3 The failure by any Bank to comply with its obligations under this Agreement
shall not affect either the enforceability of this Agreement as a whole or
the obligations of any other party. In such case, AMD Saxonia shall have a
claim solely against the defaulting Bank.
(S) 3
Purpose
3.1 Facility A shall be used only for the purpose of the partial financing of
the Project Costs. Utilisation of Facility A to finance Project Costs which
are not Capital Expenditure is
13
<PAGE>
permitted only up to a maximum amount of DM 100,000,000 and only in
respect of costs incurred before 1 January 1999.
3.2 The use and source of funds in respect of each Project Phase shall be
evidenced by furnishing to the Agent a statement of the use and source of
funds, in the form set out in Schedule 16, certified by the Auditor, such
-----------
statement to be delivered simultaneously with the Scheduled Project Phase
Technical Completion Certificates pursuant to Schedules 9 and 10 for the
----------- --
relevant Project Phase and in any event promptly after the expiry of each
calendar quarter, save as may, in individual cases, be otherwise agreed
with the Agent.
(S) 4
Utilisation of the Facilities
4.1 To the extent that all the conditions precedent set out in (S)5 are
satisfied, the Facilities may be drawn on and subject to the following
terms and conditions by the delivery to the Paying Agent, with a copy to
the Agent, of a written Drawdown Notice to be received by the Paying
Agent, in the case of the first Drawdown Notice at least ten (10) Banking
Days before the drawdown date and, in the case of any other Drawdown
Notice five (5) Banking Days before the drawdown date, set out in such
notice:
4.1.1 Facility A
----------
Prior to Completion, advances shall be made up to the cumulative limit in
each Project Phase set out in the Drawdown Schedule in accordance with
the Project Schedule. Such limit and any advances drawn after Completion
shall not, however, without the prior written consent of the Guarantors,
be greater than the maximum guaranty amount for any calendar year
prescribed by the Guarantors pursuant to Schedule 63. Advances shall be
in minimum amounts of DM 15,000,000 and in integral multiples of DM
5,000,000 or in an equal amount to the undrawn portion of Facility A. No
more than one advance may be made in any calendar month.
Drawdowns in any Project Phase are permitted only in the amount of
Project Costs which have been incurred during the same Project Phase, as
the same are documented by invoices and other supporting evidence to be
furnished together with the Drawdown Notice, as required below. Drawdowns
in a current Project Phase are however permitted in respect of Project
Costs which are shown to have been incurred in respect of an invoice for
goods or services performed or delivered, submitted in the last thirty
days prior to the end of a prior Project Phase and which have been
included in full in the first Drawdown Notice of such current Project
Phase. The preceding two sentences shall not apply to drawdowns requested
following Completion.
Drawdown Notices, and the confirmation contained therein from AMD Saxonia
in the form set out in Schedule 3, shall be furnished to the Agent and
----------
the Paying Agent at the same time. The following documents shall be
furnished to the Agent together with relevant Drawdown Notice:
14
<PAGE>
(i) written confirmation of the Managing Directors (Geschaftsfuhrung)
of AMD Saxonia and an authorised representative of AMD Inc. that
the conditions precedent referred to in (S)(S) 5.2.2 to 5.2.4 with
respect to it have been satisfied at the time of the Drawdown
Notice;
(ii) in respect of drawdowns requested prior to Completion only, unless
the Agent has waived the same, copies of invoices and a description
in reasonable detail of the deliveries and services performed in
respect of amounts which are at least equal to the amount proposed
to be drawn. Project Costs which are not Capital Expenditure may be
supported by evidence other than invoices, in such form as is
reasonably satisfactory to the Agent;
(iii) in respect of drawdowns requested prior to Completion only, written
confirmation of the Auditor that the amounts invoiced are, or were,
to the extent already paid, due and any contractually agreed
retentions and other deductions, such as discounts, have been
deducted in each case, in the form set out in Schedule 21, as
-----------
amended.
Amounts drawn and subsequently repaid may not be reborrowed.
4.1.2 [left intentionally blank]
4.1.3 [left intentionally blank]
4.2 Drawings of the Facilities are not permitted after 29 June 2001.
4.3 Drawings under the Facilities shall be permitted only to the extent that
the making of an advance would not result in the total amount advanced by
the Banks exceeding by more than three times the total amount paid up on
the ordinary share capital of AMD Saxonia and the total amount of
subordinated loans advanced to AMD Saxonia (but excluding, for this
purpose, Revolving Loans) and/or cash contributions made to the reserves
and not repaid in accordance with Section 6.3 second sentence of the
Sponsors' Support Agreement and used for Project Costs.
4.4 Advances under the Facilities will be made available to AMD Saxonia by
the Paying Agent crediting AMD Saxonia's *** with the Agent.
4.5 The Banks shall be entitled to reject Drawdown Notices from AMD Saxonia
if and to the extent that AMD Saxonia has assigned or charged its claims
under this Agreement to any third party or if such claims have been
subject to an attachment order without the consent of the Banks or if AMD
Saxonia is in default in the payment of any amount due or is in breach of
a material obligation, under this Agreement.
- ----------------
*** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
15
<PAGE>
(S) 5
Conditions to Drawing
5.1 Initial utilisation of the Facilities is subject to the satisfaction of
the conditions set out in (S) 4 and all the following conditions
(including those set out in (S) 5.2) at the date of the Drawdown Notice
and written confirmation from the Agent and/or the Paying Agent that it
has received a duly completed Drawdown Notice and confirmation from the
Agent that it has received the documents referred to in (S) 5.1.1 to
5.1.16.
5.1.1 Written confirmation of the Chief Financial Officer of AMD Inc. ***
5.1.2 Written confirmation from AMD Saxonia and AMD Inc. that as at the date of
the initial Drawdown Notice all material governmental approvals, consents
and measures which are necessary for the implementation and ongoing
operation of the Project in accordance with the Plans and Specifications
and the Operative Documents are available, or have been taken, as the
case may be, which, according to the progress of the Project are
appropriate and there is no reason to believe that the same will be
revoked, restricted or made subject to conditions or that governmental
approvals, consents and measures necessary at a later stage of the
Project will not be obtained or taken in a timely fashion. Schedule 20
-----------
contains a list of all material approvals, consents and measures within
the meaning referred to above. To the extent applicable as aforesaid and
if any Bank should so reasonably require, AMD Saxonia shall furnish the
Agent with certified copies of all relevant documents required for the
performance of the Operative Documents, and of the governmental
approvals, consents and measures necessary for the operation of the
Fabrication Facility and the Design Center.
5.1.3 Confirmation from AMD Inc. that as at the date of the initial Drawdown
Notice all consents or approvals necessary from third party creditors in
relation to the indebtedness or contingent liabilities of AMD Inc. and in
relation to the execution, delivery and performance by each of the AMD
Companies of their existing obligations and the subject matter of the
Operative Documents have been obtained.
5.1.4 Receipt of an extract from the Land Register confirming that AMD Saxonia
has been registered in the Register as the owner of parcels referred to
as nos. Folio 851 parcels nos. 150/2, 121/2, 122, 123, 124, 125/2, 126,
127, 128/2, 129/3, 130, 131, 132, 133/1, 134, 135, 136, 137, 138, 139,
140, 141, 142, 143, 143a, 144, 145, 146, 147, 148, 149, 151/2, 152, 153,
154/2, 155, 156, 157, 158, 159, 160/1, 160/2, 161, 162, 694/1 in the
County Court of Dresden von Wilschdorf and that the land charge to be
granted in accordance with (S) 8.1.6 has been registered and that there
are no prior registered charges.
5.1.5 All fees to be borne by AMD Saxonia pursuant to this Agreement and the
other Operative Documents, to which the Agent, the Security Agent, the
Paying Agent or the Banks are party, and other payments relating to costs
incurred pursuant to (S) 25.1 which are due have been paid.
- -----------------
*** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
16
<PAGE>
5.1.6 The Agent has received the following duly executed legally binding
documents whose effectiveness is not conditional (save solely in respect
of any condition relating to this Agreement):
(i) all Security Documents pursuant to (S) 8 with the exception of
such Consents and Agreements required in accordance with this
Agreement and the Security Documents set out in Schedules 49 and
------------
55 which are to be furnished together with the relevant contracts
--
when the same are entered into
(ii) Sponsors' Support Agreement, in the form set out in Schedule 28
-----------
(iii) AMD Saxonia Wafer Purchase Agreement, in the form set out in
Schedule 35.
-----------
(iv) AMD Holding Wafer Purchase Agreement, in the form set out in
Schedule 33.
-----------
(v) AMD Saxonia Research, Design and Development Agreement, in the
form set out in Schedule 36.
-----------
(vi) AMD Holding Research, Design and Development Agreement, in the
form set out in Schedule 34.
-----------
(vii) Management Service Agreement, in the form set out in Schedule 37.
-----------
(viii) License Agreement in the form set out in Schedule 38.
-----------
(ix) Sponsors' Loan Agreement, in the form set out in Schedule 29.
-----------
(x) Sponsors' Consent and Agreement, in the form set out in Schedule
--------
31.
--
(xi) Design/Build Agreement including Contractor's Consent and
Agreement, in the form set out in Schedule 39.
-----------
(xii) copies, certified by a lawyer as true copies, of Material
Equipment Supply Contracts and Material Service Contracts (to the
extent executed as at the date of the initial Drawdown Notice),
including relevant Consents and Agreements in the form set out in
Schedule 40 Part II, Annex 3 of Schedule 49 or in such other form
----------- -----------
as the Agent has consented to as well as all other Consents and
Agreements required in accordance with the Security Documents in
the form set out in Schedules 49 and 55.
------------ --
(xiii) AMD/Dresdner Subsidy Agreement (Zuschussvertrag).
(xiv) SAB/Dresdner Subsidy Agreement (Zuwendungsvertrag).
(xv) AMD Saxonia Hedging Agreement in the form set out in Schedule 50a.
------------
(xvi) confirmation in writing from the State Ministry of Saxony for
Economics and Labour that it has received a Letter from the
European Commission confirming
17
<PAGE>
its non-objection to the interest subsidies to be paid under the
Subsidy Agreements.
(xvii) Sale and Settlement Agreement between AMD Saxonia and the City of
Dresden dated 11 June 1996, together with amendments dated 25
October 1996 and 28 February 1997.
5.1.7 The Agent has received from AMD Saxonia, AMD Holding and AMD Inc.
respectively, confirmation that, as at the date of relevant Drawdown
Notice, subject to any disclosure to the contrary in the Disclosure
Schedule set out in Schedule 15, (i) its representations and warranties
-----------
in the Operative Documents are true and accurate in all material respects
as at such date; (ii) none of the events referred to in (S) 21 has
occurred and is continuing, (iii) each of the Operative Documents to
which it is a party is legally binding on it and in full force and effect
and (iv) there has been no breach by AMD Saxonia of such Operative
Documents.
5.1.8 The Agent has been furnished with the following documents:
(i) Documents relating to AMD Inc.
------------------------------
(a) a certificate of incorporation of AMD Inc. together with any
amendments thereto duly certified by the Secretary of State
of the State of Delaware, USA;
(b) a certificate of the Secretary of State of the State
Delaware, USA, referring to the certificate of incorporation
of AMD Inc. and any amendments and confirming that the same
are the only charter documents furnished to the Secretary of
State concerning AMD Inc., that AMD Inc. is incorporated in
the State of Delaware, USA, and is in good standing and at
the date of the certificate all franchise taxes due up to
that date have been paid;
(c) a certificate signed by the Secretary of State of the State
of California, USA, in customary form, confirming that under
Californian law, AMD Inc. satisfies all the conditions for
intra-state business and as at the date of the confirmation
is entitled to engage in intra-state business, subject to
any required permits of the State of California otherwise
required;
(d) a duly signed confirmation of the Recorder of Deeds of New
Castle County, Delaware, USA, in customary form, confirming
that a certified copy of the certificate of incorporation of
AMD Inc. together with all amendments referred to in the
certificate delivered pursuant to (S) 5.1.8 (b), has been
furnished to his office;
(e) a duly signed confirmation of the Secretary of the Franchise
Tax Board of the State of California, USA, in customary
form, confirming that AMD Inc. is in good standing, has no
unpaid tax obligations
18
<PAGE>
known to the Franchise Tax Board and is entitled to carry
on business in the State of California; the provision of
such confirmation shall not, however, be necessary to the
extent that such confirmation cannot be provided for the
reasons disclosed in the Disclosure Schedule, provided the
decisions concerning the tax assessments have been
challenged bona fide in appropriate proceedings and
provision has been made therefor in accordance with US
GAAP.
The date of the documents referred to above shall not be more than one
month prior to the date of the initial Drawdown Notice.
(ii) Documents relating to AMD Holding
---------------------------------
(a) certified copy of the Commercial Registry extract and the
articles of incorporation of AMD Holding in the form
certified by the County Court. The date of the Commercial
Registry extract shall not be more than one month prior to
the date of the Drawdown Notice;
(b) confirmation of the Managing Directors (Geschaftsfuhrung)
of AMD Holding that the matters set out in the documents
referred to in (a) are true and accurate in all respects
as they relate to the actual facts;
(c) audited financial statements of AMD Holding, including
notes to the statements and a management report, together
with an unqualified report by the Auditors for the year
ended 31 December 1996.
(iii) Documents relating to AMD Saxonia
---------------------------------
(a) certified copy of the Commercial Registry extract and the
articles of incorporation of AMD Saxonia in the form
certified by the County Court; the date of the Commercial
Registry extract shall not be more than one month prior to
the date of the initial Drawdown Notice;
(b) written confirmation of the Managing Directors
(Geschaftsfuhrung) of AMD Saxonia that the documents
referred to in (a) are true and accurate in all respects
as they relate to the actual facts.
(c) audited financial statements of AMD Saxonia including
notes to the statements and a management report, together
with an unqualified report by the Auditors for the year
ended 31 December 1996.
5.1.9 The Agent has received from AMD Inc. confirmation in the form of Schedule
--------
3, dated as of the date of the initial Drawdown Notice, stating that
-
there is attached (i) a written resolution of its Board of Directors
authorising execution of the Operative Documents and (ii) a copy of its
by-laws in effect at the date of the initial Drawdown Notice and (iii) a
list of its agents and officers who have signed the Operative Documents
and the documents relating thereto as authorised signatories.
19
<PAGE>
5.1.10 The Agent has received an opinion acceptable to it from a recognised
reputable first class US financial advisory firm confirming that the
Operative Documents to which AMD Inc. is a party are fair to AMD Inc.
from a financial point of view.
5.1.11 The Agent has received the following legal opinions:
(i) legal opinion (including an Exhibit A thereto in a form
satisfactory to the Agent) of Bronson, Bronson & McKinnon LLP,
counsel to AMD Inc., in the form set out in Schedule 57, relating
-----------
to the Senior Secured Note Indenture dated 1 August 1996 and the
Credit Agreement dated 19 July 1996 each as referred to in (S)
15.1.13, dated not more than 21 calendar after the date hereof;
(ii) legal opinion of O'Melveny & Myers LLP, counsel to the AMD
Companies, of even date herewith, in the form set out in Schedule
--------
58, together with confirmation in accordance with Schedule 58 from
-- -----------
O'Melveny & Myers LLP that the statements referred to in the legal
opinion continue to be true and accurate as at a date not more
than ten calendar days prior to the date of the initial Drawdown
Notice;
(iii) legal opinion of Norr, Stiefenhofer & Lutz, counsel to the AMD
Companies including an opinion relating to the completeness of the
schedule of required governmental approvals, permits and measures
(Schedule 20) as well as relating to the status of such required
-----------
approvals, permits and measures in accordance with the progress of
the Project, in a form updated from that set out in Schedule 59
-----------
satisfactory to the Banks dated not more than ten calendar days
prior to the date of the initial Drawdown Notice; and
(iv) legal opinion of Doser Amereller Noack / Baker & McKenzie, counsel
to the Agent and the Banks of even date herewith, in the form set
out in Schedule 60, together with confirmation from Doser
-----------
Amereller Noack/Baker & McKenzie that the statements referred to
in the legal opinion continue to be true and accurate as at a date
not more than ten calendar days prior to the date of the initial
Drawdown Notice;
(v) legal opinions of Feddersen Laule Scherzberg & Ohle Hansen
Ewerwahn, counsel to the Agent and the Banks of even date herewith
in the form set out in Schedule 61, together with confirmation
-----------
from Feddersen Laule Scherzberg & Ohle Hansen Ewerwahn that the
statements referred to in the legal opinion continue to be true
and accurate as at a date not more than ten calendar days prior to
the date of the initial Drawdown Notice.
5.1.12 The Agent has received a technical report (Technical Report) from the
Technical Advisor, in form and substance satisfactory to the Agent
together with an updated confirmation from the Technical Advisor that
the Technical Report continues to be true and accurate in all material
respects together with the confirmation in writing from AMD Saxonia in
the form set out in Schedule 19;
-----------
20
<PAGE>
5.1.13 The Agent has received confirmations from AMD Saxonia's Insurance
Brokers in the form of Annexes I and II of Schedule 22 as well as
-----------
confirmation from the Insurance Advisor in form and substance
satisfactory to the Agent evidencing, in particular, that AMD Saxonia
has taken out insurances in the scope required pursuant to (S) 17.8 and
Schedule 22.
-----------
5.1.14 AMD Saxonia has registered its stated capital of at least DM 217,500,00
in the Commercial Register of which an amount of at least DM 108,750,000
has been paid up, at the latest on the date of the initial Drawdown
Notice and that a sum in this amount has been credited to a Project
Account in accordance with (S) 19.
5.1.15 The Technical Advisor has received the Plans and Specifications in form
and substance satisfactory to the Technical Advisor and the Agent has
received confirmation in writing, to that effect.
5.1.16 The conditions to initial drawing referred to in the AMD/Dresdner
Subsidy Agreement and the SAB/Dresdner Subsidy Agreement relating to the
payment of grants and subsidies have been satisfied.
5.2 Each of the following conditions must be satisfied on each drawing
(including the first) of the Facilities:
5.2.1 the Agent and the Paying Agent have received a Drawdown Notice and the
Agent has received the documents to be submitted simultaneously with
such notice pursuant to (S) 4.1. Each Drawdown Notice shall in
particular contain confirmation that the conditions referred to in (S)
5.2.2 to (S) 5.2.4 below are true and accurate;
5.2.2 the representations and warranties given by each of the AMD Companies in
each of the Operative Documents are true and accurate in all material
respects as at the date of the Drawdown Notice and will be true and
accurate as at the date of drawing, save to the extent that their
content relates solely to an earlier date;
5.2.3 as at the date of the Drawdown Notice and as at the date of drawing,
none of the events referred to in (S) 21 which would entitle the Banks
to terminate this Agreement has occurred;
5.2.4 as at the date of the Drawdown Notice and as at the date of drawing no
event which has a "Material Adverse Effect" within the meaning of the
Sponsors' Support Agreement has occurred;
5.2.5 the Agent has received a copy certified by a lawyer of each Material
Equipment Supply Contract and each Material Service Contract entered
into by such date, together with the written Consent and Agreements of
the other contracting party relating to the transfer of the relevant
contracts in the form set out in Part II of Schedule 40 or in such other
-----------
form to which the Agent shall have consented together with all Consents
and Agreements required pursuant to the Security Documents set out in
Schedules 49 and 55 which have not already been obtained;
------------ --
21
<PAGE>
5.2.6 the Agent has received evidence reasonably requested by it that all the
governmental approvals, permits and measures necessary according to the
progress of the Project have been granted and, or taken, in accordance
with Part B of Schedule 20 as well as, at the beginning of each Project
-----------
Phase, a legal opinion acceptable to it from Norr, Stiefenhofer & Lutz
relating to the completeness and the legal validity of such approvals,
permits and measures;
5.2.7 the Agent has received at the beginning of each then current Project
Phase confirmation in the form of the Scheduled Project Phase Technical
Completion Certificates in accordance with Schedules 9 and 10 stating
----------- --
that the relevant preceding Project Phase has been completed;
5.2.8 the Agent has received at the end of each calendar year confirmations
from AMD Saxonia's Insurance Brokers in the form of Annexes I and II of
Schedule 22 as well as confirmation of the Insurance Advisor pursuant to
-----------
(S) 5.1.13;
5.2.9 the Agent has received all evidence reasonably requested by it relating
to compliance with or the enforceability of AMD Saxonia's obligations
under this Agreement and the Security Documents.
(S) 6
Interest, Commitment Fee, Payments
6.1 AMD Saxonia may elect, by a notification in a Drawdown Notice and/or an
interest rate notice, whether a variable rate, a fixed rate or a
combination of variable and fixed rates should apply to drawings under
Facility A.
The rate of interest applicable to each advance drawn and the Interest
Period applicable thereto as determined in accordance with (S) 6.2 shall
be, at AMD Saxonia's option:
(i) in respect of a fixed rate, the sum of the Reference Rate and the
margin,
(ii) in respect of a variable rate, the sum of the LIBOR-Rate and the
margin.
6.1.1 The Reference Rate is the arithmetic mean (rounded up to the fourth
--------------
decimal place) of the fixed rates per annum for DM interest rate swaps
(fixed rate as against 6 months LIBOR) in an amount equal to the
relevant advance for the Interest Period requested by AMD Saxonia, as
corresponds to the rate quoted by the Reference Banks at 11.00 a.m.
(London time) as the offered rate on the second Banking Day prior to the
relevant Interest Period, as determined by the Paying Agent.
The LIBOR-Rate is the DM interest rate per annum in the London Interbank
----------
Market which in accordance with "Telerate Screen" page 3750 (or such
other page as may be substituted for page 3750 on that system for the
purpose of displaying offered rates for DM deposits) is quoted as the
offered rate at 11.00 a.m (London time) on the second Banking Day prior
to the relevant Interest Period for such Interest Period.
22
<PAGE>
To the extent that no interest rate is displayed on the relevant
"Telerate Screen" page at the relevant time on any day for the
determination of the interest rate, the rate determined by the Paying
Agent shall be the arithmetic mean (rounded to the fourth decimal place)
quoted to the Paying Agent by the Reference Banks as the DM interest
rate per annum at which the Reference Banks offer to prime banks in the
London Interbank Market on the relevant date at 11.00 a.m. London time
for deposits for the relevant period and in an amount comparable to the
relevant advance.
If any Reference Bank does not notify such a rate to the Paying Agent
for any relevant period, the LIBOR-Rate and/or the Reference Rate as
applicable shall be determined on the basis of the rates notified by the
other Reference Banks.
6.1.2 The margin applicable to Facility A prior to 31 December 2001 shall be
one percent (1.00%) per annum. After 31 December 2001, the margin shall
be calculated by reference to:
(a) the rating of the public long-term senior unsecured debt securities
of AMD Inc. by Moody's Investor Services, Inc. (or any successor or
other undertaking which has assumed the relevant functions of
Moody's Investor Service, Inc. which is a rating agency of
international repute) in effect at the relevant time; and
(b) the ratio (expressed as a percentage of utilization) of outstanding
advances under Facility A to DM 1,500,000,000,-,
in each case, corresponding to the interest rate set out in the right
hand column of the following table:
<TABLE>
<CAPTION>
=======================================================================================
Rating Utilisation percentage Margin
=======================================================================================
<S> <C> <C>
less than "investment grade 70% or more 1.00% per annum;
(Baa3)" or no rating
- ---------------------------------------------------------------------------------------
less than "investment grade at least 50% but less than 70% 0.90% per annum;
(Baa3)" or no rating
- ---------------------------------------------------------------------------------------
less than "investment grade less than 50% 0.75% per annum;
(Baa3)" or no rating
- ---------------------------------------------------------------------------------------
"investment grade (Baa3)" or 70% or more 0.75% per annum;
better
- ---------------------------------------------------------------------------------------
"investment grade (Baa3)" or at least 50% but less than 70% 0.70% per annum; and
better
- ---------------------------------------------------------------------------------------
"investment grade (Baa3)" or less than 50% 0.55% per annum.
better
=======================================================================================
</TABLE>
23
<PAGE>
Adjustments to the margin in respect of each advance shall be made at the
beginning of the next Interest Period and/or at the next interest payment
date as set out in (S) 6.6, as the case may be.
AMD Saxonia shall ensure that the Interest Periods elected by it always
correspond with the repayment schedule in (S) 7.2 of this Agreement. To the
extent that any advance must be prepaid prior to the Interest Period agreed
therefor in order to comply with such repayment schedule, the provisions of
(S) 7.5 shall apply accordingly.
6.2 In respect of a variable interest rate, the Interest Periods shall be 1, 3,
6 or 12 months (to the extent available). The Interest Periods in respect
of fixed interest rates shall be of a duration of integral multiples of one
year or of such duration as AMD Saxonia and the Agent may agree in order to
match the dates on which repayment instalments are made in accordance with
(S) 7.2 but shall not in any event exceed five nor be less than two years.
Upon the Agent's request, AMD Saxonia will consolidate individual
outstanding advances so that not more than ten separate advances are
outstanding at any one time.
6.3 AMD Saxonia will notify the Agent, with a copy to the Paying Agent, in an
irrevocable Drawdown Notice and/or an interest rate notice to be received
at the latest by the fifth Banking Day prior to an Interest Period of the
relevant interest rate (variable or fixed rate), the amount for which the
specified interest rate shall apply and the duration of the relevant
Interest Period. If the Agent has not received in the time specified
therefor an interest rate notice in the form set out in Schedule 4 for the
----------
next Interest Period, the relevant advance shall be for an Interest Period
of the same duration as the previous Interest Period and bear interest on
the same interest rate basis applicable to such Period.
6.4 The first Interest Period for each advance will commence on the date of
drawing. Each succeeding Interest Period will commence on the expiration of
the immediately preceding Interest Period. If the last day of an Interest
Period does not fall on a Banking Day, the Interest Period shall be deemed
to end on the next following Banking Day or if the Interest Period relates
to an advance bearing interest at a variable rate and the next following
Banking Day would otherwise fall in the next calendar month, such Interest
Period shall be deemed to end on the immediately preceding Banking Day. If
an Interest Period for any advance would otherwise extend beyond a due date
for payment pursuant to (S) 7.2 of this Agreement, the relevant Interest
Period shall be deemed to end on the relevant due date.
6.5 Interest in respect of the variable interest rate shall be calculated on
the basis of the actual number of days elapsed and a 360 day year. Interest
in respect of the fixed interest rate shall be calculated on the basis of a
30 day month and a 360 day year.
6.6 Interest shall be paid on the last day of an interest period. In the case
of an Interest Period for a variable rate advance of more than 3 months
interest shall be due and payable at the end of every 3 months. In the case
of a fixed rate advance, interest shall
24
<PAGE>
be paid on the last day of each calendar quarter or, if such day is not a
Banking Day, on the next succeeding Banking Day.
6.7 AMD Saxonia shall be in default (Verzug), without any requirement for
notice, if it has failed to make payments which are due hereunder on the
relevant due date or if it does not make such payments in full. AMD Saxonia
shall pay default interest on the outstanding amount of the overdue payment
at the rate equal to 4 percentage points per annum above the applicable
discount rate of the German Bundesbank, or the equivalent rate following
introduction of the single currency under European Monetary Union, from the
due date until receipt by the Paying Agent of the outstanding amounts.
Should there be no such rate following introduction of the single currency,
the Banks shall determine the applicable rate in accordance with (S) 315
BGB. If AMD Saxonia is in default of payment of interest, AMD Saxonia shall
pay to the Banks liquidated damages. The amount of such liquidated damages
shall correspond to a rate of interest of 4 percentage points above the
applicable discount rate of the German Bundesbank (or the equivalent rate
following introduction of the single currency under European Monetary
Union) from the due date until receipt by the Paying Agent of the overdue
interest amounts. Should there be no such rate following introduction of
the single currency, the Banks shall determine the applicable rate in
accordance with (S) 315 BGB.
6.8 AMD Saxonia agrees to pay to the Paying Agent for the account of each Bank
as from the date of execution of this Agreement until the end of the
availability period pursuant to (S) 4.2 a commitment fee at the rate of
0,2% per annum on such Bank's commitment of the unused portion of the
Facilities calculated on the basis of the actual days elapsed and on the
basis of a 360 day year. The commitment fee shall be calculated on a
quarterly basis and shall be payable at the end of each calendar quarter
for that quarter.
6.9 All payments to be made by AMD Saxonia to the Banks pursuant to the terms
of this Loan Agreement shall at all times be made to the Paying Agent's
account no. *** with Dresdner Bank in Frankfurt or such other account as
may be specified by the Paying Agent on the relevant due date. The Security
Agent is hereby also authorised to debit the relevant amounts due from AMD
Saxonia's account no. *** with the Security Agent in Dresden on or after
the due date and to pay the same to the Agent for distribution to the
individual Banks. Payments made otherwise than in accordance with this
provision shall not constitute good discharge in favour of AMD Saxonia.
6.10 AMD Saxonia shall not be entitled to assert any rights of set off or
retention against the claims of the Banks for payment hereunder.
(S) 7
Term and Repayment
7.1 The Facilities shall be for a term expiring on 31 December 2005.
7.2 The Facilities shall be amortized, commencing on 30 June 2001,
- ----------------
*** CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
25
<PAGE>
in semi-annual repayments in the percentages set out below on the last
Banking Day of the relevant six month period:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Instalments Percentage of the aggregate principal
amount of the Facilities outstanding at
the end of the availability period
pursuant to (S) 4.2
============================================================================================
<S> <C>
first and second instalment 6.50 % each
--------------------------------------------------------------------------------------------
third and fourth instalment 13.50 % each
--------------------------------------------------------------------------------------------
fifth and sixth instalment 14.25 % each
--------------------------------------------------------------------------------------------
seventh and eighth instalment 10.50 % each
--------------------------------------------------------------------------------------------
ninth and tenth instalment 5.25 % each
--------------------------------------------------------------------------------------------
</TABLE>
Each scheduled repayment of the Facilities shall be made, together with
all interest accrued at the due date for repayment and with all other
amounts due under this Agreement at such date.
7.3 AMD Saxonia is entitled to prepay the outstanding amount of the
Facilities, in whole or in part, but not in an amount of less than DM
10,000,000 or, if higher, an integral multiple of DM 5,000,000 or the
total amount outstanding provided that it shall have notified the Paying
Agent (with a copy to the Agent) at least five Banking Days in advance by
notice in writing, substantially in the form of Schedule 5. Each
----------
repayment shall include accrued interest up to the date of repayment.
7.4 At the latest on 15 August 2002, AMD Saxonia shall make a prepayment of
the outstanding Facilities in an amount equal to the excess (if any) of:
7.4.1 all drawdowns under the Facilities made after Completion,
over
----
7.4.2 Capital Expenditure incurred between 1 January 2001 and 1 July 2002, as
set out in the Statement as to the Use and Sources of Funds submitted
pursuant to (S) 16.2.6 (ii) for such period, signed by the Auditor.
7.5 Prepayments shall be applied to payments pursuant to (S) 7.2 in inverse
order of maturity. In the event that the Banks incur a loss arising from
a repayment (save for a repayment at the end of an Interest Period) by
virtue of the fact that the reinvestment of any advances repaid by AMD
Saxonia is only possible at interest rates lower than those agreed with
AMD Saxonia, AMD Saxonia shall indemnify the Banks in respect of
reinvestment losses so incurred as a result of prepayment. In such
circumstances, the Banks shall be entitled to make a claim for the
reinvestment loss which is equal to the difference between the rate of
interest which would have been payable by AMD Saxonia for the relevant
remaining term of the Interest Period on the basis of the applicable
rates and the rate available to the Banks for such period as the
reinvestment rate. For this
26
<PAGE>
purpose, the reinvestment rate for the remaining term and/or the
remaining term of the Interest Period is capital market rate
corresponding to the offered rate for German
Pfandbriefe/Kommunalobligationen (Inhaberschuldverschreibungen) of an
equivalent maturity in the interbank market, determined in accordance
with (S) 6.1. The difference in interest rates shall be discounted to net
present value at a discount rate equivalent to the reinvestment rate. The
Banks shall be entitled to make a claim for any loss incurred by them
which is higher. AMD Saxonia shall have the right to prove that damages
have not been incurred or not in the amount claimed. All notices in
relation to a prepayment shall be irrevocable.
(S) 8
Security
8.1 The Facilities are secured by the 65/35 Guaranty in the form known to the
Banks and AMD Saxonia, as set out in Schedule 24 including in particular
-----------
deeds of guaranty in the form set out in the specimen annexed thereto. A
copy of the Guaranty Decision is also set out in Schedule 24 and the
-----------
terms of such Decision constitute a material term of this Agreement. All
terms and conditions of the Guaranty Decision to be incorporated herein
are hereby agreed by the parties notwithstanding that the same are not
expressly set out in this Agreement; this shall apply in particular to
the obligation to agree to amendments to this Agreement only with the
consent of the Guarantors. AMD Saxonia undertakes to observe and comply
with all relevant conditions of the Guaranty Decision directly applicable
to it and to do all things to enable AMD Inc. to observe and comply with
all obligations encumbent on it in connection with the Guaranty Decision.
The Guarantors are entitled to appoint authorised representatives for the
purpose of administering the 65/35 Guaranty. In addition, AMD Saxonia
shall grant, or procure that there is granted, in favour of the Banks and
the Security Agent the following security as security for all claims of
the Banks as well as any potential claims of the Guarantors arising under
or in connection with this Agreement:
8.1.1 a joint and several guaranty by the Sponsors in an amount of up to the
greater of (i) thirty five per cent. (35%) of all amounts outstanding
under this Agreement, and (ii) DM 217,500,000, in each case plus interest
thereon and costs and expenses, but subject to a maximum amount of DM
600,000,000, as set out in the Sponsors' Guaranty in the form of Schedule
--------
32, as amended;
--
8.1.2 a subordination agreement between AMD Saxonia, the Sponsors, the Agent
and the Security Agent, in the form set out in Schedule 30;
-----------
8.1.3 a guaranty by AMD Inc. of obligations of AMD Holding under certain
Operative Documents, in the form set out in Schedule 27;
-----------
8.1.4 a pledge of all shares in AMD Holding held by AMD Inc. in the form set as
out in Schedule 41;
-----------
8.1.5 a subordination agreement between AMD Holding, AMD Inc., the Agent and
the Security Agent, in the form set out in Schedule 42.
-----------
27
<PAGE>
8.1.6 a first priority land charge over real property registered in the Land
Registry of the Dresden County Court, Dresden von Wilschdorf parcels
numbers Folio 851 parcels nos.150/2, 121/2, 122, 123, 124, 125/2, 126,
127, 128/2, 129/3, 130, 131, 132, 133/1, 134, 135, 136, 137, 138, 139,
140, 141, 142, 143, 143a, 144, 145, 146, 147, 148, 149, 151/2, 152, 153,
154/2, 155, 156, 157, 158, 159, 160/1, 160/2, 161, 162, 694/1 of AMD
Saxonia in respect of an amount of DM 1,650,000,000 together with
interest in an amount of 15 % per annum together with a lump sum payment
in an amount of 5 % of the total charge amount as an immediately
enforceable charge without prior charges in Section III of the Register
in favour of the Security Agent together with a personal acknowledgement
of enforceability by AMD Saxonia to be granted in the form set out in
Schedule 43;
-----------
8.1.7 a security assignment of the current assets of AMD Saxonia (raw
materials, supplemental and operational materials, finished and
unfinished products as well as trading products), in the form set out in
Schedule 44;
-----------
8.1.8 a security assignment of fixed assets of AMD Saxonia, in the fom set out
in Schedule 45;
-----------
8.1.9 a security assignment of insurance claims of AMD Saxonia, in the form set
out in Schedule 46;
-----------
8.1.10 a global assignment of all receivables of AMD Saxonia not otherwise
assigned from the supply of equipment and other services and from other
claims against debtors other than the Sponsors, in the form set out in
Schedule 47;
-----------
8.1.11 a pledge of all amounts standing to the credit of AMD Saxonia in the
Project Accounts in the form set out in Schedule 48;
-----------
8.1.12 an assignment of AMD Saxonia's rights under the Design/Build Agreement in
the form set out in Schedule 39, the Equipment Supply Contracts, the
Service Contracts and other contracts not governed by the laws of the
United States of America or any state thereof together with an offer to
transfer such contracts as required by Schedule 49 and with Consents and
-----------
Agreements in the form of Annex 3 to Schedule 49 as therein required. AMD
-----------
Saxonia is hereby authorised by the Security Agent to enforce on its
behalf rights in its name under the agreements referred to above as
against the relevant obligor for as long as no circumstances exist which
entitle the Banks to terminate this Agreement; AMD Saxonia hereby accepts
such authorisation.
8.1.13 an assignment of claims and contractual rights of AMD Saxonia under the
AMD Saxonia Wafer Purchase Agreement , the Equipment Supply Contracts,
the Service Contracts and rights under other contracts governed by the
laws of the United States of America or any state thereof, in the form
set out in Schedule 50.
-----------
8.1.14 a pledge of all shares in AMD Saxonia held by AMD Holding, in the form
set out in Schedule 51;
-----------
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8.1.15 a security assignment of current assets of AMD Holding (raw materials,
supplemental and operational materials, finished and unfinished products
as well as trading products), in the form set out in Schedule 52.
-----------
8.1.16 a global assignment of all receivables of AMD Holding not otherwise
assigned from the supply of equipment and other services and of other
claims against all debtors, with the exception of AMD Inc., in the form
set out in Schedule 53;
-----------
8.1.17 a pledge of all amounts standing to the credit of AMD Holding in bank
accounts, in the form set out in Schedule 54;
-----------
8.1.18 an assignment of AMD Holding's rights under contracts not governed by
laws of the United States of America or any state thereof and an offer
to transfer such contracts, pursuant to the form set out in Schedule 55
-----------
together with Consents and Agreements in the form set out in Annex 3 to
Schedule 55 as therein required; AMD Holding will be authorised by the
-----------
Security Agent to enforce on its behalf rights in its name under the
agreements referred to above as against the relevant obligor for so long
as no circumstances exist which entitle the Banks to terminate this
Agreement.
8.1.19 an assignment of claims and contractual rights of AMD Holding under the
AMD Holding Wafer Purchase Agreement and other contracts governed by the
laws of the United States of America or any state thereof, in the form
set out in Schedule 56.
-----------
8.2. AMD Saxonia undertakes that, in the event of any material deterioration
of the security as a whole, in particular as a result of reduction in
value and/or loss, it will on the request of the Agent grant additional
security or repay the Facilities accordingly. AMD Saxonia undertakes to
charge real property which is not presently charged or which is acquired
in the future if the same is or intended to be used for operational
purposes.
8.3 If AMD Saxonia is of the opinion that the realisable value of the
security as a whole (with the exception of the 65/35 Guaranty) exceeds
at any time by a material amount the total outstanding claims of the
Banks under this Agreement, otherwise than temporarily, AMD Saxonia may
by notice to the Security Agent, including supporting material, require
the release of security. The Security Agent will pass a copy of such
notice to the Guarantors for their comment.
Following receipt of the Guarantors' comments, the Security Agent and
the Banks will release security to the extent a material over-
collateralisation has been adequately demonstrated.
The Security Agent shall be obliged to agree to a release if and to the
extent that the realisable value as determined in accordance with the
individual Security Documents of all Security provided by AMD Saxonia
exceeds 120% of the secured claims of the Banks other than temporarily.
The choice of the securities released shall be at the discretion of the
Security Agent and of the Banks, as the case may be.
8.4 In the event that the Banks are entitled to terminate the Facilities
pursuant to (S) 21 of this Agreement, AMD Saxonia hereby authorises the
Agent, on behalf of the Banks, to
29
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satisfy on its behalf all obligations of, and to discharge all claims
against it (including those arising under extended retention of title
clauses), at the expense of AMD Saxonia. AMD Saxonia waives its rights
pursuant to (S) 267 II BGB and undertakes to reimburse the Agent promptly
after request by the Agent all reasonable costs and expenses which the
Agent may have incurred in connection with the exercise of its rights to
satisfy obligations and discharge claims as aforesaid.
(S) 9
Illegality
If it becomes illegal or unlawful pursuant to domestic or foreign legislation or
it becomes contrary to any requirement of any domestic or foreign authority or
public body for any Bank to comply with its outstanding obligations - in whole
or in part - under this Agreement such Bank may immediately after it has become
aware thereof inform AMD Saxonia through the Agent. After receipt of such
notification, the Facilities made available by the relevant Bank affected by the
illegality or unlawfulness shall be cancelled without notice or on such
reasonable notice as may be determined by the relevant Bank and specified in the
notification referred to, as the case may be. In such case, AMD Saxonia shall
repay to the Paying Agent for distribution to the relevant Bank all outstanding
amounts under the affected Facilities at the date such notice becomes effective,
together with accrued interest and all other amounts due at the date of such
notice.
(S) 10
Market Disruption; Alternative Method of Calculation
10.1 The Paying Agent shall immediately notify AMD Saxonia and the Banks if any
of the following events occur in relation to any interest period:
(i) the Paying Agent, after consultation with the Reference Banks,
determines that due to circumstances affecting the London interbank
market, the LIBOR rate or the reference rate cannot be adequately
and reasonably determined; or
(ii) in the case of a LIBOR rate, no interest rate for the relevant
interest period appears on the Telerate Monitor and less than two
(2) Reference Banks provide the Paying Agent with a LIBOR rate or in
the case of the reference rate, less than two Reference Banks
provide the Paying Agent with a reference rate; or
(iii) a majority of Banks, as determined pursuant to (S) 22.5, inform the
Paying Agent (with a copy to the Agent) that in respect of the
relevant interest period no DM funds in the required amount are
available in the London interbank market or that the average of the
LIBOR-rates appearing on the Telerate Monitor do not adequately
reflect the cost to such Banks of making or maintaining their
respective participations in the relevant advance for such interest
period.
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Following receipt of such notification no further advances may be made
until an alternative method of calculation pursuant to (S) 10.2 is agreed
upon or such notice is revoked by further notification from the Paying
Agent to AMD Saxonia and the Banks.
10.2 As soon as notification pursuant to (S) 10.1 has been made, AMD Saxonia and
the Paying Agent, in coordination with the Banks, will negotiate in good
faith for a maximum period of thirty days with a view to setting an
alternative method of refinancing the affected advances as well as the
applicable interest rate, the interest period and the payment dates. To the
extent that instead of a LIBOR rate, a reference rate can be determined or
instead of a reference rate, a LIBOR rate can be determined, AMD Saxonia
shall be entitled to require that the rate which is available shall apply
to the relevant advance. If agreement as to the alternative interest rate
is reached between the Banks and AMD, the alternative calculation method
agreed shall apply for all relevant advances. If no agreement in respect of
an alternative method of calculation is achieved within thirty days and
agreed upon in writing or if AMD Saxonia does not require an alternative
available Reference Rate or LIBOR-Rate, the following shall apply:
(i) to the extent that the Facilities have not been drawn, no drawing will
be permitted. AMD Saxonia shall then be obliged to pay immediately all
amounts due to the Paying Agent for distribution to the Banks pursuant
to the terms of this Agreement;
(ii) to the extent that the Facilities have already been drawn, AMD Saxonia
and the Agent (in consultation with the Paying Agent) may determine a
repayment date for the entire outstanding amount of the Facilities
affected of not less than thirty days. Repayment shall be effected on
such day together with interest in an amount equivalent to the costs
of the Banks of making or maintaining their respective participations
in the relevant advance for such interest period together with the
margin to the Paying Agent for distribution to the Banks. In the event
that such costs of the Banks cannot be determined, the applicable rate
shall be determined in accordance with (S) 315 BGB.
(S) 11
Increased Costs
11.1 If a Bank or its Lending Office determines that the introduction of or a
change of any law applicable to it or change in interpretation of any such
law or the application or compliance with any regulation of any public body
results or will result:
(i) in the affected Bank being obliged to pay any tax or other payment
relating to any advance made by it or to any payment to be made by AMD
Saxonia to it, or
(ii) the affected Bank being subject to any other measure which leads to an
increase in the costs of that Bank in funding advances or that the
amount or the effective return in relation to any payment which the
affected Bank receives pursuant to this Agreement is reduced, or
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(iii) the affected Bank being subject to additional costs which arise from
its commitment under the Facility,
such Bank shall be entitled to inform AMD Saxonia through the Agent. AMD
Saxonia shall then be obliged on request and irrespective of whether
advances made are repaid to the affected Bank to pay such amount to the
Paying Agent for the account of the affected Bank as is demonstrated to be
necessary to compensate the affected Bank for the relevant increase in
costs or reduction of payment. The foregoing shall apply only to the extent
that the affected Bank has informed AMD Saxonia, via the Agent, of the
relevant circumstance in respect of paragraphs (i) to (iii).
11.2 An increase in costs or reduction of payment referred to in (S) 11.1 does
not include:
(i) any tax on overall net income of any Bank or a branch thereof;
(ii) any tax required to be deducted or withheld from any amount payable
by AMD Saxonia which AMD Saxonia has paid in accordance with (S) 13;
(iii) any amount relating to any reserve amount, special deposits, equity,
cost ratio, liquidity or capital adequacy requirement or any other
form of banking or monetary control resulting from any law or
regulation in effect at the date of this Agreement.
11.3 For as long as the circumstances referred to in 11.1 above continue, AMD
Saxonia shall be entitled by written notice to the Paying Agent, with a
copy to the Agent, to repay all outstanding advances made by the affected
Bank on thirty days notice expiring at the end of an interest period and to
cancel the Facilities only as they relate to the affected Bank.
(S) 12
Indemnity
12.1 Without prejudice in particular to the provisions of (S) 6.7, (S) 7.5, (S)
10 and (S) 11, AMD Saxonia shall be obliged to hold harmless from and to
indemnify each Bank and the Paying Agent on demand in respect of all
losses, obligations, damage, costs and expenses (including loss of profit)
under or arising out of this Agreement which are suffered by a Bank or the
Paying Agent as result of:
(i) the occurrence of circumstances which entitle the Banks to terminate
this Agreement or breach by AMD Saxonia of its obligations under
this Agreement;
(ii) the failure to draw down funds under the Facilities following a
Drawdown Notice;
(iii) any amounts prepaid otherwise than in accordance with the terms of
this Agreement (in particular also pursuant to (S) 10 and (S) 11).
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<PAGE>
12.2 The obligation to hold harmless and indemnify includes also all costs and
expenses which a Bank incurs as result of the redeployment of funds which
are obtained for the purposes of refinancing its commitment under the
Facilities as well as all interest, fees and costs which arise as a result
of the funding of the amounts not drawn.
12.3 The Paying Agent will maintain books of account in accordance with
customary banking practice which will at all relevant times record the
amounts owed by AMD Saxonia pursuant to this Agreement. In the event of
disputes or other questions in connection with this Agreement, the contents
of the Paying Agent's books of account as they relate to the obligations of
AMD Saxonia pursuant to this Agreement and the amount thereof shall be
conclusive, save in the case of manifest error. AMD Saxonia's ability to
prove any error in the contents of such books of account shall remain
unaffected.
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(S) 13
No Deductions or Withholdings
13.1 All sums payable by AMD Saxonia under this Agreement shall be paid in full
without set off or withholding in respect of tax or other deductions. The
right to set off or the enforcement of any rights of retention or other
claims is hereby excluded. To the extent that AMD Saxonia or a third party
is obliged by law to make deductions or withholdings or to retain money for
tax or other reasons, AMD Saxonia shall be obliged to make a payment of the
difference together with the relevant amount in such additional amount as
will ensure that the relevant Bank or the Paying Agent (as applicable)
receives the full amount which would otherwise have been received by it if
the relevant deduction or withholding had not been made. AMD Saxonia shall
be obliged to furnish the Paying Agent, with a copy to the Agent,
immediately with copies of all the relevant documents confirming that the
amount deducted or withheld has been paid to the relevant tax or other
authority in the full amount.
13.2 If AMD Saxonia becomes aware that deductions or withholdings within the
meaning of 13.1 are required, AMD Saxonia shall notify the Paying Agent,
with a copy to the Agent, immediately giving details and information
relating to the relevant regulations.
13.3 If any Bank receives the benefit of a tax credit or a relief or remission
of tax resulting from the receipt of any additional amount under (S) 13.1
such Bank shall promptly reimburse to AMD Saxonia such part of that benefit
as will leave such Bank after such payment in no more and no less
favourable a position than would have applied if no such benefit or relief
had been received. The relevant Bank shall be obliged to take all
reasonable steps to claim such credit, relief or remission from or against
its tax liabilities even if this results in an obligation to make a
reimbursement to AMD Saxonia. The Banks shall not, however, be obliged to
permit AMD Saxonia to inspect its books in connection with the obligation
referred to above nor to take any particular steps in relation to their tax
affairs.
13.4 No additional amount will be payable to a Bank under (S) 13.1 to the extent
that such additional amount becomes payable as a result only of a change in
the Lending Office of the relevant Bank, unless (i) such change is
requested by AMD Saxonia, or (ii) under the relevant laws, regulations,
treaties or rules in effect at the time of the change in Lending Office,
such additional amount would not have been payable.
13.5 If AMD Saxonia is obliged to pay an additional amount under (S)13.1, AMD
Saxonia may prepay in whole (but not in part) (without prejudice to (S)
12.1) the amount made available to it under this Agreement by the affected
Bank, on AMD Saxonia giving not less than five Banking Days' prior written
notice to the Paying Agent (with a copy to the Agent) and the affected
Bank, provided that such notice is given within thirty (30) days of AMD
Saxonia becoming aware that it would be obliged to pay such amount;
prepayments under this (S)13.5 shall not be permitted after the expiry of
such period. The liability of such Bank to make any further advances
available to AMD Saxonia shall be cancelled on the giving of such notice.
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<PAGE>
(S) 14
Continuity Clause
European Economic and Monetary Union anticipates the introduction of a single
currency and the substitution of the national currencies of Member States
participating in such 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 such 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 such 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 particular, interest rates which
have been set for an interest period shall remain unchanged for such interest
period, subject to any mandatory provisions.
(S) 15
Representations and Warranties
15.1 AMD Saxonia represents and warrants to the Banks as follows:
15.1.1 each of AMD Saxonia and AMD Holding is a duly organised and existing
company under the laws of the Federal Republic of Germany;
15.1.2 each of AMD Saxonia and AMD Holding have taken all necessary steps and
obtained all necessary consents to enter into legally binding
obligations pursuant to the Operative Documents and the Security
Documents and to exercise its respective rights thereunder;
15.1.3 the certified Commercial Registry extracts furnished to the Agent and
the notarially certified articles of association of AMD Saxonia and AMD
Holding and the other documents to be furnished pursuant to (S) 16.5
reflect in all respects the actual position existing on the date
furnished to the Agent;
15.1.4 the execution of the Operative Documents by AMD Saxonia, AMD Holding and
AMD Inc. and the compliance by each of them of their obligations
thereunder and the exercise by each of them of their rights thereunder:
(i) do not violate any provision of applicable law, any judgment or any
requirements or any approvals of any authority or the like or
contractual obligations applicable to them or any other
obligations;
(ii) will not result in the termination or acceleration of any of their
other respective obligations;
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(iii) will not result in an obligation of any of them to create or
grant any security in favour of any third party, save as
contemplated in the Security Documents or in this Agreement.
15.1.5 All Operative Documents entered into by the AMD Companies constitute the
legally valid and binding obligations of AMD Saxonia, AMD Holding and/or
AMD Inc., respectively, enforceable in accordance with their terms,
subject, however, to the Opinion Reservations. For this purpose,
"Opinion Reservations" means limitations on the enforceability of legal
documents which are subject to German law or the law of the U.S.A. or
one of its states to the extent that in respect of these circumstances
qualifications are expressly made in the legal opinions which are to be
furnished to the Agent pursuant to (S) 5.1.11 and which are to be
approved by the Agent. The granting of the security pursuant to (S)
8.1.1 to (S) 8.1.19 (inclusive) will be effective to grant to the
Security Agent and / or the Banks a first priority security interest in
each case, subject to retentions of title permitted in accordance with
this Agreement. At the date of entering into this Agreement, AMD Saxonia
does not own any real property, save for the real property referred to
in (S) 8.1.6.
15.1.6 The audited consolidated financial statements of AMD Holding and the
audited financial statements of AMD Saxonia each as at 31 December 1996
which have been furnished to the Agent, together with the relevant cash
flow statements as at such date were, and the financial statements to be
delivered pursuant to (S) 16.2.1 will be, prepared in accordance with
generally accepted accounting principles consistently applied; in
accordance with these principles they fairly represent, and, in the case
of the financial statements to be delivered pursuant to (S) 16.2.1, will
fairly represent, the consolidated financial position of AMD Holding and
AMD Saxonia respectively without qualification and make provision for
all material indebtedness and other liabilities, actual or contingent,
of AMD Holding and AMD Saxonia save to the extent set out in Schedule
--------
15. Since their respective dates of incorporation, there has been no
--
material adverse change in the business or financial position of AMD
Saxonia and AMD Holding.
15.1.7 The audited financial statements of AMD Saxonia to be delivered in
accordance with (S) 5.1.8 (iii) and (S) 16.2.2 were prepared in
accordance with generally accepted accounting principles consistently
applied. They are in accordance with those principles, true and accurate
in all material respects and fairly represent the financial position of
AMD Saxonia without qualification; in particular, provision has been
made for all material indebtednes and all other liabilities, actual or
contingent. Since the date of the latest audited accounts there has been
no material adverse change in the business or financial position of AMD
Saxonia.
15.1.8 There are no actions, suits, proceedings, claims or disputes or
administrative proceedings pending or threatened against AMD Saxonia or
AMD Holding or the assets or other sources of income of AMD Saxonia or
AMD Holding which if an unfavourable outcome was reasonably probable,
could reasonably be expected to have a material adverse effect on the
financial position of AMD Saxonia or AMD Holding.
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15.1.9 To the best of its knowledge and belief, no Event of Default in
relation to any of the Operative Documents exists at the time of
entering into this Agreement.
15.1.10 Neither AMD Holding nor AMD Saxonia is insolvent or incapable of paying
its debts as they fall due; neither is in liquidation and no steps have
been commenced for the dissolution of either of them.
15.1.11 AMD Saxonia is a wholly owned and the only subsidiary of AMD Holding
which is, in turn, a wholly owned subsidiary of AMD Inc.
15.1.12 The ordinary share capital of AMD Holding has been paid up in full and
the stated ordinary share capital of AMD Saxonia has been paid up in
accordance with the provisions of the Sponsors' Support Agreement;
there have been no repayments of capital. AMD Saxonia has no other
equity participations.
15.1.13 AMD Holding and AMD Saxonia are "Unrestricted Subsidiaries" and not
"Restricted Subsidiaries" within the meaning of the Advanced Micro
Devices Inc. 11% Senior Secured Note Indenture dated 1 August 1996, as
amended, between AMD Inc. and the United States Trust Company of New
York or the Loan and Security Agreement of July 13, 1999, as amended,
between AMD Inc. and the Bank of America National Trust and Savings
Association.
15.1.14 The assets and rights of AMD Saxonia and AMD Holding are not subject to
encumbrances nor has any security been granted in favour of third
parties in respect thereof save in respect of customary retention of
title in favour of suppliers agreed in the ordinary course of business.
No agreements with respect to extended or prolonged retention of title
nor current account or group retention of title agreements have been
concluded with material suppliers.
15.1.15 The operation and assets of AMD Holding and AMD Saxonia are fully
insured against all risks customarily insured against by similar
businesses and on similar terms. All insurances have been entered into
with first class reputable insurance companies which are not affiliates
of AMD Inc. The insurances in force from time to time in accordance
with the progress of the Project will at a minimum satisfy the
requirements set out in (S) 17.8 and Schedule 22.
-----------
15.1.16 AMD Saxonia and AMD Holding have submitted all necessary tax filings
within a reasonable time of the relevant due date and in any event
before penalties attach thereto. Neither AMD Saxonia nor AMD Holding is
in default in relation to the payment of any tax claims or any other
public law claims, other than those referred to in (S) 15.1.17, which
are due except for these which are being contested in good faith by
appropriate proceedings and for which proper provision has been made in
accordance with German generally accepted accounting principles. There
is no proposed tax assessment against AMD Saxonia or AMD Holding which
would, if made, have a material adverse effect on the financial
position of AMD Holding or AMD Saxonia.
15.1.17 All governmental or public law approvals, consents and measures
(including those from the European Union) necessary for the proper
implementation of the Project and the
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compliance by AMD Saxonia and AMD Holding of their obligations pursuant
to the Operative Documents including in particular all such approvals,
consents and measures necessary to ensure the legally binding nature of
all governmental subsidies and grants in connection with the Project
have been obtained, save for those set out in Part B to Schedule 20 and
-----------
there are no grounds to believe that they could be revoked or cancelled
or made subject to material restrictions.
15.1.18 All governmental or public law approvals, consents and measures set out
in Part A of Schedule 20 have been obtained or taken and there is no
-----------
reason to believe that (i) the same would be revoked, cancelled,
limited or made subject to conditions of a material adverse nature nor
that (ii) the governmental approvals consents and measures set out in
Part B of Schedule 20 will not ultimately be available on a timely
-----------
basis.
15.1.19 The business of AMD Saxonia and AMD Holding is not subject to any
unusual limitations of a material nature which might affect compliance
by them of their obligations pursuant to the Operative Documents.
15.1.20 Neither AMD Saxonia nor AMD Holding has engaged in any business or
operation or incurred liabilities save in connection with their
incorporation, the Project and the Operative Documents.
15.1.21 The factual information furnished by AMD Saxonia or AMD Holding to the
Agent or to the Banks in connection with any of the Operative Documents
or the subject matter thereof (including the Information Memorandum
dated September 1996) is true and accurate in all material respects and
have not become misleading as a result of the omission of any material
fact. All assumptions, estimates and projections contained therein have
been made with due care and attention.
15.1.22 AMD Saxonia has not entered into any Material Equipment Supply
Contracts or Material Service Contracts other than those notified to
the Agent in writing, together with copies of the relevant contract or
orders.
15.2 The above representations and warranties (with the exception of the
representation in (S) 15.1.4) shall be deemed repeated in full on the
date of each Drawdown Notice, on the completion of each Project Phase
pursuant to the Project Schedule, and each submission of AMD Saxonia's
annual financial statements by reference to the facts and circumstances
then existing.
(S) 16
Reporting and Information Requirements
16.1 AMD Saxonia will as soon as possible and in any event within five
Banking Days after becoming aware thereof inform the Agent of the
occurrence of an Event of Default within the meaning of (S) 21 or any
other Event of Default which in the reasonable opinion of an
experienced third party would affect the legal or risk position of the
Banks under this Agreement in a manner which is more than immaterial by
notice in writing
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setting out the relevant circumstances and describing the measures
within its powers which AMD Saxonia proposes to take in relation
thereto.
16.2 AMD Saxonia undertakes to keep the Agent regularly informed of its
financial affairs during the term of the Facilities. In particular, it
is agreed as follows:
16.2.1 AMD Saxonia will as soon as possible and in any event within sixty (60)
days of the end of each quarter of each financial year or, in the case
of the last quarter of a financial year, within ninety (90) days of such
quarter, furnish the Agent with (i) quarterly financial statements
(balance sheet and profit and loss statement as well as a cash flow
statement) for the relevant quarter and the period of the four preceding
financial quarters including a comparative statement for the four
financial quarters preceding such period together with (ii) a
certificate of compliance in respect of the financial covenants as set
out in Schedule 18, in each case in a form reasonably satisfactory to
-----------
the Agent. The quarterly financial statements to be delivered hereunder
shall be prepared in accordance with generally accepted accounting
principles applicable in Germany as consistently applied.
16.2.2 AMD Saxonia will as soon as possible and at the latest within ninety
(90) days after the end of each financial year furnish to the Agent
audited financial statements prepared by the Auditor confirming that the
financial statements are unqualified and including notes to the
statements and a management report, together with an audited cash flow
statement including comparative figures for the preceding financial year
and an updated Management Plan. At the same time, AMD Saxonia will
furnish the Agent with confirmation of the Auditor that the quarterly
financial statements furnished at the end of a financial quarter
correspond with the audited annual financial statements and AMD
Saxonia's books of account (including a reconciliation statement) and
whether the financial covenants set out in Schedule 17 have been
-----------
properly calculated and have been complied with in the relevant
financial year, together with a confirmation in accordance with (S)
15.2.
16.2.3 AMD Saxonia will furnish to the Agent, simultaneously with the annual
financial statements and other documents pursuant to (S) 16.2.1 and (S)
16.2.2 written confirmation that as at the end of the relevant balance
sheet date no Event of Default within the meaning of (S) 21.2 has
occurred or, alternatively, which events have lead to such an Event of
Default during the relevant balance sheet period. If such Event of
Default has occurred, written notice thereof in accordance with (S) 16.1
shall be given to the Agent, together with written confirmation that,
except as stated therein, to AMD Saxonia's knowledge no other Events of
Default have occurred.
16.2.4 AMD Saxonia will furnish to the Agent immediately after receipt all
reports and similar documents prepared by the auditors or other
independent firms of accountants and which relate to audits undertaken
as of the end of a financial year or any interim audits.
16.2.5 [left intentionally blank]
16.2.6 AMD Saxonia will furnish to the Agent the following:
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(i) within thirty (30) days after the end of each calendar quarter a
status report in the form set out in Schedule 8, as amended;
----------
(ii) within sixty (60) days of the end of each quarter of each financial
year, or in the case of the last quarter of a financial year within
ninety (90) day of such quarter and within ninety (90) days after
the end of each Project Phase a Statement as to the Use and Source
of Funds and compliance with the reimbursement obligations of the
AMD Saxonia Wafer Purchase Agreement in accordance with Schedule 16,
-----------
as amended, signed by the Auditor; and
(iii) at the latest by 28 February 2002, a status report as of 31 December
2001 relating to the Project prepared by the Technical Advisor
updating (and in form similar to) the Technical Appraisal of the
Technical Advisor dated 5 October 2000.
16.3 AMD Saxonia will inform the Agent promptly in writing in the event that
production in the Fabrication Facility or research activity in the Design
Center is not undertaken at any time after first commercial shipment of
Products (as defined in the AMD Saxonia Wafer Purchase Agreement) for a
period of more than five (5) successive days or if legal administrative or
arbitration proceedings are instituted or threatened against AMD Saxonia or
AMD Holding which may have a material adverse affect on the assets or
ability of AMD Saxonia or AMD Holding to comply with its obligations under
the Operative Documents.
16.4 AMD Saxonia will inform and keep the Agent informed in a reasonable manner
of all circumstances relating to the operations of AMD Saxonia and its
other activities as well as its economic situation to the extent required
by the Agent or any Bank or to the extent the same may have a material
adverse effect on AMD Saxonia's financial position or the viability of the
Project. This obligation also applies to circumstances affecting any
affiliate of AMD Saxonia and which may materially adversely affect the
operations or other activities or economic position of AMD Saxonia or the
assets which are the subject matter of the Security Documents.
16.5 On any change to the Commercial or Land Registry extracts furnished to the
Agent, AMD Saxonia will promptly inform the Agent of the relevant event by
providing copies of the documents to be filed with the Commercial or Land
Registry and, following filing, AMD Saxonia will provide the Agent with
certified copies of the new extracts.
(S) 17
Covenants
17.1 [left intentionally blank]
17.2 AMD Saxonia will comply in all material respects with all relevant laws and
other regulations and administrative directives applicable to it and will
on a timely basis comply with all reasonable requirements of the fiscal
authorities.
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17.3 AMD Saxonia will at all times promptly enforce to the full extent
reasonable all its rights under the Operative Documents and at the Agent's
request will take all reasonable steps to so do. AMD Saxonia hereby
irrevocably appoints the Agent to take all measures and to enter into all
undertakings which the Agent regards as necessary following the occurrence
of an event which entitles the Banks to terminate this Agreement.
17.4 AMD Saxonia undertakes to complete the Project in accordance with:
(i) the timetable contained in the Project Schedule (save that the
completion date of any Project Phase (other than last) may be deferred
for up to six (6) months in aggregate for all such deferrals) provided
that Completion shall be no later than 31 December 2000; and
(ii) the Plans and Specifications.
17.5 AMD Saxonia will on a timely basis and to the full extent comply with its
obligations pursuant to the Operative Documents and particular, take all
steps to enable AMD Inc. and/or AMD Holding to comply with its respective
obligations under the Sponsors' Support Agreement, in particular in
connection with the increase of AMD Saxonia's ordinary share capital as
well as the contribution of other equity capital by the Sponsors. If AMD
Saxonia intends not to comply with its obligations pursuant to the
Operative Documents it will immediately inform the Agent thereof in
writing.
17.6 AMD Saxonia will permit the Agent, the Banks' Auditor and the Technical
Advisor as well as all other advisors of the Agent who are bound by a
professional duty of confidence at all reasonable times to inspect its
properties and to examine the financial and other records of AMD Saxonia
and to discuss the affairs of AMD Saxonia and AMD Holding to the extent
relevant to this Agreement and the risk position of the Banks hereunder
with the management and competent employees. AMD Saxonia will provide
unrestricted access to its relevant records and those of AMD Holding and
make available a reasonable number of copies thereof at reasonable request.
All such inspections and examinations shall be performed in such manner as
not to unreasonably disrupt AMD Saxonia's normal business operations and
its manufacture of the products described in the preamble to this
Agreement.
17.7 AMD Saxonia will at all times maintain proper books of account and prepare
its records in accordance with general accepted book keeping and accounting
principles in Germany as consistently applied. The balance sheet
assumptions will be applied consistently by reference to generally accepted
valuation principles.
17.8 AMD Saxonia will at all times maintain insurance which in type (all
buildings, machines, other equipment, stock, business interruption, third
party liability and the like), scope and amount is at least equal to the
insurance cover of a comparable business and which, in addition, satisfies
the requirements of the Operative Documents. In particular, AMD Saxonia
undertakes to maintain the insurances referred to in Schedule 22 in the
-----------
scope and on the terms and conditions therein referred to, save that AMD
Saxonia shall be under no obligation to maintain insurance with respect to
the risk of
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earthquake and floods, provided that it shall have first furnished to the
Agent confirmation with respect thereto in writing from a third party
(acceptable to the Agent) in form and substance satisfactory to the Banks
and the Guarantors. The persons referred to in Schedule 22 shall be named
-----------
in all contracts of insurance as an additional insured and the Security
Agent as "loss payee" in accordance with Schedule 22. At the end of each
-----------
financial year, AMD Saxonia will furnish to the Agent a complete list of
the above insurances for the next succeeding financial year giving the
details referred to in Schedule 22 together with confirmation from its
-----------
insurance brokers and the Insurance Advisor that AMD's insurance cover
complies with the said requirements.
17.9 AMD Saxonia will construct the Plant and the Design Center in such a way
as will ensure that the Plans and Specifications are complied with.
17.10 AMD Saxonia will at all times ensure that it has obtained and/or taken
and will maintain and/or take on a timely basis all necessary
governmental approvals, permits and measures required for performance by
it of its obligations under the Operative Documents to which it is party.
17.11 AMD Saxonia will make payment of all fees and other amounts due in
connection with the 65/35 Guaranty promptly. The Guarantors through their
authorised representatives, C&L Deutsche Revision AG, Dusseldorf, are
entitled to payment of one-off and regular fees together with commitment
fees and processing fees in connection with the 65/35 Guaranty in
accordance with the following provisions (as a genuine contract for the
direct benefit of third parties):
(i) AMD Saxonia shall after acceptance, and for the duration, of the
65/35 Guaranty pay the following guaranty fees:
- on the issue of the guaranty commitment, 0.25 % of the maximum
guaranty amount in relation to the guaranteed indebtedness,
whereby the calculation of the fee will be determined in
accordance with the drawdowns (in accordance with Section 5 of
the Guaranty Decision) so that the fee due on the issue of the
documents relating the Guaranty Decision are calculated only by
reference to the first drawdown and the first fees due in respect
of the following drawdowns are due when such drawdowns are
included in the terms of the Guaranty and/or in the case of
special guaranty issues on the issue of the Guaranty.
- following the issue of the guaranty,on 1 April and 1 October of
each year in respect of each half year commencing on such dates,
0.25 % of the Guaranty amount outstanding at such times (the
maximum amount referred to in the Guaranty in respect of the
guaranteed indebtedness less payments of principal).
(ii) AMD Saxonia undertakes to pay the following amounts to the
Guarantors, in the event that the Guarantors shall so request:
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- on any extension of the guaranty commitment, a commitment fee up
to an amount of 0.25 % of the extended guaranty commitment,
- in the event of material amendments to a guaranty which has been
approved but not yet issued, a processing fee in an amount of up
to DM 25,000;
(iii) the processing fee for material amendments to an approved but
unissued guaranty is payable to C&L Deutsche Revision AG,
Dusseldorf to its Acount No. 31 308 12, Westdeutsche Landesbank
Girozentrale, Dusseldorf. Other current fees together with the
commitment fee are payable to C&L Treuarbeit Deutsche Revision AG,
Dusseldorf to their trust account "Bundesminister der Finanzen"
Account No.: 30 151 12 at Westdeutsche Landesbank Girozentrale,
Dusseldorf quoting the reference number of the guaranty.
17.12 AMD Saxonia undertakes to comply with and to fullfill all covenants and
other ancillary requirements applicable to it in connection with the
grant of the subsidies. This obligation applies in particular to
covenants and ancillary requirements which are dealt with in the SAB/
Dresdner Subsidy Agreement and the AMD/Dresdner Subsidy Agreement
together with the schedules to these documents. AMD Saxonia also
undertakes to ensure that AMD Companies undertake all steps applicable to
them under the covenants and other ancillary requirements in connection
with the subsidies. AMD Saxonia undertakes futhermore to ensure that all
obligations undertaken by it in connection with the granting of other
state aid (in particular investment allowances) are fulfilled.
17.13 AMD Saxonia undertakes to enter into the Equipment Supply Contracts and
Service Supply Contracts in accordance with the timetable set out in the
Project Schedule and to ensure that equipment or goods delivered pursuant
thereto are subject to retention of title only to the extent customary
and in the ordinary course of business. AMD Saxonia will use its best
endeavours to ensure that retention of title arrangements are not entered
into with material suppliers and in any event that no current account,
group or extended or prolonged retention of title agreements are entered
into. The Equipment Supply Contracts entered into by AMD Saxonia shall
not in the aggregate require the making of advance payments by AMD
Saxonia in excess of an aggregate amount of DM 20,000,000.
17.14 AMD Saxonia undertakes to hedge at least 50 % of all variable interest
rate advances with interest rate caps with the Agent or other Banks and
to inform the Paying Agent thereof. Any advances for which AMD Saxonia
has elected a fixed interest rate pursuant to (S) 6.3 shall be deemed
hedged for the purposes of this (S) 17.14. All rights arising out of
contracts entered into by AMD Saxonia to hedge interest rate shall be
assigned to the Security Agent in accordance with the Global Assignment
in the form set out in Schedule 47; to the extent an assignment is not
-----------
possible, the Banks shall be granted other appropriate security rights.
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17.15 AMD Saxonia undertakes that, until satisfaction in full of all claims of
the Banks under this Agreement, it will not, without the consent of the
Agent and, in the case of (ii), (v), (ix) and (x) without the consent of
the Guarantors:
(i) grant in favour of third parties any security as security for its
own obligations or those of a third party save as contemplated or
permitted by the Operative Documents and save for customary
retention of title rights in favour of suppliers permitted
pursuant to (S) 17.13. AMD Saxonia's right to further encumber
real property already subject to land charges in favour of the
Banks shall remain unaffected ((S) 1136 BGB);
(ii) incur indebtedness for borrowed money or incur liabilities save
for such liabilities contemplated in the Operative Documents and
liabilities in the ordinary course of business;
(iii) save in respect of the lease agreement in respect of premises at
Washingtonstrasse 16 A/B, 01139 Dresden, dated 7/13.08.1996
entered into with Siemens Technopark GmbH Dresden & Co.
Grundstucksverwaltung OHG or any extension thereof, incur any
other obligations as lessee, save to the extent that such
obligations arise under agreements entered into in the ordinary
course of business in connection with the operation of the
Fabrication Facility and of the Design Center and do not exceed in
aggregate more than DM 50,000,000;
(iv) establish any subsidiaries or acquire interests in any other
undertakings or enter into any merger agreements;
(v) dispose of any assets or rights and/or remove such assets from the
location of the Fabrication Facility and the Design Center save to
the extent (a) contemplated by and permitted in the Operative